Exhibit 10.25


 




 





LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT


 


effective as of January 1, 2004


 


between


 


AES EASTERN ENERGY, L.P.


as Borrower


 


and


 


THE AES CORPORATION


as L/C Provider




 





 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1

  	
  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Defined Terms

  	
   

  
	
  Section 1.02.

  	
  Other Interpretive Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Commitment to Lend

  	
   

  
	
  Section 2.02.

  	
  Evidence of Indebtedness

  	
   

  
	
  Section 2.03.

  	
  Payments by the Borrower

  	
   

  
	
  Section 2.04.

  	
  Permitted Subordinated Indebtedness
  Designation

  	
   

  
	
  Section 2.05.

  	
  Letters of Credit and Cash Collateral
  Agreements

  	
   

  
	
  Section 2.06.

  	
  Reimbursement to L/C Provider

  	
   

  
	
  Section 2.07.

  	
  Obligations Absolute

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  CONDITIONS TO EXTENSIONS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Conditions to the Initial Extension of
  Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  FEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Commitment Fee.

  	
   

  
	
  Section 4.02.

  	
  Computation of Fee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Notices and Deliveries.

  	
   

  
	
  Section 5.02.

  	
  Amendments: Waivers

  	
   

  
	
  Section 5.03.

  	
  No Third Parties Benefited

  	
   

  
	
  Section 5.04.

  	
  Governing Law

  	
   

  
	
  Section 5.05.

  	
  Judicial Proceedings; Waiver of Jury Trial

  	
   

  
	
  Section 5.06.

  	
  Severability of Provisions

  	
   

  
	
  Section 5.07.

  	
  Counterparts

  	
   

  
	
  Section 5.08.

  	
  Successors and Assigns

  	
   

  
				



 


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LETTER
OF CREDIT AND REIMBURSEMENT AGREEMENT


 


This Letter of Credit and Reimbursement Agreement (this “Agreement”),
is made on February 12, 2004 and effective as of January 1, 2004 (the
“Agreement Date”), between AES EASTERN ENERGY, L.P., as Borrower (the “Borrower”),
and THE AES CORPORATION, as L/C Provider (the “L/C Provider”).


 


W  I  T
N  E  S  S  E  T  H :


 


WHEREAS, the Borrower has requested that the L/C Provider cause, from
time to time, the issuance of Letters of Credit (as defined below) or the
posting of Cash Collateral (as defined below) to satisfy certain obligations
arising in connection with the Borrower’s sale of electricity.


 


WHEREAS, the L/C Provider has agreed to and will cause the issuance of
Letters of Credit or the posting of Cash Collateral from time to time, subject
to the execution and delivery of this Agreement and the terms and conditions
hereof.


 


NOW THEREFORE, in consideration of the agreements herein, the parties
hereto agree as follows:


 


ARTICLE 1


 


INTERPRETATION


 


Section 1.01.     Defined
Terms.  Each capitalized term used
herein and not otherwise defined herein shall have the meaning assigned to such
term in Appendix A to the Participation Agreement (Kintigh A-1), dated as of
May 1, 1999, as amended on or before the Agreement Date (and as amended,
supplemented or otherwise modified after the Agreement Date) (“Appendix A”),
among the Borrower, as Lessee, Kintigh Facility Trust A-1, as Owner Trust, DCC
Project Finance Fourteen, Inc., as Owner Participant, Bankers Trust Company, as
Indenture Trustee, and Bankers Trust Company, as Pass Through Trustee, and the
principles of interpretation set forth in such Appendix A shall apply to such
definitions.  As used herein, the term
“Operative Documents” shall refer not only to the plural of such term as
defined in such Appendix A but shall also refer to each Other Operative
Document as such term is defined in such Appendix A.  For the purposes of this Agreement:


 


“AES Costs” means all costs incurred by the L/C Provider in
connection with the issuance, modification or amendment of any Letter of
Credit, the execution, delivery, modification or amendment of  any Cash Collateral Agreement, a drawing
under such Letter of Credit, a drawing under such Cash Collateral Agreement,
and all other costs incurred by the L/C Provider in connection with this
Agreement, such Letter of Credit or such Cash Collateral Agreement, including
without limitation any fees, interest costs, reimbursement obligations and
other expenses incurred by the L/C Provider in connection with any Letter of
Credit or Cash Collateral or any drawing thereon or in connection with its
maintenance of commitments from Letter of Credit issuers sufficient to enable
the L/C Provider to satisfy its obligations hereunder, but without duplication
for the fees paid by Borrower to the L/C Provider pursuant to Section 4.01
of this Agreement.


