EXHIBIT 10.1.1.2
EXECUTION VERSION
200,000,000
FIRST PRIORITY SECURED REVOLVING LOANS
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 23, 2004
among
CALPINE GENERATING COMPANY, LLC
The Borrower
THE GUARANTORS PARTY HERETO FROM TIME TO TIME
The Guarantors
THE LENDERS PARTY HERETO FROM TIME TO TIME
The Lenders
THE BANK OF NOVA SCOTIA
Administrative Agent, LC Bank, Lead Arranger and Sole Bookrunner
BAYERISCHE LANDESBANK CAYMAN ISLANDS BRANCH
Arranger and Co-Syndication Agent
CREDIT LYONNAIS NEW YORK BRANCH
Arranger and Co-Syndication Agent
ING CAPITAL LLC
Arranger and Co-Syndication Agent
TORONTO DOMINION (TEXAS) INC.
Arranger and Co-Syndication Agent
and
UNION BANK OF CALIFORNIA, N.A.
Arranger and Co-Syndication Agent
TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1 Definitions................................................................................ 3
SECTION 1.2 Rules of Construction...................................................................... 49
ARTICLE II.
THE CREDIT FACILITIES
SECTION 2.1 Revolving Loan Facility.................................................................... 50
Section 2.1.1 Revolving Loans................................................................... 50
Section 2.1.2 Amount of Revolving Loans; Availability of Funds.................................. 51
Section 2.1.3 Use of Proceeds................................................................... 51
Section 2.1.4 Evidence of Debt; Register; Lenders' Books and Records; Notes..................... 52
Section 2.1.5 Interest.......................................................................... 52
Section 2.1.6 Continuation Notice............................................................... 53
Section 2.1.7 Default Interest.................................................................. 54
Section 2.1.8 Fees.............................................................................. 55
Section 2.1.9 Payments.......................................................................... 55
Section 2.1.10 Voluntary Prepayments; Voluntary Commitment Reductions............................ 55
Section 2.1.11 Mandatory Repayments and Commitment Reductions.................................... 56
Section 2.1.12 General Provisions Regarding Payments............................................. 56
Section 2.1.13 Ratable Sharing................................................................... 57
Section 2.1.14 Making or Maintaining Revolving Loans............................................. 58
Section 2.1.15 Increased Costs; Capital Adequacy................................................. 60
Section 2.1.16 Taxes; Withholding, etc........................................................... 61
Section 2.1.17 Removal or Replacement of a Lender................................................ 64
SECTION 2.2 Letter of Credit Facilities................................................................ 64
Section 2.2.1 Issuance of the Letters of Credit................................................. 65
Section 2.2.2 Use of Letters of Credit.......................................................... 65
Section 2.2.3 Notice of LC Activity............................................................. 65
Section 2.2.4 Reimbursement..................................................................... 66
Section 2.2.5 Reimbursement Obligation Absolute................................................. 66
Section 2.2.6 Reduction and Reinstatement of Stated Amount...................................... 67
Section 2.2.7 Lender Participation.............................................................. 67
Section 2.2.8 Commercial Practices.............................................................. 68
Section 2.2.9 Letter of Credit Fees............................................................. 69
Section 2.2.10 Termination of Letters of Credit.................................................. 69
ARTICLE III.
CONDITIONS PRECEDENT
SECTION 3.1 Conditions Precedent to Closing............................................................ 69
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Section 3.1.1 Resolutions....................................................................... 69
Section 3.1.2 Incumbency........................................................................ 70
Section 3.1.3 Formation Documents............................................................... 70
Section 3.1.4 Good Standing Certificates........................................................ 70
Section 3.1.5 Financial Officer's Certificate................................................... 70
Section 3.1.6 Security.......................................................................... 71
Section 3.1.7 Consummation of Notes Offering, Term Loan Agreements,
and Revolving Loan Documents ..................................................... 72
Section 3.1.8 No Material Adverse Change........................................................ 73
Section 3.1.9 Independent Engineer Report....................................................... 73
Section 3.1.10 Third Party Approvals............................................................. 73
Section 3.1.11 Opinions.......................................................................... 74
Section 3.1.12 Officer's Certificates............................................................ 74
Section 3.1.13 Title Policies.................................................................... 74
Section 3.1.14 Evidence of Insurance............................................................. 74
Section 3.1.15 Other Financing Documents......................................................... 75
Section 3.1.16 No Default........................................................................ 75
Section 3.1.17 Fees.............................................................................. 75
Section 3.1.18 Delivery of Financials............................................................ 75
Section 3.1.19 Notice of Borrowing............................................................... 75
Section 3.1.20 Notice of LC Activity............................................................. 75
Section 3.1.21 Site Assessment Reports........................................................... 75
Section 3.1.22 Major Project Documents........................................................... 76
SECTION 3.2 Conditions Precedent to Each Revolving Loan After the Closing Date......................... 76
Section 3.2.1 Representations and Warranties.................................................... 76
Section 3.2.2 No Material Adverse Effect........................................................ 76
Section 3.2.3 No Default........................................................................ 76
Section 3.2.4 Notice of Borrowing............................................................... 76
SECTION 3.3 Conditions Precedent to the Issuance of Letters of Credit.................................. 76
Section 3.3.1 Representations and Warranties.................................................... 76
Section 3.3.2 No Material Adverse Effect........................................................ 76
Section 3.3.3 No Default........................................................................ 77
Section 3.3.4 Notice of LC Activity............................................................. 77
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Organization............................................................................... 77
SECTION 4.2 Financing Documents and Major Project Documents............................................ 77
SECTION 4.3 Collateral................................................................................. 78
SECTION 4.4 Governmental Approvals..................................................................... 78
SECTION 4.5 Compliance with Law........................................................................ 78
SECTION 4.6 Ownership of Property; Liens............................................................... 79
SECTION 4.7 Governmental Authorizations; Permits....................................................... 79
SECTION 4.8 Labor Disputes............................................................................. 79
SECTION 4.9 Intellectual Property Rights............................................................... 79
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SECTION 4.10 Hazardous Substances....................................................................... 79
SECTION 4.11 Litigation................................................................................. 80
SECTION 4.12 Financial Information...................................................................... 80
SECTION 4.13 Disclosure; Projections.................................................................... 80
SECTION 4.14 Adverse Change............................................................................. 81
SECTION 4.15 Taxes...................................................................................... 83
SECTION 4.16 Investment Company Act..................................................................... 81
SECTION 4.17 ERISA .................................................................................. 81
SECTION 4.18 Governmental Regulation.................................................................... 82
SECTION 4.19 Margin Stock, Etc.......................................................................... 83
SECTION 4.20 No Violations or Defaults.................................................................. 83
SECTION 4.21 No Material Adverse Agreements............................................................. 83
SECTION 4.22 Solvency .................................................................................. 83
SECTION 4.23 Capitalization............................................................................. 84
SECTION 4.24 Other Indebtedness......................................................................... 84
SECTION 4.25 Patriot Act Compliance..................................................................... 84
ARTICLE V.
COVENANTS
SECTION 5.1 Reports.................................................................................... 85
SECTION 5.2 Compliance Certificate..................................................................... 86
SECTION 5.3 Stay, Extension and Usury Laws............................................................. 87
SECTION 5.4 Restricted Payments........................................................................ 87
SECTION 5.5 Dividend and Other Payment Restrictions Affecting Subsidiaries............................. 88
SECTION 5.6 Incurrence of Indebtedness and Issuance of Preferred Equity................................ 90
SECTION 5.7 Asset Sales; Application of Net Proceeds................................................... 93
SECTION 5.8 Transactions with Affiliates............................................................... 96
SECTION 5.9 Liens...................................................................................... 98
SECTION 5.10 Business Activities........................................................................ 98
SECTION 5.11 Payments for Consent....................................................................... 98
SECTION 5.12 Restrictions on Activities of CalGen Finance............................................... 99
SECTION 5.13 Additional Subsidiaries.................................................................... 99
SECTION 5.14 Limitation on Issuances and Sales of Equity Interests in Subsidiaries...................... 99
SECTION 5.15 Deposit of Revenues........................................................................ 99
SECTION 5.16 Maintenance of Insurance................................................................... 99
SECTION 5.17 Coverage Ratio; Kilowatt Test.............................................................. 100
SECTION 5.18 Further Assurances......................................................................... 100
SECTION 5.19 Commercial Operations...................................................................... 100
SECTION 5.20 Compliance with Law........................................................................ 100
SECTION 5.21 Inspection Rights.......................................................................... 100
SECTION 5.22 Suspension of Certain Covenants............................................................ 101
ARTICLE VI.
SUCCESSORS
SECTION 6.1 Merger, Consolidation, or Sale of Assets................................................... 101
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SECTION 6.2 Successor Corporation Substituted.......................................................... 101
ARTICLE VII.
DEFAULTS AND REMEDIES
SECTION 7.1 Events of Default.......................................................................... 102
SECTION 7.2 Acceleration............................................................................... 103
SECTION 7.3 Other Remedies............................................................................. 103
SECTION 7.4 Waiver of Past Defaults; Rescission........................................................ 104
SECTION 7.5 Control by Majority........................................................................ 104
SECTION 7.6 Collection Suit by Administrative Agent.................................................... 104
SECTION 7.7 Priorities................................................................................. 105
ARTICLE VIII.
AGENTS
SECTION 8.1 Appointment of Agents...................................................................... 105
SECTION 8.2 Powers and Duties.......................................................................... 106
SECTION 8.3 General Immunity........................................................................... 106
SECTION 8.4 Agents Entitled to Act as Lender........................................................... 107
SECTION 8.5 Lenders' Representations, Warranties and Acknowledgment.................................... 107
SECTION 8.6 Right to Indemnity......................................................................... 107
SECTION 8.7 Successor Administrative Agent or LC Bank.................................................. 108
SECTION 8.8 Withholding Tax............................................................................ 108
ARTICLE IX.
COLLATERAL AND SECURITY
ARTICLE X.
RANKING OF LIENS AND COLLATERAL SHARING
ARTICLE XI.
REVOLVING LOAN GUARANTEE
SECTION 11.1 Guarantee.................................................................................. 110
SECTION 11.2 Right of Contribution...................................................................... 111
SECTION 11.3 Subordination.............................................................................. 111
SECTION 11.4 No Subrogation............................................................................. 112
SECTION 11.5 Amendments, etc. with respect to the Revolving Loan Obligations............................ 112
SECTION 11.6 Guarantee Absolute and Unconditional....................................................... 112
SECTION 11.7 Waiver..................................................................................... 114
SECTION 11.8 Bankruptcy................................................................................. 116
SECTION 11.9 Reinstatement.............................................................................. 117
SECTION 11.10 Payments .................................................................................. 118
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ARTICLE XII.
MISCELLANEOUS
SECTION 12.1 Notices ................................................................................... 118
SECTION 12.2 Expenses .................................................................................. 118
SECTION 12.3 Indemnity.................................................................................. 119
SECTION 12.4 Set-Off
SECTION 12.5 Amendments and Waivers..................................................................... 120
SECTION 12.6 Successors and Assigns; Participations..................................................... 122
SECTION 12.7 Independence of Covenants.................................................................. 126
SECTION 12.8 Survival of Representations, Warranties and Agreements..................................... 126
SECTION 12.9 No Waiver; Remedies Cumulative............................................................. 126
SECTION 12.10 Marshalling; Payments Set Aside............................................................ 127
SECTION 12.11 Severability............................................................................... 127
SECTION 12.12 Revolving Loan Obligations Several; Independent Nature of Lenders' Rights.................. 127
SECTION 12.13 Headings .................................................................................. 127
SECTION 12.14 Applicable Law............................................................................. 127
SECTION 12.15 Consent to Jurisdiction.................................................................... 128
SECTION 12.16 Waiver Of Jury Trial....................................................................... 128
SECTION 12.17 Confidentiality............................................................................ 129
SECTION 12.18 Usury Savings Clause....................................................................... 129
SECTION 12.19 Counterparts; Execution by Facsimile....................................................... 130
SECTION 12.20 Effectiveness.............................................................................. 130
SECTION 12.21 Statements Required in Certificate or Opinion.............................................. 130
SECTION 12.22 No Recourse Against the Borrower or the Guarantors......................................... 130
APPENDICES:
Appendix A: Revolving Loan Commitments
Appendix B: Notice Addresses
EXHIBITS:
Exhibit A: Subordination Terms
Exhibit B: Assignment and Assumption Agreement
Exhibit C: Certificate Re Non-Bank Status
Exhibit D: Continuation Notice
Exhibit E: Notice of Borrowing
Exhibit F: Lender Addendum
Exhibit G: Loan Note
Exhibit H: Notice of LC Activity
Exhibit I: Form of Opinions
SCHEDULES:
Schedule A: Third Party Project Documents
Schedule 4.1: Capital Structure
Schedule 4.11: Litigation
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Schedule 4.18(b): Qualifying Facilities
Schedule 4.18(c): Exempt Wholesale Generators
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AMENDED AND RESTATED
CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 23, 2004
(this "Agreement"), is entered into by and among CALPINE GENERATING COMPANY,
LLC, a Delaware limited liability company (the "Borrower"), the GUARANTORS party
hereto from time to time, the LENDERS party hereto from time to time, THE BANK
OF NOVA SCOTIA, as administrative agent (together with its successors and
permitted assignees in such capacity, the "Administrative Agent"), as issuer of
the Letters of Credit hereunder (together with its successors and permitted
assigns in such capacity, the "LC Bank") and as lead arranger and sole
bookrunner, and BAYERISCHE LANDESBANK CAYMAN ISLANDS BRANCH, CREDIT LYONNAIS NEW
YORK BRANCH, ING CAPITAL LLC, TORONTO DOMINION (TEXAS) INC. and UNION BANK OF
CALIFORNIA, N.A., each as an Arranger and Co-Syndication Agent, and this
Agreement amends and restates in its entirety that certain Credit Agreement,
dated as of October 16, 2000 (the "Existing Senior Secured Credit Facility"),
among the Borrower, Credit Suisse First Boston, as lead arranger and
administrative agent (in such capacity, the "Existing Credit Administrative
Agent"), and the lenders and other agents and arrangers party thereto from time
to time.
RECITALS
WHEREAS, the Borrower intends to borrow, on a non-recourse basis,
$600,000,000 in aggregate principal amount of first priority secured
institutional term loans due 2009 (the "First Priority Term Loans") pursuant to
a Credit and Guarantee Agreement, dated as of the date hereof (the "First
Priority Term Loan Agreement"), among the Borrower, the Guarantors party thereto
from time to time, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as the administrative
agent (together with its successors and permitted assigns in such capacity, the
"First Priority Term Loan Administrative Agent"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding,
Inc., as sole lead arranger, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as sole
book-runner, and the lenders party thereto from time to time;
WHEREAS, the Borrower:
(a) intends to issue, together with CalGen Finance Corp., a
Delaware corporation and a Wholly Owned Subsidiary of the Borrower
("CalGen Finance"), as co-issuer, on a non-recourse basis:
(i) $235,000,000 in aggregate principal amount of its
First Priority Secured Floating Rate Notes due 2009 (the
"First Priority Notes"), pursuant to the Indenture, dated as
of the date hereof (the "First Priority Indenture"), among the
Borrower, CalGen Finance, the Guarantors party thereto from
time to time and Wilmington Trust FSB, as trustee (together
with its successors and permitted assigns in such capacity,
the "First Priority Indenture Trustee");
(ii) $640,000,000 in aggregate principal amount of
its Second Priority Secured Floating Rate Notes due 2010 (the
"Second Priority Notes"), pursuant to the Indenture, dated as
of the date hereof (the "Second Priority Indenture"),
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among the Borrower, CalGen Finance, the Guarantors party
thereto from time to time and Wilmington Trust FSB, as trustee
(together with its successors and permitted assigns in such
capacity, the "Second Priority Indenture Trustee"); and
(iii) (A) $680,000,000 in aggregate principal amount
of its Third Priority Secured Floating Rate Notes due 2011
(the "Third Priority Floating Rate Notes"), and (B)
$150,000,000 in aggregate principal amount of its 11.50% Third
Priority Secured Notes due 2011 (the "Third Priority Fixed
Rate Notes" and, together with the First Priority Notes, the
Second Priority Notes and the Third Priority Floating Rate
Notes, the "Notes"), pursuant to the Indenture, dated as of
the date hereof (the "Third Priority Indenture" and, together
with the First Priority Indenture and the Second Priority
Indenture, the "Indentures"), among the Borrower, CalGen
Finance, the Guarantors party thereto from time to time and
Wilmington Trust FSB, as trustee (together with its successors
and permitted assigns in such capacity, the "Third Priority
Indenture Trustee");
(b) intends to borrow, on a non-recourse basis, $100,000,000
in aggregate principal amount of second priority secured institutional
term loans due 2010 (the "Second Priority Term Loans" and, together
with the First Priority Term Loans, the "Term Loans"), pursuant to a
Credit and Guarantee Agreement, dated as of the date hereof (the
"Second Priority Term Loan Agreement" and, together with the First
Priority Term Loan Agreement, the "Term Loan Agreements"), among the
Borrower, the Guarantors party thereto from time to time, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Senior Funding, Inc., as the administrative agent (together
with its successors and permitted assigns in such capacity, the "Second
Priority Term Loan Administrative Agent"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior
Funding, Inc., as sole lead arranger, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding,
Inc., as sole book-runner, and the lenders party thereto from time to
time; and
(c) intends to borrow, on a non-recourse basis, as described
in Section 12.22 (No Recourse), up to $200,000,000 in aggregate
principal amount of first priority secured revolving loans (the
"Revolving Loans") under this Agreement;
WHEREAS, each Guarantor is a Wholly Owned Subsidiary of the Borrower
and each Guarantor will receive substantial direct and indirect benefit from the
making of the Revolving Loans and the use of proceeds therefrom and the issuance
of Letters of Credit (as defined below) hereunder;
WHEREAS, the Guarantors shall guarantee, on a non-recourse basis as
described in Section 12.22 (No Recourse), payment of the Revolving Loans and all
other Revolving Loan Obligations pursuant to the terms hereof;
WHEREAS, the Borrower and the Guarantors intend to secure the First
Priority Term Loans, the Second Priority Term Loans, all other First Priority
Term Loan Obligations, all other Second Priority Term Loan Obligations, the
Notes, all other Note Obligations and all other First Priority Lien Obligations
(including the Revolving Loan Obligations), Second Priority Lien Obligations and
Third Priority Lien Obligations with a lien on all present and future
Collateral;
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WHEREAS, Calpine CalGen Holdings, Inc., a Delaware corporation
("Holdings"), CalGen Finance, the Borrower, the Guarantors, the Administrative
Agent, the First Priority Term Loan Administrative Agent, Second Priority Term
Loan Administrative Agent, the First Priority Indenture Trustee, the Second
Priority Indenture Trustee, the Third Priority Indenture Trustee, and Wilmington
Trust Company as collateral agent (together with its successors and permitted
assigns, the "Collateral Agent") have entered into the Collateral Trust
Agreement (as defined below), which sets forth the terms on which the Borrower
and the Guarantors, among others, have appointed the Collateral Agent as trustee
for the present and future holders of the Secured Obligations to (a) receive,
hold, maintain, administer, and enforce (i) all Security Documents and (ii) all
interests, rights, powers and remedies of the Collateral Agent thereunder, and
(b) distribute the proceeds of the Collateral in a manner consistent with the
priority of liens established by the Collateral Trust Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree that the Existing Senior Secured
Credit Facility is hereby amended and restated in its entirety, upon all of the
terms and conditions of this Agreement, as follows:
ARTICLE I.
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1 Definitions.
Unless the context otherwise requires, the following capitalized terms,
when used in this Agreement, including in its preamble and recitals, shall have
the following meanings:
"Acquired Debt" means, with respect to any specified Person:
(a) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with
or into, or becoming a Subsidiary of, such specified Person; and
(b) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Adjusted LIBOR Rate" means, with respect to the relevant Interest
Period, the quotient of (a) the LIBOR Rate applicable to such Interest Period,
divided by (b) one minus the Applicable Reserve Requirement (expressed as a
decimal) applicable to such Interest Period.
"Administrative Agent" is defined in the Preamble hereto.
"Administrative Services Agreement" means that certain Master
Administrative Services Agreement, dated as of the date hereof, among the
Borrower, CalGen Finance, each of the Subsidiaries of the Borrower from time to
time party thereto and Calpine Administrative Services Company, Inc.
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"Affected Lender" is defined in Section 2.1.14 (Making or Maintaining
Revolving Loans).
"Affected Loans" is defined in Section 2.1.14 (Making or Maintaining
Revolving Loans).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, that beneficial ownership of 10% or more of
the Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.
"Affiliate Subordinated Indebtedness" means Indebtedness incurred by
the Borrower pursuant to any arrangement with an Affiliate of the Borrower;
provided, that such Indebtedness (a) is contractually subordinated in right of
payment and in all other respects to the Revolving Loan Obligations and all
other Secured Obligations on the terms described in Exhibit A, including an
agreement by the holders of such Indebtedness not to exercise any remedies until
the Secured Obligations Termination Date and is not secured other than by
unperfected security interests, (b) does not provide for mandatory redemption or
other redemption thereof until at least six months after final Stated Maturity
of the Revolving Loans, (c) provides for payment of interest thereon in the form
of cash or additional Affiliate Subordinated Indebtedness having a principal
amount equal to the amount of interest due (i.e., pay-in-kind), and (d) is
otherwise in the form set forth in Exhibit A.
"Affiliate Transaction" is defined in Section 5.8 (Transactions With
Affiliates).
"Agents" means the Administrative Agent, the Collateral Agent, the LC
Bank and the Lead Arranger.
"Aggregate Amounts Due" is defined in Section 2.1.13 (Ratable Sharing).
"Aggregate LC Stated Amount" means, at any time, the aggregate Stated
Amounts of all Letters of Credit issued and outstanding under this Agreement.
"Agreement" is defined in the Preamble hereto.
"Applicable Reserve Requirement" means, at any time, the maximum rate,
expressed as a decimal, at which reserves (including any basic marginal,
special, supplemental, emergency or other reserves) are required to be
maintained with respect thereto against "Eurocurrency liabilities" (as such term
is defined in Regulation D) under regulations issued from time to time by the
Board of Governors of the Federal Reserve System or other applicable banking
regulator. Without limiting the effect of the foregoing, the Applicable Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (a) any category of liabilities which includes
deposits by reference to which the applicable Adjusted LIBOR Rate or any other
interest rate of a Revolving Loan is to be determined, or (b) any category of
extensions of credit or other assets which include Revolving Loans. Each
Revolving
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Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be
deemed subject to reserve requirements without benefits of credit for proration,
exceptions or offsets that may be available from time to time to the applicable
Lender. The rate of interest on Revolving Loans shall be adjusted automatically
on and as of the effective date of any change in the Applicable Reserve
Requirement.
"Asset Sale" means:
(a) the sale, lease, conveyance or other disposition of
any assets or rights by the Borrower or any of its Subsidiaries;
provided, that the sale, conveyance or other disposition of all or
substantially all of the assets of the Borrower and its Subsidiaries
taken as a whole will be governed by the provisions of Section 6.1
(Merger, Consolidation or Sale of Assets) and not by the provisions of
Section 5.7 (Asset Sales; Application of Net Proceeds); and
(b) the issuance of Equity Interests in any of the
Borrower's Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.
Notwithstanding the preceding, none of the following items will be deemed to be
an Asset Sale:
(a) any single transaction or series of related
transactions that involves assets having a Fair Market Value of less
than $25,000,000 (other than any transaction which involves the sale of
an undivided interest, participation or Equity Interest in any Facility
or any Subsidiary of the Borrower, each of which shall constitute an
Asset Sale);
(b) a transfer of assets between or among the Borrower
and the Guarantors,
(c) an issuance of Equity Interests by a Subsidiary to
the Borrower or to a Guarantor;
(d) the sale or lease of products, services or accounts
receivable in the ordinary course of business and any sale or other
disposition of damaged, worn-out or obsolete assets in the ordinary
course of business;
(e) the sale or other disposition of cash or Cash
Equivalents;
(f) a Restricted Payment that does not violate the
covenant in Section 5.4 (Restricted Payments) or a Permitted
Investment;
(g) an issuance of Equity Interests in the Borrower in
accordance with the terms of this Agreement; and
(h) the sale of the Columbia Facility pursuant to the
Columbia FILOT Arrangement.
"Assignment Agreement" means an Assignment and Assumption Agreement
substantially in the form of Exhibit B with such amendments or modifications
thereto as may be approved by the Administrative Agent.
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"Available Loan Commitment" means, at any time and from time to time
during the Loan Availability Period, the Total Loan Commitment at such time
minus the sum of (a) the aggregate principal amount of all Revolving Loans
outstanding at such time plus (b) the Aggregate LC Stated Amount and the
aggregate amount of all outstanding Reimbursement Obligations at such time.
"Bank Book" means that certain confidential information memorandum
titled "Calpine Generating Company, LLC, $600,000,000 First Priority Secured
Term Loan B, $100,000,000 Second Priority Secured Term Loan B" dated March 2004.
"Bankruptcy Case" means any case under the Bankruptcy Law commenced
voluntarily or involuntarily against the Borrower or any other Obligor.
"Bankruptcy Event" shall be deemed to occur, with respect to any
Person, if that Person shall institute a voluntary case seeking liquidation or
reorganization under the Bankruptcy Law, or shall consent to the institution of
an involuntary case thereunder against it; or such Person shall file a petition
or consent or otherwise institute any similar proceeding under any other
applicable Federal or state law, or shall consent thereto; or such Person shall
apply for, or consent or acquiesce to, the appointment of, a receiver,
administrator, administrative receiver, liquidator, sequestrator, trustee or
other officer with similar powers for itself or any substantial part of its
assets; or such Person shall make a general assignment for the benefit of its
creditors; or such Person shall admit in writing its inability to pay its debts
generally as they become due; or if an involuntary case shall be commenced
seeking liquidation or reorganization of such Person under the Bankruptcy Law or
any similar proceedings shall be commenced against such Person under any other
applicable Federal or state law and (a) the petition commencing the involuntary
case is not timely controverted, (b) the petition commencing the involuntary
case is not dismissed within 90 days of its filing, (c) an interim trustee is
appointed to take possession of all or a portion of the property, and/or to
operate all or any part of the business of such Person and such appointment is
not vacated within 90 days, or (d) an order for relief shall have been issued or
entered therein; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, administrator, administrative
receiver, liquidator, sequestrator, trustee or other officer having similar
powers, over such Person or all or a part of its property shall have been
entered; or any other similar relief shall be granted against such Person under
any applicable Bankruptcy Law.
"Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, and any other
state or federal insolvency, reorganization, moratorium or similar law for the
relief of debtors, or any successor statute.
"Base Rate" means, for any day, a fluctuating rate of interest per
annum equal to the higher of (a) the Prime Rate for such day and (b) the sum of
(i) the Federal Funds Effective Rate for such day and (ii) one half of one
percent (0.50%) per annum.
"Base Rate Loan" means a Revolving Loan bearing interest at a rate
determined by reference to the Base Rate.
"▇▇▇▇ Report" is defined in Section 3.1.5(d) (Financial Officer's
Certificate).
6
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.
"Board of Directors" means:
(a) with respect to a corporation, the board of directors
of the corporation or any committee thereof duly authorized to act on
behalf of such board;
(b) with respect to a partnership, the Board of Directors
of the general partner of the partnership or any committee duly
authorized and empowered to take action on behalf of such partnership
by the partnership agreement of such partnership;
(c) with respect to a limited liability company, the
managing member or members or any controlling committee of managing
members thereof; and
(d) with respect to any other Person, the board or
committee of such Person serving a similar function.
"Borrower" is defined in the Preamble hereto.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which commercial banks in New York City or any of the Lenders are authorized
or required by law to close; provided, however, that when used in connection
with a LIBOR Rate Loan (including with respect to all notices and determinations
in connection therewith and any payments of principal, interest or other amounts
thereon), the term "Business Day" shall also exclude any day on which banks are
not open for dealings in dollar deposits in the London interbank market.
"CalGen Companies" means the Borrower and the Subsidiaries of the
Borrower.
"CalGen Expansion Company" means CalGen Expansion Company, LLC, a
Delaware limited liability company.
"CalGen Finance" is defined in the Recitals hereto.
"Calpine" means Calpine Corporation, a Delaware corporation.
"Calpine Performance Guaranty" means that certain Affiliated Party
Guaranty, dated as of the date hereof, by Calpine in favor of the Borrower and
each of the Facility Owners.
"Calpine Project Undertaking" means that certain Project Undertaking
and Agreement, dated as of the date hereof, among the Borrower, each of the
Facility Owners and Calpine.
7
"Capital Lease Obligations" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.
"Capital Stock" means:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any
and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(c) in the case of a partnership or limited liability
company, partnership interests (whether general or limited) or
membership interests; and
(d) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person, but excluding from all
of the foregoing any debt securities convertible into Capital Stock,
whether or not such debt securities include any right of participation
with Capital Stock.
"Cash Equivalents" means:
(a) United States dollars;
(b) securities issued or directly and fully guaranteed or
insured by the United States government (or any agency or
instrumentality thereof), the Canadian government (or any agency or
instrumentality thereof) or the government of a member state of the
European Union (or any agency or instrumentality thereof), in each case
the payment of which is backed by the full faith and credit of the
United States, Canada or the relevant member state of the European
Union, as the case may be, and having maturities of not more than six
months from the date of acquisition;
(c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case, with any lender party to the
Credit Facilities or any domestic commercial bank having capital and
surplus in excess of $500,000,000 and a Thomson Bank Watch (or
successor rating agency) Rating of "B" or better;
(d) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses
(b) and (c) above entered into with any financial institution meeting
the qualifications specified in clause (c) above;
(e) overnight deposits with entities whose unsecured
commercial paper or other unsecured short-term debt obligations have,
at the time of such investment, credit
8
ratings of at least P-1 (or its equivalent) or higher from ▇▇▇▇▇'▇ and
A-1 (or its equivalent) or higher from S&P; and
(e) investments in money market funds or money market
mutual funds which have, at the time of such investments, credit
ratings of at least P-1 (or its equivalent) or higher from ▇▇▇▇▇'▇ and
A-1 (or its equivalent) or higher from S&P.
"Casualty Event" means any damage to or destruction of a Facility in
excess of $20,000,000.
"Certificate re Non-Bank Status" means a certificate substantially in
the form of Exhibit C.
"CES" means Calpine Energy Services, L.P., a Delaware limited
partnership.
"Change of Control" means the occurrence of any of the following:
(a) the adoption of a plan relating to the liquidation or
dissolution of the Borrower;
(b) the consummation of any transaction (including any
merger or consolidation) the result of which is that any "person" (as
that term is used in Section 13(d) of the Exchange Act) becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the
Voting Stock of Calpine, measured by voting power rather than number of
shares; or
(c) the first day on which Calpine fails to own, directly
or indirectly, 100% of the issued and outstanding Equity Interests
(other than Perpetual Preferred Stock) of the Borrower (other than as a
result of the issuance of Perpetual Preferred Stock by any direct or
indirect parent of the Borrower).
"Closing Date" means the date on which all of the conditions precedent
set forth in Article III shall have been satisfied or waived in accordance with
Section 12.5 (Amendments and Waivers).
"Closing Date Facilities" means the electric generating facilities
(including any electric generating facilities under construction) owned by
Baytown Energy Center, LP; ▇▇▇▇▇▇▇▇ Energy LLC; Channel Energy Center, LP;
Columbia Energy LLC; Corpus Christi Cogeneration LP; Decatur Energy Center, LLC;
Delta Energy Center, LLC, Freestone Power Generation, LP; Goldendale Energy
Center, LLC, Los Medanos Energy Center, LLC; ▇▇▇▇▇▇ Energy Center, LLC; Calpine
▇▇▇▇▇ Power, L.P.; Pastoria Energy Facility, LLC and Zion Energy LLC.
"Closing Date Mortgages" is defined in Section 3.1.13 (Title Policies).
"Closing Date Mortgage Policies" is defined in Section 3.1.13 (Title
Policies).
9
"Closing Date Mortgaged Properties" means all of the real property
interests owned or leased by any of the Guarantors, and "Closing Date Mortgaged
Property" means all of the real property interests owned or leased by a
Guarantor.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means (a) all of the Capital Stock of the Borrower held by
Holdings, (b) all of the Capital Stock of CalGen Expansion Company held by the
Borrower, and (c) all assets and properties of the Borrower and each of the
Guarantors (other than the Excluded Assets and the Excluded Subsidiary), in each
case as more particularly provided for in the Security Documents.
"Collateral Agent" has the meaning provided in the Recitals hereto.
"Collateral Trust Agreement" means that certain Collateral Trust and
Intercreditor Agreement, dated as of the date hereof, by and among Holdings, the
Borrower, the Guarantors, the Administrative Agent, the First Priority Term Loan
Administrative Agent, the Second Priority Term Loan Administrative Agent, the
First Priority Indenture Trustee, the Second Priority Indenture Trustee, the
Third Priority Indenture Trustee, the Collateral Agent and each other party from
time to time a party thereto.
"Columbia Facility" means the Facility owned by Columbia Energy LLC.
"Columbia FILOT Arrangement" means a fee-in-lieu-of-taxes arrangement
pursuant to which the Columbia Facility will be sold to ▇▇▇▇▇▇▇ County, South
Carolina, or a Person acting on its behalf, and leased to Columbia Energy LLC
for a nominal annual amount in lieu of certain ad valorem taxes that would
otherwise be owed to ▇▇▇▇▇▇▇ County in connection with the Columbia Facility,
together with the payment of a fee to ▇▇▇▇▇▇▇ County in lieu of such ad valorem
taxes; provided, that (a) Columbia Energy LLC has the right under such
arrangement to repurchase the Columbia Facility for nominal consideration upon
completion or termination of the lease agreement, (b) the leasehold interest
held by Columbia Energy LLC is part of the Collateral, (c) the arrangement is
not reasonably expected to have a material adverse effect on the operation or
financial condition of the Columbia Facility and (d) the arrangement does not
impair the Columbia Facility's status as a QF.
"Commercial Operation" means, with respect to a Facility, that such
Facility is able to operate and produce electrical energy for commercial sale in
accordance with Prudent Utility Practices and applicable Legal Requirements.
"Commitment Fee" is defined in Section 2.1.8 (Fees).
"Condemnation Event" means any Facility (or any portion thereof in
excess of $20,000,000) is condemned, confiscated, requisitioned, captured,
seized or subjected to forfeiture, or title thereto is taken, by any
governmental authority (or any Person acting under color of governmental
authority).
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus,
without duplication:
10
(a) an amount equal to any extraordinary loss plus any
net loss realized by such Person or any of its Subsidiaries in
connection with an Asset Sale, to the extent such losses were deducted
in computing such Consolidated Net Income; plus
(b) provision for taxes based on income or profits of
such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was deducted in computing such Consolidated
Net Income; plus
(c) the Fixed Charges of such Person and its Subsidiaries
for such period, to the extent that such Fixed Charges were deducted in
computing such Consolidated Net Income; plus
(d) depreciation, amortization (including amortization of
intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person
and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus
(e) non-cash items increasing such Consolidated Net
Income for such period, other than the accrual of revenue in the
ordinary course of business,
in each case, on a consolidated basis and determined in accordance with GAAP.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
for such period plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) any and all interest
expense for such period, including, without limitation, Consolidated Interest
Expense and any interest expense attributable to Affiliate Subordinated
Indebtedness, (ii) consolidated income tax expense for such period, (iii) all
amounts attributable to depreciation and amortization for such period, (iv) any
extraordinary or non-recurring non-cash charges (other than the write-down of
current assets) for such period (including any such non-cash charges for such
period relating to the application of fresh start accounting principals), (v)
any non-cash goodwill or other intangible asset impairment charges incurred
after the date hereof resulting from the application of Statement Number 142 of
the Financial Accounting Standards Board, (vi) any non-recurring expenses
incurred in connection with the transactions contemplated by the Financing
Documents and (vii) any non-cash compensation charges (provided that, to the
extent that all or any portion of the income of any Subsidiary of the Borrower
or other Person is excluded from Consolidated Net Income pursuant to the
definition thereof for all or any portion of such period, any amounts set forth
in the preceding clauses (i) through (vii) that are attributable to such
Subsidiary or other Person shall be not be included for purposes of this clause
(a) for such period or portion thereof), plus (b) without duplication, the cash
amount of (i) prepayments received by the Borrower or any of its Subsidiaries
under any Major Project Document during such period and (ii) any distributions
received by the Borrower or any of its Subsidiaries pursuant to the Index Hedge
during such period, and minus (c) without duplication (i) all cash payments made
during such period on account of reserves, restructuring charges and other
non-cash charges added to Consolidated Net
11
Income pursuant to clause (a) above in a previous period and (ii) to the extent
included in determining such Consolidated Net Income, any extraordinary gains
and all non-cash items of income for such period, all determined on a
consolidated basis in accordance with GAAP; provided that, if the Borrower has
any Subsidiary that is not a Wholly Owned Subsidiary, Consolidated EBITDA shall
be reduced (to the extent not otherwise reduced by GAAP) by an amount equal to
(A) the sum of (1) the consolidated net income (loss) of such Subsidiary (to the
extent included in Consolidated Net Income) and (2) the amounts set forth in
clause (a)(i)-(vii) above attributable to such Subsidiary multiplied by (B) the
percentage of Equity Interests in such Subsidiary not directly or indirectly
owned by the Borrower on the last day of such period. Notwithstanding anything
to the contrary herein, for each of the first four fiscal quarters ended after
the Closing Date, Consolidated EBITDA will be calculated on a Pro Forma basis as
if all transactions entered into by the Borrower on the Closing Date were
entered into on the first day of the period for which Consolidated EBITDA is
being measured.
"Consolidated Interest Coverage Ratio" means, on any date, the ratio of
(a) Consolidated EBITDA of the Borrower and its Subsidiaries for the period of
four consecutive fiscal quarters most recently ended on or prior to such date,
taken as one accounting period, to (b) Consolidated Interest Expense of the
Borrower and its Subsidiaries for the period of four consecutive fiscal quarters
most recently ended on or prior to such date, taken as one accounting period.
"Consolidated Interest Expense" means, for any period, (a) the sum of,
without duplication, (i) the interest expense (including imputed interest
expense in respect of Capital Lease Obligations and Synthetic Lease Obligations,
but excluding any interest expense attributable to Affiliate Subordinated
Indebtedness) of the Borrower and its Subsidiaries for such period (including
all commissions, discounts and other fees and charges owed by the Borrower and
its Subsidiaries with respect to letters of credit and bankers' acceptance
financing), net of interest income, in each case determined on a consolidated
basis in accordance with GAAP, plus (ii) any interest accrued (other than
interest accrued with respect to Affiliate Subordinated Indebtedness) during
such period in respect of Indebtedness of the Borrower or any Subsidiary of the
Borrower that is required to be capitalized rather than included in consolidated
interest expense for such period in accordance with GAAP, minus (b) to the
extent included in such consolidated interest expense for such period, amounts
attributable to the amortization of financing costs and non-cash amounts
attributable to the amortization of debt discounts. For purposes of this
definition, interest expense shall be determined after giving effect to any net
payments made or received by the Borrower or any Subsidiary of the Borrower with
respect to interest rate Hedging Obligations. Notwithstanding anything to the
contrary herein, for each of the first four fiscal quarters ended after the
Closing Date, Consolidated Interest Expense will be calculated on a Pro Forma
basis as if all transactions entered into by the Borrower on the Closing Date
were entered into on the first day of the period for which Consolidated Interest
Expense is being measured.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, that:
(a) the Net Income of any Subsidiary will be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that Net
12
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders; and
(b) the cumulative effect of a change in accounting principles
will be excluded.
"Continuation Notice" means a Continuation Notice substantially in the
form of Exhibit D.
"Credit Event Date" means the date of the making of a Revolving Loan by
the Lenders or of the issuance of a Letter of Credit by the LC Bank.
"Credit Facilities" means one or more debt facilities or commercial
paper facilities (including the debt facilities provided under this Agreement
and the Term Loan Agreements), in each case with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced (including by means of sales of debt securities to
institutional investors) in whole or in part from time to time.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Default Rate" is defined in Section 2.1.7 (Default Interest).
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the Stated Maturity of the Revolving Loans. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the
Borrower to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Borrower may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 5.4 (Restricted Payments). The amount of
Disqualified Stock deemed to be outstanding at any time for purposes of this
Agreement will be the maximum amount that the Borrower and its Subsidiaries may
become obligated to pay upon the maturity of, or pursuant to any mandatory
redemption provisions of, such Disqualified Stock, exclusive of accrued
dividends.
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Drawing Date" has the meaning given in Section 2.2.4 (Reimbursement).
13
"Drawing Payment" means any payment by the LC Bank honoring a drawing
under a Letter of Credit.
"Eligible Assignee" means (a) any Lender, any Affiliate of any Lender
and any Related Fund (any two or more Related Funds being treated as a single
Eligible Assignee for all purposes hereof), and (b) any commercial bank,
insurance company, investment or mutual fund or other entity that is an
"accredited investor" (as defined in Regulation D under the Securities Act) and
which extends credit or buys loans as one of its businesses.
"Environmental Consultants" means E Cubed, Inc., ENSR Corporation,
Environmental Consulting & Technology, Inc., STS Consultants, Ltd and Separation
Systems Consultants, Inc.
"Environmental Law" is defined in Section 4.10 (Hazardous Substances).
"Equally and Ratably" is defined in the Collateral Trust Agreement.
"Equity Contributions" means contributions of cash or Cash Equivalents
to the common equity capital of the Borrower by Persons other than the Borrower
and its Subsidiaries.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with Borrower or any
of its Subsidiaries under Section 52 or 414 of the Code or Title IV of ERISA.
"ERISA Plan" means any employee benefit plan (including any
Multiemployer Plan) under Section 3(3) of ERISA (a) maintained by Borrower or
its Subsidiaries or any ERISA Affiliate, or to which any of them contributes or
is obligated to contribute, or has contributed or been obligated to contribute,
or has any liability, and (b) covered by Title IV of ERISA or to which Section
302 of ERISA, Section 412 of the Code or Subtitle J of the Code applies.
"Estimated Peak Capacity" means, with respect to a Facility, the
nominal, as-tested new and clean capacity of such Facility, as corrected to
average ambient conditions, plus all incremental peaking capability of such
Facility derived from duct firing, power augmentation, steam injection or other
means.
"Event of Default" is defined in Section 7.1 (Events of Default).
"EWG" is defined in Section 4.18 (Governmental Regulation).
"Excess Cash Flow" means, for any period:
(a) the sum of:
14
(i) all revenues (excluding (A) non-cash revenues and
(B) any payments received from contract monetizations,
contract buy-outs and similar transactions) received by the
Borrower and its Subsidiaries during such period,
(ii) all Net Proceeds of Asset Sales, Casualty Events
and Condemnation Events, and all net proceeds from the sale,
lease, conveyance or other disposition of any assets or rights
not constituting "Asset Sales", in each case received by the
Borrower and its Subsidiairies during such period remaining
after application of such proceeds to any repayment pursuant
to Sections 2.1.11 (Mandatory Repayments and Commitment
Reductions) and 5.7 (Asset Sales; Application of Net
Proceeds), and
(iii) all Excess Expansion Asset Financing Proceeds
received by the Borrower and its Subsidiaries during such
period; less
(b) the sum of:
(i) all costs, expenses, fees and other charges
(including liquidated damages or other damages or penalties)
incurred by the Borrower and its Subsidiaries during such
period in connection with the ownership, operation,
maintenance and use of the Facilities, including all payments
under Major Project Documents and other agreements relating to
the Facilities (other than Major Maintenance Expenses),
(ii) all trustee fees, collateral agent fees and
other similar administrative fees and expenses paid by the
Borrower and its Subsidiaries during such period,
(iii) the Fixed Charges of the Borrower and its
Subsidiaries during such period (other than Fixed Charges of
the kind referred to in clause (d) of the definition of Fixed
Charges and Fixed Charges relating to Subordinated
Indebtedness or any other Indebtedness of the Borrower or any
of its Subsidiaries that is contractually subordinated to the
Revolving Loan Obligations),
(iv) all payments of principal of Indebtedness of the
Borrower and its Subsidiaries required to be made (whether or
not actually made) during such period, other than payments of
principal of Subordinated Indebtedness or any other
Indebtedness of the Borrower or any of its Subsidiaries that
is contractually subordinated to the Revolving Loan
Obligations, and
(v) all amounts paid by the Borrower and its
Subsidiaries for capital expenditures to the Facilities during
such period, other than Excluded CapEx Amounts.
"Excess Expansion Asset Financing Proceeds" means the excess of (a) the
aggregate amount of proceeds of Expansion Debt incurred to finance costs
associated with Expansion Assets in accordance with Section 5.6(b)(iii) and
Equity Contributions made in connection therewith, over (b) the amount of such
proceeds and Equity Contributions required to finance
15
costs associated with such Expansion Assets in compliance with the conditions
set forth in Section 5.6(b)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" means
(a) the fixtures and equipment relating to any Facility if, to
the extent that and for so long as (i) the ownership or operation of
such Facility is regulated by any federal or state regulatory authority
and (ii) under the law applicable to such regulatory authority the
grant of a security interest in such fixtures and equipment is
prohibited or a security interest in such fixtures and equipment may be
granted only after completion of a filing with, or receipt of consent
from, such regulatory authority which has not been effectively
completed or received; provided, that (A) such fixtures and equipment
will be an Excluded Asset only to the extent and for so long as the
conditions set forth in clauses (i) and (ii) in this clause (a) are and
remain satisfied and to the extent such assets otherwise constitute
Collateral, will cease to be an Excluded Asset, and will become subject
to the security interests granted to the Collateral Agent under the
Security Documents, immediately and automatically at such time as such
conditions cease to exist, including by reason of the effective
completion of any required filing or effective receipt of any required
regulatory approval, and (B) unless prohibited by law, the proceeds of
any sale, lease or other disposition of any such fixtures or equipment
that are Excluded Assets shall not be an Excluded Asset and shall at
all times be and remain subject to the security interests granted to
the Collateral Agent under the security documents except as such
proceeds are applied and used by the Borrower or its Subsidiaries in
the ordinary course of business and applied in accordance with Section
5.7 (Asset Sales; Application of Net Proceeds);
(b) with respect to personal property, any contract,
agreement, lease, license, permit, franchise, power, authority or right
if, to the extent that and for so long as (i) the grant of a security
interest therein constitutes or would result in the abandonment,
invalidation or unenforceability of such contract, agreement, lease,
license, permit, franchise, power, authority or right or the
termination of or a default under the instrument or agreement by which
such contract, agreement, lease, license, permit, franchise, power,
authority or right is governed and (ii) such abandonment, invalidation,
unenforceability, termination or default is not rendered ineffective
pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform
Commercial Code (or any successor provisions) of any relevant
jurisdiction or any other applicable Legal Requirement (including the
United States bankruptcy code); provided, that (A) such contract,
agreement, lease, license, permit, franchise, power, authority or right
will be an Excluded Asset only to the extent and for so long as the
conditions set forth in clauses (i) and (ii) of this clause (b) are and
remain satisfied and to the extent that such assets otherwise
constitute Collateral, will cease to be an Excluded Asset, and will
become subject to the security interests granted to the Collateral
Agent under the Security Documents, immediately and automatically at
such time as such conditions cease to exist, including by reason of any
waiver or consent under the applicable instrument or agreement, and (B)
the proceeds of any sale, lease or other disposition of any such
contract, agreement, lease, license, permit, franchise, power,
16
authority or right that is or becomes an Excluded Asset shall not be an
Excluded Asset and shall at all times be and remain subject to the
security interests granted to the Collateral Agent under the Security
Documents except as such proceeds are applied and used by the Borrower
or its Subsidiaries in the ordinary course of business and applied in
accordance with Section 5.7 (Asset Sales; Application of Net Proceeds);
(c) with respect to any real property, any lease, license,
permit, franchise, power, authority or right if, to the extent that and
for so long as the grant of a security interest therein constitutes or
would result in the abandonment, invalidation or unenforceability of
such lease, license, permit, franchise, power, authority or right or
the termination of or a default under the instrument or agreement by
which such lease, license, permit, franchise, power, authority or right
is governed; provided, that such lease, license, permit, franchise,
power, authority or right will be an Excluded Asset only to the extent
and for as long as the condition set forth above is and remains
satisfied and to the extent such assets otherwise constitute
Collateral, will cease to be an Excluded Asset, and will become subject
to the security interests granted to the Collateral Agent under the
Security Documents except as such proceeds are applied and used by the
Borrower or its Subsidiaries in the ordinary course of business and
applied in accordance with Section 5.7 (Asset Sales; Application of Net
Proceeds);
(d) any Excluded Subsidiary Securities;
(e) any property or assets owned by the Excluded Subsidiary;
(f) any Expansion Assets; provided, that any Expansion Assets
will be Excluded Assets only if and for so long as the limitations
imposed by the debt instruments of Calpine and its Subsidiaries on the
ability to ▇▇▇▇▇ ▇ ▇▇▇▇ on such Expansion Assets to secure the Secured
Obligations continue to be applicable, as determined in good faith by
the Borrower; and
(g) the Borrower's rights under or with respect to the Working
Capital Facility.
