FACILITY AND SECURITY AGREEMENT

Exhibit 10.1

FACILITY AND SECURITY AGREEMENT

Dated as of June 17, 2008

Between

DYNEGY HOLDINGS INC.

as Borrower

and

 

MORGAN STANLEY CAPITAL GROUP INC.

as Lender, Issuer, Collateral Agent and Paying Agent

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I

DEFINITIONS

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND OF
ISSUANCES OF LETTERS OF CREDIT AND ADVANCES

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

ARTICLE V

EVENTS OF DEFAULT

ARTICLE VI

THE PAYING AGENT

 

 

 

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ARTICLE VII

GRANT OF SECURITY INTEREST; REMEDIES

ARTICLE VIII

COLLATERAL AGENT

ARTICLE IX

MISCELLANEOUS

 

 

 

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EXHIBITS

 

Exhibit A-1 – Form of Letter of Credit (Reducing)

Exhibit A-2 – Form of Letter of Credit (Non-Reducing)

Exhibit B – Anti-Money Laundering Form

Exhibit C – Form of Guaranty

 

 

 

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FACILITY AND SECURITY AGREEMENT

FACILITY AND SECURITY AGREEMENT (this “ Agreement ”)dated as of June 17, 2008, between DYNEGY HOLDINGS INC., a Delaware corporation (the “ Borrower ”), and MORGAN STANLEY CAPITAL GROUP INC. (individually, “ MSCG ”), as issuer of letters of credit hereunder (in such capacity, the “ Issuer ”), as lender to the Borrower hereunder (in such capacity, the “ Lender ”) and as collateral agent for the Issuer and the Lender (in such capacity, the “ Collateral Agent ”).

The Borrower has requested that each Lender Party (as defined below) extend a credit facility to the Borrower, pursuant to which the Borrower may incur obligations to repay borrowed money (including reimbursement obligations arising from drawings pursuant to letters of credit). Each Lender Party has indicated its willingness to extend such facility on the terms and conditions of this Agreement.

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.          Certain Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Acceleration Date ” has the meaning specified at the end of Section 5.01.

“ Advance ” means a Credit Advance or a Letter of Credit Advance.

“ Amendment Condition ” means the satisfaction of the conditions precedent set forth in Section 3.02.

“ Amendment Condition Effective Date ” has the meaning specified in Section 2.03(b).

“ Available Amount ” means, at any time in respect of any Letter of Credit, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing).

“ Bank Business Day ” means a day of the year on which banks are not required or authorized by law to close in New York City and on which dealings are carried on in the London interbank market.

“ Bankruptcy ” means, in the case of any Person, that such Person (i) is dissolved (other than pursuant to a consolidation, amalgamation, or merger); or (ii) becomes insolvent or

 

 

 

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is unable to pay its debts, or fails, or admits in writing its inability generally, to pay its debts as they become due; or (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; or (iv) institutes or has instituted against it a proceeding, whether judicial, quasi-judicial or administrative, seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or is subject to a petition presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; or (v) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); or (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; or (vii) has a secured party or a governmental entity take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party or governmental entity maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; or (viii) causes or is subject to any event with respect to which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (i) to (vii) (inclusive).

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

“ Collateral ” has the meaning specified in Section 7.01.

“ Collateral Account ” means Account No. 102897-20010 maintained in the name of the Collateral Agent with the Account Bank at its office at Harborside Financial Center Plaza 10, Suite 1401, 3 Second Street, Jersey City, NJ 07311-3988.

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

“ Credit Advance ” has the meaning specified in Section 2.01(a).

“ Credit Facility ” means, at any time, an amount equal to the Credit Facility Available Amount reduced by the sum of (a) the aggregate principal amount of the Advances outstanding at such time plus (b) the aggregate principal amount of Reimbursement Obligations at such time plus (c) the aggregate Available Amount in respect of all Letters of Credit at such time.

“ Credit Facility Available Amount ” has the meaning specified for such term in the Letter Agreement; provided, however , that in no event shall the Credit Facility Available Amount exceed $300,000,000.

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the passage of time or the requirement that notice be given or both.

 

 

 

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“ DMT ” means Dynegy Marketing and Trade, a Colorado partnership, that is a Subsidiary of the Borrower.

“ DPM ” means Dynegy Power Marketing Inc., a Texas corporation, that is a Subsidiary of the Borrower.

