EXHIBIT 10.77
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DISBURSEMENT AND SECURITY AGREEMENT
among
COGEN TECHNOLOGIES NJ VENTURE,
Borrower,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
Lender, and
MIDLANTIC NATIONAL BANK,
Disbursement Trustee
Dated as of December 15, 1988
Bayonne Cogeneration Project
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS..................................................... 1
ARTICLE II
APPOINTMENT OF DISBURSEMENT TRUSTEE;
CREATION OF ACCOUNTS
SECTION 2.01. Appointment of Disbursement
Trustee...................................... 1
SECTION 2.02. Creation of Revenue Account.................. 2
SECTION 2.03. Creation of Debt Service Reserve
Account...................................... 2
SECTION 2.04. Creation of Current Debt
Account...................................... 2
SECTION 2.05. Creation of Insurance Account................ 2
ARTICLE III
ASSIGNMENT, PLEDGE AND GRANT OF
SECURITY INTEREST
SECTION 3.01. Assignment .................................... 3
ARTICLE IV
DEPOSITS INTO ACCOUNTS
SECTION 4.01. (a) Deposit of Revenues, etc .................. 3
(b) Insurance Proceeds ........................ 3
SECTION 4.02. Information to Accompany Amounts
Delivered to Disbursement
Trustee; Deposits Irrevocable................ 4
SECTION 4.03. Books of Account; Statements .................. 4
(i)
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ARTICLE V
TRANSFERS FROM ACCOUNTS
SECTION 5.01. Transfers From Accounts -
No Debt Service Reserve
Period....................................... 4
SECTION 5.02. Transfers From Accounts During
Debt Service Reserve Period.................. 5
SECTION 5.03. Delivery of Certificates; Timing
of Payments.................................. 6
SECTION 5.04. Defaults....................................... 7
ARTICLE VI
INVESTMENT...................................................... 7
ARTICLE VII
TRUSTEE......................................................... 8
ARTICLE VIII
DETERMINATIONS
SECTION 8.01. Value.......................................... 9
SECTION 8.02. Disputes....................................... 10
SECTION 8.03. Cash Available................................. 10
ARTICLE IX
REMEDIES
SECTION 9.01. Remedies....................................... 10
SECTION 9.02. Remedies Cumulative; Delay
Not Waiver................................... 11
SECTION 9.03. Superior Liens................................. 12
(ii)
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. Fees and Indemnification of
Disbursement Trustee......................... 12
SECTION 10.02. Replacement or Resignation of
Disbursement Trustee......................... 13
SECTION 10.03. Termination.................................... 14
SECTION 10.04. Severability................................... 14
SECTION 10.05. Counterparts................................... 14
SECTION 10.06. Amendments..................................... 14
SECTION 10.07. Applicable Law................................. 14
SECTION 10.08. Notices........................................ 15
SECTION 10.09. Benefit of Agreement........................... 15
SCHEDULE I Addresses for Payments and Notices
SCHEDULE II Disbursement Agreement Definitions
(iii)
DISBURSEMENT AND SECURITY AGREEMENT dated as of December 15, 1988
among COGEN TECHNOLOGIES NJ VENTURE, a general partnership organized under the
laws of the State of New Jersey (the "Borrower"), THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA (the "Lender") and MIDLANTIC NATIONAL BANK, a national
banking association (the "Disbursement Trustee").
The Borrower and the Lender are parties to a Term Loan Agreement dated
as of November 1, 1987 (the "Term Loan Agreement"). The Term Loan Agreement
contemplates that, on or prior to the Borrowing Date, the parties hereto shall
execute and deliver this Disbursement Agreement, which provides for, inter alia,
(1) the appointment of Midlantic National Bank, as disbursement trustee, (2) the
deposit, investment and disbursement of all Project Revenues during the term
hereof and (3) the funding, maintenance and investment of a debt service reserve
fund under certain terms and conditions. Pursuant to the terms of this
Agreement, the Borrower will pledge and collaterally assign all its rights to
such revenues to the Lender to secure the Term Loan Payments to be made by it
under the Term Loan Agreement. The Disbursement Trustee will hold the Project
Revenues in the Accounts established hereunder as security agent and in trust
for the Lender.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used herein and not otherwise defined herein or in
the Term Loan Agreement shall have the meanings assigned to them in Schedule II
attached hereto.
ARTICLE II
APPOINTMENT OF DISBURSEMENT TRUSTEE;
CREATION OF ACCOUNTS
SECTION 2.01. Appointment of Disbursement Trustee. Midlantic National
Bank is hereby appointed by the
Lender to act as disbursement trustee hereunder (the "Disbursement Trustee") and
hereby agrees to receive and deposit Project Revenues in the Accounts in
accordance with this Agreement. The Disbursement Trustee shall hold and
safeguard the Accounts (and the revenues, cash, payments, securities,
investments and other amounts on deposit therein) during the term of this
Disbursement Agreement as security agent and in trust for the Lender and shall
treat the Accounts as trust funds to be held in accordance with the terms hereof
and as security for the obligations of the Borrower to make the Term Loan
Payments.