"Excluded CapEx Amounts" means amounts paid by the Borrower and its
Subsidiaries for capital expenditures to the Facilities using funds derived from
either of the following funding sources:
(a) Equity Contributions, other than Equity Contributions made
to comply with Section 5.6(b)(iii); and
(b) proceeds of Expansion Debt incurred in accordance with
Section 5.6(b)(iii).
"Excluded Subsidiary" means Goldendale Energy Center, LLC, only if and
for so long as the limitations imposed by the debt instruments of Calpine and
its Subsidiaries on Goldendale Energy Center, LLC's ability to be a Guarantor
and ▇▇▇▇▇ ▇ ▇▇▇▇ on its property and assets to
17
secure the Secured Obligations continue to be applicable to Goldendale Energy
Center, LLC, as determined in good faith by the Borrower.
"Excluded Subsidiary Securities" means Capital Stock or other
securities of any Subsidiary of the Borrower, other than the Equity Interests in
CalGen Expansion Company.
"Existing Credit Administrative Agent" is defined in the Preamble
hereto.
"Existing Purchase Option" means an Asset Sale required in accordance
with any of the following, without giving effect to any amendments or other
modifications thereto after the Closing Date:
(a) the exercise by ▇▇▇▇▇▇▇ Chemical Company (or its
successors and permitted assigns) of any of its purchase options under
the Energy Services Agreement, dated as of August 15, 2000 and as
amended to the Closing Date, between Columbia Energy LLC and ▇▇▇▇▇▇▇
Chemical Company;
(b) the exercise by Solutia, Inc. (or its successors and
permitted assigns) of its purchase option upon an event of default
under the Second Amended and Restated Lease, Steam Sales and Shared
Services Agreement, dated as of January 31, 2001 and as amended to the
Closing Date, between Decatur Energy Center, LLC and Solutia, Inc.;
(c) the exercise by Bayer Corporation (or its successors and
permitted assigns) of its purchase option under the Energy Services
Agreement, dated as of January 12, 2000 and as amended to the Closing
Date, between Baytown Energy Center, LP and Bayer Corporation;
(d) the exercise by Lyondell-CITGO Refining L.P. (or its
successors and permitted assigns) of any of its options to acquire
certain property under the Amended and Restated Ground Lease and
Easement Agreement, dated as of March 30, 2001 and as amended to the
Closing Date, between Channel Energy Center, LP and Lyondell-CITGO
Refining L.P.;
(e) the exercise by CITGO Refining and Chemicals Company L.P.
(or its successors and permitted assigns) of its right of first offer
under the Energy Services Agreement, dated as of March 23, 1999 and as
amended to the Closing Date, between Corpus Christi Cogeneration, LP
and CITGO Refining and Chemicals Company L.P.; and
(f) the exercise by Flint Hills Resources, L.P. (or its
successors and permitted assigns) its purchase option under the Energy
Services Agreement, dated as of July 24, 2003 and as amended to the
Closing Date, between Corpus Christi Cogeneration, LP and Flint Hills
Resources, L.P.
"Existing Senior Secured Credit Facility" is defined in the Preamble
hereto.
"Expansion Assets" means the assets (including real property rights,
contractual rights, rights under permits, other general intangibles and other
ancillary rights) added to a Facility in
18
connection with the addition of capacity to, or other expansion of, such
Facility; provided, that such Expansion Assets are not necessary for the
operation of such Facility or any other Facility (other than the Expansion
Assets themselves), are readily distinguishable from such Facility and can be
removed or separated from such Facility, dismantled or operated independently of
the operation of such Facility without impairing such Facility or any other
Facility in any material respect.
"Expansion Debt" means Indebtedness incurred for the purpose of
financing the development, construction or purchase of, or repairs, improvements
or additions to, Expansion Assets relating to one or more Facilities, including
any Indebtedness existing at the time such Expansion Assets are acquired,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, the acquisition of such Expansion Assets; provided, that such
Indebtedness was incurred to finance the development, construction or purchase
of, or repairs, improvements or additions to, such Expansion Assets.
"Expiration Date" has the meaning given in each Letter of Credit.
"Facilities" means the Closing Date Facilities and any other electric
generating facilities acquired or constructed after the Closing Date in
accordance with the terms hereof; provided that any Facility disposed of in
accordance with the terms hereof shall from and after the date of any such
disposition be deemed not to be a Facility hereunder from and after the date of
such disposition.
"Facility Owners" means Baytown Energy Center, LP; ▇▇▇▇▇▇▇▇ Energy LLC;
Channel Energy Center, LP; Columbia Energy LLC; Corpus Christi Cogeneration LP;
Decatur Energy Center, LLC; Delta Energy Center, LLC, Freestone Power
Generation, LP; Goldendale Energy Center, LLC, Los Medanos Energy Center, LLC;
▇▇▇▇▇▇ Energy Center, LLC; Calpine ▇▇▇▇▇ Power, L.P.; Pastoria Energy Facility,
L.L.C. and Zion Energy LLC.
"Fair Market Value" means the value that would be paid by a willing
buyer to a willing seller in a transaction not involving distress or necessity
of either party, (a) determined in good faith by an Officer of the Borrower and
evidenced by an Officer's Certificate delivered to the Administrative Agent, if
such value is less than or equal to $10,000,000, or (b) determined in good faith
by the Board of Directors of the Borrower and evidenced by a resolution
delivered to the Administrative Agent, if such value is greater than
$10,000,000.
"Federal Funds Effective Rate" means for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the Federal Funds Rate for such day shall be the average rate
charged to the Administrative Agent, in its capacity as a Lender, on such day on
such transactions as determined by the Administrative Agent.
"FERC" is defined in Section 4.18 (Governmental Regulation).
19
"Financing Documents" means this Agreement, the Term Loan Agreements,
the Purchase Agreement, the Indentures, the Notes, the Registration Rights
Agreement, the Security Documents and all other security documents and
intercreditor agreements entered into by Holdings, the Borrower or any
Subsidiary thereof (on the one hand) and any Agent or any Lender (on the other
hand) in connection therewith.
"Financing Statements" is defined in Section 3.1.6 (Security).
"First Priority Debt Representative" is defined in the Collateral Trust
Agreement.
"First Priority Indenture" is defined in the Recitals hereto.
"First Priority Indenture Trustee" is defined in the Recitals hereto.
"First Priority Lien" means a Lien granted by the Borrower or any
Guarantor under a Security Document to the Collateral Agent upon any assets or
property of the Borrower or any Guarantor to secure First Priority Lien
Obligations.
"First Priority Lien Cap" means as of any date, (a) the principal
amount of First Priority Notes, plus (b) the principal amount of all
Indebtedness outstanding under the First Priority Term Loan Agreement plus the
Indebtedness outstanding under any other Credit Facility (including this
Agreement), all in an aggregate principal amount not to exceed the amount
provided for in Section 5.6(b)(i)(A), less (c) the amount of Second Priority
Lien Debt and Third Priority Lien Debt incurred after the Closing Date the net
proceeds of which are used to repay First Priority Lien Debt, plus (d) the
amount of accrued interest, fees and expenses, including premiums, paid in
connection with the incurrence of any Permitted Refinancing Indebtedness with
respect to the Indebtedness described in clauses (a) and (b), plus (e) the
notional amount of Hedging Obligations incurred to hedge or manage interest rate
risk with respect to other First Priority Lien Debt having an aggregate notional
amount not to exceed, together with the aggregate notional amount of any
outstanding Hedging Obligations constituting Second Priority Lien Debt,
$500,000,000. For purposes of this definition of First Priority Lien Cap, all
letters of credit will be valued at the face amount thereof, whether or not
drawn.
"First Priority Lien Debt" means, collectively, (a) the First Priority
Notes, (b) the Indebtedness under this Agreement, (c) the Indebtedness under the
First Priority Term Loan Agreement, (d) Hedging Obligations incurred to hedge or
manage interest rate risk with respect to other First Priority Lien Debt having
an aggregate notional amount not to exceed, together with the aggregate notional
amount of any outstanding Hedging Obligations constituting Second Priority Lien
Debt, $500,000,000, (e) Indebtedness under any other Credit Facility that is
secured by a First Priority Lien, and (f) any other Indebtedness the net
proceeds of which are used to refund, refinance, replace, defease, discharge or
otherwise acquire or retire any other First Priority Lien Debt; provided,
however, such Indebtedness shall constitute First Priority Lien Debt only if, in
the case of clauses (d), (e) or (f) of this definition:
(A) such Indebtedness was permitted to be incurred and so
secured under each applicable Financing Document (or the lenders under
such Indebtedness obtained an Officer's Certificate of the Borrower at
the time of incurrence to the effect that such
20
Indebtedness was permitted to be incurred and so secured under each
applicable Financing Document);
(B) on or before the date on which such Indebtedness is
incurred by the Borrower or the applicable Subsidiary, such
Indebtedness is designated by the Borrower, in an Officer's Certificate
delivered to each First Priority Debt Representative and the Collateral
Agent, as First Priority Lien Debt for the purposes of the Collateral
Trust Agreement and the other First Priority Lien Documents;
(C) such Indebtedness is governed by an agreement that
includes a Sharing Confirmation, a Lien Priority Confirmation and an
agreement by the holder of such Indebtedness and the applicable First
Priority Debt Representative to vote with respect to such Indebtedness
as described in the Collateral Trust Agreement; and
(D) all requirements set forth in the Collateral Trust
Agreement as to the confirmation, grant or perfection of the Collateral
Agent's Liens to secure such Indebtedness or Obligations in respect
thereof are satisfied (and the satisfaction of such requirements will
be conclusively established if the Borrower delivers to the Collateral
Agent an Officer's Certificate stating that such requirements have been
satisfied and that such Indebtedness is First Priority Lien Debt).
"First Priority Lien Documents" means this Agreement, the First
Priority Notes, the Guarantees related thereto, the First Priority Indenture,
the First Priority Term Loan Agreement, each agreement governing any other
series of First Priority Lien Debt and all other agreements governing, securing
or relating to any First Priority Lien Obligations.
"First Priority Lien Obligations" means the First Priority Lien Debt
and all other Obligations in respect of First Priority Lien Debt.
"First Priority Notes" is defined in the Recitals hereto.
"First Priority Notes Indenture" is defined in the Recitals hereto.
"First Priority Secured Parties" shall mean the holders of the First
Priority Lien Obligations (including the holders of the First Priority Notes,
the Lenders, the Administrative Agent, the LC Bank and the lenders under the
First Priority Term Loan Agreement).
"First Priority Term Loan Administrative Agent" is defined in the
Recitals hereto.
"First Priority Term Loan Agreement" is defined in the Recitals hereto.
"First Priority Term Loan Documents" means the First Priority Term Loan
Agreement and the Security Documents which relate to any of the First Priority
Term Loan Obligations and all other agreements related thereto.
"First Priority Term Loan Obligations" means the First Priority Term
Loans and all other Obligations under the First Priority Term Loan Documents
relating to such loans.
21
"First Priority Term Loans" is defined in the Recitals hereto.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that the specified Person or any of its Subsidiaries incurs, assumes,
guarantees, repays, repurchases, redeems, defeases or otherwise discharges any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred equity subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio will be calculated giving Pro Forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase, redemption, defeasance or other
discharge of Indebtedness, or such issuance, repurchase or redemption of
preferred equity, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the such period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(a) acquisitions that have been made by the specified Person
or any of its Subsidiaries, including through mergers or
consolidations, or any Person or any of its Subsidiaries acquired by
the specified Person or any of its Subsidiaries, and including any
related financing transactions and including increases in ownership of
Subsidiaries, during the applicable reference period or subsequent to
such reference period and on or prior to the Calculation Date will be
given Pro Forma effect as if they had occurred on the first day of such
reference period;
(b) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses (and ownership interests therein) disposed of prior to the
Calculation Date, will be excluded;
(c) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
(and ownership interests therein) disposed of prior to the Calculation
Date, will be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Subsidiaries following the Calculation
Date;
(d) any Person that is a Subsidiary on the Calculation Date
will be deemed to have been a Subsidiary at all times during such
reference period;
(e) any Person that is not a Subsidiary on the Calculation
Date will be deemed not to have been a Subsidiary at any time during
such reference period; and
(f) if any Indebtedness bears a floating rate of interest, the
interest expense on such Indebtedness will be calculated as if the rate
in effect on the Calculation Date had been the applicable rate for the
entire reference period (taking into account any Hedging Obligation
applicable to such Indebtedness if such Hedging Obligation has a
remaining term as at the Calculation Date in excess of 12 months).
22
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(a) the consolidated interest expense of such Person and
its Subsidiaries for such period, whether paid or accrued, including
amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net of the effect of all payments
made or received pursuant to Hedging Obligations in respect of
interest rates, plus one-third of all payments with respect to
operating leases, but excluding the consolidated interest expense of
such Person and its Subsidiaries for such period, whether paid or
accrued, under any Affiliate Subordinated Indebtedness; plus
(b) the consolidated interest of such Person and its
Subsidiaries that was capitalized during such period, but excluding
the consolidated capitalized interest of such Person and its
Subsidiaries for such period under any Affiliate Subordinated
Indebtedness; plus
(c) any interest accruing on Indebtedness of another Person
that is Guaranteed by such Person or one of its Subsidiaries or
secured by a Lien on assets of such Person or one of its
Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus
(d) the product of (i) all dividends, whether paid or
accrued and whether or not in cash, on any series of preferred equity
of such Person or any of its Subsidiaries, other than dividends on
Equity Interests payable solely in Equity Interests of CalGen (other
than Disqualified Stock) or to CalGen or a Subsidiary of CalGen,
times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the effective combined federal,
state and local statutory tax rate of such Person for the immediately
preceding fiscal year, expressed as a decimal,
in each case, on a consolidated basis and determined in accordance with GAAP.
"FPA" is defined in Section 4.18 (Governmental Regulation).
"GAAP" means generally accepted accounting principles set forth in
the statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on the
applicable date of determination.
"Goldendale Facility" means the Facility owned by Goldendale Energy
Center, LLC.
"Governmental Authority" means any federal, state, municipal,
national or other government, governmental department, commission, board,
bureau, court, agency or instrumentality or political subdivision thereof or any
entity or officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.
23
"Governmental Rule" means any law, rule, regulation, ordinance,
order, code interpretation, treaty, judgment, decree, directive, guidelines,
policy or similar form of decision of any Governmental Authority.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof, of all or any
part of any Indebtedness (whether arising by virtue of partnership arrangements,
or by agreements to keep-well, to purchase assets, goods, securities or
services, to take or pay or to maintain financial statement conditions or
otherwise).
"Guarantors" means
(a) CalGen Expansion Company; CPN Freestone, LLC; Calpine
Freestone, LLC; Freestone Power Generation LP; Calpine Freestone
Energy GP, LLC; Calpine Freestone Energy, LP; Calpine Power Equipment
LP; Calpine Channel Energy Center LP, LLC; Calpine Channel Energy
Center GP, LLC; Channel Power GP, LLC; Channel Power, LP; Channel
Energy Center, LP; CalGen Equipment Finance Holdings, LLC; CalGen
Project Equipment Finance Company One, LLC; CalGen Project Equipment
Finance Company Three LLC; CalGen Equipment Finance Company, LLC;
Nueces Bay Energy LLC; Calpine Northbrook Southcoast Investors, LLC;
Calpine Corpus Christi Energy GP, LLC; Calpine Corpus Christi Energy,
LP; Corpus Christi Cogeneration LP; Zion Energy LLC; Los Medanos
Energy Center, LLC; ▇▇▇▇▇▇ Energy Center, LLC; ▇▇▇▇▇▇▇▇ Energy LLC;
Decatur Energy Center, LLC; Calpine ▇▇▇▇▇ Power I, LLC; Calpine ▇▇▇▇▇
Power II, LLC; Calpine ▇▇▇▇▇ Power, L.P.; Calpine Baytown Energy
Center LP, LLC; Calpine Baytown Energy Center GP, LLC; Baytown Energy
Center, LP; Baytown Power GP, LLC; Baytown Power, LP; Columbia Energy
LLC; Delta Energy Center, LLC; CalGen Project Equipment Finance
Company Two, LLC; Pastoria Energy Facility L.L.C.; and Calpine
Pastoria Holdings, LLC; and
(b) any other Subsidiary of the Borrower that becomes a
Guarantor in accordance with the provisions of this Agreement;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any specified Person,
the Obligations of such Person under:
(a) interest rate swap agreements (whether from fixed to
floating or from floating to fixed), interest rate cap agreements and
interest rate collar agreements;
(b) other agreements or arrangements designed to manage
interest rate risk; and
(c) other agreements or arrangements designed to protect
such Person against fluctuations in currency exchange rates or
commodity prices.
24
"Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to any Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"Holding Companies" means
(a) Calpine Baytown Energy Center LP, LLC; Calpine Baytown
Energy Center GP, LLC; Baytown Power GP, LLC; Baytown Power, LP;
Channel Power, LP; Calpine Channel Energy Center LP, LLC; Calpine
Channel Energy Center GP, LLC; Channel Power GP, LLC; Calpine Corpus
Christi Energy GP, LLC; Calpine Corpus Christi Energy, LP; Nueces Bay
Energy LLC; Calpine Northbrook Southcoast Investors, LLC; CPN
Freestone, LLC; Calpine Freestone, LLC; Calpine Freestone Energy GP,
LLC; Calpine Freestone Energy, LP; Calpine ▇▇▇▇▇ Power I, LLC;
Calpine ▇▇▇▇▇ Power II, LLC; CalGen Equipment Finance Holdings, LLC;
and Calpine Pastoria Holdings, LLC; and
(b) any other Subsidiary of the Borrower that becomes a
Holding Company in accordance with the provisions of this Agreement;
and their respective successors and assigns.
"Holdings" is defined in the Recitals hereto.
"Increased-Cost Lender" is defined in Section 2.1.17 (Removal
Replacement of a Lender).
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses and trade payables),
whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in
respect thereof);
(c) in respect of bankers' acceptances;
(d) representing Capital Lease Obligations;
(e) representing the balance deferred and unpaid of the
purchase price of any property or services due more than six months
after such property is acquired or such services are completed; or
(f) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with
25
GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others
secured by a Lien on any asset of the specified Person (whether or not such
Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Guarantee by the specified Person of any Indebtedness of
any other Person.
The amount of any Indebtedness outstanding as of any date will be:
(i) the accreted value of the Indebtedness, in the case of
any Indebtedness issued with original issue discount;
(ii) the principal amount of the Indebtedness, in the case
of any other Indebtedness; and
(iii) in respect of Indebtedness of another Person secured
by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such asset at the
date of determination, and
(B) the amount of the Indebtedness of the other
Person.
Notwithstanding anything to the contrary in this definition of
Indebtedness, with respect to any contingent obligations (other than with
respect to contractual obligations to repurchase goods sold or distributed,
which shall be included to the extent reflected on the balance sheet of such
Person in accordance with GAAP) of a Person, the maximum liability of such
Indebtedness shall be as determined by such Person's Board of Directors, in good
faith, as, in light of the facts and circumstances existing at the time,
reasonably likely to be incurred upon the occurrence of the contingency giving
rise to such obligation.
"Indemnified Liabilities" has the meaning assigned to it in the
Collateral Trust Agreement.
"Indemnitee" is defined in Section 12.3 (Indemnity).
"Indentures" is defined in the Recitals hereto.
"Independent Engineer" means ▇.▇. ▇▇▇▇ or any other independent
engineering company of national standing selected by the Borrower and reasonably
acceptable to the Administrative Agent.
"Index Based Gas Sale and Power Purchase Agreement" means that
certain Index Based Gas Sale and Power Purchase Agreement, dated as of the date
hereof, among the Borrower, each Facility Owner and CES.
"Index Hedge" means, collectively, (a) that certain ISDA Master
Agreement (MULTICURRENCY-CROSS BORDER), dated as of March 12, 2004, between the
Borrower and MSCG, as supplemented by that certain Schedule to the Master
Agreement, dated as of March 12, 2004, between the Borrower and MSCG and by that
certain Amended and Restated
26
Confirmation, dated as of March 12, 2004, between the Borrower and MSCG, and (b)
that certain Guaranty, dated as of March 12, 2004, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for the
benefit of the Borrower.
"Insolvency Proceeding" means
(a) any proceeding for the reorganization, recapitalization
or adjustment or marshalling of the assets or liabilities of the
Borrower or any other Obligor, any receivership or assignment for the
benefit of creditors relating to the Borrower or any other Obligor or
any similar case or proceeding relative to the Borrower or any other
Obligor or its creditors, as such, in each case whether or not
voluntary;
(b) any liquidation, dissolution, marshalling of assets or
liabilities or other winding up of or relating to the Borrower or any
other Obligor, in each case whether or not voluntary and whether or
not involving bankruptcy or insolvency; or
(c) any other proceeding of any type or nature in which
substantially all claims of creditors of the Borrower or any other
Obligor are determined and any payment or distribution is or may be
made on account of such claims.
"intellectual property rights" is defined in Section 4.9
(Intellectual Property Rights).
"Interest Payment Date" means (a) in the case of each Base Rate Loan,
on the last Business Day of each March, June, September and December, (b) in the
case of each LIBOR Rate Loan, on the last day of the each Interest Period
related to such LIBOR Rate Loan or, if such Interest Period is longer than three
months, every three months after the date immediately preceding the date that
such LIBOR Rate Loan was made, converted or continued, and (c) in all cases,
upon prepayment of any Revolving Loans (to the extent thereof and including any
optional or mandatory prepayments or redemptions), upon conversion from a Base
Rate Loan to a LIBOR Rate Loan or a LIBOR Rate Loan to a Base Rate Loan, and on
the Maturity Date.
"Interest Period" means the period of one, two, three or six months,
as selected by the Borrower in the applicable Notice of Borrowing or
Continuation Notice commencing on the day on which the immediately preceding
Interest Period expires; provided, (a) if an Interest Period would otherwise
expire on a day that is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day unless no further Business Day occurs in such
month, in which case such Interest Period shall expire on the immediately
preceding Business Day; (b) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) of this definition, end on the last Business Day of
such calendar month; and (c) no Interest Period shall extend beyond the Maturity
Date.
"Interest Rate Determination Date" means, with respect to any
Interest Period, the date that is two Business Days prior to the first day of
such Interest Period.
"Investment Company Act" is defined in Section 4.16 (Investment
Company Act).
27
"Investments" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the form of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Borrower
or any of its Subsidiaries sells or otherwise disposes of any Equity Interests
of any direct or indirect Subsidiary of the Borrower such that, after giving
effect to any such sale or disposition, such Person is no longer a Subsidiary of
the Borrower, the Borrower will be deemed to have made an Investment on the date
of any such sale or disposition equal to the Fair Market Value of the Borrower's
Investments in such Subsidiary that were not sold or disposed of in an amount
determined as provided in the final paragraph of Section 5.4 (Restricted
Payments). Except as otherwise provided in this Agreement, the amount of an
Investment will be determined at the time the Investment is made and without
giving effect to subsequent changes in value.
"LC Bank" is defined in the Preamble hereto.
"LC Beneficiary" means the account beneficiary under a Letter of
Credit, or any assignee or transferee of such beneficiary with respect to the
rights of such beneficiary under such Letter of Credit.
"Lead Arranger" means The Bank of Nova Scotia.
"Legal Requirements" means, as to any Person, the articles of
incorporation, bylaws or other organizational or governing documents of such
Person, and any requirement under a Permit, and any Governmental Rule in each
case applicable to or binding upon such Person or any of its properties or to
which such Person or any of its property is subject.
"Lender" means each financial institution listed on the signature
pages hereto as a Lender, and any other Person that becomes a party hereto
pursuant to an Assignment Agreement.
"Lender Addendum" means with respect to any initial Lender, a Lender
Addendum, substantially in the form of Exhibit F to be executed and delivered by
such Lender on the Closing Date as provided in Section 12.6(j) (Successors and
Assigns; Participations).
"Letter of Credit" means a letter of credit issued by the LC Bank
pursuant to Section 2.2 (Letter of Credit Facilities) in substantially the form
of letters of credit generally issued by the LC Bank.
"Letter of Credit Fee" is defined in Section 2.2.9 (Letter of Credit
Fee).
"LIBOR Rate" means, with respect to any LIBOR Rate Loan for any
Interest Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m. (London time) on the applicable Interest Rate
Determination Date by reference to the British Bankers' Association Interest
Settlement Rates for deposits in dollars (as set forth by the Bloomberg
Information Service or any successor thereto or any other service selected by
the Administrative Agent which has been nominated by the British Bankers'
Association as an authorized
28
information vendor for the purpose of displaying such rates) for a period equal
to such Interest Period; provided that, to the extent that an interest rate is
not ascertainable pursuant to the foregoing provisions of this definition, the
"LIBOR Rate" shall be the rate per annum at which the Administrative Agent or
one of its affiliate banks offers to place deposits in Dollars with first-class
banks in the London interbank market in London, England for such relevant
Interest Period at approximately 11:00 a.m. (London time) on the applicable
Interest Rate Determination Date, in amounts equal to $1,000,000.
"LIBOR Rate Loan" means a Revolving Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Lien Priority Confirmation" is defined in the Collateral Trust
Agreement.
"Loan Agreements" means this Agreement and the Term Loan Agreements.
"Loan Availability Period" means the period from the Closing Date to
(but excluding) the Maturity Date.
"Major Maintenance Expenses" means all costs, expenses, fees and
other charges (including liquidated damages or other damages or penalties)
incurred by the Borrower and its Subsidiaries during a period for major
maintenance of the Facilities under the Master Maintenance Services Agreement or
otherwise.
"Major Project Documents" means the WECC Fixed Price Gas Sale and
Power Purchase Agreement, the Index Based Gas Sale and Power Purchase Agreement,
the Index Hedge, the Working Capital Facility, the Master Operation and
Maintenance Agreement, the Master Maintenance Services Agreement, the Calpine
Performance Guaranty, the Master Construction Management Agreement, the Calpine
Project Undertaking and the Administrative Services Agreement.
"Master Construction Management Agreement" means that certain Master
Construction Management Agreement, dated as of the date hereof, among the
Borrower, Columbia Energy LLC, Goldendale Energy Center, LLC, Pastoria Energy
Facility, LLC and Calpine Construction Management Company, Inc.
"Master Maintenance Services Agreement" means that certain Master
Maintenance Services Agreement, dated as of the date hereof, among the Borrower,
each Facility Owner and Calpine Operating Services Company, Inc.
29
"Master Operation and Maintenance Agreement" means that certain
Master Operation and Maintenance Agreement, dated as of the date hereof, among
the Borrower, each Facility Owner and Calpine Operating Services Company, Inc.
"Material Adverse Effect" means a material adverse effect on (a) the
current or reasonably anticipated business, property, results of operation or
financial condition of the Borrower and its Subsidiaries taken as a whole, (b)
the ability of the Borrower and its Subsidiaries to perform their obligations
under this Agreement and the other Revolving Loan Documents or (c) the value of,
or the validity or priority of the Collateral Agent's security interests in, the
Collateral taken as a whole.
"Materially Adverse" means, with respect to an event or circumstance,
that such event or circumstance has had or is reasonably expected to have a
material adverse effect on the Borrower and its Subsidiaries, taken as a whole;
it being understood that an event or circumstance would have a material adverse
effect on the Borrower and its Subsidiaries, taken as a whole, if the Excess
Cash Flow for the Borrower's most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such event or circumstance occurred or commenced to exist, as
applicable, would have decreased by more than 5.0%, determined on a Pro Forma
basis.
"Maturity Date" means the earlier of (a) March 23, 2007 and (b) the
date that all Revolving Loans shall become due and payable in full hereunder,
whether by acceleration or otherwise.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgages" means each of the mortgages and deeds of trust
encumbering any of the properties of any of the Guarantors including the Closing
Date Mortgages and the mortgages and/or deeds of trust entered into pursuant to
Section 5.13 (Additional Subsidiaries).
"MSCG" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Group, Inc.
"MSSF" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
"Multiemployer Plan" means any "Multiemployer Plan" (as such term is
defined in Section 3(37) or 4001(a)(3) of ERISA).
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(a) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in
connection with (a) any Asset Sale or (b) the disposition of any
securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its
Subsidiaries; and
(b) any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but not
loss).
30
"Net Proceeds" means:
(a) the aggregate cash proceeds received by the Borrower or
any of its Subsidiaries in respect of any Asset Sale (including any
cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including legal, accounting and
investment banking fees, sales commissions, any relocation expenses
incurred as a result of the Asset Sale, and any taxes paid or payable
by the Borrower, any of its Subsidiaries or Calpine as a result of
the Asset Sale, in each case, after taking into account any available
tax credits or deductions and any tax sharing arrangements, amounts
required to be applied to the repayment of Indebtedness secured by a
Lien on the asset or assets that were the subject of the Asset Sale
(other than Secured Obligations), and any reserve for adjustment in
respect of the sale price of such asset or assets established in
accordance with GAAP;
(b) all proceeds of any insurance, indemnity, warranty or
guaranty payable from time to time with respect to any Casualty Event
that are not applied to the repair, replacement or rebuilding of the
applicable Facility to the extent commercially feasible, other than
business interruption insurance proceeds, net of the direct costs
relating to the collection of such proceeds; and
(c) all payments (in any form whatsoever) made or due and
payable from time to time in connection with any Condemnation Event
by any governmental authority (or any Person acting under color of
governmental authority) that are not applied to the repair,
replacement or rebuilding of the applicable Facility to the extent
commercially feasible, net of the direct costs relating to the
collection of such proceeds.
"Non-Consenting Lender" is defined in Section 2.1.17 (Removal or
Replacement of a Lender).
"Non-U.S. Lender" is defined in Section 2.1.16 (Taxes; Withholding,
etc.).
"Note Documents" means the Indentures, the Notes, the Note
Guarantees, the Collateral Trust Agreement, each Sharing Confirmation, the other
Security Documents which relate to any of the Note Obligations and all other
agreements related thereto.
"Note Guarantee" means the Guarantee by each Guarantor of the
Borrower's obligations under each Indenture and on the Notes issued in
connection therewith, including the payment, when due and payable, of principal,
interest and premium, if any, thereunder, executed pursuant to the provisions of
each Indenture.
"Note Obligations" means the Notes, the Note Guarantees and all other
Obligations of any Obligor under the Note Documents.
"Notes" is defined in the Recitals hereto.
"Notice of Borrowing" means a notice of borrowing substantially in
the form of Exhibit E.
31
"Notice of LC Activity" is defined in Section 2.2.3 (Notice of LC
Activity).
"Obligations" means any principal (including reimbursement
obligations with respect to letters of credit whether or not drawn), interest,
premium (if any), fees, indemnifications, reimbursements, expenses and other
liabilities payable under the documentation governing or securing any
Indebtedness.
"Obligor" means Holdings, the Borrower, the Guarantors and each other
Subsidiary of the Borrower that has granted the Collateral Agent a Lien upon any
of the Collateral as security for any Secured Obligations.
"Offering Memorandum" means the Offering Memorandum dated March 17,
2004 of the Borrower and CalGen Finance, as amended or supplemented.
"Officer" means, with respect to any Person, the chairman of the
board, the chief executive officer, the president, the chief operating officer,
the chief financial officer, the treasurer, any assistant treasurer, the
controller, the secretary or any vice-president of such Person.
"Officer's Certificate" means a certificate signed on behalf of the
Borrower by one Officer of the Borrower that meets the requirements of Section
12.21.
"Other Taxes" means any and all present and future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any of the Revolving Loan Documents
or from the execution, delivery or enforcement of, or otherwise with respect to,
any of the Revolving Loan Documents.
"Participation Interests" is defined in Section 2.2.7 (Lender
Participation)
"Pastoria Facility" means the Facility owned by Pastoria Energy
Facility, LLC.
"Payment Default" is defined in Section 7.1 (Events of Default).
"Payout Amount" is defined in Section 3.1.6(a)(iv) (Security).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Business" means the ownership, construction, operation and
maintenance of the Closing Date Facilities and any substantially similar
electric generating facilities located in the United States, together with any
related assets or facilities, including gas pipelines supplying natural gas to
such generating facilities, electric transmission lines carrying energy
generated from such generating facilities, and any related gas or electric
interconnection facilities.
"Permitted Counterparty Lien" means a Lien in favor of a counterparty
under a PPA; provided, that the following conditions are satisfied:
32
(a) the counterparty is not an Affiliate of the Borrower;
(b) the Lien does not secure any Indebtedness and (i) is
granted solely to secure the performance obligations of the Borrower
or the applicable Subsidiary under the PPA and/or any obligation of
the Borrower or the applicable Subsidiary to make a termination
payment under the PPA upon the occurrence of the event described in
clause (c)(iii)(A) below or the termination by the counterparty upon
the occurrence of any of the events described in clause (c)(iii)(B)
below, or (ii) creates rights designed to enable the counterparty to
assume operational control of the relevant Facility or Facilities
(e.g., step-in rights) or otherwise continue performance of the
Borrower's or the applicable Subsidiary's obligations under the PPA;
(c) the counterparty can exercise its rights with respect
to the Lien only (i) for so long as the counterparty remains current
with respect to all of its payment obligations under the PPA and is
not otherwise in a continuing default under the PPA, (ii) if the
counterparty continues to acknowledge the existence of the Liens
securing the Secured Obligations (unless and until Liens securing the
Secured Obligations are eliminated in connection with a foreclosure
of the Permitted Counterparty Liens as contemplated by clause (d) of
this definition), and (iii) if either (A) the Borrower or the
applicable Subsidiary has terminated, rejected or repudiated the PPA
(including any rejection or similar act by or on behalf of the
Borrower or the applicable Subsidiary in connection with any
bankruptcy proceeding) or (B) the Borrower or the applicable
Subsidiary has intentionally breached its obligations under the PPA;
provided, that the following actions will be considered an
intentional breach by the Borrower or the applicable Subsidiary under
the PPA: (1) the Borrower or the applicable Subsidiary provides or
delivers capacity or energy to a third party if the Borrower or the
applicable Subsidiary is required under the PPA to provide or deliver
such capacity or energy to the counterparty; (2) the Borrower or the
applicable Subsidiary of the Borrower fails to operate or attempt to
operate one or more of the relevant Facilities at a time when the
Borrower or the applicable Subsidiary of the Borrower was required,
under the PPA, to operate or attempt to operate such Facility or
Facilities and such operation or attempted operation is not prevented
by force majeure, forced outage or other events or circumstances
outside the reasonable control of the Person responsible therefor;
(3) any failure by the Borrower or the applicable Subsidiary to
comply with any provisions of the PPA designed to enable the
counterparty to assume operational control of the relevant Facility
or Facilities (e.g., step-in rights) or otherwise take actions
necessary to continue performance of the Borrower's or the applicable
Subsidiary's obligations under the PPA, in each case to the extent
the Borrower or the applicable Subsidiary is then capable of
complying with such provisions; or (4) any failure by the Borrower or
the applicable Subsidiary to pay to the counterparty any amount due
and payable in accordance with the terms and conditions of the PPA;
and
(d) the counterparty's exercise of its rights with respect
to the Lien is limited to (i) the taking of actions pursuant to any
provisions of the PPA designed to enable the counterparty to assume
operational control of the relevant Facility or Facilities (e.g.,
step-in rights) or otherwise necessary to continue performance of the
Borrower's or the applicable Subsidiary's obligations under the PPA
or (i) the recovery of any termination
33
payment due under the PPA upon the occurrence of the event described
in clause (c)(iii)(A) above or the termination by the counterparty
upon the occurrence of any of the events described in clause
(c)(iii)(B) above.
"Permitted Debt" is defined in Section 5.6 (Incurrence of
Indebtedness and Issuance of Preferred Equity).
"Permitted Investment" means:
(a) any Investment in the Borrower or in a Guarantor;
(b) (i) any Investment in the Goldendale Facility to
finance the construction and completion of the Goldendale Facility
and any other repairs, improvements or other capital expenditures
necessary to operate and maintain such Facility in accordance with
prudent industry practice, and (ii) any other Investment in the
Goldendale Facility made with the proceeds of Equity Contributions,
Perpetual Preferred Stock or Affiliate Subordinated Indebtedness;
(c) any Investment in Cash Equivalents;
(d) any Investment by the Borrower or any Guarantor in a
Person, if as a result of such Investment:
(i) such Person becomes a Wholly Owned Subsidiary
of the Borrower and a Guarantor; or
(ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into,
the Borrower or a Guarantor;
(e) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 5.7 (Asset Sales; Application of Net
Proceeds);
(f) any acquisition of assets or Capital Stock solely in
exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Borrower;
(g) any Investments received in compromise or resolution of
(i) obligations of trade creditors or customers that were incurred in
the ordinary course of business of the Borrower or any of its
Subsidiaries, including pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of any trade
creditor or customer; or (ii) litigation, arbitration or other
disputes with Persons who are not Affiliates;
(h) Investments represented by Hedging Obligations;
(i) repurchases of the Notes and other Secured Obligations;
34
(j) negotiable instruments held for deposit or collection
in the ordinary course of business; and
(k) other Investments in any Person other than an Affiliate
of the Borrower having an aggregate Fair Market Value (measured on
the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (k) that are at the time
outstanding, not to exceed $30,000,000.
"Permitted Liens" means:
(a) Liens in favor of the Collateral Agent Equally and Ratably
securing the First Priority Notes, the First Priority Term Loans, the Revolving
Loans and all other First Priority Lien Debt, all in an aggregate principal
amount not exceeding the First Priority Lien Cap, and all related First Priority
Lien Obligations;
(b) Liens in favor of the Collateral Agent Equally and Ratably
securing the Second Priority Notes, the Second Priority Term Loans and all other
Second Priority Lien Debt, all in an aggregate principal amount not exceeding
the Second Priority Lien Cap, and all related Second Priority Lien Obligations;
(c) Liens in favor of the Collateral Agent Equally and Ratably
securing the Third Priority Notes and all other Third Priority Lien Debt and all
related Third Priority Lien Obligations;
(d) Liens in favor of the Borrower or the Guarantors;
(e) pledges or deposits made under workers' compensation,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for payment of
Indebtedness) or operating leases to which such Person is a party;
(f) Liens or deposits to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business;
(g) (i) Liens to secure Expansion Debt that encumber the Expansion
Assets financed with the proceeds of such Expansion Debt and other Expansion
Assets owned by the Person incurring such Expansion Debt (including any rights
of such Person under Shared Facilities Arrangements), (ii) Liens to secure
Expansion Debt that encumber the Capital Stock of CalGen Expansion Company;
provided, that any such Capital Stock must be part of the Collateral and any
such Liens must be junior to all Liens securing Secured Obligations in
accordance with the terms of the Collateral Trust Agreement, including an
agreement by the holders of such Liens not to exercise any remedies with respect
to such Collateral, and a provision to the effect that the holders of such Liens
will not be entitled to the proceeds of such Collateral upon a sale thereof, in
each case until the Secured Obligations Termination Date; and (iii) if such
Expansion Assets are not Excluded Assets and are part of the Collateral, Liens
to secure Expansion Debt on the other property and assets of such Person;
provided, that any such Liens must be junior to all Liens securing Secured
Obligations in accordance with the terms of the Collateral Trust
35
Agreement, including an agreement by the holders of such Liens not to exercise
any remedies with respect to such Collateral, and a provision to the effect that
the holders of such Liens will not be entitled to the proceeds of such
Collateral upon a sale thereof, in each case until the Secured Obligations
Termination Date;
(h) obligations under Shared Facilities Arrangements, to the extent
such obligations constitute Liens, and Liens on Shared Facilities securing the
Borrower's or the applicable Subsidiary's obligations under Shared Facility
Arrangements;
(i) Liens which constitute bankers' liens, rights of set-off or
similar rights and remedies as to deposit accounts or other funds maintained
with any bank or other financial institution, whether arising by operation of
law or pursuant to contract;
(j) Liens existing on the Closing Date;
(k) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided,
that any reserve or other appropriate provision as is required in conformity
with GAAP has been made therefor;
(l) Liens imposed by law, such as carriers', warehousemen's,
landlord's and mechanics' Liens, in each case, incurred in the ordinary course
of business; or Liens arising out of judgments that do not constitute a Default
or an Event of Default;
(m) survey exceptions, easements or reservations of, or rights of
others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real property or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties that were not incurred in
connection with Indebtedness and that do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person;
(n) Liens to secure any Permitted Refinancing Indebtedness permitted
to be incurred under this Agreement; provided, however, that:
(i) the new Lien shall be limited to all or part of the
same property and assets that secured the original Lien (plus
repairs, improvements and additions to such property or assets); and
(ii) the Indebtedness secured by the new Lien is not
increased to any amount greater than the sum of (A) the outstanding
principal amount or, if greater, committed amount, of the Permitted
Refinancing Indebtedness and (B) an amount necessary to pay any fees
and expenses, including premiums, related to such Indebtedness;
(o) Liens not in respect of Indebtedness arising from Uniform
Commercial Code financing statements for informational purposes with respect to
operating leases incurred in the ordinary course of business and not otherwise
prohibited by this Agreement;
36
(p) Liens not in respect of Indebtedness consisting of the interest
of the lessor under any operating lease entered into in the ordinary course of
business and not otherwise prohibited by this Agreement;
(q) Permitted Counterparty Liens;
(r) to the extent constituting Liens, obligations of the Borrower or
its Subsidiaries under or restrictions imposed by any PPA Recognition Agreement;
(s) Liens on property and assets of the Borrower to secure Third
Party Subordinated Indebtedness; provided, that all such property and assets
must be part of the Collateral and any such Liens must be junior to all Liens
securing Secured Obligations in accordance with the terms of the Collateral
Trust Agreement, including an agreement by the holders of such Liens not to
exercise any remedies with respect to the Collateral, and a provision to the
effect that the holders of such Liens will not be entitled to the proceeds of
any Collateral upon a sale thereof, in each case until the Secured Obligations
Termination Date;
(t) unperfected security interests to secure (i) intercompany
Indebtedness permitted to be incurred under Section 5.6(b)(v) or (ii) Affiliate
Subordinated Indebtedness permitted to be incurred under Section 5.6(b)(ix); and
(u) Liens incurred in the ordinary course of business of the Borrower
or any Subsidiary of the Borrower with respect to obligations that do not exceed
$50,000,000 at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Borrower or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Borrower or any of its Subsidiaries (other than intercompany
Indebtedness); provided, that:
(a) the principal amount (or accreted value, if applicable)
of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the
Indebtedness extended, refinanced, renewed, replaced, defeased or
refunded (plus all accrued interest on the Indebtedness and the
amount of all fees and expenses, including premiums, incurred in
connection therewith);
(b) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
(c) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of
payment to the Revolving Loan Obligations, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Revolving
Loan Obligations on terms at least as favorable to the holders of the
Revolving Loan Obligations as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
37
(d) such Indebtedness is incurred either by the Borrower or
by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Tax Payments" means without duplication as to amounts and
as long as the Borrower is a pass-through entity for U.S. federal income tax
purposes, payments to Calpine in an amount equal to the federal, state, local
and foreign taxes (including any penalties and interest) that the Borrower would
owe if the Borrower were a corporation for U.S. federal income tax purposes
filing a consolidated or combined return with its Subsidiaries.
"Perpetual Preferred Stock" means, with respect to any Person,
preferred Capital Stock of such Person that is not subject to mandatory
redemption and is not Voting Stock.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
"PPA" means an agreement (including a tolling agreement, fuel
conversion services agreement or other similar agreement) entered into by the
Borrower or any of its Subsidiaries for the sale of capacity or energy (and
services ancillary or related thereto) from one or more of the Facilities.
"PPA Recognition Agreement" means an agreement by the Collateral
Agent, on behalf of the holders of Secured Obligations, (a) to assume the rights
and obligations of the Borrower or any of its Subsidiaries under the WECC Fixed
Price Gas Sale and Power Purchase Agreement in the event of a foreclosure under
any Financing Documents and (b) not to reject the WECC Fixed Price Gas Sale and
Power Purchase Agreement in a Bankruptcy Case (subject to applicable law and the
discretion of the bankruptcy court) so long as CES is not then in default under
WECC Fixed Price Gas Sale and Power Purchase Agreement or the Index Based Gas
Sale and Power Purchase Agreement, provided that such Recognition Agreement is
substantially in the form attached as an exhibit to the Collateral Trust
Agreement.
"preferred stock" means, with respect to any Person, any Capital
Stock of such Person, however designated, which entitles the holder thereof to a
preference with respect to dividends, distributions or liquidation proceeds of
such Person over the holders of the other Capital Stock issued by such Person.
"Prime Rate" means the rate of interest per annum that the
Administrative Agent announces from time to time as its prime lending rate, as
in effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
The Administrative Agent or any other Lender may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.
"Principal Office" means, for the Administrative Agent, its
"Principal Office" as set forth on Appendix B, or such other office as the
Administrative Agent (or any permitted successor or thereof) may from time to
time designate in writing to the Borrower, the Collateral Agent and each Lender.
38
"Pro Forma" means, with respect to a calculation, that such
calculation is made in accordance with Regulation S-X under the Securities Act
and gives effect to all relevant modifications to Major Project Documents and
other contractual arrangements that have been made prior to, or are being made
on, the calculation date and, in the case of a calculation for any period
commencing prior to the Closing Date, all Major Project Documents and other
contractual arrangements in effect on the Closing Date shall be deemed to have
been in effect for the entirety of such period.
"Pro Rata Share" means, with respect to the Revolving Loans, the
Participation Interests or the Revolving Loan Commitments of any Lender, as
applicable, the percentage set forth after such Lender's name on Appendix A (as
the same may be updated or adjusted from time to time to reflect any assignments
made by any Lender hereunder).
"Project Documents" means, collectively, agreements or documents
relating to the development, construction, operation or maintenance of any
Facility owned by any Subsidiary of the Borrower, including any such documents
or agreements entered into after the Closing Date.
"Projections" is defined in Section 3.1.18 (Delivery of Financials).
"Prudent Utility Practices" means those practices, methods,
equipment, specifications and standards of safety and performance, as the same
may change from time to time, as are commonly used by natural gas fired electric
generation stations in the United States of America of a type and size similar
to the Facility as good, safe and prudent engineering practices in connection
with the design, construction, operation, maintenance, repair and use of
electrical and other equipment, facilities and improvements of such electrical
station, with commensurate standards of safety, performance, dependability,
efficiency and economy. "Prudent Utility Practices" does not necessarily mean
one particular practice, method, equipment specification or standard in all
cases, but is instead intended to encompass a broad range of acceptable
practices, methods, equipment specifications and standards.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"PURPA" is defined in Section 4.18 (Governmental Regulation).
