**Exhibit 10.25**

 

**EXECUTIONCOPY**

 

**AMENDED ANDRESTATEDCREDIT AGREEMENT**

 

**dated as ofOctober 26, 2004**

 

among

 

**AES EASTERNENERGY, L.P.**

*asBorrower*

 

and

 

**THE BANKSNAMED HEREIN**

*as Banks*

 

and

 

**THE LETTEROF CREDIT ISSUING BANKSPARTIES HERETO FROM TIME TO TIME**

*as IssuingBanks*

 

and

 

**CALYON NEWYORK BRANCH**

*as Agent*

 

----

 

**TABLE OFCONTENTS**

 
| Article 1  INTERPRETATION              |                                                                            |
|---------------------------------------------|---------------------------------------------------------------------------------|
| Section 1.01.                          | Defined Terms                                                                   |   |
| Section 1.02.                          | Other  Interpretive Provisions                                                  |   |
| Section 1.03.                          | Accounting  Matters                                                             |   |
| Section 1.04.                          | Representations  and Warranties                                                 |   |
| Section 1.05.                          | Captions                                                                        |   |
| Section 1.06.                          | Interpretation  of Related Documents                                            |   |
|                                        |                                                                            |   |
| Article 2 LOAN  FACILITY; COMPUTATIONS |                                                                            |
| Section 2.01.                          | Commitment to  Lend                                                             |   |
| Section 2.02.                          | Manner of  Borrowing                                                            |   |
| Section 2.03.                          | Interest                                                                        |   |
|  (a)                                   | Rates                                                                           |   |
|  (b)                                   | Payment                                                                         |   |
|  (c)                                   | Conversion and Continuation                                                     |   |
|  (d)                                   | Maximum  Interest Rate                                                          |   |
| Section 2.04.                          | Repayment                                                                       |   |
| Section 2.05.                          | Prepayments                                                                     |   |
|  (a)                                   | Optional  Payments                                                              |   |
|  (b)                                   | Commitment  Reduction Mandatory Prepayments                                     |   |
|  (c)                                   | Clean-Up Period  Mandatory Prepayments                                          |   |
|  (d)                                   | Rent Payment  Date Mandatory Prepayments                                        |   |
|  (e)                                   | Total  Commitment Amount Reduction Mandatory Prepayments/Cash Collateralization |   |
| Section 2.06.                          | Limitation  on Types of Loans                                                   |   |
| Section 2.07.                          | Termination or  Reduction of Commitments                                        |   |
| Section 2.08.                          | Fees                                                                            |   |
|  (a)                                   | Commitment  Fees                                                                |   |
|  (b)                                   | Letter  of Credit Fees                                                          |   |
|  (c)                                   | Agency Fees                                                                     |   |
|  (d)                                   | Fronting Fees                                                                   |   |
|  (e)                                   | Supplemental  Fees for Utilizations over $50,000,000                            |   |
|  (f)                                   | Fees  Non-Refundable                                                            |   |
|  (g)                                   | Survival                                                                        |   |
| Section 2.09.                          | Computation  of Interest and Fees                                               |   |
| Section 2.10.                          | Evidence  of Indebtedness                                                       |   |
| Section 2.11.                          | Payments  by the Borrower                                                       |   |
|  (a)                                   | Time, Place and Manner                                                          |   |
|  (b)                                   | No Reductions                                                                   |   |
|  (c)                                   | Extension of Payment Dates                                                      |   |
| Section 2.12.                          | Distribution of  Payments by the Agent                                          |   |
| Section 2.13.                          | Taxes                                                                           |   |
|  (a)                                   | Taxes Payable by the  Borrower                                                  |   |
|  (b)                                   | Taxes  Payable by the Agent, any Bank or any Issuing Bank                       |   |

 

i

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|  (c)                                              | Limitations                                                                              |   |
|--------------------------------------------------------|------------------------------------------------------------------------------------------|--------|
|  (d)                                              | Exemption  from U.S. Withholding Taxes                                                   |   |
| Section 2.14.                                     | *Pro Rata Treatment*                                                                     |   |
| Section 2.15.                                     | Extension  of Maturity Date                                                              |   |
| Section 2.16.                                     | Working  Capital Facility Designation                                                    |   |
|                                                   |                                                                                     |   |
| Article 3 LETTERS OF  CREDIT                      |                                                                                     |
| Section 3.01.                                     | Issuing Banks                                                                            |   |
| Section 3.02.                                     | Letters of Credit                                                                        |   |
| Section 3.03.                                     | Issuing Bank Fees                                                                        |   |
| Section 3.04.                                     | Reimbursement  to Issuing Banks; Interest                                                |   |
| Section 3.05.                                     | Obligations  Absolute                                                                    |   |
| Section 3.06.                                     | Liability  of Issuing Banks and the Banks                                                |   |
|                                                   |                                                                                     |   |
| Article 4  CONDITIONS TO EXTENSIONS OF CREDIT     |                                                                                     |
| Section 4.01.                                     | Conditions  to the Initial Extension of Credit                                           |   |
| Section 4.02.                                     | Conditions  to increase the Total Commitment Amount                                      |   |
| Section 4.03.                                     | Conditions  to Each Extension of Credit                                                  |   |
| Section 4.04.                                     | Reliance on  Certificates                                                                |   |
|                                                   |                                                                                     |   |
| Article 5  CERTAIN REPRESENTATIONS AND WARRANTIES |                                                                                     |
| Section 5.01.                                     | Due  Organization, Etc                                                                   |   |
| Section 5.02.                                     | Loan  Documents: Authorization: Enforceability; Required Consents; Absence of  Conflicts |   |
| Section 5.03.                                     | Operative  Documents: Due Authorization, Enforceability, Etc                             |   |
| Section 5.04.                                     | Operative  Documents: No Conflicts                                                       |   |
| Section 5.05.                                     | Operative  Documents: Governmental Actions                                               |   |
| Section 5.06.                                     | Litigation                                                                               |   |
| Section 5.07.                                     | No Defaults                                                                              |   |
| Section 5.08.                                     | Liens                                                                                    |   |
| Section 5.09.                                     | Regulatory  Status/Utility Regulation                                                    |   |
| Section 5.10.                                     | Investment  Company Act                                                                  |   |
| Section 5.11.                                     | Compliance With  Laws                                                                    |   |
| Section 5.12.                                     | Taxes                                                                                    |   |
| Section 5.13.                                     | ERISA                                                                                    |   |
| Section 5.14.                                     | Adequate Rights                                                                          |   |
| Section 5.15.                                     | Environmental  Matters                                                                   |   |
| Section 5.16.                                     | Subsidiaries                                                                             |   |
| Section 5.17.                                     | Property                                                                                 |   |
| Section 5.18.                                     | No Event of Loss                                                                         |   |
| Section 5.19.                                     | AEE2 Liens                                                                               |   |
| Section 5.20.                                     | AEE2 Adequate  Rights                                                                    |   |
| Section 5.21.                                     | Additional  Facilities Environmental Matters                                             |   |
| Section 5.22.                                     | Burdensome  Provisions                                                                   |   |
| Section 5.23.                                     | No  Adverse Change or Event                                                              |   |
| Section 5.24.                                     | Additional  Adverse Facts                                                                |   |
| Section 5.25.                                     | Margin Stock                                                                             |   |

 

ii

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| Section 5.26.                | Title to  Properties                                                                                                                           |   |
|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Section 5.27.                | Insurance                                                                                                                                      |   |
| Section 5.28.                | Lien  in Collateral                                                                                                                            |   |
| Section 5.29.                | Projections                                                                                                                                    |   |
|                              |                                                                                                                                           |   |
| Article 6 CERTAIN  COVENANTS |                                                                                                                                           |
| Section 6.01.                | Coverage Ratio                                                                                                                                 |   |
| Section 6.02.                | Preservation of Existence and  Properties, Scope of Business, Compliance with Law, Payment of Taxes and  Claims Preservation of Enforceability |   |
| Section 6.03.                | Insurance                                                                                                                                      |   |
| Section 6.04.                | Use of Proceeds                                                                                                                                |   |
| Section 6.05.                | Liens                                                                                                                                          |   |
| Section 6.06.                | Merger or Consolidation                                                                                                                        |   |
| Section 6.07.                | Disposition of Assets                                                                                                                          |   |
| Section 6.08.                | Incurrence of Indebtedness                                                                                                                     |   |
| Section 6.09.                | Limitations on Investments                                                                                                                     |   |
| Section 6.10.                | Transactions with Affiliates                                                                                                                   |   |
| Section 6.11.                | Subsidiaries                                                                                                                                   |   |
| Section 6.12.                | Additional Facilities                                                                                                                          |   |
| Section 6.13.                | Payment of Operating and Maintenance  Costs                                                                                                    |   |
| Section 6.14.                | Annual Operating Budget                                                                                                                        |   |
| Section 6.15.                | AEE Revenues                                                                                                                                   |   |
| Section 6.16.                | No Abandonment                                                                                                                                 |   |
| Section 6.17.                | Assignment                                                                                                                                     |   |
| Section 6.18.                | Compliance with ERISA                                                                                                                          |   |
| Section 6.19.                | Restricted Payments                                                                                                                            |   |
| Section 6.20.                | PPA Term                                                                                                                                       |   |
| Section 6.21.                | Commitment Increase Date                                                                                                                       |   |
|                              |                                                                                                                                           |   |
| Article 7 INFORMATION        |                                                                                                                                           |
| Section 7.01.                | Information to Be Furnished                                                                                                                    |   |
|  (a)                         | Quarterly Financial  Statements                                                                                                                |   |
|  (b)                         | Year-End  Financial Statements; Accountants’ Certificate                                                                                  |   |
|  (c)                         | Operating Budgets                                                                                                                              |   |
|  (d)                         | Monthly  Operations Report                                                                                                                     |   |
|  (e)                         | Notices  under each of the Participation Agreements                                                                                            |   |
|  (f)                         | Reports,  Filings and Notices                                                                                                                  |   |
|  (g)                         | Requested  Information                                                                                                                         |   |
|  (h)                         | Notice  of Defaults, Material Adverse Changes and Other Matters                                                                                |   |
| Section 7.02.                | Accuracy of Financial  Statements and Information                                                                                              |   |
|  (a)                         | Historical  Financial Statements                                                                                                               |   |
|  (b)                         | Future  Financial Statements                                                                                                                   |   |
|  (c)                         | Historical Information                                                                                                                         |   |
|  (d)                         | Future  Information                                                                                                                            |   |
| Section 7.03.                | Additional Covenants  Relating to Disclosure                                                                                                   |   |
|  (a)                         | Accounting Methods and Financial Records                                                                                                       |   |
|  (b)                         | Fiscal  Year                                                                                                                                   |   |

 

iii

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|  (c)                                             | Visits,  Inspections and Discussions                                                       |   |
|-------------------------------------------------------|--------------------------------------------------------------------------------------------|--------|
| Section 7.04.                                    | Authorization of  Third Parties to Deliver Information and Discuss Affairs                 |   |
|                                                  |                                                                                       |   |
| Article 8 DEFAULT                                |                                                                                       |
| Section 8.01.                                    | Events of Default                                                                          |   |
| Section 8.02.                                    | Remedies upon Event of  Default                                                            |   |
|                                                  |                                                                                       |   |
| Article 9  ADDITIONAL CREDIT FACILITY PROVISIONS |                                                                                       |
| Section 9.01.                                    | Mandatory Suspension and  Conversion of Eurodollar Rate Loans and Eurodollar Rate Drawings |   |
| Section 9.02.                                    | Regulatory Changes                                                                         |   |
| Section 9.03.                                    | Capital Requirements                                                                       |   |
| Section 9.04.                                    | Funding Losses                                                                             |   |
| Section 9.05.                                    | Certain Determinations;  Survival                                                          |   |
| Section 9.06.                                    | Change of Lending Office                                                                   |   |
| Section 9.07.                                    | Replacement of Bank in  Respect of Increased Costs                                         |   |
|                                                  |                                                                                       |   |
| Article 10 THE AGENT                             |                                                                                       |
| Section 10.01.                                   | Appointment and Powers                                                                     |   |
| Section 10.02.                                   | Limitation on Agent’s  Liability                                                      |   |
| Section 10.03.                                   | Defaults                                                                                   |   |
| Section 10.04.                                   | Rights as a Bank                                                                           |   |
| Section 10.05.                                   | Indemnification                                                                            |   |
| Section 10.06.                                   | Non-Reliance on Agent  and Other Banks                                                     |   |
| Section 10.07.                                   | Execution and Amendment  of Loan Documents on Behalf of the Banks                          |   |
| Section 10.08.                                   | Resignation of the  Agent                                                                  |   |
|                                                  |                                                                                       |   |
| Article 11  MISCELLANEOUS                        |                                                                                       |
| Section 11.01.                                   | Notices and Deliveries                                                                     |   |
|  (a)                                             | Notices  and Materials Other than Collateral                                               |   |
|  (b)                                             | Collateral                                                                                 |   |
| Section 11.02.                                   | Expenses; Indemnification                                                                  |   |
| Section 11.03.                                   | Amounts Payable Due upon  Request for Payment                                              |   |
| Section 11.04.                                   | Remedies of the Essence                                                                    |   |
| Section 11.05.                                   | Rights Cumulative                                                                          |   |
| Section 11.06.                                   | Amendments; Waivers                                                                        |   |
| Section 11.07.                                   | Set-Off; Suspension of Payment  and Performance                                            |   |
| Section 11.08.                                   | Sharing of Recoveries                                                                      |   |
| Section 11.09.                                   | Assignments and  Participations                                                            |   |
|  (a)                                             | Assignments                                                                                |   |
|  (b)                                             | Participations                                                                             |   |
| Section 11.10.                                   | Governing Law                                                                              |   |
| Section 11.11.                                   | Judicial Proceedings;  Waiver of Jury Trial                                                |   |
| Section 11.12.                                   | LIMITATION OF LIABILITY                                                                    |   |
| Section 11.13.                                   | Process Agent                                                                              |   |
| Section 11.14.                                   | Severability of  Provisions                                                                |   |
| Section 11.15.                                   | Counterparts                                                                               |   |

 

iv

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| Section 11.16. | Survival of Obligations                                  |   |
|---------------------|----------------------------------------------------------|--------|
| Section 11.17. | Entire Agreement                                         |   |
| Section 11.18. | Successors and Assigns                                   |   |
| Section 11.19. | No Fiduciary  Relationship Established By Loan Documents |   |
| Section 11.20. | No Recourse to  Affiliates                               |   |
| Section 11.21. | Confidential  Information                                |   |
| Section 11.22. | Registered Notes                                         |   |
| Section 11.23. | USA PATRIOT Act                                          |   |
| Section 11.24. | J. Aron Letters of Credit                                |   |

 
| ANNEX                       |   |                                                                         |
|-----------------------------|--------|------------------------------------------------------------------------------|
|                        |   |                                                                         |
| Annex A                     | -      | Commitments,  Lending Offices and Notice Addresses                           |   |
|                        |   |                                                                         |   |
| SCHEDULES                   |   |                                                                         |   |
|                        |   |                                                                         |   |
| Schedule 2.02          | -      | Notice of Borrowing                                                          |   |
| Schedule 2.03(c)(iv)   | -      | Notice of Conversion or  Continuation                                        |   |
| Schedule 2.05(a)       | -      | Notice of Prepayment                                                         |   |
| Schedule 2.05(c)       | -      | Notice of Clean-Up Period                                                    |   |
| Schedule 2.13(d)       | -      | Non-US Bank Certificate                                                      |   |
| Schedule 3.04(e)       | -      | Notice of Conversion of Base Rate  Drawing                                   |   |
| Schedule 4.01  (a)(xi) | -      | Form of  Opinion of Special New York Counsel to the Borrower and AES NY |   |
| Schedule 5.05          | -      | Governmental Actions                                                         |   |
| Schedule 5.06          | -      | Litigation                                                                   |   |
| Schedule 5.09          | -      | Utility Regulation                                                           |   |
| Schedule 5.13          | -      | ERISA                                                                        |   |
| Schedule 5.15          | -      | Environmental Matters                                                        |   |
| Schedule 5.24          | -      | Additional Material Adverse Facts                                            |   |
| Schedule 7.01 (a)      | -      | Certificate As To Financial  Statements and Defaults                         |   |
| Schedule 7.02(a)       | -      | Base Financial Statements                                                    |   |
| Schedule 8.01 (g)      | -      | Certain Events of Default (Lease  Agreement)                                 |   |
| Schedule 11.09(a)      | -      | Notice of Assignment                                                         |   |
|                        |   |                                                                         |   |
| EXHIBITS                    |   |                                                                         |   |
|                        |   |                                                                         |   |
| Exhibit A              | -      | Form of  Promissory Note                                                |   |
| Exhibit B              | -      | Form of  Pledge Agreement                                               |   |
| Exhibit C              | -      | Form of  Issuing Bank Agreement                                         |   |
| Exhibit D              | -      | Form of  Letter of Credit                                               |   |
| Exhibit E              | -      | Form of  Bank Assignment                                                |   |

 

v

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**AMENDED ANDRESTATED CREDIT AGREEMENT**

 

Dated as of October 26, 2004

 

AES EASTERN ENERGY, L.P., as Borrower, the BANKS, the ISSUING BANKS,and CALYON NEW YORK BRANCH, as Agent, agree as follows (with certain terms usedherein being defined in Article 1):

 

RECITALS

 

WHEREAS, on April 10, 2001, the Borrower entered into the ExistingCredit Facility (as hereinafter defined) with Union Bank of California, N.A.,as the “Agent” (in such capacity, the “Original Agent”);

 

WHEREAS, Union Bank of California, N.A. (“Union Bank”) enteredinto the Issuing Bank Agreement dated as of April 10, 2001 between theBorrower and Union Bank, as the “Issuing Bank” (in such capacity, the “OriginalIssuing Bank”) (the “Original Issuing Bank Agreement”);

 

WHEREAS, Calyon New York Branch, immediately prior to the execution anddelivery of this Agreement on the Agreement Date (as hereinafter defined), haspurchased the outstanding loans (the “Existing Loans”) made under theExisting Credit Facility by each of Union Bank and Citibank, N.A. (“Citi”),as the bank parties thereto (Union Bank and Citi, collectively, the “TransferorBanks”) and the Unreimbursed Drawings owed to each of the Tansferor Banksand has assumed all of the rights and obligations of the Transferor Banks underthe Existing Credit Facility including the Commitments of each Transferor Bank;

 

WHEREAS, immediately prior to the execution and delivery of thisAgreement on the Agreement Date, the Borrower will arrange to have each letterof credit issued pursuant to the Original Issuing Bank Agreement returned tothe Original Issuing Bank;

 

WHEREAS, pursuant to Section 10.08 of the Existing CreditFacility, Union Bank will resign as the Original Agent hereunder immediatelyprior to the Agreement Date;

 

WHEREAS, the Agent is willing to assume the obligations and theresponsibilities of the Original Agent under the Existing Credit Facility; and

 

WHEREAS, the parties hereto mutually desire to amend the ExistingCredit Facility to provide for, among other things, the making by Calyon ofLoans and the issuance of Letters of Credit (as hereinafter defined) by Calyonas Issuing Bank, and for convenience to restate the Existing Credit Facility,as amended in its entirety as hereinafter set forth.

 

NOW, THEREFORE, in consideration of the premises and the mutualcovenants contained herein, the parties hereto agree that on the AgreementDate, the Existing Credit Facility shall be amended and restated in itsentirety to read as follows:

 

----

 

ARTICLE 1

 

INTERPRETATION

 

Section 1.01.                             Defined Terms.  Eachcapitalized term used herein and not otherwise defined herein shall have thedefinition assigned to such term in Appendix A to the Participation Agreement (KintighA-l), dated as of May 1, 1999, as amended on or before the date hereof(and as amended, supplemented or otherwise modified after the date hereof withthe prior written consent of the Required Banks and the Issuing Banks) (“AppendixA”), among the Borrower, as Lessee, Kintigh Facility Trust A-l, as OwnerTrust, DCC Project Finance Fourteen, Inc., as Owner Participant, BankersTrust Company, as Indenture Trustee, and Bankers Trust Company, as Pass ThroughTrustee, and the principles of interpretation set forth in such Appendix Ashall apply to such definitions. As used herein, (i) the term “Leases”shall refer not only to the singular of such term as defined in such Appendix Abut shall also refer to each Other Lease and each Related Lease as such termsare defined in such Appendix A, (ii) the term “Participation Agreements”shall refer not only to the singular of such term as defined in such Appendix Abut shall also refer to each other Participation Agreement as defined in anyOther Lease or any Related Lease, (iii) the term “Facility” shall refernot only to the singular of such term as defined in such Appendix A but shallalso refer to each Related Facility as such term is defined in such Appendix A,(iv) the term “Facility Site” shall refer not only to the singular of suchterm as defined in such Appendix A but shall also refer to each RelatedFacility Site as such term is defined in such Appendix A, (v) the term “SiteLease” shall refer not only to the singular of such term as defined in suchAppendix A but shall also refer to each Related Site Lease as such term isdefined in such Appendix A, and (vi) the term “Operative Documents” shallrefer not only to the singular of such term as defined in such Appendix A butshall also refer to each Other Operative Document as such term is defined insuch Appendix A. For the purposes of the Loan Documents:

 

“Adjusted Eurodollar Rate” means, for any Interest Period, a rate *perannum*(rounded upward, if necessary, to the nearest wholemultiple of 1/100 of 1%) equal to the rate obtained by *dividing*(a) the Eurodollar Rate forsuch Interest Period by (b) a percentage equal to 1 *minus*the Reserve Requirement in effectfrom time to time during such Interest Period.

 

“AEE2” means AEE2, L.L.C., a limited liability company organizedunder the laws of the State of Delaware.

 

“AEE2 Entity” means AEE2, AES Westover, L.L.C. and AES Greenidge,L.L.C.

 

“AES” means The AES Corporation, a Delaware corporation.

 

“AES Cayuga” means AES Cayuga, L.L.C., a limited liabilitycompany organized under the laws of the State of Delaware.

 

“AES Somerset” means AES Somerset, L.L.C., a limited liabilitycompany organized under the laws of the State of Delaware.

 

2

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“Affiliate” means, with respect to a Person, any other Personthat, directly or indirectly through one or more intermediaries, Controls, oris Controlled by, or is under common Control with, such first Person; unlessotherwise specified, “Affiliate” means an Affiliate of the Borrower.

 

“Agent” means Calyon New York Branch, as agent for andrepresentative (within the meaning of Section 9-102(a)(72) of theUniform Commercial Code) of the Banks and the Issuing Banks under thisAgreement and the other Loan Documents, and any successor Agent appointedpursuant to Section 10.08.

 

“Agent’s Fee Letter” means the letter agreement dated the datehereof between the Borrower and the Agent.

 

“Agent’s Office” means the address of the Agent specified in ordetermined in accordance with the provisions of Section 11.01(a)(ii).

 

“Agreement” means this Agreement, including all schedules,annexes and exhibits hereto.

 

“Agreement Date” means the date set forth as such on thesignature pages hereof, which is the date the executed copies of thisAgreement were delivered by all parties hereto and, accordingly, this Agreementbecame effective and the Banks and the Issuing Banks first became committed toprovide the Extensions of Credit pursuant to the terms of, and as contemplatedby, this Agreement. If no such date is there set forth, the Agreement Dateshall be the date as of which this Agreement is dated.

 

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

 

“Applicable Law” means, anything in Section 11.10 to thecontrary notwithstanding, (a) all applicable common law and principles ofequity and (b) all applicable provisions of all (i) constitutions,statutes, rules, regulations and orders of governmental bodies, (ii) GovernmentalApprovals and Governmental Registrations and (iii) orders, decisions,judgments and decrees.

 

“Applicable Margin”: (i) for each Type of Loan (prior tothe second anniversary of the Agreement Date), the rate*per annum*setforth under the relevant column heading below:

 

| **Base  Rate  Loans** | ** ** | **Eurodollar Rate  Loans** | ** ** |
|-----------------------|------------|----------------------------|------------|
| 0.750                 | %          | 1.750                      | %          |

 

(ii)                                  for each Type of Loan (on or after the secondanniversary of the Agreement Date) the rate*per annum*set forth opposite suchperiod under the relevant column heading below:

 

3

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| **Base  Rate  Loans** | ** ** | **Eurodollar Rate  Loans** | ** ** |
|-----------------------|------------|----------------------------|------------|
| 1.00                  | %          | 2.00                       | %          |

 

“Available Commitment” means, as to any Bank, at any time, anamount equal to the excess, if any, of (a) the amount of such Bank’sCommitment *(provided*that forpurposes of this definition only, each Bank’s Commitment shall at all times bedetermined by using a Total Commitment Amount equal to the Increased TotalCommitment Amount) then in effect over (b) the sum of such Bank’s (i) Loans,(ii) Unreimbursed Drawings then outstanding and (iii) Percentage ofLC Outstandings.

 

“Available Commitments” means the aggregate of the Banks’Available Commitments.

 

“Bank” means (a) any Person listed on the signature pages hereoffollowing the Agent and (b) any Person (other than the Borrower or any ofits Affiliates) that has been assigned any or all of the rights or obligationsof a Bank pursuant to Section 11.09(a).

 

“Bank Tax” means any net income or franchise tax or anequivalent type of tax imposed upon any Bank by any jurisdiction (or politicalsubdivision thereof) in which such Bank or any of its Lending Offices islocated.

 

“Bank Assignment” means, the Bank Assignment dated as of October 26,2004 among the Transferor Banks and Calyon, substantially in the form of Exhibit Ehereto.

 

“Base Rate” means, for any day, a rate*per annum*equalto the higher of (a) the Prime Rate in effect on such day and (b) thesum of the Federal Funds Rate in effect on such day *plus*0.50%.

 

“Base Rate Drawing” means any Unreimbursed Drawing the intereston which is, or is to be, as the context may require, computed on the basis ofthe Base Rate.

 

“Base Rate Loan” means any Loan the interest on which is, or isto be, as the context may require, computed on the basis of the Base Rate.

 

“Borrower” means AES Eastern Energy, L.P., a Delaware limitedpartnership.

 

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

 

“Calyon” means, Calyon New York Branch.

 

“Capital Security” means, with respect to any Person, (a) anyshare of capital stock of or other unit of ownership interest in such Person or(b) any security convertible into, or any option, warrant or other rightto acquire, any share of capital stock of or other unit of ownership interestin such Person.

 

4

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“Clean-Up Period” means, with respect to each consecutive periodof 365 or, in the case of a leap year, 366 consecutive days occurring withinthe period from the Agreement Date through the Maturity Date, one period of 15consecutive days.

 

“Closing Date” means the date upon which each of the conditionsprecedent enumerated in Section 4.01 has been fulfilled to thesatisfaction of the Agent and the Borrower. All transactions contemplated bythe Closing Date shall take place on or before October 26, 2004, at theoffices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, NewYork, New York 10017, at 10:00 A.M., or such other time and/or location asthe parties hereto may mutually agree.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” means all property in which a Lien is createdpursuant to the Pledge Agreement.

 

“Commitment” means, as to any Bank, the obligation of such Bankto make Loans to the Borrower and to participate in Extensions of Creditresulting from the issuance (or extension, modification or amendment) of anyLetter of Credit, in an aggregate amount not to exceed at any time the productof (i) such Bank’s Percentage and (ii) the Total Commitment Amount ineffect at such time, as such amount may be reduced from time to time pursuantto Section 2.07 or increased or reduced from time to time pursuant toassignments in accordance with Section 11.09(a) or (b), as thecontext may require.

 

“Commitment Increase Date” means the date upon which each of theconditions precedent enumerated in Section 4.02 has been fulfilled, whichdate must occur on or prior to December 31, 2004.

 

“Contract” means (a) any agreement (whether bilateral orunilateral or executory or non-executory and whether a Person entitled torights thereunder is so entitled directly or as a third party beneficiary),including an indenture, lease or license, (b) any deed or other instrumentof conveyance, (c) any certificate of incorporation, charter, partnershipagreement, limited liability company agreement or other organizational documentand (d) any by-law.

 

“Control” means, with respect to a Person, possession by anotherPerson, directly or indirectly, of the power to direct or cause the directionof the management or policies of such first Person, whether through theownership of voting securities, by contract or otherwise. The words “Controlling”and “controlled” have correlative meanings.

 

“Debt” means any Liability that constitutes “debt” or “Debt”under section 101(12) of the Bankruptcy Code or under the UniformFraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any analogousApplicable Law.

 

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

 

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

 

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“Domestic Lending Office” of any Bank means (a) the branchor office of such Bank set forth below such Bank’s name under the heading “DomesticLending Office” on Annex A or, in the case of a Bank that becomes a Bankpursuant to an assignment, the branch or office of such Bank set forth underthe heading “Domestic Lending Office” in the Notice of Assignment given to theBorrower and the Agent with respect to such assignment, as the case may be, or (b) suchother branch or office of such Bank designated by such Bank from time to timeas the branch or office at which its Base Rate Loans and Base Rate Drawings areto be made or maintained.

 

“Eligible Assignee” means (a) any commercial bank, savingsand loan institution or savings bank organized under the laws of the UnitedStates, or any State thereof, and having combined capital and surplus in excessof $100,000,000, (b) any commercial bank organized under the laws of any othercountry that is a member of the Organization for Economic Cooperation andDevelopment (“OECD”), or a political subdivision of any such country,and having combined capital and surplus (or the equivalent thereof under theaccounting principles applicable thereto) in excess of $100,000,000, *provided*that such bank is acting througha branch, agency or Affiliate located in the country in which it is organizedor another country that is also a member of the OECD, (c) the central bankof any country that is a member of the OECD or (d) any insurance company,pension fund, mutual fund or other financial institution of recognizedstanding.

 

“Enacted” as applied to a Regulatory Change, means the date suchRegulatory Change first becomes effective or is implemented or first requiredor expected to be complied with, whether the same is (a) the result of anenactment by a government or any agency or political subdivision thereof, adetermination of a court or regulatory authority, a request or directive of aregulatory authority, or otherwise or (b) enacted, adopted, issued orproposed before or after the Agreement Date.

 

“Eurodollar Business Day” means any Business Day on whichdealings in Dollar deposits are carried on in the London interbank market andon which commercial banks are open for domestic and international business(including dealings in Dollar deposits) in London, England.

 

“Eurodollar Lending Office” of any Bank means (a) thebranch or office of such Bank set forth below such Bank’s name under the heading“Eurodollar Lending Office” on Annex A or, in the case of a Bank thatbecomes a Bank pursuant to an assignment, the branch or office of such Bank setforth under the heading “Eurodollar Lending Office” in the Notice of Assignmentgiven to the Borrower and the Agent with respect to such assignment, as thecase may be, or (b) such other branch or office of such Bank designated bysuch Bank from time to time as the branch or office at which its EurodollarRate Loans and Eurodollar Rate Drawings are to be made or maintained.

 

“Eurodollar Rate” means, for any Interest Period, an interestrate *per**annum*(rounded upwards, if necessary, to the nearest whole multiple of1/100 of 1%) equal to the rate *per annum*appearingon Telerate Page 3750 (or any successor page) as the London interbankoffered rate for deposits in Dollars at approximately 11:00 A.M. (London,England time) two Business Days prior to the first day of such Interest Periodfor a term comparable to such Interest

 

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Period. If for any reason such rate is not available the EurodollarRate shall be determined by reference to such other comparable publiclyavailable service for displaying Eurodollar Rates as may be selected by theAgent with the consent of the Borrower (such consent not to be unreasonablywithheld) or, in the absence of such availability, the Eurodollar Rate shallbe, for any Interest Period, an interest rate*per annum*(rounded upwards, ifnecessary, to the nearest whole multiple of 1/100 of 1%) equal to the rate*perannum*at which deposits in Dollars are offered to the Agentin the London interbank market at approximately 11:00 A.M. (New York Citytime) two Business Days prior to the first day of such Interest Period in anamount of $1,000,000 and for a period equal to such Interest Period.

 

“Eurodollar Rate Drawing” means any Unreimbursed Drawing theinterest on which is, or is to be, as the context may require, computed on thebasis of the Adjusted Eurodollar Rate.

 

“Eurodollar Rate Loan” means any Loan the interest on which is,or is to be, as the context may require, computed on the basis of the AdjustedEurodollar Rate.

 

“Event of Default” means any of the events specified in Section 8.01.

 

“Existing Credit Facility” means the $35,000,000 CreditAgreement, dated as of April 10, 2001, as amended, among the Borrower, thebanks party thereto, and Union Bank of California, N.A., as Agent.

 

“Extension of Credit” means (i) the making of any Loan, (ii) theissuance of any Letter of Credit, or (iii) the amendment of any Letter ofCredit having the effect of extending the stated expiration date thereof,increasing the LC Outstandings thereunder, or otherwise altering any of thematerial terms or conditions thereof.

 

“Federal Funds Rate” means, for any day, the weighted average ofthe rates on overnight Federal funds transactions with members of the FederalReserve 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) bythe Federal Reserve Bank of New York or, if such rate is not so published forany day that is a Business Day, the average of quotations for such day on suchtransactions received by the Agent from three Federal funds brokers ofrecognized standing selected by the Agent.

 

“Governmental Approval” means any authority, consent, approval,license (or the like) or exemption (or the like) of any governmental unit.

 

“Governmental Registration” means any registration or filing (orthe like) with, or report or notice (or the like) to, any governmental unit.

 

“Increased Total Commitment Amount” means $75,000,000 (or suchlesser amount to which the Commitments may have been reduced pursuant to Section 2.07hereof) *provided*,**thatif as of any Rent Payment Date a PPA Term is in effect and (i) theCoverage Ratio for either of the two semi-annual Rent Payment Periodsimmediately preceding such Rent Payment Date (based on actual operatinghistory) shall be less than 1.7 to 1.0 but greater than 1.6 to 1.0 or the ProForma Coverage Ratio for any of the two semi-annual periods immediately

 

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succeedingsuch Rent Payment Date (based on Pro Forma) shall be less than 1.7 to 1.0 butgreater than 1.6 to 1.0, then until the next Rent Payment Date the TotalCommitment Amount shall equal $69,000,000 so long as clause (ii) is nototherwise applicable or (ii) the Coverage Ratio for either of the twosemi-annual Rent Payment Periods immediately preceding such Rent Payment Date(based on actual operating history) shall be less than 1.6 to 1.0 or the ProForma Coverage Ratio for any of the two semi-annual periods immediatelysucceeding such Rent Payment Date (based on Pro Forma) shall be less than 1.6to 1.0, then until the next Rent Payment Date the Total Commitment Amount shallequal $63,000,000; *provided further*thatif the Total Commitment Amount is less than $75,000,000 (or such lesser amountto which the Commitments may have been reduced pursuant to Section 2.07hereof) by reason of the proviso set forth above, the Borrower shall bepermitted to increase the Total Commitment Amount up to $75,000,000 (or suchlesser amount to which the Commitments may have been reduced pursuant to Section 2.07hereof) by providing cash collateral to the Agent, as Secured Party (with theAgent holding such cash collateral for its benefit and the benefit of theIssuing Bank and the Banks) pursuant to a cash collateral security agreementacceptable to the Agent and the Total Commitment Amount shall be increased bythe amount of cash collateral so provided to the Agent *provided further*thatthe Total Commitment Amount shall in no event exceed $75,000,000 (or suchlesser amount to which the Commitments may have been reduced pursuant to Section 2.07hereof).

 

“Indemnified Person” means any Person that is, or at any time,was, the Agent, a Bank, an Issuing Bank, an Affiliate of the Agent, a Bank oran Issuing Bank, or a director, officer, employee or agent of any such Person.

 

“Independent Engineer” E3 Consulting or such other nationallyrecognized engineering firm reasonably acceptable to the Borrower as the Agentmay designate.

 

“Information” means data, certificates, reports, statements(including financial statements), opinions of counsel, documents and otherinformation.

 

“Insolvency” means, with respect to any Multiemployer Plan, thecondition that such Plan is insolvent within the meaning of Section 4245of ERISA.

 

“Insolvent” means pertaining to a condition of Insolvency.

 

“Insurance Consultant”: Marsh USA, Inc., or such otherinsurance consultant reasonably acceptable to the Borrower as the Agent maydesignate.

 

“Intellectual Property” means (a)(i) patents and patentrights, (ii) trademarks, trademark rights, trade names, trade name rights,corporate names, business names, trade styles, service marks, logos and generalintangibles of like nature and (iii) copyrights, in each case whetherregistered, unregistered or under pending registration and, in the case of anysuch that are registered or under pending registration, whether registered orunder pending registration under the laws of the United States or any othercountry, (b) reissues, continuations, continuations-in-part and extensionsof any Intellectual Property referred to in clause (a), and (c) rightsrelating to any Intellectual Property referred to in clause (a) or (b),including rights

 

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under applications (whether pending under the laws of the United Statesor any other country) or licenses relating thereto.

 

“Interest Payment Date” means each Rent Payment Date and thesecond calendar day of April and October of each year.

 

“Interest Period” means a period commencing, in the case of thefirst Interest Period applicable to a Eurodollar Rate Loan or Eurodollar RateDrawing (as the case may be), on the date of the making of, or conversion into,such Eurodollar Rate Loan or Eurodollar Rate Drawing (as the case may be), and,in the case of each subsequent, successive Interest Period applicable thereto,on the last day of the immediately preceding Interest Period. The duration ofeach Interest Period shall be one, two, three or six months or any other periodless than one month agreed to by the Agent (*provided,*thatthe Borrower may not select an Interest Period of six months in the case of aEurodollar Rate Drawing), as the Borrower may, in accordance with Section 2.02(a),Section 2.03(c) or Section 3.04(e), as applicable, select,except that (a) any Interest Period that would otherwise have a Rent PaymentDate occur during the term of such Interest Period shall end on the day that issuch Rent Payment Date, (b) any Interest Period that would otherwise endon a day that is not a Eurodollar Business Day shall be extended to the nextsucceeding Eurodollar Business Day unless such Eurodollar Business Day falls inanother calendar month, in which case such Interest Period shall end on thenext preceding Eurodollar Business Day, (c) any Interest Period thatbegins on the last Eurodollar Business Day of a calendar month (or on a day forwhich there is no numerically corresponding day in the calendar month in whichsuch Interest Period ends) shall end on the last Eurodollar Business Day of acalendar month, (d) the Borrower may not select any Interest Period that endsafter the Maturity Date, and (e) any Interest Period selected by theBorrower in respect of a Eurodollar Rate Drawing must end on the next-scheduledRent Payment Date following the date of such Eurodollar Rate Drawing.

 

“Issuing Bank” means any Bank designated by the Borrower inaccordance with Section 3.01 as the issuer of a Letter of Credit pursuantto an Issuing Bank Agreement; *provided,*thateach Issuing Bank shall, at the time of such designation, have outstandingunsecured indebtedness that is rated A- or better by S&P and A3 or betterby Moody’s (or an equivalent rating by another nationally-recognized creditrating agency of similar standing if either of such corporations is not then inthe business of rating unsecured indebtedness of entities engaged in suchbusinesses). As of the date hereof, the Borrower has designated Calyon as anIssuing Bank and Calyon has accepted such designation as an Issuing Bank.

 

“Issuing Bank Agreement” means an agreement between an IssuingBank and the Borrower, substantially in the form of Exhibit C orotherwise in form and substance satisfactory to the Agent, providing for theissuance of one or more Letters of Credit.

 

“Issuing Bank’s Fee Letter” means the letter agreement dated thedate hereof between the Borrower and the Issuing Bank.

 

“LC Payment Notice” has the meaning assigned to that term in Section 3.04(b).

 

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“LC Outstandings” means, for any Letter of Credit on any date ofdetermination, the maximum amount available to be drawn under such Letter ofCredit at any time on or after such date (assuming the satisfaction of allconditions for drawing set forth therein).

 

“Lending Office” of any Bank means the Domestic Lending Officeor the Eurodollar Lending Office of such Bank.

 

“Letter of Credit” means any irrevocable standby letter ofcredit, substantially in the form of Exhibit D or otherwise in formand substance satisfactory to the Agent and the Borrower, issued by an IssuingBank pursuant to Section 3.02, with an expiration date not longer than oneyear after the issuance thereof, to support the obligations of the Borrower to (a) purchasersof power from the Borrower’s or its Subsidiaries’ power generating facilitiesand/or (b) third parties in connection with obligations incurred by theBorrower or its Subsidiaries in connection with the use and/or operation of theBorrower’s or its Subsidiaries’ power generating facilities from time to time,as such letter of credit may from time to time be amended, modified or extendedin accordance with the terms of this Agreement and the Issuing Bank Agreementto which it relates.

 

“Liability” of any Person means (in each case, whether with fullor limited recourse) any indebtedness, liability, obligation, covenant or dutyof or binding upon, or any term or condition to be observed by or binding upon,such Person or any of its assets, of any kind, nature or description, direct orindirect, absolute or contingent, due or not due, contractual or tortious,liquidated or unliquidated, whether arising under Contract, Applicable Law, orotherwise, whether now existing or hereafter arising, and whether for thepayment of money or the performance or non-performance of any act.

 

“Lien” means (a) with respect to any property or asset ofany Person, including any investment property, or any income or profitstherefrom, in each case whether the same is consensual or nonconsensual orarises by Contract, operation of law, legal process or otherwise, (i) anymortgage, lien, pledge, attachment, levy or other security interest of any kindthereupon or in respect thereof or (ii) any other arrangement, express orimplied, under which the same is subordinated, transferred, sequestered orotherwise identified so as to subject the same to, or make the same availablefor, the payment or performance of any Liability in priority to the payment ofthe ordinary, unsecured Liabilities of such Person, or (b) in the case ofany investment property, any Contract or other arrangement, express or implied,under which any Person has the right to control such investment property, *provided*that for purposes of thisdefinition the right of the Borrower to direct the investment of such propertyshall not constitute control of such investment property. For the purposes ofthis Agreement, a Person shall be deemed to own subject to a Lien any assetthat it has acquired or holds subject to the interest of a vendor or lessorunder any conditional sale agreement, capital lease or other title retentionagreement relating to such asset.

 

“Loan” means any amount advanced by a Bank pursuant to Section 2.01.

 

“Loan Document Related Claim” means any claim or dispute(whether arising under Applicable Law, including any “environmental” or similarlaw, under Contract or otherwise and, in the case of any proceeding relating toany such claim or dispute, whether civil,

 

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criminal, administrative or otherwise) in any way arising out of,related to, or connected with the Loan Documents, the relationships establishedthereunder or any actions or conduct thereunder or with respect thereto,whether such claim or dispute arises or is asserted before or after theAgreement Date or before or after the Repayment Date.

 

“Loan Document Representation and Warranty” means any “Representationand Warranty” as defined in any Loan Document and any other representation orwarranty made or deemed made under any Loan Document.

 

“Loan Documents” means (a) this Agreement, the Notes, thePledge Agreement, the Issuing Bank Agreement(s), the Agent’s Fee Letter, theIssuing Bank’s Fee Letter and the Depositary Agreement and (b) all otheragreements, documents and instruments relating to, arising out of, or in anyway connected with any agreement, document or instrument referred to in clause (a) towhich the Agent, any Bank or any Issuing Bank and the Borrower, AES or one ormore AEE Entities are parties.

 

“Loan Party” means any Person (other than the Agent, a Bank oran Issuing Bank) that is a party to a Loan Document.

 

“Loan Sublimit” means $35,000,000.

 

“Materially Adverse Effect” means (a) with respect to anyPerson, any materially adverse effect on such Person’s business, assets,Liabilities, financial condition, results of operations or business prospects, (b) withrespect to a group of Persons “taken as a whole,” any materially adverse effecton such Persons’ business, assets, Liabilities, financial conditions, resultsof operations or business prospects taken as a whole on, where appropriate, aconsolidated basis in accordance with GAAP, (c) with respect to any LoanDocument, any adverse effect, in any material respect, on the binding nature,validity or enforceability thereof as an obligation of the Borrower and (d) withrespect to any Collateral, or any category of Collateral, pledged by theBorrower, a materially adverse effect on its value as Collateral or aMaterially Adverse Effect with respect to AEE2, AES Somerset or AES Cayuga orany of such Persons’ utility in the Borrower’s business or an adverse effect,in any material respect, on the validity, perfection, priority orenforceability of the Security Interest therein. Any such adverse effect mayhave occurred, and such an event may have occurred or failed to occur, at anyparticular time notwithstanding the fact that at such time no Default shallhave occurred and be continuing.

 

“Maturity Date” means January 2, 2008 or such later date towhich the Maturity Date is extended in accordance with Section 2.15

 

“Maximum Permissible Rate” means, with respect to interestpayable on any amount, the rate of interest on such amount that, if exceeded,could, under Applicable Law, result in (a) civil or criminal penaltiesbeing imposed on the payee or (b) the payee’s being unable to enforcepayment of (or, if collected, to retain) all or any part of such amount or theinterest payable thereon.

 

“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) ofERISA, that is subject to Title IV of ERISA and to which the Borrower or any ofits ERISA Affiliates is making or accruing an obligation to make contributions,or has

 

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within any of the preceding five plan years made oraccrued an obligation to make contributions, such plan being maintained pursuantto one or more collective bargaining agreements.

 

“Multiple Employer Plan” means a single employer plan, asdefined in Section 4001(a)(15) of ERISA, that is subject to Title IV ofERISA and that (i) is maintained for employees of the Borrower or any ofits ERISA Affiliates and at least one Person other than the Borrower and itsERISA Affiliates, or (ii) was so maintained and in respect of which theBorrower or any of its ERISA Affiliates could have liability under Section 4064or 4069 of ERISA in the event such plan has been or were to be terminated.

