EXHIBIT 10.2.3
EXECUTION VERSION
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$600,000,000
FIRST PRIORITY SECURED INSTITUTIONAL TERM LOANS DUE 2009
CREDIT AND GUARANTEE AGREEMENT
Dated as of March 23, 2004
among
CALPINE GENERATING COMPANY, LLC
The Borrower
THE GUARANTORS PARTY HERETO FROM TIME TO TIME
The Guarantors
THE LENDERS PARTY HERETO FROM TIME TO TIME
The Lenders
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.
Administrative Agent
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.
Sole Lead Arranger and Sole Bookrunner
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TABLE OF CONTENTS
PAGE
ARTICLE I.
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions........................................................................3
SECTION 1.02. Rules of Construction.............................................................47
ARTICLE II.
THE FIRST PRIORITY TERM LOANS
SECTION 2.01. First Priority Term Loans.........................................................48
SECTION 2.02. Amount of First Priority Term Loans; Availability of Funds........................48
SECTION 2.03. Use of Proceeds...................................................................49
SECTION 2.04. Evidence of Debt; Register; Lenders' Books and Records; Notes.....................49
SECTION 2.05. Interest..........................................................................50
SECTION 2.06. Continuation Notice...............................................................51
SECTION 2.07. Default Interest..................................................................52
SECTION 2.08. Fees..............................................................................53
SECTION 2.09. Payments..........................................................................53
SECTION 2.10. Voluntary Prepayments.............................................................53
SECTION 2.11. Mandatory Repayment Offers........................................................54
SECTION 2.12. General Provisions Regarding Payments.............................................55
SECTION 2.13. Ratable Sharing...................................................................56
SECTION 2.14. Making or Maintaining First Priority Term Loans...................................57
SECTION 2.15. Increased Costs; Capital Adequacy.................................................59
SECTION 2.16. Taxes; Withholding, etc...........................................................60
SECTION 2.17. Removal or Replacement of a Lender................................................63
ARTICLE III.
CONDITIONS PRECEDENT
SECTION 3.01. Resolutions.......................................................................64
SECTION 3.02. Incumbency........................................................................64
SECTION 3.03. Formation Documents...............................................................64
SECTION 3.04. Good Standing Certificates........................................................64
SECTION 3.05. Financial Officer's Certificate...................................................64
SECTION 3.06. Security..........................................................................65
SECTION 3.07. Consummation of Notes Offering, Second Priority Term Loan Agreement, Revolving
Loan Agreement and First Priority Term Loan Documents.........................67
SECTION 3.08. Ratings...........................................................................67
SECTION 3.09. No Material Adverse Change........................................................67
SECTION 3.10. Third Party Approvals.............................................................68
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SECTION 3.11. Opinions..........................................................................68
SECTION 3.12. Officer's Certificates............................................................68
SECTION 3.13. Title Policies....................................................................68
SECTION 3.14. Evidence of Insurance.............................................................69
SECTION 3.15. Other Financing Documents.........................................................69
SECTION 3.16. No Default........................................................................69
SECTION 3.17. Fees..............................................................................69
SECTION 3.18. Funding Notice....................................................................69
SECTION 3.19. Delivery of Financials............................................................69
SECTION 3.20. Site Assessment Reports...........................................................70
SECTION 3.21. Major Project Documents...........................................................70
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Organization......................................................................70
SECTION 4.02. Financing Documents and Major Project Documents...................................71
SECTION 4.03. Collateral........................................................................71
SECTION 4.04. Governmental Approvals............................................................71
SECTION 4.05. Compliance with Law...............................................................72
SECTION 4.06. Ownership of Property; Liens......................................................72
SECTION 4.07. Governmental Authorizations; Permits..............................................72
SECTION 4.08. Labor Disputes....................................................................72
SECTION 4.09. Intellectual Property Rights......................................................72
SECTION 4.10. Hazardous Substances..............................................................73
SECTION 4.11. Litigation........................................................................73
SECTION 4.12. Financial Information.............................................................73
SECTION 4.13. Disclosure; Projections...........................................................73
SECTION 4.14. Adverse Change....................................................................74
SECTION 4.15. Taxes.............................................................................74
SECTION 4.16. Investment Company Act............................................................74
SECTION 4.17. ERISA.............................................................................75
SECTION 4.18. Governmental Regulation...........................................................75
SECTION 4.19. Margin Stock, Etc.................................................................76
SECTION 4.20. No Violations or Defaults.........................................................76
SECTION 4.21. Solvency..........................................................................76
SECTION 4.22. Capitalization....................................................................76
SECTION 4.23. Other Indebtedness................................................................77
ARTICLE V.
COVENANTS
SECTION 5.01. Reports...........................................................................77
SECTION 5.02. Compliance Certificate............................................................77
SECTION 5.03. Stay, Extension and Usury Laws....................................................78
SECTION 5.04. Restricted Payments...............................................................78
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SECTION 5.05. Dividend and Other Payment Restrictions Affecting Subsidiaries....................79
SECTION 5.06. Incurrence of Indebtedness and Issuance of Preferred Equity.......................81
SECTION 5.07. Asset Sales; Application of Net Proceeds..........................................84
SECTION 5.08. Transactions with Affiliates......................................................86
SECTION 5.09. Liens.............................................................................88
SECTION 5.10. Business Activities...............................................................88
SECTION 5.11. Payments for Consent..............................................................88
SECTION 5.12. Offer to Prepay Upon Change of Control............................................89
SECTION 5.13. Restrictions on Activities of CalGen Finance......................................89
SECTION 5.14. Additional Subsidiaries...........................................................89
SECTION 5.15. Limitation on Issuances and Sales of Equity Interests in Subsidiaries.............90
SECTION 5.16. Deposit of Revenues...............................................................90
SECTION 5.17. Maintenance of Insurance..........................................................90
SECTION 5.18. Coverage Ratio; Kilowatt Test.....................................................90
SECTION 5.19. Further Assurances; Ratings.......................................................90
SECTION 5.20. Suspension of Certain Covenants...................................................91
ARTICLE VI.
SUCCESSORS
SECTION 6.01. Merger, Consolidation, or Sale of Assets..........................................91
SECTION 6.02. Successor Corporation Substituted.................................................92
ARTICLE VII.
DEFAULTS AND REMEDIES
SECTION 7.01. Events of Default.................................................................92
SECTION 7.02. Acceleration......................................................................93
SECTION 7.03. Other Remedies....................................................................94
SECTION 7.04. Waiver of Past Defaults; Rescission...............................................94
SECTION 7.05. Control by Majority...............................................................94
SECTION 7.06. Collection Suit by Administrative Agent...........................................94
SECTION 7.07. Priorities........................................................................95
ARTICLE VIII.
AGENTS
SECTION 8.01. Appointment of Agents.............................................................95
SECTION 8.02. Powers and Duties.................................................................96
SECTION 8.03. General Immunity..................................................................96
SECTION 8.04. Agents Entitled to Act as Lender..................................................97
SECTION 8.05. Lenders' Representations, Warranties and Acknowledgment...........................97
SECTION 8.06. Right to Indemnity................................................................97
SECTION 8.07. Successor Administrative Agent....................................................98
SECTION 8.08. Withholding Tax...................................................................98
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ARTICLE IX.
COLLATERAL AND SECURITY
ARTICLE X.
RANKING OF LIENS AND COLLATERAL SHARING
ARTICLE XI.
FIRST PRIORITY TERM LOAN GUARANTEE
SECTION 11.01. Guarantee........................................................................100
SECTION 11.02. Right of Contribution............................................................101
SECTION 11.03. Subordination....................................................................101
SECTION 11.04. No Subrogation...................................................................102
SECTION 11.05. Amendments, etc. with respect to the First Priority Term Loan Obligations........102
SECTION 11.06. Guarantee Absolute and Unconditional.............................................102
SECTION 11.07. Waiver...........................................................................105
SECTION 11.08. Bankruptcy.......................................................................106
SECTION 11.09. Reinstatement....................................................................107
SECTION 11.10. Payments.........................................................................108
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01. Notices..........................................................................108
SECTION 12.02. Expenses.........................................................................108
SECTION 12.03. Indemnity........................................................................109
SECTION 12.04. Set-Off..........................................................................110
SECTION 12.05. Amendments and Waivers...........................................................110
SECTION 12.06. Successors and Assigns; Participations...........................................112
SECTION 12.07. Independence of Covenants........................................................116
SECTION 12.08. Survival of Representations, Warranties and Agreements...........................116
SECTION 12.09. No Waiver; Remedies Cumulative...................................................116
SECTION 12.10. Marshalling; Payments Set Aside..................................................117
SECTION 12.11. Severability.....................................................................117
SECTION 12.12. First Priority Term Loan Obligations Several; Independent Nature of Lenders'
Rights.......................................................................117
SECTION 12.13. Headings.........................................................................117
SECTION 12.14. Applicable Law...................................................................117
SECTION 12.15. Consent to Jurisdiction..........................................................117
SECTION 12.16. Waiver Of Jury Trial.............................................................118
SECTION 12.17. Confidentiality..................................................................119
SECTION 12.18. Usury Savings Clause.............................................................119
SECTION 12.19. Counterparts; Execution by Facsimile.............................................120
SECTION 12.20. Effectiveness....................................................................120
SECTION 12.21. Statements Required in Certificate or Opinion....................................120
SECTION 12.22. No Recourse Against the Borrower or the Guarantors...............................120
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APPENDICES:
Appendix A: Initial First Priority Term Loan Commitments
Appendix B: Notice Addresses
EXHIBITS:
Exhibit A: Subordination Terms
Exhibit B: Assignment and Assumption Agreement
Exhibit C: Certificate Re Non-Bank Status
Exhibit D: Continuation Notice
Exhibit E: Funding Notice
Exhibit F: First Priority Term Loan Note
Exhibit G: Form of Opinions
SCHEDULES:
Schedule A: Third Party Project Documents
Schedule 2.09: Amortization Schedule
Schedule 4.01: Capital Structure
Schedule 4.11: Litigation
Schedule 4.18(b): Qualifying Facilities
Schedule 4.18(c): Exempt Wholesale Generators
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CREDIT AND GUARANTEE AGREEMENT
This
CREDIT AND GUARANTEE AGREEMENT, dated as of March 23, 2004 (this
"Agreement"), is entered into by and among CALPINE GENERATING COMPANY, LLC, a
Delaware limited liability company (the "Borrower"), the GUARANTORS party hereto
from time to time, the LENDERS party hereto from time to time, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
SENIOR FUNDING, INC., as administrative agent (together with its successors and
permitted assigns in such capacity, the "Administrative Agent"), and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ SENIOR FUNDING, INC., as sole lead arranger and sole bookrunner.
RECITALS
WHEREAS, the Borrower intends to borrow, on a non-recourse basis as
described in Section 12.22 (No Recourse), $600,000,000 in aggregate principal
amount of first priority secured institutional term loans due 2009 (the "First
Priority Term Loans") under this Agreement;
WHEREAS, the Borrower:
(a) intends to issue, together with CalGen Finance Corp., a
Delaware corporation and a Wholly Owned Subsidiary of the Borrower
("CalGen Finance"), as co-issuer, on a non-recourse basis:
(i) $235,000,000 in aggregate principal amount of its
First Priority Secured Floating Rate Notes due 2009 (the
"First Priority Notes"), pursuant to the Indenture, dated as
of the date hereof (the "First Priority Indenture"), among the
Borrower, CalGen Finance, the Guarantors party thereto from
time to time and Wilmington Trust FSB, as trustee (together
with its successors and permitted assigns in such capacity,
the "First Priority Indenture Trustee");
(ii) $640,000,000 in aggregate principal amount of
its Second Priority Secured Floating Rate Notes due 2010 (the
"Second Priority Notes"), pursuant to the Indenture, dated as
of the date hereof (the "Second Priority Indenture"), among
the Borrower, CalGen Finance, the Guarantors party thereto
from time to time and Wilmington Trust FSB, as trustee
(together with its successors and permitted assigns in such
capacity, the "Second Priority Indenture Trustee"); and
(iii) (A) $680,000,000 in aggregate principal amount
of its Third Priority Secured Floating Rate Notes due 2011
(the "Third Priority Floating Rate Notes"), and (B)
$150,000,000 in aggregate principal amount of its 11.50% Third
Priority Secured Notes due 2011 (the "Third Priority Fixed
Rate Notes" and, together with the First Priority Notes, the
Second Priority Notes and the Third Priority Floating Rate
Notes, the "Notes"), pursuant to the Indenture, dated as of
the date hereof (the "Third Priority Indenture" and, together
with the First Priority Indenture and the Second Priority
Indenture, the "Indentures"), among the Borrower, CalGen
Finance, the Guarantors party thereto from time to time and
Wilmington Trust FSB, as trustee (together with its successors
and permitted assigns in such capacity, the "Third Priority
Indenture Trustee");
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(b) intends to borrow, on a non-recourse basis, $100,000,000
in aggregate principal amount of second priority secured institutional
term loans due 2010 (the "Second Priority Term Loans" and, together
with the First Priority Term Loans, the "Term Loans"), pursuant to a
Credit and Guarantee Agreement, dated as of the date hereof (the
"Second Priority Term Loan Agreement" and, together with this
Agreement, the "Term Loan Agreements"), among the Borrower, the
Guarantors party thereto from time to time, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior
Funding, Inc., as the administrative agent (together with its
successors and permitted assigns in such capacity, the "Second Priority
Term Loan Administrative Agent"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.,
as sole lead arranger, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as sole
book-runner, and the lenders party thereto from time to time; and
(c) has entered into that certain Amended and Restated Credit
Agreement, dated as of the date hereof (the "Revolving Loan
Agreement"), among the Borrower, the Guarantors party thereto from time
to time, the lenders party thereto from time to time, The Bank of Nova
Scotia, as administrative agent (together with its successors and
permitted assigns in such capacity, the "Revolver Administrative
Agent"), and each of the other agents and arrangers party thereto,
which provides for the borrowing on a non-recourse basis of up to
$200,000,000 in aggregate principal amount of first priority secured
revolving loans (the "Revolving Loans");
WHEREAS, each Guarantor is a Wholly Owned Subsidiary of the Borrower
and each Guarantor will receive substantial direct and indirect benefit from the
making of the First Priority Term Loans and the use of proceeds therefrom;
WHEREAS, the Guarantors shall guarantee, on a non-recourse basis as
described in Section 12.22 (No Recourse), payment of the First Priority Term
Loans and all other First Priority Term Loan Obligations pursuant to the terms
hereof;
WHEREAS, the Borrower and the Guarantors intend to secure the First
Priority Term Loans, the Second Priority Term Loans, all other First Priority
Term Loan Obligations, all other Second Priority Term Loan Obligations, the
Notes, all other Note Obligations and all other First Priority Lien Obligations
(including the Revolving Loan Obligations), Second Priority Lien Obligations and
Third Priority Lien Obligations with a lien on all present and future
Collateral; and
WHEREAS, Calpine CalGen Holdings, Inc., a Delaware corporation
("Holdings"), CalGen Finance, the Borrower, the Guarantors, the Administrative
Agent, the Second Priority Term Loan Administrative Agent, the Revolver
Administrative Agent, the First Priority Indenture Trustee, the Second Priority
Indenture Trustee, the Third Priority Indenture Trustee, and Wilmington Trust
Company as collateral agent (together with its successors and permitted assigns,
the "Collateral Agent") have entered into the Collateral Trust Agreement (as
defined below), which sets forth the terms on which the Borrower and the
Guarantors, among others, have appointed the Collateral Agent as trustee for the
present and future holders of the Secured Obligations to (a) receive, hold,
maintain, administer, and enforce (i) all Security Documents and (ii) all
interests, rights, powers and remedies of the Collateral Agent thereunder, and
(b)
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distribute the proceeds of the Collateral in a manner consistent with the
priority of liens established by the Collateral Trust Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions.
Unless the context otherwise requires, the following capitalized terms,
when used in this Agreement, including in its preamble and recitals, shall have
the following meanings:
"Acquired Debt" means, with respect to any specified Person:
(a) 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 Subsidiary of, such specified Person; and
(b) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Adjusted LIBOR Rate" means, with respect to the relevant Interest
Period, the greater of (a) 1.25% and (b) the quotient of (i) the LIBOR Rate
applicable to such Interest Period, divided by (ii) one minus the Applicable
Reserve Requirement (expressed as a decimal) applicable to such Interest Period.
"Administrative Agent" is defined in the Preamble hereto.
"Administrative Services Agreement" means that certain Master
Administrative Services Agreement, dated as of the date hereof, among the
Borrower, CalGen Finance, each of the Subsidiaries of the Borrower from time to
time party thereto and Calpine Administrative Services Company, Inc.
"Affected Lender" is defined in Section 2.14 (Making or Maintaining
First Priority Term Loans).
"Affected Loans" is defined in Section 2.14 (Making or Maintaining
First Priority Term Loans).
"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
3
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 beneficial ownership of 10% or more of the Voting Stock of a Person will be
deemed to be control. For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" have correlative meanings.
"Affiliate Subordinated Indebtedness" means Indebtedness incurred by
the Borrower pursuant to any arrangement with an Affiliate of the Borrower;
provided, that such Indebtedness (a) is contractually subordinated in right of
payment and in all other respects to the First Priority Term Loan Obligations
and all other Secured Obligations on the terms described in Exhibit A, including
an agreement by the holders of such Indebtedness not to exercise any remedies
until the Secured Obligations Termination Date and is not secured other than by
unperfected security interests, (b) does not provide for mandatory redemption or
other redemption thereof until at least six months after final Stated Maturity
of the First Priority Term Loans, (c) provides for payment of interest thereon
in the form of cash or additional Affiliate Subordinated Indebtedness having a
principal amount equal to the amount of interest due (i.e., pay-in-kind), and
(d) is otherwise in the form set forth in Exhibit A.
"Affiliate Transaction" is defined in Section 5.08 (Transactions With
Affiliates).
"Agents" means the Administrative Agent, the Collateral Agent and the
Sole Lead Arranger.
"Aggregate Amounts Due" is defined in Section 2.13 (Ratable Sharing).
"Agreement" is defined in the Preamble hereto.
"Applicable Reserve Requirement" means, at any time, the maximum rate,
expressed as a decimal, at which reserves (including any basic marginal,
special, supplemental, emergency or other reserves) are required to be
maintained with respect thereto against "Eurocurrency liabilities" (as such term
is defined in Regulation D) under regulations issued from time to time by the
Board of Governors of the Federal Reserve System or other applicable banking
regulator. Without limiting the effect of the foregoing, the Applicable Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (a) any category of liabilities which includes
deposits by reference to which the applicable Adjusted LIBOR Rate or any other
interest rate of a First Priority Term Loan is to be determined, or (b) any
category of extensions of credit or other assets which include First Priority
Term Loans. Each First Priority Term Loan shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed subject to reserve
requirements without benefits of credit for proration, exceptions or offsets
that may be available from time to time to the applicable Lender. The rate of
interest on First Priority Term Loans shall be adjusted automatically on and as
of the effective date of any change in the Applicable Reserve Requirement.
"Asset Sale" means:
(a) the sale, lease, conveyance or other disposition of any
assets or rights by the Borrower or any of its Subsidiaries; provided,
that the sale, conveyance or other
4
disposition of all or substantially all of the assets of the Borrower
and its Subsidiaries taken as a whole will be governed by the
provisions of Section 6.01 (Merger, Consolidation or Sale of Assets)
and not by the provisions of Section 5.07 (Asset Sales; Application of
Net Proceeds); and
(b) the issuance of Equity Interests in any of the Borrower's
Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.
Notwithstanding the preceding, none of the following items will be deemed to be
an Asset Sale:
(a) any single transaction or series of related transactions
that involves assets having a Fair Market Value of less than
$25,000,000 (other than any transaction which involves the sale of an
undivided interest, participation or Equity Interest in any Facility or
any Subsidiary of the Borrower, each of which shall constitute an Asset
Sale);
(b) a transfer of assets between or among the Borrower and the
Guarantors,
(c) an issuance of Equity Interests by a Subsidiary to the
Borrower or to a Guarantor;
(d) 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 in the ordinary
course of business;
(e) the sale or other disposition of cash or Cash Equivalents;
(f) a Restricted Payment that does not violate the covenant in
Section 5.04 (Restricted Payments) or a Permitted Investment;
(g) an issuance of Equity Interests in the Borrower in
accordance with the terms of this Agreement; and
(h) the sale of the Columbia Facility pursuant to the Columbia
FILOT Arrangement.
"Assignment Agreement" means an Assignment and Assumption Agreement
substantially in the form of Exhibit B with such amendments or modifications
thereto as may be approved by the Administrative Agent.
"Bank Book" means that certain confidential information memorandum
titled "Calpine Generating Company, LLC, $600,000,000 First Priority Secured
Term Loan B, $100,000,000 Second Priority Secured Term Loan B" dated March 2004.
"Bankruptcy Case" means any case under the Bankruptcy Law commenced
voluntarily or involuntarily against the Borrower or any other Obligor.
"Bankruptcy Event" shall be deemed to occur, with respect to any
Person, if that Person shall institute a voluntary case seeking liquidation or
reorganization under the Bankruptcy Law,
5
or shall consent to the institution of an involuntary case thereunder against
it; or such Person shall file a petition or consent or otherwise institute any
similar proceeding under any other applicable Federal or state law, or shall
consent thereto; or such Person shall apply for, or consent or acquiesce to, the
appointment of, a receiver, administrator, administrative receiver, liquidator,
sequestrator, trustee or other officer with similar powers for itself or any
substantial part of its assets; or such Person shall make a general assignment
for the benefit of its creditors; or such Person shall admit in writing its
inability to pay its debts generally as they become due; or if an involuntary
case shall be commenced seeking liquidation or reorganization of such Person
under the Bankruptcy Law or any similar proceedings shall be commenced against
such Person under any other applicable Federal or state law and (a) the petition
commencing the involuntary case is not timely controverted, (b) the petition
commencing the involuntary case is not dismissed within 90 days of its filing,
(c) an interim trustee is appointed to take possession of all or a portion of
the property, and/or to operate all or any part of the business of such Person
and such appointment is not vacated within 90 days, or (d) an order for relief
shall have been issued or entered therein; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
administrator, administrative receiver, liquidator, sequestrator, trustee or
other officer having similar powers, over such Person or all or a part of its
property shall have been entered; or any other similar relief shall be granted
against such Person under any applicable Bankruptcy Law.
"Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, and any other
state or federal insolvency, reorganization, moratorium or similar law for the
relief of debtors, or any successor statute.
"Base Rate" means, for any day, a fluctuating rate of interest per
annum equal to the higher of (a) the Prime Rate for such day and (b) the sum of
(i) the Federal Funds Effective Rate for such day and (ii) one half of one
percent (0.50%) per annum.
"Base Rate Loan" means a First Priority Term Loan bearing interest at a
rate determined by reference to the Base Rate.
"▇▇▇▇ Report" is defined in Section 3.05(d) (Financial Officer's
Certificate).
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.
"Board of Directors" means:
(a) 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;
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(b) with respect to a partnership, the Board of Directors of
the general partner of the partnership or any committee duly authorized
and empowered to take action on behalf of such partnership by the
partnership agreement of such partnership;
(c) with respect to a limited liability company, the managing
member or members or any controlling committee of managing members
thereof; and
(d) with respect to any other Person, the board or committee
of such Person serving a similar function.
"Borrower" is defined in the Preamble hereto.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which commercial banks in
New York City are authorized or required by law to
close; provided, however, that when used in connection with a LIBOR Rate Loan
(including with respect to all notices and determinations in connection
therewith and any payments of principal, interest or other amounts thereon), the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CalGen Companies" means the Borrower and the Subsidiaries of the
Borrower.
"CalGen Expansion Company" means CalGen Expansion Company, LLC, a
Delaware limited liability company.
"CalGen Finance" is defined in the Recitals hereto.
"Calpine" means
Calpine Corporation, a Delaware corporation.
"Calpine Performance Guaranty" means that certain Affiliated Party
Guaranty, dated as of the date hereof, by Calpine in favor of the Borrower and
each of the Facility Owners.
"Calpine Project Undertaking" means that certain Project Undertaking
and Agreement, dated as of the date hereof, among the Borrower, each of the
Facility Owners and Calpine.
"Capital Lease Obligations" 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:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
7
(c) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership
interests; and
(d) 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
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 Equivalents" means:
(a) United States dollars;
(b) securities issued or directly and fully guaranteed or
insured by the United States government (or any agency or
instrumentality thereof), the Canadian government (or any agency or
instrumentality thereof) or the government of a member state of the
European Union (or any agency or instrumentality thereof), in each case
the payment of which is backed by the full faith and credit of the
United States, Canada or the relevant member state of the European
Union, as the case may be, and having maturities of not more than six
months from the date of acquisition;
(c) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Credit Facilities
or any domestic commercial bank having capital and surplus in excess of
$500,000,000 and a Thomson Bank Watch (or successor rating agency)
Rating of "B" or better;
(d) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (b)
and (c) above entered into with any financial institution meeting the
qualifications specified in clause (c) above;
(e) overnight deposits with entities whose unsecured
commercial paper or other unsecured short-term debt obligations have,
at the time of such investment, credit ratings of at least P-1 (or its
equivalent) or higher from ▇▇▇▇▇'▇ and A-1 (or its equivalent) or
higher from S&P; and
(e) investments in money market funds or money market mutual
funds which have, at the time of such investments, credit ratings of at
least P-1 (or its equivalent) or higher from ▇▇▇▇▇'▇ and A-1 (or its
equivalent) or higher from S&P.
"Casualty Event" means any damage to or destruction of a Facility in
excess of $20,000,000.
"Certificate re Non-Bank Status" means a certificate substantially in
the form of Exhibit C.
"CES" means Calpine Energy Services, L.P., a Delaware limited
partnership.
8
"Change of Control" means the occurrence of any of the following:
(a) the adoption of a plan relating to the liquidation or
dissolution of the Borrower;
(b) the consummation of any transaction (including any merger
or consolidation) the result of which is that any "person" (as that
term is used in Section 13(d) of the Exchange Act) becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the
Voting Stock of Calpine, measured by voting power rather than number of
shares; or
(c) the first day on which Calpine fails to own, directly or
indirectly, 100% of the issued and outstanding Equity Interests (other
than Perpetual Preferred Stock) of the Borrower (other than as a result
of the issuance of Perpetual Preferred Stock by any direct or indirect
parent of the Borrower).
"Closing Date" means the date on which all of the conditions precedent
set forth in Article III shall have been satisfied or waived in accordance with
Section 12.05 (Amendments and Waivers).
"Closing Date Facilities" means the electric generating facilities
(including any electric generating facilities under construction) owned by
Baytown Energy Center, LP; ▇▇▇▇▇▇▇▇ Energy LLC; Channel Energy Center, LP;
Columbia Energy LLC; Corpus Christi Cogeneration LP; Decatur Energy Center, LLC;
Delta Energy Center, LLC, Freestone Power Generation LP; Goldendale Energy
Center, LLC, Los Medanos Energy Center, LLC; ▇▇▇▇▇▇ Energy Center, LLC; Calpine
▇▇▇▇▇ Power, L.P.; Pastoria Energy Facility L.L.C. and Zion Energy LLC.
"Closing Date Mortgages" is defined in Section 3.13 (Title Policies).
"Closing Date Mortgage Policies" is defined in Section 3.13 (Title
Policies).
"Closing Date Mortgaged Properties" means all of the real property
interests owned or leased by any of the Guarantors, and "Closing Date Mortgaged
Property" means all of the real property interests owned or leased by a
Guarantor.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means (a) all of the Capital Stock of the Borrower held by
Holdings, (b) all of the Capital Stock of CalGen Expansion Company held by the
Borrower, and (c) all assets and properties of the Borrower and each of the
Guarantors (other than the Excluded Assets and the Excluded Subsidiaries), in
each case as more particularly provided for in the Security Documents.
"Collateral Agent" has the meaning provided in the Recitals hereto.
"Collateral Trust Agreement" means that certain Collateral Trust and
Intercreditor Agreement, dated as of the date hereof, by and among Holdings, the
Borrower, the Guarantors, the Administrative Agent, the Second Priority Term
Loan Administrative Agent, the Revolver
9
Administrative Agent, the First Priority Indenture Trustee, the Second Priority
Indenture Trustee, the Third Priority Indenture Trustee, the Collateral Agent
and each other party from time to time a party thereto.
"Columbia Facility" means the Facility owned by Columbia Energy LLC.
"Columbia FILOT Arrangement" means a fee-in-lieu-of-taxes arrangement
pursuant to which the Columbia Facility will be sold to ▇▇▇▇▇▇▇ County, South
Carolina, or a Person acting on its behalf, and leased to Columbia Energy LLC
for a nominal annual amount in lieu of certain ad valorem taxes that would
otherwise be owed to ▇▇▇▇▇▇▇ County in connection with the Columbia Facility,
together with the payment of a fee to ▇▇▇▇▇▇▇ County in lieu of such ad valorem
taxes; provided, that (a) Columbia Energy LLC has the right under such
arrangement to repurchase the Columbia Facility for nominal consideration upon
completion or termination of the lease agreement, (b) the leasehold interest
held by Columbia Energy LLC is part of the Collateral, (c) the arrangement is
not reasonably expected to have a material adverse effect on the operation or
financial condition of the Columbia Facility and (d) the arrangement does not
impair the Columbia Facility's status as a QF.
"Condemnation Event" means any Facility (or any portion thereof in
excess of $20,000,000) is condemned, confiscated, requisitioned, captured,
seized or subjected to forfeiture, or title thereto is taken, by any
governmental authority (or any Person acting under color of governmental
authority).
"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:
(a) an amount equal to any extraordinary loss plus any net
loss realized by such Person or any of its Subsidiaries in connection
with an Asset Sale, to the extent such losses were deducted in
computing such Consolidated Net Income; plus
(b) provision for taxes based on income or profits of such
Person and its Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; plus
(c) the Fixed Charges of such Person and its Subsidiaries for
such period, to the extent that such Fixed Charges were deducted in
computing such Consolidated Net Income; plus
(d) depreciation, amortization (including amortization of
intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) 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 or amortization of a
prepaid cash expense that was paid in a prior period) of such Person
and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus
(e) non-cash items increasing such Consolidated Net Income for
such period, other than the accrual of revenue in the ordinary course
of business, in each case, on a consolidated basis and determined in
accordance with GAAP.
10
"Consolidated EBITDA" means, for any period, Consolidated Net Income
for such period plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) any and all interest
expense for such period, including, without limitation, Consolidated Interest
Expense and any interest expense attributable to Affiliate Subordinated
Indebtedness, (ii) consolidated income tax expense for such period, (iii) all
amounts attributable to depreciation and amortization for such period, (iv) any
extraordinary or non-recurring non-cash charges (other than the write-down of
current assets) for such period (including any such non-cash charges for such
period relating to the application of fresh start accounting principals), (v)
any non-cash goodwill or other intangible asset impairment charges incurred
after the date hereof resulting from the application of Statement Number 142 of
the Financial Accounting Standards Board, (vi) any non-recurring expenses
incurred in connection with the transactions contemplated by the Financing
Documents and (vii) any non-cash compensation charges, including any such
charges arising from stock options, restricted stock grants and other equity
incentive programs (provided that, to the extent all or any portion of the
income of any Subsidiary of the Borrower or other Person is excluded from
Consolidated Net Income pursuant to the definition thereof for all or any
portion of such period, any amounts set forth in the preceding clauses (i)
through (vii) that are attributable to such Subsidiary or other Person shall be
not be included for purposes of this clause (a) for such period or portion
thereof), plus (b) without duplication, the cash amount of (i) prepayments
received by the Borrower or any of its Subsidiaries under any Major Project
Document during such period and (ii) any distributions received by the Borrower
or any of its Subsidiaries pursuant to the Index Hedge during such period, and
minus (c) without duplication (i) all cash payments made during such period on
account of reserves, restructuring charges and other non-cash charges added to
Consolidated Net Income pursuant to clause (a) above in a previous period and
(ii) to the extent included in determining such Consolidated Net Income, any
extraordinary gains and all non-cash items of income for such period, all
determined on a consolidated basis in accordance with GAAP; provided that, if
the Borrower has any Subsidiary that is not a Wholly Owned Subsidiary,
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced by
GAAP) by an amount equal to (A) the sum of (1) the consolidated net income
(loss) of such Subsidiary (to the extent included in Consolidated Net Income)
and (2) the amounts set forth in clause (a)(i)-(vii) above attributable to such
Subsidiary multiplied by (B) the percentage of Equity Interests in such
Subsidiary not directly or indirectly owned by the Borrower on the last day of
such period. Notwithstanding anything to the contrary herein, for each of the
first four fiscal quarters ended after the Closing Date, Consolidated EBITDA
will be calculated on a Pro Forma basis as if all transactions entered into by
the Borrower on the Closing Date were entered into on the first day of the
period for which Consolidated EBITDA is being measured.
"Consolidated Interest Coverage Ratio" means, on any date, the ratio of
(a) Consolidated EBITDA of the Borrower and its Subsidiaries for the period of
four consecutive fiscal quarters most recently ended on or prior to such date,
taken as one accounting period, to (b) Consolidated Interest Expense of the
Borrower and its Subsidiaries for the period of four consecutive fiscal quarters
most recently ended on or prior to such date, taken as one accounting period.
"Consolidated Interest Expense" means, for any period, (a) the sum of,
without duplication, (i) the interest expense (including imputed interest
expense in respect of Capital
11
Lease Obligations and Synthetic Lease Obligations but excluding any interest
expense attributable to Affiliate Subordinated Indebtedness) of the Borrower and
its Subsidiaries for such period (including all commissions, discounts and other
fees and charges owed by the Borrower and its Subsidiaries with respect to
letters of credit and bankers' acceptance financing), net of interest income, in
each case determined on a consolidated basis in accordance with GAAP, plus (ii)
any interest accrued (other than interest accrued with respect to Affiliate
Subordinated Indebtedness) during such period in respect of Indebtedness of the
Borrower or any Subsidiary of the Borrower that is required to be capitalized
rather than included in consolidated interest expense for such period in
accordance with GAAP, minus (b) to the extent included in such consolidated
interest expense for such period, amounts attributable to the amortization of
financing costs and non-cash amounts attributable to the amortization of debt
discounts. For purposes of this definition, interest expense shall be determined
after giving effect to any net payments made or received by the Borrower or any
Subsidiary of the Borrower with respect to interest rate Hedging Obligations.
Notwithstanding anything to the contrary herein, for each of the first four
fiscal quarters ended after the Closing Date, Consolidated Interest Expense will
be calculated on a Pro Forma basis as if all transactions entered into by the
Borrower on the Closing Date were entered into on the first day of the period
for which Consolidated Interest Expense is being measured.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, that:
(a) the Net Income of any Subsidiary will be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that 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 Subsidiary or its stockholders; and
(b) the cumulative effect of a change in accounting principles
will be excluded.
"Continuation Notice" means a Continuation Notice substantially in the
form of Exhibit D.
"Credit Facilities" means one or more debt facilities or commercial
paper facilities (including the debt facilities provided under this Agreement,
the Second Priority Term Loan Agreement and the Revolving Loan Agreement) in
each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed 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
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.
12
"Default Rate" is defined in Section 2.07 (Default Interest).
"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 Stated Maturity of the First Priority Term Loans.
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 Borrower to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale will not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Borrower
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 5.04 (Restricted
Payments). The amount of Disqualified Stock deemed to be outstanding at any time
for purposes of this Agreement will be the maximum amount that the Borrower and
its 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.
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Eligible Assignee" means (a) any Lender, any Affiliate of any Lender
and any Related Fund (any two or more Related Funds being treated as a single
Eligible Assignee for all purposes hereof), and (b) any commercial bank,
insurance company, investment or mutual fund or other entity that is an
"accredited investor" (as defined in Regulation D under the Securities Act) and
which extends credit or buys loans as one of its businesses.
"Environmental Consultants" means E Cubed, Inc., ENSR Corporation,
Environmental Consulting & Technology, Inc., STS Consultants, Ltd and Separation
Systems Consultants, Inc.
"Environmental Law" is defined in Section 4.10 (Hazardous Substances).
"Equally and Ratably" is defined in the Collateral Trust Agreement.
"Equity Contributions" means contributions of cash or Cash Equivalents
to the common equity capital of the Borrower by Persons other than the Borrower
and its Subsidiaries.
"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).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with Borrower or any
of its Subsidiaries under Section 52 or 414 of the Code or Title IV of ERISA.
"ERISA Plan" means any employee benefit plan (including any
Multiemployer Plan) under Section 3(3) of ERISA (a) maintained by Borrower or
its Subsidiaries or any ERISA
13
Affiliate, or to which any of them contributes or is obligated to contribute, or
has contributed or been obligated to contribute, or has any liability, and (b)
covered by Title IV of ERISA or to which Section 302 of ERISA, Section 412 of
the Code or Subtitle J of the Code applies.
"Estimated Peak Capacity" means, with respect to a Facility, the
nominal, as-tested new and clean capacity of such Facility, as corrected to
average ambient conditions, plus all incremental peaking capability of such
Facility derived from duct firing, power augmentation, steam injection or other
means.
"Event of Default" is defined in Section 7.01 (Events of Default).
"EWG" is defined in Section 4.18 (Governmental Regulation).
"Excess Cash Flow" means, for any period:
(a) the sum of:
(i) all revenues (excluding (A) non-cash revenues and
(B) any payments received from contract monetizations,
contract buy-outs and similar transactions) received by the
Borrower and its Subsidiaries during such period,
(ii) all Net Proceeds of Asset Sales, Casualty Events
and Condemnation Events, and all net proceeds from the sale,
lease, conveyance or other disposition of any assets or rights
not constituting "Asset Sales," in each case received by the
Borrower and its Subsidiaries during such period and remaining
after application of such proceeds to a Mandatory Repayment
Offer pursuant to Section 2.11 (Mandatory Repayment Offers)
and Section 5.07 (Asset Sales; Application of Net Proceeds),
and
(iii) all Excess Expansion Asset Financing Proceeds
received by the Borrower and its Subsidiaries during such
period; less
(b) the sum of:
(i) all costs, expenses, fees and other charges
(including liquidated damages or other damages or penalties)
incurred by the Borrower and its Subsidiaries during such
period in connection with the ownership, operation,
maintenance and use of the Facilities, including all payments
under Major Project Documents and other agreements relating to
the Facilities (other than Major Maintenance Expenses),
(ii) all trustee fees, collateral agent fees and
other similar administrative fees and expenses paid by the
Borrower and its Subsidiaries during such period,
(iii) the Fixed Charges of the Borrower and its
Subsidiaries during such period (other than Fixed Charges of
the kind referred to in clause (d) of the definition of Fixed
Charges and Fixed Charges relating to Subordinated
14
Indebtedness or any other Indebtedness of the Borrower or any
of its Subsidiaries that is contractually subordinated to the
First Priority Term Loan Obligations),
(iv) all payments of principal of Indebtedness of the
Borrower and its Subsidiaries required to be made (whether or
not actually made) during such period, other than payments of
principal of Subordinated Indebtedness or any other
Indebtedness of the Borrower or any of its Subsidiaries that
is contractually subordinated to the First Priority Term Loan
Obligations, and
(v) all amounts paid by the Borrower and its
Subsidiaries for capital expenditures to the Facilities during
such period, other than Excluded CapEx Amounts.