"Purchase Agreement" means the Purchase Agreement, dated March 12,
2004, among the Borrower, CalGen Finance, the Guarantors and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated as the initial purchaser.
"QF" means a "qualifying cogeneration facility" as defined under the
FPA, as amended by PURPA and Subpart B of Part 292 of the FERC's regulations.
"Register" is defined in Section 2.1.4(b)(Evidence of Debt;
Register).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Borrower, CalGen Finance, the
First Priority Indenture Trustee, the Second Priority Indenture Trustee, the
Third Priority Indenture Trustee, and the other Person from time to time party
thereto.
39
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" means the Borrower's obligation to repay
Drawing Payments under any of the Letters of Credit as provided in Sections
2.2.4 (Reimbursement) and 2.2.5 (Reimbursement Obligations Absolute).
"Reimbursement Payment" means a payment made by or on behalf of the
Borrower in partial or complete satisfaction of a Reimbursement Obligation,
including any interest payment obligation in connection therewith.
"Related Fund" means, with respect to any Lender that is an
investment fund, any other investment fund that invests in commercial loans
similar to the Revolving Loans and that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
"Replacement Lender" is defined in Section 2.1.17 (Removal or
Replacement of a Lender).
"Requisite Lenders" means one or more Lenders holding more than 50%
of the sum of the aggregate outstanding Revolving Loans, unfunded Revolving Loan
Commitments and outstanding Participation Interests. For this purpose only,
Revolving Loans and Participation Interests registered in the name of, or
beneficially owned by, the Borrower or any Affiliate of the Borrower shall be
deemed not to be outstanding.
"Restricted Investments" means an Investment other than a Permitted
Investment.
"Restricted Payment" is defined in Section 5.4 (Restricted Payments).
"Revenue Account" means account number A/C 65572-1 (short title:
CALGEN REV A/C SUB SEC INT of WTC AS CA) in the name of the Borrower maintained
at Wilmington Trust Company and any successor account or accounts.
"Revolving Loan" is defined in the Recitals hereto
"Revolving Loan Commitment" means the commitment of a Lender to make
or otherwise fund a Revolving Loan. The amount of each Lender's Revolving Loan
Commitment is set forth (as the case may be) on Appendix A, on Schedule 1 to the
Lender Addendum delivered by such Lender or in the applicable Assignment
Agreement, subject to any adjustment or reduction in
40
such amount pursuant to the terms and conditions hereof. The Revolving Loan
Commitment of each Lender shall be reduced, on a pro rata basis, in the event
that the Total Loan Commitment is reduced for any reason. The aggregate amount
of the Revolving Loan Commitments as of the Closing Date is $200,000,000.
"Revolving Loan Documents" means this Agreement, any Letters of
Credit issued hereunder, the Security Documents which relate to the Revolving
Loan Obligations and all other agreements related thereto.
"Revolving Loan Guarantees" means the Guarantees by the Guarantors of
the Borrower's and the other Guarantors' obligations with respect to Revolving
Loan Obligations under this Agreement, as set forth in Article XI hereof.
"Revolving Loan Notes" means a promissory note in the form of Exhibit
G evidencing a Revolving Loan.
"Revolving Loan Obligations" means the Revolving Loans, the
Reimbursement Obligations and all other Obligations under the Revolving Loan
Documents relating to such loans.
"Revolving Loans" is defined in the Recitals hereto.
"Revolving Loan Secured Obligations Termination Date" means the date
on which all Revolving Loan Obligations (including all interest accrued thereon
after the commencement of any bankruptcy, insolvency or liquidation proceeding
at the rate, including any applicable post-default rate, specified in the
Revolving Loan Documents even if such interest is not enforceable, allowable or
allowed as a claim in such proceeding) have been paid in full in cash, all
outstanding Letters of Credit have been cancelled, terminated or cash
collateralized at 102.5% of the aggregate undrawn amount thereof and all
commitments to extend credit (including Letters of Credit) hereunder have been
terminated.
"Revolving Loan Secured Parties" means the Administrative Agent, the
LC Bank and the Lenders.
"▇.▇. ▇▇▇▇" means ▇.▇. ▇▇▇▇, Inc.
"S&P" means Standard & Poor's Ratings Group.
"Second Priority Debt Representative" is defined in the Collateral
Trust Agreement.
"Second Priority Indenture" is defined in the Recitals hereto.
"Second Priority Indenture Trustee" is defined in the Recitals
hereto.
"Second Priority Lien Cap" means as of any date, (a) the principal
amount of Second Priority Notes, plus (b) the principal amount of all
Indebtedness outstanding under the Second Priority Term Loan Agreement plus the
Indebtedness outstanding under any other Credit Facility, all in an aggregate
principal amount not to exceed the amount provided for in Section
41
5.6(b)(i)(B), less (c) the amount of Third Priority Lien Debt incurred after the
Closing Date the net proceeds of which are used to repay Second Priority Lien
Debt, plus (d) the amount of accrued interest, fees and expenses, including
premiums, paid in connection with the incurrence of any Permitted Refinancing
Indebtedness with respect to the Indebtedness described in clauses (a) and (b),
plus (e) the notional amount of Hedging Obligations incurred to hedge or manage
interest rate risk with respect to other Second Priority Lien Debt having an
aggregate notional amount not to exceed, together with the aggregate notional
amount of any outstanding Hedging Obligations constituting First Priority Lien
Debt, $500,000,000. For purposes of this definition of Second Priority Lien Cap,
all letters of credit will be valued at the face amount thereof, whether or not
drawn.
"Second Priority Lien Debt" means, collectively, (a) the Second
Priority Notes, (b) the Indebtedness under the Second Priority Term Loan
Agreement, (c) Hedging Obligations incurred to hedge or manage interest rate
risk with respect to other Second Priority Lien Debt having an aggregate
notional amount not to exceed, together with the aggregate notional amount of
any outstanding Hedging Obligations constituting First Priority Lien Debt,
$500,000,000, (d) Indebtedness under any other Credit Facility that is secured
by a Second Priority Lien, and (e) any other Indebtedness the net proceeds of
which are used to refund, refinance, replace, defease, discharge or otherwise
acquire or retire any other Second Priority Lien Debt or any First Priority Lien
Debt; provided, however, in the case of clauses (c), (d) or (e) of this
definition, such Indebtedness shall constitute Second Priority Lien Debt only if
(i) such Indebtedness was permitted to be incurred and so secured under each
applicable Financing Document (or the lenders under such Indebtedness obtained
an Officer's Certificate of the Borrower at the time of incurrence to the effect
that such Indebtedness was permitted to be incurred and so secured under each
applicable Financing Document), (ii) on or before the date on which such
Indebtedness is incurred by the Borrower or the applicable Subsidiary, such
Indebtedness is designated by the Borrower, in an Officer's Certificate
delivered to each Second Priority Debt Representative and the Collateral Agent,
as Second Priority Lien Debt for the purposes of the Collateral Trust Agreement
and the other Second Priority Lien Documents; (iii) such Indebtedness is
governed by an agreement that includes a Sharing Confirmation, a Lien Priority
Confirmation, and an agreement by the applicable Second Priority Debt
Representative to vote with respect to such Indebtedness as described in the
Collateral Trust Agreement; and (iv) all requirements set forth in the
Collateral Trust Agreement as to the confirmation, grant or perfection of the
Collateral Agent's Liens to secure such Indebtedness or Obligations in respect
thereof are satisfied (and the satisfaction of such requirements will be
conclusively established if the Borrower delivers to the Collateral Agent an
Officer's Certificate stating that such requirements have been satisfied and
that such Indebtedness is Second Priority Lien Debt).
"Second Priority Lien Documents" means the Second Priority Notes, the
Guarantees related thereto, the Second Priority Indenture, the Second Priority
Term Loan Agreement, each agreement relating to any other series of Second
Priority Lien Debt and all other agreements governing, securing or relating to
any Second Priority Lien Obligations.
"Second Priority Lien Obligations" means the Second Priority Lien
Debt and all other Obligations in respect of Second Priority Lien Debt.
"Second Priority Notes" is defined in the Recitals hereto.
42
"Second Priority Secured Parties" shall mean the holders of the
Second Priority Lien Obligations (including the holders of the Second Priority
Notes, the Second Priority Term Loan Administrative Agent and the lenders under
the Second Priority Term Loan Agreement).
"Second Priority Term Loan Administrative Agent" is defined in the
Recitals hereto.
"Second Priority Term Loan Agreement" is defined in the Recitals
hereto.
"Second Priority Term Loan Documents" means the Second Priority Term
Loan Agreement and any security documents which relate to any of the Second
Priority Term Loan Obligations and all other agreements related thereto.
"Second Priority Term Loan Obligations" means the Second Priority
Term Loans and all other Obligations related thereto under the Second Priority
Term Loan Documents.
"Second Priority Term Loans" is defined in the Recitals hereto.
"Secured Debt" means, collectively, First Priority Lien Debt, Second
Priority Lien Debt and Third Priority Lien Debt.
"Secured Obligations" means, collectively, First Priority Lien
Obligations, Second Priority Lien Obligations and Third Priority Lien
Obligations.
"Secured Obligations Termination Date" means the date on which all
Secured Obligations (including all interest accrued thereon after the
commencement of any bankruptcy, insolvency or liquidation proceeding at the
rate, including any applicable post-default rate, specified in the First
Priority Lien Documents, Second Priority Lien Documents or Third Priority Lien
Documents, as applicable, even if such interest is not enforceable, allowable or
allowed as a claim in such proceeding) have been paid in full in cash (and/or
defeased in accordance with the applicable Financing Documents), all commitments
to extend credit under all Financing Documents have terminated or expired and
all outstanding letters of credit issued pursuant to any Financing Documents
have been cancelled, terminated or cash collateralized at 102.5% of the
aggregate undrawn amount.
"Secured Parties" means the First Priority Secured Parties, the
Second Priority Secured Parties and the Third Priority Secured Parties.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Documents" means the Collateral Trust Agreement and all
security agreements, pledge agreements, collateral assignments, mortgages,
collateral agency agreements, control agreements, deeds of trust or other grants
or transfers for security executed and delivered by Holdings, the Borrower or
any Guarantor creating (or purporting to create) a Lien upon Collateral in favor
of the Collateral Agent with respect to the Revolving Loan Obligations.
"SEC" means the Securities and Exchange Commission.
43
"SERC" means the Southeastern Electric Reliability Council and any
successor organization.
"Shared Facilities" means equipment, facilities, pipelines, permits,
real estate rights, entitlements or other property that are shared or jointly
used, owned or operated by the Borrower or any of its Subsidiaries and any owner
of Expansion Assets.
"Shared Facilities Arrangement" means any arrangement that provides
for the sharing, joint operation or use, common ownership, leasing or contingent
use of Shared Facilities between the Borrower or any of its Subsidiaries and any
owner of Expansion Assets or Toll Party (as defined below), and/or their
respective lenders, including (a) agreements for the sharing or joint use or
operation of Shared Facilities, (b) ownership of undivided interests in Shared
Facilities as tenants in common or other similar forms of joint ownership, (c)
leasing of Shared Facilities by the Borrower or any of its Subsidiaries to an
owner of Expansion Assets, (d) ownership of Shared Facilities by a single
purpose entity formed solely to own the Shared Facilities and owned by the
Borrower or any of its Subsidiaries or jointly owned by the Borrower or any of
its Subsidiaries and the owner of the Expansion Assets, (e) tolling agreements
between the Borrower or any of its Subsidiaries and any other Person (the "Toll
Party") with respect to a Facility's steam turbine, (f) granting of conditional
or unconditional real estate rights for the construction, installation or use of
Shared Facilities, (g) Liens on the Shared Facilities or interests therein to
secure any such arrangement; provided, that the Borrower shall deliver to the
Collateral Agent an Officer's Certificate to the effect that, and, with respect
to items (c) and (d) below, a nationally-recognized independent engineer will
deliver a report concluding that (subject to customary assumptions and
qualifications):
(a) the ownership, operation, leasing or use of such Shared
Facilities by the owner of Expansion Assets (including the use of the
steam turbine by the Toll Party) cannot unreasonably interfere with
or otherwise materially adversely affect the operation of the
Facility;
(b) the owner of the Facility (or another entity on such
owner's behalf) continues to operate and maintain the Facility and
the Shared Facilities;
(c) the costs of operating and maintaining the Shared
Facilities are shared by the owner of the Facility and the owner of
the Expansion Assets or the Toll Party, as applicable, on an
equitable basis;
(d) the Shared Facilities and the entitlements related
thereto are sufficient to fully serve both the Facility and the
Expansion Assets or the Toll Party, as applicable, or, to the extent
the Shared Facilities or the entitlements related thereto are
insufficient to fully serve both the Facility and the Expansion
Assets or the Toll Party, as applicable, the Facility will have
priority with respect to such Shared Facilities or entitlements, so
long as the Facility is operated within the requirements, operating
restrictions and other limitations associated with such Shared
Facilities or entitlements;
(e) the holder of the Expansion Assets or the Toll Party,
as applicable, will not have any rights with respect to the sale or
other disposition of, or exercise of remedies
44
with respect to, the Facility, so long as the Shared Facilities
remain subject to the Shared Facilities Arrangements;
(f) each party waives the defense that an adequate remedy
exists at law and affords the other party (and its lenders or agents
on behalf of such lenders) the right to specifically enforce the
agreement; and
(g) the owner of the Expansion Assets or the Toll Party, as
applicable, cannot prevent a dismantling of the Facility and the
receipt by the holders of the Secured Debt of the proceeds of the
sale thereof, so long as (i) such owner or Toll Party, as applicable,
is given an option to purchase the Shared Facilities at their Fair
Market Value, as determined by appraisal, prior to dismantling of the
Facility, (ii) such owner or Toll Party, as applicable, is given a
right of first refusal to acquire the Shared Facilities in the event
they are offered for sale in connection with the dismantling of the
Facility, and (iii) the owner of the Facility cooperates with the
owner of the Expansion Assets or the Toll Party, as applicable, in
accommodating the continued use and operation of the Expansion Assets
and the Shared Facilities to the maximum extent reasonably possible
notwithstanding the dismantling of the Facility, including providing
reasonable periods for and cooperating in the modification of the
Shared Facilities.
"Sharing Confirmation" means, as the context requires, First Priority
Debt Sharing Confirmation, Second Priority Debt Sharing Confirmation or Third
Priority Debt Sharing Confirmation, in each case as defined in the Collateral
Trust Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Amount" means, with respect to each Letter of Credit, the
total amount available to be drawn thereunder at any time in question in
accordance with the terms of such Letter of Credit.
"Stated Maturity" means, with respect to any installment of interest
or principal on any Indebtedness, the date on which the payment of interest or
principal was scheduled to be paid in the documentation governing such
Indebtedness as of the Closing Date, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subordinated Indebtedness" means any Affiliate Subordinated
Indebtedness, Working Capital Facility Indebtedness or Third Party Subordinated
Indebtedness.
"Subsidiary" means, with respect to any specified Person,
(a) any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency
and after giving effect to any voting agreement or stockholders'
agreement that effectively transfers voting power) to vote in the
election of directors, managers or trustees of the corporation,
association or other business entity is
45
at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and
(b) any partnership (i) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (ii) the only general partners of which are that
Person or one or more Subsidiaries of that Person (or any combination
thereof).
"Synthetic Lease Obligations" means all monetary obligations of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention lease
or (b) an agreement for the use or possession of any property (whether real,
personal or mixed) creating obligations which do not appear on the balance sheet
of such Person, but which, upon the insolvency or bankruptcy of such Person,
would be characterized as Indebtedness of such Person (without regard to
accounting treatment).
"Tax" means any present or future tax, levy, impost, charge,
deduction or withholding of any nature and whatever called, by whomsoever, on
whomsoever and wherever imposed, levied, collected, withheld or assessed by a
taxing authority other than a "Tax on the overall net income" of any Person. A
"Tax on the overall net income" of a Person shall be construed as a reference to
a tax (including U.S. backup withholding taxes) imposed by the jurisdiction in
which that Person is organized or in which that Person's applicable principal
office (and/or, in the case of a Lender, its lending office) is located or in
which that Person (and/or, in the case of a Lender, its lending office) is
deemed to be doing business on all or part of the net income, profits or gains
(whether worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction, or otherwise)
of that Person (and/or, in the case of a Lender, its applicable lending office).
"Terminated Lender" is defined in Section 2.1.17 (Removal or
Replacement of a Lender).
"Term Loan Agreements" is defined in the Recitals hereto.
"Term Loans" is defined in the Recitals hereto.
"Third Party Project Documents" means the agreements listed on
Schedule A.
"Third Party Subordinated Indebtedness" means Indebtedness loaned to
the Borrower by a Person other than an Affiliate of the Borrower; provided, that
such Indebtedness (a) is contractually subordinated in right of payment to the
Revolving Loans and all other Secured Obligations on the terms described in
Exhibit A, including an agreement by the holders of such Indebtedness not to
exercise any remedies until the Secured Obligations Termination Date, (b) does
not provide for mandatory redemption or other redemption thereof until at least
six months after final Stated Maturity of the Revolving Loans, (c) provides for
payment of interest thereon in the form of cash or additional Third Party
Subordinated Indebtedness having a principal amount equal to the amount of
interest due (i.e., "pay-in-kind"), and (d) is otherwise in the form set forth
in Exhibit A.
"Third Priority Debt Representative" is defined in the Collateral
Trust Agreement.
46
"Third Priority Fixed Rate Notes" is defined in the Recitals hereto.
"Third Priority Floating Rate Notes" is defined in the Recitals
hereto.
"Third Priority Indenture" is defined in the Recitals hereto.
"Third Priority Indenture Trustee" is defined in the Recitals hereto.
"Third Priority Lien Debt" means, collectively, (a)the Third Priority
Floating Rate Notes and the Third Priority Fixed Rate Notes; (b) any other
Indebtedness the net proceeds of which are used to refund, refinance, replace,
defease, discharge or otherwise acquire or retire First Priority Lien Debt,
Second Priority Lien Debt or other Third Priority Lien Debt; and (c) Hedging
Obligations incurred to hedge or manage interest rate risk with respect to Third
Priority Lien Debt having a notional amount not to exceed the aggregate
principal amount of outstanding Third Priority Lien Debt; provided, that, in the
case of any Indebtedness referred to in clause (b) or (c) of this definition:
(i) such Indebtedness was permitted to be incurred and so
secured under each applicable Financing Document (or the lenders
under such Indebtedness obtained an Officer's Certificate of Borrower
at the time of incurrence to the effect that such Indebtedness was
permitted to be incurred and so secured under each applicable
Financing Document);
(ii) on or before the date on which such Indebtedness is
incurred by the Borrower or the applicable Subsidiary, such
Indebtedness is designated by the Borrower, in an Officer's
Certificate delivered to each Third Priority Debt Representative and
the Collateral Agent, as Third Priority Lien Debt for the purposes of
the Collateral Trust Agreement and the other Third Priority Lien
Documents;
(iii) such Indebtedness is governed by an agreement that
includes a Sharing Confirmation, a Lien Priority Confirmation and an
agreement by the applicable Third Priority Debt Representative to
vote with respect to such Indebtedness as described in the Collateral
Trust Agreement; and
(iv) all requirements set forth in the Collateral Trust
Agreement as to the confirmation, grant or perfection of the
Collateral Agent's Liens to secure such Indebtedness or Obligations
in respect thereof are satisfied (and the satisfaction of such
requirements will be conclusively established if the Borrower
delivers to the Collateral Agent an Officer's Certificate stating
that such requirements have been satisfied and that such Indebtedness
is Third Priority Lien Debt).
"Third Priority Lien Documents" means the Third Priority Floating
Rate Notes and the Third Priority Fixed Rate Notes, the Guarantees related
thereto, the Third Priority Indenture, each agreement governing any other series
of Third Priority Lien Debt and all other agreements governing, securing or
relating to any Third Priority Lien Obligations.
"Third Priority Lien Obligations" means the Third Priority Lien Debt
and all other Obligations in respect of Third Priority Lien Debt.
47
"Third Priority Secured Parties" shall mean the holders of the Third
Priority Lien Obligations (including the holders of the Third Priority Fixed
Rate Notes and the holders of the Third Priority Floating Rate Notes).
"Title Company" means ▇▇▇▇▇▇▇ Title Guaranty Company.
"Total Loan Commitment" is defined in Section 2.1.1 (Revolving Loans).
"TPUC" is defined in Section 4.18(d) (Governmental Regulation).
"Type of Loan" means, with respect to any Revolving Loan, a Base Rate Loan
or a LIBOR Rate Loan.
"U.S." means the United States of America.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WECC" means the Western Electricity Coordinating Council and any
successor organization.
"WECC Fixed Price Gas Sale and Power Purchase Agreement" means that
certain WECC Fixed Price Gas Sale and Power Purchase Agreement, dated as of the
date hereof, among the Borrower, certain Facility Owners and CES.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(a) the sum of the products obtained by multiplying (a) the amount
of each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of
such payment; by
(b) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any specified Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) will at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
"Working Capital Facility" means that certain Working Capital Facility,
dated as of the date hereof, among the Borrower, Holdings and Calpine.
48
"Working Capital Facility Indebtedness" means Indebtedness incurred by the
Borrower under the Working Capital Facility; provided, that such Indebtedness
(a) is contractually subordinated in right of payment and in all other respects
to the Revolving Loans and all other Secured Obligations on the terms described
in Exhibit A including an agreement by the holders of such Indebtedness not to
exercise any remedies until the Secured Obligations Termination Date, (b) does
not provide for mandatory redemption thereof until at least six months after the
Maturity Date, (c) provides for payment of interest thereon in the form of cash
or by capitalizing the interest to principal, and (d) is otherwise in the form
set forth in Exhibit A.
SECTION 1.2 Rules of Construction.
Unless the context otherwise requires:
(a) An accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP.
(b) Any of the terms used or defined herein may be used in the singular or
the plural, depending on the reference.
(c) Except as expressly provided in any Revolving Loan Documents, any
reference to any agreement or instrument shall be deemed to include a reference
to such agreement or instrument as assigned, amended, amended and restated,
supplemented, otherwise modified from time to time or replaced in accordance
with the terms of this Agreement.
(d) The use in this Agreement or any of the Revolving Loan Documents of
the word "include" or "including," when following any general statement, term or
matter, shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not nonlimiting language (such as "without
limitation" or "but not limited to" or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement,
term or matter. The word "will" shall be construed to have the same meaning and
effect as the word "shall."
(e) References to "Articles", "Sections" and "clauses" shall be to
Articles, Sections and clauses, respectively, of this Agreement unless otherwise
specifically provided.
(f) References to "Exhibits", "Appendices" and "Schedules" shall be to
Exhibits, Appendices and Schedules, respectively, to this Agreement unless
otherwise specifically provided.
(g) The use in this Agreement of the words "herein," "hereof," and
"hereunder," and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof.
(h) This Agreement, the other Revolving Loan Documents and any documents
or instruments delivered pursuant hereto or thereto shall be construed without
regard to the identity of the party who drafted the various provisions of the
same. Each and every provision of this Agreement, the other Revolving Loan
Documents and instruments and documents entered into
49
and delivered in connection therewith shall be construed as though the parties
participated equally in the drafting of the same. Consequently, each of the
parties acknowledges and agrees that any rule of construction that a document is
to be construed against the drafting party shall not be applicable either to
this Agreement or the other Revolving Loan Documents and instruments and
documents entered into and delivered in connection therewith.
ARTICLE II.
THE CREDIT FACILITIES
SECTION 2.1 Revolving Loan Facility.
Section 2.1.1 Revolving Loans.
(a) Revolving Loan Commitments. Subject to the terms and conditions hereof
(including without limitation the conditions to extensions of credit set forth
in Article 3), (i) each Lender severally agrees to make, from time to time
during the Loan Availability Period, Revolving Loans to the Borrower in an
amount up to such Lender's Revolving Loan Commitment, and (ii) the Borrower may
borrow, repay and reborrow the funds available for Revolving Loans from time to
time during the Loan Availability Period. The aggregate principal amount of all
Revolving Loans outstanding at any time shall not exceed the difference of (A)
$200,000,000 or, if such amount is reduced pursuant to Section 2.1.10 (Voluntary
Prepayments) or Section 2.1.11 (Mandatory Repayments and Commitment Reductions),
such lower amount (such amount as so reduced from time to time, the "Total Loan
Commitment"), minus (B) the sum of (1) the Aggregate LC Stated Amount then
outstanding plus (2) the aggregate amount of all Reimbursement Obligations then
outstanding. All amounts owed hereunder with respect to the Revolving Loans
shall be paid in full no later than the Maturity Date. Each Lender's Revolving
Loan Commitment shall terminate immediately and without further action on the
Maturity Date.
(b) Borrowing Mechanics for Revolving Loans. By delivering a Notice of
Borrowing to the Administrative Agent on or before 10:00 a.m. (New York City
time) on a Business Day, an Officer of the Borrower may from time to time
irrevocably request, on not less than three Business Days, in the case of LIBOR
Rate Loans, or one Business Day in the case of Base Rate Loans, nor more than
five Business Days' notice, that a Revolving Loan be made in a minimum amount of
$2,000,000 or in the unused amount of the Total Loan Commitment. The
Administrative Agent shall promptly transmit the information in each of the
Borrower's Notices of Borrowing to each Lender. On the terms and subject to the
conditions of this Agreement (including the conditions precedent specified in
Section 3.1 (Conditions Precedent to Closing) or Section 3.2 (Conditions
Precedent to each Revolving Loan), as applicable), each Revolving Loan shall be
comprised of the Types of Loans, and shall be made by each Lender on the
Business Day, specified in such Notice of Borrowing. On or before 12:00 p.m.
(New York City time) on the Business Day specified in such Notice of Borrowing,
each Lender shall deposit with the Administrative Agent an amount equal to such
Lender's applicable Pro Rata Share of the requested Revolving Loan. Such deposit
will be made by wire transfer of same day funds in Dollars to an account which
the Administrative Agent shall specify from time to time by notice to the
Lenders. To the extent funds are received from the applicable Lenders, the
Administrative
50
Agent shall make such funds available to the Borrower by wire transfer to one or
more accounts as may be designated in writing to the Administrative Agent by the
Borrower.
Section 2.1.2 Amount of Revolving Loans; Availability of Funds.
(a) Amount of Revolving Loans. All Revolving Loans shall be made by the
Lenders simultaneously in proportion to their respective Revolving Loan
Commitments, it being understood that no Lender shall be responsible for any
default by any other Lender in such other Lender's obligation to make a
Revolving Loan hereunder nor shall any Revolving Loan Commitment of any Lender
be increased or decreased as a result of a default by any other Lender in such
other Lender's obligation to make a Revolving Loan hereunder.
(b) Availability of Funds. Unless the Administrative Agent shall have been
notified by any Lender prior to a Credit Event Date that such Lender does not
intend to make available to the Administrative Agent the amount of such Lender's
Revolving Loan, the Administrative Agent may assume that such Lender has made
and will make such amount available to the Administrative Agent on such Credit
Event Date and the Administrative Agent may, in its sole discretion, but shall
not be obligated to, make available to the Borrower a corresponding amount on
such Credit Event Date. If such corresponding amount is not in fact made
available to the Administrative Agent by such Lender, the Administrative Agent
shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Credit Event Date
until the date such amount is paid to the Administrative Agent, at the customary
rate set by the Administrative Agent for the correction of errors among banks
for three Business Days and thereafter at the Base Rate. If such Lender does not
pay such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the Borrower and the
Borrower shall immediately pay such corresponding amount to the Administrative
Agent together with interest thereon, for each day from the Closing Date until
the date such amount is paid to the Administrative Agent, at the rate payable
hereunder for Revolving Loans. Nothing in this Section 2.1.2(b) shall be deemed
to relieve any Lender from its obligation to fulfill its Revolving Loan
Commitment hereunder or to prejudice any rights that the Borrower may have
against any Lender as a result of any default by such Lender hereunder.
Section 2.1.3 Use of Proceeds. The proceeds of Revolving Loans shall
be applied by the Borrower only (a) to finance the development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Borrower or any Subsidiary (other than a Subsidiary that is a Holding
Company) or (b) to pay interest on the Term Loans and the Notes. The proceeds of
Revolving Loans may also be applied by the Borrower to repay Reimbursement
Obligations under a Letter of Credit; provided that such Letter of Credit
financed the development, construction or purchase of or by, or repairs,
improvements or additions to, property or assets of the Borrower or any
Subsidiary (other than a Subsidiary that is a Holding Company). No portion of
the proceeds of any Revolving Loan shall be used (nor shall any Letter of Credit
be used) in any manner that causes or might cause the funding of the Revolving
Loans or the issuance of a Letter of Credit or the application of such proceeds
to violate Regulation T, Regulation U or Regulation X or any other regulation of
the Board of Governors of the Federal Reserve System or to violate the Exchange
Act.
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Section 2.1.4 Evidence of Debt; Register; Lenders' Books and Records;
Notes.
(a) Lenders' Evidence of Debt. Each Lender shall maintain on its internal
records an account or accounts evidencing the Indebtedness of the Borrower to
such Lender, including the amounts of the Revolving Loans made by it and each
repayment and prepayment in respect thereof. Any such recordation shall be
conclusive and binding on the Borrower, absent manifest error; provided, that
the failure to make any such recordation, or any error in such recordation,
shall not affect the Borrower's Obligations in respect of any Revolving Loan;
and provided further, that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register shall
govern.
(b) Register. The Administrative Agent shall maintain at the Principal
Office a register for the recordation of the names and addresses of the Lenders
and the Revolving Loans and Participation Interests of each Lender from time to
time (the "Register"). The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. The Administrative Agent shall record in the Register
the Revolving Loans, the Participation Interests, each issuance, cancellation,
drawing or termination of any Letter of Credit, each repayment or prepayment in
respect of the principal amount of the Revolving Loans and the Total Loan
Commitment and each Lender's Revolving Loan Commitment, and any such recordation
shall be conclusive and binding on the Borrower and each Lender, absent manifest
error; provided, that the failure to make any such recordation, or any error in
such recordation, shall not affect the Borrower's Obligations in respect of any
Revolving Loan. The Borrower hereby designates the Administrative Agent to serve
as the Borrower's agent solely for purposes of maintaining the Register as
provided in this Section 2.1.4, and the Borrower hereby agrees that, to the
extent the Administrative Agent serves in such capacity, the Administrative
Agent and its officers, directors, employees, agents and affiliates shall
constitute "Indemnitees" under Section 12.3 (Indemnity).
(c) Revolving Loan Notes. If so requested by any Lender by written notice
to the Borrower (with a copy to the Administrative Agent) at any time, the
Borrower shall execute and deliver to such Lender (and/or, if applicable and if
so specified in such notice, to any Person who is an assignee of such Lender
pursuant to Section 12.6 (Successors and Assigns; Participations)) on the
Closing Date (or, if such notice is delivered after the Closing Date, promptly
after the Borrower's receipt of such notice), a Revolving Loan Note payable to
such Lender in a maximum principal amount equal to such Lender's commitment to
fund Revolving Loans.
Section 2.1.5 Interest.
(a) Except as otherwise set forth herein, the Revolving Loans shall bear
interest on the unpaid principal amount thereof from the date made through
repayment (whether by acceleration or otherwise) thereof as follows:
(i) if a Base Rate Loan, at the Base Rate plus 2.50% per annum; or
(ii) if a LIBOR Rate Loan, at the Adjusted LIBOR Rate plus 3.50% per
annum.
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(b) The Type of Loan, and the Interest Period with respect to any LIBOR
Rate Loan, shall be selected by the Borrower and notified to the Administrative
Agent and the Lenders pursuant to the applicable Notice of Borrowing or
Continuation Notice, as the case may be. If on any day a Revolving Loan is
outstanding with respect to which a Notice of Borrowing or Continuation Notice
has not been delivered to the Administrative Agent in accordance with the terms
hereof specifying the applicable basis for determining the rate of interest,
then for that day such Revolving Loan shall be a Base Rate Loan.
(c) In connection with LIBOR Rate Loans there shall be no more than five
Interest Periods outstanding at any time. In the event that the Borrower fails
to specify the Type of Loan in the applicable Notice of Borrowing or
Continuation Notice, such Revolving Loan (if outstanding as a LIBOR Rate Loan)
will be automatically converted into a Base Rate Loan on the last day of the
then-current Interest Period for such Revolving Loan (or if outstanding as a
Base Rate Loan will remain as, or (if not then outstanding) will be made as, a
Base Rate Loan). In the event that the Borrower fails to specify an Interest
Period for any LIBOR Rate Loan in the applicable Notice of Borrowing or
Continuation Notice, the Borrower shall be deemed to have selected an Interest
Period of one month. As soon as practicable after 10:00 a.m. (New York City
time) on each Interest Rate Determination Date, the Administrative Agent shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the LIBOR Rate Loans for which an interest rate is then being determined for the
applicable Interest Period and, upon the request of the Borrower, shall promptly
give notice thereof (in writing or by telephone confirmed in writing) to the
Borrower and each Lender.
(d) Interest payable pursuant to Section 2.1.5(a) shall be computed (i) in
the case of Base Rate Loans on the basis of a 365-day or 366-day year, as the
case may be, and (ii) in the case of LIBOR Rate Loans, on the basis of a 360-day
year, in each case for the actual number of days elapsed in the period during
which it accrues. In computing interest on any Revolving Loan, the date of the
making of such Revolving Loan or the first day of an Interest Period applicable
to such Revolving Loan or, with respect to a Base Rate Loan being converted from
a LIBOR Rate Loan, the date of conversion of such LIBOR Rate Loan to such Base
Rate Loan, as the case may be, shall be included, and the date of payment of
such Revolving Loan or the expiration date of an Interest Period applicable to
such Revolving Loan or, with respect to a Base Rate Loan being converted to a
LIBOR Rate Loan, the date of conversion of such Base Rate Loan to such LIBOR
Rate Loan, as the case may be, shall be excluded; provided, if a Revolving Loan
is repaid on the same day on which it is made, one day's interest shall be paid
on that Revolving Loan.
(e) Except as otherwise set forth herein, interest on each Revolving Loan
shall be payable in arrears on and to each Interest Payment Date applicable to
that Revolving Loan.
Section 2.1.6 Continuation Notice.
(a) Subject to Section 2.1.15 (Increased Costs; Capital Adequacy) and so
long as no Default or Event of Default shall have occurred and then be
continuing, the Borrower shall have the option:
53
(i) to convert at any time all or any part of any Revolving Loan
equal to $2,000,000 and integral multiples of $500,000 in excess of that
amount from one Type of Loan to another Type of Loan; provided, a LIBOR
Rate Loan may only be converted on the expiration of the Interest Period
applicable to such LIBOR Rate Loan unless the Borrower shall pay all
amounts due under Section 2.1.14 (Making or Maintaining Revolving Loans)
in connection with any such conversion; or
(ii) upon the expiration of any Interest Period applicable to any
LIBOR Rate Loan, to continue all or any portion of such Revolving Loan
equal to $2,000,000 and integral multiples of $500,000 in excess of that
amount as a LIBOR Rate Loan.
(b) The Borrower shall deliver a Continuation Notice to the Administrative
Agent no later than 10:00 a.m. (New York City time) at least one Business Day in
advance of the proposed conversion date (in the case of a conversion to a Base
Rate Loan) and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a LIBOR Rate Loan). Except as otherwise provided herein, a Continuation
Notice for conversion to, or continuation of, any LIBOR Rate Loans shall be
irrevocable on and after the related Interest Rate Determination Date, and the
Borrower shall be bound to effect a conversion or continuation in accordance
therewith. In the event that the Borrower shall have failed to provide a
Continuation Notice as required by this Section 2.1.6(b) to continue any LIBOR
Rate Loan into a subsequent Interest Period (and shall not otherwise have given
notice in accordance with this Section 2.1.6(b) to convert such LIBOR Rate Loan
into a Base Rate Loan), then such LIBOR Rate Loan shall, at the end of the
applicable Interest Period, automatically be converted into a Base Rate Loan.
(c) Any Continuation Notice shall be executed by an Officer of the
Borrower in a writing delivered to the Administrative Agent. In lieu of
delivering a written notice, the Borrower may give the Administrative Agent
telephonic notice by the required time of any continuation; provided each such
notice shall be promptly confirmed in writing by delivery of the applicable
Continuation Notice to the Administrative Agent on or before the applicable date
of continuation. Neither the Administrative Agent nor any Lender shall incur any
liability to the Borrower in acting upon any telephonic notice referred to above
that the Administrative Agent believes in good faith to have been given by a
duly authorized officer or other Person authorized on behalf of the Borrower or
otherwise acting in good faith.
Section 2.1.7 Default Interest. Notwithstanding anything to the contrary
herein, upon the occurrence and during the continuation of any Event of Default,
the outstanding principal amount of all Revolving Loans and, to the extent
permitted by applicable Legal Requirements, any accrued but unpaid interest
payments thereon and any accrued but unpaid fees and other amounts hereunder,
shall thereafter bear interest (including post-petition interest in any
proceeding under applicable Bankruptcy Laws) payable upon demand at a rate that
is (a) 2% per annum in excess of the interest rate then otherwise payable under
this Agreement with respect to the applicable Revolving Loans or (b) in the case
of any such fees and other amounts, at a rate that is 2% per annum in excess of
the interest rate then otherwise payable under this Agreement for Base Rate
Loans (the "Default Rate"); provided that if an Event of Default has occurred
and is continuing on the expiration date of the Interest Period for any LIBOR
Rate Loans, then such LIBOR Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest
54
payable upon demand at a rate that is 2% per annum in excess of the interest
rate then otherwise payable under this Agreement for Base Rate Loans. Payment or
acceptance of the increased rates of interest provided for in this Section 2.1.7
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of the Administrative Agent, the Collateral Agent or any Lender.
Section 2.1.8 Fees.
(a) Fee Letter. The Borrower agrees to pay to each Agent and each
applicable Lender the fees in the amounts and at the times set forth herein and
any other fees as separately agreed upon by the Borrower and such Agent or such
Lender (as applicable) in writing.
(b) Revolving Loan Commitment Fees. On the last Business Day in each
calendar quarter (where all or any portion of such calendar quarter occurs on or
after the Closing Date and prior to the Maturity Date) and on the Maturity Date
(or, if the Total Loan Commitment is canceled prior to such date, on the date of
such cancellation), the Borrower shall pay to the Administrative Agent, for the
benefit of the Lenders, accruing from the Closing Date or the first day of such
quarter, as the case may be, a commitment fee (the "Commitment Fee") for such
quarter (or portion thereof) then ending equal to the product of (a) 0.75% times
(b) the daily average Available Loan Commitment for such quarter (or portion
thereof) times (c) a fraction, the numerator of which is the number of days in
such quarter (or portion thereof) and the denominator of which is the number of
days in that calendar year (365 or 366, as the case may be).
Section 2.1.9 Payments. The principal amounts of the Revolving Loans
(reduced in connection with any voluntary or mandatory prepayments of the
Revolving Loans, in accordance with Sections 2.1.10 (Voluntary Prepayments),
2.1.11 (Mandatory Repayments and Commitment Reductions) and Section 5.7 (Asset
Sales; Application of Net Proceeds), as applicable) shall be repaid from time to
time in the discretion of the Borrower, but in any event in full on the Maturity
Date.
Section 2.1.10 Voluntary Prepayments; Voluntary Commitment Reductions.
(a) The Borrower may voluntarily prepay (without premium or penalty)
Revolving Loans on any Business Day, in whole or in part, in an aggregate
minimum amount of $2,000,000 and integral multiples of $500,000 (or the
remaining amount outstanding) in excess of that amount.
(b) All such prepayments shall be made:
(i) upon not less than one Business Day's prior written, email or
telephonic notice in the case of Base Rate Loans; and
(ii) upon not less than three Business Days' prior written, email or
telephonic notice in the case of LIBOR Rate Loans;
in each case given to the Administrative Agent by 1:00 p.m. (New York City time)
on the date required and, if given by telephone, promptly confirmed in writing
to the Administrative Agent (and
55
the Administrative Agent will promptly transmit such telephonic or original
notice, by telefacsimile or telephone to each Lender). Upon the giving of any
such notice, the principal amount of the Revolving Loans specified in such
notice shall become due and payable on the prepayment date specified therein.
Any prepayment of any Revolving Loan pursuant to this Section shall be applied
in inverse order of maturities and otherwise in accordance with Section 2.1.12
(General Provisions Regarding Payments).
(c) The Borrower may, upon not less than five Business Days' prior written
notice to Administrative Agent, at any time and from time to time terminate in
whole or permanently reduce in part, without premium or penalty, the Total Loan
Commitment; provided that any such partial reduction of the Total Loan
Commitment shall be in an aggregate minimum amount of $2,000,000 and integral
multiples of $500,000 in excess of that amount. The Borrower's notice to the
Administrative Agent shall designate the date (which shall be a Business Day) of
such termination or reduction and the amount of any partial reduction, and such
termination or reduction of the Total Loan Commitment shall be effective on the
date specified in the Borrower's notice and shall reduce the Revolving Loan
Commitment of each Lender proportionately to its Pro Rata Share. Notwithstanding
anything to the contrary herein, the Borrower may not terminate in whole or
permanently reduce in part the Total Loan Commitment if, after giving effect to
any such termination or reduction, such termination or reduction would result in
the aggregate amount of the Total Loan Commitment being at such time less than
the sum of (i) the aggregate principal amount of outstanding Revolving Loans at
such time and (ii) the Aggregate Stated LC Amount and all outstanding
Reimbursement Obligations at such time. Together with the delivery by the
Borrower to the Administrative Agent of its notice of intent to terminate or
reduce the Total Loan Commitment, the Borrower shall deliver an Officer's
Certificate certifying to the foregoing.
Section 2.1.11 Mandatory Repayments and Commitment Reductions. The
Borrower shall prepay the Revolving Loans with the Net Proceeds of an Asset
Sale, Casualty Event or Condemnation Event as and to the extent required by
Section 5.7(c). Each such prepayment shall be made on a pro rata basis with the
First Priority Term Loans and the First Priority Notes. The Total Loan
Commitment shall be permanently reduced by the amount of each such prepayment,
and each Lender's Revolving Loan Commitment shall be correspondingly reduced in
proportion to its Pro Rata Share (provided, if after giving effect to any such
reduction, the Total Loan Commitment is less than the sum of (i) the aggregate
principal amount of all Revolving Loans outstanding at such time and (ii) the
aggregate Stated LC Amount and Reimbursement Obligations at such time, then the
Borrower shall immediately prepay such Revolving Loans and cash collateralize
(pursuant to a cash collateral agreement in form and substance reasonable
satisfactory to the Administrative Agent) such Letters of Credit or
Reimbursement Obligations to the extent necessary to cause the Total Loan
Commitment to be equal to or greater than the amounts specified in clauses (i)
and (ii) above).
Section 2.1.12 General Provisions Regarding Payments.
(a) All payments by the Borrower or any Guarantor of principal, interest,
fees and other Revolving Loan Obligations shall be made in Dollars in same day
funds, without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to the Administrative Agent not later than 1:00 p.m.
(New York City time) on the date due at the Administrative
56
Agent's Principal Office for the account of the Administrative Agent or the
Lenders, as the case may be. Funds received by the Administrative Agent after
that time on such due date shall be deemed to have been paid by the Borrower or
the applicable Guarantor on the next succeeding Business Day.
(b) All payments in respect of the principal amount of any Revolving Loan
shall include payment of accrued interest on the principal amount being repaid
or prepaid, and all such payments (and, in any event, any payments in respect of
any Revolving Loan on a date when interest is due and payable with respect to
such Revolving Loan) shall be applied to the payment of interest before
application to principal.
(c) The Administrative Agent shall promptly distribute to each Lender at
such address as such Lender shall indicate in writing, such Lender's applicable
Pro Rata Share of all payments and prepayments of principal and interest due
hereunder together with all other amounts due thereon, including all fees
payable with respect thereto, to the extent received by the Administrative
Agent.
(d) Whenever any payment to be made hereunder shall be stated to be due on
a day that is not a Business Day, such payment shall be due on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder.
(e) The Borrower hereby authorizes the Administrative Agent to charge the
Borrower's accounts (if any) with the Administrative Agent in order to cause
timely payment to be made to the Administrative Agent of all principal,
interest, fees and expenses due hereunder (to the extent there are funds
available in its accounts for that purpose) upon the occurrence and during the
continuation of any Event of Default in respect of its payment obligations
hereunder.
(f) The Administrative Agent shall deem any payment by or on behalf of the
Borrower hereunder that is not made in same day funds prior to 1:00 p.m. (New
York City time) on the date therefor to be a non-conforming payment. Any such
payment shall not be deemed to have been received by the Administrative Agent
until the later of (i) the time such funds become available funds, and (ii) the
applicable next Business Day. The Administrative Agent shall give prompt
telephonic notice to the Borrower and each applicable Lender (confirmed in
writing) if any payment is non-conforming. Any non-conforming payment may
constitute or become a Default or Event of Default in accordance with the terms
of Section 7.1 (Events of Default). Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until such funds become
available funds (but in no event less than the period from the date of such
payment to the next succeeding applicable Business Day) at the rate determined
pursuant to Section 2.1.7 (Default Interest) from the date such amount was due
and payable until the date such amount is paid in full.
Section 2.1.13 Ratable Sharing. The Lenders hereby agree among themselves
that if any of them shall, whether by voluntary payment (other than a voluntary
prepayment of Revolving Loans made and applied in accordance with the terms
hereof), through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the
Revolving Loan Documents or otherwise, or as adequate protection of a deposit
treated as cash collateral under the Bankruptcy Law, receive payment or
reduction of a proportion of the
57
aggregate amount of principal, interest, fees and other amounts then due and
owing to such Lender hereunder or under the other Revolving Loan Documents
(collectively, the "Aggregate Amounts Due" to such Lender) which is greater than
the proportion received by any other Lender in respect of the Aggregate Amounts
Due to such other Lender, then the Lender receiving such proportionately greater
payment shall (a) notify the Administrative Agent and each other Lender of the
receipt of such payment and (b) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each Lender that
is deemed to be the seller of a participation simultaneously upon the receipt by
such seller of its portion of such payment) in the Aggregate Amounts Due to the
other Lenders, so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to each of
them, respectively; provided, if all or part of such proportionately greater
payment received by such purchasing Lender is thereafter recovered from such
Lender upon the bankruptcy or reorganization of the Borrower or otherwise, the
foregoing purchases of participations shall be rescinded and the purchase prices
paid for such participations shall be returned to such purchasing Lender(s)
ratably to the extent of such recovery, but without interest. The Borrower
expressly consents to the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all monies owing by the Borrower
to that holder with respect thereto as fully as if that holder were owed the
amount of the participation held by that holder.
Section 2.1.14 Making or Maintaining Revolving Loans.
(a) Inability to Determine Applicable Interest Rate. In the event that the
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto absent manifest error), on
any Interest Rate Determination Date with respect to any Revolving Loans, that
by reason of circumstances affecting the London interbank market adequate and
fair means do not exist for ascertaining the interest rate applicable to such
Revolving Loans on the basis provided for in the definition of Adjusted LIBOR
Rate, the Administrative Agent shall on such date give notice (by telefacsimile
or by telephone confirmed in writing) to the Borrower and each Lender of such
determination, whereupon (i) no Revolving Loans may be made or maintained with
an interest rate based on the Adjusted LIBOR Rate, and instead will be made and
maintained with an interest rate equal to the Base Rate plus 2.50% per annum,
until such time as the Administrative Agent notifies the Borrower and Lenders
that the circumstances giving rise to such notice no longer exist, and (ii) any
Notice of Borrowing or Continuation Notice given by the Borrower with respect to
the Revolving Loans in respect of which such determination was made shall be
deemed to be rescinded by the Borrower.