SECTION 2.02. Creation of Revenue Account. There is hereby created and
established a special, segregated and irrevocable trust fund entitled the
"Bayonne Revenue Account" (the "Revenue Account") to be held in the custody of
the Disbursement Trustee as security agent and in trust for the Lender. No
payments shall be made out of the Revenue Account except for the purposes and on
the terms herein stated.
SECTION 2.03. Creation of Debt Service Reserve Account. There is
hereby created and established a special, segregated and irrevocable trust fund
entitled the "Bayonne Debt Service Reserve Account" (the "Debt Service Reserve
Account") to be held in the custody of the Disbursement Trustee as security
agent and in trust for the Lender. No payments shall be made out of such trust
fund except for the purposes and on the terms herein stated.
SECTION 2.04. Creation of Current Debt Account. There is hereby
created and established a special, segregated and irrevocable trust fund
entitled the "Bayonne Current Debt Account" (the "Current Debt Account") to be
held in the custody of the Disbursement Trustee as security agent and in trust
for the Lender. No payments shall be made out of such trust fund except for the
purposes and on the terms herein stated.
SECTION 2.05. Creation of Insurance Account. There is hereby created
and established a special, segregated and irrevocable trust fund entitled the
"Bayonne Insurance Account" (the "Insurance Account") to be held in the custody
of the Disbursement Trustee as security agent and in trust for the Lender. No
payments shall be made out of such trust fund except for the purposes and on the
terms herein stated.
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ARTICLE III
ASSIGNMENT, PLEDGE AND GRANT OF
SECURITY INTEREST
SECTION 3.01. Assignment. To secure the timely payment of all Term
Loan Payments due and owing by the Borrower, the Borrower does hereby assign,
transfer and pledge to, and subject to a security interest in favor of, the
Lender, all the estate, right, title and interest of the Borrower in and to (i)
all amounts payable under the Assigned Contracts, including without limitation,
the Power Purchase Agreements; (ii) all other Project Revenues and any other
moneys derived from the Project; (iii) each of the Accounts, including all
moneys and investment securities held in such Accounts and all other funds held
by the Disbursement Trustee as depositary under this Agreement; and (iv) the
proceeds of all the foregoing (all the collateral described above being herein
collectively called the "Collateral Security"). The Borrower hereby relinquishes
to the Disbursement Trustee as security agent for the Lender all right, title
and interest which the Borrower has in the Collateral Security, subject to the
terms and conditions of this Agreement. The Disbursement Trustee shall maintain
at all times a list of Permitted Investments, shall obtain receipts from all
transferors of Permitted Investments in the Accounts and shall take such other
action as may be requested by the Lender in order to comply with the provisions
of the UCC governing the perfection of security interests in property similar to
the Permitted Investments.
ARTICLE IV
DEPOSITS INTO ACCOUNTS
SECTION 4.01. (a) Deposit of Revenues, etc. As soon as practicable
after the Borrower receives any Project Revenue, the Borrower shall deliver (or
cause to be delivered) such to the Disbursement Trustee. The Borrower agrees to
request each Buyer to make all payments under its respective Power Purchase
Agreement directly to the Disbursement Trustee (such notice to be in form and
scope satisfactory to the Lender). The Disbursement Trustee shall deposit all
such Project Revenues received from the Borrower or a Buyer into the Revenue
Account.
(b) Insurance Proceeds. Any insurance proceeds received by the
Disbursement Trustee in connection with any
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Event of Loss or Partial Loss or Damage shall be deposited by the Disbursement
Trustee into the Insurance Account for application in accordance with the Term
Loan Agreement. The Disbursement Trustee shall transfer amounts in the Insurance
Account as directed by the Lender.
SECTION 4.02. Information to Accompany Amounts Delivered to
Disbursement Trustee; Deposits Irrevocable. (a) The Borrower agrees that as to
all amounts delivered to the Disbursement Trustee it shall, on the date of any
such delivery, provide the Disbursement Trustee with information in reasonable
detail specifying the source of the amounts and the Account or Accounts into
which such amounts are to be deposited.
(b) Any deposit made into any Account (except any deposit made through
clerical or other manifest error) shall be irrevocable and the amount of such
deposit and any security held in any Account and all interest and gains thereon
shall be held in trust by the Disbursement Trustee and applied, invested and
transferred solely as provided herein.
SECTION 4.03. Books of Account; Statements. (a) The Disbursement
Trustee shall maintain books of account on a cash basis and record therein all
deposits into and transfers to and from the Accounts and all investment
transactions effected by the Disbursement Trustee pursuant to Article VI. The
Disbursement Trustee shall make such books of account available during normal
business hours for inspection and audit by the Borrower and the Lender and their
respective representatives.
