Exhibit 4.22.38
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CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-4)
Dated as of October 18, 2001
among
CALPINE CORPORATION,
as Guarantor,
and
ROCKGEN OL-4, LLC, as Owner Lessor,
SBR OP-4, LLC, as Owner Participant,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture Trustee, and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity but solely as Pass Through Trustee,
as Beneficiaries
ROCKGEN PROJECT
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CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-4)
This CALPINE GUARANTY AND PAYMENT AGREEMENT (ROCKGEN RG-4), dated as
of October 18, 2001 (the "Guaranty"), is entered into by and among Calpine
Corporation, a Delaware corporation, as guarantor (the "Guarantor"), ROCKGEN
OL-4, LLC, a Delaware limited liability company, as Owner Lessor, SBR OP-4,
LLC, a Delaware limited liability company, as Owner Participant, State Street
Bank and Trust Company of Connecticut, National Association, not in its
individual capacity but solely as Indenture Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Pass Through Trustee, and is issued by the Guarantor in
favor of the Beneficiaries (as defined in Section 4 below).
WITNESSETH:
WHEREAS, RockGen Energy LLC (the "RockGen Lessee") is an indirect
wholly-owned subsidiary of the Guarantor;
WHEREAS, the RockGen Lessee is a party to the Participation
Agreement (RG-4) dated as of October 18, 2001 (the "Participation Agreement"),
among the RockGen Lessee, ▇▇▇▇▇ Fargo Bank Northwest, National Association, not
in its individual capacity except as expressly provided in the Participation
Agreement, but solely as Lessor Manager, RockGen OL-4, LLC, as Owner Lessor,
the Guarantor, SBR OP-4, LLC, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as expressly provided in the Participation Agreement, but solely as
Indenture Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, not in its individual capacity, except as expressly
provided in the Participation Agreement, but solely as Pass Through Trustee;
WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-4) Facility Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Lease"), providing for the Owner
Lessor's leasing an undivided interest of the RockGen Facility to the RockGen
Lessee as contemplated therein;
WHEREAS, the RockGen Lessee and the Owner Lessor are entering into
the RockGen (RG-4) Facility Site Lease, to be dated as of October 18, 2001 (as
amended, modified or supplemented from time to time pursuant to Section 14.23
of the Participation Agreement, the "Facility Site Lease"), providing for the
Owner Lessor's leasing an undivided interest in the Facility Site to the
RockGen Lessee as contemplated therein;
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WHEREAS, the Guarantor will obtain benefits as a result of the
RockGen Lessee entering into the Facility Lease, the Facility Site Lease and
the other transactions contemplated by the Participation Agreement; and
WHEREAS, pursuant to Section 4.2 of the Participation Agreement,
this Guaranty is required to be provided by the Guarantor.
NOW, THEREFORE, in consideration of the foregoing premises, the
mutual agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor
agrees as follows:
SECTION 1. DEFINITIONS
(a) Capitalized terms used in this Guaranty, including the recitals,
and not otherwise defined herein shall have the respective meanings set forth
on Appendix A to the Participation Agreement, provided that if a term that is
defined in this Guaranty (the "Guaranty Definition") includes in such
definition a term that is defined in Appendix A to the Participation Agreement
(the "Appendix A Definition"), and the Appendix A Definition in turn includes
in such definition a term that is defined both in this Guaranty and in Appendix
A to the Participation Agreement (the "Embedded Definition"), then for purposes
of the Appendix A Definition as it is used in the Guaranty Definition and for
purposes of the Guaranty Definition, the Embedded Definition shall be used as
defined in this Guaranty and not as defined in Appendix A to the Participation
Agreement. Except as otherwise provided in the previous sentence, the Rules of
Interpretation set forth in Appendix A to the Participation Agreement shall
apply to the terms used in this Guaranty and specifically defined herein.
(b) As used in this Guaranty, the following terms shall have the
respective meanings assigned thereto as follows:
"2000 Calpine Indenture" shall mean that certain Indenture,
dated as of August 10, 2000, relating to the issuance of a principal amount of
$250,000,000 8-1/4% Senior Notes due 2005, issuance of a principal amount of
$750,000,000 8-5/8% Senior Notes due 2010 and issuance of a principal amount of
$2,000,000,000 8-1/2% Senior Notes due 2011 by and between Calpine and the
Wilmington Trust Company, as trustee, as the same may be amended, modified or
supplemented from time to time.
"GAAP" means generally accepted accounting principals in the
United States of America as in effect and, to the extent optional, adopted by
the Guarantor, on the date of the Guaranty, consistently applied.
"Indebtedness" of any Person means, without duplication, (i)
the principal in respect of indebtedness of such Person for money borrowed and;
(ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations
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(other than obligations described in (i) and (ii) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit); (iv) all obligations of the type referred to in clauses (i) through
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation on any date of
determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be, with respect to unconditional obligations,
the outstanding balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date, the maximum
liability 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.
"Lien" means any mortgage, lien, pledge, charge, or other
security interest or encumbrance of any kind (including any conditional sale or
other title retention agreement and any lease in the nature thereof).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.
"Voting Shares", with respect to any corporation, means the
Capital Stock having the general voting power under ordinary circumstances to
elect at least a majority of the board of directors (irrespective of whether or
not at the time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
SECTION 2. GUARANTEED AND PAYMENT OBLIGATIONS
Section 2.1. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Beneficiaries (except that the obligations
referred to in clauses (1), (2) and (5)(A) (relating to clause (1) and clause
(2) amounts) of this Section 2.1(a) are for the benefit only of the Owner
Lessor and the Indenture Trustee (as assignee of the Owner Lessor), as their
interests may appear), as primary obligor and not merely as a surety, the
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due, punctual and full payment (when and as the same may become due and
payable), and, as applicable, performance by the RockGen Lessee of all of the
RockGen Lessee's obligations under the Operative Documents to which it is a
party, including, without limitation, but without duplication, (1) the RockGen
Lessee's obligation to make Periodic Rent, Supplemental Rent and other payments
(in accordance with the terms of the Operative Documents) to the Owner Lessor,
(2) the RockGen Lessee's obligation to pay the Termination Value (and amounts
computed by reference thereto) to the Owner Lessor and all other amounts owed
under the Operative Documents under and in accordance with the Facility Lease,
(3) without duplication of the preceding clause (2), the RockGen Lessee's
obligation to pay the Equity Portion of Periodic Rent and the Equity Portion of
Termination Value to the Owner Lessor, (4) the RockGen Lessee's obligation to
make indemnity payments when due in accordance with the terms of the
Participation Agreement and the Tax Indemnity Agreement, (5) the RockGen
Lessee's obligation, pursuant to Section 3.3 of the Facility Lease, to pay as
Supplemental Rent an amount equal to (A) interest at the applicable Overdue
Rate on any amount under clauses (1), (2), (3), (4) and 5(B) of this Section
2.1(a), not paid when due and (B) any Make-Whole Amount to the extent then due
and payable by the Owner Lessor to the Certificateholders pursuant to the
Participation Agreement, the Facility Lease or any other Operative Document to
which the RockGen Lessee is a party and (6) the RockGen Lessee's obligation to
make any and all other payments, and perform all other covenants and
agreements, when due under and in accordance with the terms of the Operative
Documents.