"Excess Expansion Asset Financing Proceeds" means the excess of (a) the
aggregate amount of proceeds of Expansion Debt incurred to finance costs
associated with Expansion Assets in accordance with Section 5.06(b)(iii) and
Equity Contributions made in connection therewith, over (b) the amount of such
proceeds and Equity Contributions required to finance costs associated with such
Expansion Assets in compliance with the conditions set forth in Section
5.06(b)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" means
(a) the fixtures and equipment relating to any Facility if, to
the extent that and for so long as (i) the ownership or operation of
such Facility is regulated by any federal or state regulatory authority
and (ii) under the law applicable to such regulatory authority the
grant of a security interest in such fixtures and equipment is
prohibited or a security interest in such fixtures and equipment may be
granted only after completion of a filing with, or receipt of consent
from, such regulatory authority which has not been effectively
completed or received; provided, that (A) such fixtures and equipment
will be an Excluded Asset only to the extent and for so long as the
conditions set forth in clauses (i) and (ii) in this clause (a) are and
remain satisfied and to the extent such assets otherwise constitute
Collateral, will cease to be an Excluded Asset, and will become subject
to the security interests granted to the Collateral Agent under the
Security Documents, immediately and automatically at such time as such
conditions cease to exist, including by reason of the effective
completion of any required filing or effective receipt of any required
regulatory approval, and (B) unless prohibited by law, the proceeds of
any sale, lease or other disposition of any such fixtures or equipment
that are Excluded Assets shall not be an Excluded Asset and shall at
all times be and remain subject to the security interests granted to
the Collateral Agent under the security documents except as such
proceeds are applied and used by the Borrower or its Subsidiaries in
the ordinary course of business and applied in accordance with Section
5.07 (Asset Sales; Application of Net Proceeds);
(b) with respect to personal property, any contract,
agreement, lease, license, permit, franchise, power, authority or right
if, to the extent that and for so long as (i) the
15
grant of a security interest therein constitutes or would result in the
abandonment, invalidation or unenforceability of such contract,
agreement, lease, license, permit, franchise, power, authority or right
or the termination of or a default under the instrument or agreement by
which such contract, agreement, lease, license, permit, franchise,
power, authority or right is governed and (ii) such abandonment,
invalidation, unenforceability, termination or default is not rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
Uniform Commercial Code (or any successor provisions) of any relevant
jurisdiction or any other applicable Legal Requirement (including the
United States bankruptcy code); provided, that (A) such contract,
agreement, lease, license, permit, franchise, power, authority or right
will be an Excluded Asset only to the extent and for so long as the
conditions set forth in clauses (i) and (ii) of this clause (b) are and
remain satisfied and to the extent that such assets otherwise
constitute Collateral, will cease to be an Excluded Asset, and will
become subject to the security interests granted to the Collateral
Agent under the Security Documents, immediately and automatically at
such time as such conditions cease to exist, including by reason of any
waiver or consent under the applicable instrument or agreement, and (B)
the proceeds of any sale, lease or other disposition of any such
contract, agreement, lease, license, permit, franchise, power,
authority or right that is or becomes an Excluded Asset shall not be an
Excluded Asset and shall at all times be and remain subject to the
security interests granted to the Collateral Agent under the Security
Documents except as such proceeds are applied and used by the Borrower
or its Subsidiaries in the ordinary course of business and applied in
accordance with Section 5.07 (Asset Sales; Application of Net
Proceeds);
(c) with respect to any real property, any lease, license,
permit, franchise, power, authority or right if, to the extent that and
for so long as the grant of a security interest therein constitutes or
would result in the abandonment, invalidation or unenforceability of
such lease, license, permit, franchise, power, authority or right or
the termination of or a default under the instrument or agreement by
which such lease, license, permit, franchise, power, authority or right
is governed; provided, that such lease, license, permit, franchise,
power, authority or right will be an Excluded Asset only to the extent
and for as long as the condition set forth above is and remains
satisfied and to the extent such assets otherwise constitute
Collateral, will cease to be an Excluded Asset, and will become subject
to the security interests granted to the Collateral Agent under the
Security Documents except as such proceeds are applied and used by the
Borrower or its Subsidiaries in the ordinary course of business and
applied in accordance with Section 5.07 (Asset Sales; Application of
Net Proceeds);
(d) any Excluded Subsidiary Securities;
(e) any property or assets owned by the Excluded Subsidiary;
(f) any Expansion Assets; provided, that any Expansion Assets
will be Excluded Assets only if and for so long as the limitations
imposed by the debt instruments of Calpine and its Subsidiaries on the
ability to ▇▇▇▇▇ ▇ ▇▇▇▇ on such Expansion Assets to secure the Secured
Obligations continue to be applicable, as determined in good faith by
the Borrower; and
16
(g) the Borrower's rights under or with respect to the Working
Capital Facility.
"Excluded CapEx Amounts" means amounts paid by the Borrower and its
Subsidiaries for capital expenditures to the Facilities using funds derived from
either of the following funding sources:
(a) Equity Contributions, other than Equity Contributions made
to comply with Section 5.06(b)(iii); and
(b) proceeds of Expansion Debt incurred in accordance with
Section 5.06(b)(iii).
"Excluded Subsidiary" means Goldendale Energy Center, LLC, only if and
for so long as the limitations imposed by the debt instruments of Calpine and
its Subsidiaries on Goldendale Energy Center, LLC's ability to be a Guarantor
and ▇▇▇▇▇ ▇ ▇▇▇▇ on its property and assets to secure the Secured Obligations
continue to be applicable to Goldendale Energy Center, LLC, as determined in
good faith by the Borrower.
"Excluded Subsidiary Securities" means Capital Stock or other
securities of any Subsidiary of the Borrower, other than the Equity Interests in
CalGen Expansion Company.
"Existing Credit Administrative Agent" means Credit Suisse First
Boston, acting through its
New York Branch, as the administrative agent under
the Existing Senior Secured Credit Facility.
"Existing Purchase Option" means an Asset Sale required in accordance
with any of the following, without giving effect to any amendments or other
modifications thereto after the Closing Date:
(a) the exercise by ▇▇▇▇▇▇▇ Chemical Company (or its
successors and permitted assigns) of any of its purchase options under
the Energy Services Agreement, dated as of August 15, 2000, and as
amended to the Closing Date, between Columbia Energy LLC and ▇▇▇▇▇▇▇
Chemical Company;
(b) the exercise by Solutia, Inc. (or its successors and
permitted assigns) of its purchase option upon an event of default
under the Second Amended and Restated Lease, Steam Sales and Shared
Services Agreement, dated as of January 31, 2001, and as amended to the
Closing Date, between Decatur Energy Center, LLC and Solutia, Inc.;
(c) the exercise by Bayer Corporation (or its successors and
permitted assigns) of its purchase option under the Energy Services
Agreement, dated as of January 12, 2000, and as amended to the Closing
Date, between Baytown Energy Center, LP and Bayer Corporation;
(d) the exercise by Lyondell-CITGO Refining L.P. (or its
successors and permitted assigns) of any of its options to acquire
certain property under the Amended and Restated Ground Lease and
Easement Agreement, dated as of March 30, 2001, and
17
as amended to the Closing Date, between Channel Energy Center, LP and
Lyondell-CITGO Refining L.P.;
(e) the exercise by CITGO Refining and Chemicals Company L.P.
(or its successors and permitted assigns) of its right of first offer
under the Energy Services Agreement, dated as of March 23, 1999, and as
amended to the Closing Date, between Corpus Christi Cogeneration, LP
and CITGO Refining and Chemicals Company L.P.; and
(f) the exercise by Flint Hills Resources, L.P. (or its
successors and permitted assigns) its purchase option under the Energy
Services Agreement, dated as of July 24, 2003, and as amended to the
Closing Date, between Corpus Christi Cogeneration, LP and Flint Hills
Resources, L.P.
"Existing Senior Secured Credit Facility" means the Credit Agreement,
dated as of October 16, 2000, among the Borrower, the Existing Credit
Administrative Agent, the financial institutions thereto from time to time as
lenders and the other agents and arrangers party thereto.
"Expansion Assets" means the assets (including real property rights,
contractual rights, rights under permits, other general intangibles and other
ancillary rights) added to a Facility in connection with the addition of
capacity to, or other expansion of, such Facility; provided, that such Expansion
Assets are not necessary for the operation of such Facility or any other
Facility (other than the Expansion Assets themselves), are readily
distinguishable from such Facility and can be removed or separated from such
Facility, dismantled or operated independently of the operation of the Facility
without impairing the Facility or any other Facility in any material respect.
"Expansion Debt" means Indebtedness incurred for the purpose of
financing the development, construction or purchase of, or repairs, improvements
or additions to, Expansion Assets relating to one or more Facilities, including
any Indebtedness existing at the time such Expansion Assets are acquired,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, the acquisition of such Expansion Assets; provided, that such
Indebtedness was incurred to finance the development, construction or purchase
of, or repairs, improvements or additions to, such Expansion Assets.
"Facilities" means the Closing Date Facilities and any other electric
generating facilities acquired or constructed after the Closing Date in
accordance with the terms hereof; provided that any Facility disposed of in
accordance with the terms hereof shall from and after the date of any such
disposition be deemed not to be a Facility hereunder from and after the date of
such disposition.
"Facility Owners" means Baytown Energy Center, LP; ▇▇▇▇▇▇▇▇ Energy LLC;
Channel Energy Center, LP; Columbia Energy LLC; Corpus Christi Cogeneration LP;
Decatur Energy Center, LLC; Delta Energy Center, LLC, Freestone Power Generation
LP; Goldendale Energy Center, LLC, Los Medanos Energy Center, LLC; ▇▇▇▇▇▇ Energy
Center, LLC; Calpine ▇▇▇▇▇ Power, L.P.; Pastoria Energy Facility L.L.C. and Zion
Energy LLC.
18
"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, (a) determined in good faith by an Officer of the Borrower and
evidenced by an Officer's Certificate delivered to the Administrative Agent, if
such value is less than or equal to $10,000,000, or (b) determined in good faith
by the Board of Directors of the Borrower and evidenced by a resolution
delivered to the Administrative Agent, if such value is greater than
$10,000,000.
"Federal Funds Effective Rate" means for any day, an interest rate per
annum equal to the weighted average 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 for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of
New York, or, if such rate is not so published for any day which is a
Business Day, the Federal Funds Rate for such day shall be the average rate
charged to the Administrative Agent, in its capacity as a Lender, on such day on
such transactions as determined by the Administrative Agent.
"FERC" is defined in Section 4.18 (Governmental Regulation).
"Financing Documents" means this Agreement, the Second Priority Term
Loan Agreement, the Revolving Loan Agreement, the Purchase Agreement, the
Indentures, the Notes, the Registration Rights Agreement, the Security Documents
and all other security documents and intercreditor agreements entered into by
Holdings, the Borrower or any Subsidiary thereof (on the one hand) and any Agent
or any Lender (on the other hand) in connection therewith.
"Financing Statements" is defined in Section 3.06 (Security).
"First Priority Debt Representative" is defined in the Collateral Trust
Agreement.
"First Priority Indenture" is defined in the Recitals hereto.
"First Priority Indenture Trustee" is defined in the Recitals hereto.
"First Priority Lien" means a Lien granted by the Borrower or any
Guarantor under a Security Document to the Collateral Agent upon any assets or
property of the Borrower or any Guarantor to secure First Priority Lien
Obligations.
"First Priority Lien Cap" means as of any date, (a) the principal
amount of First Priority Notes, plus (b) the principal amount of all
Indebtedness outstanding under this Agreement on the Closing Date, plus the
Indebtedness outstanding under any other Credit Facility (including the
Revolving Loan Agreement), all in an aggregate principal amount not to exceed
the amount provided for in Section 5.06(b)(i)(A), less (c) the amount of Second
Priority Lien Debt and Third Priority Lien Debt incurred after the Closing Date
the net proceeds of which are used to repay First Priority Lien Debt, plus (d)
the amount of accrued interest, fees and expenses, including premiums, paid in
connection with the incurrence of any Permitted Refinancing Indebtedness with
respect to the Indebtedness described in clauses (a) and (b), plus (e) the
notional amount of Hedging Obligations incurred to hedge or manage interest rate
risk with respect to other First Priority Lien Debt having an aggregate notional
amount not to exceed, together with the aggregate notional amount of any
outstanding Hedging Obligations constituting Second Priority
▇▇
▇▇▇▇ ▇▇▇▇, $500,000,000. For purposes of this definition of First Priority Lien
Cap, all letters of credit will be valued at the face amount thereof, whether or
not drawn.
"First Priority Lien Debt" means, collectively, (a) the First Priority
Notes, (b) the Indebtedness under this Agreement, (c) the Indebtedness under the
Revolving Loan Agreement, (d) Hedging Obligations incurred to hedge or manage
interest rate risk with respect to other First Priority Lien Debt having an
aggregate notional amount not to exceed, together with the aggregate notional
amount of any outstanding Hedging Obligations constituting Second Priority Lien
Debt, $500,000,000, (e) Indebtedness under any other Credit Facility that is
secured by a First Priority Lien, and (f) any other Indebtedness the net
proceeds of which are used to refund, refinance, replace, defease, discharge or
otherwise acquire or retire any other First Priority Lien Debt; provided,
however, such Indebtedness shall constitute First Priority Lien Debt only if, in
the case of clauses (d), (e) or (f) of this definition, (i) such Indebtedness
was permitted to be incurred and so secured under each applicable Financing
Document (or the lenders under such Indebtedness obtained an Officer's
Certificate of the Borrower at the time of incurrence to the effect that such
Indebtedness was permitted to be incurred and so secured under each applicable
Financing Document), (ii) on or before the date on which such Indebtedness is
incurred by the Borrower or the applicable Subsidiary, such Indebtedness is
designated by the Borrower, in an Officer's Certificate delivered to each First
Priority Debt Representative and the Collateral Agent, as First Priority Lien
Debt for the purposes of the Collateral Trust Agreement and the other First
Priority Lien Documents; (iii) such Indebtedness is governed by an agreement
that includes a Sharing Confirmation, a Lien Priority Confirmation and an
agreement by the holder of such Indebtedness and the applicable First Priority
Debt Representative to vote with respect to such Indebtedness as described in
the Collateral Trust Agreement; and (iv) all requirements set forth in the
Collateral Trust Agreement as to the confirmation, grant or perfection of the
Collateral Agent's Liens to secure such Indebtedness or Obligations in respect
thereof are satisfied (and the satisfaction of such requirements will be
conclusively established if the Borrower delivers to the Collateral Agent an
Officer's Certificate stating that such requirements have been satisfied and
that such Indebtedness is First Priority Lien Debt).
"First Priority Lien Documents" means this Agreement, the First
Priority Notes, the Guarantees related thereto, the First Priority Indenture,
the Revolving Loan Agreement, each agreement governing any other series of First
Priority Lien Debt and all other agreements governing, securing or relating to
any First Priority Lien Obligations.
"First Priority Lien Obligations" means the First Priority Lien Debt
and all other Obligations in respect of First Priority Lien Debt.
"First Priority Notes" is defined in the Recitals hereto.
"First Priority Notes Indenture" is defined in the Recitals hereto.
"First Priority Secured Parties" shall mean the holders of the First
Priority Lien Obligations (including the holders of the First Priority Notes,
the Lenders, the Administrative Agent and the lenders under the Revolving Loan
Agreement).
20
"First Priority Term Loan Commitment" means the commitment of a Lender
to make or otherwise fund a First Priority Term Loan and "First Priority Term
Loan Commitments" means such commitments of all Lenders in the aggregate. The
aggregate amount of the First Priority Term Loan Commitments as of the Closing
Date is $600,000,000.
"First Priority Term Loan Documents" means this Agreement and the
Security Documents which relate to any of the First Priority Term Loan
Obligations and all other agreements related thereto.
"First Priority Term Loan Guarantees" means the Guarantees by the
Guarantors of the Borrower's and the other Guarantors' obligations with respect
to First Priority Term Loan Obligations under this Agreement, as set forth in
Article XI hereof.
"First Priority Term Loan Note" means a promissory note in the form of
Exhibit F, evidencing a First Priority Term Loan.
"First Priority Term Loan Obligations" means the First Priority Term
Loans and all other Obligations under the First Priority Term Loan Documents
relating to such loans.
"First Priority Term Loan Secured Obligations Termination Date" means
the date on which all First Priority Term Loan Obligations (including all
interest accrued thereon after the commencement of any bankruptcy, insolvency or
liquidation proceeding at the rate, including any applicable post-default rate,
specified in the First Priority Term Loan Documents even if such interest is not
enforceable, allowable or allowed as a claim in such proceeding) have been paid
in full in cash and all commitments to extend credit hereunder have been
terminated.
"First Priority Term Loan Secured Parties" means the Administrative
Agent, the Collateral Agent and the Lenders.
"First Priority Term Loans" is defined in the Recitals hereto.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that the specified Person or any of its 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 equity 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 will 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 equity, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the such period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
21
(a) acquisitions that have been made by the specified Person
or any of its Subsidiaries, including through mergers or
consolidations, or any Person or any of its Subsidiaries acquired by
the specified Person or any of its Subsidiaries, and including any
related financing transactions and including increases in ownership of
Subsidiaries, during the applicable reference period or subsequent to
such reference period and on or prior to the Calculation Date will be
given Pro Forma effect as if they had occurred on the first day of such
reference period;
(b) 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, will be excluded;
(c) 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, will be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Subsidiaries following the Calculation
Date;
(d) any Person that is a Subsidiary on the Calculation Date
will be deemed to have been a Subsidiary at all times during such
reference period;
(e) any Person that is not a Subsidiary on the Calculation
Date will be deemed not to have been a Subsidiary at any time during
such reference period; and
(f) if any Indebtedness bears a floating rate of interest, the
interest expense on such Indebtedness will be calculated as if the rate
in effect on the Calculation Date had been the applicable rate for the
entire reference period (taking into account any Hedging Obligation
applicable to such Indebtedness if such Hedging Obligation has a
remaining term as at the Calculation Date in excess of 12 months).
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(a) the consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued, including
amortization of debt issuance costs 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, 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 in respect of interest rates,
plus one-third of all payments with respect to operating leases, but
excluding the consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued, under any
Affiliate Subordinated Indebtedness; plus
(b) the consolidated interest of such Person and its
Subsidiaries that was capitalized during such period, but excluding the
consolidated capitalized interest of such Person and its Subsidiaries
for such period under any Affiliate Subordinated Indebtedness; plus
22
(c) any interest accruing on Indebtedness of another Person
that is Guaranteed by such Person or one of its Subsidiaries or secured
by a Lien on assets of such Person or one of its Subsidiaries, whether
or not such Guarantee or Lien is called upon; plus
(d) the product of (i) all dividends, whether paid or accrued
and whether or not in cash, on any series of preferred equity of such
Person or any of its Subsidiaries, other than dividends on Equity
Interests payable solely in Equity Interests of CalGen (other than
Disqualified Stock) or to CalGen or a Subsidiary of CalGen, times (ii)
a fraction, the numerator of which is one and the denominator of which
is one minus the effective combined federal, state and local statutory
tax rate of such Person for the immediately preceding fiscal year,
expressed as a decimal,
in each case, on a consolidated basis and determined in accordance with GAAP.
"FPA" is defined in Section 4.18 (Governmental Regulation).
"Funding Notice" means a notice substantially in the form of Exhibit E.
"GAAP" means generally accepted accounting principles set forth in the
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 on the
applicable date of determination.
"Goldendale Facility" means the Facility owned by Goldendale Energy
Center, LLC.
"Governmental Authority" means any federal, state, municipal, national
or other government, governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.
"Governmental Rule" means any law, rule, regulation, ordinance, order,
code interpretation, treaty, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.
"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, 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).
"Guarantors" means
(a) CalGen Expansion Company; CPN Freestone, LLC; Calpine
Freestone, LLC; Freestone Power Generation LP; Calpine Freestone Energy
GP, LLC; Calpine Freestone Energy, LP; Calpine Power Equipment LP;
Calpine Channel Energy Center LP, LLC; Calpine Channel Energy Center
23
GP, LLC; Channel Power GP, LLC; Channel Power, LP; Channel Energy
Center, LP; CalGen Equipment Finance Holdings, LLC; CalGen Project
Equipment Finance Company One, LLC; CalGen Project Equipment Finance
Company Three LLC; CalGen Equipment Finance Company, LLC; Nueces Bay
Energy LLC; Calpine Northbrook Southcoast Investors, LLC;
Calpine
Corpus Christi Energy GP, LLC;
Calpine Corpus Christi Energy, LP;
Corpus Christi Cogeneration LP; Zion Energy LLC; Los Medanos Energy
Center, LLC; ▇▇▇▇▇▇ Energy Center, LLC; ▇▇▇▇▇▇▇▇ Energy LLC; Decatur
Energy Center, LLC; Calpine ▇▇▇▇▇ Power I, LLC; Calpine ▇▇▇▇▇ Power II,
LLC; Calpine ▇▇▇▇▇ Power, L.P.; Calpine Baytown Energy Center LP, LLC;
Calpine Baytown Energy Center GP, LLC; Baytown Energy Center, LP;
Baytown Power GP, LLC; Baytown Power, LP; Columbia Energy LLC; Delta
Energy Center, LLC; CalGen Project Equipment Finance Company Two, LLC;
Pastoria Energy Facility L.L.C.; and Calpine Pastoria Holdings, LLC;
and
(b) any other Subsidiary of the Borrower that becomes a
Guarantor in accordance with the provisions of this Agreement;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any specified Person, the
Obligations of such Person under:
(a) interest rate swap agreements (whether from fixed to
floating or from floating to fixed), interest rate cap agreements and
interest rate collar agreements;
(b) other agreements or arrangements designed to manage
interest rate risk; and
(c) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange rates or commodity
prices.
"Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to any Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"Holding Companies" means
(a) Calpine Baytown Energy Center LP, LLC; Calpine Baytown
Energy Center GP, LLC; Baytown Power GP, LLC; Baytown Power, LP;
Channel Power, LP; Calpine Channel Energy Center LP, LLC; Calpine
Channel Energy Center GP, LLC; Channel Power GP, LLC;
Calpine Corpus
Christi Energy GP, LLC;
Calpine Corpus Christi Energy, LP; Nueces Bay
Energy LLC; Calpine Northbrook Southcoast Investors, LLC; CPN
Freestone, LLC; Calpine Freestone, LLC; Calpine Freestone Energy GP,
LLC; Calpine Freestone Energy, LP; Calpine ▇▇▇▇▇ Power I, LLC; Calpine
▇▇▇▇▇ Power II, LLC; CalGen Equipment Finance Holdings, LLC; and
Calpine Pastoria Holdings, LLC; and
24
(b) any other Subsidiary of the Borrower that becomes a
Holding Company in accordance with the provisions of this Agreement;
and their respective successors and assigns.
"Holdings" is defined in the Recitals hereto.
"Increased-Cost Lender" is defined in Section 2.17 (Removal Replacement
of a Lender).
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses and trade payables),
whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in
respect thereof);
(c) in respect of bankers' acceptances;
(d) representing Capital Lease Obligations;
(e) 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
(f) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
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.
The amount of any Indebtedness outstanding as of any date will be:
(i) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount;
(ii) the principal amount of the Indebtedness, in the case of
any other Indebtedness; and
(iii) in respect of Indebtedness of another Person secured by
a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such asset at the date
of determination, and
(B) the amount of the Indebtedness of the other
Person.
25
Notwithstanding anything to the contrary in this definition of
Indebtedness, with respect to any contingent obligations (other than with
respect to contractual obligations to repurchase goods sold or distributed,
which shall be included to the extent reflected on the balance sheet of such
Person in accordance with GAAP) of a Person, the maximum liability of such
Indebtedness shall be as determined by such Person's Board of Directors, in good
faith, as, in light of the facts and circumstances existing at the time,
reasonably likely to be incurred upon the occurrence of the contingency giving
rise to such obligation.
"Indemnified Liabilities" has the meaning assigned to it in the
Collateral Trust Agreement.
"Indemnitee" is defined in Section 12.03 (Indemnity).
"Indentures" is defined in the Recitals hereto.
"Independent Engineer" means ▇.▇. ▇▇▇▇ or any other independent
engineering company of national standing selected by the Borrower and reasonably
acceptable to the Administrative Agent.
"Index Based Gas Sale and Power Purchase Agreement" means that certain
Index Based Gas Sale and Power Purchase Agreement, dated as of the date hereof,
among the Borrower, each Facility Owner and CES.
"Index Hedge" means, collectively, (a) that certain ISDA Master
Agreement (MULTICURRENCY-CROSS BORDER), dated as of March 12, 2004, between the
Borrower and MSCG, as supplemented by that certain Schedule to the Master
Agreement, dated as of March 12, 2004, between the Borrower and MSCG and by that
certain Amended and Restated Confirmation, dated as of March 12, 2004, between
the Borrower and MSCG, and (b) that certain Guaranty, dated as of March 12,
2004, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for the benefit of the Borrower.
"Insolvency Proceeding" means
(a) any proceeding for the reorganization, recapitalization or
adjustment or marshalling of the assets or liabilities of the Borrower
or any other Obligor, any receivership or assignment for the benefit of
creditors relating to the Borrower or any other Obligor or any similar
case or proceeding relative to the Borrower or any other Obligor or its
creditors, as such, in each case whether or not voluntary;
(b) any liquidation, dissolution, marshalling of assets or
liabilities or other winding up of or relating to the Borrower or any
other Obligor, in each case whether or not voluntary and whether or not
involving bankruptcy or insolvency; or
(c) any other proceeding of any type or nature in which
substantially all claims of creditors of the Borrower or any other
Obligor are determined and any payment or distribution is or may be
made on account of such claims.
"intellectual property rights" is defined in Section 4.09 (Intellectual
Property Rights).
26
"Interest Payment Date" means (a) July 1, 2004, (b) each October 1,
January 1, April 1 and July 1 thereafter, and (c) in all cases, upon prepayment
of any First Priority Term Loans (to the extent thereof and including any
optional or mandatory prepayments or redemptions), upon conversion from a Base
Rate Loan to a LIBOR Rate Loan or a LIBOR Rate Loan to a Base Rate Loan, and on
the Maturity Date.
"Interest Period" means the period of one, two, three or six months, as
selected by the Borrower in the applicable Continuation Notice commencing on the
day on which the immediately preceding Interest Period expires; provided, (a) if
an Interest Period would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day unless no
further Business Day occurs in such month, in which case such Interest Period
shall expire on the immediately preceding Business Day; (b) any Interest Period
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (c) of this definition, end on
the last Business Day of such calendar month; (c) no Interest Period shall
extend beyond the Maturity Date; and (d) the first Interest Period is deemed to
begin on the Closing Date and expire on March 31, 2004.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the date that is two Business Days prior to the first day of such
Interest Period.
"Investment Company Act" is defined in Section 4.16 (Investment Company
Act).
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the form
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding 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. If the Borrower
or any of its Subsidiaries sells or otherwise disposes of any Equity Interests
of any direct or indirect Subsidiary of the Borrower such that, after giving
effect to any such sale or disposition, such Person is no longer a Subsidiary of
the Borrower, the Borrower will be deemed to have made an Investment on the date
of any such sale or disposition equal to the Fair Market Value of the Borrower's
Investments in such Subsidiary that were not sold or disposed of in an amount
determined as provided in the final paragraph of Section 5.04 (Restricted
Payments). Except as otherwise provided in this Agreement, the amount of an
Investment will be determined at the time the Investment is made and without
giving effect to subsequent changes in value.
"Legal Requirements" means, as to any Person, the articles of
incorporation, bylaws or other organizational or governing documents of such
Person, and any requirement under a Permit, and any Governmental Rule in each
case applicable to or binding upon such Person or any of its properties or to
which such Person or any of its property is subject.
"Lender" means each financial institution listed on the signature pages
hereto as a Lender, and any other Person that becomes a party hereto pursuant to
an Assignment Agreement.
27
"LIBOR Rate" means, with respect to any LIBOR Rate Loan for any
Interest Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m. (London time) on the applicable Interest Rate
Determination Date by reference to the British Bankers' Association Interest
Settlement Rates for deposits in dollars (as set forth by the Bloomberg
Information Service or any successor thereto or any other service selected by
the Administrative Agent which has been nominated by the British Bankers'
Association as an authorized information vendor for the purpose of displaying
such rates) for a period equal to such Interest Period; provided that, to the
extent that an interest rate is not ascertainable pursuant to the foregoing
provisions of this definition, the "LIBOR Rate" shall be the rate per annum at
which the Administrative Agent or one of its affiliate banks offers to place
deposits in Dollars with first-class banks in the London interbank market in
London, England for such relevant Interest Period at approximately 11:00 a.m.
(London time) on the applicable Interest Rate Determination Date, in amounts
equal to $1,000,000.
"LIBOR Rate Loan" means a First Priority Term Loan bearing interest at
a rate determined by reference to the Adjusted LIBOR Rate.
"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, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Lien Priority Confirmation" is defined in the Collateral Trust
Agreement.
"Loan Agreements" means this Agreement, the Second Priority Term Loan
Agreement and the Revolving Loan Agreement.
"Major Maintenance Expenses" means all costs, expenses, fees and other
charges (including liquidated damages or other damages or penalties) incurred by
the Borrower and its Subsidiaries during a period for major maintenance of the
Facilities under the Master Maintenance Services Agreement or otherwise.
"Major Project Documents" means the WECC Fixed Price Gas Sale and Power
Purchase Agreement, the Index Based Gas Sale and Power Purchase Agreement, the
Index Hedge, the Working Capital Facility, the Master Operation and Maintenance
Agreement, the Master Maintenance Services Agreement, the Calpine Performance
Guaranty, the Master Construction Management Agreement, the Calpine Project
Undertaking and the Administrative Services Agreement.
"Mandatory Repayment Offer" is defined in Section 2.11 (Mandatory
Repayment Offers).
"Master Construction Management Agreement" means that certain Master
Construction Management Agreement, dated as of the date hereof, among the
Borrower, Columbia Energy LLC, Goldendale Energy Center, LLC, Pastoria Energy
Facility, LLC and Calpine Construction Management Company, Inc.
28
"Master Maintenance Services Agreement" means that certain Master
Maintenance Services Agreement, dated as of the date hereof, among the Borrower,
each Facility Owner and Calpine Operating Services Company, Inc.
"Master Operation and Maintenance Agreement" means that certain Master
Operation and Maintenance Agreement, dated as of the date hereof, among the
Borrower, each Facility Owner and Calpine Operating Services Company, Inc.
"Material Adverse Effect" means a material adverse effect on (a) the
current or reasonably anticipated business, property, results of operation or
financial condition of the Borrower and its Subsidiaries taken as a whole, (b)
the ability of the Borrower and its Subsidiaries to perform their obligations
under this Agreement and the other First Priority Term Loan Documents or (c) the
value of, or the validity or priority of the Collateral Agent's security
interests in, the Collateral taken as a whole.
"Materially Adverse" means, with respect to an event or circumstance,
that such event or circumstance has had or is reasonably expected to have a
material adverse effect on the Borrower and its Subsidiaries, taken as a whole;
it being understood that an event or circumstance would have a material adverse
effect on the Borrower and its Subsidiaries, taken as a whole, if the Excess
Cash Flow for the Borrower's most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such event or circumstance occurred or commenced to exist, as
applicable, would have decreased by more than 5.0%, determined on a Pro Forma
basis.
"Maturity Date" means the earlier of (a) April 1, 2009 and (b) the date
that all First Priority Term Loans shall become due and payable in full
hereunder, whether by acceleration or otherwise.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgages" means each of the mortgages and deeds of trust encumbering
any of the properties of any of the Guarantors including the Closing Date
Mortgages and the mortgages and/or deeds of trust entered into pursuant to
Section 5.14 (Additional Subsidiaries).
"MSCG" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Group, Inc.
"MSSF" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
"Multiemployer Plan" means any "Multiemployer Plan" (as such term is
defined in Section 3(37) or 4001(a)(3) of ERISA).
"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:
(a) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection
with (a) any Asset Sale or (b) the
29
disposition of any securities by such Person or any of its Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries; and
(b) any extraordinary gain (but not loss), together with any
related provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means:
(a) the aggregate cash proceeds received by the Borrower or
any of its Subsidiaries in respect of any Asset Sale (including 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 legal, accounting and investment
banking fees, sales commissions, any relocation expenses incurred as a
result of the Asset Sale, and any taxes paid or payable by the
Borrower, any of its Subsidiaries or Calpine 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, amounts required to be
applied to the repayment of Indebtedness secured by a Lien on the asset
or assets that were the subject of the Asset Sale (other than Secured
Obligations), and any reserve for adjustment in respect of the sale
price of such asset or assets established in accordance with GAAP;
(b) all proceeds of any insurance, indemnity, warranty or
guaranty payable from time to time with respect to any Casualty Event
that are not applied to the repair, replacement or rebuilding of the
applicable Facility to the extent commercially feasible, other than
business interruption insurance proceeds, net of the direct costs
relating to the collection of such proceeds; and
(c) all payments (in any form whatsoever) made or due and
payable from time to time in connection with any Condemnation Event by
any governmental authority (or any Person acting under color of
governmental authority) that are not applied to the repair, replacement
or rebuilding of the applicable Facility to the extent commercially
feasible, net of the direct costs relating to the collection of such
proceeds.
"Non-Consenting Lender" is defined in Section 2.17 (Removal or
Replacement of a Lender).
"Non-U.S. Lender" is defined in Section 2.16 (Taxes; Withholding,
etc.).
"Note Documents" means the Indentures, the Notes, the Note Guarantees,
the Collateral Trust Agreement, each Sharing Confirmation, the other Security
Documents which relate to any of the Note Obligations and all other agreements
related thereto.
"Note Guarantee" means the Guarantee by each Guarantor of the
Borrower's obligations under each Indenture and on the Notes issued in
connection therewith, including the payment, when due and payable, of principal,
interest and premium, if any, thereunder, executed pursuant to the provisions of
each Indenture.
"Note Obligations" means the Notes, the Note Guarantees and all other
Obligations of any Obligor under the Note Documents.
30
"Notes" is defined in the Recitals hereto.
"Obligations" means any principal (including reimbursement obligations
with respect to letters of credit whether or not drawn), interest, premium (if
any), fees, indemnifications, reimbursements, expenses and other liabilities
payable under the documentation governing or securing any Indebtedness.
"Obligor" means Holdings, the Borrower, the Guarantors and each other
Subsidiary of the Borrower that has granted the Collateral Agent a Lien upon any
of the Collateral as security for any Secured Obligations.
"Offer Amount" is defined in Section 2.11 (Mandatory Repayment Offers).
"Offer Period" is defined in Section 2.11 (Mandatory Repayment Offers).
"Offering Memorandum" means the Offering Memorandum dated March 17,
2004 of the Borrower and CalGen Finance, as amended or supplemented.
"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 or any vice-president of such Person.
"Officer's Certificate" means a certificate signed on behalf of the
Borrower by one Officer of the Borrower that meets the requirements of Section
12.21.
"Other Taxes" means any and all present and future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any of the First Priority Term Loan Documents or
from the execution, delivery or enforcement of, or otherwise with respect to,
any of the First Priority Term Loan Documents.
"Payment Default" is defined in Section 7.01 (Events of Default).
"Payout Amount" is defined in Section 3.06(a)(iv) (Security).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Business" means the ownership, construction, operation and
maintenance of the Closing Date Facilities and any substantially similar
electric generating facilities located in the United States, together with any
related assets or facilities, including gas pipelines supplying natural gas to
such generating facilities, electric transmission lines carrying energy
generated from such generating facilities, and any related gas or electric
interconnection facilities.
"Permitted Counterparty Lien" means a Lien in favor of a counterparty
under a PPA; provided, that the following conditions are satisfied:
31
(a) the counterparty is not an Affiliate of the Borrower;
(b) the Lien does not secure any Indebtedness and (i) is
granted solely to secure the performance obligations of the Borrower or
the applicable Subsidiary under the PPA and/or any obligation of the
Borrower or the applicable Subsidiary to make a termination payment
under the PPA upon the occurrence of the event described in clause
(c)(iii)(A) below or the termination by the counterparty upon the
occurrence of any of the events described in clause (c)(iii)(B) below,
or (ii) creates rights designed to enable the counterparty to assume
operational control of the relevant Facility or Facilities (e.g.,
step-in rights) or otherwise continue performance of the Borrower's or
the applicable Subsidiary's obligations under the PPA;
(c) the counterparty can exercise its rights with respect to
the Lien only (i) for so long as the counterparty remains current with
respect to all of its payment obligations under the PPA and is not
otherwise in a continuing default under the PPA, (ii) if the
counterparty continues to acknowledge the existence of the Liens
securing the Secured Obligations (unless and until Liens securing the
Secured Obligations are eliminated in connection with a foreclosure of
the Permitted Counterparty Liens as contemplated by clause (d) of this
definition), and (iii) if either (A) the Borrower or the applicable
Subsidiary has terminated, rejected or repudiated the PPA (including
any rejection or similar act by or on behalf of the Borrower or the
applicable Subsidiary in connection with any bankruptcy proceeding) or
(B) the Borrower or the applicable Subsidiary has intentionally
breached its obligations under the PPA; provided, that the following
actions will be considered an intentional breach by the Borrower or the
applicable Subsidiary under the PPA: (1) the Borrower or the applicable
Subsidiary provides or delivers capacity or energy to a third party if
the Borrower or the applicable Subsidiary is required under the PPA to
provide or deliver such capacity or energy to the counterparty; (2) the
Borrower or the applicable Subsidiary of the Borrower fails to operate
or attempt to operate one or more of the relevant Facilities at a time
when the Borrower or the applicable Subsidiary of the Borrower was
required, under the PPA, to operate or attempt to operate such Facility
or Facilities and such operation or attempted operation is not
prevented by force majeure, forced outage or other events or
circumstances outside the reasonable control of the Person responsible
therefor; (3) any failure by the Borrower or the applicable Subsidiary
to comply with any provisions of the PPA designed to enable the
counterparty to assume operational control of the relevant Facility or
Facilities (e.g., step-in rights) or otherwise take actions necessary
to continue performance of the Borrower's or the applicable
Subsidiary's obligations under the PPA, in each case to the extent the
Borrower or the applicable Subsidiary is then capable of complying with
such provisions; or (4) any failure by the Borrower or the applicable
Subsidiary to pay to the counterparty any amount due and payable in
accordance with the terms and conditions of the PPA; and
(d) the counterparty's exercise of its rights with respect to
the Lien is limited to (i) the taking of actions pursuant to any
provisions of the PPA designed to enable the counterparty to assume
operational control of the relevant Facility or Facilities (e.g.,
step-in rights) or otherwise necessary to continue performance of the
Borrower's or the applicable Subsidiary's obligations under the PPA or
(i) the recovery of any termination
32
payment due under the PPA upon the occurrence of the event described in
clause (c)(iii)(A) above or the termination by the counterparty upon
the occurrence of any of the events described in clause (c)(iii)(B)
above.
"Permitted Debt" is defined in Section 5.06 (Incurrence of Indebtedness
and Issuance of Preferred Equity).
"Permitted Investment" means:
(a) any Investment in the Borrower or in a Guarantor;
(b) (i) any Investment in the Goldendale Facility to finance
the construction and completion of the Goldendale Facility and any
other repairs, improvements or other capital expenditures necessary to
operate and maintain such Facility in accordance with prudent industry
practice, and (ii) any other Investment in the Goldendale Facility made
with the proceeds of Equity Contributions, Perpetual Preferred Stock or
Affiliate Subordinated Indebtedness;
(c) any Investment in Cash Equivalents;
(d) any Investment by the Borrower or any Guarantor in a
Person, if as a result of such Investment:
(i) such Person becomes a Wholly Owned Subsidiary of
the Borrower and a Guarantor; or
(ii) 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
Borrower or a Guarantor;
(e) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 5.07 (Asset Sales; Application of Net
Proceeds);
(f) any acquisition of assets or Capital Stock solely in
exchange for the issuance of Equity Interests (other than Disqualified
Stock) of the Borrower;
(g) any Investments received in compromise or resolution of
(i) obligations of trade creditors or customers that were incurred in
the ordinary course of business of the Borrower or any of its
Subsidiaries, including pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of any trade
creditor or customer; or (ii) litigation, arbitration or other disputes
with Persons who are not Affiliates;
(h) Investments represented by Hedging Obligations;
(i) repurchases of the Notes and other Secured Obligations;
33
(j) negotiable instruments held for deposit or collection in
the ordinary course of business; and
(k) other Investments in any Person other than an Affiliate of
the Borrower 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 (k) that are at the time
outstanding, not to exceed $30,000,000.
"Permitted Liens" means:
(a) Liens in favor of the Collateral Agent Equally and Ratably securing
the First Priority Notes, the First Priority Term Loans, the Revolving Loans and
all other First Priority Lien Debt, all in an aggregate principal amount not
exceeding the First Priority Lien Cap, and all related First Priority Lien
Obligations;
(b) Liens in favor of the Collateral Agent Equally and Ratably securing
the Second Priority Notes, the Second Priority Term Loans and all other Second
Priority Lien Debt, all in an aggregate principal amount not exceeding the
Second Priority Lien Cap, and all related Second Priority Lien Obligations;
(c) Liens in favor of the Collateral Agent Equally and Ratably securing
the Third Priority Notes and all other Third Priority Lien Debt and all related
Third Priority Lien Obligations;
(d) Liens in favor of the Borrower or the Guarantors;
(e) pledges or deposits made under workers' compensation, unemployment
insurance laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for payment of Indebtedness) or operating
leases to which such Person is a party;
(f) Liens or deposits to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business;
(g) (i) Liens to secure Expansion Debt that encumber the Expansion
Assets financed with the proceeds of such Expansion Debt and other Expansion
Assets owned by the Person incurring such Expansion Debt (including any rights
of such Person under Shared Facilities Arrangements), (ii) Liens to secure
Expansion Debt that encumber the Capital Stock of CalGen Expansion Company;
provided, that any such Capital Stock must be part of the Collateral and any
such Liens must be junior to all Liens securing Secured Obligations in
accordance with the terms of the Collateral Trust Agreement, including an
agreement by the holders of such Liens not to exercise any remedies with respect
to such Collateral, and a provision to the effect that the holders of such Liens
will not be entitled to the proceeds of such Collateral upon a sale thereof, in
each case until the Secured Obligations Termination Date; and (iii) if such
Expansion Assets are not Excluded Assets and are part of the Collateral, Liens
to secure Expansion Debt on the other property and assets of such Person;
provided, that any such Liens must be junior to all Liens securing Secured
Obligations in accordance with the terms of the Collateral Trust
34
Agreement, including an agreement by the holders of such Liens not to exercise
any remedies with respect to such Collateral, and a provision to the effect that
the holders of such Liens will not be entitled to the proceeds of such
Collateral upon a sale thereof, in each case until the Secured Obligations
Termination Date;
(h) obligations under Shared Facilities Arrangements, to the extent
such obligations constitute Liens, and Liens on Shared Facilities securing the
Borrower's or the applicable Subsidiary's obligations under Shared Facilities
Arrangements;
(i) Liens which constitute bankers' liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with any
bank or other financial institution, whether arising by operation of law or
pursuant to contract;
(j) Liens existing on the Closing Date;
(k) 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;
(l) Liens imposed by law, such as carriers', warehousemen's, landlord's
and mechanics' Liens, in each case, incurred in the ordinary course of business;
or Liens arising out of judgments that do not constitute a Default or an Event
of Default;
(m) survey exceptions, easements or reservations of, or rights of
others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real property or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties that were not incurred in
connection with Indebtedness and that 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;
(n) Liens to secure any Permitted Refinancing Indebtedness permitted to
be incurred under this Agreement; provided, however, that:
(i) the new Lien shall be limited to all or part of the same
property and assets that secured the original Lien (plus repairs,
improvements and additions to such property or assets); and
(ii) the Indebtedness secured by the new Lien is not increased
to any amount greater than the sum of (A) the outstanding principal
amount or, if greater, committed amount, of the Permitted Refinancing
Indebtedness and (B) an amount necessary to pay any fees and expenses,
including premiums, related to such Indebtedness;
(o) Liens not in respect of Indebtedness arising from Uniform
Commercial Code financing statements for informational purposes with respect to
operating leases incurred in the ordinary course of business and not otherwise
prohibited by this Agreement;
35
(p) Liens not in respect of Indebtedness consisting of the interest of
the lessor under any operating lease entered into in the ordinary course of
business and not otherwise prohibited by this Agreement;
(q) Permitted Counterparty Liens;
(r) to the extent constituting Liens, obligations of the Borrower or
its Subsidiaries under or restrictions imposed by any PPA Recognition Agreement;
(s) Liens on property and assets of the Borrower to secure Third Party
Subordinated Indebtedness; provided, that all such property and assets must be
part of the Collateral and any such Liens must be junior to all Liens securing
Secured Obligations in accordance with the terms of the Collateral Trust
Agreement, including an agreement by the holders of such Liens not to exercise
any remedies with respect to the Collateral, and a provision to the effect that
the holders of such Liens will not be entitled to the proceeds of any Collateral
upon a sale thereof, in each case until the Secured Obligations Termination
Date;
(t) unperfected security interests to secure (i) intercompany
Indebtedness permitted to be incurred under Section 5.06(b)(v) or (ii) Affiliate
Subordinated Indebtedness permitted to be incurred under Section 5.06(b)(ix);
and
(u) Liens incurred in the ordinary course of business of the Borrower
or any Subsidiary of the Borrower with respect to obligations that do not exceed
$50,000,000 at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Borrower or any of its 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 Borrower or any of its Subsidiaries (other than intercompany
Indebtedness); provided, that:
(a) 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 fees and expenses,
including premiums, incurred in connection therewith);
(b) 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;
(c) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to
the First Priority Term Loan Obligations, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the First Priority
Term Loan Obligations on terms at least as favorable to the holders of
the First Priority Term Loan Obligations as those contained in the
documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and
36
(d) such Indebtedness is incurred either by the Borrower or by
the Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Permitted Tax Payments" means without duplication as to amounts and as
long as the Borrower is a pass-through entity for U.S. federal income tax
purposes, payments to Calpine in an amount equal to the federal, state, local
and foreign taxes (including any penalties and interest) that the Borrower would
owe if the Borrower were a corporation for U.S. federal income tax purposes
filing a consolidated or combined return with its Subsidiaries.