(b) Not later than 10 Business Days after each Monthly Distribution
Date, the Disbursement Trustee shall deliver to each of the parties hereto, a
statement setting forth the transactions into and out of each Account since the
previous Monthly Distribution Date and specifying the revenues, cash, payments,
securities, investments and other amounts held in each Account at the close of
business on such Monthly Distribution Date and the Value thereof at such time.
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ARTICLE V
TRANSFERS FROM ACCOUNTS
SECTION 5.01. Transfers From Accounts - No Debt Service Reserve
Period. Subject to Sections 5.02 and 5.04, the Disbursement Trustee shall
transfer, from the Revenue Account and from Surplus Funds in the Debt Service
Reserve Account, such amounts, for such purposes and at such times, as the
Borrower may request the Disbursement Trustee; provided, that the Borrower may
order the Disbursement Trustee to transfer funds only on a current basis and the
Borrower shall not have the right to order the Disbursement Trustee to transfer
funds effective as of some future date or dates.
SECTION 5.02. Transfers from Accounts During Debt Service Reserve
Period. The Lender or the Borrower shall notify the Disbursement Trustee in
writing of the commencement of any Debt Service Reserve Period. The Lender shall
notify the Disbursement Trustee in writing of the termination of any Debt
Service Reserve Period promptly upon receipt of notice from the Borrower
pursuant to Section 8.2(k) of the Term Loan Agreement that the Coverage Ratio is
at least 1.5. During any Debt Service Reserve Period, there shall be no
transfers pursuant to Section 5.01, and, subject to Section 5.04, the only
permitted transfers from the Accounts shall be as follows:
(a) On each Monthly Distribution Date occurring during each Debt
Service Reserve Period, the Disbursement Trustee shall transfer from the cash
available in the Revenue Account to the Borrower, an amount certified in an
Officer's Certificate of the Borrower to be equal to the excess of (i) the
amount estimated by the Borrower to be payable during the next monthly period in
respect of the costs referenced in clause (b) of the definition of Net Revenues
over (ii) the amount of any funds transferred to the Borrower on the immediately
preceding Monthly Distribution Date pursuant to this clause that remains
unspent; provided, that the Borrower shall specify in such officer's Certificate
by reference to line items in the then current Operating Budget the use to which
such cash is to be used; and further, provided, that in no single fiscal year
shall the Disbursement Trustee transfer to the Borrower with respect to costs
referenced to a particular line item in the Operating Budget an amount in the
aggregate in excess of the annual amount provided in the Operating Budget for
such line item unless the Borrower certifies that such excess is al-
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lowable pursuant to Section 8.11(c) of the Term Loan Agreement. With respect to
any Debt Service Reserve Period which commences after the first calendar quarter
of the fiscal year of the Borrower, the Borrower shall provide the Disbursement
Trustee with a statement of expenditures made by the Borrower in the then
current fiscal year prior to the commencement of such Debt Service Reserve
Period for each line item in the then current Operating Budget.
(b) on each Monthly Distribution Date which is not an Interest Payment
Date and following the transfer described in Section 5.02(a) hereof, the
Disbursement Trustee shall transfer from the Revenue Account to the Current Debt
Account an amount equal to one-third of the Term Loan Payments scheduled to be
paid by the Borrower on the next Interest Payment Date.
(c) On each Interest Payment Date and following the transfer described
in Section 5.02(a) hereof, the Disbursement Trustee shall transfer to the
Lender an amount equal to the Term Loan Payments then due and owing the Lender,
first, from cash available in the Current Debt Account, second, from cash
available in the Revenue Account, and third, from cash available in the Debt
Service Reserve account.
(d) On each Monthly Distribution Date following the transfers, if any,
described in Section 5.02(a), 5.02(b) and 5.02(c) hereof, the Disbursement
Trustee shall transfer from the Revenue Account to the Debt Service Reserve
Account an amount such that after such transfer the balance of the Debt Service
Reserve Account is such that if such balance had been present in the Debt
Reserve Account as of the immediately preceding Quarterly Calculation Date, the
Debt Service Reserve Period would have terminated or would not have commenced,
as the case may be, as of such preceding Quarterly Calculation Date.
(e) On each Monthly Distribution Date and following the transfers
described in Sections 5.02(a),, 5.02(b), 5.02(c) and 5.02(d) hereof, the
Disbursement Trustee shall transfer to the Borrower the balance of the cash
remaining in the Revenue Account.
SECTION 5.03. Delivery of Certificates; Timing of Payments. (a) Each
of the officer's Certificates required to be delivered to the Disbursement
Trustee hereunder shall be delivered to the Disbursement Trustee not later than
five Business Days prior to the date of any transfer or distribu-
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tion contemplated by such certificate unless otherwise specified herein. Any
Officer's Certificate delivered later than the time specified herein shall
nevertheless be considered valid and shall be honored by the Disbursement
Trustee on or as promptly after the date otherwise specified herein for payment
as is practicable, subject to the availability of cash in the applicable
Account.