“ Effective Date ” has the meaning specified in Section 3.01.

“ Events of Default ” has the meaning specified in Section 5.01.

“ Facility ” means the Credit Facility or the Letter of Credit Facility.

“ 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 Bank Business Day, for the next preceding Bank Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Bank Business Day, the average of the quotations for such day for such transactions received by the Issuer from three Federal funds brokers of recognized standing selected by it.

“ Force Majeure Event ” means any force majeure event or act of state that is beyond the control of the Issuer and that the Issuer could not, after using reasonable commercial efforts (which will not require the Issuer to incur an expense or loss, other than immaterial, incidental expenses), overcome.

“ Interest Period ” means, for each Advance and each Reimbursement Obligation, the period commencing on the date of such Advance or Reimbursement Obligation, as the case may be, and ending on the last day of the calendar quarter in which such Advance is made or such Reimbursement Obligation is incurred, as the case may be, and, thereafter, each subsequent period commencing on the first day of a calendar quarter and ending on the last day of such quarter.

“ ISP98 ” means the International Standby Practices (ISP98), in force as of 1 January 1999, ICC Publication No. 590.

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

“ L/C Related Documents ” has the meaning specified in Section 2.05(a).

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

“ Lender Party ” means the Lender or the Issuer.

“ Letter Agreement ” means the letter agreement dated the date hereof between the Borrower and the Issuer.

 

 

 

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“ Letter of Credit ” means a Reducing Letter of Credit or a Non-Reducing Letter of Credit.

“ Letter of Credit Advance ” has the meaning specified in Section 2.03(b).

“ Letter of Credit Availability ”has the meaning specified in Section 2.01(b).

“ Letter of Credit Facility ” means, at any time, an amount equal to the Credit Facility Available Amount reduced by the sum of (a) the aggregate principal amount of the Advances outstanding at such time plus (b) the aggregate principal amount of Reimbursement Obligations at such time.

“ LIBOR Rate ” means, for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR01 (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at 11:00 a.m. (London time) two Bank Business Days before the first day of such Interest Period for a period equal to three months; provided , however , that, if for any reason such rate is not available, the term “ LIBOR Rate ” means, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in U.S. dollars at approximately 11:00 a.m. (London time) two Bank Business Days prior to the first day of such Interest Period for a period equal to three months; provided if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.

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

“ Netting Agreement ” has the meaning specified in the 2007 Credit Agreement.

“ Non-Reducing Letter of Credit ” means an irrevocable letter of credit, in substantially the form of Exhibit A-2 hereto or in such other form as shall be permitted under Section 2.03(a), supporting a Permitted Contract or a Netting Agreement and issued by the Issuer pursuant to Section 2.01(b).

“ Paying Agent ” has the meaning specified in Section 6.01.

“ Permitted Contract ” has the meaning specified in the 2007 Credit Agreement.

“ Person ” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

“ Proposed Termination Date ” has the meaning specified in Section 9.11(a).

“ Proposed Termination Notice ” has the meaning specified in Section 9.11(a).

" Public Disclosure " means Dynegy Inc.'s and the Borrower's most recent annual report, Form 10-K for the most recently completed fiscal year, each quarterly report on Form 10-Q or any current reports on Form 8-K (or similar reports filed on successor forms) filed since the

 

 

 

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initial filing date of such Form 10-K, in each case filed at least five Bank Business Days prior to the Effective Date.

“ Reducing Letter of Credit ” means an irrevocable letter of credit, in substantially the form of Exhibit A-1 hereto or in such other form as shall be permitted under Section 2.03(a) (provided, however, that such other form shall provide for the automatic reduction of the amount of such letter of credit in a manner similar to the form of Exhibit A-1), supporting a Permitted Contract or a Netting Agreement and issued by the Issuer pursuant to Section 2.01(b).

“ Repayment Schedule ” means, for each Advance, unless otherwise agreed between the parties hereto, repayment of one-third of the principal amount of such Advance within three Bank Business Days from the date of such Advance and repayment of the balance of such principal amount of such Advance in 12 equal monthly installments on the last day of each month thereafter, beginning with such last day next following such third Bank Business Day; provided , however , that the full balance of such Advance shall be repayable in full on the Termination Date.

“ Request for Credit Advance ” has the meaning specified in Section 2.02(a).

