Construction Loan And Lease Commitment

EXHIBIT 10.24


PANDA-BRANDYWINE, L. P.


CONSTRUCTION LOAN AGREEMENT


AND LEASE COMMITMENT


Dated as of March 30, 1995


GENERAL ELECTRIC CAPITAL CORPORATION


(230 MW Natural Gas-Fired Qualifying Cogeneration Facility
located in Brandywine, Maryland)


[TABLE OF CONTENTS AT BOTTOM OF DOCUMENT]


CONSTRUCTION LOAN AGREEMENT AND LEASE COMMITMENT (this "Agreement"), dated as of March 30, 1995 among PANDA- BRANDYWINE, L.P., a Delaware limited partnership (the "Partnership"), PANDA BRANDYWINE CORPORATION, a Delaware corporation and the sole general partner of the Partnership (the "General Partner"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE Capital").


W I T N E S S E T H :

WHEREAS, (a) the Partnership desires that GE Capital (i) provide construction financing for the Project hereinafter referred to, (ii) issue the Letters of Credit as collateral security for certain obligations of the Partnership under the Power Purchase Agreement hereinafter referred to, (iii) acting through the Owner Trustee, lease the Site from the Partnership and sublease the Site back to the Partnership (iv) upon completion of the Project, acting through the Owner Trustee, purchase the Facility hereinafter referred to from the Partnership and lease the Facility back to the Partnership, and (v) upon completion of the Project, make Equity Loans to the Partnership or the Partners, and (b) GE Capital is willing, either directly or through the Owner Trustee, as the case may be, to provide such financing, issue the Letters of Credit, lease and sublease the Site, purchase and lease the Facility and make the Equity Loans subject to and upon the terms and conditions set forth herein;


NOW, THEREFORE, it is agreed:


Section 1. DEFINITIONS


1.1 Defined Terms. Capitalized terms used in this Agreement shall, unless otherwise defined herein, have the respective meanings assigned thereto in Appendix A.


1.2 Other Definitional Provisions. (a) All terms defined in this Agreement shall have the defined meanings when used in the Note or in any certificate or other document made or delivered pursuant hereto.


(b) As used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms not defined in Appendix A, and accounting terms partly defined in Appendix A, to the extent not defined, shall have the respective meanings given to them under GAAP.


(c) The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, schedule and exhibit references are to this Agreement unless otherwise specified.


(d) Any term defined by reference to an agreement, instrument or other document shall have the meaning so assigned to it whether or not such agreement, instrument or document is in effect.


Section 2. AMOUNTS AND TERMS OF LOANS


2.1 Loans. (a) Subject to the terms and conditions of this Agreement, GE Capital agrees to make construction loans (collectively, the "Loans") to the Partnership from time to time during the Loan Commitment Period in an aggregate principal amount not to exceed the Loan Commitment. If the Loan Commitment Period shall expire on the Lease Closing Date, on the Lease Closing Date the Partnership may, subject to the terms and conditions of this Agreement, nonetheless borrow an amount up to the available Loan Commitment equal to the amount required to be deposited on the Lease Closing Date in the Rent Reserve Account, the Operation and Maintenance Reserve Account and the Warranty Maintenance Reserve Account pursuant to Section 7 of the Facility Lease and an amount equal to the Success Fee, if any, payable on the Lease Closing Date. Such borrowing shall be repaid on such date from the proceeds received from the sale of the Facility to the Owner Trustee pursuant to Section 5 hereof.


(b) Each Loan shall be payable on the Construction Loan Maturity Date without further action on the part of GE Capital.


(c) Unless required to be converted pursuant to the terms of this Agreement, the Loans shall be Eurodollar Loans.


2.2 Procedure for Borrowing. Whenever the Partnership desires GE Capital to make a Loan, the Partnership shall give GE Capital irrevocable notice to be received by GE Capital prior to 10:00 A.M., New York City time, at least three Business Days prior to the requested Borrowing Date, which notice shall be in substantially the form of Exhibit C-2 (a "Notice of Borrowing") and shall specify (i) the amount to be borrowed, (ii) the proposed Borrowing Date, (iii) wire transfer instructions for the disbursement of the proceeds of the Loan and (iv) the length of the initial Interest Period with respect thereto. The Borrowing Date shall be the next-to last Business Day of each calendar month, or such other Business Day as GE Capital and the Partnership shall mutually agree. Each Loan shall be in the minimum amount of $100,000. No more than one Borrowing shall be made in any calendar month.