 

















 


“Appendix A” has the meaning assigned to that term in the
initial paragraph of this Section 1.01.


 


“Applicable Law” means (a) all applicable common law and
principles of equity and (b) all applicable provisions of all constitutions,
statutes, rules, regulations and orders of governmental bodies.


 


 “Business Day” means any
day other than a Saturday, Sunday or other day on which banks in New York City
are authorized or required by law to close.


 


“Cash Collateral” means any cash collateral posted (pursuant to
a Cash Collateral Agreement) by the L/C Provider pursuant to Section 2.05
to support certain obligations of the Borrower related to the sale of power
from the Borrower’s power generating facilities.


 


“Cash Collateral Agreement” means any agreement, in form and
substance reasonably satisfactory to the Borrower, the L/C Provider and the
beneficiary of such Cash Collateral Agreement, pursuant to which Cash
Collateral is pledged to such beneficiary or its designee to support certain
obligations of the Borrower related to the sale of power from the Borrower’s
power generating facilities, as such agreement may from time to time be
amended, modified or extended in accordance with the terms of this Agreement.


 


“Commitment” means, (i) from the Agreement Date until
December 31, 2004, the obligation to cause the issuance (or cause the
continuation, extension, modification or amendment) of Letters of Credit or to
execute and deliver (or continue, extend, modify or amend) Cash Collateral
Agreements in an aggregate amount no greater than $35,000,000 and,
(ii) from January 1, 2005 until the Maturity Date, the obligation to
cause the issuance (or cause the continuation, extension, modification or
amendment) of Letters of Credit or to execute and deliver (or continue, extend,
modify or amend) Cash Collateral Agreements in an aggregate amount no greater
than $25,000,000.


 


“Dollars” and the sign “$” mean lawful money of the
United States of America.


 


“Extension
of Credit” means (i) causing the issuance of any Letter of Credit,
or causing the amendment or modification of any Letter of Credit having the
effect of extending the stated expiration date thereof, increasing the LC
Outstandings thereunder, or otherwise altering any of the material terms or
conditions thereof or (ii) executing and delivering any Cash Collateral
Agreement, or amending or modifying any Cash Collateral Agreement having the
effect of extending the stated expiration date thereof, increasing the LC
Outstandings thereunder, or otherwise altering any of the material terms or
conditions thereof .


 


“LC
Outstandings” means the aggregate of the following (i) for any
Letter of Credit on any date of determination, the maximum amount available to
be drawn under such Letter of Credit at any time on or after such date
(assuming the satisfaction of all conditions for drawing set forth therein)
plus (ii) for any Cash Collateral Agreement on any date of determination, the
maximum amount of Cash Collateral available to be drawn upon at any time on or
after such date (assuming the satisfaction of all conditions for drawing set
forth in such Cash Collateral Agreement).


 


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“Letter
of Credit” means any irrevocable standby letter of credit caused to
be issued by the L/C Provider pursuant to Section 2.05 to support certain
obligations of the Borrower related to the sale of power from the Borrower’s
power generating facilities, as such letter of credit may from time to time be
amended, modified or extended in accordance with the terms of this Agreement.


 


“Maturity Date” means December 30, 2005.


 


“Person” means any individual, sole proprietorship, corporation,
partnership, trust, limited liability company, unincorporated organization,
mutual company, joint stock company, estate, union, employee organization,
government or any agency or political subdivision thereof.


 


“Request for Issuance” has the meaning assigned to that term in
Section 2.05(a).


 


“Tax” means any Federal, State or foreign tax, assessment or
other governmental charge (including any withholding tax) upon a Person or upon
its assets, revenues, income or profits.


 


“Unreimbursed Drawing” means any drawing under a Letter of
Credit that has not yet been reimbursed by the Borrower to the L/C Provider and
any drawing of Cash Collateral under a Cash Collateral Agreement that has not
yet been reimbursed by the Borrower to the L/C Provider.