“ Secured Obligations ” has the meaning specified in Section 7.02.

“ Subsidiary ” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“ Termination Date ” means the earliest of (i) March 20, 2010, (ii) the date of termination in whole of the Facilities pursuant to Section 9.11, and (iii) the Acceleration Date.

“ Termination Fee ” means a termination fee determined by the Issuer in its reasonable discretion (taking into account (x) the difference between the Ongoing Fee (as such term is defined in the Letter Agreement) and the Borrower’s then-current credit default swap spreads from the time of the Borrower’s request to terminate and December 16, 2009, (y) the time remaining between the Termination Date and December 16, 2009, and (z) the Credit Facility Available Amount) and notified to the Borrower in accordance with Section 9.02 on the Bank Business Day prior to the Proposed Termination Date in accordance with Section 9.11(b).

“ Transaction Documents ” means this Agreement and the Letter Agreement.

 

 

 

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“ 2007 Credit Agreement ” means the Fifth Amended and Restated Credit Agreement dated as of April 2, 2007, as amended by Amendment No. 1 dated as of May 24, 2007, among the Borrower, Dynegy Inc., a Delaware corporation, Dynegy Illinois Inc., an Illinois corporation, the other Guarantors party thereto, the Lenders party thereto, Citicorp USA, Inc., as administrative agent and payment agent, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and each L/C Issuer party thereto, as such Agreement may be further amended, amended and restated, supplemented, or otherwise modified, or refinanced or refunded.

“ 2007 Credit Agreement Amendment ” means an amendment to the 2007 Credit Agreement which permits the Borrower to obtain, repay and secure Advances pursuant to the terms hereof, in form and substance reasonably satisfactory to the Lender.

“ 2007 Credit Agreement Date ” means the earliest of (i) October 2, 2013, (ii) the date of termination in whole of the Facilities pursuant to Section 9.11 and (iii) the Acceleration Date.

“ UCC ” means the Uniform Commercial Code from time to time in effect in the specified jurisdiction.

“ UCP ” means the Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600.

“ U.S. ” or “ United States ” means United States of America.

SECTION 1.02.          Computation of Time Periods . In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “ from ” means “from and including” and the words “ to ” and “ until ” each mean “to but excluding.”

SECTION 1.03.          Uniform Commercial Code . Terms defined in Article 8 or Article 9 of the UCC of the State of New York are used in this Agreement as such terms are defined in such Article 8 or Article 9.

ARTICLE II

 

AMOUNTS AND TERMS OF THE ADVANCES

AND THE LETTERS OF CREDIT

SECTION 2.01.          The Advances and the Letters of Credit . (a) The Credit Advances . Provided the Amendment Condition is satisfied, the Lender may, in its sole discretion and on the terms and conditions hereinafter set forth, make advances (each a “ Credit Advance ”) to the Borrower in U.S. Dollars from time to time on any Bank Business Day during the period from the Amendment Condition Effective Date until the Termination Date in an amount for each such Credit Advance not to exceed the Credit Facility at such time (it being understood and agreed that, subject to the other terms and conditions herein, the Borrower may obtain such Credit Advances for its account on behalf of either DMT or DPM). Within the foregoing limits, the Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.06, and reborrow under this Section 2.01.

 

 

 

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(b)        The Letters of Credit . The Issuer agrees, on the terms and conditions hereinafter set forth, to issue Letters of Credit in U.S. dollars for the account of the Borrower from time to time on any Bank Business Day during the period from the Effective Date until December 15, 2009, in an Available Amount for each such Letter of Credit not to exceed an amount equal to the Letter of Credit Facility at such time reduced by the aggregate Available Amount of all other Letters of Credit issued on or prior to the date of issuance of such Letter of Credit and then outstanding (such amount as so reduced being the“ Letter of Credit Availability ”)at such time (it being understood and agreed that, subject to the other terms and conditions herein, the Borrower may obtain Letters of Credit for its account on behalf of either DMT or DPM). Each Letter of Credit shall be in the amount of at least $1,000,000. The expiration date for each Letter of Credit shall be no later than the earlier of (i) one year after the date of issuance thereof and (ii) March 15, 2010.