(b) The Disbursement Trustee shall make any payment hereunder required
in immediately available funds, to the account of the payee set forth on
Schedule I hereto, prior to 1:30 p.m. (New York City Time) on the date specified
herein for such payment, or by such other means of payment, to such other
address or at such later time as shall be specified by such payee.
SECTION 5.04. Defaults. Notwithstanding any other provision contained
in this Disbursement Agreement, upon receipt by the Disbursement Trustee of
written notice from the Borrower or the Lender to the effect that an Event of
Default under the Term Loan Agreement shall have occurred and be continuing, the
Disbursement Trustee shall thereafter distribute the cash from the Accounts in
the amount and in the manner as directed by the Lender and only upon the express
written instructions of the Lender until notified in writing to the contrary by
the Lender, in which case the Disbursement Trustee shall thereafter make such
distributions or draws in accordance with the terms of this Disbursement
Agreement.
ARTICLE VI
INVESTMENT
Prior to the receipt by the Disbursement Trustee of written notice of
a default described in Section 5.04 of this Agreement, any cash held by the
Disbursement Trustee in the Accounts shall be invested by the Disbursement
Trustee from time to time in Permitted Investments as directed in writing by the
Borrower and if the Borrower fails so to direct, in United States Treasury
obligations having a maturity of no more than 30 days. Subsequent to the receipt
by the Disbursement trustee of written notice of a default described in Section
5.04 of this Agreement, any cash held by the Disbursement Trustee in the
Accounts shall be invested by the Disbursement Trustee as directed in writing by
the Lender until notified in writing to the contrary by the Lender.
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Any income or gain realized as a result of any such investment shall
be held as part of the applicable Account and reinvested as provided herein. The
Disbursement Trustee shall have no liability for any loss resulting from any
such investment other than by reason of its wilful misconduct or gross
negligence. The Disbursement Trustee may sell any such investment (without
regard to maturity date) whenever the Disbursement Trustee in its sole
discretion deems it necessary to make any distribution required by this
Disbursement Agreement and the Disbursement Trustee shall not be liable to any
Person for any loss suffered because of any such sale.
ARTICLE VII
TRUSTEE
The acceptance by the Disbursement Trustee of its duties hereunder is
subject to the following terms and conditions which the parties to this
Disbursement Agreement hereby agree shall govern and control with respect to the
rights, duties, liabilities and immunities of the Disbursement Trustee:
(a) it shall not be responsible or liable in any manner whatever for
the sufficiency, correctness, genuineness or validity of any revenues, cash,
payments, securities, investments or other amounts deposited with or held by it;
(b) it shall be fully protected in acting on and relying upon any
written notice, certificate, instruction, direction, request or other paper or
document which the Disbursement Trustee in good faith believes to be genuine and
to have been signed or presented by the proper party or parties and may assume
that any Person purporting to give such written notice, certificate,
instruction, direction, request or other paper or document has been duly
authorized to do so and shall be fully protected in acting on and relying upon
any written notice, certificate, instruction, direction, request or other paper
or document as to the due execution thereof and the validity and effectiveness
of the provisions thereof and as to the truth of any information therein
contained, which the Disbursement Trustee in good faith believes to be genuine;
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(c) it shall not be liable for any error of judgment or for any act
done or step taken or omitted except in the case of its negligence, willful
misconduct or bad faith;
(d) it may consult with and obtain advice from counsel and other
skilled Persons (at the expense of the Borrower) in the event of any dispute or
question as to the construction of any provision hereof and shall be fully
protected in taking or not taking any action in good faith in reliance on such
advice;
(e) it shall have no duties as the Disbursement Trustee except those
which are expressly set forth herein, and in any modification or amendment
hereof; provided, however, that no such modification or amendment hereof shall
affect its duties unless it shall have given its written consent thereto;
(f) it may execute or perform any duty hereunder either directly or
through agents or attorneys;
(g) it may engage or be interested in any financial or other
transaction with any party hereto and may act on, or as depositary, trustee or
agent for, any committee or body of holders of obligations of such persons as
freely as if it were not the Disbursement Trustee hereunder;
(h) it shall not be obligated to take any action which in its
reasonable judgment would involve it in expense or liability unless it has been
furnished with reasonable indemnity; and
(i) it shall not take instructions from any Person except those given
in accordance with this Agreement.
ARTICLE VIII
DETERMINATIONS
SECTION 8.01. Value. Cash and securities on deposit from time to time
in the Accounts shall be valued by the Disbursement Trustee as follows:
(a) cash shall be valued at the face amount thereof; and
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(b) securities shall be valued at the liquidation value thereof (in
accordance with Section 8.03).
The term "Value" shall mean, with respect to any Account, the
aggregate value of the cash and securities then on deposit in such Account,
valued in accordance with the provisions of this Section 8.01.
