CREDIT AGREEMENT

Exhibit 10.2

CREDIT AGREEMENT

dated as of

March 29, 2006

among

THE AES CORPORATION,

as Borrower,

MERRILL LYNCH CAPITAL CORPORATION,

as Administrative Agent,

MERRILL LYNCH & CO.,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

as Lead Arranger,

THE FRONTING BANKS LISTED HEREIN,

and

THE BANKS LISTED HEREIN

 

Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005

 

TABLE OF CONTENTS

 

 

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CREDIT AGREEMENT

CREDIT AGREEMENT dated as of March 29, 2006 (this “ Agreement ”) among THE AES CORPORATION, a Delaware corporation (the “ Borrower ”), the BANKS listed on the signature pages hereof, MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Lead Arranger, MERRILL LYNCH CAPITAL CORPORATION, as Administrative Agent for the Banks, and the FRONTING BANKS party hereto.

PRELIMINARY STATEMENT:

The Borrower has requested that the Banks provide Loans to the Borrower and that the Fronting Banks provide to the Borrower Letters of Credit (and the Banks to provide funding with respect thereto) to support certain liabilities of the Borrower and its Subsidiaries, including to finance the construction of a coal-fired generation plant in Bulgaria, in an aggregate principal or face amount not exceeding $500,000,000.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01  Definitions .

The following terms, as used herein, have the following meanings:

“ Additional Credit-Linked Deposits ” has the meaning set forth in Section 2.19(d).

“ Adjusted LIBO Rate ” means, for any Interest Period, a rate per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher  ¹ / 100 ^th of 1%) by dividing (i) the applicable LIBOR by (ii) 1.00 minus the Reserve Percentage.

“ Administrative Agent ” means Merrill Lynch Capital Corporation, in its capacity as administrative agent for the Banks hereunder, and its successors in such capacity.

“ Administrative Questionnaire ” means, with respect to each Bank, an administrative questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative Agent (with a copy to the Borrower) duly completed by such Bank.

“ AES ” means The AES Corporation, a Delaware corporation, and its successors.

“ AES Business ” means a Power Supply Business or other business owned, operated or managed (including on a joint basis with others), directly or indirectly, by the Borrower.

 

“ AES BVI II ” means AES International Holdings II, Ltd., a company organized under the laws of the British Virgin Islands.

“ AES Management Group ” means (i) individuals who are members of the board of directors or officers of the Borrower or the president of any Material AES Entity; (ii) their respective spouses, children, grandchildren, siblings and parents; (iii) trusts established for the sole or principal benefit of Persons described in clauses (i) and (ii) above; (iv) heirs, executors, administrators and personal or legal representatives of Persons described in clauses (i) and (ii) above; and (v) any corporation or other Person that is controlled by, and a majority of the equity interests in which are directly owned by, Persons described in clauses (i) and (ii) above.

“ Affiliate ” means, with respect to any Person, (i) any Person that directly, or indirectly through one or more intermediaries, controls such Person (a “ Controlling Person ”), or (ii) any Person which is controlled by or is under common control with a Controlling Person or (iii) as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. As used herein, the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” has the meaning specified in the recital of the parties to this Agreement.

“ Applicable Margin ” means a rate per annum equal to the sum of (i) the Fixed Rate Treasury Spread for the applicable Determination Date minus (ii) the Buy Side Swap Spread for such Determination Date plus (iii) 0.25%. In no event will the Applicable Margin with respect to Eurodollar Loans be less than 175 basis points. The Applicable Margin in respect of Base Rate Loans shall be 100 basis points lower than for the Eurodollar Loans and in no event will be less than 75 basis points.

“ Applicable Percentage ” means, with respect to any Bank, the percentage of the total Funding Amounts represented by such Bank’s Funding Amount. If the Funding Amounts have been reduced to zero, the Applicable Percentages shall be determined based upon the Funding Amounts most recently in effect, giving effect to any assignments.

“ Applicable Margin Fee ” has the meaning set forth in Section 2.11(a).

“ Assignee ” has the meaning set forth in Section 9.06(c).

“ Assignment and Assumption ” means an assignment and assumption agreement substantially in the form of Exhibit C-1 or C-2 hereto, as applicable.

“ Assumption Agreement ” has the meaning set forth in Section 2.19(d).

 

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“ Attributable Debt ” means the present value (discounted at the rate of 9.375% per annum compounded monthly) of the obligations for rental payments required to be paid during the remaining term of any lease of more than 12 months.

“ Automatic Acceleration Event ” means the occurrence, with respect to the Borrower, of any of the Events of Default listed in clauses (g) and (h) of Section 6.01.

“ Availability Period ” means the period from and including the Closing Date to but excluding the earlier of the fifth Business Day preceding Maturity Date and the date of termination of the Funding Amounts.

“ Bank ” means each lender listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 9.06(c) and their respective successors.

“ Base Rate ” means, for any day, a rate per annum equal to the higher of (i) the rate of interest publicly announced by the Administrative Agent from time to time as its base rate for such day and (ii) the sum of  ¹ / 2 of 1% plus the Federal Funds Rate for such day.

“ Base Rate Borrowing ” means a Borrowing consisting of Base Rate Loans.

“ Base Rate Loan ” means a Loan that bears interest at the Base Rate plus the Applicable Margin.

“ Benefit Arrangement ” means, at any time, an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.

“ Borrower ” has the meaning specified in the recital of the parties to this Agreement.

“ Borrowing ” means a borrowing hereunder consisting of Loans (i) made to the Borrower at the same time by the Banks pursuant to Section 2.02(a) or (ii) deemed made to the Borrower at the same time by the Banks pursuant to Section 2.02(b) and 2.05(f).

“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan or in calculating the EURIBOR Rate, 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.

“ Buy Side Swap Spread ” for any Determination Date means the average of the bid column swap spreads between United States Treasury securities and London interbank offered rate borrowings as quoted on page 18 of the Bloomberg Screen IRSB (or such other page and place as may replace such page on such service for displaying the information referred to

 

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therein) with respect to each series of Comparable Treasury Securities, as determined by the Administrative Agent as of 11:00 a.m. (New York City time) on such Determination Date.

“ Capital Commitment ” means any contractual commitment or obligation under an equity contribution or other agreement the primary purpose of which is for the Borrower to provide to an AES Business a portion of the capital required to finance construction projects, the acquisition of additional assets or capital improvements being undertaken by such AES Business.

“ Capital Stock ” means, with respect to any Person, any and all shares, interests, participants or other equivalents (however designated, whether voting or non-voting) of, or interests in (however designated), the equity of such Person, including, without limitation, all common stock and preferred stock and partnership and joint venture interests of such Person

“ Closing Date ” means the date on or after the Effective Date on which the Administrative Agent shall have received the fees and documents specified in or pursuant to Section 3.01.

“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor statute.

“ Commitment Increase ” has the meaning set forth in Section 2.19(a).

“ Comparison Notes ” means, as of any Determination Date, Borrower’s 9.375% Senior Notes due 2010 issued and outstanding on the date of this Agreement and Borrower’s 8.875% Senior Notes due 2011 issued and outstanding on the date of this Agreement; provided that (i) if on such Determination Date, either, but not both, of such series of notes is no longer outstanding, “Comparison Notes” shall mean the series of notes still outstanding and (ii) if on such Determination Date, both such series of notes are no longer outstanding, “Comparison Notes” shall mean the issued and outstanding notes or debentures of Borrower selected by Administrative Agent in consultation with the Borrower.

“ Comparison Treasury Securities ” means, (i) with respect to the Borrower’s 9.375% Senior Notes due 2010, the United States Treasury Security with a 3.875% coupon maturing September 15, 2010 (CUSIP 912828EG1) and (ii) with respect to the Borrower’s 8.875% Senior Notes due 2011, the United States Treasury Security with a 4.500% coupon maturing February 28, 2011 (CUSIP 912828EX4); provided that if, on any date of determination, neither of such series of notes of the Borrower is outstanding, “Comparison Treasury Securities” shall mean the United States Treasury Security with a maturity most nearly equal to that of the Comparison Notes outstanding at such time, as determined by the Administrative Agent.