(b) The Guarantor agrees that upon the occurrence and during the
continuance of a Lease Event of Default, it shall pay to the Indenture Trustee
(as assignee of the Owner Lessor), upon written demand by the Indenture Trustee
(as assignee of the Owner Lessor) in accordance with the applicable Operative
Documents, all amounts constituting the Termination Value and all accrued but
unpaid Periodic Rent then due and payable. Such payment obligation shall be
effective without reference to or requirement for valuation of the Owner
Lessor's Interest or any other security held by any Person for performance of
the RockGen Lessee's obligations under the Facility Lease or any other
Operative Documents. The Guarantor agrees that it shall make such payment
notwithstanding the fact that the RockGen Lessee may have a defense to the
payment of any such amounts. The Guarantor's obligations in this Section 2.1(b)
are direct and primary obligations (and not obligations of a guarantor or
surety) of the Guarantor to the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor), which shall not be affected in any way by the
provisions of Section 2.1(a) above or any payments under any other Operative
Documents of any amounts until the Owner Lessor and the Indenture Trustee (as
assignee of the Owner Lessor) have received full payment of such amounts.
(c) The Guarantor acknowledges that notwithstanding the provisions
of the second sentence of Section 8.13 hereof (i) as and to the extent provided
in Section 5.6 of the Collateral Trust Indenture upon the occurrence and during
the continuation of a Lease Event of Default, the Indenture Trustee and the
Owner Lessor may proceed against the Guarantor for the payment of the
Termination Value (including without limitation all
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amounts the Guarantor is obligated to pay under Section 2.1(b) hereof under the
circumstances specified therein).
(d) Notwithstanding anything herein or in the Collateral Trust
Indenture to the contrary, in the event that an Indenture Event of Default that
constitutes a Lease Event of Default has occurred and is continuing and the
Indenture Trustee (as assignee of the Owner Lessor) forecloses upon and sells,
assigns or otherwise transfers, its interest in this Guaranty pursuant to the
provisions of the Collateral Trust Indenture, the Guarantor shall remain
obligated hereunder to pay to the Owner Lessor the amounts referred to in
Section 2.1(a)(3).
Section 2.2. In the case of any failure by the RockGen Lessee to
perform and observe any term, provision or condition referred to in Section
2.1(a) when due pursuant to the Operative Documents, the Guarantor agrees to
cause such performance or observance to be done, and in the case of any failure
by the RockGen Lessee to make such payment as and when the same shall become
due and payable (by acceleration or otherwise), the Guarantor hereby agrees to
make such payment (and, in addition, such further amounts, if any, as shall be
sufficient to cover the costs and expenses of collection hereunder) as and when
such payment is due and payable.
All obligations and indebtedness set forth in Section 2.1 above,
this Section 2.2, and in Section 8.15 below are referred to in this Guaranty as
the "Obligations."
Section 2.3. The obligations of the Guarantor contained herein are
direct, independent, and primary obligations of the Guarantor and are absolute,
present, unconditional and continuing obligations and are not conditioned in
any way upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations, covenants
or undertakings (including any payment obligations) of the RockGen Lessee and
shall constitute a guaranty of, and agreement with respect to, payment and
performance and not a guaranty of collection, binding upon the Guarantor and
its successors and assigns and shall remain in full force and effect and
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Participation Agreement, the Facility Lease, the Tax
Indemnity Agreement or any other agreement (including any other Operative
Document) or the lack of power or authority of the RockGen Lessee to enter into
any of the Participation Agreement, the Facility Lease, the Tax Indemnity
Agreement or any other agreement (including any other Operative Document) to
which the RockGen Lessee is a party, or any substitution, release or exchange
of any other guaranty of, or agreement with respect to, or any other security
for, any of the Obligations (including any settlement, compromise or other
adjustment with respect to the Obligations) or any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor and shall not be subject to any right of
set-off, recoupment or counterclaim and is in no way conditioned or contingent
upon any attempt to collect from the RockGen Lessee or any other entity or to
perfect or enforce any security or upon any other condition or contingency or
upon any other action, occurrence or circumstance whatsoever. Without
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limiting the generality of the foregoing, the Guarantor shall have no right to
terminate this Guaranty, or to be released, relieved or discharged from its
obligations hereunder, other than upon full payment and satisfaction and
performance of all of the Obligations (subject to Section 8.14 hereof), and
such obligations shall be neither affected nor diminished for any other reason
whatsoever, including (i) any amendment or supplement to or modification of any
of the Participation Agreement, the Facility Lease, the Tax Indemnity Agreement
or any other agreement (including any other Operative Document) to which the
RockGen Lessee is a party, any release, extension or renewal of the RockGen
Lessee's obligations under any of the Participation Agreement, the Facility
Lease, the Tax Indemnity Agreement or any other agreement (including any other
Operative Document) to which the RockGen Lessee is a party or by which it is
bound, including, without limitation, any actions taken by the Indenture
Trustee pursuant to the Collateral Trust Indenture, or any subletting,
assignment or transfer of the RockGen Lessee's or any Beneficiary's interest in
the Participation Agreement, the Facility Lease or any other Operative Document
in accordance with the terms thereof, (ii) any bankruptcy, insolvency,
readjustment, composition, liquidation or similar proceeding with respect to
the RockGen Lessee, Owner Lessor, Owner Participant or any other Person,
including, without limitation, termination of the Facility Lease and the
operation of Section 502(b)(6) of the Bankruptcy Code in connection therewith,
(iii) any furnishing or acceptance of additional security or any exchange,
substitution, surrender or release of any security, (iv) any waiver, consent or
other action or inaction or any exercise or nonexercise of any right, remedy or
power with respect to the Obligations (including any settlement, compromise or
other adjustment with respect to the Obligations) or any of the Participation
Agreement, the Facility Lease, the Tax Indemnity Agreement or any other
agreement (including any Operative Document) to which the RockGen Lessee is a
party, (v) without limiting Section 3.6(b) hereof, any merger or consolidation
of the RockGen Lessee or the Guarantor into or with any other Person, or any
sale, assignment, conveyance, lease, transfer or other disposition of all or
substantially all of the assets or properties of the RockGen Lessee or the
Guarantor, or any change in the structure of the RockGen Lessee or in the
ownership of the RockGen Lessee by the Guarantor, (vi) any default,
misrepresentation, negligence, misconduct or other action or inaction of any
kind by any Beneficiary, the Indenture Trustee or any other Person under or in
connection with any Operative Document or any other agreement relating to this
Guaranty, (vii) any action or inaction by any Beneficiary as contemplated in
Section 5 of this Guaranty; (viii) any invalidity, irregularity or
unenforceability of all or part of the Obligations or of any security therefor;
(ix) any change in the manner, place, timing or schedule of payment or
performance of, or in any other term of, all or any of the Obligations; (x)
whether the Guarantor is related or unrelated to the RockGen Lessee, (xi) the
assignment by the Owner Lessor of its rights and interests hereunder, under the
Facility Lease or under any other Operative Document in accordance with the
Operative Documents (or the genuineness, validity, legality or enforceability
of the obligations of the Owner Lessor under the Collateral Trust Indenture)
and (xii) any other circumstance whatsoever.
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SECTION 3. GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1. The Guarantor represents and warrants, as of the date
hereof:
(i) The Guarantor is duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full power,
authority and the legal right to execute, deliver and perform the terms of
this Guaranty and each Operative Document to which it is a party (together,
the "Calpine Documents").