 

“Non-US Bank” means a Person that is not a United States Personand that is not described in Section 881(c)(3) of the Code.

 

“Note” means any Note in the form of Exhibit A.

 

“Notice of Assignment” means any notice to the Borrower and theAgent with respect to an assignment pursuant to Section 11.09(a) inthe form of Schedule 11.09(a).

 

“NYPSC Order” means the order from the New York Public ServiceCommission approving working capital facility financing for the Borrower of upto $75 million under Section 69 of the Public Service Law.

 

“PBGC” means the Pension Benefit Guaranty Corporation (or anysuccessor entity) established under ERISA.

 

“Percentage” means, as to any Bank, the percentage set forthopposite such Bank’s name on Annex A under the heading “CommitmentPercentage”, as the same may from time to time be modified or amended inaccordance with the terms of Section 11.09 hereof or otherwise inaccordance with the terms hereof.

 

“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.

 

“Pledge Agreement” means the Amended and Restated LLC MembershipInterest Pledge Agreement to be entered into on the Agreement Date, between theBorrower and the Agent, as Secured Party, substantially in the form of Exhibit B.

 

“Post-Default Rate” means a rate*per annum*equalat all times to the higher of (i) the Base Rate in effect from time to time*plus*the Applicable Margin for Base Rate Loans *plus*2.0% or (ii) the rate otherwiseapplicable under Section 2.03(a)(i) *plus*2.0%.

 

“Prime Rate” means the rate of interest *per annum*publicly announced from time totime by the Agent as its prime commercial lending rate in effect at itsprincipal office in New York, New York (it being acknowledged that the primerate may not necessarily be the lowest rate of interest charged by the Agent inconnection with extensions of credit to debtors).

 

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“Public Service Law” means the New York Public Service Law.

 

“Register” means a register kept at the Agent’s office by theAgent on behalf of the Borrower, at no extra charge to the Borrower, on whichthe Agent records the names of the Registered Holders of Registered Notes.

 

“Registered Holder” means the Person in whose name a RegisteredNote is registered.

 

“Registered Note” means a Note payable to any Person whose namehas been recorded on the Register by the Agent as the holder of such Note. Theregistration of a Note shall constitute the registration of any Loan andUnreimbursed Drawing evidenced thereby.

 

“Regulation D” means Regulation D of the Board of Governors ofthe Federal Reserve System.

 

“Regulation U” means Regulation U of the Board of Governors ofthe Federal Reserve System.

 

“Regulation X” means Regulation X of the Board of Governors ofthe Federal Reserve System.

 

“Regulatory Change” means any Applicable Law, interpretation,directive, determination, request or guideline (whether or not having the forceof law), or any change therein or in the administration or enforcement thereof,that is Enacted after the Agreement Date, including any such that imposes,increases or modifies any Tax, reserve requirement, insurance charge, specialdeposit requirement, assessment or capital adequacy requirement, but excludingany such that imposes, increases or modifies any Bank Tax.

 

“Reorganization” means, with respect to any Multiemployer Plan,the condition that such Plan is in reorganization within the meaning of Section 4241of ERISA.

 

“Repayment Date” means the later to occur of (a) thetermination of the Commitments (whether as a result of the occurrence of theMaturity Date, termination pursuant to Section 2.07, or terminationpursuant to Section 8.02) and (b) the payment in full in cash of theLoans, any Unreimbursed Drawings and all other amounts payable or accrued underthe Loan Documents and the termination or expiration of all Letters of Credit.

 

“Reportable Event” means any of the events set forth in Section 4043(c) ofERISA, other than those events as to which notice is waived by the PBGCpursuant to the regulations issued under Section 4043 of ERISA.

 

“Representation and Warranty” means any representation orwarranty made pursuant to or under (a) Section 4.03, Article 5, Section 7.02or any other provision of this Agreement or (b) any amendment to, orwaiver of rights under, this Agreement, WHETHER OR NOT, IN THE CASE OF ANYREPRESENTATION OR WARRANTY REFERRED TO IN CLAUSE (a) OR (b) OF THISDEFINITION (EXCEPT, IN EACH CASE, TO THE EXTENT

 

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OTHERWISE EXPRESSLY PROVIDED), THE INFORMATION THAT IS THE SUBJECTMATTER THEREOF IS WITHIN THE KNOWLEDGE OF THE BORROWER.

 

“Request for Issuance” has the meaning assigned to that term in Section 3.02(a).

 

“Required Banks” means, on any date of determination, Banksthat, collectively, on such date (i) hold at least 51% of the thenaggregate outstanding principal amount of the Loans and Unreimbursed Drawingsowing to Banks and (ii) if no Loans or Unreimbursed Drawings are thenoutstanding, have Percentages in the aggregate of at least 51%. Anydetermination of those Banks constituting the Required Banks shall be made bythe Agent and shall be conclusive and binding on all parties absent manifesterror.

 

“Reserve Requirement” means, at any time, the then currentmaximum rate for which reserves (including any marginal, special, supplementalor emergency reserve) are required to be maintained under Regulation D bymember banks of the Federal Reserve System in New York City with depositsexceeding five billion Dollars against “Eurocurrency liabilities,” as that termis used in Regulation D. The Adjusted Eurodollar Rate shall be adjustedautomatically on and as of the effective date of any change in the ReserveRequirement.

 

“Secured Party” has the meaning ascribed to such term in thePledge Agreement.

 

“Security Interest” means the Liens created, or purported to becreated, by the Loan Documents.

 

“Single Employer Plan” means a single employer plan, as definedin Section 4001(a)(15) of ERISA, which is subject to Title IV of ERISA andwhich (i) is maintained for employees of the Borrower or any of its ERISAAffiliates and no Person other than the Borrower and its ERISA Affiliates, or (ii) wasso maintained and in respect of which the Borrower or any of its ERISAAffiliates could have liability under Section 4069 of ERISA in the eventsuch plan has been or were to be terminated.

 

“Subsidiary” means, with respect to any Person at any time, (a) anyother Person the accounts of which would be consolidated with those of suchfirst Person in its consolidated financial statements as of such time, and (b) anyother Person (i) that is, at such time, Controlled by, or (ii) securitiesof which having ordinary voting power to elect a majority of the board ofdirectors (or other persons having similar functions), or other ownershipinterests of which ordinarily constituting a majority voting interest, are atsuch time, directly or indirectly, owned or controlled by, such first Person,or by such first Person and one or more of its Subsidiaries; unless otherwisespecified, “Subsidiary” means a Subsidiary of the Borrower.

 

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

 

“Total Commitment Amount” means, (A) for the periodcommencing on the Agreement Date until the Commitment Increase Date,$35,000,000 and (B) for the period commencing on the Commitment IncreaseDate and thereafter, the Increased Total Commitment Amount.

 

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“Type” means, with respect to Loans, any of the following, eachof which shall be deemed to be a different “Type” of Loan: Base Rate Loans andEurodollar Rate Loans.

 

“Unavailable Commitment Amount” means, as to any Bank at anytime after the Commitment Increase Date, the product obtained by multiplying (a) suchBank’s Percentage *times*(b) theamount by which $75,000,000 (or such lesser amount to which the Commitments mayhave been reduced pursuant to Section 2.07 hereof) exceeds the TotalCommitment Amount at such time.

 

“Uniform Commercial Code” means the Uniform Commercial Code asin effect from time to time in the State of New York.

 

“United States Person”means a corporation, partnership or other Person created, organized orincorporated under the laws of the United States of America or a State thereof(including the District of Columbia).

 

“Unreimbursed Drawing” means any drawing under a Letter ofCredit that has not yet been reimbursed by the Borrower to (i) the IssuingBank that paid such drawing or (ii) if such Issuing Bank has beenreimbursed for such drawing by the Banks pursuant to Section 3.03, theBanks.

 

“Unsecured Amount” means, as to any Bank at any date ofdetermination after the Commitment Increase Date, the product obtained bymultiplying (a) such Bank’s Percentage *times*(b) the amount by which (x) the sum of the Loans, LCOutstandings and Unreimbursed Drawings then outstanding exceeds (y)$50,000,000. The Unsecured Amount shall never be less than $0.

 

“Upfront Fee” has the meaning set forth in the Agent’s FeeLetter.

 

Section 1.02.                             Other Interpretive Provisions. (a) Except as otherwise specifiedherein, all references herein (i) to any Person shall be deemed to includesuch Person’s successors and assigns, (ii) to any Applicable Law definedor referred to herein shall be deemed references to such Applicable Law or anysuccessor Applicable Law as the same may have been or may be amended orsupplemented from time to time and (iii) to any Loan Document or Contract(other than each of the Leases and each of the Participation Agreements,including Appendix A thereto) defined or referred to herein shall be deemedreferences to such Loan Document or Contract (and, in the case of any Note orany other instrument, any instrument issued in substitution therefor) as theterms thereof may have been or may be amended, supplemented, restated, waivedor otherwise modified from time to time (subject to any restrictions on suchamendments, supplements, restatements, waivers or modifications set forthherein or therein).

 

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

 

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(c)                                  Whenever the context so requires, the neutergender includes the masculine or feminine, the masculine gender includes thefeminine, and the singular number includes the plural, and vice versa.

 

(d)                                 Any item or list of items set forth followingthe word “including,” “include” or “includes” is set forth only for the purposeof indicating that, regardless of whatever other items are in the category inwhich such item or items are “included,” such item or items are in such category,and shall not be construed as indicating that the items in the category inwhich such item or items are “included” are limited to such items or to itemssimilar to such items.

 

(e)                                  Each authorization in favor of the Agent, theBanks, any Issuing Bank or any other Person granted by or pursuant to thisAgreement shall be deemed to be irrevocable and coupled with an interest.

 

(f)                                    Except as otherwise specified herein, allreferences herein to the Agent, any Bank, any Issuing Bank or the Borrowershall be deemed to refer to such Person however designated in Loan Documents,so that (i) a reference to rights or duties of the Agent under the Loan Documentsshall be deemed to include the rights or duties of such Person as the SecuredParty under the Pledge Agreement, (ii) a reference to costs incurred by aBank or an Issuing Bank in connection with the Loan Documents shall be deemedto include costs incurred by such Person as a “Principal” under the PledgeAgreement and (iii) a reference to the obligations of the Borrower underthe Loan Documents shall be deemed to include the obligations of such Person asthe “Pledgor” under the Pledge Agreement.

 

(g)                                 Except as otherwise specified herein, allreferences to the time of day shall be deemed to be to New York, New York timeas then in effect.

 

(h)                                 Except where the context clearly indicates adifferent meaning, all terms defined in Article 1, 8 or 9 of the UniformCommercial Code, as such definitions may be amended from time to time, are usedherein with the meanings therein ascribed to them.

 

Section 1.03.                             Accounting Matters. Unless otherwise specified herein, allaccounting determinations hereunder and all computations utilized by theBorrower in complying with the covenants contained herein shall be made, allaccounting terms used herein shall be interpreted, and all financial statementsrequired to be delivered hereunder shall be prepared, in accordance with GAAP,except, in the case of such financial statements, for departures from GAAP thatmay from time to time be approved in writing by the independent certifiedpublic accountants who are at the time, in accordance with Section 7.02(b),reporting on the Borrower’s financial statements.

 

Section 1.04.                             Representations and Warranties. All Representations and Warranties shall bedeemed made (a) in the case of any Representation and Warranty containedin this Agreement, at the time of its initial execution and delivery, exceptwhere otherwise stated therein at and as of the Agreement Date, (b) in thecase of any Representation and Warranty contained in this Agreement or anyother document, at the time any Extension of Credit is made, except whereotherwise stated therein at and as of such time and (c) in the case of anyparticular Representation and Warranty, wherever contained, at such other timeor times as such Representation and Warranty is made or deemed made inaccordance with the provisions of this

 

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Agreement or the document pursuant to, under or in connection withwhich such Representation and Warranty is made or deemed made.

 

Section 1.05.                             Captions.  Captions to Articles, Sectionsand subsections of, and Annexes, Schedules and Exhibits to, this Agreement areincluded for convenience of reference only and shall not constitute a part ofthis Agreement for any other purpose or in any way affect the meaning orconstruction of any provision of this Agreement.

 

Section 1.06.                             Interpretation of Related Documents.  Exceptas otherwise specified therein, terms that are defined herein that are used inNotes, certificates, opinions and other documents delivered in connectionherewith shall have the meanings ascribed to them herein and such documentsshall be otherwise interpreted in accordance with the provisions of this Article 1.

 

ARTICLE 2

 

LOAN FACILITY; COMPUTATIONS

 

Section 2.01.                             Commitment to Lend.  Uponthe terms and subject to the conditions of this Agreement, each Bank agrees tomake, from time to time during the period from the Agreement Date through theMaturity Date, one or more Loans to the Borrower in an aggregate principalamount at any one time outstanding which, when added to the sum of such Bank’sPercentage of the LC Outstandings and such Bank’s Unreimbursed Drawings, doesnot exceed the amount of such Bank’s Commitment at such time provided, that inno event, shall the aggregate principal amount of the Loans outstandinghereunder exceed the Loan Sublimit. Subject to Section 2.06 and the otherterms and conditions of this Agreement, the Loans may, at the option of theBorrower, be made as, and from time to time continued as or converted into,Base Rate Loans or Eurodollar Rate Loans, or any combination thereof. Upon theterms and subject to the conditions of this Agreement, the Borrower may borrow,pay or prepay and reborrow Loans.

 

Section 2.02.                             Manner of Borrowing.  (a) TheBorrower shall give the Agent notice (which shall be irrevocable) no later than11:00 A.M. on, in the case of Base Rate Loans, the Business Day before therequested date for the making of such Loans, and, in the case of Eurodollar RateLoans, the third Eurodollar Business Day before the requested date for themaking of such Loans. Each such notice shall be in the form of Schedule 2.02and shall specify (i) the requested date for the making of the requestedLoans, which (x) shall be, in the case of Base Rate Loans, a Business Day and,in the case of Eurodollar Rate Loans, a Eurodollar Business Day and (y) shallnot be a day during a Clean-Up Period, (ii) the Type or Types of Loansrequested, (iii) the amount of each such Type of Loan, and (iv) theInterest Period, if any, for such Loans. Upon receipt of any such notice, theAgent shall promptly notify each Bank of the contents thereof and of the amountand Type of each Loan to be made by such Bank on the requested date specifiedtherein.

 

(b)                                 Not later than 12:00 noon on each requesteddate for the making of Loans, each Bank shall, if it has received the noticecontemplated by Section 2.02(a) on or prior to its close of businesson, in the case of Base Rate Loans, the Business Day, and, in the case ofEurodollar Rate Loans, the third Eurodollar Business Day, before such date,make available to the Agent, in Dollars in funds immediately available to theAgent at the Agent’s Office, the Loans to be made

 

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by such Bank on such date. Any Bank’s failure to make any Loan to bemade by it on the requested date therefor shall not relieve any other Bank ofits obligation to make any Loan to be made by such other Bank on such date, butsuch other Bank shall not be liable for such failure.

 

(c)                                  Unless the Agent shall have received noticefrom a Bank prior to 10:00 A.M. on the requested date for the making ofany Loans that such Bank will not make available to the Agent the Loansrequested to be made by such Bank on such date, the Agent may assume that suchBank has made such Loans available to the Agent on such date in accordance withSection 2.02(b) and the Agent in its sole discretion may, in relianceupon such assumption, make available to the Borrower on such date acorresponding amount on behalf of such Bank. If and to the extent such Bankshall not have so made available to the Agent the Loans requested to be made bysuch Bank on such date and the Agent shall have so made available to theBorrower a corresponding amount on behalf of such Bank, such Bank shall, ondemand, pay to the Agent such corresponding amount together with interestthereon, for each day from the date such amount shall have been so madeavailable by the Agent to the Borrower until the date such amount shall havebeen repaid to the Agent, at the Federal Funds Rate until (and including) the thirdBusiness Day after demand is made and thereafter at the Base Rate. If such Bankdoes not pay such corresponding amount promptly upon the Agent’s demandtherefor, the Agent may notify the Borrower and the Borrower shall immediatelyrepay such corresponding amount to the Agent together with accrued interestthereon at the applicable rate or rates provided in Section 2.03.

 

(d)                                 All Loans made available to the Agent inaccordance with Section 2.02(b) shall be disbursed by the Agent notlater than 1:00 P.M. on the requested date therefor in Dollars in funds immediatelyavailable to the Borrower by credit to an account of the Borrower at the Agent’sOffice or in such other manner as may have been specified in the applicablenotice and as shall be acceptable to the Agent. Notwithstanding the foregoingor any other provision contained herein, the proceeds of all Loans madeavailable to the Agent shall be deposited directly by the Agent or, to theextent received by the Borrower, by the Borrower into the Revenue Account pursuantto Section 3.1(a) of the Depositary Agreement.

 

Section 2.03.                             Interest.  (a) Rates. (i) Subject to Section 2.03(a)(ii),(A) each Loan shall bear interest on the outstanding principal amountthereof at a rate *per annum*equalto (1) so long as it is a Base Rate Loan, the Base Rate as in effect fromtime to time*plus*the Applicable Margin and (2) so long asit is a Eurodollar Rate Loan, the applicable Adjusted Eurodollar Rate*plus*the Applicable Margin and (B) except as otherwiseprovided herein or in any other Loan Document, each other amount due andpayable under the Loan Documents shall, to the maximum extent permitted byApplicable Law, bear interest at a rate*per annum*equal to the Base Rateas in effect from time to time *plus*theApplicable Margin.

 

(ii)                                  Upon the occurrence and during thecontinuance of an Event of Default (and whether before or after judgment), eachLoan (whether or not due) and, to the maximum extent permitted by ApplicableLaw, each other amount due and payable under the Loan Documents shall bearinterest at a rate *per annum*equal to the applicablePost-Default Rate.

 

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(b)                                 Payment.  Interestshall be payable (i) in the case of Base Rate Loans, on each InterestPayment Date, (ii) in the case of Eurodollar Rate Loans, on the last dayof each applicable Interest Period and, if such Interest Period has a durationof more than three months, on that day of each third month during such InterestPeriod that corresponds to the first day of such Interest Period (or, if anysuch month does not have a corresponding day, then on the last day of suchmonth), (iii) in the case of each Loan, when such Loan shall be due(whether at maturity, by reason of notice of prepayment or acceleration orotherwise) or converted, but only to the extent then accrued on the amount thenso due or converted, and (iv) in the case of all other amounts due andpayable under the Loan Documents (other than amounts payable pursuant to Article 3),on demand. Except as otherwise provided in Article 3, interest at thePost-Default Rate shall be payable on demand.

 

(c)                                  Conversionand Continuation.  (i) Allor any part of the principal amount of Loans of any Type may, on any BusinessDay, be converted into any other Type or Types of Loans, except that (A) EurodollarRate Loans may be converted only on the last day of an applicable InterestPeriod and (B) Base Rate Loans may be converted into Eurodollar Rate Loansonly on a Eurodollar Business Day.

 

(ii)                                  Base Rate Loans shall continue as Base RateLoans unless and until such Loans are converted into Loans of another Type.Eurodollar Rate Loans shall continue as Loans of such Type until the end of thethen current Interest Period therefor, at which time they shall beautomatically converted into Base Rate Loans unless the Borrower shall havegiven the Agent notice in accordance with Section 2.03(c)(iv) requestingeither that such Loans continue as Loans of such Type for another InterestPeriod or that such Loans be converted into Loans of another Type at the end ofsuch Interest Period.

 

(iii)                               Notwithstanding anything to the contrarycontained in Section 2.03(c)(i) or (ii), upon the occurrence andduring the continuance of any Default, the Agent may notify the Borrower thatLoans may only be converted into or continued as Loans of certain specifiedTypes and, thereafter, until such Default no longer exists, Loans may not beconverted into or continued as Loans of any Type other than one or more of suchspecified Types.

 

(iv)                              The Borrower shall give the Agent notice(which shall be irrevocable) of each conversion of Loans or continuation ofEurodollar Rate Loans no later than 10:00 A.M. on, in the case of aconversion into Base Rate Loans, the Business Day, and, in the case of aconversion into or continuation of Eurodollar Rate Loans, the third EurodollarBusiness Day, before the requested date of such conversion or continuation.Each notice of conversion or continuation shall be in the form of Schedule 2.03(c)(iv) andshall specify (A) the requested date of such conversion or continuation, (B) theamount and Type and, in the case of Eurodollar Rate Loans, the last day of theapplicable Interest Period of the Loans to be converted or continued, (C) theamount and Type or Types of Loans into which such Loans are to be converted oras which such Loans are to be continued, and (D) the requested initialInterest Period, if any, to be applicable to the Loans resulting from suchconversion or continuation. Upon receipt of any

 

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such notice, the Agent shall promptly notify each Bank of (1) thecontents thereof, (2) the amount and Type and, in the case of EurodollarRate Loans, the last day of the applicable Interest Period of each Loan to beconverted or continued by such Bank, (3) the amount and Type or Types ofLoans into which such Loans are to be converted or as which such Loans are tobe continued, and (4) the Interest Period, if any, to be applicable to theLoans resulting from such conversion or continuation.

 

(d)                                 MaximumInterest Rate. Nothing contained in the Loan Documentsshall require the Borrower at any time to pay interest at a rate exceeding theMaximum Permissible Rate. If interest payable by the Borrower on any date wouldexceed the maximum amount permitted by the Maximum Permissible Rate, suchinterest payment shall automatically be reduced to such maximum permittedamount, and interest for any subsequent period, to the extent less than themaximum amount permitted for such period by the Maximum Permissible Rate shallbe increased by the unpaid amount of such reduction. Any interest actuallyreceived for any period in excess of such maximum amount permitted for suchperiod shall be deemed to have been applied as a prepayment of the Loans.

 

Section 2.04.                             Repayment. The Loans shall mature and become due and payable, and shall berepaid by the Borrower, in full on the Maturity Date.

 

Section 2.05.                             Prepayments.

 

(a)                                  OptionalPayments. The Borrower may, at any time and from timeto time, prepay the Loans in whole or in part, without premium or penalty (butsubject to Section 9.04), except that any partial prepayment shall be inan aggregate principal amount of at least $1,000,000. Under the terms andsubject to the conditions of this Agreement, the Borrower may reborrow amountsthat have been prepaid. The Borrower shall give the Agent notice of each prepaymentno later than 10:00 A.M. on, in the case of a prepayment of Base RateLoans, the Business Day, and, in the case of a prepayment of Eurodollar RateLoans, the third Eurodollar Business Day, before the date of such prepayment.Each such notice of prepayment shall be in the form of Schedule 2.05(a) andshall specify (i) the date such prepayment is to be made and (ii) theamount and Type and, in the case of Eurodollar Rate Loans, the last day of theapplicable Interest Period of the Loans to be prepaid. Upon receipt of any suchnotice, the Agent shall promptly notify each Bank of the contents thereof andthe amount and Type and, in the case of Eurodollar Rate Loans, the last day ofthe applicable Interest Period of each Loan of such Bank to be prepaid. Amountsto be prepaid shall irrevocably be due and payable on the date specified in theapplicable notice of prepayment, together with interest thereon as provided in Section 2.03(b).

 

(b)                                 Commitment Reduction Mandatory Prepayments. On the date of any termination or reduction of the Commitmentspursuant to Section 2.07, the Borrower shall pay or prepay so much of theLoans and Unreimbursed Drawings outstanding hereunder as shall be necessary in orderthat the sum of (x) the principal amount of the Loans outstanding, (y) the UnreimbursedDrawings and (z) the LC Outstandings (after giving effect to all Extensions ofCredit to be made on such date and the application of the proceeds thereof)will not exceed the Commitments following such termination or reduction,together with (i) accrued interest to the date of such

 

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prepaymenton the principal amount prepaid and (ii) in the case of prepayments ofEurodollar Rate Loans, any amount payable to the Banks pursuant to Section 9.04.Any prepayments required by this subsection (b) shall be applied tooutstanding Base Rate Loans up to the full amount thereof before they areapplied to outstanding Eurodollar Rate Loans.

 

(c)                                  Clean-Up Period Mandatory Prepayments. The Borrower shall prepay in whole allLoans on the Business Day immediately preceding each Clean-Up Period. TheBorrower shall, not later than the first day of each Clean-Up Period, notifythe Agent of the commencement of such Clean-Up Period. Each such notice of thecommencement of a Clean- Up Period shall be in the form of Schedule 2.05(c) andshall specify the commencement date of such Clean-Up Period.

 

(d)                                 Rent Payment Date Mandatory Prepayments. The Borrower shall prepay in whole allLoans outstanding immediately prior to making any payment of Rent, other thanany payment of Rent made solely with amounts drawn under Rent Reserve AccountPayment Undertaking Agreements, and shall not borrow hereunder on the date onwhich any payment of Rent shall be made.

 

(e)                                  Total Commitment Amount Reduction Mandatory Prepayments/Cash Collateralization. If as of any Rent Payment Date when a PPATerm is in effect the sum of (i) the principal amount of the Loansoutstanding, (ii) the Unreimbursed Drawings and (iii) the LCOutstandings exceeds the Total Commitment Amount as of such Rent Payment Date(the amount of such excess, the “Overdrawn Amount”), the Borrower shallpay to the Agent on such Rent Payment Date an amount equal to the OverdrawnAmount to be applied by the Agent (at the Borrower’s direction) to the paymentor prepayment of the Loans outstanding and/or Unreimbursed Drawings outstandinghereunder and/or the cash collateralization of the LC Outstandings (with theAgent holding such cash collateral for its benefit and the benefit of the IssuingBanks and the Banks) as contemplated in the definition of Increased TotalCommitment Amount. Any prepayment of the principal amount hereunder shall alsoinclude (x) accrued interest to the date of such prepayment on the principalamount prepaid and (y) in the case of prepayments of Eurodollar Rate Loans, anyamount payable to the Banks pursuant to Section 9.04. Any prepayments madeunder this subsection (e) shall be applied to outstanding Base RateLoans up to the full amount thereof before they are applied to outstandingEurodollar Rate Loans.

 

Section 2.06.                             Limitation on Types of Loans. Notwithstanding anything to the contrarycontained in this Agreement, the Borrower shall borrow, prepay, convert andcontinue Loans in a manner such that (a) the aggregate principal amount ofEurodollar Rate Loans having the same Interest Period shall at all times be notless than $5,000,000, (b) there shall not be, at any one time, more thanfive Interest Periods in effect with respect to Eurodollar Rate Loans and (c) eachBase Rate Loan shall be in a principal amount of not less than $1,000,000.

 

Section 2.07.                             Termination or Reduction of Commitments. The Borrower may terminate in whole orreduce in part the Commitments by giving the Agent notice (which shall be irrevocable)thereof no later than 10:00 A.M. on the third Business Day before therequested date of such termination or reduction; *provided,*that (a) in the case of a termination of theCommitments, no Loans, Letters of Credit or Unreimbursed Drawings are outstandingat the

 

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time of such termination, and (b) in the case of any reduction ofthe Commitments, (i) such reduction shall apply ratably among the Banks, (ii) suchreduction shall be in an aggregate amount not less than $1,000,000 and (iii) theCommitments shall in no event be reduced to an amount which is less than thesum of (A) the aggregate LC Outstandings on the date of such reduction and(B) the aggregate principal amount of Unreimbursed Drawings on the date ofsuch reduction. Upon receipt of any such notice, the Agent shall promptlynotify each Bank of the contents thereof and, if applicable, the amount towhich such Bank’s Commitment is to be irrevocably reduced. Once terminated orreduced, the Commitments may not be increased by the Borrower at any timethereafter.

 

Section 2.08.                             Fees. (a) Commitment Fees. TheBorrower shall pay to the Agent for the account of each Bank a commitment feeon the average daily amount of such Bank’s Available Commitment for each dayfrom the Agreement Date through (but excluding) the Maturity Date at a rate*perannum*of 0.50%, payable quarterly in arrears on each InterestPayment Date, on the Maturity Date and on the date of any termination of suchBank’s Commitment. In addition, commencing on the Commitment Increase Date andthereafter, the Borrower shall pay to the Agent for the account of each Bank asupplemental commitment fee on the average daily amount of such Bank’sUnavailable Commitment Amount for each day from the Agreement Date through (butexcluding) the Maturity Date at a rate*per annum*of 0.25% payablequarterly in arrears on each Interest Payment Date, on the Maturity Date and onthe date of any termination of such Bank’s Commitment.

 

(b)                                 Letter ofCredit Fees. The Borrower shall pay to the Agent for theaccount of each Bank a letter of credit fee on the average daily aggregateamount of the LC Outstandings for each day from the Agreement Date through (butexcluding) the Maturity Date at a rate*per annum*equal to theApplicable Margin then in effect with respect to Eurodollar Rate Loans (*provided,however,* that upon the occurrence and during the continuanceof an Event of Default, such rate shall increase to the Applicable Margin thenin effect with respect to Eurodollar Rate Loans *plus*2.0%), payable quarterly in arrears on each InterestPayment Date, on the MaturityDate and on the date of any termination of such Bank’s Commitment.

 

(c)                                  Agency Fees.The Borrower shall pay to the Agent, for its own account, the fees payable toit under the Agent’s Fee Letter, in the amounts and at the times specifiedtherein.

 

(d)                                Fronting Fees. The Borrower shall pay to the Issuing Bank, for its own account, thefees payable to it under the Issuing Bank Fee Letter, in the amounts and at thetimes specified therein.

 

(e)                                  Supplemental Fees for Utilizations over $50,000,000. The Borrower shall pay to the Agent for theaccount of each Bank a supplemental fee on the average daily amount of such Bank’sUnsecured Amount, if any, for each day from the Agreement Date through (but excluding)the Maturity Date at a rate *per annum*equal to 0.50% from theAgreement Date until the second anniversary of the Agreement Date and at a rate *perannum*of 0.25% thereafter, payable quarterly in arrears oneach Interest Payment Date, on the Maturity Date and on the date of anytermination of such Bank’s Commitment.

 

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(f)                                    FeesNon-Refundable.  Noneof the fees payable under this Section 2.08 shall be refundable in wholeor in part.

 

(g)                                 Survival.  Without prejudice to thesurvival of any other agreement of the Borrower hereunder, the agreements andobligations of the Borrower contained in this Section 2.08 shall survivethe repayment of all other amounts owing to the Agent and the Banks under theLoan Documents and the termination of the Commitments.

 

Section 2.09.                             Computation of Interest and Fees.  Interest calculated on the basis of theAdjusted Eurodollar Rate or the Federal Funds Rate and all fees payablehereunder shall be computed on the basis of a year of 360 days and paid for theactual number of days elapsed. Interest calculated on the basis of the PrimeRate shall be computed on the basis of a year of 365 or 366 days, asapplicable, and paid for the actual number of days elapsed. Interest for anyperiod shall be calculated from and including the first day thereof to butexcluding the last day thereof.

 

Section 2.10.                             Evidence of Indebtedness.  EachBank’s Loans and Unreimbursed Drawings and the Borrower’s obligation to repaysuch Loans and Unreimbursed Drawings with interest in accordance with the termsof this Agreement shall be evidenced by this Agreement, the records of suchBank and a single Note payable to the order of such Bank which, subject to Section 11.22,may be a Registered Note. The records of each Bank shall be *prima facie*evidence of such Bank’s Loans,Unreimbursed Drawings and accrued interest thereon and of all payments made inrespect thereof.

 

Section 2.11.                             Payments by the Borrower.  (a) Time, Place and Manner. Allpayments due to the Agent, the Banks or the Issuing Banks under the LoanDocuments shall be made to the Agent at the Agent’s Office or to such otherPerson or at such other address as the Agent may designate by written notice tothe Borrower. All payments due to any Bank under the Loan Documents, whethermade to the Agent or directly to such Bank, shall be made for the account of,in the case of payments in respect of Eurodollar Rate Loans and Eurodollar RateDrawings, such Bank’s Eurodollar Lending Office and, in the case of all otherpayments, such Bank’s Domestic Lending Office. A payment shall not be deemed tohave been made on any day unless such payment has been received by the requiredPerson, at the required place of payment, in Dollars in funds immediatelyavailable to such Person at such place, no later than 12:00 noon on such day.

 

(b)                                 No Reductions.  All payments due to the Agent,any Bank or any Issuing Bank under the Loan Documents, and all other terms,conditions, covenants and agreements to be observed and performed by theBorrower hereunder, shall be made, observed or performed by the Borrowerwithout any reduction or deduction whatsoever, including any reduction or deductionfor any set-off, recumbent, counterclaim (whether sounding in tort, contract orotherwise) or Tax, except, subject to Section 2.13, for any withholding ordeduction for Taxes required to be withheld or deducted under Applicable Law.

 

(c)                                  Extensionof Payment Dates.  Wheneverany payment to the Agent, any Bank or any Issuing Bank under the Loan Documentswould otherwise be due (except by reason of acceleration) on a day that is nota Business Day, or, in the case of payments of the principal of

 

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Eurodollar Rate Loans, a Eurodollar Business Day, such payment shallinstead be due on the next succeeding Business Day or Eurodollar Business Day,as the case may be, unless, in the case of a payment of the principal ofEurodollar Rate Loans, such extension would cause payment to be due in the nextsucceeding calendar month, in which case such due date shall be advanced to thenext preceding Eurodollar Business Day. If the date any payment under the LoanDocuments is due is extended (whether by operation of any Loan Document,Applicable Law or otherwise), such payment shall bear interest for suchextended time at the rate of interest applicable hereunder.

 

Section 2.12.                             Distribution of Payments by the Agent.  (a) TheAgent shall promptly distribute to each Bank its ratable share of each paymentreceived by the Agent under the Loan Documents for the account of the Banks bycredit to an account of such Bank at the Agent’s Office or by wire transfer toan account of such Bank at an office of any other commercial bank located inthe United States.

 

(b)                                 Unless the Agent shall have received noticefrom the Borrower prior to the date on which any payment is due to the Banksunder the Loan Documents that the Borrower will not make such payment in full,the Agent may assume that the Borrower has made such payment in full to theAgent on such date and the Agent in its sole discretion may, in reliance uponsuch assumption, cause to be distributed to each Bank on such due date acorresponding amount with respect to the amount then due such Bank. If and tothe extent the Borrower shall not have so made such payment in full to theAgent and the Agent shall have so distributed to any Bank a correspondingamount, such Bank shall, on demand, repay to the Agent the amount sodistributed together with interest thereon, for each day from the date suchamount is distributed to such Bank until the date such Bank repays such amountto the Agent, at the Federal Funds Rate until (and including) the thirdBusiness Day after demand is made and thereafter at the Base Rate. Nothing inthis Section 2.12 shall be deemed to limit the rights of the Agent or anyBank against the Borrower with respect to any such payment that has not beenpaid in full by the Borrower.

 

Section 2.13.                             Taxes

 

(a)                                  Taxes Payable by the Borrower.  Ifunder Applicable Law any Tax is required to be withheld or deducted by theBorrower from, or is otherwise payable by the Borrower in connection with, anypayment to the Agent, any Bank or any Issuing Bank under the Loan Documents,the Borrower (I) shall (A) if so required, withhold or deduct theamount of such Tax from such payment and, in any case, pay such Tax to theappropriate taxing authority in accordance with Applicable Law and (B) indemnifythe Agent, such Bank and such Issuing Bank in accordance with the provisions ofSection 11.02(d) against its failure so to do and (ii) shall,subject to Section 2.13(c), pay to the Agent, such Bank or such IssuingBank, as applicable, such additional amounts as may be necessary so that thenet amount received by the Agent, such Bank or such Issuing Bank with respectto such payment, after withholding or deducting all Taxes required to bewithheld or deducted by the Borrower, is equal to the full amount payable underthe Loan Documents. If any Tax is withheld or deducted by the Borrower from, oris otherwise payable by the Borrower in connection with, any payment payable tothe Agent, any Bank or any Issuing Bank under the Loan Documents, the Borrowershall, as soon as possible after the date of such payment, furnish to theAgent, such Bank or such Issuing Bank, as applicable, the original

 

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or a certified copy of a receipt for such Tax from the applicabletaxing authority. If any payment due to the Agent, any Bank or any Issuing Bankunder the Loan Documents is or is expected to be made without withholding ordeducting therefrom, or otherwise paying in connection therewith, any Taxpayable by the Borrower to any taxing authority, the Borrower shall, within 30days after any request from the Agent, such Bank or such Issuing Bank, asapplicable, furnish to the Agent, such Bank or such Issuing Bank a certificatefrom such taxing authority, or an opinion of counsel acceptable to the Agent,such Bank or such Issuing Bank, in either case stating that no Tax payable tosuch taxing authority was or is, as the case may be, required to be withheld ordeducted from, or otherwise paid by the Borrower in connection with, suchpayment.

 

(b)                                 Taxes Payable by the Agent, any Bank or anyIssuing Bank.  TheBorrower shall, within thirty days of request by the Agent, any Bank or anyIssuing Bank for the payment thereof, but subject to Section 2.13(c), payto the Agent, such Bank or such Issuing Bank, as the case may be, (i) all Taxes(other than Bank Taxes, payable by the Agent or such Bank, as the case may be)with respect to any payment due to the Agent, such Bank or such Issuing Bank underthe Loan Documents and (B) all Taxes payable by the Agent, such Bank or suchIssuing Bank as a result of payments made by the Borrower (whether made to ataxing authority or to the Agent, such Bank or such Issuing Bank) pursuant tothis Section 2.13(b). A certificate as to the amount of such payment orliability delivered to the Borrower by a Bank or Issuing Bank, or by the Agenton its own behalf or on behalf of a Bank or Issuing Bank, shall be conclusiveabsent manifest error.

 

(c)                                  Limitations. Notwithstanding anything to the contrarycontained herein, the Borrower shall not be required to pay any additionalamount in respect of withholding of United States Federal income taxes pursuantto this Section 2.13 to any Bank (i) except to the extent such Taxes arerequired to be withheld as a result of (A) in the case of a Person that is aBank on the Agreement Date, a Regulatory Change Enacted after the AgreementDate and (B) in the case of a Person that becomes a Bank after the AgreementDate pursuant to Section 11.09(a), a Regulatory Change Enacted after suchPerson becomes a Bank, or (ii) to the extent such withholding is requiredbecause such Bank has failed to submit any form or certificate that it is entitledto so submit under Applicable Law (including any Forms required to be submittedpursuant to Section 2.13(d)).

 

(d)                                 Exemption from U.S. Withholding Taxes.  Thereshall be submitted to the Borrower and the Agent (i) on or before the firstdate that interest or fees are payable to such Bank under the Loan Documents,(A) if at the time the same are applicable by each Bank that is a Non-US Bank,(x) a duly completed Internal Revenue Service Form W-8ECI or W-8BEN, as applicable,and (y) a certification in the form of Schedule 2.13(d) that suchBank is a Non-US Bank or (B) if at the time any of the foregoing areinapplicable, duly completed and signed copies of such form, if any, asentitles such Bank to exemption from withholding of United States federalincome taxes to the maximum extent to which such Bank is then entitled under ApplicableLaw, and (ii) from time to time thereafter, prior to the expiration orobsolescence of any previously delivered form or upon any previously deliveredform becoming inaccurate or inapplicable, such further duly completed andsigned copies of such form, if any, as entitles such Bank to exemption fromwithholding of United States federal income taxes to the maximum extent towhich such Bank is then entitled under Applicable Law. Each Bank shall promptlynotify the Borrower and the Agent if (I) it is required to withdraw or cancelany form or

 

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certificatepreviously submitted by it or any such form or certificate has otherwise becomeineffective or inaccurate or (II) payments to it are or will be subject towithholding of United States federal income taxes to a greater extent than theextent to which payments to it were previously subject. Upon the request of theBorrower or the Agent, each Bank that is a United States Person shall from timeto time submit to the Borrower and the Agent a certificate to the effect thatsuch Bank is a United States Person and a duly completed Internal RevenueService Form W-9.

 

Section 2.14.         *ProRata*Treatment.  Except to the extent otherwiseprovided herein, (a) Loans of each Type to be made on *any*day shall be made by the Banks *pro rata in*accordance with theirrespective Commitments, (b) Loans of the Banks shall be converted and continued*pro rata*in accordance with theirrespective amounts of Loans of the Type and, in the case of Eurodollar RateLoans, having the Interest Period being so converted or continued, (c) eachreduction in the Commitments shall be made*pro rata*in accordance with therespective amounts thereof and (d) each payment of the principal of or intereston the Loans and on Unreimbursed Drawings or of fees shall be made for theaccount of the Banks *pro rata*in accordance with therespective amounts thereof then due and payable.

 

Section 2.15.         Extension of Maturity Date.  Atleast 60 but not more than 120 days prior to the then-scheduled Maturity Date,the Borrower may, by delivering a written notice to such effect to the Agent(each such request being irrevocable), request that each Bank and Issuing Bankconsent to a one-year extension of the Maturity Date. Upon receipt of any suchnotice, the Agent shall promptly communicate such request to the Banks and theIssuing Banks. Within 30 days following the giving of such notice by theBorrower, the Banks and the Issuing Banks shall indicate to the Agent whetherthe Borrower’s request to so extend the then-scheduled Maturity Date isacceptable to the Banks and the Issuing Banks (and, if so, the conditions, ifany, relating to such acceptance), it being understood that the unanimouswritten consent of the Banks and the Issuing Banks shall be required to effectany such request, that the determination by each Bank and Issuing Bank will bein its sole and absolute discretion and that the failure of any Bank or IssuingBank to so respond within such period shall be deemed to constitute a refusalby such Bank or Issuing Bank (as the case may be) to consent to such request(with the result being that such request is denied). The Agent shall promptlynotify the Borrower, the Banks and the Issuing Banks of the result of suchrequest, and if such request shall have been consented to by all of the Banksand Issuing Banks, the Maturity Date shall be extended to the first anniversaryof the then-scheduled Maturity Date (which date shall be a Rent Payment Date).

 

Section 2.16.          WorkingCapital Facility Designation.  The Loans, Letters of Credit,LC Outstandings, Unreimbursed Drawings, aggregate Commitments and Extensions ofCredit hereunder, all interest payable hereunder and under the Notes, all feespayable pursuant to Section 2.08, and all other amounts payable hereunderand under the other Loan Documents, and all covenants, agreements and otherobligations of the Borrower relating thereto, are designated as the “Working CapitalFacility” as such term is used in the Operative Documents. The rights,obligations and remedies of the Agent, the Issuing Bank and the Banks, in theircollective capacity as “Working Capital Provider” (as such term is used in theOperative Documents), under the Operative Documents (including Sections 2.04,3.1(b)(i), 3.1(b)(ii), 3.2 and 3.3 of the Depositary Agreement) shall applysolely with respect to, and shall be limited to the extent of amounts owed inrespect of, such “Working Capital Facility”. For the avoidance of doubt, this

 

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Section 2.16 shall not restrict or otherwise limit the rights orremedies of the Agent, the Issuing Banks or the Banks in connection with anyPermitted Indebtedness (other than the Working Capital Facility) provided byany such Person to the Borrower.

 

ARTICLE 3LETTERS OF CREDIT

 

Section 3.01.         Issuing Banks.  Subjectto the terms and conditions hereof, the Borrower may from time to time identifyand arrange for one or more Banks to act as an Issuing Bank hereunder. Any suchdesignation by the Borrower shall be notified to the Agent at least threeBusiness Days prior to the first date upon which the Borrower proposes thatsuch Issuing Bank issue its first Letter of Credit. Nothing contained hereinshall be deemed to require any Bank to agree to act as an Issuing Bank, if itdoes not so desire; *provided, however,*thatif no other Bank agrees to be an Issuing Bank hereunder, Calyon shall be thesole Issuing Bank hereunder. The Borrower hereby notifies the Agent of thedesignation of Calyon to act as an Issuing Bank hereunder. The Agent herebyacknowledges such notice and Calyon hereby accepts such designation.

 

Section 3.02.         Letters of Credit. (a) Each Letter of Credit shall be issued(or the stated expiration date thereof extended or terms thereof modified oramended) on not less than two Business Days’ prior written notice thereof bythe Borrower to the Agent (which shall promptly distribute copies thereof tothe Banks) and the relevant Issuing Bank. Each such notice (a “Request forIssuance”) shall specify (i) the date (which shall be a Business Day) ofissuance of such Letter of Credit (or the date of effectiveness of suchextension, modification or amendment) and the stated expiry date thereof (whichshall be no later than the date that is five Business Days prior to theMaturity 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) whethersuch Letter of Credit should be delivered directly to the beneficiary thereofor to the Borrower and (v) such other information as shall demonstratecompliance of such Letter of Credit with the requirements specified therefor inthis Agreement and the relevant Issuing Bank Agreement. Each Request forIssuance shall be irrevocable unless modified or rescinded by the Borrower notless than two days prior to the proposed date of issuance (or effectiveness)specified therein. Not later than 12:00 noon on the proposed date of issuance(or effectiveness) specified in such Request for Issuance, and upon fulfillmentof the applicable conditions precedent and the other requirements set forthherein and in the relevant Issuing Bank Agreement, such Issuing Bank shallissue (or extend, amend or modify) such Letter of Credit in accordance withsuch Request for Issuance and provide notice and a copy thereof to the Agent,which shall promptly furnish copies thereof to the Banks and the Borrower.

 

(b)          Each Bank severally agrees with such Issuing Bank toparticipate in the Extension of Credit resulting from the issuance (orextension, modification or amendment) of such Letter of Credit, in the mannerand the amount provided in Section 3.04(b), and the issuance of such Letterof Credit shall be deemed to be a confirmation by such Issuing Bank and eachBank of such participation in such amount.