“ Conduit Lender ” means any special purpose corporation organized and administered by any Bank for the purpose of funding Credit-Linked Deposits hereunder otherwise required to be made by such Bank and designated by such Bank in a written instrument, subject to the consent of the Administrative Agent and the Borrower (which, in each

 

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case, shall not be unreasonably withheld or delayed); provided that the designation by any Bank of a Conduit Lender shall not relieve the designating Bank of any of its obligations to fund a Credit-Linked Deposit under the Agreement if, for any reason, its Conduit Lender fails to fund any such Credit-Linked Deposit, and the designating Bank (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided further that no Conduit Lender shall (i) be entitled to receive any greater amount pursuant to Section 8.03, 8.04 or 9.03 than the designating Bank would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (ii) be deemed to have any Funding Amount hereunder.

“ Consolidated Subsidiary ” means, at any date with respect to any Person, any Subsidiary of such Person or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date.

“ Consolidated Net Assets ” means the aggregate amount of assets (less reserves and other deductible items) after deducting current liabilities, as shown on the consolidated balance sheet of the Borrower and its Subsidiaries contained in the latest annual report to the stockholders of the Borrower and prepared in accordance with GAAP.

“ Controlling Person ” has the meaning set forth in the definition of “ Affiliate ” herein.

“ Credit-Linked Deposit ” means, with respect to each Bank at any time, amounts actually on deposit in the Credit-Linked Deposit Account to the credit of such Bank’s Credit-Linked Sub-Account at such time.

“ Credit-Linked Deposit Account ” means the “AES Credit-Linked Deposit Account” established by the Administrative Agent pursuant to Section 2.01(a).

“ Credit-Linked Sub-Account ” has the meaning set forth in Section 2.01(a).

“ Credit Party ” has the meaning set forth in Section 8.03(a).

“ Debt ” of any Person means at any date, without duplication, (i) all Obligations of such Person for borrowed money; (ii) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all Obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business; (iv) all Obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles; (v) all Obligations (whether contingent or non-contingent) of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit, surety or performance bond or similar instrument; (vi) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person; (vii) all Debt of others Guaranteed by such Person and (viii) all

 

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Redeemable Stock of such Person valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends. For purposes hereof, contingent obligations of the type described in clause (v) of this definition with respect to letters of credit not issued hereunder shall not be treated as “Debt” hereunder to the extent that such obligations are cash collateralized or to the extent that the issuer of any such letter of credit is entitled to draw under a Letter of Credit issued hereunder which by its terms requires that L/C Drawings under such letter of credit be applied only to reimburse such issuer for amounts paid by such issuer under such letter of credit. The obligations of the Borrower under any Capital Commitment or under any agreement, in the form of indemnity or contingent equity contribution agreement or otherwise, pursuant to which the Borrower agrees to protect any Person, in whole or in part, from tax liabilities, environmental liabilities, political risks, including currency convertibility and transferability risk and changes in law, or construction cost overruns shall not constitute Debt.

“ Default ” means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

“ Derivatives Obligations ” of any Person means all obligations of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, credit derivative transaction, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions; provided that Derivatives Obligations shall not include any obligations of such Person in relation to an equity forward contract, equity or equity index swap or equity or equity index option pertaining, linked or indexed to the common stock of such Person or any affiliate thereof. For purposes of determining the aggregate amount of Derivative Obligations on any date, the Derivative Obligations of the applicable Person in respect of any Hedge Agreement shall be the maximum aggregate amount (after giving effect to any netting agreements to the extent such netting agreements are with the same Person to whom any such Derivative Obligations are owed or with Affiliates of such Person) that the applicable Person would be required to pay if such Hedge Agreement were terminated at such time.

“ Determination Date ” means, for any Interest Period, the second Business Day prior to the first day of such Interest Period.

“ Disclosed Matters ” means matters disclosed in any SEC Filings made prior to March 29, 2006 or in written materials sent by or on behalf of the Borrower to all of the Banks prior to March 29, 2006.

“ Dollars ” means United States of America dollars.

 

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“ Effective Date ” means the date this Agreement becomes effective in accordance with Section 9.10.

“ Eligible Assignee ” means any commercial bank or financial institution (including, without limitation, any fund that regularly invests in loans similar to the Loans or investments similar to the Funding Amounts) as approved (which approval shall be required only so long as no Event of Default has occurred and is continuing at the time of an assignment) by the Borrower (such approval not to be unreasonably withheld or delayed); provided , however , that neither the Borrower nor any Subsidiary of the Borrower shall qualify as an Eligible Assignee under this definition.

“ Environmental Laws ” means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment, the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the clean-up or other remediation thereof.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.

“ ERISA Group ” means the Borrower, its Subsidiaries and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code.

“ EURIBOR ” means, for any Interest Period, the rate appearing on Page 248 of the Moneyline Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Euro by reference to the Banking Federation of the European Union Settlement Rates for deposits in Euro) at approximately 10:00 A.M., London time, two Business Days prior to the commencement of such Interest Period, as the rate for deposits in Euro with a maturity comparable to such Interest Period or, if for any reason such rate is not available, the rate at which Euro deposits for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in same day funds to first-class banks in the European interbank market at approximately 10:00 A.M., London time, two Business Days prior to the commencement of such Interest Period.

“ EURIBOR Differential Rate ” has the meaning set forth in Section 2.11(a)(iv).

 

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“ Eurodollar Borrowing ” means a Borrowing consisting of Eurodollar Loans

“ Eurodollar Default Rate ” has the meaning set forth in Section 2.12(b).

“ Eurodollar Loan ” means a Loan which bears interest at the Adjusted LIBO Rate plus the Applicable Margin.

“ Event of Default ” has the meaning set forth in Section 6.01.

“ Excluded AES Business ” means any AES Business located in Brazil or Argentina; provided that the Borrower may by written notice to the Administrative Agent make an election not to treat one or more AES Businesses in Brazil or Argentina as an “Excluded AES Business”. Once the Borrower elects not to treat an AES Business as an “Excluded AES Business” it may not thereafter change or revoke such election with respect to such AES Business without the consent of the Required Banks.

“ Excluded AES Entity ” means any Person set forth on Schedule I, as such Schedule I may be updated pursuant to Section 5.01(j) whose assets consist only of any of the Excluded AES Businesses and direct or indirect investments therein.

“ Existing Credit Agreement ” means that certain Third Amended and Restated Credit and Reimbursement Agreement dated as of March 17, 2004, as amended, among the Borrower, the subsidiary guarantors listed therein, Citicorp USA, Inc., as the administrative agent, and the banks party thereto, as further amended, modified, amended and restated, refinanced, replaced or supplemented from time to time. If the Existing Credit Agreement ceases to exist, all terms defined herein by reference to the Existing Credit Agreement shall have the meanings set forth in the Existing Credit Agreement immediately prior to such cessation.

“ Extension of Credit ” means (i) a Borrowing pursuant to Section 2.02(a) or (ii) an issuance of a Letter of Credit pursuant to Section 2.05.

“ Facilities ” means the Loans and Letters of Credit under this Agreement.

“ Federal Funds Rate ” means, for any day, the rate per annum (rounded upward, if necessary, to the nearest  ¹ / 100 ^th of 1%) 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 by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Merrill Lynch Bank USA on such day on such transactions as determined by the Administrative Agent.

“ Fee Payment Date ” has the meaning set forth in Section 2.11(a)(iii).

 

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“ Fixed Rate Treasury Spread ” for any Determination Date means the excess, if any, of (a) the average of the yields to maturity on the Determination Date on each series of the Comparison Notes received by the Administrative Agent from the Reference Dealer (based on bid price) over (b) the average of the yields to maturity on the Determination Date on each series of the Comparable Treasury Securities, as determined by the Administrative Agent as of 11:00 a.m. (New York City time) on such Determination Date.

“ Fixed Exchange Rate ” has the meaning set forth in Section 2.05(a).

“ Fronting Bank ” means (a) Merrill Lynch Bank USA, in its capacity as an issuer of Letters of Credit hereunder, (b) any commercial bank designated by the Administrative Agent (and reasonably acceptable to the Borrower) with a publicly monitored credit rating of at least A2 issued by Moody’s or at least A issued by S&P and (c) and any other Person approved by the Administrative Agent and the Borrower that shall agree to issue Letters of Credit hereunder.

“ Fronting Bank Agreement ” means an agreement, in substantially the form of Exhibit D hereto.

“ Funded Debt ” means indebtedness for borrowed money having a maturity of, or by its terms extendible or renewable for, a period of more than 12 months after the determination of the amount thereof.

“ Funding Amount ” means, with respect to each Bank, the amount that such Bank is required hereby to maintain as its Credit-Linked Deposit, as such amount may be (a) reduced or terminated from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Bank pursuant to Section 9.06(c) or (c) increased pursuant to Section 2.19. The initial amount of each Bank’s Funding Amount is set forth on Appendix I, or in the Assignment and Assumption or the Assumption Agreement pursuant to which such Bank shall have assumed its Funding Amount, as applicable. The initial aggregate amount of the Banks’ Funding Amounts is $500,000,000.