SECTION 8.02. Disputes. Subject to Section 9.01, in the event of any
dispute as to any amount to be transferred or paid pursuant to this Disbursement
Agreement, the Disbursement Trustee is authorized and directed to retain in its
possession, without liability to anyone, the disputed amount until such dispute
shall have been settled by agreement of the other parties hereto or by legal
proceedings but the Disbursement Trustee shall be under no duty whatsoever to
institute or defend any such proceedings. The Disbursement Trustee shall be
entitled to hold the disputed amount in a special account, provided that such
monies are (a) subject to the same security interests and (b) handled with the
same degree of care as such monies would be absent such special account.
SECTION 8.03. Cash Available. In determining the amount of cash
available in, or balance of, any Account at any time, the Disbursement Trustee
shall treat as cash available the net amount that the Disbursement Trustee would
have received on such day if the Disbursement Trustee had liquidated all the
securities then on deposit in such Account (at then prevailing market prices and
assuming normal sales expenses). The Disbursement Trustee will use its best
efforts to sell securities in order that actual cash shall be available on each
date on which a transfer or payment is to be made pursuant to this Disbursement
Agreement.
ARTICLE IX
REMEDIES
SECTION 9.01. Remedies. If any Event of Default under the Term Loan
Agreement has occurred and is continuing, the Lender may (i) proceed to protect
and enforce the rights vested in it by this Disbursement Agreement, including
the right to cause all revenues hereby pledged to it as security and all other
moneys pledged to it hereunder to be paid directly to it, and to enforce its
rights hereunder to such payments and all other rights hereunder by such appro-
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priate judicial proceedings as it shall deem most effective to protect and
enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether in aid of the exercise of any powers therein or herein
granted, or for any foreclosure hereunder and sale under a judgment or decree in
any judicial proceeding, or to enforce any other legal or equitable right vested
in it by this Disbursement Agreement or by law; or (ii) cause any action at law
or suit in equity or other proceeding to be instituted and prosecuted to collect
or enforce any obligations or rights included in the Collateral Security, or to
foreclose or enforce any other agreement or other instrument by or under or
pursuant to which such obligations are issued or secured, subject in each case
to the provisions and requirements thereof; or (iii) exercise any other or
additional rights or remedies granted to a secured party under law. If, pursuant
to applicable law, prior notice of any such action is required to be given to
the Borrower, the Borrower hereby agrees that the minimum time required by such
applicable law is a reasonable notice period, or if no minimum is specified,
five Business Days shall be deemed a reasonable notice period.
SECTION 9.02. Remedies Cumulative; Delay Not Waiver. No right, power
or remedy herein conferred upon or reserved to the Lender is intended to be
exclusive of any other right, power or remedy, and every such right, power and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right, power and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
All costs and expenses (including reasonable attorney's fees and
expenses) incurred by the Lender in connection with any such suit or proceeding,
together with interest thereon (to the extent permitted by law) computed at the
Stipulated Interest Rate from the date on which such costs or expenses are
incurred to the date of payment thereof, shall constitute additional
indebtedness secured by this Disbursement Agreement.
No delay or omission of the Lender to exercise any right or power
accruing upon the occurrence and during the continuance of any Event of Default
under the Term Loan Agreement as aforesaid shall impair any such right or power
or shall be construed to be a waiver of any such Event of
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Default or an acquiescence therein; and every power and remedy given by this
Disbursement Agreement may be exercised from time to time, and as often as shall
be deemed expedient, by the Lender.
SECTION 9.03. Superior Liens. The rights of the Lender to exercise
remedies hereunder, notwithstanding any other provisions hereof, shall be
consistent with any Liens granted by the Borrower in the Revenue Account, the
Current Debt Account and the Debt Service Reserve Account which secure the
Indebtedness described in Section 9.1(c) of the Term Loan Agreement (the "Senior
Indebtedness"), which Liens are Permitted Liens pursuant to Section 9.2 of the
Term Loan Agreement and which Liens are superior to the Lien of the Lender over
such Accounts. To the extent that upon the acceleration of the Term Notes
pursuant to the terms of the Term Loan Agreement, any Senior Indebtedness is
outstanding, then such Senior Indebtedness shall be repaid with the proceeds, if
any, in the Revenue Account, the Current Debt, Account and the Debt Service
Reserve Account prior to any payment of the Term Notes, unless the holder of the
Senior Indebtedness does not elect to accept such payment, or is unable to elect
to accept such payment, in which case such proceeds shall be used to repay the
Term Notes and any other obligation of the Borrower under the Term Loan
Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Fees and Indemnification of Disbursement Trustee. The
Borrower shall pay to the Disbursement Trustee reasonable compensation for its
services under this Disbursement Agreement as the Borrower and the Disbursement
Trustee may mutually agree. In addition, the Borrower hereby assumes liability
for, and agrees to indemnify, protect, save and keep harmless the Disbursement
Trustee and its respective successors, assigns, agents and servants, from and
against any and all claims, liabilities, losses and expenses (including legal
expenses) that may be imposed on, incurred by, or asserted against, at any time,
the Disbursement Trustee (whether or not also indemnified against by any other
Person under any contract or instrument) and in any way relating to or arising
out of the execution and delivery of this Disbursement Agreement, the
establishment of the Accounts, the acceptance of deposits, the purchase of
securities, the retention of money and securities or the proceeds thereof and
any payment, transfer or
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other application of money or securities by the Disbursement Trustee in
accordance with the provisions of this Disbursement Agreement, or as may arise
by reason of any act, omission or error of the Disbursement Trustee made in good
faith in the conduct of its duties; except that the Borrower shall not be
required to indemnify, protect, save and keep harmless the Disbursement Trustee
against its own gross negligence, active or passive, or wilful misconduct. The
indemnities contained in this Section 10.01 shall survive the termination of
this Disbursement Agreement.