 


Section 1.02.     Other
Interpretive Provisions.  (a)  Except as otherwise specified herein, all
references herein (i) to any Person shall be deemed to include such Person’s
successors and assigns, (ii) to any Applicable Law defined or referred to
herein shall be deemed references to such Applicable Law or any successor
Applicable Law as the same may have been or may be amended or supplemented from
time to time; and


 


(b)         When used in this
Agreement, the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and the words “Article”, “Section”, “Annex”,
“Schedule” and “Exhibit” shall refer to Articles and Sections of, and Annexes,
Schedules and Exhibits to, this Agreement unless otherwise specified.


 


ARTICLE 2


 


LETTERS OF CREDIT


 


Section 2.01.     Commitment
to Lend.  The aggregate amount of
the Commitment (i) from the date hereof until December 31, 2004 is
$35,000,000 and, (ii) from January 1, 2005 until the Maturity Date is
$25,000,000.


 


Section 2.02.     Evidence of
Indebtedness.  Each obligation to
pay any amount hereunder shall be evidenced by this Agreement and the records
of the L/C Provider.  The records of the
L/C Provider shall be prima facie
evidence of such indebtedness and of all payments made in respect thereof.


 


3

















 


Section 2.03.     Payments by
the Borrower.  (a)  Time, Place and Manner  All payments due to the L/C Provider under
this Agreement shall be made to the L/C
Provider at such address as the L/C Provider may designate by notice to
the Borrower.


 


(b)         No Reductions.  All payments due to the L/C Provider and all
other terms and agreements to be observed and performed by the Borrower
hereunder, shall be made, observed or performed by the Borrower without any
reduction or deduction whatsoever, including any reduction or deduction for any
set-off, recoupment, counterclaim (whether sounding in tort, contract or
otherwise) or Tax.


 


Section 2.04.     Permitted
Subordinated Indebtedness Designation.  The Commitment hereunder to cause the issuance of Letters of
Credit, to execute and deliver Cash Collateral Agreements, all reimbursements
payable pursuant to Sections 2.06, the Commitment Fee payable pursuant to
Section 4.01, and any other amounts payable hereunder, and all agreements
and other obligations of the Borrower relating hereto, are designated as
“Permitted Subordinated Indebtedness” as such term is used in the Operative
Documents.


 


Section 2.05.     Letters of Credit
and Cash Collateral Agreements. 
(a)  Subject to the terms and
provisions of Section 2.05(b) and Section 3.01 hereof, the L/C
Provider shall cause the issuance of each Letter of Credit (or cause the stated
expiration date thereof to be extended or the terms thereof to be modified or
amended), subject to the limitations of the Commitment, pursuant to notice by
the Borrower to the L/C Provider.  Each
such notice (a “Request for Issuance”) shall specify (i) the date
(which shall be a Business Day) of issuance of such Letter of Credit (or the
date of effectiveness of such extension, modification or amendment) and the
stated expiry date thereof (which shall be no later than the last Business Day
occurring on or before the Maturity Date), (ii) the proposed stated amount
of such Letter of Credit, (iii) the name and address of the beneficiary of such
Letter of Credit, (iv) whether such Letter of Credit should be delivered
directly to the beneficiary thereof or to the Borrower and (v) such other
information as shall demonstrate compliance of such Letter of Credit with the
requirements specified therefor in this Agreement; provided  however,
that at the option of the L/C Provider, the L/C Provider may post Cash
Collateral pursuant to a Cash Collateral Agreement, in form and substance
reasonably acceptable to the Borrower, the L/C Provider and the beneficiary of
such Cash Collateral, in lieu of causing the issuance of a Letter of Credit as
requested pursuant to the Request for Issuance.  In the event the L/C Provider elects to so post Cash Collateral
pursuant to a Cash Collateral Agreement, the L/C Provider shall, subject to the
limitations of the Commitment, cause the Cash Collateral Agreement to have the
effective date, stated expiry date and other terms (or cause the stated
expiration date thereof to be extended or the terms thereof to be modified or
amended) that are substantively equivalent to the information and directions
contained in the Request for Issuance delivered by the Borrower to the L/C
Provider.


