EX-10.1 DEBT SERVICE RESERVE LETTER OF CREDIT AND REIMBURSEMENT AGREEMENTReimbursement Agreement |
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EME HOMER CITY GENERATION LP | HOMER CITY OL1 LLC, | UNION BANK OF CALIFORNIA, N.A.,. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 10.1
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ii DEBT SERVICE RESERVE This DEBT SERVICE RESERVE LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this " Agreement "), dated as of April 1, 2005, is entered into by and among (1) HOMER CITY OL1 LLC, a Delaware limited liability company (the " Borrower " or " Owner Lessor "), (2) UNION BANK OF CALIFORNIA, N.A., as the issuer of the Debt Service Reserve Letter of Credit referred to herein (in such capacity, the " Issuing Bank ") and as a Bank (as defined below), (3) each bank or other entity that is, or becomes pursuant to Section 9.9 , a party hereto (individually, a " Bank " and collectively, the " Banks ") and (4) UNION BANK OF CALIFORNIA, N.A., as agent (in such capacity, together with its successors in such capacity, the " Agent ") for the Banks, and replaces in its entirety that certain Amended and Restated Debt Service Reserve Letter of Credit and Reimbursement Agreement, dated as of April 1, 2002 (as heretofore amended, supplemented or otherwise modified from time to time, the " Existing Reimbursement Agreement "), among the Borrower, Westdeutsche Landesbank Girozentrale, New York Branch, as issuing bank and agent, and the banks party thereto. RECITALS A. Pursuant to the Lease Indenture of Trust and Security Agreement, dated as of December 7, 2001 (as amended, supplemented or otherwise modified from time to time, the " Lease Indenture "), among the Borrower, The Bank of New York, as successor to the United States Trust Company of New York, as Security Agent (in such capacity, together with its successors in such capacity, the " Security Agent "), and The Bank of New York, as successor to the United States Trust Company of New York, as trustee (in such capacity, together with its successors in such capacity, the " Lease Indenture Trustee "), the Borrower issued two series of lessor notes in respect thereof (collectively, the " Lessor Notes "). B. The Borrower previously entered into the Existing Reimbursement Agreement to provide for the issuance of a debt service reserve letter of credit thereunder, which debt service reserve letter of credit has a stated expiration date of April 1, 2005. C. The Borrower has requested that the Issuing Bank issue and the Banks participate in, and the Issuing Bank is willing to issue and the Banks are willing to participate in, the Debt Service Reserve Letter of Credit (as defined below) upon the terms and conditions hereinafter set forth, which Debt Service Reserve Letter of Credit will replace the debt service reserve letter of credit issued pursuant to the Existing Reimbursement Agreement. AGREEMENT NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS; CONSTRUCTION SECTION 1.1 Definitions. (a) Terms defined in the Participation Agreement (in the form of such terms as they exist on the date of this Agreement and as they may hereafter be amended from time to time, but only to the extent that the incorporation of any such amendments into this Agreement has been consented to by the Required Banks in writing) have, unless the same are defined herein or the context otherwise requires, the same meaning when used herein (with appropriate substitutions). (b) The following terms are used in this Agreement with the following respective meanings: " Adjusted Base Rate " means the higher of (i) the Federal Funds Rate plus 0.50% per annum and (ii) the Prime Rate. " Adjusted Base Rate Loan " means a DSR Loan bearing interest at the Adjusted Base Rate. " Adjusted Base Rate Margin " has the meaning set forth in Section 2.6(a) . " Amended and Restated Security Deposit Agreement " means the Amended and Restated Security Deposit Agreement, dated as of December 7, 2001, among EME Homer City Generation, L.P. and The Bank of New York, as Collateral Agent. " Applicable Law " means, with respect to any Person, property or matter, any of the following applicable thereto: any statute, law, regulation, ordinance, rule, judgment, rule of common law, order, decree, arbitral decision, governmental approval, approval, concession, grant, franchise, license, agreement or other governmental restriction, or any voluntary restraint, policy or guideline with which such Person has formally agreed to comply, whether in effect as of the date of this Agreement or thereafter and in each case as amended. " Bank " has the meaning set forth in the Preamble hereto. " Borrower " has the meaning set forth in the Preamble hereto. " Business Day " means a day (other than a Saturday or Sunday) on which banks are open for business in Los Angeles, California and New York, New York, and, in matters relating to the determination of a LIBOR Rate or Interest Period, a day on which the London interbank market deals in U.S. Dollar deposits. " Closing Date " means the date on which the conditions precedent set forth in Section 3.1 have been fulfilled and the Debt Service Reserve Letter of Credit is issued. " Collateral " has the meaning set forth in the Lease Indenture. " Collateral Agent " means The Bank of New York, as successor to the United States Trust Company of New York, as collateral agent under the Amended and Restated Security Deposit Agreement, or any successor thereto pursuant to the terms thereof. " Commitment " has the meaning set forth in Section 2.1 . " Commitment Transfer Supplement " means a Commitment Transfer Supplement entered into by a Bank and another Person substantially in the form of Exhibit C . " Damages " has the meaning set forth in Section 9.10 . " Debt Service Reserve Account " has the meaning set forth in Section 5.4 of the Lease Indenture. " Debt Service Reserve Amount " means the maximum amount required by Section 5.4 of the Lease Indenture to be on deposit from time to time in the Debt Service Reserve Account without giving effect to the issuance of any letters of credit. " Debt Service Reserve Letter of Credit " means a letter of credit substantially in the form of Exhibit A , issued or to be issued by the Issuing Bank, or any letter of credit issued by the Issuing Bank in replacement thereof. " Debt Service Reserve Letter of Credit Promissory Note " means a promissory note substantially in the form of Exhibit B . " Default " means an event that with the giving of any required notice and/or the lapse of any required time would constitute an Event of Default. " Default Rate " means a rate per annum equal at all times upon the occurrence and during the continuance of an Event of Default to (i) in the case of any amount of principal of any DSR Loan that is not paid when due, 2% per annum above the higher of (A) the interest rate required to be 2 paid on such DSR Loan pursuant to the terms of this Agreement immediately prior to the date on which such amount became due and (B) the Adjusted Base Rate in effect from time to time plus the applicable Adjusted Base Rate Margin, and (ii) in the case of any amount of interest, fees or other amounts payable hereunder that is not paid when due, 2% per annum above the Adjusted Base Rate in effect from time to time plus the applicable Adjusted Base Rate Margin. " Drawing " means a drawing under the Debt Service Reserve Letter of Credit. " DSR Loan " has the meaning set forth in Section 2.4 . " DSR Note " has the meaning set forth in Section 2.14(a) . " DSR Noteholder " means each Bank that holds a DSR Note. " Event of Default " has the meaning set forth in Section 6.1 . " Existing Reimbursement Agreement " has the meaning set forth in the Preamble hereto. " Expiration Date " means the earlier of (i) the five-year anniversary of the Closing Date or (ii) the date on which the Debt Service Reserve Letter of Credit is terminated in accordance with the provisions hereof. " Exposure " means, with respect to any