Construction Agency Agreement

EXHIBIT 10.38 ================================================================================


AMENDED AND RESTATED CONSTRUCTION AGENCY AGREEMENT
[_____________] FACILITY


DATED AS OF NOVEMBER [ ], 2001


AMONG


RELIANT ENERGY [_____________], LLC,
A DELAWARE LIMITED LIABILITY COMPANY, AS AGENT,


[_____________] TRUST,
A DELAWARE BUSINESS TRUST, AS OWNER TRUST,


FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
IN ITS INDIVIDUAL CAPACITY, BUT ONLY TO THE EXTENT
EXPRESSLY PROVIDED FOR HEREIN, AS BANK,


APPLE INVESTMENTS 2001 TRUST,
A DELAWARE BUSINESS TRUST, AS OWNER TRUST PARENT,


SALOMON SMITH BARNEY INC.,
AS LEAD ARRANGER AND BOOKRUNNER,


CITICORP USA, INC.,
AS ADMINISTRATIVE AGENT,


WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH,
AS ISSUING BANK,


ROYAL BANK OF CANADA,
AS ARRANGER AND SYNDICATION AGENT,


ABN AMRO BANK N.V.,
AS ARRANGER AND DOCUMENTATION AGENT,


COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES,
AS ARRANGER AND CO-SYNDICATION AGENT,


TORONTO DOMINION (TEXAS) INC.,
AS ARRANGER AND CO-DOCUMENTATION AGENT,


THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE I,
AS CERTIFICATE PARTICIPANTS,


AND


THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE I,
AS LENDERS


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Construction Agency Agreement


TABLE OF CONTENTS


Page
---- ARTICLE I DEFINITIONS AND INTERPRETATION..............................................................2
1.1 Interpretation..............................................................................2
1.2 Accounting Terms............................................................................4
1.3 Legal Representation of the Parties.........................................................4
1.4 Defined Terms...............................................................................4
1.5 Amendment and Restatement..................................................................34


ARTICLE II APPOINTMENT OF AGENT.......................................................................35
2.1 Appointment and Acceptance.................................................................35
2.2 Agent's Required Actions...................................................................35
2.3 Scope of Authority.........................................................................38
2.4 Term.......................................................................................39
2.5 Guaranty...................................................................................39


ARTICLE III BUDGET.....................................................................................39
3.1 Preparation of Budget......................................................................39
3.2 Accuracy of Budget.........................................................................40
3.3 Budget Revisions...........................................................................40
3.4 Non-Budget Amount..........................................................................41


ARTICLE IV CONSTRUCTION OF FACILITY...................................................................42
4.1 Construction...............................................................................42
4.2 Amendments; Modifications..................................................................42
4.3 Casualty, Condemnation, Force Majeure Events and Liquidated Damages........................42
4.4 Completion Date Conditions.................................................................42


ARTICLE V ADVANCES AND DIRECT PAYMENTS; LETTERS OF CREDIT; AGENT'S DEPOSIT ACCOUNT COLLATERAL........43
5.1 Payments Pursuant to Budget................................................................43
5.2 Financing Costs and Owner Trust Yield......................................................45
5.3 Fees.......................................................................................46
5.4 Deemed Funding Requests....................................................................46
5.5 Payments to Collateral Agent and Authorized Representatives................................47


ARTICLE VI INSURANCE; CASUALTY AND CONDEMNATION.......................................................47
6.1 Coverage...................................................................................47
6.2 Adjustment of Losses.......................................................................48


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6.3 Casualty; Condemnation; Application of Net Available Proceeds..............................48


ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS OF AGENT, OWNER TRUST AND BANK..................50
7.1 Representations and Warranties of Agent....................................................50
7.2 Representations and Warranties of Owner Trust..............................................56
7.3 Representations and Warranties of Bank.....................................................57
7.4 Covenants of Agent.........................................................................58
7.5 Conditions to Effectiveness................................................................61
7.6 Conditions to Payments.....................................................................65


ARTICLE VIII AGENT EVENTS OF DEFAULT....................................................................65
8.1 Agent Events of Default....................................................................65
8.2 Remedies...................................................................................68
8.3 Survival...................................................................................69
8.4 Waivers; Rights Cumulative.................................................................69


ARTICLE IX TERMINATION BY OWNER TRUST; FAILURE TO COMPLETE............................................70
9.1 Owner Trust Termination Events.............................................................70
9.2 Owner Trust Termination Notice.............................................................71
9.3 Compliance with Required Actions...........................................................71