"Perpetual Preferred Stock" means, with respect to any Person,
preferred Capital Stock of such Person that is not subject to mandatory
redemption and is not Voting Stock.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"PPA" means an agreement (including a tolling agreement, fuel
conversion services agreement or other similar agreement) entered into by the
Borrower or any of its Subsidiaries for the sale of capacity or energy (and
services ancillary or related thereto) from one or more of the Facilities.
"PPA Recognition Agreement" means an agreement by the Collateral Agent,
on behalf of the holders of Secured Obligations, (a) to assume the rights and
obligations of the Borrower or any of its Subsidiaries under the WECC Fixed
Price Gas Sale and Power Purchase Agreement in the event of a foreclosure under
any Financing Documents and (b) not to reject the WECC Fixed Price Gas Sale and
Power Purchase Agreement in a Bankruptcy Case (subject to applicable law and the
discretion of the bankruptcy court) so long as CES is not then in default under
WECC Fixed Price Gas Sale and Power Purchase Agreement or the Index Based Gas
Sale and Power Purchase Agreement, provided that such Recognition Agreement is
substantially in the form attached as an exhibit to the Collateral Trust
Agreement.
"preferred stock" means, with respect to any Person, any Capital Stock
of such Person, however designated, which entitles the holder thereof to a
preference with respect to dividends, distributions or liquidation proceeds of
such Person over the holders of the other Capital Stock issued by such Person.
"Prime Rate" means the prime lending rate published from time to time
in the eastern edition of the Wall Street Journal. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
by the Administrative Agent or any Lender to any customer. The Administrative
Agent or any Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"Principal Office" means, for the Administrative Agent, its "Principal
Office" as set forth on Appendix B, or such other office as the Administrative
Agent (or any permitted successor or thereof) may from time to time designate in
writing to the Borrower, the Collateral Agent and each Lender.
37
"Pro Forma" means, with respect to a calculation, that such calculation
is made in accordance with Regulation S-X under the Securities Act and gives
effect to all relevant modifications to Major Project Documents and other
contractual arrangements that have been made prior to, or are being made on, the
calculation date and, in the case of a calculation for any period commencing
prior to the Closing Date, all Major Project Documents and other contractual
arrangements in effect on the Closing Date shall be deemed to have been in
effect for the entirety of such period.
"Pro Rata Share" means, with respect to the First Priority Term Loans
of any Lender, the percentage set forth after such Lender's name on Appendix A
(as the same may be updated or adjusted from time to time to reflect any
assignments made by any Lender hereunder).
"Projections" is defined in Section 3.19 (Delivery of Financials).
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"PURPA" is defined in Section 4.18 (Governmental Regulation).
"Purchase Agreement" means the Purchase Agreement, dated March 12,
2004, among the Borrower, CalGen Finance, the Guarantors and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated as the initial purchaser.
"QF" means a "qualifying cogeneration facility" as defined under the
FPA, as amended by PURPA and Subpart B of Part 292 of the FERC's regulations.
"Register" is defined in Section 2.04(b)(Evidence of Debt; Register).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Borrower, CalGen Finance, the
First Priority Indenture Trustee, the Second Priority Indenture Trustee, the
Third Priority Indenture Trustee, and the other Persons from time to time party
thereto.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Related Fund" means, with respect to any Lender that is an investment
fund, any other investment fund that invests in commercial loans similar to the
First Priority Term Loans and that is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.
38
"Repayment Date" is defined in Section 2.11 (Mandatory Repayment
Offers).
"Replacement Lender" is defined in Section 2.17 (Removal or Replacement
of a Lender).
"Requisite Lenders" means one or more Lenders holding more than 50% of
the sum of the aggregate outstanding First Priority Term Loans (or, at any time
prior to the funding of the First Priority Term Loans, the First Priority Term
Loan Commitments). For this purpose only, First Priority Term Loans registered
in the name of, or beneficially owned by, the Borrower or any Affiliate of the
Borrower shall be deemed not to be outstanding.
"Restricted Investments" means an Investment other than a Permitted
Investment.
"Restricted Payment" is defined in Section 5.04 (Restricted Payments).
"Revenue Account" means account number A/C 65572-1 (short title: CALGEN
REV A/C SUB SEC INT of WTC AS CA) in the name of the Borrower maintained at
Wilmington Trust Company and any successor account or accounts.
"Revolver Administrative Agent" is defined in the Recitals hereto.
"Revolving Loan Agreement" is defined in the Recitals hereto.
"Revolving Loan Documents" means the Revolving Loan Agreement, any
letters of credit issued thereunder, the Security Documents which relate to the
Revolving Loan Obligations and all other agreements related thereto.
"Revolving Loan Guarantee" means the Guarantee made by each Guarantor
of the Borrower's obligations under the Revolving Loan Agreement.
"Revolving Loan Obligations" means the Revolving Loans and all other
Obligations related thereto under the Revolving Loan Documents.
"Revolving Loans" is defined in the Recitals hereto.
"▇.▇. ▇▇▇▇" means ▇.▇. ▇▇▇▇, Inc.
"S&P" means Standard & Poor's Ratings Group.
"Second Priority Debt Representative" is defined in the Collateral
Trust Agreement.
"Second Priority Indenture" is defined in the Recitals hereto.
"Second Priority Indenture Trustee" is defined in the Recitals hereto.
"Second Priority Lien" means a Lien granted by the Borrower or any
Guarantor under a Security Document to the Collateral Agent upon any assets or
property of the Borrower or any Guarantor to secure Second Priority Lien
Obligations.
39
"Second Priority Lien Cap" means as of any date, (a) the principal
amount of Second Priority Notes, plus (b) the principal amount of all
Indebtedness outstanding under the Second Priority Term Loan Agreement on the
Closing Date, plus the Indebtedness outstanding under any other Credit Facility,
all in an aggregate principal amount not to exceed the amount provided for in
Section 5.06(b)(i)(B), less (c) the amount of Third Priority Lien Debt incurred
after the Closing Date the net proceeds of which are used to repay Second
Priority Lien Debt, plus (d) the amount of accrued interest, fees and expenses,
including premiums, paid in connection with the incurrence of any Permitted
Refinancing Indebtedness with respect to the Indebtedness described in clauses
(a) and (b), plus (e) the notional amount of Hedging Obligations incurred to
hedge or manage interest rate risk with respect to other Second Priority Lien
Debt having an aggregate notional amount not to exceed, together with the
aggregate notional amount of any outstanding Hedging Obligations constituting
First Priority Lien Debt, $500,000,000. For purposes of this definition of
Second Priority Lien Cap, all letters of credit will be valued at the face
amount thereof, whether or not drawn.
"Second Priority Lien Debt" means, collectively, (a) the Second
Priority Notes, (b) the Indebtedness under the Second Priority Term Loan
Agreement, (c) Hedging Obligations incurred to hedge or manage interest rate
risk with respect to other Second Priority Lien Debt having an aggregate
notional amount not to exceed, together with the aggregate notional amount of
any outstanding Hedging Obligations constituting First Priority Lien Debt,
$500,000,000, (d) Indebtedness under any other Credit Facility that is secured
by a Second Priority Lien, and (e) any other Indebtedness the net proceeds of
which are used to refund, refinance, replace, defease, discharge or otherwise
acquire or retire any other Second Priority Lien Debt or any First Priority Lien
Debt; provided, however, in the case of clauses (c), (d) or (e) of this
definition, such Indebtedness shall constitute Second Priority Lien Debt only if
(i) such Indebtedness was permitted to be incurred and so secured under each
applicable Financing Document (or the lenders under such Indebtedness obtained
an Officer's Certificate of the Borrower at the time of incurrence to the effect
that such Indebtedness was permitted to be incurred and so secured under each
applicable Financing Document), (ii) on or before the date on which such
Indebtedness is incurred by the Borrower or the applicable Subsidiary, such
Indebtedness is designated by the Borrower, in an Officer's Certificate
delivered to each Second Priority Debt Representative and the Collateral Agent,
as Second Priority Lien Debt for the purposes of the Collateral Trust Agreement
and the other Second Priority Lien Documents; (iii) such Indebtedness is
governed by an agreement that includes a Sharing Confirmation, a Lien Priority
Confirmation, and an agreement by the applicable Second Priority Debt
Representative to vote with respect to such Indebtedness as described in the
Collateral Trust Agreement; and (iv) all requirements set forth in the
Collateral Trust Agreement as to the confirmation, grant or perfection of the
Collateral Agent's Liens to secure such Indebtedness or Obligations in respect
thereof are satisfied (and the satisfaction of such requirements will be
conclusively established if the Borrower delivers to the Collateral Agent an
Officer's Certificate stating that such requirements have been satisfied and
that such Indebtedness is Second Priority Lien Debt).
"Second Priority Lien Documents" means the Second Priority Notes, the
Guarantees related thereto, the Second Priority Indenture, the Second Priority
Term Loan Agreement, each agreement relating to any other series of Second
Priority Lien Debt and all other agreements governing, securing or relating to
any Second Priority Lien Obligations.
40
"Second Priority Lien Obligations" means the Second Priority Lien Debt
and all other Obligations in respect of Second Priority Lien Debt.
"Second Priority Notes" is defined in the Recitals hereto.
"Second Priority Secured Parties" shall mean the holders of the Second
Priority Lien Obligations (including the holders of the Second Priority Notes,
the Second Priority Term Loan Administrative Agent and the lenders under the
Second Priority Term Loan Agreement).
"Second Priority Term Loan Administrative Agent" is defined in the
Recitals hereto.
"Second Priority Term Loan Agreement" is defined in the Recitals
hereto.
"Second Priority Term Loan Documents" means the Second Priority Term
Loan Agreement and any security documents which relate to any of the Second
Priority Term Loan Obligations and all other agreements related thereto.
"Second Priority Term Loan Obligations" means the Second Priority Term
Loans and all other Obligations related thereto under the Second Priority Term
Loan Documents.
"Second Priority Term Loans" is defined in the Recitals hereto.
"Secured Debt" means, collectively, First Priority Lien Debt, Second
Priority Lien Debt and Third Priority Lien Debt.
"Secured Obligations" means, collectively, First Priority Lien
Obligations, Second Priority Lien Obligations and Third Priority Lien
Obligations.
"Secured Obligations Termination Date" means the date on which all
Secured Obligations (including all interest accrued thereon after the
commencement of any bankruptcy, insolvency or liquidation proceeding at the
rate, including any applicable post-default rate, specified in the First
Priority Lien Documents, Second Priority Lien Documents or Third Priority Lien
Documents, as applicable, even if such interest is not enforceable, allowable or
allowed as a claim in such proceeding) have been paid in full in cash (and/or
defeased in accordance with the applicable Financing Documents), all commitments
to extend credit under all Financing Documents have terminated or expired and
all outstanding letters of credit issued pursuant to any Financing Documents
have been cancelled, terminated or cash collateralized at 102.5% of the
aggregate undrawn amount.
"Secured Parties" means the First Priority Secured Parties, the Second
Priority Secured Parties and the Third Priority Secured Parties.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Documents" means the Collateral Trust Agreement, and all
security agreements, pledge agreements, collateral assignments, mortgages,
collateral agency agreements, control agreements, deeds of trust or other grants
or transfers for security executed and delivered by Holdings, the Borrower or
any Guarantor creating (or purporting to create) a Lien upon Collateral in favor
of the Collateral Agent with respect to the First Priority Term Loan
Obligations.
41
"SEC" means the Securities and Exchange Commission.
"SERC" means the Southeastern Electric Reliability Council and any
successor organization.
"Shared Facilities" means equipment, facilities, pipelines, permits,
real estate rights, entitlements or other property that are shared or jointly
used, owned or operated by the Borrower or any of its Subsidiaries and any owner
of Expansion Assets.
"Shared Facilities Arrangement" means any arrangement that provides for
the sharing, joint operation or use, common ownership, leasing or contingent use
of Shared Facilities between the Borrower or any of its Subsidiaries and any
owner of Expansion Assets or Toll Party (as defined below), and/or their
respective lenders, including (a) agreements for the sharing or joint use or
operation of Shared Facilities, (b) ownership of undivided interests in Shared
Facilities as tenants in common or other similar forms of joint ownership, (c)
leasing of Shared Facilities by the Borrower or any of its Subsidiaries to an
owner of Expansion Assets, (d) ownership of Shared Facilities by a single
purpose entity formed solely to own the Shared Facilities and owned by the
Borrower or any of its Subsidiaries or jointly owned by the Borrower or any of
its Subsidiaries and the owner of the Expansion Assets, (e) tolling agreements
between the Borrower or any of its Subsidiaries and any other Person (the "Toll
Party") with respect to a Facility's steam turbine, (f) granting of conditional
or unconditional real estate rights for the construction, installation or use of
Shared Facilities, (g) Liens on the Shared Facilities or interests therein to
secure any such arrangement; provided, that the Borrower shall deliver to the
Collateral Agent an Officer's Certificate to the effect that, and, with respect
to items (c) and (d) below, a nationally-recognized independent engineer will
deliver a report concluding that (subject to customary assumptions and
qualifications):
(a) the ownership, operation, leasing or use of such Shared
Facilities by the owner of Expansion Assets (including the use of the
steam turbine by the Toll Party) cannot unreasonably interfere with or
otherwise materially adversely affect the operation of the Facility;
(b) the owner of the Facility (or another entity on such
owner's behalf) continues to operate and maintain the Facility and the
Shared Facilities;
(c) the costs of operating and maintaining the Shared
Facilities are shared by the owner of the Facility and the owner of the
Expansion Assets or the Toll Party, as applicable, on an equitable
basis;
(d) the Shared Facilities and the entitlements related thereto
are sufficient to fully serve both the Facility and the Expansion
Assets or the Toll Party, as applicable, or, to the extent the Shared
Facilities or the entitlements related thereto are insufficient to
fully serve both the Facility and the Expansion Assets or the Toll
Party, as applicable, the Facility will have priority with respect to
such Shared Facilities or entitlements, so
42
long as the Facility is operated within the requirements, operating
restrictions and other limitations associated with such Shared
Facilities or entitlements;
(e) the holder of the Expansion Assets or the Toll Party, as
applicable, will not have any rights with respect to the sale or other
disposition of, or exercise of remedies with respect to, the Facility,
so long as the Shared Facilities remain subject to the Shared
Facilities Arrangements;
(f) each party waives the defense that an adequate remedy
exists at law and affords the other party (and its lenders or agents on
behalf of such lenders) the right to specifically enforce the
agreement; and
(g) the owner of the Expansion Assets or the Toll Party, as
applicable, cannot prevent a dismantling of the Facility and the
receipt by the holders of the Secured Debt of the proceeds of the sale
thereof, so long as (i) such owner or Toll Party, as applicable, is
given an option to purchase the Shared Facilities at their Fair Market
Value, as determined by appraisal, prior to dismantling of the
Facility, (ii) such owner or Toll Party, as applicable, is given a
right of first refusal to acquire the Shared Facilities in the event
they are offered for sale in connection with the dismantling of the
Facility, and (iii) the owner of the Facility cooperates with the owner
of the Expansion Assets or the Toll Party, as applicable, in
accommodating the continued use and operation of the Expansion Assets
and the Shared Facilities to the maximum extent reasonably possible
notwithstanding the dismantling of the Facility, including providing
reasonable periods for and cooperating in the modification of the
Shared Facilities.
"Sharing Confirmation" means, as the context requires, First Priority
Debt Sharing Confirmation, Second Priority Debt Sharing Confirmation or Third
Priority Debt Sharing Confirmation, in each case as defined in the Collateral
Trust Agreement.
"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 is in effect on
the date hereof.
"Sole Lead Arranger" means MSSF.
"Stated Maturity" means, with respect to any installment of interest or
principal on any 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 Closing Date, and will 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.
"Subordinated Indebtedness" means any Affiliate Subordinated
Indebtedness, Working Capital Facility Indebtedness or Third Party Subordinated
Indebtedness.
"Subsidiary" means, with respect to any specified Person,
(a) 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
43
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
(b) any partnership (i) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (ii) the only general partners of which are that Person
or one or more Subsidiaries of that Person (or any combination
thereof).
"Synthetic Lease Obligations" means all monetary obligations of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention lease
or (b) an agreement for the use or possession of any property (whether real,
personal or mixed) creating obligations which do not appear on the balance sheet
of such Person, but which, upon the insolvency or bankruptcy of such Person,
would be characterized as Indebtedness of such Person (without regard to
accounting treatment).
"Tax" means any present or future tax, levy, impost, charge, deduction
or withholding of any nature and whatever called, by whomsoever, on whomsoever
and wherever imposed, levied, collected, withheld or assessed by a taxing
authority other than a "Tax on the overall net income" of any Person. A "Tax on
the overall net income" of a Person shall be construed as a reference to a tax
(including U.S. backup withholding taxes) imposed by the jurisdiction in which
that Person is organized or in which that Person's applicable principal office
(and/or, in the case of a Lender, its lending office) is located or in which
that Person (and/or, in the case of a Lender, its lending office) is deemed to
be doing business on all or part of the net income, profits or gains (whether
worldwide, or only insofar as such income, profits or gains are considered to
arise in or to relate to a particular jurisdiction, or otherwise) of that Person
(and/or, in the case of a Lender, its applicable lending office).
"Terminated Lender" is defined in Section 2.17 (Removal or Replacement
of a Lender).
"Term Loan Agreements" is defined in the Recitals hereto.
"Term Loans" is defined in the Recitals hereto.
"Third Party Project Documents" means the agreements listed on
Schedule A.
"Third Party Subordinated Indebtedness" means Indebtedness loaned to
the Borrower by a Person other than an Affiliate of the Borrower; provided, that
such Indebtedness (a) is contractually subordinated in right of payment to the
First Priority Term Loans and all other Secured Obligations on the terms
described in Exhibit A, including an agreement by the holders of such
Indebtedness not to exercise any remedies until the Secured Obligations
Termination Date, (b) does not provide for mandatory redemption or other
redemption thereof until at least six months after final Stated Maturity of the
First Priority Term Loans, (c) provides for payment of interest thereon in the
form of cash or additional Third Party Subordinated Indebtedness having a
principal amount equal to the amount of interest due (i.e., "pay-in-kind"), and
(d) is otherwise in the form set forth in Exhibit A.
44
"Third Priority Debt Representative" is defined in the Collateral Trust
Agreement.
"Third Priority Fixed Rate Notes" is defined in the Recitals hereto.
"Third Priority Floating Rate Notes" is defined in the Recitals hereto.
"Third Priority Indenture" is defined in the Recitals hereto.
"Third Priority Indenture Trustee" is defined in the Recitals hereto.
"Third Priority Lien Debt" means, collectively, (a) the Third Priority
Floating Rate Notes and the Third Priority Fixed Rate Notes; (b) any other
Indebtedness the net proceeds of which are used to refund, refinance, replace,
defease, discharge or otherwise acquire or retire First Priority Lien Debt,
Second Priority Lien Debt or other Third Priority Lien Debt; and (c) Hedging
Obligations incurred to hedge or manage interest rate risk with respect to Third
Priority Lien Debt having a notional amount not to exceed the aggregate
principal amount of outstanding Third Priority Lien Debt; provided, that, in the
case of any Indebtedness referred to in clause (b) or (c) of this definition:
(i) such Indebtedness was permitted to be incurred and so
secured under each applicable Financing Document (or the lenders under
such Indebtedness obtained an Officer's Certificate of the Borrower at
the time of incurrence to the effect that such Indebtedness was
permitted to be incurred and so secured under each applicable Financing
Document);
(ii) on or before the date on which such Indebtedness is
incurred by the Borrower or the applicable Subsidiary, such
Indebtedness is designated by the Borrower, in an Officer's Certificate
delivered to each Third Priority Debt Representative and the Collateral
Agent, as Third Priority Lien Debt for the purposes of the Collateral
Trust Agreement and the other Third Priority Lien Documents;
(iii) such Indebtedness is governed by an agreement that
includes a Sharing Confirmation, a Lien Priority Confirmation and an
agreement by the holder of such Indebtedness and the applicable Third
Priority Debt Representative to vote with respect to such Indebtedness
as described in the Collateral Trust Agreement; and
(iv) all requirements set forth in the Collateral Trust
Agreement as to the confirmation, grant or perfection of the Collateral
Agent's Liens to secure such Indebtedness or Obligations in respect
thereof are satisfied (and the satisfaction of such requirements will
be conclusively established if the Borrower delivers to the Collateral
Agent an Officer's Certificate stating that such requirements have been
satisfied and that such Indebtedness is Third Priority Lien Debt).
"Third Priority Lien Documents" means the Third Priority Floating Rate
Notes and the Third Priority Fixed Rate Notes, the Guarantees related thereto,
the Third Priority Indenture, each agreement governing any other series of Third
Priority Lien Debt and all other agreements governing, securing or relating to
any Third Priority Lien Obligations.
45
"Third Priority Lien Obligations" means the Third Priority Lien Debt
and all other Obligations in respect of Third Priority Lien Debt.
"Third Priority Secured Parties" shall mean the holders of the Third
Priority Lien Obligations (including the holders of the Third Priority Fixed
Rate Notes and the holders of the Third Priority Floating Rate Notes).
"Title Company" means ▇▇▇▇▇▇▇ Title Guaranty Company.
"TPUC" is defined in Section 4.18(d).
"Type of Loan" means, with respect to any First Priority Term Loan, a
Base Rate Loan or a LIBOR Rate Loan.
"U.S." means the United States of America.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"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.
"WECC" means the Western Electricity Coordinating Council and any
successor organization.
"WECC Fixed Price Gas Sale and Power Purchase Agreement" means that
certain WECC Fixed Price Gas Sale and Power Purchase Agreement, dated as of the
date hereof, among the Borrower, certain Facility Owners and CES.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(a) 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
(b) the then outstanding principal amount of such
Indebtedness.
"Wholly Owned Subsidiary" of any specified Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) will at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
"Working Capital Facility" means that certain Working Capital Facility,
dated as of the date hereof, among the Borrower, Holdings and Calpine.
46
"Working Capital Facility Indebtedness" means Indebtedness incurred by
the Borrower under the Working Capital Facility; provided, that such
Indebtedness (a) is contractually subordinated in right of payment and in all
other respects to the First Priority Term Loans and all other Secured
Obligations on the terms described in Exhibit A including an agreement by the
holders of such Indebtedness not to exercise any remedies until the Secured
Obligations Termination Date, (b) does not provide for mandatory redemption
thereof until at least six months after the Maturity Date, (c) provides for
payment of interest thereon in the form of cash or by capitalizing the interest
to principal, and (d) is otherwise in the form set forth in Exhibit A.
SECTION 1.02. Rules of Construction.
Unless the context otherwise requires:
(a) An accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP.
(b) Any of the terms used or defined herein may be used in the singular
or the plural, depending on the reference.
(c) Except as expressly provided in any First Priority Term Loan
Document, any reference to any agreement or instrument shall be deemed to
include a reference to such agreement or instrument as assigned, amended,
amended and restated, supplemented, otherwise modified from time to time or
replaced in accordance with the terms of this Agreement.
(d) The use in this Agreement or any of the First Priority Term Loan
Documents of the word "include" or "including," when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as "without limitation" or "but not limited to" or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such general
statement, term or matter. The word "will" shall be construed to have the same
meaning and effect as the word "shall."
(e) References to "Articles", "Sections" and "clauses" shall be to
Articles, Sections and clauses, respectively, of this Agreement unless otherwise
specifically provided.
(f) References to "Exhibits", "Appendices" and "Schedules" shall be to
Exhibits, Appendices and Schedules, respectively, to this Agreement unless
otherwise specifically provided.
(g) The use in this Agreement of the words "herein," "hereof," and
"hereunder," and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof.
(h) This Agreement, the other First Priority Term Loan Documents and
any documents or instruments delivered pursuant hereto or thereto shall be
construed without regard to the identity of the party who drafted the various
provisions of the same. Each and every provision of this Agreement, the other
First Priority Term Loan Documents and instruments and
47
documents entered into and delivered in connection therewith shall be construed
as though the parties participated equally in the drafting of the same.
Consequently, each of the parties acknowledges and agrees that any rule of
construction that a document is to be construed against the drafting party shall
not be applicable either to this Agreement or the other First Priority Term Loan
Documents and instruments and documents entered into and delivered in connection
therewith.
ARTICLE II.
THE FIRST PRIORITY TERM LOANS
SECTION 2.01. First Priority Term Loans.
(a) First Priority Term Loan Commitments. Subject to the terms and
conditions hereof, each Lender severally agrees to make, on the Closing Date, a
First Priority Term Loan to the Borrower in an amount equal to such Lender's
First Priority Term Loan Commitment. The Borrower may make only one borrowing
under the First Priority Term Loan Commitment, which shall be on the Closing
Date. Any amount borrowed under this Section and subsequently repaid or prepaid
may not be reborrowed. All amounts owed hereunder with respect to the First
Priority Term Loans shall be paid in full no later than the Maturity Date. Each
Lender's First Priority Term Loan Commitment shall terminate immediately and
without further action upon the funding by such Lender of its First Priority
Term Loan Commitment.
(b) Borrowing Mechanics for First Priority Term Loans.
(i) On or before the date which is three Business Days prior
to the Closing Date, the Borrower shall deliver to the Administrative
Agent a fully executed Funding Notice, which Funding Notice shall be in
the form of Exhibit E. Promptly upon receipt by the Administrative
Agent of such Funding Notice, the Administrative Agent shall notify
each Lender of the proposed borrowing.
(ii) Each Lender shall make each First Priority Term Loan to
be made by it hereunder available to the Administrative Agent not later
than 12:00 noon (
New York City time) on the Closing Date, by wire
transfer of same day funds in Dollars, at the Principal Office. Upon
satisfaction or waiver of the conditions precedent specified in Article
III and subject to Section 2.02(b) (Pro Rata Shares; Availability of
Funds) below, the Administrative Agent shall make the proceeds of the
First Priority Term Loans available to the Borrower on the Closing Date
by causing an amount of same day funds in Dollars equal to the proceeds
of all such First Priority Term Loans received by the Administrative
Agent from the Lenders to be credited to one or more accounts as may be
designated in writing to the Administrative Agent by the Borrower.
SECTION 2.02. Amount of First Priority Term Loans; Availability of Funds.
(a) Amount of First Priority Term Loans. All First Priority Term Loans
shall be made by the Lenders simultaneously in the amount of their respective
First Priority Term Loan Commitments, it being understood that no Lender shall
be responsible for any default by any
48
other Lender in such other Lender's obligation to make a First Priority Term
Loan hereunder nor shall any First Priority Term Loan Commitment of any Lender
be increased or decreased as a result of a default by any other Lender in such
other Lender's obligation to make a First Priority Term Loan hereunder.
(b) Availability of Funds. Unless the Administrative Agent shall have
been notified by any Lender prior to the Closing Date that such Lender does not
intend to make available to the Administrative Agent the amount of such Lender's
First Priority Term Loan, the Administrative Agent may assume that such Lender
has made and will make such amount available to the Administrative Agent on the
Closing Date and the Administrative Agent may, in its sole discretion, but shall
not be obligated to, make available to the Borrower a corresponding amount on
the Closing Date. If such corresponding amount is not in fact made available to
the Administrative Agent by such Lender, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Lender
together with interest thereon, for each day from the Closing Date until the
date such amount is paid to the Administrative Agent, at the customary rate set
by the Administrative Agent for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon the Administrative Agent's demand therefor,
the Administrative Agent shall promptly notify the Borrower and the Borrower
shall immediately pay such corresponding amount to the Administrative Agent
together with interest thereon, for each day from the Closing Date until the
date such amount is paid to the Administrative Agent, at the rate payable
hereunder for First Priority Term Loans. Nothing in this Section 2.02(b) shall
be deemed to relieve any Lender from its obligation to fulfill its First
Priority Term Loan Commitments hereunder or to prejudice any rights that the
Borrower may have against any Lender as a result of any default by such Lender
hereunder.
SECTION 2.03. Use of Proceeds. The proceeds of the First Priority Term Loans
shall be applied (together with the net proceeds from the making of the Second
Priority Term Loans and the issuance of the Notes) by the Borrower to prepay and
retire the Existing Senior Secured Credit Facility and to pay certain fees and
expenses due under this Agreement and the other Financing Documents in
connection therewith. No portion of the proceeds of any First Priority Term
Loans shall be used in any manner that causes or might cause the funding of the
First Priority Term Loans or the application of such proceeds to violate
Regulation T, Regulation U or Regulation X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the Exchange Act.
SECTION 2.04. Evidence of Debt; Register; Lenders' Books and Records; Notes.
(a) Lenders' Evidence of Debt. Each Lender shall maintain on its
internal records an account or accounts evidencing the Indebtedness of the
Borrower to such Lender, including the amounts of the First Priority Term Loans
made by it and each repayment and prepayment in respect thereof. Any such
recordation shall be conclusive and binding on the Borrower, absent manifest
error; provided, that the failure to make any such recordation, or any error in
such recordation, shall not affect the Borrower's Obligations in respect of any
First Priority Term Loan; and provided further, that in the event of any
inconsistency between the Register and any Lender's records, the recordations in
the Register shall govern.
49
(b) Register. The Administrative Agent shall maintain at the Principal
Office a register for the recordation of the names and addresses of the Lenders
and the First Priority Term Loans made by each Lender from time to time (the
"Register"). The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice. The Administrative Agent shall record in the Register the First Priority
Term Loans, and each repayment or prepayment in respect of the principal amount
of the First Priority Term Loans, and any such recordation shall be conclusive
and binding on the Borrower and each Lender, absent manifest error; provided,
that the failure to make any such recordation, or any error in such recordation,
shall not affect the Borrower's Obligations in respect of any First Priority
Term Loan. The Borrower hereby designates the Administrative Agent to serve as
the Borrower's agent solely for purposes of maintaining the Register as provided
in this Section 2.04, and the Borrower hereby agrees that, to the extent the
Administrative Agent serves in such capacity, the Administrative Agent and its
officers, directors, employees, agents and affiliates shall constitute
"Indemnitees" under Section 12.03 (Indemnity).
(c) First Priority Term Loan Notes. If so requested by any Lender by
written notice to the Borrower (with a copy to the Administrative Agent) at any
time, the Borrower shall execute and deliver to such Lender (and/or, if
applicable and if so specified in such notice, to any Person who is an assignee
of such Lender pursuant to Section 12.06 (Successors and Assigns;
Participations)) on the Closing Date (or, if such notice is delivered after the
Closing Date, promptly after the Borrower's receipt of such notice), a First
Priority Term Loan Note to evidence such Lender's First Priority Term Loan.
SECTION 2.05. Interest.
(a) Except as otherwise set forth herein, the First Priority Term Loans
shall bear interest on the unpaid principal amount thereof from the date made
through repayment (whether by acceleration or otherwise) thereof as follows:
(i) if a Base Rate Loan, at the Base Rate plus 2.75% per
annum; or
(ii) if a LIBOR Rate Loan, at the Adjusted LIBOR Rate plus
3.75% per annum.
Notwithstanding anything contained herein to the contrary, during the period
from the Closing Date through March 31, 2004, the First Priority Term Loans
shall bear interest on the unpaid principal amount thereof at 5.00% per annum.
(b) The Type of Loan, and the Interest Period with respect to any LIBOR
Rate Loan, shall be selected by the Borrower and notified to the Administrative
Agent and the Lenders pursuant to the applicable Continuation Notice. If on any
day a First Priority Term Loan is outstanding with respect to which a Funding
Notice or Continuation Notice has not been delivered to the Administrative Agent
in accordance with the terms hereof specifying the applicable basis for
determining the rate of interest, then for that day such First Priority Term
Loan shall be a Base Rate Loan. Notwithstanding the foregoing, during the period
from the Closing Date through March 31, 2004, the First Priority Term Loans
shall be deemed to be
50
LIBOR Rate Loans and shall have the "Interest Period" contemplated by clause (d)
of the definition thereof.
(c) In connection with LIBOR Rate Loans there shall be no more than
five Interest Periods outstanding at any time. In the event that the Borrower
fails to specify the Type of Loan in the applicable Funding Notice or
Continuation Notice, such First Priority Term Loan (if outstanding as a LIBOR
Rate Loan) will be automatically converted into a Base Rate Loan on the last day
of the then-current Interest Period for such First Priority Term Loan (or if
outstanding as a Base Rate Loan will remain as, or (if not then outstanding)
will be made as, a Base Rate Loan). In the event that the Borrower fails to
specify an Interest Period for any LIBOR Rate Loan in the applicable Funding
Notice or Continuation Notice, the Borrower shall be deemed to have selected an
Interest Period of one month. As soon as practicable after 10:00 a.m. (
New York
City time) on each Interest Rate Determination Date, the Administrative Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the LIBOR Rate Loans for which an interest rate is then being determined for the
applicable Interest Period and, upon the request of the Borrower, shall promptly
give notice thereof (in writing or by telephone confirmed in writing) to the
Borrower and each Lender.
(d) Interest payable pursuant to Section 2.05(a) shall be computed (i)
in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as the
case may be, and (ii) in the case of LIBOR Rate Loans, on the basis of a 360-day
year, in each case for the actual number of days elapsed in the period during
which it accrues. In computing interest on any First Priority Term Loan, the
date of the making of such First Priority Term Loan or the first day of an
Interest Period applicable to such First Priority Term Loan or, with respect to
a Base Rate Loan being converted from a LIBOR Rate Loan, the date of conversion
of such LIBOR Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such First Priority Term Loan or the
expiration date of an Interest Period applicable to such First Priority Term
Loan or, with respect to a Base Rate Loan being converted to a LIBOR Rate Loan,
the date of conversion of such Base Rate Loan to such LIBOR Rate Loan, as the
case may be, shall be excluded; provided, if a First Priority Term Loan is
repaid on the same day on which it is made, one day's interest shall be paid on
that First Priority Term Loan.
(e) Except as otherwise set forth herein, interest on each First
Priority Term Loan shall be payable in arrears on and to each Interest Payment
Date applicable to that First Priority Term Loan.
SECTION 2.06. Continuation Notice.
(a) Subject to Section 2.15 (Increased Costs; Capital Adequacy) and so
long as no Default or Event of Default shall have occurred and then be
continuing, the Borrower shall have the option:
(i) to convert at any time all or any part of any First
Priority Term Loan equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount from one Type of Loan to another
Type of Loan; provided, a LIBOR Rate Loan
51
may only be converted on the expiration of the Interest Period
applicable to such LIBOR Rate Loan unless the Borrower shall pay all
amounts due under Section 2.14 (Making or Maintaining First Priority
Term Loans) in connection with any such conversion; or
(ii) upon the expiration of any Interest Period applicable to
any LIBOR Rate Loan, to continue all or any portion of such First
Priority Term Loan equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount as a LIBOR Rate Loan.
(b) The Borrower shall deliver a Continuation Notice to the
Administrative Agent no later than 10:00 a.m. (
New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a LIBOR Rate Loan). Except as otherwise provided herein, a
Continuation Notice for conversion to, or continuation of, any LIBOR Rate Loans
shall be irrevocable on and after the related Interest Rate Determination Date,
and the Borrower shall be bound to effect a conversion or continuation in
accordance therewith. In the event that the Borrower shall have failed to
provide a Continuation Notice as required by this Section 2.06(b) to continue
any LIBOR Rate Loan into a subsequent Interest Period (and shall not otherwise
have given notice in accordance with this Section 2.06(b) to convert such LIBOR
Rate Loan into a Base Rate Loan), then such LIBOR Rate Loan shall, at the end of
the applicable Interest Period, automatically be converted into a Base Rate
Loan.
(c) Any Continuation Notice shall be executed by an Officer of the
Borrower in a writing delivered to the Administrative Agent. In lieu of
delivering a written notice, the Borrower may give the Administrative Agent
telephonic notice by the required time of any continuation; provided each such
notice shall be promptly confirmed in writing by delivery of the applicable
Continuation Notice to the Administrative Agent on or before the applicable date
of continuation. Neither the Administrative Agent nor any Lender shall incur any
liability to the Borrower in acting upon any telephonic notice referred to above
that the Administrative Agent believes in good faith to have been given by a
duly authorized officer or other Person authorized on behalf of the Borrower or
otherwise acting in good faith
SECTION 2.07. Default Interest. Notwithstanding anything to the contrary herein,
upon the occurrence and during the continuation of any Event of Default, the
outstanding principal amount of all First Priority Term Loans and, to the extent
permitted by applicable Legal Requirements, any accrued but unpaid interest
payments thereon and any accrued but unpaid fees and other amounts hereunder,
shall thereafter bear interest (including post-petition interest in any
proceeding under applicable Bankruptcy Laws) payable upon demand at a rate that
is (a) 2% per annum in excess of the interest rate then otherwise payable under
this Agreement with respect to the applicable First Priority Term Loans or (b)
in the case of any such fees and other amounts, at a rate that is 2% per annum
in excess of the interest rate then otherwise payable under this Agreement for
Base Rate Loans (the "Default Rate"); provided that if an Event of Default has
occurred and is continuing on the expiration date of the Interest Period for any
LIBOR Rate Loans, then such LIBOR Rate Loans shall thereupon become Base Rate
Loans and shall thereafter bear interest payable upon demand at a rate that is
2% per annum in excess of the interest rate then otherwise payable under this
Agreement for Base Rate Loans. Payment or acceptance of the increased rates of
interest provided for in this Section 2.07 is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
52
otherwise prejudice or limit any rights or remedies of the Administrative Agent,
the Collateral Agent or any Lender.
SECTION 2.08. Fees. The Borrower agrees to pay to each Agent such fees in the
amounts and at the times separately agreed upon by the Borrower and such Agent
in writing.
SECTION 2.09. Payments. The principal amounts of the First Priority Term Loans
(reduced in connection with any voluntary or mandatory prepayments of the First
Priority Term Loans, in accordance with Sections 2.10 (Voluntary Prepayments)
and 2.11 (Mandatory Repayment Offers), as applicable) shall be repaid by the
Borrower in accordance with the repayment schedule set forth on Schedule 2.09,
with any remaining unpaid principal, interest, fees and costs due and payable in
full on the Maturity Date.
SECTION 2.10. Voluntary Prepayments.
(a) Voluntary Prepayments.
(i) The Borrower may not voluntarily prepay First Priority
Term Loans except as provided in clause (b) below. In the event of any
voluntary prepayment in accordance with clause (b), the Borrower may
prepay any such First Priority Term Loans on any Business Day in whole
or in part, in an aggregate minimum amount of $5,000,000 and integral
multiples of $1,000,000 (or the remaining amount outstanding) in excess
of that amount.
(ii) All such prepayments shall be made:
(A) upon not less than one Business Day's prior
written, email or telephonic notice in the case of Base Rate
Loans; and
(B) upon not less than three Business Days' prior
written, email or telephonic notice in the case of LIBOR Rate
Loans;
in each case given to the Administrative Agent by 1:00 p.m. (
New York
City time) on the date required and, if given by telephone, promptly
confirmed in writing to the Administrative Agent (and the
Administrative Agent will promptly transmit such telephonic or original
notice, by telefacsimile or telephone to each Lender). Upon the giving
of any such notice, the principal amount of the First Priority Term
Loans specified in such notice shall become due and payable on the
prepayment date specified therein. Any prepayment of any First Priority
Term Loan pursuant to this Section shall be applied in inverse order of
maturities and otherwise in accordance with Section 2.12 (General
Provisions Regarding Payments).