(b) Illegality or Impracticability of using the Adjusted LIBOR Rate. In
the event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with the Borrower and the Administrative Agent)
that the making, maintaining or continuation of its Revolving Loans with an
interest rate based on the Adjusted LIBOR Rate (i) has become unlawful as a
result of compliance by such Lender in good faith with any Legal Requirement or
would conflict with any treaty, governmental rule, regulation, guideline or
order not having the force of law even though the failure to comply therewith
would not be unlawful, or (ii) has become impracticable, as a result of
contingencies occurring after the date hereof which materially and
58
adversely affect the London interbank market or the position of such Lender in
that market, then, and in any such event, such Lender shall be an "Affected
Lender" and on that day it shall give notice (by telefacsimile or by telephone
confirmed in writing) to the Borrower and the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each other Lender). Thereafter (A) the obligation of the Affected Lender to make
or maintain Revolving Loans with an interest rate based on the Adjusted LIBOR
Rate shall be suspended until such notice shall be withdrawn by the Affected
Lender, (B) to the extent such determination by the Affected Lender relates to a
Revolving Loan then being requested by the Borrower pursuant to a Notice of
Borrowing or a Continuation Notice, the Affected Lender shall make such
Revolving Loan as (or continue such Revolving Loan as) a Revolving Loan with an
interest rate equal to the Base Rate plus 2.50% annum, (C) the Affected Lender's
obligation to maintain its outstanding Revolving Loans with an interest rate
based on the Adjusted LIBOR Rate (the "Affected Loans") shall be terminated at
the earlier to occur of the expiration of the Interest Period then in effect
with respect to the Affected Loans or when required by law, and (D) the Affected
Loans shall automatically convert into Revolving Loans with an interest rate
equal to the Base Rate plus 2.50% per annum on the date of such termination.
Except as provided in the immediately preceding sentence, nothing in this
Section 2.1.14(b) shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Revolving Loans with an interest rate based
on the Adjusted LIBOR Rate in accordance with the terms hereof.
(c) Compensation for Breakage or Non-Commencement of Interest Periods. The
Borrower shall compensate each Lender, upon written request by such Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by such
Lender to lenders of funds borrowed by it to make or carry its Revolving Loans
and any loss, expense or liability sustained by such Lender in connection with
the liquidation or re-employment of such funds but excluding loss of anticipated
profits (such anticipated profits being the 3.50% spread over the Adjusted LIBOR
Rate) which such Lender may sustain within an Interest Period: (i) if any
prepayment or other principal payment of any of its Revolving Loans occurs on a
date prior to the last day of an Interest Period applicable to that Revolving
Loan (including pursuant to Section 2.1.10 (Voluntary Prepayments), 2.1.11
(Mandatory Repayments and Commitment Reductions) and 5.7 (Asset Sales;
Application of Net Proceeds)); (ii) if any prepayment of any of its Revolving
Loans is not made on any date specified in a notice of prepayment given by the
Borrower; or (iii) if the Borrower revokes any Notice of Borrowing submitted
pursuant to Section 2.1.2(b) above after a date which is after the applicable
minimum periods for the submission of such Notice of Borrower specified in
Section 2.1.2(b) above.
(d) Booking of Revolving Loans. Any Lender may make, carry or transfer
Revolving Loans at, to, or for the account of any of its branch offices or the
office of an Affiliate of such Lender.
(e) Assumptions Concerning Funding of Revolving Loans. Calculation of all
amounts payable to a Lender under this Section 2.1.14 and under Section 2.1.15
(Increased Costs; Capital Adequacy) shall be made as though such Lender had
actually funded each of its relevant Revolving Loans through the purchase of a
LIBOR deposit bearing interest at the rate obtained pursuant to clause (b) of
the definition of Adjusted LIBOR Rate in an amount equal to the amount of such
Revolving Loan and having a maturity comparable to the relevant Interest
59
Period and through the transfer of such LIBOR deposit from an offshore office of
such Lender to a domestic office of such Lender in the United States of America;
provided, however, each Lender may fund each of its Revolving Loans in any
manner it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this Section 2.1.14 and under
Section 2.1.15 (Increased Costs; Capital Adequacy).
Section 2.1.15 Increased Costs; Capital Adequacy.
(a) Compensation For Increased Costs and Taxes. Subject to the provisions
of Section 2.1.16 (Taxes; Withholding, etc.) (which shall be controlling with
respect to the matters covered thereby), in the event that any Lender shall
determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any Legal Requirement, or
any change therein or in the interpretation, administration or application
thereof (including the introduction of any new Legal Requirement), or any
determination of a court or governmental authority, in each case that becomes
effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to any Revolving Loans that are
reflected in the definition of Adjusted LIBOR Rate); or
(ii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Revolving Loans hereunder or to reduce
any amount received or receivable by such Lender (or its applicable lending
office) with respect thereto; then, in any such case, the Borrower shall
promptly pay to such Lender, upon receipt of the statement referred to in the
next sentence, such additional amount or amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender in its sole discretion shall determine) as may be necessary to compensate
such Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Lender shall deliver to the Borrower (with a copy to
the Administrative Agent) a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Lender
under this Section 2.1.15(a), which statement shall be conclusive and binding
upon all parties hereto absent manifest error.
(b) Capital Adequacy Adjustment. In the event that any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability after the
Closing Date of any Legal Requirement (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central
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bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Revolving Loans, or
participations therein or other obligations hereunder with respect to the
Revolving Loans to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by the Borrower
from such Lender of the statement referred to in the next sentence, the Borrower
shall pay to such Lender such additional amount or amounts as shall compensate
such Lender or such controlling corporation on an after-tax basis for such
reduction. Such Lender shall deliver to the Borrower (with a copy to the
Administrative Agent) a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Lender under this
Section 2.1.15(b), which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
Section 2.1.16 Taxes; Withholding, etc.
(a) Payments to Be Free and Clear. Except as otherwise provided in this
Section 2.1.16, all sums payable by or on behalf of any Obligor hereunder and
under the other Revolving Loan Documents shall (except to the extent required by
any applicable Legal Requirement) be paid free and clear of, and without any
deduction or withholding on account of, any Tax imposed, levied, collected,
withheld or assessed by or within the U.S. or any political subdivision in or of
the U.S. or any other jurisdiction from or to which a payment is made by or on
behalf of any Obligor.
(b) Withholding of Taxes. If any Obligor or any other Person is required
by law to make any deduction or withholding on account of any such Tax from any
sum paid or payable by or on behalf of any Obligor to the any Agent or any
Lender under any of the Revolving Loan Documents:
(i) the Borrower shall notify the Administrative Agent of any such
requirement or any change in any such requirement as soon as the Borrower
becomes aware of it;
(ii) the Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to pay
is imposed on any Obligor) for its own account or (if that liability is
imposed on such Agent or such Lender, as the case may be) on behalf of and
in the name of such Agent or such Lender;
(iii) the sum payable by such Obligor in respect of which the
relevant deduction, withholding or payment is required shall be increased
to the extent necessary to ensure that, after the making of all
deductions, withholding or payments for or with respect to Taxes, such
Agent or such Lender, as the case may be, receives on the due date
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a net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(iv) within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after the
due date of payment of any tax which it is required by clause (ii) above
to pay, the Borrower shall deliver to the Administrative Agent evidence
satisfactory to the other affected parties of such deduction, withholding
or payment and of the remittance thereof to the relevant taxing or other
authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (iii) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages hereof on
the Closing Date) or after the effective date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each other Lender)
in any such requirement for a deduction, withholding or payment as is mentioned
therein shall result in either the imposition of deduction, withholding or
payment or an increase in the rate of such deduction, withholding or payment
from that in effect at the date hereof or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender.
(c) Other Taxes. The Borrower shall pay any Other Taxes to the relevant
taxing or other authority in accordance with applicable Legal Requirements, and
shall comply with the requirements of Section 2.1.16(b)(iv) with respect to such
payments.
(d) Indemnification. Subject to the requirements of Section 2.1.16(e), the
Borrower shall indemnify each Agent and each Lender for the full amount of Taxes
(to the extent the Borrower would be required to pay additional amounts with
respect to such Taxes pursuant to Section 2.1.16(b)) or Other Taxes arising in
connection with payments made under any of the Revolving Loan Documents
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.1.16) paid by such Agent or Lender and any
penalties, additions to tax, interest and expenses arising from or with respect
to such Taxes or Other Taxes, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be made
within 10 days from the date any Agent or any Lender makes written demand
therefor.
(e) Evidence of Exemption From U.S. Withholding Tax. Each Lender that is
not a United States Person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. federal income tax purposes (a "Non-U.S. Lender") shall
deliver to the Administrative Agent for transmission to the Borrower, on or
prior to the Closing Date (in the case of each Lender listed on the signature
pages hereof on the Closing Date) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other
Lender), and at such other times as may be necessary in the determination of the
Borrower or the Administrative Agent (each in the reasonable exercise of its
discretion):
(i) two original copies of Internal Revenue Service Form W-8BEN or
W-8ECI (or any successor forms), properly completed and duly executed by
such Lender, and such other documentation required under the Code and
reasonably requested by the Borrower to establish that such Lender is not
subject to deduction or withholding of
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United States federal income tax with respect to any payments to such
Lender of principal, interest, fees or other amounts payable under any of
the Revolving Loan Documents or is subject to such deduction or
withholding at a reduced rate; or
(ii) if such Lender is not a "bank" or other Person described in
Section 881(c)(3) of the Code and is claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Certificate Re Non-Bank Status
together with two original copies of Internal Revenue Service Form W-8 (or
any successor form), properly completed and duly executed by such Lender,
and such other documentation required under the Code and reasonably
requested by the Borrower to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect
to any payments to such Lender of interest payable under any of the
Revolving Loan Documents.
Each Lender required to deliver any forms, certificates or other evidence with
respect to United States federal income tax withholding matters pursuant to this
Section 2.1.16(e) hereby agrees, from time to time after the initial delivery by
such Lender of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such Lender shall
promptly deliver to the Administrative Agent for transmission to the Borrower
two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI , or a
Certificate re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and duly executed by
such Lender, and such other documentation required under the Code and reasonably
requested by the Borrower to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income tax with
respect to payments to such Lender under the Revolving Loan Documents or is
subject to such deduction or withholding at a reduced rate, or notify the
Administrative Agent and the Borrower of its inability to deliver any such
forms, certificates or other evidence. The Borrower shall not be required to pay
any additional amount to any Non-U.S. Lender under Section 2.1.16(b)(iii) or to
indemnify the Non-U.S. Lender under Section 2.1.16(d) if such Lender shall have
failed (1) to deliver the forms, certificates or other evidence referred to in
the second sentence of this Section 2.1.16(e), or (2) to notify the
Administrative Agent and the Borrower of its inability to deliver any such
forms, certificates or other evidence, as the case may be; provided, if such
Lender shall have satisfied the requirements of the first sentence of this
Section 2.1.16(e) on the Closing Date or on the date of the Assignment Agreement
pursuant to which it became a Lender, as applicable, nothing in this last
sentence of this Section 2.1.16(e) shall relieve the Borrower of its obligation
to pay any additional amounts pursuant to Section 2.1.16(b) or to indemnify the
Non-U.S. Lender under Section 2.1.16(d) in the event that, as a result of any
change in any applicable Legal Requirement, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as
described herein. For the avoidance of doubt, to the extent the form provided by
a Lender at the time such Lender first becomes a party to this Agreement
indicates a U.S. withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from Taxes.
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Section 2.1.17 Removal or Replacement of a Lender. Anything contained
herein to the contrary notwithstanding, in the event that:
(a) (i) any Lender (an "Increased-Cost Lender") shall give notice to the
Borrower that such Lender is an Affected Lender or that such Lender is entitled
to receive payments under Section 2.1.14 (Making or Maintaining Revolving
Loans), 2.1.15 (Increased Costs; Capital Adequacy) or 2.1.16 (Taxes;
Withholding, etc), (ii) the circumstances which have caused such Lender to be an
Increased-Cost Lender or which entitle such Lender to receive such payments
shall remain in effect, and (iii) such Lender shall fail to withdraw such notice
within five Business Days after the Borrower's request for such withdrawal; or
(b) in connection with any proposed amendment, modification, termination,
waiver or consent with respect to any of the provisions hereof as contemplated
by Section 12.5(b) (Amendments and Waivers), the consent of Requisite Lenders
shall have been obtained but the consent of one or more of such other Lenders
(each a "Non-Consenting Lender") whose consent is required shall not have been
obtained;
then, with respect to each such Increased-Cost Lender or Non-Consenting Lender
(the "Terminated Lender"), the Borrower may, by giving written notice to the
Administrative Agent and any Terminated Lender of its election to do so, elect
to cause such Terminated Lender (and such Terminated Lender hereby irrevocably
agrees) to assign its outstanding Revolving Loans and its Participation
Interests in full to one or more Eligible Assignees (each a "Replacement
Lender") in accordance with the provisions of Section 12.6 (Successors and
Assigns; Participations) and the Borrower shall pay any fees payable thereunder
in connection with such assignment; provided,
(i) on the date of such assignment, the Replacement Lender shall pay
to such Terminated Lender an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding
Revolving Loans and Participation Interests of the Terminated Lender, and
(B) an amount equal to all accrued, but theretofore unpaid, fees owing to
such Terminated Lender pursuant to Section 2.1.8 (Fees);
(ii) on the date of such assignment, the Borrower shall pay any
amounts payable to such Terminated Lender pursuant to Section 2.1.14(c)
(Making or Maintaining Revolving Loans), 2.1.15 (Increased Costs; Capital
Adequacy) or 2.1.16 (Taxes; Withholding, etc.); provided that no premium
on such amounts shall be required to be paid; and
(iii) in the event such Terminated Lender is a Non-Consenting
Lender, each Replacement Lender shall consent, at the time of such
assignment, to each matter in respect of which such Terminated Lender was
a Non-Consenting Lender.
Upon the prepayment of all amounts owing to any Terminated Lender, such
Terminated Lender shall no longer constitute a "Lender" under any of the
Revolving Loan Documents; provided, any rights of such Terminated Lender to
indemnification hereunder shall survive as to such Terminated Lender.
SECTION 2.2 Letter of Credit Facilities.
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Section 2.2.1 Issuance of the Letters of Credit. Subject to the terms and
conditions set forth in this Agreement (including the conditions precedent set
forth in Section 3.3), the LC Bank shall, during the Loan Availability Period,
on each Business Day specified in a Notice of LC Activity described in Section
2.2.3, issue, extend or increase the Stated Amount (as applicable), for the
account of the Borrower, of the Letter(s) of Credit to which such Notice of LC
Activity relates, and shall deliver each such Letter of Credit (or a notice of
extension or increase in the Stated Amount thereof) to the Borrower for ultimate
delivery to the applicable LC Beneficiary, or directly to the applicable LC
Beneficiary, as requested by the Borrower. Subject to Section 2.2.6(b), the LC
Bank shall not modify the conditions for draws or terms of availability for any
Letter of Credit issued and outstanding hereunder without the Borrower's prior
written consent.
Section 2.2.2 Use of Letters of Credit. The LC Bank shall, subject to the
terms and conditions of the Agreement, at the request and for the account of the
Borrower, make Letter(s) of Credit available to the Borrower and/or its
Affiliates solely to enable the Borrower or such Affiliates (as applicable) to
provide security for their respective obligations under Project Documents (other
than Project Documents that evidence "Indebtedness" as such term is defined in
Calpine's senior indentures). No Letter of Credit shall be issued, renewed,
replaced or extended by the LC Bank until such time (or a reasonable period
before such time) as required under the Project Document pursuant to which such
Letter of Credit is being issued. The expiration date of each Letter of Credit
shall be on or prior to the scheduled Maturity Date.
Section 2.2.3 Notice of LC Activity. The Borrower shall request the
issuance, extension or increase in the Stated Amount of any Letter of Credit by
delivering to the Administrative Agent and the LC Bank an irrevocable written
notice in the form of Exhibit H, appropriately completed (a "Notice of LC
Activity"), which specifies, among other things:
(a) The particulars of the Letter of Credit to be issued or the
Letter of Credit to be extended or the Stated Amount of which is to be
increased;
(b) The Borrower (or its Affiliates) and the Facility to which such
Letter of Credit relates;
(c) The issue date and expiration date of the Letter of Credit to be
issued or extended (neither of which shall in any event be later than the
scheduled Maturity Date); and
(d) The Stated Amount of such Letter of Credit; provided, that the
sum of (i) such Stated Amount plus (ii) the Aggregate LC Stated Amount
plus (iii) all outstanding Reimbursement Obligations, shall not exceed the
amount equal to the excess, if any, of (A) the Total Loan Commitment at
such time over (B) the aggregate principal amount of all Revolving Loans
then outstanding plus the Aggregate LC Stated Amount and all outstanding
Reimbursement Obligations at such time.
The Borrower shall give the Notice of LC Activity to the Administrative Agent
and the LC Bank at least five Business Days before the requested date of
issuance of any Letter of Credit, or of any
65
extension or increase in the Stated Amount of any Letter of Credit. Any Notice
of LC Activity, once given by Borrower, may not be modified or revoked without
the prior consent of the LC Bank.
Section 2.2.4 Reimbursement. The LC Bank shall notify the Borrower of any
Drawing Payment under any Letter of Credit within one Business Day after the
date that such Drawing Payment is made (the date such Drawing Payment is made,
the "Drawing Date"); provided, however, that the LC Bank's failure to provide
such notification shall not relieve Borrower of its Reimbursement Obligation (it
being understood, however, that the LC Bank shall not be excused from any
liability it may have to the Borrower as a result of such failure to provide the
required notice). No later than 11:00 a.m. (New York City time) on the fifth
Business Day after the Drawing Date, the Borrower shall make or cause to be made
to the LC Bank a Reimbursement Payment in an amount equal to the sum of (a) the
full amount of such Drawing Payment and (b) interest thereon for each day or
portion thereof until such Reimbursement Payment is made at a rate equal to (i)
from the Drawing Date through the fifth Business Day following the Drawing Date,
the interest rate that would be applicable to a one-month LIBOR Rate Loan made
on the Drawing Date and (ii) thereafter, the Default Rate; provided, however,
that such Reimbursement Payment shall be for the benefit of each Lender (in
proportion to its Pro Rata Share) to the extent that, prior to the time such
Reimbursement Payment is made, such Lender has, pursuant to Section 2.2.7, paid
the LC Bank its respective Pro Rata Share of the Drawing Payment made by the LC
Bank. If a Reimbursement Payment is made in the full amount of such Drawing
Payment by 3:00 p.m. on the applicable Drawing Date, no interest shall be
payable on such Drawing Payment.
Section 2.2.5 Reimbursement Obligation Absolute. The Reimbursement
Obligation of the Borrower for each Drawing Payment shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under and without regard to any circumstances,
including, (a) any lack of validity or enforceability of any Revolving Loan
Documents or Project Documents, (b) any amendment or waiver of or any consent to
departure from all or any terms of any of the Revolving Loan Documents or
Project Documents, (c) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against any LC Beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such LC
Beneficiary or transferee may be acting), the LC Bank, the Administrative Agent,
any Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated herein, any Revolving Loan Document, or in the Project
Documents, or in any unrelated transaction, (d) any breach of contract or
dispute among or between the Borrower, the LC Bank, the Administrative Agent,
any Lender, or any other Person, (e) any demand, statement, certificate, draft
or other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect, (f) payment by the LC Bank under any
Letter of Credit against presentation of any demand, statement, certificate,
draft or other document which does not comply with the terms of such Letter of
Credit, (g) any non-application or misapplication by an LC Beneficiary of the
proceeds of any Drawing Payment under a Letter of Credit or any other act or
omission of an LC Beneficiary in connection with a Letter of Credit, (h) any
extension of time for or delay, renewal or compromise of or other indulgence or
modification to the Drawing Payment granted or agreed to by the LC Bank, the
Administrative Agent or any Lender, with or without notice to or approval by the
Borrower, (i) any failure to preserve or protect any Collateral, any failure to
perfect or preserve the perfection of any Lien
66
thereon, or the release of any of the Collateral securing the performance or
observance of the terms of this Agreement or any of the other Revolving Loan
Documents or any of the Project Documents, or (j) any other circumstances or
happenings whatsoever relating to the Borrower, such Reimbursement Obligation or
any Facility, whether or not similar to any of the foregoing, including the
failure of the Borrower to occupy or use any Facility in the manner contemplated
by the Revolving Loan Documents or Project Documents or otherwise, any defect in
title, design, operation, merchantability, fitness or condition of any Facility
or in the suitability of any Facility for the Borrower's purposes or needs, any
failure of consideration, destruction of or damage to any Facility, any
commercial frustration of purpose, the taking by condemnation of title to or the
use of all or any part of any Facility, any Regulatory Change, any failure of an
LC Beneficiary or any other Person to perform or observe any agreement, whether
express or implied, or any duty, liability or obligation arising out of or in
connection with the Revolving Loan Documents or the Project Documents to which
each is a party; provided, however, that nothing in this Section 2.2.5 shall
relieve the LC Bank, the Administrative Agent or any Lender from liability for
its bad faith, gross negligence or willful misconduct or breach of this
Agreement.
Section 2.2.6 Reduction and Reinstatement of Stated Amount.
(a) The Stated Amount of each Letter of Credit shall be reduced by the
amount of Drawing Payments made in respect thereof. Notwithstanding anything to
the contrary contained in this Section 2.2, once so reduced, the Stated Amount
of any Letter of Credit shall not be reinstated except (i) upon the prior
written consent of the Administrative Agent, the LC Bank and the Requisite
Lenders or (ii) upon payment by Borrower of the Reimbursement Obligation
corresponding to such Drawing Payment and satisfaction of the conditions for an
increase in the Stated Amount of a Letter of Credit set forth in Section 2.2.3
and Article 3.
(b) Upon the occurrence and during the continuation of an Event of Default
under Section 7.1(k) or at such time as, pursuant to the terms hereof, the
Revolving Loan Obligations have been accelerated, the Administrative Agent
(acting at the direction of the LC Bank or the Requisite Lenders) shall be
entitled to cancel all outstanding Letters of Credit any time at least 30 days
after delivery to the LC Beneficiary of each Letter of Credit that will be
canceled a written notice of such intent to cancel, whereupon the LC Beneficiary
shall be entitled to draw upon the applicable Letter of Credit in accordance
with its terms.
Section 2.2.7 Lender Participation. Each Lender severally agrees to
participate with the LC Bank in the extension of credit arising from the
issuance of the Letters of Credit (each a "Participation Interest") in an amount
equal to such Lender's Pro Rata Share of the Stated Amount of each Letter of
Credit, and the issuance of a Letter of Credit shall be deemed a confirmation to
the LC Bank of such participation in such amount. After written notification by
the LC Bank to the Administrative Agent at any time after the LC Bank has
received notice of or request for any Drawing Payment, the Administrative Agent
may request the Lenders to pay to the Administrative Agent on behalf of the LC
Bank their respective Pro Rata Shares of all or any portion of such Drawing
Payment made or to be made by the LC Bank under any Letter of Credit by
contacting each Lender telephonically (promptly confirmed in writing), and
specifying the amount of such Drawing Payment (as set forth in the LC Bank's
written notification of the Administrative Agent of the same), such Lender's Pro
Rata Share thereof, and the date on which
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such Drawing Payment is to be made or was made (as set forth in the LC Bank's
written notification of the Administrative Agent of the same); provided,
however, that the Administrative Agent shall not request the Lenders to make any
payment under this Section 2.2.7 in connection with any portion of a Drawing
Payment for which the LC Bank has been reimbursed through a Reimbursement
Payment by the Borrower (unless such Reimbursement Payment has been thereafter
recovered by the Borrower). Upon receipt of any such request for payment from
the Administrative Agent, each Lender shall pay to Administrative Agent such
Lender's Pro Rata Share of the unreimbursed portion of such Drawing Payment,
together with interest thereon at a per annum rate equal to the Federal Funds
Effective Rate, as in effect from time to time, from the date of such Drawing
Payment to the date on which such Lender makes payment, and the Administrative
Agent shall promptly thereafter pay to the LC Bank all amounts so received. Each
Lender's obligation to make each such payment to the Administrative Agent shall
be absolute, unconditional and irrevocable and shall not be affected by any
circumstance whatsoever, including the occurrence or continuance of any Default
or Event of Default, or the failure of any other Lender to make any payment
under this Section 2.2.7, and each Lender further agrees that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. If any Reimbursement Payment is made to Administrative Agent or the
LC Bank, the Administrative Agent or the LC Bank, as applicable, shall pay to
each Lender which has paid its Pro Rata Share of the Drawing Payment such
Lender's Pro Rata Share of the Reimbursement Payment and shall, in the case of
the Administrative Agent, pay to the LC Bank and, in the case of the LC Bank,
retain, the balance of such Reimbursement Payment.
Section 2.2.8 Commercial Practices. The Borrower assumes all risks of the
acts or omissions of any LC Beneficiary or transferee of any Letter of Credit
with respect to the use of such Letter of Credit. The Borrower agrees that
neither the LC Bank, the Administrative Agent nor any Lender (nor any of their
respective directors, officers or employees) shall be liable or responsible for:
(a) the use which may be made of any Letter of Credit or for any acts or
omissions of any LC Beneficiary or transferee in connection therewith; (b) any
reference which may be made to this Agreement or to any Letter of Credit in any
agreements, instruments or other documents; (c) the validity, sufficiency or
genuineness of documents other than the Letters of Credit, or of any
endorsement(s) thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged or any statement
therein prove to be untrue or inaccurate in any respect whatsoever; (d) payment
by the LC Bank against presentation of documents which do not strictly comply
with the terms of the applicable Letter of Credit, including failure of any
documents to bear any reference or adequate reference to such Letter of Credit;
or (e) any other circumstances whatsoever in making or failing to make payment
under any Letter of Credit, except only that the LC Bank shall be liable to the
Borrower for acts or events described in clauses (a) through (e) above, to the
extent, but only to the extent, of any direct damages, as opposed to indirect,
special or consequential damages, suffered by the Borrower which the Borrower
proves were caused by (i) the LC Bank's bad faith, willful misconduct or gross
negligence in determining whether a drawing made under the applicable Letter of
Credit complies with the terms and conditions therefor stated in such Letter of
Credit or (ii) the LC Bank's willful failure to pay under any Letter of Credit
after a drawing by the respective LC Beneficiary strictly complying with the
terms and conditions of the applicable Letter of Credit. Without limiting the
foregoing, the LC Bank may accept any document that appears on its face to be in
order, without responsibility for further investigation. The Borrower hereby
waives any right to object to any payment made under a Letter of Credit with
regard to a
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drawing that is in the form provided in such Letter of Credit but which varies
with respect to punctuation (except punctuation with respect to any Dollar
amount specified therein), capitalization, spelling or similar matters of form.
Section 2.2.9 Letter of Credit Fees. On the last Business Day in each
calendar quarter commencing on or after the Closing Date and through the
Maturity Date, on the Expiration Date of each Letter of Credit and on the
Maturity Date, the Borrower shall pay to the Administrative Agent for the
benefit of the Lenders, accruing from the date of issuance of such Letter of
Credit, a Letter of Credit fee (the "Letter of Credit Fee") for such quarter (or
portion thereof in the case of payment on the Expiration Date of a Letter of
Credit or on the Maturity Date) then ending at the rates per annum described
below and computed in the following manner: The Letter of Credit Fee in respect
of each Letter of Credit shall be equal to the product of (i) 3.50%, times (ii)
the daily average Stated Amount of each such Letter of Credit for such quarter
(or portion thereof in the case of payment on the Expiration Date of a Letter of
Credit or on the Maturity Date) times (iii) a fraction, the numerator of which
is the number of days in such quarter (or portion thereof in the case of payment
on the Expiration Date of a Letter of Credit or on the Maturity Date) and the
denominator of which is 360.
Section 2.2.10 Termination of Letters of Credit. Unless terminated earlier
in accordance with its terms, or extended pursuant to Section 2.2.3 (Notice of
LC Activity), each Letter of Credit shall terminate on the earlier to occur of
(a) 12:01 a.m., on the Expiration Date stated therein (which shall be no later
than the earlier of the Maturity Date and 15 days following the scheduled
expiration of the letter of credit obligations under the Project Document in
connection with which such Letter of Credit is to be issued) and (b)
cancellation of such Letter of Credit pursuant to Section 2.2.6(b) (Reduction
and Reinstatement of Stated Amount).
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 Conditions Precedent to Closing.
The effectiveness of this Agreement, the obligations of the Administrative
Agent hereunder, the obligations of the LC Bank hereunder and the obligations of
any Lender to make a Revolving Loan (if any) on the Closing Date are each
subject to the satisfaction, or waiver in accordance with Section 12.5
(Amendments and Waivers), of the following conditions precedent on or before the
Closing Date:
Section 3.1.1 Resolutions. The Administrative Agent shall have received a
copy of one or more resolutions or other authorizations of Holdings, the
Borrower and each Guarantor authorizing, as applicable and among other things,
the granting of the Liens under the Security Documents and the execution,
delivery and performance of this Agreement and the other Financing Documents, in
each case certified by an Officer of each such Person as being (a) in full force
and effect as of the Closing Date and (b) true, correct and complete copies of
all of the resolutions or other authorizations of such Person relating to the
transactions contemplated by this Agreement and the other Financing Documents as
of the Closing Date.
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Section 3.1.2 Incumbency. The Administrative Agent shall have received a
certificate from each of Holdings, the Borrower and each Guarantor, signed by
the appropriate authorized officer of such Person and dated as of the Closing
Date, as to the incumbency of the natural persons authorized to execute and
deliver the Revolving Loan Documents to which such Person is a party.
Section 3.1.3 Formation Documents. The Administrative Agent shall have
received (a) a copy of the certificate of formation, articles of incorporation
or other comparable constituent documents of Holdings, the Borrower and each
Subsidiary of the Borrower, in each case certified by the Secretary of State of
the state of such Person's formation or incorporation (as applicable) and (b) a
copy of the limited liability company operating agreement, bylaws or other
comparable constituent documents of such Person, in each case certified by an
Officer of such Person as being true, correct and complete as of the Closing
Date.
Section 3.1.4 Good Standing Certificates. The Administrative Agent shall
have received certificates issued by the Secretary of State of the state in
which each of Holdings, the Borrower, and each Subsidiary of the Borrower is
formed or organized (as applicable), (a) dated no more than five days prior to
the Closing Date and (b) certifying that such Person is in good standing and is
qualified to do business in, and has paid all franchise taxes or similar taxes
due to the applicable state.
Section 3.1.5 Financial Officer's Certificate. The chief financial officer
of the Borrower shall have furnished a certificate, dated the Closing Date, in
form and substance satisfactory to the Administrative Agent, stating to the
effect that:
(a) The present fair saleable value of the assets of each of the
Borrower and each Subsidiary of the Borrower (other than CalGen Finance)
exceeds the amount required to pay the probable liability on its existing
debts, respectively (whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent), as they become absolute and
matured, and as a result of the consummation of the transactions
contemplated herein and in the Bank Book, will continue to exceed such
amount;
(b) Each of the Borrower and each Subsidiary of the Borrower (other
than CalGen Finance) does not, and, as a result of the consummation of the
transactions contemplated in this Agreement, the other Financing Documents
and the Bank Book, will not, have unreasonably small capital for it to
carry on its business as proposed to be conducted;
(c) Neither the Borrower nor any Subsidiary of the Borrower (other
than CalGen Finance) is incurring obligations or making transfers under
any evidence of indebtedness with the intent to hinder, delay or defraud
any entity to which it is or will become indebted; and
(d) Nothing has come to the Borrower's attention to cause it to
believe that: (i) ▇.▇. ▇▇▇▇ is not qualified to pass on questions relating
to the technical, environmental and economic aspects of the projects
operated by the CalGen Companies as such projects are described in the
Bank Book; (ii) the assumptions included in R.W.
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▇▇▇▇'▇ report dated March 15, 2004, entitled "Independent Engineer's
Report, Calpine Generating Company, LLC Facilities" (the "▇▇▇▇ Report"),
are not reasonable; (iii) the information provided by the CalGen Companies
to ▇.▇. ▇▇▇▇ in connection with the ▇▇▇▇ Report was not prepared in good
faith by the CalGen Companies; and (iv) the factual information or the
conclusions contained in the ▇▇▇▇ Report are inaccurate in any material
adverse respect.
Section 3.1.6 Security.
(a) Release. The Collateral Agent shall have received:
(i) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Administrative Agent, dated a
date reasonably near to the Closing Date, listing all effective
Financing Statements which name Holdings, the Borrower or any
Subsidiary thereof (under its present names or any previous name) as
the debtor, together with copies of such Financing Statements (none
of which shall cover any Collateral, other than Financing Statements
that evidence (A) Liens granted in connection with the Existing
Senior Secured Credit Facility or (B) Liens permitted to exist
hereunder after the Closing Date);
(ii) appropriately completed copies, which have been duly
authorized for filing by the appropriate Person, of each UCC
Financing Statement Amendment (Form UCC-3) termination statement, if
any, necessary to release all Liens of any Person in any Collateral
previously granted by the Borrower or any of its Subsidiaries to the
extent not permitted under the Revolving Loan Documents after the
Closing Date (including (A) Liens granted in connection with the
Existing Senior Secured Credit Facility and (B) other existing Liens
which are not permitted hereunder after the Closing Date);
(iii) such releases, reconveyances, satisfactions or other
instruments as it may reasonably request to confirm the release,
satisfaction and discharge in full of all mortgages and deeds of
trust at any time delivered by the Borrower or any of its
Subsidiaries to secure any Obligations in respect of the Existing
Senior Secured Credit Facility, duly executed, delivered and
acknowledged in recordable form by the grantee named therein or its
of record successors or assigns; and
(iv) a letter or letters (in form and substance reasonably
satisfactory to the Administrative Agent) addressed to the
Collateral Agent, the First Priority Indenture Trustee, the Second
Priority Indenture Trustee, the Third Priority Indenture Trustee,
the Administrative Agent, the First Priority Term Loan
Administrative Agent and the Second Priority Term Loan
Administrative Agent executed and delivered by the Existing Credit
Administrative Agent, stating the amount (the "Payout Amount")
required to pay in full in cash at the Closing Date all outstanding
Obligations under or in respect of the Existing Senior Secured
Credit Facility.
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(b) Security. The Collateral Agent shall have received (with a copy
to the Administrative Agent):
(i) appropriately completed copies, which have been duly
authorized for filing by the appropriate Person, of Uniform
Commercial Code Financing Statements or fixture filings naming
Holdings, the Borrower, or each of the Guarantors (as applicable) as
a debtor and the Collateral Agent as the secured party, or other
similar instruments or documents to be filed under the UCC of all
jurisdictions as may be necessary or, in the reasonable opinion of
the Administrative Agent and its counsel, desirable to perfect the
security interests of the Revolving Loan Secured Parties pursuant to
the Security Documents;
(ii) (A) certificates (which certificates shall be accompanied
by irrevocable undated stock powers or transfer documents, duly
endorsed in blank and otherwise satisfactory in form and substance
to the Administrative Agent) representing all Capital Stock pledged
pursuant to the Security Documents and (B) all promissory notes or
other instruments (duly endorsed, where appropriate, in a manner
reasonably satisfactory to the Administrative Agent) evidencing any
Collateral; and
(iii) such other documents and instruments as the
Administrative Agent or the Collateral Agent may reasonably request
in order to grant and perfect the security interests contemplated by
the Security Documents
(c) Filing. All Uniform Commercial Code Financing Statements (Forms
UCC-1) or other similar Financing Statements and UCC Financing Statement
Amendments (Forms UCC-3) required pursuant to clauses (a) and (b) above
(collectively, the "Financing Statements") shall have been filed or
recorded or delivered to the Collateral Agent for filing or recording.
Section 3.1.7 Consummation of Notes Offering, Term Loan Agreements, and
Revolving Loan Documents.
(a) The Borrower and CalGen Finance shall have consummated the offering of
the Notes, and such Notes shall have been issued and sold prior to, or shall be
issued and sold simultaneously with, the Closing Date on substantially the terms
described in the Bank Book and other terms reasonably satisfactory to the
Administrative Agent.
(b) The Borrower and each Guarantor shall have executed and delivered the
Term Loan Agreements and each such agreement shall be in full force and effect
prior to, or shall become in full force and effect simultaneously with, the
Closing Date, on substantially the terms described in the Bank Book and other
terms reasonably satisfactory to the Administrative Agent.
(c) Holdings, the Borrower and each Guarantor shall have delivered to the
Lenders, each of the Revolving Loan Documents to be entered into as of the
Closing Date, each duly executed and delivered by the party or parties thereto
and, unless otherwise noted, dated the Closing Date.
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(d) The Borrower shall have received cash proceeds from the sale of the
Notes (net of underwriting discounts and commissions) in an amount sufficient,
when added to the cash proceeds from the borrowings under the Term Loan
Agreements (net of applicable expenses and fees), to pay in full in cash the
Payout Amount and all other fees, costs and expenses payable by the Borrower in
connection with the closing of the transactions contemplated herein and in the
Bank Book and shall have authorized disbursement of such cash proceeds directly
to pay the Payout Amounts and such fees, costs and expenses pursuant to a
disbursement authorization letter (in form and substance reasonably satisfactory
to the Administrative Agent) executed and delivered by the Borrower.
Section 3.1.8 No Material Adverse Change. There shall not have occurred
(a) since December 31, 2003, any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Borrower and its Subsidiaries, taken as a whole,
which, in the judgment of the Administrative Agent, is material and adverse and
makes it impractical or inadvisable to proceed with making of the Revolving
Loans; (b) since March 12, 2004, any suspension or material limitation of
trading in securities generally on the New York Stock Exchange, or any setting
of minimum prices for trading on such exchange, or any suspension of trading of
any securities of Calpine on any exchange or in the over-the-counter market; (c)
since March 12, 2004, a general moratorium on commercial banking activities
declared by either Federal or New York State authorities or a material
disruption in commercial banking or securities settlement or clearance services
in the United States which, in the judgment of the Administrative Agent, makes
it impracticable or inadvisable to proceed with the making of the Revolving
Loans; or (d) since March 12, 2004, any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of the Lead Arranger, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with the making of the Revolving Loans.
Section 3.1.9 Independent Engineer Report. The Administrative Agent shall
have received (a) a copy of a report (including the appendices thereto) by the
Independent Engineer relating to the Closing Date Facilities and (b) a reliance
letter from the Independent Engineer, dated as of the Closing Date, permitting
the Lenders to rely on such report (including the appendices thereto) as if
addressed to them and reaffirming the accuracy and completeness in all material
respects, as of the Closing Date, of the Independent Engineer's conclusions and
findings contained in the such report (including the appendices thereto); in
each case in form and substance reasonably satisfactory to the Administrative
Agent.
Section 3.1.10 Third Party Approvals. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
governmental authorities and other Persons in respect of all applicable Legal
Requirements, necessary or desirable in connection with the execution, delivery
or performance by each of Holdings, the Borrower and each Guarantor of the
Revolving Loan Documents to which it is a party (including all federal, state
and local regulatory filings, consents and approvals necessary or desirable in
connection therewith) shall have been obtained and be in full force and effect,
and the Administrative Agent shall have been furnished with appropriate evidence
thereof, and all waiting periods related thereto shall have lapsed or expired
without extension or the imposition of any conditions or restrictions.
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Section 3.1.11 Opinions. The Administrative Agent shall have received one
or more opinions addressed to the Administrative Agent and each of the Lenders
from time to time party to this Agreement, in form and substance reasonably
satisfactory to the Administrative Agent and its counsel, dated as of the
Closing Date and in the form of Exhibit I.
Section 3.1.12 Officer's Certificates. The Administrative Agent shall have
received a certificate, dated as of the Closing Date, of the president or any
vice president and a principal financial or accounting officer of the Borrower
and each of the Guarantors in which such officer, to the best of his or her
knowledge after reasonable investigation, shall state that (a) the
representations and warranties of such CalGen Company in this Agreement and the
other Revolving Loan Documents are true and correct in all material respects;
(b) such CalGen Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date; and (c) subsequent to December 31, 2003, there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of such CalGen Company or its respective
subsidiaries taken as a whole except as set forth in or contemplated by the Bank
Book or otherwise disclosed in writing to the Administrative Agent prior to the
Closing Date.
Section 3.1.13 Title Policies.
(a) Mortgages. The Collateral Agent shall have received (with a copy to
the Administrative Agent) a fully executed and notarized mortgage or deed of
trust from each Guarantor (each a "Closing Date Mortgage") encumbering all of
such Guarantor's Closing Date Mortgaged Property as security for the payment and
performance of the Secured Obligations. Each Closing Date Mortgage shall be in
proper form for recording in all applicable jurisdictions where the property
encumbered thereby is located.
(b) Title Insurance Policies. The Collateral Agent shall have received
CLTA mortgagee policies of title insurance or unconditional commitments therefor
(the "Closing Date Mortgage Policies") issued by the Title Company with respect
to the Closing Date Mortgaged Properties, providing coverage in an amount equal
to $50,000,000 per Closing Date Mortgaged Property and assuring the Collateral
Agent that the applicable Closing Date Mortgages create valid and enforceable
perfected mortgage Liens on the respective Closing Date Mortgaged Properties
encumbered thereby. The Closing Date Mortgage Policies shall (i) include
endorsements providing mechanics' lien coverage and such other coverages as are
reasonably requested by the Administrative Agent, and (ii) provide for such
affirmative insurance, gap coverage and reinsurance as the Administrative Agent
may reasonably request, all of the foregoing in form and substance reasonably
satisfactory to the Administrative Agent.
Section 3.1.14 Evidence of Insurance. The Collateral Agent shall have
received a certificate from the Borrower's insurance broker or other evidence
satisfactory to it that all insurance required to be maintained pursuant to this
Agreement is in full force and effect and that Collateral Agent on behalf of the
Secured Parties has been named as additional insured and/or loss payee
thereunder to the extent required under this Agreement.
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Section 3.1.15 Other Financing Documents. The Administrative Agent shall
have received true, correct and complete copies of each Financing Document
(other than the Revolving Loan Documents) and each shall be in full force and
effect as of the Closing Date, as certified to the Administrative Agent by an
Officer of the Borrower as of the Closing Date
Section 3.1.16 No Default. No Default or Event of Default shall have
occurred and be continuing (or would occur or would be continuing immediately
after giving effect to the making of the Revolving Loans).
Section 3.1.17 Fees. The Borrower shall have paid all fees and reasonable
out-of-pocket costs and expenses (including reasonable legal fees and expenses
of counsel) and other compensation contemplated hereby payable to the Agents and
the Lenders.
Section 3.1.18 Delivery of Financials. The Administrative Agent and each
Lender, at least four Business Days prior to the Closing Date, shall have
received copies of (a) the consolidated financial statements for the Borrower
and its Subsidiaries (covering the fiscal year ended December 31, 2003) as
audited by PricewaterhouseCoopers LLP, and such consolidated financial
statements shall be reasonably satisfactory to the Administrative Agent, (b) the
unaudited pro forma consolidated balance sheet of the Borrower and its
Subsidiaries as of the Closing Date giving effect to (i) the consummation of the
transactions contemplated hereby, (ii) the issuance of the Notes, the making of
the loans under the Term Loan Agreements and the use of proceeds thereof, and
(iii) the payment of fees and expenses in connection with the foregoing, and (c)
the forecasted operating results of the Borrower and its Subsidiaries (the
"Projections"), giving effect to the consummation of the transactions
contemplated by this Agreement, the making of the loans under the Term Loan
Agreements and the issuance of the Notes, covering the period from the Closing
Date until December 31, 2010 and in form and substance substantial similar to
the draft Projections provided to the Lenders on March 15, 2004. The
Administrative Agent is entitled, but not obligated to, request and receive,
prior to the making of any Revolving Loan, additional information reasonably
satisfactory to the Administrative Agent confirming the satisfaction of any of
the foregoing if, in the good faith judgment of the Administrative Agent, such
request is warranted under the circumstances.
Section 3.1.19 Notice of Borrowing. If the Borrower desires that the
Lenders make a Revolving Loan on the Closing Date, then the Administrative Agent
shall have received an appropriately completed Notice of Borrowing from the
Borrower at least three Business Days (in the event the Borrower is requesting a
LIBOR Rate Loan) or one Business Day (in the event the Borrower is requesting a
Base Rate Loan) prior to the Closing Date.
Section 3.1.20 Notice of LC Activity. If the Borrower desires that the LC
Bank issue a Letter of Credit on the Closing Date, then the Administrative Agent
shall have received an appropriately completed Notice of LC Activity from the
Borrower at least three Business Days prior to the Closing Date.
Section 3.1.21 Site Assessment Reports. The Administrative Agent shall
have received (a) a copy of one or more environmental site assessment reports
from each of the Environmental Consultants relating to the Closing Date
Facilities (in the form provided to counsel to the Administrative Agent prior to
the Closing Date) and (b) a reliance letter from each of the
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Environmental Consultants, permitting the Lenders to rely on such environmental
site assessment reports as if addressed to them (in form and substance
reasonably satisfactory to the Administrative Agent).
Section 3.1.22 Major Project Documents. The Borrower and each applicable
Guarantor shall have executed and delivered the Major Project Documents to which
it is a party and each such Major Project Document shall be in full force and
effect prior to, or shall become in full force and effect simultaneously with,
the Closing Date, on substantially the terms described in the Bank Book and
other terms reasonably satisfactory to the Administrative Agent.
As promptly as is reasonably practicable after the Closing Date, the Borrower
shall, at its expense, deliver to each of the Lenders as of the Closing Date an
electronic copy in cd-rom format of all of the documents, instruments and
reports delivered pursuant to this Section 3.1.
SECTION 3.2 Conditions Precedent to Each Revolving Loan After the Closing
Date. The obligations of the Lenders to make each Revolving Loan after the
Closing Date are subject to the satisfaction, or waiver in accordance with
Section 12.5 (Amendments and Waivers), of the following conditions precedent on
the relevant Credit Event Date:
Section 3.2.1 Representations and Warranties. Each representation and
warranty of the Borrower and each Guarantor in any of the Revolving Loan
Documents shall be true and correct in all material respects as if made on such
Credit Event Date, unless such representation or warranty expressly relates
solely to an earlier date.
Section 3.2.2 No Material Adverse Effect. Since the Closing Date, no
Material Adverse Effect shall have occurred and be continuing.
Section 3.2.3 No Default. No Event of Default or Default shall have
occurred and be continuing or will result from the making of such Revolving
Loan.
Section 3.2.4 Notice of Borrowing. The Borrower shall have delivered an
appropriately completed Notice of Borrowing to the Administrative Agent in
accordance with the procedures specified in Section 2.1.1(b).
SECTION 3.3 Conditions Precedent to the Issuance of Letters of Credit. The
obligation of the LC Bank to issue a Letter of Credit after the Closing Date is
subject to the satisfaction, or waiver in accordance with Section 12.5
(Amendments and Waivers), of the following conditions precedent on the relevant
Credit Event Date:
Section 3.3.1 Representations and Warranties. Each representation and
warranty of the Borrower and each Guarantor in any of the Revolving Loan
Documents shall be true and correct in all material respects as if made on such
Credit Event Date, unless such representation or warranty expressly relates
solely to an earlier date.
Section 3.3.2 No Material Adverse Effect. Since the Closing Date, no
Material Adverse Effect shall have occurred and be continuing.
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Section 3.3.3 No Default. No Event of Default or Default shall have
occurred and be continuing or will result from the issuance of such Letter of
Credit.
Section 3.3.4 Notice of LC Activity. The Borrower shall have delivered an
appropriately completed Notice of LC Activity to the Administrative Agent in
accordance with the procedures specified in Section 2.2.3.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Each of the Borrower and each Guarantor makes the following
representations and warranties to and in favor of the Lead Arranger, the
Administrative Agent, the LC Bank and the Lenders as of the Closing Date and
each Credit Event Date:
SECTION 4.1 Organization.