SECTION 2.02.          Requests for Credit Advances . (a) Provided that the Amendment Condition is satisfied and the Lender agrees in its sole discretion, the Borrower may request a Credit Advance by giving notice to the Lender. Each such request for a Credit Advance shall be given to the Lender not later than 11:00 a.m. (New York City time) on the Bank Business Day prior to the date of the proposed Credit Advance. Each such request for a Credit Advance (a “ Request for Credit Advance ”) shall be by telephone, confirmed immediately by electronic communication (and, at the Borrower’s option, also by telecopier), in each case in accordance with Section 9.02, specifying therein the requested (i) date of such Credit Advance, and (ii) amount of such Credit Advance and also specify therein (iii) the deposit account of the Borrower to which such Advance should be deposited and (iv) whether or not the Borrower is obtaining such Credit Advance on behalf of DMT or DMP, and, if so, the name of such Subsidiary and its ownership structure to support its status as a “Subsidiary” of the Borrower. The Lender will, in its sole discretion and upon such other terms and conditions (including, without limitation, a repayment schedule) as may be agreed by the Lender and the Borrower, make such Credit Advance available to the Borrower in same day funds by depositing such in such deposit account.

(b)       Each Request for Credit Advance shall be irrevocable and binding on the Borrower. The Borrower shall indemnify the Lender against any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Lender to fund the Credit Advance when such Credit Advance is not made on the requested date specified in such Request for Credit Advance.

SECTION 2.03.          Issuance of and Drawings under Letters of Credit . (a) Request for Issuance . (i) The Borrower may request the issuance of a Letter of Credit by giving notice to the Issuer in accordance with Section 9.02; provided, however, that at any time no more than twenty Letters of Credit may be issued and outstanding. Each such request for issuance of a Letter of Credit shall be given to the Issuer not later than 12:00 noon (New York City time) on the Bank Business Day that is at least two Bank Business Days before the proposed date of issuance of such Letter of Credit; provided, however, that the Issuer shall be under no obligation to issue any Letter of Credit in a form other than in substantially the form attached as Exhibit A-1 or Exhibit A-2 hereto, unless the Issuer shall have approved in its sole discretion such other form of Letter of Credit and two Bank Business Days shall have elapsed since the Issuer shall have notified

 

 

 

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the Borrower of such approval. Each such request for issuance of a Letter of Credit shall be by telephone, confirmed immediately by electronic communication (and, at the Borrower’s option, also by telecopier), in each case in accordance with Section 9.02, specifying therein (i) the Permitted Contract or Netting Agreement to be supported by such Letter of Credit and (ii) whether or not the Borrower is obtaining such Letter of Credit on behalf of DMT or DPM, and, if so, the name of such Subsidiary and its ownership structure to support its status as a “Subsidiary” of the Borrower, and specifying therein the requested (A) date of such issuance (which shall be a Bank Business Day), (B) Available Amount of such Letter of Credit (which Available Amount shall not be less than $1,000,000), (C) expiration date of such Letter of Credit, (D) name and address of the beneficiary of such Letter of Credit, and (E) form of such Letter of Credit. No later than 12:00 noon (New York City time) on the date specified in the request for issuance of a Letter of Credit by the Borrower, the Borrower shall notify the Issuer by telephone, confirmed immediately by electronic communication (and, at the Borrower’s option, also by telecopier), in each case in accordance with Section 9.02, whether the proposed Letter of Credit will be a Reducing Letter of Credit or a Non-Reducing Letter of Credit; provided, however, that the Borrower shall use commercially reasonable efforts to induce the beneficiary of such proposed Letter of Credit to accept a Reducing Letter of Credit (including, without limitation, by providing the contact details of a representative of such beneficiary to the Issuer to enable the Issuer to speak directly with such beneficiary regarding a Reducing Letter of Credit); provided further, however, that if the Borrower fails to notify the Issuer by the specified time whether the proposed Letter of Credit will be a Reducing Letter of Credit or a Non-Reducing Letter of Credit, the Borrower shall be deemed to have requested a Non-Reducing Letter of Credit. If the Letter of Credit is in substantially the form attached as Exhibit A-1 or Exhibit A-2 hereto or such other form as the Issuer may approve in its sole discretion, the Issuer will, upon fulfillment of the applicable conditions set forth in Article III, make such Letter of Credit available to the Borrower on the date specified in such request for issuance (unless a Force Majeure Event has occurred, in which case the Issuer will make such Letter of Credit available to the Borrower upon the Bank Business Day after the termination of the Force Majeure Event) at the Issuer’s office referred to in Section 9.02 or as otherwise agreed with the Borrower in connection with such issuance.