Bank at any time, the outstanding principal amount of such Bank's DSR Loans and its LC Exposure at such time. " Federal Funds Rate " means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. " Governmental Authority " means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. " Indemnified Party " has the meaning set forth in Section 9.10 . " Interest Payment Date " means, with respect to (i) any Adjusted Base Rate Loan, each April 1 and October 1, and (ii) any LIBOR Rate Loan, the last day of each Interest Period with respect thereto, provided that, for any Interest Period in excess of three (3) months, "Interest Payment Date" shall be each April 1 and October 1, in each case, commencing on the first such date after the applicable Drawing giving rise to such DSR Loan, and any date on which interest on such DSR Loan becomes due and payable upon the prepayment thereof, the final maturity date thereof, the declaration of acceleration with respect thereto, or otherwise. " Interest Period " means, with respect to any LIBOR Rate Loan, an interest period of one (1), two (2), three (3) or six (6) months (or, such other period as may be mutually agreed to among the Borrower and the Banks); provided , however , that such Interest Period shall, in all events, end no later than the next Principal Payment Date to occur. " Issuer of the Debt Service Reserve Letter of Credit " means Union Bank, in its capacity as the Issuing Bank. " Issuing Bank " has the meaning set forth in the Preamble hereto. " LC Exposure " means, at any time, the sum of (a) the aggregate undrawn amount of the outstanding Debt Service Reserve Letter of Credit at such time plus (b) the aggregate amount of 3 all Drawings that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Bank at any time shall be its applicable percentage of the total LC Exposure at such time. " Lease Indenture " has the meaning set forth in Recital A . " Lease Indenture Trustee " has the meaning set forth in Recital A . " Lessor Notes " has the meaning set forth in Recital A . " Letter of Credit Documents " means this Agreement, the DSR Notes and the Debt Service Reserve Letter of Credit. " LIBOR Margin " has the meaning set forth in Section 2.6(a) . " LIBOR Rate " means, for any LIBOR Rate Loan, a rate per annum equal to the offered rate for deposits in United States dollars (in the approximate amount and having approximately the same maturity as the LIBOR Rate Loan to be made) which appears on the Reuters LIBO Page as of 11:00 a.m. (London time), two (2) Business Days prior to the first day of the Interest Period for such LIBOR Rate Loan, and in case of variations in rates, the arithmetic average thereof rounded upwards, if necessary, to the nearest 1/100 of 1%, calculated by the Agent. " LIBOR Rate Loan " means a DSR Loan bearing interest at the LIBOR Rate. " Material Adverse Effect " means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (a) the business, assets, results of operations or financial condition of the Borrower, (b) the ability of the Borrower to perform or comply with its obligations under any of the Operative Documents (including, without limitation, the Letter of Credit Documents), (c) the validity or enforceability of any of the Operative Documents (including, without limitation, the Letter of Credit Documents), the Liens granted thereunder or the material rights and remedies of the parties thereto, or (d) with respect to the Owner Participant's interest in the Facility, the residual value or remaining useful life of the Facility. " Monthly Transfer Date " has the meaning given such term in the Amended and Restated Security Deposit Agreement. " Moody's " means Moody's Investors Service, Inc. and its successors. " Non-U.S. Bank " has the meaning set forth in Section 2.17(c) . " Obligations " means all of the obligations of the Borrower to the Banks and the Agent under this Agreement and the DSR Notes, whether for principal (including reimbursement of amounts drawn under the Debt Service Reserve Letter of Credit), interest, fees, expenses, indemnification or otherwise. " Outstanding Amount " means, at any time, the amount then available for drawing under the Debt Service Reserve Letter of Credit, which amount shall equal the Debt Service Reserve Amount in effect at such time as such amount may be further reduced, increased or reinstated from time to time in accordance with the terms and provisions hereof and of the Debt Service Reserve Letter of Credit; provided that the Outstanding Amount shall not exceed at any time the lesser of (i) the Stated Amount at such time and (ii) the Debt Service Reserve Amount at such time. " Participant " has the meaning set forth in Section 9.9(b) . " Participation Agreement " means the Participation Agreement (OL1), dated as of December 7, 2001, by and among Homer City, the Owner Lessor, Wells Fargo Bank Northwest, National 4 Association, not in its individual capacity but solely as Owner Manager, General Electric Capital Corporation, as the Owner Participant, Homer City Funding LLC, as Lender, the Lease Indenture Trustee, the Security Agent and The Bank of New York (as successor to the United States Trust Company of New York), not in its individual capacity but solely as Bondholder Trustee (as amended, modified or supplemented and as in effect from time to time). " Prime Rate " means the variable rate of interest per annum officially announced or published by the Agent from time to time as its "reference rate", such rate being set by the Agent as a general reference rate of interest, taking into account such factors as the Agent may deem appropriate, it being understood that many of the Agent's commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that the Agent may make various commercial or other loans at rates of interest having no relationship to such rate. For purposes of this Agreement, each change in the Prime Rate shall be effective as of the opening of business on the date announced as the effective date of the change in such "reference rate." " Principal Payment Date " means, with respect to any DSR Loan, each April 1 and October 1, commencing on the first such date after the applicable Drawing giving rise to such DSR Loan, and any date on which all or a portion of the principal of any DSR Loan becomes due and payable upon the prepayment thereof, the final maturity date thereof, the declaration of acceleration with respect thereto, or otherwise. " Purchasing Bank " has the meaning set forth in Section 9.9(a) . " Ratable Share " has the meaning set forth in Section 2.3 . " Regulation D " means Regulation D of the Board of Governors of the Federal Reserve System. " Regulations T, U and X " shall mean Regulations T, U and X of the Federal Reserve System of the United States (or any successors thereto). " Regulatory Change " means, subsequent to the date of this Agreement, any adoption or change in United States federal, state or municipal or foreign law or regulations (including without limitation Regulation D) or the adoption or change or making of any application, interpretation, directive, request or guideline of or under any United States federal, state or municipal or foreign law or regulation by any court, central bank or Governmental Authority. " Required Banks " means, at any time, Banks (one of which shall be the Agent) having Exposures and unused Commitments representing at least 66 2 / 3 % of the sum of the total Exposures and unused Commitments at such time; provided , however , that, if and so long as there are only two Banks, then " Required Banks " shall mean both of such Banks. " Required Lease Indenture Secured Parties " has the meaning set forth in the Lease Indenture. " Reserve Requirement " means, for DSR Loans bearing interest at the LIBOR Rate, the rate (expressed as a percentage) at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during the Interest Period therefor under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion U.S. dollars against "Eurocurrency liabilities" (as such term is used in Regulation D). " S&P " means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors. " Security Agent " has the meaning set forth in Recital A . 