(ii) The execution, delivery and performance by the Guarantor of the
Calpine Documents have been duly authorized by all necessary corporate
action. The Calpine Documents constitute legal, valid and binding
obligations of the Guarantor enforceable against the Guarantor in
accordance with their respective terms, except as such enforcement may be
affected by applicable bankruptcy, insolvency, moratorium and other similar
laws affecting creditors' rights generally and by general principles of
equity.
(iii) The execution, delivery and performance of the Calpine Documents
will not (a) contravene any provision of law, rule or regulation to which
the Guarantor is subject or any judgment, decree or order applicable to the
Guarantor, (b) conflict or be inconsistent with or result in any breach of
any terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien or other encumbrance upon any of the property or
assets of the Guarantor pursuant to the terms of any agreement or other
instrument to which the Guarantor is a party or by which it or its property
is bound or to which it or its property may be subject, in each case the
violation of which would have a material adverse effect on the business,
operations, prospects, properties or assets, or in the condition, financial
or otherwise, of the Guarantor, or (c) violate or contravene any provision
of the articles of incorporation or by-laws of the Guarantor.
(iv) No pending or, to the knowledge of the Guarantor, threatened
action, suit, investigation or proceedings against the Guarantor before any
Governmental Entity exists which, if determined adversely to the Guarantor,
would materially adversely affect the business, operations, prospects,
properties or assets, or in its condition, financial or otherwise, or the
Guarantor's ability to perform its obligations under the Calpine Documents.
(v) No consent from, authorization or approval or other action by, and
no notice to or filing with, any Person is required for the execution,
delivery and performance by the Guarantor of the Calpine Documents except
those which have been given and remain in full force and effect.
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(vi) The RockGen Lessee is an indirect, wholly-owned subsidiary of the
Guarantor.
(vii) The Guarantor is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940.
(viii) The Guarantor is not in default with respect to any
judgment, order, writ, injunction, decree, award, rule or regulation of
any court, arbitrator or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which, either,
separately or in the aggregate, would result in any material adverse
change in any of its businesses, operations, prospects or assets, or in
its condition, financial or otherwise, or its ability to perform its
obligations under the Calpine Documents.
(ix) The Guarantor is not a party to any agreement or instrument, or
subject to any corporate restriction or any judgment, order, writ,
injunction, decree, award, rule or regulation, which materially adversely
affects, or in the future may materially adversely affect, its business,
operations, prospects, properties or assets, or conditions, financial or
otherwise, or its ability to perform its obligations under the Calpine
Documents.
(x) The audited financial statements of the Guarantor and its
Consolidated Subsidiaries, as of December 31, 2000, reported on by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, copies of which have been delivered to the Indenture Trustee,
the Pass Through Trustee, the Certificateholders and the Owner Participant,
are true, complete and correct and fairly present the financial condition
of the Guarantor and its Consolidated Subsidiaries as of the date thereof.
The financial statements have been prepared in accordance with GAAP. The
Guarantor and its Consolidated Subsidiaries do not have any material
liabilities, direct or contingent, except (a) as are disclosed in such
financial statements or (b) as arise under the Operative Documents. There
has been no material adverse change in the financial condition of the
Guarantor and its Consolidated Subsidiaries since the date of the audited
financial statements referred to above.
(xi) All factual information relating to the Guarantor (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the
Guarantor in writing to the Owner Lessor, the Owner Participant, the
Indenture Trustee, the Pass Through Trustee or the Certificateholders
(including, without limitation, all such information contained herein, in
the Participation Agreement and in any preliminary or final offering
circular distributed in accordance with the terms of the Operative
Documents) for purposes of or in connection with the Calpine Documents or
any transaction contemplated therein is true and accurate in all material
respects on the date as of which such information is dated or certified and
not incomplete by omitting to state any fact necessary to make such
information relating to the Guarantor (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which
such information was
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provided; provided, that no representation or warranty is made with
regard to (i) any projections or other forward-looking statements
provided by or on behalf of the Guarantor, or (ii) the descriptions of
the Operative Documents or the tax consequences to beneficial owners of
Certificates; provided, however, each of the Beneficiaries acknowledges
and agrees that (i) Calpine has heretofore provided to the Appraiser,
solely in order to assist the Appraiser in connection with the
preparation of the appraisal to be delivered by the Appraiser to certain
of the Transaction Parties at the Closing, certain (1) general market
information, (2) information about the Arizona energy market and (3)
information passed along from other Persons and (ii) that the RockGen
Lessee does not make any representation or warranty whatsoever with
respect to the information described in clause (i) above except to the
extent expressly set forth in Section 4(b) of the Tax Indemnity Agreement.
(xii) The Guarantor is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards
and controls), except such noncompliance as would not, in the aggregate,
have a material adverse effect on the business, operations, property,
assets or condition (financial or otherwise) of the Guarantor, or the
Guarantor's ability to perform its obligations under the Calpine Documents.
(xiii) The Guarantor has filed all tax returns and reports required by
law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing (other than any such taxes or charges
which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books), except such non-filing or non-payment,
as the case may be, as would not, in the aggregate, have a material adverse
effect on the business, operations, property, assets or condition
(financial or otherwise) of the Guarantor.
(xiv) No default has occurred under this Guaranty, which default would
reasonably be expected to result in a material adverse effect on the
business, operations, assets or condition (financial or otherwise) of the
Guarantor.
(xv) In accordance with Section 8.12 hereof and Section 14.14 of the
Participation Agreement, the Guarantor has validly submitted to the
jurisdiction of the Supreme Court of the State of New York, New York County
and the United States District Court for the Southern District of New York.
Section 3.2. The Guarantor covenants and agrees that on and
after the date hereof and until this Guaranty is terminated pursuant to the
terms hereof the Guarantor shall:
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(a) file with the Owner Participant and the Indenture Trustee,
within 15 days after the filing with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Guarantor is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. In the event the Guarantor is at any time no longer
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, it shall file with the Owner Participant, and for so long as the
Certificates remain outstanding, the Indenture Trustee and the Pass Through
Trustee, within 15 days after the Guarantor would have been required to file
such documents with the SEC, copies of the annual reports and of the
information, documents and other reports which the Guarantor would have been
required to file with the SEC if the Guarantor had continued to be subject to
such Sections 13 or 15(d). Delivery of such reports, information and documents
to the Owner Participant, the Indenture Trustee and the Pass Through Trustee is
for informational purposes only and their receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Owner
Participant, the Indenture Trustee and the Pass Through Trustee are entitled to
rely exclusively on Officers' Certificates);
(b) furnish to the Beneficiaries, promptly upon the Guarantor
obtaining Actual Knowledge of any action, suit or proceeding pending or
threatened against the Guarantor before any court or before any governmental
department, commission or agency or any arbitrator, which in the Guarantor's
good faith opinion would reasonably be likely to result in a material adverse
effect on the business, operations, property, assets or condition (financial or
otherwise) of the Guarantor, a certificate of a senior officer specifying the
nature of such action, suit or proceeding and the proposed response of the
Guarantor thereto;
(c) furnish to the Beneficiaries, as soon as possible and in any
event within three days after the Guarantor obtains Actual Knowledge of default
by the Guarantor of any of its material obligations under this Guaranty, a
statement of an authorized officer of the Guarantor setting forth details of
such default and the action which the Guarantor has taken and proposes to take
with respect thereto. Notwithstanding the foregoing provision in this clause
(c), the Guarantor shall, within 120 days after the close of each fiscal year
of the Guarantor in which Certificates are outstanding hereunder, file with the
Owner Participant, and if the Certificates are outstanding during any part of
such fiscal year, the Indenture Trustee and the Pass Through Trustee, an
Officer's Certificate, provided that one Officer executing the same shall be
the principal executive officer, the principal financial officer or the
principal accounting officer of the Guarantor, covering the period from the
date hereof to the end of the fiscal year in which this Guaranty was executed
and delivered by the Guarantor, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the Actual Knowledge of each such executing
Officer, the Guarantor has complied with and performed and fulfilled all
covenants on its part contained in this Guaranty and is not in Default in the
performance or observance of any of the terms or provisions contained in this
Guaranty, and, if any such signer has obtained Actual Knowledge of any Default
by the Guarantor in the
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performance, observance or fulfillment of any such covenant, terms or provision
specifying each such Default and the nature thereof; and
(d) promptly furnish to the Owner Participant, the Owner Lessor,
the Indenture Trustee or the Pass Through Trustee such other information as the
Owner Lessor, Owner Participant, the Indenture Trustee and the Pass Through
Trustee may from time to time reasonably request with respect to the Guarantor.