 

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(c)                                 Notwithstanding anything herein to thecontrary, the sum of (i) the aggregate LC Outstandings of all Letters of Creditoutstanding at any one time, (ii) the aggregate principal amount ofUnreimbursed Drawings outstanding at such time and (iii) the Loans at such timeshall not exceed the Total Commitment Amount at such time.

 

(d)                                To the extent that any provision of anyRequest for Issuance related to any Letter of Credit is inconsistent with theprovisions of this Section 3, the provisions of this Section 3 shallapply.

 

Section 3.03.         Issuing Bank Fees.  TheBorrower shall pay directly to each Issuing Bank such fees and expenses, ifany, specified to be paid to such Issuing Bank pursuant to the Issuing BankAgreement to which it is a party, at the times, and in the manner, specified insuch Issuing Bank Agreement; *provided,however,*that if, pursuant to the Depositary Agreement, the Borroweris not permitted to pay any such fees and expenses to such Issuing Bank on thedue date therefor, the Borrower shall pay such fees and expenses on the firstdate thereafter (but in no event later than the next-scheduled Rent PaymentDate) that the Borrower is permitted to pay such fees and expenses, *provided,*that, in such case, all suchfees and expenses shall bear interest at a rate *per annum*equal to the Base Rate *plus*the Applicable Margin then in effect with respect to BaseRate Loans from such due date until paid in full, payable to such Issuing Bankon the date that such fees and expenses are paid by the Borrower.

 

Section 3.04.           Reimbursement to Issuing Banks;Interest.  (a) The Borrower hereby agrees to pay to theAgent for the account of each Issuing Bank, on demand made by such Issuing Bankto the Borrower and the Agent, on and after each date on which such IssuingBank shall pay any amount under the Letter of Credit issued by such IssuingBank, a sum equal to the amount so paid (but only to the extent that theIssuing Bank has not received payment therefor from the Banks pursuant to subsection (b)below) *plus*interest on suchamount from the date so paid by such Issuing Bank until repayment to suchIssuing Bank in full at a fluctuating interest rate*per annum*equalat all times to the Base Rate *plus*the Applicable Margin then ineffect with respect to Base Rate Loans; *provided,however,*that if, pursuant to the Depositary Agreement, the Borroweris not permitted to pay any such amounts to such Issuing Bank on the date ofdemand therefor, the Borrower shall pay such amounts (other than any amountspaid by such Issuing Bank under such Letter of Credit that have been repaid tothe Issuing Bank pursuant to subsection (b) below) on the first datethereafter (but in no event later than the next-scheduled Rent Payment Date)that the Borrower is permitted to pay such amounts, *provided,* that,**in such case, all such amountsshall bear interest at a rate *per annum*equal to the Base Rate *plus*the Applicable Margin then in effectwith respect to Base Rate Loans from such date of demand until paid in full,payable to such Issuing Bank on the date that such amounts are paid by theBorrower.

 

(b)          Ifany Issuing Bank shall not have been reimbursed in full for any payment made bysuch Issuing Bank under any Letter of Credit issued by such Issuing Bank on thedate of such payment, such Issuing Bank shall give the Agent and each Bankprompt notice thereof (an “LC Payment Notice”) no later than 12:00 noonon the Business Day immediately succeeding the date of such payment by suchIssuing Bank. Each Bank severally agrees to purchase a participation in thereimbursement obligation of the Borrower to such Issuing Bank under subsection (a)above, by paying to the Agent for the account of such Issuing Bank an amount

 

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equal to such Bank’s Percentage of such unreimbursed amount paid bysuch Issuing Bank*, plus*interest on such amount at arate *perannum*equal to the Federal Funds Rate from the date of suchpayment by such Issuing Bank to the date of payment to such Issuing Bank bysuch Bank. Each such payment by a Bank shall be made not later than 3:00 P.M.on the later to occur of (i) the Business Day immediately following the date ofsuch payment by such Issuing Bank and (ii) the Business Day on which such Bankshall have received an LC Payment Notice from such Issuing Bank. Each Bank’sobligation to make each such payment to the Agent for the account of suchIssuing Bank shall be several and shall not be affected by the occurrence orcontinuance of any Default or the failure of any other Bank to make any paymentunder this Section 3.04. Each Bank further agrees that each such paymentshall be made without any offset, abatement, withholding or reductionwhatsoever.

 

(c)                                The failure of any Bank to make any payment to the Agent for theaccount of an Issuing Bank in accordance with subsection (b) above shallnot relieve any other Bank of its obligation to make payment, but no Bank shallbe responsible for the failure of any other Bank. If any Bank (a “non-performingBank”) shall fail to make any payment to the Agent for the account of anIssuing Bank in accordance with subsection (b) above within five BusinessDays after the LC Payment Notice relating thereto, then, for so long as suchfailure shall continue, such Issuing Bank shall be deemed, for purposes of Section 11.08and Article 8 hereof, to be a Bank hereunder owed a Loan in an amountequal to the outstanding principal amount due and payable by suchnon-performing Bank to the Agent for the account of such Issuing Bank pursuantto subsection (b) above.

 

(d)                               Each Unreimbursed Drawing shall bear interest on the outstanding principalamount thereof at a rate *per annum*equal to (i) the BaseRate as in effect from time to time*plus*the Applicable Margin then ineffect with respect to Base Rate Loans, compounded quarterly on each InterestPayment Date, or (ii) upon the election of the Borrower pursuant to subsection (e)below to have such Unreimbursed Drawing bear interest at the AdjustedEurodollar Rate, the applicable Adjusted Eurodollar Rate *plus*theApplicable Margin then in effect with respect to Eurodollar Rate Loans; *provided, however,*that each UnreimbursedDrawing owing to an Issuing Bank (as a result of the failure by one or moreBanks to make payment to such Issuing Bank pursuant to subsection (b)above) shall bear interest pursuant to subsection (a) above. Upon the occurrenceand during the continuance of an Event of Default (and whether before or after judgment),each Unreimbursed Drawing (whether or not due) shall bear interest at a rate *per annum*equal to the applicable Post-Default Rate. Interest on eachUnreimbursed Drawing (including interest at the Post-Default Rate) shall bepayable on the earlier to occur of (A) the next-scheduled Rent Payment Datefollowing the date of such Unreimbursed Drawing or (B) the date that theBorrower reimburses the Banks for such Unreimbursed Drawing.

 

(e)                                So long as no Default has occurred and is continuing, the Borrower may,upon notice delivered to the Agent not later than 10:00 A.M. three EurodollarBusiness Days prior to the requested date therefor, request that any Base RateDrawing or Base Rate Drawings be converted into a Eurodollar Rate Drawing. Eachsuch notice shall be irrevocable and shall specify (i) the requested date ofsuch conversion (which date shall be a Eurodollar Business Day), (ii) theaggregate principal amount of Base Rate Drawings to be converted (which amount shallbe at least $1,000,000), and (iii) the Interest Period to be applicable to theEurodollar Rate Drawing resulting from such conversion (which Interest Periodshall be one, two or three months

 

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and shall end on the next-scheduled Rent Payment Date following thedate of such conversion). Upon receipt of any such notice, the Agent shallpromptly notify each Bank of the contents thereof. Each notice of conversiondelivered pursuant to this Section 3.04(e) shall be in the form of Schedule 3.04(e)

 

(f)            EachUnreimbursed Drawing shall mature and become due and payable, and shall berepaid by the Borrower, in full on the next-scheduled Rent Payment Datefollowing the date of such Unreimbursed Drawing (but in any event no later thanthe Maturity Date). The Borrower may, to the extent permitted under the termsof the Depositary Agreement, prepay any Unreimbursed Drawing in whole or inpart, without premium or penalty (but subject to Section 9.04), exceptthat any partial prepayment shall be in an aggregate principal amount of atleast $1,000,000. The Borrower shall give the Agent notice of each prepaymentno later than 10:00 A.M. on, in the case of a prepayment of Base Rate Drawings,the Business Day, and, in the case of a prepayment of Eurodollar Rate Drawings,the third Eurodollar Business Day, before the date of such prepayment. Eachsuch notice of prepayment shall specify (i) the date such prepayment is to bemade, (ii) the amount of such prepayment, and (iii) in the case of anyprepayment of Eurodollar Rate Drawings, the last day of the Interest Periodapplicable thereto. Upon receipt of any such notice, the Agent shall promptlynotify each Bank of the contents thereof. Amounts to be prepaid shallirrevocably be due and payable on the date specified in the applicable noticeof prepayment, together with accrued and unpaid interest thereon.

 

Section 3.05.         ObligationsAbsolute.  The payment obligations of each Bank under Section 3.04(b)and of the Borrower under this Agreement in respect of any payment under anyLetter of Credit and any Unreimbursed Drawing shall be unconditional andirrevocable, and shall be paid strictly in accordance with the terms of thisAgreement under all circumstances, including the following circumstances:

 

(a)                                 any lack of validity or enforceability of anyLoan Document or any other agreement or instrument relating thereto or to suchLetter of Credit;

 

(b)                                any amendment or waiver of, or any consent todeparture from, all or any of the Loan Documents;

 

(c)                                 the existence of any claim, set-off, defenseor other right that the Borrower may have at any time against any beneficiary,or any transferee, of such Letter of Credit (or any Persons for whom any suchbeneficiary or any such transferee may be acting), any Issuing Bank, or anyother Person, whether in connection with this Agreement, the transactionscontemplated herein or by such Letter of Credit, or any unrelated transaction;

 

(d)                                any statement or any other document presentedunder such Letter of Credit proving to be forged, fraudulent, invalid orinsufficient in any respect or any statement therein being untrue or inaccuratein any respect;

 

(e)                                 payment in good faith by any Issuing Bankunder the Letter of Credit issued by such Issuing Bank against presentation ofa draft or certificate which does not comply with the terms of such Letter ofCredit; or

 

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

 

Section 3.06.         Liabilityof Issuing Banks and the Banks.  As among the Borrower, theAgent, the Banks and the Issuing Banks, the Borrower assumes all risks of theacts and omissions of any beneficiary or transferee of any Letter of Credit.Neither the Issuing Bank that has issued such Letter of Credit, the Agent, theBanks nor any of their respective officers, directors, employees, agents orAffiliates shall be liable or responsible for (a) the use that may be made ofsuch Letter of Credit or any acts or omissions of any beneficiary or transfereethereof in connection therewith; (b) the validity, sufficiency or genuinenessof documents, or of any endorsement thereon, even if such documents should proveto be in any or all respects invalid, insufficient, fraudulent or forged; (c)payment by such Issuing Bank against presentation of documents that do notcomply with the terms of such Letter of Credit, including failure of anydocuments to bear any reference or adequate reference to such Letter of Credit;or (d) any other circumstances whatsoever in making or failing to make paymentunder such Letter of Credit, except that, notwithstanding anything containedherein to the contrary, the Borrower shall have the right to bring suit againstsuch Issuing Bank, and such Issuing Bank shall be liable to the Borrower andany Bank, to the extent of any direct, as opposed to consequential, damagessuffered by the Borrower or such Bank which the Borrower or such Bank proveswere caused by such Issuing Bank’s willful misconduct or gross negligence,including such Issuing Bank’s willful failure to make timely payment under suchLetter of Credit following the presentation to it by the beneficiary thereof ofa draft and accompanying certificate(s) which strictly comply with the termsand conditions of such Letter of Credit. In furtherance and not in limitationof the foregoing, any Issuing Bank may accept sight drafts and accompanyingcertificates presented under the Letter of Credit issued by such Issuing Bankthat appear on their face to be in order, without responsibility for furtherinvestigation, regardless of any notice or information to the contrary.Notwithstanding the foregoing, no Bank (other than the applicable Issuing Bank)shall be obligated to indemnify the Borrower for damages caused by such IssuingBank’s willful misconduct or gross negligence, and the obligation of theBorrower to reimburse the Banks hereunder shall be absolute and unconditional,notwithstanding the gross negligence or willful misconduct of any Issuing Bank.

 

ARTICLE4CONDITIONS TO EXTENSIONS OF CREDIT

 

Section 4.01.         Conditionsto the Initial Extension of Credit.  The obligation of each Bankand Issuing Bank to make its initial Extension of Credit is subject to thesatisfaction of each of the following conditions:

 

(a)           The Agent shall have received, on or before the day of theinitial Extension of Credit, the following, each dated such day (except asotherwise specified below):

 

(i)                                     This Agreement, duly executed by theBorrower, each Bank, Calyon, in its capacity as an Issuing Bank, and the Agent.

 

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(ii)                                  The Pledge Agreement, duly executed by theBorrower, together with:

 

(A)                              acknowledgment copies, dated on or before thedate of the initial Extension of Credit, of proper Financing Statements (FormUCC-3) duly filed under the Uniform Commercial Code of all jurisdictions as maybe necessary or, in the opinion of the Agent, desirable to perfect the Liens createdby the Pledge Agreement;

 

(B)                                certified copies of Requests for Informationor Copies (Form UCC-11), or equivalent reports satisfactory to the Agent, datedon or before the Agreement Date and listing the Financing Statements referredto in paragraph (A) above (or, if such Financing Statements are not so listed,other evidence satisfactory to the Agent that the same shall have been dulyfiled), and all other effective financing statements that name the Borrower(under its present name and any previous name) as debtor and that are filed inthe jurisdictions referred to in said paragraph (A), together with copies ofsuch other financing statements (none of which shall cover the collateralpurported to be covered by the Pledge Agreement);

 

(C)                                certificates evidencing all limited liabilitycompany membership interests included in the Collateral, accompanied by irrevocablestock powers, executed in blank; and

 

(D)                               evidence of the completion of all otherrecordings and filings, and all other actions, as may be necessary or, in theopinion of the Agent, desirable to perfect the Liens created by the PledgeAgreement.

 

(iii)          An Issuing Bank Agreement and the Issuing Bank’s FeeLetter, duly executed by the Borrower and Calyon, in form and substancesatisfactory to Calyon.

 

(iv)          The Agent’s Fee Letter, duly executed by the Borrower, inform and substance satisfactory to the Agent.

 

(v)           Certified copies of the resolutions of the Board ofDirectors (or comparable governing body) of AES NY authorizing the Borrower toenter into each of the Loan Documents to which it is, or is to be, a party, andof all documents evidencing other necessary action (partnership, limitedliability company or otherwise) and Governmental Approvals, if any, withrespect to such Loan Documents.

 

(vi)          A certificate of AES NY certifying the names, truesignatures and incumbency of the officers of AES NY authorized to sign the LoanDocuments to which the Borrower is, or is to be, a party, and the otherdocuments to be delivered hereunder and thereunder.

 

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(vii)         Copies of the certificate of limited partnership,partnership agreement, certificate of formation, limited liability companyagreement, certificate of incorporation, by-laws or comparable organizationaldocuments of the Borrower and each AEE Entity, together with all amendmentsthereto, in each case certified in a manner satisfactory to the Agent.

 

(viii)        Certified copies of each of the executedOperative Documents referred to in Section 4.1 of each of theParticipation Agreements (other than the Tax Indemnity Agreement).

 

(ix)           Good standing certificates in respect of the Borrower andeach AEE Entity (other than AES NY3) from its jurisdiction of organization andeach jurisdiction in which it is qualified to do business as a foreigncorporation, limited liability company or partnership, as the case may be.

 

(x)            the Notes payable to the order of each Bank, dulyexecuted by the Borrower in replacement of the notes issued under the ExistingCredit Facility.

 

(xi)           Favorable opinion of Chadbourne & Parke LLP, specialNew York counsel to the Borrower and AES NY, in substantially the form of Schedule 4.01(a)(xi).

 

(xii)          Such other approvals, reports (including reports of anyconsultants deemed necessary or desirable by the Agent), opinions and documentsas the Agent may reasonably request.

 

(b)                                 The Agent shall have received:

 

(i)            the Bank Assignment duly executed and delivered by theparties thereto effecting the transfers of the Existing Loans, UnreimbursedDrawings and Commitments and other rights and obligations contemplated thereby,

 

(ii)           satisfactory evidence that the letters of credit issued inconnection with the Existing Credit Facility have been returned to the OriginalIssuing Bank,

 

(iii)          evidence satisfactory to it that the Original Issuing BankAgreement shall have been terminated.

 

(c)                                  The following statements shall be true andthe Agent shall have received a certificate of the Borrower, dated the ClosingDate and in sufficient copies for each Bank, stating that:

 

(i)            the representations and warranties set forth in Article 5and Section 7.02 of this Agreement and Section 2.01 of the PledgeAgreement are true and correct on and as of the Closing Date with the sameeffect as though made on and as of the Closing Date, and

 

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(ii)           no Default has occurred and is continuing, both before andafter giving effect to the transactions contemplated by the Loan Documents.

 

(d)                                All fees payable on or prior to the requesteddate of such Extension of Credit pursuant to Section 2.08 of thisAgreement or any other Loan Document, and all amounts payable pursuant to Section 11.02of this Agreement for which invoices have been delivered to the Borrower on orprior to such date, shall have been paid in full or arrangements satisfactoryto the Agent shall have been made to cause them to be paid in full concurrentlywith the Extension of Credit to be made on such date.

 

(e)                                 All Governmental Approvals (except for theNYPSC Order) necessary in connection with the Loan Documents and thetransactions contemplated thereby shall have been obtained and be in full forceand effect. All third party approvals necessary or, in the judgment of theAgent, advisable in connection with the Loan Documents and the transactionscontemplated thereby shall have been obtained and be in full force and effect.All such Governmental Approvals and third party approvals, if any, shall be in formand substance satisfactory to the Agent and the Banks.

 

(f)                                   All interest, if any, on the Existing Loanswhich is accrued and unpaid up to and including the Agreement Date and allcommissions, fees and other amounts payable by the Borrower under the OriginalIssuing Bank Agreement which are accrued and unpaid to and including theAgreement Date (whether or not then due and payable) shall have been paid infull.

 

Section 4.02.         Conditions to increase the TotalCommitment AmountTheincrease of the Total Commitment Amount from $35,000,000 to the Increased TotalCommitment Amount is subject to the satisfaction of each of the followingconditions on or prior to December 31, 2004:

 

(a)                                the NYPSC Order shall have been issued andshall be in full force and effect and the Agent and each Bank shall havereceived a copy thereof;

 

(b)                               the second installment of the Upfront Feeshall have been paid as set forth in the Agent’s Fee Letter;

 

(c)                                the increase in the Total Commitment Amountwill not contravene any Applicable Law applicable to the Agent or any Bank;

 

(d)                               the Notes payable to the order of each Bankshall have been amended to reflect the increased Commitment of each Bank as ofthe Commitment Increase Date; and

 

(e)                                the Issuing Bank Agreement between theBorrower and Calyon shall have been amended to reflect the Total CommitmentAmount.

 

Section 4.03.         Conditionsto Each Extension of Credit. The obligation of each Bank or Issuing Bank, as the case may be, tomake an Extension of Credit (including the initial Extension of Credit) issubject to the satisfaction of each of the following conditions:

 

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(a)                                In the case of any Extension of Creditconsisting of Loans, (i) the Agent shall have received a Funding DateCertificate complying with the requirements of the Depositary Agreement settingforth the amounts to be applied or transferred pursuant to Section 3.1(b)of the Depositary Agreement, and (ii) after giving effect to such applicationsor transfers, including, but not limited to, the Loans to be made on the FundingDate referred to therein, the amounts remaining in the Revenue Account, the OperatingAccount and each bank account of the Borrower or any Subsidiary or otherwisethen available to the Borrower or any Subsidiary for payment of Operating and MaintenanceCosts, other than pursuant to Section 3.13 of the Depositary Agreement (collectively,“Available Amounts”), would, in the aggregate, be less than $10 million;*provided,*that the sum of (A) theaggregate amount transferred to the Operating Account with respect to any RentPayment Period (including sums properly withdrawn therefrom during such RentPayment Period to pay Operating and Maintenance Costs), (B) Available Amountsprior to giving effect to such Loans *plus*(C)the aggregate principal amount of such Loans, does not exceed the sum of (1)125% of the amount set forth in the Annual Operating Budget for such RentPayment Period *plus*(2) fuelcosts payable for such Rent Payment Period;

 

(b)                               the Agent shall have received (i) if suchExtension of Credit consists of Loans, a notice of borrowing, for the FundingDate referred to in subsection (a) above, with respect to such Loanscomplying with the requirements of Section 2.02, and/or (ii) in the caseof any other Extension of Credit, a Request for Issuance that complies with therequirements of Section 3.02(a);

 

(c)                                each Loan Document Representation andWarranty shall be true and correct in all material respects at and as of thetime such Extension of Credit is to be made, both with and without givingeffect to such Extension of Credit and all other Extensions of Credit to bemade at such time and to the application of the proceeds thereof,

 

(d)                               no Default shall have occurred and becontinuing at the time such Extension of Credit is to be made or would resultfrom the making of such Extension of Credit and all other Extensions of Creditto be made at such time or from the application of the proceeds thereof;

 

(e)                                such Bank or Issuing Bank (as the case maybe) shall have received such Information as it may have requested pursuant to Section 7.01(f);and

 

(f)                                  such Extension of Credit will not contraveneany Applicable Law applicable to such Bank.

 

Except to the extent that the Borrower shall havedisclosed in the notice of borrowing or Request for Issuance (as the case maybe), or in a subsequent notice given to the Agent, the Banks and the IssuingBanks prior to 5:00 P.M. on the Business Day before the requested date for themaking of the requested Extension of Credit, that a condition specified inclause (c) or (d) above will not be fulfilled as of the requested time for themaking of such Extension of Credit, the Borrower shall be deemed to have made aRepresentation and Warranty

 

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as of the time of the making of such Extension of Credit that theconditions specified in such clauses have been fulfilled as of such time. Nosuch disclosure by the Borrower that a condition specified in clause (c) or (d)above will not be fulfilled as of the requested time for the making of therequested Extension of Credit shall affect the right of each Bank or IssuingBank (as the case may be) to not make the Extension of Credit requested to bemade by it if, in such Bank’s or Issuing Bank’s determination, such conditionhas not been fulfilled at such time.

 

Section 4.04.         Reliance on Certificates. The Banks, the Issuing Banks and the Agentshall be entitled to rely conclusively upon the certificates delivered fromtime to time by officers of AES NY (in its capacity as general partner of the Borrower)as to the names, incumbency, authority and signatures of the respective personsnamed therein until such time as the Agent may receive a replacementcertificate, in form acceptable to the Agent, from an officer of AES NY (in itscapacity as general partner of the Borrower) identified to the Agent as havingauthority to deliver such certificate, setting forth the names and truesignatures of the officers and other representatives of AES NY thereafterauthorized to act on behalf of the Borrower and AES NY (in its capacity asgeneral partner of the Borrower).

 

ARTICLE5CERTAIN REPRESENTATIONS AND WARRANTIES

 

In order to induce each Bankand Issuing Bank to enter into this Agreement and to make each Extension ofCredit requested to be made by it, the Borrower represents and warrants asfollows:

 

Section 5.01.          DueOrganization. Etc.The Borrower is a limited partnership duly formed, validly existing, and ingood standing under the laws of the State of Delaware, is duly licensed orqualified and in good standing in each jurisdiction in which the failure to soqualify could reasonably be expected to result in (a) a Material Adverse Effector (b) a Materially Adverse Effect on (i) AES NY, (ii) the Borrower and the AEESubsidiaries taken as a whole, (iii) any Loan Document or (iv) the Collateral,and has the partnership power and authority to own, or hold under lease, itsassets and properties, conduct its business as now conducted and as presentlyproposed to be conducted and enter into and perform its obligations under thisAgreement and the other Loan Documents and the Operative Documents to which itis or will be a party. The sole general partner of the Borrower is AES NY. Thesole limited partner of the Borrower is AES NY2. Each of AES NY, AES NY2 and theAEE Subsidiaries is a limited liability company duly organized, validlyexisting, and in good standing under the laws of the State of Delaware, is dulylicensed or qualified and in good standing in each jurisdiction in which thefailure to so qualify could reasonably be expected to result in (A) a MaterialAdverse Effect or (B) a Materially Adverse Effect on (1) AES NY, (2) theBorrower and the AEE Subsidiaries taken as a whole, (3) any Loan Document or(4) the Collateral, and has all requisite power and authority to own, or holdunder lease, its assets and properties and conduct its business as nowconducted and as presently proposed to be conducted.

 

Section 5.02.         LoanDocuments: Authorization: Enforceability: Required Consents: Absence ofConflicts. TheBorrower has the power, and has taken all necessary action to authorize it, toexecute, deliver and perform in accordance with their respective terms the Loan

 

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Documentsand to request and receive Extensions of Credit in an aggregate amount equal tothe Commitments. This Agreement has been, and each of the other Loan Documentswhen delivered to the Agent will have been, duly executed and delivered by theBorrower and is, or when so delivered will be, a legal, valid and bindingagreement of the Borrower, assuming the due authorization, execution anddelivery by each other party thereto, enforceable against the Borrower inaccordance with its terms, except as may be limited by applicable bankruptcy,insolvency, reorganization, moratorium or similar laws affecting theenforcement of creditors’ rights generally and by general principles of equity.The execution, delivery and performance in accordance with their respectiveterms by the Borrower of the Loan Documents, and each Extension of Credit madehereunder, whether or not in the amount of the unused Commitments, do not and(absent any change in any Applicable Law or applicable Contract) will not (a)require any Governmental Approval or any other consent or approval, includingany consent or approval of any partner of the Borrower or any member of any AEEEntity, to have been obtained or any Governmental Registration to have beenmade, other than Governmental Approvals and other consents and approvals andGovernmental Registrations that have been obtained or made, as the case may be,are final and not subject to review on appeal or to collateral attack, and arein full force and effect, except that (i) as of the Agreement Date and untilthe Commitment Increase Date, the NYPSC Order has not yet been obtained and(ii) after the issuance of the NYPSC Order, such order is subject to an appealperiod of four months from the date of such order, or (b) violate, conflictwith, result in a breach of, constitute a default under, or result in orrequire the creation of any Lien (other than Permitted Liens described in Section 6.05(a))upon any assets of the Borrower or any AEE Entity under (i) any Contract towhich the Borrower or any AEE Entity is a party or by which the Borrower or anyAEE Entity or any of their respective properties may be bound, or (ii) anyApplicable Law that could reasonably be expected to have a Materially AdverseEffect on (x) any Loan Document or (y) the Collateral.

 

Section 5.03.         Operative Documents: DueAuthorization, Enforceability, Etc. The execution, delivery and performance of each of the OperativeDocuments to which it is or will be a party and the compliance by it with theterms and provisions thereof have been duly authorized by all necessary actionof each of the Borrower and the AEE Entities, as applicable, and such actiondoes not and will not require any further action, consent or approval by anytrustee or holder of any Indebtedness of the Borrower or such AEE Entities, asapplicable. Each of the Operative Documents to which it is or will be a partyhas been duly executed and delivered by each of the Borrower and the AEEEntities, as applicable. Assuming the due authorization, execution and deliveryby each other party thereto, the Operative Documents to which the Borrower orany AEE Entity is or will be a party constitute the legal, valid and bindingobligations of the Borrower or such AEE Entity, as applicable, enforceableagainst the Borrower or such AEE Entity, as applicable, in accordance withtheir respective terms, except as may be limited by applicable bankruptcy,insolvency, reorganization, moratorium or similar laws affecting theenforcement of creditors’ rights generally and by general principles of equity.

 

Section 5.04.         Operative Documents: No Conflicts. The execution, delivery and performance byeach of the Borrower and the AEE Entities, as applicable, of each of theOperative Documents to which it is or will be a party, the consummation by theBorrower and such AEE Entities of the transactions contemplated thereby, andcompliance by the Borrower and such AEE Entities with the terms and provisionsthereof, do not and will not (i) conflict with or result in any breach of anyagreement to which the Borrower or any AEE Entity is a party

 

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(including any Material Agreement), (ii) conflict with any ApplicableLaw which could reasonably be expected to result in a Material Adverse Effect,(iii) conflict with the partnership agreement of the Borrower or theorganizational documentation of any AEE Entity or (iv) result in the creationof any Lien (except Permitted Liens) upon any of the property or assets of theBorrower and such AEE Entities pursuant to the terms of any indenture, mortgage,deed of trust, credit agreement or any other agreement, contract or instrumentto which the Borrower or such AEE Entity is a party or by which any of theirrespective property or assets are bound.

 

Section 5.05.         Operative Documents: GovernmentalActions. Exceptfor such Governmental Approvals as have been validly issued, are in full forceand effect and are non-appealable (“Existing Governmental Approvals”),and except as set forth in Section 5.02 with respect to the NYPSC Orderand as specifically disclosed in Schedule 5.15, no GovernmentalApproval is required to be obtained in the name of the Borrower or any AEEEntity or the Owner Trust in connection with (i) the ownership, operation andmaintenance of the Facility, the Related Facility and the AdditionalFacilities, (ii) the execution, delivery and performance by the Borrower of theOperative Documents to which it is or will be a party, or (iii) the leasing ofthe Undivided Interest, except such Governmental Approvals (A) as may berequired by Applicable Law not now in effect, (B) as may be required inconsequence of any transfer of ownership of the Undivided Interest by the OwnerTrust, (C) as would be required by Applicable Law upon termination orexpiration of the Lease in connection with taking possession of an interest inany assets of the Borrower in accordance with the Support Agreements or anypart thereof or the property purported to be covered by the Site Lease, (D) asmay be required by Applicable Law if, after termination or expiration of theLease, the Borrower or any other Person should provide transmission servicesfor the Owner Trust, (E) as may be required in consequence of any exercise ofremedies or other rights by any such Person in connection with takingpossession of an interest in the Facility or the property purported to becovered by the Site Lease, or (F) as may be required as filings pursuant to theterms of a Governmental Approval (which filings the Borrower agrees to makepromptly when required) and other types of routine operating plans and filingsrequired under Applicable Law. Except as specifically disclosed in Schedule 5.05or Schedule 5.15, all of the Existing Governmental Approvals havebeen validly issued, are in full force and effect and are non-appealable exceptas set forth in Section 5.02 with respect to the NYPSC Order, and there isno proceeding pending or, to the Actual Knowledge of the Borrower, threatened,which seeks to, or which may reasonably be expected to, rescind, terminate,modify, condition, suspend or otherwise alter any such Governmental Approval(except as are necessary for the transfer or reissuance of such GovernmentalApprovals to the Borrower or any AEE Entity). Except as specifically disclosedin Schedule 5.15, each of the Borrower and the AEE Entities hasobtained and is in compliance with all Governmental Approvals required to beobtained by it as of the date hereof unless the failure to obtain suchapprovals or such non-compliance therewith, individually or in the aggregate,could not reasonably be expected to result in (a) a Material Adverse Effect or(b) a Materially Adverse Effect on (i) AES NY, (ii) the Borrower and the AEESubsidiaries taken as a whole, (iii) any Loan Document or (iv) the Collateral.

 

Section 5.06.         Litigation. (a) Except as specifically disclosed in Schedule 5.06or Schedule 5.15, there is no pending or, to the Actual Knowledgeof the Borrower, threatened action, suit, investigation or proceeding at law orin equity by or before any Governmental Entity, against or affecting theBorrower or any property or other assets or rights of the Borrower

 

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or with respect to any Operative Document, the Undivided Interest, theGround Interest, the Facility, the Facility Site, or any of the other AssignedAssets that, individually or in the aggregate, if determined adversely couldreasonably be expected to result in a Material Adverse Effect.

 

(b)          Except as specifically disclosed in Schedule 5.06or Schedule 5.15, there are not, in any court or before anyarbitrator of any kind or before or by any governmental or nongovernmentalbody, any actions, suits, investigations or proceedings pending or, to theActual Knowledge of the Borrower or any AEE Entity, threatened (nor to theActual Knowledge of the Borrower or any AEE Entity is there any substantialbasis therefor) against or in any other way relating to or affecting (i) theBorrower or any AEE Entity or any of their respective businesses or properties,(ii) any Loan Document or (iii) the Collateral, except actions, suits,investigations or proceedings that, if adversely determined, would not, singlyor in the aggregate, have a Materially Adverse Effect on (A) AES NY, (B) theBorrower and the AEE Subsidiaries taken as a whole, (C) any Loan Document or(D) the Collateral.

 

Section 5.07.         NoDefaults. Neitherthe Borrower nor any AEE Entity is in default, and no condition exists thatwith notice or lapse of time or both would constitute a default, under any ofthe Operative Documents. Neither the Borrower nor any AEE Entity is in defaultunder, and neither the Borrower nor any AEE Entity, to its Actual Knowledge, isaware of a default by any other party to, any Material Agreement in any suchcase where any such default, individually or in the aggregate, could reasonablybe expected to result in (a) a Material Adverse Effect or (b) a MateriallyAdverse Effect on (i) AES NY, (ii) the Borrower and the AEE Subsidiaries takenas a whole, (iii) any Loan Document or (iv) the Collateral.

 

Section 5.08.         Liens. (a) The Borrower has good record andmarketable fee title in the Facility Site and the Related Facility Site, ineach case free and clear of all Liens other than Permitted Liens.

 

(b)                               Good and marketable fee simple title to theUndivided Interest has been duly, validly and effectively conveyed andtransferred to the Owner Trust, free and clear of all Liens other thanPermitted Liens. A good and valid leasehold interest in the Ground Interest hasbeen duly, validly and effectively granted to the Owner Trust upon the termsand conditions in the Site Lease, free and clear of all Liens other thanPermitted Liens. A good and valid easement estate in the Easements has beenduly, validly and effectively granted to the Owner Trust upon the terms andconditions in the Site Lease, free and clear of all Liens other than PermittedLiens.

 

(c)                                None of the Permitted Liens shall materiallyinterfere with the use, operation or possession of the Facility (ascontemplated by the Operative Documents) or the use of or exercise by the OwnerTrust of its rights under the Site Lease with respect to the Facility or the FacilitySite.

 

Section 5.09.         RegulatoryStatus/Utility Regulation. Each of the Borrower and AEE2 is an “Exempt Wholesale Generator” assuch term is defined in Section 32 of PUHCA. Neither the Borrower nor anyof the AEE Entities is (a) regulated as a “public utility company,” or a “holdingcompany,” a “subsidiary company” or an “affiliate,” in each case, of either a “holdingcompany” or a “public utility company,” as such terms are defined in PUHCA, or(b) except as

 

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described in Schedule 5.09, subject to any electric utilityregulation under New York law. To the Actual Knowledge of the Borrower, none ofthe Owner Trust, the Owner Participant, the Agent, the Banks, the IssuingBanks, any Certificateholder nor any of their respective Affiliates is nor,solely by virtue of the execution, delivery or performance of, or theconsummation of the transactions contemplated by, the Loan Documents or theLease Financing (and in the case of the Owner Participant and the Owner Trust,assuming that the representations and warranties of the Owner Participant andthe Owner Trust set forth in the Participation Agreement are true and correctat all times), will be regulated as a “public utility company,” or a “holdingcompany,” a “subsidiary company” or an “affiliate,” in each case, of either a “holdingcompany” or a “public utility company,” as such terms are defined in PUHCA norsubject to any electric utility regulation under New York law*,provided, however,*that the exercise of rights or enforcementof remedies under the Operative Documents or the Loan Documents, as the casemay be, by any of the Owner Trust, the Owner Participant, the Agent, the Banks,the Issuing Banks, any Certificateholder or any of their respective Affiliates,that results in such party taking ownership of, or operating control over, theBorrower, any AEE Entity, the Facilities or the Additional Facilities, may resultin such party being regulated as a “public utility company,” or a “holdingcompany,” a “subsidiary company” or an “affiliate,” in each case, of either a “holdingcompany” or a “public utility company,” as such terms are defined in PUHCA, ormay result in such party being subject to electric utility Regulation Under NewYork law. Neither the Borrower nor any AEE Entity is subject to electric rateregulation under New York law.

 

Section 5.10.         Investment Company Act. Neither the Borrower nor any AEE Entity isan “investment company” or a company “controlled” by an “investment company”within the meaning of the Investment Company Act.

 

Section 5.11.         Compliance With Laws. Each of the Borrower and the AEE Entitiesare in compliance with all Applicable Laws, including, without limitation, allEnvironmental Laws, and none of such parties has received any written noticefrom any Governmental Entity of non-compliance with the need to perform anywork, make repairs or make any capital improvements in order to comply with, orthe imposition or threat of the imposition of penalties under, Applicable Law,except as specified on Schedule 5.06, Schedule 5.13 or Schedule 5.15hereto and otherwise, in the case of any Applicable Law, where suchnon-compliance is the subject of appropriate proceedings and could notreasonably be expected to result in (i) a Material Adverse Effect or (ii) aMaterially Adverse Effect on (A) AES NY, (B) the Borrower and the AEESubsidiaries taken as a whole, (C) any Loan Document or (D) the Collateral.

 

Section 5.12.         Taxes. Each of the Borrower and the AEE Entitieshas filed, or caused to be filed, all tax and information returns that arerequired to have been filed in any jurisdiction, and has paid all taxes shownto be due and payable on such returns and all other taxes and assessmentspayable by such Person, to the extent the same have become due and payable,other than taxes the payment of which is being contested by appropriateproceedings, in accordance with Section 5.7 of the ParticipationAgreement, and the Borrower has no Actual Knowledge of any actual or proposeddeficiency or additional assessment in connection therewith which, eitherindividually or in the aggregate, could reasonably be expected to result in (i)a Material Adverse Effect or (ii) a Materially Adverse Effect on (A) AES NY,(B) the Borrower and the AEE Subsidiaries taken as a whole, (C) any LoanDocument or (D) the Collateral.

 

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Section 5.13.         ERISA. Except as specifically disclosed in Schedule 5.13:

 

(a)                                Neither a Reportable Event nor an *“accumulated funding deficiency “*(withinthe meaning of Section 412 of the Code or Section 302 of ERISA) hasoccurred during the five-year period prior to the date on which this representationis made or deemed made with respect to any Plan, and each Plan has complied inall respects with the applicable provisions of ERISA and the Code. Notermination of a Single Employer Plan has occurred, and no Lien in favor of thePBGC or a Plan has arisen, during such five-year period. Neither the Borrowernor any ERISA Affiliate has (i) sought a waiver of the minimum funding standardunder Section 412 of the Code in respect of any Plan, (ii) failed to makeany contribution or payment to any Plan, or made any amendment to any Plan,which has resulted or could result in the imposition of a Lien or the postingof a bond or other security under ERISA or the Code or (iii) incurred anyliability in excess of $100,000 under Title IV of ERISA other than a liabilityto the PBGC for premiums under Section 4007 of ERISA. Neither the Borrowernor any ERISA Affiliate has had a complete or partial withdrawal from anyMultiemployer Plan, and neither the Borrower nor any ERISA Affiliate wouldbecome subject to any liability under ERISA if the Borrower or any such ERISAAffiliate were to withdraw completely from all Multiemployer Plans as of thevaluation date most closely preceding the date on which this representation ismade or deemed made. No such Multiemployer Plan is in Reorganization orInsolvent. Each of the representations and warranties set forth in this Section 5.13(a)is made subject to the qualification that any inaccuracy thereof has not resultedin and could not reasonably be expected to result in a Materially AdverseEffect on (i) AES NY, (ii) the Borrower and the AEE Subsidiaries taken as awhole, (iii) any Loan Document or (iv) the Collateral.

 

(b)                               The Borrower is not (i) a plan described in Section 3(3)of ERISA or Section 4975 of the Code or (ii) a “foreign person” as definedin Section 1445 of the Code.

 

(c)                                Assuming the correctness of therepresentations contained in Sections 3.2, 3.3, 3.4 and 3.5 of theParticipation Agreement and of the Certificateholders in the Certificates, theLease Financing did not constitute a non-exempt “prohibited transaction” withinthe meaning of Section 406 of ERISA or Section 4975(c)(l) of the Code(or in the case of a governmental plan or church plan (each as defined inERISA) any substantially similar federal, state or local law).

 

Section 5.14.         AdequateRights. (a) Tothe Actual Knowledge of the Borrower, in all material respects, (i) the rightsand interests made available to the Owner Trust pursuant to the SupportAgreements and the other Operative Documents, together with (ii) all materials,supplies and services, including, but not limited to, all natural gas,electrical, telephone, water, sanitary waste disposal, ash disposal, rail, coalsupply, septic or water treatment system or services and all other utility servicesnecessary for the present use, operation and maintenance of the Facility(currently available at the Facility, which to the Actual Knowledge of theBorrower are connected under valid permits and in working order, in allmaterial respects) permit on a commercially practicable basis as of the datehereof (A) the occupation, maintenance and repair of the Facility and theFacility Site, (B) the use, operation, leasing and possession of the Facility

 

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andthe Facility Site, (C) the use, operation, leasing, possession, maintenance,replacement, renewal and repair of all alterations, modifications, additions,accessions, improvements, appurtenances, replacements and substitutions thereofand thereto, subject to the provisions of the Operative Documents, (D)appropriate ingress to and egress from the Facility for any reasonable purposein connection with the operation, maintenance and use of the Facility,including, without limitation, access to dedicated public roads and all othermaterial roads, easements, servitude, rights-of-way and other rights of ingressand egress as are necessary for the present operation, maintenance and use ofthe Facility, (E) the procurement of other rights and services necessary or appropriateto utilize the Facility in a commercial manner, (F) transmission services fromthe Facility sufficient to enable the sale of the output of the Facility, and(G) the operation of the Facility as an independent unit.

 

(b)                                To the Actual Knowledge of the Borrower, in all material respects (i)the electrical, plumbing, heating, drainage, air conditioning, ventilation andother mechanical and electrical systems on and in the Facility are in goodworking order and repair and are adequate in quantity and quality for presentoperation of the Facility by the Borrower under the Lease; and (ii) theFacility is otherwise in safe condition and there are no structural or otherpatent defects in the roofs, and other structural portions of the Facility,including walls, pillars, supporting columns and foundations.

 

(c)                                 To the Actual Knowledge of the Borrower,other than Permitted Liens, the use of the Facility does not in any materialrespect depend on any variance, special exception or other municipal approval,permit or consent that has not been obtained for its present use, and all materialbuilding, construction and use related permits, approvals and consentsnecessary for such use have been issued and are in full force and effect; *provided,*that no representation is madeherein regarding zoning ordinances or regulations.

 

(d)                                To the Actual Knowledge of the Borrower, no default or breach existsunder any covenant, condition, restriction, right-of-way, easement or otheragreement affecting all or any portion of the Facility which is to be performedor complied with by the owner or occupant of all or any portion of the Facilitythe nonperformance of which could reasonably be expected to result in (i) aMaterial Adverse Effect or (ii) a Materially Adverse Effect on (A) AES NY, (B)the Borrower and the AEE Subsidiaries taken as a whole, (C) any Loan Documentor (D) the Collateral.

 

(e)                                 To the Actual Knowledge of the Borrower,there are no subleases, rental agreements or other agreements conferring on anyPerson other than the Borrower the right to use or occupy all or any portion ofthe Facility or the Facility Site except those, if any, reflected in the TitlePolicies.

 

(f)                                   To the Actual Knowledge of the Borrower,there are no public improvements pending or intended that would result in anycharge or special assessment against the Facility, except those, if any,reflected in the Title Policies. To the Actual Knowledge of the Borrower, theFacility is not subject to any material utility “tap-in” fees, except those, ifany, reflected in the Title Policies.

 

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Section 5.15.         EnvironmentalMatters. (a)Except as specifically disclosed in Schedule 5.15 or except aswould not have (i) a Material Adverse Effect or (ii) a Materially AdverseEffect on (A) AES NY, (B) the Borrower and the AEE Subsidiaries taken as awhole, (C) any Loan Document or (D) the Collateral, neither the Borrower, norany AEE Entity, nor, to the Actual Knowledge of the Borrower, NYSEG or NGE hasreceived from any Governmental Entity any written notice, letter, citation,order, warning, complaint, inquiry, claim or demand that: (1) there has been arelease, or there is a threat of release, of any Hazardous Substance in, on,under or from the Facility or the Facility Site except for releases authorizedunder or in compliance with Applicable Laws, including Environmental Laws; (2)the Borrower, NYSEG or NGE have or has any liability for the costs of cleaningup, remedying or responding to a release of any Hazardous Substance pertainingto the Facility or the Facility Site; or (3) either the Facility or theFacility Site is subject to a Lien in favor of any Governmental Entity inresponse to a release of any Hazardous Substance.

 

(b)                               Except as specifically disclosed in Schedule 5.15or except as would not have (i) a Material Adverse Effect or (ii) a MateriallyAdverse Effect on (A) AES NY, (B) the Borrower and the AEE Subsidiaries takenas a whole, (C) any Loan Document or (D) the Collateral, the Borrower and, tothe Actual Knowledge of the Borrower, each of NYSEG and NGE have taken, or aretaking, all required or necessary response actions, including any removal orremedial or other response action, in respect of any release, emission,discharge or disposal, or threat of release, discharge, disposal or emission ofany Hazardous Substance, in, on, under or from the Facility or the FacilitySite, so as to be in compliance with all Applicable Laws, including EnvironmentalLaws.