5 " Stated Amount " has the meaning set forth in the Debt Service Reserve Letter of Credit. As of the Closing Date, the Stated Amount shall equal the maximum Outstanding Amount to be in effect on any date during the period from the Closing Date to the five-year anniversary of the Closing Date (as set forth in Schedule 1 hereto). " Taxes " has the meaning set forth in Section 2.17(a) . " Termination Notice " has the meaning set forth in Section 2.2(d) . " Union Bank " means Union Bank of California, N.A., a national banking association. SECTION 1.2 Construction. In this Agreement, unless expressly specified to the contrary: the singular includes the plural and the plural the singular; words importing any gender include the other gender; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible, visible form; the words "including", "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to articles, sections (or subdivisions of sections), recitals, appendices, exhibits, annexes or schedules are to those of this Agreement; references to agreements and other instruments shall be deemed to include all amendments and other modifications to such agreements and instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement; references to Persons include their respective permitted successors and assigns and, in the case of Governmental Authorities, Persons succeeding to their respective functions and capacities; and all accounting terms used in this Agreement shall be interpreted, all accounting determinations under this Agreement shall be made and all financial statements required to be delivered under this Agreement shall be prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States. ARTICLE II DEBT SERVICE RESERVE LETTER OF CREDIT SECTION 2.1 Commitments. Each Bank irrevocably agrees severally, on the terms and conditions contained in this Agreement, to participate in the Debt Service Reserve Letter of Credit in an aggregate amount not to exceed at any time outstanding the amount set forth opposite such Bank's name on the signature pages hereof or, if such Bank has entered into one or more Commitment Transfer Supplements, set forth for such Bank in the register maintained by the Agent (such agreement by such Bank, as the same may be reduced from time to time pursuant to the terms of this Agreement, herein called such Bank's " Commitment "). SECTION 2.2 Amount and Term of Debt Service Reserve Letter of Credit. (a) Subject to the terms and conditions contained in this Agreement, the Issuing Bank irrevocably agrees to issue the Debt Service Reserve Letter of Credit on the Closing Date for the account of the Borrower in favor of the Lease Indenture Trustee, for the benefit of the holders of the Lessor Notes, in the maximum face amount of $13,588,520.83, subject to reduction, increase and reinstatement as provided hereinafter and in the Debt Service Reserve Letter of Credit. On the Closing Date, the Outstanding Amount of the Debt Service Reserve Letter of Credit shall be $13,087,509.12. The Debt Service Reserve Letter of Credit shall expire and all obligations of the Issuing Bank and any Bank in respect thereof shall terminate on the Expiration Date. (b) If the Debt Service Reserve Amount shall reduce or increase in accordance with the Lease Indenture and the Issuing Bank has received written notice thereof from the Borrower, the Outstanding Amount of the Debt Service Reserve Letter of Credit shall be reduced or increased, as the case may be, by an amount equal to the amount of such reduction or increase in the Debt Service Reserve Amount; provided , however , that in no event shall the Outstanding Amount exceed, 6 at any time, the lesser of (i) the Stated Amount in effect at such time and (ii) the Debt Service Reserve Amount in effect at such time. Subject to Section 2.2(d) and Article VI , the Outstanding Amount of the Debt Service Reserve Letter of Credit, as so reduced or increased, shall be reduced to the extent that Drawings are made and shall be reinstated to the extent that DSR Loans are repaid, provided that any such reinstatement shall not cause the Outstanding Amount (when added to the balance in the Debt Service Reserve Account) to exceed the Debt Service Reserve Amount. (c) The Debt Service Reserve Amount in effect, as of the date hereof, during the period from the Closing Date through and including the five-year anniversary of the Closing Date is set forth on Schedule 1 hereto. The Borrower shall deliver, or cause to be delivered, to each of the Agent, the Issuing Bank and the Lease Indenture Trustee prompt notice of the occurrence of any event resulting in an adjustment to the Debt Service Reserve Amount and the calculation of the Outstanding Amount and the Stated Amount resulting from such adjustment, together with all information reasonably necessary to make such calculation. Subject to Section 2.2(d) and Article VI , promptly after its receipt of any such notice, the Issuing Bank shall deliver to the Lease Indenture Trustee a notice in the form of Annex 5 to the Debt Service Reserve Letter of Credit to effect a change in the Outstanding Amount and, if applicable, the Stated Amount of the Debt Service Reserve Letter of Credit. (d) The Issuing Bank shall have the right, upon the occurrence and during the continuation of an Event of Default, to deliver a notice in the form of Annex 2 to the Debt Service Reserve Letter of Credit (a " Termination Notice "), whereupon the Expiration Date shall occur on the date specified in such notice. The Outstanding Amount shall not be reinstated upon repayment of any DSR Loans after the delivery by the Issuing Bank of a Termination Notice. (e) The Agent shall, solely for informational purposes, deliver to the Borrower a copy of any Termination Notice given to the beneficiary under the Debt Service Reserve Letter of Credit, provided , however , that the Issuing Bank's and the Banks' ability to terminate the Debt Service Reserve Letter of Credit shall not be contingent upon the Agent's delivery to the Borrower of such notice and that none of the Agent, the Issuing Bank or the Banks shall incur any liability whatsoever as a result of the Agent's failure to deliver such notice to the Borrower. SECTION 2.3 Participations in Debt Service Reserve Letter of Credit. Immediately upon the issuance of the Debt Service Reserve Letter of Credit, the Issuing Bank shall be deemed to have sold and transferred to each Bank, and each Bank shall be deemed to have purchased and received from the Issuing Bank, in each case irrevocably and without any further action by any party, an undivided interest and participation in the Debt Service Reserve Letter of Credit, each Drawing and the other Obligations in respect thereof in an amount equal to the product of (a) a fraction, the numerator of which is the amount of the Commitment of such Bank and the denominator of which is the aggregate amount of all of the Commitments (the " Ratable Share ") ( provided , however , that if the Commitments have terminated or expired, the Ratable Share shall be determined based upon the Commitments most recently in effect, giving effect to any assignments pursuant to Section 9.9(a) ) and (b) the maximum amount available to be drawn under the Debt Service Reserve Letter of Credit plus the amount of all outstanding DSR Loans. The Agent shall promptly advise each Bank of any change in the Outstanding Amount or the Expiration Date in respect of the Debt Service Reserve Letter of Credit, the cancellation or other termination of the Debt Service Reserve Letter of Credit and any Drawing, provided , however , that failure to provide such notice shall not limit or impair the rights of the Agent hereunder or under the other Operative Documents. SECTION 2.4 Drawing and Reimbursement. The payment by the Issuing Bank of a Drawing shall constitute the making by the