“ GAAP ” has the meaning set forth in Section 1.02.

“ Governmental Authority ” means the government of the United States of America, or of any other nation, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government

“ Guarantee ” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership

 

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arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or, for the avoidance of doubt, obligations of the Borrower to provide capital to an AES Business under a Capital Commitment. The term “Guarantee” used as a verb has a corresponding meaning.

“ Hazardous Substances ” means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics.

“ Hedge Agreement ” means any contract, instrument or agreement in respect of Derivative Obligations.

“ Increase Commitment Date ” has the meaning set forth in Section 2.19(b).

“ Increase Date ” has the meaning set forth in Section 2.19(a).

“ Indemnitee ” has the meaning set forth in Section 9.03(b).

“ Interest Election Request ” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.07.

“ Interest Period ” means: (a) with respect to any Loan or Borrowing, initially, the period commencing on the date of such Loan or Borrowing and ending on the numerically corresponding day in the calendar month that is one month thereafter and (b) with respect to the Credit-Linked Deposits, initially, the period commencing on the Closing Date and ending on the numerically corresponding day in the calendar month that is one month thereafter, and, in each case (a) and (b), thereafter, each period commencing on the last day of the preceding Interest Period applicable thereto and ending on the numerically corresponding day in the calendar month that is one month thereafter; provided , that (i) a single Interest Period shall at all times apply to all the Credit-Linked Deposits, (ii) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the immediately preceding Business Day, and (iii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.

“ L/C Disbursement ” means a payment made by a Fronting Bank pursuant to a Letter of Credit.

 

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“ L/C Drawing ” means a drawing effected under any Letter of Credit.

“ L/C Exposure ” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all L/C Disbursements that have not yet been reimbursed (other than by a Borrowing) by or on behalf of the Borrower at such time. The L/C Exposure of any Bank at any time shall be its Applicable Percentage of the total L/C Exposure at such time.

“ Lead Arranger ” means Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated.

“ Letter of Credit ” means any letter of credit issued pursuant to this Agreement.

“ Lending Office ” means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Lending Office by notice to the Borrower and the Administrative Agent.

“ LIBOR ” means, with respect to any Eurodollar Loan or Credit-Linked Deposit, for any Interest Period, the average (rounded upward, if necessary, to the next higher  ¹ / 16 ^th of 1%) of the respective rates per annum at which deposits in dollars are offered to the Administrative Agent in the London interbank market at approximately 11:00 A.M. (London time) two business days before the first day of such Interest Period in an amount approximately equal to the principal amount of such Eurodollar Loan or Credit-Linked Deposit and for a period of time comparable to such Interest Period.

“ LIBOR Maintenance Fee ” has the meaning set forth in Section 2.11(a)(ii).

“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Agreement, the Borrower or any of its Subsidiaries shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

“ Loan ” means a loan made or deemed to be made by the Banks to the Borrower in accordance with Sections 2.02 and 2.05(f).

“ Maritza Letters of Credit ” means any Letter of Credit issued to support, directly or indirectly, certain liabilities of Borrower and its Subsidiaries to finance the construction of an approximately $1.4 billion coal-fired generation plant in Bulgaria, called “Maritza”.

 

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“ Material Adverse Effect ” means a material adverse effect on (i) the business, consolidated results of operations, consolidated financial condition or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform its material obligations under this Agreement or (iii) the rights of and remedies available to any Bank or Fronting Bank under this Agreement.

“ Material AES Entity ” means any Person in which the Borrower has a direct or indirect equity Investment if such Person’s contribution to Parent Operating Cash Flow for the four most recently completed fiscal quarters of the Borrower constitutes 15% or more of Parent Operating Cash Flow for such period.

“ Material Debt ” means, with respect to the Borrower, Debt (other than the Loans and the Reimbursement Obligations) of the Borrower arising in one transaction, in an aggregate principal amount exceeding $50,000,000.

“ Material Hedge Agreement ” means, with respect to any Person, a Hedge Agreement entered into by such Person in respect of which the Derivative Obligations of such Person exceed $50,000,000.

“ Material Obligation ” means any obligation or liability in an amount equal to or in excess of $50,000,000.

“ Material Plan ” means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $50,000,000.

“ Maturity Date ” means the fourth anniversary of the Closing Date.

“ Moody’s ” means Moody’s Investors Services, Inc.

“ Multiemployer Plan ” means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period.

“ Note ” means a promissory note of the Borrower to the order of any Bank, in substantially the form of Exhibit A hereto, evidencing the indebtedness of the Borrower to such Bank resulting from the Loans made or deemed to have been made by such Bank hereunder.

“ Obligation ” means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 6.01(g) or (h). Without

 

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limiting the generality of the foregoing, the Obligations of the Borrower under this Agreement include (i) the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by the Borrower under this Agreement and (ii) the obligation of the Borrower to reimburse any amount in respect of any of the foregoing that any Bank, in its sole discretion, may elect to pay or advance on behalf of the Borrower.

“ Other Taxes ” has the meaning set forth in Section 8.04(b).

“ Parent ” means, with respect to any Credit Party, any Person controlling such Credit Party.

“ Parent Operating Cash Flow ” has the meaning set forth in the Existing Credit Agreement.

“ Participant ” has the meaning set forth in Section 9.06(b).

“ PBGC ” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

“ Permitted Business ” means, with respect to any Person (i) a line of business which is substantially the same line of business as one or more of the principal businesses of such Person and its Subsidiaries, (ii) a line of business which is complementary or ancillary to, one or more of the businesses of such Person and its Subsidiaries, (iii) any infrastructure business, (iv) any public utility business and (v) the ownership, extraction, processing, transportation, distribution and sales of fossil fuels and derivatives thereof, but, in each case, excluding trading activities or hedging transactions, other than (x) such activities conducted in the ordinary course of business, (y) such activities conducted in a manner consistent with past practices and (z) such activities or transactions intended to enhance the performance of physical assets.

“ Person ” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“ Plan ” means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.

 

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“ Power Supply Business ” means an electric power or thermal energy generation or cogeneration facility or related facilities, or an electric power transmission, distribution, fuel supply and fuel transportation facilities, or any combination thereof (all subject to relevant security, if any, under related project financing arrangements), together with its or their related power supply, thermal energy and fuel contracts as well as other contractual arrangements with customers, suppliers and contractors.

“ Principal Property ” means any building, structure or other facility (together with the land on which it is erected and fixtures comprising a part thereof) used primarily for manufacturing, processing, research, warehousing or distribution, owned or leased by the Borrower and having a net book value in excess of 2% of Consolidated Net Assets, other than any such building, structure or other facility or portion thereof which is a pollution control facility financed by state or local governmental obligations or which the principal executive officer, president and principal financial officer of the Borrower determine in good faith is not of material importance to the total business conducted or assets owned by the Borrower and its Subsidiaries as an entity.

“ Quarterly Date ” means each March 31, June 30, September 30 and December 31.

“ Redeemable Stock ” means any class or series of Capital Stock of any Person that by its terms or otherwise is (i) required to be redeemed prior to the first anniversary of the Maturity Date, (ii) redeemable at the option of the holder of such class or series of Capital Stock at any time prior to the first anniversary of the Maturity Date or (iii) convertible into or exchangeable for (unless solely at the option of such person) Capital Stock referred to in clause (i) or (ii) above or Debt having a scheduled maturity prior to the first anniversary of the Maturity Date; provided that any Capital Stock that would not constitute Redeemable Stock but for provisions thereof giving holders thereof the right to require such person to repurchase or redeem such Capital Stock upon the occurrence of an “asset sale” or a “change of control” occurring prior to the first anniversary of the Maturity Date shall not constitute Redeemable Stock if such Capital Stock specifically provides that such person will not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption is permitted under the terms of this Agreement

“ Reference Dealer ” means the third-party data source agreed to by the Administrative Agent and the Borrower prior to the date hereof or such other third-party data source agreed to by the Administrative Agent and the Borrower; provided that if at any time no such third-party data source is agreed to by the Administrative Agent and the Borrower, the “Reference Dealer” shall mean Merrill Lynch, Pierce, Fenner & Smith Inc.

“ Register ” has the meaning set forth in Section 9.06(f).