 

(c)                                To the Actual Knowledge of the Borrower,except as specifically disclosed in Schedule 5.15 or except aswould not have (i) a Material Adverse Effect or (ii) a Materially AdverseEffect on (A) AES NY, (B) the Borrower and the AEE Subsidiaries taken as awhole, (C) any Loan Document or (D) the Collateral:

 

(1)                                the Facility and the Facility Site and theownership, use, maintenance, modification and operation of the Facility and theFacility Site are now in compliance with applicable Environmental Laws in allmaterial respects;

 

(2)                                the disposal of all Hazardous Substancesgenerated, maintained, produced, manufactured, processed, distributed, used,treated, managed, stored, contained, recycled, transported or handled on, to,at or from the Facility or the Facility Site has been performed in compliancewith applicable Environmental Laws;

 

(3)                                no Hazardous Substances are located in, on,at or under the Facility or the Facility Site, except to the extent incidentalto the current use of the Facility or the Facility Site, and the Borrower and,to the Actual Knowledge of the Borrower, each of NYSEG and NGE has not and isnot currently maintaining, producing, manufacturing, processing, distributing,handling, treating, managing, containing, recycling, transporting, releasing,emitting, discharging, depositing, generating, storing, disposing of orcreating any Hazardous Substances in its ownership, alteration, modification,construction, use, operation or maintenance of the Facility or the FacilitySite other than in compliance with applicable Environmental Laws;

 

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(4)                                there are no Environmental Conditions withrespect to the Facility or the Facility Site;

 

(5)                                no Hazardous Substances have been releasedat, to, under, about or from the Facility or the Facility Site other than incompliance with all Environmental Laws;

 

(6)                                there are no underground storage tanks,treatment tanks, sumps, water, gas or oil wells, or associated piping locatedat on or under any of the Facility or the Facility Site, in each case that areleaking;

 

(7)                                (x) there is no friable asbestos or ureaformaldehyde insulation contained in, forming any part of, or contaminating anypart of the Facility or the Facility Site, and (y) no polychlorinated biphenyls(PCBs) are used, stored, located at or contaminate any part of the Facility orthe Facility Site; and

 

(8)                                no Lien has attached to the Facility byreason of any Environmental Condition.

 

(d)          To the Actual Knowledge of the Borrower, there are noEnvironmental Conditions with respect to the Facility or the Facility Site thatwould reasonably be likely to result in the temporary or permanent shutdown of,or cessation of operations at, the Facility.

 

Section 5.16.         Subsidiaries. The Borrower is the record and beneficialowner of 100% of the limited liability company membership interests and otherCapital Securities (if any) of AEE2, AES Cayuga and AES Somerset. AEE2 is therecord and beneficial owner of 100% of the limited liability company membershipinterests and other Capital Securities (if any) of AES Westover, L.L.C. and AESGreenidge, L.L.C. As of the Agreement Date, the Borrower has no Subsidiariesother than AEE2, AES Cayuga, AES Somerset, AES Westover, L.L.C. and AESGreenidge, L.L.C.

 

Section 5.17.         Property. Each of the Borrower and the AEE Entitieshas good and marketable title to and possession of, or a good and validleasehold interest in, the Assigned Assets (and the Borrower has good andmarketable fee simple title to the Facility Site and AEE2 has good andmarketable fee simple title to the Additional Facilities) free and clear of allLiens (except Permitted Liens), including all intellectual property or rightsto use intellectual property and other rights required for the conduct of itsrespective business, but only to the extent such intellectual property andother rights are required and the failure to obtain such property couldreasonably be expected to result in (i) a Material Adverse Effect or (ii) aMaterially Adverse Effect on (A) AES NY, (B) the Borrower and the AEE Subsidiariestaken as a whole, (C) any Loan Document or (D) the Collateral. The Borrower isnot a party to any contract or agreement to sell any interest in the Facilityother than pursuant to the Operative Documents and the operative documentsexecuted in connection with the lease financings contemplated by the OtherLeases. AEE2 is not a party to any contract or agreement to sell any interestin the Additional Facilities.

 

Section 5.18.         No Event of Loss. No Event of Loss has occurred, and, to theActual Knowledge of the Borrower, no event giving rise to an Event of Loss isthreatened, in each case with the respect to the Facility.

 

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Section 5.19.        AEE2Liens. (a) AEE2has good record and marketable fee title in each of the Additional Facilities,in each case free and clear of all Liens other than Permitted Liens.

 

(b)          None of the Permitted Liens will materially interfere withthe use, operation or possession of the Additional Facilities.

 

Section 5.20.        AEE2 Adequate Rights. (a) AEE2 is able to obtain all materials,supplies and services, including, but not limited to, all natural gas,electrical, telephone, water, sanitary waste disposal, ash disposal, rail, coalsupply, septic or water treatment system or services and all other utilityservices necessary for the present use, operation and maintenance of theAdditional Facilities (and, to the Actual Knowledge of the Borrower and the AEEEntities, all such services are currently available and are connected undervalid permits and in working order, in all material respects) so as to permiton a commercially practicable basis (i) the occupation, maintenance and repairof the Additional Facilities, (ii) the use, operation, leasing and possessionof the Additional Facilities, (iii) the use, operation, leasing, possession,maintenance, replacement, renewal and repair of all alterations, modifications,additions, accessions, improvements, appurtenances, replacements andsubstitutions thereof and thereto, (iv) appropriate ingress to and egress fromthe Additional Facilities for any reasonable purpose in connection with theexercise of rights under AEE2’s interest in the Additional Facilities,including, without limitation, access to dedicated public roads and to theActual Knowledge of the Borrower and the AEE2 Entities, all other materialroads, easements, servitudes, rights-of-way and other rights of ingress andegress as are necessary for the present operation, maintenance and use of theAdditional Facilities, (v) the procurement of other rights and servicesnecessary or appropriate to utilize the Additional Facilities in a commercialmanner, (vi) transmission services from the Additional Facilities sufficient toenable AEE2 to sell the output of the Additional Facilities, and (vii) theoperation of the Additional Facilities as independent units.

 

(b)                              To the Actual Knowledge of the Borrower and the AEE2 Entities, in allmaterial respects (i) the electrical, plumbing, heating, drainage, airconditioning, ventilation and other mechanical and electrical systems on and inthe Additional Facilities are in good working order and repair and are adequatein quantity and quality for present operation of the Additional Facilities bythe AEE2 Entities; and (ii) the Additional Facilities are otherwise in safecondition and there are no structural or other patent defects in the roofs, andother structural portions of the Additional Facilities, including walls,pillars, supporting columns and foundations.

 

(c)                               To the Actual Knowledge of the Borrower and the AEE2 Entities, otherthan Permitted Liens, the use of the Additional Facilities does not in anymaterial respect depend on any variance, special exception or other municipalapproval, permit or consent that has not been obtained for its present use, andall material building, construction and use related permits, approvals andconsents necessary for such use have been issued and are in full force andeffect; *provided,*that norepresentation is made herein regarding zoning ordinances or regulations.

 

(d)                              To the Actual Knowledge of the Borrower and the AEE2 Entities, nodefault or breach exists under any covenant, condition, restriction,right-of-way, easement or other agreement affecting all or any portion of theAdditional Facilities which is to be performed or complied with by the owner oroccupant of all or any portion of the Additional Facilities the

 

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nonperformance of which could reasonably be expected to result in (i) aMaterial Adverse Effect or (ii) a Materially Adverse Effect on (A) AES NY, (B)the Borrower and the AEE Subsidiaries taken as a whole, (C) any Loan Documentor (D) the Collateral.

 

(e)                                 To the Actual Knowledge of the Borrower andthe AEE2 Entities, there are no subleases, rental agreements or otheragreements conferring on any Person other than the AEE2 Entities the right touse or occupy all or any portion of the Additional Facilities.

 

(f)                                   To the Actual Knowledge of the Borrower andthe AEE2 Entities, there are no public improvements pending or intended thatwould result in any charge or special assessment against the AdditionalFacilities, except those, if any, reflected in the title policies relating tothe Additional Facilities.

 

Section 5.21.         Additional Facilities EnvironmentalMatters. (a)Except as specifically disclosed in Schedule 5.15 or except aswould not have (i) a Material Adverse Effect or (ii) a Materially AdverseEffect on (A) AES NY, (B) the Borrower and the AEE Subsidiaries taken as awhole, (C) any Loan Document or (D) the Collateral, no AEE2 Entity has receivedfrom any Governmental Entity any written notice, letter, citation, order,warning, complaint, inquiry, claim or demand that: (1) there has been arelease, or there is a threat of release, of any Hazardous Substance in, on,under or from the Additional Facilities except for releases authorized under orin compliance with Applicable Laws, including Environmental Laws, or anyrelease or releases for which, in the aggregate, no AEE2 Entity has anyliability for the costs of cleaning up, remedying or responding to a release ofany Hazardous Substance pertaining to the Additional Facilities; (2) any AEE2Entity has any liability for the costs of cleaning up, remedying or respondingto a release of any Hazardous Substance pertaining to the AdditionalFacilities; or (3) any Additional Facility is subject to a Lien in favor of anyGovernmental Entity in response to a release of any Hazardous Substance.

 

(b)                               Except for the conditions specificallydisclosed in Schedule 5.15 or except as would not have (i) aMaterial Adverse Effect or (ii) a Materially Adverse Effect on (A) AES NY, (B)the Borrower and the AEE Subsidiaries taken as a whole, (C) any Loan Documentor (D) the Collateral, each AEE2 Entity has taken, or is taking, all requiredor necessary response actions, including any removal or remedial or otherresponse action, in respect of any release, emission, discharge or disposal, orthreat of release, discharge, disposal or emission of any Hazardous Substance,in, on, under or from the Additional Facilities, so as to be in compliance withall Applicable Laws, including Environmental Laws.

 

(c)                                To the Actual Knowledge of the Borrower andeach AEE2 Entity, except as specifically disclosed in Schedule 5.15or except as would not have (i) a Material Adverse Effect or (ii) a MateriallyAdverse Effect on (A) AES NY, (B) the Borrower and the AEE Subsidiaries takenas a whole, (C) any Loan Document or (D) the Collateral:

 

(1)           the Additional Facilities and the ownership, use,maintenance, modification and operation of the Additional Facilities are now incompliance with applicable Environmental Laws;

 

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(2)                                  the disposal of all Hazardous Substancesgenerated, maintained, produced, manufactured, processed, distributed, used,treated, managed, stored, contained, recycled, transported or handled on, to,at or from the Additional Facilities has been performed in compliance withapplicable Environmental Laws;

 

(3)                                  no Hazardous Substances are located in, on,at or under the Additional Facilities, except to the extent incidental to thecurrent use of the Additional Facilities, and each AEE2 Entity has not and isnot currently maintaining, producing, manufacturing, processing, distributing,handling, treating, managing, containing, recycling, transporting, releasing,emitting, discharging, depositing, generating, storing, disposing of orcreating any Hazardous Substances in its ownership, alteration, modification,construction, use, operation or maintenance of the Additional Facilities otherthan in compliance with applicable Environmental Laws;

 

(4)                                  there are no Environmental Conditions withrespect to the Additional Facilities;

 

(5)                                  no Hazardous Substances have been releasedat, to, under, about or from the Additional Facilities other than in compliancewith all Environmental Laws;

 

(6)                                  there are no underground storage tanks,treatment tanks, sumps, water, gas or oil wells, or associated piping locatedat on or under any of the Additional Facilities, in each case that are leaking,other than any such for which, in the aggregate, no AEE2 Entity has anyliability for the costs of cleaning up, remedying or responding to a release ofany Hazardous Substance pertaining to the Additional Facilities;

 

(7)                                  (A) there is no friable asbestos or ureaformaldehyde insulation contained in, forming any part of, or contaminating anypart of the Additional Facilities, and (B) no polychlorinated biphenyls (PCBs)are used, stored, located at or contaminate any part of the AdditionalFacilities other than any of the foregoing for which, in the aggregate; no AEE2Entity has any liability for the costs of cleaning up, remedying or respondingto a release of any Hazardous Substance pertaining to the Additional Facilities;and

 

(8)                                  no Lien has attached to the AdditionalFacilities by reason of any Environmental Condition.

 

(d)           To the Actual Knowledge of the Borrower, there are noEnvironmental Conditions with respect to any Additional Facility that wouldreasonably be likely to result in the temporary or permanent shutdown of, orcessation of operations at, such Additional Facility.

 

Section 5.22.         BurdensomeProvisions.Neither the Borrower nor any Subsidiary is a party to or bound by any Contractor Applicable Law, compliance with which could reasonably be expected to have aMaterially Adverse Effect on (a) any Loan Document or (b) the Collateral.

 

Section 5.23.         NoAdverse Change or Event. Except as specifically set forth in Schedule 5.06, Schedule 5.13or Schedule 5.15, since December 31,2003, no change in thebusiness, assets, Liabilities, financial condition, results of operations orbusiness prospects of the Borrower or any AEE Entity has occurred, and no eventhas occurred or failed to occur, that has

 

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had or could reasonably be expected to have, either alone or inconjunction with all such other changes, events and failures, a MateriallyAdverse Effect on (a) AES NY, (b) the Borrower and the AEE Subsidiaries takenas a whole, (c) any Loan Document or (d) the Collateral.

 

Section 5.24.         Additional Adverse Facts. Except for facts and circumstancesdisclosed on Schedule 5.06, Schedule 5.13, Schedule 5.15or Schedule 5.24, neither the Borrower nor any AEE Entity has ActualKnowledge of any fact or circumstance, as of the Agreement Date, that, eitheralone or in conjunction with all other such facts and circumstances, has had orcould reasonably be expected to have (to the Actual Knowledge of the Borroweror any AEE Entity) a Materially Adverse Effect on (a) AES NY, (b) the Borrowerand the AEE Subsidiaries taken as whole, (c) any Loan Document or (d) theCollateral. If a fact or circumstance disclosed on such Schedules should in thefuture have a Materially Adverse Effect on (i) AES NY, (ii) the Borrower andthe AEE Subsidiaries taken as a whole, (iii) any Loan Document or (iv) theCollateral, such Materially Adverse Effect shall be a change or event subjectto Section 5.23 notwithstanding such disclosure.

 

Section 5.25.         MarginStock. Followingapplication of the proceeds of each Extension of Credit, not more than 25percent (25%) of the value of the assets of the Borrower will be margin stock(within the meaning of Regulation U). The Borrower is not engaged in the businessof extending credit for the purpose of buying or carrying margin stock (withinthe meaning of Regulation U), and no proceeds of any Loan or any drawing underany Letter of Credit will be used to buy or carry any margin stock or to extendcredit to others for the purpose of buying or carrying any margin stock.

 

Section 5.26.         Title to Properties. The Borrower has good and marketable titleto all of its properties and assets, real and personal, tangible andintangible, of any nature whatsoever (including patents, trademarks, tradenames, service marks and copyrights), free and clear of all Liens, charges orclaims (including infringement claims with respect to patents, trademarks,copyrights and the like), other than Permitted Liens. The Borrower has compliedin all respects with all obligations under all leases to which it is a partyand all such leases are in full force and effect, except, respectively, where afailure to comply or to be in full force and effect could not reasonably beexpected to have a Materially Adverse Effect on (a) AES NY, (b) the Borrowerand the AEE Subsidiaries taken as a whole, (c) any Loan Document or (d) theCollateral. The Borrower enjoys peaceful and undisturbed possession under allmaterial leases to which it is a party.

 

Section 5.27.         Insurance. All insurance required by Section 6.03is in full force and effect and all premiums with respect thereto have beenpaid (to the extent due and payable).

 

Section 5.28.         Lien in Collateral.The Pledge Agreement creates a valid and perfected first priority Lien in theCollateral, subject only to Permitted Liens described in Section 6.05(a),and all filings and other actions necessary to perfect and protect such Lienhave been taken.

 

Section 5.29.         Projections.All financial projections of the Borrower and its Subsidiaries previouslyfurnished by or on behalf of the Borrower to the Agent and the Banks are basedupon good faith estimates and assumptions that the Borrower believed werereasonable at the time

 

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such projections were delivered and such projections represent as ofthe Agreement Date the Borrower’s best estimate of future performance by theBorrower and its Subsidiaries.

 

ARTICLE 6CERTAIN COVENANTS

 

From the Agreement Date and until the RepaymentDate,

 

Section 6.01.         Coverage Ratio.The Borrower shall maintain, as of the last day of each fiscal quarter(commencing with the fiscal quarter ending June 30, 2004), for theimmediately preceding four-consecutive-fiscal quarter period ending on suchday, a Coverage Ratio of at least 1.20 to 1.00.

 

Section 6.02.         Preservation ofExistence and Properties, Scope of Business, Compliance with Law, Payment ofTaxes and Claims Preservation of Enforceability. The Borrower shall andshall cause each AEE Entity to (a) preserve and maintain its legal existenceand all of its other franchises, licenses, rights and privileges, (b) preserve,protect and obtain all Intellectual Property, and preserve and maintain in goodrepair, working order and condition all other properties, required for theconduct of its business, including the observation of the life extensionprograms of the Additional Facilities, (c) engage only in businesses insubstantially the same fields as the businesses conducted on the AgreementDate, (d) comply with Applicable Law and with all of its obligations under theOperative Documents, (e) pay or discharge when due all Taxes and allLiabilities that are or could reasonably be expected to become Liens on any ofits properties and (f) take all action and obtain all consents and GovernmentalApprovals and make all Governmental Registrations required so that itsobligations under the Loan Documents will at all times be legal, valid andbinding and enforceable in accordance with their respective terms, except thatthis Section 6.02 (other than clauses (a), insofar as it requires theBorrower to preserve its legal existence, (c) and (f)) shall not apply in anycircumstance where noncompliance, together with all other noncompliances withthis Section 6.02, will not have a Materially Adverse Effect on (x) anyLoan Document or (y) the Collateral.

 

Section 6.03.         Insurance. TheBorrower shall and shall cause each AEE Entity to maintain insurance withresponsible insurance companies against at least such risks and in at leastsuch amounts as is customarily maintained by similar businesses, or as may berequired by Applicable Law or reasonably requested by the Required Banks.Insurance against such risks and in at least such amounts as is required fromtime to time under the Leases shall be deemed to be what is “customarilymaintained by similar businesses” for purposes of this Section 6.03 inregards to the Additional Facilities.

 

Section 6.04.         Useof Proceeds. The Borrower shall and shall cause each AEE2 Entity to use theproceeds of the Loans only to pay Operating and Maintenance Costs. None of theproceeds of any of the Loans or of any drawing under a Letter of Credit shallbe used to purchase or carry, or to reduce or retire or refinance any creditincurred to purchase or carry, any margin stock (within the meaning ofRegulations U and X of the Board of Governors of the Federal Reserve System) orto extend credit to others for the purpose of purchasing or carrying any

 

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margin stock. If requested by any Bank, the Borrower shall complete andsign Part I of a copy of Federal Reserve Form U-l referred to in Regulation Uand deliver such copy to such Bank.

 

Section 6.05.         Liens.(a) The Borrower shall not, and shall not permit any AEE Subsidiary to,directly or indirectly permit to exist, at any time, any Lien upon any of theAEE Subsidiaries’ properties or assets of any character (including theAdditional Facilities) or upon any Collateral, in each case whether now ownedor hereafter acquired, or upon any income or profits therefrom, except thatthis Section 6.05(a) shall not apply to (i) Permitted Liens, (ii) anyrevenues of any AEE Subsidiary required to be deposited into the RevenueAccount pursuant to Section 3.1 (a) of the Depositary Agreement, or (iii)equitable Liens (if any) in existence on the date hereof, in favor of the OwnerTrust, on the assets of AEE2 deemed to be created under the Operative Documents(as in effect on the date hereof) pursuant to Applicable Law by virtue of AEE2’sobligations under the Depositary Agreement and other covenants applicable toAEE2 contained in the Operative Documents (as in effect on the date hereof);*provided, however,*that for purposes of this Section 6.05(a),clause (e) of the definition “Permitted Liens” contained in Appendix A shallread as follows “(e) Liens created by any Loan Document” and clause (i) of thedefinition “Permitted Liens” contained in Appendix A shall be omitted.

 

(b)          The Borrower shall not directly or indirectly permit toexist, at any time, any Lien upon any of the Borrower’s properties or assets ofany character (other than the Collateral), whether now owned or hereafteracquired, or upon any income or profits therefrom, except that this Section 6.05(b)shall not apply to Permitted Liens; *provided,however,*that for purposes of this Section 6.05(b), clause (e)of the definition “Permitted Liens” contained in Appendix A shall read asfollows “(e) Liens created by any Operative Document or any Other OperativeDocument, in each case as in effect on the Agreement Date” and clause (f) ofthe definition “Permitted Liens” contained in Appendix A shall be omitted.

 

Section 6.06.         Merger orConsolidation. The Borrower shall not, and shall not permit AES NY or anyAEE Subsidiary to, (a) liquidate, wind up or dissolve or (b) consolidate ormerge with or into any other Person, unless, in the case of this clause (b),the Borrower shall have provided at least ten Business Days’ prior writtennotice to the Agent, the Banks and the Issuing Banks and, immediately aftergiving effect to such transaction, (i) no Default shall have occurred and becontinuing, (ii) the entity resulting from such consolidation or surviving insuch merger shall be (A) in the case of the Borrower, the Borrower, (B) in thecase of AES NY, AES NY, and (C) in the case of any AEE Subsidiary, the Borroweror any such AEE Subsidiary, and (iii) the Borrower shall have delivered to theAgent a certificate of a Responsible Officer of the Borrower certifying thatthe provisions of this Section 6.06(b) have been complied with togetherwith such other documentation as the Agent may reasonably require to determinecompliance with this Section 6.06.

 

Section 6.07.         Disposition of Assets.The Borrower shall not, and shall not permit AEE2 or any other AEE Subsidiaryto, sell, lease, license, transfer or otherwise dispose of any asset or anyinterest therein, or to purchase, lease or acquire property or other assets, tofrom any Person or Persons in one or a series of transactions, except that theforegoing shall not apply to any of the following: (a) any such transaction inthe ordinary course of business of the Borrower or any AEE Subsidiary, (b) anytransfer or other disposition of emission allowances or the Additional Land toa third party purchaser, (c) any Permitted Affiliate Transaction that ispermitted under

 

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Section 6.10, and (d) solely with the priorwritten consent of the Agent, the Issuing Banks and the Banks, the transfer orother disposition of the Related Facility (at any time when it is owned by theBorrower or any Affiliate thereof, unless acquired by the Borrower or suchAffiliate as a result of an “Event of Loss” as defined in the Related Lease) oreither of the Additional Facilities.

 

Section 6.08.         Incurrence ofIndebtedness. The Borrower shall not, and shall not permit any AEESubsidiary to, create, incur, assume or suffer to exist any Indebtedness, otherthan (a) Indebtedness of any AEE2 Entity referred to in clause (a) of thedefinition of “Permitted Indebtedness” contained in Appendix A, (b)Indebtedness of the Borrower referred to in clauses (a) and (f) of thedefinition of “Permitted Indebtedness” contained in Appendix A, or (c) unsecuredPermitted Subordinated Indebtedness.

 

Section 6.09.         Limitations onInvestments. The Borrower shall not permit any AEE2 Entity to make orauthorize any loans, advances, purchases of securities or other investmentsother than Permitted Investments as set forth in Section 3.13 of theDepositary Agreement.

 

Section 6.10.        Transactionswith Affiliates. The Borrower shall not, and shall not permit any AEESubsidiary to, enter into any transactions with an Affiliate, other thanPermitted Affiliate Transactions, without the prior written consent of theAgent and the Required Banks; *provided,however,*that (i) any Permitted Affiliate Transaction described inclause (a)(iii) of the definition thereof contained in Appendix A shall requirethe prior written consent of the Agent and the Banks (in the case of the saleof any part of the Assigned Assets constituting all or any part of theAdditional Facilities) or the prior written consent of the Agent and theRequired Banks (in the case of any sale of any part of the Assigned Assets thatdoes not constitute any part of the Additional Facilities) and (ii) anyPermitted Affiliate Transaction described in clause (b)(II)(2)(y) of thedefinition thereof contained in Appendix A shall require the prior writtenconsent of the Agent and the Required Banks.

 

Section 6.11.         Subsidiaries. TheBorrower shall not permit any AEE2 Entity to create, acquire or permit to existany Subsidiary of any AEE2 Entity, other than AES Westover, L.L.C. and AESGreenidge, L.L.C.

 

Section 6.12.         Additional Facilities.The Borrower shall cause each Additional Facility to be maintained and operatedto the same maintenance and operating standards as the Borrower is required tomaintain and operate the Kintigh Station and Millikin Station under each Leaseas in effect as of the date hereof.

 

Section 6.13.        Payment of Operatingand Maintenance Costs. (a) Subject to the terms of the DepositaryAgreement, the Borrower shall not apply or cause the transfer of monies in theRevenue Account to any Account with a lower order of priority than the WorkingCapital Account (i) so long as any Loan or Unreimbursed Drawing is outstandinghereunder, or (ii) during any Rent Payment Period, in each case under thisclause (ii) until either (A) the aggregate amount transferred to the OperatingAccount with respect to such Rent Payment Period (including sums properlywithdrawn therefrom during such Rent Payment Period to pay Operating andMaintenance Costs) is equal to the sum of 125% of the amount set forth in theAnnual Operating Budget for such Rent Payment Period *plus*fuel costs payable for such Rent

 

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Payment Period or (B) all Operating and Maintenance Costs for such RentPayment Period have been paid.

 

(b)          The Borrower shall not, and shall not permit any Subsidiaryto, commingle monies transferred to it from the Operating Account with anyother monies. The Borrower shall, and shall cause each Subsidiary to, hold allmonies transferred to it from the Operating Account in a separate depositaccount in which only monies transferred from the Operating Account shall bedeposited. The Borrower shall not and shall not permit any Person to use moniestransferred to it from the Operating Account for any purpose other than to payOperating and Maintenance Costs.

 

Section 6.14.         Annual OperatingBudget. The Borrower shall cause each of the Facility, the Related Facilityand the Additional Facilities to be operated and maintained in accordance withthe Annual Operating Budget and shall not permit the aggregate expenditures inany year for Operating and Maintenance Costs to exceed 125% of the amount setforth in the Annual Operating Budget. Copies of the Annual Operating Budget foreach calendar year shall be furnished by the Borrower to the IndependentEngineer at least 30 days before final adoption thereof. Any amendment,modification or reallocation of the Annual Operating Budget by the Borrowerthat would cause a change of more than twenty five percent (25%) (positive ornegative) in the amounts set forth in the Annual Operating Budget shall beaccompanied by confirmation of the Independent Engineer that such amendment,modification or reallocation is based on reasonable assumptions. For purposesof this Section 6.14, fuel costs shall not be included in the calculationof the percentage change (positive or negative) in the amounts specified in theAnnual Operating Budget.

 

Section 6.15.         AEE Revenues. TheBorrower shall, and shall cause each AEE Subsidiary to, cause all AEE Revenuesto be deposited directly into the Revenue Account (except, to the extentprovided in the Depositary Agreement, for any revenues received by any AEEEntity under any Operation and Maintenance Agreement).

 

Section 6.16.         NoAbandonment. Subject to the prior written consent of the Agent, theBorrower shall not, and shall not permit any AEE Entity to, abandon or agree toabandon the operation or maintenance of the Facility or the Related Facility orotherwise cease to diligently pursue the operation and maintenance of theFacility and the Related Facility in accordance with Prudent Industry Practiceor voluntarily reduce the operations of the Facility or the Related Facility inany material respect (except to the extent required by customary maintenanceprocedures). Subject to the prior written consent of the Agent, the Borrowershall not, and shall not permit any AEE Entity to, abandon or agree to abandonthe operation or maintenance of either of the Additional Facilities orotherwise cease to diligently pursue the operation and maintenance of suchAdditional Facilities in accordance with Prudent Industry Practice (except tothe extent required by customary maintenance procedures), during the expecteduseful life of such Additional Facility.

 

Section 6.17.         Assignment.The Borrower may not Transfer any Lease or any other Operative Document or anyinterests therein without the prior written consent of the Agent and theRequired Banks (which consent shall not be unreasonably withheld).

 

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Section 6.18.         Compliancewith ERISA. The Borrower shall not (a) permit to exist any “accumulatedfunding deficiency” (as defined in Section 412(a) of the Code) withrespect to any Plan (unless such deficiency exists with respect to a MultipleEmployer Plan or Multiemployer Plan and the Borrower has no control over thereduction or elimination of such deficiency), (b) terminate, or permit any ofits ERISA Affiliates to terminate, any Plan of the Borrower or such ERISAAffiliate so as to result in any liability of the Borrower to the PBGC that, inthe reasonable opinion of the Required Banks, could reasonably be expected toresult in a Materially Adverse Effect on (i) AES NY, (ii) the Borrower and theAEE Subsidiaries taken as a whole, (iii) any Loan Document, or (iv) theCollateral, or (c) permit to exist any occurrence of any Reportable Event, orany other event or condition with respect to any Plan, that could reasonably beexpected to (i) present a material risk of such a termination by the PBGC ofany Plan of the Borrower or such ERISA Affiliate and (ii) result in anyliability to the Borrower that, in the reasonable opinion of the RequiredBanks, could reasonably be expected to result in a Materially Adverse Effect on(A) AES NY, (B) the Borrower and the AEE Subsidiaries taken as a whole, (C) anyLoan Document, or (D) the Collateral.

 

Section 6.19.         Restricted Payments.Notwithstanding any provision to the contrary set forth in the DepositaryAgreement, the Borrower will not make any Distribution (and Borrower will notpermit any AEE Subsidiary to make any Distribution other than to Borrower orany other AEE Subsidiary) unless such Distribution is made on or within tenBusiness Days after a Rent Payment Date (commencing with the Rent Payment Dateoccurring January 2, 2005) and at the time of such Distribution, theCoverage Ratios for each of the two semi-annual Rent Payment Periodsimmediately preceding such Rent Payment Date (based on actual operatinghistory) shall be equal to or greater than the Required Coverage Ratio and thePro Forma Coverage Ratios for each of the four semi-annual periods immediatelysucceeding such Rent Payment Date (based on Pro Forma) shall be equal to orgreater than the Required Coverage Ratio.

 

Section 6.20.         PPA TermThe Borroweragrees that at the time it seeks to obtain the Owner Participant’s consentpursuant to the last sentence of the definition of “PPA Term”, the Borrowershall be required, concurrently therewith, to obtain the prior written consentof the Required Banks.

 

Section 6.21.         Commitment IncreaseDateThe Borrower shall cause the Commitment Increase Date to occur as soonas practicable after the receipt of the NYPSC Order.

 

ARTICLE 7INFORMATION

 

Section 7.01.         Information to BeFurnished. From the Agreement Date and until the Repayment Date, theBorrower shall furnish to the Agent (with sufficient copies for each Bank):

 

(a)           Quarterly Financial Statements. As soon as reasonably practicable after theend of each fiscal quarter but in no event later than 60 days after the end ofsuch quarter (i) an unaudited consolidated balance sheet of the Borrower andits Consolidated Subsidiaries as of the end of such quarter and the relatedconsolidated statements of income for such quarter and for the portion of theBorrower’s fiscal year ended at the end of such quarter, and the related

 

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consolidated statements of cash flows for such quarter and for theportion of the fiscal year ended at the end of such quarter, in each casesetting forth comparative figures for previous dates and periods, to the extentavailable, and prepared in accordance with GAAP (subject to normal year-endadjustments), and (ii) an Officer’s Certificate, in the form of Schedule 7.01(a),of the Borrower stating that (A) the signer has made, or caused to be madeunder its supervision, a review of this Agreement, the other Loan Documents andthe Operative Documents; and (B) such review has not disclosed the existenceduring such fiscal quarter (and the signer does not have knowledge of theexistence as of the date of such certificate) of any condition or eventconstituting a Lease Material Default or Lease Event of Default or an Event ofLoss or a Default or, if any such condition or event existed or exists,specifying the nature thereof, the period of existence thereof and what actionthe Borrower has taken or proposes to take with respect thereto. Such Officer’sCertificate shall also contain reasonably detailed calculations demonstratingcompliance, as of the end of such fiscal quarter, with the financial covenantscontained in Section 6.01.

 

(b)                               Year-End Financial Statements: Accountants’Certificate. As soon as reasonably practicable after theend of each fiscal year but in no event later than 120 days after the end of suchyear, (i) a consolidated balance sheet of the Borrower and its ConsolidatedSubsidiaries as of the end of such fiscal year and the related consolidatedstatements of income, retained earnings and cash flows for such fiscal year(together with footnotes thereto and management discussion and analysis),setting forth in each case in comparative form the figures for the previousfiscal year, to the extent available, all prepared in accordance with GAAP andreported on and audited by an independent public accountant of nationallyrecognized standing, together with any other information required to be filedwith the Securities and Exchange Commission in respect of the Pass ThroughCertificates under applicable securities laws, (ii) an Officer’s Certificate ofthe Borrower, in the form of Schedule 7.01 (a),**stating, among other things, that (A)the signer has made, or caused to be made under its supervision, a review ofthis Agreement, the other Loan Documents and the Operative Documents; and (B)such review has not disclosed the existence during such fiscal year (and thesigner does not have knowledge of the existence as of the date of suchcertificate) of any condition or event constituting a Lease Material Default orLease Event of Default or an Event of Loss or a Default or, if any suchcondition or event existed or exists, specifying the nature thereof, the periodof existence thereof and what action the Borrower has taken or proposes to takewith respect thereto and (iii) a copy of FERC Form No. 1 to the extent filedwith FERC pursuant to 18 C.F.R. Section 141.1. Such Officer’s Certificate shallalso contain reasonably detailed calculations demonstrating compliance, as ofthe end of such fiscal year, with the financial covenants contained in Section 6.01.

 

(c)                                Operating Budgets. At least 30 days prior to the commencementof any fiscal year, the Annual Operating Budget for such fiscal yeardemonstrating that the Borrower will meet the Required Coverage Ratios,together with confirmation by the Independent Engineer that such budget isbased on reasonable assumptions and is prepared in accordance with the OperativeDocuments. Such budget shall be furnished to the Agent and each Bank pursuantto Section 11.21. Such Annual Operating Budget shall include Pro Formaprojections and projections indicating updated projected Coverage Ratios(taking the Independent Forecast into account) and shall indicate projectedchanges, if any, in the Rent Reserve Account and the Additional LiquidityAccount.

 

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(d)                                 MonthlyOperations Report.  As soon aspracticable following the end of each month, a Monthly Operations Report foreach of the Facility, the Related Facility and the Additional Facilities.  The Borrower agrees to amend the MonthlyOperations Report to include such additional operation and maintenanceinformation as the Agent may reasonably request.  The Borrower and the Agent will work togetherand establish a mutually acceptable format for such report.  The Monthly Operations Reports shall be deemedconfidential for purposes of Section 11.21 of this Agreement.

 

(e)                                  Noticesunder each of the Participation Agreements.  At the time such Information is delivered toany Owner Participant, Owner Trust, Indenture Trustee or Pass Through Trustee,the Information provided to such Owner Participant, Owner Trust, Indenture Trusteeor Pass Through Trustee pursuant to Article 5 or 6 of any ParticipationAgreement to the extent not otherwise delivered hereunder,*provided*that each opinion or certificateso delivered shall also be addressed to the Agent.

 

(f)                                    Reports,Filings and Notices.  (i) Promptlyupon receipt thereof, copies of all reports, if any, submitted to the Borroweror any Subsidiary, or the Board of Directors of the Borrower or any Subsidiary,by its independent certified public accountants, including any managementletter; (ii) as soon as practicable, copies of all such financial statementsand reports as the Borrower or any Subsidiary shall send to its stockholders(or other equity owners) and of all registration statements and all regular orperiodic reports that the Borrower or any Subsidiary shall file, or may berequired to file, with the Securities and Exchange Commission or any successorcommission; (iii) promptly after its completion, the annual actuarial valuationfor each Plan of AES NY, the Borrower and each Subsidiary of the Borrower; and(iv) promptly upon receipt thereof, copies of all notices or othercommunications received by the Borrower or any AEE Entity from the DepositaryAgent or any Owner Participant, Owner Trust, Indenture Trustee or Pass ThroughTrustee pursuant to or in connection with any Operative Document.

 

(g)                                 RequestedInformation.  From time to time andpromptly upon request of the Agent or any Bank, such Information regarding theLoan Documents or the Operative Documents to which the Borrower or anySubsidiary is a party, the Loans, the Letters of Credit or the business,assets, Liabilities, financial condition, results of operations or businessprospects of the Borrower and the Subsidiaries as the Agent or such Bank mayreasonably request, in each case in form and substance and certified in amanner satisfactory to the Agent or such requesting Bank (as the case may be).

 

(h)                                 Noticeof Defaults, Material Adverse Changes and Other Matters.  Prompt notice of:

 

(i)                                     anyDefault,

 

(ii)                                  thethreatening or commencement of, or the occurrence or nonoccurrence of anychange or event relating to, any action, suit or proceeding that would causethe Representation and Warranty contained in Section 5.06 to be incorrectif made at such time,

 

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(iii)                               the occurrence ornonoccurrence of any change or event that would cause the Representation andWarranty contained in Section 5.23 to be incorrect if made at such time,and

 

(iv)                              anychange in the rating given by any nationally recognized rating agency to anysecurities issued by the Borrower or any of its Subsidiaries.

 

Section 7.02.  Accuracy ofFinancial Statements and Information.  (a)     HistoricalFinancial Statements.  The Borrowerhereby represents and warrants that (i) Schedule 7.02(a) sets fortha complete and correct list of the financial statements submitted by theBorrower to the Banks in order to induce them to execute and deliver thisAgreement, (ii) such financial statements present fairly in all materialrespects, in accordance with GAAP, the consolidated financial position of theBorrower and the Consolidated Subsidiaries as at their respective dates and theconsolidated results of operations, retained earnings and, as applicable,changes in financial position or cash flows of the Borrower and suchSubsidiaries for the respective periods to which such statements relate, and(iii) except as disclosed or reflected in such financial statements orotherwise disclosed in Schedule 5.06, Schedule 5.13, Schedule 5.15or Schedule 5.24, neither the Borrower nor any Subsidiary has orhad any Liability, contingent or otherwise, or any unrealized or anticipatedloss, that, singly or in the aggregate, has had or could reasonably be expectedto have a Materially Adverse Effect on the Borrower and the ConsolidatedSubsidiaries taken as a whole.

 

(b)                                 FutureFinancial Statements.  The financialstatements delivered pursuant to Section 7.01(a) or (b) shall presentfairly in all material respects, in accordance with GAAP (except for changestherein or departures therefrom that are described in the certificate or reportaccompanying such statements and that have been approved in writing by theBorrower’s then current independent certified public accountants), theconsolidated financial position of the Borrower and the ConsolidatedSubsidiaries as at their respective dates and the consolidated results ofoperations, retained earnings and cash flows of the Borrower and suchSubsidiaries for the respective periods to which such statements relate, andthe furnishing of the same to the Agent and the Banks shall constitute arepresentation and warranty by the Borrower made on the date the same arefurnished to the Agent and the Banks to that effect and to the further effect that,except as disclosed or reflected in such financial statements, as at therespective dates thereof or otherwise disclosed to each Bank pursuant to Section 7.01(f)or Section 7.01(h), neither the Borrower nor any Subsidiary has or had anyLiability, contingent or otherwise, or any unrealized or anticipated loss,that, singly or in the aggregate, has had or could reasonably be expected tohave a Materially Adverse Effect on the Borrower and the ConsolidatedSubsidiaries taken as a whole.

 

(c)                                  HistoricalInformation.  The Borrower herebyrepresents and warrants that all Information furnished to the Agent or theBanks by or on behalf of the Borrower or any Subsidiary prior to the AgreementDate in connection with or pursuant to the Loan Documents and the relationshipsestablished thereunder, at the time the same was so furnished, but in the caseof Information dated as of a prior date, as of such date, (i) in the case ofany Information prepared in the ordinary course of business, was complete andcorrect in all material respects and in the light of the purpose prepared, and,in the case of any Information the preparation of which was requested by theAgent or any Bank, was complete and correct in all material respects to the

 

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extent necessary to givethe Agent or such Bank (as the case may be) true and accurate knowledge of thesubject matter thereof, (ii) did not contain any untrue statement of a materialfact, and (iii) did not omit to state a material fact necessary in order tomake the statements contained therein not misleading in the light of thecircumstances under which they were made; *provided,however,*that any representation and warranty contained in this subsection (c)in respect of any Information that relates to any Person other than theBorrower or any AEE Entity is to the best knowledge of the Borrower.

 

(d)                                 FutureInformation.  All Informationfurnished to the Agent or the Banks by or on behalf of the Borrower or anySubsidiary on or after the Agreement Date in connection with or pursuant to theLoan Documents or in connection with or pursuant to any amendment ormodification of, or waiver of rights under, the Loan Documents, shall, at thetime the same is so furnished, but in the case of Information dated as of aprior date, as of such date, (i) in the case of any Information prepared in theordinary course of business, be complete and correct in all material respectsand in the light of the purpose prepared, and, in the case of any Informationrequired by the terms of the Loan Documents or the preparation of which wasrequested by the Agent or any Bank, be complete and correct to the extentnecessary to give the Agent or such Bank (as the case may be) true and accurateknowledge of the subject matter thereof in all material respects, (ii) notcontain any untrue statement of a material fact, and (iii) not omit to state amaterial fact necessary in order to make the statements contained therein notmisleading in the light of the circumstances under which they were made, andthe furnishing of the same to the Agent or any Bank shall constitute arepresentation and warranty by the Borrower made on the date the same are sofurnished to the effect specified in clauses (i), (ii) and (iii) above; *provided, however,*that any representationand warranty contained in this subsection (d) in respect of anyInformation that relates to any Person other than the Borrower or any AEEEntity is to the best knowledge of the Borrower.

 

Section 7.03.  AdditionalCovenants Relating to Disclosure.  From the Agreement Date and until theRepayment Date, the Borrower shall and shall cause each Subsidiary to:

 

(a)                                  AccountingMethods and Financial Records.  Maintain a system of accounting, and keep suchbooks, records and accounts (which shall be true and complete), as may be requiredor necessary to permit (i) the preparation of financial statements required tobe delivered pursuant to Section 7.01(a) and (b) and (ii) thedetermination of the compliance of the Borrower and its Subsidiaries with theterms of the Loan Documents.

 

(b)                                 FiscalYear.  Maintain the same opening andclosing dates for each fiscal year as for the fiscal year reflected in thefinancial statements set forth in Schedule 7.02(a) or, if the openingand closing dates for the fiscal year reflected in such financial statementswere determined pursuant to a formula, determine the opening and closing datesfor each fiscal year pursuant to the same formula.

 

(c)                                  Visits,Inspections and Discussions.  Permitor, in the case of premises, property, books, records or Persons not within itsimmediate control, promptly upon reasonable notice take such actions as arenecessary or desirable in order to permit, representatives (whether or not officersor employees) of the Agent or any Bank, from time to time during operating orbusiness hours, as often as may be reasonably requested, to (i) visit any ofits premises or property or any

 

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premises or property ofothers on which any of its property or books and records (or books and recordsof others relating to it) may be located, (ii) inspect, and verify the amount,character and condition of, any of its property, (iii) review and make extractsfrom its books and records and books and records of others relating to it,including management letters prepared by its independent certified publicaccountants, and (iv) discuss with any Person (including its principal officers,independent certified public accountants, suppliers, customers, debtors andother creditors) its business, assets, Liabilities, financial condition,results of operation and business prospects.

 

Section 7.04.  Authorization ofThird Parties to Deliver Information and Discuss Affairs.  The Borrower hereby authorizes and directseach Person whose preparation or delivery to the Agent or the Banks of anyopinion, report or other Information is a condition or covenant under the LoanDocuments (including under Article 4 or this Article 7) to so prepareor deliver such Information for the benefit of the Agent and the Banks.  The Borrower further authorizes and directsall Persons (a) to furnish to the Agent and the Banks any Information regardingthe matters referred to in Section 7.01(g) that the Agent or any Bank mayrequest, (b) to permit representatives of the Agent or any Bank to make thevisits, inspections, reviews and extracts of premises, property, books andrecords within their possession and control contemplated by Section 7.03(c)and (c) to discuss with representatives of the Agent or any Bank the mattersreferred to in Section 7.03(c). The Borrower agrees to promptly executeand deliver from time to time such further authorizations to effect the purposesof this Section 7.04 as the Agent or any Bank may reasonably request.

 

ARTICLE 8

 

DEFAULT

 

Section 8.01.  Events of Default. Each of the following shall constitutean Event of Default, whatever the reason for such event and whether it shall bevoluntary or involuntary, or within or without the control of the Borrower orany Subsidiary, or be effected by operation of law or pursuant to any judgmentor order of any court or any order, rule or regulation of any governmental ornongovernmental body.

 

(a)                                  (i)Any payment of principal of any of the Loans, any Unreimbursed Drawings or theNotes shall not be made when and as due (whether at maturity, by reason ofnotice of prepayment or acceleration or otherwise) and in accordance with theterms of this Agreement and the Notes; or (ii) any payment of any interest,fees or other amount under this Agreement or any other Loan Document (otherthan a payment which is elsewhere in this Section specifically dealt with)shall not be made within five Business Days after the same shall be due(whether at maturity, by reason of notice of prepayment or acceleration orotherwise) and in accordance with the terms of this Agreement and the otherLoan Documents.