 


(b)         Notwithstanding anything
herein to the contrary, (i) the sum of (x) the aggregate LC Outstandings of all
Letters of Credit and all Cash Collateral Agreements outstanding at any time
during the term of such Letters of Credit and Cash Collateral Agreements and
(y) the aggregate principal amount of Unreimbursed Drawings outstanding at such
time, shall not exceed the then-current Commitment; (ii) the stated expiration
date of any Letter of Credit or Cash Collateral Agreement shall not extend past
December 31, 2004 if and to the extent that (x) the aggregate LC
Outstandings of all Letters of Credit and all Cash Collateral Agreements


 


4

















 


outstanding at any time after December 31, 2004 and (y) the
aggregate principal amount of Unreimbursed Drawings outstanding at such time,
would exceed the then-current Commitment after December 31, 2004; and
(iii) the stated expiration date of any Letter of Credit or Cash Collateral
Agreement shall not extend past the Maturity Date.


 


Section 2.06.     Reimbursement
to L/C Provider.  The Borrower
hereby agrees to pay to the L/C Provider, on demand made by the L/C Provider to
the Borrower, on and after each date on which the L/C Provider shall pay any
amount in respect of the Letter of Credit issued at the request of the Borrower
(or in respect of the Cash Collateral Agreement executed and delivered by the
L/C Provider, at its option, in lieu of the Letter of Credit which was
requested by the Borrower), an amount equal to the aggregate AES Costs incurred
and not theretofore reimbursed by Borrower hereunder through the time of
demand; provided,
however,
that if, pursuant to the Depositary Agreement, the Borrower is not permitted to pay any such amounts to the L/C Provider
on the date of demand therefor, the Borrower shall pay such amounts, and any
additional AES Costs incurred between the date of demand and the date of actual
payment to the L/C Provider, on the first date thereafter that the Borrower is
permitted to pay such amounts pursuant to the Depositary Agreement.


 


Section 2.07.     Obligations
Absolute.  The payment
obligations of the Borrower under this Agreement in respect of any AES Costs
shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following circumstances:


 


(a)          any lack of validity or
enforceability of this Agreement;


 


(b)         the existence of any
claim, set-off, defense or other right that the Borrower may have at any time
against any beneficiary, or any transferee, of any Letter of Credit or Cash
Collateral Agreement (or any Persons for whom any such beneficiary or any such
transferee may be acting), the L/C Provider or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or by such
Letter of Credit or Cash Collateral Agreement, or any unrelated transaction;


 


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


 


(d)         payment in good faith by
the issuer of a Letter of Credit on behalf of the L/C Provider against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit;


 


(e)          payment in good faith by
the L/C Provider, under a Cash Collateral Agreement executed and delivered by
the L/C Provider, against presentation of documentation which does not comply
with the terms of such Cash Collateral Agreement; or


 


(f)            any other circumstance
or happening whatsoever, whether or not similar to any of the foregoing.


 


5

















 


ARTICLE 3


 


CONDITIONS TO EXTENSIONS OF CREDIT


 


Section 3.01.     Conditions
to the Extension of Credit.  The
obligation of the L/C Provider to cause the issuance of any Letter of Credit
(or to execute and deliver any Cash Collateral Agreement) shall be subject to
(a) the L/C Provider’s receipt of the Borrower’s Request for Issuance (or
similar request given in connection with a previously executed and delivered
Cash Collateral Agreement), (b) no Lease Event of Default or Event of Loss, and
no event that with the passage of time or giving of notice or both would
constitute a Lease Event of Default or Event of Loss, shall have occurred and
be continuing under the Operative Documents, and (c) the Borrower shall not be
in default with respect to its obligations under this Agreement, including
without limitation its payment obligations under Section 2.06 and Section 4.01
hereof; provided
further , however, that if the Borrower shall not have paid in full
on any Rent Payment Date (as defined in the Depositary Agreement) the amounts
that would otherwise have been due and payable under Section 2.06 or
Section 4.01 on or before such date but for the terms of the Depositary
Agreement, then the condition precedent in this clause (c) shall not have been
satisfied.


 


ARTICLE 4


 


FEE


 


Section 4.01.                             Commitment
Fee.


 


(a)                                  Commitment
Fee.  The Borrower shall pay to the
L/C Provider a commitment fee (the “Commitment Fee”) on the average daily
unused amount of the Commitment for each day from the date hereof through (and
including) the Maturity Date at a rate per
annum of one-half of one percent (0.50%), payable quarterly in arrears
on each Rent Payment Date, and on the Maturity Date; provided, however,
that if, pursuant to the Depositary
Agreement, the Borrower is not permitted to pay any
such amounts to the L/C Provider on such Rent Payment Date or the Maturity
Date, as the case may be, the Borrower shall pay such Commitment Fee, together
with any Commitment Fee incurred between such Rent Payment Date or Maturity
Date and the date of actual payment to the L/C Provider, on the first date
thereafter that the Borrower is permitted to pay such amounts pursuant to the
Depositary Agreement.