2.3 Disbursement of Loans. Not later than 1:00 p.m., New York City time, on the Borrowing Date specified in the Notice of Borrowing given by the Partnership pursuant to subsection 2.2, if the conditions precedent to the requested Loan listed in Section 4 have been satisfied, GE Capital will make available the requested Loan on such date in Dollars and in immediately available funds, by wire transfer in accordance with the instructions set forth in such notice.


2.4 Note. The Loans made by GE Capital pursuant to subsection 2.1 shall be evidenced by a promissory note of the Partnership, substantially in the form of Exhibit A, with appropriate insertions, payable to the order of GE Capital (the "Note"). The Note shall (a) be dated the Initial Loan Funding Date, (b) represent the Partnership's obligation to pay the amount of the Loan Commitment or, if less, the aggregate unpaid principal amount of all outstanding Loans, (c) be stated to mature on the Construction Loan Maturity Date, (d) bear interest for the period from the date thereof until paid in full on the unpaid principal amount thereof from time to time outstanding in accordance with subsection 2.7 and (e) be entitled to the benefits of this Agreement and the Collateral Security Documents. GE Capital is hereby authorized to record the date and amount of each Loan, each continuation or conversion thereof, the length of each Interest Period with respect thereto and the date and amount of each payment or prepayment of principal or interest in respect thereof, on the schedules annexed to and constituting a part of the Note (or, at GE Capital's option, in its books and records), and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded. Failure by GE Capital to make any such recordation shall not limit or otherwise affect the obligations of the Partnership hereunder or under the Note.


2.5 Fees. (a) The Partnership agrees to pay to GE Capital, on the Initial Loan Funding Date, an origination fee in an amount equal to 1.50% of the Loan Commitment.


(b) The Partnership agrees to pay to GE Capital a commitment fee for the period commencing on the Initial Loan Funding Date and ending on the Loan Commitment Termination Date, computed at the rate of 1/2 of 1% per annum on the average daily unused amount of the Loan Commitment. Such commitment fee shall be payable on the next-to-last Business Day of each calendar month occurring during the Loan Commitment Period and on the Loan Commitment Termination Date.


2.6 Mandatory Prepayments; Special Payments. (a) If an Event of Loss shall occur, unless the Project is being repaired in accordance with Section 9(c)(i) of the Facility Lease, (i) the Commitment shall terminate forthwith and (ii) on the earlier of (A) the date occurring 90 days after the date of such Event of Loss and (B) the date on which insurance proceeds are received with respect to such Event of Loss, the Partnership shall (x) prepay in full the unpaid principal amount of the then outstanding Loans and LOC Reimbursement Obligations, together with accrued interest thereon to the date of prepayment, and all fees and other amounts owing with respect thereto by the Partnership hereunder and under the other Loan Documents and (y) cash collateralize all undrawn and outstanding Letters of Credit in the manner provided in the introductory paragraph of Section 8.


(b) If the Partnership receives any payments in respect of liquidated damages (Contract Price Discounts) pursuant to Section 5.04 of the Construction Contract, the Partnership shall promptly deposit such payments in the Special Payment Account. On the Construction Loan Maturity Date, such amounts on deposit in the Special Payment Account shall be applied to the repayment of the principal of the Loans, provided that all such amounts received after the Lease Closing Date shall be applied to the retroactive reduction of Lessor's Cost. If the Partnership receives any payments in respect of liquidated damages (Contract Price Discounts) pursuant to Section 5.02 of the Construction Contract, the Partnership shall, subject to the provisions of Section 4.14 of the Security Deposit Agreement, promptly apply such amounts to the payment of accrued and unpaid interest on the Loans and to such other items which are due and owing as GE Capital may specify in writing.


(c) If the Partnership receives any payments from the Power Purchaser pursuant to Subsection 15.3(b) of the Power Purchase Agreement, the Partnership shall promptly deposit all such payments in the Special Payment Account. Such amounts shall be promptly applied to (i) the repayment in full of the principal amount of the Loans and the LOC Reimbursement Obligations, together with accrued interest thereon and all fees and other amounts owing with respect thereto by the Partnership hereunder and under the other Loan Documents and (ii) the cash collateralization of all undrawn and outstanding Letters of Credit (or the termination thereof without liability to GE Capital) in the manner provided in the introductory paragraph of Section 8. Any amounts remaining in the Special Payment Account after such application shall be distributed to the Partnership in accordance with the terms of the Security Deposit Agreement.


(d) Except as required by this subsection 2.6, the Partnership shall not be permitted to prepay the Loans.