(a) The Borrower has been duly formed and is an existing limited liability
company in good standing under the laws of the State of Delaware, with power and
authority under such laws to own or lease its properties and conduct its
business; and the Borrower is duly qualified to do business as a foreign limited
liability company, and is in good standing, in all other jurisdictions in which
its ownership or leasing of property or the conduct of its business requires
such qualification.
(b) Each Subsidiary of the Borrower either (i) has been duly incorporated
and is an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with the corporate power and authority to own
or lease its properties and conduct its business; or (ii) is a general
partnership, limited partnership or a limited liability company, has been duly
formed and is validly existing as a general partnership, limited partnership or
limited liability company, as the case may be, is in good standing under the
laws of the jurisdiction of its formation, and has full partnership or limited
liability company power and authority, as the case may be, to own or lease its
properties and conduct its business.
(c) Each Subsidiary of the Borrower is duly qualified to do business as a
foreign corporation, general or limited partnership or limited liability
company, as the case may be, and is in good standing, in all other jurisdictions
in which its ownership or leasing of property or the conduct of its business
requires such qualification.
(d) All of the issued and outstanding Capital Stock in each Subsidiary of
the Borrower has been duly authorized and validly issued and is fully paid and
nonassessable, and the Capital Stock of each Subsidiary owned by the Borrower,
directly or through Subsidiaries, is owned free from liens, encumbrances and
defects except for those to be terminated at the Closing Date with respect to
the Existing Senior Secured Credit Facility and Permitted Liens.
(e) As of the Closing Date, the capital structure of Holdings and the
Borrower and its Subsidiaries is accurately set forth on Schedule 4.1.
SECTION 4.2 Financing Documents and Major Project Documents. Each of the
Financing Documents, Major Project Documents and Third Party Project Documents
to which the
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Borrower or any of its Subsidiaries is a party has been duly authorized by such
CalGen Company. Each of the Financing Documents, Major Project Documents and
Third Party Project Documents has been validly executed and delivered by such
CalGen Company and constitutes a valid and legally binding obligation of such
CalGen Company, enforceable against such CalGen Company in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
SECTION 4.3 Collateral.
(a) The Security Documents grant and create, in favor of the Collateral
Agent (for the benefit of the Secured Parties as security for all of the Secured
Obligations), a valid security interest in the personal property Collateral
defined in each of such instruments to the extent contemplated thereby.
(b) Each Mortgage grants and creates, in favor of the Collateral Agent
(for the benefit of the Secured Parties as security for all of the Secured
Obligations), a valid mortgage lien and/or security interest in the Collateral
defined in each of such Mortgage to the extent contemplated thereby.
(c) All pledged Collateral is represented by certificated securities and
all such certificated securities and all promissory notes and other instruments
evidencing or representing any Collateral have been delivered to the Collateral
Agent in pledge for the benefit of the Secured Parties as security for all of
the Secured Obligations duly endorsed by an effective endorsement.
SECTION 4.4 Governmental Approvals. No consent, approval, authorization, or
order of, or filing with, any Governmental Authority is required for the
consummation of the transactions contemplated by this Agreement, the other
Financing Documents, the Major Project Documents or the Third Party Project
Documents or otherwise in connection with the transactions contemplated by any
such documents or the grant and perfection of the security interests in the
Collateral pursuant to the Security Documents, except (a) such consents,
approvals, authorizations and orders as have already been obtained, (b) filings
required pursuant to Section 3.1.6 (Security) to perfect the Collateral Agent's
security interests granted pursuant to the Security Documents, (c) such
consents, approvals, authorizations and orders as may be required under state
securities or blue sky laws and (d) such other consents approvals,
authorizations and orders as would not, in the aggregate, have a Material
Adverse Effect.
SECTION 4.5 Compliance with Law. The execution, delivery and performance of this
Agreement, the other Financing Documents, the Major Project Documents and the
Third Party Project Documents by the Borrower and its Subsidiaries party
thereto, as applicable; the making of the Revolving Loans hereunder; the grant
and perfection of the security interests in the Collateral pursuant to the
Security Documents; compliance with the terms and provisions of each of the
foregoing by the CalGen Companies, as applicable; and the consummation by such
CalGen Companies of the transactions contemplated herein and therein, in each
case, will not result in a breach or violation of any of the terms and
provisions of, or conflict with or constitute a default under, or result in the
imposition or creation of (or the obligation to create or impose) a
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Lien (other than in favor of the Collateral Agent for the benefit of the Secured
Parties) under, any Legal Requirement applicable to any such CalGen Company, or
any agreement or instrument to which any of the CalGen Companies is a party or
by which any of the CalGen Companies is bound or to which any of the properties
of any of the CalGen Companies is subject, except to the extent that the
foregoing would not, in the aggregate, have a Material Adverse Effect.
SECTION 4.6 Ownership of Property; Liens. Except as disclosed in the Closing
Date Mortgage Policies, each of the Borrower and each Guarantor has good and
marketable title to all real properties owned by it, and good title to all other
properties and assets owned by it, in each case except for Permitted Liens, free
from Liens that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by it; and, except for
Permitted Liens or as disclosed in the Closing Date Mortgage Policies, each of
the Borrower and each Guarantor holds any leased real or personal property under
valid and enforceable leases with no exceptions to title that would materially
interfere with the use made or to be made thereof by it. No Financing Statements
in respect of any property or assets of any of the Borrower or any Guarantor is
on file in favor of any Person other than those in respect of Permitted Liens
and those to be terminated at the Closing Date with respect to the Existing
Senior Secured Credit Facility.
SECTION 4.7 Governmental Authorizations; Permits. Each of the Borrower and its
Subsidiaries possesses adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it and has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or permit
that, if determined adversely to such CalGen Company, would individually or in
the aggregate have a Material Adverse Effect.
SECTION 4.8 Labor Disputes. No labor dispute with the employees of any of the
Borrower or its Subsidiaries exists or, to the knowledge of the Borrower or any
Guarantor, is imminent that might have a Material Adverse Effect.
SECTION 4.9 Intellectual Property Rights. Each of the Borrower and its
Subsidiaries owns, possesses or can acquire on reasonable terms, adequate
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct the business
now operated by it, or presently employed by it, and has not received any notice
of infringement of or conflict with asserted rights of others with respect to
any intellectual property rights that, if determined adversely to such CalGen
Company, would individually or in the aggregate have a Material Adverse Effect.
SECTION 4.10 Hazardous Substances. None of the Borrower and its Subsidiaries is
in violation of any Legal Requirement relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "Environmental Laws"), owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, is
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, or is subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim
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would individually or in the aggregate have a Material Adverse Effect; and the
Borrower is not aware of any pending investigation which might lead to such a
claim.
SECTION 4.11 Litigation. Except as set forth on Schedule 4.11, there are no
pending actions, suits or proceedings against the Borrower or any of its
Subsidiaries or any of their respective properties that, if determined adversely
to such CalGen Company, would individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely affect the ability of such
CalGen Company to perform its or their obligations under, or contemplated by,
this Agreement, the other Financing Documents, the Major Project Documents or
the Third Party Project Documents, in each case to which such CalGen Company is
a party, or which are otherwise material in the context of the transactions
contemplated by the Financing Documents.
SECTION 4.12 Financial Information. The financial information delivered pursuant
to clauses (a) and (b) of Section 3.1.18 (Delivery of Financials) or Section 5.1
(Reports), as applicable, presents fairly the financial position of the Borrower
and its Subsidiaries on a combined or consolidated basis, as the case may be, as
of the dates shown therein and their results of operations and cash flows for
the periods shown therein, and, except as otherwise disclosed in the Bank Book,
together with the other documents, certificates and other writings delivered to
the Administrative Agent and the Lenders by or on behalf of the Borrower or any
Guarantor specifically for use in connection with the transactions contemplated
hereby, such financial statements have been prepared in conformity with GAAP
applied on a consistent basis. None of the Borrower or any of its Subsidiaries
has any material liabilities, direct or contingent, which are required to be
shown on such financial statements under GAAP, except as has been disclosed in
such financial statements.
SECTION 4.13 Disclosure; Projections(a).
(a) As of the Closing Date, the Borrower has delivered to each Lender a
copy of the Bank Book. As of the Closing Date, the Bank Book, together with the
other documents, certificates and other writings delivered to the Administrative
Agent and the Lenders by or on behalf of the Borrower or any Guarantor
specifically for use in connection with the transactions contemplated hereby,
fairly describes, in all material respects, the general nature of the business
of the Borrower and its Subsidiaries, the transactions contemplated by the
Financing Documents and the principal assets of the Borrower and its
Subsidiaries. As of the Closing Date, none of this Agreement, the Bank Book, the
documents, certificates or other writings delivered to or the Administrative
Agent or any Lender by or on behalf of the Borrower or any Guarantor in
connection with the transactions contemplated hereby, taken as a whole, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made (other than
any information that was corrected or updated in writing by the Borrower to the
Administrative Agent and the Lenders prior to the Closing Date).
(b) As of the Closing Date, the Projections are based on good faith
estimates and assumptions believed by management of the Borrower to be
reasonable as of the date of the Projections, and there are no statements or
conclusions in any of the Projections which are based upon or include
information known to the Borrower to be misleading in any material respect or
which fail to take into account material information regarding the matters
reported therein. As of
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the Closing Date, the Borrower believes that the Projections are reasonable, it
being acknowledged and agreed by the Administrative Agent and the Lenders,
however, that projections as to future events are not to be viewed as facts and
that the actual results during the period or periods covered by the Projections
may differ from the projected results and such differences may be material.
(c) Except as expressly set forth in this Section 4.13, neither the
Borrower nor any Guarantor makes any representation with respect to any
information, projections, forecasts, statements of opinion, expectations or
beliefs of any party contained in the Bank Book or delivered in connection with
the transactions contemplated under this Agreement.
SECTION 4.14 Adverse Change. Except as has been disclosed in the Bank Book,
together with the other documents, certificates and other writings delivered to
the Administrative Agent and the Lenders by or on behalf of the Borrower or any
Guarantor specifically for use in connection with the transactions contemplated
hereby, (a) with respect to the representations and warranties to be made as of
the Closing Date, since December 31, 2003 and (b) with respect to each
representation and warranty to be made after the Closing Date, since the Closing
Date, there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Borrower and its
Subsidiaries taken as a whole. As of the Closing Date, except as has been
disclosed in writing to the Administrative Agent, no long-term indebtedness has
been incurred (other than long-term indebtedness that is expressly contemplated
by the Bank Book), and no dividend or distribution of any kind has been
declared, paid or made by Borrower on any class of its equity interests.
SECTION 4.15 Taxes. Each of the Borrower, each Subsidiary of the Borrower and
Holdings has timely filed (or caused to be filed timely) all federal, material
state and material local tax returns and reports that are required to be filed
by it. All material taxes, assessments, utility charges, fees and other
governmental charges imposed on it have been timely paid (other than those taxes
that it is contesting in good faith and by appropriate proceedings). All such
tax returns are complete and accurate in all material respects. Except for
Permitted Liens, no material tax Lien has been filed, and to the knowledge of
the Borrower and each Guarantor, no claim is being asserted, with respect to any
such taxes, assessments, charges or fees. To the extent any taxes, assessments,
charges and fees are being contested, the Borrower or the applicable Guarantor
has established reserves that are adequate for the payment thereof in conformity
with GAAP.
SECTION 4.16 Investment Company Act. None of the Borrower or any of its
Subsidiaries is an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the United States Investment Company Act of 1940, as amended (the
"Investment Company Act"); none of the Borrower or any of its Subsidiaries is
or, after giving effect to the transactions contemplated by this Agreement, the
other Revolving Loan Documents and the Major Project Documents, will be an
"investment company" as defined in the Investment Company Act of 1940.
SECTION 4.17 ERISA. Either (a) there are no ERISA Plans or Multiemployer Plans
for the Borrower or any ERISA Affiliate thereof or (b) (i) each of the Borrower
and each ERISA
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Affiliate thereof has fulfilled its obligations (if any) under the minimum
funding standards of ERISA and the Code for each ERISA Plan, (ii) each such Plan
is in compliance in all material respects with the currently applicable
provisions of ERISA and the Code and (iii) neither the Borrower nor any ERISA
Affiliate thereof has incurred any liability to the PBGC or an ERISA Plan or
Multiemployer Plan under Title IV of ERISA (other than liability for premiums
due in the ordinary course). None of the assets of the Borrower or any ERISA
Affiliate thereof, constitute assets of an employee benefit plan within the
meaning of 29 C.F.R. Section 2510.3-101. Neither the Borrower nor any Subsidiary
thereof maintains, or has at any point of its existence maintained, any
employee-benefit plans that were subject to ERISA.
SECTION 4.18 Governmental Regulation.
(a) None of the Borrower or any "subsidiary company," as that term is
defined in PUHCA, of the Borrower is, or after giving effect to the borrowing of
any Revolving Loans or the issuance of any Letters of Credit will be, subject to
regulation (i) as a "holding company," a "subsidiary company" of a holding
company or a "public-utility company," as those terms are defined in PUHCA; (ii)
under the Federal Power Act, as amended (the "FPA"), other than (A) as an
"exempt wholesale generator" ("EWG") as that term is defined in PUHCA, that is
subject to regulation as a "public utility" under the FPA, other than as
described in the Bank Book, together with the other documents, certificates and
other writings delivered to the Administrative Agent and the Lenders by or on
behalf of the Borrower or any Guarantor specifically for use in connection with
the transactions contemplated hereby, or (B) as a QF under the Public Utility
Regulatory Policies Act of 1978, as amended ("PURPA"), as contemplated by 18
C.F.R. Section 292.601(c); or (iii) under any state law or regulation with
respect to rates or the financial or organizational regulation of electric
utilities, other than, with respect to Subsidiaries of the Borrower that are
QFs, as contemplated by 18 C.F.R. Section 292.602(c).
(b) Other than as described in the Bank Book, each of the power generation
projects in which the Borrower's Subsidiaries listed on Schedule 4.18(b) (as
such Schedule shall be updated by the Borrower from time to time in connection
with the acquisition or disposition of any Subsidiary thereof) have an interest
meets the requirements under PURPA and the regulations of the Federal Energy
Regulatory Commission (the "FERC") promulgated thereunder, as amended from time
to time, necessary to be a "qualifying cogeneration facility" and/or a
"qualifying small power generation production facility".
(c) Each of the Borrower's Subsidiaries listed on Schedule 4.18(c) (as
such Schedule shall be updated by the Borrower from time to time in connection
with the acquisition or disposition of any Subsidiary thereof; it being
acknowledged that the Borrower shall update Schedule 4.18(b) or 4.18(c) from
time to time such that at all times each Facility owned or leased by the
Borrower or any Subsidiary thereof is set forth on one of such Schedules) (i)
own and/or operate Eligible Facilities within the meaning of Section 32 of
PUHCA, and each such Subsidiary has received a determination from the FERC, not
subject to any pending challenge or appeal, that it is an EWG, within the
meaning of Section 32 of PUHCA; and (ii) other than as described in the Bank
Book, together with the other documents, certificates and other writings
delivered to the Administrative Agent and the Lenders by or on behalf of the
Borrower or any Guarantor specifically for use in connection with the
transactions contemplated hereby or, after the Closing Date, has validly issued
orders from the FERC, not subject to any pending challenge,
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investigation, or proceeding (other than the FERC's generic proceeding initiated
in Docket No. EL01-118-000), (A) authorizing such Subsidiary to engage in
wholesale sales of electricity, ancillary services and, to the extent permitted
under its market-based rate tariff, other services at market-based rates, and
(B) granting such waivers and blanket authorizations as are customarily granted
to entities with market-based rate authority; with respect to each such
Subsidiary, the FERC has not imposed any rate caps or mitigation measures other
than rate caps and mitigation measures generally applicable to similarly
situated marketers or generators selling electricity, ancillary services or
other services at wholesale in the geographic market where such Subsidiary
conducts its business.
(d) Each of the Borrower's Subsidiaries that are participating in the
Texas wholesale electric market has registered with the Texas Public Utilities
Commission ("TPUC"), and the TPUC has not imposed on the Borrower any specific
rate cap or mitigation measures.
(e) Other than as described in the Bank Book, together with the other
documents, certificates and other writings delivered to the Administrative Agent
and the Lenders by or on behalf of the Borrower or any Guarantor specifically
for use in connection with the transactions contemplated hereby, there are no
pending complaints filed with the FERC seeking abrogation or modification of a
contract for the sale of power by the Borrower or any of its Subsidiaries.
SECTION 4.19 Margin Stock, Etc. None of the transactions contemplated by this
Agreement or the other Revolving Loan Documents (including the use of the
proceeds received as a result of such transactions) will violate or result in a
violation of Section 7 of the Exchange Act, or any regulation promulgated
thereunder, including Regulations T, U, and X of the Board of Governors of the
Federal Reserve System.
SECTION 4.20 No Violations or Defaults. As of the Closing Date, neither the
Borrower nor any Subsidiary of the Borrower is in violation of its
organizational documents or in default in the performance or observance of any
material obligation, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other material agreement or instrument
to which it is a party or by which it or any of its properties may be bound.
SECTION 4.21 No Material Adverse Agreements. None of the Borrower or any
Guarantor is party to any agreement which restricts in any material respect the
ability of any Subsidiary of the Borrower to make any payments, directly or
indirectly, to the Borrower by way of dividends, advances, repayments of loans
or advances, reimbursements of management and other intercompany charges,
expenses and accruals or other returns on investments, or restricts in any
material respect the ability of any such Subsidiary to make any payment,
directly or indirectly, to the Borrower, in each case other than (a) this
Agreement or any other Financing Document, (b) the Existing Senior Secured
Credit Facility (to the extent any such prohibitions or restrictions will be
terminated on the Closing Date) or (c) Permitted Liens.
SECTION 4.22 Solvency. As of the Closing Date, the present fair saleable value
of the assets of each of the Borrower and each Subsidiary of the Borrower
exceeds the amount required to pay the probable liability on its existing debts,
respectively (whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent), as they become absolute and matured,
83
and as a result of the consummation of the transactions contemplated herein and
in the Bank Book, will continue to exceed such amount.
SECTION 4.23 Capitalization. As of the Closing Date, each of the Borrower and
each Subsidiary of the Borrower does not, and, as a result of the consummation
of the transactions contemplated in this Agreement, the other Revolving Loan
Documents and the Bank Book, will not, have unreasonably small capital for it to
carry on its business as proposed to be conducted.
SECTION 4.24 Other Indebtedness. As of the Closing Date, neither the Borrower
nor any Subsidiary of the Borrower is incurring obligations or making transfers
under any evidence of indebtedness with the intent to hinder, delay or defraud
any entity to which it is or will become indebted.
SECTION 4.25 Patriot Act Compliance.
(a) Neither the Borrower's borrowing of the Revolving Loans nor its use of
the proceeds thereof will violate in any material respect (i) the United States
Trading with the Enemy Act, as amended, (ii) any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto, (iii) Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by
the President of the United States (Executive Order Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism) (the "Terrorism Order") or (iv) the anti-money laundering provisions
of the Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law
107-56 (October 26, 2001) amending the Bank Secrecy Act, 31 U.S.C. Section 5311
et seq. No part of the proceeds from the Revolving Loans hereunder will be used,
directly or, to the best of the Borrower's and each Subsidiary's knowledge,
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in material violation of the United
States Foreign Corrupt Practices Act of 1977, as amended.
(b) Neither the Borrower nor any Subsidiary (i) is or will become a
"blocked person" as described in Section 1 of the Terrorism Order or (ii) to the
best of the Borrower's and each Subsidiary's knowledge, engages or will engage
in any dealings or transactions, or is otherwise associated, with any such
blocked person.
(c) The Borrower and its Subsidiaries are in compliance in all material
respects with the anti-money laundering provisions of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26,
2001) amended the Bank Secrecy Act, 31 U.S.C. Section 5311 et seq.
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ARTICLE V.
COVENANTS
SECTION 5.1 Reports. Unless the Administrative Agent otherwise consents, the
Borrower shall deliver or cause to be delivered to the Administrative Agent, in
form and detail reasonably satisfactory to the Administrative Agent:
(a) As soon as available and in any event within 60 days after the end of
the first, second and third quarterly accounting periods of each fiscal year of
the Borrower (commencing with the quarter ending March 31, 2004), the unaudited
consolidated financial statements of (i) Calpine and (ii) the Borrower and its
Subsidiaries as of the last day of such quarterly period and the related
statements of income, cash flow, and shareholders' or members' equity (as
applicable) for such quarterly period and for the portion of the fiscal year
ending with the last day of such quarterly period, setting forth in each case in
comparative form corresponding unaudited figures from the preceding fiscal year
(it being acknowledged that such requirement may be satisfied by the delivery of
the appropriate report or Form 10-Q filed with the SEC), all prepared in
accordance with GAAP (subject to changes resulting from audit and normal
year-end adjustments and the absence of footnote disclosure);
(b) As soon as available and in any event within 120 days after the end of
each fiscal year of the Borrower, the audited consolidated financial statements
of (i) Calpine and (ii) the Borrower and its Subsidiaries (it being acknowledged
that such requirement may be satisfied by the delivery of the appropriate report
or Form 10-K filed with the SEC). Such financial statements shall include a
statement of equity, a balance sheet as of the close of such year, an income and
expense statement, reconciliation of capital accounts (where applicable), a
statement of cash flow and summary results of hedging and trading activities,
all prepared in accordance with GAAP and certified by an independent certified
public accountant selected by the Person whose financial statements are being
prepared. Such certificate shall not be qualified or limited because of
restricted or limited examination by such accountant of any material portion of
the records of Calpine or the Borrower or any of its Subsidiaries, as
applicable.
(c) Promptly, upon acquiring notice or giving notice (except as otherwise
specified below), as the case may be, or obtaining knowledge thereof, written
notice (together with copies of any underlying notices, papers, files or related
documentation) of:
(i) any litigation pending or, to the Borrower's or any of its
Subsidiaries' knowledge, threatened in writing against the Borrower or any
of its Subsidiaries involving claims against the Borrower, any Subsidiary
or any Facility in excess of $10,000,000 individually or $25,000,000 in
the aggregate per calendar year or involving any injunctive, declaratory
or other equitable relief, or that otherwise has or could have a Material
Adverse Effect, such notice to include, if requested in writing by the
Administrative Agent, copies of all papers filed in such litigation and to
be given monthly if any such papers have been filed since the last notice
given;
(ii) any casualty, damage or loss, whether or not insured, through
fire, theft, other hazard or casualty, or any act or omission of (a) the
Borrower or any Subsidiary of the Borrower, or any of their employees,
agents, contractors, consultants or
85
representatives in excess of $10,000,000 for any one casualty or loss or
$20,000,000 in the aggregate in any calendar year, or (b) to Borrower's or
any of its Subsidiaries' knowledge, any other Person if such casualty,
damage or loss could reasonably be expected to have a Material Adverse
Effect;
(iii) any cancellation, suspension or material change in the terms,
coverage or amounts of any insurance maintained by the Borrower or any of
its Subsidiaries;
(iv) any material written notices, reports or other information
related to the construction, operation or maintenance of any of the
Facilities delivered to, or received by the Borrower or any Subsidiary of
the Borrower from, the parties to the Major Project Documents;
(v) any contractual obligations (including change orders) incurred
by the Borrower or any Subsidiary of the Borrower exceeding $35,000,000
per year in the aggregate, not including any obligations incurred pursuant
to the Financing Documents or any Project Document or any other obligation
contemplated in the Bank Book;
(vi) any written claim of events of force majeure which exist or
have existed for more than seven consecutive Business Days and which could
reasonably be expected to have a Material Adverse Effect (as determined by
the Borrower in good faith), together with a copy of any supporting
documentation relating thereto delivered or received by the Borrower or
any of its Subsidiaries under any Third Party Project Document or any
other Major Project Document; and
(vii) any ownership transfers of interests in any of the Borrower's
Subsidiaries or the acquisition of any new Subsidiary.
(d) Promptly after the delivery thereof to the First Priority Term Loan
Administrative Agent, Second Priority Term Loan Administrative Agent, First
Priority Indenture Trustee, Second Priority Indenture Trustee, or the Third
Priority Indenture Trustee, the Borrower shall deliver a copy of each report or
notice delivered to the First Priority Term Loan Administrative Agent, Second
Priority Term Loan Administrative Agent, First Priority Indenture Trustee,
Second Priority Indenture Trustee, or the Third Priority Indenture Trustee under
any of the Financing Documents to the Administrative Agent.
SECTION 5.2 Compliance Certificate.
(a) Together with the delivery of each financial statement referred to in
Section 5.1(a) or Section 5.1(b) above, the Borrower shall provide a compliance
certificate of an Officer of the Borrower (who shall be a senior financial
officer of the Borrower) stating that a review of the activities of the Borrower
and its Subsidiaries during the preceding fiscal quarter or year, as applicable,
has been made under the supervision of the signing Officer with a view to
determining whether the Borrower and its Subsidiaries have kept, observed,
performed and fulfilled their obligations under this Agreement, and further
stating, as to the Officer signing such certificate, that to the best of his or
her knowledge the Borrower and its Subsidiaries have kept, observed, performed
and fulfilled each and every covenant contained in this Agreement and is not in
default in the performance or observance of any of the terms, provisions and
conditions of
86
this Agreement (or, if a Default or Event of Default has occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Borrower is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Revolving Loans borrowed under this Agreement is
prohibited or if such event has occurred, a description of the event and what
action the Borrower is taking or proposes to take with respect thereto. Such
certificate shall include the information (in reasonable detail and with
appropriate calculations, supporting information and computations) (i)
demonstrating compliance by the Borrower with Section 5.17 (Coverage Ratio;
Kilowatt Test), Section 5.8 (Transactions with Affiliates), Section 2.1.11
(Mandatory Repayment and Commitment Reductions), Section 5.7 (Asset Sales;
Application of Net Proceeds), Section 5.5 (Dividend and Other Payment
Restrictions Affecting Subsidiaries, and Section 5.6 (Incurrence of Indebtedness
and Issuance of Preferred Equity) during such quarter or year, (ii) calculating
Excess Cash Flow for such quarter or year, and (iii) calculating cumulative
excess Asset Sale and Casualty Event proceeds.
(b) So long as not contrary to the then-current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 5.1(a) (Reports) above shall be
accompanied by a written statement of the Borrower's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Borrower has violated any provisions of Article V or Article VI hereof or, if
any such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) So long as any of the Revolving Loan Obligations are outstanding, the
Borrower shall deliver to the Administrative Agent, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officer's Certificate
specifying such Default or Event of Default and what action the Borrower is
taking or proposes to take with respect thereto.
SECTION 5.3 Stay, Extension and Usury Laws. Each of the Borrower and each
Guarantor covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, that may affect the covenants or the
performance of this Agreement; and each of the Borrower and each Guarantor (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Administrative Agent, but shall suffer and permit the execution of every
such power as though no such law has been enacted.
SECTION 5.4 Restricted Payments.
(a) The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly:
87
(i) (A) declare or pay any dividend or make any other payment or
distribution on account of the Borrower's Equity Interests (including any
payment in connection with any merger or consolidation involving the
Borrower) or to the direct or indirect holders of the Borrower's Equity
Interests in their capacity as such, including Permitted Tax Payments
(other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Borrower or dividends or distributions
payable to the Borrower or a Guarantor) or (B) pay any Major Maintenance
Expenses;
(ii) purchase, redeem or otherwise acquire or retire for value
(including in connection with any merger or consolidation involving the
Borrower) any Equity Interests of the Borrower;
(iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Subordinated
Indebtedness or any other Indebtedness of the Borrower or any of its
Subsidiaries that is contractually subordinated to the Secured Obligations
(excluding any intercompany Indebtedness between or among the Borrower and
any of the Guarantors); or
(iv) make any Restricted Investment;
(all such payments and other actions set forth in these clauses (i) through (iv)
above being collectively referred to as "Restricted Payments"), unless:
(A) such Restricted Payment is made from Excess Cash Flow
generated since the Closing Date;
(B) no Default or Event of Default has occurred and is
continuing or would occur as a consequence of such Restricted
Payment (other than any Default or Event of Default that is cured as
a result of such Restricted Payment); and
(C) at the time of making any such Restricted Payment that is
not a payment on or with respect to, or a purchase, redemption,
defeasance or other acquisition or retirement for value of,
Subordinated Indebtedness, all amounts then due under all
Subordinated Indebtedness have been paid in full.
SECTION 5.5 Dividend and Other Payment Restrictions Affecting Subsidiaries.
(a) The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Subsidiary to:
(i) pay dividends or make any other distributions on its Capital
Stock to the Borrower or any of its Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to the Borrower or any of its Subsidiaries;
(ii) make loans or advances to the Borrower or any of its
Subsidiaries; or
88
(iii) transfer any of its properties or assets to the Borrower or
any of its Subsidiaries.
However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(A) this Agreement;
(B) the Term Loan Agreements, the Indentures and the Notes and
any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the Term
Loan Agreements, the Indentures and the Notes; provided, that the
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are not
materially more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in the
Term Loan Agreements, the Indentures and the Notes on the Closing
Date;
(C) any applicable Legal Requirements;
(D) customary non-assignment provisions in contracts,
agreements, leases, permits or licenses entered into or issued in
the ordinary course of business and consistent with past practices;
(E) purchase money obligations for property acquired in the
ordinary course of business and Capital Lease Obligations that
impose restrictions on the property purchased or leased of the
nature described in clauses (i) and (iii) of the preceding
paragraph;
(F) any agreement for the sale or other disposition of a
Subsidiary that restricts distributions by that Subsidiary pending
the sale or other disposition;
(G) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not materially more restrictive, taken
as a whole, than those contained in the agreements governing the
Indebtedness being refinanced;
(H) Liens securing Indebtedness otherwise permitted to be
incurred under the provisions of Section 5.6 (Incurrence of
Indebtedness and Issuance of Preferred Equity) hereof that limit the
right of the debtor to dispose of the assets subject to such Liens
or to use the proceeds of any such disposition;
(I) provisions limiting or prohibiting the disposition or
distribution of assets or property in joint venture agreements,
asset sale agreements, sale-leaseback agreements, stock sale
agreements and other similar agreements entered into with the
approval of the Borrower's Board of Directors, which limitation or
prohibition is applicable only to the assets that are the subject of
such agreements;
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(J) provisions restricting cash or other deposits or net worth
imposed by customers or suppliers under contracts entered into in
the ordinary course of business; and
(K) provisions restricting or encumbering the sale or other
disposition of Expansion Assets or the payment of dividends,
distributions or similar payments made from cash flow derived
exclusively from Expansion Assets, in each case pursuant to the
terms of any Expansion Debt incurred pursuant to clause (iv) of the
definition of Permitted Debt; provided, that such encumbrance or
restriction will not materially adversely affect the Borrower's
ability to meet its obligations under this Agreement, and, in the
written opinion of the president, chief operating officer or chief
financial officer of the Borrower, is required in order to obtain
such Expansion Debt and is customary for financings of such type.
SECTION 5.6 Incurrence of Indebtedness and Issuance of Preferred Equity.
(a) The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Borrower shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred equity.
(b) Section 5.6(a) shall not prohibit the incurrence of any of the
following items (collectively, "Permitted Debt"):
(i) (A) the incurrence by the Borrower (and the guarantee by its
Subsidiaries) of Indebtedness and letters of credit under Credit
Facilities in an aggregate principal amount at any one time outstanding
under this clause (i)(A) (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Borrower
and its Subsidiaries thereunder) not to exceed $800,000,000 less the
aggregate amount of all Net Proceeds of Asset Sales, Casualty Events or
Condemnation Events applied by the Borrower or any of its Subsidiaries
since the Closing Date to repay any term Indebtedness under any such
Credit Facilities or to repay, or cash collateralize letters of credit
under, any revolving Indebtedness under any such Credit Facilities and
effect a corresponding commitment reduction thereunder, and (B) the
incurrence by the Borrower (and the guarantee by its Subsidiaries) of
Indebtedness and letters of credit under Credit Facilities in an aggregate
principal amount outstanding under this clause (i)(B) (with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Borrower and its Subsidiaries thereunder) not
to exceed $100,000,000 less the aggregate amount of all Net Proceeds of
Asset Sales, Casualty Events and Condemnation Events applied by the
Borrower or any of its Subsidiaries since the Closing Date to repay any
term Indebtedness under any such Credit Facility or to repay, or cash
collateralize letters of credit under, any revolving Indebtedness under
any such Credit Facility and effect a corresponding commitment reduction
thereunder;
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(ii) the incurrence by the Borrower, CalGen Finance and the
Guarantors of Indebtedness represented by the Notes, the related Note
Guarantees and the other Note Obligations incurred on the Closing Date,
and the exchange notes and the related Note Guarantees to be issued
pursuant to the Registration Rights Agreement;
(iii) the incurrence by the Borrower or any of its Subsidiaries of
Expansion Debt; provided, that:
(A) any Expansion Debt incurred by the Excluded Subsidiary is
recourse only to the Expansion Assets financed with such Expansion
Debt and to other Expansion Assets owned by the Excluded Subsidiary
(including any rights of the Excluded Subsidiary under Shared
Facilities Arrangements);
(B) if the Fixed Charge Coverage Ratio for the Borrower's most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on
which the Expansion Debt is incurred would have been at least 2.0 to
1.0, determined on a Pro Forma basis as if the Expansion Debt had
been incurred at the beginning of such period and the proceeds
therefrom had been applied as intended to be applied (but without
giving effect to the completion of any construction projects unless
actual completion has been achieved), at least 25% of the cost of
such Expansion Assets is financed with Equity Contributions or the
proceeds of Perpetual Preferred Stock or Affiliate Subordinated
Indebtedness;
(C) if the Fixed Charge Coverage Ratio for the Borrower's most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on
which the Expansion Debt is incurred would have been less than 2.0
to 1.0, determined on a Pro Forma basis as if the Expansion Debt had
been incurred at the beginning of such period and the proceeds
therefrom had been applied as intended to be applied (but without
giving effect to the completion of any construction projects unless
actual completion has been achieved);
(1) at least 40% of the cost of such Expansion Assets is
financed with Equity Contributions or the proceeds of
Perpetual Preferred Stock or Affiliate Subordinated
Indebtedness; and
(2) after giving effect to such incurrence, the amount
of Expansion Debt incurred pursuant to this clause (iii),
together with the aggregate amount of all other Expansion Debt
then outstanding, including all Permitted Refinancing
Indebtedness incurred to renew, refund, refinance, replace,
defease or discharge any Expansion Debt incurred pursuant to
this clause (iii), does not exceed $250,000,000;
(iv) the incurrence by the Borrower or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace, Indebtedness (other than
intercompany Indebtedness) that
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was permitted by this Agreement to be incurred under clauses (ii), (iii),
(iv) or (x) of this Section 5.6(b);
(v) the incurrence by the Borrower or any Guarantor of intercompany
Indebtedness between or among the Borrower and any Guarantors that is
subordinated in right of payment to all Secured Obligations on the terms
set forth on Exhibit A hereto and is not secured other than by unperfected
security interests; provided, however, that (A) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Borrower or a Guarantor and (B) any sale
or other transfer of any such Indebtedness to a Person that is not either
the Borrower or a Guarantor will be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Borrower or such Guarantor, as the
case may be, that was not permitted by this clause (v); and provided,
further, that any such intercompany Indebtedness must be included in the
Collateral;
(vi) the incurrence by the Borrower or any of its Subsidiaries of
Hedging Obligations, in connection with Permitted Debt or otherwise, in
the ordinary course of business and not for speculative purposes;
provided, that (A) such Hedging Obligations will have tenors that expire
on or prior to the maturity date (or other expiration) of the underlying
Obligation being hedged, and (B) any such Hedging Obligations hedging or
managing interest rate risk with respect to a particular series of Notes
or loans under the Term Loan Agreements or this Agreement will have tenors
that expire on or prior to the Stated Maturity of the applicable Notes or
loans;
(vii) the incurrence by the Borrower or any of its Subsidiaries of
Indebtedness in respect of workers' compensation claims, self-insurance
obligations, bankers' acceptances, and performance and surety bonds in the
ordinary course of business;
(viii) the incurrence by the Borrower or any of its Subsidiaries of
Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn
against insufficient funds, so long as such Indebtedness is covered within
five Business Days;
(ix) the incurrence by the Borrower of (a) Affiliate Subordinated
Indebtedness in an aggregate principal amount not to exceed $250,000,000
at any one time outstanding and (b) Working Capital Facility Indebtedness
in an aggregate principal amount not to exceed $750,000,000 at any one
time outstanding; and
(x) the incurrence by the Borrower of Third Party Subordinated
Indebtedness; provided, that:
(A) the Net Proceeds of the Third Party Subordinated
Indebtedness are applied:
(1) to acquire all or substantially all of the assets
of, or any Equity Interests in, a business that constitutes a
Permitted Business, provided, that in the case of an
acquisition of Equity Interests, the business
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is or becomes a Subsidiary of the Borrower and a Guarantor
concurrently with such acquisition;
(2) to make a capital expenditure;
(3) to acquire other assets that are not classified as
current assets under GAAP and that are used or useful in a
Permitted Business; or
(4) any combination of the foregoing; and
(B) the Fixed Charge Coverage Ratio for the Borrower's most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on
which the Third Party Subordinated Indebtedness is incurred would
have been at least 2.0 to 1.0, determined on a Pro Forma basis as if
the Third Party Subordinated Indebtedness had been incurred at the
beginning of such period and the proceeds therefrom had been applied
as intended to be applied (but without giving effect to the
completion of any construction projects unless actual completion has
been achieved).
(c) The Borrower shall not incur, and shall not permit any Subsidiary to
incur, any Indebtedness (including Permitted Debt) that is contractually
subordinated in right of payment to any other Indebtedness of the Borrower or
such Subsidiary unless such Indebtedness is also contractually subordinated in
right of payment to the Revolving Loans, the applicable Revolving Loan
Guarantees and the other Revolving Loan Obligations on substantially identical
terms or on terms that are more favorable to the Lenders hereunder; provided,
however, that no Indebtedness will be deemed to be contractually subordinated in
right of payment to any other Indebtedness of the Borrower or any of its
Subsidiaries solely by virtue of being unsecured or by virtue of being secured
on a junior basis.
(d) For purposes of determining compliance with this Section 5.6, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (x) of
Section 5.6(b), the Borrower will be permitted to classify such item of
Indebtedness on the date of its incurrence, or later reclassify all or a portion
of such item of Indebtedness, in any manner that complies with this Section 5.6.
The accrual of interest, the accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
will not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Stock for purposes of this Section 5.6. Notwithstanding any other
provision of this Section 5.6, the maximum amount of Indebtedness that the
Borrower or any Subsidiary may incur pursuant to this Section 5.6 shall not be
deemed to be exceeded solely as a result of fluctuations in exchange rates or
currency values.
SECTION 5.7 Asset Sales; Application of Net Proceeds.
(a) Asset Sales. The Borrower shall not, and shall not permit any of its
Subsidiaries to, consummate an Asset Sale unless:
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(i) except with respect to an Asset Sale made pursuant to the
Existing Purchase Option, the Borrower (or any of its Subsidiaries, as the
case may be) receives consideration at the time of the Asset Sale at least
equal to the Fair Market Value of the assets or Equity Interests issued or
sold or otherwise disposed of;
(ii) at least 90% of the consideration received in the Asset Sale by
the Borrower or such Subsidiary is in the form of cash. For purposes of
this provision, each of the following shall be deemed to be cash:
(A) any liabilities, as shown on the Borrower's most recent
consolidated balance sheet, of the Borrower or any of its
Subsidiaries (other than contingent liabilities and liabilities that
are by their terms subordinated to the Revolving Loans and the
Revolving Loan Guarantees) that are assumed by the transferee of any
such assets pursuant to a customary novation or similar agreement
that releases the Borrower or such Subsidiary from further
liability;
(B) any securities, notes or other obligations received by the
Borrower or any such Subsidiary from such transferee that are
promptly, subject to ordinary settlement periods, converted by the
Borrower or such Subsidiary into cash, to the extent of the cash
received in that conversion; and
(C) in connection with the exercise by a purchaser of an
Existing Purchase Option, any amount owed by the Borrower or the
applicable Subsidiary to the purchaser under the agreement
containing such Existing Purchase Option that is set off by the
purchaser against the purchase price;
(iii) if the assets disposed of in such Asset Sale include any
component of a Facility that is necessary for the operation of such
Facility, the Asset Sale involves the disposition of such Facility as a
whole; and
(iv) if the Asset Sale involves the sale of a Facility or all or
substantially all the assets of a Facility, (A) such Asset Sale is to a
Person other than an Affiliate of the Borrower, and (B) all necessary and
appropriate amendments are made to those Major Project Documents
applicable to such Facility to remove such Facility from the scope of such
Major Project Documents.
(b) Application of Net Proceeds from First Asset Sale and Second Asset
Sale. The Borrower (or the applicable Subsidiary, as the case may be) shall
apply the Net Proceeds from the first and the second Asset Sale to occur (other
than any Asset Sale relating to the Facility owned or operated by Delta Energy
Center, LLC or Los Medanos Energy Center, LLC, the Net Proceeds of which shall
be applied under Section 5.7(c) below), as follows:
(i) to the lenders under the First Priority Term Loan Agreement and
all holders of First Priority Notes (to the extent required under the
applicable First Priority Lien Documents), to purchase, prepay or redeem
the maximum principal amount of such First Priority Lien Obligations that
may be purchased, prepaid or redeemed out of such Net Proceeds (taking
into account any mandatory prepayment or redemption of First Priority Lien
Obligations required under any First Priority Lien Document);
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(ii) if any such Net Proceeds remain after the offer (and, if
applicable, reoffer) to holders of First Priority Lien Obligations (and
any mandatory purchase, prepayment or redemption of First Priority Lien
Obligations) in accordance with clause (i) above, to all holders of the
Second Priority Lien Obligations (to the extent required under the
applicable Second Priority Lien Documents), to purchase, prepay or redeem
the maximum principal amount of such Second Priority Lien Obligations that
may be purchased, prepaid or redeemed out of such remaining Net Proceeds
(taking into account any mandatory purchase, prepayment or redemption of
Second Priority Lien Obligations required under any Second Priority Lien
Document); and
(iii) if any such Net Proceeds remain after the offer (and, if
applicable, reoffer) to holders of Second Priority Lien Obligations (and
any mandatory purchase, prepayment or redemption of Second Priority Lien
Obligations) in accordance with clauses (i) and (ii) above, to all holders
of the Third Priority Lien Obligations (to the extent required under the
applicable Third Priority Lien Documents), to purchase, prepay or redeem
the maximum principal amount of such Third Priority Lien Obligations that
may be purchased, prepaid or redeemed out of such remaining Net Proceeds
(taking into account any mandatory purchase, prepayment or redemption of
Third Priority Lien Obligations required under any Second Third Lien
Document).
For the avoidance of doubt, the Lenders under this Agreement shall not be
entitled to receive any Net Proceeds under this Section 5.7(b).
(c) Application of Other Net Proceeds. Other than the Net Proceeds to be
applied under Section 5.7(b), the Borrower (or the applicable Subsidiary, as the
case may be) shall apply the Net Proceeds from each Asset Sale, Casualty Event
or Condemnation Event, as follows:
(i) to the Lenders under this Agreement and all other holders of the
First Priority Lien Obligations (to the extent required under the
applicable First Priority Lien Documents), to purchase, prepay or redeem
the maximum principal amount of such First Priority Lien Obligations that
may be purchased, prepaid or redeemed out of such Net Proceeds (taking
into account any mandatory purchase, prepayment or redemption of First
Priority Lien Obligations required under any First Priority Lien
Document);
(ii) if any such Net Proceeds remain after the offer (and, if
applicable, reoffer) to holders of First Priority Lien Obligations (and
any mandatory purchase, prepayment or redemption of First Priority Lien
Obligations) in accordance with clause (i) above, to all holders of the
Second Priority Lien Obligations (to the extent required under the
applicable Second Priority Lien Documents), to purchase, prepay or redeem
the maximum principal amount of such Second Priority Lien Obligations that
may be purchased, prepaid or redeemed out of such remaining Net Proceeds
(taking into account any mandatory purchase, prepayment or redemption of
Second Priority Lien Obligations required under any Second Priority Lien
Document); and
(iii) if any such Net Proceeds remain after the offer (and, if
applicable, reoffer) to holders of Second Priority Lien Obligations (and
any mandatory purchase, prepayment or redemption of Second Priority Lien
Obligations) in accordance with clauses (i) and (ii)
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above, to all holders of the Third Priority Lien Obligations (to the
extent required under the applicable Third Priority Lien Documents), to
purchase, prepay or redeem the maximum principal amount of such Third
Priority Lien Obligations that may be purchased, prepaid or redeemed out
of such remaining Net Proceeds (taking into account any mandatory
purchase, prepayment or redemption of Third Priority Lien Obligations
required under any Third Priority Lien Document).
The Borrower is required to and shall prepay the Revolving Loans within 30 days
of the receipt of any such Net Proceeds under this Section 5.7(c), in the order
of priority and in the manner provided for in Section 5.7(c)(i) above and in
Section 2.1.11.
(d) Excess Proceeds; Pro Rata Basis. In the event that any Net Proceeds
from an Asset Sale, Casualty Event or Condemnation Event remain after the
Borrower has made the prepayments in accordance with Section 2.1.11 (Mandatory
Repayments and Commitment Reductions) and the Term Loan Agreements and such Net
Proceeds have otherwise been applied in accordance with clause (b) and (c)
above, then the Borrower may use such remaining Net Proceeds for any purpose not
otherwise prohibited by the Financing Documents, including the making of
Restricted Payments. If the aggregate principal amount of all Secured
Obligations having the same priority that are to be prepaid under clauses (b) or
(c) above exceeds the amount of Net Proceeds available therefor, then the
Borrower will repurchase, repay or redeem the Secured Obligations, pro rata
based on the aggregate principal amount of all of such Secured Obligations to be
prepaid.
SECTION 5.8 Transactions with Affiliates.
(a) The Borrower shall not, and shall not permit any of its Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate of the Borrower
(each, an "Affiliate Transaction"), unless:
(i) the Affiliate Transaction, taken as a whole with all other
related Affiliate Transactions, is on terms that are no less favorable to
the Borrower and its Subsidiaries, taken as a whole, than those that would
have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated Person; and
(ii) the Borrower delivers to the Administrative Agent (other than
with respect to a Shared Facilities Arrangement between or among only the
Borrower and/or any of its Subsidiaries):
(A) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $10,000,000 but less than or equal to $25,000,000, a
resolution of the Board of Directors set forth in an Officer's
Certificate certifying that such Affiliate Transaction complies with
this Section 5.8 and that such Affiliate Transaction has been
approved by a majority of the Board of Directors; and
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(B) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $25,000,000, a positive opinion as to the Fair Market
Value of such Affiliate Transaction issued by an accounting,
appraisal or investment banking firm of national standing.