 

(b)                                 AnyLoan Document Representation and Warranty shall at any time prove to have beenincorrect or misleading in any material respect when made and, in the case of arepresentation or warranty pursuant to or under Section 5.03, Section 5.04,Section 5.05, Section 5.06(a), Section 5.07, Section 5.08, Section 5.09,Section 5.10,

 

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Section 5.11,Section 5.12, Section 5.13(b), Section 5.13(c), Section 5.14,Section 5.15, Section 5.17, Section 5.18, Section 5.19, Section 5.20or Section 5.21, if capable of being remedied, such representation orwarranty shall continue to be incorrect or misleading in any material respectfor a period of 30 days after notice thereof shall have been given to theBorrower by the Agent or any other Transaction Party, *provided*,**that if a good faith effort to remedy isinitiated within such 30 day period and pursued diligently, no Event of Defaultwith respect thereto shall be deemed to have occurred unless (i) the eventresulting in such representation or warranty being incorrect or misleading in anymaterial respect could or does result in a Materially Adverse Effect on (A) AESNY, (B) the Borrower and the AEE Subsidiaries taken as a whole, (C) any LoanDocument or (D) the Collateral or (ii) such representation or warranty remainsincorrect or misleading in any material respect for 180 days after such noticeis given.

 

(c)                                  (i)The Borrower shall default in the performance or observance of:

 

(A)                              anyterm, covenant, condition or agreement contained in Section 6.01, Section 6.02(a)(insofar as such Section requires the preservation of the corporateexistence of the Borrower),Section 6.02(f), Section 6.03 through Section 6.08, Section 6.10through Section 6.20 or Section 7.01(h)(i); or

 

(B)                                anyterm, covenant, condition or agreement contained in this Agreement or any otherLoan Document (other than a term, covenant, condition or agreement a default inthe performance or observance of which is elsewhere in this Section specificallydealt with) and, if capable of being remedied, such default shall continue unremediedfor a period of 30 days after notice shall have been given by the Agent or anyother Transaction Party to the Borrower requiring that such default be cured, *provided,*that if such default is capableof being remedied and a good faith effort to remedy such default is initiatedwithin such 30 day period and pursued diligently, no Event of Default withrespect thereto shall be deemed to have occurred until (1) such default has hada Materially Adverse Effect on (w) AES NY, (x) the Borrower and the AEE Subsidiariestaken as a whole, (y) any Loan Document or (z) the Collateral or (2) suchdefault has remained uncured for a period of 180 days after the notice setforth above shall have been given to the Borrower by the Agent or any otherTransaction Party;

 

(ii)                                  TheBorrower shall default in the performance or observance of:

 

(A)                              anyterm, covenant, condition or agreement contained in Article 1, Section 3.01(a), (b), (c), (d) or (g)(i), or Section 3.02 of the Pledge Agreement; or

 

(B)                                anyterm, covenant, condition or agreement contained in the Pledge Agreement (otherthan any term, covenant, condition or agreement a default in the performance orobservance of which is

 

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elsewhere in this Section specificallydealt with) and, if capable of being remedied, such default shall continueunremedied for a period of 30 days after notice shall have been given by theAgent to the Borrower requiring that such default be cured.

 

(d)                                 AnyAEE Entity or any of its Affiliates asserts, or any AEE Entity or any of itsAffiliates or any other Transaction Party institutes any proceedings seeking toestablish, that (i) any provision of the Loan Documents is invalid, not bindingor unenforceable or (ii) the**Security Interest is not a validand perfected first priority security interest in the Collateral subject onlyto Permitted Liens described in Section 6.05(a); or

 

(e)                                  TheBorrower shall at any time beneficially directly own less than 100% of AEE2’sissued and outstanding Capital Securities.

 

(f)                                    Thelimited liability company agreement or other organizational document of anyAEE2 Entity shall be amended, changed, modified or supplemented in any materialrespect.

 

(g)                                 Theoccurrence of a Lease Event of Default under any Lease as in effect as of thedate hereof. *(See*Schedule 8.01(g), for information purposes.)

 

(h)                                 Anymaterial provision of any of the Loan Documents, after delivery thereofpursuant to Article 4, shall for any reason, except to the extentpermitted by the express terms hereof or thereof, cease to be valid and bindingon or enforceable against the Borrower.

 

(i)                                     (i)Any Person shall engage in any *“prohibited transaction”*(asdefined in Section 406 of ERISA or Section 4975 of the Code)involving any Plan that is not otherwise exempt under any statute, regulationor administrative action, (ii) any *“accumulatedfunding deficiency”*(as defined in Section 302 of ERISA),whether or not waived, shall exist with respect to any Plan or any Lien infavor of the PBGC or a Plan shall arise on the assets of the Borrower or anyERISA Affiliate, (iii) a Reportable Event shall occur with respect to, orproceedings shall commence to have a trustee appointed, or a trustee shall beappointed, to administer or to terminate, any Single Employer Plan, whichcommencement of proceedings or appointment of a trustee is, in the reasonableopinion of the Required Banks, likely to result in the termination of such Planfor purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminatefor purposes of Title IV of ERISA or notice is given of intent to terminate anySingle Employer Plan, (v) the Borrower or any ERISA Affiliate shall, or in thereasonable opinion of the Required Banks is likely to, incur any liability inconnection with (A) a withdrawal from a Multiemployer Plan or Multiple EmployerPlan or (B) the Insolvency or Reorganization of a Multiemployer Plan or (vi)any other event or condition shall occur or exist with respect to a Plan; *provided*that, in each case in clauses (i)through (vi) above, such event or condition, together with all other suchevents or conditions, if any, has had or could reasonably be expected to have aMaterially Adverse Effect on

 

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(w) AES NY, (x) theBorrower and the AEE Subsidiaries taken as a whole, (y) any Loan Document or(z) the Collateral.

 

(j)                                     ThePledge Agreement, after delivery thereof pursuant to Article 4, shall forany reason, except to the extent permitted by the terms hereof or thereof,cease to create a valid and perfected first priority Lien (subject only toPermitted Liens described in Section 6.05(a)) in any portion of theCollateral.

 

(k)                                  Atany time any Issuing Bank shall have been served with or otherwise subjected toa court order, injunction, or other process or decree issued or granted at theinstance of the Borrower restraining or seeking to restrain such Issuing Bankfrom paying any amount under any Letter of Credit issued by it and either (i)there has been a drawing under such Letter of Credit which such Issuing Bankwould otherwise be obligated to pay or (ii) the stated expiration date or anyreduction of the stated amount of such Letter of Credit has occurred but theright of the beneficiary to draw thereunder has been extended in connectionwith the pendency of the related court action or proceeding.

 

Section 8.02.  Remedies uponEvent of Default.  During thecontinuance of any Event of Default (other than one specified in Section 16(g)or (h) of any Lease) and in every such event, the Agent, upon notice to theBorrower, may do any or all of the following: (a) declare, in whole or, fromtime to time, in part, the principal of and interest on the Loans, theUnreimbursed Drawings and the Notes and all other amounts owing under the LoanDocuments to be, and the Loans, the Unreimbursed Drawings and the Notes and allsuch other amounts shall thereupon and to that extent become, due and payable,(b) terminate, in whole or, from time to time, in part, the Commitments, (c)require the Borrower to pay immediately to the Agent an amount equal to theaggregate LC Outstandings of all Letters of Credit then outstanding, to be heldby the Agent (for its benefit and the benefit of the Issuing Banks and theBanks) as cash collateral securing such LC Outstandings, and/or (d) exercise inrespect of the Collateral, in addition to the other rights and remediesprovided for herein and in the Pledge Agreement or otherwise available to theAgent or the Banks, all the rights and remedies of a secured party on defaultunder the Uniform Commercial Code in effect in the State of New York and ineffect in any other jurisdiction in which any Collateral is located at thattime.  Upon the occurrence of an Event ofDefault specified in Section 16(g) or (h) of any Lease, automatically andwithout *any*notice to theBorrower, (i) the principal of and interest on the Loans, the UnreimbursedDrawings and the Notes and all other amounts owing under the Loan Documentsshall be due and payable, (ii) the Commitments shall terminate and (iii) theBorrower shall pay immediately to the Agent an amount equal to the aggregate LCOutstandings of all Letters of Credit then outstanding, to be held by the Agent(for its benefit and the benefit of the Issuing Banks and the Banks) as cashcollateral securing such LC Outstandings.  Presentment, demand, protest or notice of anykind (other than the notice provided for in the first sentence of this Section 8.02)are hereby expressly waived.

 

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ARTICLE 9

 

ADDITIONAL CREDITFACILITY PROVISIONS

 

Section 9.01.  MandatorySuspension and Conversion of Eurodollar Rate Loans and Eurodollar Rate Drawings. A Bank’s obligations to make, continueor convert into Eurodollar Rate Loans or Eurodollar Rate Drawings shall besuspended, all such Bank’s outstanding Eurodollar Rate Loans and EurodollarRate Drawings shall be converted on the last day of their applicable InterestPeriods (or, if earlier, in the case of clause (c) below, on the last day suchBank may lawfully continue to maintain Eurodollar Rate Loans and EurodollarRate Drawings or, in the case of clause (d) below, on the day determined bysuch Bank to be the last Business Day before the effective date of theapplicable restriction) into, and all pending requests for the making orcontinuation of or conversion into Eurodollar Rate Loans or Eurodollar RateDrawings by such Bank shall be deemed requests for, Base Rate Loans or BaseRate Drawings (as applicable), if:

 

(a)                                  onor prior to the determination of an interest rate for a Eurodollar Rate Loan orEurodollar Rate Drawing for any Interest Period, the Agent determines that for anyreason appropriate information is not available to it for purposes ofdetermining the Adjusted Eurodollar Rate for such Interest Period;

 

(b)                                 onor prior to the first day of any Interest Period for a Eurodollar Rate Loan orEurodollar Rate Drawing, such Bank determines that the Adjusted Eurodollar Rateas determined by the Agent for such Interest Period would not accuratelyreflect the cost to such Bank of making, continuing or converting into aEurodollar Rate Loan or Eurodollar Rate Drawing (as the case may be) for suchInterest Period;

 

(c)                                  atany time such Bank determines that any Regulatory Change Enacted after theAgreement Date makes it unlawful or impracticable for such Bank or its applicableLending Office to make, continue or convert into any Eurodollar Rate Loan or EurodollarRate Drawing, or to comply with its obligations hereunder in respect thereof; or

 

(d)                                 suchBank determines that, by reason of any Regulatory Change Enacted after theAgreement Date, such Bank or its applicable Lending Office is restricted, directlyor indirectly, in the amount that it may hold of (i) a category of liabilitiesthat includes deposits by reference to which, or on the basis of which, theinterest rate applicable to Eurodollar Rate Loans or Eurodollar Rate Drawingsis directly or indirectly determined or (ii) the category of assets thatincludes Eurodollar Rate Loans or Eurodollar Rate Drawings.

 

If, as a result ofthis Section 9.01, any Loan or Unreimbursed Drawing of any Bank that wouldotherwise be made or maintained as or converted into a Eurodollar Rate Loan orEurodollar Rate Drawing (as applicable) for any Interest Period is instead madeor maintained as or converted into a Base Rate Loan or Base Rate Drawing (asapplicable), then, unless the corresponding Loan or Unreimbursed Drawing (asapplicable) of each of the other Banks is also to be made or maintained as orconverted into a Base Rate Loan or Base Rate Drawing (as

 

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applicable), such Loan orUnreimbursed Drawing (as applicable) shall be treated as being a EurodollarRate Loan or Eurodollar Rate Drawing (as applicable) for such Interest Periodfor all purposes of this Agreement (including the timing, application andproration among the Banks of interest payments, conversions and prepayments)except for the calculation of the interest rate borne by such Loan or UnreimbursedDrawing (as applicable). The Agent shall promptly notify the Borrower and eachBank of the existence or occurrence of any condition or circumstance specifiedin clause (a) above, and each Bank shall promptly notify the Borrower and theAgent of the existence or occurrence of any condition or circumstance specifiedin clause (b), (c) or (d) above applicable to such Bank’s Loans andUnreimbursed Drawings, but the failure by the Agent or such Bank to give anysuch notice shall not affect such Bank’s rights hereunder.

 

Section 9.02.  RegulatoryChanges.  If in the determination ofany Bank or Issuing Bank (a) any Regulatory Change Enacted after the AgreementDate shall directly or indirectly (i) reduce the amount of any sum received orreceivable by such Bank with respect to any Loan or Unreimbursed Drawing or thereturn to be earned by such Bank on any Loan or Unreimbursed Drawing, (ii)impose a cost on such Bank or any Affiliate of such Bank that is attributableto (A) the making, funding or maintaining of, or such Bank’s commitment tomake, any Loan or Unreimbursed Drawing, or (B) participating in the issuance,maintenance or funding of any Letter of Credit, (iii) increase the cost to suchIssuing Bank of issuing or maintaining any Letter of Credit, (iv) require suchBank or any Affiliate of such Bank to make any payment on or calculated byreference to the gross amount of any amount received by such Bank under anyLoan Document, (v) reduce, or have the effect of reducing, the rate of returnon any capital of such Bank or any Affiliate of such Bank that such Bank orsuch Affiliate is required to maintain on account of any Loan or UnreimbursedDrawing or such Bank’s commitment to make any Loan or to participate in theissuance, maintenance or funding of any Letter of Credit, or (vi) reduce, orhave the effect of reducing, the rate of return on any capital of such IssuingBank or any Affiliate of such Issuing Bank that such Issuing Bank or suchAffiliate is required to maintain on account of any Letter of Credit or suchIssuing Bank’s commitment to issue any Letter of Credit, and (b) suchreduction, increased cost or payment shall not be fully compensated for by anadjustment in the applicable rates of interest payable under the LoanDocuments, then the Borrower shall pay to such Bank or Issuing Bank (as thecase may be) such additional amounts as such Bank or Issuing Bank (as the casemay be) determines will, together with any adjustment in the applicable ratesof interest payable hereunder, fully compensate for such reduction, increasedcost or payment.  Such additional amountsshall be due and payable, in the case of those applicable to prior periods,within 15 days after request by such Bank or Issuing Bank (as the case may be)for such payment and, in the case of those applicable to future periods, on thedates specified, or determined in accordance with a method specified, by suchBank or Issuing Bank (as the case may be); *provided,however,*that if, pursuant to the Depositary Agreement, the Borroweris not permitted to pay any such additional amounts to such Issuing Bank on anysuch due date, the Borrower shall pay such additional amounts to such IssuingBank on the first date thereafter (but in no event later than thenext-scheduled Rent Payment Date) that the Borrower is permitted to pay suchadditional amounts, *provided,*that,in such case, all such additional amounts shall bear interest at a rate *per annum*equal to the Base Rate *plus*the Applicable Margin from such duedate until paid in full, payable to such Issuing Bank on the date that suchadditional amounts are paid.  Each Bankand Issuing Bank will promptly notify the Borrower of any determination made byit referred to in clauses (a) and (b) above, but the failure

 

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to give such notice shallnot affect such Bank’s or Issuing Bank’s (as the case may be) right tocompensation.

 

Section 9.03.  CapitalRequirements.  If, in thedetermination of any Bank or Issuing Bank, any Regulatory Change relating to capitaladequacy Enacted after the Agreement Date requires such Bank or Issuing Bank,or any Affiliate of such Bank or Issuing Bank, to maintain capital on accountof (i) any Loan or Unreimbursed Drawing, (ii) such Bank’s Commitment, (iii)such Bank’s participation in the issuance, maintenance or funding of any Letterof Credit, or (iv) such Issuing Bank’s issuance or maintenance of any Letter ofCredit or commitment to issue any Letter of Credit, in a greater amount thansuch Bank, Issuing Bank or Affiliate would otherwise have to maintain onaccount of such Loan, Unreimbursed Drawing, Commitment, participation or Letterof Credit, as applicable, then, upon request by such Bank or Issuing Bank (asthe case may be), the Borrower shall from time to time thereafter pay to suchBank or Issuing Bank (as the case may be) such additional amounts as such Bankor Issuing Bank (as the case may be) determines will fully compensate for anyreduction in the rate of return on the capital that such Bank, Issuing Bank or Affiliateis so required to maintain on account of such Loan, Unreimbursed Drawing,Commitment, participation or Letter of Credit, as applicable.  Such additional amounts shall be due andpayable, in the case of those applicable to prior periods, within 15 days afterrequest by such Bank or Issuing Bank (as the case may be) for such payment and,in the case of those relating to future periods, on the dates specified, ordetermined in accordance with a method specified, by such Bank or Issuing Bank(as the case may be); *provided, however,*thatif, pursuant to the Depositary Agreement, the Borrower is not permitted to payany such additional amounts to such Issuing Bank on any such due date, theBorrower shall pay such additional amounts to such Issuing Bank on the firstdate thereafter (but in no event later than the next-scheduled Rent PaymentDate) that the Borrower is permitted to pay such additional amounts, *provided,*that, in such case, all suchadditional amounts shall bear interest at a rate *per annum*equal to the Base Rate*plus*the Applicable Margin from such due date until paid infull, payable to such Issuing Bank on the date that such additional amounts arepaid.

 

Section 9.04.  Funding Losses. The Borrower shall pay to each Bank,within five Business Days after any request therefor, such amount or amounts assuch Bank determines are necessary to compensate it for any loss, cost orreasonable expense (but not including loss of anticipated profits) incurred byit as a result of (a) any payment, prepayment or conversion of a EurodollarRate Loan or Eurodollar Rate Drawing on a date other than the last day of anInterest Period therefor or (b) a Eurodollar Rate Loan or Eurodollar RateDrawing for any reason not being made or converted, or any payment of principalthereof or interest thereon not being made, on the date therefor determined inaccordance with the applicable provisions of this Agreement.  At the election of such Bank, and withoutlimiting the generality of the foregoing, but without duplication, suchcompensation on account of losses may include an amount equal to the excess of(i) the interest that would have been received from the Borrower under thisAgreement on any amounts to be reemployed during an Interest Period or itsremaining portion over (ii) the interest component of the return that such Bankdetermines it could have obtained had it placed such amount on deposit in theinterbank Dollar market selected by it for a period equal to such InterestPeriod or its remaining portion.  If,pursuant to the Depositary Agreement, the Borrower is not permitted to pay anysuch amounts to any Bank on the date that such payment is due and payablepursuant to the first sentence of this Section 9.04, the Borrower shallpay such amounts to such

 

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Bank on the first datethereafter (but in no event later than the next-scheduled Rent Payment Date)that the Borrower is permitted to pay such amounts, *provided,*that, in such case, all such amounts shall bearinterest at a rate*per annum*equalto the Base Rate *plus*theApplicable Margin from such due date until paid in full, payable to such Bankon the date that such amounts are paid.

 

Section 9.05.  CertainDeterminations; Survival.  (a) Inmaking the determinations contemplated by Section 9.01, Section 9.02and Section 9.03, each Bank and Issuing Bank may make such estimates,assumptions, allocations and the like that such Bank or Issuing Bank (as thecase may be) in good faith determines to be appropriate, and such Bank’s orIssuing Bank’s (as the case may be) selection thereof in accordance with this Section 9.05,and the determinations made by such Bank or Issuing Bank (as the case may be)on the basis thereof, shall be final, binding and conclusive upon the Borrower,except, in the case of such determinations, for manifest errors in computationor transmission.  Each Bank and IssuingBank shall furnish to the Borrower upon request a certificate outlining inreasonable detail the computation of any amounts claimed by it under Section 9.02and Section 9.03 and the assumptions underlying such computations.  So long as any such request by the Borrower ismade within five Business Days after such Bank or Issuing Bank first requestspayment of such amounts pursuant to Section 9.02 or Section 9.03 (asthe case may be), the Borrower shall not be required to pay such amounts untilit has received such certificate.

 

(b)                                 TheBorrower’s obligations under this Article 9 shall survive the repayment ofall other amounts owing to the Lenders, the Agents and the Issuing Banks underthe Loan Documents and the termination of the Commitments.  If and to the extent that the obligations ofthe Borrower under this Article 9 are unenforceable for any reason, theBorrower agrees to make the maximum contribution to the payment andsatisfaction thereof which is permissible under applicable law.

 

Section 9.06.  Change of LendingOffice.  If an event occurs withrespect to a Lending Office of any Bank that obligates the Borrower to pay anyamount under Section 2.13, makes operable the provisions of clause (c) or(d) of Section 9.01 or entitles such Bank to make a claim under Section 2.13,Section 9.02 or Section 9.03, such Bank shall, if requested by theBorrower, use reasonable efforts to designate another Lending Office orOffices, the designation of which will reduce the amount the Borrower is soobligated to pay, eliminate such operability or reduce the amount such Bank isso entitled to claim, *provided*thatsuch designation would not, in the sole and absolute discretion of such Bank,be disadvantageous to such Bank in any manner or contrary to such Bank’spolicies.  Each Bank may at any time andfrom time to time change any Lending Office and shall give notice of any suchchange to the Agent and the Borrower.  Exceptin the case of a change in Lending Offices made at the request of the Borrower,the designation of a new Lending Office by any Bank shall not obligate theBorrower to pay any amount to such Bank under Section 2.13, make operable theprovisions of clause (c) or (d) of Section 9.01 or entitle such Bank tomake a claim under Section 2.13 or Section 9.02 if such obligation,the operability of such clause or such claim results solely from suchdesignation and not from a Regulatory Change Enacted thereafter.

 

Section 9.07.  Replacement ofBank in Respect of Increased Costs.  (a) Within 15 days after receipt by theBorrower of written notice from any Bank (an “Affected Bank”) (i)claiming

 

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payment of additionalamounts under Section 2.13, Section 9.02 or Section 9.03, or(ii) claiming that it is unable or unlawful for it to make Eurodollar RateLoans or Eurodollar Rate Drawings as set forth in Section 9.01, theBorrower may, if no Event of Default then exists, at its option, notify theAgent and such Affected Bank of its intention to replace the Affected Bank.  The Borrower, with the consent of the Agent(which consent shall not be unreasonably withheld), may obtain, at the Borrower’sexpense, a replacement bank (“Replacement Bank”) for the Affected Bank,which Replacement Bank must be reasonably satisfactory to the Agent andsatisfactory to the Issuing Bank in its sole discretion (other than any IssuingBank that is also the Affected Bank). The Affected Bank must promptly sell andassign its Loans, Unreimbursed Drawings and Commitments to such ReplacementBank for an amount equal to the principal balance of all Loans and UnreimbursedDrawings held by the Affected Bank and all accrued interest and fees withrespect thereto through the date of such sale, *provided*that the Borrower shall have reimbursed such Affected Bank for theadditional amounts, increased costs and any other amounts that it is entitledto receive under this Agreement through the date of such sale and assignment.

 

(b)                                 Notwithstandingthe foregoing, the Borrower shall not have the right to obtain a ReplacementBank if the Affected Bank rescinds its demand for increased costs or additionalamounts within 15 days following its receipt of the Borrower’s notice ofintention to replace such Affected Bank.  Furthermore, if the Borrower gives a notice ofintention to replace and does not so replace such Affected Bank within 70 daysthereafter, the Borrower’s rights to replace the Affected Bank as a result ofclaims based upon the events given rise to such claim referred to in suchwritten notice shall terminate.  TheBorrower shall promptly pay all increased costs or additional amountspreviously demanded by such Affected Bank and shall continue to pay immediatelyupon receipt of an invoice therefor all such increased costs and amountsincurred during any period after such written notice through the date of suchassignment.

 

ARTICLE 10

 

THE AGENT

 

Section 10.01.  Appointment andPowers.  Each Bank and Issuing Bankhereby irrevocably appoints and authorizes Calyon, and Calyon hereby agrees, toact as the agent for and representative (within the meaning of Section 9-102(a)(72)of the Uniform Commercial Code) of such Bank and Issuing Bank under the LoanDocuments with such powers as are delegated to the Agent and the Secured Partyby the terms thereof, together with such other powers as are reasonablyincidental thereto.  The Agent’s dutiesshall be purely ministerial and it shall have no duties or responsibilitiesexcept those expressly set forth in the Loan Documents and no impliedcovenants, functions, responsibilities, duties, obligations or liabilitiesshall be read into this Agreement or any other Loan Document or otherwise existagainst the Agent.  The Agent shall notbe required under any circumstances to take any action that, in its judgment,(a) is contrary to any provision of the Loan Documents or Applicable Law or (b)would expose it to any Liability or expense against which it has not beenindemnified to its satisfaction.  TheAgent shall not, by reason of its serving as the Agent, be a trustee or otherfiduciary for any Bank.

 

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Section 10.02.  Limitation onAgent’s Liability.  Neither the Agentnor any of its directors, officers, employees or agents shall be liable orresponsible for any action taken or omitted to be taken by it or them under orin connection with the Loan Documents, except for its or their own grossnegligence, willful misconduct or knowing violations of law.  The Agent shall not be responsible to any Bankor Issuing Bank for (a) any recitals, statements, representations or warrantiescontained in the Loan Documents or in any certificate or other documentreferred to or provided for in, or received by any of the Banks or IssuingBanks under, the Loan Documents, (b) the validity, effectiveness orenforceability of the Loan Documents or any such certificate or other document,(c) the value or sufficiency of the Collateral, (d) the satisfaction of anycondition set forth in Article 4 or elsewhere in any Loan Document, otherthan to confirm receipt of items expressly required to be delivered to theAgent or (e) any failure by the Borrower to perform any of its obligationsunder the Loan Documents.  The Agent mayemploy agents and attorneys-in-fact and shall not be responsible for thenegligence or misconduct of any such agents or attorneys-in-fact so long as theAgent was not grossly negligent in selecting or directing such agents orattorneys-in-fact.  The Agent shall beentitled to rely upon any certification, notice or other communication(including any thereof by telephone, telex, telecopier, telegram or cable)believed by it to be genuine and correct and to have been signed or given by oron behalf of the proper Person or Persons, and upon advice and statements oflegal counsel, independent accountants and other experts selected by the Agent. As to any matters not expressly providedfor by the Loan Documents, the Agent shall in all cases be fully protected inacting, or in refraining from acting, under the Loan Documents in accordancewith instructions signed by the Required Banks, and such instructions of theRequired Banks and any action taken or failure to act pursuant thereto shall bebinding on all of the Banks.

 

Section 10.03.  Defaults.  The Agent shall not be deemed to haveknowledge or notice of the occurrence of a Default (other than the non-paymentto it of principal of or interest on Loans) unless the Agent has receivednotice from a Bank or the Borrower specifying such Default and stating thatsuch notice is a “Notice of Default.” In the event that the Agent has knowledgeof such a non-payment or receives such a notice of the occurrence of a Default,the Agent shall give prompt notice thereof to the Banks.  In the event of any Default, the Agent shall(a) in the case of a Default that constitutes an Event of Default, take any orall of the actions referred to in the first sentence of Section 8.02 if sodirected by the Required Banks and (b) in the case of any Default, take suchother action with respect to such Default as shall be reasonably directed bythe Required Banks.  Unless and until theAgent shall have received such directions, in the event of any Default, theAgent may (but shall not be obligated to) take such action, or refrain fromtaking such action, with respect to such Default as it shall deem advisable inthe best interests of the Banks.

 

Section 10.04.  Rights as a Bank. Each Person acting as the Agent that isalso a Bank shall, in its capacity as a Bank, have the same rights and powersunder the Loan Documents as any other Bank and may exercise the same as thoughit were not acting as the Agent, and the term “Bank” or “Banks” shall includesuch Person in its individual capacity.  EachPerson acting as the Agent (whether or not such Person is a Bank) and itsAffiliates may (without having to account therefor to any Bank) accept depositsfrom, lend money to and generally engage in any kind of banking, trust or otherbusiness with the Borrower and its Affiliates as if it were not acting as theAgent, and such Person and its Affiliates may accept fees and otherconsideration

 

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from the Borrower and itsAffiliates for services in connection with the Loan Documents or otherwisewithout having to account for the same to the Banks.

 

Section 10.05. Indemnification. The Banks agree to indemnify the Agent(to the extent not reimbursed by the Borrower hereunder), ratably on the basisof the respective Percentages of the Banks, for any and all Liabilities,losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements of any kind and nature whatsoever that may be imposed on, incurredby or asserted against the Agent (including the costs and expenses that theBorrower is obligated to pay hereunder) in any way relating to or arising outof the Loan Documents or any other documents contemplated thereby or referredto therein or the transactions contemplated thereby or the enforcement of anyof the terms thereof or of any such other documents, *provided*that no Bank shall be liable for any of theforegoing to the extent (a) they are subject to the indemnity contemplated bythe last sentence of Section 11.09(b) or (b) they arise from the grossnegligence or willful misconduct of the Agent.

 

Section 10.06.  Non-Reliance onAgent and Other Banks.  Each Bankagrees that it has made and will continue to make, independently and withoutreliance on the Agent or any other Bank, and based on such documents andinformation as it deems appropriate, its own credit analysis of the Borrower,its own evaluation of the Collateral and its own decision to enter into theLoan Documents and to take or refrain from taking any action in connectiontherewith.  The Agent shall not berequired to keep itself informed as to the performance or observance by theBorrower of the Loan Documents or any other document referred to or providedfor therein or to inspect the properties or books of the Borrower or any AEEEntity or the Collateral.  Except fornotices, reports and other documents and information expressly required to befurnished to the Banks by the Agent under the Loan Documents, the Agent shallhave no obligation to provide any Bank with any information concerning thebusiness, status, operation, property or condition (financial or otherwise) ofthe Borrower or any AEE Entity, the Loan Documents or the Collateral that maycome into the possession of the Agent or any of its Affiliates.

 

Section 10.07.  Execution andAmendment of Loan Documents on Behalf of the Banks.  Each Bank and Issuing Bank hereby authorizesthe Agent to execute and deliver, in the name of and on behalf of such Bank andIssuing Bank, (a) the Pledge Agreement and (b) all UCC financing andcontinuation statements and other documents the filing or recordation of whichare, in the determination of the Agent, necessary or appropriate to create,perfect or maintain the existence or perfected status of the Security Interest. The Agent shall consent to any amendmentof any term, covenant, agreement or condition of the Pledge Agreement, or toany waiver of any right thereunder, if, but only if, the Agent is directed todo so in writing by the Required Banks; *provided,however,*that (i) the Agent shall not be required to consent to anysuch amendment or waiver that affects its rights or duties and (ii) the Agentshall not, unless directed to do so in writing by each Bank, (A) consent to anyassignment by the Borrower of any of its rights or obligations under any suchagreement or (B) release any Collateral from the Security Interest, except asrequired or contemplated by the Loan Documents.

 

Section 10.08.  Resignation of theAgent.  The Agent may at any timegive notice of its resignation to the Banks and the Borrower.  Upon receipt of any such notice ofresignation, the Required Banks may, after consultation with the Borrower,appoint a successor Agent which shall be acceptable to the Borrower, in itsreasonable judgment.  If no successorAgent shall have

 

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been so appointed by theRequired Banks and shall have accepted such appointment within 30 days afterthe retiring Agent’s giving of notice of resignation, then the retiring Agentmay, on behalf of the Banks and after consultation with the Borrower, appoint asuccessor Agent which shall be a bank with an office in New York, New Yorkhaving a combined capital and surplus of at least $500,000,000 or an Affiliateof any such bank, which Affiliate shall be reasonably acceptable to theBorrower.  Upon the acceptance by anyPerson of its appointment as a successor Agent, (a) such Person shall thereuponsucceed to and become vested with all the rights, powers, privileges, dutiesand obligations of the retiring Agent and the retiring Agent shall bedischarged from its duties and obligations as Agent under the Loan Documentsand (b) the retiring Agent shall promptly transfer all Collateral within itspossession or control to the possession or control of the successor Agent andshall execute and deliver such notices, instructions and assignments as may benecessary or desirable to transfer the rights of the Agent with respect to theCollateral to the successor Agent.  Afterany retiring Agent’s resignation as Agent, the provisions of this Article 10shall continue in effect for its benefit in respect of any actions taken oromitted to be taken by it while it was acting as the Agent.

 

ARTICLE 11

 

MISCELLANEOUS

 

Section 11.01.  Notices andDeliveries.  (a) Notices and MaterialsOther than Collateral.  Except asprovided inSection 10.01(b):

 

(i)                                     Mannerof Delivery.  All notices,communications and materials (including all Information) to be given ordelivered pursuant to the Loan Documents shall, except in those cases wheregiving notice by telephone is expressly permitted, be given or delivered inwriting (which shall include telecopy transmissions). Notices under Section 2.02,Section 2.03(c), Section 2.05, Section 2.07, Section 3.01, Section 3.02,Section 3.04(e) and Section 8.02 may be by telephone, promptly, inthe case of each notice other than one under Section 8.02, confirmed inwriting.  In the event of a discrepancybetween any telephonic notice and any written confirmation thereof, suchwritten confirmation shall be deemed the effective notice except to the extentthat the Agent has acted in reliance on such telephonic notice.

 

(ii)                                  Addresses. All notices, communications andmaterials to be given or delivered pursuant to the Loan Documents shall begiven or delivered at the following respective addresses and telecopier andtelephone numbers and to the attention of the following individuals ordepartments:

 

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(A)                              ifto the Borrower, to it at:

 

AES EasternEnergy, L.P.

7725 Lake Road

Barker, New York14012

Telecopier No.(716)  795-3654

Telephone No.(716)  795-9501

Attention:                          AmyConley, Chief Financial Officer

 

(B)                                ifto the Agent, to it at:

 

Calyon New YorkBranch

1301 Avenue of theAmericas

New York, New York10019

Telecopier No.:(212) 261-3421

Telephone No.:(212) 261-7888

Attention:                          TedVandermel

(CreditContact)

JustineVentrelli

(Operations)

 

(C)                                ifto any Bank (including in its capacity as an Issuing Bank), to it at theaddress or telex, telecopier or telephone number and to the attention of theindividual or department, set forth below such Bank’s name under the heading “NoticeAddress” on Annex A or, in the case of a Bank that becomes a Bankpursuant to an assignment set forth under the heading “Notice Address” in theNotice of Assignment given to the Borrower and the Agent with respect to suchassignment;

 

or at such otheraddress or telecopier or telephone number or to the attention of such otherindividual or department as the party to which such information pertains mayhereafter specify for such purpose in a notice specifically captioned “Noticeof Change of Address” given to (x) if the party to which such informationpertains is the Borrower, the Agent and each Bank, (y) if the party to whichsuch information pertains is the Agent, the Borrower and each Bank and (z) ifthe party to which such information pertains is a Bank, the Borrower and theAgent.

 

(iii)                               Effectiveness.  Each notice and communication and any materialto be given or delivered pursuant to the Loan Documents shall be deemed sogiven or delivered (A) if sent by registered or certified mail, postageprepaid, return receipt requested, on the fifth Business Day after such notice,communication or material, addressed as above provided, is delivered to aUnited States post office and a receipt therefor is issued thereby, (B) if sentby any other means of physical delivery, when such notice, communication ormaterial is delivered to the appropriate address as above provided, (C) if sentby telecopier, when such notice, communication or material is transmitted tothe appropriate telecopier number as above provided and is received at suchnumber and (D) if given by

 

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telephone, whencommunicated to the individual or any member of the department specified as theindividual or department to whose attention notices, communications andmaterials are to be given or delivered, or, in the case of notice by the Agentto the Borrower under Section 8.02 given by telephone as above provided,if any individual or any member of the department to whose attention notices,communications and materials are to be given or delivered is unavailable at thetime, to any other officer or employee of the Borrower, except that (x) noticesof a change of address, telecopier or telephone number or individual ordepartment to whose attention notices, communications and materials are to begiven or delivered shall not be deemed given until received and (y) notices,communications and materials to be given or delivered to the Agent, any Bank orany Issuing Bank pursuant to Section 2.02, Section 2.03(c), Section 2.05,Section 2.07, Section 2.12(b), Article 3 and Article 7shall not be deemed given or delivered until received by the officer of theAgent, such Bank or such Issuing Bank responsible, at the time, for theadministration of the Loan Documents.

 

(iv)                              ReasonableNotice.  Any requirement underApplicable Law of reasonable notice by the Agent, the Banks or the IssuingBanks to the Borrower of any event in connection with, or in any way relatedto, the Loan Documents or the exercise by the Agent, the Banks or the IssuingBanks of any of their rights thereunder shall be met if notice of such event isgiven to the Borrower in the manner prescribed above at least ten days before(A) the date of such event or (B) the date after which such event will occur.

 

(b)                                 Collateral.  Until the Agent shall otherwise specify, allCollateral to be delivered to the Agent pursuant to the Loan Documentsconsisting of instruments, securities, chattel paper, letters of credit ordocuments shall be delivered to the Agent at the Agent’s Office either by handdelivery or by registered or certified mail, postage prepaid, return receiptrequested, in either case insured in an amount not less than the greater of theaggregate face amount and the aggregate fair market value of the Collateral sobeing delivered.  All other Collateral tobe delivered to the Agent pursuant to the Loan Documents shall be delivered tosuch Person, at such address, by such means and in such manner as the Agent maydesignate.

 

Section 11.02.  Expenses;Indemnification.  Whether or not anyExtensions of Credit are made hereunder, the Borrower shall:

 

(a)                                  payor reimburse the Agent, each Bank and each Issuing Bank for all transfer,documentary, stamp and similar taxes, and all recording and filing fees andtaxes payable in connection with, arising out of, or in any way related to, theexecution, delivery and performance of the Loan Documents or the making of theExtensions of Credit;

 

(b)                                 payor reimburse the Agent for all reasonable costs and expenses (including feesand disbursements of legal counsel, appraisers, accountants and other expertsemployed or retained by the Agent) incurred by the Agent in connection with, or

 

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arising out of, orin any way related to (i) the negotiation, preparation, execution, delivery andsyndication of (A) the Loan Documents and (B) whether or not executed, anywaiver, amendment or consent thereunder or thereto, (ii) the administration ofand any operations under the Loan Documents, (iii) consulting with respect toany matter in any way arising out of, related to, or connected with, the LoanDocuments, including (A) the protection or preservation of the Collateral, (B)the protection, preservation, exercise or enforcement of any of the rights ofthe Agent, the Banks or the Issuing Banks in, under or related to theCollateral or the Loan Documents or (C) the performance of any of theobligations of the Agent, the Banks or the Issuing Banks under or related tothe Loan Documents, (iv) protecting or preserving the Collateral or (v)protecting, preserving, exercising or enforcing any of the rights of the Agent,the Banks or the Issuing Banks in, under or related to the Collateral or theLoan Documents, including defending the Security Interest as a valid,perfected, first priority security interest in the Collateral subject only toPermitted Liens;

 

(c)                                  payor reimburse each Bank for all reasonable costs and expenses (including feesand disbursements of legal counsel and other experts employed or retained bysuch Bank) incurred by such Bank in connection with, arising out of, or in anyway related to (i) consulting during a Default with respect to (A) theprotection, preservation, exercise or enforcement of any of its rights in,under or related to the Collateral or the Loan Documents or (B) the performanceof any of its obligations under or related to the Loan Documents or (ii)protecting, preserving, exercising or enforcing during a Default any of itsrights in, under or related to the Collateral or the Loan Documents; *provided, however,*that the Agent and eachBank shall exercise reasonable efforts to select one common legal counsel foreach jurisdiction and other common experts except to the extent that the Agentor any Bank deems in its reasonable judgment that the use of common legalcounsel or other experts would prejudice its interests; and

 

(d)                                 indemnifyand hold each Indemnified Person harmless from and against all losses(including judgments, penalties and fines) suffered, and pay or reimburse each IndemnifiedPerson for all reasonable costs and expenses (including fees and disbursementsof legal counsel and other experts employed or retained by such IndemnifiedPerson) incurred, by such Indemnified Person in connection with, arising out of,or in any way related to (i) any Loan Document Related Claim (whether assertedby such Indemnified Person or the Borrower or any other Person), including theprosecution or defense thereof and any litigation or proceeding with respectthereto (whether or not, in the case of any such litigation or proceeding, suchIndemnified Person is a party thereto), (ii) any actual or alleged presence orrelease of any Hazardous Substance on or from any property owned or operated bythe Borrower or any of its Affiliates, or any Environmental Conditions relatedin any way to the Borrower or any of its Affiliates, or (iii) anyinvestigation, governmental or otherwise, arising out of, related to, or in anyway connected with, the Loan Documents or the relationships establishedthereunder, except that the foregoing indemnity shall not be applicable to anyloss suffered by any Indemnified Person to the extent such loss is determinedby a judgment of a court that is binding on the Borrower and such IndemnifiedPerson, final and not subject to review on appeal, to be the result of acts oromissions on the part of such Indemnified Person constituting (x) willfulmisconduct or (y) gross negligence.

 

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Section 11.03.  Amounts PayableDue upon Request for Payment.  Allamounts payable by the Borrower under Section 11.02 and under the otherprovisions of the Loan Documents shall, except as otherwise expressly provided,be immediately due upon request for the payment thereof.

 

Section 11.04.  Remedies of theEssence.  The various rights andremedies of the Agent, the Banks and the Issuing Banks under the Loan Documentsare of the essence of those agreements, and the Agent, the Banks and theIssuing Banks shall be entitled to obtain a decree requiring specificperformance of each such right and remedy.

 

Section 11.05.  Rights Cumulative. Each of the rights and remedies of theAgent, the Banks and the Issuing Banks under the Loan Documents shall be inaddition to all of their other rights and remedies under the Loan Documents andApplicable Law, and nothing in the Loan Documents shall be construed aslimiting any such rights or remedies.

 

Section 11.06.  Amendments;Waivers.  Any term, covenant,agreement or condition of the Loan Documents may be amended, and any rightunder the Loan Documents may be waived, if, but only if, such amendment orwaiver is in writing and is signed by (a) in the case of an amendment or waiverwith respect to the Loan Documents referred to in Section 10.07, theAgent, (b) in the case of an amendment or waiver with respect to any other LoanDocument, (i) the Required Banks, (ii) if the rights and duties of the Agentare affected thereby, by the Agent, and (iii) if the rights and duties of anyIssuing Bank are affected thereby, by such Issuing Bank, and (c) in the case ofan amendment with respect to any Loan Document, by the Borrower; *provided, however,*that no amendment shallbe effective, unless in writing and signed by each Bank affected thereby, tothe extent it changes the amount of such Bank’s Commitment; and, *provided, further,*that no amendment orwaiver shall be effective, unless in writing and signed by each Bank, to theextent it (A) reduces the principal of or the rate of interest on any Bank’sLoans, Unreimbursed Drawings or Note or the fees payable to any Bank hereunder,(B) postpones any date fixed (otherwise than as a result of a prepaymentpursuant to Section 2.05) for any payment of principal of or interest onany Bank’s Loans, Unreimbursed Drawings or Note or the fees payable to suchBank hereunder, (C) amends Section 2.14, this Section 11.06 or anyother provision of this Agreement requiring the consent or other action of allof the Banks, (D) eliminates or reduces the voting rights of any Bank (E)reduces any percentage specified in the definition of Required Banks or (F)releases all or substantially all of the Collateral.  Unless otherwise specified in an amendment orwaiver, an amendment or waiver under the Loan Documents shall be effective onlyin the specific instance and for the specific purpose for which given.  By entering into an amendment with, or givinga waiver under, a section of the Loan Documents, the Banks shall not bedeemed to have, or to have intended to have, (1) waived any rights that they,or any of them, then or thereafter may have under any other provisions of theLoan Documents and (2) if such amendment or waiver was occasioned by aparticular fact or facts, accepted that fact or those facts for any otherpurpose or Section of the Loan Documents, including Section 5.23 ofthis Agreement, so that, for purposes of Section 5.23, if such fact orfacts has had or could have, either alone, or together with other facts, aMaterially Adverse Effect, such Materially Adverse Effect shall be a change orevent subject to Section 5.23, notwithstanding such amendment or waiver.  No election not to exercise, failure toexercise or delay in exercising any right, nor any course of dealing orperformance, shall operate as a waiver of any right of the Agent, any Bank orany Issuing Bank under the Loan Documents

 

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or Applicable Law, norshall any single or partial exercise of any such right preclude any other orfurther exercise thereof or the exercise of any other right of the Agent, anyBank or any Issuing Bank under the Loan Documents or Applicable Law.

 

Section 11.07.  Set-Off;Suspension of Payment and Performance.  The Agent, each Bank and each Issuing Bank ishereby authorized by the Borrower, at any time and from time to time, withoutnotice, (a) during any Event of Default, to set-off against, and to appropriateand apply to the payment of, the Liabilities of the Borrower under the LoanDocuments (whether owing to such Person or to any other Person that is theAgent, a Bank or an Issuing Bank and whether matured or unmatured, fixed orcontingent or liquidated or unliquidated), any and all Liabilities owing bysuch Person or any of its Affiliates to the Borrower (whether payable inDollars or any other currency, whether matured or unmatured and, in the case ofLiabilities that are deposits, whether general or special, time or demand andhowever evidenced and whether maintained at a branch or office located withinor without the United States) and (b) during any Default, to suspend thepayment and performance of such Liabilities owing by such Person or itsAffiliates in an amount equal to the amount then due and payable under the LoanDocuments and, in the case of Liabilities that are deposits, to the extentnecessary, to return as unpaid for insufficient funds any and all checks andother items drawn against such deposits.  The Agent, such Bank or such Issuing Bankshall provide the Borrower with written notice of the set-off, *provided,*that the failure of the Agent,such Bank or such Issuing Bank to provide such notice will not effect theirrights under this Agreement.