(b) First Priority Term Loan Call Protection.
(i) The First Priority Term Loans may not be voluntarily
prepaid at any time on or prior to April 1, 2007;
53
(ii) The Borrower may, at its option, upon notice as provided
in clause (a) above, prepay at any time all, or from time to time any
part of, the First Priority Term Loans, if such prepayment is after
April 1, 2007 but on or before April 1, 2008, in an amount equal to
102.5% of the principal amount so prepaid, plus all other amounts owed
hereunder in connection with such prepayment, including amounts payable
under Sections 2.05 (Interest) and 2.14 (Making or Maintaining First
Priority Term Loans) hereof; and
(iii) Subject to clause (a) above, First Priority Term Loans
may be prepaid at any time without premium or penalty after April 1,
2008.
SECTION 2.11. Mandatory Repayment Offers.
(a) In the event that, pursuant to Section 5.07 (Asset Sales;
Application of Net Proceeds) or Section 5.12 (Offer to Prepay Upon Change of
Control), the Borrower shall elect to repay or be required to offer to prepay
First Priority Term Loans, then the Borrower shall make an offer to each Lender
(a "Mandatory Repayment Offer") in accordance with the following the procedures
specified below:
(i) The Mandatory Repayment Offer shall be made by the
Borrower within 30 days following (A) the receipt by the Borrower or
any of its Subsidiaries of Net Proceeds from an Asset Sale, Casualty
Event or Condemnation Event or (B) a Change of Control, as applicable,
and shall remain open until 5:00 p.m. (
New York City time) on the date
specified in such Mandatory Repayment Offer, which date shall be no
earlier than 30 days and no later than 60 days from the date such
Mandatory Repayment Offer was made, except to the extent that a longer
period is required by applicable law (the "Offer Period");
(ii) The Borrower shall make the Mandatory Repayment Offer by
sending a notice to the Administrative Agent (for delivery to each
Lender). The notice shall contain all instructions and materials
necessary to enable the Lenders to accept the Mandatory Repayment Offer
for all of their First Priority Term Loans pursuant to the Mandatory
Repayment Offer. The Mandatory Repayment Offer shall be made to all
Lenders. The notice, which shall govern the terms of the Mandatory
Repayment Offer, shall state:
(A) that the Mandatory Repayment Offer is being made
pursuant to this Section 2.11 and Section 5.07 (Asset Sales;
Application of Net Proceeds) or Section 5.12 (Offer to Prepay
Upon Change of Control), as applicable, and the date on which
the Mandatory Repayment Offer shall end;
(B) the total amount the Borrower is offering to
prepay (the "Offer Amount") and the Repayment Date therefor;
(C) that, unless the Borrower defaults in making such
payment, any First Priority Term Loan with respect to which a
Lender accepts the Mandatory Repayment Offer shall cease to
accrue interest from and after the Repayment Date;
54
(D) that a Lender that accepts a Mandatory Repayment
Offer must accept such Mandatory Repayment Offer with respect
to all (but not part) of its First Priority Term Loans (up to
the amount of such Lender's First Priority Term Loans that the
Borrower is offering to prepay);
(E) that the Lenders shall be entitled to withdraw
their acceptance of a Mandatory Repayment Offer if the
Borrower and the Administrative Agent receive, not later than
the expiration of the Offer Period, a notice setting forth the
name of the Lender, the principal amount of the First Priority
Term Loans for which the Lender previously accepted such
Mandatory Repayment Offer and a statement that such Lender is
rescinding its acceptance of such Mandatory Repayment Offer;
and
(F) in the case of a Mandatory Repayment Offer being
made pursuant to Section 5.07 (Asset Sales; Application of Net
Proceeds), that if the aggregate principal amount of First
Priority Term Loans for which the Mandatory Repayment Offer is
accepted by the Lenders exceeds the Offer Amount, then the
Administrative Agent shall select the First Priority Term
Loans to be purchased in accordance with Section 2.12(c)
(General Provisions Regarding Payments).
(iii) On or before the fifth day after the termination of the
Offer Period (the "Repayment Date"), the Borrower shall (A) to the
extent lawful, pay, in accordance with Section 2.12(c) (General
Provisions Regarding Payments), the amount of First Priority Term Loans
with respect to which the Mandatory Repayment Offer was accepted, and
(B) deliver to the Administrative Agent (for delivery to the Lenders)
an Officer's Certificate stating the amount of the First Priority Term
Loans to be repaid in accordance with the terms of this Section 2.11.
The Administrative Agent shall promptly forward the appropriate amount
to each Lender being repaid.
(b) In the event that one or more, but not all, Lenders have not
elected to participate in any Mandatory Repayment Offer made pursuant to Section
5.07 (Asset Sales; Application of Net Proceeds), the Borrower shall, upon the
end of the Offer Period, immediately commence a second Mandatory Repayment Offer
in accordance with the procedure provided in clause (a) of this Section 2.11,
provided that such subsequent offer shall only be made to Lenders who elected to
participate in the initial Mandatory Repayment Offer and, provided, further,
that the Borrower shall not be required to make more than one such subsequent
offer with respect to each initial Mandatory Repayment Offer.
SECTION 2.12. General Provisions Regarding Payments.
(a) All payments by the Borrower or any Guarantor of principal,
interest, fees and other First Priority Term Loan Obligations shall be made in
Dollars in same day funds, without defense, setoff or counterclaim, free of any
restriction or condition, and delivered to the Administrative Agent not later
than 1:00 p.m. (
New York City time) on the date due at the Administrative
Agent's Principal Office for the account of the Administrative Agent or the
Lenders, as the case may be. Funds received by the Administrative Agent after
that time on such
55
due date shall be deemed to have been paid by the Borrower or the applicable
Guarantor on the next succeeding Business Day.
(b) All payments in respect of the principal amount of any First
Priority Term Loan shall include payment of accrued interest on the principal
amount being repaid or prepaid, and all such payments (and, in any event, any
payments in respect of any First Priority Term Loan on a date when interest is
due and payable with respect to such First Priority Term Loan) shall be applied
to the payment of interest before application to principal.
(c) The Administrative Agent shall promptly distribute to each Lender,
at such address as such Lender shall indicate in writing, such Lender's
applicable Pro Rata Share of all payments and prepayments of principal and
interest due hereunder, except that prepayment offers accepted by Lenders
pursuant to Section 2.11 (Mandatory Repayment Offer), and in respect of the Net
Proceeds from any Asset Sale, Casualty Event or Condemnation Event, shall be
allocated to the accepting Lenders ratably in proportion to the principal amount
of First Priority Term Loans outstanding to each accepting Lender (and not to
all Lenders based on Pro Rata Shares), together with all other amounts due
thereon, including all fees payable with respect thereto, to the extent received
by the Administrative Agent.
(d) Whenever any payment to be made hereunder shall be stated to be due
on a day that is not a Business Day, such payment shall be due on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder.
(e) The Borrower hereby authorizes the Administrative Agent to charge
the Borrower's accounts (if any) with the Administrative Agent in order to cause
timely payment to be made to the Administrative Agent of all principal,
interest, fees and expenses due hereunder (to the extent there are funds
available in its accounts for that purpose) upon the occurrence and during the
continuation of any Event of Default in respect of its payment obligations
hereunder.
(f) The Administrative Agent shall deem any payment by or on behalf of
the Borrower hereunder that is not made in same day funds prior to 1:00 p.m.
(
New York City time) on the date therefor to be a non-conforming payment. Any
such payment shall not be deemed to have been received by the Administrative
Agent until the later of (i) the time such funds become available funds, and
(ii) the applicable next Business Day. The Administrative Agent shall give
prompt telephonic notice to the Borrower and each applicable Lender (confirmed
in writing) if any payment is non-conforming. Any non-conforming payment may
constitute or become a Default or Event of Default in accordance with the terms
of Section 7.01 (Events of Default). Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until such funds become
available funds (but in no event less than the period from the date of such
payment to the next succeeding applicable Business Day) at the rate determined
pursuant to Section 2.07 (Default Interest) from the date such amount was due
and payable until the date such amount is paid in full.
SECTION 2.13. Ratable Sharing. The Lenders hereby agree among themselves that,
except in the case of prepayments pursuant to Section 2.11 (Mandatory Repayment
Offers), if any of them shall, whether by voluntary payment (other than a
voluntary prepayment of First Priority Term Loans made and applied in accordance
with the terms hereof), through the exercise
56
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the First Priority Term Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Law, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, fees and other amounts then due and
owing to such Lender hereunder or under the other First Priority Term Loan
Documents (collectively, the "Aggregate Amounts Due" to such Lender) which is
greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (a) notify the Administrative Agent and
each other Lender of the receipt of such payment and (b) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each Lender that is deemed to be the seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due to the other Lenders, so that all such recoveries
of Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to each of them, respectively; provided, if all or part of
such proportionately greater payment received by such purchasing Lender is
thereafter recovered from such Lender upon the bankruptcy or reorganization of
the Borrower or otherwise, the foregoing purchases of participations shall be
rescinded and the purchase prices paid for such participations shall be returned
to such purchasing Lender(s) ratably to the extent of such recovery, but without
interest. The Borrower expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by the Borrower to that holder with respect thereto as fully as if
that holder were owed the amount of the participation held by that holder.
SECTION 2.14. Making or Maintaining First Priority Term Loans.
(a) Inability to Determine Applicable Interest Rate. In the event that
the Administrative Agent shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto absent manifest error),
on any Interest Rate Determination Date with respect to any First Priority Term
Loans, that by reason of circumstances affecting the London interbank market
adequate and fair means do not exist for ascertaining the interest rate
applicable to such First Priority Term Loans on the basis provided for in the
definition of Adjusted LIBOR Rate, the Administrative Agent shall on such date
give notice (by telefacsimile or by telephone confirmed in writing) to the
Borrower and each Lender of such determination, whereupon (i) no First Priority
Term Loans may be made or maintained with an interest rate based on the Adjusted
LIBOR Rate, and instead will be made and maintained with an interest rate equal
to the Base Rate plus 2.75% per annum, until such time as the Administrative
Agent notifies the Borrower and Lenders that the circumstances giving rise to
such notice no longer exist, and (ii) any Funding Notice or Continuation Notice
given by the Borrower with respect to the First Priority Term Loans in respect
of which such determination was made shall be deemed to be rescinded by the
Borrower.
(b) Illegality or Impracticability of using the Adjusted LIBOR Rate. In
the event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with the Borrower and the Administrative Agent)
that the making, maintaining or continuation of its First Priority Term Loans
with an interest rate based on the Adjusted LIBOR Rate (i) has become unlawful
as
57
a result of compliance by such Lender in good faith with any Legal Requirement
or would conflict with any treaty, governmental rule, regulation, guideline or
order not having the force of law even though the failure to comply therewith
would not be unlawful, or (ii) has become impracticable, as a result of
contingencies occurring after the date hereof which materially and adversely
affect the London interbank market or the position of such Lender in that
market, then, and in any such event, such Lender shall be an "Affected Lender"
and on that day it shall give notice (by telefacsimile or by telephone confirmed
in writing) to the Borrower and the Administrative Agent of such determination
(which notice the Administrative Agent shall promptly transmit to each other
Lender). Thereafter (A) the obligation of the Affected Lender to make or
maintain First Priority Term Loans with an interest rate based on the Adjusted
LIBOR Rate shall be suspended until such notice shall be withdrawn by the
Affected Lender, (B) to the extent such determination by the Affected Lender
relates to a First Priority Term Loan then being requested by the Borrower
pursuant to a Funding Notice or a Continuation Notice, the Affected Lender shall
make such First Priority Term Loan as (or continue such First Priority Term Loan
as) a First Priority Term Loan with an interest rate equal to the Base Rate plus
2.75% annum, (C) the Affected Lender's obligation to maintain its outstanding
First Priority Term Loans with an interest rate based on the Adjusted LIBOR Rate
(the "Affected Loans") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (D) the Affected Loans shall automatically
convert into First Priority Term Loans with an interest rate equal to the Base
Rate plus 2.75% per annum on the date of such termination. Except as provided in
the immediately preceding sentence, nothing in this Section 2.14(b) shall affect
the obligation of any Lender other than an Affected Lender to make or maintain
First Priority Term Loans with an interest rate based on the Adjusted LIBOR Rate
in accordance with the terms hereof.
(c) Compensation for Breakage or Non-Commencement of Interest Periods.
The Borrower shall compensate each Lender, upon written request by such Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by such
Lender to lenders of funds borrowed by it to make or carry its First Priority
Term Loans and any loss, expense or liability sustained by such Lender in
connection with the liquidation or re-employment of such funds but excluding
loss of anticipated profits (such anticipated profits being the 3.75% spread
over the Adjusted LIBOR Rate) which such Lender may sustain within an Interest
Period: (i) if any prepayment or other principal payment of any of its First
Priority Term Loans occurs on a date prior to the last day of an Interest Period
applicable to that First Priority Term Loan (including pursuant to Section 2.10
(Voluntary Prepayments), 2.11 (Mandatory Repayment Offers), 5.07 (Asset Sales;
Application of Net Proceeds) and 5.12 (Offer to Prepay Upon Change of Control);
or (ii) if any prepayment of any of its First Priority Term Loans is not made on
any date specified in a notice of prepayment given by the Borrower.
(d) Booking of First Priority Term Loans. Any Lender may make, carry or
transfer First Priority Term Loans at, to, or for the account of any of its
branch offices or the office of an Affiliate of such Lender.
(e) Assumptions Concerning Funding of First Priority Term Loans.
Calculation of all amounts payable to a Lender under this Section 2.14 and under
Section 2.15 (Increased Costs; Capital Adequacy) shall be made as though such
Lender had actually funded each of its relevant
58
First Priority Term Loans through the purchase of a LIBOR deposit bearing
interest at the rate obtained pursuant to clause (b) of the definition of
Adjusted LIBOR Rate in an amount equal to the amount of such First Priority Term
Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such LIBOR deposit from an offshore office of such
Lender to a domestic office of such Lender in the United States of America;
provided, however, each Lender may fund each of its First Priority Term Loans in
any manner it sees fit and the foregoing assumptions shall be utilized only for
the purposes of calculating amounts payable under this Section 2.14 and under
Section 2.15 (Increased Costs; Capital Adequacy).
SECTION 2.15. Increased Costs; Capital Adequacy.
(a) Compensation For Increased Costs and Taxes. Subject to the
provisions of Section 2.16 (Taxes; Withholding, etc.) (which shall be
controlling with respect to the matters covered thereby), in the event that any
Lender shall determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any Legal
Requirement, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new Legal Requirement),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such
Lender (other than any such reserve or other requirements with respect
to any First Priority Term Loans that are reflected in the definition
of Adjusted LIBOR Rate); or
(ii) imposes any other condition (other than with respect to a
Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining First Priority Term Loans hereunder or
to reduce any amount received or receivable by such Lender (or its applicable
lending office) with respect thereto; then, in any such case, the Borrower shall
promptly pay to such Lender, upon receipt of the statement referred to in the
next sentence, such additional amount or amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender in its sole discretion shall determine) as may be necessary to compensate
such Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Lender shall deliver to the Borrower (with a copy to
the Administrative Agent) a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Lender
under this Section 2.15(a), which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
59
(b) Capital Adequacy Adjustment. In the event that any Lender shall
have determined that the adoption, effectiveness, phase-in or applicability
after the Closing Date of any Legal Requirement (or any provision thereof)
regarding capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's First Priority Term Loans, or participations therein or other
obligations hereunder with respect to the First Priority Term Loans to a level
below that which such Lender or such controlling corporation could have achieved
but for such adoption, effectiveness, phase-in, applicability, change or
compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by the Borrower from such Lender
of the statement referred to in the next sentence, the Borrower shall pay to
such Lender such additional amount or amounts as shall compensate such Lender or
such controlling corporation on an after-tax basis for such reduction. Such
Lender shall deliver to the Borrower (with a copy to the Administrative Agent) a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Lender under this Section 2.15(b), which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
SECTION 2.16. Taxes; Withholding, etc.
(a) Payments to Be Free and Clear. Except as otherwise provided in this
Section 2.16, all sums payable by or on behalf of any Obligor hereunder and
under the other First Priority Term Loan Documents shall (except to the extent
required by any applicable Legal Requirement) be paid free and clear of, and
without any deduction or withholding on account of, any Tax imposed, levied,
collected, withheld or assessed by or within the U.S. or any political
subdivision in or of the U.S. or any other jurisdiction from or to which a
payment is made by or on behalf of any Obligor.
(b) Withholding of Taxes. If any Obligor or any other Person is
required by law to make any deduction or withholding on account of any such Tax
from any sum paid or payable by or on behalf of any Obligor to the any Agent or
any Lender under any of the First Priority Term Loan Documents:
(i) the Borrower shall notify the Administrative Agent of any
such requirement or any change in any such requirement as soon as the
Borrower becomes aware of it;
(ii) the Borrower shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on any Obligor) for its own account or (if
that liability is imposed on such Agent or such Lender, as the case may
be) on behalf of and in the name of such Agent or such Lender;
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(iii) the sum payable by such Obligor in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of
all deductions, withholding or payments for or with respect to Taxes,
such Agent or such Lender, as the case may be, receives on the due date
a net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(iv) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any tax which it is required by
clause (ii) above to pay, the Borrower shall deliver to the
Administrative Agent evidence satisfactory to the other affected
parties of such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (iii) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages hereof on
the Closing Date) or after the effective date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each other Lender)
in any such requirement for a deduction, withholding or payment as is mentioned
therein shall result in either the imposition of deduction, withholding or
payment or an increase in the rate of such deduction, withholding or payment
from that in effect at the date hereof or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender.
(c) Other Taxes. The Borrower shall pay any Other Taxes to the relevant
taxing or other authority in accordance with applicable Legal Requirements, and
shall comply with the requirements of Section 2.16(b)(iv) with respect to such
payments.
(d) Indemnification. Subject to the requirements of Section 2.16(e),
the Borrower shall indemnify each Agent and each Lender for the full amount of
Taxes (to the extent the Borrower would be required to pay additional amounts
with respect to such Taxes pursuant to Section 2.16(b)) or Other Taxes arising
in connection with payments made under any of the First Priority Term Loan
Documents (including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.16) paid by such Agent or Lender and any
penalties, additions to tax, interest and expenses arising from or with respect
to such Taxes or Other Taxes, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be made
within 10 days from the date any Agent or any Lender makes written demand
therefor.
(e) Evidence of Exemption From U.S. Withholding Tax. Each Lender that
is not a United States Person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. federal income tax purposes (a "Non-U.S. Lender") shall
deliver to the Administrative Agent for transmission to the Borrower, on or
prior to the Closing Date (in the case of each Lender listed on the signature
pages hereof on the Closing Date) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other
Lender), and at such other times as may be necessary in the determination of the
Borrower or the Administrative Agent (each in the reasonable exercise of its
discretion):
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(i) two original copies of Internal Revenue Service Form
W-8BEN or W-8ECI (or any successor forms), properly completed and duly
executed by such Lender, and such other documentation required under
the Code and reasonably requested by the Borrower to establish that
such Lender is not subject to deduction or withholding of United States
federal income tax with respect to any payments to such Lender of
principal, interest, fees or other amounts payable under any of the
First Priority Term Loan Documents or is subject to such deduction or
withholding at a reduced rate; or
(ii) if such Lender is not a "bank" or other Person described
in Section 881(c)(3) of the Code and is claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest", a Certificate Re Non-Bank
Status together with two original copies of Internal Revenue Service
Form W-8 (or any successor form), properly completed and duly executed
by such Lender, and such other documentation required under the Code
and reasonably requested by the Borrower to establish that such Lender
is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of interest
payable under any of the First Priority Term Loan Documents.
Each Lender required to deliver any forms, certificates or other evidence with
respect to United States federal income tax withholding matters pursuant to this
Section 2.16(e) hereby agrees, from time to time after the initial delivery by
such Lender of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such Lender shall
promptly deliver to the Administrative Agent for transmission to the Borrower
two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI , or a
Certificate re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and duly executed by
such Lender, and such other documentation required under the Code and reasonably
requested by the Borrower to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income tax with
respect to payments to such Lender under the First Priority Term Loan Documents
or is subject to such deduction or withholding at a reduced rate, or notify the
Administrative Agent and the Borrower of its inability to deliver any such
forms, certificates or other evidence. The Borrower shall not be required to pay
any additional amount to any Non-U.S. Lender under Section 2.16(b)(iii) or to
indemnify the Non-U.S. Lender under Section 2.16(d) if such Lender shall have
failed (1) to deliver the forms, certificates or other evidence referred to in
the second sentence of this Section 2.16(e), or (2) to notify the Administrative
Agent and the Borrower of its inability to deliver any such forms, certificates
or other evidence, as the case may be; provided, if such Lender shall have
satisfied the requirements of the first sentence of this Section 2.16(e) on the
Closing Date or on the date of the Assignment Agreement pursuant to which it
became a Lender, as applicable, nothing in this last sentence of this Section
2.16(e) shall relieve the Borrower of its obligation to pay any additional
amounts pursuant to Section 2.16(b) or to indemnify the Non-U.S. Lender under
Section 2.16(d) in the event that, as a result of any change in any applicable
Legal Requirement, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date establishing the fact
that such Lender is not subject to withholding as described herein. For the
avoidance of doubt, to the extent the form provided by a Lender at the time such
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Lender first becomes a party to this Agreement indicates a U.S. withholding tax
rate in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes.
SECTION 2.17. Removal or Replacement of a Lender. Anything contained herein to
the contrary notwithstanding, in the event that:
(a) (i) any Lender (an "Increased-Cost Lender") shall give notice to
the Borrower that such Lender is an Affected Lender or that such Lender is
entitled to receive payments under Section 2.14 (Making or Maintaining First
Priority Term Loans), 2.15 (Increased Costs; Capital Adequacy) or 2.16 (Taxes;
Withholding, etc), (ii) the circumstances which have caused such Lender to be an
Increased-Cost Lender or which entitle such Lender to receive such payments
shall remain in effect, and (iii) such Lender shall fail to withdraw such notice
within five Business Days after the Borrower's request for such withdrawal; or
(b) in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions hereof as
contemplated by Section 12.05(b) (Amendments and Waivers), the consent of
Requisite Lenders shall have been obtained but the consent of one or more of
such other Lenders (each a "Non-Consenting Lender") whose consent is required
shall not have been obtained;
then, with respect to each such Increased-Cost Lender or Non-Consenting Lender
(the "Terminated Lender"), the Borrower may, by giving written notice to the
Administrative Agent and any Terminated Lender of its election to do so, elect
to cause such Terminated Lender (and such Terminated Lender hereby irrevocably
agrees) to assign its outstanding First Priority Term Loans in full to one or
more Eligible Assignees (each a "Replacement Lender") in accordance with the
provisions of Section 12.06 (Successors and Assigns; Participations); provided,
(i) on the date of such assignment, the Replacement Lender
shall pay to such Terminated Lender an amount equal to the sum of (A)
an amount equal to the principal of, and all accrued interest on, all
outstanding First Priority Term Loans of the Terminated Lender, and (B)
an amount equal to all accrued, but theretofore unpaid, fees owing to
such Terminated Lender pursuant to Section 2.08 (Fees);
(ii) on the date of such assignment, the Borrower shall pay
any amounts payable to such Terminated Lender pursuant to Section
2.14(c) (Making or Maintaining First Priority Term Loans), 2.15
(Increased Costs; Capital Adequacy) or 2.16 (Taxes; Withholding, etc.);
provided that no premium on such amounts shall be required to be paid;
and
(iii) in the event such Terminated Lender is a Non-Consenting
Lender, each Replacement Lender shall consent, at the time of such
assignment, to each matter in respect of which such Terminated Lender
was a Non-Consenting Lender.
Upon the prepayment of all amounts owing to any Terminated Lender, such
Terminated Lender shall no longer constitute a "Lender" under any of the First
Priority Term Loan Documents; provided, any rights of such Terminated Lender to
indemnification hereunder shall survive as to such Terminated Lender.
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ARTICLE III.
CONDITIONS PRECEDENT
The obligation of any Lender to make a First Priority Term Loan on the
Closing Date is subject to the satisfaction, or waiver in accordance with
Section 12.05 (Amendments and Waivers), of the following conditions precedent on
or before the Closing Date:
SECTION 3.01. Resolutions. The Administrative Agent shall have received a copy
of one or more resolutions or other authorizations of Holdings, the Borrower and
each Guarantor authorizing, as applicable and among other things, the granting
of the Liens under the Security Documents and the execution, delivery and
performance of this Agreement and the other Financing Documents, in each case
certified by an Officer of each such Person as being (a) in full force and
effect as of the Closing Date and (b) true, correct and complete copies of all
of the resolutions or other authorizations of such Person relating to the
transactions contemplated by this Agreement and the other Financing Documents as
of the Closing Date.
SECTION 3.02. Incumbency. The Administrative Agent shall have received a
certificate from each of Holdings, the Borrower and each Guarantor, signed by
the appropriate authorized officer of such Person and dated as of the Closing
Date, as to the incumbency of the natural persons authorized to execute and
deliver the First Priority Term Loan Documents to which such Person is a party.
SECTION 3.03. Formation Documents. The Administrative Agent shall have received
(a) a copy of the certificate of formation, articles of incorporation or other
comparable constituent documents of Holdings, the Borrower and each Subsidiary
of the Borrower, in each case certified by the Secretary of State of the state
of such Person's formation or incorporation (as applicable) and (b) a copy of
the limited liability company operating agreement, bylaws or other comparable
constituent documents of such Person, in each case certified by an Officer of
such Person as being true, correct and complete as of the Closing Date.
SECTION 3.04. Good Standing Certificates. The Administrative Agent shall have
received certificates issued by the Secretary of State of the state in which
each of Holdings, the Borrower, and each Subsidiary of the Borrower is formed or
organized (as applicable), (a) dated no more than five days prior to the Closing
Date and (b) certifying that such Person is in good standing and is qualified to
do business in, and has paid all franchise taxes or similar taxes due to the
applicable state.
SECTION 3.05. Financial Officer's Certificate. The chief financial officer of
the Borrower shall have furnished a certificate, dated the Closing Date, in form
and substance satisfactory to the Administrative Agent, stating to the effect
that:
(a) The present fair saleable value of the assets of each of
the Borrower and each Subsidiary of the Borrower (other than CalGen
Finance) exceeds the amount required to pay the probable liability on
its existing debts, respectively (whether matured or unmatured,
liquidated or unliquidated, absolute, fixed or contingent), as they
become
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absolute and matured, and as a result of the consummation of the
transactions contemplated herein and in the Bank Book, will continue to
exceed such amount;
(b) Each of the Borrower and each Subsidiary of the Borrower
(other than CalGen Finance) does not, and, as a result of the
consummation of the transactions contemplated in this Agreement, the
other Financing Documents and the Bank Book, will not, have
unreasonably small capital for it to carry on its business as proposed
to be conducted;
(c) Neither the Borrower nor any Subsidiary of the Borrower
(other than CalGen Finance) is incurring obligations or making
transfers under any evidence of indebtedness with the intent to hinder,
delay or defraud any entity to which it is or will become indebted; and
(d) Nothing has come to the Borrower's attention to cause it
to believe that: (i) ▇.▇. ▇▇▇▇ is not qualified to pass on questions
relating to the technical, environmental and economic aspects of the
projects operated by the CalGen Companies as such projects are
described in the Bank Book; (ii) the assumptions included in ▇.▇.
▇▇▇▇'▇ report dated March 15, 2004, entitled "Independent Engineer's
Report, Calpine Generating Company, LLC Facilities" (the "▇▇▇▇
Report"), are not reasonable; (iii) the information provided by the
CalGen Companies to ▇.▇. ▇▇▇▇ in connection with the ▇▇▇▇ Report was
not prepared in good faith by the CalGen Companies; and (iv) the
factual information or the conclusions contained in the ▇▇▇▇ Report are
inaccurate in any material adverse respect.
SECTION 3.06. Security.
(a) Release. The Collateral Agent shall have received:
(i) certified copies of Uniform Commercial Code
Requests for Information or Copies (Form UCC-11), or a similar
search report certified by a party acceptable to the
Administrative Agent, dated a date reasonably near to the
Closing Date, listing all effective Financing Statements which
name Holdings, the Borrower or any Subsidiary thereof (under
its present names or any previous name) as the debtor,
together with copies of such Financing Statements (none of
which shall cover any Collateral, other than Financing
Statements that evidence (A) Liens granted in connection with
the Existing Senior Secured Credit Facility or (B) Liens
permitted to exist hereunder after the Closing Date);
(ii) appropriately completed copies, which have been
duly authorized for filing by the appropriate Person, of each
UCC Financing Statement Amendment (Form UCC-3) termination
statement, if any, necessary to release all Liens of any
Person in any Collateral previously granted by the Borrower or
any of its Subsidiaries to the extent not permitted under the
First Priority Term Loan Documents after the Closing Date
(including (A) Liens granted in connection with the Existing
Senior Secured Credit Facility and (B) other existing Liens
which are not permitted hereunder after the Closing Date);
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(iii) such releases, reconveyances, satisfactions or
other instruments as it may reasonably request to confirm the
release, satisfaction and discharge in full of all mortgages
and deeds of trust at any time delivered by the Borrower or
any of its Subsidiaries to secure any Obligations in respect
of the Existing Senior Secured Credit Facility, duly executed,
delivered and acknowledged in recordable form by the grantee
named therein or its of record successors or assigns; and
(iv) a letter or letters (in form and substance
reasonably satisfactory to the Administrative Agent) addressed
to the Collateral Agent, the First Priority Indenture Trustee,
the Second Priority Indenture Trustee, the Third Priority
Indenture Trustee, the Administrative Agent, the Second
Priority Term Loan Administrative Agent and the Revolver
Administrative Agent executed and delivered by the Existing
Credit Administrative Agent, stating the amount (the "Payout
Amount") required to pay in full in cash at the Closing Date
all outstanding Obligations under or in respect of the
Existing Senior Secured Credit Facility.
(b) Security. The Collateral Agent shall have received (with a
copy to the Administrative Agent):
(i) appropriately completed copies, which have been
duly authorized for filing by the appropriate Person, of
Uniform Commercial Code Financing Statements or fixture
filings naming Holdings, the Borrower, or each of the
Guarantors (as applicable) as a debtor and the Collateral
Agent as the secured party, or other similar instruments or
documents to be filed under the UCC of all jurisdictions as
may be necessary or, in the reasonable opinion of the
Administrative Agent and its counsel, desirable to perfect the
security interests of the First Priority Term Loan Secured
Parties pursuant to the Security Documents;
(ii) (A) certificates (which certificates shall be
accompanied by irrevocable undated stock powers or transfer
documents, duly endorsed in blank and otherwise satisfactory
in form and substance to the Administrative Agent)
representing all Capital Stock pledged pursuant to the
Security Documents and (B) all promissory notes or other
instruments (duly endorsed, where appropriate, in a manner
reasonably satisfactory to the Administrative Agent)
evidencing any Collateral; and
(iii) such other documents and instruments as the
Administrative Agent or the Collateral Agent may reasonably
request in order to grant and perfect the security interests
contemplated by the Security Documents
(c) Filing. All Uniform Commercial Code Financing Statements
(Forms UCC-1) or other similar Financing Statements and UCC Financing
Statement Amendments (Forms UCC-3) required pursuant to clauses (a) and
(b) above (collectively, the "Financing Statements") shall have been
filed or recorded or delivered to the Collateral Agent for filing or
recording.
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SECTION 3.07. Consummation of Notes Offering, Second Priority Term Loan
Agreement, Revolving Loan Agreement and First Priority Term Loan Documents.
(a) The Borrower and CalGen Finance shall have consummated the offering
of the Notes, and such Notes shall have been issued and sold prior to, or shall
be issued and sold simultaneously with, the Closing Date on substantially the
terms described in the Bank Book and other terms reasonably satisfactory to the
Administrative Agent.
(b) The Borrower and each Guarantor shall have executed and delivered
the Second Priority Term Loan Agreement and the Revolving Loan Agreement and
each such agreement shall be in full force and effect prior to, or shall become
in full force and effect simultaneously with, the Closing Date, on substantially
the terms described in the Bank Book and other terms reasonably satisfactory to
the Administrative Agent.
(c) Holdings, the Borrower and each Guarantor shall have delivered to
the Lenders, each of the First Priority Term Loan Documents to be entered into
as of the Closing Date, each duly executed and delivered by the party or parties
thereto and, unless otherwise noted, dated the Closing Date.
(d) The Borrower shall have received cash proceeds from the sale of the
Notes (net of underwriting discounts and commissions) in an amount sufficient,
when added to the cash proceeds from the borrowings hereunder and under the
Second Priority Term Loan Agreement (in each case, net of applicable expenses
and fees), to pay in full in cash the Payout Amount and all other fees, costs
and expenses payable by the Borrower in connection with the closing of the
transactions contemplated herein and in the Bank Book and shall have authorized
disbursement of such cash proceeds directly to pay the Payout Amounts and such
fees, costs and expenses pursuant to a disbursement authorization letter (in
form and substance reasonably satisfactory to the Administrative Agent) executed
and delivered by the Borrower.
SECTION 3.08. Ratings. The First Priority Term Loans shall have received a
rating by S&P.
SECTION 3.09. No Material Adverse Change. There shall not have occurred (a)
since December 31, 2003, any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Borrower and its Subsidiaries, taken as a whole,
which, in the judgment of the Administrative Agent, is material and adverse and
makes it impractical or inadvisable to proceed with making of the First Priority
Term Loans; (b) since March 12, 2004, any suspension or material limitation of
trading in securities generally on the New York Stock Exchange, or any setting
of minimum prices for trading on such exchange, or any suspension of trading of
any securities of Calpine on any exchange or in the over-the-counter market; (c)
since March 12, 2004, a general moratorium on commercial banking activities
declared by either Federal or New York State authorities or a material
disruption in commercial banking or securities settlement or clearance services
in the United States which, in the judgment of the Administrative Agent, makes
it impracticable or inadvisable to proceed with the making of the First Priority
Term Loans; or (d) since March 12, 2004, any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of the Administrative Agent, the effect of any
such outbreak, escalation, declaration, calamity or
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emergency makes it impractical or inadvisable to proceed with the making of the
First Priority Term Loans.
SECTION 3.10. Third Party Approvals. All consents, exemptions, authorizations,
or other actions by, or notices to, or filings with, governmental authorities
and other Persons in respect of all applicable Legal Requirements, necessary or
desirable in connection with the execution, delivery or performance by each of
Holdings, the Borrower and each Guarantor of the First Priority Term Loan
Documents to which it is a party (including all federal, state and local
regulatory filings, consents and approvals necessary or desirable in connection
therewith) shall have been obtained and be in full force and effect, and the
Administrative Agent shall have been furnished with appropriate evidence
thereof, and all waiting periods related thereto shall have lapsed or expired
without extension or the imposition of any conditions or restrictions.
SECTION 3.11. Opinions. The Administrative Agent shall have received one or more
opinions addressed to the Administrative Agent and each of the Lenders from time
to time party to this Agreement, in form and substance reasonably satisfactory
to the Administrative Agent and its counsel, dated as of the Closing Date and in
the form of Exhibit G.
SECTION 3.12. Officer's Certificates. The Administrative Agent shall have
received a certificate, dated as of the Closing Date, of the president or any
vice president and a principal financial or accounting officer of the Borrower
and each of the Guarantors, in which such officer, to the best of his or her
knowledge after reasonable investigation, shall state that (a) the
representations and warranties of such CalGen Company in this Agreement and the
other First Priority Term Loan Documents are true and correct in all material
respects; (b) such CalGen Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date; and (c) subsequent to December 31, 2003, there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of such CalGen Company or its respective
subsidiaries taken as a whole except as set forth in or contemplated by the Bank
Book or otherwise disclosed in writing to the Administrative Agent prior to the
Closing Date.
SECTION 3.13. Title Policies.
(a) Mortgages. The Collateral Agent shall have received (with a copy to
the Administrative Agent) a fully executed and notarized mortgage or deed of
trust from each Guarantor (each a "Closing Date Mortgage") encumbering all of
such Guarantor's Closing Date Mortgaged Property as security for the payment and
performance of the Secured Obligations. Each Closing Date Mortgage shall be in
proper form for recording in all applicable jurisdictions where the property
encumbered thereby is located.
(b) Title Insurance Policies. The Collateral Agent shall have received
CLTA mortgagee policies of title insurance or unconditional commitments therefor
(the "Closing Date Mortgage Policies") issued by the Title Company with respect
to the Closing Date Mortgaged Properties, providing coverage in an amount equal
to $50,000,000 per Closing Date Mortgaged Property and assuring the Collateral
Agent that the applicable Closing Date Mortgages create
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valid and enforceable perfected mortgage Liens on the respective Closing Date
Mortgaged Properties encumbered thereby. The Closing Date Mortgage Policies
shall (i) include endorsements providing mechanics' lien coverage and such other
coverages as are reasonably requested by the Administrative Agent, and (ii)
provide for such affirmative insurance, gap coverage and reinsurance as the
Administrative Agent may reasonably request, all of the foregoing in form and
substance reasonably satisfactory to the Administrative Agent.
SECTION 3.14. Evidence of Insurance. The Collateral Agent shall have received a
certificate from the Borrower's insurance broker or other evidence satisfactory
to it that all insurance required to be maintained pursuant to this Agreement is
in full force and effect and that Collateral Agent on behalf of the Secured
Parties has been named as additional insured and/or loss payee thereunder to the
extent required under this Agreement.
SECTION 3.15. Other Financing Documents. The Administrative Agent shall have
received true, correct and complete copies of each Financing Document (other
than the First Priority Term Loan Documents) and each shall be in full force and
effect as of the Closing Date, as certified to the Administrative Agent by an
Officer of the Borrower as of the Closing Date
SECTION 3.16. No Default. No Default or Event of Default shall have occurred and
be continuing (or would occur or would be continuing immediately after giving
effect to the making of the First Priority Term Loans).
SECTION 3.17. Fees. The Borrower shall have paid all fees and reasonable
out-of-pocket costs and expenses (including reasonable legal fees and expenses
of counsel) and other compensation contemplated hereby payable to the Agents and
the Lenders.
SECTION 3.18. Funding Notice. The Administrative Agent shall have received a
fully executed and delivered Funding Notice from the Borrower at least three
Business Days prior to the Closing Date.
SECTION 3.19. Delivery of Financials. The Administrative Agent and each Lender,
at least four Business Days prior to the Closing Date, shall have received
copies of (a) the consolidated financial statements for the Borrower and its
Subsidiaries (covering the fiscal year ended December 31, 2003) as audited by
PricewaterhouseCoopers LLP, and such consolidated financial statements shall be
reasonably satisfactory to the Administrative Agent, (b) the unaudited pro forma
consolidated balance sheet of the Borrower and its Subsidiaries as of the
Closing Date giving effect to (i) the consummation of the transactions
contemplated hereby, (ii) the issuance of the Notes, the making of the loans
under the Second Priority Term Loan Agreement and the use of proceeds thereof,
and (iii) the payment of fees and expenses in connection with the foregoing, and
(c) the forecasted operating results of the Borrower and its Subsidiaries (the
"Projections"), giving effect to the consummation of the transactions
contemplated by this Agreement, the making of the loans under the Second
Priority Term Loan Agreement and the issuance of the Notes, covering the period
from the Closing Date until December 31, 2010 and in form and substance
substantial similar to the draft Projections provided to the Lenders on March
16, 2004. The Administrative Agent is entitled, but not obligated to, request
and receive, prior to the making of any First Priority Term Loan, additional
information reasonably satisfactory to the Administrative Agent confirming the
satisfaction of
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any of the foregoing if, in the good faith judgment of the Administrative Agent,
such request is warranted under the circumstances.
SECTION 3.20. Site Assessment Reports. The Administrative Agent shall have
received (a) a copy of one or more environmental site assessment reports from
each of the Environmental Consultants relating to the Closing Date Facilities
(in the form provided to counsel to the Administrative Agent prior to the
Closing Date) and (b) a reliance letter from each of the Environmental
Consultants, dated within three Business Days of the Closing Date, permitting
the Lenders to rely on such environmental site assessment reports as if
addressed to them (in form and substance reasonably satisfactory to the
Administrative Agent).
SECTION 3.21. Major Project Documents. The Borrower and each applicable
Guarantor shall have executed and delivered the Major Project Documents to which
it is a party and each such Major Project Document shall be in full force and
effect prior to, or shall become in full force and effect simultaneously with,
the Closing Date, on substantially the terms described in the Bank Book and
other terms reasonably satisfactory to the Administrative Agent.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Each of the Borrower and each Guarantor makes the following
representations and warranties to and in favor of the Sole Lead Arranger, the
Administrative Agent and the Lenders as of the Closing Date.
SECTION 4.01. Organization.
(a) The Borrower has been duly formed and is an existing limited
liability company in good standing under the laws of the State of Delaware, with
power and authority under such laws to own or lease its properties and conduct
its business as described in the Bank Book; and the Borrower is duly qualified
to do business as a foreign limited liability company, and is in good standing,
in all other jurisdictions in which its ownership or leasing of property or the
conduct of its business requires such qualification.