2.7 Computation of Interest and Fees. (a) (i) The Loans that are Eurodollar Loans shall bear interest for each day during each Interest Period with respect thereto on the unpaid principal amount thereof at the rate per annum equal to the Interest Rate set forth in clause "(a)" of the definition of "Interest Rate" and (ii) the Loans that are Base Rate Loans shall bear interest on the unpaid principal amount thereof at the Interest Rate then in effect as set forth in clause "(b)" of the definition of "Interest Rate". Interest in respect of Eurodollar Loans and all fees hereunder shall be calculated on the basis of a 360-day year for the actual days elapsed. Interest in respect of Base Rate Loans shall be calculated on the basis of a 365/366 day year for the actual days elapsed.


(b) Interest on the aggregate unpaid principal amount of the Loans shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this subsection 2.7 shall be payable from time to time on demand.


(c) In the event that, and for so long as, any Event of Default shall have occurred and be continuing, the outstanding principal amount of all Loans and, to the extent permitted by Applicable Law, accrued interest in respect of all Loans, and all fees and other amounts payable hereunder shall bear interest at a rate per annum equal to the Default Rate from the date of such Event of Default until such amount is paid in full (as well after as before judgment).


(d) GE Capital shall as soon as practicable notify the Partnership of each determination of a Eurodollar Rate and a Base Rate and of the effective date and amount of each change in the Base Rate. Each determination of an interest rate by GE Capital pursuant to any provision of this Agreement shall be conclusive and binding on the Partnership in the absence of manifest error. GE Capital shall, at the request of the Partnership, deliver to the Partnership a statement showing the quotations, if any, used by GE Capital in determining any interest rate pursuant to paragraph (a) of this subsection 2.7. In the event that GE Capital shall have determined that by reason of circumstances affecting the interbank eurodollar market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate applicable for any Interest Period with respect to (a) proposed Loans or (b) the continuation of Eurodollar Loans beyond the expiration of the then current Interest Period therefor, GE Capital shall give notice of such event to the Partnership. Within 30 days following the date of such notice by GE Capital, GE Capital and the Partnership shall enter into negotiations in good faith with a view to agreeing to an alternative basis acceptable to the Partnership and GE Capital for determining the interest rate (the "Substitute Eurodollar Rate") which shall be applicable during such Interest Period for the Eurodollar Loans to which such Interest Period applies and which shall reflect the cost to GE Capital of funding such Eurodollar Loans for such Interest Period from alternate sources plus the margin for Eurodollar Loans set forth in the definition of "Interest Rate". At the expiration of 30 days from the giving of such notice by GE Capital, (i) if GE Capital and the Partnership have agreed to such Substitute Eurodollar Rate, such Substitute Eurodollar Rate shall take effect with respect to such Interest Period from the beginning of such Interest Period or (ii) if GE Capital and the Partnership have not agreed to a Substitute Eurodollar Rate, (A) any requested Loans shall be deemed to have been made as Base Rate Loans, and (B) any outstanding Eurodollar Loans shall be converted, on the last day of the then current Interest Period therefor, to Base Rate Loans. Until such notice has been withdrawn by GE Capital, no further Eurodollar Loans shall be made.


(e) The Partnership shall select the duration of the initial Interest Period with respect to each Eurodollar Loan in the Notice of Borrowing. Unless the Partnership otherwise elects pursuant to the proviso to this sentence, the Partnership shall be deemed to have elected to continue such Eurodollar Loan at the expiration of the Interest Period with respect thereto as a loan having an Interest Period of the same duration as such expiring Interest Period; provided that the Partnership may elect to convert such Eurodollar Loan, on the last day of the then current Interest Period with respect thereto, to a loan having an Interest Period of any other authorized duration by providing irrevocable notice to GE Capital not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; and provided, further, that no Eurodollar Loan will be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Base Rate Loan on the last day of the Interest Period with respect thereto.


(f) It is the intention of the parties hereto to conform strictly to applicable usury laws and, anything herein or elsewhere to the contrary notwithstanding, the Obligations shall be subject to the limitation that the Partnership shall not be required to pay, and GE Capital shall not be entitled to charge or receive, any interest to the extent that such interest exceeds the maximum rate of interest which GE Capital is permitted by any applicable law to contract for, charge or receive and which would not give rise to any claim or defense of usury. If, as a result of any circumstances whatsoever, performance of any provision hereof or of any of the Loan Documents shall, at the time performance of such provision is due, violate applicable usury law, then, ipso facto, the obligation to be performed shall be reduced to the highest lawful rate, and if, from any such circumstance, GE Capital shall ever receive interest or anything which might be deemed interest under applicable law which would exceed the highest lawful rate, the amount of such excess interest shall be applied to the reduction of the principal amount owing on account of the Note or the amounts owing on other Obligations and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance of the Obligations, such excess shall be refunded to the Partnership.