SECTION 10.02. Replacement or Resignation of Disbursement Trustee. (a)
The Disbursement Trustee may at any time resign by giving notice to each other
party to this Disbursement Agreement, such resignation to be effective upon the
appointment of a successor Disbursement Trustee as hereinafter provided. If a
successor Disbursement Trustee shall not have been appointed within 30 days
after the giving of written notice of such resignation, the Disbursement Trustee
may apply to any court of competent jurisdiction to appoint a successor
Disbursement Trustee to act until such time, if any, as a successor shall have
been appointed as herein provided.
(b) The Lender may remove the Disbursement Trustee at any time by
giving notice to each other party to this Disbursement Agreement, such removal
to be effective upon the appointment of a successor Disbursement Trustee as
hereinafter provided; provided, that the Lender shall give the Disbursement
Trustee at least 3 Business Days' prior written notice of such removal.
(c) In the event of any resignation or removal of the Disbursement
Trustee, a successor Disbursement Trustee, which shall be a bank or trust
company organized under the laws of the United States of America, the State of
New Jersey or the State of New York, having its principal corporate trust office
in the State of New Jersey or the State of New York and a capital and surplus of
not less than $100,000,000 shall be appointed by the Borrower, with the approval
of the Lender (such consent not to be unreasonably withheld). Any such successor
Disbursement Trustee shall deliver to each party to this Disbursement Agreement
a written instrument accepting such appointment hereunder and thereupon such
successor Disbursement Trustee shall succeed to all the rights and duties of the
Disbursement Trustee hereunder and shall be entitled to receive the Accounts
from the predecessor Disbursement Trustee.
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(d) Any corporation into which the Disbursement Trustee may be merged
or converted or within which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Disbursement
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Disbursement Trustee may be transferred, shall,
subject to the terms of Section 10.02(c), be the Disbursement Trustee under this
Agreement without further act.
SECTION 10.03. Termination. This Disbursement Agreement shall
terminate on the earliest of (i) the date on which all Term Notes and all
obligations of the Borrower under the Term Loan Agreement have been satisfied in
full, (ii) twenty-one years less one day after the death of the last survivor of
the now living lineal descendants of the late ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, father of the
late ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President of the United States, living on the date hereof
and (iii) any other date agreed to by the parties hereto. The Lender shall
deliver written notice of such termination to the Disbursement Trustee. Upon
termination of this Disbursement Agreement, all cash, securities and
investments, together with all interest thereon, then held in any of the
Accounts shall be transferred as soon as practicable by the Disbursement Trustee
at the written direction of the Borrower (if a termination under clause (i)) or
of the Borrower and the Lender (if a termination under clause (ii) and (iii)).
SECTION 10.04. Severability. If any one or more of the covenants or
agreements provided in this Disbursement Agreement on the part of the parties
hereto to be performed should be determined by a court of competent jurisdiction
to be contrary to law, such covenant or agreement shall be deemed and construed
to be severable from the remaining covenants and agreements herein contained and
shall in no way affect the validity of the remaining provisions of this
Disbursement Agreement.
SECTION 10.05. Counterparts. This Disbursement Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
SECTION 10.06. Amendments. This Disbursement Agreement may not be
modified or amended without the prior written consent of each of the parties
hereto.
-14-
SECTION 10.07. APPLICABLE LAW. THIS DISBURSEMENT AGREEMENT HAS BEEN
NEGOTIATED AND DELIVERED IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY IN THAT STATE INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.08. Notices. All notices, requests, consents, demands and
other communications (collectively, "notices") required or permitted to be given
under this Disbursement Agreement to any Person shall be in writing and shall
become effective, if mailed, five Business Days after being deposited in the
United States mail, proper postage for first-class mail affixed thereto or, if
delivered by hand or courier service or in the form of a telex or telegram, when
received, and shall be directed to the address of such Person set forth in
Schedule I hereto.