(ii)       If, on the date specified in the request for issuance of a Letter of Credit by the Borrower in accordance with clause (i) above:

(A)      the Credit Facility Available Amount on such specified date is less than the sum of (w) the requested Available Amount of such Letter of Credit plus (x) the aggregate principal amount of the Advances outstanding at such time plus (y) the aggregate principal amount of the Reimbursement Obligations at such time plus (z) the aggregate Available Amount in respect of all existing Letters of Credit at such time, then the Available Amount of the Letter of Credit issued shall be reduced to an amount which, when added to the amounts set forth in (x), (y) and (z) above, is equal to the Credit Facility Available Amount (rounded up to the nearest $500,000) on such specified date; provided, however, that if the Borrower has requested the issuance of two or more Letters of Credit on such specified date, the Available Amounts of such Letters of Credit will be reduced pro rata in

 

 

 

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accordance with this clause (A), unless the Borrower and the Issuer shall agree otherwise; or

(B)      the Credit Facility Available Amount on such specified date is greater than the sum of (w) the requested Available Amount of such Letter of Credit plus (x) the aggregate principal amount of the Advances outstanding at such time plus (y) the aggregate principal amount of the Reimbursement Obligations at such time plus (z) the aggregate Available Amount in respect of all existing Letters of Credit at such time, then the Borrower may make a request to the Issuer by telephone, confirmed immediately by electronic communication (and, at the Borrower’s option, also by telecopier), in each case in accordance with Section 9.02, no later than 12:00 noon (New York City time) on the date specified in the request for issuance of such Letter of Credit, to increase the Available Amount of such Letter of Credit to an amount not to exceed the amount which, when added to the amounts set forth in (x), (y) and (z) above, is equal to the Credit Facility Available Amount on such specified date.

(iii)      If at the time of, and in connection with, the Borrower’s request for a Letter of Credit pursuant to Section 2.03(a)(i) above, the Borrower shall notify the Issuer in accordance with Section 9.02 hereof that the beneficiary requests that such Letter of Credit be guaranteed by Morgan Stanley, the Issuer will arrange for such a guaranty to be issued by Morgan Stanley in substantially the form of Exhibit C hereto.

(b)        Drawing and Reimbursement . The payment by the Issuer of each drawing under any Letter of Credit shall automatically create for all purposes of this Agreement an obligation (a “ Reimbursement Obligation ”) of the Borrower to the Issuer to repay the Issuer the amount of such drawing pursuant to such Letter of Credit pursuant to Section 2.04(c). On the date on which the Amendment Condition is satisfied (the “ Amendment Condition Effective Date ”), each Reimbursement Obligation shall automatically constitute, and on and after such date the payment by the Issuer of each drawing under any Letter of Credit shall constitute, for all purposes of this Agreement the making by the Issuer of an advance (a “ Letter of Credit Advance ”) to the Borrower in the amount of such Reimbursement Obligation or such drawing, as the case may be, and each such Reimbursement Obligation shall be deemed to be repaid in full by the corresponding Letter of Credit Advance.

SECTION 2.04.          Repayment of Advances and Reimbursement Obligations . (a)  Credit Advances . The Borrower shall repay to the Lender the principal amount of each Credit Advance in accordance with the Repayment Schedule for such Credit Advance.

(b)        Letter of Credit Advances . The Borrower shall repay to the Issuer the principal amount of each Letter of Credit Advance in accordance with the Repayment Schedule for such Letter of Credit Advance.

(c)        Reimbursement Obligations . The Borrower shall repay to the Issuer the principal amount of each Reimbursement Obligations on the 2007 Credit Agreement Date; provided, however , that upon the Amendment Condition Effective Date, each Reimbursement Obligation shall thereupon automatically constitute, and be deemed repaid in full by, a

 

 

 

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corresponding Letter of Credit Advance in accordance with Section 2.03(b) and the Borrower shall repay such Letter of Credit Advance in accordance with Section 2.04(b).

