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Calpine / THE Bank of New York Mellon - Hazardous Materials Undertaking and UnSecured Indemnity
EXHIBIT 10.39
AMENDED AND RESTATED HAZARDOUS MATERIALS UNDERTAKING AND
UNSECURED INDEMNITY
This Amended and Restated Hazardous Materials Undertaking and Unsecured Indemnity (this "Indemnity") is executed by CALPINE CORPORATION, a Delaware corporation (the "Indemnitor") in favor of THE BANK OF NEW YORK, a New York banking corporation ("BONY"), not in its individual capacity but solely as Collateral Trustee under the Collateral Trust Agreement dated July 16, 2003 (the "Collateral Trust Agreement") among Indemnitor, BONY, the 2007 Trustee, the 2010 Trustee, the 2013 Trustee, Credit Agreement Agent and Term Loan Administrative Agent (collectively, with the Secured Debtholders and their successors and assigns, the "Indemnified Parties"), whose address is 101 Barclay Street, New York, New York 10286.
Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Collateral Trust Agreement.
Recitals
Indemnitor is party to that certain (i) Credit Agreement, dated as of March 8, 2002 (herein, as the same may be amended, modified or supplemented from time to time, called the "Existing 2002 Credit Agreement"), and (ii) Second Amended and Restated Credit Agreement dated as of May 23, 2000 (herein, as the same may be amended, modified, or supplemented from time to time, called the "Existing 2000 Credit Agreement" and together with the Existing 2002 Credit Agreement, collectively, the "Existing Credit Agreements").
Indemnitor, as a condition to the making of the loans pursuant to the Existing Credit Agreement has heretofore executed and delivered to The Bank of Nova Scotia, for itself and as agent for the Lender Parties, that certain Hazardous Materials Undertaking and Unsecured Indemnity, dated as of May 1, 2002 (the "Existing Hazardous Materials Indemnity").
Indemnitor, the Existing Lenders and the Credit Agreement Agent have now agreed to, among other things, (i) terminate the commitments under the Existing 2000 Credit Agreement, and (ii) amend and restate the Existing 2002 Credit Agreement (as so amended and restated, and as the same may, from time to time hereafter, be amended, supplemented, modified or amended and restated, the "Amended and Restated Credit Agreement").
Indemnitor also intends to issue the 2007 Notes, the 2010 Notes, and the 2013 Notes (collectively, the "Notes") and to borrow the Term Loans pursuant to the Term Loan Agreement. The proceeds from the issuance of the Notes, and the borrowing of the Term Loans will be used to refinance a portion of the loans and other indebtedness outstanding under the Existing Credit Agreements.
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The Secured Debt is secured by, among other things, all of the right, title and interest of Indemnitor in the real property and interests comprising the oil and gas reserves, gas, assets, power plants and any other real property at any time owned by Indemnitor and now or hereafter mortgaged to BONY and all fixtures, personal property and other improvements now existing or to be constructed on any of such properties (such properties, descriptions of which are attached hereto as Exhibit A, herein collectively called, the "Properties"), with respect to which Indemnitor has executed counterparts of those certain mortgages or deeds of trust dated July 16, 2003 (the "Mortgages").
The Secured Debtholders have agreed to enter into the Secured Debt Documents only if the Indemnified Parties are indemnified and held harmless with respect to any risk that the Properties may now or in the future be in any way contaminated, or its use or value impacted by any Hazardous Materials, as defined below.
It is a condition precedent to issuing the Secured Debt that Indemnitor execute and deliver this Indemnity, which Indemnity amends and restates the Existing Hazardous Materials Indemnity.
In order to induce the Lenders to issue the Secured Debt, and with the full intention and understanding that the Indemnified Parties will rely hereon, Indemnitor represents, warrants, covenants and agrees as follows:
1. CERTAIN DEFINITIONS. As used in this Indemnity, the following terms shall have the following respective meanings:
"Hazardous Materials" means crude or refined oil or fraction thereof, petroleum substances, petrochemical products, PCBs, asbestos, asbestos containing materials, urea formaldehyde, salts, flammable explosives, radioactive materials, hazardous wastes, toxic, mutagenic or pathogenic substances or related materials, including, without limitation, any substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or state laws or regulations.
"Hazardous Materials Laws" means all federal, state or local laws, ordinances, regulations, orders and directives pertaining to Hazardous Materials.