Issuing Bank of a loan in the amount of such payment. In the event that a Drawing is not repaid by the Borrower by 12:00 noon, New York City time, on the day of such Drawing, the Agent shall promptly notify each other Bank. Each such Bank shall deliver to the Agent 7 for the Issuing Bank's account, on the day of such notification and in immediately available funds, an amount equal to such Bank's Ratable Share of the payment made by the Issuing Bank and not reimbursed or paid by the Borrower pursuant to this Section 2.4 . In the event that any Bank fails to make available to the Agent for the account of the Issuing Bank the amount of such loan, the Issuing Bank shall be entitled to recover such amount on demand from such Bank together with interest thereon at (i) for the first three (3) days of nonpayment, the Federal Funds Rate and (ii) thereafter, the Federal Funds Rate plus 2.50%. Each payment by a Bank pursuant to this Section 2.4 shall constitute a "DSR Loan" under this Agreement. SECTION 2.5 Fees. The Borrower shall pay the following fees to the Agent for the respective accounts of the Persons specified below: (a) for the account of the Agent, a non-refundable administration fee, payable annually in advance on the Closing Date and on each anniversary thereof until the Expiration Date, equal to the Owner Lessor's Percentage of the lesser of (i) the product of (A) $10,000 multiplied by (B) the number of Banks party to this Agreement on the date that such fee is payable, and (ii) $20,000; (b) for the ratable accounts of the Banks, a letter of credit fee, payable semi-annually in advance for the six-month period then commencing, beginning on April 1, 2005, equal to the product of (i) the Outstanding Amount in effect during such period multiplied by (ii) the applicable percentage set forth in the table below, based on the ratings of the Fundco Bonds in effect from time to time; provided , however , that (A) in the event that such ratings as provided by S&P and Moody's are "split" such that the rating associated with one such agency would yield a different applicable percentage than the rating associated with the other such agency (e.g., a rating of "BBB-" from S&P and a rating of "Ba1" from Moody's), then the lower rating (i.e., "Ba1" from Moody's in the example above) shall apply for purposes of determining the applicable percentage, and (B) upon the occurrence and during the continuance of an Event of Default, each of the applicable percentages set forth in the table below shall be increased by 2.0% per annum :
The letter of credit fee shall be increased or decreased in accordance with this Section 2.5(b) upon any change in the applicable ratings of the Fundco Bonds, and such increased or decreased letter of credit fee shall be effective from the date of announcement of any such new ratings. The Borrower agrees to notify the Agent of each change in any rating of the Fundco Bonds promptly after the Borrower receives notice of any such change from Homer City or otherwise obtains Actual Knowledge thereof. (c) for the ratable accounts of the Banks, a commitment fee, payable semi-annually in advance for the six-month period then commencing, beginning on April 1, 2005, equal to 0.25% per annum on the excess of (i) the aggregate amount of the Banks' Commitments hereunder over (ii) the Outstanding Amount in effect during such period; (d) for the account of the Agent, the fees set forth in that certain letter agreement, dated February 11, 2005, among Union Bank, the Borrower, the Other Owner Lessors and Homer City; and (e) for the account of the Issuing Bank, such additional administrative fees and charges (including cable charges) as are generally associated with letters of credit, in accordance with the 8 Issuing Bank's standard internal charge guidelines, payable on the Monthly Transfer Date next succeeding the date on which the Issuing Bank requests payment from the Borrower for any such fees or charges. SECTION 2.6 Interest. (a) The Borrower shall pay interest on the unpaid principal amount of each DSR Loan resulting from a Drawing, from the date of such DSR Loan until such principal amount has been repaid in full. Except as set forth in Section 2.6(e) , such interest shall be payable in arrears on each applicable Interest Payment Date and shall be paid at a rate per annum equal to: (i) so long as no Event of Default has occurred and is continuing, either (x) with respect to an Adjusted Base Rate Loan, the sum of the Adjusted Base Rate in effect from time to time plus the applicable margin determined in accordance with the table set forth below (the " Adjusted Base Rate Margin ") or (y) with respect to a LIBOR Rate Loan, the sum of the LIBOR Rate plus the applicable margin determined in accordance with the table set forth below (the " LIBOR Margin "), in each case based on the ratings of S&P and Moody's with respect to the Fundco Bonds in effect from time to time; provided , however , that (A) in the event that such ratings as provided by S&P and Moody's are "split" such that the rating associated with one such agency would yield a different applicable margin than the rating associated with the other such agency, then the lower rating shall apply for purposes of determining the applicable margin and (B) any DSR Loan resulting from a Drawing that is not reimbursed by the Borrower on the date of such Drawing shall bear interest at the rate per annum set forth in clause (x) or (y) above, as applicable, plus an additional margin of 2.0% per annum ( provided, however, that such additional margin shall not apply with respect to any such Drawing that results solely from a downgrade by S&P or Moody's of the Issuing Bank's long-term unsecured debt, such that the Issuing Bank no longer has long-term unsecured debt that is rated A2 or higher by Moody's or A or higher by S&P); and (ii) so long as an Event of Default has occurred and is continuing (other than any failure to pay the principal amount of any DSR Loan when due, which principal amount shall bear interest pursuant to Section 2.6(e) and not this clause (ii)), with respect to each DSR Loan, the higher of (A) the interest rate applicable to Adjusted Base Rate Loans from time to time pursuant to Section 2.6(a)(i) plus 2.0% per annum and (B) 2.0% per annum above the interest rate applicable to such DSR Loan from time to time pursuant to Section 2.6(a)(i) .
The Applicable Base Rate Margin and LIBOR Margin shall be increased or decreased in accordance with this Section 2.6(a) upon any change in the applicable ratings of the Fundco Bonds, and such increased or decreased Applicable Base Rate Margin and LIBOR Margin shall be effective from the date of announcement of any such new ratings. (b) Subject to Sections 2.6(a)(i)(B) and 2.6(a)(ii) , each Drawing and each DSR Loan made pursuant to Section 2.4 shall initially bear interest based on the Adjusted Base Rate as in effect from time to time plus the Adjusted Base Rate Margin; provided , however , that prior to the making of any DSR Loan, the Borrower may give the Agent written notice of the Borrower's election that such DSR Loan shall bear interest based on the LIBOR Rate. Such notice shall be irrevocable and shall be effective only if received by the Agent not later than 12:00 noon, New York City time, 9 three (3) Business Days prior to the occurrence of the Drawing giving rise to such DSR Loan. The Agent shall promptly notify the Banks of the contents of each such notice. Subject to Sections 2.6(d) , 2.19 and 2.23 , such DSR Loan shall then bear interest based on the LIBOR Rate from the date of such DSR Loan. (c) Subject to Sections 2.6(d) , 2.19 and 2.23 , unless an Event of Default shall have occurred and be continuing, the Borrower may at any time, upon three (3) Business Days' irrevocable written notice to the Agent, (x) convert (i) any Adjusted Base Rate Loan to a LIBOR Rate Loan or (ii) any LIBOR Rate Loan to an Adjusted Base Rate Loan, provided that a LIBOR Rate Loan may be converted only on the last day of the