SECTION 2.05.          Obligations Unconditional; Limitations of Liability . (a) The obligations of the Borrower under this Agreement shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, including, without limitation, the following circumstances:

(i)        any lack of validity or enforceability of this Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the “ L/C Related Documents ”);

(ii)       any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents;

(iii)      the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any Lender Party or any beneficiary or transferee of a Letter of Credit (or any Persons for which any such beneficiary or transferee may be acting), or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction;

(iv)      any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v)       payment by the Issuer under a Letter of Credit against presentation of a draft, certificate or other document that does not strictly comply with the terms of such Letter of Credit; or

(vi)      any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor.

The foregoing shall not be construed to excuse the Issuer from liability to the Borrower to the extent of any direct, but not consequential, damages suffered by the Borrower that are caused by the Issuer’s failure to exercise reasonable care when determining whether a draft and other document presented under any Letter of Credit appear, on their face, to be in strict compliance with the terms and conditions thereof, in accordance with, and to the extent set forth in, Section 9.09, the UCP or ISP98 (in either case, as applicable to such Letter of Credit), and Article 5 of the Uniform Commercial Code as in effect in the State of New York.

(b)       Without limiting any other provision of this Agreement or of ISP98 or the UCP (as applicable), the Issuer and any guarantor or confirmer of any Letter of Credit:

 

 

 

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(i)        shall not be responsible for the identity or authority of any signer or the form, accuracy, genuineness, falsification or legal effect of any statement, certificate or other document presented under any Letter of Credit if such statement, certificate or other document on its face appears to be in accordance with the terms and conditions of such Letter of Credit;

(ii)        shall not be responsible for any acts or omissions by, or the solvency of, the beneficiary of any Letter of Credit or any other Person having any role in any transaction underlying any Letter of Credit;

(iii)      shall not be responsible for any failure of any statement, certificate or other document presented under any Letter of Credit to conform, to comply, or to be in accordance, in any way with any underlying contract or agreement between the beneficiary of such Letter of Credit and the Borrower or any of its affiliates; and

(iv)      may accept or pay as complying with the terms and conditions of any Letter of Credit any statement, certificate or other document appearing on its face (A) substantially to comply with the terms and conditions of such Letter of Credit, (B) to be signed or presented by or issued to any successor of the beneficiary or any other Person in whose name such Letter of Credit requires or authorizes that any statement, certificate or other document be signed, presented or issued, including any administrator, trustee in bankruptcy, debtor in possession, liquidator, receiver, or successor by merger or consolidation, or any other Person purporting to act as the representative of or in place of any of the foregoing, or (C) to have been signed, presented or issued after a change of name of the beneficiary.

SECTION 2.06.          Voluntary Prepayments and Mandatory Reduction/ Collateralization of Letters of Credit . (a) The Borrower may, at any time and from time to time upon at least three Bank Business Days’ notice to the Lender (such notice to be provided in accordance with Section 9.02) stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay in whole or in part the outstanding aggregate principal amount of the Advances and the Reimbursement Obligations, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid.

(b)       If, on any Bank Business Day (a “ Trigger Date ”), the sum of (x) the aggregate principal amount of the Advances outstanding at such time plus (y) the aggregate principal amount of the Reimbursement Obligations at such time plus (z) the aggregate Available Amount in respect of all Letters of Credit at such time, exceeds the Credit Facility Available Amount by more than $500,000 at such time, the Issuer shall, by 11:00 a.m. (New York City time) on such Bank Business Day, notify the Borrower of the occurrence of such Trigger Date in accordance with Section 9.02.

(c)       If the Issuer shall notify the Borrower of the occurrence of any Trigger Date, the Borrower shall, by 2:00 p.m. (New York City time) on the day that is two Bank Business Days after the day of such notification, terminate or amend existing Letters of Credit sufficient to reduce the aggregate Available Amount of such Letters of Credit to the amount

 

 

 

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which is the greater of (i) the amount which is equal to the Credit Facility Available Amount on the date of such notification less the sum of (x) the aggregate principal amount of the Advances outstanding at such time plus (y) the aggregate principal amount of the Reimbursement Obligations at such time and (ii) zero; provided , however , that the Borrower shall have no obligation to amend or terminate any existing Letter of Credit pursuant to this clause (c) if it has used commercially reasonable efforts to induce the beneficiary of such Letter of Credit to terminate or amend such Letter of Credit, including, without limitation, offering cash collateral to such beneficiary, and such beneficiary has refused to so amend or terminate such Letter of Credit.