“ Regulation U ” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

14

“ Reimbursement Obligations ” means at any date the obligations then outstanding of the Borrower to reimburse the Banks for L/C Drawings under Letters of Credit.

“ Related Fund ” means with respect to any Bank that is a fund that invests in bank loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Bank or by an Affiliate of such investment advisor.

“ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“ Request for Loan ” means an executed request for a Loan substantially in the form of Exhibit E hereto with all blanks completed by the Borrower.

“ Required Banks ” means at any time the Banks having at least a majority of the aggregate Total Exposure at such time.

“ Reserve Percentage ” means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of “Eurocurrency liabilities” (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). The Adjusted LIBO Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage.

“ Responsible Officer ” means any duly authorized officer of the Borrower or any of its Subsidiaries.

“ Return on Deposits ” has the meaning set forth in Section 2.01(d).

“ S&P ” means Standard & Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc.

“ SEC Filings ” means public filings made by the Borrower with the Securities and Exchange Commission on Form 8-K, Form 10-Q or Form 10-K, and any filed amendments to any of the foregoing.

“ Significant AES Entity ” means (i) any Material AES Entity, (ii) AES BVI II and (iii) any other Person (other than any Excluded AES Entity) in which the Borrower has a direct or indirect equity Investment if (A) such Person’s contribution to Parent Operating Cash Flow for the four most recently completed fiscal quarters of the Borrower constitutes 10% or more of Parent Operating Cash Flow for such period, or (B) on any date of determination, the Borrower’s direct or indirect interest in the total assets of such Person if such Person is a

 

15

Consolidated Subsidiary or in the net assets of such Person in all other cases is at least equal to 10% of the consolidated assets of the Borrower and its Consolidated Subsidiaries, taken as a whole, on such date of determination.

“ Solvent ” and “ Solvency ” mean, with respect to any Person on a particular date, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (ii) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“ Subsidiary ” means, with respect to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.

“ Taxes ” has the meaning set forth in Section 8.04(a).

“ Total Exposure ” means at any time, as to any Bank, the sum of its Applicable Percentage of the outstanding principal amount of the Loans and its Applicable Percentage of the L/C Exposure at such time.

“ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans constituting such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Base Rate

“ Unfunded Liabilities ” means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

“ United States ” means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions.

 

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Section 1.02  Accounting Terms and Determinations .

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower’s independent public accountants) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Banks (“ GAAP ”); provided that, if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article V to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Banks wish to amend Article V for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Banks.

Section 1.03  Currency Conversions Generally .

In connection with any conversion of Dollars to Euros or from Euros to Dollars required under this Agreement, the Administrative Agent shall make such conversion as follows: (i) Euros shall be converted to Dollars based on the rate of exchange quoted by the Administrative Agent in New York, at 4 P.M. (London time) on the date of determination, for the Bid-Side EUR/USD exchange rate as published by the WM Company & Reuters PLC found on Reuters page WMRSPOTO5 and (ii) Dollars shall be converted to Euros based on the rate of exchange quoted by the Administrative Agent in New York, at 4 P.M. (London time) on the date of determination, for the Ask-Side EUR/USD exchange rate as published by the WM Company & Reuters PLC found on Reuters page WMRSPOTO5 plus $.0010 per Euro.

In calculating the Total Exposure or L/C Exposure, amounts shall be calculated in Dollars using the exchange rate that was applicable at the time of the initial conversion from Dollars to Euros in respect of Maritza Letters of Credit or Loans with respect thereto.

Section 1.04  Interest Rate Determinations .

With respect to each Interest Period, the Administrative Agent shall deliver a notice to the Borrower within three Business Days following the beginning of such Interest Period, which notice shall contain the Administrative Agent’s determination (in accordance with the terms hereof) of LIBOR, the Adjusted LIBO Rate, the Applicable Margin and, if applicable, the Base Rate and EURIBOR, in each case with respect to such Interest Period. All such determinations shall be conclusive absent manifest error.

 

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ARTICLE II

THE CREDITS

Section 2.01  Credit-Linked Deposit Accounts .

(a)  Establishment of Credit-Linked Deposit Account and Credit-Linked Sub-Accounts . On or prior to the Closing Date, the Administrative Agent shall establish a Credit-Linked Deposit Account in the name of the Administrative Agent at Merrill Lynch Bank USA with the title “AES Credit-Linked Deposit Account”. The Administrative Agent shall maintain records enabling it to determine at any time the amount of the interest of each Bank in the Credit-Linked Deposit Account (the interest of each Bank in the Credit-Linked Deposit Account, as evidenced by such records, being referred to as such Bank’s “ Credit-Linked Sub-Account ”). The Administrative Agent shall establish such additional Credit-Linked Sub-Accounts for assignee Banks as shall be required pursuant to Section 9.06(c). No Person (other than the Administrative Agent) shall have the right to make any withdrawal from the Credit-Linked Deposit Account or to exercise any other right or power with respect thereto. Without limiting the generality of the foregoing, each party hereto acknowledges and agrees that the Credit-Linked Deposits are and (subject to the last paragraph of Section 6.01) will at all times be solely the property of the Banks, that the Credit-Linked Deposits shall be used solely in accordance with this Agreement and that no amount on deposit at any time in the Credit-Linked Deposit Account shall be the property of the Borrower, constitute collateral for any Obligations of the Borrower under this Agreement or otherwise be available in any manner to satisfy any Obligations of the Borrower under this Agreement. Each Bank agrees that its right, title and interest in and to the Credit-Linked Deposit Account shall be limited to the right to require amounts in its Credit-Linked Sub-Account to be applied as provided in paragraph (c) below and that it will have no right to require the return of its Credit-Linked Deposit other than as expressly provided in such paragraph (c) (each Bank hereby acknowledging that its Credit-Linked Deposit constitutes payment for its participations in Loans made or deemed to be made hereunder and Letters of Credit issued or to be issued hereunder and that each Fronting Bank will be issuing, amending, renewing and extending Letters of Credit in reliance on the availability of such Bank’s Credit-Linked Deposit to discharge such Bank’s obligations in accordance with Section 2.05(f)). The funding of the Credit-Linked Deposits and the agreements with respect thereto set forth in this Agreement constitute arrangements solely among the Administrative Agent, the Fronting Banks and the Banks with respect to the funding and reimbursement obligations of the Banks under this Agreement, and do not, except as and when specifically set forth herein, constitute loans, extensions of credit or other financial accommodations to the Borrower. Except as specifically set forth herein, the Borrower shall not have any responsibility or liability to the Banks, the Administrative Agent or any other Person in respect of the establishment, maintenance, administration or misappropriation of the Credit-Linked Deposit Account (or any

 

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Credit-Linked Sub-Account) or with respect to the investment of amounts held therein, including pursuant to paragraph (d) below, or the duties and responsibilities of the Administrative Agent with respect to the foregoing contemplated by paragraph (e) below.

(b)  Deposits in Credit-Linked Deposit Account . The following amounts will be deposited in the Credit-Linked Deposit Account at the following times:

(i) On the Closing Date, each Bank shall deposit in the Credit-Linked Deposit Account an amount in Dollars equal to such Bank’s Funding Amount. Thereafter, the Credit-Linked Deposits shall be available, on the terms and subject to the conditions set forth herein, for application pursuant to Section 2.05(f) to reimburse such Bank’s Applicable Percentage of L/C Disbursements that are not reimbursed by the Borrower.

(ii) On any date prior to the Maturity Date on which the Administrative Agent or any Fronting Bank receives any reimbursement payment from the Borrower in respect of an L/C Disbursement or a Loan, with respect to which amounts were withdrawn from the Credit-Linked Deposit Account to reimburse or pay such L/C Disbursement or fund such Loan, subject to clause (iii) below, the Administrative Agent shall deposit in the Credit-Linked Deposit Account, and credit to the Credit-Linked Sub-Accounts of the Banks, the portion of such reimbursement or other payment to be deposited therein, in accordance with Section 2.05(f) or 2.10(a), as the case may be.

(iii) If, at any time when any amount is required to be deposited in the Credit-Linked Deposit Account under clause (ii) above, the sum of such amount and the aggregate amount of the Credit-Linked Deposits at such time would exceed the higher of the total aggregate Funding Amounts and the Total Exposure, then such excess shall not be deposited in the Credit-Linked Deposit Account and the Administrative Agent shall instead pay to each Bank its Applicable Percentage of such excess.

(iv) Concurrently with the effectiveness of any assignment by any Bank of all or any portion of its Funding Amount, the Administrative Agent shall transfer into the Credit-Linked Sub-Account of the assignee the corresponding portion of the amount on deposit in the assignor’s Credit-Linked Sub-Account in accordance with Section 9.06(c).