(b) The following items shall not be deemed to be Affiliate Transactions
and, therefore, shall not be subject to the provisions of Section 5.8(a):
(i) any employment agreement, employee benefit plan, officer and
director indemnification agreement or any similar arrangement entered into
by the Borrower or any of its Subsidiaries in the ordinary course of
business;
(ii) transactions between or among the Borrower and/or any of the
Guarantors (other than Shared Facilities Arrangements);
(iii) transactions with a Person that is an Affiliate of the
Borrower (but not a Subsidiary of the Borrower) solely because the
Borrower owns, directly or through a Subsidiary, an Equity Interest in, or
controls, such Person;
(iv) payment of reasonable directors' fees to Persons who are not
otherwise Affiliates of the Borrower;
(v) any issuance of Equity Interests (other than Disqualified Stock)
of the Borrower to Affiliates of the Borrower; provided that such Equity
Interests are included in the Collateral;
(vi) Restricted Payments that do not violate the provisions of this
Agreement as described in Section 5.4 (Restricted Payments);
(vii) loans or advances to employees in the ordinary course of
business not to exceed $1,000,000 in the aggregate at any one time
outstanding;
(viii) Permitted Tax Payments;
(ix) transactions under or pursuant to written agreements with
Affiliates of the Borrower in place as of the date of this Agreement or
any amendment or modification thereto, so long as any such amendment or
modification meets the requirements of clause (x) or (xi) of this Section
5.8(b);
(x) any amendments or modifications of, or waivers under, any
written agreement described under clause (ix) of this 5.8(b) that is not a
Major Project Document; provided that no such amendment, modification or
waiver alters any such agreement in a manner than is materially adverse to
the interests of the Lenders;
(xi) any amendments or modifications of, or waivers under, any Major
Project Document, which are permitted by Section 5.10(b) (Business
Activities) and are on terms that are no less favorable to the Borrower or
its relevant Subsidiary (as certified to the
97
Administrative Agent in an Officer's Certificate) than those that would
have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated Person; and
(xii) any agreement to do any of the foregoing.
SECTION 5.9 Liens. The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired, except
Permitted Liens.
SECTION 5.10 Business Activities.
(a) The Borrower shall not, and shall not permit any of its Subsidiaries
to, engage in any business other than Permitted Businesses, except to such
extent as would not be material to the Borrower and its Subsidiaries taken as a
whole.
(b) The Borrower shall, and shall cause its Subsidiaries to, perform all
their obligations under the Major Project Documents, and the Borrower shall not,
and shall not permit any of its Subsidiaries to, terminate, amend or otherwise
modify, or consent to any termination, amendment or modification of, or grant
any waiver under, any Major Project Document, unless any failure to so perform
or any such termination, amendment, modification or waiver would not, when taken
together with all other such failures to perform, terminations, amendments,
modifications and waivers since the Closing Date, be Materially Adverse, as
evidenced by a certificate of the chief financial officer of the Borrower;
provided, however, that the provisions of this paragraph will not apply to any
amendment, modification or termination of any Major Project Document required
under this Agreement in connection with an Asset Sale.
(c) The Borrower shall, and shall cause its Subsidiaries to, obtain and
maintain all permits and approvals necessary for the construction and operation
of the Facilities, including applicable exemptions from PUHCA, unless the
failure to do so would not reasonably be expected to have a Material Adverse
Effect.
(d) The Borrower shall not, and shall not permit any of its Subsidiaries
to, use or dispose of any hazardous materials or allow any hazardous materials
to be brought onto or stored or used on or transported to or released from the
Facilities, other than in accordance with prudent industry practices and in
compliance with all applicable Environmental Laws, except to the extent such
non-compliance, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(e) Notwithstanding anything to the contrary herein, the Borrower shall
not, and shall not permit any of its Subsidiaries to, enter into any contract
monetization, contract buy-out or similar transactions.
SECTION 5.11 Payments for Consent. The Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any holder of any Revolving Loan or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of any Revolving Loan Document unless such consideration is offered to be paid
and is paid to all Lenders that consent, waive or agree to
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amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
SECTION 5.12 Restrictions on Activities of CalGen Finance. The Borrower shall
not permit CalGen Finance to hold any material assets, become liable for any
material obligations or engage in any significant business activities; provided
that, notwithstanding anything to the contrary contained herein, CalGen Finance
may be a co-obligor or guarantor with respect to Indebtedness if the Borrower is
an obligor on such Indebtedness and the net proceeds of such Indebtedness are
received by the Borrower, CalGen Finance or one or more of the Borrower's other
Subsidiaries.
SECTION 5.13 Additional Subsidiaries. If the Borrower or any of its Subsidiaries
acquires or creates another Subsidiary after the Closing Date, then (a) that
newly acquired or created Subsidiary will (i) become a Guarantor hereunder, (ii)
if such Subsidiary's assets and property consist solely of its ownership
interests in any Guarantor, become a Holding Company hereunder and (iii) deliver
or cause to be delivered an opinion of counsel reasonably satisfactory to the
Administrative Agent within 30 days of the date on which it was acquired or
created, and (b) all real and personal property of that Subsidiary will become
part of the Collateral within 30 days of the date on which that Subsidiary was
acquired or created pursuant to documentation (including security documents,
financing statements, opinions and other documents) reasonably satisfactory to
the Administrative Agent and the Collateral Agent.
SECTION 5.14 Limitation on Issuances and Sales of Equity Interests in
Subsidiaries.
(a) The Borrower shall not, and shall not permit any of its Subsidiaries
to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests
in any Subsidiary of the Borrower to any Person (other than the Borrower or a
Guarantor), unless:
(i) such transfer, conveyance, sale, lease or other disposition is
of all the Equity Interests in such Subsidiary; and
(ii) the Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with Section 5.7 (Asset Sales;
Application of Net Proceeds).
(b) The Borrower shall not permit any of its Subsidiaries to issue any
Equity Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Borrower or a Guarantor.
SECTION 5.15 Deposit of Revenues. The Borrower shall, and shall cause its
Subsidiaries to, deposit all revenues received by the Borrower and its
Subsidiaries, within 10 Business Days of receipt thereof, in the Revenue
Account.
SECTION 5.16 Maintenance of Insurance. The Borrower shall, and shall cause its
Subsidiaries to, maintain with financially sound and reputable insurance
companies, insurance on their property, including the Collateral, in at least
such amounts, with such deductibles and against at least such risks as is
customary for companies of the same or similar size engaged in the same or
similar businesses as those of the Borrower and its Subsidiaries and furnish to
the Administrative Agent, upon written request, full information as to such
Persons' property and
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liability insurance carriers. The Borrower shall, and shall cause its
Subsidiaries to, cause all their insurance policies to name the Lenders, as a
class, as additional insureds with waiver of subrogation and shall cause all
its, and its Subsidiaries', property and casualty policies to name the
Collateral Agent as loss payee (together with other lien holders as their
interests may appear), with the right to receive 30 days notice of any
cancellation of or material change in such insurance policies.
SECTION 5.17 Coverage Ratio; Kilowatt Test.
(a) Consolidated Interest Coverage Ratio. As of the last day of each
fiscal quarter of the Borrower, the Borrower shall cause the Consolidated
Interest Coverage Ratio of the Borrower and its Subsidiaries to be equal to or
greater than 1.25:1.0.
(b) Consolidated First and Second Priority Lien Debt to Kilowatt Test. As
of the last day of each fiscal quarter of the Borrower, the Borrower shall cause
the ratio of (a) the aggregate outstanding principal amount of First Priority
Term Loans, First Priority Notes, Revolving Loans, Second Priority Term Loans
and Second Priority Notes, to (b) the combined Estimated Peak Capacity of all
the Facilities (including all Facilities in operation and under construction)
owned by the Borrower and its Subsidiaries (expressed in kilowatts) to be equal
to or less than $235 per kilowatt.
SECTION 5.18 Further Assurances. The Borrower and each Guarantor shall perform
such reasonable acts as may be necessary to carry out the intent of this
Agreement and the other Revolving Loan Documents promptly after written request
by the Administrative Agent.
SECTION 5.19 Commercial Operations. The Borrower shall cause (a) the Columbia
Facility to achieve Commercial Operation on or before April 5, 2005; (b) phase
one of the Pastoria Facility to achieve Commercial Operation on or before
September 1, 2005; (c) phase two of the Pastoria Facility to achieve Commercial
Operation on or before September 1, 2006; and (d) the Goldendale Facility to
achieve Commercial Operation on or before August 1, 2005.
SECTION 5.20 Compliance with Law. The Borrower shall, and shall cause its
Subsidiaries to, comply with all applicable Legal Requirements, except to the
extent that any such noncompliance would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 5.21 Inspection Rights. Upon the request of the Administrative Agent,
the Borrower and its Subsidiaries will permit the Administrative Agent or any of
the Lenders to visit and inspect any of the Collateral and examine and make
abstracts from any of its books and records relating to the Collateral at any
reasonable time and as often as may be reasonably requested (it being
acknowledged that (a) the costs and expenses of the Administrative Agent and the
Lenders incurred in connection with any such visits, inspections and
examinations shall be borne solely by the Administrative Agent or the applicable
Lender (as the case may be), unless a Default or Event of Default shall have
occurred and be continuing, in which case such costs and expenses shall be borne
solely by the Borrower, and (b) nothing in this Section 5.21 shall limit the
Collateral Agent's rights under the Collateral Trust Agreement).
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SECTION 5.22 Suspension of Certain Covenants. In the event that from time to
time, after giving effect to the suspension of covenants and the event of
default provided for in this Section 5.20, the Third Priority Fixed Rate Notes
and the Third Priority Floating Rate Notes are rated Baa3 or better by ▇▇▇▇▇'▇
and BBB- or better by S&P, then the covenants contained in Section 5.4
(Restricted Payments), Section 5.5 (Dividend and Other Payment Restrictions
Affecting Subsidiaries), Section 5.6 (Incurrence of Indebtedness and Issuance of
Preferred Equity), Section 5.10 (Business Activities), Section 5.15 (Deposit of
Revenues) and Section 7.1(j) shall be suspended. In the event that, at any time,
neither the Third Priority Fixed Rate Notes nor the Third Priority Floating Rate
Notes are rated Baa3 or better by ▇▇▇▇▇'▇ and BBB- or better by S&P, the
covenants and event of default contained in such Sections shall be reinstated.
ARTICLE VI.
SUCCESSORS
SECTION 6.1 Merger, Consolidation, or Sale of Assets.
(a) The Borrower shall not, directly or indirectly: (i) consolidate or
merge with or into another Person (whether or not the Borrower is the surviving
entity); (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Borrower and its
Subsidiaries taken as a whole, in one or more related transactions, to another
Person; or (iii) lease all or substantially all of its properties or assets, in
one or more related transactions, to any other Person; provided, however, that
the foregoing shall not apply to:
(i) a merger of the Borrower with an Affiliate solely for the
purpose of reconstituting the Borrower in another jurisdiction; or
(ii) any sale, transfer, assignment, conveyance, lease or
other disposition of assets between or among the Borrower and the
Guarantors.
(b) Notwithstanding the foregoing, the Borrower is permitted to
reorganize as a corporation or a limited liability company in accordance with
the procedures established in this Agreement, provided that the Borrower shall
have delivered to the Administrative Agent an Opinion of Counsel in the United
States reasonably acceptable to the Administrative Agent confirming that such
reorganization is not adverse to the Lenders (it being recognized that such
reorganization shall not be deemed adverse to the Lenders solely because (i) of
the accrual of deferred tax liabilities resulting from such reorganization or
(ii) the successor or surviving corporation (A) is subject to income tax as a
corporate entity or (B) is considered to be an "includable corporation" of an
affiliated group of corporations within the meaning of the Code or any similar
state or local law).
SECTION 6.2 Successor Corporation Substituted. Upon any consolidation or merger,
or any sale, assignment, transfer, lease, conveyance or other disposition of all
or substantially all of the assets of the Borrower in a transaction that is
subject to, and that complies with the provisions of, Section 6.1 (Merger,
Consolidation, or Sale of Assets), the successor corporation formed by such
consolidation or into or with which the Borrower is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other
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disposition, the provisions of this Agreement referring to the "Borrower" shall
refer instead to the successor corporation and not to the Borrower), and may
exercise every right and power of the Borrower under this Agreement with the
same effect as if such successor Person had been named as the Borrower herein;
provided, however, that the predecessor Borrower shall not be relieved from the
obligation to pay the principal of and interest on or other amounts in respect
of the Revolving Loans.
ARTICLE VII.
DEFAULTS AND REMEDIES
SECTION 7.1 Events of Default.
Each of the following is an "Event of Default":
(a) default for 5 days in the payment when due of interest or fees on
the Revolving Loans;
(b) default in payment when due of the principal of, or premium, if
any, on the Revolving Loans;
(c) the occurrence of a Change of Control;
(d) failure by the Borrower or any of its Subsidiaries to comply with
Section 5.7 (Asset Sales; Application of Net Proceeds) or 5.15 (Deposit of
Revenues);
(e) failure by Holdings, the Borrower or any of its Subsidiaries for 30
days after written notice from the Administrative Agent or the Lenders holding
at least 50% in outstanding aggregate principal amount of the Revolving Loans
then outstanding to comply with any of the agreements in this Agreement or the
other Revolving Loan Documents;
(f) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Borrower or any of its Subsidiaries (or
the payment of which is guaranteed by the Borrower or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of this Agreement, if that default:
(i) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default
(a "Payment Default"); or
(ii) results in the acceleration of such Indebtedness prior to
its express maturity,
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$25,000,000 or more, and such default shall not have been cured or waived or any
such acceleration rescinded, or such Indebtedness repaid, within 20 days of the
Borrower or the applicable Subsidiary becoming aware of such default;
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(g) failure by the Borrower or any of its Subsidiaries to pay final
judgments aggregating in excess of $25,000,000 (excluding those covered by
insurance), which judgments are not paid, discharged or stayed for a period of
60 days;
(h) the repudiation by Holdings, the Borrower or any of its
Subsidiaries of any of its obligations under the Security Documents or the
unenforceability of the Security Documents against Holdings, the Borrower or any
of its Subsidiaries for any reason; provided that such repudiation or
unenforceability relates to Collateral having a Fair Market Value of $25,000,000
or more;
(i) except as permitted by this Agreement, any Revolving Loan Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Revolving Loan Guarantee, and such condition shall not
have been cured within 30 days after written notice from the trustee or the
holders of at least 50% in aggregate principal amount of outstanding Revolving
Loans;
(j) breach by any Person (other than the Borrower or any of its
Subsidiaries) of its obligations under, or termination or failure to be in full
force and effect of, a Major Project Document (unless such breach, termination
or failure to be in full force and effect would not, when taken together with
all other such breaches, terminations or failures since the date of this
Agreement (other than those that have been cured as contemplated below,
including by entering into a replacement agreement), be Materially Adverse, as
evidenced by a certificate of the chief financial officer of the Borrower),
unless with respect to any Major Project Document such breach is cured, or such
Major Project Document is replaced with a substantially similar agreement (it
being understood that an agreement will be considered substantially similar if
it would not be Materially Adverse), within 60 days thereafter (or 120 days with
respect to the Interest Hedge); and
(k) the Borrower, any of its Subsidiaries that is a Significant
Subsidiary or any group of Subsidiaries that, taken together would constitute a
Significant Subsidiary, suffer a Bankruptcy Event.
SECTION 7.2 Acceleration. In the case of an Event of Default specified in clause
(k) of Section 7.1 (Events of Default), with respect to the Borrower or any of
its Subsidiaries, the outstanding Revolving Loans and Reimbursement Obligations
shall become due and payable immediately without further action or notice. If
any other Event of Default occurs and is continuing, the Administrative Agent or
the Requisite Lenders may declare all the Revolving Loans and Reimbursement
Obligations to be due and payable immediately. Upon any such declaration, the
Revolving Loans and Reimbursement Obligations shall become due and payable
immediately.
SECTION 7.3 Other Remedies.
(a) Subject to the Collateral Trust Agreement, if an Event of Default
occurs and is continuing, the Administrative Agent may pursue any available
remedy to collect the payment of
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principal, premium, if any, and interest on the Revolving Loan Obligations or to
enforce the performance of this Agreement and any other Revolving Loan Document.
(b) The Administrative Agent may maintain a proceeding even if it does
not possess any of the Revolving Loan Obligations. A delay or omission by the
Administrative Agent or any Lender in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
(c) Upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent may cancel all or any portion of the Total
Commitment and each Lender's Revolving Loan Commitment; further, the
Administrative Agent, the LC Bank and the Lenders shall not be obligated to
continue any Revolving Loans, make any additional Revolving Loans, issue, renew,
extend or increase the Stated Amount of any Letter of Credit, or make any
payments, or permit the making of payments, from any account or any proceeds or
other funds held by the Administrative Agent under the Revolving Loan Documents
or on behalf of the Borrower.
(d) Upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent may maintain in a cash collateral account, for
payment of any Reimbursement Obligations or interest thereon (in each case, in
whole or in part) arising in connection with any outstanding Letter of Credit,
an amount of cash equal to the Stated Amount of each such Letter of Credit (plus
accrued interest on the amounts in such account).
SECTION 7.4 Waiver of Past Defaults; Rescission. The Requisite Lenders by notice
to the Administrative Agent may on behalf of the Lenders waive an existing
Default or Event of Default and its consequences hereunder. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Agreement; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon. The Requisite Lenders,
by written notice to the Administrative Agent, may on behalf of all of the
Lenders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
SECTION 7.5 Control by Majority. The Requisite Lenders may direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Administrative Agent or exercising any trust or power conferred
on it. However, the Administrative Agent may refuse to follow any direction that
conflicts with law, this Agreement, the other Revolving Loan Documents, that the
Administrative Agent determines may be unduly prejudicial to the rights of other
Lenders, that may involve the Administrative Agent in personal liability, or
that is inconsistent with the Collateral Trust Agreement.
SECTION 7.6 Collection Suit by Administrative Agent. If an Event of Default
specified in Section 7.1(a) or (b) (Events of Default) occurs and is continuing,
the Administrative Agent is authorized to recover judgment in its own name and
as trustee of an express trust against the Borrower for the whole amount of
principal of, premium, if any, and interest remaining unpaid
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on the Revolving Loans and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent, its agents and
counsel.
SECTION 7.7 Priorities.
Subject to the Collateral Trust Agreement, if the Administrative Agent
collects any money pursuant to this Article VII, it shall pay out the money in
the following order:
First: to the Administrative Agent and the Lenders on a pro
rata basis, their respective agents and attorneys for amounts due under
this Agreement and the other Revolving Loan Documents, including
payment of all compensation, expense and liabilities incurred, and all
advances made, by the Administrative Agent or any of the Lenders and
the costs and expenses of collection;
Second: to the Lenders for amounts due and unpaid on the
Revolving Loan Obligations for principal, premium, if any, fees, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Revolving Loan
Obligations for principal, premium, if any, fees, and interest,
respectively; and
Third: to the Borrower or to such party as a court of
competent jurisdiction shall direct.
The Administrative Agent may fix a record date and payment date for any
payment to the Lenders pursuant to this Section 7.7.
ARTICLE VIII.
AGENTS
SECTION 8.1 Appointment of Agents. The Borrower and the Lenders acknowledge and
agree that The Bank of Nova Scotia has acted and shall be credited as lead
arranger and bookrunner of the Revolving Loans. The Borrower and the Lenders
acknowledge and agree that The Bank of Nova Scotia is hereby appointed the
Administrative Agent and the LC Bank hereunder and under the other Revolving
Loan Documents. The Borrower and each Lender hereby authorizes the Collateral
Agent to act as the Collateral Agent with respect to the Revolving Loan
Obligations, and each Lender authorizes the Collateral Agent and the
Administrative Agent to enter into and perform their respective obligations
under the Collateral Trust Agreement. Each Lender hereby authorizes (a) the
Administrative Agent to act as its agent and (b) the LC Bank to act as issuing
bank, in each case in accordance with the terms hereof and the other Revolving
Loan Documents. The Administrative Agent hereby agrees to act upon the express
conditions contained herein and the other Revolving Loan Documents, as
applicable. The provisions of this Article VIII are solely for the benefit of
the Agents and the Lenders and no Obligor shall have any rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties hereunder, the Administrative Agent shall act solely as an agent of the
Lenders and no Agent does or shall assume or be deemed to have assumed any
obligation towards or relationship of agency or trust with or for the Borrower
or any of its Subsidiaries. The Bank of Nova Scotia in its capacity as the lead
arranger and bookrunner shall
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not have any duties, liabilities or obligations under the Revolving Loan
Documents but shall be entitled to all benefits of this Article VIII.
SECTION 8.2 Powers and Duties. Each Lender irrevocably authorizes each Agent to
take such action on such Lender's behalf and to exercise such powers, rights and
remedies hereunder and under the other Revolving Loan Documents as are
specifically delegated or granted to such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are
expressly specified herein and in the other Revolving Loan Documents. Each Agent
may exercise such powers, rights and remedies and perform such duties by or
through its agents or employees. No Agent shall have, by reason hereof or any of
the other Revolving Loan Documents, a fiduciary relationship in respect of any
Lender; and nothing herein or any of the other Revolving Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
any Agent any obligations in respect hereof or any of the other Revolving Loan
Documents except as expressly set forth herein or therein.
SECTION 8.3 General Immunity.
(a) No Responsibility for Certain Matters. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency hereof or any other
Revolving Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by any Agent to the Lenders or by or on
behalf of any Obligor to any Agent or any Lender in connection with the
Revolving Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of any Obligor or any other Person
liable for the payment of any Revolving Loan Obligations, nor shall any Agent be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained in any of
the Revolving Loan Documents or as to the use of the proceeds of the Revolving
Loans or Letters of Credit or as to the existence or possible existence of any
Material Adverse Effect, Event of Default or Default or to make any disclosures
with respect to the foregoing. Anything contained herein to the contrary
notwithstanding, the Administrative Agent shall not have any liability arising
from confirmations of the amount of outstanding Revolving Loans, Participation
Interests or the component amounts thereof.
(b) Exculpatory Provisions. No Agent nor any of its officers, partners,
directors, employees or agents shall be liable to the Lenders for any action
taken or omitted by any Agent under or in connection with any of the Revolving
Loan Documents except to the extent caused by such Agent's bad faith, gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection herewith or any of the other Revolving Loan Documents or from the
exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until such Agent shall have received instructions in
respect thereof from Requisite Lenders (or such other Lenders as may be required
to give such instructions under Section 12.5 (Amendments and Waivers)) and, upon
receipt of such instructions from Requisite Lenders (or such other Lenders, as
the case may be), such Agent shall be entitled to act or (where so instructed)
refrain from acting, or to
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exercise such power, discretion or authority, in accordance with such
instructions. Without prejudice to the generality of the foregoing, (i) each
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for the Borrower and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against any
Agent as a result of such Agent acting or (where so instructed) refraining from
acting hereunder or any of the other Revolving Loan Documents in accordance with
the instructions of Requisite Lenders (or such other Lenders as may be required
to give such instructions under Section 12.5 (Amendments and Waivers)).
SECTION 8.4 Agents Entitled to Act as Lender. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Revolving Loans, each Agent shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as if it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" shall, unless the context clearly otherwise
indicates, include each Agent in its individual capacity. Any Agent and its
Affiliates may accept deposits from, lend money to, own securities of, and
generally engage in any kind of banking, trust, financial advisory or other
business with the Borrower or any of its Affiliates as if it were not performing
the duties specified herein, and may accept fees and other consideration from
the Borrower for services in connection herewith and otherwise without having to
account for the same to the Lenders.
SECTION 8.5 Lenders' Representations, Warranties and Acknowledgment.
(a) Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with its Revolving Loans hereunder and that
it has made and shall continue to make its own appraisal of the creditworthiness
of the CalGen Companies. No Agent shall have any duty or responsibility, either
initially or on a continuing basis, to make any such investigation or any such
appraisal on behalf of the Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Revolving Loans or at any time or times thereafter, and
no Agent shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to the Lenders.
(b) Each Lender, by delivering its signature page to this Agreement,
shall be deemed to have acknowledged receipt of, and consented to and approved,
each Revolving Loan Document and each other document required to be approved by
any Agent, Requisite Lenders or the Lenders, as applicable on the Closing Date.
SECTION 8.6 Right to Indemnity. Each Lender, in proportion to its Pro Rata
Share, severally agrees to indemnify each Agent, to the extent that such Agent
shall not have been reimbursed by any Obligor, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or
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asserted against such Agent in exercising its powers, rights and remedies or
performing its duties hereunder or under the other Revolving Loan Documents or
otherwise in its capacity as such Agent in any way relating to or arising out of
this Agreement or the other Revolving Loan Documents; provided, no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Agent's bad faith, gross negligence or willful misconduct. If any
indemnity furnished to any Agent for any purpose shall, in the opinion of such
Agent, be insufficient or become impaired, such Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished; provided, in no event shall this
sentence require any Lender to indemnify any Agent against any liability,
obligation, loss, damage, penalty, action, judgment, suit, cost, expense or
disbursement in excess of such Lender's Pro Rata Share thereof; and provided
further, this sentence shall not be deemed to require any Lender to indemnify
any Agent against any liability, obligation, loss, damage, penalty, action,
judgment, suit, cost, expense or disbursement described in the proviso in the
immediately preceding sentence.
SECTION 8.7 Successor Administrative Agent or LC Bank. The Administrative Agent
or the LC Bank may resign at any time by giving 30 days' prior written notice
thereof to the Lenders and the Borrower, and the Administrative Agent or the LC
Bank may be removed at any time with or without cause by an instrument or
concurrent instruments in writing delivered to the Borrower and the
Administrative Agent and the LC Bank and signed by the Requisite Lenders. Upon
any such notice of resignation or any such removal, the Requisite Lenders shall
have the right, upon five Business Days' notice to the Borrower, to appoint a
successor Administrative Agent or LC Bank (as applicable); provided, that the
Borrower shall have the right to approve any such successor Administrative Agent
(such approval not to be unreasonably withheld or delayed) so long as no Default
or Event of Default shall have occurred and be continuing. Upon the acceptance
of any appointment as Administrative Agent or LC Bank hereunder by a successor
Administrative Agent or LC Bank, as applicable, that successor Administrative
Agent or LC Bank (as applicable) shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring or removed
Administrative Agent or LC Bank, as applicable and the retiring or removed
Administrative Agent or LC Bank shall promptly transfer to such successor
Administrative Agent or LC Bank, as applicable, all sums, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Administrative Agent or LC Bank, as
applicable under the Revolving Loan Documents, whereupon such retiring or
removed Administrative Agent or LC Bank (as applicable) shall be discharged from
its duties and obligations hereunder. After any retiring or removed
Administrative Agent's or LC Bank's (as applicable) resignation or removal
hereunder as Administrative Agent or LC Bank, as applicable, the provisions of
this Article VIII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent or LC Bank (as applicable)
hereunder. In connection with any retiring or replacement of the LC Bank
hereunder, the new LC Bank shall, at the expense of the Lenders, replace and
reissue all Letters of Credit issued by the retiring or removed LC Bank.
SECTION 8.8 Withholding Tax.
(a) To the extent required by any applicable Legal Requirement, the
Administrative Agent may withhold from any interest payment to any Lender an
amount equivalent to any
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applicable withholding tax, including any withholding tax resulting from any
Lenders' failure to deliver the forms or other documentation as required by
Section 2.1.16(e) (Taxes; Withholding, etc). Nothing in this Section 8.8 shall
relieve the Borrower of its obligation with respect to Taxes and Other Taxes
provided in Section 2.1.16 (Taxes; Withholding, etc.).
(b) If the Internal Revenue Service or any authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest,
together with all expenses incurred, including legal expenses, allocated staff
costs and any out of pocket expenses.
ARTICLE IX.
COLLATERAL AND SECURITY
The Collateral Agent's Liens upon the Collateral shall no longer secure
the Revolving Loan Obligations outstanding under this Agreement, and the right
of the Lenders to the benefits and proceeds of the Collateral Agent's Liens on
Collateral shall terminate and be discharged:
(a) on the Revolving Loan Secured Obligations Termination Date; or
(b) with the prior written consent of each Lender whose consent is
required under Section 12.5.
Nothing in this Article IX shall be deemed to restrict the Collateral Agent's
rights to release liens on Collateral in accordance with the terms of the
Collateral Trust Agreement or as otherwise permitted pursuant to the terms of
this Agreement.
ARTICLE X.
RANKING OF LIENS AND COLLATERAL SHARING
EACH LENDER AND EACH AGENT HEREBY ACKNOWLEDGES AND AGREES THAT THE
THEIR RESPECTIVE LIEN PRIORITIES, THE DISTRIBUTION OF PROCEEDS OF COLLATERAL,
THE EXERCISE OF REMEDIES UNDER THE REVOLVING LOAN DOCUMENTS, AMENDMENTS AND
WAIVERS TO THE REVOLVING LOAN DOCUMENTS, AND OTHER MATTERS RELATED TO THE
COLLATERAL ARE SUBJECT TO AND GOVERNED BY THE COLLATERAL TRUST AGREEMENT. Each
Lender and each Agent, by delivering its signature page hereto, funding its
Revolving Loan on the Closing Date and/or executing an Assignment Agreement (as
the case may be), shall be deemed to have (a) acknowledged receipt of, consented
to and approved the Collateral Trust Agreement, and (b) authorized the Agents to
perform their respective obligations thereunder. Each Lender and each Agent
further acknowledges that, in certain circumstances related to intercreditor and
security matters, the Collateral Trust Agreement provides that, where lenders
and/or noteholders hold the same series of Obligations (such as the Revolving
Loan Obligations, the Obligations under the Term Loan Agreement and the
Obligations under the First Priority
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Notes), such lenders and noteholders will vote as a single class, and the agent
or trustee for such lenders or noteholders, as applicable, will vote the
obligations of such lenders or noteholders, as applicable, as a class (and not
by percentage of lenders or noteholders voting for or against the applicable
intercreditor or security matter). Accordingly, in such circumstances under the
Collateral Trust Agreement, if the Requisite Lenders hereunder do (or do not)
consent, approve, waive or otherwise provide direction to the Administrative
Agent with respect to any request, decision, action, or otherwise, then the
Administrative Agent shall vote 100% of the Revolving Loan Obligations in favor
of such consent, approval or waiver (or rejection thereof), as applicable, all
in accordance with the terms of the Collateral Trust Agreement.
ARTICLE XI.
REVOLVING LOAN GUARANTEE
SECTION 11.1 Guarantee.
(a) Subject to the limitations set forth in Section 12.22 (No Recourse
Against the Borrower or the Guarantors) and in Section 11.1(b), the Guarantors
hereby, jointly and severally, unconditionally and irrevocably, guarantee to the
Administrative Agent, for the benefit of the Lenders and the LC Bank and their
respective successors, endorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower and each other Guarantor when
due (whether at the stated maturity, by acceleration or otherwise) of the
Revolving Loan Obligations;
(b) Each Guarantor, and by its making of a Revolving Loan on the
Closing Date, each Lender, and by its issuance of each Letter of Credit, the LC
Bank, hereby confirms that it is the intention of all such parties that the
Revolving Loan Guarantee(s) of such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any Revolving Loan Guarantee. To
effectuate the foregoing intention, the Administrative Agent, the LC Bank, the
Lenders and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will be limited to the maximum amount that will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article XI, result in the obligations of such Guarantor
under its Revolving Loan Guarantee not constituting a fraudulent transfer or
conveyance.
(c) Each Guarantor agrees that the Revolving Loan Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor under this Article XI without impairing the guarantee of such
Guarantor to the extent provided in this Article XI or affecting the rights and
remedies of the Administrative Agent or any other Secured Party hereunder.
(d) The guarantee provided in this Article XI shall remain in full
force and effect until the Revolving Loan Secured Obligations Termination Date.
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(e) With respect to each Guarantor, no payment made by the Borrower, any
of the Guarantors or any other Person or received or collected by the
Administrative Agent or any other Secured Party from the Borrower, any of the
other Guarantors or any other Person, by virtue of any action or proceeding or
any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of any Revolving Loan Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of such Guarantor
hereunder, which Guarantor shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Revolving Loan Obligations
or any payment received or collected from such Guarantor in respect of the
Revolving Loan Obligations), remain liable for the Revolving Loan Obligations
outstanding from time to time hereunder up to the maximum amount of such
Guarantor's liability hereunder until the Revolving Loan Secured Obligations
Termination Date.
SECTION 11.2 Right of Contribution.
(a) Each Guarantor hereby agrees that to the extent that a Guarantor shall
have paid more than its proportionate share of any payment made hereunder, such
Guarantor shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate share of such
payment. Each Guarantor's right of contribution shall be subject to the terms
and conditions of Section 11.4 (No Subrogation).
(b) The provisions of this Section 11.2 shall in no respect limit the
obligations and liabilities of any Guarantor to the Administrative Agent and the
other Revolving Loan Secured Parties, and each Guarantor shall remain liable to
the Administrative Agent and the other Revolving Loan Secured Parties for the
full amount guaranteed by such Guarantor hereunder.
SECTION 11.3 Subordination. Except as otherwise specifically provided in this
Article XI, (a) all existing and future indebtedness of, or other obligations
owed by, the Borrower or any of its subsidiaries to any Guarantor is hereby
subordinated to all Revolving Loan Obligations, and (b) without the prior
written consent of the Administrative Agent, such subordinated indebtedness
(including interest thereon) shall not be paid or withdrawn in whole or in part,
nor shall any Guarantor accept any payment of or on account of any such
indebtedness while the guarantee provided hereunder is in effect. Any payment by
the Borrower or any subsidiary thereof in violation of this Section 11.3 shall
be received by the relevant Guarantor in trust for the Administrative Agent and
the Revolving Loan Secured Parties, and such Guarantor shall cause the same to
be paid to the Administrative Agent for the benefit of the Revolving Loan
Secured Parties immediately upon demand by the Administrative Agent on account
of the Revolving Loan Obligations. No Guarantor shall assign all or any portion
of such indebtedness while the guarantee provided hereunder remains in effect
except upon prior written notice to the Administrative Agent and pursuant to an
agreement by which the assignee of any such indebtedness agrees that the
assignment is made subject to the terms of this Agreement, and that any
attempted assignment of such indebtedness in violation of the provisions hereof
shall be void. Nothing in this Section 11.3 shall apply to any repayment of
existing or future indebtedness or obligation, distribution, withdrawal of
capital or any other payment of any kind or nature whether in cash, in kind, or
otherwise, that is permitted to be made to the Guarantor or any of its
Affiliates pursuant to and in accordance with the Financing Documents.
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SECTION 11.4 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any other Secured Party, no Guarantor shall be entitled
to be subrogated to any of the rights of the Administrative Agent or any other
Secured Party against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by the Administrative Agent or any
other Secured Party for the payment of the Secured Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from the
Borrower or any other Guarantor in respect of payments made by such Guarantor
hereunder, until the Revolving Loan Secured Obligations Termination Date. If any
amount shall be paid to any Guarantor on account of such subrogation rights at
any time when all of the Revolving Loan Obligations shall not have been paid in
full, such amount shall be held by such Guarantor in trust for the
Administrative Agent and the other Revolving Loan Secured Parties, segregated
from other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form received
by such Guarantor (duly endorsed by such Guarantor to the Administrative Agent,
if required), to be applied against the Revolving Loan Obligations, whether
matured or unmatured, in such order as the Administrative Agent may determine,
subject to the terms and provisions of the Collateral Trust Agreement.
SECTION 11.5 Amendments, etc. with respect to the Revolving Loan Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Revolving Loan
Obligations made by the Administrative Agent or any other Secured Party may be
rescinded by the Administrative Agent or such other Secured Party and any of the
Revolving Loan Obligations continued, and the Revolving Loan Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Administrative
Agent or any other Secured Party, and any of the Revolving Loan Documents may be
amended, modified, supplemented or terminated, in whole or in part, as the
requisite parties thereto deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the Administrative
Agent or any other Secured Party for the payment of the Revolving Loan
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any other Secured Party shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Revolving Loan Obligations or for the guarantee contained in this
Article XI or any property subject thereto.
SECTION 11.6 Guarantee Absolute and Unconditional.
(a) Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Revolving Loan Obligations and notice of or
proof of reliance by the Administrative Agent or any Lender upon the guarantee
contained in this Article XI or acceptance of the guarantee contained in this
Article XI. Each Guarantor agrees that the Revolving Loan Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
Revolving Loan Guarantees. Each Guarantor agrees that all dealings between the
Borrower and any of the Guarantors, on the one hand, and the Administrative
Agent and the Lenders, on the
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other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Article XI. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Revolving Loan Obligations.
(b) The obligations of each Guarantor hereunder are primary obligations of
such Guarantor and are an absolute, unconditional, continuing and irrevocable
guaranty of payment and performance of the Revolving Loan Obligations and the
other obligations of Guarantor hereunder and not of collectibility, and are in
no way conditioned on or contingent upon any attempt to enforce in whole or in
part Holdings', the Borrower's or any CalGen Company's liabilities and
obligations to the Secured Parties. Each failure by a Guarantor to pay or
perform, as the case may be, a Revolving Loan Obligation or any other obligation
hereunder shall give rise to a separate cause of action hereunder, and separate
suits may be brought hereunder as each cause of action arises.
(c) The Revolving Loan Secured Parties may, at any time and from time to
time (whether or not after revocation or termination of the guarantee contained
in this Article XI) without the consent of or notice to any Guarantor, except
such notice as may be required by the Revolving Loan Documents or applicable law
which cannot be waived, without incurring responsibility to any Guarantor,
without impairing or releasing the obligations of any Guarantor hereunder, upon
or without any terms or conditions and in whole or in part:
(i) change the manner, place and terms of payment or performance of,
or renew or alter, any Revolving Loan Obligation or any obligations and
liabilities (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, or in any manner modify, amend or
supplement the terms of the Revolving Loan Documents or any documents,
instruments or agreements executed in connection therewith, in each case
with the consent of Holdings, the Borrower, the CalGen Companies and any
Guarantor (in each case, as and to the extent required by this Agreement
or the relevant Security Document, as applicable), and the agreements and
guarantees herein made shall apply to the Revolving Loan Obligations or
such other obligations as changed, extended, renewed, modified, amended,
supplemented or altered in any manner;
(ii) exercise or refrain from exercising any rights against
Holdings, the Borrower, any CalGen Company, or others (including any
Guarantor) or otherwise act or refrain from acting;
(iii) add or release any other guarantor from its obligations
without affecting or impairing the obligations of any Guarantor hereunder;
(iv) settle or compromise any Revolving Loan Obligations or any
obligations and liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate
the payment or performance of all or any part thereof to the payment or
performance of any obligations and liabilities which may be due to the
Secured Parties or others;
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(v) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner or in any order any property by whomsoever pledged
or mortgaged to secure or securing the Revolving Loan Obligations or any
liabilities or obligations (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof and/or any offset
there against;
(vi) apply any sums by whomsoever paid or howsoever realized to any
obligations and liabilities of Holdings, the Borrower or any CalGen
Company to the Revolving Loan Secured Parties under the Revolving Loan
Documents in the manner provided therein regardless of what obligations
and liabilities remain unpaid, except that sums paid by any Guarantor
hereunder shall be deemed to have been paid in respect of the applicable
obligation of such Guarantor hereunder;
(vii) consent to or waive any breach of, or any act, omission or
default under, the Revolving Loan Documents or otherwise amend, modify or
supplement (with the consent of the Guarantors, Holdings, the Borrower and
the CalGen Companies, as and to the extent required by the Revolving Loan
Documents) the Revolving Loan Documents or any of such other instruments
or agreements; and/or
(viii) act or fail to act in any manner referred to in this
Agreement which may deprive any Guarantor of its right to subrogation
against the Borrower or any CalGen Company to recover full indemnity for
any payments or performances made pursuant to this Agreement or of its
right of contribution against any other party.
(d) No invalidity, irregularity or unenforceability of the Revolving Loan
Obligations or invalidity, irregularity, unenforceability or non-perfection of
any collateral therefor, shall affect, impair or be a defense to the guarantee
contained in this Article XI, which is a primary obligation of each Guarantor.
(e) The guarantee provided hereunder is a continuing guarantee and all
obligations to which it applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. In the event
that, notwithstanding the provisions of Section 11.6(b) above, the guarantee
provided by any Guarantor hereunder shall be deemed revocable in accordance with
applicable law, then any such revocation shall become effective only upon
receipt by Administrative Agent of written notice of revocation signed by such
Guarantor. To the extent permitted by applicable law, no revocation or
termination hereof shall affect, in any manner, rights arising under hereunder
with respect to Revolving Loan Obligations arising prior to receipt by
Administrative Agent of written notice of such revocation or termination. Any
such revocation or termination shall be deemed to be an Event of Default.
SECTION 11.7 Waiver. Each Guarantor hereby unconditionally and irrevocably
waives and relinquishes, to the maximum extent permitted by applicable Legal
Requirements, all rights and remedies accorded to sureties or guarantors and
agrees not to assert or take advantage of any such rights or remedies,
including:
(a) any right to require Administrative Agent or the other Secured Parties
to proceed against the Borrower, any CalGen Company or any other Person or to
proceed against or exhaust
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any security held by Administrative Agent or any other Secured Party at any time
or to pursue any other remedy in Administrative Agent's or any other Secured
Party's power before proceeding against such Guarantor;
(b) any defense that may arise by reason of the incapacity, lack of power
or authority, death, dissolution, merger, termination or disability of such
Guarantor, the Borrower, any other CalGen Company or any other Person or the
failure of the Administrative Agent or any other Secured Party to file or
enforce a claim against the estate (in administration, bankruptcy or any other
proceeding) of such Guarantor, Holdings, the Borrower, any CalGen Company or any
other Person;
(c) promptness, diligence, demand, presentment, protest and notice of any
kind, including notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of Holdings, the Borrower, any CalGen Company, the Administrative Agent, the
other Secured Parties, any endorser or creditor of the foregoing or on the part
of any other Person under this or any other instrument in connection with any
obligation or evidence of indebtedness held by the Administrative Agent or the
other Secured Parties as collateral or in connection with any Revolving Loan
Obligation;
(d) any defense based upon an election of remedies by the Administrative
Agent or the other Secured Parties, including an election to proceed by
non-judicial rather than judicial foreclosure, which destroys or otherwise
impairs the subrogation rights of such Guarantor, the right of such Guarantor to
proceed against Holdings, the Borrower, any CalGen Company or another Person for
reimbursement, or both;
(e) any defense based on any offset against any amounts which may be owed
by any Person to such Guarantor for any reason whatsoever;
(f) any defense based on any act, failure to act, delay or omission
whatsoever on the part of Holdings, the Borrower, any CalGen Company or any of
the Borrower's Affiliates or the failure by Holdings, the Borrower, any CalGen
Company or any of the Borrower's Affiliates to do any act or thing or to observe
or perform any covenant, condition or agreement to be observed or performed by
it under the Financing Documents;
(g) any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(h) any defense setoff or counterclaim which may at any time be available
to or asserted by Holdings, the Borrower, any CalGen Company or any of the
Borrower's Affiliates thereof against the Administrative Agent, the other
Secured Parties or any other Person under the Financing Documents;
(i) any duty on the part of the Administrative Agent or any other Secured
Party to disclose to such Guarantor any facts any Secured Party may now or
hereafter know about Holdings, the Borrower, any CalGen Company or the
Facilities, regardless of whether the Administrative Agent or any other Secured
Party has reason to believe that any such facts materially increase the risk
beyond that which such Guarantor intends to assume, or have reason
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to believe that such facts are unknown to such Guarantor, or have a reasonable
opportunity to communicate such facts to such Guarantor, since such Guarantor
acknowledges that such Guarantor is fully responsible for being and keeping
informed of the financial condition of the Borrower and of all circumstances
bearing on the risk of non-payment or non-performance of any Revolving Loan
Obligation;
(j) any defense based on any change in the time, manner or place of any
payment or performance under, or in any other term of, this Agreement or any
other Financing Document, or any other amendment, renewal, extension,
acceleration, compromise or waiver of or any consent or departure from the terms
of this Agreement or any other Financing Document;
(k) any right to assert the bankruptcy or insolvency of Holdings, the
Borrower, any CalGen Company or any other Person as a defense hereunder or as
the basis for rescission hereof and any defense arising because of the
Administrative Agent's or any other Secured Party's election, in any proceeding
instituted under the Bankruptcy Law, of the application of Section 1111(b)(2) of
the Bankruptcy Law;
(l) any defense based upon any borrowing or grant of a security interest
under Section 364 of the Bankruptcy Law; and
(m) any other circumstance (including any statute of limitations), any act
or omission by Holdings, the Borrower, any CalGen Company, or any existence of
or reliance on any representation by the Administrative Agent, Holdings, the
Borrower, any CalGen Company or any Secured Party that might otherwise
constitute a defense available to, or discharge of, any guarantor or surety
(other than, subject to Section 11.8 (Bankruptcy), the defense of payment or
performance of the applicable Obligations guaranteed hereunder).
SECTION 11.8 Bankruptcy.
(a) The obligations of any Guarantor under the guarantee provided in this
Article XI shall not be altered, limited or affected by any proceeding,
voluntary or involuntary, involving the bankruptcy, reorganization, insolvency,
receivership, liquidation or arrangement of Holdings, the Borrower, any other
Guarantor or any Affiliate thereof, or by any defense which Holdings, the
Borrower, any Guarantor or any Affiliate thereof may have by reason of any
order, decree or decision of any court or administrative body resulting from any
such proceeding.
(b) Each Guarantor shall file, in any bankruptcy or other proceeding in
which the filing of claims is required or permitted by law, all claims which
such Guarantor may have against Holdings, the Borrower or any CalGen Company
relating to any indebtedness of the Borrower or any CalGen Company to such
Guarantor, and hereby assigns to the Administrative Agent (for the benefit of
itself and the Lenders) all rights of such Guarantor thereunder. If any
Guarantor does not file any such claim, the Administrative Agent, as
attorney-in-fact for such Guarantor, is hereby authorized to do so in the name
of such Guarantor or, in the Administrative Agent's discretion, to assign the
claim to a nominee and to cause proofs of claim to be filed in the name of the
Administrative Agent's nominee. The foregoing power of attorney is coupled with
an interest and cannot be revoked. The Administrative Agent or its nominee shall
have the sole right to accept or reject any plan proposed in any such proceeding
and to take any other
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action which a party filing a claim is entitled to take. In all such cases,
whether in administration, bankruptcy or otherwise, the person authorized to pay
such a claim shall pay the same to the Administrative Agent to the extent of any
Revolving Loan Obligations which then remain unpaid or unperformed, and, to the
full extent necessary for that purpose, each Guarantor hereby assigns to the
Administrative Agent all of such Guarantor's rights to all such payments or
distributions to which such Guarantor would otherwise be entitled; provided,
however, that such Guarantor's obligations hereunder shall not be satisfied
except to the extent that the Administrative Agent receives cash by reason of
any such payment or distribution. If the Administrative Agent receives anything
hereunder other than cash, the same shall be held as collateral for amounts due
under the guarantee contained in this Article XI.
(c) Each Guarantor hereby irrevocably waives, to the extent it may do so
under applicable Legal Requirements, any protection to which it may be entitled
under Sections 365(c)(1), 365(c)(2) and 365(e)(2) of the Bankruptcy Law or
equivalent provisions of the laws or regulations of any other jurisdiction with
respect to any proceedings, or any successor provision of law of similar import,
in the event of any Bankruptcy Event with respect to Holdings, the Borrower or
any CalGen Company. Specifically, in the event that the trustee (or similar
official) in a Bankruptcy Event with respect to Holdings, the Borrower or any
CalGen Company or the debtor-in-possession takes any action (including the
institution of any action, suit or other proceeding for the purpose of enforcing
the rights of Holdings, the Borrower, or any Guarantor under this Agreement or
any Security Document), no Guarantor shall assert any defense, claim or
counterclaim denying liability hereunder on the basis that this Agreement or any
Security Document is an executory contract or a "financial accommodation" that
cannot be assumed, assigned or enforced or on any other theory directly or
indirectly based on Section 365(c)(1), 365(c)(2) or 365(e)(2) of the Bankruptcy
Law, or equivalent provisions of the law or regulations of any other
jurisdiction with respect to any proceedings or any successor provision of law
of similar import. If a Bankruptcy Event with respect to Holdings, the Borrower
or any CalGen Company shall occur, each Guarantor agrees, after the occurrence
of such Bankruptcy Event, to reconfirm in writing, to the extent permitted by
applicable Legal Requirements, its pre-petition waiver of any protection to
which it may be entitled under Sections 365(c)(1), 365(c)(2) and 365(e)(2) of
the Bankruptcy Law or equivalent provisions of the laws or regulations of any
other jurisdiction with respect to proceedings and, to give effect to such
waiver, each Guarantor consents to the assumption and enforcement of each
provision of the guarantee contained in this Article XI and any other provision
hereof and in any other Revolving Loan Document by the debtor-in-possession or
Holdings', the Borrower's or any CalGen Company's trustee in bankruptcy, as the
case may be.