So long as the Indenture Trustee is also serving as the Pass Through
Trustee, delivery to the Indenture Trustee shall satisfy the Guarantor's
obligation to furnish information to the Pass Through Trustee under this
Section 3.2.
Section 3.3. The Guarantor covenants and agrees that it will not
transfer or assign or cause to be transferred or assigned the Ownership
Interest in the RockGen Lessee to any other Person, without the prior written
consent of the Owner Lessor, the Owner Participant and, so long as the Lien of
the Collateral Trust Indenture has not been terminated or discharged, the
Indenture Trustee and the Pass Through Trustee (it being agreed and understood
that a consolidation with or merger of the Guarantor into, or a sale by the
Guarantor of all or substantially all of its assets to, another Person in
accordance with Section 3.6 hereof shall not be deemed to be a transfer or
assignment of the Ownership Interest in the RockGen Lessee for the purposes of
this Section), except as permitted in this Section 3.3 or in Section 8.4
hereof. Notwithstanding the foregoing, and subject to Section 8.4 below, so
long as this Guaranty remains in full force and effect, the Guarantor may
transfer a portion of the Ownership Interest in the RockGen Lessee (provided
that following such transfer the Guarantor shall continue to own at least a
majority of the Ownership Interest in the RockGen Lessee) without the consent
of the Owner Lessor, the Owner Participant, the Indenture Trustee, the Pass
Through Trustee or any other Transaction Party if the following conditions have
been satisfied:
(i) the Owner Lessor, the Owner Participant and, so long as the Lien
of the Collateral Trust Indenture shall not have been terminated or
discharged, the Indenture Trustee and the Pass Through Trustee shall have
received an Opinion of Counsel to the effect that all regulatory approvals
required in connection with such transfer have been obtained;
(ii) all the obligations of the RockGen Lessee under the Operative
Documents shall remain in full force and effect, the Guarantor shall
reaffirm in writing all of its obligations hereunder in a manner reasonably
satisfactory to the Owner Participant, such obligations of the Guarantor
shall remain in full force and effect;
(iii) no Significant Lease Default or Lease Event of Default shall
have occurred and be continuing at the time of or immediately following
such transfer;
(iv) the transfer shall not subject the RockGen Lessee, the Owner
Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
Trustee or
11
any Certificateholder to regulation under PUHCA or state laws and
regulations regarding the rate and financial or organizational regulation
of electric utilities in the affected party's reasonable opinion, nor
result in a Regulatory Event of Loss; and
(v) the RockGen Lessee shall have paid, at no after-tax cost to such
parties, all reasonable and documented out-of-pocket expenses (including
reasonable attorneys' fees and expenses) of the Owner Lessor, the Owner
Participant, the Indenture Trustee, the Lease Indenture Company and the
Pass Through Trustee in connection with such assignment.
Section 3.4. Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction unless (i) the Guarantor or such Restricted Subsidiary would be
entitled to create a Lien on such property securing Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction without equally
and ratably securing the Obligations pursuant to Section 3.5 or (ii) the net
proceeds of such sale are at least equal to the fair value (as determined by
the Board of Directors) of such property or asset and the Guarantor or such
Restricted Subsidiary shall apply or cause to be applied an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days of
the effective date of any such arrangement, of Indebtedness of the Guarantor or
any Restricted Subsidiary; provided, however, that in addition to the
transactions permitted pursuant to the foregoing clauses (i) and (ii), the
Guarantor or any Restricted Subsidiary may enter into a Sale/Leaseback
Transaction as long as the sum of (x) the Attributable Debt with respect to
such Sale/Leaseback Transaction and all other Sale/Leaseback Transactions
entered into pursuant to this proviso plus (y) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to the final proviso to Section
3.5 does not exceed 15% of Consolidated Net Tangible Assets as determined based
on the consolidated balance sheet of the Guarantor as of the end of the most
recent fiscal quarter for which financial statements are available; and
provided, further, that a Restricted Subsidiary may enter into a Sale/Leaseback
Transaction with respect to property or assets owned by such Restricted
Subsidiary, the proceeds of which are used to explore, drill, develop,
construct, purchase, repair, improve or add to property or assets of any
Restricted Subsidiary, or to repay (within 365 days of the commencement of full
commercial operation of any such property) Indebtedness Incurred to explore,
drill, develop, construct, purchase, repair, improve or add to property or
assets of any Restricted Subsidiary.
Section 3.5. Subject to Section 4, the Guarantor shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, incur
any Lien on any of its properties or assets (including Capital Stock), whether
owned at the date hereof or thereafter acquired, in each case to secure
Indebtedness of the Guarantor or any Restricted Subsidiary, other than (a)(1)
Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens
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incurred by any Restricted Subsidiary that does not own, directly or indirectly,
at the time of such original incurrence of such Lien under this clause (2) any
operating properties or assets, securing Indebtedness Incurred to finance the
exploration, drilling, development, construction or purchase of or by, or
repairs, improvements or additions to, property or assets of any Restricted
Subsidiary that does not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, which Liens may
include Liens on the Capital Stock of one or more Restricted Subsidiaries that
do not, directly or indirectly, own any operating properties or assets at the
time of such original incurrence of such Lien, provided, however, that the
Indebtedness secured by any such Lien may not be issued more than 365 days after
the later of the exploration, drilling, development, completion of construction,
purchase, repair, improvement, addition or commencement of full commercial
operation of the property or assets being so financed; (b) Liens existing on the
date hereof (other than Liens relating to Indebtedness or other obligations
being repaid or Liens that are otherwise extinguished with the proceeds of the
offering of the Certificates); (c) Liens on property, assets or shares of stock
of a Person at the time such Person becomes a Subsidiary; provided, however,
that any such Lien may not extend to any other property or assets owned by the
Guarantor or any Restricted Subsidiary; (d) Liens on property or assets at the
time the Guarantor or a Subsidiary acquires the property or asset, including any
acquisition by means of a merger or consolidation with or into the Guarantor or
a Subsidiary; provided, however, that such Liens are not incurred in connection
with, or in contemplation of, such merger or consolidation; and provided,
further, that the Lien may not extend to any other property or asset owned by
the Guarantor or any Restricted Subsidiary; (e) Liens securing Indebtedness or
other obligations of a Subsidiary owing to the Guarantor or a Restricted
Subsidiary or of the Guarantor owing to a Subsidiary; (f) Liens incurred on
assets that are the subject of a Capitalized Lease Obligation to which the
Guarantor or a Subsidiary is a party, which shall include, Liens on the stock or
other ownership interest in one or more Restricted Subsidiaries leasing such
assets; (g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (a), (b), (c), (d) and (f), provided,
however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements or
additions to such property or assets and Liens on the stock or other ownership
interest in one or more Restricted Subsidiaries beneficially owning such
property or assets) and (y) the amount of the Indebtedness secured by such Lien
at such time (or, if the amount that may be realized in respect of such Lien is
limited, by contract or otherwise, such limited lesser amount) is not increased
(other than by an amount necessary to pay fees and expenses, including premiums,
related to the refinancing, refunding, extension, renewal or replacement of such
Indebtedness); (h) Liens by which the Obligations are secured equally and
ratably with other Indebtedness pursuant to this Section 3.5; in any such case
without effectively providing that the Obligations shall be secured equally and
ratably with (or prior to) the obligations so secured for so long as such
obligations are so secured; provided, however, that the Guarantor or a
Restricted Subsidiary may Incur other Liens to secure outstanding Indebtedness
as long as the sum of (x) the lesser of (A) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to this proviso (or, if the
13
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness,
plus (y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 3.4 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available; and (i) Liens otherwise permitted
under the 2000 Calpine Indenture.