 

Section 11.08.  Sharing ofRecoveries.  (a) Each Bank agreesthat, if, for any reason, including as a result of (i) the exercise of anyright of counterclaim, set-off, banker’s lien or similar right, (ii) its claimin any applicable bankruptcy, insolvency or other similar law being deemedsecured by a Debt owed by it to the Borrower, including a claim deemed securedunder Section 506 of the Bankruptcy Code, or (iii) the allocation ofpayments by the Agent or the Borrower in a manner contrary to the provisions ofSection 2.14, such Bank shall receive payment of a proportion of theaggregate amount due and payable to it hereunder as principal of or interest onthe Loans or Unreimbursed Drawings or fees that is greater than the proportionreceived by any other Bank in respect of the aggregate of such amounts due andpayable to such other Bank hereunder, then the Bank receiving suchproportionately greater payment shall purchase participations (which it shallbe deemed to have done simultaneously upon the receipt of such payment) in therights of the other Banks hereunder so that all such recoveries with respect tosuch amounts due and payable hereunder (net of costs of collection) shall be*pro rata; provided,*that if all or partof such proportionately greater payment received by the purchasing Bank isthereafter recovered by or on behalf of the Borrower from such Bank, suchpurchases shall be rescinded and the purchase prices paid for suchparticipations shall be returned to such Bank to the extent of such recovery,but without interest (unless the purchasing Bank is required to pay interest onthe amount recovered to the Person recovering such amount, in which case theselling Bank shall be required to pay interest at a like rate). So long as thepurchasing Bank has not advised it to the contrary, each selling Bank mayassume, for purposes of Section 11.09(b), that no Tax is required to bewithheld or deducted by the Borrower from, or is otherwise payable by theBorrower in connection with, any payment by the Borrower to or for the accountof such Bank under the Loan Documents.  TheBorrower expressly consents to the foregoing arrangements and agrees that anyholder of a participation in any rights hereunder so purchased or acquiredpursuant to this Section 11.08(a) shall, with respect to suchparticipation, be entitled

 

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to all of the rights of aBank under Section 2.13, Section 9.02, Section 9.03, Section 9.04,Section 9.05, Section 11.02, Section 11.07 (subject to anycondition imposed on a Bank hereunder with respect thereto, including deliveryof the forms and certificates required under Section 2.13(a)(iv)) and mayexercise any and all rights of set-off with respect to such participation as fullyas though the Borrower were directly indebted to the holder of suchparticipation for Loans in the amount of such participation.

 

(b)                                 EachBank agrees to exercise any right of counterclaim, set-off, banker’s lien orsimilar right that it may have in respect of the Borrower in a manner so as toapportion the amount subject to such exercise, on *a pro rata*basis, between (i) obligations of the Borrowerfor amounts subject to the sharing provisions of Section 11.08(a) and (ii)other Liabilities of the Borrower.

 

Section 11.09.  Assignments andParticipations.

 

(a)                                  Assignments*.*  (i) The Borrowermay not assign any of its rights or obligations under the Loan Documentswithout the prior written consent of (A) in the case of the Loan Documentsreferred to in Section 10.07, the Agent and (B) in the case of any of theother Loan Documents, each Bank, and no assignment of any such obligation shallrelease the Borrower therefrom unless the Agent or each Bank, as applicable,shall have consented to such release in a writing specifically referring to theobligation from which the Borrower is to be released.

 

(ii)                                  EachBank may from time to time assign any or all of its rights and obligationsunder the Loan Documents to one or more Persons; *provided*that, except in the case of the grant of anassignment to a Federal Reserve Bank (which may be made without condition orrestriction), no such assignment shall be effective unless (A) the assignmentis consented to by (unless an Event of Default specified in Section 16(g)or 16(h) of the Lease exists) the Agent, (B) the assignment is consented to byeach Issuing Bank, (C) the assignment is (1) to a Bank or an Eligible Assigneeor an Affiliate of a Bank or an Eligible Assignee and (2) consented to by theBorrower, which consent shall not be unreasonably withheld or delayed *(provided,*that such consent by theBorrower shall not be required (x) for any assignment to a Bank or an Affiliateof a Bank or (y) during the existence of an Event of Default), (D) in the caseof a partial assignment, after giving effect thereto, the aggregate amount ofthe Commitment and the outstanding principal amount of the Loans andUnreimbursed Drawings of both the assignor and the assignee shall be not lessthan $5,000,000, (E) the assignment shall involve the assignment of a fixedpercentage of all of the assignor’s rights and obligations under the LoanDocuments, (F) a Notice of Assignment with respect to the assignment, dulyexecuted by the assignor and the assignee, shall have been given to theBorrower and the Agent, (G) in the case of an assignment of a Registered Note,such Registered Note shall have been surrendered for registration of assignmentduly endorsed by (or accompanied by a written instrument of assignment dulyexecuted by) the Registered Holder and such assignment shall have been recordedon the Register and (H) except in the case of an assignment by the Bank that isthe Agent, the Agent shall have been paid an assignment fee of $3,500. Upon anyeffective assignment, the assignor Bank

 

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shall be releasedfrom the obligations so assigned and, in the case of an assignment of all ofits Loans, Unreimbursed Drawings and Commitment, shall cease to be a Bank.  In the event of any effective assignment by aBank, the Borrower shall, against (except in the case of a partial assignment)receipt of the existing Note of the assignor Bank, issue a new Note to theassignee Bank.

 

(iii)                               Notwithstanding anythingto the contrary contained herein, any Bank (a “Granting Bank”) may grantto a special purpose funding vehicle (an “SPC”), identified as such inwriting from time to time by the Granting Bank to the Agent and the Borrower,the option to fund all or any part of any Loan that such Granting Bank wouldotherwise be obligated to fund pursuant to this Agreement; *provided*that (A) nothing herein shallconstitute a commitment by any SPC to make any Loan, and (B) nothing hereinshall excuse any Granting Bank from its obligations hereunder.  The funding of a Loan by an SPC hereundershall utilize the Commitment of the Granting Bank to the same extent, and asif, such Loan were funded by such Granting Bank.  Each party hereto hereby agrees that no SPCshall be liable for any indemnity or similar payment obligation under thisAgreement for which a Bank would otherwise be liable for so long as, and to theextent, the Granting Bank provides such indemnity or makes such payment.  In furtherance of the foregoing, each Bankhereby agrees (which agreement shall survive the termination of this Agreement)that, prior to the date that is one year and one day after the payment in fullof all outstanding commercial paper or other senior indebtedness of any SPC, itwill not institute against, or join any other Person in instituting against,such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidationproceedings under the laws of the United States or any State thereof.  In addition, notwithstanding anything to thecontrary contained in this Section 11.09(a)(iii), any SPC may, with priornotice to, but without the prior written consent of, the Borrower and the Agentand without paying any processing fee therefor, assign all or a portion of itsinterests in any Loans to the Granting Bank or to any financial institutions(consented to by the Borrower and the Agent) providing liquidity and/or creditsupport to or for the account of such SPC to support the funding or maintenanceof Loans.  This Section 11.09(a)(iii)may not be amended without the prior written consent of each Granting Bank, allor any part of whose Loans are being funded by an SPC at the time of suchamendment.  Notwithstanding the foregoingprovisions of this Section 11.09(a)(iii), (1) an SPC shall not be deemed tobe a Bank and shall have no rights under this Agreement except as provided inthis Section 11.09(a)(iii), and in particular, but not by way oflimitation, shall have no rights to compensation for increased costs or otherpayments pursuant to Section 2.13, Section 9.02 or Section 9.03,(2) the Granting Bank’s obligations under this Agreement (including itsCommitment to the Borrower hereunder) shall remain unchanged, (3) the GrantingBank shall remain solely responsible to the other parties hereto for theperformance of such obligations, (4) the Granting Bank shall remain the holderof any Notes for all purposes of this Agreement, (5) the Borrower, the Agent,the Issuing Banks and the other Banks shall continue to deal solely anddirectly with the Granting Bank in connection with such Granting Bank’s rightsand obligations under this Agreement, and (6) the Granting Bank

 

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shall indemnifyand hold the Borrower and its Affiliates harmless from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses or disbursements of any kind or nature whatsoever thatmay be incurred or shall arise as a result of any grant to an SPC contemplatedhereunder.

 

(b)                                 Participations. Each Bank may from time to time sell orotherwise grant participations in any or all of its rights and obligationsunder the Loan Documents without the consent of the Borrower, the Agent, anyIssuing Bank or any other Bank.  In theevent of any such grant by a Bank of a participation, such Bank’s obligationsunder the Loan Documents to the other parties thereto shall remain unchanged,such Bank shall remain solely responsible for the performance thereof, and theBorrower, the Agent, the Issuing Banks and the other Banks may continue to dealsolely and directly with such Bank in connection with such Bank’s rights andobligations thereunder.  A Bank may notgrant to any holder of a participation the right to require such Bank to takeor omit to take any action under the Loan Documents, except that a Bank maygrant to any such holder the right to require such holder’s consent to (i)reduce the principal of or the rate of interest on such Bank’s Loans orUnreimbursed Drawings or the fees payable to such Bank hereunder, (ii) postponeany date fixed for any payment of principal of or interest on such Bank’s Loansor Unreimbursed Drawings or the fees payable to such Bank hereunder, (iii)permit any Loan Party to assign any of its obligations under the Loan Documentsto any other Person or (iv) release any Collateral from the Security Interestexcept as required or contemplated by the Loan Documents.  Each holder of a participation in any rightsunder the Loan Documents, if and to the extent the applicable participationagreement so provides, shall, with respect to such participation, be entitledto all of the rights of a Bank as fully as though it were a Bank and mayexercise any and all rights of set-off with respect to such participation asfully as though the Borrower were directly indebted to the holder of suchparticipation for Loans and Unreimbursed Drawings in the amount of suchparticipation; *provided, however,*thatno holder of a participation shall be entitled to any amounts that wouldotherwise be payable to it under Section 2.13, Section 9.02 or Section 9.03with respect to its participation unless such amounts would have been payableto the Bank that granted such participation if such participation had not beengranted.  Each Bank selling or granting aparticipation, including a participation sold pursuant to Section 11.08,shall indemnify the Borrower and the Agent for any Taxes and Liabilities thatthey may sustain as a result of such Bank’s failure to withhold and pay anyTaxes applicable to payments by such Bank to its participant in respect of suchparticipation.

 

Section 11.10.  Governing Law. The rights and duties of the Borrower,the Agent, the Banks and the Issuing Banks under this Agreement and the Notes(including matters relating to the Maximum Permissible Rate), and the otherLoan Documents, shall pursuant to New York General Obligations Law Section 5-1401,be governed by the law of the State of New York.

 

Section 11.11.  JudicialProceedings: Waiver of Jury Trial.  Anyjudicial proceeding brought against the Borrower with respect to any LoanDocument Related Claim may be brought in any court of competent jurisdiction inthe State of New York, the courts of the United States of America for theSouthern District of New York, and appellate courts from any thereof (each, a “ChosenCourt”) and, by execution and delivery of this Agreement, the Borrower (a)accepts, generally and unconditionally, the nonexclusive jurisdiction of suchChosen Court and irrevocably agrees to be bound by any judgment renderedthereby in connection with any Loan

 

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Document Related Claimand (b) irrevocably waives any objection it may now or hereafter have as to thevenue of any such proceeding brought in such a court or that such a court is aninconvenient forum.  The Borrower herebywaives personal service of process and consents that service of process upon itmay be made by certified or registered mail, return receipt requested, at itsaddress specified or determined in accordance with the provisions of Section 11.01(a)(ii),and service so made shall be deemed completed on the third Business Day aftersuch service is deposited in the mail.  Nothingherein shall affect the right of the Agent, any Bank, any Issuing Bank or anyother Indemnified Person to serve process in any other manner permitted by lawor shall limit the right of the Agent, any Bank, any Issuing Bank or any otherIndemnified Person to bring proceedings against the Borrower in the courts ofany other jurisdiction.  THE BORROWER,THE AGENT, EACH BANK AND EACH ISSUING BANK HEREBY WAIVE TRIAL BY JURY IN ANYJUDICIAL PROCEEDING INVOLVING ANY LOAN DOCUMENT RELATED CLAIM.

 

Section 11.12.  LIMITATION OFLIABILITY.  NEITHER THE AGENT NOR THEBANKS NOR THE ISSUING BANKS NOR ANY OTHER INDEMNIFIED PERSON SHALL HAVE ANYLIABILITY WITH RESPECT TO, AND THE BORROWER HEREBY WAIVES, RELEASES AND AGREESNOT TO SUE FOR, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL, AND, TO THE EXTENTPERMITTED UNDER APPLICABLE LAW, PUNITIVE DAMAGES SUFFERED BY THE BORROWER INCONNECTION WITH ANY LOAN DOCUMENT RELATED CLAIM.

 

Section 11.13.  Process Agent. The Borrower hereby agrees that serviceof all writs, process and summonses in any such suit, action or proceedingbrought in the State of New York may be made upon CT Corporation, presentlylocated at 111 Eighth Avenue, New York, New York 10011, U.S.A. (the “ProcessAgent”), and the Borrower hereby confirms and agrees that the Process Agenthas been duly and irrevocably appointed as its agent and true and lawfulattorney-in-fact in its name, place and stead to accept such service of any andall such writs, process and summonses, and agrees that the failure of theProcess Agent to give any notice of any such service of process to the Borrowershall not impair or affect the validity of such service or of any judgmentbased thereon.

 

Section 11.14.  Severability ofProvisions.  Any provision of theLoan Documents that is prohibited or unenforceable in any jurisdiction shall,as to such jurisdiction, be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions thereof oraffecting the validity or enforceability of such provision in any otherjurisdiction.  To the extent permitted byApplicable Law, the Borrower hereby waives any provision of Applicable Law thatrenders any provision of the Loan Documents prohibited or unenforceable in anyrespect.

 

Section 11.15.  Counterparts.  This Agreement may be signed in any number ofcounterparts, each of which shall be an original, with the same effect as ifthe signatures thereto were upon the same instrument.

 

Section 11.16.  Survival ofObligations.  Except as otherwiseexpressly provided therein, the rights and obligations of the Borrower, theAgent, the Banks, the Issuing Banks and the other

 

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75 Indemnified Personsunder the Loan Documents shall survive the Repayment Date and the terminationof the Security Interest.

 

Section 11.17.  Entire Agreement. This Agreement, the Notes and the otherLoan Documents embody the entire agreement among the Borrower, the Agent, theBanks and the Issuing Banks relating to the subject matter hereof and supersedeall prior agreements, representations and understandings, if any, relating tothe subject matter hereof.

 

Section 11.18.  Successors andAssigns.  All of the provisions ofthis Agreement shall be binding upon and inure to the benefit of the partieshereto and their respective successors and assigns.

 

Section 11.19.  No FiduciaryRelationship Established By Loan Documents.  The relationship between the Borrower and theBanks is that of DEBTOR and CREDITOR.  TheLoan Documents are not intended to, and do not, establish a FIDUCIARYrelationship, nor does a FIDUCIARY relationship otherwise exist, between theBorrower on the one hand, and the Agent, the Banks and the Issuing Banks, onthe other hand.  The parties hereto havedealt at arm’s length in negotiating the Loan Documents.

 

Section 11.20.  No Recourse to Affiliates. This Agreement is solely and exclusivelyamong the Borrower, the Agent, the Banks and the Issuing Banks, and anyobligations created herein shall be the sole obligations of the parties hereto. No party shall have recourse to anyparent, subsidiary, affiliate, director or officer, as such, of any other partyfor performance of said obligations unless the obligations are assumed inwriting by the Person against whom recourse is sought.

 

Section 11.21.  ConfidentialInformation.  Notwithstanding anythingto the contrary contained in this Agreement, each party to any Loan Documentagrees that all documents, agreements or other information received by itpursuant to this Agreement or any other Loan Document that was, at the time ofits delivery, identified in writing by any party hereto as being confidentialwill be held by such party in confidence in accordance with such party’scustomary procedures for handling confidential information.  It is understood that each party to any LoanDocument consistent with any such procedures, may disclose such confidentialinformation, or portions thereof:

 

(i)                                     inthe case of any Bank, to any bona fide permitted prospective transferee orparticipant in connection with any contemplated assignment or grant of a participation;*provided,*that such transferee orparticipant (as the case may be) is aware of the confidential nature of suchinformation in accordance with the terms of this Section 11.21;

 

(ii)                                  tothe extent necessary or appropriate to comply with the request of, or asotherwise customarily disclosed to, any Governmental Entity or representativesthereof;

 

(iii)                               to any Related Party ofsuch Person and those of any Subsidiary or Affiliate of such Person;

 

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(iv)                              tothe extent necessary or appropriate to comply with any subpoena or other courtprocess or in connection with any litigation or legal proceeding but only aftergiving each party hereto the opportunity to obtain an appropriate protectiveorder;

 

(v)                                 tosuch Person’s independent auditors and accountants, counsel, and otherprofessional advisers in the course of their respective duties;

 

(vi)                              tothe extent necessary to comply with any Applicable Law;

 

(vii)                           in the enforcement of suchPerson’s rights, as applicable, hereunder, or any other Loan Document duringthe continuance of an Event of Default; and

 

(viii)                        which is, or after delivery tosuch Person becomes, otherwise publicly known or generally available to thepublic other than as a result of a violation of this Section 11.21 by suchPerson.

 

Section 11.22.  Registered Notes. A Bank that is a Non-US Bank and thathas complied with Section 2.13(d)(i)(A) may have its Notes issued asRegistered Notes, and for this purpose the Agent shall cause to be maintained aRegister.  Once issued, Registered Notesmay not be exchanged for Notes that are not Registered Notes and the ownershipof Registered Notes, and of the Loans and Unreimbursed Drawings evidencedthereby, may be transferred only in accordance with the provisions of Section 11.09(a)(ii)(G).

 

Section 11.23.  USA PATRIOT Act. Each Bank subject to the Act herebynotifies the Borrower that pursuant to the requirements of the USA PATRIOT Act(Title 111 of Publ. L. 107-56 (signed into law October 26,2001)) (the “Act”),it is required to obtain, verify and record information that identifies theBorrower, which information includes the name and address of the Borrower andother information that will allow such Bank to identify the Borrower inaccordance with the Act.

 

Section 11.24.  J. Aron Letters ofCredit

 

Notwithstandingthe limitation that each Letter of Credit have an expiration date not longerthan one year after the issuance thereof as set forth in the definition ofLetter of Credit, it is hereby agreed that any Letter of Credit issued in favorof J. Aron and Company that has an expiration date prior to November 1,2007 may contain the following provision: “Documents must be presented notlater than (insert expiry date) or in the event of a force majeure interruptingour business, within thirty (30) days after resumption of our business,whichever is later”.

 

**[The remainder of this page has beenintentionally left blank.]**

 

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IN WITNESSWHEREOF, the parties hereto have caused this Agreement to be executed by theirduly authorized officers all as of the Agreement Date.

 

 
|   | AES EASTERN ENERGY,  L.P.                |
|--------|------------------------------------------|
|   |                                     |
|   | By: AES NY, L.L.C., its  general partner |
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ Kevin R. Pierce |   |
|   |                                     | Name: | Kevin R. Pierce |
|   |                                     | Title: | Vice President |
|        |                                          |  |  |  |

 

AMENDED ANDRESTATED CREDIT AGREEMENT

 

----

 
|   | CALYON NEW YORK BRANCH,  as Agent and Issuing Bank |
|--------|----------------------------------------------------|
|   |                                               |
|   |                                               |
|   | By:                                                | /s/ Glenn W. Muscosky |   |
|   |                                               | Name: | Glenn W. Muscosky |   |
|   |                                               | Title: | Director |   |
|   |                                               |
|   |                                               |
|   | By:                                                | /s/ Nina Eshoo |   |
|   |                                               | Name: | Nina Eshoo |
|   |                                               | Title: | Managing Director |
|        |                                                    |  |  |  |  |

 

----

 
|       | CALYON NEW YORK BRANCH,  as Bank       |
|------------|----------------------------------------|
|       |                                   |
|       |                                   |
|       | By:                                    | /s/ Glenn W. Muscosky |   |
|       |                                   | Name: | Glenn W. Muscosky |   |
|       |                                   | Title: | Director |   |
|       |                                   |
|       |                                   |
|       | By:                                    | /s/ Nina Eshoo |   |
|       |                                   | Name: | Nina Eshoo |
|       |                                   | Title: | Managing Director |
|       |                                   |
| ** ** | Agreement Date: October 26,  2004 |
|            |                                        |  |  |  |  |

 

----

 

**ANNEX A**

 
| **Name  of Bank**       | ** ** | **Commitment  Percentage** | ** ** | **Notice Address**                                                        | ** ** | **Domestic Lending Office** | ** ** | **Eurodollar Lending  Office** | ** ** |
|-------------------------|------------|----------------------------|------------|---------------------------------------------------------------------------|------------|-----------------------------|------------|--------------------------------|------------|
| Calyon New York  Branch |       | 100                        | %          | Calyon New York  Branch  1301 Avenue of the  Americas  New York, NY 10019 |       |                        |       |                           |       |
|                    |       |                       |       |                                                                      |       |                        |       |                           |       |
|                    |       |                       |       | Credit Contact  Ted Vandermel  212 261 7888  212 261 3421 (fax)           |       |                        |       |                           |       |
|                    |       |                       |       |                                                                      |       |                        |       |                           |       |
|                    |       |                       |       | Operations Contact  Justine Ventrelli  212 261 7886  212 261 3421 (fax)   |       |                        |       |                           |       |

 

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Schedule 2.02

 

NOTICE OF BORROWING

 

CalyonNew York Branch, as Agent

1301Avenue of the Americas

NewYork, New York 10019

Attention:

 

Date:               ,

 

Gentlemen:

 

Reference is made to the Amended and Restated CreditAgreement, dated as of October 26, 2004, among AES Eastern Energy, L.P.,the Banks listed on the signature pages thereof, the Issuing Banks fromtime to time parties thereto, and Calyon New York Branch, as Agent (as amended,supplemented or otherwise modified from time to time, the “Credit Facility”;the terms defined therein being used herein as therein defined). Theundersigned hereby gives notice pursuant to Section 2.02 of the CreditFacility of its request to have the following Loans made to it on [insertrequested date of borrowing]:

 
| **Type  of Loan** | ** ** | **Amount** | ** ** | **Interest Period*** |
|-------------------|------------|------------|------------|----------------------|
|              |       |       |       |                 |
|              |       |       |       |                 |
|              |       |       |       |                 |

 

----

*                 ifapplicable

 

----

 

The undersigned, on behalf of the Borrower, represents and warrantsthat (a) the borrowing requested hereby complies with the requirements ofthe Credit Facility, (b) attached to this Notice of Borrowing is a FundingDate Certificate complying with the requirements of the Depositary Agreementand the Credit Facility and (c) except to the extent set forth on Annex Ahereto, (i) each Loan Document Representation and Warranty is true andcorrect on and as of the date hereof and (except to the extent the undersignedgives notice to the Banks to the contrary prior to 5:00 p.m. on theBusiness Day before the requested date for the making of the Loans) will betrue and correct at and as of the time the Loans are made, in each case bothwith and without giving effect to the Loans and the application of the proceedsthereof, and (ii) no Default has occurred and is continuing as of the datehereof or would result from the making of the Loans or from the application ofthe proceeds thereof if the Loans were made on the date hereof, and (except tothe extent the undersigned gives notice to the Banks to the contrary prior to5:00 p.m. on the Business Day before the requested date for the making ofthe Loans) no Default will have occurred and be continuing at the time theLoans are to be made or would result from the making of the Loans or from theapplication of the proceeds thereof.

 

 
|   | AES  EASTERN ENERGY, L.P.                |
|--------|------------------------------------------|
|   |                                     |
|   | By:  AES NY, L.L.C., its general partner |
|   |                                     |
|   |                                     |
|   | By                                       |   |   |
|   |                                     | Name: |
|   |                                     | Title: |

 

2

----

 

Schedule 2.03(c)(iv)

 

NOTICE OF CONVERSION OR CONTINUATION

 

CalyonNew York Branch, as Agent

1301Avenue of the Americas

NewYork, New York 10019

Attention:

 

 

Date:               ,

 

Gentlemen:

 

Reference is made to the Amended and Restated Credit Agreement, datedas of October 26, 2004, among AES Eastern Energy, L.P., the Banks listedon the signature pages thereof, the Issuing Banks from time to time partiesthereto, and Calyon New York Branch, as Agent (as amended, supplemented orotherwise modified from time to time, the “Credit Facility”; the terms definedtherein being used herein as therein defined). The undersigned hereby givesnotice pursuant to Section 2.03(c)(iv) of the Credit Facility of itsdesire to convert or continue the Loans specified below into or as Loans of theTypes and in the amounts specified below on [insert date of conversion orcontinuation]:

 
| **Loans to be Converted or Continued** | ** ** | **Converted or Continued Loans**                     | ** ** |
|----------------------------------------|------------|------------------------------------------------------|------------|
| **Type  of Loan**                      | ** ** | **Last Day of   Current Interest****   Period** | ** ** | **Amount** | ** ** | **Type of Loan** | ** ** | **Amount** | ** ** | **Interest****Period*** | ** ** |
|                                   |       |                                                 |       |   |   |   |   |   |   |   |   |
|                                   |       |                                                 |       |   |   |   |   |   |   |   |   |
|                                   |       |                                                 |       |   |   |   |   |   |   |   |   |

 

The undersigned represents and warrants that conversions andcontinuations requested hereby comply with the requirements of the CreditFacility.

 
|   | AES  EASTERN ENERGY, L.P.                |
|--------|------------------------------------------|
|   |                                     |
|   | By:  AES NY, L.L.C., its general partner |
|   |                                     |
|   |                                     |
|   | By                                       |   |
|   |                                     | Name: |
|   |                                     | Title: |

 

----

*                 ifapplicable

 

----

 

Schedule 2.05(a)

 

NOTICE OF PREPAYMENT

 

CalyonNew York Branch, as Agent

1301Avenue of the Americas

NewYork, New York 10019

Attention:

 

 

Date:           ,

 

Gentlemen:

 

Reference is made to the Amended and Restated Credit Agreement, datedas of October 26, 2004, among AES Eastern Energy, L.P., the Banks listedon the signature pages thereof, the Issuing Banks from time to timeparties thereto, and Calyon New York Branch, as Agent (as amended, supplementedor otherwise modified from time to time, the “Credit Facility”; the termsdefined therein being used herein as therein defined). The undersigned herebygives notice pursuant to Section 2.05(a) of the Credit Facility thatit will prepay the Loans specified below on [insert date of prepayment]:

 
| **Type  of Loan** | ** ** | **Last Day of Current  Interest Period *** | ** ** | **Amount** | ** ** |
|-------------------|------------|--------------------------------------------|------------|------------|------------|
|              |       |                                       |       |       |       |
|              |       |                                       |       |       |       |
|              |       |                                       |       |       |       |

 

The undersigned represents and warrants that the prepayment set forthherein complies with the requirements of the Credit Facility.

 
|   | AES  EASTERN ENERGY, L.P.                |
|--------|------------------------------------------|
|   |                                     |
|   | By:  AES NY, L.L.C., its general partner |
|   |                                     |
|   |                                     |
|   | By                                       |   |   |
|   |                                     | Name: |
|   |                                     | Title: |

 

----

*                 ifapplicable

 

----

 

Schedule 2.05(c)

 

NOTICE OF CLEAN-UP PERIOD

 

Calyon New York Branch, as Agent

1301 Avenue of the Americas

New York, New York 10019

Attention:

 

 

Date:                 ,

 

Gentlemen:

 

Reference is made to the Amended and Restated Credit Agreement, dated asof October 26, 2004, among AES Eastern Energy, L.P., the Banks listed onthe signature pages thereof, the Issuing Banks from time to time partiesthereto, and Calyon New York Branch, as Agent (as amended, supplement orotherwise modified from time to time, the “Credit Facility”; the terms definedtherein being used herein as therein defined). The undersigned hereby givesnotice pursuant to Section 2.05(c) of the Credit Facility of thecommencement of a Clean-Up Period on                                               .

 
|   | AES  EASTERN ENERGY, L.P.                |
|--------|------------------------------------------|
|   |                                     |
|   | By:  AES NY, L.L.C., its general partner |
|   |                                     |
|   |                                     |
|   | By                                       |   |   |
|   |                                     | Name: |
|   |                                     | Title: |

 

----

 

Schedule 2.13(d)

 

NON-US BANK CERTIFICATE

 

AESEastern Energy, L.P.

7725Lake Road

Barker,New York 14012

 

 

CalyonNew York Branch, as Agent

1301Avenue of the Americas

NewYork, New York 10019

Attention:

 

 

Gentlemen:

 

Reference is made to the Amended and Restated Credit Agreement, datedas of October 26, 2004, among AES Eastern Energy, L.P., the Banks listedon the signature pages thereof, the Issuing Banks from time to timeparties thereto, and Calyon New York Branch, as Agent (as amended, supplementor otherwise modified from time to time, the “Credit Facility”). Terms usedherein that are defined in such Credit Facility are used with the meaningstherein ascribed to them.

 

The undersigned hereby (a) certifies to the Borrower and the Agentthat it (i) is a Non-US Bank and (ii) is entitled to submit anInternal Revenue Service Form [W-8BEN] [W-8ECI]* and (b) agreesto indemnify and defend the Borrower and the Agent from, and hold each of themharmless against, any and all losses, liabilities, claims, damages, andexpenses of any kind arising out of, resulting from, or in any way connectedwith the certification made pursuant to the foregoing clause (a) beingincorrect.

 
|   | Very  truly yours, |
|--------|--------------------|
|   |               |
|   | [Bank]             |
|   |               |
|   |               |
|   | By                 |   |   |
|   |               | Name: |
|   |               | Title: |

 

----

*                 Insert asapplicable.

 

----

 

Schedule 3.04(e)

 

NOTICE OF CONVERSION OF BASE RATE DRAWING

 

CalyonNew York Branch, as Agent

1301Avenue of the Americas

NewYork, New York 10019

Attention:

 

 

Date:                  ,

 

Gentlemen:

 

Reference is made to the Amended and Restated Credit Agreement, datedas of October 26, 2004, among AES Eastern Energy, L.P., the Banks listedon the signature pages thereof, the Issuing Banks from time to timeparties thereto, and Calyon New York Branch, as Agent (as amended, supplementedor otherwise modified from time to time, the “Credit Facility”; terms definedtherein being used herein as therein defined). The undersigned hereby givesnotice pursuant to Section 3.04(e) of the Credit Facility of itsdesire to convert the following Base Rate Drawing(s) into a Eurodollar RateDrawing in the amounts specified below on [insert date of conversion]:

 
| **Base Rate Drawing(s) to be Converted** | ** ** | **Converted Eurodollar Drawing** |
|------------------------------------------|------------|----------------------------------|
| **Date  of Drawing**                     | ** ** | **Amount**                       | ** ** | **Amount** | ** ** | **Interest Period** |
|                                     |       |                             |   |   |   |   |
|                                     |       |                             |   |   |   |   |
|                                     |       |                             |   |   |   |   |

 

The undersigned represents and warrants that the conversion requestedhereby complies with the requirements of the Credit Facility.

 
|   | AES  EASTERN ENERGY, L.P.                |
|--------|------------------------------------------|
|   |                                     |
|   | By:  AES NY, L.L.C., its general partner |
|   |                                     |
|   |                                     |
|   | By                                       |   |   |
|   |                                     | Name: |
|   |                                     | Title: |

 

----

 

Schedule 5.05

 

GOVERNMENTAL ACTIONS

 

(See Schedule 5.15)

 

----

 

Schedule 5.06

 

MATERIAL LITIGATION

 

1.                                       On June 25, 2003, AES Somerset filed acomplaint against Niagara Mohawk Power Corporation (“NIMO”) with the FederalEnergy Regulatory Commission (the “FERC”). The complaint involves outstandingstation service charges for the period April 2000 to May 2003. AESSomerset has calculated that the outstanding charges owed are $290,000, whileNIMO has calculated that the outstanding charges are $3.6 million. In December 2003,FERC, in the Somerset and Nine Mile orders, reiterated its 2001 ruling thatindependent power plants can net station service power. NIMO appealed the ruling.Somerset received a favorable FERC ruling in 2004; it is highly likely,however, that Niagara Mohawk will appeal the matter to the DC Circuit Court ofAppeals. As of December 31, 2003, AES Somerset has accrued approximately$1.6 million for these charges.

 

----

 

Schedule 5.09

 

UTILITY REGULATION

 

1.                                       AES Eastern Energy, L.P. and AEE2, L.L.C. aresubject to “lightened regulation” pursuant to that certain “Order Providing forLightened Regulation”, Case 99-E-0148, issued April 23, 1999by the New York State Public Service Commission.

 

----

 

Schedule 5.13

 

ERISA MATTERS

 

None

 

----

 

Schedule 5.15

 

ENVIRONMENTAL MATTERS

 

1.                                       By letter dated May 25, 2000, the NewYork State Department of Environmental Conservation (“NYSDEC”) issued a Noticeof Violation (“NOV”) to the New York State Electric & Gas Corporation(“NYSEG”) for violations of the federal Clean Air Act and the New YorkEnvironmental Conservation Law at the Greenidge and Westover plants related toNYSEG’s alleged failure to undergo an air permitting review and obtain a permitfor alleged air emissions increases due to plant modifications made during the1980s and 1990s. Pursuant to the Asset Purchase Agreement, AEE has agreed thatit will assume the responsibility for the NOV, subject to a reservation of AEE’sright to assert any applicable exception to its contractual undertaking toassume preexisting environmental liabilities. In addition, AEE received aninformation request letter from the New York State Attorney General on October 14,1999 and a subpoena from the NYDEC on January 13, 2000 seeking detailedoperating and maintenance history for the Westover and Greenidge Plants. AEEhas provided the requested information to the Attorney General and NYSDEC, andthere is a potential that AEE may receive a NOV for alleged on-going violationsin connection with the alleged failure of the plant to obtain appropriatepermits for past plant modifications.

 

2.                                       On April 14, 2000, AEE received arequest for information pursuant to Section 114 of the Clean Air Act fromthe U.S. Environmental Protection Agency (“EPA”) seeking detailed operating andmaintenance history data for the Cayuga and Somerset Plants. This informationwas sought in connection with EPA’s investigation of coal-fired electric powergenerators that are suspected of undertaking modifications in the past withoutundergoing an air permitting review. AEE has provided the requested documentationto the EPA. In addition, AEE received a subpoena from the NYSDEC on January 13,2000 requesting similar information for the Cayuga and Somerset plants. AEE hasprovided the requested information to the NYSDEC.

 

3.                                       The Somerset, Cayuga, Westover and Greenidgeplants is required to meet an opacity limit. In the past, several of theseplants exceeded these limits. This was a common problem at coal-firedelectricity generating stations, and the NYSDEC has initiated an enforcementaction against several utilities, including NYSEG. In January 2000, wereceived a draft consent order from the NYSDEC that alleges violations of the opacityemission limitations in the air permits for Cayuga, Westover, and Greenidge occurringsince these plants were purchased from NYSEG. The draft consent order wouldrequire us to prepare an opacity compliance plan and would impose penalties foropacity violations occurring after May 14, 1999, the date of theacquisition. AES NY,

 

----

 

L.L.C.also received notice from NYSEG that NYSEG has received a draft consent orderfrom the NYSDEC seeking penalties primarily for opacity violations occurringprior to May 14, 1999. In the notice, NYSEG asserts that it will seekindemnification from AES NY, L.L.C. for any penalties, attorney fees, andrelated costs that it incurs in connection with this matter.

 

4.                                       AEE voluntarily disclosed to the NYSDEC andEPA on November 27, 2002 that NOx exceedances appeared to have occurred onOctober 30 and 31 and November 1-8 and 10 of 2002. Theexceedances were discovered through an audit by plant personnel of the Plants’NOx Reasonably Available Control Technology (RACT) tracking system whichmonitors NOx emissions at all the Plants subject to AEE’s NOx RACT Plan. AEEbelieves that it has taken all reasonable, good faith efforts to assess andcorrect the exceedances. Immediately upon the discovery of the exceedances, theSelective Catalytic Reduction System (SCR) at the Somerset Plant was activatedto reduce NOx emissions. Emission data indicates that the system had alreadyreturned to a compliant operation by the time the error was discovered. The EPAhas decided to defer to the NYSDEC for review of the self-disclosure letter andtechnical issues.

 

5.                                       AEE voluntarily disclosed to the NYSDEC in January 2003that the Cayuga Plant had inadvertently burned synfuel (coal with a latexbinder applied), which it is not permitted to burn. AEE had entered into anagreement with a supplier to purchase coal. It received approximately one 9,000-tontrain per month from April 24, 2001 to December 27, 2002. In January 2003,AEE became aware that the product the Cayuga Plant had been receiving was synfuel.AEE has suspended all shipments from that supplier until a resolution could bereached. AEE has reviewed the emission and operation data which showed therewas no adverse effect to air quality with respect to applicable permitemissions limits attributable to burning the material.

 

6.                                       AES Creative Resources L.P. (“ACR”) hasassumed responsibility for the Weber ash disposal site; however, AEE2, L.L.C.,has contributed one-half of the closure costs for the Weber ash disposal sitebased on the amount of ash disposed at the site from Westover and Greenidge,which are owned by AEE2, L.L.C., compared to the amount disposed from theHickling and Jennison plants which are owned by ACR.

 

7.                                       Natural groundwater conditions present at theSomerset site make it very difficult to distinguish between landfill leachateand naturally occurring substances in the groundwater. Substances that aretypically considered indicators of leachate infiltration into groundwater fromash monofill operations, namely sulfates, iron and manganese, are alsonaturally occurring in the groundwater around and beneath the Area 1 section ofthe landfill located on the Somerset plant site. NYSEG commissioned independentconsultants to perform groundwater testing using sophisticated geochemical fingerprintingtechniques, which distinguish the major ions of a water sample. NYSEG’s

 

----

 

consultantshave shown, to the satisfaction of the Public Service Commission, that therehad been no material release of leachate from Area 1 into the groundwater.

 

8.                                       Cayuga has seen concentrations of certainanalytical parameters above established action levels in groundwater monitoringwells down gradient from the ash disposal area. Remedies are being discussedwith the NYSDEC. Actions may include operational changes or capping theexisting landfill, construction of a new landfill cell, or a combination ofthese actions.

 

9.                                       In an area adjacent to the Lockwood ashdisposal site, AEE’s environmental consultant reported that approximately 500to 700 drums of abrasives were disposed in the early 1970s and covered withash. AEE has budgeted $520,000 to conduct a site investigation and remove thedrums. In addition, groundwater sampling in this area and around the Lockwoodash disposal site indicates that some monitoring wells have parameters whichexceed state regulatory limits.

 

10.                                 The Somerset plant received approval fromNYPSC to construct a new landfill cell at the plant. That approval remainssubject to appeal.

 

----

 

Schedule 5.24

 

ADDITIONAL MATERIAL ADVERSE FACTS

 

None

 

----

 

Schedule 7.01(a)

 

AES EASTERN ENERGY, L.P.

 

CERTIFICATE AS TO FINANCIAL STATEMENTS ANDDEFAULTS

 

I,                                ,[Title] of AES Eastern Energy, L.P., a Delaware limited partnership (the “Borrower”),hereby state, pursuant to Section [7.01(a)] [7.0l(b)] of the Amended and RestatedCredit Agreement, dated as of October     , 2004,among AES Eastern Energy, L.P. (the “Borrower”), the Banks named therein, theIssuing Banks party thereto from time to time and Calyon New York Branch, asAgent and Issuing Bank (as amended, supplemented or otherwise modified fromtime to time, the “Credit Agreement”; the terms defined or incorporated byreference therein being used herein as therein defined), that:

 

(a)                                  I have made, or caused to be made under mysupervision, a review of the Credit Agreement, the other Loan Documents and theOperative Documents; and

 

(b)                                 such review has not disclosed the existenceduring the fiscal [quarter] [year] ending                 ,200  , (and I do not have knowledge of the existence as of the dateof this certificate) of any condition or event constituting a Lease MaterialDefault or Lease Event of Default or an Event of Loss or an Event of Default[or, if any such condition or event existed or exists, specifying the naturethereof, the period of existence thereof and what action the Borrower has takenor proposes to take with respect thereto].

 

andI hereby certify, pursuant to such Section [7.01(a)] [7.01(b)], that

 

1.                                       (a)                                  The accompanying [unaudited] [audited] consolidatedand consolidating financial statements of the Borrower and its ConsolidatedSubsidiaries as at                                  andfor the [quarterly] [annual] accounting period ending                    ,20  , are complete and correct and present fairly, in accordance withGAAP (except for changes therein or departures therefrom described below thathave been approved in writing by Messrs.                                     ,the Borrower’s current independent certified public accountants), theconsolidated and consolidating financial position of the Borrower and itsConsolidated Subsidiaries as at the end of such quarter, and the consolidatedand consolidating results of operations and cash flows for such [quarter][year], and for the elapsed portion of the fiscal year ended with the last dayof such quarter, in each case on the basis presented and subject only to normalyear-end auditing adjustments] [year].

 

(b)                                 Except as disclosed or reflected in suchfinancial statements, as at                                  ,neither the Borrower nor any Subsidiary had any Liability, contingent or otherwise,or any unrealized or anticipated loss, that, singly or in the aggregate, hashad or might have a Materially Adverse Effect on the Borrower and itsConsolidated Subsidiaries taken as a whole.

 

----

 

2.                                       (a)                                  The changes in and departures from GAAP areas follows:

 

Allsuch changes have been approved in writing by Messrs.                                             .

 

[(b)                             Attached as Annex A are [unaudited] [audited]consolidated and consolidating financial statements of the Borrower and theConsolidated Subsidiaries as at                                 andfor the [quarterly] [annual] accounting period ending                        ,20   , which have been prepared in accordance with GAAP withoutgiving effect to the changes referred to in Paragraph 2(a) of thisCertificate or any previous Certificate. Such financial statements are completeand correct and present fairly, in accordance with GAAP, the consolidated andconsolidating financial position of the Borrower and the ConsolidatedSubsidiaries as at the end of such quarter, and the consolidated andconsolidating results of operations and cash flows for such [quarter] [year],and for the elapsed portion of the fiscal year ending with the last day of suchquarter, in each case on the basis presented and subject only to normalyear-end auditing adjustments] [year].

 

3.                                       There follow reasonably detailed calculationsrequired to establish whether or not the Borrower was in compliance with thefinancial covenants contained in Section 6.01 of the Credit Agreement.

 

4.                                       Based on an examination sufficient to enableme to make an informed statement, no Default exists, including, in particular,any such arising under the provisions of Article 6 of the CreditAgreement, except the following:

 

[If none such exist, insert “None”; if any doexist, specify the same by Section, give the date the same occurred, and thesteps being taken by the Borrower or a Subsidiary with respect thereto.]

 

 
| Dated: |   |   |
|--------|--------|--------|
|   | Name:  |
|   | Title: |

 

----

 

*                                        Paragraph (b) should be included in, andAnnex A attached to, the Certificate only if changes from Generally AcceptedAccounting Principles are specified in Paragraph 2(a) of this or anyprevious Certificate.

 

2

----

 

Schedule 7.02(a)

 

BASE FINANCIAL STATEMENTS

 

1.                                       The Borrower’s condensed consolidated balancesheet as at June 30, 2004 and the related condensed consolidatedstatements of income, cash flows and changes in partners’ capital for thesix-month period ended June 30, 2004, in each case contained in theBorrower’s Quarterly Report on Form 10-Q for the fiscal quarterended June 30, 2004 as filed with the Securities and Exchange Commissionon August 12, 2004.

 

2.                                       The Borrower’s consolidated balance sheet asat December 31, 2003 and the related consolidated statements of income,cash flows and changes in partners’ capital for the fiscal year ended December 31,2003, in each case contained in the Borrower’s Annual Report on Form 10-Kfor the fiscal year ended December 31, 2003 as filed with the Securitiesand Exchange Commission on March 16, 2004.

 

----

 

Schedule 8.01(g)

 

CERTAIN EVENTS OF DEFAULT

 

Attached to this Schedule 8.01(g) is Section 16 of theFacility Lease Agreement (Kintigh A-1), dated as of May 14, 1999,between Kintigh Facility Trust A-1 and AEE.

 

----

 

SECTION 16

 

EVENTS OF DEFAULT

 

Any of the following events shall constitute a “Lease Event of Default”hereunder (whether any such event shall be voluntary or involuntary or comeabout or be effected by operation of law or pursuant to or in compliance withany judgment, decree or order of any court or any order, rule orregulation of any Governmental Entity):

 

(a)                                  The Lessee shall fail to make any payment ofBasic Rent (other than Deferrable Payments, but only to the extent provided in Section 3.4),or Termination Value, in each case within 5 Business Days after the same shall becomedue.

 

(b)                                 The Lessee shall fail to make any payment ofSupplemental Rent (other than Termination Value and, unless the OwnerParticipant shall have declared a default with respect thereto, ExceptedPayments) after the same shall have become due and such failure shall havecontinued for a period of 30 days after receipt by the Lessee of written noticeof such failure from the Owner Participant, the Lessor or the IndentureTrustee; provided, however, that, in the case of any failure to make anindemnity payment (or any portion thereof or interest thereon), if sufficientavailable funds are not then on deposit in the Indemnity Account for such payment,then the period within which to remedy such failure shall be extended up to adate five (5) days following the date such funds are on deposit in theIndemnity Account for the payment of such indemnity (or portion thereof orinterest thereon) in accordance with the Depositary Agreement.

 

(c)                                  The Lessee shall fail to maintain insurancein the amounts and on the terms set forth in Section 11.