SECTION 11.9 Reinstatement. The guarantee contained in this Article XI shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Revolving Loan Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Holdings, the Borrower or any Guarantor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, Holdings, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
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SECTION 11.10 Payments. Each Guarantor shall make all payments due hereunder in
accordance with Section 2.1.12 (General Provisions Regarding Payments).
ARTICLE XII.
MISCELLANEOUS
SECTION 12.1 Notices. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given to the Borrower,
any Guarantor, the Administrative Agent or the LC Bank shall be sent to such
Person's address as set forth on Appendix B or in the other relevant Revolving
Loan Document, and in the case of any Lender, the address as indicated on
Appendix B or otherwise indicated to the Administrative Agent and the LC Bank in
writing. Each notice hereunder shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service and signed for against receipt thereof, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided, no notice to the
Administrative Agent or the LC Bank shall be effective until received by the
Administrative Agent or the LC Bank (as applicable). Documents, notices or
reports required to be delivered to the Lenders pursuant to Sections
2.1.1(b)(Revolving Loans), 2.1.6 (Continuation Notice), 2.1.10 (Voluntary
Prepayment; Commitment Reductions), 2.1.11 (Mandatory Repayments and Commitment
Reductions), 2.2 (Letter of Credit Facilities), 5.1(a) (Reports) and 5.2
(Compliance Certificate) may be delivered electronically and posted
electronically on IntraLinks/IntraAgency or other relevant website to which the
Lenders have access (whether a commercial, third-party website or whether
sponsored by Administrative Agent), if any; provided that (i) the Administrative
Agent shall deliver paper copies of such reports to any Lender upon written
request therefor; and (ii) the Administrative Agent shall notify (which may be
by facsimile or electronic mail) each Lender of the posting of any such reports
and provide to each Lender by email electronic versions (i.e., soft copies) of
such reports.
SECTION 12.2 Expenses.
The Borrower agrees to pay promptly, without duplication among the
separate clauses of this Section 12.2 and without duplication of amounts paid
under the Purchase Agreement or the Term Loan Agreements or any other Financing
Document:
(a) all the costs incurred after the Closing Date of furnishing all
opinions by counsel for the Borrower and the other Obligors;
(b) the reasonable fees, expenses and disbursements of counsel to the Lead
Arranger in connection with the administration of the Revolving Loan Documents
and the negotiation, preparation and execution of any consents, amendments,
waivers or other modifications thereto and any other documents or matters
requested by the Borrower;
(c) all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Collateral Agent, for the benefit of the Secured
Parties pursuant hereto, including filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, title insurance
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premiums and reasonable fees, expenses and disbursements of counsel to each
Agent and of counsel providing any opinions that any Agent or Requisite Lenders
may request in respect of the Collateral or the Liens created pursuant to the
Security Documents;
(d) all the actual costs and reasonable fees, expenses and disbursements
of any auditors, accountants, consultants or appraisers if reasonably required
in connection with the administration or enforcement of this Agreement;
(e) all the actual costs and reasonable expenses (including the reasonable
fees, expenses and disbursements of any appraisers, consultants, advisors and
agents employed or retained by Collateral Agent and its counsel) reasonably
required in connection with the custody or preservation of any of the
Collateral; and
(f) after the occurrence of a Default or an Event of Default, all costs
and expenses, including attorneys' fees and costs of settlement, incurred by any
Agent and the Lenders in enforcing any Revolving Loan Obligations of or in
collecting any payments due from any Obligor hereunder or under the other
Revolving Loan Documents by reason of such Default or Event of Default
(including in connection with the sale of, collection from, or other realization
upon any of the Collateral or the enforcement of the Revolving Loan Guarantees)
or in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a "work-out" or pursuant to any
Bankruptcy Case or Insolvency Proceeding.
SECTION 12.3 Indemnity.
(a) In addition to the payment of costs and expenses pursuant to Section
12.2 (Expenses), whether or not the transactions contemplated hereby shall be
consummated, the Borrower and the Guarantors agree to defend (subject to
Indemnitees' selection of counsel), indemnify, pay and hold harmless the
Administrative Agent, the LC Bank and the Lenders and each of their respective
Affiliates and each and all of the directors, officers, partners, trustees,
employees, attorneys and agents, and (in each case) their respective heirs,
representatives, successors and assigns (each of the foregoing, an "Indemnitee")
from and against any and all Indemnified Liabilities; provided, no Indemnitee
shall be entitled to indemnification hereunder with respect to any Indemnified
Liability to the extent such Indemnified Liability is found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
directly and primarily from the bad faith, gross negligence or willful
misconduct of such Indemnitee.
(b) All amounts due under Section 12.3(a) shall be payable not later than
10 days after written demand therefor.
(c) To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in Section 12.3(a) may be unenforceable in whole or in part
because they are violative of any law or public policy, the Borrower and the
Guarantors shall contribute the maximum portion that they are permitted to pay
and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Indemnitees or any of them.
(d) The Borrower and the Guarantors shall not assert any claim against any
Indemnitee, on any theory of liability, for any lost profits or special,
indirect or consequential damages or (to the fullest extent lawful) any punitive
damages arising out of, in connection with,
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or as a result of, this Agreement or any other Revolving Loan Document or any
agreement or instrument or transaction contemplated hereby or relating in any
respect to any Indemnified Liability, and the Borrower and the Guarantors hereby
forever waive, release and agree not to ▇▇▇ upon any claim for any such lost
profits or special, indirect, consequential or (to the fullest extent lawful)
punitive damages, whether or not accrued and whether or not known or suspected
to exist in its favor.
(e) The agreements in this Section 12.3 shall survive repayment of the
Revolving Loans and all other amounts payable hereunder.
SECTION 12.4 Set-Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default each Lender is hereby authorized by the
Borrower and the Guarantors at any time or from time to time subject to the
consent of the Administrative Agent, without prior written notice to such Person
or to any other Person (other than the Administrative Agent), any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by such Lender to
or for the credit or the account of the Borrower or any Guarantor against and on
account of the obligations and liabilities of such party to such Lender
hereunder, and under the other Revolving Loan Documents, including all claims of
any nature or description arising out of or connected hereto, or with any other
Revolving Loan Document, irrespective of whether or not (a) such Lender shall
have made any demand hereunder or (b) the principal of or the interest on the
Revolving Loans or any other amounts due hereunder shall have become due and
payable pursuant to Article II and although such obligations and liabilities, or
any of them, may be contingent or unmatured.
SECTION 12.5 Amendments and Waivers.
(a) Requisite Lenders' Consent. Subject to Section 12.5(e), no amendment,
modification, termination or waiver of any provision of the Revolving Loan
Documents, or consent to any departure by any Obligor therefrom, shall in any
event be effective without the written concurrence of the Requisite Lenders and
any additional consents required by Sections 12.5(b) and (c).
(b) Affected Lenders' Consent. No amendment, modification, termination, or
consent shall be effective if the effect thereof would:
(i) extend the scheduled final maturity or Expiration Date of any
Revolving Loan, Letter of Credit or Revolving Loan Note outstanding to any
Lender without the prior written consent of that Lender and, with respect
to Letters of Credit, the LC Bank;
(ii) waive, reduce or postpone any scheduled repayment (but not
prepayment) due to any Lender without the prior written consent of that
Lender;
(iii) reduce the rate of interest on any Revolving Loan Obligation
(other than any waiver of any increase in the interest rate applicable to
any Revolving Loan Obligation pursuant to Section 2.1.7 (Default
Interest)) payable to any Lender or reduce
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or extend any fee payable hereunder to any Lender without the prior
written consent of that Lender;
(iv) reduce the principal amount of any Revolving Loan or
Reimbursement Obligation outstanding to any Lender without the prior
written consent of that Lender;
(v) amend, modify, terminate or waive any provision of this Section
12.5(b), as it applies to any Lender without the prior written consent of
that Lender;
(vi) amend the definition of "Requisite Lenders" or "Pro Rata Share"
without the prior written consent of all Lenders;
(vii) release any Collateral (other than immaterial portions
thereof) from the Liens created by the Security Documents, except as
specifically provided for in this Agreement and the Security Documents,
without the prior written consent of all Lenders;
(viii) release any Guarantor from its obligations under its
Revolving Loan Guarantee(s) or otherwise consent to the assignment or
transfer by any Obligor of any of its rights and obligations under any
Revolving Loan Document without the prior written consent of all Lenders;
or
(ix) amend or modify any provision which requires pro rata payments
among and as between the Lenders without the prior written consent of all
Lenders.
(c) Other Consents. No amendment, modification, termination or waiver of
any provision of the Revolving Loan Documents, or consent to any departure by
any Obligor therefrom, shall amend, modify, terminate or waive any provision of
Article VIII as the same applies to the Administrative Agent, or any other
provision hereof as the same applies to the rights or obligations of any Agent,
in each case without the consent of the Administrative Agent and the LC Bank.
(d) Execution of Amendments, etc. The Administrative Agent may, but shall
have no obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on any Obligor in any
case shall entitle any Obligor to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 12.5 shall be binding upon
each Lender at the time outstanding, each future Lender and, if signed by an
Obligor, on such Obligor.
(e) Certain Amendments. Notwithstanding the preceding provisions of this
Section 12.5, the Borrower and the Administrative Agent may amend or supplement
the Revolving Loan Documents without the consent of any Lender:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for the assumption of the Borrower's obligations to
the Lenders by a successor to the Borrower pursuant to Article VI hereof;
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(iii) to make any change that would provide any additional rights or
benefits to the Lenders or that does not adversely affect the legal rights
hereunder of any Lender;
(iv) to allow any Subsidiary of the Borrower to provide a Revolving
Loan Guarantee or allow any Guarantor to execute a supplemental Guarantee
with respect to the Revolving Loan Obligations;
(v) to make, complete or confirm any grant of Collateral permitted
or required by this Agreement or any of the Security Documents or any
release of Collateral that becomes effective as set forth in this
Agreement or any of the Security Documents;
(vi) to conform the text of this Agreement, the Revolving Loan Notes
or the Security Documents to any provision of the "Description of
Revolving Credit Facility" or "Description of Notes" section of the
Offering Memorandum to the extent that such provision of the "Description
of Revolving Credit Facility" or "Description of Notes" section of the
Offering Memorandum was intended to be a verbatim recitation of a
provision of this Agreement, the Revolving Loans or the Security
Documents; or
(vii) to reflect any waiver or termination of any right arising
under the provisions of this Agreement that otherwise would be enforceable
by any holder of the Notes, if such waiver or termination is set forth in
the indentures governing such Notes, provided that no such waiver or
amendment shall adversely affect the rights of the Lenders.
SECTION 12.6 Successors and Assigns; Participations.
(a) Generally. This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of the Lenders and the other
parties hereto. No Obligor's rights or obligations hereunder nor any interest
therein may be assigned or delegated by any Obligor without the prior written
consent of all Lenders. Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, Affiliates of each of the Agents and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.
(b) Register. The Borrower, the Administrative Agent and the Lenders shall
deem and treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Revolving Loan Commitments, Participation Interests
and Revolving Loans listed therein for all purposes hereof, and no assignment or
transfer of any such Revolving Loan Commitment, Participation Interest or
Revolving Loan (including any Revolving Loan represented by a Revolving Loan
Note) shall be effective, in each case, unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been delivered to and
accepted by the Administrative Agent and recorded in the Register as provided in
Section 12.6(e). Prior to such recordation, all amounts owed with respect to the
applicable Revolving Loan Commitment, Participation Interest or Revolving Loan
shall be owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at
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the time of making such request or giving such authority or consent, is listed
in the Register as a Lender shall be conclusive and binding on any subsequent
holder, assignee or transferee of the corresponding Revolving Loan Commitments,
Participation Interests or Revolving Loans.
(c) Right to Assign. Each Lender shall have the right (after receiving
the Borrower's prior written consent as to the identity of the assignee, which
consent shall not be unreasonably withheld or delayed or required if an Event of
Default has occurred and is continuing) at any time to sell, assign or transfer
all or a portion of its rights and obligations under this Agreement, including
all or a portion of its Revolving Loan Commitment, Participation Interest,
Participation Interest or Revolving Loans owing to it or other Revolving Loan
Obligation (provided, however, that each such assignment shall be of a uniform,
and not varying, percentage of all rights and obligations under and in respect
of any Revolving Loan, Participation Interests and any related Revolving Loan
Commitments):
(i) to any Person meeting the criteria of clause (a) of the
definition of the term of "Eligible Assignee" upon the giving of notice
to the Borrower and the Administrative Agent; and
(ii) to any Person meeting the criteria of clause (b) of the
definition of the term of "Eligible Assignee";
provided, further each such assignment pursuant to this Section 12.6(c) shall be
in an aggregate amount of not less than $1,000,000 (or such lesser amount as may
be agreed to by the Borrower and the Administrative Agent or as shall constitute
the aggregate amount of the Revolving Loan Commitments, Participation Interests
and Revolving Loans outstanding to the assigning Lender), and written notice of
each such assignment shall be provided to the Borrower and the Administrative
Agent by the delivery of an Assignment Agreement executed by the parties to such
assignment.
Notwithstanding anything to the contrary herein, the LC Bank shall have
the unfettered right to approve any assignment of any of Participation
Interests.
(d) Mechanics; Fee. The assigning Lender and the assignee thereof shall
execute and deliver to the Administrative Agent an Assignment Agreement,
together with (a) such forms, certificates or other evidence, if any, with
respect to United States federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver to the Administrative
Agent pursuant to Section 2.1.16(e) (Taxes; Withholding, etc.) and (b) an
administrative fee of $3,500 paid by the assignee thereof.
(e) Notice of Assignment. Upon its receipt of a duly executed and
completed Assignment Agreement (and any forms, certificates or other evidence
required by this Agreement in connection therewith) and the applicable fee, the
Administrative Agent shall record the information contained in such Assignment
Agreement in the Register, shall give prompt notice thereof to the Borrower and
shall maintain a copy of such Assignment Agreement.
(f) Representations and Warranties of Assignee. Each Lender, upon
execution and delivery hereof or upon executing and delivering an Assignment
Agreement, as the case may be, and without limiting any other representation or
warranty contained in any such Assignment
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Agreement, represents and warrants as of the Closing Date or as of the
applicable Effective Date (as defined in the applicable Assignment Agreement)
that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the
making of or investing in commitments or loans such as the applicable Revolving
Loan Commitments or Revolving Loans, as the case may be; and (iii) it shall make
or invest in, as the case may be, its Revolving Loan Commitments, Participation
Interests or Revolving Loans for its own account in the ordinary course of its
business and without a view to distribution of such Revolving Loan Commitments,
Participation Interests or Revolving Loans within the meaning of the Securities
Act or the Exchange Act or other federal securities laws (it being understood
that, subject to the provisions of this Section 12.6, the disposition of such
Revolving Loan Commitments, Participation Interests or Revolving Loans or any
interests therein shall at all times remain within its exclusive control).
(g) Effect of Assignment. Subject to the terms and conditions of this
Section 12.6, as of the "Effective Date" specified in the applicable Assignment
Agreement:
(i) the assignee thereunder shall have the rights and
obligations of a "Lender" hereunder to the extent such rights and
obligations hereunder have been assigned to it pursuant to such
Assignment Agreement and shall thereafter be a party hereto and a
"Lender" for all purposes hereof;
(ii) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned thereby pursuant to
such Assignment Agreement, relinquish its rights (other than any rights
which survive the termination hereof under Section 12.8 (Survival of
Representations, Warranties and Agreements) and be released from its
obligations hereunder (and, in the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender's rights
and obligations hereunder, such Lender shall cease to be a party
hereto; provided, anything contained in any of the Revolving Loan
Documents to the contrary notwithstanding, such assigning Lender shall
continue to be entitled to the benefit of all indemnities hereunder as
specified herein with respect to matters arising out of the prior
involvement of such assigning Lender as a Lender hereunder);
(iii) the Revolving Loan Commitments shall be modified to
reflect the Revolving Loan Commitment of such assignee; and
(iv) if any such assignment occurs after the issuance of any
Revolving Loan Note hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Revolving Loan Notes to the
Administrative Agent for cancellation, and thereupon the Borrower shall
issue and deliver new Revolving Loan Notes, if so requested by the
assignee and/or assigning Lender, to such assignee and/or to such
assigning Lender, with appropriate insertions, to reflect the new
outstanding Revolving Loans of the assignee and/or the assigning
Lender.
(h) Participations. Each Lender shall have the right at any time to
sell one or more participations to any Person (other than the Borrower, any of
its Restricted Subsidiaries or any of its Affiliates) in all or any part of its
Revolving Loan Commitments, Revolving Loans or in any other Revolving Loan
Obligation. The holder of any such participation, other than an Affiliate
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of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except with respect to any
amendment, modification or waiver that would:
(i) extend the final scheduled maturity of any Revolving Loan
or Revolving Loan Note in which such participant is participating, or
reduce the rate or extend the time of payment of interest or fees
thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over
the amount thereof then in effect (it being understood that a waiver of
any Default or Event of Default or of a mandatory reduction in the
Revolving Loan Commitment shall not constitute a change in the terms of
such participation, and that an increase in any Revolving Loan
Commitment or Revolving Loan shall be permitted without the consent of
any participant if the participant's participation is not increased as
a result thereof);
(ii) consent to the assignment or transfer by any Obligor of
any of its rights and obligations under this Agreement; or
(iii) release the Collateral under the Security Documents
(except as expressly provided in the Revolving Loan Documents)
supporting the Revolving Loan Obligations hereunder in which such
participant is participating.
The Borrower agrees that each participant shall be entitled to the benefits of
Sections 2.1.14(c) (Making or Maintaining Revolving Loans), 2.1.15 (Increased
Costs; Capital Adequacy) and 2.1.16 (Taxes; Withholding, etc.) to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (c) of this Section; provided, (i) a participant shall not
be entitled to receive any greater payment under Section 2.1.14 (Making or
Maintaining Revolving Loans) or 2.1.15 (Increased Costs; Capital Adequacy) than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such participant, unless the sale of the participation to
such participant is made with the Borrower's prior written consent and (ii) a
participant that would be a Non-U.S. Lender if it were a Lender shall not be
entitled to the benefits of Section 2.1.16 (Taxes; Withholding, etc.) unless the
Borrower is notified of the participation sold to such participant and such
participant agrees, for the benefit of the Borrower, to comply with Section
2.1.16 (Taxes; Withholding, etc.) as though it were a Lender. To the extent
permitted by law, each participant also shall be entitled to the benefits of
Section 12.4 (Set-Off) as though it were a Lender, provided such participant
agrees to be subject to Section 2.1.13 (Ratable Sharing) as though it were a
Lender.
(i) Certain Other Assignments.
(i) In addition to any other assignment permitted pursuant to
this Section 12.6, any Lender may assign and/or pledge all or any
portion of its Revolving Loans, the other Revolving Loan Obligations
owed by or to such Lender, and its Revolving Loan Notes, if any, to
secure obligations of such Lender including (i) to any Federal Reserve
Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating circular
issued by such Federal Reserve Bank and (ii) with respect to any Lender
that is a fund that invests in bank loans, to any trustee
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or holder of obligations owed, or securities issued by, such fund as
security for such obligations or securities or to any other
representative of such holders; provided, no Lender, as between the
Borrower and such Lender, shall be relieved of any of its obligations
hereunder as a result of any such assignment and pledge, and provided
further, in no event shall the applicable Federal Reserve Bank, trustee
or such holder of obligations be considered to be a "Lender" or be
entitled to require the assigning Lender to take or omit to take any
action hereunder.
(ii) At the request of the Borrower in connection with the
payment in full of all of the Revolving Loan Obligations, whether by
voluntary or mandatory prepayment thereof or on the Maturity Date or
otherwise, each Lender shall execute and deliver to the Borrower (or to
such Person(s) as the Borrower requests) such documents and instruments
as the Borrower reasonably requests to assign all of such Lender's
Revolving Loan Obligations (together with all of such Lender's right,
title and interest in, to and under all the Revolving Loan Documents)
to such Person(s) as the Borrower may direct; provided, that (A) upon
the effectiveness of such assignment the Borrower shall execute and
deliver to each Lender an instrument pursuant to which the Borrower and
the Guarantors release such Lender from all claims under this Agreement
and all of the other Revolving Loan Documents and (B) such assignment
shall be without recourse to and without any representations or
warranties from the assigning Lender. If any such assignment occurs
after the issuance to it of any Revolving Loan Notes hereunder, then
upon the effectiveness of such assignment, the assigning Lender shall
deliver all of its Revolving Loan Notes to the Borrower for
cancellation or re-issuance to the new Lender.
(j) Delivery of Lender Addenda. Each initial Lender shall become a
party to this Agreement by delivering to the Administrative Agent a Lender
Addendum duly executed by such Lender, the Borrower and the Administrative
Agent.
SECTION 12.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.
SECTION 12.8 Survival of Representations, Warranties and Agreements. All
agreements made herein shall survive the execution and delivery hereof and the
making of any Revolving Loan. Notwithstanding anything herein or implied by law
to the contrary, the agreements of the Borrower and the Guarantors set forth in
Sections 2.1.14(c) (Making or Maintaining Revolving Loans), 2.1.15 (Increased
Costs; Capital Adequacy), 2.1.16 (Taxes; Withholding, etc.), 12.2 (Expenses),
12.3 (Indemnity), 12.4 (Set-Off), 12.15 (Consent to Jurisdiction), 12.16 (Waiver
of Jury Trial) and 12.17 (Confidentiality) and the agreements of Lenders set
forth in Sections 2.1.13 (Ratable Sharing), 8.3(b) (General Immunity), 8.6
(Right to Indemnity), 2.2.7 (Lender Participation), 2.2.8 (Commercial
Practices), shall survive the payment of the Revolving Loans, the Reimbursement
Payments for Letters of Credit and the termination hereof.
SECTION 12.9 No Waiver; Remedies Cumulative. No failure or delay on the part of
any Agent or any Lender in the exercise of any power, right or privilege
hereunder or under any other
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Revolving Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other power, right or privilege. The
rights, powers and remedies given to each Agent and each Lender hereby are
cumulative and shall be in addition to and independent of all rights, powers and
remedies existing by virtue of any statute or rule of law or in any of the other
Revolving Loan Documents. Any forbearance or failure to exercise, and any delay
in exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
SECTION 12.10 Marshalling; Payments Set Aside. Neither any Agent nor any Lender
shall be under any obligation to marshal any assets in favor of any Obligor or
any other Person or against or in payment of any or all of the Revolving Loan
Obligations. To the extent that any Obligor makes a payment or payments to the
Administrative Agent or the Lenders (or to the Administrative Agent, on behalf
of the Lenders), or the Administrative Agent or the Lenders enforce any security
interests or exercise their rights of setoff, and such payment or payments or
the proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
SECTION 12.11 Severability. In case any provision in or obligation under any
Revolving Loan Document shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 12.12 Revolving Loan Obligations Several; Independent Nature of Lenders'
Rights. The obligations of the Lenders hereunder are several and no Lender shall
be responsible for the obligations or Revolving Loan Commitment of any other
Lender hereunder. Nothing contained herein or in any other Revolving Loan
Document, and no action taken by the Lenders pursuant hereto or thereto, shall
be deemed to constitute the Lenders as a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time hereunder
to each Lender shall be a separate and independent debt, and each Lender shall
be entitled to protect and enforce its rights arising out hereof and it shall
not be necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
SECTION 12.13 Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.
SECTION 12.14 Applicable Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed by, and shall be construed and enforced
in accordance with, the laws of the State of New York without regard to conflict
of laws principles thereof.
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SECTION 12.15 Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY PARTY HERETO ARISING OUT OF OR RELATING HERETO OR ANY OTHER REVOLVING LOAN
DOCUMENT, OR ANY OF THE REVOLVING LOAN OBLIGATIONS, MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY HERETO, FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (B)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE OBLIGOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 12.1 (NOTICES); (D) AGREES THAT
SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE APPLICABLE OBLIGOR IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
AND (E) AGREES THAT THE AGENTS AND THE LENDERS RETAIN THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY OBLIGOR
IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 12.16 Waiver Of Jury Trial. EACH OF THE PARTIES HERETO HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER REVOLVING LOAN
DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED.
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND
THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.
EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
12.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR
ANY OF THE OTHER REVOLVING LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO
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THE REVOLVING LOAN OBLIGATIONS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
SECTION 12.17 Confidentiality.
Each Lender shall hold all non-public information regarding the
Borrower and its business identified as such by the Borrower and obtained by
such Lender pursuant to the requirements hereof in accordance with such Lender's
customary procedures for handling confidential information of such nature, it
being understood and agreed by the Borrower that, in any event, a Lender may
make:
(i) disclosures of such information to Affiliates of such
Lender and to their agents and advisors (and to other Persons
authorized by a Lender or Agent to organize, present or disseminate
such information in connection with disclosures otherwise made in
accordance with this Section 12.17);
(ii) disclosures of such information reasonably required by
any bona fide or potential assignee, transferee or participant in
connection with the contemplated assignment, transfer or participation
by such Lender of any Revolving Loan Obligations or any participations
therein;
(iii) disclosure to any rating agency when required by it,
provided that, prior to any disclosure, such rating agency shall
undertake in writing to preserve the confidentiality of any
confidential information relating to the Obligors received by it from
any of the Agents or any Lender, and
(iv) disclosures required or requested by any governmental
agency or representative thereof or by the National Association of
Insurance Commissioners or pursuant to legal or judicial process;
provided, unless specifically prohibited by applicable law or court
order, each Lender shall make reasonable efforts to notify the Borrower
of any request by any governmental agency or representative thereof
(other than any such request in connection with any examination of the
financial condition or other routine examination of such Lender by such
governmental agency) for disclosure of any such non-public information
prior to disclosure of such information.
SECTION 12.18 Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged with respect to any of the Revolving Loan
Obligations, including all charges or fees in connection therewith deemed in the
nature of interest under applicable law shall not exceed the Highest Lawful
Rate. If the rate of interest (determined without regard to the preceding
sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the
outstanding amount of the Revolving Loan Obligations shall bear interest at the
Highest Lawful Rate until the total amount of interest due hereunder equals the
amount of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect. In
addition, if when the Revolving Loan Obligations are repaid in full the total
interest due hereunder (taking into account the increase provided for above) is
less than the total amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect, then to the extent permitted by law, the Borrower
129
shall pay to the Administrative Agent an amount equal to the difference between
the amount of interest paid and the amount of interest which would have been
paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding
the foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Revolving Loan Obligations or be refunded to the
Borrower.
SECTION 12.19 Counterparts; Execution by Facsimile.
(a) This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
(b) The delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
SECTION 12.20 Effectiveness. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
the Borrower and the Administrative Agent of written or telephonic notification
of such execution and authorization of delivery thereof.
SECTION 12.21 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Agreement must include:
(i) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of such Person, he or
she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been satisfied; and
(iv) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 12.22 No Recourse Against the Borrower or the Guarantors.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT OR ANY
OTHER REVOLVING LOAN DOCUMENT, THE REVOLVING LOANS AND THE REVOLVING LOAN
GUARANTEES ARE NON-RECOURSE SECURED OBLIGATIONS OF THE BORROWER AND THE
APPLICABLE GUARANTORS, RESPECTIVELY. THE ONLY RECOURSE A LENDER WILL HAVE WITH
RESPECT TO
130
THE PAYMENT OF PRINCIPAL OF, OR INTEREST OR PREMIUM ON, THE REVOLVING LOAN
OBLIGATIONS (WHETHER UNDER THIS AGREEMENT OR PURSUANT TO THE GUARANTEES) WILL BE
ENFORCEMENT OF ITS RIGHTS AGAINST THE COLLATERAL PURSUANT TO THE SECURITY
DOCUMENTS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
131
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CALPINE GENERATING COMPANY, LLC,
as the Borrower
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[Revolving Loan Agreement - Calpine Generating Company, LLC]
THE BANK OF NOVA SCOTIA,
as Administrative Agent, LC Bank, Lead
Arranger and Bookrunner
By: /s/ ▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇'▇▇▇▇▇
Title: Managing Director
THE BANK OF NOVA SCOTIA,
as a Lender
By: /s/ ▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇'▇▇▇▇▇
Title: Managing Director
ING CAPITAL LLC,
as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ G. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: G. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
Title: Director
CREDIT LYONNAIS NEW YORK BRANCH,
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
[Revolving Loan Agreement - Calpine Generating Company, LLC]
TORONTO DOMINION (TEXAS) INC.,
as a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
BAYERISCHE LANDESBANK CAYMAN ISLANDS
BRANCH,
as a Lender
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: First Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[Revolving Loan Agreement - Calpine Generating Company, LLC]
THE GUARANTORS:
CALGEN EXPANSION COMPANY, LLC
CPN FREESTONE, LLC
CALPINE FREESTONE, LLC
CALPINE FREESTONE ENERGY GP, LLC
CALPINE CHANNEL ENERGY CENTER LP, LLC
CALPINE CHANNEL ENERGY CENTER GP, LLC
CHANNEL POWER GP, LLC
CALGEN EQUIPMENT FINANCE HOLDINGS, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY
ONE, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY
THREE LLC
CALGEN EQUIPMENT FINANCE COMPANY, LLC
NUECES BAY ENERGY LLC
CALPINE NORTHBROOK SOUTHCOAST INVESTORS,
LLC
CALPINE CORPUS CHRISTI ENERGY GP, LLC
ZION ENERGY LLC
LOS MEDANOS ENERGY CENTER, LLC
▇▇▇▇▇▇ ENERGY CENTER, LLC
▇▇▇▇▇▇▇▇ ENERGY LLC
DECATUR ENERGY CENTER, LLC
CALPINE ▇▇▇▇▇ POWER I, LLC
CALPINE ▇▇▇▇▇ POWER II, LLC
CALPINE BAYTOWN ENERGY CENTER LP, LLC
CALPINE BAYTOWN ENERGY CENTER GP, LLC
BAYTOWN POWER GP, LLC
COLUMBIA ENERGY LLC
DELTA ENERGY CENTER, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY
TWO, LLC
PASTORIA ENERGY FACILITY L.L.C.
CALPINE PASTORIA HOLDINGS, LLC
Executing this Agreement on behalf of
and so as to bind each of the limited
liability companies named above under
the caption "The Guarantors"
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[Revolving Loan Agreement - Calpine Generating Company, LLC]
THE GUARANTORS:
FREESTONE POWER GENERATION LP
CALPINE FREESTONE ENERGY, LP
CALPINE POWER EQUIPMENT LP
CHANNEL POWER, LP
CHANNEL ENERGY CENTER, LP
CALPINE CORPUS CHRISTI ENERGY, LP
CORPUS CHRISTI COGENERATION LP
CALPINE ▇▇▇▇▇ POWER, L.P.
BAYTOWN ENERGY CENTER, LP
BAYTOWN POWER, LP
Executing this Agreement on behalf of
and so as to bind each of the limited
partnerships named above under the
caption "The Guarantors"
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[Revolving Loan Agreement - Calpine Generating Company, LLC]
APPENDIX A
TO REVOLVING LOAN AGREEMENT
INITIAL REVOLVING LOAN COMMITMENTS
Pro
Lender Revolving Loan Commitment Rata Share
------ ------------------------- ----------
Bayerische Landesbank Cayman Islands Branch $33,333,333.33 16.66%
Credit Lyonnais New York Branch $33,333,333.33 16.67%
ING Capital LLC $33,333,333.33 16.67%
Toronto Dominion (Texas) INC. $33,333,333.33 16.66%
The Bank of Nova Scotia $33,333,333.35 16.67%
Union Bank of California, N.A. $33,333,333.33 16.67%
-------------- -----
Total $ 200,000,000 100%
============== =====
B-1
APPENDIX B
TO REVOLVING LOAN AGREEMENT
NOTICE ADDRESSES
Administrative Agent's
Principal Office: The Bank of Nova Scotia,
as Administrative Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Loan Administration
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Collateral Agent: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Borrower: Calpine Generating Company, LLC
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Each Guarantor: c/o Calpine Generating Company, LLC
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
B-2
EXHIBIT A
TO REVOLVING LOAN AGREEMENT
FORM OF SUBORDINATION TERMS
[TO BE INCLUDED AS AN ARTICLE IN THE INSTRUMENT EVIDENCING "AFFILIATE
SUBORDINATED INDEBTEDNESS" INCURRED PURSUANT TO THIS AGREEMENT, THIRD PARTY
SUBORDINATED INDEBTEDNESS INCURRED PURSUANT TO THIS AGREEMENT, AND AS OTHERWISE
REQUIRED BY THIS AGREEMENT]
[THE COLLATERAL AGENT SHALL EITHER BE A PARTY TO OR A THIRD PARTY BENEFICIARY OF
THESE SUBORDINATION TERMS]
ARTICLE [__]
SUBORDINATION
Section [__].1. Definitions. All capitalized terms used herein
and not otherwise defined herein shall have the meanings given to such terms in
the Collateral Trust Agreement, dated as of March 23, 2004, among Calpine CalGen
Holdings, Inc., Calpine Generating Company, LLC ("CalGen"), CalGen Finance
Corp., the guarantors party thereto from time to time (the "Guarantors"), the
Secured Debt Representatives party thereto and Wilmington Trust Company, as
collateral agent (the "Collateral Agent"), as in effect on the date hereof. As
used in this Article, the following terms shall have the following respective
meanings:
"Junior Claimant" means [INSERT NAME OF LENDER UNDER
SUBORDINATED DEBT].
"Proceeding" means any (a) insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition or
other similar proceeding of or against the Subordinated Debtor or its
property or its creditors as such, (b) proceeding for any liquidation,
dissolution or other winding-up of the Subordinated Debtor, voluntary
or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (c) general assignment for the benefit of creditors of the
Subordinated Debtor, or (d) other marshalling of the assets of the
Subordinated Debtor.
"Senior Claimants" means the holders of Senior
Obligations.
"Senior Claim Documents" means the Secured Debt
Documents other than the Other Junior Lien Debt Documents.
"Senior Claims" means, collectively, (a) the
principal of, and premium, if any, and interest on, the Senior
Obligations (in each case, including, without limitation, any interest
accruing thereon at the legal rate after the commencement of any
Proceeding
A-1
and any additional interest that would have accrued thereon but for the
commencement of such Proceeding), and (b) all other Obligations of the
Subordinated Debtor to the Senior Claimants, whether now existing or
hereafter incurred or created, under or with respect to the Senior
Claim Documents or any replacement, supplement to or refinancing of the
Senior Obligations.
"Senior Obligations" means all Secured Obligations
other than the Other Junior Lien Obligations.
"Senior Obligations Termination Date" means the date
on which all Senior Obligations (including all interest accrued thereon
after the commencement of any bankruptcy, insolvency or liquidation
proceeding at the rate, including any applicable post-default rate,
specified in the applicable Senior Claim Documents, even if such
interest is not enforceable, allowable or allowed as a claim in such
proceeding) have been paid in full in cash (and/or defeased in
accordance with the applicable Senior Claim Documents), all commitments
to extend credit under all Senior Claim Documents have terminated or
expired and all outstanding letters of credit issued pursuant to any
Senior Claim Documents have been cancelled, terminated or cash
collateralized at 102.5% of the aggregate undrawn amount.
"Subordinated Debt" means all indebtedness owing to
Junior Claimant arising under or in respect of the Subordinated Debt
Documents.
"Subordinated Debt Documents" means [DESCRIBE
SUBORDINATED DEBT INSTRUMENT], any promissory note or other instrument
relating thereto and any other documents or instruments directly
relating to the foregoing (in each case, including any amendments,
replacements or substitutions thereof).
"Subordinated Debtor" means [INSERT CALGEN OR
GUARANTOR INCURRING THE SUBORDINATED DEBT].
Section [_].2. Certain Subordination Terms. Until the Senior
Obligations Termination Date, and notwithstanding anything in the Subordinated
Debt Documents to the contrary:
[__].2.1. Except as permitted under the Senior Claim
Documents, the Subordinated Debtor shall not, directly or indirectly, make any
payment of principal, interest or otherwise on or in respect of the Subordinated
Debt.
[__].2..2. Except for the right to accept payments as
provided in Section [__].2.1 or [__].2.5(b), Junior Claimant shall not demand,
▇▇▇ for or accept from the Subordinated Debtor or any other Person any such
payment or collateral, nor take any other action to enforce or collect upon any
such payment or to enforce its rights to receive any such payment, in either
case in respect of the Subordinated Debt, provided, however, that nothing herein
shall limit the right or ability of Junior Claimant (i) to receive payments from
the Subordinated Debtor in respect of the Subordinated Debt as provided in
Section [__].2.1 so long as no default or event of default under any Secured
Debt Document has occurred and is
A-2
continuing, or (ii) to accelerate the maturity of the Subordinated Debt at any
time after all of the Senior Claims have been accelerated; and provided further,
that in the event that after an acceleration any of the Senior Claimants rescind
the acceleration of the Senior Claims, and provide written notice to Junior
Claimant thereof, or Junior Claimant otherwise becomes aware of such rescission,
Junior Claimant shall rescind the acceleration of the Subordinated Debt.
[__].2.3. Neither the Subordinated Debtor nor Junior
Claimant shall take any action prejudicial to or inconsistent with the Senior
Claimants' priority position over Junior Claimant created by this Article,
including, without limitation, any action which will hinder, delay or otherwise
prevent the Senior Claimants from taking any action they deem necessary to
enforce rights with respect to the Senior Claims or the Lien of the Senior Claim
Documents. The Junior Claimant shall not take any action or otherwise act to
contest on account of the Subordinated Debt (i) the validity or priority of any
Liens or security interests granted to, or for the benefit of, the Senior
Claimants, (ii) the relevant rights and duties of the Senior Claimants with
respect to Junior Claimant on account of any Subordinated Debt as established in
this Article or (iii) the Senior Claimants' exercise of remedies in accordance
with the Senior Claim Documents.
[__].2.4. Each document or instrument evidencing
Subordinated Debt shall bear a legend providing that payment of the Subordinated
Debt thereunder has been subordinated to prior payment of the Senior Claims in
the manner and to the extent set forth in this Article.
[__].2.5. Junior Claimant shall not commence or join
with any other creditor or creditors of the Subordinated Debtor in commencing
any Proceeding against the Subordinated Debtor, [CalGen, CalGen Holdings or any
Guarantor--ADD ALL THAT ARE NOT SUBORDINATED DEBTORS], but may join in any
Proceeding after it has commenced. At any general meeting of creditors of
Subordinated Debtor, [CalGen, CalGen Holdings or any Guarantor--ADD ALL THAT ARE
NOT SUBORDINATED DEBTORS], or in the event of any Proceeding, if all Senior
Claims have not been paid in full in cash at such time, the Collateral Agent on
behalf of the Senior Claimants is hereby irrevocably authorized at any such
meeting or in any such Proceeding:
(a) To enforce claims comprising
Subordinated Debt in the name of Junior Claimant, by proof of
debt, proof of claim, suit or otherwise;
(b) To collect any assets of the
Subordinated Debtor distributed, divided or applied by way of
dividend or payment as a result of a Proceeding, or such
securities issued, on account of Subordinated Debt as a result
thereof and apply the same, or the proceeds of any realization
upon the same that the Senior Claimants in their discretion
elect to effect, to Senior Claims until all Senior Claims
shall have been paid in full in cash (the Senior Claimants
hereby agreeing to render any surplus to Junior Claimant
and/or other subordinated creditors, as their interests
appear, or to interplead such surplus with a court of
competent jurisdiction); and
A-3
(c) To take generally any action in
connection with any such meeting or proceeding which Junior
Claimant might otherwise take in respect of the Subordinated
Debt and claims relating thereto.
After the commencement of any such Proceeding, Junior
Claimant may inquire in writing of the Collateral Agent on behalf of the Senior
Claimants whether the respective Senior Claimants intend to exercise the
foregoing rights with respect to the Subordinated Debt. Should the Senior
Claimants fail, at least 20 days before the deadline therefor, either to file a
proof of claim with respect to the Subordinated Debt and to furnish a copy
thereof to Junior Claimant, or to inform Junior Claimant in writing that the
Senior Claimants intend to exercise their rights to assert the Subordinated Debt
in the manner hereinabove provided, Junior Claimant may, but shall not be
required to, proceed to file a proof of claim with respect to the Subordinated
Debt and take such further steps with respect thereto, not inconsistent with
this Article, as Junior Claimant may deem proper.
[__].2.6. Upon the occurrence and during the
continuation of an event of default under a Secured Debt Document, Junior
Claimant may, but shall have no obligation to, upon not less than 10 days prior
written notice to the Collateral Agent, purchase all of the outstanding Senior
Obligations owing to the Senior Claimants by irrevocably tendering, in
immediately available funds, full payment of the Purchase Price (as defined
below) to the Senior Claimants:
(a) The Purchase Price shall be equal to the
total amount of Senior Claims at the time of acceleration
(assuming such obligations have been accelerated);
(b) Any such purchase by Junior Claimant
shall be without warranty by, or recourse to, the Senior
Claimants, except with respect to the legal and beneficial
ownership by the Senior Claimants of the Obligations so
purchased, free and clear of all Liens and rights of others;
and
(c) Concurrently with any such purchase, the
Senior Claimants shall forthwith sell, assign, transfer and
convey to Junior Claimant all of their right, title and
interest in and to the Senior Obligations, and all Liens and
other security interests in favor of the Senior Claimants
securing the obligations of the Subordinated Debtor in
connection therewith.
Section [__].3. Senior Claim Documents. The Junior Claimant
acknowledges that it has been provided with a copy of the Senior Claim Documents
and has read and is familiar with the provisions thereof.
Section [__].4. Time of Filing. Notwithstanding the time of
filing, attachment or recording of any document or other instrument, it is
agreed by Junior Claimant that any Liens arising under or pursuant to the Senior
Claim Documents shall be senior to any Liens arising in favor of Junior Claimant
as part of or relating to the Subordinated Debt Documents, if any;
A-4
provided, however, that nothing herein shall be deemed to permit Junior Claimant
to obtain any such Liens.
Section [__].5. Wrongful Collections. Should any payment on
account of, or any collateral for any part of, the Subordinated Debt be received
by Junior Claimant in violation of this Article, such payment or collateral
shall be delivered forthwith to the Collateral Agent by the recipient for
application to Senior Claims, in the form received. The Collateral Agent is
irrevocably authorized to supply any required endorsement or assignment which
may have been omitted. Until so delivered, any such payment or collateral shall
be held by the recipient in trust for the Senior Claimants and shall not be
commingled with other funds or property of the recipient.
Section [__].6. Ownership of Subordinated Debt; Amendment of
Subordinated Debt Documents.
[__].6.1. The Junior Claimant represents and warrants
that it is the lawful owner of the Subordinated Debt. Any security interest in
the Junior Claimant's interest in the Subordinated Debt will at all times be
subject to the rights of the Senior Claimants hereunder. The Junior Claimant
agrees that it may not assign all or any portion of the Subordinated Debt or any
of its rights or remedies under the Subordinated Debt Documents unless any
assignee expressly agrees in writing for the benefit of the Collateral Agent
that it takes such Subordinated Debt subject in all respects to the rights of
the Senior Claimants hereunder.
[__].6.2. The Subordinated Debt Documents may not be
amended so as to have an adverse effect upon the Senior Claims or the
Subordinated Debtor's ability to pay the Senior Claims at any time.
Section [__].7. Waivers. The Collateral Agent and the Senior
Claimants are hereby authorized to demand specific performance of this Article,
whether or not the Subordinated Debtor shall have complied with the provisions
hereof applicable to it, at any time when Junior Claimant shall have failed to
comply with any provision hereof applicable to it. Junior Claimant hereby
irrevocably waives any defense based on the adequacy of a remedy at law which
might be asserted as a bar to the remedy of specific performance hereof in any
action brought therefor by the Senior Claimants. Junior Claimant (a) further
waives presentment, notice and protest in connection with all negotiable
instruments evidencing Senior Claims or Subordinated Debt to which Junior
Claimant may be a party, notice of the acceptance of this Article by the Senior
Claimants, notice of any loan made, extension granted or other action taken in
reliance hereon, and all demands and notices of every kind in connection with
this Article, Senior Claims or time of payment of Senior Claims or Subordinated
Debt and (b) hereby assents to any renewal, extension or postponement of the
time of payment of Senior Claims or any other indulgence with respect thereto,
to any increase in the amount of Senior Claims, to any substitution, exchange or
release of collateral therefor and to the addition or release of any person
primarily or secondarily liable thereon and assents to the provisions of any
instrument, security or other writing evidencing Senior Claims.
A-5
Section [__].8. Subrogation; No Impairment of Subordinated
Debtor's Obligations. Subject to and from and after the Senior Obligations
Termination Date, Junior Claimant shall be subrogated to the rights of the
Senior Claimants to receive payments or distributions of cash, property or
securities of the Subordinated Debtor applicable to the Senior Claims until all
amounts owing on the Subordinated Debt shall be paid in full. For purposes of
such subrogation, no payments or distributions to the Senior Claimants to which
Junior Claimant would be entitled but for the provisions of this Article, and no
payments paid over by Junior Claimant to Senior Claimants pursuant to this
Article shall, as among the Subordinated Debtor, its creditors other than the
Senior Claimants, and Junior Claimant, be deemed to be a payment or distribution
on account of the Subordinated Debt, it being understood that the provisions of
this Article are intended solely for the purpose of defining the relative rights
of Junior Claimant and the Senior Claimants. Nothing contained in this Article
is intended to or shall impair, as between the Subordinated Debtor and Junior
Claimant, the obligation of the Subordinated Debtor, which is absolute and
unconditional, to pay to Junior Claimant the principal of and the premium, if
any, and the interest on the Subordinated Debt, and all other amounts payable by
the Subordinated Debtor under the Subordinated Debt Documents, as and when the
same shall become due and payable, or to affect the relative rights of Junior
Claimant and creditors of Subordinated Debtor other than the Senior Claimants.
Section [__].9. Reinstatement. The obligations of Junior
Claimant under this Article shall continue to be effective, or be reinstated, as
the case may be, if at any time any payment in respect of any Senior Claim, or
any other payment to any holder of any Senior Claim in its capacity as such, is
rescinded or must otherwise be restored or returned by the holder of such Senior
Claims upon the occurrence of any Proceeding, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Subordinated Debtor or any substantial part of its property, or
otherwise, all as though such payment had not been made.
Section [__].10. Bankruptcy. This Article shall remain in full
force and effect as between Junior Claimant and the Senior Claimants
notwithstanding the occurrence of any Proceeding affecting the Subordinated
Debtor.
Section [__].11. Further Assurances. The Subordinated Debtor
and Junior Claimant shall execute and deliver to the Senior Claimants such
further instruments and shall take such further action as the Senior Claimants
may at any time or times reasonably request in order to carry out the provisions
and intent of this Article.
Section [__].12. Successors and Assigns. The provisions of
this Article shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Neither Junior Claimant nor
the Senior Claimants shall have a duty to preserve rights against prior parties
in any property of any kind received hereunder. Nothing contained herein shall
impose on the Senior Claimants any duties with respect to any property of the
Subordinated Debtor or Junior Claimant received hereunder.
Section [__].13. Governing Law. This Article is intended to
take effect as a sealed instrument, shall be binding upon the parties hereto and
their respective executors,
A-6
administrators, other legal representatives, successors and assigns, and shall
inure to the benefit of the Senior Claimants, their respective successors and
assigns and shall be governed by the laws of the State of New York without
reference to principles of conflict of laws (other than Section 5-1401 of the
New York General Obligations Law). The parties hereto intend and agree that this
Article shall remain binding on such parties (other than the Subordinated
Debtor) notwithstanding the termination (except upon the payment in full of
Senior Claims in cash) or unenforceability of this Article as against the
Subordinated Debtor.