Section 3.6. (a) The Guarantor covenants and agrees that it shall
not consolidate or merge with or into any other Person, or sell, assign,
convey, lease, transfer or otherwise dispose of, all or substantially all of
its properties or assets to any Person or Persons in one or a series of
transactions, unless immediately after giving effect to such transaction,
(i) no Significant Lease Default or Lease Event of Default shall have
occurred and be continuing;
(ii) either (A) the Guarantor shall be the continuing Person, or (B)
the Person (if other than the Guarantor) formed by such consolidation or
into which the Guarantor is merged or to which the properties and assets of
the Guarantor are sold, assigned, conveyed, transferred, disposed of or
leased as aforesaid shall be an entity organized and existing under the
laws of the United States or any State thereof or the District of Columbia
and shall execute and deliver to the Owner Participant, the Owner Lessor
and, so long as the Lien of the Collateral Trust Indenture shall not have
been terminated or discharged, the Indenture Trustee and the Pass Through
Trustee, a Guarantor Assignment and Assumption Agreement; and
(iii) each of the Owner Participant, the Owner Lessor and, so long as
the Lien of the Collateral Trust Indenture shall not have been terminated
or discharged, the Indenture Trustee and the Pass Through Trustee shall
have received an Officer's Certificate of the Guarantor, the surviving
entity or the transferee, as the case may be, in form and substance
reasonably satisfactory to each of such parties, stating that the proposed
merger, consolidation, assignment, conveyance, transfer, disposition, lease
or sale, and the Guarantor Assignment and Assumption Agreement complies
with the terms of this Section 3(a) and, as to legal matters, an Opinion of
Counsel; and
(iv) In addition to the conditions set forth in clauses (i) through
(iii) above, the Guarantor, subject to Section 4, will not consummate any
such consolidation, merger or sale of all or substantially all of its
properties or assets unless the long-term unsecured debt of the resulting,
surviving or succeeding entity shall have a credit rating assigned by the
Rating Agencies that is not less than the lower of (x) the credit rating of
the long-term unsecured debt of the Guarantor assigned by the Rating
Agencies immediately prior to such transaction and (y) a credit rating of
the long-term unsecured debt of the resulting, surviving
14
or succeeding entity assigned by the Rating Agencies that is Investment
Grade; provided however, the foregoing credit rating condition set forth
in this paragraph may be waived by the Owner Participant in its sole
discretion, and provided further, that if such credit rating condition is
not otherwise satisfied, or waived by the Owner Participant, the
Guarantor, the surviving entity or the transferee, as the case may be,
may provide in the alternative, either (A) a letter of credit from a L/C
Bank with at least either (1) an A rating from S&P or (2) an A2 rating
from ▇▇▇▇▇'▇, in either case, covering the Equity Portion of Termination
Value from time to time throughout the Lease Term, or (B) alternative or
additional credit support arrangements which result in the satisfaction
of the rating condition in either clause (x) or clause (y) above,
provided that such arrangements contemplated in this sub-clause (B) are
satisfactory to the Owner Participant and result in the satisfaction of
such rating condition.
(b) Upon the consummation of such transaction described in
Section 3.6(a), the resulting, surviving or succeeding entity, if other than
the Guarantor, shall succeed to, and be substituted for, and may exercise every
right and power and shall perform every obligation of, the Guarantor under this
Guaranty and each other Calpine Document, and from and after the effective date
and time of the consummation of such transfer, the Guarantor shall be released
from all obligations accruing hereunder other than those accruing prior to such
effective date and time.
Section 3.7. The Guarantor shall, together with each payment it
makes hereunder, provide a written notice to each Beneficiary or Beneficiaries
which are the intended recipients of such payment of the amount payable to each
such Beneficiary and the Operative Document(s) with respect to which such
payment is being made.
SECTION 4. BENEFICIARIES; TERMINATION OF CERTAIN COVENANTS
The Owner Participant, the Owner Lessor, the Trust Company (but only
to the extent indemnified under the Participation Agreement) and, so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Lease Indenture Company, and (but
only to the extent expressly referred to herein, and with respect to Section
3.2(a) hereof and with respect to the obligations of the RockGen Lessee under
the Participation Agreement) the Pass Through Trustee (for the benefit of the
Certificateholders) and the Pass Through Company, in each case, together with
their respective permitted successors and assigns (and with respect to clause
(ii) below, the other related Persons referred to therein), are each
beneficiaries of this Guaranty (each a "Beneficiary" or, together, the
"Beneficiaries"); provided that, notwithstanding the foregoing or any other
provision of this Guaranty, (i) the Owner Participant shall be the sole and
exclusive beneficiary of, and shall have the sole right to enforce, (A) clause
(iv) of Section 3.6(a) hereof, (B) clause (4) of Section 2.1(a) hereof to the
extent relating to the RockGen Lessee's indemnity obligation under the Tax
Indemnity Agreement, (ii) to the extent that the RockGen Lessee is obligated to
indemnify a particular Beneficiary (or any Affiliate, agent director, officer,
or employee thereof) in accordance with Section 9 of the Participation
Agreement, then such Beneficiary (or such Affiliate, agent, director, officer
or employee) shall be the sole and
15
exclusive beneficiary of, and shall have the sole right to enforce, the
Guarantor's guaranty of, and agreement with respect to, such indemnification
obligation hereunder, (iii) the Owner Lessor and Indenture Trustee (as assignee
of Owner Lessor) shall be the sole and exclusive beneficiaries of, and shall
have the sole right to enforce, the fourth sentence of Section 2.1(b) hereof,
and (iv) the Indenture Trustee, the Lease Indenture Company, the Pass Through
Trustee and the Pass Through Company shall be the sole and exclusive
beneficiaries of the provisions of Section 3.4 and Section 3.5 hereof; provided
however, with respect to this clause (iv), once the Certificates shall have
been paid in full, the covenants set forth in Section 3.4 and Section 3.5
hereof shall, subject to the immediately following sentence, immediately and
without any further action terminate and be of no further force or effect. Any
amendment, waiver or modification of or supplement to Section 3.4 or Section
3.5 which is consented to by the Indenture Trustee shall be binding upon the
Owner Lessor and the Owner Participant. Notwithstanding the foregoing or
anything herein or in any of the Operative Documents to the contrary, if the
Owner Lessor shall have issued additional Lease Debt at the request of the
RockGen Lessee in accordance with Section 11 of the Participation Agreement
prior to, simultaneously with, or after payment in full of the Certificates and
such new Lease Debt is outstanding on or after the date the Certificates are
paid in full, the covenants set forth in Section 3.4 and Section 3.5 shall, to
the extent required by the terms of such new Lease Debt, remain in effect or
thereafter become effective if not then in effect, but shall be for the sole
and exclusive benefit of, and enforceable solely by, the holder of such new
Lease Debt. Upon repayment of such new Lease Debt, or compliance with the
terms thereof, the covenants set forth in Section 3.4 and Section 3.5 shall
immediately and without further action terminate and be of no further force and
effect. Notwithstanding any of the preceding provisions, a breach of Sections
3.4 or 3.5 under this Guaranty at such time as such breach shall have become an
"Event of Default" under Section 7.1 shall constitute a Lease Event of Default
under the circumstances provided in, and to the extent set forth in, the
Facility Lease.