(c)  Withdrawals From and Closing of Credit-Linked Deposit Account . Amounts on deposit in the Credit-Linked Deposit Account shall be withdrawn and distributed (or transferred, in the case of clause (v) below) as follows:

(i) On each date on which any Fronting Bank is to be reimbursed by the Banks pursuant to Section 2.05(f) for any L/C Disbursement, the Administrative Agent shall withdraw from the Credit-Linked Deposit Account the amount of such unreimbursed L/C Disbursement (and debit the Credit-Linked Sub-Account of each Bank in the amount of such Bank’s Applicable Percentage of such unreimbursed L/C

 

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Disbursement) and make such amount available to such Fronting Bank in accordance with Section 2.05(f).

(ii) Concurrently with each voluntary reduction of the Funding Amounts pursuant to and in accordance with Section 2.08(b), the Administrative Agent shall withdraw from the Credit-Linked Deposit Account and pay to each Bank such Bank’s Applicable Percentage of the amount of such reduction (provided that, after giving effect thereto, the aggregate amount of the Credit-Linked Deposits is not less than the greater of the Total Exposure or Funding Amounts).

(iii) Concurrently with any reduction of the total aggregate Funding Amounts to zero pursuant to and in accordance with Section 2.08(b) or Article VI, the Administrative Agent shall withdraw from the Credit-Linked Deposit Account and pay to each Bank such Bank’s Applicable Percentage of the excess of the aggregate amount of the Credit-Linked Deposits at such time over the L/C Exposure at such time.

(iv) Concurrently with the effectiveness of any assignment by any Bank of all or any portion of its Funding Amount, the corresponding portion of the assignor’s Credit-Linked Sub-Account shall be transferred from the assignor’s Credit-Linked Sub-Account to the assignee’s Credit-Linked Sub-Account in accordance with Section 9.06(c) and, if required by Section 9.06(c), the Administrative Agent shall close such assignor’s Credit-Linked Sub-Account.

(v) Upon the reduction in accordance with the terms hereof of each of the Funding Amounts and the L/C Exposure to zero, the Administrative Agent shall withdraw from the Credit-Linked Deposit Account and pay to each Bank the entire remaining amount of such Bank’s Credit-Linked Deposit, and shall close the Credit-Linked Deposit Account.

(vi) In accordance with 2.02(c) upon the making of a Loan.

Each Bank irrevocably and unconditionally agrees that its Credit-Linked Deposit may be applied or withdrawn from time to time as set forth in this paragraph (c).

(d)  Deposit Earnings . Each of the Administrative Agent, each Fronting Bank and each Bank hereby acknowledges and agrees that each Bank is funding its Credit-Linked Deposit to the Administrative Agent for application in the manner contemplated by Sections 2.05(f) and that the Administrative Agent and the Borrower have mutually agreed to invest the Credit-Linked Deposits on deposit in the Credit-Linked Deposit Account so as to earn a return (the “ Return on Deposits ”) (subject to Section 8.01) for the Banks equal at any time to (i) for Dollar denominated Credit-Linked Deposits, (w) the Adjusted LIBO Rate in effect for the Credit-Linked Deposits at such time minus (x) 15 basis points or (ii) for Euro denominated deposits, (y) the EURIBOR in effect for the Credit-Linked Deposits at such time minus (z) 15 basis points; provided that, in the event that the Borrower shall revoke any notice of prepayment

 

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and termination pursuant to Section 2.10(b), the Administrative Agent shall use commercially reasonable efforts to invest the Credit-Linked Deposits that are affected thereby in a manner that is consistent with its policies relating to such deposits. Such interest will be paid to the Banks by the Administrative Agent in arrears on each day on which fees are due and payable to the Banks under Section 2.11(a) (and amounts earned in Euros shall be converted to Dollars by the Administrative Agent (in accordance with Section 1.03) any time fees are payable pursuant to Section 2.11(a)). All such interest shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day) and shall be calculated based on the daily amounts of the Credit-Linked Deposits of the Banks during the applicable period. The applicable Adjusted LIBO Rate or EURIBOR shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

(e)  Sufficiency of Deposits to Provide for Total Exposure . Notwithstanding any other provision of this Agreement, including Sections 2.01, 2.02 and 2.05(a), no Loan shall be made pursuant to Section 2.02(a) and no Letter of Credit shall be issued, if after giving effect thereto the L/C Exposure would exceed the aggregate amount of the Credit-Linked Deposits.

(f)  Satisfaction of Bank Funding Obligations . The Borrower and each Fronting Bank acknowledge and agree that, notwithstanding any other provision contained herein (but without limiting the obligations of any Bank under Section 9.03(c)), the deposit by each Bank in the Credit-Linked Deposit Account on the Closing Date of funds equal to its Funding Amount will fully discharge the obligation of such Bank to fund Loans by such Bank pursuant to Section 2.02(a) and to reimburse such Bank’s Applicable Percentage of L/C Disbursements that are not reimbursed by the Borrower pursuant to Section 2.05(f), and that no other or further payments shall be required to be made by any Bank in respect of any such funding or reimbursement obligations.

(g)  Security . Each Bank grants to the Administrative Agent for the benefit of the Fronting Banks a security interest in such Bank’s Credit-Linked Deposit, its Credit-Linked Sub-Account and all of its rights, title and interest to and under the Credit-Linked Deposit Account to secure the obligations of such Bank under Sections 2.05(f) . The Administrative Agent hereby grants a security interest for the benefit of the Fronting Banks in all its rights title and interest to and under the Credit-Linked Deposit Account and confirms the grant by the Banks made above to secure the obligations of the Banks under Section 2.05(f). To the extent that there are multiple Fronting Banks, such Fronting banks shall share ratably in such security interest in proportion to the outstanding Obligations owed to such Fronting Banks.

(h)  Fronting Bank Insecure . If the Administrative Agent or any Fronting Bank is enjoined from taking any action referred to in paragraph (i) of Section 2.01(c), or if the Administrative Agent or any Fronting Bank reasonably determines that, by operation of law, it may reasonably be precluded from taking any such action, or if the Borrower or any Bank challenges in any legal proceeding any of the acknowledgements, agreements or characterizations set forth in any of the fifth, sixth or seventh sentences of Section 2.01(a), then,

 

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in any such case (and so long as such event or condition shall be continuing), and notwithstanding anything contained herein to the contrary, no Fronting Bank shall be required to or to issue, renew or extend any Letter of Credit.

Section 2.02  Loans .

(a)  Requested Loans . Subject to the terms and conditions set forth herein, the Banks shall, from time to time during the Availability Period at the request of the Borrower, make one or more Dollar denominated Loans to the Borrower in an aggregate principal amount that will not result in (i) the aggregate amount of the Total Exposures exceeding the aggregate amount of the Funding Amounts or (ii) the L/C Exposure exceeding the balance of the Credit-Linked Deposit Account (excluding any portion of the Credit-Linked Deposit Account attributable to interest). Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans. Loans shall constitute utilization of the Funding Amounts.

(b)  Deemed Loans . The Banks shall, from time to time during the Availability Period, if the Borrower fails to reimburse any L/C Disbursement when required by the provisions of 2.05(f), be deemed to have made a Dollar denominated Loan to the Borrower in the aggregate principal amount of the unreimbursed L/C Disbursement. In the case of a Maritza Letter of Credit, the amount of such corresponding Loan shall equal the unreimbursed L/C Disbursement measured in Euros not reimbursed by the Borrower multiplied by the Fixed Exchange Rate.

(c)  Withdrawal Authorization . In consideration and in furtherance of the foregoing, each Bank hereby absolutely and unconditionally authorizes and directs the Administrative Agent to withdraw from the Credit-Linked Deposit Account (and debit such Bank’s Credit-Linked Sub-Account in the amount of) such Bank’s Applicable Percentage of the principal amount of any such Loan pursuant to clause (a) or (b) above (it being understood and agreed that each Bank’s obligations in respect of funding Loans shall be payable solely from, and limited to, such Bank’s Credit-Linked Deposit). In the case of a Borrowing pursuant to Section 2.02(a), the Administrative Agent will make Loans available to the Borrower by promptly transferring by wire transfer the amounts so withdrawn by 3:00 p.m. New York City time, on the requested date of such Loan, to an account of the Borrower designated by the Borrower in the applicable Request for Loan.