(b) Each Subsidiary of the Borrower either (i) has been duly
incorporated and is an existing corporation in good standing under the laws of
the jurisdiction of its incorporation, with the corporate power and authority to
own or lease its properties and conduct its business; or (ii) is a general
partnership, limited partnership or a limited liability company, has been duly
formed and is validly existing as a general partnership, limited partnership or
limited liability company, as the case may be, is in good standing under the
laws of the jurisdiction of its formation, and has full partnership or limited
liability company power and authority, as the case may be, to own or lease its
properties and conduct its business.
(c) Each Subsidiary of the Borrower is duly qualified to do business as
a foreign corporation, general or limited partnership or limited liability
company, as the case may be,
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and is in good standing, in all other jurisdictions in which its ownership or
leasing of property or the conduct of its business requires such qualification.
(d) All of the issued and outstanding Capital Stock in each Subsidiary
of the Borrower has been duly authorized and validly issued and is fully paid
and nonassessable, and the Capital Stock of each Subsidiary owned by the
Borrower, directly or through Subsidiaries, is owned free from liens,
encumbrances and defects except for those to be terminated at the Closing Date
with respect to the Existing Senior Secured Credit Facility and Permitted Liens.
(e) The capital structure of Holdings and the Borrower and its
Subsidiaries is accurately set forth on Schedule 4.01.
SECTION 4.02. Financing Documents and Major Project Documents. Each of the
Financing Documents, Major Project Documents and Third Party Project Documents
to which the Borrower or any of its Subsidiaries is a party has been duly
authorized by such CalGen Company. Each of the Financing Documents, Major
Project Documents and Third Party Project Documents has been validly executed
and delivered by such CalGen Company and constitutes a valid and legally binding
obligation of such CalGen Company, enforceable against such CalGen Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
SECTION 4.03. Collateral.
(a) The Security Documents grant and create, in favor of the Collateral
Agent (for the benefit of the Secured Parties as security for the Secured
Obligations), a valid security interest in the personal property Collateral
defined in each of such instruments to the extent contemplated thereby.
(b) Each Mortgage grants and creates, in favor of the Collateral Agent
(for the benefit of the Secured Parties as security for the Secured
Obligations), a valid mortgage lien and/or security interest in the Collateral
defined in each of such Mortgage to the extent contemplated thereby.
(b) All pledged Collateral is represented by certificated securities
and all such certificated securities and all promissory notes and other
instruments evidencing or representing any Collateral have been delivered to the
Collateral Agent in pledge for the benefit of the Secured Parties as security
for all of the Secured Obligations, duly endorsed by an effective endorsement.
SECTION 4.04. Governmental Approvals. No consent, approval, authorization, or
order of, or filing with, any Governmental Authority is required for the
consummation of the transactions contemplated by this Agreement, the other
Financing Documents, the Major Project Documents or the Third Party Project
Documents or otherwise in connection with the transactions contemplated by any
such documents or the grant and perfection of the security interests in the
Collateral pursuant to the Security Documents, except (a) such consents,
approvals, authorizations and orders as have already been obtained, (b) filings
required pursuant to Section 3.06 (Security) to perfect the Collateral Agent's
security interests granted pursuant to
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the Security Documents, (c) such consents, approvals, authorizations and orders
as may be required under state securities or blue sky laws and (d) such other
consents approvals, authorizations and orders as would not, in the aggregate,
have a Material Adverse Effect.
SECTION 4.05. Compliance with Law. The execution, delivery and performance of
this Agreement, the other Financing Documents, the Major Project Documents and
the Third Party Project Documents by the Borrower and its Subsidiaries party
thereto, as applicable; the making of the First Priority Term Loans hereunder;
the grant and perfection of the security interests in the Collateral pursuant to
the Security Documents; compliance with the terms and provisions of each of the
foregoing by the CalGen Companies, as applicable; and the consummation by such
CalGen Companies of the transactions contemplated herein and therein, in each
case, will not result in a breach or violation of any of the terms and
provisions of, or conflict with or constitute a default under, or result in the
imposition or creation of (or the obligation to create or impose) a Lien (other
than in favor of the Collateral Agent for the benefit of the Secured Parties)
under, any Legal Requirement applicable to any such CalGen Company, or any
agreement or instrument to which any of the CalGen Companies is a party or by
which any of the CalGen Companies is bound or to which any of the properties of
any of the CalGen Companies is subject, except to the extent that the foregoing
would not, in the aggregate, have a Material Adverse Effect.
SECTION 4.06. Ownership of Property; Liens. Except as disclosed in the Closing
Date Mortgage Policies, each of the Borrower and each Guarantor has good and
marketable title to all real properties owned by it, and good title to all other
properties and assets owned by it, in each case except for Permitted Liens, free
from Liens that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by it; and, except for
Permitted Liens or as disclosed in the Closing Date Mortgage Policies, each of
the Borrower and each Guarantor holds any leased real or personal property under
valid and enforceable leases with no exceptions to title that would materially
interfere with the use made or to be made thereof by it. No Financing Statements
in respect of any property or assets of any of the Borrower or any Guarantor is
on file in favor of any Person other than those in respect of Permitted Liens
and those to be terminated at the Closing Date with respect to the Existing
Senior Secured Credit Facility.
SECTION 4.07. Governmental Authorizations; Permits. Each of the Borrower and its
Subsidiaries possesses adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it and has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or permit
that, if determined adversely to such CalGen Company, would individually or in
the aggregate have a Material Adverse Effect.
SECTION 4.08. Labor Disputes. No labor dispute with the employees of any of the
Borrower or its Subsidiaries exists or, to the knowledge of the Borrower or any
Guarantor, is imminent that might have a Material Adverse Effect.
SECTION 4.09. Intellectual Property Rights. Each of the Borrower and its
Subsidiaries owns, possesses or can acquire on reasonable terms, adequate
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct the
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business now operated by it, or presently employed by it, and has not received
any notice of infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that, if determined adversely to
such CalGen Company, would individually or in the aggregate have a Material
Adverse Effect.
SECTION 4.10. Hazardous Substances. None of the Borrower and its Subsidiaries is
in violation of any Legal Requirement relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "Environmental Laws"), owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, is
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, or is subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect; and the Borrower is not aware of any
pending investigation which might lead to such a claim.
SECTION 4.11. Litigation. Except as set forth on Schedule 4.11, there are no
pending actions, suits or proceedings against the Borrower or any of its
Subsidiaries or any of their respective properties that, if determined adversely
to such CalGen Company, would individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely affect the ability of such
CalGen Company to perform its or their obligations under, or contemplated by,
this Agreement, the other Financing Documents, the Major Project Documents or
the Third Party Project Documents, in each case to which such CalGen Company is
a party, or which are otherwise material in the context of the transactions
contemplated by the Financing Documents.
SECTION 4.12. Financial Information. The financial information delivered
pursuant to clauses (a) and (b) of Section 3.19 (Delivery of Financials)
presents fairly the financial position of the Borrower and its Subsidiaries on a
combined or consolidated basis, as the case may be, as of the dates shown
therein and their results of operations and cash flows for the periods shown
therein, and, except as otherwise disclosed in the Bank Book, together with the
other documents, certificates and other writings delivered to the Administrative
Agent and the Lenders by or on behalf of the Borrower or any Guarantor
specifically for use in connection with the transactions contemplated hereby,
such financial statements have been prepared in conformity with GAAP applied on
a consistent basis. None of the Borrower or any of its Subsidiaries has any
material liabilities, direct or contingent, which are required to be shown on
such financial statements under GAAP, except as has been disclosed in such
financial statements.
SECTION 4.13. Disclosure; Projections.
(a) The Borrower has delivered to each Lender a copy of the Bank Book.
The Bank Book, together with the other documents, certificates and other
writings delivered to the Administrative Agent and the Lenders by or on behalf
of the Borrower or any Guarantor specifically for use in connection with the
transactions contemplated hereby, fairly describes, in all material respects,
the general nature of the business of the Borrower and its Subsidiaries, the
transactions contemplated by the Financing Documents and the principal assets of
the Borrower and its Subsidiaries. None of this Agreement, the Bank Book, the
documents, certificates or other writings delivered to or the Administrative
Agent or any Lender by or on behalf of the Borrower or any Guarantor in
connection with the transactions contemplated hereby, taken as a
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whole, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made
(other than any information that was corrected or updated in writing by the
Borrower to the Administrative Agent and the Lenders prior to the Closing Date).
(b) The Projections are based on good faith estimates and assumptions
believed by management of the Borrower to be reasonable as of the date of the
Projections, and there are no statements or conclusions in any of the
Projections which are based upon or include information known to the Borrower to
be misleading in any material respect or which fail to take into account
material information regarding the matters reported therein. The Borrower
believes that the Projections are reasonable on the Closing Date, it being
acknowledged and agreed by the Administrative Agent and the Lenders, however,
that projections as to future events are not to be viewed as facts and that the
actual results during the period or periods covered by the Projections may
differ from the projected results and such differences may be material.
(c) Except as expressly set forth in this Section 4.13, neither the
Borrower nor any Guarantor makes any representation with respect to any
information, projections, forecasts, statements of opinion, expectations or
beliefs of any party contained in the Bank Book or delivered in connection with
the transactions contemplated under this Agreement.
SECTION 4.14. Adverse Change. Except as has been disclosed in the Bank Book,
together with the other documents, certificates and other writings delivered to
the Administrative Agent and the Lenders by or on behalf of the Borrower or any
Guarantor specifically for use in connection with the transactions contemplated
hereby, since December 31, 2003 there has been no material adverse change, nor
any development or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of operations of
the Borrower and its Subsidiaries taken as a whole, and, except as has been
disclosed in writing to the Administrative Agent, no long-term indebtedness has
been incurred (other than long-term indebtedness that is expressly contemplated
by the Bank Book), and no dividend or distribution of any kind has been
declared, paid or made by Borrower on any class of its equity interests.
SECTION 4.15. Taxes. Each of the Borrower, each Subsidiary of the Borrower and
Holdings has timely filed (or caused to be filed timely) all federal, material
state and material local tax returns and reports that are required to be filed
by it. All material taxes, assessments, utility charges, fees and other
governmental charges imposed on it have been timely paid (other than those taxes
that it is contesting in good faith and by appropriate proceedings). All such
tax returns are complete and accurate in all material respects. Except for
Permitted Liens, no material tax Lien has been filed, and to the knowledge of
the Borrower and each Guarantor, no claim is being asserted, with respect to any
such taxes, assessments, charges or fees. To the extent any taxes, assessments,
charges and fees are being contested, the Borrower or the applicable Guarantor
has established reserves that are adequate for the payment thereof in conformity
with GAAP.
SECTION 4.16. Investment Company Act. None of the Borrower or any of its
Subsidiaries is an open-end investment company, unit investment trust or
face-amount certificate company
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that is or is required to be registered under Section 8 of the United States
Investment Company Act of 1940, as amended (the "Investment Company Act"); none
of the Borrower or any of its Subsidiaries is or, after giving effect to the
transactions contemplated by this Agreement, the other First Priority Term Loan
Documents and the Major Project Documents, will be an "investment company" as
defined in the Investment Company Act of 1940.
SECTION 4.17. ERISA. Either (a) there are no ERISA Plans or Multiemployer Plans
for the Borrower or any ERISA Affiliate thereof or (b)(i) each of the Borrower
and each ERISA Affiliate thereof has fulfilled its obligations (if any) under
the minimum funding standards of ERISA and the Code for each ERISA Plan, (ii)
each such Plan is in compliance in all material respects with the currently
applicable provisions of ERISA and the Code and (iii) neither the Borrower nor
any ERISA Affiliate thereof has incurred any liability to the PBGC or an ERISA
Plan or Multiemployer Plan under Title IV of ERISA (other than liability for
premiums due in the ordinary course). None of the assets of the Borrower or any
ERISA Affiliate thereof, constitute assets of an employee benefit plan within
the meaning of 29 C.F.R. Section 2510.3-101. Neither the Borrower nor any
Subsidiary thereof maintains, or has at any point of its existence maintained,
any employee-benefit plans that were subject to ERISA.
SECTION 4.18. Governmental Regulation.
(a) None of the Borrower or any "subsidiary company," as that term is
defined in PUHCA, of the Borrower is, or after giving effect to the borrowing of
any First Priority Term Loans will be, subject to regulation (i) as a "holding
company," a "subsidiary company" of a holding company or a "public-utility
company," as those terms are defined in PUHCA; (ii) under the Federal Power Act,
as amended (the "FPA"), other than (A) as an "exempt wholesale generator"
("EWG") as that term is defined in PUHCA, that is subject to regulation as a
"public utility" under the FPA, other than as described in the Bank Book,
together with the other documents, certificates and other writings delivered to
the Administrative Agent and the Lenders by or on behalf of the Borrower or any
Guarantor specifically for use in connection with the transactions contemplated
hereby, or (B) as a QF under the Public Utility Regulatory Policies Act of 1978,
as amended ("PURPA"), as contemplated by 18 C.F.R. Section 292.601(c); or (iii)
under any state law or regulation with respect to rates or the financial or
organizational regulation of electric utilities, other than, with respect to
Subsidiaries of the Borrower that are QFs, as contemplated by 18 C.F.R. Section
292.602(c).
(b) Other than as described in the Bank Book, each of the power
generation projects in which the Borrower's Subsidiaries listed on Schedule
4.18(b) have an interest meets the requirements under PURPA and the regulations
of the Federal Energy Regulatory Commission (the "FERC") promulgated thereunder,
as amended from time to time, necessary to be a "qualifying cogeneration
facility" and/or a "qualifying small power generation production facility".
(c) Each of the Borrower's Subsidiaries listed on Schedule 4.18(c) (i)
own and/or operate Eligible Facilities within the meaning of Section 32 of
PUHCA, and each such Subsidiary has received a determination from the FERC, not
subject to any pending challenge or appeal, that it is an EWG, within the
meaning of Section 32 of PUHCA; and (ii) other than as described in the Bank
Book, together with the other documents, certificates and other writings
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delivered to the Administrative Agent and the Lenders by or on behalf of the
Borrower or any Guarantor specifically for use in connection with the
transactions contemplated hereby, has validly issued orders from the FERC, not
subject to any pending challenge, investigation, or proceeding (other than the
FERC's generic proceeding initiated in Docket No. EL01-118-000), (A) authorizing
such Subsidiary to engage in wholesale sales of electricity, ancillary services
and, to the extent permitted under its market-based rate tariff, other services
at market-based rates, and (B) granting such waivers and blanket authorizations
as are customarily granted to entities with market-based rate authority; with
respect to each such Subsidiary, the FERC has not imposed any rate caps or
mitigation measures other than rate caps and mitigation measures generally
applicable to similarly situated marketers or generators selling electricity,
ancillary services or other services at wholesale in the geographic market where
such Subsidiary conducts its business.
(d) Each of the Borrower's Subsidiaries that are participating in the
Texas wholesale electric market has registered with the Texas Public Utilities
Commission ("TPUC"), and the TPUC has not imposed on the Borrower any specific
rate cap or mitigation measures.
(e) Other than as described in the Bank Book, together with the other
documents, certificates and other writings delivered to the Administrative Agent
and the Lenders by or on behalf of the Borrower or any Guarantor specifically
for use in connection with the transactions contemplated hereby, there are no
pending complaints filed with the FERC seeking abrogation or modification of a
contract for the sale of power by the Borrower or any of its Subsidiaries.
SECTION 4.19. Margin Stock, Etc. None of the transactions contemplated by this
Agreement or the other First Priority Term Loan Documents (including the use of
the proceeds received as a result of such transactions) will violate or result
in a violation of Section 7 of the Exchange Act, or any regulation promulgated
thereunder, including Regulations T, U, and X of the Board of Governors of the
Federal Reserve System.
SECTION 4.20. No Violations or Defaults. Neither the Borrower nor any Subsidiary
of the Borrower is in violation of its organizational documents or in default in
the performance or observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other material agreement or instrument to which it is a party or by which it or
any of its properties may be bound.
SECTION 4.21. Solvency. The present fair saleable value of the assets of each of
the Borrower and each Subsidiary of the Borrower exceeds the amount required to
pay the probable liability on its existing debts, respectively (whether matured
or unmatured, liquidated or unliquidated, absolute, fixed or contingent), as
they become absolute and matured, and as a result of the consummation of the
transactions contemplated herein and in the Bank Book, will continue to exceed
such amount.
SECTION 4.22. Capitalization. Each of the Borrower and each Subsidiary of the
Borrower does not, and, as a result of the consummation of the transactions
contemplated in this Agreement, the other First Priority Term Loan Documents and
the Bank Book, will not, have unreasonably small capital for it to carry on its
business as proposed to be conducted.
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SECTION 4.23. Other Indebtedness. Neither the Borrower nor any Subsidiary of the
Borrower is incurring obligations or making transfers under any evidence of
indebtedness with the intent to hinder, delay or defraud any entity to which it
is or will become indebted.
ARTICLE V.
COVENANTS
SECTION 5.01. Reports.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any First Priority Term Loan Obligations are outstanding, the Borrower
shall furnish to the Administrative Agent (for delivery to each Lender), within
the time periods specified in the SEC's rules and regulations:
(i) all quarterly and annual reports that would be required to
be filed with the SEC on Forms 10-Q and 10-K if the Borrower were
required to file such reports; and
(ii) all current reports that would be required to be filed
with the SEC on Form 8-K if the Borrower were required to file such
reports.
(b) 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 shall include a report on the Borrower's
consolidated financial statements by the Borrower's certified independent
accountants.
SECTION 5.02. Compliance Certificate.
(a) The Borrower shall deliver to the Administrative Agent (for
delivery to each Lender), within 90 days after the end of each fiscal year, an
Officer's Certificate stating that a review of the activities of the Borrower
and its Subsidiaries during the preceding fiscal year, as applicable, has been
made under the supervision of the signing Officer with a view to determining
whether the Borrower has kept, observed, performed and fulfilled its obligations
under this Agreement, and further stating, as to the Officer signing such
certificate, that to the best of his or her knowledge the Borrower has kept,
observed, performed and fulfilled each and every covenant contained in this
Agreement and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Agreement (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 Borrower 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 on
account of the principal of or interest, if any, on the First Priority Term
Loans borrowed under this Agreement is prohibited or if such event has occurred,
a description of the event and what action the Borrower is taking or proposes to
take with respect thereto. Such certificate shall include information (i)
demonstrating compliance by the Borrower with Section 5.18 (Coverage Ratio;
Kilowatt Test) and (ii) calculating Excess Cash Flow for such fiscal quarter or
such fiscal year.
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(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 5.01(a) (Reports) above shall be
accompanied by a written statement of the Borrower'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
Borrower has violated any provisions of Article V or Article VI hereof 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 First Priority Term Loan Obligations are
outstanding, the Borrower shall deliver to the Administrative Agent, 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
Borrower is taking or proposes to take with respect thereto.
SECTION 5.03. Stay, Extension and Usury Laws. Each of the Borrower and each
Guarantor covenants (to the extent that it may lawfully do so) that it 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 Agreement; and each of the Borrower and each Guarantor (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Administrative Agent, but shall suffer and permit the execution of every
such power as though no such law has been enacted.
SECTION 5.04. Restricted Payments.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
(i) (A) declare or pay any dividend or make any other payment
or distribution on account of the Borrower's Equity Interests
(including any payment in connection with any merger or consolidation
involving the Borrower) or to the direct or indirect holders of the
Borrower's Equity Interests in their capacity as such, including
Permitted Tax Payments (other than dividends or distributions payable
in Equity Interests (other than Disqualified Stock) of the Borrower or
dividends or distributions payable to the Borrower or a Guarantor) or
(B) pay any Major Maintenance Expenses;
(ii) purchase, redeem or otherwise acquire or retire for value
(including in connection with any merger or consolidation involving the
Borrower) any Equity Interests of the Borrower;
(iii) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any
Subordinated Indebtedness or any other Indebtedness of the Borrower or
any of its Subsidiaries that is contractually subordinated
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to the Secured Obligations (excluding any intercompany Indebtedness
between or among the Borrower and any of the Guarantors);
(iv) make any Restricted Investment;
(all such payments and other actions set forth in these clauses (i)
through (iv) above being collectively referred to as "Restricted
Payments"), unless:
(A) such Restricted Payment is made from Excess Cash
Flow generated since the Closing Date;
(B) no Default or Event of Default has occurred and
is continuing or would occur as a consequence of such
Restricted Payment (other than any Default or Event of Default
that is cured as a result of such Restricted Payment); and
(C) at the time of making any such Restricted Payment
that is not a payment on or with respect to, or a purchase,
redemption, defeasance or other acquisition or retirement for
value of, Subordinated Indebtedness, all amounts then due
under all Subordinated Indebtedness have been paid in full; or
(v) use the proceeds of any Indebtedness under any revolving
Credit Facility which is First Priority Lien Debt to prepay, repay or
redeem the principal of any Second Priority Lien Debt or Third Priority
Lien Debt.
SECTION 5.05. Dividend and Other Payment Restrictions Affecting Subsidiaries.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Subsidiary to:
(i) pay dividends or make any other distributions on its
Capital Stock to the Borrower or any of its Subsidiaries, or with
respect to any other interest or participation in, or measured by, its
profits, or pay any indebtedness owed to the Borrower or any of its
Subsidiaries;
(ii) make loans or advances to the Borrower or any of its
Subsidiaries; or
(iii) transfer any of its properties or assets to the Borrower
or any of its Subsidiaries.
However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(A) this Agreement;
(B) the Second Priority Term Loan Agreement, the
Revolving Loan Agreement, the Indentures and the Notes and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or
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refinancings of the Second Priority Term Loan Agreement, the
Revolving Loan Agreement, the Indentures and the Notes;
provided, that the amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings are not materially more restrictive, taken as a
whole, with respect to such dividend and other payment
restrictions than those contained in the Second Priority Term
Loan Agreement, the Revolving Loan Agreement, the Indentures
and the Notes on the Closing Date;
(C) any applicable Legal Requirements;
(D) customary non-assignment provisions in contracts,
agreements, leases, permits or licenses entered into or issued
in the ordinary course of business and consistent with past
practices;
(E) 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 clauses (i) and (iii) of
the preceding paragraph;
(F) any agreement for the sale or other disposition
of a Subsidiary that restricts distributions by that
Subsidiary pending the sale or other disposition;
(G) 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;
(H) Liens securing Indebtedness otherwise permitted
to be incurred under the provisions of Section 5.06
(Incurrence of Indebtedness and Issuance of Preferred Equity)
hereof that limit the right of the debtor to dispose of the
assets subject to such Liens or to use the proceeds of any
such disposition;
(I) 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 with the approval of the Borrower's Board of
Directors, which limitation or prohibition is applicable only
to the assets that are the subject of such agreements;
(J) provisions restricting cash or other deposits or
net worth imposed by customers or suppliers under contracts
entered into in the ordinary course of business; and
(K) provisions restricting or encumbering the sale or
other disposition of Expansion Assets or the payment of
dividends, distributions or similar payments made from cash
flow derived exclusively from Expansion Assets, in each case
pursuant to the terms of any Expansion Debt incurred pursuant
to clause (iv) of the definition of Permitted Debt; provided,
that such encumbrance or restriction will not materially
adversely affect the Borrower's ability to meet its
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obligations under this Agreement, and, in the written opinion
of the president, chief operating officer or chief financial
officer of the Borrower, is required in order to obtain such
Expansion Debt and is customary for financings of such type.
SECTION 5.06. Incurrence of Indebtedness and Issuance of Preferred Equity.
(a) The Borrower shall not, and shall not permit any of its
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 Borrower shall not issue any Disqualified Stock and shall not
permit any of its Subsidiaries to issue any shares of preferred equity.
(b) Section 5.06(a) shall not prohibit the incurrence of any of the
following items (collectively, "Permitted Debt"):
(i) (A) the incurrence by the Borrower (and the guarantee by
its Subsidiaries) of Indebtedness and letters of credit under Credit
Facilities in an aggregate principal amount at any one time outstanding
under this clause (i)(A) (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the
Borrower and its Subsidiaries thereunder) not to exceed $800,000,000
less the aggregate amount of all Net Proceeds of Asset Sales, Casualty
Events or Condemnation Events applied by the Borrower or any of its
Subsidiaries since the Closing Date to repay any term Indebtedness
under any such Credit Facilities or to repay, or cash collateralize
letters of credit under, any revolving Indebtedness under any such
Credit Facilities and effect a corresponding commitment reduction
thereunder, and (B) the incurrence by the Borrower (and the guarantee
by its Subsidiaries) of Indebtedness and letters of credit under Credit
Facilities in an aggregate principal amount outstanding under this
clause (i)(B) (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of the Borrower and its
Subsidiaries thereunder) not to exceed $100,000,000 less the aggregate
amount of all Net Proceeds of Asset Sales, Casualty Events and
Condemnation Events applied by the Borrower or any of its Subsidiaries
since the Closing Date to repay any term Indebtedness under any such
Credit Facility or to repay, or cash collateralize letters of credit
under, any revolving Indebtedness under any such Credit Facility and
effect a corresponding commitment reduction thereunder;
(ii) the incurrence by the Borrower, CalGen Finance and the
Guarantors of Indebtedness represented by the Notes, the related Note
Guarantees and the other Note Obligations incurred on the Closing Date,
and the exchange notes and the related Note Guarantees to be issued
pursuant to the Registration Rights Agreement;
(iii) the incurrence by the Borrower or any of its
Subsidiaries of Expansion Debt; provided, that:
(A) any Expansion Debt incurred by the Excluded
Subsidiary is recourse only to the Expansion Assets financed
with such Expansion Debt and to
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other Expansion Assets owned by the Excluded Subsidiary
(including any rights of the Excluded Subsidiary under Shared
Facilities Arrangements);
(B) if the Fixed Charge Coverage Ratio for the
Borrower's most recently ended four full fiscal quarters for
which internal financial statements are available immediately
preceding the date on which the Expansion Debt is incurred
would have been at least 2.0 to 1.0, determined on a Pro Forma
basis as if the Expansion Debt had been incurred at the
beginning of such period and the proceeds therefrom had been
applied as intended to be applied (but without giving effect
to the completion of any construction projects unless actual
completion has been achieved), at least 25% of the cost of
such Expansion Assets is financed with Equity Contributions or
the proceeds of Perpetual Preferred Stock or Affiliate
Subordinated Indebtedness;
(C) if the Fixed Charge Coverage Ratio for the
Borrower's most recently ended four full fiscal quarters for
which internal financial statements are available immediately
preceding the date on which the Expansion Debt is incurred
would have been less than 2.0 to 1.0, determined on a Pro
Forma basis as if the Expansion Debt had been incurred at the
beginning of such period and the proceeds therefrom had been
applied as intended to be applied (but without giving effect
to the completion of any construction projects unless actual
completion has been achieved);
(1) at least 40% of the cost of such
Expansion Assets is financed with Equity
Contributions or the proceeds of Perpetual Preferred
Stock or Affiliate Subordinated Indebtedness; and
(2) after giving effect to such incurrence,
the amount of Expansion Debt incurred pursuant to
this clause (iii), together with the aggregate amount
of all other Expansion Debt then outstanding,
including all Permitted Refinancing Indebtedness
incurred to renew, refund, refinance, replace,
defease or discharge any Expansion Debt incurred
pursuant to this clause (iii), does not exceed
$250,000,000;
(iv) the incurrence by the Borrower or any of its 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
by this Agreement to be incurred under clauses (ii), (iii), (iv) or (x)
of this Section 5.06(b);
(v) the incurrence by the Borrower or any Guarantor of
intercompany Indebtedness between or among the Borrower and any
Guarantors that is subordinated in right of payment to all Secured
Obligations on the terms set forth on Exhibit A hereto and is not
secured other than by unperfected security interests; provided,
however, that (A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Borrower or a Guarantor and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the
Borrower
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or a Guarantor will be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Borrower or such Guarantor, as
the case may be, that was not permitted by this clause (v); and
provided, further, that any such intercompany Indebtedness must be
included in the Collateral.
(vi) the incurrence by the Borrower or any of its Subsidiaries
of Hedging Obligations, in connection with Permitted Debt or otherwise,
in the ordinary course of business and not for speculative purposes;
provided, that (A) such Hedging Obligations will have tenors that
expire on or prior to the maturity date (or other expiration) of the
underlying Obligation being hedged, and (B) any such Hedging
Obligations hedging or managing interest rate risk with respect to a
particular series of Notes or loans under this Agreement, the Second
Priority Term Loan Agreement or the Revolving Loan Agreement will have
tenors that expire on or prior to the Stated Maturity of the applicable
Notes or loans;
(vii) the incurrence by the Borrower or any of its
Subsidiaries of Indebtedness in respect of workers' compensation
claims, self-insurance obligations, bankers' acceptances, and
performance and surety bonds in the ordinary course of business;
(viii) the incurrence by the Borrower or any of its
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;
(ix) the incurrence by the Borrower of (a) Affiliate
Subordinated Indebtedness in an aggregate principal amount not to
exceed $250,000,000 at any one time outstanding and (b) Working Capital
Facility Indebtedness in an aggregate principal amount not to exceed
$750,000,000 at any one time outstanding; and
(x) the incurrence by the Borrower of Third Party Subordinated
Indebtedness; provided, that:
(A) the Net Proceeds of the Third Party Subordinated
Indebtedness are applied:
(1) to acquire all or substantially all of
the assets of, or any Equity Interests in, a business
that constitutes a Permitted Business, provided, that
in the case of an acquisition of Equity Interests,
the business is or becomes a Subsidiary of the
Borrower and a Guarantor concurrently with such
acquisition;
(2) to make a capital expenditure;
(3) to acquire other assets that are not
classified as current assets under GAAP and that are
used or useful in a Permitted Business; or
(4) any combination of the foregoing; and
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(B) the Fixed Charge Coverage Ratio for the
Borrower's most recently ended four full fiscal quarters for
which internal financial statements are available immediately
preceding the date on which the Third Party Subordinated
Indebtedness is incurred would have been at least 2.0 to 1.0,
determined on a Pro Forma basis as if the Third Party
Subordinated Indebtedness had been incurred at the beginning
of such period and the proceeds therefrom had been applied as
intended to be applied (but without giving effect to the
completion of any construction projects unless actual
completion has been achieved).
(c) The Borrower shall not incur, and shall not permit any Subsidiary
to incur, any Indebtedness (including Permitted Debt) that is contractually
subordinated in right of payment to any other Indebtedness of the Borrower or
such Subsidiary unless such Indebtedness is also contractually subordinated in
right of payment to the First Priority Term Loans, the applicable First Priority
Term Loan Guarantees and the other First Priority Term Loan Obligations on
substantially identical terms or on terms that are more favorable to the Lenders
hereunder; provided, however, that no Indebtedness will be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the
Borrower or any of its Subsidiaries solely by virtue of being unsecured or by
virtue of being secured on a junior basis.
(d) For purposes of determining compliance with this Section 5.06, 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 (i) through (x) of
Section 5.06(b), the Borrower will be permitted to classify such item of
Indebtedness on the date of its incurrence, or later reclassify all or a portion
of such item of Indebtedness, in any manner that complies with this Section
5.06. 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
will not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Stock for purposes of this Section 5.06. Notwithstanding any other
provision of this Section 5.06, the maximum amount of Indebtedness that the
Borrower or any Subsidiary may incur pursuant to this Section 5.06 shall not be
deemed to be exceeded solely as a result of fluctuations in exchange rates or
currency values.
SECTION 5.07. Asset Sales; Application of Net Proceeds.
(a) Asset Sales. The Borrower shall not, and shall not permit any of
its Subsidiaries to, consummate an Asset Sale unless:
(i) except with respect to an Asset Sale made pursuant to the
Existing Purchase Option, the Borrower (or any of its Subsidiaries, as
the case may be) receives consideration at the time of the Asset Sale
at least equal to the Fair Market Value of the assets or Equity
Interests issued or sold or otherwise disposed of;
(ii) at least 90% of the consideration received in the Asset
Sale by the Borrower or such Subsidiary is in the form of cash. For
purposes of this provision, each of the following shall be deemed to be
cash:
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(A) any liabilities, as shown on the Borrower's most
recent consolidated balance sheet, of the Borrower or any of
its Subsidiaries (other than contingent liabilities and
liabilities that are by their terms subordinated to the First
Priority Term Loans and the First Priority Term Loan
Guarantees) that are assumed by the transferee of any such
assets pursuant to a customary novation or similar agreement
that releases the Borrower or such Subsidiary from further
liability;
(B) any securities, notes or other obligations
received by the Borrower or any such Subsidiary from such
transferee that are promptly, subject to ordinary settlement
periods, converted by the Borrower or such Subsidiary into
cash, to the extent of the cash received in that conversion;
and
(C) in connection with the exercise by a purchaser of
an Existing Purchase Option, any amount owed by the Borrower
or the applicable Subsidiary to the purchaser under the
agreement containing such Existing Purchase Option that is set
off by the purchaser against the purchase price;
(iii) if the assets disposed of in such Asset Sale include any
component of a Facility that is necessary for the operation of such
Facility, the Asset Sale involves the disposition of such Facility as a
whole; and
(iv) if the Asset Sale involves the sale of a Facility or all
or substantially all the assets of a Facility, (A) such Asset Sale is
to a Person other than an Affiliate of the Borrower, and (B) all
necessary and appropriate amendments are made to those Major Project
Documents applicable to such Facility to remove such Facility from the
scope of such Major Project Documents.
(b) Application of Net Proceeds. The Borrower (or the applicable
Subsidiary, as the case may be) shall apply the Net Proceeds from each Asset
Sale, Casualty Event or Condemnation Event, as follows:
(i) to the Lenders under this Agreement and all other holders
of the First Priority Lien Obligations (to the extent required under
the applicable First Priority Lien Documents), to purchase, prepay or
redeem the maximum principal amount of such First Priority Lien
Obligations that may be purchased, prepaid or redeemed out of such Net
Proceeds (taking into account any mandatory purchase, prepayment or
redemption of First Priority Lien Obligations required under any First
Priority Lien Document);
(ii) if any such Net Proceeds remain after the offer (and, if
applicable, reoffer) to holders of First Priority Lien Obligations (and
any mandatory purchase, prepayment or redemption of First Priority Lien
Obligations) in accordance with clause (i) above, to all holders of the
Second Priority Lien Obligations (to the extent required under the
applicable Second Priority Lien Documents), to purchase, prepay or
redeem the maximum principal amount of such Second Priority Lien
Obligations that may be purchased, prepaid or redeemed out of such
remaining Net Proceeds (taking into account
85
any mandatory purchase, prepayment or redemption of Second Priority
Lien Obligations required under any Second Priority Lien Document); and
(iii) if any such Net Proceeds remain after the offer (and, if
applicable, reoffer) to holders of Second Priority Lien Obligations
(and any mandatory purchase, prepayment or redemption of Second
Priority Lien Obligations) in accordance with clauses (i) and (ii)
above, to all holders of the Third Priority Lien Obligations (to the
extent required under the applicable Third Priority Lien Documents), to
purchase, prepay or redeem the maximum principal amount of such Third
Priority Lien Obligations that may be purchased, prepaid or redeemed
out of such remaining Net Proceeds (taking into account any mandatory
purchase, prepayment or redemption of Third Priority Lien Obligations
required under any Third Priority Lien Document).
(c) Mandatory Repayment Offer. The Borrower is required to and shall
effectuate each repayment of the First Priority Term Loans by commencing a
Mandatory Repayment Offer as described in Section 2.11 (Mandatory Repayment
Offers).
(d) Excess Proceeds; Pro Rata Basis. In the event that any Net Proceeds
from an Asset Sale, Casualty Event or Condemnation Event remain after the
Borrower has made a Mandatory Repayment Offer (and, if applicable, reoffer) in
accordance with Section 2.11 (Mandatory Repayment Offers) and such Net Proceeds
have otherwise been applied in accordance with clause (b) above, then the
Borrower may use such remaining Net Proceeds for any purpose not otherwise
prohibited by the Financing Documents, including the making of Restricted
Payments. If the aggregate principal amount of all Secured Obligations having
the same priority that are to be prepaid under clause (b) above exceeds the
amount of Net Proceeds available therefor, then the Borrower will select the
Secured Obligations to be purchased, pro rata based on the aggregate principal
amount of all of such Secured Obligations to be prepaid.
SECTION 5.08. Transactions with Affiliates.
(a) The Borrower shall not, and shall not permit any of its
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 Borrower (each, an "Affiliate Transaction"), unless:
(i) the Affiliate Transaction, taken as a whole with all other
related Affiliate Transactions, is on terms that are no less favorable
to the Borrower and its Subsidiaries, taken as a whole, than those that
would have been obtained in a comparable transaction by the Borrower or
such Subsidiary with an unrelated Person; and
(ii) the Borrower delivers to the Administrative Agent (other
than with respect to a Shared Facilities Arrangement between or among
only the Borrower and/or any of its Subsidiaries):
(A) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $10,000,000 but less than or equal
to $25,000,000, a resolution of the Board of Directors set
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forth in an Officer's Certificate certifying that such
Affiliate Transaction complies with this Section 5.08 and that
such Affiliate Transaction has been approved by a majority 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 $25,000,000, a positive opinion as
to the Fair Market Value of such Affiliate Transaction 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
5.08(a):
(i) any employment agreement, employee benefit plan, officer
and director indemnification agreement or any similar arrangement
entered into by the Borrower or any of its Subsidiaries in the ordinary
course of business;
(ii) transactions between or among the Borrower and/or any of
the Guarantors (other than Shared Facilities Arrangements);
(iii) transactions with a Person that is an Affiliate of the
Borrower (but not a Subsidiary of the Borrower) solely because the
Borrower owns, directly or through a Subsidiary, an Equity Interest in,
or controls, such Person;
(iv) payment of reasonable directors' fees to Persons who are
not otherwise Affiliates of the Borrower;
(v) any issuance of Equity Interests (other than Disqualified
Stock) of the Borrower to Affiliates of the Borrower; provided that
such Equity Interests are included in the Collateral;
(vi) Restricted Payments that do not violate the provisions of
this Agreement as described in Section 5.04 (Restricted Payments);
(vii) loans or advances to employees in the ordinary course of
business not to exceed $1,000,000 in the aggregate at any one time
outstanding;
(viii) Permitted Tax Payments;
(ix) transactions under or pursuant to written agreements with
Affiliates of the Borrower in place as of the date of this Agreement or
any amendment or modification thereto, so long as any such amendment or
modification meets the requirements of clause (x) or (xi) of this
Section 5.08(b);
(x) any amendments or modifications of, or waivers under, any
written agreement described under clause (ix) of this 5.08(b) that is
not a Major Project Document; provided that no such amendment,
modification or waiver alters any such agreement in a manner than is
materially adverse to the interests of the Lenders;
87
(xi) any amendments or modifications of, or waivers under, any
Major Project Document, which are permitted by Section 5.10(b)
(Business Activities) and are on terms that are no less favorable to
the Borrower or its relevant Subsidiary (as certified to the
Administrative Agent in an Officer's Certificate) than those that would
have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated Person; and
(xii) any agreement to do any of the foregoing.
SECTION 5.09. Liens. The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired, except
Permitted Liens.
SECTION 5.10. Business Activities.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Borrower and its Subsidiaries
taken as a whole.
(b) The Borrower shall, and shall cause its Subsidiaries to, perform
all their obligations under the Major Project Documents, and the Borrower shall
not, and shall not permit any of its Subsidiaries to, terminate, amend or
otherwise modify, or consent to any termination, amendment or modification of,
or grant any waiver under, any Major Project Document, unless any failure to so
perform or any such termination, amendment, modification or waiver would not,
when taken together with all other such failures to perform, terminations,
amendments, modifications and waivers since the Closing Date, be Materially
Adverse, as evidenced by a certificate of the chief financial officer of the
Borrower; provided, however, that the provisions of this paragraph will not
apply to any amendment, modification or termination of any Major Project
Document required under this Agreement in connection with an Asset Sale.
(c) The Borrower shall, and shall cause its Subsidiaries to, obtain and
maintain all permits and approvals necessary for the construction and operation
of the Facilities, including applicable exemptions from PUHCA, unless the
failure to do so would not reasonably be expected to have a Material Adverse
Effect.
(d) The Borrower shall not, and shall not permit any of its
Subsidiaries to, use or dispose of any hazardous materials or allow any
hazardous materials to be brought onto or stored or used on or transported to or
released from the Facilities, other than in accordance with prudent industry
practices and in compliance with all applicable Environmental Laws, except to
the extent such non-compliance, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
SECTION 5.11. Payments for Consent. The Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any holder of any First Priority Term
Loan or as an inducement to any consent, waiver or
88
amendment of any of the terms or provisions of any First Priority Term Loan
Document unless such consideration is offered to be paid and is paid to all
Lenders 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 5.12. Offer to Prepay Upon Change of Control.
(a) If a Change of Control occurs, the Borrower shall make a Mandatory
Repayment Offer on the terms set forth herein and in Section 2.11 (Mandatory
Repayment Offers). In such Mandatory Repayment Offer, the Borrower shall offer
to prepay each Lender's First Priority Term Loans in an amount equal to (i) with
respect to any such Mandatory Prepayment Offer made on or before April 1, 2008,
101% of the aggregate principal amount of First Priority Term Loans then
outstanding, (ii) with respect to any such Mandatory Prepayment Offer made after
April 1, 2008, 100% of the aggregate principal amount of First Priority Term
Loans then outstanding, plus, in each case, accrued and unpaid interest thereon,
to but excluding the date of repayment, plus, in each case, any other amount
then required to be paid hereunder.