SECTION 5. BENEFICIARIES' RIGHTS
Each Beneficiary may at any time and from time to time without the
consent of, or notice to the Guarantor, without incurring responsibility to the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Obligations due to
it, any security therefor, or any liability incurred directly or indirectly in
respect thereof, and, subject to clause (d) below, the guaranty and agreement
herein made shall apply to the Obligations due to it as so changed, extended,
renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof due to it, and/or any offset thereagainst due to
it;
16
(c) exercise or refrain from exercising any rights against the
RockGen Lessee or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Obligations due to it, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the RockGen Lessee to its creditors other than the Guarantor;
provided that any settlement or compromise with respect to, or other reduction
(by operation of law or negotiation) of, any of the Obligations (or amounts
underlying such Obligations) due to it (whether occurring before or after the
occurrence of a Lease Event of Default) shall not alter the amount of the
original Obligations due to it guaranteed hereby and the Guarantor acknowledges
and agrees that its obligations hereunder shall be for the full amount of the
Obligations due to it without giving effect to any such settlement, compromise
or other reduction;
(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the RockGen Lessee to such Beneficiary regardless
of what liabilities or liabilities of the RockGen Lessee remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, the Participation Agreement or the Facility Lease, or otherwise
amend, modify or supplement the Participation Agreement or the Facility Lease
or any of such other instruments or agreements; and/or
(g) act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the RockGen
Lessee to recover full indemnity for any payments made pursuant to this
Guaranty.
Anything herein to the contrary notwithstanding, any exercise of rights or
remedies by any Beneficiary hereunder or under any other Operative Document, or
the failure of any Beneficiary to exercise any rights or remedies hereunder in
accordance with the provisions hereof or under any other Operative Document,
shall not in any way adversely affect the ability of any other Beneficiary to
exercise its rights or remedies hereunder.
SECTION 6. SURVIVAL OF GUARANTY AND PAYMENT AGREEMENT (ROCKGEN (RG-4))
Notwithstanding anything to the contrary herein, this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any of the amounts paid to any of the Beneficiaries, in whole or in part, is
required to be repaid upon the insolvency, bankruptcy, dissolution,
liquidation, or reorganization of the Guarantor or the RockGen Lessee or any
other Person, or as a result of the appointment of a custodian, interviewer,
receiver, trustee, or other officer with similar powers with respect to the
Guarantor or the RockGen Lessee or any other Person or any substantial part of
the property of the Guarantor or the RockGen Lessee or such other Person, all
as if such payments had not been made.
SECTION 7. DEFAULTS; REMEDIES; SUBROGATION
17
Section 7.1. Defaults. The following events shall constitute an
"Event of Default" hereunder (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any Governmental Entity):
(a) the Guarantor or the RockGen Lessee under the Facility Lease
shall fail to make any payment with respect to Periodic Rent or the Termination
Value (including the Equity Portion of Termination Value and Debt Portion of
Termination Value) when due and payable under such Facility Lease or this
Guaranty within five (5) days after the same shall become due thereunder; or
(b) the Guarantor or the RockGen Lessee shall fail to make any other
amount payable under any Operative Document after the same shall become due
thereunder and such failure shall have continued from a period of ten (10)
Business Days after receipt by the RockGen Lessee and the Guarantor of written
notice of such failure by the RockGen Lessee and/or the Guarantor, as
applicable;
(c) The Guarantor shall fail to comply with its covenants set forth
in Section 3.3 (transfer of RockGen Lessee ownership), 3.6 (Guarantor merger)
or 8.4 (assignment of Guaranty) of this Guaranty.
(d) the Guarantor shall fail to perform or observe any covenant,
obligation or agreement to be performed or observed by it under any Calpine
Document (other than any covenant, obligation or agreement referred to in
clauses (a) or (b) of this Section 7.1) in any material respect, which shall
continue unremedied for (1) with respect to the Guarantor's guaranty of, and
agreement with respect to, any nonmonetary obligation, covenant or agreement of
the RockGen Lessee under any of the Operative Documents, 30 days after receipt
by the Guarantor of written notice thereof from the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee; provided,
however, if such condition cannot be remedied within such 30-day period, then
the period within which to remedy such condition shall be extended up to an
additional 180 days, so long as the Guarantor diligently pursues such remedy
and such condition is reasonably capable of being remedied within such
additional 180-day period, and (2) with respect to any other obligation,
covenant or agreement hereunder, 30 days after receipt by the Guarantor of
written notice thereof;
(e) there shall have occurred either (i) a default by the Guarantor
or any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of the Guarantor or
any Restricted Subsidiary of the Guarantor (other than the Obligations) having
an outstanding principal amount of $50,000,000 (or its foreign currency
equivalent) or more individually or in the aggregate that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity, unless such declaration has been rescinded within 30 days or
(ii) a default by the Guarantor or any Restricted Subsidiary in the payment
when due of any portion of the principal under any such instrument or
instruments, and such unpaid portion exceeds $50,000,000 (or its foreign
currency equivalent) individually or in the
18
aggregate and is not paid, or such default is not cured or waived, within any
grace period applicable thereto, unless such Indebtedness is discharged within
30 days of the Guarantor or a Restricted Subsidiary becoming aware of such
default;
(f) the Guarantor or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it
in an involuntary case;
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property;
(iv) makes a general assignment for the benefit of its
creditors; or
(v) admits in writing its inability to generally pay its
debts as such debts become due;
or takes any comparable action under any foreign laws relating to
insolvency;
(g) an involuntary case or other proceeding shall be commenced
against the Guarantor or any Significant Subsidiary seeking (i) liquidation,
reorganization or other relief with respect to it or its debts under Title 11
of the Bankruptcy Code or any bankruptcy, insolvency or other similar law now
or hereafter in effect, or (ii) the appointment of a trustee, receiver,
liquidator, custodian or other similar official with respect to it or any
substantial part of its property or (iii) the winding-up or liquidation of the
Guarantor or such Significant Subsidiary; and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;
(h) any representation or warranty made by the Guarantor herein
shall prove to have been incorrect in any material respect when made or
misleading in any material respect when made because of the omission to state a
material fact and such incorrect or misleading representation is and continues
to be material and unremedied for a period of 30 days after receipt by the
Guarantor of written notice thereof; provided, however, that if such condition
cannot be remedied within such 30-day period, then the period within which to
remedy such condition shall be extended up to an additional 60 days, so long as
the Guarantor diligently pursues such remedy and such condition is reasonably
capable of being remedied within such additional 60-day period.