(d)  Type of Loans . Subject to Article VIII, (i) each Borrowing pursuant to Section 2.02(a) shall be constituted entirely of Base Rate Loans or of Eurodollar Loans as the Borrower may request in accordance herewith and (ii) each Borrowing deemed to have been made pursuant to Section 2.02(b) shall be constituted entirely of Eurodollar Loans. If the provisions of Article VIII prohibit the making of Eurodollar Loans, each Borrowing made or deemed to be made hereunder shall be constituted entirely of Base Rate Loans.

 

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(e)  Minimum Amounts; Limitation on Number of Borrowings . Each Borrowing shall be in an aggregate amount of $1,000,000 or a larger multiple of $1,000,000; provided that a Borrowing deemed to be made pursuant to Section 2.02(b) may be in an aggregate amount that is required to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(f). Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of five Eurodollar Borrowings outstanding that were made pursuant to Section 2.02(a).

Section 2.03  [Intentionally Omitted] .

Section 2.04  Requests for Borrowings .

(a)  Notice by the Borrower . To request a Borrowing pursuant to Section 2.02(a), the Borrower shall notify the Administrative Agent of such request by telephone not later than 11:00 a.m., New York City time, on the day of the proposed Borrowing. Each such telephonic request for a Loan shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a Request for Loan signed by the Borrower. In connection with a deemed Loan made pursuant to Section 2.02(b), the Borrower shall be deemed to have furnished a timely, duly completed Request for Loan.

(b)  Content of Request for Loans . Each telephonic request for a Loan and written Request for Loan shall specify the following information in compliance with Section 2.02:

 

(i)

the aggregate amount of the requested Borrowing;

 

(ii)

the date of such Borrowing, which shall be a Business Day;

 

(iii)

whether such Borrowing is to be an Base Rate Borrowing or a Eurodollar Borrowing; and

 

(iv)

the location and number of the Borrower’s account to which funds are to be disbursed.

(c)  Notice by the Administrative Agent to the Lenders . Promptly following receipt of a Request for Loan in accordance with this Section, the Administrative Agent shall advise each Bank of the details thereof and of the amount of such Bank’s Loan to be made as part of the requested Borrowing.

(d)  Failure to Elect . If no election as to the Type of a Borrowing is specified, then the requested Borrowing shall be a Base Rate Borrowing.

 

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Section 2.05  Letters of Credit .

(a)  General . Subject to the terms and conditions set forth herein, the Borrower may request any Fronting Bank to issue, and such Fronting Bank shall issue, at any time and from time to time during the period commencing on the Closing Date and ending on the date that is five Business Days prior to the Maturity Date, Letters of Credit for its own account in such form as is acceptable to each of the Administrative Agent and such Fronting Bank in its reasonable determination (including, without limitation, “auto-renewal” letters of credit); provided that such Fronting Bank shall not be under any obligation to issue any Letter of Credit if the issuance of such Letter of Credit would violate one or more policies of such Fronting Bank generally applicable to the issuance of letters of credit. All Letters of Credit shall be denominated in Dollars except for any Maritza Letter of Credit, which shall be denominated in Euros. All Letters of Credit issued hereunder by the Fronting Banks shall be issued for the account of the Borrower as the named account party thereon, provided that Letters of Credit may, in addition to showing the Borrower as account party, show any Subsidiary of the Borrower as a favoree under such Letter of Credit. Letters of Credit issued hereunder shall constitute utilization of the Funding Amounts. Concurrently with the issuance of a Maritza Letter of Credit, a corresponding amount equal to the face amount of such Maritza Letter of Credit held in the Credit-Linked Deposit Account will be converted by the Administrative Agent (in accordance with Section 1.03) into Euros at the then prevailing exchange rate (the “ Fixed Exchange Rate ”). To the extent a Maritza Letter of Credit is reduced or returned by the beneficiary thereunder, or drawn and reimbursed by the Borrower pursuant to the provisions hereof, a corresponding amount of Euros in the Credit-Linked Deposit Account will be converted to Dollars by the Administrative Agent (in accordance with Section 1.03) at the then prevailing exchange rate. The Administrative Agent shall provide notice to the Borrower, within two Business Days of such reduction, return or reimbursement, as applicable, of the Dollar amount resulting from such conversion as well as a calculation of the product of such amount of Euros multiplied by the Fixed Exchange Rate. To the extent such Dollar amount is less then the product of such amount of Euros multiplied by the Fixed Exchange Rate, the Borrower shall deposit, within two Business Days of such notice from the Administrative Agent, Dollars into the Credit-Linked Deposit Account equal to such deficit. To the extent such product is greater than such Dollar amount, within two Business Days of such reduction, return or reimbursement as applicable, the Administrative Agent shall withdraw such excess from the Credit-Linked Deposit Account and pay such excess to the Borrower.

(b)  Notice of Issuance, Amendment, Renewal or Extension . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Fronting Bank) to the applicable Fronting Bank and the Administrative Agent (other than the Letters of Credit requested prior to the date hereof, not later than 11:00 a.m. on the fourth Business Day preceding the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be

 

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a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (d) of this Section), whether or not such Letter of Credit is to be a Maritza Letter of Credit, the amount of such Letter of Credit (which shall be denominated in Euros in the case of a Maritza Letter of Credit), the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the applicable Fronting Bank, the Borrower also shall submit a letter of credit application on such Fronting Bank’s standard form in connection with any request for a Letter of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, any Fronting Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. Each Fronting Bank shall promptly notify the Administrative Agent of any Letters of Credit issued, amended, renewed or extended by it hereunder and shall deliver a report (in form and substance reasonably acceptable to the Administrative Agent) within five Business Days following the end of each month after the Closing Date detailing its letter of credit activity under this Agreement.

(c)  Limitations on Amounts . A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the aggregate Total Exposure shall not exceed the total Funding Amounts and (ii) the L/C Exposure shall not exceed the balance of the Credit-Linked Deposit Account (excluding any portion of the Credit-Linked Deposit Account attributable to interest).

(d)  Expiration Date . Each Letter of Credit (other than a Maritza Letter of Credit) shall expire (or provide that the applicable Fronting Bank shall have the option to refuse to renew such Letter of Credit) at or prior to the close of business on the earlier of (i) the date twelve months after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, twelve months after the then-current expiration date of such Letter of Credit, so long as such renewal or extension occurs no earlier than three months prior to such then-current expiration date) and (ii) the date that is five Business Days prior to the Maturity Date. Each Maritza Letter of Credit shall expire at or prior to the close of business on the date that is five Business Days prior to the Maturity Date.

(e)  Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) by any Fronting Bank, and without any further action on the part of such Fronting Bank or the Banks, such Fronting Bank hereby grants to each Bank, and each Bank hereby acquires from such Fronting Bank, a participation in such Letter of Credit equal to such Bank’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. Each Bank acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or, subject to Section 2.01(f), reduction or termination of the Funding Amounts.

 

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In consideration and in furtherance of the foregoing, each Bank hereby absolutely and unconditionally authorizes and directs the Administrative Agent to withdraw from the Credit-Linked Deposit Account (and debit such Bank’s Credit-Linked Sub-Account in the amount of) such Bank’s Applicable Percentage of each L/C Disbursement made by any Fronting Bank and not reimbursed by the Borrower on the date due as provided in paragraph (f) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason (it being understood and agreed that each Bank’s obligations in respect of participations in Letters of Credit shall be payable solely from, and limited to, such Bank’s Credit-Linked Deposit).

(f)  Reimbursement . (i) If any Fronting Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such Fronting Bank in respect of such L/C Disbursement by paying to the Administrative Agent an amount equal to such L/C Disbursement in the currency in which the applicable Letter of Credit is denominated on the first Business Day (other than with respect to any Maritza Letter of Credit which shall be governed by the provisions set forth in clause (ii) of this subsection (f)) after such drawing. If the Borrower fails to make such payment within a Business Day of when due, the Administrative Agent shall reimburse the applicable Fronting Bank for such L/C Disbursement with funds from the Credit-Linked Deposits and the obligations of the Borrower to reimburse such Fronting Bank shall be converted into a Loan payable to the Administrative Agent for the account of the Banks in accordance with Section 2.02.

(ii) Notwithstanding any provision herein to the contrary, if any Fronting Bank shall receive a demand for payment in accordance with Section 2.05(h) hereof with respect to any Maritza Letter of Credit, such Fronting Bank shall notify the Administrative Agent and the Borrower within one Business Day of receipt of such notice (which notice sets forth the date of payment). The Borrower must notify the Administrative Agent and such Fronting Bank whether or not it will reimburse such Fronting Bank within one Business Day after it receives such notice. If the Borrower elects to reimburse such Fronting Bank, the Borrower shall be obligated to reimburse such Fronting Bank on the same Business Day that such Fronting Bank notified the Borrower as the date of payment.