applicable Interest Period with respect thereto or (y) continue any LIBOR Rate Loan as a LIBOR Rate Loan with the same or a different Interest Period on the last day of the applicable Interest Period with respect thereto. The Agent shall promptly notify the Banks of the contents of each such notice. In the event the Borrower fails to select the applicable interest rate, within the time period and otherwise as provided in this Section 2.6(c) , such DSR Loan (if outstanding as a LIBOR Rate Loan) will be automatically converted into an Adjusted Base Rate Loan on the last day of the then current Interest Period for such DSR Loan or (if outstanding as an Adjusted Base Rate Loan) will remain as, or (if not then outstanding) will be made as, an Adjusted Base Rate Loan. (d) The Borrower shall pay to the Agent for the account of each Bank, upon the request of such Bank through the Agent, such amount or amounts as shall be sufficient (in the reasonable opinion of such Bank) to compensate it for any loss, cost or expense which such Bank determines is attributable to any failure for any reason (i) of any LIBOR Rate Loan, pursuant to a notice given under Section 2.6(b) , to occur or (ii) of the Borrower to convert an Adjusted Base Rate Loan from such Bank to a LIBOR Rate Loan, or to continue a LIBOR Rate Loan, as and when specified in the relevant notice given pursuant to Section 2.6(b) or 2.6(c) . (e) Any principal, interest, fees or other amounts payable by the Borrower hereunder or under any of DSR Notes that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest, from the date when due until paid in full, at a rate per annum equal at all times to the Default Rate, payable on demand on the Monthly Transfer Date immediately following such demand (provided such demand is made at least five (5) Business Days prior thereto, or if not, on the next Monthly Transfer Date). SECTION 2.7 Repayment. (a) The Borrower shall repay the principal amount of the DSR Loans in full on the Expiration Date. (b) Subject to Section 2.7(c) , on the date of each Drawing, the Issuing Bank shall reduce the Outstanding Amount thereafter available for drawings under the Debt Service Reserve Letter of Credit by the amount of such Drawing. (c) Subject to Section 2.2 and Article VI and the terms of the Debt Service Reserve Letter of Credit, the Issuing Bank shall, upon receipt of written notice from the Borrower, reinstate the Outstanding Amount to the extent of any repayment or prepayment of the principal amount of any DSR Loan. SECTION 2.8 Prepayments. (a) The Borrower may, at any time and from time to time on any Business Day, irrevocably notify the Agent in writing that the Borrower intends to prepay all or any portion (and so stating the aggregate principal amount to be prepaid) of the DSR Loans then outstanding on a day which is at least three (3) Business Days after the date of such notice. If the Borrower delivers any such notice, the Borrower shall, not later than 12:00 noon, New York City time, on the prepayment date set forth in such notice, prepay without premium or penalty the outstanding principal amount of the DSR Loans so indicated in such notice, together with accrued interest to the date of such prepayment on the principal amount so prepaid. 10 (b) The Borrower agrees to indemnify each Bank and hold each Bank harmless from any direct loss (but excluding any indirect, consequential or incidental loss or damage), cost or reasonable out-of-pocket expense which such Bank incurs as a result of a prepayment of any DSR Loan bearing interest at the LIBOR Rate on a date which is not the last day of an Interest Period applicable thereto. (c) All prepayments made hereunder shall be applied by the Agent and the Banks against the principal amount of outstanding DSR Loans (i) as long as no Event of Default has occurred and is continuing, in the order as specified by Borrower or, in the absence of such specification, in the order such DSR Loans were made, and (ii) if an Event of Default has occurred and is continuing, in the order as specified by the Agent or, in the absence of such specification, in the order such DSR Loans were made. SECTION 2.9 Security. The Obligations shall be secured by the Security Documents, the rights and remedies in respect of which shall be exercised pursuant to the Lease Indenture. SECTION 2.10 Payments. (a) The Borrower shall make each payment hereunder and under the DSR Notes not later than 1:00 P.M., New York City time, on the day when due in United States dollars to the Agent at its address set forth in Section 9.2 , in immediately available funds; provided that, notwithstanding the foregoing or anything else to the contrary herein, if such payment is received after 1:00 P.M. but before 5:00 P.M. on the day when due, then such payment will not be considered late but interest will accrue on such payment amount for one additional day, and such additional accrued interest shall be paid on the next Monthly Transfer Date. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal (including reimbursement of Drawings), interest or fees ratably (other than amounts payable for the account of the Agent or the Issuing Bank pursuant to Section 2.5(a) , (d) or (e) or payable pursuant to Section 9.4 ) to the Banks and like funds relating to the payment of any other amount payable to any Bank to such Bank, in each case to be applied in accordance with the terms of this Agreement. (b) Unless the Agent receives notice from the Borrower before the date on which any payment is due to the Banks hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date, and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due to such Bank. If and to the extent that the Borrower has not so made such payment in full to the Agent, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date on which such Bank repays such amount to the Agent (i) for the first three (3) days of non-repayment, at the Federal Funds Rate and (ii) thereafter, at the Federal Funds Rate plus 2.50% per annum . SECTION 2.11 Computation of Interest and Fees. All computations of interest and fees hereunder shall be made on the basis of a year of three hundred sixty (360) days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each calculation and each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.12 Payments on Non-Business Days. Whenever any payment hereunder or under any DSR Note is stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be. If no due date is specified for the payment of any amount payable by the Borrower hereunder, such amount shall be due and payable not later than ten (10) Business Days after receipt by the Borrower of written demand from the Agent for the payment thereof. In connection with a LIBOR Rate Loan, if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding 11 Business Day; provided that, if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day. SECTION 2.13 Sharing of Payments, Etc. If any Bank obtains any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of its Commitment or the DSR Loans made by it (other than pursuant to Section 9.4 ) in excess of its ratable share of such payments obtained by all of the Banks, then such Bank shall forthwith purchase from the other Banks such participations in their Commitments or the DSR Loans made by them as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them; provided , however , that if all or any portion of such excess payment is thereafter recovered from such purchasing Bank, such purchase from such other Banks shall be rescinded and such other Banks shall repay to the purchasing Bank the purchase price to the extent of such recovery together with an amount equal to each such other Bank's ratable share (according to the proportion of (a) the amount of such Bank's required repayment to (b) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered. The Borrower agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 2.13 may, to the fullest extent permitted by law and the terms of this Agreement, exercise