SECTION 10.09. Benefit of Agreement. This Disbursement Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their
successors and assigns. No party hereto (other than the Lender) may assign its
rights and/or obligations hereunder. Nothing in this Disbursement Agreement,
whether expressed or implied, shall be construed to give any Person not a party
to this Agreement any legal or equitable right, remedy or claim under or in
respect of this Disbursement Agreement.
-15-
IN WITNESS WHEREOF, the parties hereto have each caused this
Disbursement Agreement to be executed by their duly authorized officers as of
the date first above written.
COGEN TECHNOLOGIES NJ VENTURE
By Cogen Technologies NJ, Inc.,
its Managing Venturer
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Vice President
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By PRUCAPITAL MANAGEMENT, INC.,
agent
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President,
Corporate Finance
MIDLANTIC NATIONAL BANK
By /s/ GUY F. SQUILLAGE
---------------------------
Name: Guy F. Squillage
Title: VICE PRESIDENT
& TRUST OFFICER
-16-
SCHEDULE I
to
Disbursement Agreement
ADDRESSES FOR
PAYMENTS AND NOTICES
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA:
In the case of all Term Loan Payments:
By bank wire transfer
in immediately available
funds to its account
#▇▇▇-▇▇-▇▇▇ in:
▇▇▇▇▇▇ Guaranty Trust
Company of New York
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
In the case of all other
communications:
c/o PruCapital Management,
Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Regional Vice President -
Special Industries (East)
COGEN TECHNOLOGIES NJ VENTURE
In the case of all payments:
By bank wire transfer in
immediately available funds to:
Midlantic Newark/Trust
ABA No. ▇▇▇▇▇▇▇▇▇
Account No.: 20-4-1263-1
Account of Cogen Technologies
NJ Venture
In the case of all other communications:
c/o Cogen Technologies NJ, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,.▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
MIDLANTIC NATIONAL BANK
In the case of all payments:
By bank wire transfer
in immediately available funds
to the Revenue Account:
Midlantic Newark/Trust
A.B.A. No. 021200012
Account No. ▇▇▇▇▇▇▇▇
Attn: ▇. ▇▇▇▇▇▇▇, Vice President
In the case of all other
communications:
Midlantic National Bank
Metropark Plaza
P.O. Box 600
Edison, N.J. 08818
Attn: ▇. ▇▇▇▇▇▇▇, Vice President
SCHEDULE II
to
Disbursement
Agreement
Disbursement Agreement
Definitions
"Account": shall mean any of the Revenue Account, the Insurance
Account, the Current Debt Account and the Debt Service Reserve Account.
"Current Debt Account": as defined in Section 2.04 of the Disbursement
Agreement.
"Debt Service Reserve Account": as defined in Section 2.03 of the
Disbursement Agreement.
"Debt Service Reserve Period": any period commencing with a Quarterly
Calculation Date as of which the Coverage Ratio is less than 1.5 and ending on
the next following Quarterly Calculation Date as of which the Coverage Ratio is
equal to or greater than 1.5.
"Insurance Account": as defined in Section 2.05 of the Disbursement
Agreement.
"Monthly Distribution Date": the first day of each month (or the next
succeeding Business Day thereafter if such date is not a Business Day).
"Officers' Certificate": a certificate signed by a general partner of
any partnership and by the President, Vice President, Treasurer or Secretary of
any corporation.
"Quarterly Calculation Date": the day following the day on which the
Borrower furnishes the Coverage Ratio pursuant to Section 8.2(k) of the Term
Loan Agreement.
"Permitted Investments": shall mean investments in (a) obligations of,
or guaranteed as to interest and principal by, the United States of America
maturing within one year after such investment; (b) widely traded commercial
paper of any corporation incorporated under the laws of the United States of
America or any state thereof which is rated "prime-1" or its equivalent by
▇▇▇▇▇'▇ Investor Services, Inc. or "A-1" or its equivalent by Standard & Poor's
Corporation maturing within one year after the date of such in-
Schedule II
page 2
vestment; (c) certificates of deposit maturing within one year after such
investment and issued by commercial banks organized under the laws of the United
States of America or any state thereof (i) having a combined capital and surplus
in excess of $500,000,000 or (ii) which are domestic branches of a foreign bank,
the senior debt obligations of which are rated "AAA" (or "Aaa") or better by
Standard & Poor's Corporation (or ▇▇▇▇▇'▇ Investor Services, Inc.) provided that
no more than $1,000,000 may be invested in such certificates of deposit at any
one such branch; (d) tax-exempt variable rate demand bonds backed by letters of
credit issued by banks described in clause (c) above; (e) Eurodollar time
deposits, provided that (i) no more than $5,000,000 may be invested in such
deposits at any one time, (ii) such deposits mature within 90 days or less after
the date of such investment, (iii) such deposits are issued by commercial banks
rated at least "AAA" (or "Aaa") by Standard & Poor's Corporation (or ▇▇▇▇▇'▇
Investor Services, Inc.), (iv) no more than $3,000,000 may be invested in such
deposits at any one bank at any one time and (v) such deposits must be purchased
in the United States; and (f) repurchase agreements respecting any of the
foregoing with banks incorporated under the laws of the United States or of any
state thereof whose commercial paper is rated "A-1" (or "prime-1") by Standard
& Poor's Corporation (or ▇▇▇▇▇'▇ Investor Services, Inc.), provided, however,
that the collateral therefor is actually transferred or that custody of the
collateral therefor is maintained by a domestic commercial bank having total
assets of not less than $1,000,000,000 and confirmation is received from such
bank that such collateral is being held as security for such repurchase
obligation.