(b) The provisions of this Section 5.12 and of Section 2.11 (Mandatory
Repayment Offers) that require the Borrower to make a Mandatory Repayment Offer
following a Change of Control shall be applicable whether or not any other
provisions of this Agreement are applicable; provided that, the Borrower shall
not be required to make a Mandatory Repayment Offer upon a Change of Control if
a third party makes the Mandatory Repayment Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Agreement
applicable to a Mandatory Repayment Offer required upon a Change of Control and
repays all First Priority Term Loans (and the other amounts required to be paid
pursuant to clause (a) above).
SECTION 5.13. Restrictions on Activities of CalGen Finance. The Borrower shall
not permit CalGen Finance to hold any material assets, become liable for any
material obligations or engage in any significant business activities; provided
that, notwithstanding anything to the contrary contained herein, CalGen Finance
may be a co-obligor or guarantor with respect to Indebtedness if the Borrower is
an obligor on such Indebtedness and the net proceeds of such Indebtedness are
received by the Borrower, CalGen Finance or one or more of the Borrower's other
Subsidiaries.
SECTION 5.14. Additional Subsidiaries. If the Borrower or any of its
Subsidiaries acquires or creates another Subsidiary after the Closing Date, then
(a) that newly acquired or created Subsidiary will (i) become a Guarantor
hereunder, (ii) if such Subsidiary's assets and property consist solely of its
ownership interests in any Guarantor, become a Holding Company hereunder and
(iii) deliver or cause to be delivered an opinion of counsel reasonably
satisfactory to the Administrative Agent within 30 days of the date on which it
was acquired or created, and (b) all real and personal property of that
Subsidiary will become part of the Collateral within 30 days of the date on
which that Subsidiary was acquired or created pursuant to documentation
(including security documents, financing statements, opinions and other
documents) reasonably satisfactory to the Administrative Agent and the
Collateral Agent.
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SECTION 5.15. Limitation on Issuances and Sales of Equity Interests in
Subsidiaries.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Subsidiary of the Borrower to any Person (other than the
Borrower or a Guarantor), unless:
(i) such transfer, conveyance, sale, lease or other
disposition is of all the Equity Interests in such Subsidiary; and
(ii) the Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with Sections 2.11
(Mandatory Offers) and 5.07 (Asset Sales; Application of Net Proceeds).
(b) The Borrower shall not permit any of its Subsidiaries to issue any
Equity Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Borrower or a Guarantor.
SECTION 5.16. Deposit of Revenues. The Borrower shall, and shall cause its
Subsidiaries to, deposit all revenues received by the Borrower and its
Subsidiaries, within 10 Business Days of receipt thereof, in the Revenue
Account.
SECTION 5.17. Maintenance of Insurance. The Borrower shall, and shall cause its
Subsidiaries to, maintain with financially sound and reputable insurance
companies, insurance on their property, including the 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 Borrower and its Subsidiaries and furnish to
the Administrative Agent, upon written request, full information as to such
Persons' property and liability insurance carriers. The Borrower shall, and
shall cause its Subsidiaries to, cause all their insurance policies to name the
Lenders, as a class, as additional insureds with waiver of subrogation and shall
cause all its, and its Subsidiaries', property and casualty policies to name the
Collateral Agent as loss payee (together with other lien holders as their
interests may appear), with the right to receive 30 days notice of any
cancellation of or material change in such insurance policies.
SECTION 5.18. Coverage Ratio; Kilowatt Test.
(a) Consolidated Interest Coverage Ratio. As of the last day of each
fiscal quarter of the Borrower, the Borrower shall cause the Consolidated
Interest Coverage Ratio of the Borrower and its Subsidiaries to be equal to or
greater than 1.05:1.0.
(b) Consolidated First and Second Priority Lien Debt to Kilowatt Test.
As of the last day of each fiscal quarter of the Borrower, the Borrower shall
cause the ratio of (a) the aggregate outstanding principal amount of First
Priority Term Loans, First Priority Notes, Revolving Loans, Second Priority Term
Loans and Second Priority Notes, to (b) the combined Estimated Peak Capacity of
all the Facilities (including all Facilities in operation and under
construction) owned by the Borrower and its Subsidiaries (expressed in
kilowatts) to be equal to or less than $235 per kilowatt.
SECTION 5.19. Further Assurances; Ratings. The Borrower and each Guarantor shall
perform such reasonable acts as may be necessary to carry out the intent of this
Agreement and
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the other First Priority Term Loan Documents promptly after written request by
the Administrative Agent. The Borrower shall, as promptly as practical after the
date hereof, perform all reasonable acts as may be necessary to cause ▇▇▇▇▇'▇ to
issue a credit rating in respect of the First Priority Term Loans.
SECTION 5.20. Suspension of Certain Covenants. In the event that, from time to
time, after giving effect to the suspension of covenants and the event of
default provided for in this Section 5.20, the Third Priority Fixed Rate Notes
and the Third Priority Floating Rate Notes are rated Baa3 or better by ▇▇▇▇▇'▇
and BBB- or better by S&P, then the covenants contained in Section 5.04
(Restricted Payments), Section 5.05 (Dividend and Other Payment Restrictions
Affecting Subsidiaries), Section 5.06 (Incurrence of Indebtedness and Issuance
of Preferred Equity), Section 5.10 (Business Activities), Section 5.16 (Deposit
of Revenues) and Section 7.01(i) shall be suspended. In the event that, at any
time, neither the Third Priority Fixed Rate Notes nor the Third Priority
Floating Rate Notes are rated Baa3 or better by ▇▇▇▇▇'▇ and BBB- or better by
S&P, the covenants and event of default contained in such Sections shall be
reinstated.
ARTICLE VI.
SUCCESSORS
SECTION 6.01. Merger, Consolidation, or Sale of Assets.
(a) The Borrower shall not, directly or indirectly: (i) consolidate or
merge with or into another Person (whether or not the Borrower is the surviving
entity); (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Borrower and its
Subsidiaries taken as a whole, in one or more related transactions, to another
Person; or (iii) lease all or substantially all of its properties or assets, in
one or more related transactions, to any other Person; provided, however, that
the foregoing shall not apply to:
(i) a merger of the Borrower with an Affiliate solely for the
purpose of reconstituting the Borrower in another jurisdiction; or
(ii) any sale, transfer, assignment, conveyance, lease or
other disposition of assets between or among the Borrower and the
Guarantors.
(b) Notwithstanding the foregoing, the Borrower is permitted to
reorganize as a corporation or a limited liability company in accordance with
the procedures established in this Agreement, provided that the Borrower shall
have delivered to the Administrative Agent an Opinion of Counsel in the United
States reasonably acceptable to the Administrative Agent confirming that such
reorganization is not adverse to the Lenders (it being recognized that such
reorganization shall not be deemed adverse to the Lenders solely because (i) of
the accrual of deferred tax liabilities resulting from such reorganization or
(ii) the successor or surviving corporation (A) is subject to income tax as a
corporate entity or (B) is considered to be an "includable corporation" of an
affiliated group of corporations within the meaning of the Code or any similar
state or local law).
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SECTION 6.02. 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 Borrower in a
transaction that is subject to, and that complies with the provisions of,
Section 6.01 (Merger, Consolidation, or Sale of Assets), the successor
corporation formed by such consolidation or into or with which the Borrower 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 Agreement referring to the "Borrower" shall
refer instead to the successor corporation and not to the Borrower), and may
exercise every right and power of the Borrower under this Agreement with the
same effect as if such successor Person had been named as the Borrower herein;
provided, however, that the predecessor Borrower shall not be relieved from the
obligation to pay the principal of and interest on or other amounts in respect
of the First Priority Term Loans.
ARTICLE VII.
DEFAULTS AND REMEDIES
SECTION 7.01. Events of Default.
Each of the following is an "Event of Default":
(a) default for 30 days in the payment when due of interest on the
First Priority Term Loans;
(b) default in payment when due of the principal of, or premium, if
any, on the First Priority Term Loans;
(c) failure by the Borrower or any of its Subsidiaries to comply with
Section 5.07 (Asset Sales; Application of Net Proceeds), 5.12 (Offer to Prepay
Upon Change of Control) or 5.16 (Deposit of Revenues);
(d) failure by Holdings, the Borrower or any of its Subsidiaries for 30
days after written notice from the Administrative Agent or the Lenders holding
at least 50% in outstanding aggregate principal amount of the First Priority
Term Loans then outstanding to comply with any of the agreements in this
Agreement or the other First Priority Term Loan Documents;
(e) 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 Borrower or any of its Subsidiaries (or
the payment of which is guaranteed by the Borrower or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of this Agreement, if that default:
(i) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default
(a "Payment Default"); or
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(ii) 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
$25,000,000 or more, and such default shall not have been cured or waived or any
such acceleration rescinded, or such Indebtedness repaid, within 20 days of the
Borrower or the applicable Subsidiary becoming aware of such default;
(f) failure by the Borrower or any of its Subsidiaries to pay final
judgments aggregating in excess of $25,000,000 (excluding those covered by
insurance), which judgments are not paid, discharged or stayed for a period of
60 days;
(g) the repudiation by Holdings, the Borrower or any of its
Subsidiaries of any of its obligations under the Security Documents or the
unenforceability of the Security Documents against Holdings, the Borrower or any
of its Subsidiaries for any reason; provided that such repudiation or
unenforceability relates to Collateral having a Fair Market Value of $25,000,000
or more;
(h) except as permitted by this Agreement, any First Priority Term Loan
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its First Priority Term Loan Guarantee, and such
condition shall not have been cured within 30 days after written notice from the
trustee or the holders of at least 50% in aggregate principal amount of
outstanding First Priority Term Loans;
(i) breach by any Person (other than the Borrower or any of its
Subsidiaries) of its obligations under, or termination or failure to be in full
force and effect of, a Major Project Document (unless such breach, termination
or failure to be in full force and effect would not, when taken together with
all other such breaches, terminations or failures since the date of this
Agreement (other than those that have been cured as contemplated below,
including by entering into a replacement agreement), be Materially Adverse, as
evidenced by a certificate of the chief financial officer of the Borrower),
unless with respect to any Major Project Document such breach is cured, or such
Major Project Document is replaced with a substantially similar agreement (it
being understood that (a) an agreement will be considered substantially similar
if it would not be Materially Adverse and (b) the use of an Affiliate of the
Borrower as the counterparty under an agreement replacing the Index Hedge will
not by itself be considered Materially Adverse), within 60 days thereafter (or
120 days with respect to the Interest Hedge); and
(j) the Borrower, any of its Subsidiaries that is a Significant
Subsidiary or any group of Subsidiaries that, taken together would constitute a
Significant Subsidiary, suffer a Bankruptcy Event.
SECTION 7.02. Acceleration. In the case of an Event of Default specified in
clause (j) of Section 7.01 (Events of Default), with respect to the Borrower or
any of its Subsidiaries, the
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outstanding First Priority Term Loans shall become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the Administrative Agent or the Requisite Lenders may declare all
the First Priority Term Loans to be due and payable immediately. Upon any such
declaration, the First Priority Term Loans shall become due and payable
immediately.
SECTION 7.03. Other Remedies.
(a) Subject to the Collateral Trust Agreement, if an Event of Default
occurs and is continuing, the Administrative Agent may pursue any available
remedy to collect the payment of principal, premium, if any, and interest on the
First Priority Term Loan Obligations or to enforce the performance of this
Agreement and any other First Priority Term Loan Document.
(b) The Administrative Agent may maintain a proceeding even if it does
not possess any of the First Priority Term Loan Obligations. A delay or omission
by the Administrative Agent or any Lender in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 7.04. Waiver of Past Defaults; Rescission. The Requisite Lenders by
notice to the Administrative Agent may on behalf of the Lenders waive an
existing Default or Event of Default and its consequences hereunder. Upon any
such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Agreement; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon. The Requisite Lenders,
by written notice to the Administrative Agent, may on behalf of all of the
Lenders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
SECTION 7.05. Control by Majority. The Requisite Lenders may direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Administrative Agent or exercising any trust or power conferred
on it. However, the Administrative Agent may refuse to follow any direction that
conflicts with law, this Agreement, the other First Priority Term Loan
Documents, that the Administrative Agent determines may be unduly prejudicial to
the rights of other Lenders, that may involve the Administrative Agent in
personal liability, or that is inconsistent with the Collateral Trust Agreement.
SECTION 7.06. Collection Suit by Administrative Agent. If an Event of Default
specified in Section 7.01(a) or (b) (Events of Default) occurs and is
continuing, the Administrative Agent is authorized to recover judgment in its
own name and as trustee of an express trust against the Borrower for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
First Priority Term Loans and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent, its agents and
counsel.
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SECTION 7.07. Priorities.
Subject to the Collateral Trust Agreement, if the Administrative Agent
collects any money pursuant to this Article VII, it shall pay out the money in
the following order:
First: to the Administrative Agent and the Lenders on a pro
rata basis, their respective agents and attorneys for amounts due under
this Agreement and the other First Priority Term Loan Documents,
including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Administrative Agent or any of
the Lenders and the costs and expenses of collection;
Second: to the Lenders for amounts due and unpaid on the First
Priority Term Loan Obligations for principal, premium, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the First Priority Term
Loan Obligations for principal, premium, if any and interest,
respectively; and
Third: to the Borrower or to such party as a court of
competent jurisdiction shall direct.
The Administrative Agent may fix a record date and payment date for any
payment to the Lenders pursuant to this Section 7.07.
ARTICLE VIII.
AGENTS
SECTION 8.01. Appointment of Agents. The Borrower and the Lenders acknowledge
and agree that MSSF has acted and shall be credited as sole lead arranger of the
First Priority Term Loans. The Borrower and the Lenders acknowledge and agree
that MSSF has acted and shall be credited as sole bookrunner of the First
Priority Term Loans and that MSSF is hereby appointed Administrative Agent
hereunder and under the other First Priority Term Loan Documents. The Borrower
and each Lender hereby authorizes the Collateral Agent to act as the Collateral
Agent with respect to the First Priority Term Loan Obligations, and each Lender
authorizes the Collateral Agent and the Administrative Agent to enter into and
perform their respective obligations under the Collateral Trust Agreement. Each
Lender hereby authorizes the Administrative Agent to act as its agent in
accordance with the terms hereof and the other First Priority Term Loan
Documents. The Administrative Agent hereby agrees to act upon the express
conditions contained herein and the other First Priority Term Loan Documents, as
applicable. The provisions of this Article VIII are solely for the benefit of
the Agents and the Lenders and no Obligor shall have any rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties hereunder, the Administrative Agent shall act solely as an agent of the
Lenders and no Agent does or shall assume or be deemed to have assumed any
obligation towards or relationship of agency or trust with or for the Borrower
or any of its Subsidiaries. MSSF in its capacity as the sole lead arranger and
bookrunner, shall not have any duties, liabilities or obligations under the
First Priority Term Loan Documents but shall be entitled to all benefits of this
Article VIII.
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SECTION 8.02. Powers and Duties. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other First Priority Term Loan Documents as
are specifically delegated or granted to such Agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably
incidental thereto. Each Agent shall have only those duties and responsibilities
that are expressly specified herein and in the other First Priority Term Loan
Documents. Each Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. No Agent shall have, by
reason hereof or any of the other First Priority Term Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing herein or any of
the other First Priority Term Loan Documents, expressed or implied, is intended
to or shall be so construed as to impose upon any Agent any obligations in
respect hereof or any of the other First Priority Term Loan Documents except as
expressly set forth herein or therein.
SECTION 8.03. General Immunity.
(a) No Responsibility for Certain Matters. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency hereof or any other
First Priority Term Loan Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statements or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by any Agent to the
Lenders or by or on behalf of any Obligor to any Agent or any Lender in
connection with the First Priority Term Loan Documents and the transactions
contemplated thereby or for the financial condition or business affairs of any
Obligor or any other Person liable for the payment of any First Priority Term
Loan Obligations, nor shall any Agent be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the First Priority Term Loan
Documents or as to the use of the proceeds of the First Priority Term Loans or
as to the existence or possible existence of any Material Adverse Effect, Event
of Default or Default or to make any disclosures with respect to the foregoing.
Anything contained herein to the contrary notwithstanding, the Administrative
Agent shall not have any liability arising from confirmations of the amount of
outstanding First Priority Term Loans or the component amounts thereof.
(b) Exculpatory Provisions. No Agent nor any of its officers, partners,
directors, employees or agents shall be liable to the Lenders for any action
taken or omitted by any Agent under or in connection with any of the First
Priority Term Loan Documents except to the extent caused by such Agent's bad
faith, gross negligence or willful misconduct. Each Agent shall be entitled to
refrain from any act or the taking of any action (including the failure to take
an action) in connection herewith or any of the other First Priority Term Loan
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until such Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required to give such instructions under Section 12.05 (Amendments and
Waivers)) and, upon receipt of such instructions from Requisite Lenders (or such
other Lenders, as the case may be), such Agent shall be entitled to act or
(where so instructed) refrain from acting, or to exercise such power, discretion
or authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) each Agent shall
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be entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper Person or Persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for the Borrower and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting hereunder
or any of the other First Priority Term Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under Section 12.05 (Amendments and Waivers)).
SECTION 8.04. Agents Entitled to Act as Lender. The agency hereby created shall
in no way impair or affect any of the rights and powers of, or impose any duties
or obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the First Priority Term Loans, each Agent
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as if it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" shall, unless the context
clearly otherwise indicates, include each Agent in its individual capacity. Any
Agent and its Affiliates may accept deposits from, lend money to, own securities
of, and generally engage in any kind of banking, trust, financial advisory or
other business with the Borrower or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection herewith and
otherwise without having to account for the same to the Lenders.
SECTION 8.05. Lenders' Representations, Warranties and Acknowledgment.
(a) Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with its First Priority Term Loans hereunder
and that it has made and shall continue to make its own appraisal of the
creditworthiness of the CalGen Companies. No Agent shall have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of the Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the First Priority Term Loans or at any
time or times thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any information provided to
the Lenders.
(b) Each Lender, by delivering its signature page to this Agreement and
funding its First Priority Term Loan on the Closing Date, shall be deemed to
have acknowledged receipt of, and consented to and approved, each First Priority
Term Loan Document and each other document required to be approved by any Agent,
Requisite Lenders or the Lenders, as applicable on the Closing Date.
SECTION 8.06. Right to Indemnity. Each Lender, in proportion to its Pro Rata
Share, severally agrees to indemnify each Agent, to the extent that such Agent
shall not have been reimbursed by any Obligor, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements)
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or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against such Agent in exercising its powers, rights and
remedies or performing its duties hereunder or under the other First Priority
Term Loan Documents or otherwise in its capacity as such Agent in any way
relating to or arising out of this Agreement or the other First Priority Term
Loan Documents; provided, no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's bad faith, gross
negligence or willful misconduct. If any indemnity furnished to any Agent for
any purpose shall, in the opinion of such Agent, be insufficient or become
impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished; provided, in no event shall this sentence require any Lender to
indemnify any Agent against any liability, obligation, loss, damage, penalty,
action, judgment, suit, cost, expense or disbursement in excess of such Lender's
Pro Rata Share thereof; and provided further, this sentence shall not be deemed
to require any Lender to indemnify any Agent against any liability, obligation,
loss, damage, penalty, action, judgment, suit, cost, expense or disbursement
described in the proviso in the immediately preceding sentence.
SECTION 8.07. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving 30 days' prior written notice thereof to the
Lenders and the Borrower, and the Administrative Agent may be removed at any
time with or without cause by an instrument or concurrent instruments in writing
delivered to the Borrower and the Administrative Agent and signed by the
Requisite Lenders. Upon any such notice of resignation or any such removal, the
Requisite Lenders shall have the right, upon five Business Days' notice to the
Borrower, to appoint a successor Administrative Agent; provided, that the
Borrower shall have the right to approve any such successor Administrative Agent
(such approval not to be unreasonably withheld or delayed) so long as no Default
or Event of Default shall have occurred and be continuing. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Administrative Agent and the retiring or removed
Administrative Agent shall promptly transfer to such successor Administrative
Agent all sums, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Administrative Agent under the First Priority Term Loan Documents, whereupon
such retiring or removed Administrative Agent shall be discharged from its
duties and obligations hereunder. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions
of this Article VIII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent hereunder.
SECTION 8.08. Withholding Tax.
(a) To the extent required by any applicable Legal Requirement, the
Administrative Agent may withhold from any interest payment to any Lender an
amount equivalent to any applicable withholding tax, including any withholding
tax resulting from any Lenders' failure to deliver the forms or other
documentation as required by Section 2.16(e) (Taxes; Withholding, etc). Nothing
in this Section 8.08 shall relieve the Borrower of its obligation with respect
to Taxes and Other Taxes provided in Section 2.16 (Taxes; Withholding, etc.).
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(b) If the Internal Revenue Service or any authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest,
together with all expenses incurred, including legal expenses, allocated staff
costs and any out of pocket expenses.
ARTICLE IX.
COLLATERAL AND SECURITY
The Collateral Agent's Liens upon the Collateral shall no longer secure
the First Priority Term Loan Obligations outstanding under this Agreement, and
the right of the Lenders to the benefits and proceeds of the Collateral Agent's
Liens on Collateral shall terminate and be discharged:
(a) on the First Priority Term Loan Secured Obligations
Termination Date; or
(b) with the prior written consent of each Lender whose
consent is required under Section 12.05.
Nothing in this Article IX shall be deemed to restrict the Collateral Agent's
rights to release liens on Collateral in accordance with the terms of the
Collateral Trust Agreement or as otherwise permitted pursuant to the terms of
this Agreement.
ARTICLE X.
RANKING OF LIENS AND COLLATERAL SHARING
EACH LENDER AND EACH AGENT HEREBY ACKNOWLEDGES AND AGREES THAT THE
THEIR RESPECTIVE LIEN PRIORITIES, THE DISTRIBUTION OF PROCEEDS OF COLLATERAL,
THE EXERCISE OF REMEDIES UNDER THE FIRST PRIORITY TERM LOAN DOCUMENTS,
AMENDMENTS AND WAIVERS TO THE FIRST PRIORITY TERM LOAN DOCUMENTS, AND OTHER
MATTERS RELATED TO THE COLLATERAL ARE SUBJECT TO AND GOVERNED BY THE COLLATERAL
TRUST AGREEMENT. Each Lender and each Agent, by delivering its signature page
hereto, funding its First Priority Term Loan on the Closing Date and/or
executing an Assignment Agreement (as the case may be), shall be deemed to have
(a) acknowledged receipt of, consented to and approved the Collateral Trust
Agreement and (b) authorized the Agents to perform their respective obligations
thereunder. Each Lender and each Agent further acknowledges that, in certain
circumstances related to intercreditor and security matters, the Collateral
Trust Agreement provides that, where lenders and/or noteholders hold the same
series of Obligations (such as the First Priority Term Loan Obligations and the
Obligations under the First Priority Notes), such lenders and noteholders will
vote as a single class, and the agent or trustee for such lenders or
noteholders, as
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applicable, will vote the obligations of such lenders or noteholders, as
applicable, as a class (and not by percentage of lenders or noteholders voting
for or against the applicable intercreditor or security matter). Accordingly, in
such circumstances under the Collateral Trust Agreement, if the Requisite
Lenders hereunder do (or do not) consent, approve, waive or otherwise provide
direction to the Administrative Agent with respect to any request, decision,
action, or otherwise, then the Administrative Agent shall vote 100% of the First
Priority Term Loan Obligations in favor of such consent, approval or waiver (or
rejection thereof), as applicable, all in accordance with the terms of the
Collateral Trust Agreement.
ARTICLE XI.
FIRST PRIORITY TERM LOAN GUARANTEE
SECTION 11.01. Guarantee.
(a) Subject to the limitations set forth in Section 12.22 (No Recourse
Against the Borrower or the Guarantors) and in Section 11.01(b), the Guarantors
hereby, jointly and severally, unconditionally and irrevocably, guarantee to the
Administrative Agent, for the benefit of the Lenders making the First Priority
Term Loans and their respective successors, endorsees, transferees and assigns,
the prompt and complete payment and performance by the Borrower and each other
Guarantor when due (whether at the stated maturity, by acceleration or
otherwise) of the First Priority Term Loan Obligations;
(b) Each Guarantor, and by its making of a First Priority Term Loan on
the Closing Date, each Lender, hereby confirms that it is the intention of all
such parties that the First Priority Term Loan Guarantee(s) of such 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 First
Priority Term Loan Guarantee. To effectuate the foregoing intention, the
Administrative Agent, the Lenders and the Guarantors hereby irrevocably agree
that the obligations of such 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 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 Guarantor in respect of the
obligations of such other Guarantor under this Article XI, result in the
obligations of such Guarantor under its First Priority Term Loan Guarantee not
constituting a fraudulent transfer or conveyance.
(c) Each Guarantor agrees that the First Priority Term Loan Obligations
may at any time and from time to time exceed the amount of the liability of such
Guarantor under this Article XI without impairing the guarantee of such
Guarantor to the extent provided in this Article XI or affecting the rights and
remedies of the Administrative Agent or any other Secured Party hereunder.
(d) The guarantee provided in this Article XI shall remain in full
force and effect until the First Priority Term Loan Secured Obligations
Termination Date.
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(e) With respect to each Guarantor, no payment made by the Borrower,
any of the other Guarantors or any other Person, or received or collected by the
Administrative Agent or any other Secured Party from the Borrower, any of the
other Guarantors or any other Person, by virtue of any action or proceeding or
any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of any First Priority Term Loan Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of such
Guarantor hereunder, which Guarantor shall, notwithstanding any such payment
(other than any payment made by such Guarantor in respect of the First Priority
Term Loan Obligations or any payment received or collected from such Guarantor
in respect of the First Priority Term Loan Obligations), remain liable for the
First Priority Term Loan Obligations outstanding from time to time hereunder up
to the maximum amount of such Guarantor's liability hereunder until the First
Priority Term Loan Secured Obligations Termination Date.
SECTION 11.02. Right of Contribution.
(a) Each Guarantor hereby agrees that to the extent that a Guarantor
shall have paid more than its proportionate share of any payment made hereunder,
such Guarantor shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder which has not paid its proportionate share
of such payment. Each Guarantor's right of contribution shall be subject to the
terms and conditions of Section 11.04 (No Subrogation).
(b) The provisions of this Section 11.02 shall in no respect limit the
obligations and liabilities of any Guarantor to the Administrative Agent and the
other First Priority Term Loan Secured Parties, and each Guarantor shall remain
liable to the Administrative Agent and the other First Priority Term Loan
Secured Parties for the full amount guaranteed by such Guarantor hereunder.
SECTION 11.03. Subordination. Except as otherwise specifically provided in this
Article XI, (a) all existing and future indebtedness of, or other obligations
owed by, the Borrower or any of its subsidiaries to any Guarantor is hereby
subordinated to all First Priority Term Loan Obligations, and (b) without the
prior written consent of the Administrative Agent, such subordinated
indebtedness (including interest thereon) shall not be paid or withdrawn in
whole or in part, nor shall any Guarantor accept any payment of or on account of
any such indebtedness while the guarantee provided hereunder is in effect. Any
payment by the Borrower or any subsidiary thereof in violation of this Section
11.03 shall be received by the relevant Guarantor in trust for the
Administrative Agent and the First Priority Term Loan Secured Parties, and such
Guarantor shall cause the same to be paid to the Administrative Agent for the
benefit of the First Priority Term Loan Secured Parties immediately upon demand
by the Administrative Agent on account of the First Priority Term Loan
Obligations. No Guarantor shall assign all or any portion of such indebtedness
while the guarantee provided hereunder remains in effect except upon prior
written notice to the Administrative Agent and pursuant to an agreement by which
the assignee of any such indebtedness agrees that the assignment is made subject
to the terms of this Agreement, and that any attempted assignment of such
indebtedness in violation of the provisions hereof shall be void. Nothing in
this Section 11.03 shall apply to any repayment of existing or future
indebtedness or obligation, distribution, withdrawal of capital or any other
payment of any kind or nature whether in cash, in kind, or otherwise, that is
permitted to be
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made to the Guarantor or any of its Affiliates pursuant to and in accordance
with the Financing Documents.
SECTION 11.04. No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any other Secured Party, no Guarantor shall be entitled
to be subrogated to any of the rights of the Administrative Agent or any other
Secured Party against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by the Administrative Agent or any
other Secured Party for the payment of the Secured Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from the
Borrower or any other Guarantor in respect of payments made by such Guarantor
hereunder, until the First Priority Term Loan Secured Obligations Termination
Date. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the First Priority Term Loan
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Administrative Agent and the other First Priority
Term Loan Secured Parties, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the
Administrative Agent in the exact form received by such Guarantor (duly endorsed
by such Guarantor to the Administrative Agent, if required), to be applied
against the First Priority Term Loan Obligations, whether matured or unmatured,
in such order as the Administrative Agent may determine, subject to the terms
and provisions of the Collateral Trust Agreement.
SECTION 11.05. Amendments, etc. with respect to the First Priority Term Loan
Obligations. Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without notice
to or further assent by any Guarantor, any demand for payment of any of the
First Priority Term Loan Obligations made by the Administrative Agent or any
other Secured Party may be rescinded by the Administrative Agent or such other
Secured Party and any of the First Priority Term Loan Obligations continued, and
the First Priority Term Loan Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any other Secured Party,
and any of the First Priority Term Loan Documents may be amended, modified,
supplemented or terminated, in whole or in part, as the requisite parties
thereto deem advisable from time to time, and any collateral security, guarantee
or right of offset at any time held by the Administrative Agent or any other
Secured Party for the payment of the First Priority Term Loan Obligations may be
sold, exchanged, waived, surrendered or released. Neither the Administrative
Agent nor any other Secured Party shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the First
Priority Term Loan Obligations or for the guarantee contained in this Article XI
or any property subject thereto.
SECTION 11.06. Guarantee Absolute and Unconditional.
(a) Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the First Priority Term Loan Obligations and
notice of or proof of reliance by the Administrative Agent or any Lender upon
the guarantee contained in this Article XI or
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acceptance of the guarantee contained in this Article XI. Each Guarantor agrees
that the First Priority Term Loan Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the First Priority Term Loan
Guarantees. Each Guarantor agrees that all dealings between the Borrower and any
of the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Article XI.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or any of the Guarantors
with respect to the First Priority Term Loan Obligations.
(b) The obligations of each Guarantor hereunder are primary obligations
of such Guarantor and are an absolute, unconditional, continuing and irrevocable
guaranty of payment and performance of the First Priority Term Loan Obligations
and the other obligations of Guarantor hereunder and not of collectibility, and
are in no way conditioned on or contingent upon any attempt to enforce in whole
or in part Holdings', the Borrower's or any CalGen Company's liabilities and
obligations to the Secured Parties. Each failure by a Guarantor to pay or
perform, as the case may be, a First Priority Term Loan Obligation or any other
obligation hereunder shall give rise to a separate cause of action hereunder,
and separate suits may be brought hereunder as each cause of action arises.
(c) The First Priority Term Loan Secured Parties may, at any time and
from time to time (whether or not after revocation or termination of the
guarantee contained in this Article XI) without the consent of or notice to any
Guarantor, except such notice as may be required by the First Priority Term Loan
Documents or applicable law which cannot be waived, without incurring
responsibility to any Guarantor, without impairing or releasing the obligations
of any Guarantor hereunder, upon or without any terms or conditions and in whole
or in part:
(i) change the manner, place and terms of payment or
performance of, or renew or alter, any First Priority Term Loan
Obligation or any obligations and liabilities (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, or in any manner modify, amend or supplement the terms of the
First Priority Term Loan Documents or any documents, instruments or
agreements executed in connection therewith, in each case with the
consent of Holdings, the Borrower, the CalGen Companies and any
Guarantor (in each case, as and to the extent required by this
Agreement or the relevant Security Document, as applicable), and the
agreements and guarantees herein made shall apply to the First Priority
Term Loan Obligations or such other obligations as changed, extended,
renewed, modified, amended, supplemented or altered in any manner;
(ii) exercise or refrain from exercising any rights against
the Borrower, Holdings, any CalGen Company, or others (including any
Guarantor) or otherwise act or refrain from acting;
(iii) add or release any other guarantor from its obligations
without affecting or impairing the obligations of any Guarantor
hereunder;
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(iv) settle or compromise any First Priority Term Loan
Obligations or any obligations and liabilities (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment or performance of all or any
part thereof to the payment or performance of any obligations and
liabilities which may be due to the Secured Parties or others;
(v) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner or in any order any property by
whomsoever pledged or mortgaged to secure or securing the First
Priority Term Loan Obligations or any liabilities or obligations
(including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof and/or any offset there against;
(vi) apply any sums by whomsoever paid or howsoever realized
to any obligations and liabilities of Holdings, the Borrower or any
CalGen Company to the First Priority Term Loan Secured Parties under
the First Priority Term Loan Documents in the manner provided therein
regardless of what obligations and liabilities remain unpaid, except
that sums paid by any Guarantor hereunder shall be deemed to have been
paid in respect of the applicable obligation of such Guarantor
hereunder;
(vii) consent to or waive any breach of, or any act, omission
or default under, the First Priority Term Loan Documents or otherwise
amend, modify or supplement (with the consent of the Guarantors,
Holdings, the Borrower and the CalGen Companies, as and to the extent
required by the First Priority Term Loan Documents) the First Priority
Term Loan Documents or any of such other instruments or agreements;
and/or
(viii) act or fail to act in any manner referred to in this
Agreement which may deprive any Guarantor of its right to subrogation
against the Borrower or any CalGen Company to recover full indemnity
for any payments or performances made pursuant to this Agreement or of
its right of contribution against any other party.
(d) No invalidity, irregularity or unenforceability of the First
Priority Term Loan Obligations or invalidity, irregularity, unenforceability or
non-perfection of any collateral therefor, shall affect, impair or be a defense
to the guarantee contained in this Article XI, which is a primary obligation of
each Guarantor.
(e) The guarantee provided hereunder is a continuing guarantee and all
obligations to which it applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. In the event
that, notwithstanding the provisions of Section 11.06(b) above, the guarantee
provided by any Guarantor hereunder shall be deemed revocable in accordance with
applicable law, then any such revocation shall become effective only upon
receipt by Administrative Agent of written notice of revocation signed by such
Guarantor. To the extent permitted by applicable law, no revocation or
termination hereof shall affect, in any manner, rights arising under hereunder
with respect to First Priority Term Loan Obligations arising prior to receipt by
Administrative Agent of written notice of such revocation or termination. Any
such revocation or termination shall be deemed to be an Event of Default.
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SECTION 11.07. Waiver. Each Guarantor hereby unconditionally and irrevocably
waives and relinquishes, to the maximum extent permitted by applicable Legal
Requirements, all rights and remedies accorded to sureties or guarantors and
agrees not to assert or take advantage of any such rights or remedies,
including:
(a) any right to require Administrative Agent or the other Secured
Parties to proceed against the Borrower, any CalGen Company or any other Person
or to proceed against or exhaust any security held by Administrative Agent or
any other Secured Party at any time or to pursue any other remedy in
Administrative Agent's or any other Secured Party's power before proceeding
against such Guarantor;
(b) any defense that may arise by reason of the incapacity, lack of
power or authority, death, dissolution, merger, termination or disability of
such Guarantor, the Borrower, any other CalGen Company or any other Person or
the failure of the Administrative Agent or any other Secured Party to file or
enforce a claim against the estate (in administration, bankruptcy or any other
proceeding) of such Guarantor, Holdings, the Borrower, any CalGen Company or any
other Person;
(c) promptness, diligence, demand, presentment, protest and notice of
any kind, including notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of Holdings, the Borrower, any CalGen Company, the Administrative Agent, the
other Secured Parties, any endorser or creditor of the foregoing or on the part
of any other Person under this or any other instrument in connection with any
obligation or evidence of indebtedness held by the Administrative Agent or the
other Secured Parties as collateral or in connection with any First Priority
Term Loan Obligation;
(d) any defense based upon an election of remedies by the
Administrative Agent or the other Secured Parties, including an election to
proceed by non-judicial rather than judicial foreclosure, which destroys or
otherwise impairs the subrogation rights of such Guarantor, the right of such
Guarantor to proceed against Holdings, the Borrower, any CalGen Company or
another Person for reimbursement, or both;
(e) any defense based on any offset against any amounts which may be
owed by any Person to such Guarantor for any reason whatsoever;
(f) any defense based on any act, failure to act, delay or omission
whatsoever on the part of Holdings, the Borrower, any CalGen Company or any of
the Borrower's Affiliates or the failure by Holdings, the Borrower, any CalGen
Company or any of the Borrower's Affiliates to do any act or thing or to observe
or perform any covenant, condition or agreement to be observed or performed by
it under the Financing Documents;
(g) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(h) any defense setoff or counterclaim which may at any time be
available to or asserted by Holdings, the Borrower, any CalGen Company or any of
the Borrower's Affiliates
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thereof against the Administrative Agent, the other Secured Parties or any other
Person under the Financing Documents;
(i) any duty on the part of the Administrative Agent or any other
Secured Party to disclose to such Guarantor any facts any Secured Party may now
or hereafter know about Holdings, the Borrower, any CalGen Company or the
Facilities, regardless of whether the Administrative Agent or any other Secured
Party has reason to believe that any such facts materially increase the risk
beyond that which such Guarantor intends to assume, or have reason to believe
that such facts are unknown to such Guarantor, or have a reasonable opportunity
to communicate such facts to such Guarantor, since such Guarantor acknowledges
that such Guarantor is fully responsible for being and keeping informed of the
financial condition of the Borrower and of all circumstances bearing on the risk
of non-payment or non-performance of any First Priority Term Loan Obligation;
(j) any defense based on any change in the time, manner or place of any
payment or performance under, or in any other term of, this Agreement or any
other Financing Document, or any other amendment, renewal, extension,
acceleration, compromise or waiver of or any consent or departure from the terms
of this Agreement or any other Financing Document;
(k) any right to assert the bankruptcy or insolvency of Holdings, the
Borrower, any CalGen Company or any other Person as a defense hereunder or as
the basis for rescission hereof and any defense arising because of the
Administrative Agent's or any other Secured Party's election, in any proceeding
instituted under the Bankruptcy Law, of the application of Section 1111(b)(2) of
the Bankruptcy Law;
(l) any defense based upon any borrowing or grant of a security
interest under Section 364 of the Bankruptcy Law; and
(m) any other circumstance (including any statute of limitations), any
act or omission by Holdings, the Borrower, any CalGen Company, or any existence
of or reliance on any representation by the Administrative Agent, Holdings, the
Borrower, any CalGen Company or any Secured Party that might otherwise
constitute a defense available to, or discharge of, any guarantor or surety
(other than, subject to Section 11.08 (Bankruptcy), the defense of payment or
performance of the applicable Obligations guaranteed hereunder).
SECTION 11.08. Bankruptcy.
(a) The obligations of any Guarantor under the guarantee provided in
this Article XI shall not be altered, limited or affected by any proceeding,
voluntary or involuntary, involving the bankruptcy, reorganization, insolvency,
receivership, liquidation or arrangement of Holdings, the Borrower, any other
Guarantor or any Affiliate thereof, or by any defense which Holdings, the
Borrower, any Guarantor or any Affiliate thereof may have by reason of any
order, decree or decision of any court or administrative body resulting from any
such proceeding.
(b) Each Guarantor shall file, in any bankruptcy or other proceeding in
which the filing of claims is required or permitted by law, all claims which
such Guarantor may have against Holdings, the Borrower or any CalGen Company
relating to any indebtedness of the Borrower or any CalGen Company to such
Guarantor, and hereby assigns to the Administrative
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Agent (for the benefit of itself and the Lenders) all rights of such Guarantor
thereunder. If any Guarantor does not file any such claim, the Administrative
Agent, as attorney-in-fact for such Guarantor, is hereby authorized to do so in
the name of such Guarantor or, in the Administrative Agent's discretion, to
assign the claim to a nominee and to cause proofs of claim to be filed in the
name of the Administrative Agent's nominee. The foregoing power of attorney is
coupled with an interest and cannot be revoked. The Administrative Agent or its
nominee shall have the sole right to accept or reject any plan proposed in any
such proceeding and to take any other action which a party filing a claim is
entitled to take. In all such cases, whether in administration, bankruptcy or
otherwise, the person authorized to pay such a claim shall pay the same to the
Administrative Agent to the extent of any First Priority Term Loan Obligations
which then remain unpaid or unperformed, and, to the full extent necessary for
that purpose, each Guarantor hereby assigns to the Administrative Agent all of
such Guarantor's rights to all such payments or distributions to which such
Guarantor would otherwise be entitled; provided, however, that such Guarantor's
obligations hereunder shall not be satisfied except to the extent that the
Administrative Agent receives cash by reason of any such payment or
distribution. If the Administrative Agent receives anything hereunder other than
cash, the same shall be held as collateral for amounts due under the guarantee
contained in this Article XI.