(iii) Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this subsection (f), the Administrative Agent shall distribute such payment to the applicable Fronting Bank or, to the extent that amounts have been withdrawn (and credited to each Bank’s Credit-Linked Sub-Account in the amount of such Bank’s Applicable Percentage of such deposit) from the Credit-Linked Deposit Account to make any payment pursuant to this paragraph to reimburse such Fronting Bank, then such payment shall be deposited in the Credit-Linked Deposit Account.

If any unreimbursed L/C Disbursement resulting in a withdrawal from the Credit-Linked Deposits Accounts as provided in the preceding paragraph shall be subsequently reimbursed or the Loan deemed issued in respect of such unreimbursed L/C Disbursement is repaid other than on the last day of any Interest Period for Credit-Linked Deposits, the

 

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Administrative Agent shall invest the amount so reimbursed in overnight or short-term cash equivalent investments until the end of such Interest Period and the Borrower shall pay to the Administrative Agent, upon the Administrative Agent’s request therefor, the amount, if any, by which the interest accrued on a like amount of the Credit-Linked Deposits at the Adjusted LIBO Rate shall exceed the interest earned through the investment of the amount so reimbursed for the period from the date of such reimbursement through the end of such Interest Period, as determined by the Administrative Agent (such determination to be conclusive absent manifest error) and set forth in the request for payment delivered to the Borrower. In the event the Borrower shall fail to pay any amount due under this paragraph, the interest payable by the Administrative Agent to the Banks on their Credit-Linked Deposits under Section 2.01(d) shall be correspondingly reduced and the Banks shall without further act succeed, ratably in accordance with their Applicable Percentages, to the rights of the Administrative Agent with respect to such amount.

(g)  Obligations Absolute . The Borrower’s obligation to reimburse L/C Disbursements as provided in paragraph (f) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by any Fronting Bank under a Letter of Credit against presentation of a draft or other document that does not comply strictly with the terms of such Letter of Credit, and (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower’s obligations hereunder.

Neither the Administrative Agent, the Banks, the Fronting Banks, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit by any Fronting Bank or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of such Fronting Bank; provided that the foregoing shall not be construed to excuse such Fronting Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Fronting Bank’s gross negligence or willful misconduct when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that:

(i) a Fronting Bank may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for

 

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further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit;

(ii) a Fronting Bank shall have the right, in its sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

(iii) this sentence shall establish the standard of care to be exercised by any Fronting Bank when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

(h)  Disbursement Procedures . Each Fronting Bank shall, within a reasonable time following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Each Fronting Bank shall promptly after such examination notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether such Fronting Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse such Fronting Bank and the Banks with respect to any such L/C Disbursement.

(i)  Interim Interest . If any Fronting Bank shall make any L/C Disbursement, then, unless the Borrower shall reimburse (including through a Borrowing or a deemed Borrowing of Loans) such L/C Disbursement in full on the date such L/C Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such L/C Disbursement is made to but excluding the date that the Borrower reimburses such L/C Disbursement, as provided in Section 2.12(c). Interest accrued pursuant to this paragraph shall be for the account of such Fronting Bank, except that interest accrued on and after the date of payment from the Credit-Linked Deposit of any Bank to reimburse such Fronting Bank shall be for the account of such Bank to the extent of such payment.

Section 2.06  [Intentionally Omitted] .

Section 2.07  Interest Elections .

(a)  Elections by the Borrower . The Loans constituting each Borrowing initially shall be (i) of the Type specified in the applicable Request for Loan in the case of Loans made pursuant to Section 2.02(a) and (ii) Eurodollar Loans in the case of Loans deemed made pursuant to Section 2.02(b). Thereafter, the Borrower may elect to convert such Borrowing to a Borrowing of a different Type or to continue such Borrowing as a Borrowing of the same Type.

 

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(b)  Notice of Elections . To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by 11:00 a.m., New York City time, on the day of the proposed election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request substantially in the form of Exhibit F hereto and signed by the Borrower.

(c)  Content of Interest Election Requests . Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clause (iii) of this paragraph shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; and

(iii) whether the resulting Borrowing is to be an Base Rate Borrowing or a Eurodollar Borrowing.

(d)  Notice by the Administrative Agent to the Lenders . Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Bank of the details thereof and of such Bank’s portion of each resulting Borrowing.

(e)  Failure to Elect; Events of Default . If the Borrower fails to deliver a timely and complete Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period therefor, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a Base Rate Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Banks, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to a Base Rate Borrowing at the end of the applicable Interest Period thereof.

Section 2.08  Termination and Reduction of the Funding Amounts .

(a)  Scheduled Termination . Unless previously terminated, the Funding Amounts shall be reduced to zero on the Maturity Date.

 

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(b)  Voluntary Termination or Reduction . The Borrower may at any time terminate, or from time to time reduce, the Funding Amounts; provided that (i) each reduction of the Funding Amounts pursuant to this Section shall be in an amount that is $1,000,000 or a larger multiple of $1,000,000 (or, if less, the entire remaining aggregate amount of the Funding Amounts) and (ii) the Borrower shall not terminate or reduce the Funding Amounts if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the Total Exposure of all of the Banks would exceed the total Funding Amounts.

(c)  Notice of Voluntary Termination or Reduction . The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Funding Amounts under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the affected Banks of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Funding Amounts delivered by the Borrower may state that such notice is conditioned upon the issuance of securities or the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

Section 2.09  Repayment of Loans; Evidence of Debt .

(a)  Repayment . The Borrower hereby unconditionally promises to pay the to the Administrative Agent for account of the Banks the outstanding principal amount of the Loans on the Maturity Date.

(b)  Maintenance of Records by Banks . Each Bank shall maintain in accordance with its usual practice records evidencing the indebtedness of the Borrower to such Bank resulting from each Loan made or deemed made by such Bank, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder.

(c)  Manner of Payment . Prior to any repayment or prepayment of any Borrowings hereunder (including, without limitation, prepayments pursuant to Section 2.10), the Borrower shall select the Borrowings to be paid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection in accordance with Section 2.10(b). If the Borrower fails to make a timely selection of the specific Borrowings to be repaid or prepaid, such payment shall be applied ratably to all outstanding Loans.

(d)  Maintenance of Records by the Administrative Agent . The Administrative Agent shall maintain records in which it shall record (i) the amount of each Loan made hereunder and Type thereof, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Bank hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for account of the Bank’s and each Bank’s share thereof.

 

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(e)  Effect of Entries . The entries made in the records maintained pursuant to paragraph (b) or (d) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Bank or the Administrative Agent to maintain such records or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(f)  Promissory Notes . Any Bank may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Bank a promissory note payable to such Bank (or, if requested by such Bank, to such Bank and its registered assigns) and in substantially the same form as Exhibit A.

Section 2.10  Prepayment of Loans .

(a)  Optional Prepayments . The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part subject to the requirements of this Section 2.10.

(b)  Notices, Etc. The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder, under Section 2.10(a), not later than 11:00 a.m. New York City time, three Business Days before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Funding Amounts as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the relevant Banks of the contents thereof. Each partial prepayment of any Borrowing shall be in an aggregate amount of $1,000,000 or multiple of $1,000,000 in excess thereof, except as necessary to fully repay such Borrowing. Each prepayment of a Borrowing shall be applied ratably to the Banks included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12.

Section 2.11  Fees .

(a) (i) The Borrower agrees to pay to the Administrative Agent for the account of each Bank a fee (the “ Applicable Margin Fee ”) accruing at a rate per annum equal to the Applicable Margin (subject to the last sentence of clause (iii) below) on the daily amount of the Credit-Linked Deposit of such Bank during the period from and including the date hereof to but excluding the date on which each of the Funding Amounts of all of the Banks and the L/C Exposure have been reduced to zero.

(ii) In addition, the Borrower agrees to pay to the Administrative Agent for the account of each Bank an additional fee (the “ LIBOR Maintenance Fee ”), accruing at the rate of 0.15% per annum, on the daily amount of the Credit-Linked Deposit of such Bank during

 

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the period from and including the date hereof to but excluding the date on which each of the Funding Amounts of all of the Banks and the L/C Exposure have been reduced to zero.