(d)       If, after taking the actions required pursuant to clause (c) above, the sum of (x) the aggregate principal amount of the Advances outstanding at such time plus (y) the aggregate principal amount of the Reimbursement Obligations at such time plus (z) the aggregate Available Amount in respect of all Letters of Credit at such time, still exceeds the Credit Facility Available Amount on the date of such notification, then the Borrower shall, by 2:00 p.m. (New York City time) on the day that is two Bank Business Days after the day the Issuer notifies the Borrower of the occurrence of such Trigger Date and subject to the provisions of Section 2.11(c) below:

(i)          first , prepay Advances, if any, plus interest thereon as directed by the Lender or the Issuer, in an amount which is the lesser of (A) the aggregate principal amount of the Advances outstanding at such time and (B) the amount by which the sum of (x) the aggregate principal amount of the Advances outstanding at such time plus (y) the aggregate principal amount of the Reimbursement Obligations at such time plus (z) the aggregate Available Amount in respect of all Letters of Credit at such time (after giving effect to any actions take pursuant to clause (c) above), exceeds the Credit Facility Available Amount on the day of such notification; and

(ii)        second , pay to the Paying Agent in same day funds the amount which is the lesser of (1) the aggregate Available Amount of all then outstanding Letters of Credit and (2) the amount by which the sum of (x) the aggregate principal amount of the Advances outstanding at such time (after giving effect to any actions take pursuant to clause (d)(i) above) plus (y) the aggregate principal amount of the Reimbursement Obligations at such time plus (z) the aggregate Available Amount in respect of all Letters of Credit at such time (after giving effect to any actions take pursuant to clause (c) above), exceeds the Credit Facility Available Amount on the day of such notification (such excess, an “ Excess Payment ”). The Paying Agent shall, at the direction of the Issuer it its sole discretion, either:

(A)      pay such Excess Payment, or a portion thereof, pro rata to the beneficiaries under the outstanding Reducing Letters of Credit, ratably in accordance with their respective Available Amounts, pursuant to the payment instructions furnished to the Lender or the Issuer under Section 3.03(b)(ii)(B); and/or

(B)      pay such Excess Payment, or a portion thereof, into the Collateral Account in accordance with Section 2.11(b).

 

 

 

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The Paying Agent shall, not later than one Bank Business Day after the application of any funds pursuant to this Section 2.06(d)(ii), notify the Borrower in accordance with Section 9.02 as to the details of how such funds were applied.

SECTION 2.07.          Interest . The Borrower shall pay interest (without having regard to any Collateral provided by or on behalf of the Borrower) on (a) the unpaid principal amount of each Advance owing to each Lender Party from the date of such Advance until such principal amount shall be paid in full and (b) the full amount of each Reimbursement Obligation owing to the Issuer from the date such Reimbursement Obligation is incurred until such Reimbursement Obligation is paid in full, in each case at the applicable rate per annum, and payable at the times, set forth in the Letter Agreement.

SECTION 2.08.          Fees . The Borrower shall pay to the Issuer the fees set forth in the Letter Agreement.

SECTION 2.09.          Payments and Computations . (a) The Borrower shall make each payment hereunder and under the Letter Agreement, irrespective of any right of counterclaim or set-off, not later than 2:00 p.m. (New York City time) on the day when due in U.S. dollars in same day funds to the applicable Lender Party at the deposit account designated by such Lender Party to the Borrower.

(b)       All computations of interest under Section 2.07 and Section 2.11(d) and the Letter Agreement and of the ongoing fees under Section 2.08 and the Letter Agreement shall be made on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fee is payable. Each determination of such interest rate or fee by any Lender Party shall be conclusive and binding for all purposes, absent manifest error.

(c)       Whenever any payment hereunder or under the Letter Agreement shall be stated to be due on a day other than a Bank Business Day, such payment shall be made on the next succeeding Bank Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fee, as the case may be.

SECTION 2.10.          Evidence of Debt . (a) Each Lender Party shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender Party resulting from each Advance or Reimbursement Obligation owing to such Lender Party from time to time, including the amounts of principal and interest payable and paid to such Lender Party from time to time hereunder. Entries made in good faith by such Lender Party in such account or accounts shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to such Lender Party under this Agreement and the Letter Agreement, absent manifest error; provided , however , that the failure of such Lender Party to make an entry, or any finding that an entry is incorrect, in such account or accounts shall not limit or otherwise affect the obligations of the Borrower to such Lender Party under this Agreement