(c) Each Guarantor hereby irrevocably waives, to the extent it may do
so under applicable Legal Requirements, any protection to which it may be
entitled under Sections 365(c)(1), 365(c)(2) and 365(e)(2) of the Bankruptcy Law
or equivalent provisions of the laws or regulations of any other jurisdiction
with respect to any proceedings, or any successor provision of law of similar
import, in the event of any Bankruptcy Event with respect to Holdings, the
Borrower or any CalGen Company. Specifically, in the event that the trustee (or
similar official) in a Bankruptcy Event with respect to Holdings, the Borrower
or any CalGen Company or the debtor-in-possession takes any action (including
the institution of any action, suit or other proceeding for the purpose of
enforcing the rights of Holdings, the Borrower, or any Guarantor under this
Agreement or any Security Document), no Guarantor shall assert any defense,
claim or counterclaim denying liability hereunder on the basis that this
Agreement or any Security Document is an executory contract or a "financial
accommodation" that cannot be assumed, assigned or enforced or on any other
theory directly or indirectly based on Section 365(c)(1), 365(c)(2) or 365(e)(2)
of the Bankruptcy Law, or equivalent provisions of the law or regulations of any
other jurisdiction with respect to any proceedings or any successor provision of
law of similar import. If a Bankruptcy Event with respect to Holdings, the
Borrower or any CalGen Company shall occur, each Guarantor agrees, after the
occurrence of such Bankruptcy Event, to reconfirm in writing, to the extent
permitted by applicable Legal Requirements, its pre-petition waiver of any
protection to which it may be entitled under Sections 365(c)(1), 365(c)(2) and
365(e)(2) of the Bankruptcy Law or equivalent provisions of the laws or
regulations of any other jurisdiction with respect to proceedings and, to give
effect to such waiver, each Guarantor consents to the assumption and enforcement
of each provision of the guarantee contained in this Article XI and any other
provision hereof and in any other First Priority Term Loan Document by the
debtor-in-possession or Holdings', the Borrower's or any CalGen Company's
trustee in bankruptcy, as the case may be.
SECTION 11.09. Reinstatement. The guarantee contained in this Article XI shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the First Priority Term Loan Obligations
is rescinded or must otherwise be restored or
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returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Holdings, the Borrower
or any Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, Holdings, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
SECTION 11.10. Payments. Each Guarantor shall make all payments due hereunder in
accordance with Section 2.12 (General Provisions Regarding Payments).
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01. Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given to the
Borrower or any Guarantor or the Administrative Agent shall be sent to such
Person's address as set forth on Appendix B or in the other relevant First
Priority Term Loan Document, and in the case of any Lender, the address as
indicated on Appendix B or otherwise indicated to the Administrative Agent in
writing. Each notice hereunder shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service and signed for against receipt thereof, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided, no notice to the
Administrative Agent shall be effective until received by the Administrative
Agent. Documents, notices or reports required to be delivered to the Lenders
pursuant to Sections 2.11 (Mandatory Repayment Offers), 5.01(a) (Reports), 5.02
(Compliance Certificate) and 5.12 (Offer to Prepay Upon Change of Control) may
be delivered electronically and posted electronically on IntraLinks/IntraAgency
or other relevant website to which the Lenders have access (whether a
commercial, third-party website or whether sponsored by Administrative Agent),
if any; provided that (i) the Administrative Agent shall deliver paper copies of
such reports to any Lender upon written request therefor; and (ii) the
Administrative Agent shall notify (which may be by facsimile or electronic mail)
each Lender of the posting of any such reports and provide to each Lender by
email electronic versions (i.e., soft copies) of such reports.
SECTION 12.02. Expenses.
The Borrower agrees to pay promptly, without duplication among the
separate clauses of this Section 12.02 and without duplication of amounts paid
under the Purchase Agreement or the Revolving Loan Agreement or any other
Financing Document:
(a) all the costs incurred after the Closing Date of furnishing all
opinions by counsel for the Borrower and the other Obligors;
(b) the reasonable fees, expenses and disbursements of counsel to the
Sole Lead Arranger in connection with the administration of the First Priority
Term Loan Documents and
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the negotiation, preparation and execution of any consents, amendments, waivers
or other modifications thereto and any other documents or matters requested by
the Borrower;
(c) all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Collateral Agent, for the benefit of the Secured
Parties pursuant hereto, including filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, title insurance premiums and
reasonable fees, expenses and disbursements of counsel to each Agent and of
counsel providing any opinions that any Agent or Requisite Lenders may request
in respect of the Collateral or the Liens created pursuant to the Security
Documents;
(d) all the actual costs and reasonable fees, expenses and
disbursements of any auditors, accountants, consultants or appraisers if
reasonably required in connection with the administration or enforcement of this
Agreement;
(e) all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any appraisers, consultants,
advisors and agents employed or retained by Collateral Agent and its counsel)
reasonably required in connection with the custody or preservation of any of the
Collateral; and
(f) after the occurrence of a Default or an Event of Default, all costs
and expenses, including attorneys' fees and costs of settlement, incurred by any
Agent and the Lenders in enforcing any First Priority Term Loan Obligations of
or in collecting any payments due from any Obligor hereunder or under the other
First Priority Term Loan Documents by reason of such Default or Event of Default
(including in connection with the sale of, collection from, or other realization
upon any of the Collateral or the enforcement of the First Priority Term Loan
Guarantees) or in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a "work-out" or pursuant to any
Bankruptcy Case or Insolvency Proceeding.
SECTION 12.03. Indemnity.
(a) In addition to the payment of costs and expenses pursuant to
Section 12.02 (Expenses), whether or not the transactions contemplated hereby
shall be consummated, the Borrower and the Guarantors agree to defend (subject
to Indemnitees' selection of counsel), indemnify, pay and hold harmless the
Administrative Agent and the Lenders 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 bad faith, gross negligence or willful
misconduct of such Indemnitee.
(b) All amounts due under Section 12.03(a) 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 12.03(a) may be unenforceable in whole or in
part because they are violative
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of any law or public policy, the Borrower and the Guarantors shall contribute
the maximum portion that they are 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) The Borrower and the Guarantors shall not 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 Agreement or
any other First Priority Term Loan Document or any agreement or instrument or
transaction contemplated hereby or relating in any respect to any Indemnified
Liability, and the Borrower and the Guarantors hereby forever waive, release and
agree 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 12.03 shall survive repayment of the
First Priority Term Loans and all other amounts payable hereunder.
SECTION 12.04. Set-Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default each Lender is hereby authorized by the
Borrower and the Guarantors at any time or from time to time subject to the
consent of the Administrative Agent, without prior written notice to such Person
or to any other Person (other than the Administrative Agent), any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by such Lender to
or for the credit or the account of the Borrower or any Guarantor against and on
account of the obligations and liabilities of such party to such Lender
hereunder, and under the other First Priority Term Loan Documents, including all
claims of any nature or description arising out of or connected hereto, or with
any other First Priority Term Loan Document, irrespective of whether or not (a)
such Lender shall have made any demand hereunder or (b) the principal of or the
interest on the First Priority Term Loans or any other amounts due hereunder
shall have become due and payable pursuant to Article II and although such
obligations and liabilities, or any of them, may be contingent or unmatured.
SECTION 12.05. Amendments and Waivers.
(a) Requisite Lenders' Consent. Subject to Section 12.05(e), no
amendment, modification, termination or waiver of any provision of the First
Priority Term Loan Documents, or consent to any departure by any Obligor
therefrom, shall in any event be effective without the written concurrence of
the Requisite Lenders and any additional consents required by Sections 12.05(b)
and (c).
(b) Affected Lenders' Consent. No amendment, modification, termination,
or consent shall be effective if the effect thereof would:
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(i) extend the scheduled final maturity of any First Priority
Term Loan or First Priority Term Loan Note outstanding to any Lender
without the prior written consent of that Lender;
(ii) waive, reduce or postpone any scheduled repayment (but
not prepayment) due to any Lender without the prior written consent of
that Lender;
(iii) reduce the rate of interest on any First Priority Term
Loan (other than any waiver of any increase in the interest rate
applicable to any First Priority Term Loan pursuant to Section 2.07
(Default Interest)) payable to any Lender or reduce or extend any fee
payable hereunder to any Lender without the prior written consent of
that Lender;
(iv) reduce the principal amount of any First Priority Term
Loan outstanding to any Lender without the prior written consent of
that Lender;
(v) amend, modify, terminate or waive any provision of this
Section 12.05(b), as it applies to any Lender without the prior written
consent of that Lender;
(vi) amend the definition of "Requisite Lenders" or "Pro Rata
Share" without the prior written consent of all Lenders;
(vii) release any Collateral from the Liens created by the
Security Documents, except as specifically provided for in this
Agreement and the Security Documents, without the prior written consent
of all Lenders;
(viii) release any Guarantor from its obligations under its
First Priority Term Loan Guarantee(s) or otherwise consent to the
assignment or transfer by any Obligor of any of its rights and
obligations under any First Priority Term Loan Document without the
prior written consent of all Lenders; or
(ix) amend or modify any provision which requires pro rata
payments among and as between the Lenders without the prior written
consent of all Lenders.
(c) Other Consents. No amendment, modification, termination or waiver
of any provision of the First Priority Term Loan Documents, or consent to any
departure by any Obligor therefrom, shall amend, modify, terminate or waive any
provision of Article VIII as the same applies to the Administrative Agent, or
any other provision hereof as the same applies to the rights or obligations of
any Agent, in each case without the consent of the Administrative Agent.
(d) Execution of Amendments, etc. The Administrative Agent may, but
shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of such Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on any Obligor
in any case shall entitle any Obligor to any other or further notice or demand
in similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 12.05 shall be
binding upon each Lender at the time outstanding, each future Lender and, if
signed by an Obligor, on such Obligor.
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(e) Certain Amendments. Notwithstanding the preceding provisions of
this Section 12.05, the Borrower and the Administrative Agent may amend or
supplement the First Priority Term Loan Documents without the consent of any
Lender:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for the assumption of the Borrower's
obligations to the Lenders by a successor to the Borrower pursuant to
Article VI hereof;
(iii) to make any change that would provide any additional
rights or benefits to the Lenders or that does not adversely affect the
legal rights hereunder of any Lender;
(iv) to allow any Subsidiary of the Borrower to provide a
First Priority Term Loan Guarantee or allow any Guarantor to execute a
supplemental Guarantee with respect to the First Priority Term Loan
Obligations;
(v) to make, complete or confirm any grant of Collateral
permitted or required by this Agreement or any of the Security
Documents or any release of Collateral that becomes effective as set
forth in this Agreement or any of the Security Documents;
(vi) to conform the text of this Agreement, the First Priority
Term Loan Notes or the Security Documents to any provision of the
Description of New Term Loans or Description of Notes section of the
Offering Memorandum to the extent that such provision of the
Description of New Term Loans or Description of Notes section of the
Offering Memorandum was intended to be a verbatim recitation of a
provision of this Agreement, the First Priority Term Loans or the
Security Documents; or
(vii) to reflect any waiver or termination of any right
arising under the provisions of this Agreement that otherwise would be
enforceable by any holder of the Notes, if such waiver or termination
is set forth in the indentures governing such Notes, provided that no
such waiver or amendment shall adversely affect the rights of the
Lenders.
SECTION 12.06. Successors and Assigns; Participations.
(a) Generally. This Agreement shall be binding upon the parties hereto
and their respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders and the other
parties hereto. No Obligor's rights or obligations hereunder nor any interest
therein may be assigned or delegated by any Obligor without the prior written
consent of all Lenders. Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, Affiliates of each of the Agents and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.
(b) Register. The Borrower, the Administrative Agent and the Lenders
shall deem and treat the Persons listed as Lenders in the Register as the
holders and owners of the corresponding First Priority Term Loan Commitments and
First Priority Term Loans listed
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therein for all purposes hereof, and no assignment or transfer of any such First
Priority Term Loan Commitment or First Priority Term Loan (including any First
Priority Term Loan represented by a First Priority Term Loan Note) shall be
effective, in each case, unless and until an Assignment Agreement effecting the
assignment or transfer thereof shall have been delivered to and accepted by the
Administrative Agent and recorded in the Register as provided in Section
12.06(e). Prior to such recordation, all amounts owed with respect to the
applicable First Priority Term Loan Commitment or First Priority Term Loan shall
be owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding First Priority Term Loan Commitments or First
Priority Term Loans.
(c) Right to Assign. Each Lender shall have the right at any time to
sell, assign or transfer all or a portion of its rights and obligations under
this Agreement, including all or a portion of its First Priority Term Loan
Commitment or First Priority Term Loans owing to it or other First Priority Term
Loan Obligation (provided, however, that each such assignment shall be of a
uniform, and not varying, percentage of all rights and obligations under and in
respect of any First Priority Term Loan and any related First Priority Term Loan
Commitments):
(i) to any Person meeting the criteria of clause (a) of the
definition of the term of "Eligible Assignee" upon the giving of notice
to the Borrower and the Administrative Agent; and
(ii) to any Person meeting the criteria of clause (b) of the
definition of the term of "Eligible Assignee";
provided, further each such assignment pursuant to this Section 12.06(c) shall
be in an aggregate amount of not less than $1,000 (or such lesser amount as may
be agreed to by the Borrower and the Administrative Agent or as shall constitute
the aggregate amount of the First Priority Term Loan Commitments and First
Priority Term Loans outstanding to the assigning Lender).
(d) Mechanics; Fee. The assigning Lender and the assignee thereof shall
execute and deliver to the Administrative Agent an Assignment Agreement,
together with such forms, certificates or other evidence, if any, with respect
to United States federal income tax withholding matters as the assignee under
such Assignment Agreement may be required to deliver to the Administrative Agent
pursuant to Section 2.16(e) (Taxes; Withholding, etc.).
(e) Notice of Assignment. Upon its receipt of a duly executed and
completed Assignment Agreement (and any forms, certificates or other evidence
required by this Agreement in connection therewith), the Administrative Agent
shall record the information contained in such Assignment Agreement in the
Register, shall give prompt notice thereof to the Borrower and shall maintain a
copy of such Assignment Agreement.
(f) Representations and Warranties of Assignee. Each Lender, upon
execution and delivery hereof or upon executing and delivering an Assignment
Agreement, as the case may be, and without limiting any other representation or
warranty contained in any such Assignment Agreement, represents and warrants as
of the Closing Date or as of the applicable Effective Date
113
(as defined in the applicable Assignment Agreement) that (i) it is an Eligible
Assignee; (ii) it has experience and expertise in the making of or investing in
commitments or loans such as the applicable First Priority Term Loan Commitments
or First Priority Term Loans, as the case may be; and (iii) it shall make or
invest in, as the case may be, its First Priority Term Loan Commitments or First
Priority Term Loans for its own account in the ordinary course of its business
and without a view to distribution of such First Priority Term Loan Commitments
or First Priority Term Loans within the meaning of the Securities Act or the
Exchange Act or other federal securities laws (it being understood that, subject
to the provisions of this Section 12.06, the disposition of such First Priority
Term Loan Commitments or First Priority Term Loans or any interests therein
shall at all times remain within its exclusive control).
(g) Effect of Assignment. Subject to the terms and conditions of this
Section 12.06, as of the "Effective Date" specified in the applicable Assignment
Agreement:
(i) the assignee thereunder shall have the rights and
obligations of a "Lender" hereunder to the extent such rights and
obligations hereunder have been assigned to it pursuant to such
Assignment Agreement and shall thereafter be a party hereto and a
"Lender" for all purposes hereof;
(ii) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned thereby pursuant to
such Assignment Agreement, relinquish its rights (other than any rights
which survive the termination hereof under Section 12.08 (Survival of
Representations, Warranties and Agreements) and be released from its
obligations hereunder (and, in the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender's rights
and obligations hereunder, such Lender shall cease to be a party
hereto; provided, anything contained in any of the First Priority Term
Loan Documents to the contrary notwithstanding, such assigning Lender
shall continue to be entitled to the benefit of all indemnities
hereunder as specified herein with respect to matters arising out of
the prior involvement of such assigning Lender as a Lender hereunder);
and
(iii) if any such assignment occurs after the issuance of any
First Priority Term Loan Note hereunder, the assigning Lender shall,
upon the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable First Priority Term Loan Notes to
the Administrative Agent for cancellation, and thereupon the Borrower
shall issue and deliver new First Priority Term Loan Notes, if so
requested by the assignee and/or assigning Lender, to such assignee
and/or to such assigning Lender, with appropriate insertions, to
reflect the new outstanding First Priority Term Loans of the assignee
and/or the assigning Lender.
(h) Participations. Each Lender shall have the right at any time to
sell one or more participations to any Person (other than the Borrower, any of
its Restricted Subsidiaries or any of its Affiliates) in all or any part of its
First Priority Term Loans or in any other First Priority Term Loan Obligation.
The holder of any such participation, other than an Affiliate of the Lender
granting such participation, shall not be entitled to require such Lender to
take or omit to take any action hereunder except with respect to any amendment,
modification or waiver that would:
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(i) extend the final scheduled maturity of any First Priority
Term Loan or First Priority Term Loan Note in which such participant is
participating, or reduce the rate or extend the time of payment of
interest or fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce
the principal amount thereof, or increase the amount of the
participant's participation over the amount thereof then in effect (it
being understood that a waiver of any Default or Event of Default shall
not constitute a change in the terms of such participation, and that an
increase in any First Priority Term Loan shall be permitted without the
consent of any participant if the participant's participation is not
increased as a result thereof);
(ii) consent to the assignment or transfer by any Obligor of
any of its rights and obligations under this Agreement; or
(iii) release all or substantially all of the Collateral under
the Security Documents (except as expressly provided in the First
Priority Term Loan Documents) supporting the First Priority Term Loan
Obligations hereunder in which such participant is participating.
The Borrower agrees that each participant shall be entitled to the benefits of
Sections 2.14(c) (Making or Maintaining First Priority Term Loans), 2.15
(Increased Costs; Capital Adequacy) and 2.16 (Taxes; Withholding, etc.) to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (c) of this Section; provided, (i) a participant shall not
be entitled to receive any greater payment under Section 2.14 (Making or
Maintaining First Priority Term Loans) or 2.15 (Increased Costs; Capital
Adequacy) than the applicable Lender would have been entitled to receive with
respect to the participation sold to such participant, unless the sale of the
participation to such participant is made with the Borrower's prior written
consent and (ii) a participant that would be a Non-U.S. Lender if it were a
Lender shall not be entitled to the benefits of Section 2.16 (Taxes;
Withholding, etc.) unless the Borrower is notified of the participation sold to
such participant and such participant agrees, for the benefit of the Borrower,
to comply with Section 2.16 (Taxes; Withholding, etc.) as though it were a
Lender. To the extent permitted by law, each participant also shall be entitled
to the benefits of Section 12.04 (Set-Off) as though it were a Lender, provided
such participant agrees to be subject to Section 2.13 (Ratable Sharing) as
though it were a Lender.
(i) Certain Other Assignments.
(i) In addition to any other assignment permitted pursuant to
this Section 12.06, any Lender may assign and/or pledge all or any
portion of its First Priority Term Loans, the other First Priority Term
Loan Obligations owed by or to such Lender, and its First Priority Term
Loan Notes, if any, to secure obligations of such Lender including (A)
to any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System
and any operating circular issued by such Federal Reserve Bank and (B)
with respect to any Lender that is a fund that invests in bank loans,
to any trustee or holder of obligations owed, or securities issued by,
such fund as security for such obligations or securities or to any
other representative of such holders; provided, no Lender, as between
the Borrower and such Lender, shall be relieved of any of its
obligations hereunder as a result of any such assignment and pledge,
and
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provided further, in no event shall the applicable Federal Reserve
Bank, trustee or such holder of obligations be considered to be a
"Lender" or be entitled to require the assigning Lender to take or omit
to take any action hereunder.
(ii) At the request of the Borrower in connection with the
payment in full of all of the First Priority Term Loan Obligations,
whether by voluntary or mandatory prepayment thereof or on the Maturity
Date or otherwise, each Lender shall execute and deliver to the
Borrower (or to such Person(s) as the Borrower requests) such documents
and instruments as the Borrower reasonably requests to assign all of
such Lender's First Priority Term Loan Obligations (together with all
of such Lender's right, title and interest in, to and under all the
First Priority Term Loan Documents) to such Person(s) as the Borrower
may direct; provided, that (A) upon the effectiveness of such
assignment the Borrower shall execute and deliver to each Lender an
instrument pursuant to which the Borrower and the Guarantors release
such Lender from all claims under this Agreement and all of the other
First Priority Term Loan Documents and (B) such assignment shall be
without recourse to and without any representations or warranties from
the assigning Lender. If any such assignment occurs after the issuance
to it of any First Priority Term Loan Notes hereunder, then upon the
effectiveness of such assignment, the assigning Lender shall deliver
all of its First Priority Term Loan Notes to the Borrower for
cancellation or re-issuance to the new Lender.
SECTION 12.07. Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.
SECTION 12.08. Survival of Representations, Warranties and Agreements. All
agreements made herein shall survive the execution and delivery hereof and the
making of any First Priority Term Loan. Notwithstanding anything herein or
implied by law to the contrary, the agreements of the Borrower and the
Guarantors set forth in Sections 2.14(c) (Making or Maintaining First Priority
Term Loans), 2.15 (Increased Costs; Capital Adequacy), 2.16 (Taxes; Withholding,
etc.), 12.02 (Expenses), 12.03 (Indemnity), 12.04 (Set-Off), 12.15 (Consent to
Jurisdiction), 12.16 (Waiver of Jury Trial) and 12.17 (Confidentiality) and the
agreements of Lenders set forth in Sections 2.13 (Ratable Sharing), 8.03(b)
(General Immunity) and 8.06 (Right to Indemnity) shall survive the payment of
the First Priority Term Loans and the termination hereof.
SECTION 12.09. No Waiver; Remedies Cumulative. No failure or delay on the part
of any Agent or any Lender in the exercise of any power, right or privilege
hereunder or under any other First Priority Term Loan Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege. The rights, powers and remedies given to each
Agent and each Lender hereby are cumulative and shall be in addition to and
independent of all rights, powers and remedies existing by virtue of any statute
or rule of law or in any of the other First Priority Term Loan Documents. Any
forbearance or failure to exercise, and any delay in exercising, any right,
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power or remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
SECTION 12.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender
shall be under any obligation to marshal any assets in favor of any Obligor or
any other Person or against or in payment of any or all of the First Priority
Term Loan Obligations. To the extent that any Obligor makes a payment or
payments to the Administrative Agent or the Lenders (or to the Administrative
Agent, on behalf of the Lenders), or the Administrative Agent or the Lenders
enforce any security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, any other state or federal law, common law or any
equitable cause, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.
SECTION 12.11. Severability. In case any provision in or obligation under any
First Priority Term Loan Document shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 12.12. First Priority Term Loan Obligations Several; Independent Nature
of Lenders' Rights. The obligations of the Lenders hereunder are several and no
Lender shall be responsible for the obligations or First Priority Term Loan
Commitment of any other Lender hereunder. Nothing contained herein or in any
other First Priority Term Loan Document, and no action taken by the Lenders
pursuant hereto or thereto, shall be deemed to constitute the Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out hereof and it shall not be necessary for any other Lender to
be joined as an additional party in any proceeding for such purpose.
SECTION 12.13. Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.
SECTION 12.14. Applicable Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed by, and shall be construed and enforced
in accordance with, the laws of the State of New York without regard to conflict
of laws principles thereof.
SECTION 12.15. Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY PARTY HERETO ARISING OUT OF OR RELATING HERETO OR ANY OTHER FIRST PRIORITY
TERM LOAN DOCUMENT, OR ANY OF THE FIRST PRIORITY TERM LOAN OBLIGATIONS, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
117
PARTY HERETO, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE
OBLIGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 12.01 (NOTICES); (D)
AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER THE APPLICABLE OBLIGOR IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT; AND (E) AGREES THAT THE AGENTS AND THE LENDERS RETAIN THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST ANY OBLIGOR IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 12.16. Waiver Of Jury Trial. EACH OF THE PARTIES HERETO HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER FIRST PRIORITY TERM
LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 12.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS HERETO OR ANY OF THE OTHER FIRST PRIORITY TERM LOAN DOCUMENTS OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE FIRST PRIORITY TERM LOAN
OBLIGATIONS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
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SECTION 12.17. Confidentiality.
Each Lender shall hold all non-public information regarding the
Borrower and its business identified as such by the Borrower and obtained by
such Lender pursuant to the requirements hereof in accordance with such Lender's
customary procedures for handling confidential information of such nature, it
being understood and agreed by the Borrower that, in any event, a Lender may
make:
(i) disclosures of such information to Affiliates of such
Lender and to their agents and advisors (and to other Persons
authorized by a Lender or Agent to organize, present or disseminate
such information in connection with disclosures otherwise made in
accordance with this Section 12.17);
(ii) disclosures of such information reasonably required by
any bona fide or potential assignee, transferee or participant in
connection with the contemplated assignment, transfer or participation
by such Lender of any First Priority Term Loan Obligations or any
participations therein;
(iii) disclosure to any rating agency when required by it,
provided that, prior to any disclosure, such rating agency shall
undertake in writing to preserve the confidentiality of any
confidential information relating to the Obligors received by it from
any of the Agents or any Lender, and
(iv) disclosures required or requested by any governmental
agency or representative thereof or by the National Association of
Insurance Commissioners or pursuant to legal or judicial process;
provided, unless specifically prohibited by applicable law or court
order, each Lender shall make reasonable efforts to notify the Borrower
of any request by any governmental agency or representative thereof
(other than any such request in connection with any examination of the
financial condition or other routine examination of such Lender by such
governmental agency) for disclosure of any such non-public information
prior to disclosure of such information.
SECTION 12.18. Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged with respect to any of the First Priority
Term Loan Obligations, including all charges or fees in connection therewith
deemed in the nature of interest under applicable law shall not exceed the
Highest Lawful Rate. If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate, the outstanding amount of the First Priority Term Loan Obligations shall
bear interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect. In addition, if when the First Priority Term Loan Obligations are
repaid in full the total interest due hereunder (taking into account the
increase provided for above) is less than the total amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect, then to the extent permitted by law,
the Borrower shall pay to the Administrative Agent an amount equal to the
difference between the amount of interest paid and the amount of interest which
would have been paid if the Highest Lawful Rate had at all times been in effect.
Notwithstanding the foregoing, it is the intention of the Lenders and the
Borrower to conform strictly to any applicable usury laws. Accordingly, if any
Lender contracts for, charges, or
119
receives any consideration which constitutes interest in excess of the Highest
Lawful Rate, then any such excess shall be cancelled automatically and, if
previously paid, shall at such Lender's option be applied to the outstanding
amount of the First Priority Term Loan Obligations or be refunded to the
Borrower.
SECTION 12.19. Counterparts; Execution by Facsimile.
(a) This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
(b) The delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
SECTION 12.20. Effectiveness. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
the Borrower and the Administrative Agent of written or telephonic notification
of such execution and authorization of delivery thereof.
SECTION 12.21. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Agreement must include:
(i) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(ii) 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;
(iii) 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
(iv) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 12.22. No Recourse Against the Borrower or the Guarantors.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT OR ANY
OTHER FIRST PRIORITY TERM LOAN DOCUMENT, THE FIRST PRIORITY TERM LOANS AND THE
FIRST PRIORITY TERM LOAN GUARANTEES ARE NON-RECOURSE SECURED OBLIGATIONS OF THE
BORROWER AND THE APPLICABLE GUARANTORS, RESPECTIVELY. THE ONLY RECOURSE A LENDER
WILL HAVE WITH RESPECT TO THE PAYMENT OF PRINCIPAL OF, OR INTEREST OR PREMIUM
ON, THE FIRST PRIORITY TERM LOAN OBLIGATIONS (WHETHER UNDER THIS AGREEMENT OR
PURSUANT TO THE GUARANTEES) WILL
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BE ENFORCEMENT OF ITS RIGHTS AGAINST THE COLLATERAL PURSUANT TO THE SECURITY
DOCUMENTS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CALPINE GENERATING COMPANY, LLC,
as the Borrower
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[First Priority
Credit and Guarantee Agreement -
Calpine Generating Company, LLC]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.,
as Administrative Agent and a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.,
as Sole Lead Arranger and Sole Bookrunner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name:
Title:
[First Priority
Credit and Guarantee Agreement -
Calpine Generating Company, LLC]
▇▇▇▇ BANK, S.S.B., as a Lender
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇▇
Title: SVP
[First Priority
Credit and Guarantee Agreement -
Calpine Generating Company, LLC]
THE GUARANTORS:
CALGEN EXPANSION COMPANY, LLC
CPN FREESTONE, LLC
CALPINE FREESTONE, LLC
CALPINE FREESTONE ENERGY GP, LLC
CALPINE CHANNEL ENERGY CENTER LP, LLC
CALPINE CHANNEL ENERGY CENTER GP, LLC
CHANNEL POWER GP, LLC
CALGEN EQUIPMENT FINANCE HOLDINGS, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY ONE,
LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY THREE
LLC
CALGEN EQUIPMENT FINANCE COMPANY, LLC
NUECES BAY ENERGY LLC
CALPINE NORTHBROOK SOUTHCOAST INVESTORS, LLC
CALPINE CORPUS CHRISTI ENERGY GP, LLC
ZION ENERGY LLC
LOS MEDANOS ENERGY CENTER, LLC
▇▇▇▇▇▇ ENERGY CENTER, LLC
▇▇▇▇▇▇▇▇ ENERGY LLC
DECATUR ENERGY CENTER, LLC
CALPINE ▇▇▇▇▇ POWER I, LLC
CALPINE ▇▇▇▇▇ POWER II, LLC
CALPINE BAYTOWN ENERGY CENTER LP, LLC
CALPINE BAYTOWN ENERGY CENTER GP, LLC
BAYTOWN POWER GP, LLC
COLUMBIA ENERGY LLC
DELTA ENERGY CENTER, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY TWO,
LLC
PASTORIA ENERGY FACILITY L.L.C.
CALPINE PASTORIA HOLDINGS, LLC
Executing this Agreement on
behalf of and so as to bind
each of the limited
liability companies named
above under the caption
"The Guarantors"
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[First Priority
Credit and Guarantee Agreement -
Calpine Generating Company, LLC]
THE GUARANTORS:
FREESTONE POWER GENERATION LP
CALPINE FREESTONE ENERGY, LP
CALPINE POWER EQUIPMENT LP
CHANNEL POWER, LP
CHANNEL ENERGY CENTER, LP
CALPINE CORPUS CHRISTI ENERGY, LP
CORPUS CHRISTI COGENERATION LP
CALPINE ▇▇▇▇▇ POWER, L.P.
BAYTOWN ENERGY CENTER, LP
BAYTOWN POWER, LP
Executing this Agreement on
behalf of and so as to bind
each of the limited
partnerships named above
under the caption "The
Guarantors"
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[First Priority
Credit and Guarantee Agreement -
Calpine Generating Company, LLC]
APPENDIX A
TO FIRST PRIORITY TERM LOAN AGREEMENT
INITIAL FIRST PRIORITY TERM LOAN COMMITMENTS
First Priority
Lender Term Loan Commitment Pro Rata Share
-------------------------------------------------- -------------------------------- --------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc. $425,000,000.00 70.8%
▇▇▇▇ Bank, S.S.B. $175,000,000.00 29.2%
--------------- ----
Total $600,000,000.00 100%
=============== ====
▇-▇
▇▇▇▇▇▇▇▇ ▇
TO FIRST PRIORITY TERM LOAN AGREEMENT
NOTICE ADDRESSES
Administrative Agent's
Principal Office: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
as the Administrative Agent
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Collateral Agent: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Borrower: Calpine Generating Company, LLC
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Each Guarantor: c/o Calpine Generating Company, LLC
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
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EXHIBIT A
TO FIRST PRIORITY TERM LOAN AGREEMENT
FORM OF SUBORDINATION TERMS
[TO BE INCLUDED AS AN ARTICLE IN THE INSTRUMENT EVIDENCING "AFFILIATE
SUBORDINATED INDEBTEDNESS" INCURRED PURSUANT TO THIS AGREEMENT, THIRD PARTY
SUBORDINATED INDEBTEDNESS INCURRED PURSUANT TO THIS AGREEMENT, AND AS OTHERWISE
REQUIRED BY THIS AGREEMENT]
[THE COLLATERAL AGENT SHALL EITHER BE A PARTY TO OR A THIRD PARTY BENEFICIARY OF
THESE SUBORDINATION TERMS]
ARTICLE [__]
SUBORDINATION
Section [__].1. Definitions. All capitalized terms used herein and
not otherwise defined herein shall have the meanings given to such terms in the
Collateral Trust Agreement, dated as of March 23, 2004, among Calpine CalGen
Holdings, Inc., Calpine Generating Company, LLC ("CalGen"), CalGen Finance
Corp., the guarantors party thereto from time to time (the "Guarantors"), the
Secured Debt Representatives party thereto and Wilmington Trust Company, as
collateral agent (the "Collateral Agent"), as in effect on the date hereof. As
used in this Article, the following terms shall have the following respective
meanings:
"Junior Claimant" means [INSERT NAME OF LENDER UNDER
SUBORDINATED DEBT].
"Proceeding" means any (a) insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition or
other similar proceeding of or against the Subordinated Debtor or its
property or its creditors as such, (b) proceeding for any liquidation,
dissolution or other winding-up of the Subordinated Debtor, voluntary
or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (c) general assignment for the benefit of creditors of the
Subordinated Debtor, or (d) other marshalling of the assets of the
Subordinated Debtor.
"Senior Claimants" means the holders of Senior Obligations.
"Senior Claim Documents" means the Secured Debt Documents
other than the Other Junior Lien Debt Documents.
"Senior Claims" means, collectively, (a) the principal of, and
premium, if any, and interest on, the Senior Obligations (in each case,
including, without limitation, any interest accruing thereon at the
legal rate after the commencement of any Proceeding and any additional
interest that would have accrued thereon but for the commencement of
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such Proceeding), and (b) all other Obligations of the Subordinated
Debtor to the Senior Claimants, whether now existing or hereafter
incurred or created, under or with respect to the Senior Claim
Documents or any replacement, supplement to or refinancing of the
Senior Obligations.
"Senior Obligations" means all Secured Obligations other than
the Other Junior Lien Obligations.
"Senior Obligations Termination Date" means the date on which
all Senior Obligations (including all interest accrued thereon after
the commencement of any bankruptcy, insolvency or liquidation
proceeding at the rate, including any applicable post-default rate,
specified in the applicable Senior Claim Documents, even if such
interest is not enforceable, allowable or allowed as a claim in such
proceeding) have been paid in full in cash (and/or defeased in
accordance with the applicable Senior Claim Documents), all commitments
to extend credit under all Senior Claim Documents have terminated or
expired and all outstanding letters of credit issued pursuant to any
Senior Claim Documents have been cancelled, terminated or cash
collateralized at 102.5% of the aggregate undrawn amount.
"Subordinated Debt" means all indebtedness owing to Junior
Claimant arising under or in respect of the Subordinated Debt
Documents.
"Subordinated Debt Documents" means [DESCRIBE SUBORDINATED
DEBT INSTRUMENT], any promissory note or other instrument relating
thereto and any other documents or instruments directly relating to the
foregoing (in each case, including any amendments, replacements or
substitutions thereof).
"Subordinated Debtor" means [INSERT CALGEN OR GUARANTOR
INCURRING THE SUBORDINATED DEBT].
Section [_].2. Certain Subordination Terms. Until the Senior
Obligations Termination Date, and notwithstanding anything in the Subordinated
Debt Documents to the contrary:
[__].2.1. Except as permitted under the Senior Claim Documents, the
Subordinated Debtor shall not, directly or indirectly, make any payment of
principal, interest or otherwise on or in respect of the Subordinated Debt.
[__].2..2. Except for the right to accept payments as provided in
Section [__].2.1 or [__].2.5(b), Junior Claimant shall not demand, ▇▇▇ for or
accept from the Subordinated Debtor or any other Person any such payment or
collateral, nor take any other action to enforce or collect upon any such
payment or to enforce its rights to receive any such payment, in either case in
respect of the Subordinated Debt, provided, however, that nothing herein shall
limit the right or ability of Junior Claimant (i) to receive payments from the
Subordinated Debtor in respect of the Subordinated Debt as provided in Section
[__].2.1 so long as no default or event of default under any Secured Debt
Document has occurred and is continuing, or (ii) to accelerate the maturity of
the Subordinated Debt at any time after all of the Senior Claims have been
accelerated; and provided further, that in the event that after an
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acceleration any of the Senior Claimants rescind the acceleration of the Senior
Claims, and provide written notice to Junior Claimant thereof, or Junior
Claimant otherwise becomes aware of such rescission, Junior Claimant shall
rescind the acceleration of the Subordinated Debt.
[__].2.3. Neither the Subordinated Debtor nor Junior Claimant shall
take any action prejudicial to or inconsistent with the Senior Claimants'
priority position over Junior Claimant created by this Article, including,
without limitation, any action which will hinder, delay or otherwise prevent the
Senior Claimants from taking any action they deem necessary to enforce rights
with respect to the Senior Claims or the Lien of the Senior Claim Documents. The
Junior Claimant shall not take any action or otherwise act to contest on account
of the Subordinated Debt (i) the validity or priority of any Liens or security
interests granted to, or for the benefit of, the Senior Claimants, (ii) the
relevant rights and duties of the Senior Claimants with respect to Junior
Claimant on account of any Subordinated Debt as established in this Article or
(iii) the Senior Claimants' exercise of remedies in accordance with the Senior
Claim Documents.
[__].2.4. Each document or instrument evidencing Subordinated Debt
shall bear a legend providing that payment of the Subordinated Debt thereunder
has been subordinated to prior payment of the Senior Claims in the manner and to
the extent set forth in this Article.
[__].2.5. Junior Claimant shall not commence or join with any other
creditor or creditors of the Subordinated Debtor in commencing any Proceeding
against the Subordinated Debtor, [CalGen, CalGen Holdings or any Guarantor--ADD
ALL THAT ARE NOT SUBORDINATED DEBTORS], but may join in any Proceeding after it
has commenced. At any general meeting of creditors of Subordinated Debtor,
[CalGen, CalGen Holdings or any Guarantor--ADD ALL THAT ARE NOT SUBORDINATED
DEBTORS], or in the event of any Proceeding, if all Senior Claims have not been
paid in full in cash at such time, the Collateral Agent on behalf of the Senior
Claimants is hereby irrevocably authorized at any such meeting or in any such
Proceeding:
(a) To enforce claims comprising Subordinated Debt in the name
of Junior Claimant, by proof of debt, proof of claim, suit or
otherwise;
(b) To collect any assets of the Subordinated Debtor
distributed, divided or applied by way of dividend or payment as a
result of a Proceeding, or such securities issued, on account of
Subordinated Debt as a result thereof and apply the same, or the
proceeds of any realization upon the same that the Senior Claimants in
their discretion elect to effect, to Senior Claims until all Senior
Claims shall have been paid in full in cash (the Senior Claimants
hereby agreeing to render any surplus to Junior Claimant and/or other
subordinated creditors, as their interests appear, or to interplead
such surplus with a court of competent jurisdiction); and
(c) To take generally any action in connection with any such
meeting or proceeding which Junior Claimant might otherwise take in
respect of the Subordinated Debt and claims relating thereto.
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After the commencement of any such Proceeding, Junior Claimant may
inquire in writing of the Collateral Agent on behalf of the Senior Claimants
whether the respective Senior Claimants intend to exercise the foregoing rights
with respect to the Subordinated Debt. Should the Senior Claimants fail, at
least 20 days before the deadline therefor, either to file a proof of claim with
respect to the Subordinated Debt and to furnish a copy thereof to Junior
Claimant, or to inform Junior Claimant in writing that the Senior Claimants
intend to exercise their rights to assert the Subordinated Debt in the manner
hereinabove provided, Junior Claimant may, but shall not be required to, proceed
to file a proof of claim with respect to the Subordinated Debt and take such
further steps with respect thereto, not inconsistent with this Article, as
Junior Claimant may deem proper.
[__].2.6. Upon the occurrence and during the continuation of an
event of default under a Secured Debt Document, Junior Claimant may, but shall
have no obligation to, upon not less than 10 days prior written notice to the
Collateral Agent, purchase all of the outstanding Senior Obligations owing to
the Senior Claimants by irrevocably tendering, in immediately available funds,
full payment of the Purchase Price (as defined below) to the Senior Claimants:
(a) The Purchase Price shall be equal to the total amount of
Senior Claims at the time of acceleration (assuming such obligations
have been accelerated);
(b) Any such purchase by Junior Claimant shall be without
warranty by, or recourse to, the Senior Claimants, except with respect
to the legal and beneficial ownership by the Senior Claimants of the
Obligations so purchased, free and clear of all Liens and rights of
others; and
(c) Concurrently with any such purchase, the Senior Claimants
shall forthwith sell, assign, transfer and convey to Junior Claimant
all of their right, title and interest in and to the Senior
Obligations, and all Liens and other security interests in favor of the
Senior Claimants securing the obligations of the Subordinated Debtor in
connection therewith.
Section [__].3. Senior Claim Documents. The Junior Claimant
acknowledges that it has been provided with a copy of the Senior Claim Documents
and has read and is familiar with the provisions thereof.
Section [__].4. Time of Filing. Notwithstanding the time of filing,
attachment or recording of any document or other instrument, it is agreed by
Junior Claimant that any Liens arising under or pursuant to the Senior Claim
Documents shall be senior to any Liens arising in favor of Junior Claimant as
part of or relating to the Subordinated Debt Documents, if any; provided,
however, that nothing herein shall be deemed to permit Junior Claimant to obtain
any such Liens.
Section [__].5. Wrongful Collections. Should any payment on account
of, or any collateral for any part of, the Subordinated Debt be received by
Junior Claimant in violation of this Article, such payment or collateral shall
be delivered forthwith to the Collateral Agent by
A-4
the recipient for application to Senior Claims, in the form received. The
Collateral Agent is irrevocably authorized to supply any required endorsement or
assignment which may have been omitted. Until so delivered, any such payment or
collateral shall be held by the recipient in trust for the Senior Claimants and
shall not be commingled with other funds or property of the recipient.
Section [__].6. Ownership of Subordinated Debt; Amendment of
Subordinated Debt Documents.