 

(d)                                 The Lessee shall fail to perform or observeany covenant, obligation or agreement to be performed or observed by it underthis Lease or any other Operative Document, including without limitation anycovenant made by the Lessee herein or in Section 5 of the ParticipationAgreement with respect to any AEE Entity (other than any covenant, obligationor agreement contained in the Tax Indemnity Agreement or Section 5.12 ofthe Participation Agreement or any covenant, obligation or agreement referredto in clause (a), (b), (c), or (e) of this Section 16) in anymaterial respect, which shall continue unremedied for 30 days after receipt bythe Lessee of written notice thereof by the Lessor or the Indenture Trustee;provided, however, that if such condition cannot be remedied within 30

 

----

 

days, then the period within which to remedy such failure shall beextended up to an additional 180 days, so long as the Lessee diligently pursuessuch remedy and such condition is reasonably capable of being remedied withinsuch additional 180-day period.

 

(e)                                  The Lessee shall fail to perform or observein any material respect its obligations set forth in Section 6 of theParticipation Agreement.

 

[Missing p. 2 — will be supplied tomorrow (Thursday)]

 

(i)                                     AES shall cease to own or control, directlyor indirectly, at least 51% of the voting and economic interests in the Lessee,which interests shall be free and clear of all Liens; or

 

(ii)                                  AES shall cease to own or control, directlyor indirectly, at least 51% of the voting and economic interests in AES NY,which interests shall be free and clear of all Liens; or

 

(iii)                               AES shall cease to own or control, directlyor indirectly, 51% of the voting and economic interests in AES NY3, whichinterests shall be free and clear of Liens; or AES NY3 shall cease to own orcontrol, directly or indirectly, 100% of the voting and economic interests inSomerset Railroad, which interests shall be free and clear of all Liens otherthan any Lien created in connection with the Rail Credit Facility or anyfacility replacing, refunding or refinancing the Rail Credit Facility; or

 

(iv)                              the Lessee shall cease to own and control,directly or indirectly, 100% of the voting and economic interests in each ofthe AEE Subsidiaries, which interests shall be free and clear of all Liens,other than any Lien created in connection with the Working Capital Facility orany facility replacing, refunding or refinancing the Working Capital Facilityand any other Liens securing Permitted Secured Indebtedness.

 

(l)                                     The Lessee shall fail (i) to cause theRent Reserve Account to be funded in an amount at least equal to the RentReserve Account Required Balance either through amounts available pursuant to aPayment Undertaking Agreement, through amounts on deposit in the Rent ReserveAccount or through a combination thereof, on three consecutive Rent PaymentDates (after giving effect to the payment of Basic Rent (other than DeferrablePayments) on such dates) or (ii) at any time after the payment in full ofthe Lessor Notes, to cause the Additional Liquidity Account to be funded inaccordance with the Depositary Agreement in an amount at least equal to theAdditional

 

----

 

LiquidityRequired Balance, on three consecutive Rent Payment Dates (after giving effectto the payment of Basic Rent (other than Deferrable Payments) on such dates).

 

(m)                               The certificate of formation, operatingagreement or partnership agreement or such other organizational document ofAEE, AES NY or AES NY3, as applicable, shall be amended, changed, modified orsupplemented in any material respect.

 

----

 

Schedule 11.09(a)

 

NOTICE OF ASSIGNMENT

 

AES Eastern Energy, L.P.

7725 Lake Road

Barker, New York 14012

 

 

CalyonNew York Branch, as Agent

1301Avenue of the Americas

NewYork, New York 10019

Attention:

 

 

Date:                  ,

 

 

Gentlemen:

 

Reference is made to the Amended and Restated Credit Agreement, datedas of October 26, 2004, among AES Eastern Energy, L.P., the Banks listedon the signature pages thereof, the Issuing Banks from time to timeparties thereto, and CalyonNew York Branch, as Agent (as amended, supplemented or otherwise modified fromtime to time, the “Credit Facility”; terms defined therein being used herein astherein defined). The undersigned hereby give notice pursuant to Section 11.09(a) ofthe Credit Facility that [insert name of Assignor] (the “Assignor”) has madethe following assignment to [insert name of Assignee] (the “Assignee”):

 

Rights and Obligations Assigned:

 

 

Effective Date of Assignment:

 

 

[The Assignee’s Lending Offices and address for notices are as follows:

Domestic Lending Office:

 

Eurodollar Lending Office:

 

Notice Address:]*

 

----

 

The Assignor hereby requests that the Agent [and the Borrower] consentto the assignment described above by signing a copy of this letter in the spaceprovided below and returning it to the Assignor. Such consent shall release theAssignor from all of the obligations described above as having been assigned tothe Assignee.

 
|                                     | [NAME  OF ASSIGNOR] |
|------------------------------------------|---------------------|
|                                     |                |
|                                     |                |
|                                     | By                  |   |   |
|                                     |                | Name: |
|                                     |                | Title: |
|                                     |                |
|                                     |                |
|                                     | [NAME  OF ASSIGNEE] |
|                                     |                |
|                                     |                |
|                                     | By                  |   |   |
|                                     |                | Name: |
|                                     |                | Title: |
|                                     |                |
|                                     |                |
| Assignment  and release consented to:    |                |
|                                     |                |
| Calyon  New York Branch*,                |                |
| as  Agent                                |                |
|                                     |                |
|                                     |                |
| By                                       |                |   |   |
|                                     | Name:               |   |
|                                     | Title:              |   |
|                                     |                |
|                                     |                |
| By                                       |                |   |   |
|                                     | Name:               |   |
|                                     | Title:              |   |
|                                     |                |
| AES  Eastern Energy, L.P.**,             |                |
| as  Borrower                             |                |
|                                     |                |
| By:  AES NY, L.L.C., its general partner |                |
|                                     |                |
|                                     |                |
| By                                       |                |   |   |
|                                     | Name:               |   |
|                                     | Title:              |   |
|                                          |                     |  |  |  |  |  |

 

----

*                 Omitif the Assignee is a Bank.

**          Only when required pursuant to Section 11.09.

 

----

 

EXHIBITA

 

AES EASTERN ENERGY, L.P.

 

PROMISSORY NOTE

 

Date: October     ,2004

 

FOR VALUE RECEIVED, AES EASTERN ENERGY, L.P. (the “Borrower”) hereby promisesto pay to the order of                                   (the “Bank”), for the account of its applicable Lending Office, the unpaidprincipal amount of each Loan made by such Bank under the Credit Agreementreferred to below, on the dates and in the amounts specified in the CreditAgreement, and to pay interest on the principal amount of each such Loan on thedates and at the rates specified in Section 2.03 of such Credit Agreement.All payments due to the Bank hereunder shall be made to the Bank at the place,in the type of money and funds and in the manner specified in Section 2.11of such Credit Agreement. Capitalized terms used herein have the meaningassigned thereto in the Credit Agreement.

 

Each holder hereof is authorized to endorse on the grid attachedhereto, or on a continuation hereof, each Loan of the Bank and each paymentwith respect thereto.

 

Presentment, demand, protest, notice of dishonor and notice of intentto accelerate are hereby waived by the undersigned.

 

This Promissory Note evidences Loans made under, and is entitled to thebenefits of, the Amended and Restated Credit Agreement, dated as of October 26,2004, among the Borrower, the Banks listed on the signature pages thereof,the Issuing Banks from time to time parties thereto, and Calyon New YorkBranch, as Agent, as the same may be amended from time to time (the “CreditAgreement”). Reference is made to the Credit Agreement, as so amended, forprovisions relating to the prepayment and the acceleration of the maturityhereof. This Promissory Note is also entitled to the benefits of the PledgeAgreement.

 

This Promissory Note shall, pursuant to New York General ObligationsLaw Section 5-1401, be governed by the law of the State of New York.

 
|   | AES  EASTERN ENERGY, L.P.                |
|--------|------------------------------------------|
|   |                                     |
|   | By:  AES NY, L.L.C., its general partner |
|   |                                     |
|   |                                     |
|   | By:                                      |   |   |
|   |                                     | Name: |
|   |                                     | Title: |

 

----

 

GRID

 

PROMISSORY NOTE

 

 
| **Date** | ** ** | **Amount of Loan** | ** ** | **Amount of  Principal Repaid** | ** ** | **Notation Made By** |
|----------|------------|--------------------|------------|---------------------------------|------------|----------------------|
|     |       |               |       |                            |       |                 |
|     |       |               |       |                            |       |                 |
|     |       |               |       |                            |       |                 |

 

2

----

 

EXECUTION COPY

 

**AMENDED ANDRESTATED LLC MEMBERSHIP INTEREST PLEDGE AGREEMENT**

 

Dated as of October 26, 2004

 

Amended and Restated LLC Membership Interest Agreement dated as of October 26,2004 by and between AES EASTERN ENERGY, L.P., a Delaware limited partnership(the “Pledgor”) and CALYON NEW YORK BRANCH (the “Secured Party”).

 

RECITALS:

 

WHEREAS, the Pledgor is the legal and beneficial owner of, and has goodand marketable title to the Collateral (as defined below);

 

WHEREAS, the Pledgor entered into the LLC Membership Interest PledgeAgreement dated as of April 10, 2001 between the Borrower and Union Bankof California, N.A. (“Union Bank”) (the “Original Pledge Agreement”);

 

WHEREAS, the Secured Party, immediately prior to the execution anddelivery of the Credit Agreement on the Agreement Date, has purchased theoutstanding loans (“Existing Loans”) made under the Existing CreditFacility by each of Union Bank and Citibank, N.A. (“Citi”) as the bankparties thereto (Union Bank and Citi, collectively, the “Transferor Banks”)and the Unreimbursed Drawings owed to each of the Transferor Banks and hasassumed all of the rights and obligations of the Transferor Banks under theExisting Credit Facility including the Commitments of each Transferor Bank;

 

WHEREAS, the Secured Party has agreed to replace Union Bank as agentunder the Existing Credit Facility and as secured party under the OriginalPledge Agreement;

 

WHEREAS, concurrently with the execution and delivery of this Agreementon the Agreement Date, the Existing Credit Facility is being amended andrestated in its entirety;

 

In consideration of the execution and delivery of the Credit Agreement,Pledgor hereby agrees with Secured Party, to amend and restate the OriginalPledge Agreement in its entirety as follows (with certain terms used hereinbeing defined in Article 6):

 

ARTICLE 1.

 

SECURITY INTEREST

 

Section 1.01.                             Grant of Security Interest.  Tosecure the payment, observance and performance of the Secured Obligations, thePledgor hereby pledges and assigns the Collateral to the Secured Party, andgrants to the Secured Party a continuing security interest in, and a continuinglien upon, the Collateral.

 

Section 1.02.                             Validity and Priority of Security Interest.  ThePledgor agrees that (a) the Security Interest shall at all times be valid,perfected and enforceable against the Pledgor and all third parties, inaccordance with the terms hereof, as security for the Secured Obligations, and

 

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(b) theCollateral shall not at any time be subject to any Lien, other than a PermittedLien, that is prior to, on a parity with or junior to the Security Interest,except that, unless a Termination Event exists that results in termination ofthe Depositary Agreement, this Section 1.02 shall not require thecontinuation of the perfection of the Security Interest in any amounts paid bythe Pledgor or AEE2 to the Depositary Agent in accordance with the terms of theDepositary Agreement. The requirement of this Section 1.02 that theSecurity Interest at all times be perfected shall be complied with only to theextent that the Secured Party shall have obtained control of the Collateral ora Uniform Commercial Code financing statement shall have been filed withrespect thereto.

 

Section 1.03.                             Maintenance of Status of Security Interest Collateraland Rights.  (a) Required Action. The Pledgorshall take all actions, including the action specified on Schedule 1.03,that may be necessary or desirable, or that the Secured Party may request, soas at all times (i) to maintain the validity, perfection, enforceabilityand priority of the Security Interest in the Collateral in conformity with therequirements of Section 1.02, (ii) to protect and preserve theCollateral and (iii) to protect and preserve, and to enable the exerciseor enforcement of, the rights of the Secured Party therein and hereunder andunder the other Collateral Documents.

 

(b)                                 Authorized Action.  TheSecured Party is hereby authorized to file or record financing statements andother filing or recording documents or instruments with respect to theCollateral without the signature of the Pledgor in such form and in suchoffices as the Secured Party determines appropriate to perfect the securityinterest of the Secured Party under this Agreement. The Pledgor hereby ratifiesand authorizes the filing by the Secured Party of any financing statement withrespect to the Collateral made prior to the date hereof. A carbon, photographic,electronic or other reproduction of this Agreement shall be sufficient as a financingstatement for filing in any jurisdiction.

 

(c)                                  Delivery of Collateral.  Allcertificates and instruments, if any, representing or evidencing the Collateralshall be delivered to and held by or on behalf of the Secured Party pursuanthereto and shall be accompanied by duly executed instruments of transfer orassignment in blank, all in form and substance satisfactory to the SecuredParty.

 

Section 1.04.                             Evidence of Status of Security Interest.  ThePledgor shall from time to time, upon the reasonable request of the Secured Party,deliver to the Secured Party (a) such file search reports from suchUniform Commercial Code and other filing and recording offices and (b) suchopinions of counsel relating to the Collateral, the attachment and perfectionof the Security Interest and otherwise to this Agreement, as the Secured Partymay request.

 

Section 1.05.                             Pledgor Remains Obligated: Secured Party NotObligated.  The grant by the Pledgor to the Secured Partyof the Security Interest shall not (a) relieve the Pledgor of any Liabilityto any Person under or in respect of any of the Collateral or (b) imposeon the Secured Party any such Liability or any Liability for any act oromission on the part of the Pledgor relative thereto.

 

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ARTICLE 2.

 

CERTAIN REPRESENTATIONS ANDWARRANTIES

 

Section 2.01.   Representationsand Warranties.  The Pledgorrepresents and warrants as follows:

 

(a)           None of the Collateral of the Pledgor has been issued or transferred inviolation of the securities registration, securities disclosure or similar lawsof any jurisdiction to which such issuance or transfer may be subject;

 

(b)           The pledge, assignment and delivery of the Collateral, together withduly executed instruments of transfer signed in blank, pursuant to thisAgreement will create a valid first priority lien on and a first priorityperfected security interest in the Collateral pledged by the Pledgor and theproceeds thereof (subject to the provisions of Section 9-315 of theUniform Commercial Code), securing the payment of the Secured Obligations.

 

(c)           The Questionnaire is, as of the Agreement Date, complete and correct inall material respects.

 

(d)           The Pledgor is the legal and beneficial owner of, and has good andmarketable title to (and has full right and authority to pledge and assign),the Collateral purported to be pledged and assigned by it hereunder, free andclear of any Lien, except for any Permitted Liens. No effective financingstatement or other instrument similar in effect covering all or any part of theCollateral is on file in any recording office, except (i) such as may havebeen filed in favor of the Secured Party relating to this Agreement and (ii) afinancing statement that names Union Bank, as secured party, which financingstatement will be assigned promptly on or after the date hereof pursuant to aproperly completed UCC-3 financing statement that has been delivered to thePledgor.

 

(e)           Each LLC Agreement, true and complete copies of which have beenfurnished to the Secured Party, has been duly authorized, executed anddelivered by the Pledgor, has not been amended or otherwise modified (except (i) forany such amendments or modifications prior to the Closing Date or (ii) tothe extent otherwise permitted hereunder or under any other Loan Document), isin full force and effect and is the legal, valid and binding obligation of, andenforceable against, the Pledgor in accordance with its terms, subject to theeffect of any applicable bankruptcy, insolvency, reorganization, moratorium orsimilar law affecting creditor’s right generally, and subject to the effect ofgeneral principles of equity (regardless of whether considered in a proceedingin equity or at law). There exists no default under any LLC Agreement by thePledgor.

 

ARTICLE 3.

 

CERTAIN COVENANTS

 

Section 3.01.  Certain Matters Relating to Preservation of Status of SecurityInterestChief Executive Office, Change of Name, Identity, Etc.. The Pledgorwill not (i) change the location of its chief executive office or chiefplace of business from that specified in the

 

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Questionnaire, or (ii) change its name, identity, corporatestructure or jurisdiction of organization without giving the Secured Partysixty (60) days’ prior notice thereof in each instance.

 

(b)           Other Financing Statements.  Exceptwith respect to Permitted Liens, the Pledgor shall not file, or suffer to be onfile, or authorize or permit to be filed or to be on file, in any jurisdiction,any financing statement or like instrument with respect to the Collateral inwhich the Secured Party is not named as the sole secured party.

 

(c)           The Pledgor covenants and agrees that:

 

(i)            Without the prior written consent of theSecured Party, the Pledgor will not sell, assign, transfer, pledge or otherwisedispose of or encumber any of its rights in or to the Collateral or anyinterest therein, except that this Section shall not be deemed to prohibitor otherwise restrict the payment of any amounts by the Pledgor or AEE2 to the DepositaryAgent in accordance with the terms of the Depositary Agreement.

 

(ii)           The Pledgor will, upon obtaining anyadditional Capital Securities of any Issuer as required under Section 3.05(b),promptly (and in any event within five (5) Business Days) deliver to theSecured Party a Pledge Amendment, duly executed by such Pledgor, insubstantially the form of Schedule 3.01(d)(ii) hereto (a “PledgeAmendment”). The Pledgor hereby authorizes the Secured Party to attach eachPledge Amendment to this Agreement and agrees that all Capital Securitieslisted on any Pledge Amendment delivered to Lender shall for all purposeshereunder be considered Collateral.

 

(iii)          The Pledgor will not, without the writtenconsent of the Agent (such consent not to be unreasonably withheld), take anyaction to amend, alter or change any Issuer’s LLC Agreement or other governingdocument or permit any Issuer to repeal its LLC Agreement or other governingdocument.

 

(iv)          The Pledgor covenants and agrees that it willcause each Issuer to comply in all material respects with all the terms andlimitations contained in such Issuer’s LLC Agreement or other governingdocument.

 

(d)           The Pledgor shall remain liable under the contracts and agreementsincluded in the Collateral (including each LLC Agreement) to the extent setforth therein, and shall perform all of its duties and obligations under suchcontracts and agreements to the same extent as if this Agreement had not beenexecuted. The exercise by the Secured Party of any of its rights hereundershall not release the Pledgor from any of its duties or obligations under anysuch contracts or agreements included in the Collateral.

 

(e)           The Pledgor shall (i) maintain each LLC Agreement in full forceand effect, (ii) enforce each LLC Agreement in accordance with its terms,and (iii) take all such action to such end as may from time to time bereasonably requested by the Secured Party.

 

(f)            The Pledgor shall pay when due all taxes,fees and assessments imposed on or with respect to the Collateral or inconnection with any of the transactions contemplated by this Agreement, exceptto the extent the validity thereof is being contested in good faith by

 

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appropriateproceedings for which adequate reserves in accordance with GAAP have been setaside by the Pledgor.

 

Section 3.02.   NoAmendments, Etc., of Collateral.  Subjectto Section 3.05(b), the Pledgor shall not enter into or permit to existany restriction with respect to the transferability of or any rights under orin respect of the Collateral, other than restrictions arising under the LoanDocuments and restrictions on transfer contained in the LLC Agreements (as ineffect on the date hereof).

 

Section 3.03.   Ownershipand Defense of Collateral.  ThePledgor shall at all times (a) have good title to, and be the sole ownerof, each asset that is Collateral, free of (i) in the case of anyCollateral that is a financial asset, any adverse claim (as defined in Section 8-102(a)(l)of the Uniform Commercial Code), and (ii) in the case of any Collateralthat is an instrument, any claim referred to in Section 3-305(1) ofthe Uniform Commercial Code, and (b) defend the Collateral against theclaims and demands of all third Persons, except that this Section 3.03shall not apply to (x) for only so long as such Lien is a Permitted Lien, theinterest in the Collateral and the claims and demands of a holder of aPermitted Lien, or (y) Collateral to which Section 1.02 does not apply.

 

Section 3.04.  Status ofCollateral.  (a) The Pledgorrepresents, warrants and agrees that (i) so long as any Securities areCollateral, such Collateral is and shall be (A) duly authorized andvalidly issued and fully paid and non-assessable and (B) except for suchregistration as may be required under the Securities Act as a result of apublic offering or sale of such Collateral, freely saleable without limit, orregistration or qualification, under Applicable Law and (ii) as of theAgreement Date, the shares or other units of the Capital Securities listed on Schedule 3.04represent all of the outstanding shares or other units of such CapitalSecurities.

 

(b)           The Pledgor agrees that it will take all steps necessary, including thepurchase of additional shares or other units of Capital Securities of theIssuers, so that such shares or other units of Capital Securities that areCollateral are all of the outstanding shares or other units of CapitalSecurities of the Issuers.

 

Section 3.05.   CertainRights of Secured Party and Pledgor.  (a) Upon the occurrence and during thecontinuance of a Termination Event, the Secured Party may, and is herebyauthorized to, transfer into or register in its name or the name of its nomineeany or all of the Collateral. The Pledgor shall promptly give the Secured Partycopies of all notices and other communications received by the Pledgor withrespect to any Collateral registered in the name of the Pledgor.

 

(b)           Upon the occurrence and during the continuance of a Termination Event,the Secured Party, after a notice to the Pledgor that it intends to exerciseits rights under this Section 3.05(b), may, from time to time, in its ownor the Pledgor’s name, exercise any and all rights, powers and privileges withrespect to the Collateral, and with the same force and effect, as could thePledgor.

 

(c)           Unless and until the Secured Party exercises its rights under Section 3.05(b),the Pledgor may, with respect to any of the Collateral, if the Pledgor shallhave given the Secured

 

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Partynot less than five (5) Business Days’ written notice thereof, vote andgive consents, ratifications and waivers with respect thereto, except to theextent that any such would (A) be for a purpose that would constitute orresult in a Default or (B) in the sole judgment of the Secured Party,detract from the value thereof as Collateral, and from time to time, uponrequest from the Pledgor, the Secured party shall deliver to the Pledgorsuitable proxies so that the Pledgor may cast such votes, consents,ratifications and waivers. Each such request from the Pledgor shall constitutea Representation and Warranty by the Pledgor hereunder that no Default existsor would result therefrom.

 

Section 3.06.   PaymentsUnder Depositary Agreement. (a) During the absence of any TerminationEvent, the Pledgor shall be entitled to receive and retain all cashDistributions paid by AEE2 in respect of the Securities. Upon the occurrenceand during the continuance of a Termination Event, the Secured Party maynotify, or request the Pledgor to notify, AEE2 to make all Distributions andother payments in respect of the Collateral directly to the Secured Party,except to the extent that AEE2 is required to make payments to the DepositaryAgent in accordance with the terms of the Depositary Agreement. Unless aTermination Event is continuing, the Pledgor shall deliver to the DepositaryAgent in accordance with, and to the extent required under, the DepositaryAgreement all cash Distributions received by the Pledgor. The Pledgor shallimmediately deliver to the Secured Party (to hold as Collateral) all non-cashDistributions made by AEE2 in the identical form received with any necessaryendorsements or with appropriate stock or bond powers duly executed in blank.

 

(b)           Upon the occurrence and during the continuance of a Termination Event,the Pledgor shall (i) receive and hold all Distributions in trust for theSecured Party, (ii) not commingle any Distributions that it is required tohold in trust with any of its other funds or property and (iii) immediatelydeliver all Distributions that it is required to hold in trust to the SecuredParty in the identical form received with any necessary endorsements or withappropriate stock or bond powers duly executed in blank.

 

ARTICLE 4.

 

TERMINATION EVENTS

 

Upon the occurrence and during the continuance of a Termination Event,and in each such case:

 

Section 4.01.   Applicationof Proceeds.  Subject to rights ofthe Depositary Agent prior to the occurrence of a Termination Event, all cashproceeds received by the Secured Party upon any sale of, collection of, orother realization upon, all or any part of the Collateral and all cash held bythe Secured Party as Collateral shall, subject to the Secured Party’s right tocontinue to hold the same as cash Collateral, be applied as follows:

 

First:  Tothe payment of all reasonable out-of-pocket costs and expenses incurred inconnection with the sale of or other realization upon the Collateral, includingattorneys’ fees and disbursements;

 

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Second:  Tothe payment of the Secured Obligations owing to the Agent in such order as theAgent may elect (with the Pledgor remaining liable for any deficiency);

 

Third:  Tothe payment of the other Secured Obligations in such order as the RequiredBanks may elect (with the Pledgor remaining liable for any deficiency); and

 

Fourth:  Tothe extent of the balance (if any) of such proceeds, to the payment to thePledgor, subject to Applicable Law and to any duty to pay such balance to theholder of any subordinate Lien in the Collateral.

 

Section 4.02.   GeneralRemedies.  (a) Power of Sale.The Secured Party (i) may sell the Collateral in one or more parcels atpublic or private sale, at any of its offices or elsewhere, for cash, on creditor for future delivery, and at such price or prices and upon such other termsas it may deem commercially reasonable, (ii) shall not be obligated tomake any sale of Collateral regardless of notice of sale having been given, and(iii) may adjourn any public or private sale from time to time byannouncement at the time and place fixed therefor, and such sale may, withoutfurther notice, be made at the time and place to which it was so adjourned. TheSecured Party shall give Pledgor at least ten (10) days’ prior writtennotice of the Secured Party’s intention to make any sale of any Collateralspecifying the time such disposition is to be made and, if such disposition isa public sale, specifying the place of such sale, and the Pledgor agrees thatany such notice shall constitute reasonable notification.

 

(b)           Foreclosure.  The Secured Party, instead ofexercising the power of sale conferred upon it by Section 4.02(a) andApplicable Law, may proceed by a suit or suits at law or in equity to foreclosethe Security Interest and sell the Collateral, or any portion thereof, under ajudgment or a decree of a court or courts of competent jurisdiction.

 

(c)           Receiver.  The Secured Party may obtainthe appointment of a receiver of the Collateral and the Pledgor consents to andwaives any right to notice of such appointment.

 

Section 4.03.   OtherRemedies.  (a) Secured Party’sRights with Respect to Proceeds and Other Collateral. All payments andother deliveries received by or for the account of the Secured Party from timeto time pursuant to Section 3.06, together with the proceeds of all otherCollateral from time to time held by or for the account of the Secured Party(whether as a result of the exercise by the Secured Party of its rights under Section 4.02(a) or(b) or otherwise) may, at the election of the Secured Party, (i) beheld by the Secured Party, or any Person designated by the Secured Party toreceive or hold the same, as Collateral, (ii) be or continue to be appliedas provided in Section 4.01 or (iii) be disposed of as provided in Section 4.02(a) or(b).

 

(b)           Enforcement by Secured Party. The Secured Party may, without notice tothe Pledgor and at such time or times as the Secured Party in its solediscretion may determine, exercise any or all of the Pledgor’s rights in, toand under, or in any way connected with or related to, any or all of theCollateral, including (i) demanding and enforcing payment and performanceof, and exercising any or all of the Pledgor’s rights and remedies with respectto the collection, enforcement or prosecution of, any or all of the CollateralObligations, in each case by legal proceedings or otherwise, (ii) settling,adjusting, compromising, extending, renewing, discharging and releasing any orall of, and any legal proceedings brought to collect or enforce

 

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anyor all of, the Collateral Obligations and (iii) preparing, filing andsigning the name of the Pledgor on (A) any proof of claim or similardocument to be filed in any bankruptcy or similar proceeding involving anyIssuer and (B) any notice of lien, assignment or satisfaction of lien, orsimilar document in connection with any Collateral Obligation.

 

(c)           Adjustments.  The Secured Party may settleor adjust disputes and claims directly with each Issuer for amounts and onterms that the Secured Party considers advisable and in all such cases only thenet amounts received by the Secured Party in or as payment of such amounts,after deduction of reasonable out-of-pocket costs and expenses of collection,including reasonable attorneys’ fees and expenses, shall be subject to theother provisions of this Agreement.

 

ARTICLE 5.

 

MISCELLANEOUS

 

Section 5.01.   Expensesof Pledgor’s Agreements and Duties.  Theterms, conditions, covenants and agreements to be observed or performed by thePledgor under the Collateral Documents shall be observed or performed by it atits sole cost and expense.

 

Section 5.02.   SecuredParty’s Right to Perform on Pledgor’s Behalf.  If the Pledgor shall fail to observe orperform any of the terms, conditions, covenants and agreements to be observedor performed by it under the Collateral Documents, the Secured Party may (butshall not be obligated to) do the same or cause it to be done or performed orobserved, either in its name or in the name and on behalf of the Pledgor, andthe Pledgor hereby authorizes the Secured Party so to do.

 

Section 5.03.   SecuredParty’s Right to Use Agents and to Act in Name of Pledgor.  The Secured Party may exercise its rights andremedies under the Collateral Documents through an agent or other designee and,in the exercise thereof, the Secured Party or any such other Person may act inits own name or upon the occurrence and during the continuance of a TerminationEvent in the name and on behalf of the Pledgor.

 

Section 5.04.  NoInterference: Compensation or Expense.  The Secured Party may exercise its rights andremedies under the Collateral Documents (a) without resistance orinterference by the Pledgor, (b) without payment of any kind to thePledgor and (c) for the account, and at the expense, of the Pledgor.

 

Section 5.05.   Limitationof Secured Party’s Obligations with Respect to Collateral.  (a) The Secured Party shall have noobligation to protect or preserve any Collateral or to preserve rightspertaining thereto other than the obligation to use reasonable care in thecustody and preservation of any Collateral in its actual possession. TheSecured Party shall be deemed to have exercised reasonable care in the custodyand preservation of any Collateral in its possession if such Collateral isaccorded treatment substantially equal to that which the Secured Party accordsits own property. The Secured Party shall be relieved of all responsibility forany Collateral in its possession upon surrendering it, or tendering surrenderof it, to the Pledgor.

 

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(b)           Nothing contained in the Collateral Documents shall be construed asrequiring or obligating the Secured Party, and the Secured Party shall not berequired or obligated, to (i) make any demand, or to make any inquiry asto the nature or sufficiency of any payment received by it, or to present orfile any claim or notice or take any action, with respect to any CollateralObligation or any other Collateral or the monies due or to become duethereunder or in connection therewith, (ii) ascertain or take action withrespect to calls, conversions, exchanges, maturities, tenders, offers or othermatters relating to any Collateral, whether or not the Secured Party has or isdeemed to have knowledge or notice thereof, (iii) take any necessary stepsto preserve rights against any prior parties with respect to any Collateral or (iv) notifythe Pledgor of any decline in the value of any Collateral.

 

Section 5.06.  Rights ofSecured Party Under Uniform Commercial Code and Applicable Law.  The Secured Party shall have, with respect tothe Collateral, in addition to all of its rights and remedies under the CollateralDocuments, (a) the rights and remedies of a secured party under theUniform Commercial Code, whether or not the Uniform Commercial Code wouldotherwise apply to the Collateral in question, and (b) the rights andremedies of a secured party under all other Applicable Law.

 

Section 5.07.   Waiversof Rights Inhibiting Enforcement.  ThePledgor waives (a) any claim that, as to any part of the Collateral, apublic sale, should the Secured Party elect so to proceed, is, in and ofitself, not a commercially reasonable method of sale for such Collateral, (b) theright to assert in any action or proceeding between it and the Secured Partyany offsets or counterclaims that it may have, (c) except as otherwiseprovided in any of the Collateral Documents, to the extent permitted byApplicable Law, notice or judicial hearing in connection with the Secured Party’staking possession or disposition of any of the Collateral, including any andall prior notice and hearing for any prejudgment remedy or remedies and anysuch right that the Pledgor would otherwise have under the U.S. Constitution orany statute of the United States or of any state, and all other requirements asto the time, place and terms of sale or other requirements with respect to theenforcement of the Secured Party’s rights hereunder, (d) all rights ofredemption, appraisement, valuation, stay and extension or moratorium and (e) allother rights the exercise of which would, directly or indirectly, prevent,delay or inhibit the enforcement of any of the rights or remedies under theCollateral Documents or the absolute sale of the Collateral, now or hereafterin force under any Applicable Law, and the Pledgor, for itself and all who mayclaim under it, insofar as it or they now or hereafter lawfully may, herebywaive the benefit of all such laws and rights.

 

Section 5.08.   Power ofAttorney.  (a) In addition tothe other powers granted to the Secured Party by the Pledgor under theCollateral Documents, the Pledgor hereby appoints the Secured Party, and anyother Person that the Secured Party may designate, as the Pledgor’sattorney-in-fact to act, in the name, place and stead of the Pledgor in any wayin which the Pledgor itself could do, with respect to each of the following: (i) uponthe occurrence and during the continuance of a Termination Event, endorsing thePledgor’s name on (A) any checks, notes, acceptances, money orders, draftsor other forms of payment, (B) any securities, instruments, documents,notices, or other documents or agreements relating to the Collateral, (C) schedulesand assignments of Collateral Obligations and (D) notices of assignment,UCC-1 financing statements and other public records; (ii) taking anyactions or exercising any rights, powers or privileges that the Pledgor is entitledto take or exercise and that, under the terms of any of the

 

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CollateralDocuments, the Secured Party is authorized to take or exercise; (iii) uponthe occurrence and during the continuance of an Event of Default, doing orcausing to be done any or all things necessary or, in the determination of theSecured Party, desirable to observe or perform the terms, conditions, covenantsand agreements to be observed or performed by the Pledgor under the CollateralDocuments and otherwise to carry out the provisions of the CollateralDocuments; and (iv) upon the occurrence and during the continuance of aTermination Event, notifying the post office authorities to change the addressfor delivery of the Pledgor’s mail to an address designated by the SecuredParty, and receiving, opening and disposing of all mail addressed to thePledgor (with all mail not constituting, evidencing or relating to theCollateral to be forwarded by the Secured Party to the Pledgor). The Pledgorhereby ratifies and approves all acts of said attorney-in-fact.

 

(b)           To induce any third Person to act under this Section 5.08, thePledgor hereby agrees that any third Person receiving a duly executed copy orfacsimile of this Agreement may act under this Section 5.08, and that thetermination of this Section 5.08 shall be ineffective as to such thirdPerson unless and until actual notice or knowledge of such termination shallhave been received by such third Person, and the Pledgor, on behalf of itselfand its successors and assigns, hereby agrees to indemnify and hold harmlessany such third Person from and against any and all claims that may ariseagainst such third Person by reason of such third Person having relied on theprovisions of this Section 5.08.

 

Section 5.09.   Termination of Security Interest.  The Security Interest and all of the Pledgor’sobligations under Articles 1, 3 and 4 shall terminate upon the later to occurof (a) the indefeasible repayment in full in cash, to the extent due, and,to the extent not due, the satisfaction or securing, in a manner acceptable tothe Secured Party, of the Secured Obligations, and (b) the termination ofthe Commitments and the termination or expiration of all Letters of Credit.

 

Section 5.10.   GoverningLaw.  This Agreement and the rightsand duties of the Pledgor, the Secured Party and the other Principals under theCollateral Documents (including matters relating to the Maximum PermissibleRate) shall, pursuant to New York General Obligations Law Section 5-1401,be governed by the law of the State of New York, except to the extent that thevalidity or perfection of the Security Interest, or remedies hereunder, inrespect of any particular Collateral are governed by the laws of a jurisdictionother than the State of New York.

 

Section 5.11.   LIMITATION OF LIABILITY.  NEITHER THE SECURED PARTY NOR ANY OTHERPRINCIPAL SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND THE PLEDGOR HEREBYWAIVES, RELEASES AND AGREES NOT TO SUE FOR:

 

(a)           ANY LOSS OR DAMAGE SUSTAINED BY THE PLEDGOR, OR ANY LOSS, DAMAGE,DEPRECIATION OR OTHER DIMINUTION IN THE VALUE OF ANY COLLATERAL, THAT MAY OCCURAS A RESULT OF, IN CONNECTION WITH, OR THAT IS IN ANY WAY RELATED TO, ANYEXERCISE OF ANY RIGHT OR REMEDY UNDER THE COLLATERAL DOCUMENTS, EXCEPT FOR ANYSUCH LOSS, DAMAGE, DEPRECIATION OR DIMINUTION TO THE EXTENT THAT THE SAME ISDETERMINED BY A JUDGMENT OF A COURT THAT IS BINDING ON THE PLEDGOR AND SUCHPRINCIPAL, FINAL AND NOT SUBJECT TO REVIEW ON APPEAL, TO BE

 

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THERESULT OF ACTS OR OMISSIONS ON THE PART OF SUCH PRINCIPAL CONSTITUTING (i) WILLFULMISCONDUCT OR (ii) GROSS NEGLIGENCE; OR

 

(b)           ANY SPECIAL, INDIRECT OR CONSEQUENTIAL, AND, TO THE EXTENT PERMITTEDUNDER APPLICABLE LAW, PUNITIVE DAMAGES SUFFERED BY THE PLEDGOR IN CONNECTIONWITH ANY COLLATERAL DOCUMENT RELATED CLAIM.

 

Section 5.12.   Counterparts. This Agreement and eachother Collateral Document may be signed in any number of counterparts, each ofwhich shall be an original, with the same effect as if the signatures theretowere upon the same instrument.

 

Section 5.13.   EntireAgreement. This Agreement embodies the entire agreement among the Pledgorand the Secured Party relating to the subject matter hereof and supersedes allprior agreements, representations and understandings, if any, relating to thesubject matter hereof.

 

Section 5.14.   Successorsand Assigns. All of the provisions of this Agreement and each otherCollateral Document shall be binding on and inure to the benefit of the partieshereto and thereto and their respective successors and assigns; *provided, however*, that the Pledgor may not assign any of its rights orobligations under this Agreement or any other Collateral Document without theprior written consent of the Secured Party and the other Principals.

 

Section 5.15.   Deliveryof Opinions Authorized. The Pledgor hereby acknowledges and agrees thateach Person that has rendered or may render an opinion, report or similarcommunication, including legal opinions and accountant’s reports, to any Personin connection with the Collateral Documents, has been and is hereby authorizedand directed to so deliver such opinion, report or communication.

 

ARTICLE 6.

 

INTERPRETATION

 

Section 6.01.   DefinitionalProvisions. (a) Certain Terms Defined byReference. Except where the context clearly indicates a different meaning,all terms defined in Article 1, 8 or 9 of the Uniform Commercial Code, assuch definitions may be amended from time to time, are used herein with themeanings therein ascribed to them. In addition, the terms “collateral” and “securityinterest”, when capitalized, have the meanings specified in subsection (b) belowand the term “deposit account” includes an account evidenced by a certificate ofdeposit. Capitalized terms used but not defined herein shall have the meaningset forth in the Credit Agreement.

 

(b)           Other Defined Terms. For purposes of this Agreement:

 

“Agreement”means this Agreement, including all schedules, annexes and exhibits hereto.

 

“Agreement Date” means the date set forth as such on the lastsignature page hereof.

 

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“Collateral” means the Pledgor’s right, title and interest ineach of the following, in each case whether now or hereafter existing or nowowned or hereafter acquired by the Pledgor:

 

(i)            all Securities;

 

(ii)           the limited liability company agreement oroperating agreement (as the case may be) of each Issuer identified in Schedule 3.04(each such agreement, as it may be amended, supplemented, restated or otherwisemodified from time to time, being referred to herein as an “LLC Agreement”)and all limited liability company membership interests of the Pledgor in suchIssuer, including (A) all rights of the Pledgor as a member of such Issuerand all rights to receive distributions, cash, instruments and other propertyfrom time to time received, receivable or otherwise distributed under orpursuant to such LLC Agreement, (B) all rights of the Pledgor to receiveproceeds of any insurance, indemnity, warranty or guaranty with respect to suchLLC Agreement, (C) all claims of the Pledgor for damages arising out of orfor breach of or default under such LLC Agreement, (D) the right of thePledgor to terminate such LLC Agreement, to perform and exercise consensual orvoting rights thereunder and to compel performance and otherwise exercise allremedies thereunder, (E) all rights of the Pledgor, whether as a member ofsuch Issuer or otherwise, to all property and assets of such Issuer (whetherreal property, inventory, equipment, contract rights, accounts, receivables,general intangibles, securities, instruments, chattel paper, documents, chosesin action, or otherwise), and (F) certificates or instruments evidencingan ownership or membership interest in such Issuer or its assets;

 

(iii)          all rights (contractual and otherwise andwhether constituting accounts, general intangibles, investment property orfinancial assets) constituting, arising under, connected with, or in any way relatedto, any or all Collateral;

 

(iv)          all claims (including the right to sue orotherwise recover on such claims) (A) to items referred to in thedefinition of Collateral, (B) under warranties relating to any of theCollateral, and (C) against third parties that in any way arise under orout of or are related to or connected with any or all of the Collateral; and

 

(v)           all products and proceeds of Collateral inwhatever form (including proceeds that constitute property of the typesdescribed above). The inclusion of “proceeds” of Collateral in the definitionof “Collateral” shall not be deemed a consent by the Secured Party to any saleor other disposition of any Collateral not otherwise specifically permitted bythe terms hereof.

 

“CollateralDocument Related Claim” means any claim (whether civil, criminal oradministrative and whether arising under any Applicable Law, including any “environmental”or similar law, or sounding in tort, contract or otherwise) in any way arisingout of, related to, or connected with (i) the Collateral Documents, (ii) therelationships established thereunder, (iii) the exercise of any right orremedy available thereunder or under Applicable Law or (iv) theCollateral, whether such claim arises or is asserted before or after the AgreementDate or before or after the release of the Security Interest.

 

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“CollateralDocuments” means (i) this Agreement and (ii) all otheragreements, documents and instruments related to, arising out of, or in any wayconnected with, (A) this Agreement, (B) any other agreement, documentor instrument referred to in this clause (ii), or (C) any of thetransactions contemplated by this Agreement or any such other agreement,document or instrument, in each case whether now or hereafter executed.

 

“Collateral Obligation” means a Liability that constitutes orarises in connection with any Collateral and includes any such Liabilityconstituting or arising under any Security.

 

“Credit Agreement” means the Amended and Restated CreditAgreement, dated as of the date hereof, among the Pledgor, the Banks andIssuing Banks listed on the signature pages thereof and from time to timeparties thereto, and Calyon New York Branch, as Agent.

 

“Distributions” means Ordinary Distributions and ExtraordinaryDistributions.

 

“Extraordinary Distributions” means (in each case whether or notin cash) all dividends, interest, principal payments and other distributionsand other payments (including cash and securities payable in connection withcalls, conversions, stock splits, redemptions and the like) on or in respectof, and all proceeds (including cash and securities receivable in connectionwith tender or other offers) of, Collateral other than Ordinary Distributions.

 

“Issuer” means each of AEE2, AES Cayuga and AES Somerset.

 

“LLC Agreement” has the meaning assigned to such term in clause (ii) ofthe definition of “Collateral” contained in this Section 6.01 (b).

 

“Ordinary Distributions” means cash dividends to the extent paidout of retained earnings, and interest paid in cash, in each case with respectto Collateral, except to the extent that any such dividend is made inconnection with partial or total liquidation or a reduction of capital or anysuch interest is penalty interest, or, in each case, to the extent the same isnot in the ordinary course.

 

“Permitted Lien” means (i) a Lien consented to in writingby the Secured Party but only if the Secured Party shall not have requested thedischarge thereof, (ii) a Lien created in favor of the Secured Party underthe Collateral Documents, and (iii) any other Permitted Lien (as definedin Appendix A) to the extent expressly permitted under, and as described in, Section 6.05(a) ofthe Credit Agreement.

 

“Pledge Amendment” has the meaning ascribed to that term in Section 3.01(c)(ii) hereto.

 

“Pledgor” means AES Eastern Energy, L.P., a Delaware limitedpartnership.

 

“Principals” means all Persons that are, or at any time were,the Secured Party, the Agent, a Bank, an Issuing Bank and any other IndemnifiedPerson.

 

“Questionnaire” means the Questionnaire in the form attachedhereto as Schedule 6.01 executed and delivered by the Pledgor tothe Secured Party in connection with this Agreement.

 

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“Representation and Warranty” means each representation orwarranty made pursuant to or under (i) Article 2, Article 3 orany other provision of this Agreement, (ii) any of the other CollateralDocuments or (iii) any amendment to, or waiver of rights under, thisAgreement or under any of the other Collateral Documents, whether or not, inthe case of any representation or warranty referred to in clause (i), (ii) or(iii) of this definition (except in each case, to the extent otherwiseexpressly provided), the information that is the subject matter thereof is withinthe knowledge of the Pledgor.

 

“Security” means (i) each security (A) listed on Schedule 3.04and (B) acquired by the Pledgor pursuant to its obligations under Section 3.04(b),(ii) each security, whether or not listed on Schedule 3.04,issued by an Issuer in the possession of (A) the Secured Party, (B) thePledgor or (C) a Person acting on behalf of the Secured Party or who hasacknowledged that it holds such security for the Secured Party, and (iii) eachsecurity, whether or not listed on Schedule 3.04, of the same classor series issued by an Issuer and delivered to or for the account of thePledgor by the Secured Party or any such Person for a purpose contemplated by Section 9-312(g) ofthe Uniform Commercial Code.

 

“SecuredObligations”means all Liabilities of the Pledgor owing to, or in favor orfor the benefit of, or purporting to be owing to, or in favor or for thebenefit of, the Principals under the Loan Documents to which the Pledgor is aparty, in each case (i) whether now existing or hereafter arising oracquired and (ii) whether owing to, or in favor or for the benefit of, orpurporting to be owing to, or in favor or for the benefit of, Persons that arePrincipals as of the Agreement Date or that become Principals by reason of anysuccession or assignment at any time thereafter, and including, withoutlimitation, all Loan Document Related Claims to the extent that the Pledgor isor may be obligated to indemnify the Secured Party, the Banks or the IssuingBanks therefor pursuant to the Credit Agreement or any other Loan Document; butin no event shall the principal amount of the Secured Obligations exceed$50,000,000.

 

“Secured Party” means the Agent, acting both on its own behalfas Agent and as the agent for and representative (within the meaning of Section 9-102(a)(72)of the Uniform Commercial Code) of the other Principals.