ARTICLE X AGENT'S OPTIONS............................................................................71
10.1 Purchase Option............................................................................71
10.2 Lease Option...............................................................................76


ARTICLE XI REMARKETING OF FACILITY....................................................................77
11.1 Remarketing of Facility....................................................................77
11.2 Deposit Payment and Allocation of Proceeds of Sale.........................................77


ARTICLE XII AGENT'S INDEMNITIES........................................................................78
12.1 Agent's General Indemnification............................................................78
12.2 Agent's Environmental Indemnity............................................................79
12.3 Agent's General Tax Indemnity..............................................................80
12.4 Agent's Special Tax Indemnity..............................................................88
12.5 Additional Costs...........................................................................88
12.6 Agent's Indemnity Exclusions...............................................................88
12.7 Agent's Indemnification Procedure under Sections 12.1 and 12.2.............................89
12.8 Agent's Subrogation........................................................................91
12.9 Agent's Survival of Agent's Indemnification Obligations....................................91


ARTICLE XIII OWNER TRUST'S INDEMNITIES..................................................................92
13.1 Owner's Trust's General Indemnification....................................................92


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13.2 Owner Trust's Environmental Indemnity......................................................92
13.3 Owner Trust's General Tax Indemnity........................................................93
13.4 Owner Trust's Special Tax Indemnity........................................................98
13.5 Indemnity Exclusions.......................................................................98
13.6 Indemnification Procedure under Section 13.1 or 13.2.......................................99
13.7 Subrogation...............................................................................100
13.8 Survival of Indemnification Obligations...................................................100
13.9 Limitation on Indemnification.............................................................100
13.10 Third Party Beneficiary Rights............................................................100


ARTICLE XIV CREDIT AGREEMENT, MASTER TRUST AGREEMENT AND OTHER FINANCING DOCUMENT RIGHTS..............101
14.1 Assignment of Credit Agreement, Master Trust Agreement Rights and Other Financing
Documents.................................................................................101


ARTICLE XV MISCELLANEOUS.............................................................................103
15.1 Intent....................................................................................103
15.2 Notices...................................................................................104
15.3 Assignment; Successors and Assigns........................................................105
15.4 GOVERNING LAW.............................................................................107
15.5 SUBMISSION TO JURISDICTION; WAIVERS; SERVICE OF PROCESS...................................107
15.6 WAIVERS OF JURY TRIAL.....................................................................108
15.7 Amendments and Waivers....................................................................108
15.8 Counterparts..............................................................................109
15.9 Severability..............................................................................109
15.10 Headings and Table of Contents............................................................109
15.11 Parties in Interest.......................................................................109
15.12 Payment Obligations Absolute..............................................................109
15.13 Further Assurances........................................................................109
15.14 Limitations on Recourse...................................................................109
15.15 No Petition...............................................................................110
15.16 Conflict in Operative Agreements..........................................................110


ARTICLE XVI REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CERTIFICATE PARTICIPANTS.................110
16.1 Trust Agreements..........................................................................110
16.2 [Intentionally Omitted]...................................................................110
16.3 Upstream Purchase and Releases............................................................110
16.4 Disclosure................................................................................111
16.5 Representations and Warranties of Secured Parties.........................................111
16.6 Confidentiality...........................................................................112


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List of Exhibits


Exhibit A - Budget Exhibit B - Form of Completion Certificate Exhibit C - Form of Payment Direction/Borrowing Notice Exhibit D - Form of Quarterly Certificate Exhibit E - Intentionally Omitted Exhibit F - Insurance Exhibit G - Form of Purchase Option Certificate Exhibit H - Form of Purchase Option Assignment and Assumption Agreement Exhibit I - Form of Lease Supplement Exhibit J - Marketing Procedures Exhibit K - Form of Opinion of Local Counsel


List of Schedules


Schedule I - Certificate Participants, Administrative Agent, Lenders
and Addresses Schedule II - Land Schedule III - [_____________] Remediation Schedule IV - Shared Facilities


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Construction Agency Agreement