[__].6.1. The Junior Claimant represents and warrants that it
is the lawful owner of the Subordinated Debt. Any security interest in the
Junior Claimant's interest in the Subordinated Debt will at all times be subject
to the rights of the Senior Claimants hereunder. The Junior Claimant agrees that
it may not assign all or any portion of the Subordinated Debt or any of its
rights or remedies under the Subordinated Debt Documents unless any assignee
expressly agrees in writing for the benefit of the Collateral Agent that it
takes such Subordinated Debt subject in all respects to the rights of the Senior
Claimants hereunder.
[__].6.2. The Subordinated Debt Documents may not be amended
so as to have an adverse effect upon the Senior Claims or the Subordinated
Debtor's ability to pay the Senior Claims at any time.
Section [__].7. Waivers. The Collateral Agent and the Senior
Claimants are hereby authorized to demand specific performance of this Article,
whether or not the Subordinated Debtor shall have complied with the provisions
hereof applicable to it, at any time when Junior Claimant shall have failed to
comply with any provision hereof applicable to it. Junior Claimant hereby
irrevocably waives any defense based on the adequacy of a remedy at law which
might be asserted as a bar to the remedy of specific performance hereof in any
action brought therefor by the Senior Claimants. Junior Claimant (a) further
waives presentment, notice and protest in connection with all negotiable
instruments evidencing Senior Claims or Subordinated Debt to which Junior
Claimant may be a party, notice of the acceptance of this Article by the Senior
Claimants, notice of any loan made, extension granted or other action taken in
reliance hereon, and all demands and notices of every kind in connection with
this Article, Senior Claims or time of payment of Senior Claims or Subordinated
Debt and (b) hereby assents to any renewal, extension or postponement of the
time of payment of Senior Claims or any other indulgence with respect thereto,
to any increase in the amount of Senior Claims, to any substitution, exchange or
release of collateral therefor and to the addition or release of any person
primarily or secondarily liable thereon and assents to the provisions of any
instrument, security or other writing evidencing Senior Claims.
Section [__].8. Subrogation; No Impairment of Subordinated Debtor's
Obligations. Subject to and from and after the Senior Obligations Termination
Date, Junior Claimant shall be subrogated to the rights of the Senior Claimants
to receive payments or distributions of cash, property or securities of the
Subordinated Debtor applicable to the Senior Claims until all amounts owing on
the Subordinated Debt shall be paid in full. For purposes of such subrogation,
no payments or distributions to the Senior Claimants to which Junior Claimant
would be entitled but for the provisions of this Article, and no payments paid
over by Junior
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Claimant to Senior Claimants pursuant to this Article shall, as among the
Subordinated Debtor, its creditors other than the Senior Claimants, and Junior
Claimant, be deemed to be a payment or distribution on account of the
Subordinated Debt, it being understood that the provisions of this Article are
intended solely for the purpose of defining the relative rights of Junior
Claimant and the Senior Claimants. Nothing contained in this Article is intended
to or shall impair, as between the Subordinated Debtor and Junior Claimant, the
obligation of the Subordinated Debtor, which is absolute and unconditional, to
pay to Junior Claimant the principal of and the premium, if any, and the
interest on the Subordinated Debt, and all other amounts payable by the
Subordinated Debtor under the Subordinated Debt Documents, as and when the same
shall become due and payable, or to affect the relative rights of Junior
Claimant and creditors of Subordinated Debtor other than the Senior Claimants.
Section [__].9. Reinstatement. The obligations of Junior Claimant
under this Article shall continue to be effective, or be reinstated, as the case
may be, if at any time any payment in respect of any Senior Claim, or any other
payment to any holder of any Senior Claim in its capacity as such, is rescinded
or must otherwise be restored or returned by the holder of such Senior Claims
upon the occurrence of any Proceeding, or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar officer for,
the Subordinated Debtor or any substantial part of its property, or otherwise,
all as though such payment had not been made.
Section [__].10. Bankruptcy. This Article shall remain in full
force and effect as between Junior Claimant and the Senior Claimants
notwithstanding the occurrence of any Proceeding affecting the Subordinated
Debtor.
Section [__].11. Further Assurances. The Subordinated Debtor and
Junior Claimant shall execute and deliver to the Senior Claimants such further
instruments and shall take such further action as the Senior Claimants may at
any time or times reasonably request in order to carry out the provisions and
intent of this Article.
Section [__].12. Successors and Assigns. The provisions of this
Article shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. Neither Junior Claimant nor the Senior
Claimants shall have a duty to preserve rights against prior parties in any
property of any kind received hereunder. Nothing contained herein shall impose
on the Senior Claimants any duties with respect to any property of the
Subordinated Debtor or Junior Claimant received hereunder.
Section [__].13. Governing Law. This Article is intended to take
effect as a sealed instrument, shall be binding upon the parties hereto and
their respective executors, administrators, other legal representatives,
successors and assigns, and shall inure to the benefit of the Senior Claimants,
their respective successors and assigns and shall be governed by the laws of the
State of New York without reference to principles of conflict of laws (other
than Section 5-1401 of the New York General Obligations Law). The parties hereto
intend and agree that this Article shall remain binding on such parties (other
than the Subordinated Debtor) notwithstanding the termination (except upon the
payment in full of Senior Claims in cash) or unenforceability of this Article as
against the Subordinated Debtor.
A-6
EXHIBIT B
TO FIRST PRIORITY TERM LOAN AGREEMENT
FORM OF
ASSIGNMENT AGREEMENT
Date: _______ __, ____
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
as the Administrative Agent
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Calpine Generating Company, LLC
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Re: Calpine Generating Company, LLC - Assignment Agreement
Ladies and Gentlemen:
Reference is made to the
Credit and Guarantee Agreement, dated as of
March 23, 2004 (as amended, supplemented, replaced or otherwise modified from
time to time, the "First Priority Term Loan Agreement"), among Calpine
Generating Company, LLC, a Delaware limited liability company (the "Borrower"),
the guarantors from time to time party thereto, the lenders from time to time
party thereto, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as administrative agent
(with its successors and permitted assigns in such capacity, the "Administrative
Agent") and each of the other agents and arrangers listed on the signature pages
thereto. Unless otherwise defined herein, terms defined in the First Priority
Term Loan Agreement and used herein shall have the meanings given to them in the
First Priority Term Loan Agreement.
As of [INSERT EFFECTIVE DATE OF ASSIGNMENT] (the "Effective Date"),
[INSERT NAME OF ASSIGNOR] (the "Assignor") irrevocably sells, transfers, conveys
and assigns, without recourse, representation or warranty (except as expressly
set forth herein), to [INSERT NAME OF ASSIGNEE] (the "Assignee"), and the
Assignee irrevocably purchases from the Assignor and assumes (as more
particularly described in Schedule I hereto), (a) [INSERT PERCENTAGE OF FIRST
PRIORITY TERM LOANS TO BE ASSIGNED]% of the First Priority Term Loans under the
First Priority Term Loan Agreement (which represents $[INSERT AMOUNT OF FIRST
PRIORITY TERM LOANS TO BE ASSIGNED]) and (b) all rights, benefits, obligations,
liabilities, and indemnities related to such First Priority Term Loans under and
in connection with the First Priority Term Loan Agreement and the other First
Priority Term Loan Documents (the "Assigned Portion").
B-1
In addition, this Assignment Agreement constitutes notice to the
Administrative Agent, pursuant to Section 12.06 of the First Priority Term Loan
Agreement, of the assignment and delegation to the Assignee of the Assigned
Portion of the First Priority Term Loans of the Assignor outstanding under the
First Priority Term Loan Agreement as of the Effective Date, subject to its
written consents.
All accrued and unpaid interest, fees and other amounts payable with
respect to the Assigned Portion for any period of time prior to the Effective
Date shall be payable to the Assignor, and all accrued and unpaid interest, fees
and other amounts payable with respect to the Assigned Portion for any period
from and after the Effective Date shall be payable to the Assignee. The Assignor
and Assignee each agree to hold in trust for the other any such amounts that it
receives pursuant to any First Priority Term Loan Document and to which the
other party is entitled.
The Assignee confirms and agrees that in becoming a Lender and in
making its First Priority Term Loans under the First Priority Term Loan
Agreement, such actions have and will be made without recourse to, or
representation or warranty by, the Administrative Agent, except for the
representations expressly set forth below.
The Assignor represents and warrants that it is legally authorized to
enter into and deliver this Assignment Agreement, that its existing aggregate
First Priority Term Loans are as set forth on Schedule I hereto, that it is the
legal and beneficial owner of the Assigned Portion and that it has not created
any adverse claim on its interest in the Assigned Portion. Except as set forth
in the previous sentence, the Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made pursuant to or in connection with this Assignment
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Assignment Agreement, the First Priority Term Loan
Agreement, any other First Priority Term Loan Document or any other instrument
or document furnished pursuant hereto or thereto, including the financial
condition of any CalGen Company or the performance or observance by any Lender
or any of the Agents of any of its obligations under the First Priority Term
Loan Agreement, any other First Priority Term Loan Document or any other
instrument or document furnished pursuant hereto or thereto.
The Assignee (a) represents and warrants that (i) it is an Eligible
Assignee and that it is legally authorized to enter into and deliver this
Assignment Agreement, (ii) it has experience and expertise in the making of or
investing in loans such as the applicable First Priority Term Loans and (iii) it
will make or invest in its First Priority Term Loans for its own account in the
ordinary course of business and without a view to the distribution of such First
Priority Term Loans within the meaning of the Securities Act or the Exchange Act
or other federal securities laws, (b) confirms that it has received a copy of
the First Priority Term Loan Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 3.19 of the First Priority
Term Loan Agreement and copies of the documents which were required to be
delivered under the First Priority Term Loan Agreement as a condition to the
making of First Priority Term Loans thereunder and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (c) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the First Priority Term Loan Agreement and the other First Priority Term Loan
Documents are
B-2
required to be performed by it as a Lender, (d) acknowledges that it has
received copies of, consented to and approved the Collateral Trust Agreement,
and authorizes the Agents to perform their respective obligations thereunder and
(e) attaches the forms prescribed by applicable Governmental Authorities as to
the Assignee's status for purposes of determining exemption from withholding
taxes with respect to all payments to be made to the Assignee under any of the
First Priority Term Loan Documents or such other documents as are necessary to
indicate that all such payments are subject to such rates at a rate reduced by
an applicable tax treaty. In addition, the Assignee, independently and without
reliance upon the Assignor, the Administrative Agent, any other Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, shall continue to make its own credit decisions in
taking or not taking action under the First Priority Term Loan Agreement, the
other First Priority Term Loan Documents and the other instruments and documents
delivered in connection therewith. ASSIGNEE HEREBY ACKNOWLEDGES AND AGREES THAT
ITS LIEN PRIORITIES, THE DISTRIBUTION OF PROCEEDS OF COLLATERAL, THE EXERCISE OF
REMEDIES UNDER THE FIRST PRIORITY TERM LOAN AGREEMENT, AMENDMENTS AND WAIVERS TO
THE FIRST PRIORITY TERM LOAN DOCUMENTS, AND OTHER MATTERS RELATED TO THE
COLLATERAL ARE SUBJECT TO AND GOVERNED BY THE COLLATERAL TRUST AGREEMENT.
Following the execution of this Assignment Agreement, it will be
delivered to the Administrative Agent for recording by the Administrative Agent
pursuant to Section 12.06 of the First Priority Term Loan Agreement, effective
as of the Effective Date. The Assignor attaches hereto the First Priority Term
Loan Note held by it, if any, evidencing the Assigned Portion and (i) upon
request by the Assignee, will request that the Administrative Agent exchange the
attached First Priority Term Loan Note for a new First Priority Term Loan Note,
payable to the Assignee and (ii) if the Assignor has retained any interest, may
request that the Administrative Agent exchange the attached First Priority Term
Loan Note for a new First Priority Term Loan Note, payable to the Assignor, and
in each case in amounts which reflect the assignment being made hereby and after
giving effect to any other assignments which have become effective on the
Effective Date.
Except as otherwise provided in the First Priority Term Loan
Agreement, effective as of the Effective Date:
(a) the Assignee:
(i) shall be deemed automatically to have become a party to
the First Priority Term Loan Agreement, have all the rights and
obligations of a "Lender" under the First Priority Term Loan Agreement
and the other First Priority Term Loan Documents as if it were an
original signatory thereto to the extent specified in the second
paragraph of this Assignment Agreement, and hereby expressly confirms
its undertakings regarding its appointments and indemnity obligations
provided for in Article XII of the First Priority Term Loan Agreement;
and
(ii) agrees to be bound by the terms and conditions set
forth in the First Priority Term Loan Agreement and the other First
Priority Term Loan Documents as if it were an original signatory
thereto; and
B-3
(b) the Assignor shall be released from its obligations and
shall relinquish its rights under the First Priority Term Loan
Agreement and the other First Priority Term Loan Documents to the
extent specified in the second paragraph of this Assignment Agreement,
except with regard to those provisions that expressly survive the
termination of the First Priority Term Loan Agreement to the extent
such provisions relate to the time prior to the Effective Date.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned First Priority Term Loan
Commitments and First Priority Term Loans:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
(B) Payment Instructions:
[ASSIGNEE TO COMPLETE.]
The Assignee has attached hereto the forms, certificates or other
evidence required by Section 2.16(e) of the First Priority Term Loan Agreement
no later than the date of acceptance hereof by the Administrative Agent. The
Assignee has also attached hereto any powers of attorney or other public or
private documents requested by the Collateral Agent which are necessary to
enable the Collateral Agent to enforce any of the Security Documents on behalf
of the Secured Parties.
The Administrative Agent shall notify the Borrower of any such
assignments.
This Assignment Agreement may be executed by the Assignor and Assignee
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute
but one and the same agreement. The delivery of an executed signature page of
this Assignment Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. The parties hereto hereby
agree to execute and deliver such other documents or instruments as shall be
necessary to effect the purposes of this Assignment Agreement.
This Assignment Agreement shall be governed by the laws of the State of
New York without regard to the conflicts of law provisions thereof, other than
sections 5-1401 and 5-1402 of the General Obligations Law of the State of New
York.
(signature page follows)
B-4
IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Assignment Agreement as of the date first written above.
[INSERT NAME OF ASSIGNOR]
By:
------------------------------------
Name:
Title:
[INSERT NAME OF ASSIGNEE]
By:
------------------------------------
Name:
Title:
Accepted and acknowledged
for recording in the Register
this ____ day of ________, ____
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.
By:
-----------------------------------------
Name:
Title:
B-5
[INCLUDE THE FOLLOWING ACKNOWLEDGEMENTS AND AGREEMENTS IN RESPECT OF
ASSIGNMENTS FOR LESS THAN $1,000 IF SUCH ASSIGNMENT IS FOR AN AMOUNT THAT DOES
NOT CONSTITUTE THE AGGREGATE AMOUNT OF THE FIRST PRIORITY TERM LOANS OUTSTANDING
TO THE ASSIGNOR:]
Acknowledged and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.
By:
-----------------------------------------
Name:
Title:
CALPINE GENERATING COMPANY, LLC
By:
-----------------------------------------
Name:
Title:
B-6
SCHEDULE I
to Assignment Agreement
First Priority Term Loans
AGGREGATE AMOUNT OF FIRST PRIORITY AMOUNT OF FIRST PRIORITY PERCENTAGE OF ASSIGNED FIRST
TERM LOANS FOR ALL LENDERS TERM LOANS ASSIGNED PRIORITY TERM LOANS
---------------------------------- ------------------------ ----------------------------
%
%
%
%
%
B-7
EXHIBIT C
TO FIRST PRIORITY TERM LOAN AGREEMENT
[LETTERHEAD OF NON-U.S. LENDER]
FORM OF CERTIFICATE RE: NON-BANK STATUS
Certificate Date: _______ __, ____
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
as the Administrative Agent
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Re: Calpine Generating Company, LLC - Non-Bank Status
Ladies and Gentlemen:
Reference is made to the Credit and Guarantee Agreement, dated as of March
23, 2004 (as amended, supplemented, replaced or otherwise modified from time to
time, the "First Priority Term Loan Agreement"), among Calpine Generating
Company, LLC, a Delaware limited liability company (the "Borrower"), the
guarantors from time to time party thereto, the lenders from time to time party
thereto, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as administrative agent (with its
successors and permitted assigns in such capacity, the "Administrative Agent")
and each of the other agents and arrangers listed on the signature pages
thereto. Unless otherwise defined herein, terms defined in the First Priority
Term Loan Agreement and used herein shall have the meanings given to them in the
First Priority Term Loan Agreement.
[INSERT NAME OF NON-U.S. LENDER] (the "Non-U.S. Lender") is providing this
certificate pursuant to Section 2.16(e) of the First Priority Term Loan
Agreement. The Non-U.S. Lender hereby represents and warrants as follows:
1. The Non-U.S. Lender is the sole record and beneficial owner of the
First Priority Term Loans or the obligations evidenced by First Priority Term
Loan Note in respect of which it is providing this certificate.
2. The Non-U.S. Lender is not a "bank" for purposes of Section 871(h) or
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In
this regard, the Non-U.S. Lender further represents and warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other Legal
Requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for purposes
of any tax, securities law or other filing or submission made to any
Governmental
C-1
Authority, any application made to a rating agency or qualification
for any exemption from tax, securities law or other Legal
Requirements.
3. The Non-U.S. Lender is not a 10 percent shareholder of the Borrower
within the meaning of Section 871(h) or 881(c)(3)(B) of the Code.
4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 871(h) or
881(c)(3)(C) of the Code.
(signature page follows)
C-2
IN WITNESS WHEREOF, the undersigned has duly executed this certificate by
its respective authorized representative as of the day and year first above
written.
[INSERT NAME OF NON-U.S. LENDER]
By:
------------------------------------
Name:
Title:
C-3
EXHIBIT D
TO FIRST PRIORITY TERM LOAN AGREEMENT
[LETTERHEAD OF THE BORROWER]
FORM OF
CONTINUATION NOTICE
Date: _____ __, ____
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
as the Administrative Agent
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Re: Calpine Generating Company, LLC - Continuation Notice
Ladies and Gentlemen:
Reference is made to the Credit and Guarantee Agreement, dated as of March
23, 2004 (as amended, supplemented, replaced or otherwise modified from time to
time, the "First Priority Term Loan Agreement"), among Calpine Generating
Company, LLC, a Delaware limited liability company (the "Borrower"), the
guarantors from time to time party thereto, the lenders from time to time party
thereto, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as administrative agent (with its
successors and permitted assigns in such capacity, the "Administrative Agent")
and each of the other agents and arrangers listed on the signature pages
thereto. Unless otherwise defined herein, terms defined in the First Priority
Term Loan Agreement and used herein shall have the meanings given to them in the
First Priority Term Loan Agreement.
The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.06
of the First Priority Term Loan Agreement, that the Borrower hereby requests a
[CONTINUATION] [CONVERSION] of First Priority Term Loans under the First
Priority Term Loan Agreement and, in connection therewith, sets forth below the
information relating to such [CONTINUATION] [CONVERSION] (the "Proposed
[CONTINUATION] [CONVERSION]") as required by Section 2.06 of the First Priority
Term Loan Agreement.
(a) The Borrower hereby requests that First Priority Term Loans be
[CONTINUED] [CONVERTED] as follows:
(i) The first day of the new Interest Period in respect of the
Proposed [CONTINUATION] [CONVERSION] is ________ __, ____ (which is a
Business Day).
(ii) [IF SUCH FIRST PRIORITY TERM LOANS ARE TO BE CONTINUED WITH NO
CHANGE IN ANY TYPE OF LOAN(1):] $___________ of the currently outstanding
principal amount of
------------
(1) LIBOR Rate Loans may only be continued in a minimum amount equal to
$5,000,000 and in integral multiples of $1,000,000 in excess of that
amount.
D-1
First Priority Term Loans currently being maintained as First Priority Term
Loans with an Interest Period of [ONE] [TWO] [THREE] [SIX] month(s), the
last day of which is the day immediately preceding the first day of the
Proposed Continuation referred to in clause (i) above, should be continued
as $__________ of First Priority Term Loans with an Interest Period of
[ONE] [TWO] [THREE] [SIX] month(s).
(iii) [IF SUCH FIRST PRIORITY TERM LOANS ARE TO BE CONVERTED:]
$___________ of the currently outstanding principal amount of First
Priority Term Loans which are [BASE RATE LOANS] [LIBOR RATE LOANS(2)] with
an Interest Period of [ONE] [TWO] [THREE] [SIX] month(s), the last day of
which is the day immediately preceding the first day of the Proposed
Conversion referred to in clause (i) above, should be converted to [BASE
RATE LOANS] [LIBOR RATE LOANS] with an Interest Period of [ONE] [TWO]
[THREE] [SIX] month(s).
(b) The Borrower hereby certifies that, as of the date hereof, no Default
or Event of Default has occurred and is continuing.
(signature page follows)
-----------
(2) LIBOR Rate Loans may only be converted upon the expiration of the Interest
Period applicable to such LIBOR Rate Loan.
D-2
IN WITNESS WHEREOF, the Borrower has caused this Continuation Notice to be
executed and delivered by a duly authorized officer of the Borrower on the date
first written above.
CALPINE GENERATING COMPANY, LLC
By:
------------------------------------
Name:
Title:
D-3
EXHIBIT E
TO FIRST PRIORITY TERM LOAN AGREEMENT
CALPINE GENERATING COMPANY, LLC
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FORM OF FUNDING NOTICE
Certificate Date: March __, 2004(1)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
as the Administrative Agent
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Re: Calpine Generating Company, LLC - Funding Notice
Ladies and Gentlemen:
Reference is made to the Credit and Guarantee Agreement, dated as of March
23, 2004 (as amended, supplemented, replaced or otherwise modified from time to
time, the "Term Loan Agreement"), among Calpine Generating Company, LLC, a
Delaware limited liability company (the "Borrower"), the guarantors from time to
time party thereto, the lenders from time to time party thereto, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Funding, Inc., as administrative agent (with its successors (and
permitted assigns) in such capacity, the "Administrative Agent") and each of the
other agents and arrangers listed on the signature pages thereto. Unless
otherwise defined herein, terms defined in the First Priority Term Loan
Agreement and used herein shall have the meanings given to them in the First
Priority Term Loan Agreement.
The Borrower hereby gives you notice in accordance with Section 2.01 of the
First Priority Term Loan Agreement that the Borrower irrevocably requests that a
First Priority Term Loan be made on March 23, 2004 (which date is a Business
Day), which shall be a LIBOR Rate Loan in an aggregate principal amount of
$600,000,000 with an initial Interest Period ending March 31, 2004.
(signature page follows)
-----------
(1) The Borrower must deliver the Funding Notice to the Administrative Agent or
before the date which is three Business Days prior to the Closing Date.
E-1
IN WITNESS WHEREOF, the Borrower has caused this Funding Notice to be
executed and delivered by a duly authorized officer of the Borrower on the date
first written above.
CALPINE GENERATING COMPANY, LLC
By:
------------------------------------
Name:
Title:
E-2
EXHIBIT F
TO FIRST PRIORITY TERM LOAN AGREEMENT
FORM OF FIRST PRIORITY TERM NOTE
$__________ ____________, _____
FOR VALUE RECEIVED, the undersigned, Calpine Generating Company, LLC, a
Delaware limited liability company (the "Borrower"), hereby unconditionally
promises to pay to the order of ________________________ (the "Lender") the
principal sum in immediately available funds, of ________________________ or
such lesser amount as may be outstanding from time to time hereunder pursuant to
the First Priority Term Loan Agreement (as defined below). The Borrower further
agrees to pay interest in like money at the Principal Office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in Section 2.05 of the First Priority Term Loan Agreement.
The holder of this First Priority Term Loan Note is authorized to endorse
on the schedules annexed hereto and made a part hereof, or on a continuation
thereof which shall be attached hereto and made a part hereof, the date and
amount of each payment or prepayment of principal hereof, each continuation
hereof and the length of each Interest Period with respect hereto. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any error in
any such endorsement shall not affect the obligations of the Borrower in respect
of any First Priority Term Loan.
This First Priority Term Loan Note (a) is one of the First Priority Term
Loan Notes referred to in the Credit and Guarantee Agreement, dated as of March
23, 2004 (as amended, supplemented, replaced or otherwise modified from time to
time, the "First Priority Term Loan Agreement"), among the Borrower, the
guarantors from time to time party thereto, the lenders from time to time party
thereto, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as administrative agent (with its
successors and permitted assigns in such capacity, the "Administrative Agent")
and each of the other agents and arrangers listed on the signature pages
thereto; (b) is subject to the provisions of the First Priority Term Loan
Agreement and (c) is subject to voluntary and mandatory prepayment in whole or
in part as provided in the First Priority Term Loan Agreement. This First
Priority Term Loan Note is secured and guaranteed as provided in the First
Priority Term Loan Documents. Reference is hereby made to the First Priority
Term Loan Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this First Priority
Term Loan Note in respect thereof.
Upon the occurrence of any Event of Default, all principal and all accrued
interest then remaining unpaid on this First Priority Term Loan Note shall
become, or may be declared to be, immediately due and payable, all as provided
in, and subject to, the First Priority Term Loan Agreement.
F-1
All parties now and hereafter liable with respect to this First Priority
Term Loan Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive presentment, demand, protest and all other notices of
any kind.
This First Priority Term Loan Note is subject to the limitations on
recourse set forth in Section 12.22 of the First Priority Term Loan Agreement.
Repayments of principal, interest and all other amounts due with respect to
or in connection with this First Priority Term Loan Note are subject to the
terms of the Collateral Trust Agreement (as defined in the First Priority Term
Loan Agreement).
Unless otherwise defined herein, terms defined in the First Priority Term
Loan Agreement and used herein shall have the meanings given to them in the
First Priority Term Loan Agreement.
This First Priority Term Loan Note has been delivered in New York, New York
and shall be deemed to be a contract made under, governed by and construed in
accordance with the laws of the State of New York without regard to the conflict
of law provisions thereof (other than sections 5-1401 and 5-1402 of the General
Obligations Law of the state of New York).
CALPINE GENERATING COMPANY, LLC
By:
------------------------------------
Name:
Title:
F-2
Schedule A
to First Priority Term Loan Note
FIRST PRIORITY TERM LOANS AND REPAYMENTS OF FIRST PRIORITY TERM LOANS
Date Amount of First Priority Term Loans Type of Loan Interest Period Amount of Principal Repaid Notation Made By
---- ----------------------------------- ------------ --------------- -------------------------- ----------------
EXHIBIT G
TO FIRST PRIORITY TERM LOAN AGREEMENT
FORM OF OPINIONS
[SEE ATTACHED]
G-1
SCHEDULE A
TO FIRST PRIORITY TERM LOAN AGREEMENT
THIRD PARTY PROJECT DOCUMENTS
Baytown
1. Energy Services Agreement, dated as of January 12, 2000, between Bayer
Corporation and Baytown Energy Center, L.P. (as assignee of Calpine
Construction Finance Company, L.P.), as amended by Amendment of
Project Documents dated as of August 13, 2002.
2. Services Agreement, dated as of January 12, 2000, between Bayer
Corporation and Baytown Energy Center, L.P. (as assignee of Calpine
Construction Finance Company, L.P.), as amended by Amendment of
Project Documents, dated as of August 13, 2002.
3. Ground Lease and Easement Agreement, dated as of January 12, 2000,
between Bayer Corporation and Baytown Energy Center, L.P. (as assignee
of Calpine Construction Finance Company, L.P.), as amended by
Amendment of Project Documents, dated as of August 13, 2002.
▇▇▇▇▇▇▇▇
1. Energy Services Agreement, dated as of December 28, 1999, between
Cos-Mar Incorporated and ▇▇▇▇▇▇▇▇ Energy LLC, as amended by Amendment
No. 1 to Energy Services Agreement, dated as of April 30, 2000, and
Amendment No. 2 to Energy Services Agreement, dated as of June 26,
2001.
2. Agreement for Purchased Power from Qualified Cogeneration Facility,
dated as of August 31, 2002, between Entergy Gulf States, Inc. and
▇▇▇▇▇▇▇▇ Energy LLC.
Channel
1. Energy Services Agreement, dated as of January 25, 2000, between
Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.).
2. Facility Services Agreement, dated as of January 25, 2000, between
Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.).
3. Operating Lease Agreement, dated as of January 25, 2000, between
Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction
Schedule A-2-1
Finance Company, L.P.), as amended by Amendment No. 1 to Operating
Lease Agreement, dated as of March 30, 2001.
4. Amended and Restated Ground Lease and Easement Agreement, dated as of
October 30, 2001, between Lyondell-Citgo Refining LP and Channel
Energy Center, L.P.
Columbia
1. Energy Services Agreement, dated as of August 15, 2000, between
▇▇▇▇▇▇▇ Chemical Company and Columbia Energy LLC, as amended by First
Amendment to Energy Services Agreement, dated as of August 1, 2001,
and Second Amendment to Energy Services Agreement, dated as of October
1, 2002.
2. Amended and Restated Ground Lease Agreement, dated as of August 1,
2001, between ▇▇▇▇▇▇▇ Chemical Company and Columbia Energy LLC, as
amended by First Amendment to Amended and Restated Ground Lease
Agreement, dated as of October 22, 2002.
Corpus Christi
1. Energy Services Agreement. dated as of March 23, 1999. between Corpus
Christi Cogeneration LP (as assignee of Nueces Bay Energy LLC) and
Citgo Refining and Chemicals, L.P., as amended by Amendment No. 1 to
Energy Services Agreement, dated as of March 22, 2001, and Second
Amendment of Energy Services Agreement, dated as of August 24, 2001.
2. Restated Energy Services Agreement - Steam, dated as of July 26, 2002,
between Corpus Christi Cogeneration LP and Elementis Chromium L.P.
3. Energy Services Agreement, dated as of July 24, 2003, between Corpus
Christi Cogeneration LP and Flint Hills Resources, LP.
4. Project Site Lease Agreement, dated as of June 21, 1999, between
Corpus Christi Cogeneration LP (as assignee of Nueces Bay Energy LLC)
and Citgo Refining and Chemicals, L.P., as amended by First Amendment
of Project Site Lease Agreement, dated as of August 24, 2001.
Decatur
1. Second Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of January 31, 2001, between Solutia Inc. and
Decatur Energy Center, LLC, as amended by First Amendment to Second
Amended and Restated Lease, Steam Sales and Shared Services Agreement,
dated as of June 28, 2001, Second Amendment to Second Amended and
Restated Lease, Steam Sales and Shared Services Agreement, dated as of
August 13, 2001, Third Amendment to Second Amended and Restated Lease,
Steam Sales and Shared Services Agreement, dated as of October 31,
2001, Fourth Amendment
Schedule A-2-2
to Second Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of January 28, 2002, and Fifth Amendment to Second
Amended and Restated Lease, Steam Sales and Shared Services Agreement,
dated as of October 7, 2002.
2. Power Purchase Agreement, dated as of June 21, 2002, between Decatur
Energy Center, LLC and Tennessee Valley Authority.
Delta
1. Merchant Plant Lease, dated as of April 13, 2000, between The Dow
Chemical Company and Delta Energy Center, LLC (as assignee of Calpine
Construction Finance Company, L.P.), as amended by First Amendment to
Merchant Plant Lease, dated as of July 31, 2001, Second Amendment to
Merchant Plant Lease, dated as of December 14, 2001, Third Amendment
to Merchant Plant Lease, dated as of February 20, 2003, and Fourth
Amendment to Merchant Plant Lease, dated as of February 20, 2003.
2. Must-Run Service Agreement, dated as of February 10, 2003, between
Delta Energy Center LLC and California Independent System Operator
Corporation and Offer Letter from Delta Energy Center LLC to
California Independent System Operator Corporation for Provision of
RMR Services in 2004.
Freestone
None.
Los Medanos
1. Energy Purchase and Sale Agreement, dated as of December 21, 1998,
between USS-POSCO Industries and Los Medanos Energy Center, LLC (as
successor in interest to Pittsburg District Energy Facility, LLC), as
amended by Modification Agreement (First Amendment to Energy Purchase
and Sale Agreement), dated as of June 30, 1999, and Second Amendment
to Energy Purchase and Sale Agreement, dated as of April 30, 2001.
2. Ground Lease Agreement, dated as of October 4, 1999, between USS-POSCO
Industries and Los Medanos Energy Center, LLC (as successor in
interest to Pittsburg District Energy Facility, LLC), as amended by
First Amendment to Ground Lease Agreement, dated as of August 25,
2000, Second Amendment to Ground Lease Agreement, dated as of October
30, 2000, Third Amendment to Ground Lease Agreement, dated as of July
6, 2001, and Fourth Amendment to Ground Lease Agreement, dated as of
May 31, 2002.
3. Energy Supply Arrangements with Dow comprising: Binding Letter of
Intent, dated as of December 10, 2002, among The Dow Chemical Company,
Los Medanos Energy Center, LLC, Calpine Pittsburg, LLC, and Delta
Energy Center, LLC; Steam Supply Agreement, dated as of December 10,
2002, between Calpine Pittsburg, LLC and Los Medanos Energy Center,
LLC; and Agreement Regarding Power and Steam Supply, dated as of
Schedule A-2-3
December 10, 2002, among Calpine Pittsburg, LLC, Los Medanos Energy
Center, LLC, and Delta Energy Center, LLC.
4. Amended and Restated Must-Run Service Agreement, dated June 17, 2003,
between Los Medanos Energy Center, LLC and California Independent
System Operator Corporation.
▇▇▇▇▇▇
1. Project Agreement, dated as of June 1, 2000, between BP Amoco Chemical
Company and ▇▇▇▇▇▇ Energy Center, LLC (as assignee of Calpine
Construction Finance Company, L.P.), as amended by First Amendment to
Project Agreement, dated as of August 20, 2001.
2. Energy Sales Agreement, dated as of June 1, 2000, between BP Amoco
Chemical Company and ▇▇▇▇▇▇ Energy Center, LLC (as assignee of Calpine
Construction Finance Company, L.P.), as amended by First Amendment to
Energy Sales Agreement, dated as of August 20, 2001, and Second
Amendment to Energy Sales Agreement, dated as of July 31, 2003.
3. Site Interface Agreement, dated as of September 29, 2000, between BP
Amoco Chemical Company and ▇▇▇▇▇▇ Energy Center, LLC (as assignee of
Calpine Construction Finance Company, L.P.).
4. Land Lease, dated as of September 29, 2000, between BP Amoco Chemical
Company and ▇▇▇▇▇▇ Energy Center, LLC (as assignee of Calpine
Construction Finance Company, L.P.), as amended by First Amendment of
Land Lease and Memorandum of Lease and Grant of Easements, dated as of
August 20, 2001, and Second Amendment of Land Lease and Memorandum of
Lease and Grant of Easements, dated as of December 13, 2001.
5. Power Purchase Agreement, dated as of June 19, 2003, between ▇▇▇▇▇▇
Energy Center, LLC and Tennessee Valley Authority.
▇▇▇▇▇
None.
Pastoria
1. Ground Lease, dated as of July 19, 2001, between Tejon Ranchcorp and
Pastoria Energy Facility L.L.C., as amended by Landlord
Non-disturbance and Consent Agreement, dated as of September 28, 2001.
Zion
Schedule A-2-4
1. Amended and Restated Fuel Conversion Services Agreement, dated as of
April 28, 2003, between Zion Energy LLC and Wisconsin Electric Power
Company.
Schedule A-2-5
SCHEDULE 2.09
TO FIRST PRIORITY TERM LOAN AGREEMENT
AMORTIZATION SCHEDULE
PERCENTAGE OF ORIGINAL PRINCIPAL
PAYMENT DATE AMOUNT PAYABLE ON SUCH DATE
------------ --------------------------------
July 1, 2007 0.250%
October 1, 2007 0.250%
January 1, 2008 0.250%
April 1, 2008 0.250%
July 1, 2008 0.250%
October 1, 2008 0.250%
January 1, 2009 0.250%
All remaining principal of the First Priority Term Loans will be payable on
April 1, 2009.
Schedule 2.09-1
SCHEDULE 4.01
TO FIRST PRIORITY TERM LOAN AGREEMENT
CAPITAL STRUCTURE
[SEE ATTACHED]
Schedule 4.01-1
SCHEDULE 4.11
TO FIRST PRIORITY TERM LOAN AGREEMENT
LITIGATION
We are party from time to time to various litigation matters arising in the
normal course of business. On July 22, 2003, PG&E filed with CPUC a complaint
and request for immediate issuance of an order to show cause against Calpine,
CPN Pipeline Company, CES, Calpine Natural Gas Company and LGS. The complaint
requests that CPUC issue an order requiring the defendants to (i) show cause why
they should not be ordered to cease and desist from using any direct
interconnections between the facilities of CPN Pipeline Company and those of
LGS, unless such parties first seek and obtain regulatory approval from CPUC,
and (ii) pay to PG&E any underpayments of PG&E's tariffed transportation rates
and to make restitution for any profits earned from any business activity
related to LGS' direct interconnections to any entity other than PG&E. The
complaint also seeks an order permanently enjoining LGS and any entity other
than PG&E from entering into or utilizing direct interconnections with LGS, and
directing defendants to pay to PG&E any underpayments of PG&E's tariffed
transportation rates and to make restitution for any profits earned from any
business activity related to LGS' direct interconnections to any entity other
than PG&E. The complaint also alleges that various natural gas consumers,
including Calpine-affiliated generation facilities within California, are
engaged with defendants in the acts complained of, and that the defendants
unlawfully bypass PG&E's system and operate as an unregulated local distribution
company within PG&E's service territory. On August 27, 2003, Calpine filed its
answer and a motion to dismiss, which was denied on October 16, 2003.
On January 15, 2004, PG&E, the Calpine entities and LGS entered into the
Settlement which would resolve all issues raised by the complaint. Although the
Settlement became effective as of January 15, 2004, certain of its terms will
only become effective upon approval of the Settlement by CPUC, and in the event
that CPUC does not approve the Settlement certain of its provisions will become
null and void. Upon approval of the Settlement by CPUC, PG&E would be paid $2.7
million and the parties would release all claims relating to prior periods. PG&E
also would agree not to pursue any new claim of unauthorized public utility
activity against the Calpine entities named in the complaint, except insofar as
such new claim raises matters not raised in the complaint, or with respect to a
change in the facts and circumstances relating to alleged unauthorized public
utility activity from those facts and circumstances existing as of January 15,
2004. As provided by the Settlement. the direct interconnections between CPN
Pipeline and LGS have been shut down pending possible future regulatory action.
In accordance with the procedural schedule adopted by the presiding
administrative law judge, a settlement meeting was conducted pursuant to CPUC
settlement procedures on January 26, 2004. The settling parties filed a motion
for approval of the Settlement on February 6. Comments on the Settlement were
due March 8, and no party filed comments opposing any provision of the
settlement agreement. Reply comments are due March 23.
Schedule 4.11-1
The complaint does not name us or our facilities as defendants. However, if
the Settlement is not approved, there can be no assurances that this litigation
will not adversely affect CPN Pipeline Company's ability to perform its
obligations under the Cotenancy, Operating and Maintenance Agreement among CPN
Pipeline Company, Gilroy Energy Center, LLC, the Delta facility and the Los
Medanos facility.
On June 11, 2003, the Estate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Estate of ▇▇▇▇▇▇▇
▇▇▇▇▇ filed a complaint against Calpine in the U.S. District Court, Western
District of Washington. Calpine purchased Goldendale Energy, Inc., a Washington
corporation, from ▇▇▇▇▇▇▇ ▇▇▇▇▇. The agreement provided, among other things,
that upon substantial completion of the Goldendale facility, Calpine would pay
▇▇. ▇▇▇▇▇ (i) $6.0 million and (ii) $18.0 million less $0.2 million per day for
each day that elapsed between July 1, 2002 and the date of substantial
completion. Substantial completion of the Goldendale facility has not occurred
and the daily reduction in the payment amount has reduced the $18.0 million
payment to zero. The complaint alleges that by not achieving substantial
completion by July 1, 2002, Calpine breached its contract with ▇▇. ▇▇▇▇▇,
violated a duty of good faith and fair dealing, and caused an inequitable
forfeiture. The complaint seeks damages in an unspecified amount in excess of
$75,000. On July 28, 2003, Calpine filed a motion to dismiss the complaint for
failure to state a claim upon which relief can be granted. The court granted
Calpine's motion to dismiss the complaint on March 10, 2004. The plaintiffs may
appeal, and could also seek reconsideration of the decision.
The ultimate outcome of these matters cannot presently be determined, nor
can the liability that could potentially result from a negative outcome in each
case presently be reasonably estimated.
Schedule 4.11-2
SCHEDULE 4.18 (B)
TO FIRST PRIORITY TERM LOAN AGREEMENT
QUALIFYING FACILITIES
1. Baytown Energy Center, LP
2. ▇▇▇▇▇▇▇▇ Energy LLC
3. Channel Energy Center, LP
4. Corpus Christi Cogeneration LP
5. Columbia Energy LLC
6. Decatur Energy Center, LLC
7. Los Medanos Energy Center LLC
8. ▇▇▇▇▇▇ Energy Center, LLC
Schedule 4.18(b)-1
SCHEDULE 4.18(C)
TO FIRST PRIORITY TERM LOAN AGREEMENT
EXEMPT WHOLESALE GENERATORS
1. Delta Energy Center, LLC
2. Goldendale Energy Center, LLC
3. Pastoria Energy Center L.L.C.
4. Freestone Power Generation LP
5. Calpine ▇▇▇▇▇ Power, L.P.
6. Zion Energy LLC
Schedule 4.18(c)-1