all its rights of payment with respect to such participation as fully as if such Bank were the direct creditor of the Borrower in the amount of such participation. SECTION 2.14 Evidence of Debt. (a) The indebtedness of the Borrower resulting from all DSR Loans made by each Bank from time to time shall be evidenced by an appropriate notation on the schedule, or a continuation thereof, to the Debt Service Reserve Letter of Credit Promissory Note substantially in the form of Exhibit B (each a " DSR Note "), delivered by the Borrower to such Bank; provided , however , that the failure by any Bank to make any such notation shall not affect the obligations of the Borrower under such DSR Note or any other Letter of Credit Document. (b) The books and accounts of the Agent shall be conclusive evidence, absent manifest error, of the amounts of all Drawings, DSR Loans, fees, interest and other amounts advanced, due, outstanding, payable or paid pursuant to this Agreement or any DSR Note. SECTION 2.15 Increased Debt Service Reserve Letter of Credit Costs. If, after the date hereof, any introduction of or change in any Applicable Law (including for purposes hereof, any directive, guideline or requirement of any Governmental Authority (whether or not having the force of law)) or in the interpretation thereof by any Governmental Authority charged with the administration thereof either (a) imposes, modifies or makes applicable any reserve, special deposit or similar requirement against letters of credit issued by, or assets held by, or deposits or other liabilities in or for the account of, the Agent, the Issuing Bank or any Bank or (b) imposes on the Agent, the Issuing Bank or any Bank any other condition regarding this Agreement, the Agent, the Issuing Bank, such Bank, the Debt Service Reserve Letter of Credit or the DSR Loans, and the result of any event referred to in the preceding clause (a) or (b) is to increase the cost to the Agent, the Issuing Bank or such Bank of issuing or maintaining the Debt Service Reserve Letter of Credit or the DSR Loans, reduce the amount of any payment receivable by the Agent, the Issuing Bank or such Bank hereunder or reduce the rate of return on the Issuing Bank's or any Bank's capital as a consequence of its obligations hereunder below that which the Issuing Bank or such Bank (as the case may be) would have achieved but for such circumstance, then, in each such case, upon demand by the Agent, the Issuing Bank or such Bank, the Borrower shall pay to the Agent, the Issuing Bank or such Bank, from time to time as specified thereby on the next scheduled Monthly Transfer Date, additional amounts sufficient to compensate the Agent, the Issuing Bank or such Bank for such increased costs, reduction in payments receivable or reduction in rate of return. A certificate as to any such additional amount or amounts submitted by Agent or by the Issuing Bank or a Bank (as the case may be), through the Agent, to the Borrower and the other Banks shall certify that similar demands have been made to other customers of 12 the Agent, the Issuing Bank or such Bank (as the case may be) which are subject to similar provisions and shall, in the absence of manifest error, be final and conclusive. In determining such amount, the Agent, the Issuing Bank and each Bank may use any reasonable averaging and attribution methods. Notwithstanding the foregoing, the Borrower shall only be obligated to compensate the Agent, the Issuing Bank or any Bank for any amount described in this Section 2.15 arising or occurring during (i) any time period commencing not more than 90 days prior to the date on which the Issuing Bank or such Bank notifies the Agent and the Borrower, or on which the Agent notifies the Borrower, as the case may be, that the Issuing Bank, such Bank or the Agent proposes to demand such compensation and (ii) any time period during which, because of the unannounced retroactive application of such statute, regulation or other basis, the Agent, the Issuing Bank or such Bank, as the case may be, could not have known that such amount might arise or accrue. SECTION 2.16 Capital Adequacy. If the Agent, the Issuing Bank or any Bank reasonably determines that compliance with any Applicable Law (including for purposes hereof, any directive, guideline or requirement of any Governmental Authority (whether or not having the force of law)) affects or would affect the amount of capital required or expected to be maintained by the Agent, the Issuing Bank or such Bank or any Person controlling the Agent, the Issuing Bank or such Bank and that the amount of such capital is increased by or based upon the existence of such Bank's Commitment or the issuance of the Debt Service Reserve Letter of Credit or outstanding DSR Loans, then, upon demand by the Agent, the Issuing Bank or such Bank, the Borrower shall pay to the Agent, the Issuing Bank or such Bank (as the case may be), from time to time as specified thereby, additional amounts sufficient to compensate the Agent, the Issuing Bank or such Bank (as the case may be) in light of such circumstances, to the extent that the Agent, the Issuing Bank or such Bank reasonably determines such increase in capital to be allocable to the existence of such Bank's Commitment or the issuance of the Debt Service Reserve Letter of Credit or such DSR Loans. A certificate as to any such additional amount or amounts submitted by the Agent or by the Issuing Bank or a Bank, through the Agent, to the Borrower and the other Banks shall certify that similar demands have been made to other customers of the Agent, the Issuing Bank or such Bank (as the case may be) which are subject to similar provisions and shall, in the absence of manifest error, be final and conclusive. In determining such amount, the Agent, the Issuing Bank and each Bank may use any reasonable averaging and attribution methods. Notwithstanding the foregoing, the Borrower shall only be obligated to compensate the Agent, the Issuing Bank or any Bank for any amount described in this Section 2.16 arising or occurring during (i) any time period commencing not more than 90 days prior to the date on which the Issuing Bank or such Bank notifies the Agent and the Borrower, or on which the Agent notifies the Borrower, as the case may be, that the Issuing Bank, such Bank or the Agent proposes to demand such compensation and (ii) any time period during which, because of the unannounced retroactive application of such statute, regulation or other basis, the Agent, the Issuing Bank or such Bank, as the case may be, could not have known that such amount might arise or accrue. SECTION 2.17 Taxes. (a) All payments, except as otherwise provided in Section 2.17(c) , by the Borrower of principal of, and interest on, the DSR Notes and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Bank's net income, in each case, imposed as a result of a connection between the Bank and the jurisdiction imposing the tax (other than a connection arising solely from the Bank having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement) (such non-excluded items being called " Taxes "). In the event that any withholding or deduction from any 13 payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any Applicable Law, then the Borrower will: (i) pay directly to the relevant authority the full amount required to be so withheld or deducted; (ii) within 30 days after such payment forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authority; and (iii) pay to the Agent for the account of the Agent, the Issuing Bank or the Banks (as the case may be) such additional amount or amounts as is necessary to ensure that the net amount actually received by the Agent, the Issuing Bank and each Bank will equal the full amount the Agent, the Issuing Bank and such Bank would have received had no such withholding or deduction been required. Moreover, if any Taxes are directly asserted against the Agent, the Issuing Bank or any Bank with respect to any payment received