A-7
EXHIBIT B
TO REVOLVING LOAN AGREEMENT
FORM OF ASSIGNMENT
AND ASSUMPTION AGREEMENT
Date: _______ __, ____
The Bank of Nova Scotia,
as Administrative Agent
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Loan Administration
Calpine Generating Company, LLC
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Re: Calpine Generating Company, LLC - Assignment Agreement
Ladies and Gentlemen:
Reference is made to the Amended and Restated
Credit
Agreement, dated as of March 23, 2004 (the "Revolving Loan Agreement"), entered
into by and among Calpine Generating Company, LLC, a Delaware limited liability
company (the "Borrower"), the Guarantors party thereto from time to time, the
Lenders party thereto from time to time, and The Bank of Nova Scotia, as
administrative agent (together with its successors and permitted assignees in
such capacity, the "Administrative Agent"), as issuer of the Letters of Credit
thereunder (together with its successors and permitted assigns in such capacity,
the "LC Bank") and as lead arranger and sole bookrunner. Unless otherwise
defined herein, terms defined in the Revolving Loan Agreement and used herein
shall have the meanings given to them in the Revolving Loan Agreement.
As of [INSERT EFFECTIVE DATE OF ASSIGNMENT] (the "Effective
Date"), [INSERT NAME OF ASSIGNOR] (the "Assignor") irrevocably sells, transfers,
conveys and assigns, without recourse, representation or warranty (except as
expressly set forth herein), to [INSERT NAME OF ASSIGNEE] (the "Assignee"), and
the Assignee irrevocably purchases from the Assignor and assumes (as more
particularly described in Schedule I hereto), (a) [INSERT PERCENTAGE OF
REVOLVING LOAN COMMITMENTS TO BE ASSIGNED]% of the Revolving Loan Commitments
under the Revolving Loan Agreement (which represents $[INSERT AMOUNT OF
REVOLVING LOAN COMMITMENTS TO BE ASSIGNED]), (b) [INSERT PERCENTAGE OF
PARTICIPATION INTERESTS TO BE ASSIGNED]% of the Participation Interests under
the Revolving Loan Agreement (which represents $[INSERT AMOUNT OF PARTICIPATION
INTERESTS TO BE ASSIGNED]), (c) [INSERT PERCENTAGE OF REVOLVING LOANS TO BE
B-1
ASSIGNED]% of the Revolving Loans under the Revolving Loan Agreement (which
represents $[INSERT AMOUNT OF REVOLVING LOANS TO BE ASSIGNED]), and (d) all
rights, benefits, obligations, liabilities, and indemnities related to such
Revolving Loan Commitments, Participation Interests, and Revolving Loans, as
applicable, under and in connection with the Revolving Loan Agreement and the
other Revolving Loan Documents (the "Assigned Portion"). After giving effect to
the foregoing assignment and delegation, the Assignor's and the Assignee's
outstanding Revolving Loan Commitments, Participation Interests and Revolving
Loans for the purposes of the Revolving Loan Agreement and each other Revolving
Loan Document will be as set forth in Schedule I hereto.
In addition, this Assignment Agreement constitutes notice to the
Administrative Agent, pursuant to Section 12.6 of the Revolving Loan Agreement,
of the assignment and delegation to the Assignee of the Assigned Portion of the
Revolving Loans of the Assignor outstanding under the Revolving Loan Agreement
as of the Effective Date, subject to its written consents.
All accrued and unpaid interest, fees and other amounts payable with
respect to the Assigned Portion for any period of time prior to the Effective
Date shall be payable to the Assignor, and all accrued and unpaid interest, fees
and other amounts payable with respect to the Assigned Portion for any period
from and after the Effective Date shall be payable to the Assignee. The Assignor
and Assignee each agree to hold in trust for the other any such amounts that it
receives pursuant to any Revolving Loan Document and to which the other party is
entitled.
The Assignee confirms and agrees that in becoming a Lender and in
making its Revolving Loans under the Revolving Loan Agreement, such actions have
and will be made without recourse to, or representation or warranty by, the
Administrative Agent, except for the representations expressly set forth below.
The Assignor represents and warrants that it is legally authorized to
enter into and deliver this Assignment Agreement, that its existing aggregate
Revolving Loan Commitments, Participation Interests and Revolving Loans are as
set forth on Schedule I hereto, that it is the legal and beneficial owner of the
Assigned Portion and that it has not created any adverse claim on its interest
in the Assigned Portion. Except as set forth in the previous sentence, the
Assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made pursuant to or in
connection with this Assignment Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Assignment Agreement,
the Revolving Loan Agreement, any other Revolving Loan Document or any other
instrument or document furnished pursuant hereto or thereto, including the
financial condition of any CalGen Company or the performance or observance by
any Lender or any of the Agents of any of its obligations under the Revolving
Loan Agreement, any other Revolving Loan Document or any other instrument or
document furnished pursuant hereto or thereto.
The Assignee (a) represents and warrants that (i) it is an Eligible
Assignee and that it is legally authorized to enter into and deliver this
Assignment Agreement, (ii) it has experience and expertise in the making of or
investing in commitments or loans such as the applicable
B-2
Revolving Loan Commitments or Revolving Loans, as the case may be, (iii) it will
make or invest in, as the case may be, its Revolving Loan Commitments or
Revolving Loans for its own account in the ordinary course of business and
without a view to the distribution of such Revolving Loan Commitments or
Revolving Loans within the meaning of the Securities Act or the Exchange Act or
other federal securities laws and (iv) it has paid to the Administrative Agent,
for its account, in connection with the assignment of the Assigned Portion, the
$3,500 administrative fee described in Section 12.6(d) of the Revolving Loan
Agreement, (b) confirms that it has received a copy of the Revolving Loan
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 3.1.18 of the Revolving Loan Agreement and copies
of the documents which were required to be delivered under the Revolving Loan
Agreement as a condition to the making of Revolving Loans thereunder and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment Agreement, (c) agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Revolving Loan Agreement and the other Revolving Loan
Documents are required to be performed by it as a Lender, (d) acknowledges that
it has received copies of, consented to and approved the Collateral Trust
Agreement, and authorizes the Agents to perform their respective obligations
thereunder, and (e) attaches the forms prescribed by applicable Governmental
Authorities as to the Assignee's status for purposes of determining exemption
from withholding taxes with respect to all payments to be made to the Assignee
under any of the Revolving Loan Documents or such other documents as are
necessary to indicate that all such payments are subject to such rates at a rate
reduced by an applicable tax treaty. In addition, the Assignee, independently
and without reliance upon the Assignor, the Administrative Agent, any other
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, shall continue to make its own credit
decisions in taking or not taking action under the Revolving Loan Agreement, the
other Revolving Loan Documents and the other instruments and documents delivered
in connection therewith. ASSIGNEE HEREBY ACKNOWLEDGES AND AGREES THAT ITS LIEN
PRIORITIES, THE DISTRIBUTION OF PROCEEDS OF COLLATERAL, THE EXERCISE OF REMEDIES
UNDER THE Revolving LOAN AGREEMENT, AMENDMENTS AND WAIVERS TO THE Revolving LOAN
DOCUMENTS, AND OTHER MATTERS RELATED TO THE COLLATERAL ARE SUBJECT TO AND
GOVERNED BY THE COLLATERAL TRUST AGREEMENT.
Following the execution of this Assignment Agreement, it will be
delivered to the Administrative Agent for recording by the Administrative Agent
pursuant to Section 12.6 of the Revolving Loan Agreement, effective as of the
Effective Date. The Assignor attaches hereto the Revolving Loan Note held by it,
if any, evidencing the Assigned Portion and (i) upon request by the Assignee,
will request that the Administrative Agent exchange the attached Revolving Loan
Note for a new Revolving Loan Note, payable to the Assignee and (ii) if the
Assignor has retained any interest, may request that the Administrative Agent
exchange the attached Revolving Loan Note for a new Revolving Loan Note, payable
to the Assignor, and in each case in amounts which reflect the assignment being
made hereby and after giving effect to any other assignments which have become
effective on the Effective Date.
Except as otherwise provided in the Revolving Loan Agreement, effective
as of the Effective Date:
B-3
(a) the Assignee:
(i) shall be deemed automatically to have become a
party to the Revolving Loan Agreement, have all the rights and
obligations of a "Lender" under the Revolving Loan Agreement and the
other Revolving Loan Documents as if it were an original signatory
thereto to the extent specified in the second paragraph of this
Assignment Agreement, and hereby expressly confirms its undertakings
regarding its appointments and indemnity obligations provided for in
Article XII of the Revolving Loan Agreement; and
(ii) agrees to be bound by the terms and conditions
set forth in the Revolving Loan Agreement and the other Revolving Loan
Documents as if it were an original signatory thereto; and
(b) the Assignor shall be released from its obligations and
shall relinquish its rights under the Revolving Loan Agreement and the
other Revolving Loan Documents to the extent specified in the second
paragraph of this Assignment Agreement, except with regard to those
provisions that expressly survive the termination of the Revolving Loan
Agreement to the extent such provisions relate to the time prior to the
Effective Date.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Revolving Loan Commitments and Revolving
Loans:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
(B) Payment Instructions:
[ASSIGNEE TO COMPLETE.]
The Assignee has attached hereto the forms, certificates or other
evidence required by Section 2.1.16(e) of the Revolving Loan Agreement no later
than the date of acceptance hereof by the Administrative Agent. The Assignee has
also attached hereto any powers of attorney or other public or private documents
requested by the Collateral Agent which are necessary to enable the Collateral
Agent to enforce any of the Security Documents on behalf of the Secured Parties.
The Administrative Agent shall notify the Borrower of any such
assignments.
This Assignment Agreement may be executed by the Assignor and Assignee
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute
but one and the same agreement. The
B-4
delivery of an executed signature page of this Assignment Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof. The parties hereto hereby agree to execute and deliver such other
documents or instruments as shall be necessary to effect the purposes of this
Assignment Agreement.
This Assignment Agreement shall be governed by the laws of the State of
New York without regard to the conflicts of law provisions thereof, other than
sections 5-1401 and 5-1402 of the General Obligations Law of the State of New
York.
(signature page follows)
B-5
IN WITNESS WHEREOF, each of the undersigned has executed and
delivered this Assignment Agreement as of the date first written above.
[INSERT NAME OF ASSIGNOR]
By:
-----------------------------------
Name:
Title:
[INSERT NAME OF ASSIGNEE]
By:
-----------------------------------
Name:
Title:
Accepted and acknowledged
for recording in the Register
this ____ day of ________, ____
THE BANK OF NOVA SCOTIA,
as the Administrative Agent and the LC Bank
By:
----------------------------------------
Name:
Title:
B-6
Acknowledged and Agreed:
THE BANK OF NOVA SCOTIA,
as the Administrative Agent and LC Bank
By:
----------------------------------------
Name:
Title:
CALPINE GENERATING COMPANY, LLC,
as the Borrower
By:
----------------------------------------
Name:
Title:
B-7
SCHEDULE I
to Assignment Agreement
A. Assigned Portion:
Revolving Loan Commitments $________
and Applicable Percentage with respect thereto ________%
Participation Interests $________
and Applicable Percentage with respect thereto ________%
Revolving Loans $________
and Applicable Percentage with respect thereto ________%
B. Assignor's Adjusted Total Revolving Loan Commitments, Participation Interests and
Revolving Loans (after giving effect to the assignment contemplated hereby):
Revolving Loan Commitments $________
and Applicable Percentage with respect thereto ________%
Participation Interests $________
and Applicable Percentage with respect thereto ________%
Revolving Loans $________
and Applicable Percentage with respect thereto ________%
C. Assignee's Adjusted Total Revolving Loan Commitments, Participation Interests and
Revolving Loans (after giving effect to the assignment contemplated hereby):
Revolving Loan Commitments $________
and Applicable Percentage with respect thereto ________%
Participation Interests $________
and Applicable Percentage with respect thereto ________%
Revolving Loans $________
and Applicable Percentage with respect thereto ________%
B-8
EXHIBIT C
TO REVOLVING LOAN AGREEMENT
[LETTERHEAD OF NON-U.S. LENDER]
FORM OF CERTIFICATE RE: NON-BANK STATUS
Certificate Date: _______ __, ____
The Bank of Nova Scotia,
as Administrative Agent
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Loan Administration
Re: Calpine Generating Company, LLC - Non-Bank Status
Ladies and Gentlemen:
Reference is made to the Amended and Restated
Credit Agreement, dated
as of March 23, 2004 (as amended, supplemented, replaced or otherwise modified
from time to time, the "Revolving Loan Agreement"), among Calpine Generating
Company, LLC, a Delaware limited liability company (the "Borrower"), the
guarantors from time to time party thereto, the lenders from time to time party
thereto, The Bank of Nova Scotia, as administrative agent (with its successors
and permitted assigns in such capacity, the "Administrative Agent") and each of
the other agents and arrangers listed on the signature pages thereto. Unless
otherwise defined herein, terms defined in the Revolving Loan Agreement and used
herein shall have the meanings given to them in the Revolving Loan Agreement.
[INSERT NAME OF NON-U.S. LENDER] (the "Non-U.S. Lender") is providing
this certificate pursuant to Section 2.1.16(e) of the Revolving Loan Agreement.
The Non-U.S. Lender hereby represents and warrants as follows:
1. The Non-U.S. Lender is the sole record and beneficial owner of the
Revolving Loans or the obligations evidenced by the Revolving Loan Notes in
respect of which it is providing this certificate.
2. The Non-U.S. Lender is not a "bank" for purposes of Section 871(h)
or 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
In this regard, the Non-U.S. Lender further represents and warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other
Legal Requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for
purposes of any tax, securities law or other filing or
submission made to any Governmental
C-1
Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or
other Legal Requirements.
3. The Non-U.S. Lender is not a 10 percent shareholder of the Borrower
within the meaning of Section 871(h) or 881(c)(3)(B) of the Code.
4. The Non-U.S. Lender is not a controlled foreign corporation
receiving interest from a related person within the meaning of Section 871(h) or
881(c)(3)(C) of the Code.
(signature page follows)
C-2
IN WITNESS WHEREOF, the undersigned has duly executed this certificate
by its respective authorized representative as of the day and year first above
written.
[INSERT NAME OF NON-U.S. LENDER]
By:
----------------------------------
Name:
Title:
C-3
EXHIBIT D
TO REVOLVING LOAN AGREEMENT
[LETTERHEAD OF THE BORROWER]
FORM OF
CONTINUATION NOTICE
Date: _____ __, ____
The Bank of Nova Scotia,
as Administrative Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Loan Administration
Re: Calpine Generating Company, LLC - Continuation Notice
Ladies and Gentlemen:
Reference is made to the Amended and Restated
Credit Agreement, dated
as of March 23, 2004 (as amended, supplemented, replaced or otherwise modified
from time to time, the "Revolving Loan Agreement"), among Calpine Generating
Company, LLC, a Delaware limited liability company (the "Borrower"), the
guarantors from time to time party thereto, the lenders from time to time party
thereto, The Bank of Nova Scotia, as administrative agent (with its successors
and permitted assigns in such capacity, the "Administrative Agent") and each of
the other agents and arrangers listed on the signature pages thereto. Unless
otherwise defined herein, terms defined in the Revolving Loan Agreement and used
herein shall have the meanings given to them in the Revolving Loan Agreement.
The Borrower hereby gives you notice, irrevocably, pursuant to Section
2.1.6 of the Revolving Loan Agreement, that the Borrower hereby requests a
[CONTINUATION] [CONVERSION] of Revolving Loans under the Revolving Loan
Agreement and, in connection therewith, sets forth below the information
relating to such [CONTINUATION] [CONVERSION] (the "Proposed [CONTINUATION]
[CONVERSION]") as required by Section 2.1.6 of the Revolving Loan Agreement.
(a) The Borrower hereby requests that Revolving Loans be [CONTINUED]
[CONVERTED] as follows:
(i) The first day of the new Interest Period in respect of the
Proposed [CONTINUATION] [CONVERSION] shall be ________ __, ____ (which is a
Business Day).
D-1
(ii) [IF SUCH REVOLVING LOANS ARE TO BE CONTINUED WITH NO
CHANGE IN ANY TYPE OF LOAN(1):] $___________ of the currently outstanding
principal amount of Revolving Loans currently being maintained as Revolving
Loans with an Interest Period of [ONE] [TWO] [THREE] [SIX] month(s), the last
day of which is the day immediately preceding the first day of the Proposed
Continuation referred to in clause (i) above, should be continued as $__________
of Revolving Loans with an Interest Period of [ONE] [TWO] [THREE] [SIX]
month(s).
(iii) [IF SUCH REVOLVING LOANS ARE TO BE CONVERTED:]
$___________ of the currently outstanding principal amount of Revolving Loans
which are [BASE RATE LOANS] [LIBOR RATE LOANS(1)] with an Interest Period of
[ONE] [TWO] [THREE] [SIX] month(s), the last day of which is the day immediately
preceding the first day of the Proposed Conversion referred to in clause (i)
above, should be converted to [BASE RATE LOANS] [LIBOR RATE LOANS] with an
Interest Period of [ONE] [TWO] [THREE] [SIX] month(s).
(b) The Borrower hereby certifies that, as of the date hereof, no
Default or Event of Default has occurred and is continuing.
(signature page follows)
----------
(1) LIBOR Rate Loans may only be continued in a minimum amount equal to
$2,000,000 and in integral multiples of $500,000 in excess of that
amount.
(1) LIBOR Rate Loans may only be converted upon the expiration of the
Interest Period applicable to such LIBOR Rate Loan
D-2
IN WITNESS WHEREOF, the Borrower has caused this Continuation Notice to
be executed and delivered by a duly authorized officer of the Borrower on the
date first written above.
CALPINE GENERATING COMPANY, LLC
By:
--------------------------------
Name:
Title:
D-3
EXHIBIT E
TO REVOLVING LOAN AGREEMENT
CALPINE GENERATING COMPANY, LLC
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▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FORM OF NOTICE OF BORROWING
Certificate Date: _________ __, ____(1)
The Bank of Nova Scotia,
as Administrative Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Loan Administration
Re: Calpine Generating Company, LLC - Notice of Borrowing
Ladies and Gentlemen:
Reference is made to the Amended and Restated
Credit Agreement, dated
as of March 23, 2004 (as amended, supplemented, replaced or otherwise modified
from time to time, the "Revolving Loan Agreement"), among Calpine Generating
Company, LLC, a Delaware limited liability company (the "Borrower"), the
guarantors from time to time party thereto, the lenders from time to time party
thereto, The Bank of Nova Scotia, as administrative agent (with its successors
and permitted assigns in such capacity, the "Administrative Agent") and each of
the other agents and arrangers listed on the signature pages thereto. Unless
otherwise defined herein, terms defined in the Revolving Loan Agreement and used
herein shall have the meanings given to them in the Revolving Loan Agreement.
The Borrower hereby gives you notice in accordance with
Section 2.1.1 of the Revolving Loan Agreement that the Borrower irrevocably
requests that a Revolving Loan be made on [___________], 2004 (which date is a
Business Day), each of which shall be a [BASE RATE LOAN] [LIBOR RATE LOAN] in an
aggregate principal amount of $[INSERT PRINCIPAL AMOUNT OF EACH REVOLVING LOAN]
[WITH AN INITIAL INTEREST PERIOD ENDING [_________], [_____]]. [BORROWER TO
MODIFY AS NECESSARY IF MORE THAN ONE INTEREST PERIOD, AMOUNT OR TYPE OF LOAN IS
BEING SELECTED.]
----------
(1) The Borrower must deliver the Notice of Borrowing to the Administrative
Agent (i) in the case of LIBOR Rate Loans, no less than three Business
Days prior to the date of the requested Borrowing, (ii) in the case of
Base Rate Loans, at least one Business Day prior to the date of the
requested Borrowing, and (iii) in all cases, no more than five Business
Days prior to the date of the requested making of the Revolving Loans.
E-1
[WITH RESPECT TO ANY REVOLVING LOAN MADE AFTER THE CLOSING
DATE, INSERT THE FOLLOWING:] The Borrower hereby confirms and certifies to the
Administrative Agent and each Lender that the following statements are accurate,
true and complete as of the date hereof, and will be accurate, true and complete
as of the proposed date of the requested making of the Revolving Loans: (i) each
of the conditions precedent set forth in Section 3.2 of the Revolving Loan
Agreement have been satisfied or waived in accordance with the terms thereof and
(ii) after giving effect to the requested making of Revolving Loans, the sum of
(x) the aggregate principal amount of Revolving Loans plus (y) the aggregate
principal amount of outstanding Reimbursement Obligations plus (z) the Stated
Amount with respect to all outstanding Letters of Credit is not greater than the
amount of the then-current Total Loan Commitment.
(signature page follows)
E-2
IN WITNESS WHEREOF, the Borrower has caused this Notice of
Borrowing to be executed and delivered by a duly authorized officer of the
Borrower on the date first written above.
CALPINE GENERATING COMPANY, LLC
By:
---------------------------------
Name:
Title:
E-3
EXHIBIT F
TO REVOLVING LOAN AGREEMENT
[INSERT LENDER NAME]
LENDER ADDENDUM
__________________ ___, _______
Reference is made to the Amended and Restated
Credit Agreement, dated
as of March 23, 2004 (as amended, supplemented, replaced or otherwise modified
from time to time, the "Revolving Loan Agreement"), among Calpine Generating
Company, LLC, a Delaware limited liability company (the "Borrower"), the
guarantors from time to time party thereto, the lenders from time to time party
thereto, The Bank of Nova Scotia, as administrative agent (with its successors
and permitted assigns in such capacity, the "Administrative Agent") and each of
the other agents and arrangers listed on the signature pages thereto. Unless
otherwise defined herein, terms defined in the Revolving Loan Agreement and used
herein shall have the meanings given to them in the Revolving Loan Agreement.
Upon execution and delivery of this Lender Addendum by the parties
hereto as provided in Section 12.6(j) of the Revolving Loan Agreement, the
undersigned hereby becomes a Lender thereunder having the Revolving Loan
Commitments set forth in Schedule 1 hereto, effective as of the Closing Date.
This Lender Addendum shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
This Lender Addendum may be executed by one or more of the parties
hereto on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
Delivery of an executed signature page hereof by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
(signature pages follow)
F-1
IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum
to be duly executed and delivered by their proper and duly authorized officers
as of the date first above written.
----------------------------------
Name of Lender
By:
-------------------------------
Name:
Title:
Accepted and agreed:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:
-----------------------------
Name:
Title:
F-2
REVOLVING LOAN COMMITMENTS AND NOTICE ADDRESS
1. Name of Lender:
Notice Addresses:
Credit Contact
Name:
Title:
Address:
Telephone:
Facsimile:
Operations Contact
Name:
Title:
Address:
Telephone:
Facsimile:
Movement of Funds Information
Bank Name:
City, State:
ABA No.:
Acct Name:
Acct No.:
Attn:
Reference:
2. Revolving Loan Commitment:
F-3
EXHIBIT G
TO REVOLVING LOAN AGREEMENT
FORM OF REVOLVING LOAN NOTE
$____________ __________________, ______
FOR VALUE RECEIVED, the undersigned, Calpine Generating Company, LLC, a
Delaware limited liability company (the "Borrower"), hereby unconditionally
promises to pay to the order of ________________________ (the "Lender") the
principal sum in immediately available funds, of ________________________ or
such lesser amount as may be outstanding from time to time hereunder pursuant to
the Revolving Loan Agreement (as defined below). The Borrower further agrees to
pay interest in like money at the Principal Office on the unpaid principal
amount hereof from time to time outstanding at the rates and on the dates
specified in Section 2.1.5 of the Revolving Loan Agreement.
The holder of this Revolving Loan Note is authorized to endorse on the
schedules annexed hereto and made a part hereof, or on a continuation thereof
which shall be attached hereto and made a part hereof, the date and amount of
each Revolving Loan made pursuant to the Revolving Loan Agreement and the date
and amount of each payment or prepayment of principal hereof, each continuation
hereof and the length of each Interest Period with respect thereto. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any error in
any such endorsement shall not affect the obligations of the Borrower in respect
of any Revolving Loan.
This Revolving Loan Note (a) is one of the Revolving Loan Notes
referred to in the Amended and Restated
Credit Agreement, dated as of March 23,
2004 (as amended, supplemented, replaced or otherwise modified from time to
time, the "Revolving Loan Agreement"), among the Borrower, the guarantors from
time to time party thereto, the lenders from time to time party thereto, The
Bank of Nova Scotia, as administrative agent (with its successors and permitted
assigns in such capacity, the "Administrative Agent") and each of the other
agents and arrangers listed on the signature pages thereto; (b) is subject to
the provisions of the Revolving Loan Agreement and (c) is subject to voluntary
and mandatory prepayment in whole or in part as provided in the Revolving Loan
Agreement. This Revolving Loan Note is secured and guaranteed as provided in the
Revolving Loan Documents. Reference is hereby made to the Revolving Loan
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests and each
guarantee were granted and the rights of the holder of this Revolving Loan Note
in respect thereof.
Upon the occurrence of any Event of Default, all principal and all
accrued interest then remaining unpaid on this Revolving Loan Note shall become,
or may be declared to be, immediately due and payable, all as provided in, and
subject to, the Revolving Loan Agreement.
G-1
All parties now and hereafter liable with respect to this Revolving
Loan Note, whether maker, principal, surety, guarantor, endorser or otherwise,
hereby waive presentment, demand, protest and all other notices of any kind.
This Revolving Loan Note is subject to the limitations on recourse set
forth in Section 12.22 of the Revolving Loan Agreement.
Repayments of principal, interest and all other amounts due with
respect to or in connection with this Revolving Loan Note are subject to the
terms of the Collateral Trust Agreement (as defined in the Revolving Loan
Agreement).
Unless otherwise defined herein, terms defined in the Revolving Loan
Agreement and used herein shall have the meanings given to them in the Revolving
Loan Agreement.
This Revolving Loan Note has been delivered in New York, New York and
shall be deemed to be a contract made under, governed by and construed in
accordance with the laws of the State of New York without regard to the conflict
of law provisions thereof (other than sections 5-1401 and 5-1402 of the General
Obligations Law of the state of New York).
CALPINE GENERATING COMPANY, LLC
By:
------------------------------------
Name:
Title:
G-2
Schedule A
to Revolving Loan Note
REVOLVING LOANS AND REPAYMENTS OF REVOLVING LOANS
Date Amount of Revolving Loans Type of Loan Interest Period Amount of Principal Repaid Notation Made By
---- ------------------------- ------------ --------------- -------------------------- ----------------
EXHIBIT H
TO REVOLVING LOAN AGREEMENT
CALPINE GENERATING COMPANY, LLC
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FORM OF NOTICE OF LC ACTIVITY
Certificate Date: _________ __, ____(1)
The Bank of Nova Scotia,
as Administrative Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Loan Administration
cc: The Bank of Nova Scotia
as the LC Bank
---------------------------
---------------------------
Attention: __________________
Re: Calpine Generating Company, LLC - Notice of LC Activity
Ladies and Gentlemen:
Reference is made to the Amended and Restated Credit
Agreement, dated as of March 23, 2004 (as amended, supplemented, replaced or
otherwise modified from time to time, the "Revolving Loan Agreement"), among
Calpine Generating Company, LLC, a Delaware limited liability company (the
"Borrower"), the guarantors from time to time party thereto, the lenders from
time to time party thereto, The Bank of Nova Scotia, as administrative agent
(with its successors and permitted assigns in such capacity, the "Administrative
Agent") and as the LC Bank, and each of the other agents and arrangers listed on
the signature pages thereto. Unless otherwise defined herein, terms defined in
the Revolving Loan Agreement and used herein shall have the meanings given to
them in the Revolving Loan Agreement.
[THE BORROWER HEREBY REQUESTS THAT A LETTER OF CREDIT BE
ISSUED FOR THE ACCOUNT OF [THE BORROWER AND] [INSERT SUBSIDIARY OF BORROWER TO
WHOM LETTER OF CREDIT IS REQUESTED TO BE ISSUED] WITH RESPECT TO [INSERT
APPLICABLE FACILITY] PURSUANT TO [INSERT
----------
(1) The Borrower must deliver the Notice of LC Activity to the
Administrative Agent no less than five Business Days prior to the date
of the requested issuance, extension or increase, as applicable.
H-1
DESCRIPTION OF PROJECT DOCUMENT PURSUANT TO WHICH THE REQUESTED LETTER OF CREDIT
IS BEING ISSUED] FOR THE BENEFIT OF [INSERT COUNTERPARTY TO PROJECT DOCUMENT
PURSUANT TO WHICH THE REQUESTED LETTER OF CREDIT IS BEING ISSUED] ("LC
BENEFICIARY") AS PROVIDED HEREIN. THE STATED AMOUNT OF THE REQUESTED LETTER OF
CREDIT IS $[_________].]
[THE BORROWER HEREBY REQUESTS THAT THE [EXPIRATION DATE]
[STATED AMOUNT] OF LETTER OF CREDIT NO. [_________], WHICH WAS ISSUED TO
[_________] WITH RESPECT TO [INSERT APPLICABLE FACILITY] PURSUANT TO [INSERT
DESCRIPTION OF PROJECT DOCUMENT PURSUANT TO WHICH THE SUBJECT LETTER OF CREDIT
WAS ISSUED] FOR THE BENEFIT OF [INSERT COUNTERPARTY TO PROJECT DOCUMENT PURSUANT
TO WHICH THE SUBJECT LETTER OF CREDIT WAS ISSUED] ("LC BENEFICIARY") AND DATED
AS OF [_________] BE [EXTENDED TO [INSERT DATE OF REQUESTED EXTENSION, WHICH
SHALL BE NO LATER THAN THE MATURITY DATE]] [INCREASED FROM $[_________] TO
$[_________]] AS PROVIDED HEREIN.]
THE PROPOSED DATE OF THE REQUESTED [ISSUANCE] [EXTENSION OF
THE EXPIRATION DATE] [INCREASE IN THE STATED AMOUNT] OF THE LETTER OF CREDIT IS
[INSERT DATE WHICH IS ON OR BEFORE THE MATURITY DATE].
[INSERT THE FOLLOWING EXCEPT WHERE THE EXPIRATION DATE IS
SPECIFIED IN THE ABOVE PARAGRAPH:] THE EXPIRATION DATE OF THE REQUESTED LETTER
OF CREDIT IS [INSERT DATE WHICH IS ON OR BEFORE THE MATURITY DATE]. [BORROWER TO
ADD ANY OTHER DESCRIPTION NECESSARY TO COMPLETE, ISSUE AND DELIVER THE LETTER OF
CREDIT.]
LC BANK IS INSTRUCTED TO DELIVER THE [LETTER OF CREDIT]
[NOTICE OF EXTENSION OF THE EXPIRATION DATE OF THE LETTER OF CREDIT] [NOTICE OF
INCREASE IN THE STATED AMOUNT OF THE LETTER OF CREDIT] TO [INSERT BENEFICIARY OF
LETTER OF CREDIT, AS LC BENEFICIARY] [BORROWER], AT [INSERT APPLICABLE ADDRESS].
The Borrower hereby confirms and certifies to the
Administrative Agent, the LC Bank and each Lender that the following statements
are accurate, true and complete as of the date hereof, and will be accurate,
true and complete as of the proposed date of the requested [ISSUANCE] [EXTENSION
OF THE EXPIRATION DATE] [INCREASE IN THE STATED AMOUNT] of the Letter of Credit:
A. The Letter of Credit requested or modified hereby
shall only be used in the manner and for the purposes
specified and permitted by the Credit Agreement.
B. [THE REQUESTED STATED AMOUNT [AS INCREASED] DOES NOT,
TOGETHER WITH THE AGGREGATE LC STATED AMOUNT AND ALL
OUTSTANDING REIMBURSEMENT OBLIGATIONS, EXCEED THE
AMOUNT EQUAL TO THE EXCESS, IF ANY, OF (i) THE AMOUNT
OF THE TOTAL LOAN COMMITMENT MINUS (II) THE AGGREGATE
PRINCIPAL AMOUNT OF ALL OUTSTANDING REVOLVING LOANS
PLUS THE AGGREGATE LC STATED AMOUNT PLUS ALL
OUTSTANDING REIMBURSEMENT OBLIGATIONS.]
C. [THE REQUESTED ISSUANCE OF THE LETTER OF CREDIT IS
REQUIRED UNDER, AND WILL SATISFY THE CREDIT SUPPORT
AND PAYMENT AND PERFORMANCE SECURITY
H-2
REQUIREMENTS WITH RESPECT TO LC BENEFICIARY CONTAINED
IN, [INSERT DESCRIPTION OF APPLICABLE PROJECT
DOCUMENT].]
D. Each of the conditions precedent set forth in Section
3.3 of the Revolving Loan Agreement has been
satisfied or waived in accordance with the terms
thereof.
(signature page follows)
H-3
IN WITNESS WHEREOF, the Borrower has caused this Notice of LC
Activity to be executed and delivered by a duly authorized officer of the
Borrower on the date first written above.
CALPINE GENERATING COMPANY, LLC
By:
--------------------------------
Name:
Title:
H-4
EXHIBIT I
TO REVOLVING LOAN AGREEMENT
FORM OF OPINIONS
[SEE ATTACHED]
I-1
SCHEDULE A
TO REVOLVING LOAN AGREEMENT
THIRD PARTY PROJECT DOCUMENTS
Baytown
1. Energy Services Agreement, dated as of January 12, 2000,
between Bayer Corporation and Baytown Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.), as
amended by Amendment of Project Documents dated as of August
13, 2002.
2. Services Agreement, dated as of January 12, 2000, between
Bayer Corporation and Baytown Energy Center, L.P. (as assignee
of Calpine Construction Finance Company, L.P.), as amended by
Amendment of Project Documents, dated as of August 13, 2002.
3. Ground Lease and Easement Agreement, dated as of January 12,
2000, between Bayer Corporation and Baytown Energy Center,
L.P. (as assignee of Calpine Construction Finance Company,
L.P.), as amended by Amendment of Project Documents, dated as
of August 13, 2002.
▇▇▇▇▇▇▇▇
1. Energy Services Agreement, dated as of December 28, 1999,
between Cos-Mar Incorporated and ▇▇▇▇▇▇▇▇ Energy LLC, as
amended by Amendment No. 1 to Energy Services Agreement, dated
as of April 30, 2000, and Amendment No. 2 to Energy Services
Agreement, dated as of June 26, 2001.
2. Agreement for Purchased Power from Qualified Cogeneration
Facility, dated as of August 31, 2002, between Entergy Gulf
States, Inc. and ▇▇▇▇▇▇▇▇ Energy LLC.
Channel
1. Energy Services Agreement, dated as of January 25, 2000,
between Lyondell-Citgo Refining LP and Channel Energy Center,
L.P. (as assignee of Calpine Construction Finance Company,
L.P.).
2. Facility Services Agreement, dated as of January 25, 2000,
between Lyondell-Citgo Refining LP and Channel Energy Center,
L.P. (as assignee of Calpine Construction Finance Company,
L.P.).
3. Operating Lease Agreement, dated as of January 25, 2000,
between Lyondell-Citgo Refining LP and Channel Energy Center,
L.P. (as assignee of Calpine Construction Finance Company,
L.P.), as amended by Amendment No. 1 to Operating Lease
Agreement dated as of March 30, 2001.
4. Amended and Restated Ground Lease and Easement Agreement,
dated as of October 30, 2001, between Lyondell-Citgo Refining
LP and Channel Energy Center, L.P.
Schedule A-1
Columbia
1. Energy Services Agreement, dated as of August 15, 2000,
between ▇▇▇▇▇▇▇ Chemical Company and Columbia Energy LLC, as
amended by First Amendment to Energy Services Agreement, dated
as of August 1, 2001, and Second Amendment to Energy Services
Agreement, dated as of October 1, 2002.
2. Amended and Restated Ground Lease Agreement, dated as of
August 1, 2001, between ▇▇▇▇▇▇▇ Chemical Company and Columbia
Energy LLC, as amended by First Amendment to Amended and
Restated Ground Lease Agreement, dated as of October 22, 2002.
Corpus Christi
1. Energy Services Agreement, dated as of March 23, 1999, between
Corpus Christi Cogeneration LP (as assignee of Nueces Bay
Energy LLC) and Citgo Refining and Chemicals, L.P., as amended
by Amendment No. 1 to Energy Services Agreement, dated as of
March 22, 2001, and Second Amendment of Energy Services
Agreement, dated as of August 24, 2001.
2. Restated Energy Services Agreement - Steam, dated as of July
26, 2002, between Corpus Christi Cogeneration LP and Elementis
Chromium L.P.
3. Energy Services Agreement, dated as of July 24, 2003, between
Corpus Christi Cogeneration LP and Flint Hills Resources, LP.
4. Project Site Lease Agreement, dated as of June 21, 1999,
between Corpus Christi Cogeneration LP (as assignee of Nueces
Bay Energy LLC) and Citgo Refining and Chemicals, L.P., as
amended by First Amendment of Project Site Lease Agreement,
dated as of August 24, 2001.
Decatur
1. Second Amended and Restated Lease, Steam Sales and Shared
Services Agreement, dated as of January 31, 2001, between
Solutia Inc. and Decatur Energy Center, LLC, as amended by
First Amendment to Second Amended and Restated Lease, Steam
Sales and Shared Services Agreement, dated as of June 28,
2001, Second Amendment to Second Amended and Restated Lease,
Steam Sales and Shared Services Agreement, dated as of August
13, 2001, Third Amendment to Second Amended and Restated
Lease, Steam Sales and Shared Services Agreement, dated as of
October 31, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to Second Amended and
Restated Lease, Steam Sales and Shared Services Agreement,
dated as of January 28, 2002, and Fifth Amendment to Second
Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of October 7, 2002.
2. Power Purchase Agreement, dated as of June 21, 2002, between
Decatur Energy Center, LLC and Tennessee Valley Authority.
Schedule A-2
Delta
1. Merchant Plant Lease, dated as of April 13, 2000, between The
Dow Chemical Company and Delta Energy Center, LLC (as assignee
of Calpine Construction Finance Company, L.P.), as amended by
First Amendment to Merchant Plant Lease, dated as of July 31,
2001, Second Amendment to Merchant Plant Lease, dated as of
December 14, 2001, Third Amendment to Merchant Plant Lease,
dated as of February 20, 2003, and Fourth Amendment to
Merchant Plant Lease, dated as of February 20, 2003.
2. Must-Run Service Agreement, dated as of February 10, 2003,
between Delta Energy Center LLC and California Independent
System Operator Corporation and Offer Letter from Delta Energy
Center LLC to California Independent System Operator
Corporation for Provision of RMR Services in 2004.
Freestone
None.
Los Medanos
1. Energy Purchase and Sale Agreement, dated as of December 21,
1998, between USS-POSCO Industries and Los Medanos Energy
Center LLC (as successor in interest to Pittsburg District
Energy Facility, LLC), as amended by Modification Agreement
(First Amendment to Energy Purchase and Sale Agreement), dated
as of June 30, 1999, and Second Amendment to Energy Purchase
and Sale Agreement, dated as of April 30, 2001.
2. Ground Lease Agreement, dated as of October 4, 1999, between
USS-POSCO Industries and Los Medanos Energy Center LLC (as
successor in interest to Pittsburg District Energy Facility,
LLC), as amended by First Amendment to Ground Lease Agreement,
dated as of August 25, 2000, Second Amendment to Ground Lease
Agreement, dated as of October 30, 2000, Third Amendment to
Ground Lease Agreement, dated as of July 6, 2001, and Fourth
Amendment to Ground Lease Agreement dated as of May 31, 2002.
3. Energy Supply Arrangements with Dow comprising: Binding Letter
of Intent, dated as of December 10, 2002, among The Dow
Chemical Company, Los Medanos Energy Center, LLC, Calpine
Pittsburg, LLC, and Delta Energy Center, LLC; Steam Supply
Agreement, dated as of December 10, 2002, between Calpine
Pittsburg, LLC and Los Medanos Energy Center, LLC; and
Agreement Regarding Power and Steam Supply, dated as of
December 10, 2002, among Calpine Pittsburg, LLC, Los Medanos
Energy Center, LLC, and Delta Energy Center, LLC.
4. Amended and Restated Must-Run Service Agreement, dated June
17, 2003, between Los Medanos Energy Center, LLC and
California Independent System Operator Corporation.
▇▇▇▇▇▇
1. Project Agreement, dated as of June 1, 2000, between BP Amoco
Chemical Company and ▇▇▇▇▇▇ Energy Center, LLC (as assignee of
Calpine Construction Finance
Schedule A-3
Company, L.P.), as amended by First Amendment to Project
Agreement, dated as of August 20, 2001.
2. Energy Sales Agreement, dated as of June 1, 2000, between BP
Amoco Chemical Company and ▇▇▇▇▇▇ Energy Center, LLC (as
assignee of Calpine Construction Finance Company, L.P.), as
amended by First Amendment to Energy Sales Agreement, dated as
of August 20, 2001, and Second Amendment to Energy Sales
Agreement, dated as of July 31, 2003.
3. Site Interface Agreement, dated as of September 29, 2000,
between BP Amoco Chemical Company and ▇▇▇▇▇▇ Energy Center,
LLC (as assignee of Calpine Construction Finance Company,
L.P.).
4. Land Lease, dated as of September 29, 2000, between BP Amoco
Chemical Company and ▇▇▇▇▇▇ Energy Center, LLC (as assignee of
Calpine Construction Finance Company, L.P.), as amended by
First Amendment of Land Lease and Memorandum of Lease and
Grant of Easements, dated as of August 20, 2001, and Second
Amendment of Land Lease and Memorandum of Lease and Grant of
Easements, dated as of December 13, 2001.
5. Power Purchase Agreement, dated as of June 19, 2003, between
▇▇▇▇▇▇ Energy Center, LLC and Tennessee Valley Authority.
▇▇▇▇▇
None.
Pastoria
1. Ground Lease, dated as of July 19, 2001, between Tejon
Ranchcorp and Pastoria Energy Facility L.L.C., as amended by
Landlord Non-disturbance and Consent Agreement, dated as of
September 28, 2001.
Zion
1. Amended and Restated Fuel Conversion Services Agreement, dated
as of April 28, 2003, between Zion Energy LLC and Wisconsin
Electric Power Company.
Schedule A-4
SCHEDULE 4.1
TO REVOLVING LOAN AGREEMENT
CAPITAL STRUCTURE
[SEE ATTACHED]
Schedule 4.1-1
SCHEDULE 4.11
TO REVOLVING LOAN AGREEMENT
LITIGATION
We are party from time to time to various litigation matters arising in
the normal course of business. On July 22, 2003, PG&E filed with CPUC a
complaint and request for immediate issuance of an order to show cause against
Calpine, CPN Pipeline Company, CES, Calpine Natural Gas Company and LGS. The
complaint requests that CPUC issue an order requiring the defendants to (i) show
cause why they should not be ordered to cease and desist from using any direct
interconnections between the facilities of CPN Pipeline Company and those of
LGS, unless such parties first seek and obtain regulatory approval from CPUC,
and (ii) pay to PG&E any underpayments of PG&E's tariffed transportation rates
and to make restitution for any profits earned from any business activity
related to LGS' direct interconnections to any entity other than PG&E. The
complaint also seeks an order permanently enjoining LGS and any entity other
than PG&E from entering into or utilizing direct interconnections with LGS, and
directing defendants to pay to PG&E any underpayments of PG&E's tariffed
transportation rates and to make restitution for any profits earned from any
business activity related to LGS' direct interconnections to any entity other
than PG&E. The complaint also alleges that various natural gas consumers,
including Calpine-affiliated generation facilities within California, are
engaged with defendants in the acts complained of, and that the defendants
unlawfully bypass PG&E's system and operate as an unregulated local distribution
company within PG&E's service territory. On August 27, 2003, Calpine filed its
answer and a motion to dismiss, which was denied on October 16, 2003.
On January 15, 2004, PG&E, the Calpine entities and LGS entered into
the Settlement which would resolve all issues raised by the complaint. Although
the Settlement became effective as of January 15, 2004, certain of its terms
will only become effective upon approval of the Settlement by CPUC, and in the
event that CPUC does not approve the Settlement certain of its provisions will
become null and void. Upon approval of the Settlement by CPUC, PG&E would be
paid $2.7 million and the parties would release all claims relating to prior
periods. PG&E also would agree not to pursue any new claim of unauthorized
public utility activity against the Calpine entities named in the complaint,
except insofar as such new claim raises matters not raised in the complaint, or
with respect to a change in the facts and circumstances relating to alleged
unauthorized public utility activity from those facts and circumstances existing
as of January 15, 2004. As provided by the Settlement. the direct
interconnections between CPN Pipeline and LGS have been shut down pending
possible future regulatory action.
In accordance with the procedural schedule adopted by the presiding
administrative law judge, a settlement meeting was conducted pursuant to CPUC
settlement procedures on January 26, 2004. The settling parties filed a motion
for approval of the Settlement on February 6. Comments on the Settlement were
due March 8, and no party filed comments opposing any provision of the
settlement agreement. Reply comments are due March 23.
Schedule 4.11-1
The complaint does not name us or our facilities as defendants.
However, if the Settlement is not approved, there can be no assurances that this
litigation will not adversely affect CPN Pipeline Company's ability to perform
its obligations under the Cotenancy, Operating and Maintenance Agreement among
CPN Pipeline Company, Gilroy Energy Center, LLC, the Delta facility and the Los
Medanos facility.
On June 11, 2003, the Estate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Estate of ▇▇▇▇▇▇▇
▇▇▇▇▇ filed a complaint against Calpine in the U.S. District Court, Western
District of Washington. Calpine purchased Goldendale Energy, Inc., a Washington
corporation, from ▇▇▇▇▇▇▇ ▇▇▇▇▇. The agreement provided, among other things,
that upon substantial completion of the Goldendale facility, Calpine would pay
▇▇. ▇▇▇▇▇ (i) $6.0 million and (ii) $18.0 million less $0.2 million per day for
each day that elapsed between July 1, 2002 and the date of substantial
completion. Substantial completion of the Goldendale facility has not occurred
and the daily reduction in the payment amount has reduced the $18.0 million
payment to zero. The complaint alleges that by not achieving substantial
completion by July 1, 2002, Calpine breached its contract with ▇▇. ▇▇▇▇▇,
violated a duty of good faith and fair dealing, and caused an inequitable
forfeiture. The complaint seeks damages in an unspecified amount in excess of
$75,000. On July 28, 2003, Calpine filed a motion to dismiss the complaint for
failure to state a claim upon which relief can be granted. The court granted
Calpine's motion to dismiss the complaint on March 10, 2004. The plaintiffs may
appeal, and could also seek reconsideration of the decision.
The ultimate outcome of these matters cannot presently be determined,
nor can the liability that could potentially result from a negative outcome in
each case presently be reasonably estimated.
Schedule 4.11-2
SCHEDULE 4.18 (B)
TO REVOLVING LOAN AGREEMENT
QUALIFYING FACILITIES
1. Baytown Energy Center, LP
2. ▇▇▇▇▇▇▇▇ Energy LLC
3. Channel Energy Center, LP
4. Corpus Christi Cogeneration LP
5. Columbia Energy LLC
6. Decatur Energy Center, LLC
7. Los Medanos Energy Center LLC
8. ▇▇▇▇▇▇ Energy Center, LLC
Schedule 4.18(b)-1
SCHEDULE 4.18(C)
TO REVOLVING LOAN AGREEMENT
EXEMPT WHOLESALE GENERATORS
1. Delta Energy Center, LLC
2. Goldendale Energy Center, LLC
3. Pastoria Energy Center L.L.C.
4. Freestone Power Generation LP
5. Calpine ▇▇▇▇▇ Power, L.P.
6. Zion Energy LLC
Schedule 4.18(c)-1