(g) (A) Any other provision of this Agreement to the contrary notwithstanding, if any Law or any change therein or in the interpretation or the application thereof by any Governmental Authority charged with interpretation or administration thereof shall make it unlawful for GE Capital to make or maintain Eurodollar Loans as contemplated by this Agreement, GE Capital shall give written notice thereof to the Partnership and the commitment of GE Capital hereunder to make Eurodollar Loans shall forthwith be suspended so long as such Law, interpretation or application shall continue, and all Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the last day of the then current Interest Period therefor or within such earlier period as may be required by Law and all Loans made thereafter by GE Capital shall bear interest based upon the Base Rate. If any such conversion of Eurodollar Loans is made on a day which is not the last day of an Interest Period, the Partnership shall pay to GE Capital upon such request, such amount or amounts as may be necessary to compensate GE Capital for any loss or expense sustained or incurred by GE Capital in respect of the Eurodollar Loans as a result of such conversion, including but not limited to any interest or fees payable by GE Capital to lenders of funds obtained by it in order to make or maintain the Eurodollar Loans hereunder, and shall pay to GE Capital the Eurodollar Rate on such Eurodollar Loans to the date of such automatic conversion.


(B) In the event that any Law or any change therein or in the interpretation or application thereof by any Governmental Authority charged with the administration or interpretation thereof, or compliance by GE Capital with any request or directive (whether or not having the force of Law) received from any central bank or monetary authority or other Governmental Authority:


(1) does or shall subject GE Capital to any tax
of any kind whatsoever or change therein with respect
to this Agreement, or any Loan hereunder, or the
performance by GE Capital of its obligations hereunder,
or change the basis of taxation of payments to GE
Capital of principal, interest, or any other amount
payable hereunder (except for changes in the rate of
tax on the overall net income of GE Capital); or


(2) does or shall impose, modify or hold applicable
or change any reserve (including, without limitation,
basic, supplemental, marginal and emergency
reserves), special deposit, compulsory loan or
similar requirement against assets held by, deposits
or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or
any other acquisition of funds by (including, without
limitation, all eurocurrency funding by and all
eurocurrency liabilities), any office of GE Capital
which is not otherwise included in the determination
of the Eurodollar Rate; or

(3) does or shall impose on GE Capital any
other condition, or change therein;
and the result of any of the foregoing is to increase the cost to GE Capital (as compared to the Initial Loan Funding Date) of making, committing to make, renewing, converting or maintaining Loans, or to reduce any amount receivable by GE Capital hereunder or thereunder (as compared to the Initial Loan Funding Date), then, in any such case, the Partnership shall promptly pay GE Capital, upon its demand, such additional amount which will compensate GE Capital for such additional cost or reduced amount receivable.


(C) In the event that the adoption of any Law, rule, regulation or guideline regarding capital adequacy, or any change therein or in the interpretation or application thereof by any Governmental Authority charged with the administration or interpretation thereof or compliance by GE Capital with any request or directive regarding capital adequacy (whether or not having the force of Law) from any central bank or Governmental Authority including, without limitation, the issuance of any final rule, regulation or guideline, does or shall have the effect of reducing the rate of return on GE Capital's capital as a consequence of its obligations hereunder to a level below that which GE Capital could have achieved but for such adoption, change or compliance (taking into consideration GE Capital's policies with respect to capital adequacy) by any material amount, then from time to time, upon demand by GE Capital, the Partnership shall pay to GE Capital such additional amount or amounts as will compensate GE Capital for such reduction.


(D) If circumstances arise that would entitle GE Capital to claim any additional amounts pursuant to this paragraph (g) of this subsection 2.7, GE Capital shall promptly notify the Partnership thereof and consult in good faith with the Partnership with a view toward avoiding such circumstance to the extent reasonably practicable; provided that the failure of GE Capital to so notify or consult the Partnership shall not act as a waiver of the right of GE Capital to receive additional amounts pursuant to this paragraph (g) when GE Capital provides the required notice to the Partnership. A certificate as to any additional amounts payable pursuant to this paragraph (g) submitted by GE Capital to the Partnership shall be conclusive absent manifest error. The provisions of this paragraph (g) shall accrue to the benefit of each Assignee of GE Capital and shall survive the termination of this Agreement, payment of the outstanding Notes and all other amounts payable hereunder.