 

“Security Interest” means the pledges and assignments to theSecured Party of, the continuing security interest of the Secured Party in, andthe continuing lien of the Secured Party upon, the Collateral intended to beeffected by the terms of this Agreement or any of the other CollateralDocuments.

 

“Termination Event” means (i) the termination of all Leasesor (ii) the Secured Party notifies the Pledgor that pursuant to Section 8.02of the Credit Agreement the Commitments have terminated and the Secured Partyhas elected to exercise remedies under this Agreement.

 

Section 6.02.   OtherInterpretative Provisions. (a) Except asotherwise specified herein, all references herein (i) to any Person shallbe deemed to include such Person’s successors and assigns, (ii) to anyApplicable Law defined or referred to herein shall be deemed references to suchApplicable Law as the same may have been or may be amended or supplemented fromtime to time and (iii) to any Loan Document or Contract defined orreferred to herein shall be deemed references to such Loan Document or Contract(and, in the case of any instrument, any other

 

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instrumentissued in substitution therefor) as the terms thereof may have been or may beamended, supplemented, waived or otherwise modified from time to time (subjectto any restrictions on such amendments, supplements, waivers or modificationsset forth herein or in any other Loan Document).

 

(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 notto any particular provision of this Agreement, and the words “Article”, “Section”,“Schedule” and “Exhibit” shall refer to Articles, Sections of, and Schedulesand Exhibits to, this Agreement unless otherwise specified.

 

(c)           Whenever the context so requires, the neuter gender includes themasculine or feminine, the masculine gender includes the feminine, and thesingular number includes the plural, and vice versa.

 

(d)           Any item or list of items set forth following the word “including”, “include”or “includes” is set forth only for the purpose of indicating that, regardlessof whatever other items are in the category in which such item or items are “included”,such item or items are in such category, and shall not be construed asindicating that the items in the category in which such item or items are “included”are limited to such items or to items similar to such items.

 

(e)           Each power of attorney, license and other authorization in favor of theSecured Party or any other Person granted by or pursuant to this Agreementshall be deemed to be irrevocable and coupled with an interest.

 

(f)            Except as otherwise indicated, any referenceherein to the “Collateral”, the “Secured Obligations”, the “Loan Documents”,the “Collateral Documents”, the “Principals”, the “Issuers” or any othercollective or plural term shall be deemed a reference to each and every itemincluded within the category described by such collective or plural term, sothat (i) a reference to the “Collateral”, the “Secured Obligations”, the “Principals”or the “Issuers” shall be deemed a reference to any or all of the Collateral,the Secured Obligations, the Principals or the Issuers, as the case may be, and(ii) a reference to the “obligations” of the Pledgor under the “LoanDocuments” or the “Collateral Documents” shall be deemed a reference to eachand every obligation under each and every Loan Document or Collateral Document,as the case may be, whether any such obligation is incurred under one, some orall of the Loan Documents or the Collateral Documents, as the case may be.

 

(g)           Except where the context clearly indicates a different meaning,references in this Agreement to Securities and other types of property meansthe same to the extent they constitute Collateral.

 

Section 6.03.  Representations and Warranties. AllRepresentations and Warranties shall be deemed made (a) in the case of anyRepresentation and Warranty contained in this Agreement at the time of itsinitial execution and delivery, except where otherwise stated herein, at and asof the Agreement Date, (b) in the case of any Representation and Warrantycontained in this Agreement or any other Loan Document at the time any Loan ismade, except where otherwise stated therein, at and as of such time and (c) inthe case of any particular Representation and

 

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Warranty,wherever contained, at such other time or times as such Representation andWarranty is made or deemed made in accordance with the provisions of thisAgreement or the document pursuant to, under or in connection with which suchRepresentation and Warranty is made or deemed made.

 

Section 6.04.   Captions.Captions to Articles, Sections and subsections of, and Annexes, Schedules andExhibits to, the Collateral Documents are included for convenience of referenceonly and shall not constitute a part of the Collateral Documents for any otherpurpose or in any way affect the meaning or construction of any provision ofthe Collateral Documents.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beexecuted by their duly authorized officers all as of the Agreement Date.

 
|   | AES  EASTERN ENERGY, L.P.               |
|--------|-----------------------------------------|
|   | By:  AES NY, L.L.C., as general partner |
|   |                                    |
|   |                                    |
|   | By                                      | /s/  Kevin R. Pierce |   |
|   | Name:                                   | Kevin  R. Pierce |
|   | Title:                                  | Vice  President |
|        |                                         |  |  |  |

 

AMENDED AND RESTATED LLC MEMBERSHIP INTEREST PLEDGE AGREEMENT

 

----

 
|   | CALYON  NEW YORK BRANCH,               |
|--------|----------------------------------------|
|   | as  Secured Party                      |
|   |                                   |
|   |                                   |
|   | By                                     | /s/ Glenn W. Muscosky |   |
|   | Name:                                  | Glenn W. Muscosky |
|   | Title:                                 | Director |
|   |                                   |
|   |                                   |
|   | By                                     | /s/ Nina Eshoo |   |
|   | Name:                                  | Nina Eshoo |
|   | Title:                                 | Managing Director |
|   |                                   |   |
|   | Agreement  Date: October 26, 2004 |
|        |                                        |  |  |  |  |

 

----

 

Schedule 1.03 

 

SCHEDULE OF REQUIRED ACTION

 

Pursuant to, and without thereby limiting, its obligations under Section 1.03,the Pledgor hereby agrees that it will:

 

1.             (A)          Deliver to the Secured Party certificatesevidencing Securities either (i) in bearer form or (ii) if suchSecurity is in registered form, either (a) registered in the name of the SecuredParty, (b) indorsed to the Secured Party or in blank by an effectiveendorsement or (c) accompanied by blank stock or bond powers.

 

(B)           Deliver to the Secured Party UCC-3 Financing Statements in form andsubstance satisfactory to the Secured Party.

 

2.             Upon the occurrence and during thecontinuance of any Termination Event, to the extent that the same isCollateral: hold all money, checks, notes, drafts and other payments receivedby the Pledgor or any of its agents that constitute Collateral, in trust forthe Secured Party, not commingle the same with any other property of thePledgor and, within five (5) Business Days (or such shorter period as theSecured Party may specify in writing to the Pledgor) after receipt, cause thesame to be delivered to the Secured Party.

 

3.             At all times (a) mark its books and recordsas may be necessary or appropriate to evidence, protect and perfect theSecurity Interest and (b) cause its financial statements to reflect theSecurity Interest in Collateral with respect to which perfection is noteffected by public filing or recording.

 

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Schedule 3.0l(c)(ii) 

 

PLEDGE AMENDMENT

 

Additional CapitalSecurities

 
| ** ** | ** ** | **Class**  | ** ** | **Number of Shares   (or other Units)** | ** ** | ** **               |
|------------|------------|------------|------------|-----------------------------------------|------------|--------------------------|
| ** ** | ** ** | **or**     | ** ** | **or**                                  | ** ** | **% of Outstanding**     |
| **Issuer** | ** ** | **Series** | ** ** | **Principal Amounts**                   | ** ** | **Class or Series** |
| ** ** | ** ** | ** ** | ** ** | ** **                              | ** ** | ** **               |
| ** ** | ** ** | ** ** | ** ** | ** **                              | ** ** | ** **               |
| ** ** | ** ** | ** ** | ** ** | ** **                              | ** ** | ** **               |

 

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Schedule 3.04

 

SHARES OF THE CAPITAL SECURITIES

 
| **Issuer**            | ** ** | **Debt or   Equity** | ** ** | **Certificated or  Uncertificated** | ** ** | **Class or  Series** | ** ** | **LLC  Agreement**                                                                        | ** ** | **Number of  Shares/Units or  Principal Amount   Owned** | ** ** | **Percent of  Outstanding  Class or Series** | ** ** |
|-----------------------|------------|----------------------|------------|-------------------------------------|------------|---------------------------|------------|-------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------|------------|
| AEE2,  L.L.C.         |       | Equity               |       | Certificated                        |       | Common Shares             |       | Amended  and Restated Limited Liability Company Agreement dated as of May 4, 1999    |       | 10                                                       |       | 100                                               | %          |
|                  |       |                 |       |                                |       |                      |       |                                                                                      |       |                                                     |       |                                              |       |
| AES  Cayuga, L.L.C.   |       | Equity               |       | Certificated                        |       | Common Shares             |       | Amended  and Restated Limited Liability Company Agreement dated as of March 9,  2001 |       | 10                                                       |       | 100                                               | %          |
|                  |       |                 |       |                                |       |                      |       |                                                                                      |       |                                                     |       |                                              |       |
| AES  Somerset, L.L.C. |       | Equity               |       | Certificated                        |       | Common Shares             |       | Amended  and Restated Limited Liability Company Agreement dated as of March 9,  2001 |       | 10                                                       |       | 100                                               | %          |

 

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Schedule 6.01

 

LLC MEMBERSHIP INTERESTPLEDGE AGREEMENT QUESTIONNAIRE

 

Theundersigned (the “Pledgor”) is entering into an Amended and Restated LLCMembership Interest Pledge Agreement (the “Pledge Agreement”)with Calyon New York Branch, as Secured Party. In connection with the PledgeAgreement, the Pledgor is required to answer the following questions:

 

1.             What is the Pledgor’s exact complete name?

 

 

AES Eastern Energy, L.P

 

 

2.             Has the Pledgor ever changed its name? If so,state each other name the Pledgor has had.

 

No.

 

 

3.             Does the Pledgor do business under any othername? If so, state each such name.

 

No.

 

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4.             Has the Pledgor changed its identity or legalstructure in any way within the past five years? Changes in legal structurewould include incorporation of a partnership or sole proprietorship,reincorporation in a different state, mergers, consolidations and acquisitions.If any such change has taken place, indicate the nature of such change and givethe names of each corporation or other entity that was incorporated, merged orconsolidated with or acquired by the Pledgor in such transaction (includingeach name under which each such corporation or entity has done business) andthe address of each place of business of each such corporation or entityimmediately prior to such incorporation, merger, consolidation or acquisitionand within four months prior to the date of this Questionnaire.

 

No.

 

 

 

5.             State the complete address (including thecounty) of the Pledgor’s place of business or, if the Pledgor has more than oneplace of business, its chief executive office and, if different from its placeof business or chief executive office, of the location where the Pledgor keepsits books and records relating to its accounts or contract rights.

 

 

7725 Lake Road

 

Barker, New York 14012

 

6.             Has the Pledgor’s place of business or chiefexecutive office been located at any other address (including that of anyindependent computer service firm or the like) during the past four months? Ifso, specify each such address (including the county).

 

No.

 

 

7.             State the complete address (including thecounty) of each other place of business that the Pledgor presently has:

 
| AES  Cayuga, L.L.C. |   | AES  Somerset, L.L.C. |
|---------------------|--------|-----------------------|
|                |   |                  |
| 228  Cayuga Drive   |   | 7725  Lake Road       |
|                |   |                  |
| Lansing,  NY 14882  |   | Barker,  NY 14012     |

 

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8.             State the complete address (including the county)of each place of business that the Pledgor has had in the past four months,other than those listed in the answers to questions 5, 6, and 7.

 

 

9.             State the following information, in each caseas of the Agreement Date, with respect to each security that is to beCollateral on the Agreement Date

 
| **Issuer**            | ** ** | **Debt or  Equity** | ** ** | **Certificated or  Uncertificated** | ** ** | **Class or  Series** | ** ** | **LLC  Agreement**                                                                               | ** ** | **Number  of  Shares/Units  or Principal  Amount  Owned** | ** ** | **Percent  of  Outstanding  Class or  Series** | ** ** |
|-----------------------|------------|---------------------|------------|-------------------------------------|------------|---------------------------|------------|--------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|-----------------------------------------------------|------------|
| AEE2,  L.L.C.    |       | Equity              |       | Certificated                        |       | Common Shares             |       | Amended  and Restated Limited Liability Company Agreement, dated as of May 4,  1999         |       | 10                                                        |       | 100                                                 | %          |
|                  |       |                |       |                                |       |                      |       |                                                                                             |       |                                                      |       |                                                |       |
| AES  Cayuga, LLC      |       | Equity              |       | Certificated                        |       | Common Shares             |       | Amended  and “Restated-Limited Liability Company Agreement, dated as of March 9,  2001 |       | 10                                                        |       | 100                                                 | %          |
|                  |       |                |       |                                |       |                      |       |                                                                                             |       |                                                      |       |                                                |       |
| AES  Somerset, L.L.C. |       | Equity              |       | Certificated                        |       | Common Shares             |       | Amended  and Restated Limited Liability Company Agreement, dated as of March 9,  2001       |       | 10                                                        |       | 100                                                 | %          |

 

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ThePledgor hereby certifies that its answers to the foregoing questions arecomplete and correct and confirms that such answers constitute representationsand warranties under the Pledge Agreement.

 

 

Date:October 26, 2004

 
|   | Pledgor:                                |
|--------|-----------------------------------------|
|   |                                    |
|   | AES  EASTERN ENERGY, L.P.               |
|   |                                    |
|   | By: AES NY, L.L.C., as general  partner |
|   |                                    |
|   |                                    |
|   | By                                      | /s/ Kevin R. Pierce |   |
|   | Name:                                   | Kevin  R. Pierce |
|   | Title:                                  | Vice  President |
|        |                                         |  |  |  |

 

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EXECUTION COPY

 

**ISSUINGBANK AGREEMENT**

 

ISSUING BANK AGREEMENT, dated as of October 26, 2004 between AESEASTERN ENERGY, L.P., a Delaware limited partnership (the ***“Borrower”***), andCALYON NEW YORK BRANCH (the ***“New Issuing Bank”***).

 

PRELIMINARY STATEMENTS

 

(1)           The Borrower has entered into the Amended and Restated CreditAgreement, dated as of October 26, 2004 (said Agreement, as amended,supplemented, restated or otherwise modified from time to time, being the ***“Credit Agreement”***), withcertain Banks named therein and from time to time parties thereto (the “Banks”),certain letter of credit issuing banks from time to time parties thereto, and CalyonNew York Branch, as Agent. Unless otherwise defined herein, capitalized termsused herein shall have the meaning assigned to such terms in the CreditAgreement.

 

(2)           Pursuant to Section 3.01 of the Credit Agreement, the Borrower mayfrom time to time identify and arrange for one or more of the Banks to act asan Issuing Bank thereunder and issue one or more Letters of Credit (as definedbelow). The Borrower desires to designate the New Issuing Bank as an IssuingBank under the Credit Agreement. Subject to the terms and conditions hereof andof the Credit Agreement, the New Issuing Bank has agreed to act as an IssuingBank and to issue Letters of Credit from time to time at the request of and forthe account of the Borrower in an aggregate stated amount not to exceed$35,000,000 (such amount referred to herein as the ***“Commitment”***) at anyone time outstanding.

 

NOW, THEREFORE, in consideration of the premises and in order to inducethe New Issuing Bank to issue Letters of Credit from time to time, the partieshereto agree as follows:

 

ARTICLE IDEFINITIONS

 

***SECTION 1.01.   Certain Defined Terms.*** As used in thisAgreement, the following terms shall have the following meanings (such meaningsto be equally applicable to both the singular and plural forms of the termsdefined):

 

***“Beneficiary”*** means, with respect toany Letter of Credit, the beneficiary of such Letter of Credit.

 

***“Commitment”***has the meaning assigned to that term inPreliminary Statement (2) hereof.

 

***“******Commitment Termination Date******”*********has the meaning assigned to thatterm in Section 3.01 hereof.

 

***“******Letter of Credit******”***means a “Letter of Credit” (as such term is defined in the Credit Agreement)issued by the New Issuing Bank, in form and substance satisfactory to the NewIssuing Bank, the Borrower and the Agent.

 

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***“Stated Expiration Date”***means, with respect to any Letter of Credit,the stated expiration date of such Letter of Credit as designated by theBorrower in the applicable Request for Issuance; *provided*, thatexcept as provided in Section 11.24 of the Credit Agreement, the StatedExpiration Date of each Letter of Credit shall in no event be later than thedate that is the earlier of (i) the one year anniversary of the issuanceof such Letter of Credit and (ii) five Business Days prior to the MaturityDate.

 

***SECTION 1.02.    Computation of Time******Periods*****.** Computation of a period of time from a specified date toa later specified date shall be made in accordance with the Credit Agreement.

 

***SECTION 1.03.  Accounting Terms.***All accounting terms not specifically definedherein or in the Credit Agreement shall be construed in accordance withgenerally accepted United States accounting principles as in effect as of thedate hereof consistently applied, except as otherwise stated herein.

 

ARTICLE IITHE CREDIT AGREEMENT

 

***SECTION 2.01.    Credit Agreement.***   (a) The parties hereto acknowledge and agree that this Agreementis an “Issuing Bank Agreement” under the Credit Agreement, and that the partieshereto shall be entitled to the rights and remedies, and bound by theobligations, accorded to the parties in interest to an “Issuing Bank Agreement”as so provided in the Credit Agreement. The parties hereto hereby furtheracknowledge and agree that the Agent and the Banks are intended third-partybeneficiaries hereof and are entitled (acting through the Agent, in the case ofthe Banks) to the rights and benefits accorded hereunder.

 

(b)           The New Issuing Bank hereby acknowledges and agrees that it is an “IssuingBank” under the Credit Agreement, that, by its execution and delivery hereof,it is deemed a party to the Credit Agreement as if it were a signatory thereofin such capacity and that it assumes all obligations, and acquires all rightsand remedies, of an “Issuing Bank” under the Credit Agreement.

 

(c)           In the event of any conflict between the terms of this Agreement andthe terms of the Credit Agreement (unless such conflict arises solely as aresult of an amendment to the Credit Agreement made after the date hereofwithout the written consent of the New Issuing Bank thereto), the terms of theCredit Agreement shall control and such conflicting terms hereunder shall be ofno force or effect.

 

ARTICLE III

AMOUNT AND TERMS OF THE LETTERSOF CREDIT

 

***SECTION 3.01.   The Lettersof Credit.*** The New Issuing Bank agrees, on the terms andconditions hereinafter set forth, to issue each Letter of Credit to theBeneficiary designated therefor by the Borrower pursuant to the applicableRequest for Issuance on any Business Day during the period from the date hereofto and including the date that occurs ten Business Days immediately precedingthe Maturity Date (the “Commitment Termination Date”), in an

 

2

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aggregatestated amount not to exceed the amount of the Commitment less the aggregatestated amount of all previously issued and outstanding Letters of Credit, andexpiring on or before the Stated Expiration Date.

 

***SECTION 3.02.   Issuing the Letters of Credit.*** Each Letter of Creditshall be issued pursuant to Section 3.02 of the Credit Agreement.

 

***SECTION 3.03.  Letter of Credit Fees.*** The Borrower agrees topay to the New Issuing Bank for its own account those fees set forth in thatcertain fee letter agreement, dated the date hereof, between the Borrower andthe New Issuing Bank, which fee letter agreement is incorporated herein byreference for the benefit of the New Issuing Bank. In addition, the Borroweragrees to pay to the New Issuing Bank the customary charges of the New IssuingBank for opening, drawings under, amendments to, and transfers of each Letterof Credit.

 

***SECTION 3.04.  Payments and Computations.*** The Borrower shall makeeach payment hereunder not later than 12:00 noon (New York, New York time) onany day when due in U.S. Dollars. Any such payment shall be made to the Agentfor the account of the New Issuing Bank at the Agent’s office set forth in Section 11.01of the Credit Agreement. The Borrower hereby authorizes the New Issuing Bank,if and to the extent payment is not made when due hereunder, to charge fromtime to time against any or all of the Borrower’s accounts with the New IssuingBank any amount so due. Computations of the fees hereunder shall be made by theNew Issuing Bank on the basis of a year of 360-days for the actual number ofdays (including the first day but excluding the last day) elapsed.

 

***SECTION 3.05.  Extension of the Stated Expiration Date.*** At least 30 days butnot more than 90 days before the Stated Expiration Date of each Letter ofCredit, and in any event no later than five Business Days prior to theCommitment Termination Date, the Borrower may request the New Issuing Bank inwriting (with a copy of each such request to the Agent) to extend the StatedExpiration Date of such Letter of Credit for purposes of this Agreement andsuch Letter of Credit to any date not later than the earlier of (i) theone year anniversary of the Stated Expiration Date and (ii) the date thatoccurs five Business Days prior to the Maturity Date (except as otherwiseprovided in Section 11.24 of the Credit Agreement). If the Borrower shallmake such a request, the New Issuing Bank shall, within five Business Daysafter its receipt of such request, notify the Borrower in writing whether ornot the New Issuing Bank consents to such request and, if the New Issuing Bankdoes so consent, the conditions of such consent (including, without limitation,conditions relating to legal documentation and the consent of the Beneficiarythereof). If the New Issuing Bank shall not so notify the Borrower, the NewIssuing Bank shall be deemed not to have consented to such request. Any suchextension shall be effective only if and when made in accordance with Articles3 and 4 of the Credit Agreement.

 

ARTICLE IVCONDITIONS OF ISSUANCE

 

***SECTION 4.01.   Conditions Precedent to Issuance of EachLetter of Credit.*** The obligation of the New Issuing Bank to issueeach Letter of Credit is subject to the satisfaction of the applicableconditions precedent set forth in Article 4 of the Credit Agreement.

 

3

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ARTICLE VREPRESENTATIONS AND WARRANTIES

 

***SECTION 5.01.   Representations and Warranties of theBorrower.*** The Borrower hereby represents and warrantsfor the benefit of the New Issuing Bank that the representations and warrantiesof the Borrower set forth in Article 5 of the Credit Agreement are trueand correct in all material respects on the date hereof, on each date ofissuance of a Letter of Credit and on each date on which any of the materialterms or conditions of a Letter of Credit are modified, as if made on and as ofsuch date.

 

ARTICLE VIMISCELLANEOUS

 

***SECTION 6.01.   Amendments, Etc.*** No amendment or waiverof any provision of this Agreement, nor consent to any departure by theBorrower therefrom, shall in any event be effective unless the same shall be inwriting, signed by the New Issuing Bank and the Borrower and consented to bythe Agent on behalf of the Required Banks.

 

***SECTION 6.02.   Notices, Etc.*** All notices and othercommunications provided for hereunder shall be made in accordance with Section 11.01of the Credit Agreement and sent, if to the New Issuing Bank, at its addressset forth on the signature page hereof.

 

***SECTION 6.03.   No Waiver; Remedies.***No failure on the part of the New IssuingBank to exercise, and no delay in exercising, any right hereunder or under theCredit Agreement shall operate as a waiver thereof; nor shall any single orpartial exercise of any right hereunder or thereunder preclude any other orfurther exercise thereof or the exercise of any other right. The remediesherein and therein provided are cumulative and not exclusive of any remediesprovided by law.

 

***SECTION 6.04.   Costs, Expenses and Taxes.***The Borrower agrees to pay on demand (a) thereasonable fees and expenses of counsel to the New Issuing Bank in connectionwith the preparation, execution, delivery and administration of this Agreementand any other documents that may be delivered in connection with this Agreementand any proposed modification, amendment or consent relating to this Agreementand with respect to advising the New Issuing Bank as to its rights andresponsibilities under this Agreement and (b) all costs and expenses(including reasonable counsel fees and expenses) in connection with (i) theenforcement of this Agreement and such other documents that may be delivered inconnection with this Agreement (whether through negotiations, legal proceedingsor otherwise) and (ii) any action or proceeding relating to a court order,injunction, or other process or decree restraining or seeking to restrain theNew Issuing Bank from paying any amount under any Letter of Credit.Notwithstanding the foregoing, if, pursuant to the Depositary Agreement, theBorrower is not permitted to pay any such fees, costs or expenses to the NewIssuing Bank promptly after demand therefor by the New Issuing Bank, theBorrower shall pay such fees, costs and expenses on the first date thereafter(but in no event later than the next-scheduled Rent Payment Date) that theBorrower is permitted to pay such fees, costs and expenses, *provided*, that, in such case, all such fees, costs and expenses shallbear interest at a rate per annum equal to the Base Rate plus the ApplicableMargin from the date of such demand until paid in full, payable to the NewIssuing Bank on the date that such fees, costs and expenses are paid. Inaddition, the Borrower shall pay any and all stamp and other taxes and fees

 

4

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payable or determined to be payable in connection with the executionand delivery of this Agreement or any Letter of Credit or any such otherdocuments, and agree to save the New Issuing Bank harmless from and against anyand all liabilities with respect to or resulting from any delay in paying oromission to pay such taxes and fees.

 

***SECTION 6.05.  Binding Effect.*** This Agreement shallbecome effective when it shall have been executed by the Borrower and the NewIssuing Bank and consented to in writing by the Agent (for itself as Agent andon behalf of the Banks); and thereafter shall be binding upon and inure to thebenefit of the Borrower, the New Issuing Bank, the Agent, the Banks and theirrespective successors and assigns, except that the Borrower shall not have theright to assign its rights hereunder or any interest herein without the priorwritten consent of the Banks, and the New Issuing Bank shall not have the rightto assign its rights hereunder or any interest herein without the prior writtenconsent of the Required Banks and the Borrower, which consent shall not beunreasonably withheld or delayed.

 

***SECTION 6.06.   Severability.*** Any provision of thisAgreement that is prohibited, unenforceable or not authorized in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent ofsuch prohibition, unenforceability or non-authorization without invalidatingthe remaining provisions hereof or affecting the validity, enforceability orlegality of such provision in any other jurisdiction.

 

***SECTION 6.07.   WAIVER OF JURY TRIAL.*** EACH OF THE NEW ISSUINGBANK AND THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY INANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THISAGREEMENT OR ANY LETTER OF CREDIT, OR ANY OTHER INSTRUMENT OR DOCUMENTDELIVERED HEREUNDER OR THEREUNDER.

 

***SECTION 6.08.   Governing Law; Submission to Jurisdiction.*** This Agreement shall begoverned by, and construed in accordance with, the laws of the State of NewYork. The New Issuing Bank (i) irrevocably submits to the non-exclusivejurisdiction of any New York State court or Federal court sitting in New YorkCity in any action arising out of this Agreement or any Letter of Credit, (ii) agreesthat all claims in such action may be decided in such court, (iii) waives,to the fullest extent it may effectively do so, the defense of an inconvenientforum and (iv) consents to the service of process by mail. A finaljudgment in any such action shall be conclusive and may be enforced in otherjurisdictions. Nothing herein shall affect the right of any party to servelegal process in any manner permitted by law or affect its right to bring anyaction in any other court.

 

***SECTION 6.09.   Headings.*** Section headingsin this Agreement are included herein for convenience of reference only andshall not constitute a part of this Agreement for any other purpose.

 

***SECTION 6.10.   Execution in Counterparts.*** This Agreement may beexecuted and consented to in any number of counterparts and by differentparties hereto in separate counterparts, each of which when so executed orconsented to shall be deemed to be an original and all of which taken togethershall constitute one and the same instrument.

 

5

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beduly executed and delivered by their respective officers thereunto dulyauthorized as of the date first above written.

 
|   | AES  EASTERN ENERGY, L.P.                |
|--------|------------------------------------------|
|   |                                     |
|   | By:  AES NY, L.L.C., its general partner |
|   |                                     |
|   |                                     |
|   | By                                       | /s/ Kevin R. Pierce |   |
|   |                                     | Name: | Kevin R. Pierce |
|   |                                     | Title: | Vice President |
|        |                                          |  |  |  |

 

ISSUING BANK AGREEMENT

 

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|   | CALYON  NEW YORK BRANCH,                |
|--------|-----------------------------------------|
|   | as  New Issuing Bank                    |
|   |                                    |
|   |                                    |
|   | By                                      | /s/ Glenn W. Moscosky |   |
|   |                                    | Name: | Glenn W. Moscosky |   |
|   |                                    | Title: | Director |   |
|   |                                    |
|   |                                    |
|   | By                                      | /s/ Nina Eshoo |   |
|   | Name:  Nina Eshoo                       |
|   | Title: Managing Director                |
|   |                                    |
|   | Address:                                |
|   | 1301  Avenue of the Americas            |
|   | New  York, New York 10019               |
|   |                                    |
|   | Attention:  Letter of Credit Department |

 

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| Consented to as of the  date first  above written: |
|----------------------------------------------------|
|                                               |
| CALYON  NEW YORK BRANCH,                           |
| as  Agent on behalf of the Banks                   |
|                                               |
|                                               |
| By                                                 | /s/  Glenn W. Muscosky |   |
|                                               | Name: | Glenn W. Muscosky |   |
|                                               | Title: | Director |   |
|                                               |   |
|                                               |   |
| By                                                 | /s/ Nina Eshoo |   |
|                                               | Name: | Nina  Eshoo |
|                                               | Title: | Managing  Director |
|                                                    |  |  |  |  |  |  |

 

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EXHIBITD

 

[FORM OF]

IRREVOCABLE STANDBY LETTER OF CREDIT

NO.              

 

[Date]

 

[Name of Beneficiary]

[Address]

[Address]

 
| Attention: |   | [Name]  |
|------------|--------|---------|
|       |   | [Title] |

 

Dear Sirs:

 

1.             We hereby establish in your favor the [Nameof the Issuing Bank] (the “Bank”) Irrevocable Standby Letter of Credit No.(this “*Letter of Credit*”)*,*whichshall be effective immediately and expire as set forth herein, wherein you arehereby irrevocably authorized to draw on this Letter of Credit, for the accountof AES Eastern Energy, L.P., a Delaware limited partnership (the “Company”),available by your drafts at sight upon the terms and conditions hereinafter setforth, in an aggregate amount not exceeding $                                 (                                          U.S.Dollars) (the “*Stated Amount*”).

 

2.             Funds under this Letter of Credit areavailable to you against your sight draft(s) drawn on us, stating on theirface: “Drawn under [Name of the Issuing Bank] Irrevocable Standby Letter ofCredit No.                       dated                     ,20  ” accompanied by your written certificate purportedly signed byyour authorized officer in the form of Exhibit A hereto. Drafts andcertificates hereunder shall be dated the date of presentation and shall be presentedat our office located at, [Address of the Issuing Bank], Attention:                     (orat such other office as we may designate by written notice to you).Presentation of such drafts and certificates shall be presented in originalsfor drawings under this Letter of Credit.

 

3.             We hereby agree that each draft drawn underand in compliance with the terms of this Letter of Credit will be duly honoredby us upon due delivery of the documents as specified if presented as specifiedon or before the Expiration Date (as defined below). If a presentation in respectof payment is made by you hereunder at or prior to 11:00 A.M., [InsertAppropriate Time Zone] time, on a business day on or prior to the ExpirationDate, and provided that the documents so presented conform to the terms andconditions hereof, payment shall be made to you of the amount specified, inimmediately available funds, not later than 3:00 P.M., [Insert Appropriate TimeZone] time, on the next succeeding business day. If a presentation in respect

 

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of payment is made by you hereunder after 11:00 A.M., [InsertAppropriate Time Zone] time, on a business day on or prior to the ExpirationDate, and provided that the documents so presented conform to the terms andconditions hereof, payment shall be made to you of the amount specified, inimmediately available funds, not later than 3:00 P.M., [Insert Appropriate TimeZone] time, on the second succeeding business day (notwithstanding that suchbusiness day may be after the Expiration Date). As used herein, “*businessday*”**shall meana day on which banks in the city in which our principal office is located arenot required or authorized by law or executive order to remain closed and onwhich trading on the New York Stock Exchange, Inc. is not closed.

 

4.             Partial drawings are permitted. Drawings inrespect of payments hereunder honored by us shall not, in the aggregate, exceedthe Stated Amount. Each drawing honored by the Bank hereunder shall *pro tanto*reduce the Stated Amount. In noevent shall amounts drawn and paid by us hereunder be reinstated.

 

5.             Upon the payment to you of the amountspecified in a sight draft(s) drawn hereunder, we shall be fully discharged ofour obligation under this Letter of Credit with respect to such sight draft(s),and we shall not thereafter be obligated to make any further payments underthis Letter of Credit in respect of such sight draft(s) to you or any otherperson.

 

6.             This Letter of Credit shall expire at 5:00P.M., [Insert Appropriate Time Zone] time, on the earlier to occur (suchearlier date being the “*Expiration Date*”*)*of (i)                       ,20    (the “*Stated Expiration Date*”*)*and (ii) the date you surrenderthis Letter of Credit for cancellation. In no event shall (any drawinghereunder be presented after the Stated Expiration Date.

 

7.             This Letter of Credit is subject to theUniform Customs and Practice for Documentary Credits (1993 Revision),International Chamber of Commerce Publication No. 500 (the “UCP 500”). ThisLetter of Credit shall be deemed to be made under the laws of the State of NewYork, including Article 5 of the Uniform Commercial Code, and shall, as tomatters not governed by the UCP 500, be governed by and construed in accordancewith the laws of the State of New York.

 

8.             Communications (other than drawings) withrespect to this Letter of Credit shall be in writing and shall be addressed tous at [Address of the Issuing Bank], Attention:                             (orat such other office as we may designate by written notice to you) or by facsimiletransmission received by us at (      )          -             (orat such other number as we may designate by written notice to you) specificallyreferring to the number of this Letter of Credit.

 

9.             This Letter of Credit sets forth in full ourundertaking, and such undertaking shall not in any way be modified, amended,amplified or limited by reference to any document, instrument or agreementreferred to herein, except only the exhibit hereto (but not any document referredto therein) and the sight draft(s); and any such reference shall not be deemedto incorporate herein by reference any document, instrument or agreement exceptas set forth above.

 

2

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|   | Very  truly yours,          |
|--------|-----------------------------|
|   |                        |
|   | [NAME  OF THE ISSUING BANK] |
|   |                        |
|   |                        |
|   | By:                         |   |
|   |                        | Name: |
|   |                        | Title: |

 

3

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EXHIBIT A TOLETTER OF CREDIT

 

[CERTIFICATE OF DRAWING]

(Default under Agreement)

 

The undersigned, a duly authorized officer of [Name of the Beneficiary](the “Beneficiary”), hereby certifies, represents and warrants to [Name of theIssuing Bank] (the “Bank”), with reference to [Name of the Issuing Bank]Irrevocable Standby Letter of Credit No.                ,dated                           ,20   , issued by the Bank in favor of the Beneficiary (the “Letterof Credit”) (any capitalized term used herein and not defined shall have itsrespective meaning as set forth in the Letter of Credit) that:

 

1.     [Name of the Applicable AEE Entity] hasfailed to pay the Beneficiary in accordance with the terms and provisions ofone or more agreements between [Name of the Applicable AEE Entity] andBeneficiary (“the Agreement”) (i) for the purchase, sale and/or exchange ofelectric power, capacity, ancillary services or other related commodities, or(ii) in connection with the use and/or operation of [Name of Applicable AEEEntity’s] power generating facilities.

 

2.     The Beneficiary hereby certifies that, (i)pursuant to the Agreement, as a result of the failure described in paragraph 1above, [Name of the Applicable AEE Entity] is obligated to pay damages (“Damages”)to the Beneficiary in the amount of USD                 (                        and                  U.S.Dollars); (ii) Beneficiary has made all demands for payment of the Damages asrequired under the Agreement, but the Damages remain unpaid as of the date ofthis Certificate; and (iii) Beneficiary is entitled to be paid the Damages asof the date of this Certificate.

 

3.     The Beneficiary hereby draws upon the Letterof Credit in an amount equal to the Damages required to be paid by [Name of AEEEntity] to Beneficiary pursuant to the Agreement in the sum of USD                          (                    and                     U.S.Dollars).

 

4.     The amount of the sight draft(s) accompanyingthis Certificate does not exceed the remaining Stated Amount of the Letter ofCredit.

 

IN WITNESS WHEREOF, the Beneficiary has executed and delivered thisCertificate as of the      day of                   ,20   .

 
|   | [NAME  OF BENEFICIARY] |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    |   |   |
|   |                   | Name: |
|   |                   | Title: |

 

4

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EXECUTION COPY

 

**BANKASSIGNMENT**

 

BANK ASSIGNMENT, dated as of October 26, 2004, among (i) UNIONBANK OF CALIFORNIA, N.A. (“Union Bank”) and CITIBANK, N.A. (“Citi”)as Banks party to the Credit Agreement referred to below (Union Bank and Citi,collectively, the “Transferor Banks”) and (ii) CALYON NEW YORK BRANCH(the “Purchasing Bank”).

 

W I T N E S S E T H:

 

WHEREAS, this Bank Assignment is being executed and delivered inaccordance with Section 11.09(a)(ii) of the $35,000,000 Credit Agreement,dated as of April 10, 2001, among AES Eastern Energy, L.P (the “Borrower”),the Banks named therein or that have become party thereto subsequent to suchdate, the Letter of Credit Issuing Banks named therein or that have becomeparty thereto subsequent to such date and Union Bank, as Agent (as from time totime amended, supplemented or otherwise modified in accordance with the termsthereof, the “Credit Agreement”; terms defined therein being used hereinas therein defined);

 

WHEREAS, the Purchasing Bank wishes to become a Bank party to theCredit Agreement; and

 

WHEREAS, each Transferor Bank is selling its Loans and UnreimbursedDrawings, and assigning its Commitment under the Credit Agreement to thePurchasing Bank;

 

WHEREAS, the Purchasing Bank is willing to purchase the Loans andUnreimbursed Drawings from each Transferor Bank and, assume the Commitment ofeach Transferor Bank;

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

1.             From and after the Transfer Effective Date(as hereinafter defined), the Purchasing Bank shall be a Bank party to theCredit Agreement for all purposes thereof and each Transferor Bank shall ceaseto be a Bank party thereto and the Purchasing Bank shall assume the Commitmentof each Transferor Bank thereunder. The “Transfer Effective Date” shallmean the date as of which: (a) each Transferor Bank shall have received, inimmediately available funds, an amount equal to the sum of (i) the aggregateprincipal amount of such Bank’s Loans outstanding and Unreimbursed Drawings onsuch date plus (ii) all interest, fees and other amounts accrued andoutstanding (whether or not then due and payable) as of such date under theCredit Agreement for the account of such Transferor Bank (including, without limitation,any expenses incurred by such Transferor Bank as a consequence of anyprepayment made in connection with this Bank Assignment of any Eurodollar RateLoan on a day which is not the expiration date of the Interest Period withrespect thereto); (b) each Issuing Bank Agreement shall have been terminatedincluding, the Issuing Bank Agreement dated as of April 10, 2001 betweenthe Borrower and Union Bank and (c) Union Bank, as the Issuing Bank thereunder,shall have been paid, in immediately available funds, all amounts owed to UnionBank by the Borrower thereunder as a result of such termination or otherwise.

 

2.             Effective on the Transfer Effective Date,each Transferor Bank hereby irrevocably sells, assigns and transfers to thePurchasing Bank, without recourse and (except as

 

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setforth elsewhere herein) without representation or warranty, and the PurchasingBank hereby irrevocably purchases, takes and assumes from each Transferor Bank,all of such Transferor Bank’s Loans, Unreimbursed Drawings and Commitmentsunder the Credit Agreement, together with all instruments, documents andcollateral security pertaining thereto.

 

3.             From and after the Transfer Effective Date,all principal, interest, fees and other amounts that would otherwise be payableto or for the account of any Transferor Bank pursuant to the Credit Agreementand the other Loan Documents shall, instead, be payable to or for the accountof the Purchasing Bank.

 

4.             On or prior to the Transfer Effective Date,each Transferor Bank shall deliver its Note to the Purchasing Bank.

 

5.             Each of the parties to this Bank Assignmentagrees that at any time and from time to time upon the written request of anyother party, it will execute and deliver such further documents and do suchfurther acts and things as such other party may reasonably request in order toeffect the purposes of this Bank Assignment.

 

6.             By executing and delivering this BankAssignment, the Purchasing Bank confirms that it satisfies the requirements ofan Eligible Assignee and each Transferor Bank and the Purchasing Bank confirmto and agree with each other, the Agent and the Banks as follows: (i) otherthan the representation and warranty that it is the legal and beneficial ownerof the interest being assigned hereby free and clear of any adverse claim, noneof the Transferor Banks make any representation or warranty or assumes anyresponsibility with respect to any statements, warranties or representationsmade in or in connection with the Credit Agreement or the execution, legality,validity, enforceability, genuineness, sufficiency or value of the Credit Agreementor any other instrument or document furnished pursuant thereto; (ii) none ofthe Transferor Banks makes any representation or warranty or assumes anyresponsibility with respect to the financial condition of the Borrower or theperformance or observance by the Borrower of any of its obligations under theCredit Agreement or any other document delivered in connection therewith or anyother instrument or document furnished pursuant thereto; (iii) the PurchasingBank confirms that it has received a copy of the Credit Agreement, the Loan Documentsand such other documents and information as it has deemed appropriate to makeits own credit analysis and decision to enter into this Bank Assignment; and(iv) the Purchasing Bank will, independently and without reliance upon theAgent, any Transferor Bank or any other Bank and based on such documents andinformation as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under the Credit Agreement orany other document delivered in connection therewith.

 

7.             Each of the parties hereto agrees that, uponthe Transfer Effective Date, Union Bank shall cease to be the Agent and shallbe discharged from its duties and obligations under the Credit Agreement andthe other Loan Documents as the Agent.

 

8.             By its execution hereof, the Agent herebyagrees to waive the requirement for payment of the assignment fee set forth in Section 11.09(a)(ii)(H)of the Credit Agreement in connection with this Bank Assignment.

 

2

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**9.****            ****THIS BANK ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUEDIN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.**

 

10.           This Bank Assignment may be executed inseveral counterparts, each of which shall be an original and all of which shallconstitute but one and the same instrument.

 

3

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IN WITNESS WHEREOF, the parties hereto have caused this Bank Assignmentto be executed by their respective duly authorized officers as of the date setforth above.

 

 
|   | CALYON  NEW YORK BRANCH, as Purchasing  Bank                   |
|--------|----------------------------------------------------------------|
|   |                                                           |
|   |                                                           |
|   | By:                                                            | /s/ Glenn W. Muscosky |   |
|   |                                                           | Name: | Glenn  W. Muscosky |   |
|   |                                                           | Title: | Director |   |
|   |                                                           |
|   |                                                           |
|   | By:                                                            | /s/ Nina Eshoo |   |
|   |                                                           | Name: | Nina  Eshoo |
|   |                                                           | Title: | Managing  Director |
|   |                                                           |
|   | CITIBANK,  N.A., as Transferor Bank                            |
|   |                                                           |
|   |                                                           |
|   | By:                                                            |   |   |
|   |                                                           | Name: |
|   |                                                           | Title: |
|   |                                                           |
|   |                                                           |
|   | UNION  BANK OF CALIFORNIA, N.A., as  Transferor Bank and Agent |
|   |                                                           |
|   |                                                           |
|   | By:                                                            |   |   |
|   |                                                           | Name: |
|   |                                                           | Title: |

 

----

 

IN WITNESS WHEREOF, the parties hereto have caused this Bank Assignmentto be executed by their respective duly authorized officers as of the date setforth above.

 

 
|   | CALYON  NEW YORK BRANCH, as Purchasing  Bank                   |
|--------|----------------------------------------------------------------|
|   |                                                           |
|   |                                                           |
|   | By:                                                            |   |   |
|   |                                                           | Name: |   |
|   |                                                           | Title: |   |
|   |                                                           |
|   |                                                           |
|   | By:                                                            |   |   |
|   |                                                           | Name: |   |
|   |                                                           | Title: |   |
|   |                                                           |
|   | CITIBANK,  N.A., as Transferor Bank                            |
|   |                                                           |
|   |                                                           |
|   | By:                                                            | /s/ Sarah Terner |   |
|   |                                                           | Name: | SARAH TERNER |   |
|   |                                                           | Title: | Vice President  388 Greenwich/21st Fl.  (212) 816-8663 |   |
|   |                                                           |
|   | UNION  BANK OF CALIFORNIA, N.A., as  Transferor Bank and Agent |
|   |                                                           |
|   |                                                           |
|   | By:                                                            |   |   |
|   |                                                           | Name: |
|   |                                                           | Title: |
|        |                                                                |  |  |  |  |  |

 

----

 

IN WITNESS WHEREOF, the parties hereto have caused this Bank Assignmentto be executed by their respective duly authorized officers as of the date setforth above.

 

 
|   | CALYON  NEW YORK BRANCH, as Purchasing  Bank                   |
|--------|----------------------------------------------------------------|
|   |                                                           |
|   |                                                           |
|   | By:                                                            |   |   |
|   |                                                           | Name: |
|   |                                                           | Title: |
|   |                                                           |
|   | By:                                                            |   |   |
|   |                                                           | Name: |
|   |                                                           | Title: |
|   |                                                           |
|   | CITIBANK,  N.A., as Transferor Bank                            |
|   |                                                           |
|   |                                                           |
|   | By:                                                            |   |   |
|   |                                                           | Name: |
|   |                                                           | Title: |
|   |                                                           |
|   |                                                           |
|   | UNION  BANK OF CALIFORNIA, N.A., as  Transferor Bank and Agent |
|   |                                                           |
|   |                                                           |
|   | By:                                                            | /s/ Chad Canfield |   |
|   |                                                           | Name:  Chad Canfield |
|   |                                                           | Title:  Vice President |

 

----

 

ACKNOWLEDGED AND AGREED:

 

AESEASTERN ENERGY, L.P.

 

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

 

 
| By     | /s/ Kevin R. Pierce |   |
|--------|---------------------|--------|
| Name:  | Kevin  R. Pierce    |   |
| Title: | Vice  President     |   |
|        |                     |        |  |

 

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