by the Agent, the Issuing Bank or such Bank hereunder, the Agent, the Issuing Bank or such Bank (as the case may be) may pay such Taxes and, upon receipt of notice from the Agent, the Issuing Bank or such Bank within 30 days after such payment, the Borrower will promptly pay such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such Person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such Person would have received had no such Taxes been asserted. (b) If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Agent, for the account of the respective Banks, the required receipts or other required documentary evidence, the Borrower shall indemnify the Agent, the Issuing Bank and the Banks for any incremental Taxes, interest or penalties that may become payable by the Agent, the Issuing Bank or any Bank as a result of any such failure. (c) Each Bank that is not a United States person as defined in Section 7701(a)(3) of the Code (a " Non-U.S. Bank ") shall deliver to the Borrower and the Agent two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Bank claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the DSR Notes. Such forms shall be delivered by each Non-U.S. Bank on or before the date it becomes a party to this Agreement. In addition, each Non-U.S. Bank shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Bank. Each Non-U.S. Bank shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). The Borrower shall not be required to increase any such amounts payable to any Non-U.S. Bank with respect to any Taxes (i) that are attributable to such Non-U.S. Bank's failure to comply with the requirements of this Section 2.17(c) or (ii) that are United States withholding taxes imposed on amounts payable to such Bank at the time the Bank becomes a party to this Agreement, except to the extent that such Bank's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such Taxes pursuant to Section 2.17(a) . Notwithstanding any other provision of this Section 2.17(c) , a Non-U.S. Bank shall not be required to deliver any form pursuant to this Section 2.17(c) that such Non-U.S. Bank is not legally able to deliver. 14 SECTION 2.18 Change of Law. (a) Notwithstanding any other provision of this Agreement, if any Regulatory Change, or compliance by any Bank with any Regulatory Change, makes it unlawful or impossible for any Bank to make, maintain or continue its proportionate interest in the Debt Service Reserve Letter of Credit or any DSR Loan (or commitments therefor), then such Bank shall promptly give notice together with evidence thereof to the Borrower and the Agent, and the Borrower shall pay forthwith all amounts outstanding, accrued or payable under this Agreement to such Bank and cause such Bank to be released from all obligations of such Bank under this Agreement. (b) A Bank shall (consistent with legal and regulatory restrictions) designate a different lending office for the DSR Loans (or commitments therefor) or its participation in the Debt Service Reserve Letter of Credit affected pursuant to this Section 2.18 before giving any notice to the Borrower and the Agent pursuant to this Section 2.18 if such designation will avoid the need for giving such notice and will not, in the sole opinion of such Bank, be disadvantageous to such Bank, except that such Bank shall have no obligation to designate a lending office located in the United States of America. If the Borrower so requests within ten (10) days of receipt of the notice referred to above (which notice is based on circumstances not generally applicable to United States or foreign lenders making loans of the types contemplated hereunder), such Bank shall (consistent with legal and regulatory restrictions) comply with Section 2.20 hereof. SECTION 2.19 Non-Availability. (a) If at any time dollar deposits in the principal amount of any Bank's proportionate interest in, or obligation under, any DSR Loan bearing interest at the LIBOR Rate are not available to such Bank in the London interbank market for the next Interest Period, such Bank shall so notify the Agent, who shall so notify the Borrower, and the obligation of such affected Bank to make or continue or to convert DSR Loans into DSR Loans bearing interest based on the LIBOR Rate shall be immediately suspended and during such suspension be converted into an obligation to do the same with respect to DSR Loans bearing interest at the Adjusted Base Rate; provided , however , that outstanding DSR Loans bearing interest at the LIBOR Rate shall be converted into DSR Loans bearing interest at the Adjusted Base Rate on the last day of the then current Interest Period applicable to such DSR Loans. (b) If at any time the interest rate then in effect based on the LIBOR Rate does not adequately and fairly reflect, in the reasonable judgment of any Bank, the cost for such Bank of advancing or maintaining its respective proportionate interest in any DSR Loan bearing interest at the LIBOR Rate during any Interest Period, then such Bank shall notify the Agent, who shall so notify the Borrower, and interest on such Bank's proportionate share of the DSR Loans shall for any subsequent Interest Period accrue at the Adjusted Base Rate. (c) If the Borrower so requests after the suspension of a Bank's obligation to make DSR Loans bearing interest at the LIBOR Rate under this Section 2.19 for at least ten (10) consecutive Business Days based on circumstances not generally applicable to United States or foreign lenders making loans of the types contemplated hereunder, such Bank shall (consistent with legal and regulatory restrictions) comply with Section 2.20 hereof. SECTION 2.20 Assignments by Banks. (a) If (i) a Bank is required to comply with this Section 2.20 after a request from the Borrower pursuant to Section 2.17 , 2.18 or 2.19 or (ii) the Borrower requests that the provisions of this Section 2.20 apply to a Bank within ten (10) days after it receives a notice from the Agent that (A) such Bank has failed to make available to the Agent its portion of any DSR Loan on the date required to be made available to the Agent pursuant to this Agreement after the Agent has made written demand upon such Bank for such payment or (B) such Bank has provided the Agent with notice that such Bank shall not make available to the Agent such portion of any DSR Loan required to be made available to the Agent pursuant to this Agreement or (C) such Bank has failed to reimburse the Agent pursuant to the terms of this Agreement, such Bank shall assign all or a part of its proportionate share of the DSR Loans and its commitment to make 15 DSR Loans to a replacement Bank (which may be, but is not required to be, one of the other Banks) designated by the Borrower, provided that any assignment or transfer made by a Bank to a replacement Bank shall satisfy the following conditions: (i) the Borrower shall promptly pay when due all reasonable fees and expenses which such Bank incurs in connection with such transfer or assignment and (ii) any assignment of all or part of the DSR Loans or obligations shall be made without recourse, representation or warranty, and the Borrower shall cause the replacement Bank to pay to the Agent for the account of the assigning Bank in immediately available funds all amounts outstanding or payable under this Agreement to each Bank assigning its interest in the DSR Loans. (b) Each Bank agrees that as promptly as practicable after it has made a determination to make a claim for amounts under Section 2.8(b) , 2.15 , 2.16 or 2.17 with respect to events or conditions arising after the date hereof, it shall notify the Borrower of the same and use commercially reasonable efforts (consistent with legal and regulatory restrictions and such Bank's internal policies) to mitigate the effect of such provisions on the Borrower, including (i) in the case of Section 2.15 , 2.16 or 2.17 , efforts to make, fund, issue or maintain its DSR Loans or the Debt Service Reserve Letter of Credit, as relevant, through another office of such Bank