(iii) On each Fee Payment Date (as defined below), any difference between the Adjusted LIBO Rate and the sum of the Return on Deposits and the LIBOR Maintenance Fee for the applicable period resulting from Euro denominated Credit-Linked Deposits which earn a return based on EURIBOR (as determined by the Administrative Agent and communicated to the Borrower in the invoice referred to in clause (iv) below) shall be considered the “ EURIBOR Differential Rate ”. If the sum of the Return of Deposits and the LIBOR Maintenance Fee is less than the Adjusted LIBO Rate, then the Borrower agrees to pay to the Administrative Agent for the account of each Bank a fee accruing at a rate per annum equal to the EURIBOR Differential Rate on the daily amount of the Credit-Linked Deposit of such Bank during such period. If the sum of the Return on Deposits and the LIBOR Maintenance Fee is greater than the Adjusted LIBO Rate, then the Applicable Margin (for purposes of clause (i) above only) shall be reduced by the amount of the EURIBOR Differential Rate.

(iv) The fees payable under this Section 2.11(a) accrued to but excluding the last day of each Interest Period for Credit-Linked Deposits shall be invoiced to the Borrower by the Administrative Agent within three Business Days following the last day of each such Interest Period and shall be payable on the second Business Day following the date of such invoice, and on the date on which each of the Funding Amounts of all of the Banks and the L/C Exposure have been reduced to zero (each such payment date, a “ Fee Payment Date ”). All such fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). All amounts payable under this Section 2.11(a) with respect to the daily amount of the Credit-Linked Deposit of a Bank shall be calculated based on the actual amount of Dollars comprising such Credit-Linked Deposit and the Dollar-equivalent of the actual amount of Euros comprising such Credit-Linked Deposit (calculated by the Administrative Agent using the Fixed Exchange Rate applicable to such Euros).

(b) The Borrower agrees to pay to each Fronting Bank a fronting fee, which shall accrue at the rate of 0.125% per annum or such other rate or rates per annum separately agreed upon between the Borrower and the applicable Fronting Bank, on the average daily amount of the L/C Exposure (excluding any portion thereof attributable to unreimbursed L/C Disbursements) during the period from and including the Closing Date to but excluding the date on which each of the Funding Amounts of all of the Banks and the L/C Exposure have been reduced to zero, as well as such Fronting Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Fronting fees accrued to but excluding each Quarterly Date shall be payable on such Quarterly Date; provided that all such accrued fees shall be payable on the date on which the Funding Amounts of all of the Banks are reduced to zero and any such fees accruing after the such date shall be payable on demand. Any other fees payable to any Fronting Bank pursuant to this

 

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paragraph shall be payable within 10 days after demand. All fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) The Borrower agrees to pay to the Administrative Agent for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the applicable Fronting Bank, in the case of fees payable to it) for distribution, in the case of fees payable under Section 2.11(a), to the Banks entitled thereto. Fees paid shall not be refundable under any circumstances.

Section 2.12  Interest .

(a)  Loans . The Loans constituting each (i) LIBOR Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO Rate plus the Applicable Margin and (ii) Base Rate Borrowing shall bear interest at the Base Rate plus the Applicable Margin.

(b)  Default Interest . Upon the occurrence and during the continuance of an Event of Default described in Section 6.01(a) or an Event of Default described in Section 6.01(g) or 6.01(h) with respect to the Borrower, the Borrower shall pay interest on (x) (i) the outstanding principal amount of each Base Rate Loan owing to each Bank, payable on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Base Rate Loan pursuant to Section 2.12(a) above and (ii) to the fullest extent permitted by law, the amount of any interest that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, at a rate per annum equal to 2% per annum above the rate per annum required to be paid on the Base Rate Loans on which such interest has accrued pursuant to Section 2.12(a) above, (y)(i) the outstanding principal amount of each Eurodollar Loan owing to each Bank payable on demand, at a rate per annum equal at all times to a rate per annum equal to the higher of (i) the sum of 2% plus the Applicable Margin applicable to such Loan plus the Adjusted LIBO Rate applicable to such Eurodollar Loan and (ii) the sum of 2% plus the Applicable Margin applicable to such Loan plus the quotient obtained (rounded upward, if necessary, to the next higher  ¹ / 100 th of 1%) by dividing (x) the average (rounded upward, if necessary, to the next higher  ¹ / 16 th of 1%) of the respective rates per annum at which one day (or, if such amount due remains unpaid more than three Business Days, then for such other period of time not longer than three months as the Administrative Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to the Reference Dealers are offered to the Reference Dealers in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the relevant rate applicable to Base Rate Loans) (the “ Eurodollar Default Rate ”) and (ii) to the fullest extent permitted by law, the amount of any interest that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, at a rate per

 

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annum equal to the Eurodollar Default Rate for the Eurodollar Loans on which such interest has accrued pursuant to Section 2.12(a) above and (z) in the case of a Credit-Linked Deposit, the rate of fees payable by Borrower shall be increased by 2% from the date the Required Banks shall so elect until such Event of Default has been cured or waived by the Required Banks, provided that accrual at the rate provided for hereunder shall commence automatically upon occurrence of an Event of Default of the type specified in clauses (a) or (h) of Section 8.01.

(c)  Payment of Interest . Accrued interest on each Loan shall be payable in arrears on the last day of each Interest Period for such Loan and upon termination of the Funding Amounts; provided that (i) interest accrued pursuant to paragraph (b) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of a Loan prior to the Maturity Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Borrowing prior to the end of the Interest Period therefor, accrued interest on such Borrowing shall be payable on the effective date of such conversion.

(d)  Computation . All interest hereunder shall be computed on the basis of a year of 360 days (or 365 or 366 days, as the case may be, in the case of Base Rate Loans based on the Base Rate) and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Adjusted LIBO Rate or Base Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

Section 2.13  [Intentionally Omitted] .

Section 2.14  [Intentionally Omitted] .

Section 2.15  Break Funding Payments . In the event of (a) the payment of any principal of any Eurodollar Loan or the reduction of any Credit-Linked Deposit other than on the last day of any Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto, (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 9.16 or (e) the revocation of any notice of prepayment pursuant to Section 2.10(b), then, in any such event, the Borrower shall compensate (within 15 days following a demand therefore) each applicable Bank, each applicable Fronting Bank, or the Administrative Agent, as applicable, for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan or a Credit-Linked Deposit, such loss, cost or expense to any applicable Bank, each applicable Fronting Bank or the Administrative Agent may, at the option of such party, be deemed to include an amount determined by such Bank, each applicable Fronting Bank or the Administrative Agent, as the case may be, to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan or on such

 

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Credit-Linked Deposit had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan or such Credit-Linked Deposit, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Bank or such Fronting Bank, as the case may be, would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market. A certificate of any Bank setting forth any amount or amounts that such Bank is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. In the event the Borrower shall fail to pay any amount due to any Fronting Bank under this Section, the interest payable by the Administrative Agent to the Banks on their Credit-Linked Deposits under Section 2.01(d) shall be correspondingly reduced and the Banks shall without further act succeed, ratably in accordance with their Applicable Percentages, to the rights of such Fronting Bank respect to such amount.

Section 2.16  [Intentionally Omitted] .

Section 2.17  Payments Generally; Pro Rata Treatment; Sharing of Set-offs .

(a)  Payments by the Borrower . The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of L/C Disbursements, or under Section 2.15, 8.03 or 8.04, or otherwise) or under any Note (except to the extent otherwise provided therein) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices referred to in Section 9.01 except as otherwise expressly provided in this Agreement or any Note and except payments to be made directly to any Fronting Bank as expressly provided herein and payments pursuant to Sections 2.15, 8.03, and 8.04, which shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for account of any other Person to the appropriate recipient (or will deposit such payments in the Credit-Linked Deposit Account, as applicable) promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder or under any other Note (except to the extent otherwise provided therein) shall be made in Dollars.

(b)  Application of Insufficient Payments . If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of

 

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interest and fees then due to such parties, and (ii) second, to pay principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

(c)  Sharing of Payments by Banks . If any Bank shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in L/C Disbursements resulting in such Bank receiving payment of a greater proportion of the aggregate amount of its Loans and participations in L/C Disbursements and accrued interest thereon then due than the proportion received by any other Bank, then the Bank receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in L/C Disbursements of other Banks to the extent necessary so that the benefit of all such payments shall be shared by the Banks ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in L/C Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Bank as consideration for the assignment of or sale of a participation in any of its Loans or participations in L/C Disbursements to any assignee or participant, other than to any Subsidiary or Affiliate of the Borrower (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Bank acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and countercl