 


(b)                                 Fee
Non-Refundable.  The Commitment Fee
payable under this Section 4.01 shall not be refundable in whole or in
part.


 


Section 4.02.                             Computation
of Fee.  The Commitment Fee payable
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed.


 


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ARTICLE 5


 


MISCELLANEOUS


 


Section 5.01.     Notices and
Deliveries.


 


(a)                                  Manner
of Delivery.  All notices, communications
and materials to be given or delivered pursuant to this Agreement shall be
given or delivered in writing (which shall include telecopy transmissions).


 


(b)                                 Addresses.  All notices, communications and materials to
be given or delivered hereunder shall be given or delivered at the following
respective addresses and telecopier number and to the attention of the
following individuals or departments:


 


(i)                                     if to the
Borrower, to it at:


7725 Lake Road


Barker, New York 14012


Telecopier No.:               (716) 795-3153


Attention:                                         Amy
Conley


 


(ii)                                  if to the L/C
Provider, to it at:


 


1001 North 19th Street, 20th Floor


Arlington, VA 22209


Telecopier No.:               (703) 528-4510


Attention:                                         Kyle
Hoffman


 


or at such other address or telecopier number or to the attention of
such other individual or department as the party to which such information
pertains may hereafter specify for such purpose in a notice specifically
captioned “Notice of Change of Address”.


 


Section 5.02.     Amendments:
Waivers.  No amendment or waiver of
any provision of this Agreement, and no consent with respect to any departure
by the Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the L/C Provider and the Borrower and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.


 


Section 5.03.     No Third
Parties Benefited.  Except as
expressly provided for herein, this Agreement is made and entered into for the
sole protection and legal benefit of the Borrower and the L/C Provider, and no
other person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with this Agreement.


 


Section 5.04.     Governing
Law.  The rights and duties of the
Borrower and the L/C Provider under this Agreement shall, pursuant to New York
General Obligations Law Section 5-1401, be governed by the law of the
State of New York.


 


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Section 5.05.     Judicial
Proceedings; Waiver of Jury Trial. 
Any judicial proceeding brought against the Borrower with respect to
this Agreement may be brought in any court of competent jurisdiction in the
City of New York, and, by execution and delivery of this Agreement, the
Borrower (a) accepts, generally and unconditionally, the nonexclusive
jurisdiction of such courts and any related appellate court and irrevocably
agrees to be bound by any judgment rendered thereby and (b) irrevocably waives
any objection it may now or hereafter have as to the venue of any such
proceeding brought in such a court or that such a court is an inconvenient
forum.  The Borrower hereby waives
personal service of process and consents that service of process upon it may be
made by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of
Section 5.01(b), and service so made shall be deemed completed on the
third Business Day after such service is deposited in the mail.  THE BORROWER AND THE L/C PROVIDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY CLAIM HEREUNDER.


 


Section 5.06.     Severability
of Provisions.  Any provision of
this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.  To the extent permitted
by Applicable Law, the Borrower hereby waives any provision of Applicable Law
that renders any provision of this Agreement prohibited or unenforceable in any
respect.


 


Section 5.07.     Counterparts.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto were upon the same instrument.


 


Section 5.08.     Successors
and Assigns.  This Agreement is not
assignable without the consent of the non-assigning party.  This Agreement shall not be binding upon any
successors of the parties hereto.


 


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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers effective as of January 1,
2004.


 


	
   

  	
  AES EASTERN ENERGY, L.P., as Borrower

  
	
   

  	
   

  
	
   

  	
  By: 
  AES NY, L.L.C., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Amy
  Conley

  	
   

  
	
   

  	
   

  	
  Name: Amy
  Conley

  
	
   

  	
   

  	
  Title: Vice
  President and Chief Financial

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE AES CORPORATION, as L/C Provider

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Barry
  Sharp

  	
   

  
	
   

  	
   

  	
  Name: Barry
  Sharp

  
	
   

  	
   

  	
  Title: Vice
  President and Chief Financial

  Officer

  



 


9