The grace periods set forth in Section 7.1(a) and (b) above shall not
affect in any way the right hereunder of any Beneficiary entitled to a payment
of any amount payable to it, or performance of any obligation, by the RockGen
Lessee under any Operative Document to demand prompt payment thereof, or
performance thereof, by the Guarantor immediately upon any failure of the
RockGen Lessee to pay or perform the same when it
19
has become due (and, for the avoidance of doubt, without regard to the
existence of any cure or grace period before such failure by the RockGen Lessee
becomes a Lease Event of Default); provided, however, notwithstanding the
foregoing, no Lease Event of Default under Section 16(m) and no remedies under
the Facility Lease may be exercised until a Calpine Guaranty Event of Default
has occurred and is continuing.
Section 7.2. Remedies. Subject to the last paragraph of Section 7.1,
each Beneficiary shall be entitled to (a) all rights and remedies to which it
may be entitled hereunder or at law, in equity or by statute and may proceed by
appropriate court action to enforce the terms hereof and to recover damages for
the breach hereof. Each and every remedy of the Beneficiaries shall, to the
extent permitted by law, be cumulative and shall be in addition to any other
remedy now or hereafter existing at law or in equity. At the option of each
Beneficiary and upon notice to the Guarantor, the Guarantor may be joined in
any action or proceeding commenced by such Beneficiary against the RockGen
Lessee in respect of any Obligations and recovery may be had against the
Guarantor in such action or proceeding or in any independent action or
proceeding against the Guarantor, without any requirement such Beneficiary
first assert, prosecute or exhaust any remedy or claim against the RockGen
Lessee. Notwithstanding any of the foregoing, if an Event of Default specified
in clause (e) or (f) of Section 7.1 with respect to the Guarantor occurs, all
monetary Obligations shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Owner Participant, the
Owner Lessor, the Indenture Trustee or the Pass Through Trustee.
Section 7.3. Subrogation. The Guarantor will not exercise any rights
that it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or thereunder or otherwise, until all of the Obligations and all
other obligations of the RockGen Lessee and the Guarantor owing to any of the
Beneficiaries (or any other party) under the Operative Documents shall have
been paid in full. If any amount shall be paid to the Guarantor on account of
such subrogation rights at any time when all of the Obligations and such other
obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Beneficiary to whom such Obligation or other
obligation is payable and shall forthwith be paid to such Beneficiary to be
credited and applied to such Obligation or other obligation, whether matured or
unmatured, in accordance with the terms of the Operative Document under which
such Obligation or other obligation arose. If (i) the Guarantor shall make
payment to any Beneficiary of all or any part of the Obligations or other
obligations and (ii) all the Obligations and such other obligations shall be
paid and performed in full, such Beneficiary will, at the Guarantor's request
and expense, execute and deliver to the Guarantor appropriate documents,
without recourse, subject to Section 6 hereof, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations and
such other obligations resulting from such payment by the Guarantor.
Section 7.4. Waiver of Demands, Notices, Etc.
(a) Without limiting the last sentence of Section 7.1, the Guarantor
hereby unconditionally waives (i) notice of any of the matters referred to in
the second sentence of Section 2.3 hereof; (ii) all notices which may be
required by statute, rule of law or
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otherwise, now or hereafter in effect, to preserve any rights against the
Guarantor hereunder, including, without limitation, any demand, proof or notice
of non-payment of any Obligation; (iii) any right to the enforcement, assertion
or exercise of any right, remedy, power or privilege under or in respect of the
Facility Lease (or under or in respect of any other agreement including any
Operative Document); (iv) notice of acceptance of this Guaranty, demand,
protest, presentment, notice of default and any requirement of diligence; (v)
any requirement to exhaust any remedies or to mitigate any damages resulting
from default by the RockGen Lessee or any Person under the Facility Lease (or
under any other agreement including any Operative Document); and (vi) any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety, or which might
otherwise limit recourse against the Guarantor, other than satisfaction in full
of the Obligations.
(b) This Guaranty is a continuing one and all of the Obligations
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of any Beneficiary in exercising any right, power
or privilege hereunder and no course of dealing among the Guarantor, any
Beneficiary or the RockGen Lessee shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Beneficiary would otherwise have. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of any Beneficiary to any other or further action in any circumstances
without notice or demand.
(c) If a claim is ever made upon any Beneficiary for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Obligations and any of the Beneficiaries repays all or part of said amount
by reason of (a) any judgment, decree or order of any court or administrative
body having jurisdiction over such Beneficiary or any of its property or (b)
any settlement or compromise of any such claim effected by such Beneficiary
with any such claimant (including the RockGen Lessee), then and in such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any revocation hereof or
the cancellation of the Facility Lease or other instrument evidencing any
liability of the RockGen Lessee, and the Guarantor shall be and remain liable
to the aforesaid Beneficiaries hereunder for the amount so repaid by or
recovered from such Beneficiary to the same extent as if such amount had never
originally been received by any such Beneficiary.
Section 7.5. Costs and Expenses. The Guarantor agrees to pay on an
After-Tax Basis any and all reasonable costs and expenses (including reasonable
legal fees) incurred by any Beneficiary in enforcing its rights under this
Guaranty.
Section 7.6. Survival of Remedies and Subrogation Rights. The
provisions of this Section 7 shall survive the term of this Guaranty and the
payment in full of the Obligations and the termination of the Operative
Documents.
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SECTION 8. MISCELLANEOUS
Section 8.1. Amendments and Waivers. No term, covenant, agreement or
condition of this Guaranty may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
the Guarantor and consented to by the Beneficiaries.
Section 8.2. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (b) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(c) in the case of notice by such a telecommunications device, upon
transmission thereof, provided such transmission is promptly confirmed by
either of the methods set forth in clauses (a) or (b) above, in each case
addressed to the Guarantor hereto at its address set forth below or at such
other address as such party may from time to time designate by written notice:
Calpine Corporation
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
Section 8.3. Survival. Except as expressly set forth herein, the
warranties and covenants made by the Guarantor shall not survive the expiration
or termination of this Guaranty.
Section 8.4. Assignment and Assumption. (a) Except as provided in
clause (b) below, this Guaranty may not be assigned by the Guarantor to, or
assumed by, any successor to or assign of the Guarantor (it being understood
and agreed that a consolidation with or merger of the Guarantor into, or the
sale of all or substantially all of its assets to, another Person in accordance
with Section 3.6 shall not be deemed such an assignment or assumption for the
purposes hereof) without the prior written consent of the Beneficiaries, nor
may the Guarantor transfer or assign a majority (or more) of the Ownership
Interest in the RockGen Lessee.