and (ii) in the case of Section 2.8(b) , efforts to reemploy amounts held by such Bank, in each case (x) if as a result thereof the additional moneys which would otherwise be required to be paid to such Bank pursuant to any of such provisions of this Agreement would be reduced, or the illegality or other adverse circumstances which would otherwise require a prepayment of such DSR Loans or the suspension of the issuance of, or of drawings under, the Debt Service Reserve Letter of Credit pursuant to any of such provisions would cease to exist, and (y) if, as determined by such Bank in good faith, the making, funding, issuing or maintaining of such DSR Loan or the Debt Service Reserve Letter of Credit, or the making of drawings under the Debt Service Reserve Letter of Credit through such other office would not otherwise adversely affect such Bank. SECTION 2.21 Reduction in Commitments/DSR Loans. The Borrower shall have the right to refinance all Commitments and all of the outstanding DSR Loans, if any, in whole but not in part, without premium or penalty upon at least ten (10) days' prior written notice to the Agent; provided , however , that the Borrower agrees to indemnify each Bank and hold each Bank harmless from any direct loss (but excluding any indirect, consequential or incidental loss or damage), cost or reasonable out-of-pocket expense which such Bank incurs as a result of a refinancing pursuant to this Section 2.21 of any DSR Loan bearing interest at the LIBOR Rate on a date which is not the last day of an Interest Period applicable thereto. In any refinancing of such Commitments, the Borrower shall cause the Debt Service Reserve Letter of Credit to be released and returned to the Issuing Bank. SECTION 2.22 Right of Set-off. The Borrower hereby authorizes the Issuing Bank and each Bank, upon the occurrence and during the continuance of any Event of Default, at any time and from time to time, without notice to the Borrower or any Person other than the Lease Indenture Trustee (any such notice being hereby expressly waived by the Borrower to the extent it may legally do so) to setoff and appropriate and apply any and all deposits (general or special, time or demand, provisional or final) at any time held, and other indebtedness at any time owing, by the Issuing Bank or such Bank (as the case may be) in any of its offices, wherever located (whether such deposits or indebtedness be in dollars or in any other currency), to or for the credit or the account of the Borrower against any and all of the Obligations and liabilities of the Borrower now or hereafter existing under this Agreement, irrespective of whether or not the Agent shall have made any demand hereunder or thereunder and although such Obligations may be contingent or unmatured. Each of the Issuing Bank and the Banks agrees to promptly notify the Borrower of any such set-off and application by such Person. SECTION 2.23 Minimum Amounts. (a) Anything in this Agreement to the contrary notwithstanding, the aggregate principal amount of DSR Loans bearing interest based on the LIBOR Rate shall be in an amount at least equal to $1,000,000 or in multiples of $1,000,000 in excess thereof and, if any DSR Loans bearing interest based on the LIBOR Rate would otherwise be in a lesser 16 principal amount for any period, such DSR Loans shall bear interest based on the Adjusted Base Rate during such period. (b) Not more than six (6) DSR Loans bearing interest at the LIBOR Rate may be outstanding at one time. ARTICLE III CONDITIONS PRECEDENT SECTION 3.1 Conditions Precedent to Issuance of Debt Service Reserve Letter of Credit. The obligation of the Issuing Bank to issue the Debt Service Reserve Letter of Credit is subject to the satisfaction of the following conditions precedent: (a) the Agent shall have received the following, each dated on or before the Closing Date unless otherwise specified below, in form and substance satisfactory to the Agent and in the number of originals or photostatic copies reasonably required by the Agent: (i) this Agreement and the DSR Notes duly executed by the Borrower; (ii) a certificate of the Lease Indenture Trustee as to the incumbency and specimen signatures of the officers of the Lease Indenture Trustee authorized to make Drawings, to execute and present certificates under the Debt Service Reserve Letter of Credit, and otherwise to communicate with the Agent with respect thereto; (iii) Amendment No. 1 to the Lease Indenture, substantially in the form of Exhibit D , duly executed by the Borrower, the Lease Indenture Trustee and the Security Agent; (iv) a satisfactory report on the Facility from the Agent's independent engineer; (v) a base case project model demonstrating debt service coverages satisfactory to the Agent over the term of this Agreement; (vi) evidence that such actions necessary or appropriate to grant to the Security Agent, for the benefit of the Lease Indenture Secured Parties (as defined in the Lease Indenture) (including, without limitation, the Agent, the Issuing Bank and the Banks), a first priority perfected security interest in the Collateral (as defined in the Lease Indenture) have been taken, including, without limitation, filings of appropriate financing statements under the Uniform Commercial Code; (vii) written opinions of counsel to the Borrower, the Owner Manager and Homer City as to such matters as the Agent may reasonably request; (viii) certified copies of the resolutions of the members of the Borrower and/or the board of directors (or comparable governing body) of the Owner Manager authorizing the Borrower to enter into this Agreement and each of the other Letter of Credit Documents to which it is, or is to be, a party; (ix) a certificate of an Authorized Officer of the Owner Manager certifying the names, true signatures and incumbency of the officers of the Owner Manager authorized to sign, on behalf of the Borrower, this Agreement and the other Letter of Credit Documents to which the Borrower is, or is to be, a party, and the other documents to be delivered hereunder and thereunder; (x) copies of the certificate of formation and limited liability company agreement of the Borrower, together with all amendments thereto, certified by an Authorized Officer of the Owner Manager; 17 (xi) good standing certificates with respect to the Borrower issued by the Secretary of State of the State of Delaware and the Secretary of the Commonwealth of Pennsylvania (or other evidence of good standing satisfactory to the Agent) not earlier than the date ten (10) days prior to the Closing Date; and (xii) evidence that the Existing Reimbursement Agreement has been irrevocably terminated, all obligations of the Borrower thereunder have been paid in full, and, concurrently with the issuance of the Debt Service Reserve Letter of Credit pursuant to the terms of this Agreement, the debt service reserve letter of credit issued pursuant thereto has been surrendered for cancellation to the issuing bank thereunder; (b) concurrently with the issuance of the Debt Service Reserve Letter of Credit, the Lease Indenture and the other Operative Documents shall be in full force and effect; (c) the Borrower shall have paid all accrued fees and expenses (as provided in Sections 2.5 and 9.4 ) of the Agent, the Issuing Bank and the Banks (including the reasonable accrued fees and disbursements of counsel to the Agent and the Issuing Bank), to the extent that one or more statements for such fees and expenses have been presented for payment; (d) all of the representations and warranties of the Borrower made in Article IV hereof shall be true and correct as of the Closing Date (unless such representation or warranty relates solely to an earlier date, in which case such representation and warranty shall be true and correct only as of such earlier date), and the Agent shall have received a certificate of an Authorized Officer of the O | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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