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