2.8 Payments. All payments (including prepayments) to be made by the Partnership on account of principal, interest, reimbursement obligations and fees shall be made without set-off or counterclaim and shall be made not later than 12:00 Noon New York City time on the date when due and shall be sent by wire transfer to GE Capital's account no. 50- 205-776 (GECC Depositary Account) at Bankers Trust Company, New York, New York 10017, ABA Number: 0210-0103-3 (Re: Panda Brandywine) in lawful money of the United States of America and in immediately available funds. Any payment received by GE Capital after 12:00 Noon shall be deemed to have been paid on the next succeeding Business Day. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be due and payable at the then applicable rate during such extension.


2.9 Letter of Credit Commitment. (a) Subject to the terms and conditions of this Agreement, GE Capital agrees to issue and deliver certain stand-by letters of credit during the Letter of Credit Commitment Period, substantially in the form of Exhibits B-1, B-2, B-3 and B-4 hereto, as applicable, for the account of the Partnership in favor of the Power Purchaser to secure the following obligations of the Partnership under the Power Purchase Agreement: (i) its obligation to post development security (the "Development Security Letter of Credit") as required by Section 4.1 of the Power Purchase Agreement, (ii) its obligation to post security in respect of interconnection costs (the "Interconnection Letter of Credit") as required by Section 4.2 of the Power Purchase Agreement, (iii) the Partnership's performance obligations under the Power Purchase Agreement after the Commercial Operation Date (the "Performance Letter of Credit") as required by Section 4.5 of the Power Purchase Agreement and (iv) its obligation to provide for operating and maintenance cost reserves pursuant to Section 8.7 of the Power Purchase Agreement (the "O&M Letter of Credit"; collectively with the other letters of credit described in this paragraph (a), the "PEPCO Letters of Credit" or the "Letters of Credit"). The commitment of GE Capital to issue Letters of Credit, or increase the stated amount of any Letter of Credit, shall terminate on the Letter of Credit Issuance Termination Date.


(b) (i) Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, the Development Security Letter of Credit shall initially be issued on the Initial Loan Funding Date in the stated amount of $3,450,000 and shall expire on the earlier to occur of (A) the date occurring forty (40) days after the Commercial Operation Date and (B) June 30, 1998.


(ii) Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, the Interconnection Letter of Credit shall initially be issued on the Initial Loan Funding Date in the stated amount of $2,003,460. Upon the receipt of a certificate of the Power Purchaser (attached as Annex 1 to the Interconnection Letter of Credit) detailing the interconnection costs incurred by the Power Purchaser and paid by the Partnership during the preceding month, the stated amount of the Interconnection Letter of Credit shall decrease by the amount shown in such certificate; provided that the stated amount of such Letter of Credit shall never be less than $330,000. The Interconnection Letter of Credit shall expire on the earlier to occur of (A) the date occurring forty (40) days after the Commercial Operation Date and (B) June 30, 1998.


(iii) Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, the Performance Letter of Credit shall initially be issued on the Commercial Operation Date in the stated amount of $2,000,000 and shall expire on the earlier to occur of (A) the next succeeding December 31 and (B) the Letter of Credit Commitment Termination Date.


(iv) Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, the O&M Letter of Credit shall initially be issued on the later of December 31, 1998 and the second anniversary of the Commercial Operation Date in the stated amount of $1,000,000 and shall expire on the earlier to occur of (A) the next succeeding December 31 and (B) the Letter of Credit Commitment Termination Date. So long as no Default, Event of Default, Lease Default or Lease Event of Default shall have occurred and be continuing at such time, the O&M Letter of Credit shall be amended on the later of December 31, 1999 and the third anniversary of the Commercial Operation Date to increase the stated amount to $2,000,000 and shall be amended on the later of December 31, 2000 and the fourth anniversary of the Commercial Operation Date to increase the stated amount to $5,000,000.


(c) Intentionally Left Blank.


(d) Intentionally left blank.


(e) On or prior to October 31 of each calendar year after the occurrence of the Commercial Operation Date, the Partnership shall deliver a certificate to GE Capital confirming that the Partnership continues to have obligations to the LOC Beneficiary and requesting GE Capital to renew the Letters of Credit referred to in paragraphs (b)(iii) and (iv) above. So long as no Default, Event of Default, Lease Default or Lease Event of Default shall have occurred and be continuing, on or prior to the November 30 next succeeding the delivery of the notice specified in the immediately preceding sentence, GE Capital shall deliver to the LOC Beneficiary a replacement Letter of Credit in a stated amount equal to the amount requested and having an effective date on the next succeeding January 1 and an expiration date the following December 31. GE Capital's obligation to renew Lett ...