2. REPRESENTATIONS AND WARRANTIES. Without limiting the generality of any of the representations or warranties contained in the other Secured Debt Documents, Indemnitor hereby represents and warrants to BONY and the other Indemnified Parties that, except as disclosed on Exhibit B hereto, as of the date of this Indemnity and continuing thereafter,
(a) the Properties and each portion thereof (including the
underlying groundwater) are not and have not been a site for the use,
generation, manufacture, discharge, assembly, processing, storage,
release, disposal or transportation to or from of any Hazardous Materials,
except in connection with
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the production, storage and transportation of crude oil, natural gas,
other hydrocarbons and petroleum, and other petroleum products in the
ordinary course of Indemnitor's business;
(b) the Properties and each portion thereof (including the
underlying groundwater) are presently in compliance in all material
respects with all Hazardous Materials Laws, including, without limitation,
those relating to exposure to Hazardous Materials, the labeling, storage
and containment of Hazardous Materials, and air, soil and surface and
ground water conditions;
(c) there have been no past, and there are no pending or, to
Indemnitor's knowledge, threatened
(i) claims, complaints, notices or requests for information
received by Indemnitor with respect to any alleged violation of any
Environmental Law, including Hazardous Materials Laws, that, singly
or in the aggregate, may reasonably be expected to result in a
Material Adverse Effect, or
(ii) complaints, notices or inquiries to Indemnitor regarding
potential liability under any Environmental Law, including Hazardous
Materials Laws, that, singly or in the aggregate, may reasonably be
expected to result in a Material Adverse Effect;
(d) there have been no unremediated Releases of Hazardous Materials
at, on or under any property (including the Properties) now or previously
owned or leased by Indemnitor that, singly or in the aggregate, result in,
or may reasonably be expected to result in, a Material Adverse Effect;
(e) Indemnitor has been issued and is in material compliance with
all permits, certificates, approvals, licenses and other governmental
authorizations relating to environmental matters and necessary for its
businesses;
(f) no property (including the Properties) now or previously owned
or leased by Indemnitor is listed or proposed for listing (with respect to
owned property only) on the National Priorities List pursuant to CERCLA,
on the CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
(g) Indemnitor has not directly transported or directly arranged for
the transportation of any Hazardous Material to any location which is
listed or proposed for listing on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or other
investigations which may lead to material claims against Indemnitor for
any remedial work, damage to natural resources or personal injury,
including claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property (including the Properties) now or previously owned
or leased by
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Indemnitor that, singly or in the aggregate, result in, or may reasonably
be expected to result in, a Material Adverse Effect;
(i) no conditions exist at, on or under any property (including the
Properties) now or previously owned or leased by Indemnitor which, with
the passage of time, or the giving of notice or both, would give rise to
liability under any Environmental Law, which liability would reasonably be
expected to result in a Material Adverse Effect; and
(j) to the best of the knowledge of Indemnitor, no property owned,
operated or leased by Indemnitor is located within two thousand (2,000)
feet of a significant disposal of "hazardous waste" within the meaning of
Section 25221 of the California Health and Safety Code.
3. COVENANTS. Indemnitor hereby covenants and agrees that, so long as any obligation under any of the Secured Debt Documents or otherwise in connection with the Secured Debt is outstanding:
(a) Indemnitor shall not permit the Properties or any portion of any
parcel thereof to be a site for the use, generation, manufacture,
discharge, assembly, processing, storage, Release, disposal or
transportation to or from of Hazardous Materials except (i) as disclosed
on Exhibit B hereto, (ii) in such quantities and as may be necessary for
the production, storage and transportation of crude oil, natural gas and
other Hydrocarbons (as defined in the Mortgages) in the ordinary course of
Indemnitor's business as conducted on the Effective Date, (iii) as
necessary or required to develop the Properties in the ordinary course of
Indemnitor's business and (iv) as may be necessary to respond to any
emergency, each of which excepted activities will be conducted in a manner
designed to minimize environmental risk;
(b) Indemnitor shall keep and maintain the Properties and each
portion of any parcel thereof in compliance in all material respects with
all Environmental Laws, including Hazardous Materials Laws (and to the
extent there are violations of such laws existing as of the date hereof
which are disclosed on Exhibit B, with the remediation plans and work
plans listed on Exhibit B), and otherwise shall not cause or permit the
Properties or any portion of any parcel thereof to be in violation, in any
material respect, of such laws;
(c) As to any claim or matter not disclosed on Exhibit B, Indemnitor
shall immediately advise BONY and each of the Secured Debt Representatives
in writing of:
(i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or
threatened against Indemnitor or the Properties pursuant to any
applicable Environmental Laws, including Hazardous Materials Laws
that, singly or in
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the aggregate, have, or may reasonably be expected to have, a
Material Adverse Effect;
(ii) any and all material claims made or threatened by any
third party against Indemnitor or the Properties relating to any
claim, liability, cause of action, nuisance, fine, penalty, charge,
administrative or judicial order or proceeding, judgment, remedial
action or cleanup requirement, enforcement, damage, contribution,
cost recovery, compensation, loss or injury resulting from any
Hazardous Materials that, singly or in the aggregate, have, or may
reasonably be expected to have, a Material Adverse Effect (the
matters set forth in Sections 3(c)(i) and (ii) hereof are
hereinafter referred to as "Hazardous Materials Claims");
(iii) any change in any claim or matter disclosed in Exhibit B
that, singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect; and
(iv) Indemnitor's discovery of any occurrence or condition on
any real property adjoining or in the vicinity of the Properties
that could cause the Properties or any part thereof to be classified
as "border-zone property" under the provisions of California Health
and Safety Code, Sections 25220, et seq., or any regulation adopted
in accordance therewith, or to be otherwise subject to any
restrictions on the ownership, occupancy, transferability or use of
the Properties under any Environmental Law, including Hazardous
Materials Laws. For the purpose of protecting the collateral given
to secure the Obligations, BONY and any Secured Debt Representative
shall have the right to join and participate in, as a party if it so
elects, any legal proceedings or actions initiated in connection
with any Hazardous Materials Claims and to have its reasonable
attorneys' fees and expenses in connection therewith paid by
Indemnitor;
(d) Indemnitor shall not, without the prior written consent (which
consent shall not be unreasonably withheld or delayed) of a Secured Debt
Representative, take any remedial action in response to the presence of
any Hazardous Materials on, under, or about the Properties (except (i)
with respect to oil, gas and other Hydrocarbons, in the ordinary course of
Indemnitor's business, or (ii) as may be necessary to respond to any
emergency), nor enter into any settlement agreement, consent decree, or
other compromise in respect of any Hazardous Material Cl...
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