AMENDED AND RESTATED CONSTRUCTION AGENCY AGREEMENT


AMENDED AND RESTATED CONSTRUCTION AGENCY AGREEMENT dated as of ________, 2001 (this "Agreement"), among [_____________] TRUST, a Delaware business trust (the "Owner Trust"), RELIANT ENERGY [_____________], LLC, a Delaware limited liability company (by way of assignment from Reliant Energy Construction, LLC) (the "Agent"), FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, in its individual capacity, but only to the extent expressly provided for herein (the "Bank"), and APPLE INVESTMENTS 2001 TRUST, a Delaware business trust (the "Owner Trust Parent"), the banks and other financial institutions from time to time parties hereto as identified on Schedule I hereto as lenders (the "Lenders") and as certificate participants (the "Certificate Participants"), SALOMON SMITH BARNEY INC., a New York corporation, as lead arranger and bookrunner (in such capacity, the "Lead Arranger"), CITICORP USA, INC., a Delaware corporation, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, a duly licensed branch of Westdeutsche Landesbank Girozentrale, a public law banking institution organized under the laws of North Rhine Westphalia, Germany, as issuing bank for letters of credit (the "Issuing Bank"), ROYAL BANK OF CANADA, a Canadian chartered bank, as arranger and syndication agent (in such capacity, the "Syndication Agent"), ABN AMRO BANK, N.V., a Netherlands banking corporation acting through its duly licensed Chicago branch, as arranger and documentation agent (in such capacity, the "Documentation Agent"), COMMERZBANK, AG, NEW YORK AND GRAND CAYMAN BRANCHES, the New York and Grand Cayman licensed branches, respectively, of a German banking corporation, as arranger and co-syndication agent (in such capacity, the "Co-Syndication Agent") and TORONTO DOMINION (TEXAS) INC., a Delaware corporation, as arranger and co-documentation agent (in such capacity, the "Co-Documentation Agent").


Preliminary Statement


WHEREAS, Owner Trust is in the business of leasing and providing or arranging lease financing for various equipment and a power generation project, and pursuant to the Construction Agency Agreement dated as of April 27, 2001, as amended by Amendment No. 1 to Construction Agency Agreement dated as of July 25, 2001 and as amended by Amendment No. 1 to Letter of Intent and Amendment No. 2 to Construction Agency Agreements dated October 23, 2001 (as so amended, the "Original Agreement"), among Owner Trust, Agent, Bank, Apple Investments LLC ("Apple LLC"), Apple Equity Capital Trust, a Delaware business trust ("Equity Capital Trust"), the banks and other financial institutions from time to time parties to the Credit Agreement dated as of April 27, 2001, as amended by Amendment No. 1 to Credit Agreement dated as of July 25, 2001 (as so amended, the "Original Credit Agreement"), and Westdeutsche Landesbank Girozentrale, New York Branch, a duly licensed branch of Westdeutsche Landesbank Girozentrale, a public law banking institution organized under the


Construction Agency Agreement


laws of North Rhine-Westphalia, Germany, as holder of all of the certificates of beneficial interest in Equity Capital Trust (in such capacity, the "Original Certificate Participant"), as the original lender under the Original Credit Agreement (the "Original Lender") and as administrative agent for the Original Lender (in such capacity, the "Original Administrative Agent"), and the documents entered into in connection therewith, acquired the Facility (as hereafter defined) and agreed to finance the construction of the power generation facility to be owned by Owner Trust;


WHEREAS, on July 26, 2001, the Original Lender assigned, transferred and conveyed to each of Citicorp USA, Inc., The Chase Manhattan Bank, Bank of America, N.A., and Royal Bank of Canada (collectively, together with the Original Lender, the "Club Lenders") an interest in and to certain of the Original Lender's rights and obligations under the Original Credit Agreement;


WHEREAS, effective as of the date hereof, Apple LLC, Original Certificate Participant, Equity Capital Trust and certain other persons are entering into the Master Assignment Agreement pursuant to which (i) Apple LLC is assigning, transferring and conveying to the Owner Trust Parent its entire interest in Owner Trust and (ii) the Club Lenders are assigning, transferring and conveying to the Lenders an interest in and to all of the Club Lenders' rights and obligations under the Original Credit Agreement, as amended and restated as of the date hereof;


WHEREAS, subject to the terms and conditions hereof, the parties hereto desire to amend and restate in its entirety the Original Agreement, and pursuant to this Agreement (i) Owner Trust appoints Agent as its sole and exclusive agent in connection with the construction of the Facility and (ii) Agent accepts such appointment in accordance with the terms and conditions set forth herein; and


WHEREAS, the Facility (as hereinafter defined), as constructed, will be the property of Owner Trust;


NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:


ARTICLE I


DEFINITIONS AND INTERPRETATION


1.1 Interpretation. In this Agreement, unless a clear contrary intention appears:


(a) the singular number includes the plural number and
vice versa;


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Construction Agency Agreement


(b) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;


(c) reference to any gender includes each other gender;


(d) reference to any agreement (including this Agreement),
document or instrument means such agreement, document or instrument as
amended, supplemented, modified or restated and in effect from time to
time in accordance with the terms thereof and, if applicable, the terms
of this Agreement and the other Operative Agreements;


(e) reference to any Applicable Law means such Applicable
Law as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to time, including rules and
regulations promulgated thereunder and reference to any section or
other provision of any Applicable Law means that provision of such
Applicable Law from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;


(f) reference in this Agreement to any Article, Section,
Appendix, Schedule or Exhibit means such Article or Section hereof or
Appendix, Schedule or Exhibit hereto;


(g) "hereunder," "hereof," "hereto" and words of similar
import shall be deemed references to this Agreement as a whole and not
to any particular Article, Section or other provision thereof;


(h) "including" (and with correlative meaning "include")
shall be deemed to be followed by the words "without limitation";


(i) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";


(j) with reference to any time or date specified herein,
time is of the essence;


(k) with respect to any rights and obligations of the
parties, all such rights and obligations shall be enforced to the
extent permitted by Applicable Law;


(l) with respect to any mathematical calculation, the
concept of "without duplication," shall be deemed to apply in all
instances; and


(m) notwithstanding anything to the contrary contained in
this Agreement, and except as provided for in the Intercreditor
Agreement, any Operative


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Construction Agency Agreement


Agreement or any other document entered into in connection therewith or
herewith, no Authorized Representative, Secured Party or Participant
shall be entitled to exercise (or direct or consent to the exercise of)
any right or remedy; or amend, modify, supplement or waive any such
right, remedy or provision under this Agreement in respect of any
representation, warranty, agreement, covenant, default, Agent Default,
Agent Event of Default, or Owner Trust Termination Event or other
provision contained in this Agreement unless such Person is a Benefited
Secured Party or the Authorized Representative of a Benefited Secured
Party and such representation, warranty, agreement, covenant, default,
Agent Default, Agent Event of Default, or Owner Trust Termination Event
or other provision is a Special Provision of such Benefited Secured
Party.


1.2 Accounting Terms. In this Agreement, unless expressly otherwise provided, accounting terms shall be construed and interpreted, and accounting determinations and computations shall be made, in accordance with GAAP.


1.3 Legal Representation of the Parties. The Operative Agreements were negotiated by the parties with the benefit of legal representation and any rule of construction or interpretation otherwise requiring the Operative Agreements to be construed or interpreted against any party shall not apply to any construction or interpretation hereof or thereof.


1.4 Defined Terms. Unless a clear contrary intention appears, terms defined herein have the respective indicated meanings when used in this Agreement.


"Actual Knowledge" shall mean, with respect to any Person, actual knowledge of, or receipt of written notice by, an officer (or other employee whose responsibilities include the administration of the Facility or the Operative Agreements, as the case may be) of such Person.


"Additional Costs" shall mean amounts payable by Owner Trust pursuant to Sections 9.2 and 9.3 of the Credit Agreement and Sections 13.03 and 13.04 of the Master Trust Agreement.


"Administrative Agent" shall mean Citicorp USA, Inc., as the administrative agent for the Lenders under the Operative Agreements, or any successor administrative agent appointed in accordance with the terms of the Credit Agreement.


"Advance Payments" shall mean funds advanced to Agent by Owner Trust pursuant to the Budget (a) to make payment to third parties or (b) as reimbursement for Agent's or any of Agent's Affiliates' costs and expenses incurred or accrued in connection with Agent's Required Actions, including payments to Contractors under the Construction Contracts, not less frequently than is customary for the construction of a power generation plant in the power generation industry or otherwise in a timely manner.


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Construction Agency Agreement


"Affiliates" shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.


"After Tax Basis" shall mean, with respect to any payment to be received, on a basis such that such payment received shall be supplemented by a further payment or payments to the recipient so that the sum of all such payments shall, after deduction for the net increase in all Taxes (taking into account all reductions in Taxes attributable to credits and deductions resulting from the Impositions or Claims for which payments are being made, as determined in good faith by such recipient) resulting from the receipt (actual or constructive) or accrual of such payments, be equal to the payment otherwise required to be made.


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