"Project Revenues": all revenues, cash and moneys payable to the
Borrower, including, without limitation, amounts payable pursuant to the Power
Purchase Agreements and insurance policies required pursuant to the Term Loan
Agreement.
"Revenue Account": as defined in section 2.02 of the Disbursement
Agreement.
"Surplus Funds in the Debt Service Reserve Account": funds in the Debt
Service Reserve Account following a Quarterly Calculation Date as of which the
Coverage Ratio was equal to at least 1.5 in excess of the amount required to
enable the Coverage Ratio to equal at least 1.5 as of such Quarterly Calculation
Date.
Schedule II
page 3
"Term Loan Payments": all payments of principal, premium and interest
due under the Term Notes and all other payments payable by the Borrower under
the Term Loan Agreement.
"UCC": means the Uniform Commercial Code, as from time to time in
effect in the relevant state as the context may require.
AMENDMENT NO. I
TO DISBURSEMENT AND SECURITY AGREEMENT
--------------------------------------
AMENDMENT NO. 1 TO DISBURSEMENT AND SECURITY AGREEMENT dated as of
February 9, 1989 (this "Amendment") to the Disbursement and Security Agreement
dated as of December 15, 1988 (the "Agreement") by and among Cogen Technologies
NJ Venture, The Prudential Insurance Company of America and Midlantic National
Bank.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties to the Agreement desire to amend certain
provisions of the Agreement; and
WHEREAS, pursuant to Section 10.06 of the Agreement the Agreement may
be amended by the written agreement of the parties thereto;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Agreement.
2. Amendments to the Agreement. The Agreement is hereby amended as
follows:
(a) Section 4.01 is hereby amended by adding the following as the
final two sentences thereof:
"Amounts deposited into the Revenue Account constituting a payment
from a Buyer pursuant to its respective Power Purchase Agreement
shall be held in a separate sub-account of the Revenue Account
(the "Power Purchase Agreements Sub-Account"). The Disbursement
Trustee agrees that all monies held in the Power Purchase
Agreements Sub-Account shall be subject to the same security
interests and handled with the same degree of care as such would
be absent being placed in the Power Purchase Agreements Sub-
Account."
(b) Section 4.03 shall be amended to insert the following immediately
after each use of the words "Accounts" or "Account" therein:
"and the Power Purchase Agreements Sub-Account"
(c) There shall be added a new Section 5.05 as follows:
"SECTION 5.05. Transfers from Revenue Account. Whenever the
Disbursement Trustee shall make a transfer from the Revenue
Account pursuant to the terms of this Agreement, the Disbursement
Trustee shall transfer monies therefrom first from the Power
Purchase Agreements Sub-Account and second from the other monies
held in the Revenue Account."
3. Counterparts. This Amendment may be executed simultaneously in two
or more counterparts, each of which shall be deemed to be an original, and it
shall not be necessary in making proof of this Amendment to produce or account
for more than one such counterpart.
4. Agreement Not Otherwise Amended. Terms and provisions of the
Agreement not amended hereby shall continue to remain in full force and affect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed an its behalf an of the date first above written.
COGEN TECHNOLOGIES NJ VENTURE
By COGEN TECHNOLOGIES NJ, INC.,
its Managinq Venturer
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Vice President
THE PRDUENTIAL INSURANCE COMPANY
OF AMERICA
BY PRUCAPITAL MANAGEMENT, INC.,
Agent
By
------------------------------
Title:
MIDLANTIC NATIONAL BANK
By
------------------------------
Title:
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed on its behalf as of the date first above written.
COGEN TECHNOLOGIES NJ VENTURE
By COGEN TECHNOLOGIES NJ, INC.,
its Managing Venturer
By
-----------------------------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ W. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Title: Vice President
MIDLANTIC NATIONAL BANK
By
-----------------------------
Title:
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed an its behalf as of the date first above written.
COGEN TECHNOLOGIES NJ VENTURE
By COGEN TECHNOLOGIES NJ, INC.,
its Managing Venturer
By
-----------------------------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By PRUCAPITAL MANAGEMENT, INC.,
Agent
By
-----------------------------
Title:
MIDLANTIC NATIONAL BANK
By /s/ GUY F. SQUILLAGE
------------------------------
Title: VICE PRESIDENT