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Exhibit 10.4
FORBEARANCE AGREEMENT (LEASE)
THIS FORBEARANCE AGREEMENT (LEASE) (this "Agreement" ) is
dated as of December 11, 2006 and is entered into by and between
Buzzard Power Corporation, a Delaware corporation (the
"Lessee" ) and Scrubgrass Generating Company, L.P., a
Delaware limited partnership ( "Lessor "), with respect to
the Amended and Restated Lease Agreement dated December 22,
1995 (as amended through the date hereof, the "Lease" ) by
and between Lessee and Lessor. Capitalized terms used herein
without definition shall have the same meanings herein as set forth
in the Lease.
RECITALS
WHEREAS, the parties hereto acknowledge that the current
economic projections and Operating Budget for the Project indicate
that Lessee will be unable to pay in full Basic Rent (Equity)
coming due during one or more periods prior to July 1, 2007;
and
WHEREAS, subject to the terms and conditions set forth
herein, Lessor is willing to forbear for a period commencing on the
Agreement Effective Date (as defined below), and ending on the
Forbearance Termination Date (as defined below), in the exercise of
remedies with respect to any Event of Default under the Lease
arising solely out of the failure to pay Basic Rent (Equity) under
the Lease due to a shortfall in Project Revenues available to make
such payment of Basic Rent (Equity), while reserving to Lessor (and
the Agent, the Banks and other financing parties under the Amended
and Restated Reimbursement Agreement) all rights and remedies with
respect to any other default under the Lease and the other
Transaction Documents.
NOW, THEREFORE , in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereto agree as follows:
SECTION I. AGREEMENT
Subject to the terms of this Agreement, at the request of
Lessee, Lessor hereby agrees to forbear from exercising its rights
and remedies under the Lease with respect to any Event of Default
under the Lease arising solely out of the failure to pay Basic Rent
(Equity) under Section 13.01(a)(ii) of the Lease due to a
shortfall in Project Revenues available to make such payment of
Basic Rent (Equity) (any such default, a " Specified Default
"). Such forbearance shall terminate on the " Forbearance
Termination Date ", which shall be the earlier to occur of
(i) July 1, 2007, or (ii) the occurrence of an Event
of Default under the Lease, other than a Specified Default (such
period of forbearance, the " Forbearance Period "). On and
after the Forbearance Termination Date, Lessor (and, to the extent
provided in the Transaction Documents, the Agent, the Banks and
other financing parties) shall be entitled to exercise all rights
and remedies with respect to the Specified Default as if such
forbearance had never been granted, and during the Forbearance
Period, all Basic Rent (Equity) that is not paid will continue to
accrue, together with interest on any such overdue amounts at the
Default Rate.
SECTION II. CONDITIONS TO
EFFECTIVENESS
This Agreement shall become effective only upon the satisfaction
of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "
Agreement Effective Date "):
A. Execution . Lessor shall have received a counterpart
signature page of this Agreement dul
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