(b) Notwithstanding any of the foregoing in this Section 8.4, the
Guarantor may transfer a majority (or more) of its Ownership Interest in the
RockGen Lessee to a single third party, provided that the Guarantor assigns
this Guaranty to such third party (whereupon the Guarantor shall be released
from all obligations under this Guaranty in connection with such transfer) upon
satisfaction of the following conditions:
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(i) unless the Owner Participant shall have consented to such
assignment, such transferee, or a party which unconditionally guarantees
such transferee's obligations under the Operative Documents assigned to
such transferee (A) shall have significant experience owning or operating
gas-fired electric generating facilities in the United Sates and (B) shall
have a tangible net worth of at least $1 billion after giving effect to
such transfer;
(ii) the requirements set forth in Section 3.3(i), (iii), (iv) and (v)
of this Guaranty have been satisfied and, immediately after giving effect
to such transfer, the transferee shall own at least a majority of the
Ownership Interest of the RockGen Lessee;
(iii) such transfer occurs (i) subsequent to the tenth year of the
Facility Lease Term of the RockGen Lessee and (ii) when the aggregate
principal amount of the Lessor Notes is less than $50 million;
(iv) neither the transferee nor any Affiliate of the transferee shall
be involved in any material litigation with the Owner Participant;
(v) the Rating Agencies shall have confirmed that after giving effect
to such transfer, the Certificates (if then outstanding) and the transferee
(or a party which guarantees such transferee's obligations under the
Operative Documents assigned to such transferee) shall be rated at least
Investment Grade (and not be on negative credit watch) by the Rating
Agencies;
(vi) all the obligations of the RockGen Lessee under the Operative
Documents shall remain in full force and effect, the transferee shall
assume all the obligations of the Guarantor under the Operative Documents
pursuant to the Guarantor Assignment and Assumption Agreement and such
Operative Documents as so assumed shall remain in full force and effect,
and any guaranty of such transferee's obligations pursuant to this Section
8.4 shall be in a form satisfactory to the Owner Participant (it being
acknowledged and agreed that any such guaranty which shall be in form and
substance substantially similar to this Guaranty shall be deemed to be
satisfactory to the Owner Participant); and
(vii) the Owner Participant, the Owner Lessor and, so long as the Lien
on the Collateral Trust Indenture shall not have been terminated or
discharged, the Indenture Trustee and the Pass Through Trustee shall have
received an Opinion of Counsel as to the satisfaction of the conditions set
forth in clause (vi) of this Section 8.4(b).
Section 8.5. Governing Law. This Guaranty shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions, other than New York General
Obligations Law Section 5-1401).
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Section 8.6. Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 8.7. Headings. The headings of the sections of this Guaranty
are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof.
Section 8.8. Further Assurances. The Guarantor will promptly and
duly execute and deliver such further documents as may be reasonably requested
by the Owner Lessor, all as may be reasonably necessary to affirm the
Guarantor's obligations under this Guaranty.
Section 8.9. Effectiveness of Guaranty. This Guaranty has been dated
as of the date first above written for convenience only. This Guaranty shall
be effective on the date of execution and delivery by the Guarantor.
Section 8.10. Acknowledgment by the Guarantor. The Guarantor
acknowledges that an executed (or conformed) copy of the Participation
Agreement, the Facility Lease, the other Operative Documents have been made
available to its principal executive officers and such officers are familiar
with the contents thereof.
Section 8.11. Tolling. Any acknowledgement or new promise, whether
by payment of principal or interest or otherwise and whether by the RockGen
Lessee or others (including the Guarantor), with respect to any of the
Obligations shall, if the statute of limitations in favor of the Guarantor
against any Beneficiary shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.
Section 8.12. Consent to Jurisdiction; Waiver of Trail by Jury;
Process Agent.
(a) The Guarantor (i) hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court of the State of New York, New York County
(without prejudice to the right of the Guarantor to remove to the United States
District Court for the Southern District of New York) and to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or other proceeding arising out
of this Guaranty, the Facility Lease, the other Operative Documents, or the
subject matter hereof or thereof or any of the transactions contemplated hereby
or thereby brought by any of the Beneficiaries hereunder or their successors or
assigns; (ii) hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court,
or in such federal court; and (iii) to the extent permitted by Applicable Law,
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, or
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otherwise, in any such suit, action or proceeding any claim that it is not
personally subject to the jurisdiction of the above-named courts, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Guaranty, the other
Operative Documents, or the subject matter hereof or thereof may not be
enforced in or by such court.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY SUCH SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS GUARANTY, THE OTHER OPERATIVE
DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE BENEFICIARIES HEREUNDER OR
THEIR SUCCESSORS OR ASSIGNS.
(c) By the execution and delivery of this Guaranty, the Guarantor
designates, appoints and empowers National Registered Agent, Inc., ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Guarantor shall remain outstanding hereunder or under any of
the other Operative Documents. The Guarantor shall grant an irrevocable power
of attorney to National Registered Agent, Inc. in respect of such appointment
and shall maintain such power of attorney in full force and effect for so long
as any obligation of the Guarantor shall remain outstanding hereunder or under
any of the Operative Documents.
Section 8.13. Agreement for Benefit of Parties Hereto. Nothing in
this Guaranty, express or implied, is intended or shall be construed to confer
upon, or to give to, any person other than the parties hereto and their
respective successors and assigns, any right, remedy or claim under or by
reason of this Guaranty or any covenant, condition or stipulation hereof; and
the covenants, stipulations and agreements contained in this Guaranty are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns. The Guarantor acknowledges that certain of
the rights of the Owner Lessor hereunder have been or shall be assigned to and
may be enforced by the Indenture Trustee pursuant to the terms of the
Collateral Trust Indenture (excluding, among other things, rights to Excepted
Payments), the Guarantor hereby consents to such assignment and the Guarantor
agrees to render performance of such assigned obligations directly to the
Indenture Trustee (as assignee of the Owner Lessor). The Guarantor agrees to
make all payments which have been so assigned owing to the Owner Lessor under
this Guaranty directly to the account of the Indenture Trustee to be specified
to the Guarantor in writing, or to such other account specified in writing from
time to time by the Indenture Trustee.
Section 8.14. Termination of Guaranty. Upon the full payment and
satisfaction of the Obligations and all of the Guarantor's obligations
hereunder, this Guaranty shall terminate and shall be of no further effect.
Nevertheless, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time, any payment, or any part thereof, of any of
the Obligations is rescinded or must otherwise be
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returned by any Beneficiary upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the RockGen Lessee or otherwise, all as though
such payment had not been made.
Section 8.15. Additional Obligations. Upon the assumption by the
RockGen Lessee of the Lessor Notes in connection with a termination of the
Facility Lease, as permitted therein, the obligation of the RockGen Lessee to
pay principal of, and Make-Whole Amount if any, and interest on the Lessor
Notes, and amounts payable by it to the Indenture Trustee under the Collateral
Trust Indenture, shall thereupon become Obligations for all purposes of this
Guaranty, and the Guarantor shall therefor execute and deliver to the Indenture
Trustee such further guaranties, instruments and documents as the Indenture
Trustee may reasonably request in order to more fully effectuate the
Guarantor's unconditional guaranty of such additional Obligations.
Section 8.16. Miscellaneous Provisions. The payment obligations of
the Guarantor hereunder shall rank pari passu with all other senior unsecured
indebtedness of the Guarantor for borrowed money.
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IN WITNESS WHEREOF, the parties have caused this Guaranty to be duly
executed and delivered on the day and year first above written.
CALPINE CORPORATION,
as Guarantor
By:______________________________________
Name:
Title:
ROCKGEN OL-4, LLC,
a Delaware limited liability company
By:______________________________________
Name:
Title:
SBR OP-4, LLC,
a Delaware limited liability company
By:______________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, National Association, not in its
individual capacity but solely as Indenture
Trustee
By:________________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, National Association, not in its
individual capacity but solely as Pass
Through Trustee
By:________________________________________
Name:
Title: