<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 10-K/A
(Amendment No. 1)
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________________.
Commission File Number: 1-9208
NRG GENERATING (U.S.) INC.
(Exact name of registrant as specified in its charter)
Delaware 59-2076187
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1221 Nicollet Mall, Suite 610, Minneapolis, Minnesota 55403
(Address of principal executive offices) (Zip Code)
(612) 373-8834
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days. X Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. X
As of October 24, 1997, there were outstanding 6,440,514 shares of
Common Stock. Based on the last sales price at which such stock was sold
on that date, the approximate aggregate market value of such shares held by
non-affiliates was $68,621,000.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. X Yes No
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The undersigned Registrant hereby amends the items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K
for the fiscal year ended June 30, 1996 as set forth below.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
3. Exhibits
The "Index to Exhibits" following the Consolidated Financial
Statements of the Company and its subsidiaries in the Company's Annual
Report on Form 10-K, as filed, is amended to substitute therefor the
"Exhibit Index" which follows the signature page hereof, which is
incorporated herein by reference, and to file certain exhibits which are
included herewith. Certain documents related to the projects and other
matters, some of which are listed in the Index to Exhibits, will be filed
by amendment as soon as practicable.
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Signature
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NRG GENERATING (U.S.) INC.
/s/ Timothy P. Hunstad
By: Timothy P. Hunstad
Title: Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Robert T. Sherman President and October 28, 1997
By: Robert T. Sherman, Jr. Chief Executive Officer
/s/ Timothy P. Hunstad Vice President and October 28, 1997
By: Timothy P. Hunstad Chief Financial Officer
/s/ Leonard Bluhm Chairman of the Board October 28, 1997
By: Leonard A. Bluhm of Directors
/s/ Lawrence Littman Director October 28, 1997
By: Lawrence I. Littman
/s/ Craig A. Mataczynski Director October 28, 1997
By: Craig A. Mataczynski
/s/ David H. Peterson Director October 28, 1997
By: David H. Peterson
/s/ Spyros Skouras, Jr. Director October 28, 1997
By: Spyros S. Skouras, Jr.
/s/ Charles Thayer Director October 28, 1997
By: Charles J. Thayer
/s/ Ronald J. Will Director October 28, 1997
By: Ronald J. Will
2
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Index to Exhibits
Exhibit
No. Description
2.1 Composite Fourth Amended and Restated Plan of Reorganization
for the Company dated January 31, 1996 and proposed by the
Company, the Official Committee of Equity Security Holders,
Wexford Management Corp. ("Wexford") and NRG Energy, Inc.
("NRG Energy").
2.2** Order confirming Composite Fourth Amended and Restated Plan of
Reorganization for the Company proposed by the Company, the
Official Committee of Equity Security Holders, Wexford and NRG
Energy dated February 13, 1996 and entered on February 22, 1996
and filed as Exhibit 2.1 to the Company's Current Report on Form
8-K dated February 13, 1996 and incorporated herein by this
reference.
2.3** Amended and Restated Stock Purchase and Reorganization Agreement
dated January 31, 1996 between the Company and NRG Energy filed
as Exhibit 10.1 to the Company's Current Report on Form 8-K dated
February 13, 1996 and incorporated herein by this reference.
2.4 Letter Agreement dated April 26, 1996 between the Company and NRG
Energy amending the Stock Purchase and Reorganization Agreement.
3.1 Amended and Restated Certificate of Incorporation of the Company.
3.2** Preferred Stock Certificate of Designation of the Company filed
as Exhibit 3.3 to the Company's Current Report on Form 8-K dated
April 30, 1996 and incorporated herein by this reference.
3.3** Bylaws of the Company filed as Exhibit 3.2 to the Company's
Current Report on Form 8-K dated April 30, 1996 and incorporated
herein by this reference.
10.1 Co-Investment Agreement dated April 30, 1996 between the Company
and NRG Energy.
10.2.1 Chapter 11 Financing Agreement dated August 30, 1995 between the
Company and NRG Energy.
10.2.2 Letter Agreement dated February 20, 1996 between the Company and
NRG Energy amending the Chapter 11 Financing Agreement.
10.2.3 Letter Agreement dated April 30, 1996 between the Company and NRG
Energy further amending the Chapter 11 Financing Agreement.
10.3 Liquidating Asset Management Agreement dated April 30, 1996
between the Company and Wexford.
10.4 Management Services Agreement dated as of January 31, 1996
between the Company and NRG Energy.
10.5.1 Loan Agreement dated April 30, 1996 between the Company and NRG
Energy.
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10.5.2 Note dated April 30, 1996 from the Company to NRG Energy in the
principal amount of $45,000,000.
10.6.1 Supplemental Loan Agreement dated April 30, 1996 between NRG
Energy and the Company.
10.6.2 Note dated April 30, 1996 from the Company to NRG Energy in the
principal amount of $15,855,545.25.
10.7.1* NRG Newark Cogen Loan Agreement dated April 30, 1996 between NRG
Energy and the Company.
10.7.2 Note dated April 30, 1996 from the Company to NRG Energy in the
principal amount of $24,000,000.
10.8.1 Credit Agreement dated May 17, 1996 between NRG Generating
(Newark) Cogeneration Inc. ("NRGG Newark"), NRG Generating
(Parlin) Cogeneration Inc. ("NRGG Parlin"), Credit Suisse,
Greenwich Funding Corporation and any Purchasing lender, as
Lenders under the Credit Agreement.
10.8.2 Amendment No. 1 to the Credit Agreement dated June 28, 1996
between NRG Generating (Newark) Inc., NRG Generating (Newark)
Inc. and Credit Suisse, Greenwich Funding Corporation and any
Purchase Lender (as defined therein).
10.8.3 Stock Pledge Agreement dated June 28, 1996 between the Company as
Pledgor and Credit Suisse.
10.8.4 Guaranty dated as of May 17, 1996 by NRG Energy, as Guarantor, to
Credit Suisse, as Agent for the benefit of Credit Suisse,
Greenwich Funding Corporation and any Purchasing lender, as
Lenders under the Credit Agreement.
10.8.5 Guaranty dated as of June 28, 1996 by the Company as Guarantor to
Credit Suisse as Agent for the benefit of Credit Suisse,
Greenwich Funding Corporation and any Purchasing lender, as
Lenders under the Credit Agreement.
10.8.6 Tax Indemnification Agreement dated June 28, 1996 between the
Company, NRGG Newark, NRGG Parlin and Credit Suisse.
10.8.7 Assignment and Security Agreement dated June 28, 1996 between
NRGG Parlin and Credit Suisse
10.8.8* Amended and Restated Leasehold Mortgage, Assignment of Leases and
Rents and Security Agreement dated June 28, 1996 between NRGG
Newark and Credit Suisse
10.8.9* Leasehold Mortgage, Assignment of Leases and Rents and Security
Agreement dated June 28, 1996 between NRGG Parlin and Credit
Suisse.
10.8.10 Interest Rate Swap Agreement dated August 2, 1996 between NRGG
Newark, NRGG Parlin and Credit Suisse.
10.9.1* Loan Agreement dated March 8, 1996 between O'Brien (Schuylkill)
Cogeneration Inc. and NRG Energy in connection with the Grays
Ferry Partnership.
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10.9.2* Option Agreement dated May 1, 1996 between O'Brien (Schuylkill)
Cogeneration Inc. and NRG Energy.
10.10.1** Gas Supply Agreement dated June 30, 1992 between the Company and
The Philadelphia Municipal Authority (the "PMA") regarding the NE
Plant (Philadelphia Project) and filed as an exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1992 and incorporated herein by this reference.
10.10.2** Gas Supply Agreement dated June 30, 1992 between the Company and
the PMA regarding the SW Plant (Philadelphia Project) and filed
as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1992 and incorporated herein by this
reference.
10.10.3** Energy Service Agreement dated June 30, 1992 between the Company
and the PMA regarding the NE Plant (Philadelphia Project) and
filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1992 and incorporated herein
by this reference.
10.10.4** Energy Service Agreement dated June 30, 1992 between the Company
and the PMA regarding the SW Plant (Philadelphia Project) and
filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1992 and incorporated herein
by this reference.
10.10.5** Stock Purchase Agreement dated November 12, 1993 between the
Company, OPC Acquisition, Inc. and BioGas Acquisition, Inc. and
filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993 and incorporated herein
by this reference.
10.10.6* Loan Agreement between the Company and PECO.
10.11.1** Long Term Power Purchase Contract for Cogeneration and Small
Power Production dated March 10, 1986 between the Company and
Jersey Central Power and Light ("JCP&L") and filed as an exhibit
to the Company's Registration Statement (File No. 33-11789) and
incorporated herein by this reference.
10.11.2 Letter Agreement dated June 2, 1986 between the Company and JCP&L
amending the Long Term Power Purchase Contract.
10.11.3 Second Amendment to Power Purchase Agreement dated March 1, 1988
between the Company and JCP&L.
10.11.4 Letter Agreement dated April 30, 1996 between O'Brien (Newark)
Cogeneration, O'Brien (Parlin) Cogeneration and JCP&L.
10.11.5 Third Amendment to Power Purchase Agreement dated April 30, 1996
between O'Brien (Newark) Cogeneration and JCP&L.
10.12* Gas Service Agreement dated May 13, 1993 between O'Brien (Newark)
Cogeneration, Inc. and Public Service Electric and Gas Company.
10.13.1* Interim Gas Service Agreement dated March 27, 1996 between JCP&L
and Public Service Electric and Gas Company.
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10.13.2* New Jersey Board of Public Utilities approval of Interim Gas
Service Agreement.
10.14* Transmission Service and Interconnection Agreement dated November
17, 1987 between O'Brien Energy Systems, Inc. and Public Service
Electric and Gas Company.
10.15.1* Steam Purchase Agreement dated October 3, 1986 between O'Brien
Cogeneration IV, Inc. and Newark Boxboard Co.
10.15.2 Amendment to Steam Purchase Agreement dated March 15, 1988
between O'Brien Cogeneration IV, Inc. and Newark Boxboard Co.
10.15.3 Amendment to Steam Purchase Agreement dated July 18, 1988 between
O'Brien (Newark) Cogeneration, Inc. and Newark Group Industries,
Inc.
10.16.1* Operating and Maintenance Agreement dated May 1, 1996 between
NRGG Newark and Stewart & Stevenson Operations, Inc.
10.16.2* Letter Agreement dated May 10, 1996 between the Company and
Stewart & Stevenson Operations, Inc.
10.16.3* Letter Agreement dated May 20, 1996 between NRG Generating
(Newark) Cogeneration and Stewart & Stevenson Operations, Inc.
10.17.1** Agreement for Purchase and Sale of Electric Power dated October
20. 1986 between the Company and JCP&L and filed as an exhibit to
the Company's Registration Statement (File No. 33-11789) and
incorporated herein by this reference.
10.17.2* First Amendment to Agreement for Purchase and Sale Electric Power
dated June 11, 1991 between the Company and JCP&L.
10.17.3 Amended and Restated Agreement for Purchase and Sale of Electric
Power dated April 30, 1996 between O'Brien (Parlin) Cogeneration,
Inc. and JCP&L.
10.17.4 Letter Agreement dated April 30, 1996 between O'Brien (Parlin)
Cogeneration, Inc. and JCP&L.
10.18* Gas Service Agreement dated May 13, 1993 between O'Brien (Parlin)
Cogeneration, Inc. and Public Service Electric and Gas Company.
10.19.1* Interim Gas Service Agreement dated March 27, 1996 between JCP&L
and Public Service Electric and Gas Company.
10.19.2* New Jersey Board of Public Utilities approval of Interim Gas
Service Agreement.
10.20.1 Steam Purchase Contract dated December 8, 1986 between the
Company and E.I. du Pont de Nemours("E.I. du Pont") and Company.
10.20.2 Amendment No. 1 to Steam Purchase Contract dated January 12, 1988
between the Company and E.I. du Pont.
10.20.3 Letter Agreement dated July 25, 1988 between the Company and E.I.
du Pont.
10.20.4 Amendment No. 3 to Steam Purchase Agreement dated December 12,
1988 between the Company and E.I. du Pont.
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10.20.5 Amendment No. 4 to Steam Purchase Contract dated July 14, 1989
between the Company and E.I. du Pont.
10.20.6 Amendment No. 5 to Steam Purchase Contract dated February 16,
1993 between the Company and E.I. du Pont.
10.21.1 Electricity Purchase Contract dated January 18, 1988 between the
Company and E.I. du Pont.
10.21.2 Electricity Purchase Contract dated April 30, 1996 between
O'Brien (Parlin) Cogeneration Inc. and NRG Parlin Inc.
10.21.3 Assignment of Electricity Purchase Contract dated April 30, 1996
between O'Brien (Parlin) Cogeneration, Inc., NRG Parlin, Inc. and
E.I. du Pont.
10.22.1* Operating & Maintenance Agreement dated May 1, 1996 between NRG
Generating (Parlin) Cogeneration, Inc. and Stewart Stevenson
Operations, Inc.
10.22.2* Agreement dated May 1, 1996 between the Company, NRGG Newark,
NRGG Parlin and Stewart & Stevenson Operations, Inc.
10.22.3* Letter Agreement dated May 20, 1996 between NRG Generating
(Parlin) Cogeneration, Inc. and Stewart & Stevenson Operations,
Inc.
10.23 Amended and Restated Partnership Agreement of Grays Ferry
Cogeneration Partnership ("Grays Ferry") dated March 1, 1996,
between Adwin (Schuylkill) Cogeneration, Inc. ("Adwin
Schuylkill"), O'Brien (Schuylkill) Cogeneration, Inc. ("O'Brien
Schuylkill") and Trigen-Schuylkill Cogeneration, Inc. ("Trigen-
Schuylkill").
10.24.1 Acquisition Agreement dated March 1, 1996 between Adwin
Schuylkill, O'Brien Schuylkill and Trigen-Schuylkill.
10.24.2 Side Agreement dated March 1, 1996 between Adwin Schuylkill,
O'Brien Schuylkill and Trigen-Schuylkill.
10.25.1 Contingent Capacity Purchase Addendum to the Agreement for
Purchase of Electric Output (Phase I) dated September 17, 1993
between PECO and Grays Ferry.
10.25.2 Contingent Capacity Purchase Addendum to the Agreement for
Purchase of Electric Output (Phase II) dated September 17, 1993
between PECO and Grays Ferry.
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10.25.3* Amendment Agreement dated January 31, 1994 between PECO and Grays
Ferry.
10.25.4* Agreement for Purchase of Electric Output (Phase I) dated July
28, 1992 between PECO Energy Company ("PECO") and Grays Ferry.
10.25.5* Agreement for Purchase of Electric Output (Phase II) dated July
28, 1992 between PECO and Grays Ferry.
10.26.1 Amended and Restated Steam Purchase Agreement dated September 17,
1993 among Philadelphia Thermal Energy Corporation ("PTEC"),
Adwin Equipment Company ("Adwin"), O'Brien Environmental Energy,
Inc. ("O'Brien") and Grays Ferry.
10.26.2 Amended and Restated Steam Venture Agreement dated September 17,
1993 among PTEC, Philadelphia United Power Corporation ("PUPCO"),
Adwin and O'Brien.
10.27.1* Amended and Restated Project Services and Development Agreement
dated September 17, 1993 by and between PUPCO and Grays Ferry
10.27.2 Consent to Assignment of Agreement dated March 1, 1996 between
PUPCO, Grays Ferry Cogeneration Partnership and The Chase
Manhattan Bank, N.A.
10.28 Amended and Restated Site lease, dated September 17, 1993 between
PTEC and Grays Ferry.
10.29* Newark Lease.
10.30* Parlin Lease.
10.31.1** NRG Generating (U.S.) Inc. 1996 Stock Option Plan dated September
20, 1996 and filed as Appendix A to the Company's Proxy Statement
dated October 28, 1996 and incorporated herein by reference.
10.31.2 Form of an Incentive Stock Option Agreement.
10.31.3 Form of a Nonqualified Stock Option Agreement.
10.31.4 Form of a Nonemployee Director Nonqualified Stock Option
Agreement.
10.32 Employment Agreement dated April 30, 1996 between the Company and
Leonard A. Bluhm.
11** Computation of Earnings
21** List of Subsidiaries of the Registrant.
23.1** Consent of Price Waterhouse LLP.
23.2** Consent of Coopers & Lybrand LLP.
27** Financial Data Schedule.
_____
* To be filed by amendment.
** Previously filed.
8
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Exhibit 2.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY
- - - - - - - - - - - - - - - - - - x
- - - - - - - - - - - - - - - - - - :
- - - : Chapter 11
:
In re: : Case No.: 94-26723 (RG)
:
O'BRIEN ENVIRONMENTAL ENERGY, INC. :
x
Debtor.
- - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
COMPOSITE FOURTH AMENDED AND RESTATED
PLAN OF REORGANIZATION FOR
O'BRIEN ENVIRONMENTAL ENERGY, INC.
PROPOSED BY O'BRIEN ENVIRONMENTAL ENERGY, INC.,
THE OFFICIAL COMMITTEE OF
EQUITY SECURITY HOLDERS,
WEXFORD MANAGEMENT CORP. AND NRG ENERGY, INC.
<PAGE>
TABLE OF CONTENTS
Page
I: Definitions 1
II: Unclassified Claims 17
III:Classification of Claims and Interests 18
3.1 Class 1--BLT Leasing Corp. 18
3.2 Class 2--CoreStates New Jersey National Bank 18
3.3 Class 3--CoreStates Bank 18
3.4 Class 4--Financing for Science International, Inc. 18
3.5 Class 5--First Fidelity Bank, N.A. 18
3.6 Class 6--General Electric Capital Corporation 18
3.7 Class 7--Heller Financial, Inc. 18
3.8 Class 8--MDFC Equipment Leasing Corp. 19
3.9 Class 9--Meridian Bank 19
3.10 Class 10--PECO Energy Company 19
3.11 Class 11--The Bank of New York (Equipment) 19
3.12 Class 12--The Bank of New York (Documents) 19
3.13 Class 13--Natwest 19
3.14 Class 14--Other Secured Claims 19
3.15 Class 15A--Senior Debt 19
3.16 Class 15B--Non-Subordinated Unsecured Claims 19
3.17 Class 15C--Old Subordinated Noteholder Claims 20
3.18 Class 16--Old Common Stock 20
3.19 Class 17--Old Subordinated Noteholder Securities
Claims 20
3.20 Class 18--Old Stockholder Securities Claims 20
i
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3.21 Class 19--Old Options 20
IV: Treatment of Classes Not Impaired by the Plan 20
4.1 Class 1 (BLT Leasing Corp.) 20
4.2 Class 6 (General Electric Capital) 20
4.3 Class 9 (Subclass of Meridian Bank--Collateral
Used in Biogas Projects Formerly Owned by O'Brien 20
4.4 Class 10 (PECO Energy Company) 20
4.5 Class 13 (Natwest) 20
V: Treatment of Classed Impaired by the Plan 20
5.1 Class 2 (CoreStates New Jersey National Bank) 20
5.2 Class 3 (CoreStates Bank) 21
5.3 Class 4 (Financing for Science International,
Inc.) 21
5.4 Class 5 (First Fidelity Bank) 21
5.5 Class 7 (Heller Financial, Inc.) 21
5.6 Class 8 (MDFC Equipment Leasing Corp.) 21
5.7 Class 9 (Meridian Bank) 21
5.8 Class 11 (Bank of New York--Equipment) 22
5.9 Class 12 (The Bank of New York) 22
5.10 Class 14 (Other Secured Claims) 22
5.11 Class 15A (Senior Debt) 22
5.12 Class 15B (Non-Subordinated Unsecured Claims) 22
5.13 Class 15C (Old Subordinated Noteholder Claims) 23
5.14 Class 16 (Old Common Stock) 23
5.15 Class 17 (Old Subordinated Noteholder Securities
Claims) 23
5.16 Class 18 (Old Stockholder Securities Claims) 23
5.17 Class 19 (Old Options) 24
ii
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VI:Means for Execution of Plan 24
6.1 Consummation of Acquisition and Plan 24
6.2 General Corporate Matters: Charter Amendment 25
6.3 Reconstituted Board of Directors of O'Brien 25
6.4 Corporate Action 25
6.5 Other Transaction Documents 25
6.6 Distributions 25
6.7 Distribution Dates 28
6.8 Vesting of Property 28
6.9 Consummation 28
6.10 NRG Supplemental Loan 28
6.11 Post-Petition Interest Fund 29
6.12 Deferral of DIP Loan and Wexford Administrative
Claim 29
VII: Cramdown 30
VIII:Executory Contracts 31
8.1 Rejection of Executory Contracts 31
8.2 Assumption of Executory Contracts 31
IX: Rights and Obligations of Reorganized O'Brien as Plan
Administrator 31
9.1 Appointment of Plan Administrator 31
9.2 Exculpation 31
9.3 Powers of Reorganized O'Brien 31
9.4 Duties of Reorganized O'Brien 31
X: Procedures for Resolving and Treating Disputed Claims 32
10.1 Objection Deadline 32
10.2 Responsibility For Objection to Disputed Claims 32
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10.3 No Distributions Pending Allowance 33
10.4 Distributions After Allowance 33
10.5 Treatment of Contingent Claims 33
10.6 Estimation of Claims 33
10.7 Disputed Claims Reserve 34
10.8 Administrative and Priority Claims Reserve 35
10.9 Payment of Taxes in Respect of the Distribution
Reserves 36
XI: Conditions to Confirmation and Effective Date 37
11.1 Conditions to Confirmation 37
11.2 Conditions to Effective Date 37
11.3 Waiver of Conditions 37
XII: Effects of Confirmation and Effectiveness of Plan 37
12.1 Discharge of Debtor 37
12.2 Discharge of Liens 38
12.3 Injunction 38
12.4 Exculpations and Limitations of Liability 38
XIII:Retention of Jurisdiction 39
13.1 Retention of Jurisdiction 39
13.2 Failure of Court to Exercise Jurisdiction 40
XIV:Miscellaneous Provisions 40
14.1 Compliance With Tax Requirements 40
14.2 Post-Confirmation Date Fees and Expenses of
Professional Persons 40
14.3 Retention of Avoidance Actions 40
14.4 Binding Effect 40
14.5 Governing Law 41
iv
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14.6 Amendments and Modifications 41
14.7 Revocation 41
14.8 No Modification or Subordination Rights 41
14.9 Severability 41
14.10 De Minimis Distributions 42
14.11 Interpretation and Rules of Construction 42
14.12 Other Terms 42
14.13 Headings 42
14.14 Incorporation of Exhibits 42
v
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY
- - - - - - - - - - - - - - - - - - x
- - - - - - - - - - - - - - - - - - :
- - - : Chapter 11
:
In re: : Case No.: 94-26723 (RG)
:
O'BRIEN ENVIRONMENTAL ENERGY, INC. :
x
Debtor.
- - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
COMPOSITE FOURTH AMENDED AND RESTATED
PLAN OF REORGANIZATION FOR
O'BRIEN ENVIRONMENTAL ENERGY, INC.
PROPOSED BY O'BRIEN ENVIRONMENTAL ENERGY, INC.,
THE OFFICIAL COMMITTEE OF
EQUITY SECURITY HOLDERS,
WEXFORD MANAGEMENT CORP. AND NRG ENERGY, INC.
O'Brien Environmental Energy, Inc. ("O'Brien"), the Official
Committee of Equity Security Holders of O'Brien Environmental
Energy, Inc. (the "Equity Committee"), Wexford Management Corp.,
a Delaware corporation ("Wexford"), and NRG Energy, Inc., a
Delaware corporation ("NRG"), hereby propose the following plan
of reorganization for O'Brien pursuant to Chapter 11 of the
Bankruptcy Code (the "Plan"):
ARTICLE I: Definitions
Unless the context otherwise requires, the following
capitalized terms shall have the following meanings when used
herein. Any capitalized term used herein that is not defined
below and is defined in the Acquisition Agreement shall have the
meaning assigned to such term in the Acquisition Agreement. Any
term used herein that is not defined below in this Article I and
is used in the Bankruptcy Code or the Bankruptcy Rules shall have
the meaning assigned to such term in the Bankruptcy Code or
Bankruptcy Rules, unless the context clearly requires otherwise.
1.1. "Acquired Subsidiaries" means (i) O'Brien Biogas
Inc. I (SKB); (ii) O'Brien Biogas Inc. VI; (iii) O'Brien Biogas
(Mazzaro) Inc.; (iv) O'Brien Biogas (Corona) Inc.; (v) O'Brien
Biogas Inc. IV; (vi) O'Brien Biogas (Hackensack) Inc.; (vii)
O'Brien Cogen Inc. II (Artesia); (viii) O'Brien Standby Power
Energy, Inc.; (ix) O'Brien Biogas Inc. III (Atochem); and (x)
O'Brien Biogas Inc. VII.
1.2. "Acquisition Agreement" means the Amended and
Restated Stock Purchase and Reorganization Agreement to be
executed by NRG and O'Brien, substantially in the form filed with
the Bankruptcy Court on February 2, 1996.
1.3. "Additional Cash Amount" means the sum of (A) the
aggregate amount of any payments that would have been made to any
Non-Accepting Secured Creditors had such Creditors received the
Cash Payoff Treatment rather than the Collateral Putback
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Treatment, and (B) the amount that the increase to the Cash
Equity Contribution provided for in Section 2.5 of the
Acquisition Agreement is determined to be greater than $945,000.
1.4. "Administrative and Cure Claims Cash Payment"
means the aggregate amount determined by the Bankruptcy Court
prior to the Effective Date as being necessary to fund (a)
Administrative Claims and Priority Claims that are Allowed and
are due and payable on the Effective Date (excluding the DIP Loan
Outstanding Amount and the Wexford Administrative Claim), (b) the
Cure Payments and (c) the Administrative and Priority Claims
Reserve. The Administrative and Cure Claims Cash Payment shall
be funded from the Reserved Administrative and Cure Claims Cash
Amount, the Additional Cash Amount, Excess Cash (to the extent
available as provided in Section 6.12(c)) and, to the extent
required by Section 6.10 below and subject to Section 10.8(b),
the NRG Mandatory Supplemental Loan.
1.5. "Administrative and Priority Claims Reserve" means
a segregated Cash fund in an amount that is determined by the
Court prior to the Effective Date to be an appropriate reserve
for the payment of the estimated allowable amount of all
Unresolved Administrative and Priority Claims and which shall
serve as the sole source of payment of any such claims that are
Allowed by Final Order after the Effective Date or that are
Allowed but by their respective terms not yet due and payable on
the Effective Date.
1.6. "Administrative Claim" means (i) a Claim entitled
to priority under Bankruptcy Code section 507(a)(1) (including
any Claim of NRG in respect of the DIP Loan), (ii) a Claim in
respect of any amounts required to be paid upon assumption of an
executory contract or unexpired lease under Bankruptcy Code
section 365(b)(1)(A) and (B), and (iii) any fees or charges
assessed against the Debtor under chapter 123 of title 28, United
States Code (28 U.S.C. Section 1911, et seq.).
1.7. "Administrative Claims Shortfall" has the meaning
set forth in Section 10.8 (b).
1.8. "Administrative Shortfall Loan" has the meaning
set forth in Section 10.8(b).
1.9. "Affiliate" means, with respect to any Entity, any
other Person controlling, controlled by, or under common control
with such Entity. For purposes of this definition, 'control'
shall mean the power to direct, or cause the direction of, the
management or policies of any Entity, whether through ownership
of securities, by contract or otherwise.
1.10."Aggregate Non-Reinstated Secured Claim
Supplemental Payment" means the aggregate amount of the Non-
Reinstated Secured Claim Supplemental Payments that are to be
made to the holders of Allowed Non-Reinstated Secured Claims on
the Effective Date.
1.11."Allowed", "Allowed Claim" or "Allowed Interest"
means, with reference to any Claim or Interest, (a) a Claim
against or Interest in the Debtor, proof of which was filed
within the applicable period of limitation fixed by the
Bankruptcy Court, and which is not a Disputed Claim or Disputed
Interest, (b) any Claim against or Interest in the Debtor, proof
of which was not filed within the applicable period of limitation
fixed by the Court and which has been listed by the Debtor in its
Schedules as liquidated in amount and not disputed or contingent,
(c) any Interest listed on the records of the Debtors transfer
agent as of the Distribution Record Date, or (d) any Claim
allowed by Final Order. An Allowed
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Claim or Allowed Interest does not include any Claim or Interest
or portion thereof which is a Disallowed Claim or Disallowed
Interest or which has been subsequently withdrawn, disallowed,
released or waived by the holder thereof or pursuant to a Final
Order.
1.12."Allowed General Unsecured Claim" means a General
Unsecured Claim that is an Allowed Claim.
1.13."Assumed Contracts" has the meaning set forth in
Section 8.2.
1.14."Bankruptcy Code" means title 11 of the United
States Code, as amended and in effect on the Petition Date.
1.15."Bankruptcy Rules" means the Federal Rules of
Bankruptcy Procedure, as amended.
1.16."Bidding Procedures Order" means the Order (1)
Establishing and Approving Bidding Procedures, (2) Setting
Sale/Confirmation Hearing (A) to Consider Higher and Better
Offers, If Any, (B) to Approve (i) Sale of Assets, (ii)
Assumption and Assignment, as well as Rejection, of Certain
Executory Contracts, and (iii) Establishment of Cure Amounts, If
Any, and Adequate Assurance Terms and (C) for Plan Confirmation
and (3) Setting Dates for, inter alia, Filing of Competing Bids
and Plans and Objections entered by the Court on August 30, 1995.
1.17."Biogas Asset" means equipment owned by O'Brien
that is used in connection with a biogas project operated by
O'Brien or one of the Acquired Subsidiaries.
1.18."Biogas Claim Reinstatement Treatment" means, as
to a Secured Claim that is secured by a Lien on Biogas Assets,
the following treatment: (A) such Secured Claim shall not be
bifurcated into an Allowed Secured Claim and an Allowed Unsecured
Claim based on a determination of a Deficiency Amount in respect
of such Claim; (B) the Collateral securing such Claim shall be
transferred to the Acquired Subsidiary that operates or,
following the Effective Date, will operate the biogas project in
which such Collateral is used and such Acquired Subsidiary shall
assume all of O'Brien's obligations and liabilities in respect of
such Claim; (C) if applicable, the maturity of such Claim shall
be reinstated; (D) any defaults with respect to such Claim other
than the kind specified in Bankruptcy Code section 365(b)(2)
shall be cured by O'Brien; (E) the holder of such Claim shall be
compensated by O'Brien for any damages incurred by such holder as
a result of any reasonable reliance by such holder on any
contractual provision or applicable law that entitles such holder
to demand or receive accelerated payment of such Claim after any
default with respect to such Claim; and (F) the legal, equitable
and contractual rights to which such Claim entitles such holder
shall otherwise be left unaltered.
1.19."BONY Deferred Cash Payoff Treatment" means the
following treatment accorded to The Bank of New York on the
Effective Date with respect to its Class 12 Secured Claim: (a)
the Class 12 Cure Payment and (b) The Bank of New York shall
retain the Lien securing its Class 12 Secured Claim and shall
receive on account of such Claim deferred cash payments from
Reorganized O'Brien having a value, as of the Effective Date,
equal to the Allowed Class 12 Secured Claim (excluding the Class
12 Cure Payment), which deferred cash payments shall be paid
pursuant to a payment schedule and interest rate to be on terms
acceptable to the BONY and set forth in a notice by NRG filed
with the Court and served on The Bank of New York prior to
commencement of the Confirmation Hearing.
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1.20."BPU Approval" has the meaning given to it in
Article I of the Acquisition Agreement.
1.21."Business Day" means any day excluding Saturday,
Sunday and any day which is a legal holiday under the laws of the
State of New York or is a day on which banking institutions
located in such state are authorized or required by Law or other
government action to close.
1.22."Cash" means legal tender of the United States of
America.
1.23."Cash Payment Fund" means a Cash fund available to
holders of Allowed General Unsecured Claims other than Wexford-
Related Unsecured Claims that will be created on the Effective
Date and into which there shall be deposited the General
Unsecured Claims Cash Payment; provided that any amount deposited
or held in the Cash Payment Fund in excess of the Required
Unsecured Claims Payment shall be withdrawn from the Cash Payment
Fund and deposited in the Post-Petition Interest Fund.
1.24."Cash Payoff Treatment" means, as to any Allowed
Secured Claim treated under the Plan, the following treatment: a
cash payment on the Effective Date in the amount specified in the
applicable section of Article V which, together with the
applicable Non-Reinstated Secured Claim Supplemental Payment,
shall be in full compromise and satisfaction of such Claim,
provided that such treatment shall not be applicable to any such
Claim, the holder of which (i) objects to any provision of the
Plan or votes such Allowed Secured Claim or the General Unsecured
Claim in respect of the Deficiency Amount of such Claim against
the Plan and (ii) receives a Treatment Election Notice providing
for Collateral Putback Treatment.
1.25."Cash Purchase Price" has the meaning given to it
in Section 2.2(a) of the Acquisition Agreement.
1.26."Chapter 11 Case" means the case under Chapter 11
of the Bankruptcy Code with respect to the Debtor pending in the
Court.
1.27."Claim" means a claim, as defined in Bankruptcy
Code section 101(5), against the Debtor that arises before the
Effective Date.
1.28."Class 12 Cure Payment" means a cash payment in
the amount of $192,000 on account of the arrearage owing by
O'Brien on the Effective Date to The Bank of New York in respect
of the Allowed Class 12 Claim of The Bank of New York.
1.29."Class 15 Claim" means any Class 15A Claim, Class
15B Claim or Class 15C Claim.
1.30."Class 15A Cash Payment Fund" shall mean that
portion of the Cash Payment Fund equal to a fraction, the
numerator of which is the aggregate amount of Allowed General
Unsecured Claims in respect of Senior Debt and the denominator of
which is the aggregate amount of all Allowed General Unsecured
Claims other than the Wexford-Related Unsecured Claims.
1.31."Class 15B Cash Payment Fund" shall mean that
portion of the Cash Payment Fund equal to a fraction, the
numerator of which is the aggregate amount of Allowed General
Unsecured Claims other than those in respect of the Wexford-
Related Class 15B
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Claims, Senior Debt or Old Subordinated Noteholder Claims and the
denominator of which is the aggregate amount of all Allowed
General Unsecured Claims other than the Wexford-Related Unsecured
Claims.
1.32."Class 15B Distribution Amount" shall have the
meaning given to it in Section 5.12 of the Plan.
1.33."Class 15C Cash Payment Fund" shall mean that
portion of the Cash Payment Fund equal to a fraction, the
numerator of which is the aggregate amount of Allowed Old
Subordinated Noteholder Claims other than the Wexford-Related
Class 15C Claims and the denominator of which is the aggregate
amount of all Allowed General Unsecured Claims other than the
Wexford-Related Unsecured Claims.
1.34."Class 15C Distribution Amount" shall have the
meaning given to it in Section 5.13 of the Plan.
1.35."Class 15 Supplemental Payment" means a cash
payment equal to the amount of interest that accrues, at 5% per
annum, for the period from February 1, 1996 until the Effective
Date, on $69,467,000.
1.36."Class 15A Supplemental Payment" shall mean that
portion of the Class 15 Supplemental Payment equal to a fraction,
the numerator of which is the aggregate amount of Allowed General
Unsecured Claims in respect of Senior Debt and the denominator of
which is the aggregate amount of all Allowed General Unsecured
Claims other than the Wexford-Related Unsecured Claims.
1.37."Class 15B Supplemental Payment" shall mean that
portion of the Class 15 Supplemental Payment equal to a fraction,
the numerator of which is the aggregate amount of Allowed General
Unsecured Claims other than those in respect of the Wexford-
Related Class 15B Claims, Senior Debt or Old Subordinated
Noteholder Claims and the denominator of which is the aggregate
amount of all Allowed General Unsecured Claims other than the
Wexford-Related Unsecured Claims.
1.38."Class 15C Supplemental Payment" shall mean that
portion of the Class 15 Supplemental Payment equal to a fraction,
the numerator of which is the aggregate amount of Allowed Old
Subordinated Noteholder Claims other than the Wexford-Related
Class 15C Claims and the denominator of which is the aggregate
amount of all Allowed General Unsecured Claims other than the
Wexford-Related Unsecured Claims.
1.39."Co-Investment Agreement" means the Co-Investment
Agreement between Reorganized O'Brien and NRG pursuant to which
NRG shall grant Reorganized O'Brien a right of first refusal with
respect to the Energy Development Projects (as defined in the
Acquisition Agreement), substantially in the form attached as an
Exhibit to the Acquisition Agreement.
1.40."Collateral" means any property of the Debtor
subject to a valid and enforceable Lien to secure the payment of
a Claim.
1.41."Collateral Putback Treatment" means, as to any
Allowed Secured Claim treated under the Plan, the following
treatment: the holder of such Allowed Claim will receive the
Collateral securing such Claim on the Effective Date. If the
Collateral Putback
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Treatment is applicable to a particular Secured Claim, the
Allowed amount of such Claim shall be determined by the Court
prior to the Effective Date.
1.42."Committees" means the Creditors' Committee and
the Equity Committee.
1.43."Confirmation Date" means the date on which the
Confirmation Order is entered.
1.44."Confirmation Hearing" means the hearing conducted
by the Court on confirmation of the Plan.
1.45."Confirmation Order" means an order of the Court,
approving NRG as the prevailing Competing Bidder (as defined in
the Bidding Procedures Order), confirming the Plan pursuant to
Bankruptcy Code section 1129, and approving and authorizing the
Acquisition Agreement and the Transaction Documents to which
O'Brien is to be a party, in the form filed by the Proponents
together herewith with such changes thereto as the Court may
require that are reasonably satisfactory to the Proponents.
1.46."Contingent Claim" means a Claim that is
contingent or unliquidated and that has not been Allowed by Final
Order.
1.47."Court" means the United States Bankruptcy Court
for the District of New Jersey, Judge Rosemary Gambardella
presiding, or such other court as may have jurisdiction over the
Chapter 11 Case.
1.48."Creditor Reinstatement Treatment" means either
the Biogas Claims Reinstatement Treatment or the
Reinstatement/Nonimpairment Treatment.
1.49."Creditors' Committee" means the Official
Committee of Unsecured Creditors of O'Brien appointed in the
Chapter 11 Case of O'Brien.
1.50."Cure Payments" means the aggregate amount
required to be paid to any holders of Secured Claims on the
Effective Date that are receiving the Biogas Claim Reinstatement
Treatment or the Reinstatement/Nonimpairment Treatment under the
Plan.
1.51."Debtor" means O'Brien.
1.52."Deferred Administrative Shortfall Amount" has the
meaning given to it in Section 10.8.(b)
1.53."Deferred DIP Loan Amount" shall have the meaning
given to it in Section 6.12(a) of the Plan.
1.54."Deferred Wexford Claim Amount" shall have the
meaning given to it in Section 6.12(b) of the Plan.
1.55."Deficiency Amount" means, with respect to a Claim
that is secured by a Lien on Collateral, the amount by which the
Claim exceeds the sum of (i) the amount realized or realizable
upon the exercise of any set-off rights of the holder of such
Claim against the Debtor under sections 506 and 553 of the
Bankruptcy Code, plus (ii) if the Collateral securing such Claim
is disposed of prior to the Effective Date, the amount of net
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proceeds realized therefrom or, if the Collateral is not so
disposed of, the value of the interest of the holder of the Claim
in the Debtor's interest in such Collateral, as determined by the
Court under section 506 of the Bankruptcy Code; provided,
however, that if the holder of such Claim makes the election
provided in section 1111(b) of the Bankruptcy Code, there shall
be no Deficiency Amount in respect of such Claim.
1.56."Designated Receivable" means the Insurance
Receivable or the Pakistani Receivable.
1.57."DIP Loan" shall have the meaning given to it in
the Acquisition Agreement.
1.58."DIP Loan Outstanding Amount" means the amount of
the DIP Loan that is outstanding and due and owing to NRG
immediately prior to consummation of the Plan on the Effective
Date.
1.59."Disallowed Claim" or "Disallowed Interest" shall
mean a Claim against, or Interest in, the Debtor, or any portion
thereof, that has been disallowed by Final Order.
1.60."Disclosure Statement" means the Master Disclosure
Statement filed by the Debtor, together with the supplemental
disclosure statement relating to the Plan filed by the Proponents
and any supplemental disclosure statement filed by the Proponents
of any other plan of reorganization for the Debtor with respect
to such plan of reorganization, as filed with the Court pursuant
to section 1125 of the Bankruptcy Code and the Bidding Procedures
Order.
1.61."Disclosure Statement Order" means the order of
the Court entered on November 17, 1995, approving the Disclosure
Statement pursuant to section 1125 of the Bankruptcy Code and
establishing the procedures and method of providing notice of the
Confirmation Hearing.
1.62."Disputed Claim" or "Disputed Interest" means a
Claim against, or Interest in, the Debtor, to the extent that a
proof of claim or interest has been filed or deemed filed under
applicable law, (i) as to which an objection has been filed, (ii)
which is a Contingent Claim that has not been withdrawn or
disallowed by Final Order, (iii) that is designated as disputed
in the Debtor's Schedules, (iv) in an amount in excess of that
amount which has been listed by the Debtor in its Schedules as
other than disputed, contingent or unliquidated, or (v) that has
not been listed in the Debtor's Schedules.
1.63."Disputed Claims Reserve" shall have the meaning
given to it in Section 10.7(c) of the Plan.
1.64."Distribution Date" means (i) for any Claim or
Interest that is an Allowed Claim or Allowed Interest on the
Effective Date, the Effective Date or as soon thereafter as
practicable, but in no event more than ten days thereafter and
(ii) for any Claim or Interest that is a Disputed Claim or
Disputed Interest on the Effective Date, the date as soon as
practicable, but in no event more than 30 days, after the date on
which such Claim or Interest becomes an Allowed Claim or Allowed
Interest.
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1.65."Distribution Record Date" means the close of
business in the City of New York, State of New York, on the
Effective Date or such other date as may be fixed by order of the
Court.
1.66."Distribution Reserves" means the Administrative
and Priority Claims Reserve and the Disputed Claims Reserve.
1.67."Effective Date" means a Business Day designated
by the Proponents in accordance with the Acquisition Agreement,
on which (i) the Confirmation Order is not stayed and (ii) all
conditions to the consummation of the Plan have been satisfied or
waived as provided in Article XI.
1.68."Effective Date Administrative and Cure Payments"
means the sum of the aggregate amount of Administrative Claims
and Priority Claims that are Allowed and are due and payable on
the Effective Date (excluding the DIP Loan Outstanding Amount and
the Wexford Administrative Claim) and the Cure Payments.
1.69."Effective Date Administrative Shortfall Loan"
shall have the meaning set forth in Section 10.8(b).
1.70."11% Subordinated Debentures (2010)" means the 11%
Convertible Senior Subordinated Debentures issued by O'Brien, due
March 15, 2010, pursuant to the 11% Subordinated Debentures
(2010) Indenture.
1.71."11% Subordinated Debentures (2011)" means the 11%
Convertible Senior Subordinated Debentures issued by O'Brien, due
March 15, 2011, pursuant to the 11% Subordinated Debenture (2011)
Indenture.
1.72."11% Subordinated Debentures (2010) Indenture"
means the indenture, dated as of March 15, 1990, between O'Brien
and Fidelity Bank, National Association, as Indenture Trustee.
1.73."11% Subordinated Debentures (2011) Indenture"
means the Indenture, dated as of March 14, 1991, between O'Brien
and United Jersey Bank, as Indenture Trustee.
1.74."Entity" means an individual, a corporation, a
partnership, an association, a joint stock company, a joint
venture, an estate, a trust, an unincorporated organization, a
government or any subdivision thereof or any other person or
entity.
1.75."Equipment Held for Sale" shall mean any item of
energy equipment, consisting mainly of gas and steam turbines,
owned by Reorganized O'Brien following the Effective Date and not
utilized in a project operated by a Subsidiary, including, to the
extent applicable, the energy equipment described in the
appraisal dated July 14, 1995 delivered to O'Brien by Belyea
Company Incorporated and the appraisal dated June 13, 1995
delivered to O'Brien by Arthur Andersen & Co., SC.
1.76."Equity Committee" has the meaning given to it in
the first paragraph of the Plan.
1.77."Equityholders Cash Payment" means the $7.5
million Cash payment to be made pursuant to Section 5.14 of the
Plan to the holders of Old Common Stock by
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NRG, an affiliate of NRG, or Reorganized O'Brien in such manner
as agreed between counsel to NRG and counsel to the Equity
Committee prior to the Effective Date.
1.78."Estate" means the estate of the Debtor under
section 541 of the Bankruptcy Code.
1.79."Excess Cash" shall have the meaning given to it
in Section 6.12(c) of the Plan.
1.80."Fee Request Notice" shall have the meaning given
to it in Section 10.2(b) of the Plan.
1.81."Final Order" means (1) an order of the Court as
to which the time to appeal, petition for certiorari, or move for
reargument or rehearing has expired and as to which no appeal,
petition for certiorari, or other proceedings for reargument or
rehearing shall then be pending or, (2) in the event that an
appeal, writ or certiorari, reargument, or rehearing thereof has
been sought, such order of the Court shall have been affirmed by
the highest court to which such order was appealed, or certiorari
has been denied, or from which reargument or rehearing was
sought, and the time to take any further appeal, petition for
certiorari or move for reargument or rehearing shall have
expired; provided, however, that no order shall fail to be a
Final Order solely because of the possibility that a motion
pursuant to Rule 60 of the Federal Rules of Civil Procedure may
be filed with respect to the order.
1.82."Final Resolution Date" means the date on which
all Disputed Claims have been Allowed or disallowed by Final
Order or withdrawn or otherwise finally resolved.
1.83."5 Percent Shareholder" means a shareholder
described in Section 382(k)(7) of the Tax Code.
1.84."General Unsecured Claim" means any Claim other
than an Administrative Claim, Priority Claim, Allowed Secured
Claim, Old Subordinated Noteholder Securities Claim or Old
Stockholder Securities Claim, including, but not limited to, (i)
any Claim in respect of the Deficiency Amount of any Secured
Claim classified in any of Classes 1 through 14 hereunder, as
determined in accordance with Bankruptcy Code section 506, (ii)
Old Subordinated Noteholder Claims held by holders of Old
Subordinated Notes on the Distribution Record Date, and (iii) any
Claim arising from the rejection by the Debtor of executory
contracts and unexpired leases in accordance with Section 8.1 of
the Plan.
1.85."General Unsecured Claims Cash Payment" means
$77,967,000. Notwithstanding anything herein to the contrary and
without limiting the generality of any provision hereof, neither
Reorganized O'Brien nor NRG shall be entitled to the return of
the General Unsecured Claims Cash Payment, the entire amount of
which shall be distributable to the holders of Allowed Claims.
1.86."Insurance Receivable" means the $1 million
insurance receivable described on the Pro Forma Balance Sheet of
Parlin Cogen as of June 30, 1995.
1.87."Interest" means the interest represented by any
equity security, as defined in Bankruptcy Code section 101(16).
1.88."ISRA Approval" has the meaning given to it in
Section 3.10(b) of the Acquisition Agreement.
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1.89."Lien" means any charge against or interest in
property to secure payment of a debt or performance of an
obligation.
1.90."Liquidating Asset Management Agreement" shall
mean the Asset Management Agreement into which O'Brien and
Wexford or its Affiliate will enter, effective on the Effective
Date, providing for the management of the Liquidating Assets by
Wexford or such Affiliate, in substantially the form attached as
an Exhibit to the Acquisition Agreement; provided that the fees
payable under the Liquidating Asset Management Agreement shall be
subject to Court approval prior to the payment thereof and
modified if and to the extent necessary for such fees to be
determined by the Court to be reasonable pursuant to Bankruptcy
Code section 1129(a)(4).
1.91."Liquidating Assets" means all of O'Brien's right,
title and interest in and to (i) all of the outstanding common
stock of Philadelphia Cogen and any management contracts relating
to the Philadelphia Water Department Project to which O'Brien or
any Affiliate thereof (other than Philadelphia Cogen) is a party;
(ii) all of the equity interest in Philadelphia Biogas Supply,
Inc., O'Brien Energy Services, Inc., Puma Power Plant, Ltd. and
American Hydrotherm Corp.; and (iii) the Equipment Held for Sale.
1.92."Management Agreement" means the management
agreement into which Reorganized O'Brien and NRG (or one or more
of its Affiliates) will enter, effective on the Effective Date,
providing for the provision of certain services relating to the
management of Reorganized O'Brien and its subsidiaries following
the Effective Date, substantially in the form attached as an
Exhibit to the Acquisition Agreement.
1.93."Natwest" means National Westminster Bank, plc.
1.94."New By-laws" means the new by-laws of Reorganized
O'Brien to take effect on the Effective Date, substantially in
the form attached as an Exhibit to the Acquisition Agreement.
1.95."New Certificate of Designation" means a
certificate of designation setting forth the terms of the New
O'Brien Preferred Stock, which certificate of designation shall
be filed with the Court not less than ten days prior to
commencement of the Confirmation Hearing.
1.96."New Certificate of Incorporation" means the
amended and restated certificate of incorporation of Reorganized
O'Brien to take effect on the Effective Date, substantially in
the form attached as an Exhibit to the Acquisition Agreement.
1.97."New O'Brien Common Stock" means shares of new
common stock of Reorganized O'Brien, $.01 par value, to be issued
on the Effective Date pursuant to the Plan.
1.98."New O'Brien Preferred Stock" means shares of
Class A Preferred Stock of Reorganized O'Brien, $.01 par value,
having the rights, preferences and privileges provided in the New
Certificate of Designation, to be issued to holders of Wexford-
Related Unsecured Claims (as provided in Section 5.12 and 5.13).
1.99."Newark Cogen" means O'Brien (Newark)
Cogeneration, Inc.
1.100."Newark Loan Proceeds" means $24 million,
representing the sum of the Newark Refinancing Proceeds and the
proceeds of the NRG Newark Cogen Loan.
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1.101."Newark Project" means the gas-fired Newark
Cogeneration Facility owned by Newark Cogen.
1.102."Newark Project Refinancing" means a refinancing
of the debt that is secured by a mortgage on the Newark Project.
1.103."Newark Refinancing Documentation" means the loan
agreement, mortgage and other loan documentation relating to the
Newark Project Refinancing.
1.104."Newark Refinancing Proceeds" means the proceeds,
net of closing costs and expenses and the existing mortgage debt
being refinanced, realized from the Newark Project Refinancing of
up to $24 million, which proceeds shall be distributed by Newark
Cogen to O'Brien on the Effective Date.
1.105."Non-Accepting Secured Creditor" means any holder
of an Allowed Secured Claim that objects to or votes against the
Plan and as a result receives the Collateral Putback Treatment
instead of the Cash Payoff Treatment.
1.106."Non-Reinstated Secured Claim Supplemental
Payment" means a cash payment to be made on the Effective Date to
each holder of an Allowed Non-Reinstated Secured Claim equal to
the amount of interest that accrues, at 5% per annum, for the
period from February 1, 1996 until the Effective Date, on the
Cash Payoff Treatment amount specified in the section of Article
V that is applicable to such Allowed Non-Reinstated Secured
Claim.
1.107."Non-Reinstated Secured Claims" means those
Secured Claims treated under the Plan that are not receiving
Creditor Reinstatement Treatment.
1.108."NRG" has the meaning set forth in the first
paragraph of the Plan.
1.109."NRG Discretionary Supplemental Loan" has the
meaning set forth in Section 6.10.
1.110."NRG Mandatory Supplemental Loan" has the meaning
set forth in Section 6.10.
1.111."NRG New Loan" means a loan that will be made by
NRG to Reorganized O'Brien on the Effective Date in the amount of
$45 million pursuant to the NRG New Loan Agreement.
1.112."NRG New Loan Agreement" means a loan agreement
into which Reorganized O'Brien and NRG will enter, effective on
the Effective Date, substantially in the form filed with the
Court on January 2, 1996.
1.113."NRG New Loan Expenses" means the reasonable out-
of-pocket costs and expenses of NRG up to $100,000 referred to in
Section 9.5 of the NRG New Loan Agreement.
1.114."NRG New Loan Proceeds" means the proceeds
realized by Reorganized O'Brien from the NRG New Loan, net of the
NRG New Loan Expenses of up to $100,000.
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1.115."NRG Newark Cogen Loan" means a loan that will be
made by NRG to O'Brien, on the Effective Date, pursuant to the
NRG Newark Loan Documentation in an amount equal to the amount
(if any) by which $24 million exceeds the Newark Refinancing
Proceeds, which loan will be secured, by a Lien on all payments
received or receivable by O'Brien from Newark Cogen, whether by
dividend, pursuant to any management agreement between O'Brien
and Newark Cogen or otherwise.
1.116."NRG Newark Cogen Loan Documentation" means the
loan agreement, mortgage and other loan documentation relating to
the NRG Newark Cogen Loan, substantially in the form filed with
the Court on January 2, 1996.
1.117."NRG Supplemental Loan" means the NRG
Discretionary Supplemental Loan and the NRG Mandatory
Supplemental Loan.
1.118."NRG Supplemental Loan Documentation" means the
loan agreement and other loan documentation relating to the NRG
Supplemental Loan, substantially in the form filed with the Court
on January 2, 1996, subject to such changes as are appropriate to
give effect to Section 10.8(b) of the Plan.
1.119."Objection Resolution Expenses" has the meaning
set forth in Section 10.2(b) of the Plan.
1.120."O'Brien" has the meaning set forth in the first
paragraph of the Plan.
1.121."O'Brien Parlin Paydown Contribution" means a
contribution by O'Brien to Parlin Cogen on the Effective Date of
$1 million that will be applied to pay down the outstanding
amount owing to Natwest under the Parlin Credit Agreement.
1.122."O'Brien Parlin Reserve Contribution" means the
amount of Cash that Reorganized O'Brien is required to contribute
to Parlin Cogen to fund fully the Parlin Reserve, which shall be
net of any Cash held by Parlin Cogen that is available to fund
the Parlin Reserve.
1.123."OES" means O'Brien Energy Services Company.
1.124."Old Common Stock" means the authorized shares of
Class A Common Stock and Class B Common Stock of O'Brien, par
value $.01 per share, issued and outstanding on the Petition
Date.
1.125."Old Indenture Trustees" means, collectively,
United Jersey Bank, BankAmerica National Trust Company and
Bankers Trust Company, in each case as an indenture trustee or
successor indenture trustee or successor indenture trustees.
1.126."Old Indentures" means the indentures pursuant to
which the Old Subordinated Notes were issued by O'Brien.
1.127."Old Options" means the options to purchase
shares of Old Common Stock granted pursuant to the Old Stock
Option Plans and any other outstanding options, warrants or other
rights to acquire any such shares.
1.128."Old Public Claims and Interests" means the
Allowed Old Subordinated Noteholder Claims and Allowed Interests
representing Old Common Stock.
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This term specifically excludes any Old Subordinated Noteholder
Securities Claims and Old Stockholder Securities Claims.
1.129."Old Stock Option Plans" means the 1987 Stock
Option Plan, the 1989 Stock Option Plan, and the 1991 Stock
Option Plan and any other stock option plan adopted by O'Brien.
1.130."Old Stockholder Securities Claim" means a Claim
for damages or rescission arising out of the purchase or sale of
Old Common Stock, or for reimbursement, contribution or
indemnification on account of such a Claim.
1.131."Old Subordinated Noteholder Claims" means those
Claims against O'Brien arising under any of the Old Subordinated
Notes. The term specifically excludes any Old Subordinated
Noteholder Securities Claims or any Claims held by the Old
Indenture Trustees for fees and expenses that are not
subordinated under the terms of the Old Debentures to the holders
of Senior Debt.
1.132."Old Subordinated Noteholder Securities Claim"
means any Claim for damages or rescission arising from or out of
the purchase or sale of an Old Subordinated Note, or for
reimbursement, contribution or indemnification on account of such
a Claim.
1.133."Old Subordinated Notes" means (i) the 7 3/4%
Subordinated Debentures, (ii) the 11% Subordinated Debentures
(2010) and (iii) the 11% Subordinated Debentures (2011).
1.134."Pakistani Receivable" means the $1.24 million
receivable held by O'Brien in respect of the Kribawa Project.
1.135."Parlin Cogen" means O'Brien (Parlin)
Cogeneration, Inc.
1.136."Parlin Credit Agreement" means the Construction
and Term Credit Agreement, dated March 1, 1989, between Parlin
Cogen and Natwest, as amended.
1.137."Parlin Reserve" means the $3.5 million reserve
required to be set aside pursuant to Section 7.1(c) of the Parlin
Credit Agreement or such lower amount as Natwest may agree.
1.138."Petition Date" means the date on which the
Debtor filed a voluntary petition for relief under Chapter 11 of
the Bankruptcy Code.
1.139."Philadelphia Cogen" means O'Brien (Philadelphia)
Cogeneration, Inc., a Delaware corporation.
1.140."Philadelphia Water Development Project" shall
mean the cogeneration and standby electric generating facility
currently owned by Philadelphia Cogen.
1.141."Plan" means this Composite Fourth Amended and
Restated Plan of Reorganization for O'Brien proposed by the
Proponents, as it may be amended or supplemented as provided
herein.
1.142."Plan Cash Insufficiency" has the meaning set
forth in Section 6.10.
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1.143."Plan Documents" means the documents referred to
in the Plan that aid in effectuating the Plan and that, unless
otherwise expressly provided herein, will be filed with the Court
no later than ten days prior to commencement of the Confirmation
Hearing.
1.144."Post-Petition Interest Fund" means a cash fund
consisting of any amount initially deposited in the Cash Payment
Fund that at any time is determined to be in excess of the
Required Unsecured Claims Payment Amount, which cash fund shall
be distributed to the holders of Allowed Non-Reinstated Secured
Claims and Allowed General Unsecured Claims as and to the extent
provided in Section 6.11.
1.145."Present Value" means the value, as of the
Effective Date, of cash payments to be made to holders of Allowed
Non-Reinstated Secured Claims and Allowed General Unsecured
Claims under the Plan, determined by discounting such payments to
present value at the legal rate of interest or, for purposes of
discounting to present value amounts deposited in the Cash
Payment Fund, such other rate that the Bankruptcy Court may
determine is required.
1.146."Priority Claim" means a Claim entitled to
priority under Bankruptcy Code sections 507(a)(3), 507(a)(4), or
507(a)(7) that is outstanding on the Effective Date.
1.147."Pro Rata Share" means, with reference to any
distribution on account of any Allowed Claim or Interest in any
particular class, subclass or specified group of classes of
Claims or Interests, a distribution equal in amount to the ratio
(expressed as a percentage) that the amount of such Allowed Claim
or Interest bears at the time of such distribution to the
aggregate amount of all Claims (including Disputed Claims, but
not including Disallowed Claims) or Interests in such class,
subclass or specified group of classes and, with respect to any
distribution on account of an Allowed Interest in respect of Old
Common Stock, Pro Rata Share means a distribution equal to the
ratio (expressed as a percentage) that the number of shares of
such Old Common Stock bears at the time of such distribution to
the aggregate amount of all shares of Old Common Stock (including
shares of Class A Common Stock and Class B Common Stock of
O'Brien); provided that in the case of any provision of the Plan
that provides for a holder of an Allowed Class 15B Claim or
Allowed Class 15C Claim to receive a Pro Rata Share of the Class
15B Cash Payment Fund or the Class 15C Cash Payment Fund, the Pro
Rata Share of each holder of an Allowed Class 15B Claim or an
Allowed Class 15C Claim shall be determined as though the Wexford-
Related Class 15B Claims and Wexford-Related Class 15C Claims are
not Class 15B Claims and Class 15C Claims, respectively.
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1.148."Professional Fees" means fees and expenses of
professionals retained pursuant to an order of the Court pursuant
to Bankruptcy Code section 327 or 1103 that are awarded by the
Court under Bankruptcy Code section 330(a) in respect of services
rendered by such professionals on or prior to the Effective Date.
1.149."Purchased Company Shares" means the shares of
New O'Brien Common Stock to be acquired by NRG under the
Acquisition Agreement and the Plan representing 41.86% of the
shares of New O'Brien Common Stock to be issued and outstanding
on and after the Effective Date.
1.150."Purchased Subsidiary Shares" means all of the
issued and outstanding shares of capital stock of each of the
Acquired Subsidiaries.
1.151."Reinstatement/Nonimpairment Treatment" means, as
to any Secured Claim treated under the Plan, the following
treatment: (A) such Claim shall not be bifurcated into an Allowed
Secured Claim and an Allowed Unsecured Claim based on a
determination of a Deficiency Amount in respect of such Claim;
(B) if applicable, the maturity of such Claim shall be
reinstated; (C) any defaults with respect to such Claim other
than the kind specified in Bankruptcy Code section 365(b)(2)
shall be cured; (D) the holder of such Claim shall be compensated
for any damages incurred by such holder as a result of any
reasonable reliance by such holder on any contractual provision
or applicable law that entitles such holder to demand or receive
accelerated payment of such Claim after any default with respect
to such Claim; and (E) the legal, equitable and contractual
rights to which such Claim entitles the holder thereof shall
otherwise be left unaltered.
1.152."Rejected Contracts" has the meaning set forth in
Section 8.1.
1.153."Reorganized O'Brien" means O'Brien following
consummation of the Plan on the Effective Date.
1.154."Required Unsecured Claims Payment Amount" means
cash payments that have a Present Value equal to the aggregate
amount of all Allowed General Unsecured Claims other than the
Wexford-Related Unsecured Claims.
1.155."Reserved Administrative and Cure Claims Cash
Amount" means cash equal to the sum of $14,468,000.
1.156."Retained Working Capital Amount" means Cash held
by O'Brien on the Effective Date in an amount equal to $1 million
to be retained by Reorganized O'Brien on the Effective Date for
working capital purposes.
1.157."Schedules" means the schedules filed by the
Debtor in its Chapter 11 Case pursuant to Bankruptcy Rule 1007,
as such schedules may be amended from time to time in accordance
with Bankruptcy Rule 1009.
1.158."Secured Claim" means a Claim, to the extent of
the value of any Lien on or security interest in property of the
Debtor that secures payment of such Claim.
1.159."Senior Debt" means the holders of 'Senior Debt'
or 'Senior Indebtedness,' as those terms are defined in the Old
Indentures and to which the holders of Old Subordinated Notes are
subordinated pursuant to the Old Indentures. For purposes of
this Plan, if the holder of each of Allowed Claims in respect to
Senior Debt of CoreStates New Jersey National Bank, CoreStates
Bank, First Fidelity Bank, N.A., and Heller Financial, Inc.
accepts the Plan (both as the holder of Secured Claims treated as
Classes 2, 3, 5 and 7 and as the holder of an Allowed General
Unsecured Claim in respect of Senior Debt), the aggregate amount
of Allowed Claims held by such holder that are treated in Class
15A shall be deemed to be $11,002,070 (less $455,000 in respect
of the Secured Class 2 Claim of CoreStates New Jersey National
Bank, $495,000 in respect of the Secured Class 3 Claim of
CoreStates Bank, $155,588 in respect of the Secured Class 5 Claim
of First Fidelity Bank, N.A. and $1,360,000 in respect of the
Secured Class 7 Claim of Heller Financial, Inc.). For purposes
of this Plan, if The Bank of New York accepts the Plan (both as
the holder of a Secured Claim treated in Class 11 and as the
holder of an Allowed General Unsecured Claim in respect of Senior
Debt), the Allowed Claims in respect to Senior Debt of The Bank
of New York treated in Class 15A shall be deemed to be $5,004,355
(less the sum of $1,106,000 in respect of its Class 11 Secured
Claim). To the extent that such Claims if deemed allowed
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pursuant to Section 1.151, include amounts for attorneys' fees,
such amounts shall be subject to approval of the Bankruptcy Court
in the event an objection is filed, other than by any of the
Proponents, prior to the Confirmation Hearing.
1.160."7 3/4% Subordinated Debentures" means the 7 3/4%
Convertible Senior Subordinated Debentures issued by O'Brien, due
March 15, 2002, pursuant to the 7 3/4% Subordinated Debentures
Indenture.
1.161."7 3/4% Subordinated Debentures Indenture" means
the Indenture, dated as of March 15, 1987, between O'Brien and
United Jersey Bank as Indenture Trustee.
1.162."Stock Transfer Agent" has the meaning set forth
in Section 6.6(a).
1.163."Subsidiary" has the meaning set forth in the
Acquisition Agreement.
1.164."Supplemental Interest Amount" means the sum of
(i) the Class 15 Supplemental Payment Amount and (ii) the Wexford-
Related Class 15 Supplemental Payment.
1.165."Tax Claim" means a Claim of the kind specified
in section 507(a)(7) of the Bankruptcy Code.
1.166."Tax Code" means the Internal Revenue Code of
1986, as amended from time to time.
1.167."Transaction Documents" means the contracts,
agreements, documents and instruments contemplated to be entered
into by the terms of the Acquisition Agreement.
1.168."Treatment Election Notice" has the meaning given
to it in Section 5.1.
1.169."Unresolved Administrative and Priority Claim"
means an Administrative Claim or Priority Claim against the
Debtor (i) in the case of a Claim as to which a proof of Claim
has been filed prior to the Effective Date, that is a Disputed
Claim on the Effective Date, or (ii) in the case of a Claim as
to which a proof of claim has not been filed prior to the
Effective Date, any other such Claim of any kind or nature that
is not an Allowed Claim on the Effective Date other than an
Administrative Claim that represents an undisputed liability
incurred by the Debtor in the ordinary course of business during
the Chapter 11 Case that in accordance with its terms is due and
payable on the Effective Date; provided that "Unresolved
Administrative and Priority Claim" shall not include (x) the
Administrative Claim of NRG in respect of the DIP Loan
Outstanding Amount; (y) the Wexford Administrative Claim or (z)
any Professional Fees awarded prior to the Effective Date that
are to be paid on or as soon as practicable but no more than five
Business Days after the Effective Date pursuant to clause (v) of
Article II hereof; in each case subject to any applicable bar
date established by the Court upon motion filed by the Debtor.
1.170."Wexford" has the meaning given to it in the
first paragraph of the Plan.
1.171."Wexford Administrative Claim" means an
Administrative Claim of Wexford that, upon the Effective Date,
will be deemed Allowed in the amount of $200,000 and that will be
in full settlement and satisfaction of any indemnification Claims
of Wexford or its affiliates against the Debtor with respect to
legal fees and expenses and any Claims under Bankruptcy Code
section 503(b)(3)(D) based on Wexford having made a substantial
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contribution to the Chapter 11 Case; provided that such
Administrative Claim shall be subject to approval of the Court
under Bankruptcy Code section 1129(a)(4) as reasonable.
1.172."Wexford-Related Class 15 Supplemental Payment"
means the Wexford-Related Class 15B Supplemental Payment and the
Wexford-Related Class 15C Supplemental Payment.
1.173."Wexford-Related Class 15B Claims" has the
meaning given to it in Section 5.12 of the Plan.
1.174."Wexford-Related Class 15B Supplemental Payment"
means a cash payment to be made on the applicable Distribution
Date to each of the holders of Wexford-Related Class 15B Claims
equal to the amount of interest that accrues, at 5% per annum,
for the period from February 1, 1996 until the Effective Date, on
the amount of such holder's Wexford-Related Class 15B Claims.
1.175."Wexford-Related Class 15C Supplemental Payment"
means a cash payment to be made on the applicable Distribution
Date to each of the holders of Wexford-Related Class 15C Claims
equal to the amount of interest that accrues, at 5% per annum,
for the period from February 1, 1996 until the Effective Date, on
the amount of such holder's Wexford-Related Class 15C Claims.
1.176."Wexford-Related Class 15C Claims" has the
meaning given to it in Section 5.13 of the Plan.
1.177."Wexford-Related Unsecured Claims" means,
collectively, the Wexford-Related Class 15B Claims and the
Wexford-Related Class 15C Claims.
Article II: Unclassified Claims
Unless otherwise agreed to by the holder of the Claim and the
Debtor, each holder of an Allowed Administrative Claim or an
Allowed Priority Claim against the Debtor shall receive on the
Distribution Date Cash equal to the amount of such Allowed Claim;
provided, however, that (i) Administrative Claims that represent
undisputed liabilities incurred by the Debtor in the ordinary
course of business during the Chapter 11 Case of the Debtor shall
be paid in the ordinary course of business and in accordance with
any terms and conditions that may be applicable under any
agreements relating thereto; (ii) the Debtor shall provide for
the full payment of any Administrative Claim or Priority Claim
against the Debtor that constitutes an Unresolved Administrative
and Priority Claim by establishing the Administrative and
Priority Claims Reserve on the Effective Date, which, as provided
in Section 10.8 of the Plan, shall be the sole source of payment
in respect of such Claims after the Effective Date; (iii) the
Administrative Claim of NRG in respect of the DIP Loan
Outstanding Amount shall not be due and payable on the Effective
Date and shall be repaid with deferred cash payments as and to
the extent provided in Section 6.12(a); (iv) the Wexford
Administrative Claim shall not be due and payable on the
Effective Date and shall be repaid with deferred cash payments as
and to the extent provided in Section 6.12(b) and (v) the amount
of any Professional Fees awarded by the Court prior to the
Effective Date (excluding any amount required to be held back
pending allowance by the Court after the filing of final fee
applications) shall be paid on the Effective Date to the
professionals entitled thereto as soon as practicable but no
later than five Business Days thereafter (subject to the effect
of any order entered by the Court following the filing of final
fee applications that
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finally determines the aggregate Allowed amount of Professional
Fees to be awarded to such professionals).
Article III: Classification of Claims and Interests
Claims and Interests that are required to be classified
under Bankruptcy Code section 1123(a)(1) are hereby divided into
the following classes:
3.1 Class 1--BLT Leasing Corp. Class 1 consists of
the Allowed Secured Claim of BLT Leasing Corp. in respect of its
first priority Lien on a Caterpillar G399 generator set and
related Collateral, as and to the extent specified in the
applicable security documentation between BLT Leasing Corp. and
O'Brien.
3.2 Class 2--CoreStates New Jersey National Bank.
Class 2 consists of the Allowed Secured Claims of CoreStates New
Jersey National Bank in respect of its first priority Liens on
certain generator sets, turbine sets, boilers and related
Collateral, as and to the extent specified in the applicable
security documentation between CoreStates New Jersey National
Bank and O'Brien. Each such Allowed Secured Claim that arises
out of a particular equipment financing transaction shall be
classified in a separate subclass.
3.3 Class 3--CoreStates Bank. Class 3 consists of the
Allowed Secured Claims of CoreStates Bank in respect of its first
priority Liens on certain turbine sets, and related Collateral,
as and to the extent specified in the applicable security
documentation between CoreStates Bank and O'Brien. Each such
Allowed Secured Claim that arises out of a particular equipment
financing transaction shall be classified in a separate subclass.
3.4 Class 4--Financing for Science International, Inc.
Class 4 consists of the Allowed Secured Claims of Financing for
Science International, Inc., in respect of its first priority
Liens on certain generator sets and related Collateral, as and to
the extent specified in the applicable security documentation
between O'Brien and Financing for Science International, Inc.
Each such Allowed Secured Claim that arises out of a particular
equipment financing transaction shall be classified in a separate
subclass.
3.5 Class 5--First Fidelity Bank, N.A. Class 5
consists of the Allowed Secured Claims of First Fidelity Bank,
N.A., in respect of its first priority Liens on certain generator
sets and related Collateral, as and to the extent specified in
the applicable security documentation between First Fidelity
Bank, N.A. and O'Brien. Each such Allowed Secured Claim that
arises out of a particular equipment financing transaction shall
be classified in a separate subclass.
3.6 Class 6--General Electric Capital Corporation.
Class 6 consists of the Allowed Secured Claims of General
Electric Capital Corporation in respect of its first priority
Liens on certain generator sets and related Collateral, as and to
the extent specified in the applicable security documentation
between O'Brien and General Electric Capital Corporation. Each
such Allowed Secured Claim that arises out of a particular
equipment financing transaction shall be classified in a separate
subclass.
3.7 Class 7--Heller Financial, Inc. Class 7 consists
of the Allowed Secured Claim of Heller Financial, Inc. in respect
of its first priority Lien on certain steam turbine sets,
generator sets and related Collateral, as and to the extent
specified in the applicable security documentation between
O'Brien and Heller Financial, Inc.
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3.8 Class 8--MDFC Equipment Leasing Corp. Class 8
consists of the Allowed Secured Claims of MDFC Equipment Leasing
Corp. in respect of its first priority Liens on certain generator
sets and related Collateral, as and to the extent specified in
the applicable security documentation between O'Brien and MDFC
Equipment Leasing Corp. and the Stipulation and Order entered
into by the Court on August 7, 1995 (for the purposes of the
Plan, any claims of MDFC Equipment Leasing Corp. under any
equipment lease will be deemed to be Secured Claims, whether or
not such lease is a 'true lease' or a lease that is intended to
create a security interest). Each such Allowed Secured Claim
that arises out of a particular equipment financing transaction
shall be classified in a separate subclass.
3.9 Class 9--Meridian Bank. Class 9 consists of the
Allowed Secured Claims of Meridian Bank in respect of its first
priority Liens on certain generator sets and related Collateral,
as and to the extent specified in the applicable security
documentation between O'Brien and Meridian Bank. Each such
Allowed Secured Claim that arises out of a particular equipment
financing transaction shall be classified in a separate subclass.
3.10 Class 10--PECO Energy Company. Class 10 consists
of the Allowed Secured Claim of PECO Energy Company in respect of
its first priority Lien on shares of capital stock of
Philadelphia Cogen and certain other Collateral, as and to the
extent specified in the applicable security documentation between
O'Brien and PECO Energy Company.
3.11 Class 11--The Bank of New York (Equipment). Class
11 consists of the Allowed Secured Claims of The Bank of New York
in respect of its first priority Liens on certain gas turbine
sets, generator sets, steam turbine sets and related Collateral,
as and to the extent specified in the applicable security
documentation between O'Brien and The Bank of New York. Each
such Allowed Secured Claim that arises out of a particular
equipment financing transaction shall be classified in a separate
subclass.
3.12 Class 12--The Bank of New York (Documents). Class
12 consists of all Allowed Secured Claims of The Bank of New York
in respect of its first priority Lien on certain agreements and
a standby letter of credit, as and to the extent provided in the
applicable security documentation between O'Brien and The Bank of
New York.
3.13 Class 13--Natwest. Class 13 consists of two
subclasses, Class 13A and Class 13B. Class 13A consists of the
Allowed Secured Claims of Natwest in respect of its first
priority Lien on the shares of common stock of Newark Cogen.
Class 13B consists of the Allowed Secured Claims of Natwest in
respect of its first priority Lien on the shares of common stock
of Parlin Cogen.
3.14 Class 14--Other Secured Claims. Class 14 consists
of Allowed Secured Claims against O'Brien other than those that
are specifically classified in any of Classes 1 through 13. Each
Allowed Secured Claim that is classified in Class 14 shall be
classified in a separate subclass.
3.15 Class 15A--Senior Debt. Class 15A consists of
Allowed General Unsecured Claims in respect of Senior Debt.
3.16 Class 15B--Non-Subordinated Unsecured Claims.
Class 15B consists of Allowed General Unsecured Claims other than
those in respect of Senior Debt or Old Subordinated Noteholder
Claims.
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3.17 Class 15C--Old Subordinated Noteholder Claims.
Class 15C consists of Allowed Old Subordinated Noteholder Claims.
3.18 Class 16--Old Common Stock. Class 16 consists of
Allowed Interests in O'Brien represented by the Old Common Stock.
3.19 Class 17--Old Subordinated Noteholder Securities
Claims. Class 17 consists of Allowed Old Subordinated Noteholder
Securities Claims.
3.20 Class 18--Old Stockholder Securities Claims.
Class 18 consists of Allowed Old Stockholder Securities Claims.
3.21 Class 19--Old Options. Class 19 consists of the
Allowed Interests in O'Brien represented by the Old O'Brien
Options.
Article IV: Treatment of Classes Not Impaired by the
Plan
Classes not impaired by the Plan shall be treated as
follows:
4.1 Class 1 (BLT Leasing Corp.). BLT Leasing Corp.,
as the holder of the Allowed Claim in Class 1, will receive the
Reinstatement/Nonimpairment Treatment.
4.2 Class 6 (General Electric Capital). General
Electric Capital Corporation, as the holder of the Allowed Class
6 Claim, will receive the Reinstatement/Nonimpairment Treatment.
4.3 Class 9 (Subclass of Meridian Bank--Collateral
Used in Biogas Projects Formerly Owned by O'Brien). Meridian
Bank, as the holder of Allowed Class 9 Claim that is secured by a
Lien on equipment that is leased to the owners of Biogas projects
formerly owned by O'Brien, will receive the
Reinstatement/Nonimpairment Treatment.
4.4 Class 10 (PECO Energy Company). PECO Energy
Company, as the holder of the Allowed Class 10 Claim, will
receive the Reinstatement/Nonimpairment Treatment.
4.5 Class 13 (Natwest). Natwest, as the holder of
Allowed Claims in Class 13A and 13B, will receive the
Reinstatement/Nonimpairment Treatment.
Article V: Treatment of Classes Impaired by the Plan
Classes that are or may be impaired by the Plan shall
be treated as follows:
5.1 Class 2 (CoreStates New Jersey National Bank).
The Allowed Secured Claims in Class 2 will receive, on the
Effective Date, the Cash Payoff Treatment in the amount of
$455,000, plus the applicable Non-Reinstated Secured Claim
Supplemental Payment, and, when and as provided in Section 6.11,
its Pro Rata Share of the Post-Petition Interest Fund; provided
that, in the event the holder of such Claims objects to any
provision of the Plan or votes such Claims or the General
Unsecured Claim in respect of the Deficiency Amount of such
Claims against the Plan, at the election of the Proponents made
in a written notice served and filed with the Court no later than
twenty days prior to commencement of the Confirmation Hearing
(the "Treatment Election Notice"), such holder will receive the
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Collateral Putback Treatment in respect of such holder's Allowed
Secured Claims, as and to the extent specified in the Treatment
Election Notice.
5.2 Class 3 (CoreStates Bank). The Allowed Secured
Claims in Class 3 will receive, on the Effective Date, the Cash
Payoff Treatment in the amount of $495,000, plus the applicable
Non-Reinstated Secured Claim Supplemental Payment, and, when and
as provided in Section 6.11, its Pro Rata Share of the Post-
Petition Interest Fund; provided that, in the event the holder of
such Claims objects to any provision of the Plan or votes the
General Unsecured Claim in respect of the Deficiency Amount of
its Secured Claims against the Plan, at the election of the
Proponents made in a Treatment Election Notice no later than
twenty days prior to commencement of the Confirmation Hearing,
such holder will receive the Collateral Putback Treatment in
respect of such holder's Allowed Secured Claims, as and to the
extent specified in the Treatment Election Notice.
5.3 Class 4 (Financing for Science International,
Inc.). The Allowed Secured Claims in Class 4 will receive, on
the Effective Date, the Biogas Claim Reinstatement Treatment, and
the obligations of the Debtor to Financing for Science
International, Inc. that are treated in Class 4 and are to be
assumed by the Acquired Subsidiary to which the Biogas Assets
that secure such obligations are transferred shall be
unconditionally guaranteed by NRG.
5.4 Class 5 (First Fidelity Bank). The Allowed
Secured Claims in Class 5 will receive, on the Effective Date,
the Cash Payoff Treatment in the amount of $155,588, plus the
applicable Non-Reinstated Secured Claim Supplemental Payment,
and, when and as provided in Section 6.11, its Pro Rata Share of
the Post-Petition Interest Fund; provided that, in the event the
holder of such Claims objects to any provision of the Plan or
votes the General Unsecured Claim in respect of the Deficiency
Amount of its Secured Claims against the Plan, at the election of
the Proponents made in a Treatment Election Notice no later than
twenty days prior to commencement of the Confirmation Hearing,
such holder will receive the Collateral Putback Treatment in
respect of such holder's Allowed Secured Claims, as and to the
extent specified in the Treatment Election Notice.
5.5 Class 7 (Heller Financial, Inc.). The Allowed
Secured Claims in Class 7 will receive, on the Effective Date,
the Cash Payoff Treatment in the amount of $1,360,000, plus the
applicable Non-Reinstated Secured Claim Supplemental Payment,
and, when and as provided in Section 6.11, its Pro Rata Share of
the Post-Petition Interest Fund; provided that, in the event the
holder of such Claims objects to any provision of the Plan or
votes the General Unsecured Claim in respect of the Deficiency
Amount of its Secured Claims against the Plan, at the election of
the Proponents made in a Treatment Election Notice no later than
twenty days prior to commencement of the Confirmation Hearing,
such holder will receive the Collateral Putback Treatment in
respect of such holder's Allowed Secured Claims, as and to the
extent specified in the Treatment Election Notice.
5.6 Class 8 (MDFC Equipment Leasing Corp.). The
holder of the Allowed Secured Claims in Class 8 will receive, on
the Effective Date, in the case of the Retained Generator
Equipment, as defined in the Stipulation and Order entered into
on August 7, 1995, the treatment provided in such Stipulation and
Order and, in the case of each such Secured Claim that is secured
by any Biogas Assets, such Claim shall receive the Biogas Claim
Reinstatement Treatment.
5.7 Class 9 (Meridian Bank). The Allowed Secured
Claims in Class 9 (other than the subclass treated in Section
4.3) will receive, on the Effective Date, the Cash
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Payoff Treatment in the amount of $140,000, plus the applicable
Non-Reinstated Secured Claim Supplemental Payment, and, when and
as provided in Section 6.11, its Pro Rata Share of the Post-
Petition Interest Fund; provided that, in the event the holder of
such Claims objects to any provision of the Plan or votes the
General Unsecured Claim in respect of the Deficiency Amount of
its Secured Claims against the Plan, at the election of the
Proponents made in a Treatment Election Notice no later than
twenty days prior to commencement of the Confirmation Hearing,
such holder will receive the Collateral Putback Treatment in
respect of such holder's Allowed Secured Claims, as and to the
extent specified in the Treatment Election Notice.
5.8 Class 11 (Bank of New York--Equipment). The
Allowed Secured Claims in Class 11 will receive, on the Effective
Date, the Cash Payoff Treatment in the amount of $1,106,000, plus
the applicable Non-Reinstated Secured Claim Supplemental Payment,
and, when and as provided in Section 6.11, its Pro Rata Share of
the Post-Petition Interest Fund; provided that, in the event the
holder of such Claims objects to any provision of the Plan or
votes the General Unsecured Claim in respect of the Deficiency
Amount of its Secured Claims against the Plan, at the election of
the Proponents made in a Treatment Election Notice no later than
twenty days prior to commencement of the Confirmation Hearing,
such holder will receive the Collateral Putback Treatment in
respect of such holder's Allowed Secured Claims, as and to the
extent specified in the Treatment Election Notice.
5.9 Class 12 (The Bank of New York) Documents. The
holder of the Allowed Secured Claim in Class 12 will receive the
BONY Deferred Cash Payment Treatment.
5.10 Class 14 (Other Secured Claims). Each holder of
an Allowed Secured Claim in Class 14 will receive, on the
Effective Date, the Collateral Putback Treatment or such other
treatment as may satisfy the requirements of Bankruptcy Code
section 1129(b)(2)(A).
5.11 Class 15A (Senior Debt). Subject to Article VII,
each holder of an Allowed Class 15A Claim will receive its Pro
Rata Share of (i) on the applicable Distribution Date, the Class
15A Cash Payment Fund and the Class 15A Supplemental Payment, and
(ii) when and as provided in Section 6.11, the Post-Petition
Interest Fund.
5.12 Class 15B (Non-Subordinated Unsecured Claims).
Subject to Article VII, each holder of an Allowed Class 15B Claim
will receive its Pro Rata Share of (i) on the applicable
Distribution Date, the Class 15B Cash Payment Fund and the Class
15B Supplemental Payment, and (ii) when and as provided in
Section 6.11, the Post-Petition Interest Fund; provided that, in
lieu of receiving any distributions from the Class 15B Cash
Payment Fund or any portion of the Class 15B Supplemental Payment
in accordance with the foregoing (but not in lieu of any
distributions from the Post-Petition Interest Fund, which shall
not be affected by this proviso), Wexford and any Affiliate of
Wexford shall receive in respect of any Allowed Class 15B Claims
held by Wexford and each such Affiliate ("Wexford-Related Class
15B Claims") the following less favorable treatment to which
Wexford and each such Affiliate have agreed pursuant to
Bankruptcy Code section 1123(a)(4): Wexford and each such
Affiliate shall receive, (x) on the applicable Distribution Date,
the applicable Wexford-Related Class 15B Supplemental Payment and
(y) promptly after a final determination is made of the Present
Value of the distributions from the Class 15B Cash Payment Fund
that Wexford or such Affiliate would have received pursuant to
the foregoing provisions of this Section 5.12 had the amount in
the Class 15B Cash Payment Fund been increased by the Allowed
amount of the Wexford-Related Class 15B Claims and but for this
proviso (the
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"Class 15B Distribution Amount"), shares of New O'Brien Preferred
Stock with a liquidation and redemption preference equal to the
Class 15B Distribution Amount. Notwithstanding anything to the
contrary in this Section 5.12, the holder of any General
Unsecured Claim in respect of a guarantee by the Debtor of an
obligation of any Affiliate that is an Allowed Claim on the
Effective Date shall not be treated as a Class 15 Claim and shall
instead receive the Reinstatement/Nonimpairment Treatment.
Notwithstanding anything in this Section 5.12 to the contrary,
any Allowed Claim that is held by any Subsidiary of the Debtor
shall not be treated as a Class 15 Claim and shall instead be
deemed to be released and discharged as of the Effective Date.
5.13 Class 15C (Old Subordinated Noteholder Claims).
Subject to Article VII, each holder of an Allowed Class 15C Claim
will receive its Pro Rata Share of (i) on the applicable
Distribution Date, the Class 15C Cash Payment Fund and the Class
15C Supplemental Payment, and (ii) when and as provided in
Section 6.11, the Post-Petition Interest Fund; provided that, in
lieu of receiving any distributions from the Class 15C Cash
Payment Fund in accordance with the foregoing (but not in lieu of
any distribution from the Post-Petition Interest Fund, which
shall not be affected by this proviso), Wexford and any Affiliate
of Wexford shall receive in respect of any Allowed Class 15C
Claims held by Wexford and each such Affiliate ("Wexford-Related
Class 15C Claims") the following less favorable treatment to
which Wexford and each such Affiliate have agreed pursuant to
Bankruptcy Code section 1123(a)(4): Wexford and each such
Affiliate shall receive (x) on the applicable Distribution Date,
the applicable Wexford-Related Class 15C Supplemental Payment and
(y) promptly after a final determination is made of the Present
Value of the distributions from the Class 15C Cash Payment Fund
that Wexford or such Affiliate would have received pursuant to
the foregoing provisions of this Section 5.13 had the amount in
the Class 15C Cash Payment Fund been increased by the Allowed
amount of the Wexford-Related Class 15C Claims and but for this
proviso (the "Class 15C Distribution Amount"), shares of New
O'Brien Preferred Stock with a liquidation and redemption
preference equal to the Class 15C Distribution Amount.
5.14 Class 16 (Old Common Stock). On the Effective
Date, the Old Common Stock shall be canceled and extinguished,
and on the Distribution Date each holder of an Allowed Class 16
Interest on the Distribution Record Date will receive its Pro
Rata Share of the Equityholders Cash Payment and all of the New
O'Brien Common Stock to be issued and outstanding on and after
the Effective Date other than the Purchased Company Shares.
5.15 Class 17 (Old Subordinated Noteholder Securities
Claims). If the holders of Class 17 Claims accept the Plan by
the requisite majorities under Bankruptcy Code section 1126(c),
such holders shall retain, and shall be entitled to assert
following the Effective Date, their Class 17 Claims against
O'Brien to the extent of any recoveries available to O'Brien in
respect of any insurance policies providing any insurance
coverage in respect of such Claims; provided that the holders of
Class 17 Claims shall be entitled to no other distribution under
the Plan in respect of such Claims and such Claims shall
otherwise be discharged on the Effective Date. If the holders of
Class 17 Claims do not accept the Plan by the requisite
majorities under Bankruptcy Code section 1126(c), (i) the
Proponents, prior to or at the Confirmation Hearing, shall seek
the estimation of such Claims under Bankruptcy Code section
502(c) for allowance purposes at zero, and (ii) the holders of
such Claims shall receive no distributions whatsoever on account
of such Claims.
5.16 Class 18 (Old Stockholder Securities Claims). If
the holders of Class 18 Claims accept the Plan by the requisite
majorities under Bankruptcy Code section 1126(c),
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such holders shall retain, and shall be entitled to assert,
following the Effective Date, their Class 18 Claims against
O'Brien to the extent of any recoveries available to O'Brien in
respect of any insurance policies providing any insurance
coverage in respect of such Claims; provided that the holders of
Class 18 Claims shall be entitled to no other distribution under
the Plan in respect of such Claims and such Claims shall
otherwise be discharged on the Effective Date. If the holders of
Class 18 Claims do not accept the Plan by the requisite
majorities under Bankruptcy Code section 1126(c), (i) the
Proponents, prior to or at the Confirmation Hearing, shall seek
the estimation of such Claims under Bankruptcy Code section
502(c) for allowance purposes at zero, and (ii) the holders of
such Claims shall receive no distributions whatsoever on account
of such Claims.
5.17 Class 19 (Old Options). On the Effective Date,
all Old Options shall be canceled and extinguished, and each
holder of an Allowed Class 19 Interest shall receive no
distributions on account of its Interest.
Article VI: Means for Execution of Plan
6.1 Consummation of Acquisition and Plan. Promptly
following the Confirmation Date, O'Brien shall execute and
deliver the Acquisition Agreement and O'Brien shall execute and
deliver each of the other Transaction Documents to which O'Brien
is to be a party pursuant to the Acquisition Agreement. Pursuant
to the Acquisition Agreement and the Plan, on the Effective Date,
the Plan shall be implemented and the following shall take place:
(a) Acquisition Agreement Closing. The Closing shall
occur under the Acquisition Agreement and in connection
therewith NRG shall pay or cause to be paid to Reorganized
O'Brien the Cash Purchase Price, and NRG or an Affiliate
thereof designated by NRG shall acquire the Purchased
Company Shares and the Purchased Subsidiary Shares free and
clear of all Liens, Claims and Interests and Reorganized
O'Brien shall issue to the Stock Transfer Agent for the
benefit of holders of Allowed Class 16 Interests, a
certificate representing the aggregate amount of shares of
New O'Brien Common Stock to which such holders are entitled
pursuant to Section 5.14;
(b) Cancellation of Old Common Stock. All Interests
in O'Brien shall be canceled and extinguished and all
certificates therefor shall be null and void, by operation
of the Plan and without the need for any action to be taken
by the certificate holder or by any other person;
(c) Distributions. The distributions, including the
Equityholders Cash Payment, to be made pursuant to Articles
II, IV and V on the Effective Date, shall be made or
provided for and the Distribution Reserves shall be created,
and held and administered by, Reorganized O'Brien in
accordance with Section 10.7;
(d) NRG New Loan; Creation of Cash Payment Fund. (1)
Reorganized O'Brien and NRG shall enter into the NRG New
Loan Agreement, (2) NRG New Loan Expenses of up to $100,000
will be paid from the proceeds of the NRG New Loan, (3) the
General Unsecured Claims Payment Amount shall be deposited
in the Cash Payment Fund, and (4) to the extent applicable,
any amount held in the Cash Payment Fund in excess of the
Required Unsecured Claims Payment Amount shall be withdrawn
therefrom and deposited in the Post-Petition Interest Fund;
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(e) Additional Loan. If and to the extent required to
be made pursuant to the Acquisition Agreement or the Plan,
NRG shall make the NRG Mandatory Supplemental Loan; and
(f) Parlin Contributions. Reorganized O'Brien shall
make any O'Brien Parlin Reserve Contribution and the O'Brien
Parlin Paydown Contribution.
6.2 General Corporate Matters: Charter Amendment.
Reorganized O'Brien shall take such action as is necessary under
the laws of the state of Delaware, federal law and other
applicable law to effect the terms and provisions of the Plan.
On the Effective Date, Reorganized O'Brien shall file the New
Certificate of Incorporation and the New Certificate of
Designation with the Secretary of State of the State of Delaware
in accordance with sections 102 and 103 of Delaware General
Corporation Law and the New By-laws shall be adopted.
6.3 Reconstituted Board of Directors of O'Brien.
Effective on the Effective Date, the Board of Directors of
Reorganized O'Brien shall consist of seven directors, of whom (i)
four shall have been designated by NRG, (ii) one shall have been
designated by Wexford, (iii) one shall have been designated by
the Equity Committee and (iv) one shall have been jointly
designated by Wexford and each of the holders of Old Common Stock
who are members of the Equity Committee.
6.4 Corporate Action. Except as specifically provided
in the Plan, the adoption of the New Certificate of Incorporation
and New By-laws, the designation of directors for Reorganized
O'Brien, the distribution of Cash and the adoption, execution and
delivery of all contracts, instruments, indentures and other
agreements related to any of the foregoing, including without
limitation the Plan Documents, and the other matters provided for
under the Plan involving corporate action to be taken by or
required of the Debtor shall be deemed to have occurred and be
effective as provided herein, and shall be authorized and
approved in all respects, which authorization and approval shall
be effective upon entry of the Confirmation Order, without any
requirement of further action by stockholders or directors of the
Debtor or Reorganized O'Brien.
6.5 Other Transaction Documents. On the Effective
Date and as contemplated by the Acquisition Agreement, (i) NRG
and Reorganized O'Brien shall enter into the Co-Investment
Agreement; (ii) NRG (or one or more of its Affiliates) and
Reorganized O'Brien shall enter into the Management Agreement;
(iii) Reorganized O'Brien and Wexford (or an Affiliate thereof)
shall enter into the Liquidating Asset Management Agreement; (iv)
if the Newark Project Refinancing will occur on the Effective
Date, Newark Cogen and the lender that is providing the Newark
Project Refinancing shall enter into the loan documentation
relating thereto; and (v) if the NRG Newark Cogen Loan is
required to be made pursuant to the terms hereof and the
Acquisition Agreement, NRG and Reorganized O'Brien shall enter
into the NRG Newark Cogen Loan Documentation.
6.6 Distributions.
(a) Generally. All distributions required to be made
by Reorganized O'Brien hereunder to holders of Allowed Claims and
Allowed Interests shall be made by Reorganized O'Brien (except
for the Equityholders Cash Payment, which shall be made by NRG,
an affiliate of NRG or Reorganized O'Brien in such manner as
agreed by counsel to the Equity Committee and NRG prior to the
Effective Date), provided that (i) in the case of the holders of
Old Subordinated Noteholder Claims, Reorganized O'Brien shall
make the
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distributions to which such holders are entitled to the relevant
Old Indenture Trustee, which, in turn, shall make such
distributions to the holders of Old Subordinated Noteholder
Claims entitled thereto in accordance with the applicable Old
Indenture (for which service the Old Indenture Trustees shall
receive their customary compensation), subject to any rights,
claims or liens of each Old Indenture Trustee under its Old
Indenture, to satisfy, without need for any further application
to or approval of the Court, its Claims, to the extent not
satisfied from any other source such as distributions under the
Plan, for reasonable compensation and reimbursement of reasonable
expenses and advances incurred or made by it, including
reasonable compensation, disbursements and expenses of the agents
of and legal counsel to such Old Indenture Trustee; and (ii) in
the case of the holders of Old Common Stock, the distributions of
New Common Stock and the Equityholders Cash Payment to which such
holders are entitled shall be made by the transfer agent for the
Old Common Stock or such other transfer or exchange agent as the
Proponents may designate prior to the Effective Date (the "Stock
Transfer Agent"), for which service the Stock Transfer Agent
shall receive its customary compensation from Reorganized
O'Brien.
(b) Distributions Made as of Distribution Record Date.
Only holders of record as of the Distribution Record Date shall
be entitled to receive the distributions provided under the Plan
in respect of Old Public Claims and Interests. As of the
Distribution Record Date, the respective transfer ledgers in
respect of the Old Subordinated Notes and Old Common Stock shall
be closed. Reorganized O'Brien and its agents shall have no
obligation to recognize any transfer of Old Subordinated Notes
and Old Common Stock occurring after the Distribution Record
Date. Reorganized O'Brien and its agents shall be entitled
instead to recognize and, for purposes of making distributions
under the Plan, deal only with those holders of record stated on
the transfer ledgers maintained by the respective Registrar (as
defined in the applicable Old Indenture) for the Old Subordinated
Notes or by the Stock Transfer Agent as of the Distribution
Record Date.
(c) Procedures for Distributions.
(i)On the Distribution Date, certificates representing
the New O'Brien Common Stock shall be issued in accordance
with the applicable terms of the Plan. As soon as
practicable, Reorganized O'Brien shall deliver a jumbo
certificate to the Stock Transfer Agent, which shall deliver
certificates to the holders of Old Common Stock that have
validly surrendered the certificates representing such Old
Common Stock (or other appropriate evidence of ownership if
the Old Common Stock held by such holders is in book entry
form).
(ii)As a condition to receiving distributions provided
for by the Plan in respect of the Old Public Claims and
Interests, any holder of an Allowed Claim or Interest that
is included in the Old Public Claims and Interests shall be
required to surrender the instrument or certificate
evidencing such Allowed Claim or Interest, accompanied by
duly executed and completed letters of transmittal in
appropriate form (or other appropriate evidence of ownership
if the Old Public Claims and Interests held by such holder
are in book entry form), to Reorganized O'Brien.
Distributions shall be made only to holders of Old
Subordinated Notes and Old Common Stock that have
surrendered such instruments or certificates (or, in the
case of book entry securities, other appropriate evidence of
ownership) as herein provided. Except as provided in
Section 6.6(c)(iii), no distribution shall be made to any
holder of an Old Subordinated Note or Old Common Stock that
has not so surrendered such instruments or certificates held
by it (or, in the case of book entry securities, provided
other appropriate evidence of ownership).
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(iii)Unless waived by Reorganized O'Brien, any holder
of an Allowed Claim or Interest that is included in the Old
Public Claims and Interests and that is based upon an
instrument or certificate which has been lost, stolen,
mutilated or destroyed shall, in lieu of surrendering such
instrument or certificate as provided in this section,
deliver to Reorganized O'Brien (i) evidence satisfactory to
Reorganized O'Brien of the loss, theft, mutilation or
destruction of such instrument and (ii) such security or
indemnity as may be reasonably required by Reorganized
O'Brien to hold Reorganized O'Brien harmless from any
damages, liabilities, or costs incurred in treating such
Entity as a holder of such instrument or certificate.
Thereafter, such Entity shall be treated as the holder of
the instrument or certificate for all purposes of the Plan
and shall, for all purposes under the Plan, be deemed to
have surrendered the instrument or certificate representing
such Old Public Claims or Interests.
(iv)Any holder of an Allowed Claim or Interest that is
included in the Old Public Claims or Interests who shall not
have surrendered or be deemed to have surrendered the
instruments or certificates representing such Allowed Claim
or Interest (or, in the case of book entry securities, other
appropriate evidence of ownership) within twenty-four (24)
months after the Effective Date shall have such Claim or
Interest disallowed, shall receive no distributions on such
Claim or Interest under the Plan and shall be forever barred
from asserting any Claim or Interest. All such certificates
representing shares of New O'Brien Common Stock
distributable to holders of Old Common Stock shall be
redistributed as soon as practicable after the end of the
twenty-fourth month after the Effective Date to the other
holders of Old Common Stock as of the Distribution Record
Date who previously surrendered their certificates.
(d) Calculation of Distribution Amounts of Securities.
No fractional shares of New O'Brien Common Stock shall be issued
or distributed. Fractional shares of New O'Brien Common Stock
shall be rounded to the next greater or lesser whole number as
follows: (a) fractions of greater than 0.5 shall be rounded up to
the next greater whole number and (b) fractions of 0.5 or less
shall be rounded down to the next lesser whole number; provided
that in no event shall there be issued to holders of Allowed
Class 16 Interests under the Plan an aggregate number of shares
that is less than a total of 58.14% of the issued and outstanding
shares of New O'Brien Common Stock to be issued on and after the
Effective Date.
(e) Delivery of Distributions. Subject to Bankruptcy
Rule 9010, distributions to holders of Allowed Claims and
Interests shall be mailed or otherwise delivered to the address
of each such holder as set forth on the Schedules filed with the
Court unless superseded by the address as set forth on the proofs
of Claim or proofs of Interest filed by such holders (or at the
last known addresses of such a holder if no proof of Claim or
proof of Interest is filed or if O'Brien has been notified in
writing of a change of address). If any holder's distribution is
returned as undeliverable, no further distributions to such
holder shall be made unless and until Reorganized O'Brien is
notified of such holder's then current address, at which time all
missed distributions shall be made to such holder without
interest. Amounts in respect of undeliverable distributions
shall be held by Reorganized O'Brien until such distributions are
claimed. All Claims for undeliverable distributions shall be
made on or before the later of the second anniversary of the
Effective Date and, in the case of holders of Disputed Claims
that have not been Allowed, disallowed or withdrawn at such time,
the date ninety (90) days after such Claim is Allowed, disallowed
or withdrawn. After such date, all unclaimed property shall be
the property of and released to Reorganized O'Brien and the claim
of any holder with respect to such property shall be discharged
and forever barred.
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(f) Time Bar to Cash Payments. Checks issued by
Reorganized O'Brien in respect of Allowed Claims shall be null
and void if not negotiated within six (6) months after the date
of issuance thereof. Requests for reissuance of any check shall
be made directly to Reorganized O'Brien by the holder of the
Allowed Claim with respect to which such check originally was
issued. Any claim in respect of such a voided check shall be
made on or before the later of the second anniversary of the
Effective Date and ninety (90) days after the six-month period
following the date of issuance of such check. After such date,
all claims in respect of void checks shall be discharged and
forever barred.
(g) Cancellation of Old Indentures. Subject to
Sections 6.6(a) and 14.8, the Old Indentures and the respective
obligations of the Old Indenture Trustees thereunder shall be
canceled and discharged on the Effective Date and deemed null and
void and of no further force or effect thereafter, provided that
such cancellation shall not impair the rights of the Old
Indenture Trustees to compensation or reimbursement or their duty
to make distributions pursuant to the Plan.
6.7 Distribution Dates. Any distribution required to
be made under the Plan on a particular date shall be made on such
date or as soon as practicable thereafter.
6.8 Vesting of Property. Except as otherwise provided
in the Plan or the Confirmation Order, upon the Effective Date
all property of O'Brien's Estate, wherever situated, shall vest
in Reorganized O'Brien and shall be retained by Reorganized
O'Brien or transferred or distributed as provided in the Plan.
Upon the Effective Date, all property of the Estate, whether
retained by Reorganized O'Brien or transferred or distributed,
shall be free and clear of all Claims, Liens, and Interests,
except the Claims, Liens, and Interests of Creditors expressly
provided for in the Plan.
6.9 Consummation. Substantial consummation of the
Plan, within the meaning of Bankruptcy Code section 1101(2),
shall occur on the Effective Date.
6.10 NRG Supplemental Loan. If and to the extent that
the Cash Payment Fund is not or may not be sufficient to provide
for the payment, in full, of the Allowed amount of all Class 15
Claims or that funds required to make payments contemplated to be
made to the holders of Allowed Claims under the Plan, as it may
be amended from time to time, otherwise would not or may not be
available (a "Plan Cash Insufficiency"), NRG, in its sole
discretion, may make a loan (the "NRG Discretionary Supplemental
Loan") to Reorganized O'Brien on the Effective Date in an amount
to be determined by NRG in its sole discretion up to the amount
of the Plan Cash Insufficiency. Subject to Section 10.8(b), to
the extent that (i) the Administrative and Cure Claims Cash
Payment exceeds the sum of the Additional Cash Amount (if any),
any Excess Cash available to be applied pursuant to Section
6.12(c) and the Reserved Administrative and Cure Claims Cash
Amount, or (ii) the aggregate amount of proceeds of Designated
Receivables received by O'Brien or any of its Subsidiaries after
November 17, 1995 but before the Effective Date that is available
for distribution by Reorganized O'Brien on the Effective Date is
less than $2.24 million, NRG shall make a loan (the "NRG
Mandatory Supplemental Loan") to Reorganized O'Brien on the
Effective Date equal to the sum of (x) the amount by which the
Administrative and Cure Claims Cash Payment exceeds the sum of
the Additional Cash Amount (if any), any Excess Cash available to
be applied pursuant to Section 6.12(c) and Reserved
Administrative and Cure Claims Cash Amount, and (y) the amount by
which $2.24 million exceeds the aggregate amount received by
O'Brien or any of its Subsidiaries after November 17, 1995 but
before the Effective Date in respect of the Designated
Receivables that is available for distribution by Reorganized
O'Brien on the Effective Date. The NRG Supplemental Loan shall
be subordinate to the NRG New
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Loan and shall be made pursuant to the NRG Supplemental Loan
Documentation. NRG shall be granted a security interest in any
Designated Receivables existing on the Effective Date to secure
repayment of the NRG Mandatory Supplemental Loan, and any
payments received by Reorganized O'Brien after the Effective Date
in respect of such Designated Receivables shall be applied,
first, to pay down the NRG Mandatory Supplemental Loan then
outstanding.
6.11 Post-Petition Interest Fund. Each holder of an
Allowed Non-Reinstated Secured Claim and each holder of an
Allowed General Unsecured Claim in Class 15A, 15B or 15C will
receive its Pro Rata Share of the Post-Petition Interest Fund on
the Final Resolution Date (such Pro Rata Share to be determined
as if each holder of an Allowed Non-Reinstated Secured Claim and
the holders of General Unsecured Claims are entitled to receive
such distribution, whether or not any such class forfeits its
entitlement to such distribution provisions as provided below in
this Section 6.11); provided that, if (i) any holder of an
Allowed Non-Reinstated Claim fails to accept the Plan or objects
to any provision of the Plan at the time of the Confirmation
Hearing, (ii) the Class 15A Claims held by the holders of the
Secured Claims in Classes 2, 3, 5, 7, 9 and 11 in respect of the
Deficiency Amount of such Secured Claims fail to accept the Plan
or (iii) any of Class 15B or 15C fails to accept the Plan by the
requisite majorities in accordance with Bankruptcy Code section
1126(c), the amount of the distribution from the Post-Petition
Interest Fund to which any such holder or the holders in any such
non-accepting 15B or 15C Class (or, in the case of Class 15A,
such Class containing holders that so fail to accept the Plan)
shall be entitled to receive under the Plan, at the Proponents'
option, shall be reduced or eliminated to the extent that
distributions from the Post-Petition Interest Fund are not
required to be made in order for the Plan to be confirmable.
6.12 Deferral of DIP Loan and Wexford Administrative
Claim. (a) The DIP Loan Outstanding Amount shall be deferred and
shall not be repaid on the Effective Date (the "Deferred DIP Loan
Amount") except to the extent that Excess Cash remains available
to repay the DIP Loan Outstanding Amount and the Wexford
Administrative Claim after repaying the NRG Mandatory
Supplemental Loan, to the extent of any such Loan made to cover
the amounts specified in clause (y) of Section 6.10. To the
extent such Excess Cash is available to repay less than the full
amount of the DIP Loan Outstanding Amount and the Wexford
Administrative Claim, the amount so available shall be applied to
repay the DIP Loan Outstanding Amount and the Wexford
Administrative Claim on a proportional basis. Subject to the
provisions of Section 6.12(c) with regard to the application of
Excess Cash, the Deferred DIP Loan Amount shall be repaid on a
proportional basis (together with the Deferred Wexford Claim
Amount) when and as the New O'Brien Preferred Stock is required
or permitted to be redeemed pursuant to the New Certificate of
Designation or Section 6.12(c).
(b) The Wexford Administrative Claim shall be deferred
and shall not be paid on the Effective Date (the "Deferred
Wexford Claim Amount") except to the extent that Excess Cash
remains available to repay the Wexford Administrative Claim and
the DIP Loan Outstanding Amount after repaying the NRG Mandatory
Supplemental Loan, to the extent of any such Loan made to cover
the amounts specified in clause (y) of Section 6.10. To the
extent such Excess Cash is available to repay less than the full
amount of the Wexford Administrative Claim and the DIP Loan
Outstanding Amount, the amount so available shall be applied to
repay the DIP Loan Outstanding Amount and the Wexford
Administrative Claim on a proportional basis. Subject to the
provisions of Section 6.12(c) with regard to the application of
Excess Cash, the Wexford Administrative Claim shall be paid on a
proportional basis (together with the Deferred DIP Loan Amount)
when and as the New O'Brien Preferred Stock issued to Wexford or
any of its Affiliates in respect of the Wexford-Related Unsecured
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Claims is required or permitted to be redeemed pursuant to the
New Certificate of Designation or Section 6.12(c).
(c) If, after setting aside the Administrative and
Cure Claims Cash Payment, the aggregate amount of cash payments
to be made to the holders of Allowed Secured Claims receiving the
Cash Payoff Treatment under the Plan, the amount of the O'Brien
Parlin Reserve Contribution, the O'Brien Parlin Paydown
Contribution, the NRG New Loan Expenses, the Retained Working
Capital Amount, the General Unsecured Claims Cash Payment, the
Supplemental Interest Amount, and the Equityholders Cash Payment
and there remains available and unapplied any portion of the Cash
Purchase Price or Reorganized O'Brien otherwise then holds any
other available cash, or funds are released from the
Administrative and Priority Claims Reserve pursuant to Section
10.8, any such portion of the Cash Purchase Price, other
available cash and funds so released from the Administrative and
Priority Claims Reserve (collectively, "Excess Cash") shall be
applied as provided in this Section 6.12(c). All Excess Cash
shall be used, first, to fund the difference, if any, between the
Administrative and Cure Claims Cash Payment and the sum of the
Additional Cash Amount (if any) and the Reserved Administrative
and Cure Claims Cash Amount, second, to repay the NRG Mandatory
Supplemental Loan, and third, to repay NRG the then outstanding
amount owing in respect of the DIP Loan and pay Wexford the
remaining unpaid portion of the Wexford Administrative Claim,
which shall be on a proportional basis in the event the remaining
Excess Cash is not sufficient to pay the full amount outstanding
in respect of the DIP Loan and the portion of the Wexford
Administrative Claim remaining unpaid. If the remaining Excess
Cash is sufficient to pay in full the then outstanding amount of
the DIP Loan and any unpaid portion of the Wexford Administrative
Claim, any amounts of Excess Cash available after paying in full
such amounts will be applied in redemption of the New O'Brien
Preferred Stock distributed under the Plan.
Article VII: Cramdown
If any impaired class of Claims or Interests shall fail
to accept the Plan with the requisite majorities in accordance
with Bankruptcy Code section 1126(c), the Proponents reserve the
right to request that the Court determine that the Plan is fair
and equitable as to, and does not discriminate against, each such
Class and confirm the Plan in accordance with Bankruptcy Code
section 1129(b). The Proponents hereby request the Court to
determine that the Plan is fair and equitable as to, and does not
unfairly discriminate against, Class 19 in accordance with
Bankruptcy Code section 1129(b). If any holder of a Secured
Claim in Class 2, 3, 5, 7, 9 (other than the subclass treated in
Class 4.3) or 11 fails to accept the Plan or any of 15B or 15C
fails to accept the Plan by the requisite majorities in
accordance with Bankruptcy Code section 1126(c), (i) any such
holder of a Secured Claim shall receive the Collateral Putback
Treatment if and to the extent provided in any Treatment Election
Notice which may be given to such holder and (ii) at the
Proponents' option, the distributions from the Post-Petition
Interest Fund which the holders in any such non-accepting Class
are entitled to receive under Sections 5.1, 5.2, 5.4, 5.5, 5.7,
5.8, 5.12 or 5.13, as applicable, shall be reduced or eliminated
to the extent provided, in the case of distributions from the
Post-Petition Interest Fund, in Section 6.11. If the Class 15A
Claims held by the holders of the Secured Claims in Classes 2, 3,
5, 7 and 11 in respect of the Deficiency Amount of such Secured
Claims fail to accept the Plan, the distributions from the Post-
Petition Interest Fund which the holders in Class 15A are
entitled to receive under Section 5.1, at the Proponents' option,
shall be reduced or eliminated to the extent provided in Section
6.11.
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Article VIII: Executory Contracts
8.1 Rejection of Executory Contracts. Pursuant to the
Plan and Bankruptcy Code sections 365 and 1123(b)(2), each
executory contract or unexpired lease to which O'Brien is a party
that is listed on Schedule 8.1 hereto, and any Old Options, to
the extent that such Old Options constitute executory contracts
under Bankruptcy Code section 365 (the "Rejected Contracts")
shall be rejected, effective on the Effective Date. Any Claim
for damages arising from rejection of any Rejected Contract
pursuant to the Plan shall be forever barred unless a proof of
claim therefor in proper form is filed with the Court no later
than twenty days after notice of the Confirmation Date is given
to the non-debtor party to such Rejected Contract or such earlier
date as may be set forth in an order of the Bankruptcy Court.
8.2 Assumption of Executory Contracts. Pursuant to
sections 365 and 1123(b)(2) of the Bankruptcy Code, all executory
contracts and unexpired leases to which the Debtor is a party
that are not Rejected Contracts (the "Assumed Contracts") shall
be assumed, effective on the Effective Date. All payments
required by Bankruptcy Code section 365(b)(1)(A) or (B) shall be
made by Reorganized O'Brien on the Effective Date or as soon
thereafter as is practicable in such amount as may be determined,
in each instance, by agreement between NRG and the non-debtor
party to the contract or, in the case of any dispute, by Final
Order of the Court.
Article IX: Rights and Obligations of
Reorganized O'Brien as Plan Administrator
9.1 Appointment of Plan Administrator. Because the
Proponents have jointly determined by written notice filed with
the Court prior to entry of the Confirmation Order that the
duties and responsibilities of plan administrator shall be
performed by Reorganized O'Brien rather than an appointed plan
administrator, all responsibilities of plan administration
provided for herein shall be performed by Reorganized O'Brien.
9.2 Exculpation. No holder of a Claim or an
Interest, or representative thereof, shall have or pursue any
claim or cause of action (1) against Reorganized O'Brien for
making distributions in accordance with the Plan, holding or
administering the Distribution Reserves in accordance with the
Plan or for implementing the provisions of the Plan, or (2)
against any holder of a Claim or Interest for receiving or
retaining payments or other distributions as provided for by the
Plan.
9.3 Powers of Reorganized O'Brien. Pursuant to the
terms and provisions of the Plan and the Confirmation Order,
Reorganized O'Brien shall be empowered to (a) make distributions
contemplated by the Plan, including without limitation by holding
and administering the Distribution Reserves; (b) file and
prosecute objections to Disputed Claims (other than Disputed
Class 15 Claims); (c) employ, retain, or replace professionals to
represent it with respect to the fulfillment of its
responsibilities under the Plan and the Confirmation Order; and
(d) exercise such other powers as may be vested in Reorganized
O'Brien pursuant to an order of the Court or pursuant to the
Plan.
9.4 Duties of Reorganized O'Brien. Pursuant to and
subject to the terms and provisions of (and except as may
otherwise be provided in) the Plan, Reorganized O'Brien shall
have the duties of:
(a) carrying out the distribution provisions of the
Plan;
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(b) managing property to be distributed in a manner
designed to effectuate the Plan; and
(c) complying with all tax withholding and reporting
requirements imposed on it by any governmental unit.
Article X: Procedures for Resolving and Treating
Disputed Claims
10.1 Objection Deadline. Unless otherwise provided by
order of the Court, no objections to Claims that are Allowed
Claims on the Effective Date shall be filed after the Effective
Date. No later than 60 days after the Effective Date, objections
to Claims that are Disputed Claims on the Effective Date shall be
filed with the Court and served upon the holders of each of the
Disputed Claims.
10.2 Responsibility For Objection to Disputed Claims.
(a) Reorganized O'Brien. Reorganized O'Brien shall be
responsible for objecting to the allowance of, settling and
litigating any Disputed Claims (other than Disputed Class 15
Claims) following the Effective Date on behalf of Reorganized
O'Brien, the entire cost of which, including any fees and
expenses of its counsel and other professionals, shall be borne
by Reorganized O'Brien. Nothing herein shall affect the right of
any other party in interest to file an objection to any Disputed
Claim. NRG shall have the right to object to the allowance of
any Administrative Claim. None of the Proponents shall object to
the allowance of the Wexford Administrative Claim.
(b) Creditors' Committee. Notwithstanding anything
herein to the contrary, following the Effective Date, the
Creditors' Committee shall be responsible for objecting to the
allowance of, settling and litigating any Disputed Class 15
Claims on behalf of Reorganized O'Brien, the entire cost of
which, including the fees and expenses of its counsel and other
professionals (collectively, the "Objection Resolution
Expenses"), shall be funded through and paid from the Cash
Payment Fund. In connection with the prosecution of objections
to Class 15 Claims, the Creditors' Committee shall have the
exclusive right to assert all defenses, offsets, recoupments and
counterclaims, including without limitation defenses under
Section 502(d) of the Bankruptcy Code that are based upon claims
or causes of action retained by the Reorganized Debtor under
Section 14.3 or otherwise as a defense to the allowance of any
Class 15 Claim; provided that any settlement of counterclaims
asserted by the Creditors' Committee on behalf of Reorganized
O'Brien in accordance with the foregoing shall require the
consent of Reorganized O'Brien, and any disputes between the
Creditors' Committee and Reorganized O'Brien with respect to the
assertion and settlement of such counterclaims shall be resolved
by the Bankruptcy Court. It is understood that the Creditors'
Committee is intended to have the benefit of any such
counterclaim up to the amount of the respective Disputed Class 15
Claim and that Reorganized O'Brien is intended to have the
benefit of any such counterclaim in excess of the amount of the
respective Disputed Class 15 Claim. The Creditors' Committee
shall not object to any Claim acquired by Wexford or any
Affiliate of Wexford prior to the commencement of the
Confirmation Hearing except on the basis that all or any portion
of any such Claim should be disallowed because the Debtor's
records do not reflect the claimed amount as due and owing.
Reorganized O'Brien shall reasonably cooperate with the
Creditors' Committee in the Creditors' Committee's prosecution of
objections to the allowance of Disputed Class 15 Claims,
including by providing access to relevant documentation that the
Creditors' Committee reasonably determines is necessary to
prosecute objections to Disputed Class 15 Claims. The Objection
Resolution Expenses shall be paid by Reorganized O'Brien solely
from the Cash Payment
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Fund without the necessity of any approval by the Court or review
or other action by Reorganized O'Brien; provided that, at least
fifteen days prior to any payment being made by Reorganized
O'Brien in respect of any Objection Resolution Fees, the
Creditors' Committee shall file with the Court and serve a notice
(a "Fee Request Notice") setting forth the amount of Objection
Resolution Expenses requested to be paid and the period covered
thereby, and shall promptly provide to any of such parties who so
request a copy of a statement of services rendered setting forth
in appropriate detail a description of the services performed
during the period in question on the following parties: (i) each
holder of an Allowed Class 15A Claim, (ii) each holder of one of
the five largest Class 15B Claims, (iii) each Old Indenture
Trustee, (iv) Wexford and (v) Reorganized O'Brien; provided
further that, if any holder of a Class 15 Claim that has not then
been disallowed in full or withdrawn files with the Court and
serves on the Creditors' Committee and Reorganized O'Brien,
within ten days after the Creditors' Committee shall have filed
and served any Fee Request Notice in accordance with the
foregoing, an objection to the payment of any fees or expenses
that are the subject of such Fee Request Notice, Reorganized
O'Brien shall not make payment from the Cash Payment Fund the
amount as to which any such holder has so objected until such
objection is withdrawn or the Court shall have resolved the
objection. Reorganized O'Brien shall set aside in the Disputed
Claims Reserve such amount as the Creditors' Committee may
request to serve as a reserve for the payment of all Objection
Resolution Expenses projected to be incurred following the
Effective Date; provided that, promptly after the Final
Resolution Date, any remaining amount so reserved shall be
released and distributed to the holders of Allowed Class 15
Claims.
10.3 No Distributions Pending Allowance.
Notwithstanding any other provision of the Plan, no payments or
distributions shall be made with respect to a Disputed Claim
unless and until such Claim shall be Allowed by Final Order or
the time by which Reorganized O'Brien or the Creditors'
Committee, as applicable, is required to file an objection to
such Claim shall have passed without the timely filing of an
objection.
10.4 Distributions After Allowance. Payments and
distributions from Reorganized O'Brien to each holder of a
Disputed Claim, to the extent that it ultimately becomes an
Allowed Claim, shall be made in accordance with the provisions of
the Plan governing the Class of Claims to which the Disputed
Claim belongs. On the Distribution Date in respect of a Disputed
Claim that becomes an Allowed Claim after the Effective Date, any
Cash that would have been distributed in respect of the Disputed
Claim had it been an Allowed Claim at the Effective Date shall be
distributed, with interest thereon to the extent earned after the
Effective Date and before the Distribution Date, net of any taxes
paid pursuant to Section 10.9.
10.5 Treatment of Contingent Claims. Until such time
as a Contingent Claim becomes an Allowed Claim, such Claim shall
be treated as a Disputed Claim. In the case of the holder of a
Claim against the Debtor that has recourse against an Affiliate
of the Debtor or any collateral security provided by any
Affiliate of the Debtor, the Allowable amount of such claim shall
be estimated by the Court prior to or at the Confirmation Hearing
and shall be reduced by the present value, as determined by the
Court as of the Effective Date, of the amount or value that such
holder is expected to realize as a result of recourse to such
Affiliate or collateral security thereof.
10.6 Estimation of Claims. The Proponents may, prior
to the Confirmation Date, and Reorganized O'Brien may, at any
time thereafter, request that the Court estimate any Contingent
Claim pursuant to section 502(c) of the Bankruptcy Code. In the
event that the Court estimates any Contingent Claim, that
estimated amount will constitute either the
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Allowed amount of such Claim or a maximum limitation on such
Claim, as determined by the Court. If the estimated amount
constitutes a maximum limitation on such Claim, Reorganized
O'Brien or the Creditors' Committee, as applicable, may elect to
pursue any supplemental proceedings to object to or estimate for
allowance purposes any ultimate payment on such Claim.
10.7 Disputed Claims Reserve.
(a) From and after the Effective Date, distributions
in respect of the Class 15 Supplemental Payment and from the Cash
Payment Fund and the Post-Petition Interest Fund shall be
reserved by Reorganized O'Brien for the holders of Disputed Class
15 Claims and deposited in segregated accounts to be held and
administered by Reorganized O'Brien (the "Disputed Claims
Reserve"). The distributions so deposited in the Disputed Claims
Reserve shall be held in trust by Reorganized O'Brien for the
benefit of the holders of Class 15 Claims. Except to the extent
the Court shall determine that a good and sufficient reserve for
Disputed Class 15 Claims is less than the full amount thereof, in
determining the amount of the distributions due to the holders of
Allowed Class 15 Claims and the amount to be reserved for
Disputed Class 15 Claims, the appropriate calculations shall be
made as if all Disputed Claims were allowed as of the Effective
Date in the full amount claimed by the holders thereof (which, in
the case of Contingent Claims, shall be such maximum amount as
may be estimated by the Court prior to or at the Confirmation
Hearing). In the case of Disputed Class 15 Claims covered by any
insurance policy under which the Debtor is the insured, the
Debtor shall not be required to reserve an amount in excess of
the respective Debtor's self-insured retention liability in
respect of such Claim.
(b) In the case of a Claim that is asserted as an
Administrative Claim or Priority Claim but which Reorganized
O'Brien believes constitutes, in whole or in part, a General
Unsecured Claim, Reorganized O'Brien shall not be required to
reserve within the Disputed Claims Reserve for Disputed Class 15
Claims the amount of Cash that would have been distributable on
the Effective Date if such Claim then constituted an Allowed
Class 15 Claim, provided such Claim is treated as an Unresolved
Administrative and Priority Claim and a reserve therefor is
accordingly included in the Administrative and Priority Claims
Reserve.
(c) All cash held in the Disputed Claims Reserve shall
be invested in such investments as permitted under section 345 of
the Bankruptcy Code. All interest earned on such investments
shall be held in trust in the Disputed Claims Reserve and shall
be distributed only in the manner set forth below in this Section
10.7.
(d) To the extent that a Disputed Class 15 Claim is
Allowed after the Effective Date, the amount of Cash which the
holder of such Claim theretofore would have been entitled to
receive if such Claim had been an Allowed Class 15 Claim on the
Effective Date, together with interest earned on such Cash (net
of any taxes paid pursuant to Section 10.9), shall be released
from the Disputed Claims Reserve and distributed to such holder.
(e) If and to the extent the holders of Allowed Class
15 Claims shall not, and upon receipt of such distributions will
not, have received distributions under the Plan from the Cash
Payment Fund equal to the Required Unsecured Claims Payment
Amount, at the end of each calendar quarter following the
Effective Date and on the Final Resolution Date, Reorganized
O'Brien will distribute any amounts reserved from the Cash
Payment Fund (and any interest earned thereon, net of any taxes
paid pursuant to Section 10.9) and held in the Disputed Claims
Reserve in respect of Disputed Class 15 Claims that have been
disallowed by Final Order or withdrawn after the Effective Date
or, if applicable, the end of the calendar
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quarter following the Effective Date that immediately precedes
such calendar quarter to the then holders of Allowed Class 15
Claims based on their Pro Rata Share. At the end of each
calendar quarter following the Effective Date and on the Final
Resolution Date, Reorganized O'Brien will distribute any amounts
reserved in respect of the Class 15 Supplemental Payment (and any
interest earned thereon, net of any taxes paid pursuant to
Section 10.9) and held in the Disputed Claims Reserve in respect
of Disputed Class 15 Claims that have been disallowed by Final
Order or withdrawn after the Effective Date or, if applicable,
the end of the calendar quarter following the Effective Date that
immediately precedes such calendar quarter to the then holders of
Allowed Class 15 Claims (other than the Wexford-Related Unsecured
Claims) based on their Pro Rata Share. Following the
disallowance by Final Order or the withdrawal of any Disputed
Class 15 Claim after such time as the holders of Allowed Class 15
Claims shall have received distributions under the Plan from the
Cash Payment Fund equal to the Required Unsecured Claims Payment
Amount, Reorganized O'Brien will release the Cash held in the
Disputed Claims Reserve in respect of such Disputed Class 15
Claim (and any interest earned thereon, net of taxes paid
pursuant to Section 10.9) and deposit such amounts into the Post-
Petition Interest Fund. Promptly after all Disputed Class 15
Claims shall have been Allowed or disallowed by Final Order or
withdrawn after the Effective Date, Reorganized O'Brien shall
make a final recalculation of amounts reserved from the Cash
Payment Fund then held in the Disputed Claims Reserve and shall
distribute all such amounts (together with any interest earned
thereon net of taxes paid pursuant to Section 10.9) to the
holders of Allowed Class 15 Claims, to the extent such holders
shall not, and upon such distribution will not, have received
distributions under the Plan from the Cash Payment Fund equal to
the Required Unsecured Claims Payment Amount, and shall deposit
any remaining amounts into the Post-Petition Interest Fund.
Notwithstanding any provision to the contrary herein, interim
distributions from the Post-Petition Interest Fund may be made by
Reorganized O'Brien, if and to the extent requested by the
Creditors' Committee or ordered by the Court on motion of any
holder of an Allowed Class 15 Claim.
(f) Prior to the Effective Date, the Court shall
determine the maximum amount of Disputed Claims (including
Contingent Claims) to the extent necessary for Reorganized
O'Brien to calculate the amount of distributions to be held in
the Disputed Claims Reserve.
10.8 Administrative and Priority Claims Reserve.
(a) Subject to Section 10.8(b), the Administrative and
Priority Claims Reserve shall be established on the Effective
Date in an amount determined by the Court prior to the Effective
Date. The Administrative and Priority Claims Reserve shall serve
as the sole source of payment of all Unresolved Administrative
and Priority Claims that are determined by Final Order after the
Effective Date to be Allowed Claims, irrespective of the
aggregate amount at which the Unresolved Administrative and
Priority Claims ultimately are allowed by the Court. As
Unresolved Administrative and Priority Claims are determined by
Final Order to be Allowed Claims following the Effective Date,
the Allowed amount thereof or, in the case of Unresolved
Administrative and Priority Claims that ultimately are determined
to be Allowed Class 15 Claims, the amount distributable in
respect thereof in accordance with Section 10.7, to the extent
there are funds then remaining in the Administrative and Priority
Claims Reserve, shall be released from the Administrative and
Priority Claims Reserve and paid to the holder thereof. After
(i) the time shall have expired by which any holder of an
Administrative Claim or Priority Claim must file a proof of claim
or be forever barred, (ii) the Court shall have determined by
Final Order the Allowed amount of all Unresolved Administrative
and Priority Claims and (iii) the Allowed amount of all
Unresolved Administrative and Priority Claims shall have been
paid in full from the Administrative and Priority Claims Reserve,
any funds then remaining in the Administrative
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and Priority Claims Reserve shall be released therefrom and
applied as Excess Cash as provided in Section 6.12(c)).
(b) Notwithstanding anything herein to the contrary,
if the Administrative and Cure Claims Cash Payment exceeds the
sum of the Additional Cash Amount (if any), any Excess Cash
available to be applied pursuant to Section 6.12(c) on the
Effective Date and the Reserved Administrative and Cure Claims
Cash Amount (the amount of such excess being referred to as an
"Administrative Claims Shortfall") and, therefore, NRG is
required to make an NRG Mandatory Supplemental Loan pursuant to
Section 6.10 in an amount equal to the Administrative Claims
Shortfall (an "Administrative Shortfall Loan"), the time at which
all or a portion of the Administrative Shortfall Loan shall be
required to be made shall be deferred until after the Effective
Date, as follows: (i) the amount of the Administrative Shortfall
Loan required to be made on the Effective Date shall equal the
amount by which the Effective Date Administrative and Cure
Payments exceeds the sum of the Additional Cash Amount (if any),
any Excess Cash available to be applied pursuant to Section
6.12(c) on the Effective Date and the Reserved Administrative and
Cure Claims Cash Amount (the amount of such excess being referred
to as the "Effective Date Administrative Shortfall Loan," with
the amount of the Administrative Shortfall Loan in excess of the
Effective Date Administrative Shortfall Loan (the amount of such
excess being referred to as the "Deferred Administrative
Shortfall Amount") being deferred and potentially reduced as
provided below in clause (ii) of this Section 10.8(b), and
(ii) at such time or times as Unresolved Administrative and
Priority Claims become Allowed by Final Order after the Effective
Date (or in the case of such Claims that are Allowed, but not yet
due and payable on the Effective Date, at such times as such
Claims become due and payable after the Effective Date), and
provided that NRG shall not theretofore have made deferred
Administrative Shortfall Loans pursuant hereto in excess of the
Deferred Administrative Shortfall Amount, NRG shall be required
within 3 business days thereafter to make an advance to
Reorganized O'Brien in respect of the Administrative Shortfall
Loan pursuant to the NRG Supplemental Loan Documentation equal to
the amount at which such Unresolved Administrative and Priority
Claims have been so Allowed or become due and payable (less any
amount then available in the Administrative and Priority Claims
Reserve to pay such Claims), subject to the maximum amount
thereof established by the Court prior to the Effective Date in
connection with the fixing of the amount of the Administrative
and Priority Claims Reserve. Any such advance, when received by
Reorganized O'Brien, shall be promptly deposited in the
Administrative and Priority Claims Reserve. Notwithstanding
anything herein to the contrary, NRG in any event shall be
required to make the Administrative Shortfall Loan on the
Effective Date to the extent necessary to fund the payment of all
Cure Payments and Administrative Claims and Priority Claims that
are Allowed and due and payable on the Effective Date.
10.9 Payment of Taxes in Respect of the Distribution
Reserves. Reorganized O'Brien shall pay, or cause to be paid,
out of the interest earned on funds of each Distribution Reserve,
any tax imposed by any governmental unit on the income generated
by the funds held in that Distribution Reserve. Notwithstanding
anything in Section 10.7 or Section 10.8 to the contrary, prior
to the distribution of any amount in respect of interest earned
on funds held in a Distribution Reserve to holders of an Allowed
Claim, the amount of such interest shall be reduced by the amount
of such taxes so paid by Reorganized O'Brien. Reorganized
O'Brien shall also file or cause to be filed any tax or
information returns related to the Distribution Reserves that are
required by any governmental unit.
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Article XI: Conditions to Confirmation and Effective
Date
11.1 Conditions to Confirmation. Confirmation of the
Plan is subject to the prior or concurrent satisfaction or
fulfillment of the conditions precedent that the Confirmation
Order, shall have been entered by the Court no later than
February 28, 1996.
11.2 Conditions to Effective Date. The consummation of
the Plan on the Effective Date is subject to the prior or
concurrent satisfaction or fulfillment of each of the following
conditions precedent:
(a) all conditions to the obligations of the parties
in Article 6 of the Acquisition Agreement to consummate the
transactions to be consummated on the Closing Date
thereunder (other than satisfaction or waiver of all
conditions to the occurrence of the Effective Date
hereunder) shall have been satisfied or waived as provided
therein;
(b) all indentures, mortgages, security agreements and
other agreements and instruments to be delivered under or
necessary to effectuate the Plan and consummate the
transactions to be consummated at the Closing (as defined in
the Acquisition Agreement), including without limitation the
NRG New Loan Agreement, the Co-Investment Agreement, the
Management Agreement, and the Liquidating Asset Management
Agreement shall have been executed and delivered by the
Entities that are the parties thereto; and
(c) the Effective Date shall occur on or before March
15, 1996; provided that, if the Effective Date shall not
have occurred on or before March 15, 1996 solely because
ISRA Approval and/or BPU Approval shall not have been
received, the Effective Date shall occur on the earlier of
(i) five (5) Business Days after the first date on which
both ISRA Approval and BPU Approval shall have been received
or (ii) May 15, 1996.
11.3 Waiver of Conditions. The Proponents may waive
any condition or any portion of any condition set forth in this
Article XI at any time without notice and without leave of or
order of the Court.
Article XII: Effects of Confirmation and Effectiveness
of Plan
12.1 Discharge of Debtor. Any consideration
distributed under the Plan shall be in exchange for and in
complete satisfaction, discharge, and release of all Claims or
Interests of any nature whatsoever against the Debtor or any of
its assets or properties; and, except as otherwise provided
herein, upon the Effective Date, the Debtor shall be deemed
discharged and released to the fullest extent permitted by
section 1141 of the Bankruptcy Code from any and all 'debts' (as
that term is defined in Bankruptcy Code section 101(11) and
Claims that arise prior to the Effective Date, including but not
limited to debts of the kind specified in Bankruptcy Code section
502(g), 502(h), or 502(i), whether or not (a) a proof of Claim
based upon such debt is filed or deemed filed under section 501
of the Bankruptcy Code; (b) a Claim based upon such debt is
Allowed under section 502 of the Bankruptcy Code; or (c) the
holder of a Claim based upon such debt has accepted the Plan.
Effective as of the Effective Date, all holders of Claims and
Interests shall be precluded from asserting against the Debtor,
any of its assets or properties, or any property dealt with under
the Plan any other or further Claim based upon any act or
omission, transaction, or other activity of
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any kind or nature that occurred prior to the Effective Date,
whether or not a proof of claim has been filed, such Claim is
Allowed, or the holder of such Claim accepted the Plan.
12.2 Discharge of Liens. Except as otherwise provided
in the Plan or in any contract, instrument, release, indenture or
other agreement or document created in connection with the Plan,
on the Effective Date, all mortgages, deeds of trust, liens or
other security interests against the property of the Estate shall
be fully released and discharged automatically and without the
need for further action, and all of the rights, title and
interest of any holder of such mortgages, deeds of trust, liens
or other security interests will revert to Reorganized O'Brien
and its successors and assigns. Notwithstanding the foregoing,
each holder of a Claim in any of Classes 1 through 14 that is to
receive full payment of its Claim in Cash on the Effective Date,
in exchange for and as a condition to such holder's receiving
such payment, shall execute and deliver to Reorganized O'Brien a
Uniform Commercial Code termination statement, discharge of tax
Lien, or other documents and instruments, all in such form and
substance as the Proponents may reasonably require, reasonably
necessary to evidence of record the discharge of the Lien or
Liens securing such holder's Claim. If any such holder fails to
execute and deliver to Reorganized O'Brien any such documents or
instruments within 90 days after the tender thereof to such
holder, then the effect shall be the same as though such holder's
distribution had been tendered and remained unclaimed.
12.3 Injunction. Except as provided in the Plan or
Confirmation Order, as of the Effective Date, all Entities that
have held, currently hold or may hold a Claim or other debt or
liability that is discharged or an Interest or other right of an
equity security holder that is terminated pursuant to the terms
of the Plan are permanently restrained and enjoined from taking
any of the following actions on account of any such discharged
Claims, debts or liabilities or terminated Interests or rights:
(a) commencing or continuing in any manner any action or other
proceeding against the Debtor or its property; (b) enforcing,
attaching, collecting or recovering in any manner, any judgment,
award, decree or order against the Debtor or its property; (c)
creating, perfecting or enforcing any lien or encumbrance against
the Debtor or its property; (d) asserting a setoff, right of
subrogation or recoupment of any kind against any debt, liability
or obligation due to the Debtor or its property; and (e)
commencing or continuing any action, in any manner, in any place
that does not comply with or is inconsistent with the provisions
of the Plan. As of the Effective Date, all Entities that have
held, currently hold or may hold a Claim, demand, debt, right,
cause of action or liability that is released pursuant to this
Plan are permanently enjoined from taking any of the following
actions on account of such released claims, demands, debts,
rights, causes of action or liabilities: (i) commencing or
continuing in any manner any action or other proceeding; (ii)
enforcing, attaching, collecting or recovering in any manner any
judgment, award, decree or order; (iii) creating, perfecting or
enforcing any lien or encumbrance; (iv) asserting a setoff, right
of subrogation or recoupment of any kind against any debt,
liability or obligation due to any released entity; and (v)
commencing or continuing any action, in any manner, in any place
that does not comply with or is inconsistent with the provisions
of the Plan. By accepting distributions pursuant to the Plan,
each holder of an Allowed Claim or an Allowed Interest receiving
distributions pursuant to the Plan will be deemed to have
specifically consented to the injunctions set forth in this
Section.
12.4 Exculpations and Limitations of Liability. To the
fullest extent permitted under applicable law, the Debtor, NRG,
the Equity Committee, the Creditors' Committee, Wexford and their
respective directors, officers and employees (provided that, in
the case of the Debtor, only the current directors, officers and
employees), agents, advisors, attorneys and members and
professionals, acting in such capacity, will neither have nor
incur any liability to any Entity for any act taken or omitted to
be taken in connection with or
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related to the Chapter 11 Case or the formulation, preparation,
dissemination, implementation, confirmation or consummation of
the Plan, the Disclosure Statement or any contract, instrument,
or other agreement or document created or entered into, or any
other act taken or omitted to be taken in connection with the
Plan or the Chapter 11 Case; provided, however, that the
foregoing provisions of this Section 12.4 will have no effect on:
(1) the liability of any Entity that would otherwise result from
the failure to perform or pay any obligation or liability under
the Plan or any contract, instrument, or other agreement or
document to be delivered in connection with the Plan; and (2) the
liability of any Entity that would otherwise result from any such
act or omission to the extent that such act or omission is
determined in a Final Order to have constituted gross negligence
or willful misconduct.
Article XIII: Retention of Jurisdiction
13.1 Retention of Jurisdiction. Pursuant to sections
1334 and 157 of title 28 of the United States Code, from and
after the Confirmation Date, the Court shall retain and have
jurisdiction of all matters arising in, arising under, and
related to the Chapter 11 Case and the Plan pursuant to, and for
the purposes of, sections 105(a) and 1142 of the Bankruptcy Code
and for, among other things, the following purposes:
(a) to hear and determine objections to allowance of
Claims and Interests and any actions pursuant to Bankruptcy
Code sections 510 and 542 through 553;
(b) to hear and determine any and all adversary
proceedings, applications or litigated matters pending on
the Effective Date or brought after the Effective Date;
(c) to hear and determine any and all applications for
substantial contribution and for Professional Fees;
(d) to hear and determine, pursuant to the provisions
of section 505 of the Bankruptcy Code, all issues related to
the liability of the Debtor for any tax incurred prior to
the Effective Date;
(e) to enable Reorganized O'Brien to commence and
prosecute any and all proceedings relating to Claims or
causes of action which arose prior to the Effective Date or
to recover any transfers, assets, properties or damages to
which it may be entitled;
(f) to allow or disallow any Disputed Claim;
(g) to enter and implement such orders as may be
appropriate in the event confirmation of the Plan is for any
reason stayed, reversed, revoked, modified or vacated;
(h) to modify any provision of the Plan to the extent
permitted by the Bankruptcy Code and to correct any defect,
cure any omission or reconcile any inconsistency in the Plan
or the Confirmation Order as may be necessary to carry out
the purposes and intent of the Plan;
(i) to hear and determine any dispute arising under
the Plan or the Transaction Documents, or concerning the
conduct of any parties in interest with respect to the Plan
and the Transaction Documents or the conduct of the Chapter
11 Case, its implementation and execution of any necessary
documents thereunder; and to
39
<PAGE>
hear and determine any requests to amend, modify or correct
the Plan, provided that such matters are brought to the
Court before substantial consummation as defined by
Bankruptcy Code section 1101(2), and subject further to the
restrictions provided by Bankruptcy Code section 1127(b);
(j) to enforce and implement the terms of the Plan,
including the consummation thereof and the making of all
payments required thereunder;
(k) to hear and determine any motion to assume,
reject, or assign an executory contract or unexpired lease
pursuant to Bankruptcy Code section 365;
(l) to enforce all discharge provisions of the Plan
and Bankruptcy Code sections 1141 and 524 through
appropriate means, including without limitation the granting
of injunctive relief; and
(m) to enter such orders as may be necessary or
appropriate in furtherance of consummation and
implementation of the Plan.
13.2 Failure of Court to Exercise Jurisdiction. If the
Court abstains from exercising, or declines to exercise,
jurisdiction or is otherwise without jurisdiction over any matter
arising in, arising under, or related to the Chapter 11 Case
including the matters set forth in Section 13.1 of the Plan, this
Article XIII shall have no effect upon and shall not control,
prohibit, or limit the exercise of jurisdiction by any other
court having jurisdiction with respect to such matter.
Article XIV: Miscellaneous Provisions
14.1 Compliance With Tax Requirements. In connection
with the Plan, Reorganized O'Brien shall comply with all
withholding and reporting requirements imposed by federal, state,
local and foreign taxing authorities, and all distributions
hereunder shall be subject to such withholding and reporting
requirements. Creditors may be required to provide certain tax
information as a condition to receipt of distributions pursuant
to the Plan.
14.2 Post-Confirmation Date Fees and Expenses of
Professional Persons. After the Effective Date, Reorganized
O'Brien shall, in the ordinary course of business and without the
necessity for any approval by the Court, pay the reasonable fees
and expenses of persons employed by Reorganized O'Brien related
to implementation and consummation of the Plan; provided,
however, that no such fees and expenses shall be paid except upon
receipt by Reorganized O'Brien of a detailed written invoice.
14.3 Retention of Avoidance Actions. Pursuant to
Bankruptcy Code section 1123(b)(3), following the Effective Date
the Debtor shall retain all claims or causes of action included
in its Estate, including without limitation any avoidance actions
under sections 544, 549 and 550 of the Bankruptcy Code.
14.4 Binding Effect. The Plan shall be binding upon
and inure to the benefit of the Debtor, the holders of Claims or
Interests (whether or not such holders have filed a proof of
Claim or Interest or have accepted the Plan), NRG, the Committees
and Wexford and their respective successors and assigns;
provided, however, that if the Plan is not confirmed, the Plan
shall be deemed null and void and nothing contained herein shall
be deemed (i) to constitute a waiver or release of any Claims by
the Debtor or any other Entity,
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<PAGE>
(ii) to prejudice in any manner the rights of the Debtor or any
other Entity, or (iii) to constitute any admission by the Debtor
or any other Entity.
14.5 Governing Law. Unless a rule of law or procedure
is supplied by federal law (including the Bankruptcy Code and the
Bankruptcy Rules) or the Delaware General Corporation Law or the
law of the jurisdiction of organization of any entity formed or
to be formed pursuant to the Plan, the internal laws of the State
of New Jersey shall govern the construction and implementation of
the Plan and any agreements, documents, and instruments executed
in connection with the Plan or the Chapter 11 Case, except as may
otherwise be provided in such agreements, documents, and
instruments.
14.6 Amendments and Modifications. The Proponents may,
in accordance with section 1127(a) of the Bankruptcy Code, amend
or modify the Plan prior to the entry of the Confirmation Order.
Any such amendment or modification proposed prior to entry of the
Disclosure Statement Order shall not require the consent of the
Equity Committee or Wexford; provided, however, that, if any such
amendment or modification is made without the consent of the
Equity Committee or Wexford, such entity shall be eliminated as a
proponent of the Plan. After the entry of the Confirmation
Order, the Proponents may, in accordance with section 1127(b) of
the Bankruptcy Code, amend or modify the Plan, or remedy any
defect or omission or reconcile any inconsistency in the Plan in
such manner as may be necessary to carry out the purpose and
intent of the Plan.
14.7 Revocation. Without limiting the application of
Section 14.6 and subject to the obligations of O'Brien and NRG
under the Acquisition Agreement and NRG's agreement set forth in
a letter dated September 29, 1995 addressed to the Honorable
Rosemary Gambardella and counsel to the Debtor (the "Bid
Letter"), the Proponents reserve the right to revoke and withdraw
the Plan prior to entry of the Confirmation Order.
Notwithstanding the foregoing, unless the Proponents, by prior
written notice to the Court, shall have waived the effectiveness
of this provision, the Proponents shall be deemed to have revoked
the Plan if the Effective Date shall not have occurred on or
before the date specified in Section 11.2(c). If the Proponents
revoke or withdraw the Plan pursuant to this Section 14.7, then
the Plan shall be deemed null and void and, in such event,
nothing contained herein shall be deemed to constitute a waiver
or release of any Claims by or against the Debtor or any Entity
in any further proceedings involving the Debtor. Notwithstanding
anything to the contrary set forth herein, nothing contained
herein shall be construed to modify any provision of the
Acquisition Agreement or the Bid Letter or any of NRG's rights
and obligations that may be expressly set forth in the
Acquisition Agreement or Bid Letter.
14.8 No Modification of Subordination Rights.
Notwithstanding any provision contained herein to the contrary,
nothing in the Plan shall modify or be deemed to modify any
subordination rights in favor of the holders of Senior Debt under
the Old Indentures, and any distributions from the Class 15C Cash
Payment Fund that, if made to the holders of Old Subordinated
Noteholder Claims in accordance with Section 5.13, would violate
the subordination provisions of the Old Indentures shall be
deemed automatically assigned, and shall be paid by Reorganized
O'Brien directly, to the holders of Senior Debt entitled thereto
in accordance with the applicable terms of the Old Indentures.
14.9 Severability. Should any provision in the Plan be
determined to be unenforceable, such determination shall in no
way limit or affect the enforceability and operative effect of
any other provisions of the Plan.
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14.10 De Minimis Distributions. No distribution of
less than ten dollars ($10.00) in Cash shall be made to any
holder of an Allowed Claim. Such undistributed amount will be
the property of and released to Reorganized O'Brien.
14.11 Interpretation and Rules of Construction. Unless
otherwise specified, all section, article, schedule and exhibit
references in the Plan are to the respective section in, article
of, or schedule or exhibit to, the Plan, as the same may be
amended, waived, or modified from time to time. The rules of
construction contained in section 102 of the Bankruptcy Code
shall apply to the construction of the Plan.
14.12 Other Terms. The words 'herein,' 'hereof,'
'hereto,' 'hereunder,' and others of similar import refer to the
Plan as a whole and not to any particular section, subsection, or
clause contained in the Plan.
14.13 Headings. Headings are used in the Plan for
convenience of reference only, and shall not constitute a part of
the Plan for any other purpose. Headings shall not limit or
otherwise affect the provisions of the Plan.
14.14 Incorporation of Exhibits. Each Schedule and
Exhibit to the Plan annexed hereto and each of the Plan Documents
are incorporated into and are a part of the Plan as if set forth
in full herein.
14.15 Termination of Existence of Committees. The
existence of the Equity Committee shall terminate on the
Effective Date. The Creditors' Committee shall continue in
existence following the Effective Date for the sole and limited
purpose of performing its obligations under Section 10.2(b) of
the Plan; provided that no expenses or other amounts shall be
payable hereunder for services rendered or expenses incurred
after the Effective Date, to or for the benefit of the Creditors'
Committee or any member thereof other than the Objection
Resolution Expenses that are payable pursuant to Section 10.2(b).
Upon the Final Resolution Date, the existence of the Creditors'
Committee shall terminate.
42
Dated at New York, New York, this 31st day of January, 1996.
O'BRIEN ENVIRONMENTAL ENERGY, INC.
By /s/ John B. Kelly
Name: John B. Kelly
NRG ENERGY, INC.
By /s/ Craig Mataczynski
Name: Craig A. Mataczynski
OFFICIAL COMMITTEE OF EQUITY
SECURITY HOLDERS OF O'BRIEN
ENVIRONMENTAL ENERGY, INC.
By /s/ Larry Littman
Name: Larry Littman
WEXFORD MANAGEMENT CORP.
By /s/ Spyros S. Skouras, Jr.
Name: Spyros S. Skouras, Jr.
SILLS, CUMMIS, ZUCKERMAN, RADIN,
TISCHMAN, EPSTEIN & GROSS, P.C.
One Riverfront Plaza, 13th Floor
Newark, NJ 07102-5400
By /s/ Jack Zackin
Name: Jack Zackin
Attorneys for O'Brien Environmental
Energy, Inc.
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue
New York, NY 10166
By /s/ Michael A. Rosenthal P.C.
Name: Michael A. Rosenthal
P.C.
Attorneys for NRG Energy, Inc.
43
<PAGE>
MARCUS MONTGOMERY P.C.
53 Wall Street, 8th Floor
New York, NY 10005-2815
By /s/ Claude D. Montgomery
Name: Claude D. Montgomery
Attorneys for the Official
Committee of Equity Security
Holders
ROSENMAN & COLIN LLP
575 Madison Avenue
New York, NY 10022-2585
By /s/ Jeff J. Friedman
Name: Jeff J. Friedman
Attorneys for Wexford Management Corp.
44
<PAGE>
Exhibit 2.4
NRG ENERGY, INC.
1221 NICOLLET MALL, SUITE 700
MINNEAPOLIS, MN 55403
As of April 26, 1996
O'Brien Environmental Energy, Inc.
225 South 8th Street
Philadelphia, PA 19106
Dear Sirs:
This will confirm the understanding and agreement
between O'Brien Environmental Energy, Inc. ("O'Brien") and NRG
Energy, Inc. ("NRG"), with respect to the amendment of certain
provisions of the Amended and Restated Stock Purchase and
Reorganization Agreement between O'Brien and NRG dated as of
January 31, 1996 (the "Agreement") regarding the payment of the
Equityholders Cash Payment (as such term is defined in the Plan)
pursuant to and in furtherance of the objectives of section
6.6(a) of the Plan:
1. Capitalized terms used herein without definition
shall have the respective meanings assigned to them in the
Agreement.
2. The second "Whereas" clause of the Agreement is
hereby amended by deleting such clause in its entirety and
inserting the following language:
"WHEREAS, subject to the terms and conditions set forth herein,
and pursuant to the Composite Fourth Amended and Restated Plan of
Reorganization for the Company proposed by the Company, the
Purchaser, Wexford and the Equity Committee (as each such term is
defined below) dated January 31, 1996 (as confirmed by the
Bankruptcy Court, the "Plan"), the Purchaser desires that it or
its designee acquire (i) the Purchased Old Common Stock (as
defined below), (ii) 30.913% of the issued and outstanding
capital stock of the Company as reorganized under the Plan on the
Effective Date thereof (the Company as so reorganized, the
"Reorganized Company") in exchange for the O'Brien Cash Equity
Contribution, (iii) 10.947% of the issued and outstanding
<PAGE>
capital stock of the Reorganized Company in exchange for the
Purchased Old Common Stock acquired by the Purchaser pursuant to
the terms hereof, and (iv) all of the capital stock of each of
the Acquired Subsidiaries (as defined below) (the acquisition of
the Purchased Old Common Stock, the stock of the Reorganized
Company and the stock of the Acquired Subsidiaries is hereinafter
referred to as the "Acquisition");"
3. The definition of the term "Cash Equity
Contribution" is hereby amended by deleting such definition in
its entirety and inserting the following language:
""Cash Equity Contribution" shall mean that portion of
the Cash Purchase Price funded by a cash payment by the Purchaser
in respect of certain of the Purchased Shares, as defined below,
in the amount of $28,678,062.92 (such amount including
$417,062.92 as provided for in Section 2.5) subject to adjustment
as provided in Sections 2.4 and 2.5 and increased by the amount,
if any, of the Additional NRG Equity Contribution. The Cash
Equity Contribution will be comprised of the O'Brien Cash Equity
Contribution and the Purchased Subsidiary Cash Equity
Contribution, each term as defined below."
4. A new definition is hereby added to Section 1.1 of
the Agreement following the definition of "NRG Newark Cogen Loan
Documentation" as follows:
""O'Brien Cash Equity Contribution" shall equal
$21,178,062.92 (such amount including $417,062.92 as provided for
in Section 2.5), subject to adjustment as provided in Sections
2.4 and 2.5 and increased by the amount, if any, of the
Additional NRG Equity Contribution."
5. A new definition is hereby added to Section 1.1 of
the Agreement following the definition of "Purchased Company
Shares" as follows:
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<PAGE>
""Purchased Old Common Stock" shall mean 15.845% of the
Old Common Stock (as such term is defined in the Plan) issued and
outstanding immediately prior to the Effective Date of the Plan,
being held pro-rata by each of the holders of the Old Common
Stock."
6. A new definition is hereby added to Section 1.1 of
the Agreement following the definition of "Purchased Shares" as
follows:
""Purchased Subsidiary Cash Equity Contribution" shall
equal $7,500,000."
7. Section 2.1 of the Agreement is hereby amended by
deleting the portion of such Section following "on the Closing
Date," in the third line thereof, and inserting the following
language:
"each of the holders of the Old Common Stock, as such
term is defined in the Plan, will sell to the Purchaser or its
designee, as relevant, and the Purchaser or its designee shall
purchase from each such holder, 100% of such holder's Purchased
Old Common Stock in exchange for a pro-rata portion of the
Equityholders Cash Payment, and the Reorganized Company shall
issue or sell to the Purchaser or its designee, as relevant, and
the Purchaser or its designee shall acquire from the Reorganized
Company, (i) 30.913% of the Purchased Company Shares in exchange
for the O'Brien Cash Equity Contribution, (ii) 10.947% of the
Purchased Company Shares in exchange for the Purchased Old Common
Stock and (iii) the Purchased Subsidiary Shares in exchange for
the Purchased Subsidiary Cash Equity Contribution (collectively,
the "Purchased Shares"). At the Closing, (a) the Purchased
Company Shares shall constitute 41.86% of the issued and
outstanding shares of New Common Stock and (b) the Purchased
Subsidiary Shares shall constitute 100% of the issued and
outstanding shares of capital stock of the Acquired Subsidiaries.
The Stock Transfer Agent will act as the agent of the Purchaser
or its designee to receive the Purchased Old Common Stock from
the holders thereof and to transfer such Purchased Old Common
Stock to the Company on the Purchaser's or its
3
<PAGE>
designee's behalf in exchange for 10.947% of the Purchased
Company Shares received by the Purchaser or its designee on the
Closing Date."
8. Section 2.2 of the Agreement is hereby amended by
deleting such Section in its entirety and inserting the following
language:
"SECTION 2.2 Consideration.
(a) On the Closing Date, the Purchaser shall pay or
cause to paid (1) to the Stock Transfer Agent on behalf of the
holders of Old Common Stock, the Equityholders Cash Payment as
consideration and in exchange for the Purchased Old Common Stock
and (2) to the Company, $97,678,062.92 (such amount including
$417,062.92 as provided for in Section 2.5) for distribution to
the Claimants in accordance herewith and with the Plan and the
Confirmation Order. The amount described in (2) above may be (i)
reduced by the NRG New Loan Expenses of up to $100,000, (ii)
increased or reduced, as applicable, by the adjustments to the
Cash Equity Contribution provided for in Sections 2.4, 2.5 and
2.8, (iii) increased by the amount of any Additional NRG Equity
Contribution, and (iv) increased by the aggregate amount of any
NRG Mandatory Supplemental Loan; provided that the NRG Mandatory
Supplemental Loan shall be deferred until after the Effective
Date as and to the extent provided in Section 10.8(b) of the Plan
(the amounts described in (1) and (2) above, as they may be
increased or decreased pursuant hereto, the "Cash Purchase
Price").
(b) The Equityholders Cash Payment shall be paid by the
wire transfer of immediately available funds to a bank account
designated in writing by the Stock Transfer Agent and the
remainder of the Cash Purchase Price shall be paid by the wire
transfer of immediately available funds to a bank account
designated in writing by the Company, reduced by the Holdback
Escrow Amount, if any, and by the amount of any then outstanding
DIP Loan that the Purchaser elects, pursuant to Section 3.8, to
offset against the Cash Purchase Price, subject to the terms of
the DIP Loan Agreement and the Plan."
4
<PAGE>
9. Except as expressly set forth above, the Agreement
is not affected hereby and remains in full force and effect. The
holders of Old Common Stock are hereby recognized to be the third-
party beneficiaries of this Amendment.
If the foregoing correctly sets forth the understanding
and agreement between NRG and O'Brien, please so indicate in the
space provided for that purposes below, whereupon this letter
shall constitute a binding agreement as of the date first above
written.
O'BRIEN ENVIRONMENTAL ENERGY, INC.
By: /s/ John B. Kelly
Name: John B. Kelly
Title: Chief Administrative
Officer
NRG ENERGY, INC.
By: /s/ Craig Mataczynski
Name: Craig Mataczynski
Title: Vice President
5
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Exhibit 3.1
AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
OF
NRG GENERATING (U.S.) INC.
NRG Generating (U.S.) Inc. (the "Corporation"), formerly
known as O'Brien Environmental Energy, Inc., a corporation
organized and existing under the laws of the State of Delaware,
hereby files this Amended and Restated Certificate of
Incorporation to amend Article Four from the Amended and Restated
Certificate of Incorporation filed on April 30, 1996 and to
restate in its entirety its Certificate of Incorporation. The
date of filing of its original Certificate of Incorporation with
the Secretary of State, under its original name of O'Brien Energy
Systems, Inc., was December 5, 1983. The Corporation hereby
certifies as follows:
1. This Amended and Restated Certificate of Incorporation
restates the Certificate of Incorporation of the Corporation to
read as set forth herein.
2. The text of the Certificate of Incorporation as
heretofore amended or supplemented is hereby corrected to
properly restate in Article Four the total number of authorized
shares of stock of the Corporation and is hereby further restated
to read in full as follows:
FIRST: The name of the Corporation is:
NRG GENERATING (U.S.) INC.
SECOND: The address of the registered office of the
Corporation in the State of Delaware is Corporation Trust Center,
1209 Orange Street in the City of Wilmington, County of New
Castle, and the name of its registered agent at that address is
The Corporation Trust Company.
<PAGE>
THIRD: The purpose of the Corporation is to engage
in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: (a) The total number of shares of stock which
the Corporation is authorized to issue is seventy million
(70,000,000), consisting of fifty million (50,000,000) shares of
common stock, having a par value of one cent ($0.01) per share
and twenty million (20,000,000) shares of Preferred Stock, having
a par value of one cent ($0.01) per share.
(b) The Corporation shall not issue any nonvoting
equity securities provided that this provision, which is included
in this Certificate of Incorporation in compliance with Section
1123(a)(6) of the United States Bankruptcy Code of 1978, as
amended, shall have no force or effect beyond that required by
such Section 1123(a)(6) and shall be effective only for so long
as such Section 1123(a)(6) is in effect and applicable to the
Corporation.
(c) Shares of Preferred Stock may be issued from time
to time in one or more series. The Board of Directors is hereby
authorized to fix the voting rights, designations, powers,
preferences and the relative, participating, optional or other
rights, if any, and the qualifications, limitations or
restrictions thereof, of any wholly unissued series of Preferred
Stock; and to fix the number of shares constituting such series
(but not below the number of shares thereof then outstanding).
FIFTH: (a) Except as provided below, the bylaws of
the Corporation may only be made, repealed, altered, amended or
rescinded by (i) the stockholders of the Corporation by the vote
of the holders of not less than sixty percent (60%) of the total
voting power of all outstanding shares of voting stock of the
Corporation or (ii) the directors of the Corporation by
2
<PAGE>
the vote of a majority of the entire board of directors present
at a meeting at which a quorum is present.
(b) Section 1.7(b) (regarding action by written
consent of stockholders); Section 1.11 (regarding notice of
stockholder nominations and other stockholder business); Section
2.1(b) (regarding the number of directors); Section 2.10
(regarding Independent Directors); and Section 3.2 (regarding the
Independent Directors committee), of the bylaws of the
Corporation may only be repealed, altered, amended or rescinded
by (i) the stockholders of the Corporation by a vote of the
holders of not less than seventy-five percent (75%) of the total
voting power of all outstanding shares of voting stock of the
Corporation or (ii) the directors of the Corporation by the
affirmative vote of no fewer than the lesser of all of the
directors then in office or six (6) of the Corporation's
directors; provided however, that Section 2.10 (regarding
Independent Directors) and Section 3.2 (regarding the Independent
Directors Committee) may be altered or amended pursuant to the
provisions of subparagraph (a) of Article Fifth to the extent
necessary to comply with the provisions of the applicable listing
requirements of any exchange or market system over which the
securities of the Corporation are to be traded.
SIXTH: A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director
of the Corporation
3
<PAGE>
shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended. Any repeal
or modification of this provision shall not adversely affect any
right or protection of a director of the Corporation existing at
the time of such repeal or modification.
SEVENTH: (a) Until April 30, 2002, (i) any attempted
sale, transfer, assignment, conveyance, grant, pledge, gift or
other disposition of any share or shares of stock of the
Corporation (within the meaning of Section 382 of the Internal
Revenue Code of 1986 (the "Code")), or any option or right to
purchase such stock, as defined in the Treasury Regulations under
Section 382 of the Code, to any person or entity (or group of
persons or entities acting in concert) who either directly or
indirectly owns or would be treated as owning, or whose shares
are or would be attributed to any person or entity who directly
or indirectly owns or would be treated as owning, in either case
prior to the purported transfer and after giving effect to the
applicable attribution rules of the Code and applicable Treasury
Regulations, 5 percent or more of the value of the outstanding
stock of the Corporation or otherwise treated as a 5 percent
stockholder (within the meaning of Section 382 of the Code),
regardless of the percent or the value of the stock owned, shall
be void ab initio insofar as it purports to transfer ownership or
rights in respect of such stock to the purported transferee and
(ii) any attempted sale, transfer, assignment, conveyance, grant,
gift, pledge or other disposition of any share of stock of the
Corporation (within the meaning of Section 382 of the Code) or
any option or right to purchase such stock, as defined in the
Treasury Regulations under Section 382 of the Code, to any person
or entity (or group of persons or entities acting in concert) not
described in clause (i) who directly or indirectly would own, or
whose shares would be attributed to any person or entity who
directly or indirectly would own in each case as a result of the
purported transfer and after giving
4
<PAGE>
effect to the applicable attribution rules of the Code and
applicable Treasury Regulations, 5 percent or more of the value
of any of the stock of the Corporation (or otherwise treated as a
5-percent (5%) stockholder within the meaning of Section 382 of
the Code), shall, as to that number of shares causing such person
or entity to be a 5-percent stockholder, be void ab initio
insofar as it purports to transfer ownership or rights in respect
of such stock to the purported transferee; provided, however,
that neither of the foregoing clauses (i) and (ii) shall prevent
a valid transfer if (A) the transferor obtains the written
approval of the board of directors of the Corporation which
approval shall not be unreasonably withheld and provides the
Corporation with an opinion of counsel reasonably satisfactory to
the Corporation .that (assuming, as of the date of such opinion,
the full exercise of (i) all warrants issued under, and (ii) any
options granted pursuant to any stock option plan of the
Corporation) the transfer shall not result in an ownership change
within the meaning of Section 382 of the Code and any successor
thereto or (B) a tender offer, within the meaning of the
Securities Exchange Act of 1934, as amended, and pursuant to the
rules and regulations thereof, is made by a bona fide third-party
purchaser to purchase at least sixty-six and two-thirds percent
(66-2/3%) of the issued and outstanding common stock of the
Corporation and the offeror (i) agrees to effect, within ninety
(90) days of the consummation of the tender offer, a back end
merger in which all non-tendering stockholders would receive the
same consideration as paid in the tender offer, and (ii) has
received the tender of sufficient shares to effect such merger.
Without limiting or restricting in any manner the effectiveness
of the foregoing provisions, the Corporation and any transferor
may rely and shall be protected in relying on the Corporation's
stockholder lists and stock transfer records for all purposes
relating to any opinion required hereunder.
5
<PAGE>
(b) In the absence of specific board approval, a
purported transfer of shares in excess of the shares that can be
transferred pursuant to this Article SEVENTH (the "Prohibited
Shares") to the purported acquiror (the "Purported Acquiror") is
not effective to transfer ownership of such Prohibited Shares.
On demand by the Corporation, which demand must be made within
thirty (30) days of the time the Corporation learns of the
transfer of the Prohibited Shares, a Purported Acquiror must
transfer any certificate or other evidence of ownership of the
Prohibited Shares within the Purported Acquiror's possession or
control, together with any dividends or other distributions
("Distributions") that were received by the Purported Acquiror
from the Corporation with respect to the Prohibited Shares, to an
agent designated by the Corporation (the "Agent"). The Agent
will sell the Prohibited Shares in an arm's length transaction
(over a stock exchange, if possible), and the Purported Acquiror
will receive an amount of sales proceeds not in excess of the
price paid or consideration surrendered by the Purported Acquiror
for the Prohibited Shares (or the fair market value of the
Prohibited Shares at the time of an attempted transfer to the
Purported Acquiror by gift, inheritance, or a similar transfer).
If the Purported Acquiror has resold the Prohibited Shares prior
to receiving the Corporation's demand to surrender the Prohibited
Shares to the Agent, the Purported Acquiror shall be deemed to
have sold the Prohibited Shares as an agent for the initial
transferor, and shall be required to transfer to the Agent any
proceeds of such sale and any Distributions.
(c) If the initial transferor can be identified, the
Agent will pay to it any sales proceeds in excess of those due to
the Purported Acquiror, together with any Distributions received
by the Agent. If the initial transferor cannot be identified
within ninety (90) days, the Agent may pay any such amounts to a
charity of its choosing. In no event shall amounts paid to the
Agent inure to the benefit of the Corporation or the Agent, but
such amounts may be used to
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cover expenses of the Agent in attempting to identify the initial
transferor. If the Purported Acquiror fails to surrender the
Prohibited Shares within the next thirty (30) business days from
the demand by the Corporation, then the Corporation will
institute legal proceedings to compel the surrender. The
Corporation shall be entitled to damages, including reasonable
attorneys' fees and costs, from the Purported Acquiror, on
account of such purported transfer.
EIGHTH: The affirmative vote of the holders of
greater than sixty-six and two thirds percent (66-2/3%) of the
total voting power of all outstanding shares of voting stock of
the Corporation shall be required for the approval of any
proposal (1) that the Corporation merge or consolidate with any
corporation, person, partnership, trust or other entity
("Entity"), or (2) that the Corporation sell or exchange all or
substantially all of its assets or business, or (3) that the
Corporation issue or deliver any stock or other securities of its
issue in exchange or payment for any properties or assets of any
Entity or securities issued by any Entity, and to effect such
transaction the approval of stockholders of the Corporation is
required by law or by any agreement between the Corporation and
any national securities exchange.
NINTH: (a) Any attempted sale, transfer, assignment,
conveyance, pledge or other disposition of any share of the
Corporation's common stock to any Electric Utility Interest (as
defined below) shall be null and void ab initio. No employee or
agent, including any independent transfer agent or registrar of
this Corporation, shall be permitted to record any attempted or
purported transfer made in violation of this provision, and no
intended transferee of shares of this Corporation's common stock
attempted to be transferred in violation of this Article NINTH
shall be recognized as a holder of such shares for any purpose
whatsoever, including, but not limited to, the right to vote such
shares of common stock or to receive dividends or other
distributions in respect thereof, if any. The transferor and any
such intended transferee shall be
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deemed to have appointed the corporation as attorney-in-fact,
with full power of substitution and full power and authority, in
the name and on behalf of the intended transferor and transferee,
to sell, assign and transfer the shares of Common Stock of the
corporation attempted to be transferred in violation of this
Article NINTH, and to do all lawful acts and execute all
documents deemed necessary or advisable to effect such sale,
assignment and transfer, in an arm's-length transaction, to
another entity or person; provided that the sale, assignment and
transfer to such other entity of person does not violate the
provisions of this Article NINTH. The Corporation shall apply
the proceeds of any such sale first, to pay the expenses of the
sale; second, to pay the intended transferee on whose behalf the
shares were sold, an amount equal to (i) the sum of the intended
transferee's cost of such shares (inclusive of brokerage fees and
expenses), plus interest on such cost at the then minimum rate of
interest which would prevent interest on a non-interest bearing
obligation from being imputed by the Internal Revenue Service,
less the amount of any dividends or other distributions
inadvertently paid to said intended transferee in respect of such
shares, or (ii) the balance of such proceeds, whichever is less;
and third, the balance of such proceeds, if any, shall be paid to
the corporation. Notwithstanding the foregoing, the Corporation
shall not provide any proceeds to the intended transferee, if
such intended transferee has received consideration from any
subsequent attempted transfer.
(b) This Corporation shall take all appropriate legal
action to enforce the provisions of this Article NINTH in every
case where there has been an attempted or purported transfer made
in violation thereof. In taking any action hereunder, this
Corporation, and its directors, officers and agents, will be
fully protected in relying upon any notice, paper or other
document reasonably believed by this Corporation or any such
person to be genuine and sufficient, and, to the extent permitted
by law, in no event shall this Corporation, or any of its
directors, officers or
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agents, be liable for any act performed or omitted to be
performed hereunder in the absence of gross negligence or willful
misconduct. This Corporation and each of its directors, officers
and agents may consult with counsel in connection with its
respective duties hereunder and, to the extent permitted by law,
each shall be fully protected by any act taken, suffered or
permitted in good faith in accordance with the advice of such
counsel.
(c) For purposes of this Article NINTH, the term
"Electric Utility Interest" refers to an electric utility or
utilities or an electric utility holding company or companies, or
any affiliate of either, in each case as those terms are utilized
by the Federal Energy Regulatory commission ("FERC") in
regulations or orders implementing the Public Utility Regulatory
Policies Act of 1978, as amended, and its successors ("PURPA"),
if such entity's interest in this Corporation would be a utility
interest for the purposes of 10 C.F.R. 292.206.
(d) Whenever it is deemed by the board of directors to
be prudent in protecting, preserving or obtaining for any of its
projects (including projects in which this Corporation or a
subsidiary has an interest, whether by ownership, lease or
contract) the status of a "Qualifying Facility" (as defined under
PURPA), the board of directors of this Corporation may require to
be filed with this Corporation as a condition to permitting any
proposed transfer, and/or the registration of any transfer, of
any shares of this Corporation's common stock a statement of
affidavit from any proposed transferee to the effect that such
transferee is not an "Electric Utility Interest," as defined
herein.
(e) The Corporation may, at any time that the Board of
Directors of the Corporation deems necessary or advisable to
protect, preserve or obtain for any of its projects the status of
a "Qualifying Facility", redeem any shares of its capital stock
beneficially owned by any
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Electric Utility Interest at a redemption price equal to the
"Fair Market Value" (as defined in subsection (h) below) of such
shares of capital stock.
(f) In the event the Corporation shall redeem any
shares of its capital stock pursuant to subsection (e) above,
notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than thirty (30) days nor more
than sixty (60) days prior to the redemption date, to each holder
of record of the shares to be redeemed at such holder's address
as the same appears on the books of the Corporation; provided,
however, that no failure to mail such notice nor any defect
therein shall affect the validity of the proceeding for the
redemption of any shares of capital stock to be redeemed except
as to the holder to whom the Corporation has failed to mail said
notice or except as to the holder whose notice was defective.
Each such notice shall state: (i) the redemption date; (ii) the
number of shares of capital stock to be redeemed and, if less
than all the shares held by such holder are to be redeemed from
such holder, the number of shares to be redeemed from such
holder; and (iii) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price.
(g) Notice having been mailed as aforesaid, from and
after the redemption date (unless the Corporation shall fail to
provide money for the payment of the redemption price of the
shares called for redemption) the shares of capital stock so
called for redemption shall no longer be deemed to be
outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from
the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for
any shares so redeemed (properly endorsed or assigned for
transfer, if the board of directors shall so require and the
notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price.
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In case fewer than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder
thereof.
(h) For purposes of this Article NINTH, "Fair Market
Value" shall mean the average of the closing sale prices during
the 30-day period immediately preceding the redemption date of a
share of capital stock of the Corporation as reported on the
American Stock Exchange, Inc. (the "Amex"), or, if such stock is
not then listed on the Amex, on the principal United States
securities exchange registered under the Securities Exchange Act
of 1934, as amended, on which such stock is listed, or, if such
stock is not then listed on any such exchange, the average of the
closing sale prices or closing bid quotations (whichever is
higher, if both are reported) with respect to a share of such
stock during the 30-day period immediately preceding the
redemption date of a share of such stock on the National
Association of Securities Dealers, Inc. National Market System or
any system then in use, or if no such quotations are available,
the fair market value on the redemption date of a share of such
stock as determined by the board of directors in good faith.
(i) The board of directors of this Corporation shall
have the right to determine whether any transferee or purported
transferee of shares of common stock of this corporation is an
"Electric Utility Interest" and to determine whether this
Corporation's projects (including projects in which this
Corporation or a subsidiary has an interest, whether by
ownership, lease or contract) meet the requirements for
"Qualifying Facility" status under PURPA.
(j) Nothing contained in this Article NINTH shall
limit the authority of the board of directors of this Corporation
to take such other action as it deems necessary or advisable to
protect this Corporation and interests of its stockholders by
protecting, preserving or obtaining for any of this Corporation's
projects (including projects in which this Corporation or a
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subsidiary has an interest, whether by ownership, lease or
contract) the status of a "Qualifying Facility" under PURPA.
(k) All certificates representing shares of this
Corporation's common stock shall bear the following legend:
The sale, transfer, assignment, conveyance,
pledge or other disposition of any of the shares
represented by this certificate to any "Electric
Utility Interest" (as hereinafter defined) is
restricted in accordance with the provisions of
the Certificate of Incorporation of the
Corporation. For these purposes, the term
"Electric Utility Interest" refers to an electric
utility or utilities or an electric utility
holding company or companies, or any affiliate of
either, in each case as those terms are utilized
by the Federal Energy Regulatory Commission
("FERC") in regulations or orders implementing the
Public Utility Regulatory Policies Act of 1978, as
attended, and its successors ("PURPA"), if such
entity's interest in the Corporation would be
utility interest for purposes of 10 C.F.R.
292.206.
TENTH: The provisions set forth in this Article
TENTH and subparagraph (a) of Article FIFTH (regarding the
alteration of bylaws) may not be repealed or amended in any
respect unless such repeal or amendment is approved by the
affirmative vote of the holders of not less than sixty percent
(60%) of the total voting power of all outstanding shares of
voting stock of the Corporation.
ELEVENTH: The provisions set forth in this Article
Eleventh, in subparagraph (b) of Article FIFTH (regarding the
alteration of certain bylaws) and in Article EIGHTH (regarding
the greater than sixty-six and two thirds percent (66-2/3%) vote
of stockholders
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required for certain mergers or other corporate combinations),
may not be repealed or amended in any respect unless such repeal
or amendment is approved by the affirmative vote of holders of
not less than seventy-five percent (75%) of the total voting
power of all outstanding shares of voting stock of the
Corporation.
TWELFTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter
prescribed by statute and in accordance with Articles TENTH and
ELEVENTH hereof.
IN WITNESS WHEREOF, this Certificate of Correction and
Restated Certificate of Incorporation which restates in its
entirety the provisions of the Corporation's Certificate of
Incorporation, having been duly adopted by the Board of Directors
of the Corporation in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware, has
been executed on the 8th day of January, 1997.
/s/ Timothy P. Hunstad
Timothy P. Hunstad
Treasurer and Chief Financial Officer
ATTEST:
/s/ Karen A. Brennan
By: Karen Brennan
Its: Secretary
<PAGE>
Exhibit 10.1
CO-INVESTMENT AGREEMENT
between
NRG ENERGY, INC.
and
NRG GENERATING (U.S.) INC.
Dated as of April 30, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
Section 1.1 Certain Defined Terms 1
Section 1.2 Terminology 5
ARTICLE II
Purchase Right
Section 2.1 Pre-Offer Procedures 5
Section 2.2 Offer Procedures 6
Section 2.3 Offer Price 8
Section 2.4 Standards for Offers 8
Section 2.5 NRG Financing 8
Section 2.6 Due Diligence; Delivery of Information 9
Section 2.7 NRG Covenants 9
Section 2.8 Permissive Offers 10
Section 2.9 Independent Committee 10
ARTICLE III
Exempt Transactions and Interests
Section 3.1 Exempt Transactions 11
Section 3.2 Exempt Interests 11
ARTICLE IV
Events of Default; Remedies
Section 4.1 Events of Default 12
Section 4.2 Remedies; Exclusivity 12
ARTICLE V
Arbitration
Section 5.1 Submission of Disputes to Arbitration 13
Section 5.2 Conduct of Arbitration 14
ARTICLE VI
Miscellaneous
Section 6.1 Notices 15
<PAGE>
Section 6.2 Costs and Expenses 15
Section 6.3 Amendments 15
Section 6.4 Assignment 16
Section 6.5 Successors and Assigns 16
Section 6.6 Invalidity 16
Section 6.7 Counterparts 16
Section 6.8 No Oral Agreements 16
Section 6.9 Governing Law and Submission to Jurisdiction 16
Section 6.10 Interpretation and Conflicts 16
Section 6.11 Term 16
<PAGE>
CO-INVESTMENT AGREEMENT
THIS CO-INVESTMENT AGREEMENT is entered into on, and effective as of the
Effective Date (as hereinafter defined), between NRG Energy, Inc., a
Delaware corporation ("NRG Energy"), and NRG Generating (U.S.) Inc., a
Delaware corporation ("Generating").
RECITALS
1. Pursuant to the Plan of Reorganization (as hereinafter defined), NRG
Energy acquired 41.86% of the issued and outstanding shares of capital
stock of reorganized O'Brien Environmental Energy, Inc., which has been
renamed "NRG Generating (U.S.) Inc."
2. In connection with the Plan of Reorganization, NRG Energy has agreed
to offer to Generating ownership interests in certain power projects within
the Territory (as hereinafter defined) which were initially developed by
NRG (as hereinafter defined) or with respect to which NRG has entered into
a binding acquisition agreement with a third party.
AGREEMENT
In consideration of the premises and the covenants, conditions and
agreements contained herein and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, NRG Energy and
Generating hereby agree as follows:
ARTICLE I
Definitions
Section 1.1 Certain Defined Terms. As used herein, each of the following
terms shall have the meanings ascribed thereto below:
"Acceptance Period" -- As defined in Section 2.2(b) of this Agreement.
"Agreement" -- This Co-Investment Agreement between NRG and Generating.
"Assumptions" -- The assumptions of facts upon which the financial
projections relating to Eligible Projects and delivered pursuant to this
Agreement are predicated. All assumptions applicable to an Eligible
Project, unless otherwise indicated, will be deemed to include assumptions
(which assumptions, for all purposes of the Agreement, will be deemed
reasonable) that (a) the applicable laws, legal structure and taxes will
remain the same; (b) all parties will perform their obligations under the
Project Documents for such Eligible Project, in
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all material respects; and (c) the Project Documents for such Eligible
Project will continue in effect, and will be enforceable, in accordance
with their terms.
"Bankruptcy Code" -- Title 11 of the United States Code, 101, et seq, as
now or hereafter in effect, or any successor statute thereto.
"Bankruptcy Event" -- If, with respect to any Person, (a) such Person
generally is unable to pay such Person's debts as such debts become due, or
admits in writing such Person's inability to pay such Person's debts
generally, or makes a general assignment for the benefit of such Person's
creditors; or (b) any proceeding is instituted by or against such Person
under any Bankruptcy Law seeking to adjudicate such Person as bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization,
rearrangement, adjustment, protection, relief or recomposition of such
Person or such Person's debts, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for
such Person or for all or substantially all of such Person's property and,
in the case of any such proceeding instituted against such Person (but not
instituted by or with the consent of such Person), is not controverted
within 20 days and is not dismissed or stayed for a period of 60 days after
such proceeding is filed.
"Bankruptcy Law" -- The Bankruptcy Code and any other applicable federal,
state, local or foreign insolvency, reorganization, moratorium, fraudulent
conveyance or similar Law now or hereafter in effect for the relief of
debtors.
"Book Value" -- With respect to an Ownership Interest in an Eligible
Project, the net asset value of such Ownership Interest as determined by
NRG in accordance with GAAP (as evidenced by a certificate executed by
NRG's Chief Accounting Officer setting forth such net asset value).
"Business Day" -- Any day other than Saturday, Sunday and a day on which
commercial banks are authorized or required to close in the states of New
York or Minnesota.
"Certificate of Incorporation and Bylaws" -- The Certificate of
Incorporation and Bylaws of Generating, as amended from time to time.
"Designated Closing Conditions" -- With respect to any Purchase
Agreement for an Ownership Interest, the following conditions to the
closing of the sale of such Ownership Interest: (a) all consents,
approvals and permits required for such closing pursuant to an applicable
Law or contract affecting such Ownership Interest or the underlying
Eligible Project have been obtained, (b) the parties are not enjoined (or
otherwise prohibited) from consummating such sale under applicable Law, and
(c) the representations of the seller in the Purchase Agreement are true in
all material respects.
"Dispute" -- As defined in Section 5.1 of this Agreement.
"Effective Date" -- The effective date of the Plan of Reorganization.
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"Eligible Project" -- Any proposed or existing Power Plant within the
Territory which NRG initially developed or in which NRG proposes to acquire
an Ownership Interest.
"Equity Interests" -- Collectively, stock in corporations, shares in
limited liability companies and other partnership or equity interests that
participate in the profits of the underlying entity (after the holders of
indebtedness and other securities issued by such entity have been paid the
fixed payments owed to such holders).
"Event of Default" -- As defined in Section 4.1 of this Agreement.
"Exempt Interest" -- As defined in Section 3.2 of this Agreement.
"Exempt Transaction" -- As defined in Section 3.1 of this Agreement.
"Financial Projections" -- As defined in Section 2.1 of this Agreement.
"GAAP" -- Generally accepted accounting principles in the United States in
effect from time to time.
"Generating" -- NRG Generating (U.S.) Inc., a Delaware corporation.
"Independent Committee" -- The Independent Committee of the Board of
Directors of Generating, as described in the Certificate of Incorporation
and Bylaws.
"Law" -- Collectively, a law, rule, regulation or governmental requirement.
"Limited Recourse Financing" -- With respect to any Eligible Project, the
financing for such Eligible Project that is non-recourse to, and does not
create any liability upon, NRG or any other Person that owns any direct or
indirect Ownership Interest in such Eligible Project, except for (a)
Shareholder Commitments that are fully discharged on or before a sale of
the applicable Ownership Interest in the Eligible Project or (b) liability
for misapplication of proceeds, fraud or other similar intentional wrongful
acts committed by the owner of such Ownership Interest.
"Note" -- As defined in Section 2.5 of this Agreement.
"NRG" -- Collectively, NRG Energy and any corporation, partnership,
joint venture or other entity in which NRG Energy (directly or indirectly)
owns greater than 50% of the issued and outstanding Equity Interests.
"NRG Energy" -- NRG Energy, Inc., a Delaware corporation.
"Offer" -- As defined in Section 2.2(a) of this Agreement.
"Offer Price" -- With respect to any Ownership Interest, the price
initially offered by NRG for the sale of such Ownership Interest in the
Offer to Generating; provided, that, in the
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case of an assignment by NRG to Generating of a right to acquire an
Ownership Interest, the Offer Price shall also include the amount payable
to the Third Party seller to acquire such ownership Interest.
"Offer Terms" -- As defined in Section 2.1 of this Agreement.
"Ownership Interest" -- With respect to any Eligible Project, (a) a direct
or indirect Equity Interest in such Eligible Project, and (b) a direct or
indirect interest in the long-term indebtedness or other securities issued
for such Eligible Project, which indebtedness or other securities are
subordinate to the payment of debt service for such Eligible Project's
Limited Recourse Financing.
"Permissive Projects" -- As defined in Section 2.8 of this Agreement.
"Person" -- Any individual, corporation, company, voluntary association,
partnership, joint venture, trust, unincorporated organization,
governmental authority or any other form of entity.
"Plan of Reorganization" -- The Chapter 11 plan of reorganization for
O'Brien Environmental Energy, Inc., proposed by NRG and certain other
persons.
"Potential Ownership Interest" -- As of any time, an Ownership Interest
owned or proposed to be acquired by NRG which NRG believes is reasonably
likely to become the subject of an Offer under this Agreement.
"Power Plant" -- A facility the primary purpose of which is the generation
of electricity for sale through the combustion of natural gas, oil or any
other fossil fuel (other than biogas).
"Project Description" -- As defined in Section 2.1 of this Agreement.
"Project Document Violation" -- Any breach, violation or default (or event
that with notice or the lapse of time, or both, would constitute a breach,
violation or default) under a Project Document that could reasonably be
expected to have a material adverse effect on the related Ownership
Interest. Any such breach, violation or default that has given rise to a
right to terminate (or accelerate obligations under) a Project Document
will be deemed to have a material adverse effect on the related Ownership
Interest.
"Project Documents" -- With respect to an Ownership Interest in an Eligible
Project, the contracts, licenses, and permits that burden or benefit (in
any material respect) the Ownership Interest or the Eligible Project. The
Project Documents may include one or more Shareholder Commitments.
"Purchase Agreement" -- As defined in Section 2.2(c) of this Agreement.
"Shareholder Commitment" -- Any guarantee, indemnity, other liability,
undertaking or commitment of NRG entered into in connection with the
development, acquisition,
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financing or ownership of an Eligible Project or an Ownership Interest
therein, in favor of the Eligible Project entity or any lender, supplier,
customer or governmental entity for the primary purpose of providing
financial or other credit support with respect to the Eligible Project or
the Ownership Interest therein.
"Significant Contracts Milestone" -- With respect to an Eligible Project,
the execution and delivery of a binding power purchase agreement and fuel
supply agreement and the completion of an engineering and feasibility
study.
"Subsidiary" -- With respect to any Person, means any corporation,
partnership, joint venture or other entity that is consolidated with such
Person in accordance with GAAP.
"Territory" -- All geographic areas of the United States.
"Third Party" -- Any Person, other than NRG, Generating or a Subsidiary of
Generating.
"United States" -- All states, commonwealths, territories and possessions
of the United States of America, as of the date hereof.
Section 1.2 Terminology. Unless the context of this Agreement clearly
requires otherwise, (a) pronouns, wherever used herein, and of whatever
gender, will include natural persons and corporations and associations of
every kind and character, (b) the word "included" or "including" will mean
"including without limitation", (c) the word "or" will have the inclusive
meaning represented by the phrase "and/or", (d) the words hereof, herein,
hereunder, and similar terms in this Agreement will refer to this Agreement
as a whole and not any particular section or article in which such words
appear, (e) all terms defined in this Agreement in the singular will have
the same meaning when used in the plural and vice versa, and (f) each
reference to NRG in the singular with respect to an Ownership Interest in
an Eligible Project will refer collectively to all Persons within the
definition of "NRG" which hold an Ownership Interest in such Eligible
Project. The section, article and other headings in this Agreement and the
Table of Contents to this Agreement are for reference purposes and will not
control or affect the construction of this Agreement or the interpretation
hereof in any respect. Article, section and subsection references are to
this Agreement unless otherwise specified.
ARTICLE II
Purchase Right
Section 2.1 Pre-Offer Procedures. As soon as practicable, but in no event
less than 15 days prior to the date on which NRG expects to make an Offer
pursuant to Section 2.2, NRG will give Generating notice of its estimate of
the date on which such Offer is expected to be made. Such notice will
include the following information relating to the Offer:
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<PAGE>
(a) The draft Purchase Agreement for the Offer, which will
describe the proposed terms and conditions of the Offer other than
price, including the Designated Closing Conditions and the
representations, warranties, covenants or indemnities, if any, that
NRG is required under Section 2.2(c) to offer or otherwise elects, in
its sole discretion, to offer (together with any revisions thereto
made in accordance with Section 2.2, the "Offer Terms");
(b) A description of the location and physical components of the
Eligible Project together with the Project Documents for the Eligible
Project (collectively, the "Project Description"); and
(c) One or more sets of the financial projections (including a
computer diskette thereof) for the Ownership Interest (the "Financial
Projections").
Section 2.2 Offer Procedures. If any Eligible Project reaches the
Significant Contracts Milestone prior to the expiration of the term of this
Agreement (or if, prior to the expiration of the term of this Agreement,
NRG enters a binding definitive agreement to acquire an Ownership Interest
in an Eligible Project which has previously reached its Significant
Contracts Milestone), then within 30 days NRG will offer to sell to
Generating all of NRG's Ownership Interest in such Eligible Project in
accordance with the following procedures:
(a) Offer. NRG will make a written offer to Generating to sell
all of NRG's Ownership Interest in such Eligible Project to Generating
(an "Offer"), which Offer will contain the Offer Price, the Offer
Terms presented by NRG, the terms of NRG's proposed financing in
accordance with Section 2.5 and the Project Description for such
Eligible Project.
(b) Delivery and Acceptance of Offer. Each Offer will be
delivered to the Chairman of the Independent Committee of Generating
(with a copy to the Chief Executive Officer of Generating).
Generating will have a period of 60 days after receipt of an Offer
(the "Acceptance Period") to accept the Offer by executing the
Purchase Agreement included with the Offer; provided that, in the case
of an Eligible Project with respect to which NRG proposes to acquire
an Ownership Interest, such Acceptance Period may be shortened (but
not to less than 30 days) if required by the selling party as a
condition to the agreement to sell such Ownership Interest to NRG.
NRG will deal exclusively with Generating with respect to an Ownership
Interest covered by an Offer during the Acceptance Period and may, but
shall not be required to, revise the Offer Terms based on negotiations
with the Independent Committee.
(c) Purchase Agreement. The "Purchase Agreement" for an
Ownership Interest means a binding purchase agreement, included in the
Offer Terms for such Ownership Interest (or thereafter agreed upon by
the parties), which evidences the rights and obligations of the
parties with respect to the sale of the applicable Ownership Interest.
In the Purchase Agreement for an Ownership Interest owned by
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NRG, NRG will represent to Generating that (as of the proposed closing
date): (i) the Ownership Interest will be conveyed free of material
liens or other material rights or material encumbrances (other than
those disclosed), (ii) it has provided copies to the Independent
Committee of all Project Documents for the Eligible Project and
disclosed in writing to the Independent Committee any Project Document
Violation by NRG (or, to its knowledge, any other party) under such
Project Documents, (iii) it has disclosed in writing to the
Independent Committee all pending (or, to its knowledge, threatened)
claims by Third Parties or for violations of Law that could reasonably
be expected to have a material adverse effect on the Ownership
Interest, (iv) it has all necessary corporate power and authority to
convey the Ownership Interest to Generating, and (v) the conveyance of
such Ownership Interest will not conflict with or result in a breach
of, or require any consent which has not been obtained (or disclosed
to Generating as having not yet been obtained) under, any Project
Document for the Eligible Project or applicable Law (to the extent the
failure to obtain same could be reasonably expected to have a material
adverse effect on the Ownership Interest); provided that any of the
foregoing representations may be omitted or modified upon the
agreement of the parties. In the event that NRG proposes to acquire
an Eligible Project with respect to which this Section 2.2 is
applicable, NRG may assign its rights under the acquisition agreement
between NRG and the Third Party seller to Generating and such
acquisition agreement together with the applicable assignment
documents will become the "Purchase Agreement." Unless the parties
otherwise agree, the Purchase Agreement will provide that upon the
closing of the purchase of an Ownership Interest, Generating will
assume (or indemnify NRG and its affiliates against) all Shareholder
Commitments. Unless the parties otherwise agree, the closing of the
purchase of an Ownership Interest owned by NRG will occur within 15
days after execution of the Purchase Agreement, and such closing will
be conditioned only upon satisfaction of the Designated Closing
Conditions agreed upon by the parties in the Purchase Agreement. If
such Designated Closing Conditions are not satisfied prior to the
scheduled closing, then Generating may (by notice to NRG) extend such
pre-closing period by up to an additional 30 days.
(d) Failure to Close. If, after Generating accepts an Offer and
the parties enter into the related Purchase Agreement, the Designated
Closing Conditions in the Purchase Agreement are not satisfied (or
waived), then, in the case of an Ownership Interest owned by NRG, NRG
will not be required to sell, and Generating will not be required to
purchase, the related Ownership Interest included in the Offer. In
such case, the rights of NRG to sell or dispose of such Ownership
Interest will thereafter be governed by Section 2.2(f). If Generating
fails to purchase an Ownership Interest in violation of a Purchase
Agreement, then this Agreement will no longer apply to such Ownership
Interest.
(e) Sale to Third Party. If Generating and NRG do not agree
upon the terms and conditions of the sale of an Ownership Interest
during the Acceptance Period, then NRG will have the right to sell
such Ownership Interest to a Third Party
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for a period of one year after the expiration of the Acceptance
Period, provided that (i) the purchase price for such Ownership
Interest equals or exceeds the Offer Price included in the Offer for
such Ownership Interest (with all consideration paid by the Third
Party measured at fair market value) and (ii) the terms and conditions
of the proposed sale are not materially more favorable to such Third
Party than those offered to Generating in the final Offer Terms.
(f) Continuity of Right. If an Ownership Interest is not sold
to a Third Party within one year after the expiration of the
Acceptance Period as described in Section 2.2(e), or if the Designated
Closing Conditions for the sale of an Ownership Interest are not
satisfied or waived as described in Section 2.2(d), then before
selling to any Third Party, NRG will offer to sell to Generating such
Ownership Interest by making a new Offer to Generating in accordance
with the provisions of this Article II.
Section 2.3 Offer PriceError! Bookmark not defined.. Any Offer Price will
be determined by NRG in compliance with the standards for Offers described
in Section 2.4. Notwithstanding the provisions of this Article II to the
contrary, NRG will not be required to make any Offer for an Ownership
Interest at an Offer Price payable to NRG that is below NRG's Book Value
for such Ownership Interest.
Section 2.4 Standards for Offers. NRG will be considered to have complied
(in all respects) with this Agreement with respect to an Offer if (a) the
Offer is made in accordance with the procedures described in Sections 2.1,
2.2 and 2.3, and (b) in NRG's sole judgment determined in good faith at the
time the Offer is made (and taking into consideration the Offer Terms, the
Project Description, the Offer Price and the work previously performed by
and on behalf of NRG in developing or acquiring the Eligible Project), the
Offer is commercially reasonable and within a range which a reasonable
offeree knowledgeable in the industry would reasonably be expected to
accept. Any Offer Terms required to be included in the Purchase Agreement
by Section 2.2(c) will be deemed to be commercially reasonable. Except as
otherwise specifically provided in this Agreement, NRG will be free to
establish the terms, conditions and price of any Offer it makes under this
Agreement.
Section 2.5 NRG Financing. To facilitate Generating's ability to acquire
an Ownership Interest offered by NRG pursuant to this Agreement, NRG shall
finance (on commercially competitive terms) the Offer Price to the extent
funds are unavailable to Generating on comparable terms from other sources.
Such financing shall be (i) secured by a first priority lien on the
Ownership Interest acquired or, to the extent a first priority lien is
unavailable because the relevant Eligible Project is the subject of Third
Party financing and the Third Party lender has a first priority lien, a
second priority lien, if available, (ii) recourse to Generating, (iii)
subordinated to principal and interest on the $45 million note or notes
(the "Note") issued by Generating in connection with the Plan of
Reorganization, and (iv) required to be repaid from the net proceeds
received by Generating from offerings of equity or debt securities of
Generating (when market conditions permit such offerings to be made on
favorable terms) after taking into account working capital and other cash
requirements of Generating as determined by its Board of Directors.
Notwithstanding the foregoing, NRG
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shall have no obligation to provide any Limited Recourse Financing with
respect to any Eligible Project.
Section 2.6 Due Diligence; Delivery of Information.
(a) The Independent Committee, on behalf of Generating, will
have the right to perform all due diligence reasonably necessary to
determine the value of any Ownership Interest offered under this Agreement
and NRG will make available, at NRG's corporate headquarters at all
reasonable times and upon reasonable notice, all reports, calculations,
books, records and other information available to NRG which is reasonably
necessary for the Independent Committee to perform such due diligence. NRG
will provide a periodic report (on a quarterly basis) to the Independent
Committee regarding the status of its development or acquisition of each
Potential Ownership Interest and the negotiation of the material contracts
for each Eligible Project .
(b) NRG may condition and restrict delivery to the Independent
Committee of the information described in this Section 2.6 and Section 2.1
upon execution of reasonable confidentiality and non-disclosure agreements
by Generating. NRG will not be required to disclose or deliver information
under this Agreement, if such disclosure or delivery would cause it to
violate a confidentiality or non-disclosure covenant to which it is bound;
provided that NRG will use reasonable efforts to obtain waivers or
modifications of any confidentiality or non-disclosure covenants that
prohibit it from providing the information described in this Section 2.6.
Section 2.7 NRG Covenants. NRG covenants and agrees with Generating as
follows:
(a) NRG will not sell all or any portion of any Ownership
Interest owned by it in any Eligible Project (other than an Exempt
Interest), except pursuant to Article II or pursuant to an Exempt
Transaction;
(b) NRG will use reasonable efforts to obtain all consents and
take other actions necessary to permit it to sell (and to satisfy the
Designated Closing Conditions for the sale of) Ownership Interests to
Generating in compliance with this Agreement;
(c) NRG will use reasonable efforts to avoid the occurrence of
any of the circumstances described in clauses (i) through (iii) below
to the extent such circumstances would excuse it from making an Offer
otherwise required under this Agreement;
(d) During the three year period following the Effective Date,
NRG will offer to Generating Ownership Interests in one or more
Eligible Projects or Permissive Projects described in Section 2.8
representing an aggregate equity value of at least $60,000,000 or a
minimum of 150 net megawatts;
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(e) NRG will not, directly or indirectly, take any action, and
will cause any affiliate not to take any action whether through the
exercise of its stockholder vote, through its nominees on the
Generating Board of Directors or otherwise, to remove, replace or vote
down the election of any director who constitutes a member of, or a
nominee named in accordance with Section 3.2 of the By-laws of
Generating for whom proxies are solicited for election to the Board of
Directors of Generating who will constitute a member of, the
Independent Directors' Committee of Generating;
(f) Notwithstanding any of the provisions of this Agreement to
the contrary, Generating and its common stockholders not affiliated
with NRG would not have an adequate remedy at law if NRG breaches its
obligations under Section 2.7(e), (f) and (g) and expressly agrees
that the Independent Directors' Committee, on behalf of Generating and
such stockholders shall, in addition to any other remedies at law or
in equity which it may have, be entitled to seek specific performance
of NRG's obligations thereunder, including by way of injunction,
restraining order, mandamus or otherwise, in any court of law or
equity of competent jurisdiction;
(g) The provisions of Section 2.7(e) shall survive through the
stated term of this Agreement, notwithstanding any breach of any other
provision hereof by any party hereto or any earlier termination
permitted under Section 4.2 of this Agreement.
Notwithstanding the provisions of this Article II to the contrary, NRG will
not have an obligation to Offer to Generating any Ownership Interest, if
the sale of such Ownership Interest (i) would cause Generating, NRG or
any of their respective Subsidiaries to be classified as an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended; (ii) would cause Generating, NRG or any of their respective
Subsidiaries to be classified as a "holding company", a "subsidiary
company" of a "holding company", an "affiliate" of a "holding company", or
an "affiliate" of a "subsidiary" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended; or
(iii) is prohibited by any Project Document.
Section 2.8 Permissive Offers. NRG may, in its sole discretion, offer to
Generating Ownership Interests in projects ("Permissive Projects") other
than Eligible Projects or Ownership Interests which otherwise NRG would not
be required to offer at such time to Generating under this Agreement, but
NRG will have no obligation to do so. Any such permissive offers made by
NRG will not otherwise be subject to the provisions of this Agreement, and
shall not constitute, replace or affect in any way the obligations of NRG
to make an Offer in compliance with this Agreement.
Section 2.9 Independent Committee. The Independent Committee will have
the sole authority and responsibility to make all decisions and take all
actions on behalf of Generating under this Agreement. Accordingly, all
notices, reports, books, records or other information required or permitted
to be given to Generating under this Agreement will be delivered to the
Chairman of the Independent Committee, with a copy to the Chief Executive
Officer of Generating. The Independent Committee will be free to take such
action as it determines in
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its sole discretion to be reasonably necessary to evaluate fully and fairly
the terms of any Offer, including engaging independent financial, technical
and other advisors for the purpose of evaluating Offers, determining
whether the projections on which such Offers may be based are reasonable
and other matters under this Agreement.
ARTICLE III
Exempt Transactions and Interests
Section 3.1 Exempt Transactions. Notwithstanding the provisions of
Article II to the contrary, NRG will have the right to sell its Ownership
Interest in an Eligible Project without offering such Ownership Interest to
Generating in connection with any one or more of the following transactions
(each, an "Exempt Transaction"):
(a) Any sale or disposition of all or a portion of an Ownership
Interest that is consummated as a result of a foreclosure or
conveyance in lieu of foreclosure of liens or security interests
(other than by NRG) encumbering the Eligible Project or such Ownership
Interest;
(b) Any sale or disposition of an Ownership Interest to a Third
Party that is or will become a participant in the Eligible Project
(such as a local or industry investor, a financial institution or a
fuel or equipment supplier), provided that the obligation to sell is
created prior to the Significant Contracts Milestone for the Eligible
Project and is incidental to the provision of services or the
contribution of assets to the Eligible Project; and
(c) Any sale or disposition of an Ownership Interest to another
Person as a part of a larger transaction involving the sale of all or
substantially all of the assets of NRG Energy or the sale of an Equity
Interest in NRG Energy, provided that the Person acquiring such
Ownership Interest agrees to be bound by this Agreement with respect
to such Ownership Interest (if such Ownership Interest has not
previously been offered for sale to Generating pursuant to this
Agreement).
Section 3.2 Exempt Interests. Notwithstanding the provisions of
Article II to the contrary, NRG will have the right to retain its
Ownership Interest in an Eligible Project or sell such Ownership Interest
to Third Parties without offering such Ownership Interest to Generating, if
such Ownership Interest is an Exempt Interest. As referenced in this
Agreement, an "Exempt Interest" means any of the following:
(a) An Ownership Interest in an Eligible Project which is below
a level that would cause the Eligible Project (or its owners) to be in
violation of the relevant power purchase agreement or applicable state
or federal law upon the generation of electricity for sale by such
Eligible Project;
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(b) An indirect Ownership Interest held by NRG in an Eligible
Project arising from NRG's direct or indirect ownership of Equity
Interests in Generating;
(c) An Ownership Interest that is retained in order to later be
sold in an Exempt Transaction contemplated by Section 3.1(b); and
(d) An Ownership Interest in a Power Plant below 25 megawatts in
capacity.
ARTICLE IV
Events of Default; Remedies
Section 4.1 Events of Default. If one or more of the following events
occurs with respect to a party hereto, it will constitute an "Event of
Default" with respect to such party:
(a) Failure to Perform Obligations. Such party fails to perform
or observe any material obligation under this Agreement and such
failure continues for more than 30 days after the non-defaulting party
has given notice thereof to such party (or if the nature of such
default is such that it is not capable of being cured within 30 days,
then the failure of such party to commence to cure such default within
30 days and to diligently and continuously pursue the cure of such
default thereafter, but in no event may such extended cure period
exceed 180 days);
(b) Bankruptcy Event. Such party becomes subject to a
Bankruptcy Event.
Section 4.2 Remedies; Exclusivity. Subject to the provisions of
Article V, at any time during the continuance of an Event of Default, the
non-defaulting party will have the right to (a) elect, by giving notice to
the defaulting party, not to be bound in any respect by the provisions of
this Agreement during such continuance, in which case such party will have
no obligations or liabilities hereunder during such period, (b) terminate
the Agreement upon giving notice of termination to the defaulting party, if
the Event of Default is a Bankruptcy Event or otherwise has continued
without cure for 180 days following notice pursuant to Section 4.1(a), and
(c) seek the enforcement of an arbitrators award (including an award for
damages or specific performance) pursuant to Article V. No failure on the
part of either NRG or Generating to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege
under this Agreement will operate as a waiver thereof, nor will any single
or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
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ARTICLE V
Arbitration
Section 5.1 Submission of Disputes to ArbitrationError! Bookmark not
defined.. This Article V applies to any dispute (each a "Dispute") arising
under this Agreement or under any Purchase Agreement between NRG and
Generating, including any dispute regarding: (i) whether NRG is obligated
to make an Offer, (ii) whether the terms of an Offer comply with the
requirements of this Agreement, (iii) whether any party has failed to
perform its obligations under a Purchase Agreement, and (iv) any other
matter under this Agreement or a Purchase Agreement. If the parties are
unable to resolve a Dispute, then either party may submit such Dispute to
binding arbitration under this Article V as follows:
(a) The party may give the other party a notice stating that
such party desires to have the Dispute arbitrated pursuant to this
Article V. Within 15 days after receipt of the arbitration notice,
NRG and Generating will use their reasonable efforts to designate a
single Person to act as arbitrator.
(b) If the parties are unable to agree upon the joint selection
of a single arbitrator within such 15-day period, each of NRG and
Generating will select a single arbitrator within 10 days after the
end of the 15-day period (and will notify the other party of its
selection). If either party fails to designate an arbitrator within
such 10-day period, then the arbitrator designated by the other will
act as the sole arbitrator and will be deemed to be the unanimously
approved arbitrator to resolve the Dispute.
(c) If the two arbitrators selected by the parties are unable to
reach a unanimous decision, the arbitrators will unanimously select a
third qualified arbitrator. If the two arbitrators are unable to
select a third arbitrator, either party may apply to the branch of the
American Arbitration Association nearest to Minneapolis, Minnesota to
designate and appoint the third arbitrator.
(d) If the two arbitrators appointed pursuant to Section 5.1(b)
reach a unanimous decision and award, such decision and award will be
binding upon the parties. If a third arbitrator is appointed pursuant
to Section 5.1(c), then the decision and award of two of the three
arbitrators will be binding upon the parties. If two of the three
arbitrators are unable to reach a unanimous decision, then the
decision and award of the third arbitrator appointed pursuant to
Section 5.1(c) will be binding upon the parties.
(e) Each arbitrator appointed pursuant to this Section 5.1 will
be a natural person with expertise in the issues involved in the
subject Dispute. Additionally, each arbitrator will be competent and
knowledgeable in the area of legal and contractual disputes. Each
proposed arbitrator will disclose to the parties any business or other
relationship or affiliation that may exist with either party; and any
party may disqualify
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an arbitrator on the basis that any existing relationship or
affiliation could reasonably be expected to materially affect the
decisions and objectivity of such arbitrator.
Section 5.2 Conduct of Arbitration. Within 20 days after the commencement
of an arbitration under this Article V, each party will submit to the other
and to the arbitrators their written position concerning the Dispute.
Within 20 days after the receipt by a party of the position of the other
party in the Dispute, such receiving party will submit its written response
to the other party and the arbitrators. The arbitrators will expeditiously
(and, if possible, within 60 days after receipt of the initial positions
and responses of the parties) hear and decide all matters concerning the
Dispute. Any arbitration hearing will be held in Minneapolis, Minnesota.
The arbitration will be conducted in accordance with the then-current
Commercial Arbitration Rules of the American Arbitration Association
(excluding rules governing the payment of arbitration, administrative or
other fees or expenses to the arbitrator or such Association). The
arbitrators will have the power to (a) gather such materials, information,
testimony and evidence as they consider relevant to the Dispute (and each
party will provide such materials, information, testimony and evidence
required by the arbitrators, except to the extent any information so
requested is proprietary, subject to a Third Party confidentiality
restrictions or to an attorney-client or other privilege); and (b) grant
such relief (including injunctive relief and the enforcement of specific
performance) as may be consistent with the provisions of this Agreement and
considered appropriate by the arbitrators. The arbitrators may propose
that one or more experts be retained to assist in resolving the Dispute.
The parties will have the right to approve such experts, which approval
will not be unreasonably withheld; provided that a business or other
relationship or affiliation between such expert and the arbitrators or
either party will be deemed a reasonable basis for a party to withhold its
approval of such expert. The responsibility for paying the costs and
expenses of the arbitration (including compensation to the arbitrators and
any experts retained by the arbitrators) will be allocated between the
parties in a manner determined by the arbitrators to be fair and reasonable
under the circumstances. Each party will be responsible for the fees and
expenses of its respective counsel, consultants and witnesses, unless the
arbitrators determine that compelling reasons exist for allocating all or a
portion of such costs and expenses to the other party. The decision of the
arbitrators (which will be rendered in writing) will be final, non-
appealable and binding upon the parties and may be enforced in any court of
competent jurisdiction. Any judicial proceedings relating to an
arbitration under this Article V (including proceedings to compel
arbitration or to confirm or enforce an arbitration award) will be
maintained in the state or federal courts situated in Hennepin County,
Minnesota (or any court having appellate jurisdiction therefrom) and will
not be held or maintained in any other court or jurisdiction. Each
Purchase Agreement will contain a provision stating that Disputes
thereunder will be subject to arbitration, as set forth in this Article V.
UNDER NO CIRCUMSTANCES WHATSOEVER, NOTWITHSTANDING ANY STATUTORY OR OTHER
AUTHORITY TO THE CONTRARY, WILL THE ARBITRATOR OR ARBITRATORS ACTING UNDER
THIS AGREEMENT OR A PURCHASE AGREEMENT HAVE AUTHORITY, JURISDICTION OR
POWER TO MAKE ANY AWARD FOR CONSEQUENTIAL, PUNITIVE, EXEMPLARY,
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PENAL, TREBLE, OR OTHER MULTIPLE DAMAGES, AND NO AWARD CONTAINING ANY SUCH
DAMAGES WILL BE CONFIRMED OR ENFORCED.
ARTICLE VI
Miscellaneous
Section 6.1 Notices. All notices, offers, extensions of time or
descriptions, and all other communications provided for herein (including
any modifications of, or waivers or consents under, this Agreement) will be
given or made in writing and delivered by hand, telecopy, courier or U.S.
mail to the intended recipient at the "Address for Notices" specified below
(or, as to any party, at such other address as will be designated for
notice by such party in a notice to the other party). Any notice given
pursuant to this Agreement will be deemed effective when such notice is
received (or upon refusal of receipt) by the addressee; provided that
notices received by any party after its normal business hours (or on a day
other than a Business Day) will be effective on the next Business Day.
Addresses For Notices:
To NRG Energy: NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attn: Vice President of U.S. Business Development
To Generating: Chairman -- Independent Committee
c/o NRG Generating (U.S.) Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
with a copy to: Leonard A. Bluhm, Chief Executive Officer
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Section 6.2 Costs and Expenses. Each party
will bear its own review costs, attorneys, accountants and other
professional fees and other expenses incurred by it in connection with
negotiating and entering into this Agreement and in negotiating and
entering into any of the subsequent transactions contemplated by this
Agreement.
Section 6.3 Amendments. No amendment, modification, waiver, consent,
approval, direction or other action under this Agreement will be effective
unless in writing and signed by the party to be bound (and in the case of
Generating, approved by the Independent Committee).
Section 6.4 Assignment. Except as otherwise provided in this Section 6.4,
neither party will have the right to assign any of its rights or delegate
any of its duties or obligations
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under this Agreement to any other Person without the prior written consent
of the other party to this Agreement, which consent may be withheld in the
consenting party's sole discretion. Any such assignment or delegation
without such consent will be void ab initio. Notwithstanding the foregoing
provisions of this Section 6.4 to the contrary, either party hereto will be
entitled to assign all of its rights and delegate all of its duties and
obligations under this Agreement to any successor of such party by merger
or to any purchaser of all or substantially all of the assets of such
party.
Section 6.5 Successors and Assigns. Subject to Section 6.4, this
Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
Section 6.6 Invalidity. In the event that any one or more of the
provisions contained in this Agreement will, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability will not affect any other provision of this
Agreement.
Section 6.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together will constitute one and the same
instrument and the parties hereto may execute this Agreement by signing any
such counterpart.
Section 6.8 No Oral Agreements. This Agreement embodies the entire
agreement and understanding between the parties and supersedes all other
agreements and understandings between such parties relating to the subject
matter hereof and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are
no unwritten oral agreements among the parties.
Section 6.9 Governing Law and Submission to Jurisdiction. This Agreement
will be governed by, and construed in accordance with, the laws of the
State of Minnesota, without regard to conflicts of laws principles provided
that Sections 2.7(e), (f) and (g) shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to
conflicts of law principles.
Section 6.10 Interpretation and Conflicts. No presumption will apply in
favor of any party hereto in the interpretation of this Agreement or in the
resolution of any ambiguity of any provision hereof.
Section 6.11 Term. Subject to the rights of the parties to terminate this
Agreement pursuant to Section 4.2, this Agreement will terminate on the
seventh anniversary of the Effective Date. The parties hereto will have no
further rights or obligations hereunder following such termination (other
than with respect to any defaults by either party hereunder prior to such
termination and any matter subject to an arbitration being conducted as of
such termination).
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EXECUTED as of the date first above written.
NRG ENERGY, INC.
By: /s/ Craig Mataczynski
Name: Craig Mataczynski
Title: Vice President Domestic Business
Development
NRG GENERATING (U.S.) INC.
By: /s/ Leonard Bluhm
Name: Leonard Bluhm
Title: President and Chief Executive Officer
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Exhibit 10.2.1
Exhibit B Acquisition
Agreement
CHAPTER 11
FINANCING AGREEMENT
CHAPTER 11 FINANCING AGREEMENT dated as of August 30, 1995 (the
"Agreement"), between O'BRIEN ENVIRONMENTAL ENERGY, INC. (the "Company"),
debtor and debtor-in-possession, and NRG ENERGY, INC. ("NRG"), having a
business address at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403.
WHEREAS, the Company filed a petition for relief under chapter 11 of
title 11 of the United States Code, 11 U.S.C. SS 101 et seq. (the
"Bankruptcy Code") on September 28, 1994 (the "Filing Date") in the United
States Bankruptcy Court for the District of New Jersey (the "Bankruptcy
Court"), which chapter 11 case is currently pending in the Bankruptcy Court
as Case No. 94-26723 (the "Chapter 11 Case");
WHEREAS, the Company continues in the operation of its business and
management of its property as a debtor-in-possession pursuant to sections
1107 and 1108 of the Bankruptcy Code;
WHEREAS, the Company and NRG are negotiating the terms of a stock purchase
and reorganization agreement (the "Purchase Agreement");
WHEREAS, the Company does not have sufficient working capital to maintain
its ordinary course of operations;
<PAGE>
WHEREAS, the Company is otherwise unable to obtain unsecured credit
allowable as an administrative expense; and
WHEREAS, the parties hereto are entering into this Agreement to provide the
Company with working capital to be used solely for the purposes specified
herein to enhance the prospects for successful reorganization of the
Company in the Chapter 11 Case;
NOW, THEREFORE, the parties hereto agree as follows:
1. THE LOANS.
1.1 The Loans. Subject to the terms and conditions of this
Agreement, NRG agrees to make advances to the Company from time to time
during the period (the "Commitment Period") commencing on the Effective
Date (as defined below) to but not including the Final Maturity Date (as
defined below), so long as an Event of Default (as defined below)
hereunder, or any event which upon the lapse of time or notice or both
would become an Event of Default hereunder, shall have not occurred, in an
amount which will not exceed in the aggregate at any one time $3,000,000
(the "Commitment") (each such advance, a "Loan", and collectively, the
"Loans").
1.2 The Note. The Loans made by NRG shall be evidenced by
a single promissory note substantially in the form of Exhibit A hereto (the
"Note") dated the Effective Date and payable to NRG in the aggregate
principal amount of $3,000,000, together with interest as provided herein.
The amount and date of each Loan made by NRG, and all payments on account
of the
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principal thereof, shall be recorded by NRG on its books and endorsed by
NRG on the schedule attached to the Note or any continuation thereof, and
any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded.
1.3 Prepayment. After taking into account the proviso in
section 1.9, the Company may prepay, without premium or penalty, all or
part of the Loans upon not less than three (3) business days' prior written
notice to NRG, which notice (i) shall specify the prepayment date (which
shall be a business day) and the amount of the prepayment and (ii) shall be
irrevocable and effective upon receipt by NRG, provided that interest on
the principal repaid, accrued to the prepayment date, shall be paid on the
prepayment date. Partial prepayment shall be in an aggregate principal
amount of $500,000, or a whole multiple thereof. Amounts prepaid may not
be reborrowed.
1.4 Repayment of the Loans. The Company will pay to NRG
the outstanding principal balance and unpaid interest on the Note on the
earliest to occur of (i) the effective date of a plan of reorganization for
the Company or the closing of a sale described in (ii) below, (ii) thirty
days after entry by the Bankruptcy Court of an order approving the sale of
all or any portion of the assets or capital stock of the Company or O'Brien
(Newark) Cogeneration, Inc., O'Brien (Parlin) Cogeneration, Inc. or O'Brien
Energy Services, Inc. (hereinafter collectively referred to as the
"Designated Subsidiaries"), or confirming a
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plan which provides for the sale of all or any portion of the assets or
capital stock of the Company or the Designated Subsidiaries, to a party
other than NRG or its designated Affiliate, (iii) when and if the Purchase
Agreement is executed by the Company, ten (10) days after entry by the
Bankruptcy Court of an order or judgment determining that the Company
breached its obligations under the Purchase Agreement and that NRG was
entitled to terminate the Purchase Agreement pursuant to the terms thereof,
and (iv) when and if the Purchase Agreement is executed by the Company,
ninety (90) days after the termination by either party thereto of the
Purchase Agreement for any reason other than those specified in
clause (iii) hereof, (v) conversion or dismissal of the Chapter 11 Case or
(vi) March 15, 1996. The earliest to occur of the foregoing (i) - (vi) is
herein referred to as the "Final Maturity Date". All payments hereunder
shall be applied first to any unpaid accrued interest on the Loans, and
then to the outstanding principal balance of the Loans.
1.5 Limitation.
(a) Notwithstanding anything contained in Section 1.1, NRG will
not make Loans which in the aggregate exceed the Commitment.
(b) Notwithstanding anything contained in Section 1.1, the Loans
shall not exceed any maximum borrowing authority of the Company as may from
time to time be ordered or authorized by the Bankruptcy Court.
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1.6 Procedure for Borrowing. National Westminster Bank plc
or another person designated by NRG to the Company in writing shall act as
agent (in such capacity, hereinafter referred to as "Agent") for NRG in
connection with the Commitment. The Company may borrow under the
Commitment during the Commitment Period on any business day. The Company
shall give Agent irrevocable notice (which notice must be received by Agent
in writing prior to 10:00 a.m., New York time, three business days prior to
the requested borrowing date), specifying (i) the amount of the Loan and
(ii) the requested borrowing date. Upon receipt of such notice from the
Company, Agent shall make such loan by wire transfer of immediately
available funds in accordance with the instructions set forth in
Schedule 1.6 hereto. Each Loan shall be in an amount equal to $500,000 or
a whole multiple thereof.
1.7 Purpose of Loans. The proceeds of the Loans shall be
used by the Company solely for the purposes set forth in Schedule 1.7
hereto.
1.8 Extension. If the Final Maturity Date shall have
occurred pursuant to clause (i) of Section 1.4, the Company shall have the
option, subject to the terms and conditions of this Agreement, to extend
the Final Maturity Date by an additional sixty (60) days upon payment by
the Company to NRG of an extension fee equal to 3% of the Commitment.
1.9 Repayment at Closing. Notwithstanding any provision
hereof to the contrary, the Loans and all other amounts
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<PAGE>
outstanding hereunder and under the Note as of the closing date of the
Purchase Agreement, if and when such Purchase Agreement is executed by the
Company, shall, at the election of NRG to the extent provided in the
Purchase Agreement, be repaid upon such closing; provided, that in the
event NRG and O'Brien consummate the transactions contemplated by the
Purchase Agreement, O'Brien shall not be obligated to pay to NRG any
portion of any Loan and the corresponding interest accrued thereon (i.e.,
any portion of outstanding principal balance and corresponding unpaid
interest on the Note) to the extent such portion of the Loan is used to
make capital contributions or incur any development costs in connection
with the projects commonly referred to as Edgeboro or Grays Ferry
("Specified Development Costs").
2. INTEREST.
2.1 Interest. The Loans shall bear interest at a rate per
annum equal to the Prime Rate as of the Effective Date, plus two percent
(2%). For purposes of this Financing Agreement, the term "Prime Rate"
shall mean as of any date of determination, the higher of (i) the interest
rate established by National Westminster Bank plc ("NatWest") as its prime
rate and (ii) the weighted average of the overnight federal funds rates
plus 0.5%. Subject to Section 1.4, interest shall be payable monthly in
arrears on the first day of the following month.
2.2 Computation of Interest. Interest hereunder and under
the Note shall be computed on the basis of a year of 360 days for the
actual number of days elapsed.
6
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2.3 Payments and Endorsements. Except as provided in
Section 1.9 hereof, all payments of principal of and interest hereunder and
under the Note shall be made without setoff, deduction or counterclaim and
shall be made prior to 12:00 noon, New York time, on the due date thereof,
to NRG by wire transfer of immediately available funds in accordance with
the wire transfer instructions to be provided by NRG to the Company.
2.4 Payment on Non-Business Days. Whenever any payment to
be made hereunder or under the Note shall be stated to be due on a
Saturday, Sunday or a public holiday under the laws of the State of New
York, such payment shall be made on the next succeeding business day, and
such extension of time shall in such case be included in the computation of
payment of interest hereunder or under the Note, as the case may be.
2.5 Additional Interest. If all or a portion of (i) the
principal amount of any Loan, (ii) any interest payable thereon or
(iii) any other amounts payable hereunder shall not be paid when due
(whether at stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate which (a) in the case of overdue
principal, shall be the rate applicable thereto pursuant to Section 2.1
plus 2% or (b) in the case of overdue interest or other amounts, shall be
the rate described in Section 2.1 plus 2%, in each case from the date when
due (whether at stated maturity, by acceleration or otherwise) until such
amount is paid in full. Overdue interest shall be
7
<PAGE>
compounded and bear interest on each date for payment of interest on
principal hereunder.
3. CONDITIONS PRECEDENT. NRG's obligation to make the initial Loan
requested hereunder is subject to the satisfaction or waiver of each of the
Company:
(a) NRG shall have received this Agreement and the Note in each
case executed by a duly authorized officer of the Company;
(b) An order (the "Financing Order") in the form attached as
Exhibit B shall have been entered by the Bankruptcy Court, or such other
court exercising jurisdiction over the Chapter 11 Case, approving and
authorizing (i) this Agreement, the Note and the borrowings contemplated
hereby and (ii) the superpriority of the Loans pursuant to Section
364(c)(1) of the Bankruptcy Code, which Financing Order (w) shall be in
full force and effect, (x) shall not have been revised, modified or
amended, (y) shall not be subject to any appeal which challenges whether
NRG extended the Loans hereunder in good faith or is otherwise entitled to
the benefits of section 364(e) of the Bankruptcy Code and (z) shall not be
subject to any stay or injunction;
(c) No preliminary or final injunction which restrains or
prohibits the consummation of the transactions contemplated hereby shall
have been issued and be in effect;
(d) NRG shall have received the Facility Fee (as defined below);
8
<PAGE>
(e) The representations and warranties contained in Section 7
hereof shall be true and correct on and as of the Effective Date (as
defined in Paragraph 12 below) as though made on and as of the Effective
Date; and
(f) No event shall have occurred and be continuing on the
Effective Date which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both.
4. CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES. The obligation of NRG to
make each Loan (including the initial Loan) shall be subject to the
following conditions precedent:
(a) The representations and warranties contained in Section 7
shall be true and correct on and as of the date of such Loan as though made
on and as of such date; and
(b) No event shall have occurred and be continuing on the date
of such Loan which would constitute an Event of Default or would constitute
an Event of Default but for the requirement that notice be given or time
elapse or both; and
(c) The Financing Order shall be in full force and effect on the
date of such Loan without any revision, modification or amendment which, in
NRG's judgment, adversely affects its rights, benefits or remedies.
5. COVENANTS. The Company hereby covenants and agrees with NRG that so
long as the Commitment remains in effect, the Note remains outstanding and
any portion thereof unpaid, or any other amount is owed to NRG hereunder,
it shall:
9
<PAGE>
(a) Maintain its books and records in accordance with generally
accepted accounting principles and, during reasonable business hours and
upon reasonable notice, make available to NRG the Company's books and
records. NRG shall be entitled to make such investigation of the business
of the Company as NRG reasonably requests; provided, however, that (i) the
Company shall not be required to provide its books and records to the
extent disclosure of them would compromise any attorney-client privilege
between the Company and its counsel and (ii) other than as may be provided
in any order entered by the Bankruptcy Court, NRG shall not be entitled to
receive any document or information concerning bids for the Company or its
assets submitted by entities other than NRG and its affiliates; and
provided, further, that NRG will continue to comply with the
confidentiality agreement previously entered into by NRG with the Company.
(b) Promptly give to NRG written notice of:
(i) Any Event of Default or any event which, upon
lapse of time or notice or both, would become an Event of Default;
(ii) The occurrence of any event or any matter
known to the Company which has resulted or will result in a material
adverse effect, which shall mean any condition, change or event that,
individually or in the aggregate, would materially and adversely
affect the business, operations, properties, financial condition or
10
<PAGE>
prospects of the Company and its subsidiaries taken as a whole; and
(iii) Any change in location known to the Company
of any of the Company's books and records.
6. NEGATIVE COVENANTS. The Company covenants and agrees that, so long as
the Commitment remains in effect, the Note remains outstanding and unpaid
or any other amount is owed to NRG hereunder, it will not, without the
prior written consent of NRG:
(a) Unless otherwise agreed to by NRG in writing, use all or any
portion of the Loans for purposes other than those specified in
Schedule 1.7; and
(b) Create, assume, or suffer to exist, or seek to create,
assume, or suffer to exist, any unsecured debt incurred after the Petition
Date which would have the priority senior or equal to NRG's priority under
Section 8.3 hereof, other than any unsecured debt incurred for the purpose
of making or incurring Specified Development Costs; provided, that other
unsecured debt may be incurred by the Company to finance or to fund such
development costs ("Additional Development Financing"), so long as the
Company shall have first offered the opportunity to NRG in writing to
provide such financing on substantially the same terms and conditions and
NRG has declined to provided such financing. If NRG does not accept or
decline such offer within three business days after receipt thereof of
receiving such offer in writing such offer shall be deemed declined.
11
<PAGE>
7. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to NRG on and as of the date hereof and the Effective Date that:
(a) Corporate Action. Conditioned upon entry of the Financing
Order, the Company has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the
Note; the execution, delivery, and performance by the Company of this
Agreement and the Note have been duly authorized by all necessary corporate
action on its part; and this Agreement has been duly and validly executed
by the Company and constitutes, and the Note when executed and delivered
will constitute, its legal, valid and binding obligations, enforceable in
accordance with their respective terms;
(b) Approval. Conditioned upon entry of the Financing Order, no
authorizations, approvals or consents of, and no filings or registrations
with, any governmental authority or any other person are necessary for the
execution, delivery or performance by the Company of this Agreement or the
Note or for the validity or enforceability thereof; and
(c) No Breach. Conditioned upon entry of the Financing Order,
none of the execution and delivery of this Agreement and the Note, and the
consummation of the transactions herein contemplated and compliance with
the terms and provisions hereof or of the Note will conflict with or result
in a breach of, or require any consent under, the charter or by-laws of the
12
<PAGE>
Company, or any applicable Law, or any Order of any governmental authority
or any material agreement by which the Company or any of its property is
bound.
8. CLAIM PRIORITY. NRG shall be granted an allowed administrative expense
claim in the Chapter 11 Case for the Loans and all other fees and expenses
owing hereunder and under the Note, including, but not limited to, fees and
expenses pursuant to Section 13.4 of this Agreement, which claim shall be,
pursuant to section 364(c)(1) of the Bankruptcy Code, senior to any and all
other administrative expenses in the Chapter 11 Case of the kind specified
in sections 503(b) or 507(a)(1) of the Bankruptcy Code, other than any
administrative expense claim in respect of any Additional Development
Financing, which administrative expense claim shall be entitled to pari
passu treatment with the administrative expense claim of NRG provided
herein; provided, however, that nothing contained herein shall prevent the
Company from using the proceeds of the Loans for the purposes specified in
Section 1.7.
9. EVENTS OF DEFAULT. The following shall constitute "Events of Default"
hereunder:
(a) any amounts due hereunder or under the Note shall
not have been paid when due in accordance with the terms hereof or thereof;
(b) any covenant made under this Agreement or the Note
by the Company shall be breached in any material
13
<PAGE>
respect and such breach shall continue for ten (10) business bays;
(c) any representation or warranty made under this Agreement or
the Note by the Company shall prove to have been incorrect when made (or
deemed made) or shall be breached in any material respect and such error or
breach shall continue for ten (10) business days;
(d) the appointment of a trustee under section 1104 of the
Bankruptcy Code by order of the Bankruptcy Court or such other court
exercising jurisdiction over the Chapter 11 Case unless, within sixty (60)
days following entry of an order appointing such trustee, NRG receives
written confirmation from such trustee that he, she or it will perform, as
and when due, without modification or variation, all of the obligations
(i) of the Company hereunder and under the Note and (ii) of the Company and
the Designated Subsidiaries under the Purchase Agreement, when and if it is
executed by the Company;
(e) the dismissal of the Chapter 11 Case or the conversion of
the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code;
(f) the Financing Order, as it may apply to any outstanding
Loans, shall have been vacated, revised, modified or amended without the
prior written consent of NRG; or
(g) the commencement against NRG of any action or proceeding
which asserts by or on behalf of the Company or any of the Company's
creditors or shareholders, or committees
14
<PAGE>
of any of the foregoing, or affiliates, successors, or assigns, any action
which seeks to set off or counterclaim against, disallow, limit or reduce,
or avoid or subordinate the Company's obligations to NRG, or to recover any
legal or equitable remedy against NRG, which action or proceeding has not
been dismissed within sixty (60) days after its commencement.
10. TERMINATION. The obligation of NRG to make any of the Loans hereunder
shall automatically terminate upon (x) the occurrence of an Event of
Default, which Event of Default continues uncured for the duration of any
applicable grace period or (y) the Final Maturity Date. Upon the
occurrence of an Event of Default, which continues uncured for the duration
of any applicable grace period, the principal of, and accrued interest on,
the Note shall become immediately due and payable. The Company's
obligations hereunder shall terminate at such time as the Loans and the
interest, fees and costs owing under this Agreement and the Pledge
Agreement shall have been paid in full.
11. REMEDIES. Upon the occurrence of an Event of Default:
(a) NRG may cease making Loans under the Commitment, but the
Company's obligations to perform the terms of this Agreement shall continue
until the Loans and the interest, fees and costs owing under this Agreement
are paid in full; and
(b) The automatic stay of section 362 of the Bankruptcy Code
shall be immediately and automatically terminated and vacated without
further order of the Bankruptcy Court five
15
<PAGE>
(5) business days after the date upon which NRG files in the Chapter 11
Case a notice of the Company's default under this Agreement, unless the
Company in good faith has promptly, and in no event later than three
(3) business days following the filing of such notice, applied to the
Bankruptcy Court for a continuation of the automatic stay and has requested
a hearing to be held as soon thereafter as the Bankruptcy Court's calendar
permits. Upon termination or vacation of the automatic stay, NRG may
thereafter pursue its rights and remedies as a creditor under applicable
law without seeking further relief from the Bankruptcy Court.
12. EFFECTIVE DATE.
12.1 Effective Date. The date that is ten (10) days from
and after the date that the Bankruptcy Court enters the Financing Order is
hereinafter referred to as the "Effective Date".
12.2 Fees. On the Effective Date, the Company shall pay to
NRG a facility fee equal to $25,000 (the "Facility Fee").
13. MISCELLANEOUS.
13.1 Integration. The Financing Order, this Agreement and
the Note integrate all the terms and conditions mentioned herein or
incidental hereto, and supersede all prior negotiations, whether written or
oral, and prior writings with respect to the subject matter hereof.
16
<PAGE>
13.2 No Waiver. No delay or omission to exercise any
right, power, or remedy accruing to NRG upon breach or default by the
Company under this Agreement or the Note shall impair any such right,
power, or remedy of NRG nor shall it be construed to be a waiver of any
such breach or default, nor an acquiescence therein, or of or in any breach
or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any breach or default under this Agreement or the
Note must be in writing, and shall be effective only to the extent of such
writing. All remedies under this Agreement and the Note or otherwise
afforded to NRG shall be cumulative and not alternative.
13.3 Successors and Assigns. This Agreement, together with
all extensions, amendments, and renewals thereof, shall bind and inure to
the benefit of the respective successors and assigns of each of the
parties, including any interim trustee, trustee, or examiner appointed
under the Bankruptcy Code. NRG may heretofore or hereafter sell, assign,
transfer, negotiate, or grant participations or subrogation rights in any
of its rights under this Agreement.
13.4 Attorneys' and Accountants' Fees and Costs. In the
event of any action at law or suit in equity in relation to this Agreement
or in the event that NRG incurs any attorneys' fees, accountants' fees, or
legal expenses or costs to protect or enforce its rights hereunder, the
Company, in addition to all other sums which the Company may be called upon
to pay, will pay
17
<PAGE>
to NRG the sum of NRG's reasonable attorneys' fees, accountants' fees and
legal expenses and costs, including the fees and expenses of Agent.
13.5 Notices. Any notice required to be sent hereunder
shall be deemed given and received upon the earlier of (1) telecopy or
personal delivery to the addresses listed below, or (2) three (3) calendar
days after deposit in the United States mails, postage prepaid, addressed
as follows:
(1) If to NRG at:
NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Craig A. Mataczynski
Telephone: (612) 373-5460
Telecopier: (612) 373-5430
with a copy to counsel at:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attention: Steven P. Buffone, Esq.
Telephone: (212) 351-3936
Telecopier: (212) 351-4035
(2) If to the Company at:
O'Brien Environmental Energy, Inc.
225 South Eighth Street
Philadelphia, PA 19106
Attention: Chief Administrative Officer
Telephone: (215) 627-5500
Telecopier: (215) 922-5227
18
<PAGE>
with a copy to counsel at:
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, NJ 07102
Attention: Brian S. Coven, Esq.
Telephone: (201) 643-7000
Telecopier: (201) 643-6500
13.6 Governing Law. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State of New
York, without reference to the conflicts of laws thereof, and, to the
extent applicable, the Bankruptcy Code. All disputes arising out of or
related to this Agreement, including, without limitation, any dispute
relating to the interpretation, meaning or effect of any provision hereof,
will be resolved in the Bankruptcy Court and the parties hereto each submit
to the exclusive jurisdiction of the Bankruptcy Court for the purpose of
adjudicating any such dispute.
13.7 Indemnification. The Company agrees (1) to indemnify
and hold harmless NRG, Agent and each director, officer, representative,
agent, attorney, advisor, consultant, employee and affiliate thereof (each
an "Indemnified Person") from and against any and all losses, claims,
damages, liabilities, and expenses that arise out of, result from, or in
any way relate to this Agreement or in connection with the transactions
contemplated hereby, and (ii) to reimburse each Indemnified Person, from
time to time, upon its demand for any legal or other expenses incurred in
connection with any investigation, defense, or participation in any actions
or other
19
<PAGE>
proceedings that in any way relate thereto, other than any of the foregoing
claimed by any Indemnified Person to the extent incurred by reason of the
gross negligence or willful misconduct of such person.
13.8 WAIVER OF JURY TRIAL. THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR THE NOTE OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF NRG OR THE
COMPANY RELATING THERETO.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
O'BRIEN ENVIRONMENTAL ENERGY, INC.
debtor and debtor-in-possession
By: /s/ John B. Kelly
Title: Chief Administrative Officer
NRG ENERGY, INC.
By: /s/ Craig A. Mataczynski
Title: Vice President, Domestic
Business Development
Signature Page
<PAGE>
Schedule 1.7
USES OF LOANS
1. Working capital of the Company and the O'Brien Subsidiaries,
including, but not limited to, the following:
a. salary, including state and federal employee withholding
taxes;
b. insurance;
c. maintenance expenses; and
d. general and administrative expenses.
2. Claims and expenses of administration of the bankruptcy
proceedings of the Company and the O'Brien Subsidiaries, including, but not
limited to, professional fees.
3. Fees and expenses of the Company and the O'Brien Subsidiaries
relating to ongoing operations.
4. Development costs, including but not limited to those related to
Edgeboro and Grays Ferry.
<PAGE>
Exhibit A
[Form of Note]
$3,000,000 August __, 1995
Newark, New Jersey
FOR VALUE RECEIVED, O'BRIEN ENVIRONMENTAL ENERGY, INC., a Delaware
corporation, as debtor and debtor-in-possession (the "Company"), hereby
promises to pay to the order of NRG Energy, Inc. ("NRG"), at 1221 Nicollet
Mall, Suite 700, Minneapolis, MN 55403 or at such other address as may be
designated by NRG in writing, the principal sum of Three Million
($3,000,000) Dollars in lawful money of the United States of America and in
immediately available funds, on the date provided in the Chapter 11
Financing Agreement dated as of August __, 1995, between the Company and
NRG (the "Agreement"), and to pay interest on the unpaid principal amount
of the Loans, at said office, in like money and funds, for the period
commencing on the date of each Loan until such Loan shall be paid in full,
at the rate per annum and on the dates provided in the Agreement provided,
that the payment obligations of the Company under this Note with respect to
principal and interest shall be subject to the proviso set out in section
1.9 of the Agreement.
The amount and date of each Loan made by NRG to the Company, and each
payment made on account of the principal thereof, shall be recorded by NRG
on its books and endorsed by NRG on the schedule attached hereto or any
continuation thereof.
This Note is the Note referred to in the Agreement, and evidences the
Loans made by NRG thereunder. This Note is entitled to superpriority,
administrative expense status, pursuant to section 364(c)(1) of the
Bankruptcy Code, as provided in the Agreement and in that certain order
dated August __, 1995 of the United States Bankruptcy Court for the
District of New Jersey. Capitalized terms used in this Note have the
respective meanings assigned to them in the Agreement.
The Company may at its option prepay all or any part of the principal
of this Note before maturity upon the terms provided in the Agreement.
<PAGE>
This Note has been executed and delivered in Newark, New Jersey and
shall be construed in accordance with and governed by the law of the State
of New York.
O'BRIEN ENVIRONMENTAL ENERGY, INC.
debtor and debtor-in-possession
By:
Name:
Title:
2
<PAGE>
LOANS
This Note evidences Loans made under the within described Agreement to
the Company on the dates and in the principal amounts set forth below,
subject to the payments and prepayments of principal set forth below:
Principal Amount Unpaid
Date Amount Paid or Principal Notation
of Loan of Loan Prepaid Amount Made by
<PAGE>
SILLS CUMMIS ZUCKERMAN RADIN
TISCHMAN EPSTEIN & GROSS, P.A.
JACK M. ZACKIN (JZ 2540)
One Riverfront Plaza
Newark, NJ 07102-5400
(201) 643-7000
Attorneys for O'Brien
Environmental Energy, Inc.
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY
x Chapter 11
In re : Case No. 94-26722
O'BRIEN ENVIRONMENTAL ENERGY, INC., : (RG)
Debtor. :
:
:
:
:
x
ORDER AUTHORIZING DEBTOR TO OBTAIN
POSTPETITION FINANCING PURSUANT TO
SECTION 364(c)(1) OF THE BANKRUPTCY CODE
Upon the Motion (the "Motion") duly noticed by O'Brien Environmental
Energy, Inc., debtor and debtor-in-possession (the "Debtor"), seeking,
among other things, an order of this Court pursuant to section 364(c)(1) of
title 11 of the United States Code, 11 U.S.C. 101, et seq. (the
"Bankruptcy Code"), and Rule 4001 of the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules"), authorizing the Debtor to obtain debtor
in possession financing from Calpine Corporation ("Calpine") pursuant to a
chapter 11 financing agreement attached thereto and the Court having been
advised at the duly noticed hearing on the
<PAGE>
Motion that NRG Energy, Inc. ("NRG") is willing to provide pursuant to the
terms of the Chapter 11 Financing Agreement between the Debtor and NRG,
dated August 30, 1995 (the "Financing Agreement"; capitalized terms used
herein and not otherwise defined herein shall have the meanings given to
such terms in the Financing Agreement) such chapter 11 financing on terms
more favorable than those offered by Calpine and described in the Motion;
and NRG having agreed, pursuant to the Financing Agreement, to provide
postpetition financing (the "Financing") up to the principal amount of
$3,000,000, with priority over any and all administrative expenses of the
kind specified in sections 503(b) and 507(b) of the Bankruptcy Code
pursuant to section 364(c)(1) of the Bankruptcy Code; and pursuant to
Bankruptcy Rule 4001(c)(1), due notice of the Motion and hearing on the
Motion having been given to NatWest, each of the official committees
appointed in the chapter 11 case of the Debtor, NRG, those entities who
have filed a notice of appearance pursuant to Bankruptcy Rule 2002(i), and
the United States Trustee for the District of New Jersey; and upon the
record of the hearings held on ________________, 1995 and upon all of the
pleadings filed with the Court and all of the proceedings had before the
Court, and after due deliberation and consideration and sufficient cause
appearing therefor;
It is FOUND, DETERMINED, ORDERED AND ADJUDGED that:
2
<PAGE>
1. This Court has core jurisdiction over these proceedings and the
parties and property affected hereby pursuant to 28 U.S.C. 157(b) and
1334.
2. The Debtor has an immediate need to obtain financing (i) to permit the
orderly continuation of its businesses so that they may be disposed of in a
manner which will maximize their value for the benefit of creditors and
shareholders and (ii) to satisfy other working capital needs.
3. The Debtor is otherwise unable to obtain adequate unsecured credit
allowable under section 503(b)(1) of the Bankruptcy Code as an
administrative expense. A facility in the amount provided by the Financing
Agreement is unavailable to the Debtor without the Debtor granting to NRG
pursuant to section 364(c)(1) of the Bankruptcy Code, allowed claims, with
respect to all indebtedness and obligations of the Debtor under the
Financing Agreement and the Note related thereto, having priority over any
and all administrative expenses of the kind specified in sections 503(b)
and 507(b) of the Bankruptcy Code. The ability of the Debtor to obtain
sufficient working capital and liquidity through the incurrence of
indebtedness for borrowed money and other financial accommodations is vital
to the Debtor. The preservation and maintenance of the going concern value
of the Debtor is integral to a successful reorganization of the Debtor
pursuant to the provisions of chapter 11 of the Bankruptcy Code.
4. The Financing Agreement has been negotiated in good faith and at
arm's-length between the Debtor and NRG, and
3
<PAGE>
any credit extended and Loans made to the Debtor by NRG pursuant to the
Financing Agreement shall be deemed to have been extended by NRG in good
faith, as that term is used in section 364(e) of the Bankruptcy Code.
5. The Debtor is immediately authorized to borrow pursuant to the
Financing Agreement up to an aggregate of $3 million for the purposes, and
upon the terms and conditions, provided for by the Financing Agreement.
6. Pursuant to Section 364(c)(1) of the Bankruptcy Code the Debtor is
expressly authorized, empowered, and directed to enter into the Financing
Agreement and execute and deliver, among other documents, the Financing
Agreement and the Note in substantially the form of the exhibit attached to
the Financing Agreement (collectively, the "Loan Documents") without any
resolution or further action of its Board of Directors, shareholders or any
other person. The terms and conditions of the Loan Documents are approved
and the Debtor is authorized to execute, deliver and perform and do all
acts that may be required in connection with the Loan Documents. Upon
execution and delivery of the Loan Documents, the Loan Documents shall
constitute valid and binding obligations of the Debtor, enforceable against
the Debtor in accordance with their terms. For these purposes the Chief
Administrative Officer of the Debtor so appointed by the Bankruptcy Court
shall be authorized and is directed to so execute and deliver the Loan
Documents and to
4
<PAGE>
perform any and all such further action as he may deem necessary to
effectuate the transaction contemplated by the Loan Documents.
7. The obligations of NRG to extend Loans under the Financing Agreement
are expressly subject to the conditions provided for in the Financing
Agreement.
8. For all of the Debtor's obligations and indebtedness arising under the
Financing Agreement and the other Loan Documents, NRG hereby is granted
pursuant to section 364(c)(1) of the Bankruptcy Code an allowed claim
having priority over any and all administrative expenses of the kind
specified in sections 503(b) and 507(b) of the Bankruptcy Code. Except as
otherwise provided in the Financing Agreement, no other claim having a
priority superior or pari passu to that granted by this Order to NRG shall
be granted while any amount under the Financing Agreement is unpaid or the
Commitment thereunder remains outstanding.
9. The Debtor shall use the amounts borrowed under the Financing
Agreement only for the purposes permitted thereunder.
10. At the election of NRG, National Westminster plc (in such capacity,
hereinafter referred to as "Agent"), or such other person as may be
designated by NRG in writing, is hereby authorized to act as agent for NRG
in connection with the Financing Agreement.
11. NRG's administrative expense claim pursuant to the Financing Agreement
shall be deemed filed and allowed without
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further action on NRG's part, and NRG shall not be required to take any
action to preserve the priority of its administrative expense claims
allowed in full pursuant to this Order.
12. In making decisions to make Loans to the Debtor under the Financing
Agreement or to collect the indebtedness and obligations of the Debtor
arising thereunder, NRG shall not be deemed to be in control of the
operations of the Debtor or to be acting as a "responsible person" or
"owner or operator" with respect to the operation or management of the
Debtor (as such terms, or any similar terms, are used in the United States
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, or in any similar federal or state statute).
13. The Debtor is authorized and directed to do and perform all acts, to
make, execute and deliver all instruments and documents and to pay all fees
which may be reasonably required or necessary for the Debtor's performance
under the Financing Agreement, including, without limitation: (i)
execution of the Loan Documents, and (ii) the non-refundable payment to NRG
of the Facility Fee referred to in the Financing Agreement and such other
costs and expenses as may be due from time to time including, without
limitation, reasonable attorneys' fees and disbursements as provided in the
Loan Documents.
14. Subject only to the provisions of Section 11(b) of the Financing
Agreement, the automatic stay provisions of section 362 of the Bankruptcy
Code hereby are vacated and modified to the extent necessary so as to
permit NRG to exercise, upon the
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<PAGE>
occurrence of an Event of Default (as defined in the Financing Agreement),
all rights and remedies provided for in the Loan Documents.
Notwithstanding any other provision of the Financing Agreement or this
Order, NRG shall have no obligation to make any Loans upon the occurrence
of an Event of Default.
15. The Loan Documents and the provisions of this Order shall be binding
upon NRG, Agent and the Debtor and their respective successors and assigns
(including any trustee hereinafter appointed or elected for the estate of
the Debtor) and shall inure to the benefit of NRG and the Debtor and
(except with respect to any trustee hereinafter appointed or elected for
the estate of the Debtor) their respective successors and assigns.
16. If any or all of the provisions of this Order are hereafter reversed,
modified, vacated or stayed, such reversal, stay, modification or vacation
shall not affect (x) the validity of any obligation, indebtedness or
liability incurred by the Debtor to NRG prior to written notice to NRG of
the effective date of such reversal, stay, modification or vacation, or (y)
the validity and enforceability of any priority authorized or created
hereby or pursuant to the Loan Documents. Notwithstanding any such
reversal, stay, modification or vacation, any indebtedness, obligation or
liability incurred by the Debtor to NRG prior to written notice to NRG of
the effective date of such reversal, stay, modification or vacation shall
be governed in all respects by the Loan Documents and the original
provisions of this Order,
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<PAGE>
and NRG shall be entitled to all the rights, remedies, privileges and
benefits, granted herein and pursuant to the Loan Documents with respect to
all such indebtedness, obligation or liability.
17. The provisions of this Order shall be effective upon entry of this
Order by the Clerk of the Court. All actions taken pursuant to this Order
and the terms of this Order shall survive the entry of, and shall govern
with respect to any conflict with, any order that may be entered confirming
a plan of reorganization of the Debtor or that may be entered converting
the chapter 11 case of the Debtor to a chapter 7 case. No order confirming
a plan will alter or impair the rights of NRG under this Order without the
prior written consent of NRG. The terms and provisions of this Order as
well as all rights of NRG and all obligations of the Debtor created or
arising pursuant to this Order shall continue in this chapter 11 case and
any superseding proceedings under the Bankruptcy Code, and such rights and
obligations shall maintain their priority as provided by this Order until
all Loans are satisfied by payment in full and are thereby discharged. So
long as amounts are outstanding under the Financing Agreement, the
obligations of the Debtor under the Financing Agreement shall not be
discharged by the entry of an order confirming a plan of reorganization in
this chapter 11 case and, pursuant to section 1141(d)(4) of the Bankruptcy
Code, the Debtor has waived such discharge.
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18. To the extent any of the terms and conditions of the Financing
Agreement are in conflict with the terms of this Order, the provisions of
this Order shall control.
19. The notice given by the Debtor of the Motion constitutes due and
sufficient notice of the relief granted pursuant to this Order.
Dated: Newark, New Jersey
August ____, 1995
___________________________________
HONORABLE ROSEMARY GAMBARDELLA
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Exhibit 10.2.2
NRG Energy, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, MN
April 30, 1996
O'Brien Environmental Energy, Inc.
225 South Eighth Street
Philadelphia, PA 19106
Gentlemen/Ladies:
Reference is made to that certain Chapter 11 Financing Agreement dated as
of August 30, 1995, as amended by letter Agreement dated February 20, 1996,
(the "DIP Loan Agreement") between O'Brien Environmental Energy, Inc. (the
"Company") and NRG Energy, Inc. ("NRG") and the Amended and Restated Stock
Purchase and Reorganization Agreement dated as of January 31, 1995 (the
"Acquisition Agreement") by and between the Company and NRG. This will
confirm our agreement to amend the DIP Loan Agreement by (i) striking the
proviso that appears beginning in the seventh line of Section 1.9 of the
DIP Loan Agreement and (ii) deleting the words "making or incurring
Specified Development Costs" beginning in the fifth line of Section 6(b) of
the DIP Loan Agreement and replacing them with the following: "making
capital contributions or incurring development costs in connection with the
projects commonly referred to as Edgeboro or Grays Ferry" (it being agreed
and understood that, in view of the possible increase to the Cash Purchase
Price (as defined in the Acquisition Agreement) provided for in Section 2.5
of the Acquisition Agreement in the event the Company makes capital
contributions or incurs development costs in connection with Edgeboro or
Grays Ferry using funds provided to the Company under the DIP Loan
Agreement, any provision in the DIP Loan Agreement providing for a
reduction in the amount to be repaid in respect of any DIP Loan would be
duplicative of or otherwise inconsistent with Section 2.5 of the
Acquisition Agreement. Except as expressly set forth above herein, this
letter amendment does not amend or otherwise affect the DIP Loan Agreement,
which shall continue in full force and effect.
If the foregoing accurately sets forth our agreement with respect to the
subject matter hereof, please sign in the place indicated below and return
an original of this letter agreement, as signed, to the undersigned.
<PAGE>
O'Brien Environmental Energy, Inc.
[Dated as of the Closing Date]
Page 2
NRG Energy, Inc.
By: /s/ Craig A. Mataczynski
Title: Vice President
ACCEPTED AND AGREED TO:
O'BRIEN ENVIRONMENTAL ENERGY, INC.
By: /s/ John B. Kelly
As of the date set forth above.
<PAGE>
Exhibit 10.2.3
NRG Energy, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, MN
April 30, 1996
O'Brien Environmental Energy, Inc.
225 South Eighth Street
Philadelphia, PA 19106
Gentlemen/Ladies:
Reference is made to that certain Chapter 11 Financing
Agreement dated August 30, 1995, as amended by letter agreement
dated February 20, 1996, (the "DIP Loan Agreement") between
O'Brien Environmental Energy, Inc. (the "Company") and NRG
Energy, Inc. ("NRG") and the Amended and Restated Stock Purchase
and Reorganization Agreement dated as of January 31, 1995 (the
"Acquisition Agreement") by and between the Company and NRG.
This will confirm our agreement to amend the DIP Loan Agreement
by (i) striking the proviso that appears beginning in the seventh
line of Section 1.9 of the DIP Loan Agreement and (ii) deleting
the words "making or incurring specified Development Costs"
beginning in the fifth line of Section 6(b) of the DIP Loan
Agreement and replacing them with the following: "making capital
contributions or incurring development costs in connection with
the projects commonly referred to as Edgeboro or Grays Ferry" (it
being agreed and understood that, in view of the possible
increase to the Cash Purchase Price (as defined in the
Acquisition Agreement) provided for in Section 2.5 of the
Acquisition Agreement in the event the Company makes capital
contributions or incurs development costs in connection with
Edgeboro or Grays Ferry using funds provided to the Company under
the DIP Loan Agreement, any provision in the DIP Loan Agreement
providing for a reduction in the amount to be repaid in respect
of any DIP Loan would be duplicative of or otherwise inconsistent
with Section 2.5 of the Acquisition Agreement. Except as
expressly set forth above herein, this letter amendment does not
amend or otherwise affect the DIP Loan Agreement, which shall
continue in full force and effect.
If the foregoing accurately sets forth our agreement with
respect to the subject matter hereof, please sign in the place
indicated below an return an original of this letter agreement,
as signed, to the undersigned.
<PAGE>
NRG ENERGY, INC.
By: /s/ Craig Mataczynski
Vice President
ACCEPTED AND AGREED TO:
O'BRIEN ENVIRONMENTAL ENERGY, INC.
By: /s/ John B. Kelly
As of the date set forth above.
<PAGE>
Exhibit 10.3
LIQUIDATING ASSET MANAGEMENT AGREEMENT
This Liquidating Asset Management Agreement, dated as of
April 30, 1996 (the "Agreement"), is entered into by and between
NRG Generating ~.S.) Inc., a Delaware corporation (the "Company")
and Wexford Management LLC., a Connecticut limited liability
company ("Wexford").
WITNESSETH:
WHEREAS, the Company is a Delaware corporation formerly
known as O'Brien Environmental Energy, Inc. formed pursuant to
the Plan of Reorganization for O'Brien Environmental Energy, Inc.
dated January 31, 1996, as amended and confirmed by order of the
United States Bankruptcy Court for the District of New Jersey
(the "Composite Fourth Amended and Restated Plan of
Reorganization for O'Brien Environmental Energy, Inc.").
WHEREAS, Wexford and the Company desire to enter into an
arrangement under which Wexford will manage the liquidation of
the Liquidating Assets (as defined below) and provide related
management services to the Company, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, as well as other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
1.1 Definitions. Capitalized terms used herein that are
not defined below and are defined in the Plan shall have the
meanings assigned to such terms in the Plan. When used herein the
following terms shall have the meanings indicated below:
"Affiliate" shall mean, as to any Person, any other Person
having control of, controlled by, or under common control with,
such first Person. For purposes of this definition, "control"
shall mean power to direct, or cause the direction of, the
management or policies of any Person, whether through ownership
of securities, by contract or otherwise.
"Asset Liquidation Fee" shall mean a fee equal to a market
rate liquidation services fee calculated as a percentage (not to
exceed 10%) of the Net Sales Price of any Liquidating Asset sold
by Wexford during the term of this Agreement, as defined in the
good faith judgment of the Board of Directors.
"Bankruptcy Court" shall mean the United States Bankruptcy
Court for the District of New Jersey.
"Board of Directors" shall mean the Board of Directors of
the Company.
<PAGE>
"Business Day" shall mean any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State
of New York or is a day on which banning institutions located in
such state are authorized or required by law or other government
action to close.
"Cause" shall mean (i) fraud, theft of Company property, or
malfeasance committed by Wexford in connection with the
performance of Wexford's duties hereunder, (ii) the willful
misconduct or negligence of Wexford in performing its duties
hereunder this Agreement, or (iii) a Section 2.9 Default.
"GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect from time to time.
"Joint Determination" shall mean a determination made upon
the mutual agreement of the Board of Directors and Wexford, as
provided in Article 6.8 hereof.
"Liquidating Assets" shall mean all of the Company's right,
title and interest in and to (i) all of the outstanding common
stock of Philadelphia Cogen and any management contracts relating
to the Philadelphia Water Department Project to which the Company
or any Affiliate thereto (other than Philadelphia Cogen) is a
party; (ii) all of the equity interest in Philadelphia Biogas
Supply, Inc., O'Brien Energy Services, Puma Power Plant, Ltd. and
American Hydrotherm Corp.; and (iii) the Equipment Held for Sale.
"Management Duties" shall have the meaning set forth in
Article 2.2.
"Net Sales Price" shall mean the gross sales price of any
Liquidating Asset minus commissions, sales and other taxes, legal
and accounting fees and other costs relating directly to the
sales transaction, provided, however, that such costs shall not
include any indebtedness directly associated with such
Liquidating Asset, which indebtedness is assumed or, to the
extent necessary, paid in full by the Company upon the sale of
such Liquidating Asset.
"Person" shall mean an individual, corporation, business
trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever
nature.
"Petition Date" shall have the meaning assigned to such term
in the Plan.
"Plan" shall have the meaning assigned to such term in the
Plan.
"Section 2.9 Default" shall have the meaning set forth in
Section 2.9.
"Termination Date" shall mean the effective date of
termination of this Agreement for any reason permitted under
Article Iv hereof
"Termination for Cause" shall have the meaning assigned to
such term in Section 4.2 hereof.
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<PAGE>
ARTICLE II
Management Matter
2.1 Retention of Wexford. The Company hereby retains
Wexford and Wexford hereby agrees to serve as the exclusive
manager, operator and liquidator of the Liquidating Assets of the
Company, on the terms and conditions hereinafter set forth.
2.2 Services to be Provided. Wexford shall have the
responsibility, subject to the direction and control of the Board
of Directors and any officer of the Company to whom the Board may
delegate authority from time to time, to (i) manage the
liquidation of the Liquidating Assets, (ii) to the extent
requested by the Company from time to time, manage the operation
of the Liquidating Assets on behalf of the Company as set forth
below, and (iii) do anything necessary or incidental to the
foregoing (all of such actions collectively, the "Management
Duties"), subject to the limitations set forth below. Consistent
with the foregoing, Wexford shall provide management services to
the Company and shall use its best efforts consistent with sound
commercial practice and shall render services and perform duties
as follows:
(a) market and sell, on terms designed to maximize the sale
proceeds that will be realized by the Company, all of the
Liquidating Assets and in that connection prepare appropriate
sales memoranda and other marketing material and assist in the
negotiation and preparation of appropriate sales agreements and
related documentation;
(b) supervise, hire, fire and set compensation for the
personnel necessary to perform the Management Duties (all of
which personnel shall be employed by Wexford as set forth in
Section 2.5 hereof);
(c) supervise the collection of all judgments, settlements,
fees, charges or other sums due to the Company relating to the
Liquidating Assets, the rendering of bills for the same, and,
from the proceeds of such collections or from other capital
available to the Company, cause the Company to pay all costs,
expenses and fees incurred or payable by the Company relating to
the Liquidating Assets;
(d) prepare and deliver, or cause to be prepared and
delivered, to the Board of Directors (i) no later than fifteen
(15) days after the end of each month, a monthly report of all
fees and expenses incurred by Wexford on behalf of the Company;
and (ii) all such other information as the Board of Directors may
reasonably request from time to time;
(e) prepare or cause to be prepared all financial
statements and data required pursuant to any document, agreement
or other instrument to which the Company is a party or by which
it is bound relating to the Liquidating Assets;
(f) deposit Company funds relating to the disposition of
the Liquidating Assets in such Company accounts as may be
specified by the Company;
(g) assist in the preparation and timely filing of all
returns relating to the Liquidating Assets as requested by the
Board of Directors, as necessary for federal, state and local
income tax purposes;
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<PAGE>
(h) maintain appropriate books and records on behalf of the
Company with respect to the Liquidating Assets; and
(i) subject to Section 2.3 hereof and to the preface to
this Section 2.2, perform or cause to be performed such other
services as Wexford reasonably believes are appropriate and
reasonable with respect to the Liquidating Assets.
2.3 Prohibitions. Notwithstanding anything to the contrary
contained herein, Wexford shall not be authorized on behalf of
the Company to:
(a) determine the accounting methods, conventions and
positions as to such items as income recognition and
deductibility to be used in the preparation of the income tax
returns of the Company or make any elections under the tax laws
of the United States, any states or other relevant jurisdictions;
(b) borrow money for any purpose on behalf of the Company;
(c) enter into any agreements or commitments which violate
the terms of this Agreement;
(d) enter into any agreement on behalf of the Company
outside the ordinary course of business without obtaining the
approval of the Board of Directors.
(e) disburse Company funds in any manner other than as
provided in Section 2.2 (c) or (f).
2.4. Office Location.
(a) Wexford shall initially maintain its office in
Greenwich, Connecticut, out of which office Wexford shall perform
the Management Duties.
(b) Wexford shall give the Company at least thirty (30)
days' prior written notice of any change in the location of
Wexford's office.
(c) Wexford shall maintain insurance covering its business
premises, equipment and records of the Company located in its
office in such amounts and against such risks as shall be
reasonably acceptable to the Company. A reasonable rata portion
of the cost of such insurance, as may be agreed between Wexford
and the Company, shall be borne by the Company.
2.5 Personnel Costs and Expenses. Subject to the approval
of the Board of Directors, Wexford shall hire or retain such
qualified personnel as are necessary to fulfill its obligations
under this Agreement. All reasonable costs and expenses
associated with such personnel (i.e., salaries, taxes, benefits,
insurance, and other reasonable, agreed overhead, etc.) and the
reasonable costs and expenses of independent contractors retained
by Wexford on behalf of the Company (as approved by the Board of
Directors) shall be borne by the Company. The Company shall
reimburse Wexford for all reasonable expenses incurred by Wexford
that directly relate to the performance of its Management Duties
on behalf of the Company.
2.6 Inspection. Upon reasonable notice, Wexford shall permit the
Company and any authorized representatives to inspect and audit
all data, documents and records
4
<PAGE>
of Wexford during normal business hours relating to its
performance under this Agreement.
2.7 Budget Considerations. Subject to any restrictions set
forth in any agreements to which any of the Subsidiaries are
party, all money required to operate the Liquidating Assets shall
be obtained from the net proceeds realized from the sale of
Liquidating Assets and distributions to the Company in respect of
the capital stock of any Subsidiary.
2.8 Non-Cash Recoveries. In the event the Company receives
any non-cash recoveries from the disposition of the Liquidating
Assets, and subject to the direction of the Board of Directors,
Wexford may (i) hold such recoveries in the name of the Company
for such period as the Board of Directors deems is practical to
maximize the value of such recoveries, (ii) sell such recoveries
for cash as the Board of Directors deems is in the best interest
of the Company, and (iii) hold and dispose of any securities
received in accordance with applicable securities laws. All
proceeds received from the sale of any non-cash recoveries shall
be Company funds and shall be retained pending disposition by the
Company.
2.9 Failure to Perform. If Wexford falls to perform any
actions which the Company determines are necessary for the proper
performance by Wexford of its Management Duties hereunder, the
Company shall provide written notice to Wexford of such failure
to perform. Within ten (10) days after receipt of such notice,
Wexford shall provide written notice to the Company that either
(i) Wexford has commenced to perform such action and will
diligently pursue such action to completion or (ii) Wexford
reasonably believes that the action should not be performed, in
which event the decision as to whether or not to take the action
shall become a Joint Determination. If Wexford falls to deliver
any written notice within the ten (10) day period, or if Wexford
delivers the notice set forth in subparagraph (i), but thereafter
unreasonably falls to complete the required actions within 25
days after receipt of the written notice from the Company (either
of such events being referred to herein as an "Section 2.9
Default"), the Company may terminate this Agreement for Cause.
ARTICLE III
Management Fee
3.1 Management Fee. As full compensation for the services
contemplated to be performed by Wexford during the term of this
Agreement, the Company shall pay Wexford the Asset Liquidation
Fee. The Asset Liquidation Fee payable by the Company with
respect to a Liquidating Asset shall be paid on the closing of
the sale of such Liquidating Asset. if; during the Term of this
Agreement, the Board of Directors elects for any reason to
withdraw from sale a Liquidating Asset or otherwise takes an
action which materially affects the ability to sell any
Liquidating Asset at or above the Net Sales Price set forth on
Exhibit 3.1 hereto, the Company shall promptly pay to Wexford an
Asset Liquidation Fee as if such Liquidating Asset had been sold
at the Net Sales Price set forth on Exhibit 3.1 hereto [To come,
but not to be disclosed to the public to ensure that the parties'
assumed values of the Liquidating Assets are not made public and
therefore do not inhibit the parties' abilities to sell such
assets to third parties for the highest possible purchase
prices]. Notwithstanding anything to the contrary in this
Agreement, the aggregate Asset Liquidation Fees payable to
Wexford hereunder shall in no event exceed $1,500,000, provided
that, the payment by the Company to Wexford of such maximum Asset
Liquidation Fees of $1,500,000 shall not excuse Wexford from its
obligation to perform the Management Duties for the duration of
the term of this Agreement, which may include the further sale of
Liquidating Assets with respect to which no Asset Liquidation Fee
will thereafter be payable. If Wexford falls to continue to
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<PAGE>
perform such duties, it shall be liable to the Company for
liquidated damages calculated as Asset Liquidation Fee of the Net
Sales Price set forth on Exhibit 3.1 hereto with respect to those
Liquidating Assets with respect to which Wexford shall have filed
to perform such Management Duties.
3.2 Effect of Termination for Cause. In the event of a
Termination for Cause, Wexford shall be liable to the Company for
breach of contract damages arising out of the occurrence of the
event that gave rise to the Termination for Cause. In no event
shall Wexford be liable for consequential damages.
ARTICLE W
Termination
4.1 Term. This Agreement shall remain in full force and
effect from the date hereof until the fifth anniversary of the
date hereof, provided, however, that this Agreement may be
earlier terminated as set forth in this Article W.
4.2 Termination for Cause. This Agreement may be terminated
by the Company at any time immediately upon notice to Wexford
upon the occurrence of any event set forth in the definition of
Cause (a "Termination for Cause").
ARTICLE V
Indemnification
The Company shall indemnification and hold harmless Wexford
(and its agents, employees and representatives acting on its
behalf and independent contractors retained by Wexford in
accordance with the terms of this Agreement) and its directors,
officers, affiliates, successors and permitted assigns
(collectively, the "Indemnitees") from and against any reasonable
costs, expenses, or disbursements of any kind or nature
whatsoever including, without limitation, reasonable legal fees
which the Indemnitees may incur in connection with their status
as such, other than costs, expenses, or disbursements of any kind
or nature whatsoever arising from the willful misconduct or the
gross negligence of such Indemnitee, if the Indemnitee acted in
good faith and in a manner it reasonably believed to be in, or
not opposed to, the best interests of the Company and, with
respect to any criminal proceeding, had no reasonable cause to
believe its conduct was unlawful.
ARTICLE VI
Miscellaneous
6.1 No Waiver. No term or provision of this Agreement
shall be deemed waived and no breach or default shall be deemed
consented to unless such waiver or consent shall be in writing
and signed by the party claimed to have waived or consented. No
consent by any party to, or waiver of, a breach or default by the
other, whether express or implied, shall constitute a consent to
or a waiver of any different or subsequent breach or default.
6.2 Assignment. The rights and obligations of either party under
this Agreement may not be assigned, transferred or delegated
without the prior written consent of the other party, which such
consent may be withheld for any reason whatsoever.
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<PAGE>
6.3 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES OF SUCH
JURISDICTION.
6.4 Severability. If any term or provision of this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms and
provisions shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
6.5 Notices. All notices and other communications
hereunder shall be given in writing and shall be deemed to have
been duly given if delivered personally, upon such delivery, if
transmitted by telecopier to the number(s) designated below, upon
receipt, or if mailed by registered or certified mail, postage
prepaid, return receipt requested, five days after being placed
in the mail, to the address(es) designated below, or to such
other address(es) as either party may specify in writing from
time to time.
(a) If to Wexford:
Wexford Management Corporation
411 West Putnam Avenue
Greenwich, CT 06830
Attention: Spyro S. Skouras
(b) If to the Company:
c/o NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Vice President, Business Development
6.6 Joint Determination. With respect to any action or decision
requiring a Joint Determination under this Agreement, either the
Company or Wexford (the "Initiating Party") may initiate the
Joint Determination process set forth below by delivery of
written notice to the other party (the "Other Party") of the
action or decision requiring Joint Determination, and specifying
therein the Initiating Party's recommendation as to the action or
decision to be taken. The Other Party shall have a period of
fifteen (15) days after receipt of such written notice to respond
in writing to the Initiating Party by setting forth its
recommendation as to the action or decision requiring a Joint
Determination. If the Other Party fails to do so respond in
writing within such fifteen (15) day period, the Initiating Party
may take the action recommended in its notice without the further
consent or approval of the Other Party, provided that the Other
Party shall not be responsible for (and shall be exculpated by
the Initiating Party from any liability for) the action
recommended by the Initiating Party and/or the implementation
thereof If the Other Party responds to the Initiating Party
within the fifteen (15) day period, the Other Party and the
Initiating Party shall use their reasonable good faith efforts to
reach agreement on the action or decision requiring Joint
Determination within twenty (20) days after receipt of the Other
Party's response. In the event the Company and Wexford cannot
agree on an action which requires a Joint Determination within
such twenty (20) day period, no such action shall be taken. If a
decision is necessary for the operation of the Company or if the
Company and/or Wexford so elect, the Company and/or Wexford may
petition the Bankruptcy Court for resolution of the dispute.
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6.7 Entire Agreement. This Agreement represents the entire
understanding of the parties hereto with respect to the subject
matter hereto and supersede any and all prior negotiations,
understandings and agreements with respect thereto.
6.8 Amendments. This Agreement may be amended only by a
written document signed by both parties.
6.9 No Joint Venture. Wexford and the Company are
independent contractors, and nothing in this Agreement shall be
construed to make Wexford and the Company joint venturers or
partners or to impose upon either of them any liability as such.
6.10 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding on and enforceable against, the
permitted successors and assigns of the respective signatories
hereto.
6.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered an
original and all of which taken together shall constitute one
agreement binding on both of the parties hereto, notwithstanding
that both parties shall not have signed the same counterpart.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
WEXFORD
NOW WEXFORD MANAGEMENT LLC
WEXFORD MANAGEMENT CORP.
By: /s/ Spyros S. Skouras
Name: Spyros S. Skouras
Title: Senior Vice President
COMPANY:
NRG GENERATING (U.S.) INC.
By: /s/ Leonard Bluhm
Name: Leonard Bluhm
Title: President and Chief
Executive Officer
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Exhibit 3.1
Commission Rate: 10%
Asset Net Sales Price
Philadelphia Cogen and any management $13,000,000
contracts relating to the Philadelphia
Water Dept. Project
Each item of Equipment Held for Sale Midpoint in the range
assigned to asset
appraisals performed by
Belyea Company, Inc. dated
July 14, 1995 or Arthur
Andersen & Co., SC dated
June 13, 1995
Equity Interests in:
Philadelphia Biogas Supply $1,000,000
O'Brien Energy Services $1,700,000
Puma Power Plant, Ltd. $3,000,000
American Hydrotherm Corp. $ 500,000
<PAGE>
Exhibit 10.4
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT is entered into on, and effective as of,
the Effective Date (as hereinafter defined) by and between NRG ENERGY,
INC., a Delaware corporation (the "Manager") and NRG GENERATING (U.S.)
INC., a Delaware corporation (the "Company").
R E C I T A L S
1. Pursuant to the Plan of Reorganization (as hereinafter defined), the
Manager acquired 41.86% of the issued and outstanding shares of capital
stock of reorganized O'Brien Environmental Energy, Inc., which has been
renamed "NRG Generating (U.S.) Inc."
2. In connection with the Plan of Reorganization, the Manager has agreed
to provide management, administrative and certain other services to the
Company in connection with the day to day business of the Company.
A G R E E M E N T
In consideration of the premises and the covenants, conditions, and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
Definitions
1.1. Definitions. The following terms shall have the indicated meanings
for the purposes of this Agreement:
"Affiliates" shall have the meaning given to such term in Rule 12b-2
issued under the Securities and Exchange Act of 1934, as amended.
"Administrative and General Expenditures" shall mean all
administrative and general expenditures, including (i) salaries and
related benefits and expenses of personnel who render Services,
(ii) charges related to the computer and telecommunications services
(both voice and data) that support the provision of such Services and
(iii) the administrative fee charged by the Manager or its Affiliates
to manage, administer and bill for third-party contracts related to
the provision of Services hereunder, but the term "Administrative and
General Expenditures" shall not include charges related to the
Manager's or its Affiliate's senior executive management.
Administrative and General Expenditures shall be allocated to the
Company in a fair and reasonable manner.
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"Agreement" shall mean this Management Services Agreement.
"Bankruptcy Code" -- Title 11 of the United States Code, 101, et
seq, as now or hereafter in effect, or any successor statute thereto.
"Bankruptcy Event" -- If, with respect to any Person, (a) such
Person generally is unable to pay such Person's debts as such debts
become due, or admits in writing such Person's inability to pay such
Person's debts generally, or makes a general assignment for the
benefit of such Person's creditors; or (b) any proceeding is
instituted by or against such Person under any Bankruptcy Law seeking
to adjudicate such Person as bankrupt or insolvent, or seeking
liquidation, winding-up, reorganization, rearrangement, adjustment,
protection, relief or recomposition of such Person or such Person's
debts, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for such Person or
for all or substantially all of such Person's property and, in the
case of any such proceeding instituted against such Person (but not
instituted by or with the consent of such Person), is not
controverted within 20 days and is not dismissed or stayed for a
period of 60 days after such proceeding is filed.
"Bankruptcy Law" -- The Bankruptcy Code and any other applicable
federal, state, local or foreign insolvency, reorganization,
moratorium, fraudulent conveyance or similar Law now or hereafter in
effect for the relief of debtors.
"Company Securities" shall mean the shares of Common Stock of the
Company and any additional securities issued by the Company from time
to time, if any such additional securities are issued.
"Effective Date" shall mean the Effective Date of the Plan of
Reorganization.
"Independent Committee" shall mean the Independent Committee of
the Board of Directors of the Company as defined in the Bylaws of the
Company.
"Outsource" shall mean to cause a Service to be provided by a
third-party provider which is not an Affiliate of the Manager.
"Outsourced Services" shall mean those services which the Manager
Outsources to third-party providers which are not affiliates of the
Manager.
"Plan of Reorganization" shall mean the Chapter 11 plan of
reorganization for O'Brien Environmental Energy, Inc. proposed by the
Manager and certain other parties.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization, governmental authority or any other form
of entity.
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"Services" shall have the meaning set forth in Section 2.1.
1.2 Terminology. Unless the context of this Agreement clearly requires
otherwise, (a) pronouns, wherever used herein, and of whatever gender, will
include natural persons and corporations and associations of every kind and
character, (b) the word "included" or "including" will mean "including
without limitation", (c) the word "or" will have the inclusive meaning
represented by the phrase "and/or", (d) the words hereof, herein,
hereunder, and similar terms in this Agreement will refer to this Agreement
as a whole and not any particular section or article in which such words
appear and (e) all terms defined in this Agreement in the singular will
have the same meaning when used in the plural and vice versa. The section,
article and other headings in this Agreement and the Table of Contents to
this Agreement are for reference purposes and will not control or affect
the construction of this Agreement or the interpretation hereof in any
respect. Article, section and subsection references are to this Agreement
unless otherwise specified.
ARTICLE II
Services
2.1 General. The Company hereby appoints and retains the Manager, and the
Manager accepts the appointment, to provide to the Company and its
subsidiaries certain Services in accordance with the terms of this
Agreement. At the Manager's election, it may cause one or more of its
Affiliates or third-party contractors to provide the Services; provided,
however, that the Manager shall remain responsible for the provision of the
Services in accordance with this Agreement. Whenever services are to be
rendered by a third party contractor, the Manager shall cause such third-
party contractor to be engaged directly by the Company. The Independent
Committee will have the sole authority and responsibility to make all
decisions and take all actions on behalf of Generating under this
Agreement.
2.2 Services. The Manager shall provide all services (the "Services")
necessary to manage and administer the day to day business of the Company,
including the following:
2.2.1 General Management and Administration. The Manager
shall be responsible for the management, administration and support of
all of the businesses of the Company or any subsidiary.
2.2.2 Administration of Agreements. The Manager shall
administer all of the obligations and responsibilities of the Company
and its subsidiaries under all agreements to which the Company or any
of its subsidiaries is a party, subject to the availability of funds
therefor in the Company's accounts established pursuant to
Section 2.2.4.
2.2.3 Billing and Collection of Revenues. The Manager shall
implement and maintain billing and collection procedures in respect of
all accounts payable and other amounts due the Company or any of its
subsidiaries.
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2.2.4 Bank Accounts. The Manager shall establish and
maintain on behalf of and in the name of the Company and its
subsidiaries one or more bank accounts as required or convenient in
connection with the business of the Company and its subsidiaries.
2.2.5 Accounting and Documentation. The Manager shall
provide full bookkeeping and accounting services to the Company and
its subsidiaries as required from time to time and, to the extent
pertaining to matters within the knowledge and control of the Manager,
shall prepare and submit on behalf of the Company and its subsidiaries
all necessary documentation, certification and notices required to be
submitted by the Company or its subsidiaries pursuant to any
agreements or otherwise.
2.2.6 Licenses and Permits. The Manager shall maintain
compliance with all required permits, licenses and governmental
approvals obtained by or for the Company or its subsidiaries in
connection with the operation of their respective businesses. Where
permits must be obtained, modified or renewed by the Company and such
responsibility has not been delegated to a third party, the Manager
shall prepare any application, filing or notice related thereto, shall
cause such materials to be submitted to, and shall represent the
Company or the relevant subsidiary in contacts with, the appropriate
governmental agency, and shall perform all ministerial or
administrative acts necessary for timely issuance and the continued
effectiveness thereof. Copies of all permits, licenses and
governmental approvals obtained by or for the Company or its
subsidiaries shall be maintained by the Manager at its offices.
2.2.7 Public Relations. The Manager shall be responsible for
all public and community relations matters of the Company and its
subsidiaries.
2.2.8 Tax Matters. The Manager shall provide the services
necessary to provide required tax information for holders of the
Company Securities and prepare tax returns, if any are required with
respect to the Company and its subsidiaries.
2.2.9 Registration and Transfer of The Company Securities.
The Manager shall cause the registration and transfer of the Company
Securities issued by the Company and replacement of mutilated,
destroyed, lost or stolen certificates representing the Company
Securities including handling of any necessary interaction with
American Stock Transfer and Trust Company, or its successor, as
transfer agent.
2.2.10 SEC Filings. The Manager shall assist in connection
with the Company's obligation to prepare any and all filings required
to be made with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, or other filing and reporting obligations of other
regulatory agencies, or the American Stock Exchange or
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other applicable securities exchange pursuant to the laws, rules and
regulations governing the same, and in the preparation and
distribution of all materials required to be delivered to the holders
of the Company Securities pursuant to such laws or regulations.
2.2.11 Investor Relations. The Manager shall handle all
investor relations matters of the Company and its subsidiaries,
including the preparation of documents, responses to all inquiries
from holders of the Company Securities, analysts or potential
investors and the preparation and issuance of press releases.
2.2.12 Insurance. To the extent permitted by the Manager's
insurers, the business, properties and assets of the Company and its
subsidiaries shall be insured under the Manager's policies in effect
from time to time or separate policies arranged by the Manager. The
Manager shall provide the Company and its subsidiaries with risk
management services.
2.2.13 Audit. The Manager shall assist the Company and its
subsidiaries with negotiating services for both internal and contract
audit functions.
2.3 Personnel. The Manager shall provide and make available as necessary
all professional, supervisorial, managerial, administrative and other
personnel as are necessary to perform the Services. Such personnel shall
be qualified and experienced in the duties to which they are assigned. The
working hours, rates of compensation and all other matters relating to the
employment of individuals employed by the Manager or its Affiliates in the
performance of the Services shall be determined solely by the Manager or
its respective Affiliates. In the performance of the Services, the Manager
also shall be authorized to obtain on behalf of the Company outside
accounting, tax, legal, engineering, and other services as it reasonably
deems necessary.
2.4 Standards for Performance of Services. The Manager shall, and shall
cause its Affiliates to, perform the Services with reasonable diligence and
dispatch in a prudent, cost effective and efficient manner, in accordance
with all applicable laws, regulations, codes, permits, licenses, and
standards, and in accordance with the applicable terms and conditions of
the Company's contracts. The Manager shall not carry out any transaction
or enter into any contract or agreement on behalf of the Company or any
subsidiary hereunder with any Affiliate of the Manager except on terms no
less favorable to the Company or such subsidiary than would be available in
a bona fide arm's length transaction with a non-affiliated person. The
Manager alone may determine whether or not to Outsource a Service.
2.5 Right to Request Instruction. At any time, the Manager may, if it
reasonably deems it to be necessary or appropriate, request written
instructions from the Independent Committee, within a reasonable period
prior to the necessity for taking action, with respect to any matter
contemplated by this Agreement and may defer action thereon pending the
receipt of such written instructions. Actions taken by the Manager, its
Affiliates or its or their officers, employees and representatives in
accordance with the
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written instructions of the Independent Committee, or, except in cases of
the Manager's or such Affiliate's gross negligence or willful misconduct,
failures to act by such persons pending the receipt of such written
instructions, shall be deemed to be proper conduct within the scope of the
Manager's authority under this Agreement.
ARTICLE III
Payment
3.1 Payment. The Company, in consideration for the performance of the
Services by or on behalf of the Manager, agrees to reimburse the Manager
for (i) all expenses actually incurred by the Manager relating to the
Services provided by the Manager hereunder to the Company or its
subsidiaries, including all Administrative and General Expenditures
("Direct Charges"), (ii) the actual cost of any item purchased for the
Company or such subsidiary by the Manager or its Affiliates ("Operating
Charges"), and (iii) all expenses actually incurred by the Manager or its
Affiliates for Outsourced Services or other contract services or utilities
provided by any third-party providers for the Company or its subsidiaries
under an agreement between the Manager or is Affiliates and such third
party ("Outsourced Charges"). If the compensation for the Services does
not include sales, use, excise, value added or similar taxes, and if any
such taxes are imposed on the Services, the Company shall pay or reimburse
the Manager for any such taxes.
3.2 Invoicing.
A. The Manager shall invoice, or cause its Affiliates to
invoice, the Company by the 15th day of each month for all Direct
Charges and Operating Charges with respect to the preceding month and
any adjustments that may be necessary to correct prior invoices. The
Manager shall invoice, or cause its Affiliates to invoice, the Company
by the 15th day of the month following receipt of an invoice from a
third-party contractor for Outsourced Charges for Services provided
hereunder and any adjustments that may be necessary to correct prior
invoices. All invoices shall reflect in reasonable detail a
description of the Services performed during the preceding month and
documentation available to the Manager backing up invoiced charges and
shall be due and payable on the last day of the month of the relevant
invoice in cash by wire transfer or check to an account or accounts
designated by the Manager. In the event of a default in payment by
the Company, upon thirty (30) days' written notice to the Company,
sent by certified mail to the address specified below, the Manager may
terminate this Agreement as to those Services which relate to the
unpaid portion of the invoice if it has not received payment within
such thirty (30) days; provided, however, in the event of a dispute as
to the propriety of invoiced amounts, the Company shall pay all
undisputed amounts on each invoice, but shall be entitled to withhold
payment of any amount in dispute and shall notify the Manager within
ten (10) business days from receipt of the invoice of the disputed
amount and the reasons each such charge is disputed by the Company.
The Manager shall promptly provide the Company with records relating
to the disputed amount so as to
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enable the parties to resolve the dispute. So long as the parties are
attempting in good faith to resolve the dispute, the Manager shall not
be entitled to terminate the Services related to and by reason of the
disputed charge.
B. Any statement or payment not disputed in writing by either
party within two years of the date of such statement or payment shall
be considered final and no longer subject to adjustment. The Company
shall not be obligated to pay for any Direct Charges, Operating
Charges or Outsourced Charges for which statements for payment are
submitted more than two years after the termination of this Agreement.
ARTICLE IV
Limited Warranty; Limitation of Liability
ALL PRODUCTS OBTAINED FOR THE COMPANY ARE AS IS, WHERE IS, WITH ALL FAULTS.
SUBJECT TO THE MANAGER'S AND ITS AFFILIATES RESPONSIBILITIES SET FORTH IN
SECTION 2.4 HEREOF, THE MANAGER AND ITS AFFILIATES MAKE NO (AND HEREBY
DISCLAIM AND NEGATE ANY AND ALL) REPRESENTATIONS AND WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES RENDERED TO OR PRODUCTS
OBTAINED FOR THE COMPANY. FURTHERMORE, THE COMPANY MAY NOT RELY UPON ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE MADE TO THE MANAGER OR
ITS AFFILIATES BY ANY PARTY (INCLUDING AN AFFILIATE OF THE MANAGER)
PERFORMING SERVICES ON BEHALF OF THE MANAGER OR ITS AFFILIATES HEREUNDER,
UNLESS SUCH PARTY MAKES AN EXPRESS WRITTEN WARRANTY TO THE COMPANY.
IT IS EXPRESSLY UNDERSTOOD BY THE COMPANY AND THE COMPANY AGREES THAT THE
MANAGER AND ITS AFFILIATES SHALL HAVE NO LIABILITY FOR THE FAILURE OF THIRD-
PARTY PROVIDERS TO PERFORM ANY SERVICES HEREUNDER AND FURTHER THAT THE
MANAGER AND ITS AFFILIATES SHALL HAVE NO LIABILITY WHATSOEVER FOR THE
SERVICES PROVIDED BY SUCH THIRD-PARTY PROVIDERS UNLESS SUCH SERVICES ARE
PROVIDED IN A MANNER WHICH WOULD EVIDENCE GROSS NEGLIGENCE ON THE PART OF
THE MANAGER OR ITS AFFILIATES OR INTENTIONAL MISCONDUCT. THE COMPANY
AGREES THAT THE REMUNERATION TO BE PAID TO THE MANAGER OR AN AFFILIATE
HEREUNDER FOR THE SERVICES TO BE PERFORMED REFLECTS THIS LIMITATION OF
LIABILITY AND DISCLAIMER OF WARRANTIES. IN NO EVENT SHALL THE MANAGER OR
ITS AFFILIATES BE LIABLE TO THE COMPANY OR ANY OTHER PERSON OR ENTITY FOR
ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY ERROR
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IN THE PERFORMANCE OF SERVICES OR FROM THE BREACH OF THIS AGREEMENT,
REGARDLESS OF THE FAULT OF THE MANAGER, ANY MANAGER AFFILIATE OR ANY THIRD-
PARTY PROVIDER OR WHETHER THE MANAGER, ANY MANAGER AFFILIATE OR THIRD-PARTY
PROVIDER IS WHOLLY, CONCURRENTLY, PARTIALLY, OR SOLELY NEGLIGENT. TO THE
EXTENT ANY THIRD-PARTY PROVIDER HAS LIMITED ITS LIABILITY TO THE MANAGER OR
ITS AFFILIATE FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT, THE
COMPANY AGREES TO BE BOUND BY SUCH LIMITATION OF LIABILITY FOR ANY PRODUCT
OR SERVICE PROVIDED TO THE COMPANY BY SUCH THIRD-PARTY PROVIDER UNDER THE
MANAGER'S OR SUCH AFFILIATE'S AGREEMENT.
ARTICLE V
Force Majeure
A. THE MANAGER AND ITS AFFILIATES SHALL HAVE NO OBLIGATION TO
PERFORM OR CAUSE THE SERVICES TO BE PERFORMED IF ITS FAILURE TO DO SO IS
CAUSED BY OR RESULTS FROM ANY ACT OF GOD, GOVERNMENTAL ACTION, NATURAL
DISASTER, STRIKE, FAILURE OF ESSENTIAL EQUIPMENT OR ANY OTHER CAUSE OR
CIRCUMSTANCE BEYOND THE CONTROL OF THE MANAGER, OR, IF APPLICABLE, ITS
AFFILIATES OR THIRD-PARTY PROVIDERS OF SERVICES TO THE MANAGER ("NRG Event
of Force Majeure"). The Manager will promptly notify the Company of any
NRG Event of Force Majeure. The Manager agrees that upon restoring the
Service following any NRG Event of Force Majeure, the Manager will allow
the Company to have equal priority with the Manager and its Affiliates, in
accordance with prior practice, with respect to access to the restored
Service.
B. THE COMPANY SHALL HAVE NO OBLIGATION TO USE ANY OF THE
SERVICES IF ITS FAILURE TO DO SO IS CAUSED BY OR RESULTS FROM ANY ACT OF
GOD, GOVERNMENTAL ACTION, NATURAL DISASTER, STRIKE, FAILURE OF ESSENTIAL
EQUIPMENT OR ANY OTHER CAUSE OR CIRCUMSTANCE BEYOND THE CONTROL OF THE
COMPANY (a "Company Event of Force Majeure"). IN SUCH CASE, THE COMPANY
WILL NOT BE OBLIGATED TO PAY THE MANAGER FOR ANY SUCH SERVICES WHICH THE
COMPANY DOES NOT USE, BUT THE COMPANY WILL BE OBLIGATED TO PAY THE MANAGER
FOR ANY SUCH SERVICES WHICH THE COMPANY DOES USE. The Company will
promptly notify the Manager of any Company Event of Force Majeure.
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ARTICLE VI
Term and Termination; Events of Default
6.1 Term. The term of this Agreement shall commence on the Effective Date
and shall continue until the expiration or other termination of the Co-
Investment Agreement, subject to earlier termination pursuant to Section
6.2 or 6.3.
6.2 Events of Default. If one or more of the following events occurs with
respect to a party hereto, it will constitute an "Event of Default" with
respect to such party:
(a) Failure to Perform Obligations. Such party fails to perform
or observe any material obligation under this Agreement and such
failure continues for more than 30 days after the non-defaulting party
has given notice thereof to such party (or if the nature of such
default is such that it is not capable of being cured within 30 days,
then the failure of such party to commence to cure such default within
30 days and to diligently and continuously pursue the cure of such
default thereafter, but in no event may such extended cure period
exceed 180 days);
(b) Bankruptcy Event. Such party becomes subject to a
Bankruptcy Event.
6.3 Remedies; Exclusivity. At any time during the continuance of an
Event of Default, the non-defaulting party will have the right to
(a) elect, by giving notice to the defaulting party, not to be bound in any
respect by the provisions of this Agreement during such continuance, in
which case such party will have no obligations or liabilities hereunder
during such period, (b) terminate the Agreement upon giving notice of
termination to the defaulting party, if the Event of Default is a
Bankruptcy Event or otherwise has continued without cure for 180 days
following notice pursuant to Section 6.2(a), and (c) pursue its rights in
accordance with Section 7.11. No failure on the part of either NRG or the
Company to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement will
operate as a waiver thereof, nor will any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
ARTICLE VII
Miscellaneous
7.1 Severability. In the event any portion of this Agreement shall be
found by a court of competent jurisdiction to be unenforceable, that
portion of the Agreement will be null and void and the remainder of the
Agreement will be binding on the parties as if the unenforceable provisions
had never been contained herein.
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7.2 Assignment. Except for the ability of the Manager to cause one or
more of the Services to be performed by one of its Affiliates or a third-
party provider, no party shall have the right to assign its rights or
obligations under this Agreement without the consent of the other party.
7.3 Entire Agreement. This Agreement constitutes the entire agreement of
the parties relating to the performance of the Services. All prior or
contemporaneous written or oral agreements are merged herein.
7.4 Law. This Agreement shall be subject to and governed by the laws of
the State of Minnesota, excluding any conflicts-of-law rule or principle
that might refer the construction or interpretation of this Agreement to
the laws of another state.
7.5 Amendment or Modification. This Agreement may be amended or modified
from time to time only by a written amendment signed by the parties hereto.
7.6 Notices. Any notice, request, instruction, correspondence or other
document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered personally
or mailed, postage prepaid, or by telegram or telecopier, as follows:
(a) if to the Company, to:
NRG Generating (U.S.) Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: President and Chief Executive Officer
Telephone: 612-373-5300
Telecopier: 612-373-5346
With a copy to:
Chairman, Independent Committee
of NRG Generating (U.S.) Inc.
c/o NRG Generating (U.S.) Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Telephone: 612-373-5300
Telecopier: 612-373-5346
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(b) if to NRG, to:
NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Vice President of Operations and
Engineering
Telephone: 612-373-5300
Telecopier: 612-373-5346
With a copy to:
NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Vice President and General Counsel
Telephone: 612-373-5300
Telecopier: 612-373-5392
Notice given by personal delivery or mail shall be effective upon actual
receipt by the person to whom addressed. Notice given by telegram or
telecopier shall be effective upon actual receipt if received during the
recipient's normal business hours, or at the beginning of the recipient's
next business day after receipt if not received during the recipient's
normal business hours. Any party may change any address to which Notice is
to be given to it by giving Notice as provided above of such change of
address.
7.7 Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto
agrees to execute and deliver such additional documents and instruments as
may be required for the Manager to provide the Services hereunder and to
perform such other additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions, and
conditions of this Agreement.
7.8 Designated Contact Person. Without limiting the obligations of the
parties hereto with respect to the delivery of Notices pursuant to
Paragraph 16 hereof, the Manager hereby designates Craig A. Mataczynski
(phone no. (612) 373-5460) as a person with whom representatives of the
Company may communicate regarding any Services to be performed hereunder.
The Company hereby designates Leonard A. Bluhm (phone no. (612) 373-5300)
as its designated person with whom the Manager may communicate regarding
any problems or other matters that the Manager may have in providing any
Service hereunder by itself or any third-party provider. Either party
hereto may redesignate its representative at any time during the term
hereof by written notice to the other party.
7.9 Acknowledgment Regarding Certain Provisions. EACH OF THE PARTIES
HERETO SPECIFICALLY ACKNOWLEDGES AND AGREES (a) THAT IT HAS A DUTY TO READ
THIS AGREEMENT AND THAT IT IS CHARGED WITH
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NOTICE AND KNOWLEDGE OF THE TERMS HEREOF, (b) THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE
TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT, AND (c) THAT IT RECOGNIZES
THAT CERTAIN OF THE TERMS OF THIS AGREEMENT PROVIDE FOR THE ASSUMPTION BY
ONE PARTY OF, AND/OR RELEASE OF THE OTHER PARTY FROM, CERTAIN LIABILITIES
ATTRIBUTABLE TO THE MATTERS COVERED BY THIS AGREEMENT THAT SUCH PARTY WOULD
OTHERWISE BE RESPONSIBLE FOR UNDER THE LAW. EACH PARTY HERETO FURTHER
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR
ENFORCEABILITY OF ANY SUCH PROVISIONS OF THIS AGREEMENT ON THE BASIS THAT
THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT SUCH
PROVISIONS ARE NOT "CONSPICUOUS."
7.10 No Third-Party Beneficiary. The provisions of this Agreement are
enforceable solely by the parties to this Agreement, and no other person
shall have the right, separate and apart from the Company or the Manager,
to enforce any provision of this Agreement or to compel any party to this
Agreement to comply with the terms of this Agreement.
7.11 Mediation. The Manager and the Company agree to negotiate in good
faith in an effort to resolve any dispute related to this Agreement that
may arise between the parties. If the dispute cannot be resolved promptly
by negotiation, then either party may give the other party written notice
that the dispute should be submitted to mediation. Promptly thereafter, a
mutually acceptable mediator shall be chosen by the parties, who shall
share the cost of mediation services equally. If the dispute has not been
resolved by mediation within ninety (90) days after the date of written
notice requesting mediation, then either party may initiate litigation and
pursue any and all remedies at law or at equity that such party is entitled
to.
7.12 Indemnification. The Company agrees that it will indemnify and
hold harmless the Manager, its Affiliates and their respective directors,
officers, employees, agents and controlling persons (each being a "Manager
Indemnified Party") from and against any and all losses, claims, damages
and liabilities, joint or several, to which such Manager Indemnified Party
may become subject under any applicable federal or state law, or otherwise,
relating to or arising out of the engagement of the Manager pursuant to,
and the performance by the Manager or its Affiliates of the services
contemplated by, this Agreement. The Company will reimburse any Manager
Indemnified Party for all costs and expenses (including reasonable counsel
fees and expenses) as they are incurred in connection with the
investigation of, preparation of or defense of any pending or threatened
claim or any action or proceeding covered by such indemnity. The Company
will not be liable under the foregoing indemnification provisions to the
extent that any loss, claim, damage, liability or expense is found in a
final judgment by a court to have resulted primarily from the bad faith or
gross negligence of the Manager or the relevant Affiliate.
The Manager agrees that it will indemnify and hold harmless the
Company and its directors, officers, employees, agents and controlling
persons (each being a "Company
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Indemnified Party") from and against any and all losses, claims, damages
and liabilities, joint or several, to which the Company Indemnified Party
becomes subject under any applicable federal or state law, or otherwise,
relating to or arising out of the willful misconduct or gross negligence of
the Manager or its Affiliates. The Manager will reimburse the Company
Indemnified Party for all costs and expenses (including reasonable counsel
fees and expenses) as they are incurred in connection with the
investigation of, preparation of or defense of any pending or threatened
claim or any actions or proceedings covered by such indemnity. The Manager
will not be liable under the foregoing indemnification provisions to the
extent that any loss, claim, damage, liability or expense is found in a
final judgment by a court to have resulted primarily from the bad faith or
gross negligence of the Company.
7.13 The Company Is Sole Beneficiary. The Company acknowledges that the
Services shall be provided only with respect to the businesses of the
Company and its subsidiaries. The Company shall not request performance of
any Services for the benefit of any entity other than the Company or its
subsidiaries. The Company represents and agrees that it will use the
Services only in accordance with all applicable, federal, state and local
laws and regulations and communications and common carrier tariffs, and in
accordance with the reasonable conditions, rules, regulations and
specifications which may be set forth in any manuals, materials, documents
or instructions furnished from time to time by the Manager to the Company.
The Manager reserves the right to take all actions, including termination
of any particular Services, that the Manager reasonably believes to be
necessary to assure compliance with applicable laws, regulations and
tariffs. The Manager will notify the Company of the reasons for any such
termination of Services.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on their behalf by there duly authorized officers.
NRG ENERGY, INC.
By: /s/ Craig A. Mataczynski
Name: Craig A. Mataczynski
Title: Vice President, Domestic Business
Development
NRG GENERATING (U.S.) INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President and Chief Executive Officer
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<PAGE>
Exhibit 10.5.1
LOAN AGREEMENT
dated as of April 30, 1996
$45,000,000
_______________________
Between
NRG ENERGY, INC.
and
NRG GENERATING (U.S.) INC.
<PAGE>
LOAN AGREEMENT, dated as of April 30, 1996, between NRG GENERATING (U.S.)
INC., a Delaware corporation (the "Company") and NRG ENERGY, INC., a
Delaware corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, immediately prior to the execution and delivery of this Agreement,
the Company was the debtor and the debtor in possession in Chapter 11 case
number 94-26723 (the "Case") pending before the United States Bankruptcy
Court for the District of New Jersey (the "Bankruptcy Court");
WHEREAS, pursuant to the Composite Fourth Amended and Restated Plan of
Reorganization for the Company proposed by the Lender, Wexford Management
Corp. and the Official Committee of Equity Security Holders dated January
31, 1995 (as amended and confirmed by order of the Bankruptcy Court entered
on February 22, 1996, the "NRG Plan"; capitalized terms used herein without
definition shall have the respective meanings assigned to them in the NRG
Plan), and subject to the terms and conditions of the Amended and Restated
Stock Purchase and Reorganization Agreement dated as of January 31, 1996
between the Lender and the Company, the Lender is acquiring on the date
hereof 41.86% of the outstanding shares of Common Stock of the Company and
in that connection has agreed to make certain loans to the Company;
WHEREAS, the NRG Plan contemplates that the Company would issue New Notes
in the initial principal amount of $45,000,000 in the aggregate to third
party purchasers but that the Lender would be required to purchase any of
such New Notes not so purchased by such purchasers; and
WHEREAS, in lieu of arranging for the issuance of the New Notes pursuant to
the NRG Plan and possibly purchasing some or all of such New Notes, the
Lender has committed to lend the Company $45,000,000 pending the
refinancing by the Company of the Loan (as defined below).
NOW, THEREFORE, the Company and the Lender agree as follows:
ARTICLE 1
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the terms defined
in the caption hereto shall have
<PAGE>
the meanings set forth therein, and the following terms have the following
meanings:
"Acquisition" means the acquisition by the Company pursuant to the
Acquisition Agreement of 41.86% of the issued and outstanding capital stock
of the Company as reorganized under the NRG Plan and all of the capital
stock of each of certain of the Company's subsidiaries.
"Acquisition Agreement" means the Amended and Restated Stock Purchase and
Reorganization Agreement, dated as of January 31, 1996, between the Lender
and O'Brien Environmental Energy, Inc., a Delaware corporation, the
predecessor in interest to the Company.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such
Capital Stock by the Company or another Restricted Subsidiary; or
(iii) Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary; provided, however, that, in the case
of clauses (ii) and (iii), such Restricted Subsidiary is primarily engaged
in a Related Business.
"Affiliate" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any Person who is a director or
officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of
any Person described in clause (i) above. For the purposes of this
definition, "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. For purposes of Sections 6.04 and 6.05 only,
"Affiliate" shall also mean any beneficial owner of shares representing 5%
or more of the total voting power of the Voting Stock (on a fully diluted
basis) of the Company or of rights or warrants to purchase such Voting
Stock (whether or not currently exercisable) and any Person who would be an
Affiliate of any such beneficial owner pursuant to the first sentence
hereof.
"Affiliate Transaction" shall have the meaning assigned thereto in Section
6.05(a).
"Agreement" means this Loan Agreement, as amended, supplemented or modified
from time to time.
2
<PAGE>
"Asset Disposition" means any sale, lease, transfer or other disposition of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the
purposes of this definition as a "disposition") by the Company or any of
its Restricted Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition
by a Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of property or
assets in the ordinary course of business, (iii) for purposes of
Section 6.04 only, a disposition subject to Section 6.02 and (iv) a
disposition of Liquidating Assets in accordance with and pursuant to the
terms of the Liquidating Asset Management Agreement.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of
all such payments.
"Bankruptcy Court" shall have the meaning assigned thereto in the Recitals.
"Bankruptcy Law" shall have the meaning assigned thereto in Section 8.01.
"Base Rate" means for any day, a rate per annum equal to 9.5%.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a
3
<PAGE>
capitalized lease for financial reporting purposes in accordance with GAAP,
and the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with GAAP;
and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease.
"Case" shall have the meaning assigned thereto in the Recitals.
"Closing Date" means the date, which shall be on the Effective Date, on
which the Lender makes the Loan.
"Code" means the Internal Revenue Code of 1986, as amended.
"Co-Investment Agreement" shall mean that certain Co-Investment Agreement
dated the date hereof between the Lender and the Company and as provided
for by the NRG Plan.
"Co-Investment Indebtedness" means Indebtedness incurred by the Company to
finance the Company's investment in a project offered to the Company
pursuant to the terms of the Co-Investment Agreement.
"Commercial L/C" means a commercial documentary letter of credit under
which the issuer agrees to make payments in Dollars for the account of the
Company, on behalf of the Company or a Subsidiary thereof, in respect of
obligations of the Company or such Subsidiary in connection with the
purchase of goods or services in the ordinary course of business.
"Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with the Company within the meaning of
Section 414(b) or (c) of the Code.
"Company" means the party named as such in this Agreement until a successor
replaces it and, thereafter, means the successor.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending prior to the date of such
determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (1) if the Company or any Restricted
Subsidiary has Incurred any Indebtedness since the beginning of such period
that remains outstanding on such date of determination or if the
transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence
4
<PAGE>
of Indebtedness, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of
such period and the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such
period, (2) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for
such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period or increased by an amount equal to the EBITDA
(if negative) directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Company
and its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to
the extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale), (3) if since the
beginning of such period the Company or any Restricted Subsidiary (by
merger or otherwise) shall have made an Investment in any Restricted
Subsidiary (or any Person which becomes a Restricted Subsidiary) or an
acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder,
which constitutes all or substantially all an operating unit of a business,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the Incurrence
of any Indebtedness) as if such Investment or acquisition occurred on the
first day of such period and (4) if since the beginning of such period any
Person (that subsequently became a Restricted Subsidiary or was merged with
or into the Company or any Restricted Subsidiary since the beginning of
such period) shall have made any Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment pursuant to
clause (2) or (3) above if made by the Company or a Restricted Subsidiary
during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition assets occurred on the first
day of such period. For purposes of this definition, whenever pro forma
effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto and the amount of Consolidated Interest
5
<PAGE>
Expense associated with any Indebtedness Incurred in connection therewith,
the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if
the rate in effect on the date of determination had been the applicable
rate for the entire period (taking into account any Interest Rate
Protection Agreement applicable to such Indebtedness if such Interest Rate
Protection Agreement has a remaining term as at the date of determination
in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Subsidiaries, plus, to the
extent incurred by the Company and its Subsidiaries in such period but not
included in such interest expense, (i) interest expense attributable to
Capitalized Lease Obligations, (ii) amortization of debt discount and debt
issuance cost, (iii) capitalized interest, (iv) non-cash interest expense,
(v) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing, (vi) interest actually
paid by the Company or any such Subsidiary under any Guarantee of
Indebtedness or other obligation of any other Person, (vii) net costs
associated with Hedging Obligations (including amortization of fees),
(viii) the product of (a) all Preferred Stock dividends in respect of all
Preferred Stock of Subsidiaries of the Company and Redeemable Stock of the
Company held by Persons other than the Company or a Wholly Owned Subsidiary
multiplied by (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of the Company, expressed as a decimal, in
each case, determined on a consolidated basis in accordance with GAAP and
(ix) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to
pay interest or fees to any Person (other than the Company) in connection
with Indebtedness Incurred by such plan or trust; provided, however, that
there shall be excluded therefrom any such interest expense of any
Unrestricted Subsidiary to the extent the related Indebtedness is not
Guaranteed or paid by the Company or any Restricted Subsidiary.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that
6
<PAGE>
(A) subject to the limitations contained in clause (iv) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period
to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any
such Person (other than an Unrestricted Subsidiary) for such period
shall be included in determining such Consolidated Net Income,
(ii) any net income (loss) of any person acquired by the Company
or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition,
(iii) any net income (loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that
(A) subject to the limitations contained in (iv) below, the Company's
equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a
dividend that could have been made to another Restricted Subsidiary,
to the limitation contained in this clause) and (B) the Company's
equity in a net loss of any such Restricted Subsidiary for such period
shall be included in determining such Consolidated Net Income,
(iv) any gain (but not loss) realized upon the sale or other
disposition of any asset of the Company or its consolidated
Subsidiaries (including pursuant to any sale/leaseback transaction)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (but not loss) realized upon the sale or other
disposition of any Capital Stock of any Person,
(v) any extraordinary gain or loss, and
(vi) the cumulative effect of a change in accounting principles.
7
<PAGE>
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and the Restricted Subsidiaries, determined on
a Consolidated basis, as of the end of the most recent fiscal quarter of
the Company ending prior to the taking of any action for the purpose of
which the determination is being made, as (i) the par or stated value of
all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained
earnings or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Stock.
"Contingent Obligation" means as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, dividends
or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including
any obligation of such Person, whether or not contingent (a) to purchase
any such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount (based
upon the maximum reasonably anticipated net liability in respect thereof as
determined by the Company in good faith) of the primary obligation or
portion thereof in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated net
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by the Company in good faith.
"Contractual Obligation" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of the
property owned by it is bound.
"Credit Documents" means the collective reference to this Agreement and the
Note.
8
<PAGE>
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which
such Person is a party or a beneficiary.
"Custodian" shall have the meaning assigned thereto in Section 8.01.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to
a sinking fund obligation or otherwise, (ii) is convertible or exchangeable
for Indebtedness or Disqualified Stock or (iii) is redeemable at the option
of the holder thereof, in whole or in part, in each case on or prior to the
first anniversary of the Stated Maturity of the Notes.
"Dollars" and "$" means dollars in lawful currency of the United States of
America.
"EBITDA" means, for any period the Consolidated Net Income for such period,
plus the following to the extent deducted in calculating such Consolidated
Net Income: (i) income tax expense, (ii) Consolidated Interest Expense,
(iii) depreciation expense and (iv) amortization expense, in each case for
such period.
"Effective Date" shall have the meaning assigned thereto in the NRG Plan
which definition is incorporated herein by this reference.
"Environmental Laws" means any and all Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority or requirements of law
(including court-ordered requirements of common law) regulating or imposing
liability or standards of conduct concerning environmental or public health
protection matters, including Hazardous Materials, as now or may at any
time hereafter be in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" shall have the meaning assigned thereto in Section 8.01.
9
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fee Property" shall have the meaning assigned thereto in Section 3.10.
"Fiscal Date" means the Saturday closest to February 1, May 1, August 1 or
November 1, as the case may be, in any calendar year.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of
any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation
of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in
any other manner the obligee of such Indebtedness or other obligation of
the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, however, that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Materials" means any hazardous materials, hazardous wastes,
hazardous pesticides, hazardous or toxic substances, defined, listed,
classified or regulated as such in or under any Environmental Law,
including asbestos, petroleum, any other petroleum products (including
gasoline, crude oil or any fraction thereof) polychlorinated biphenyls and
urea-formaldehyde insulation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
10
<PAGE>
"Highest Lawful Rate" shall have the meaning assigned thereto in
Section 9.10.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by
such Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money,
(ii) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments,
(iii) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement
obligations with respect thereto),
(iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services (except Trade Payables),
which purchase price is due more that six months after the date of
placing such property in service or taking delivery and title thereto
or the completion of such services,
(v) all Capitalized Lease Obligations of such Person,
(vi) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of the Company, any Preferred
Stock (but excluding, in each case, any accrued dividends),
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided, however, that the amount of Indebtedness of
such Person shall be the lesser of (A) the fair market value of such
asset at such date of determination and (B) the amount of such
Indebtedness of such other Persons,
(viii) all Indebtedness of other Persons to the extent Guaranteed
by such Person, and
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<PAGE>
(ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date.
"indemnified liabilities" shall have the meaning assigned thereto in
Section 9.05(d).
"Insolvency" means, with respect to a Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Interest Payment Date" means the last day of each March, June, September
and December, commencing on the first such day to occur after the Loan is
made.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate
option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or
a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of such Person) or
other extension of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash
or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For
purposes of the definition of "Unrestricted Subsidiary" and Section 6.02,
(i) "Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net
assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company
shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to (x) the
Company's "Investment" in such Subsidiary at the time of such redesignation
less (y) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such
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<PAGE>
redesignation; and (ii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the
time of such transfer, in each case as determined in good faith by the
Board of Directors.
"Leased Properties" shall have the meaning assigned thereto in Section
3.10.
"Lender" means the party named in this Agreement until one or more
successors replace it, and thereafter means the successor or successors.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Liquidating Assets" shall have the meaning assigned thereto in the
Liquidating Asset Management Agreement which definition shall be
incorporated herein by this reference.
"Liquidating Asset Management Agreement" means that certain Liquidating
Asset Management Agreement dated the date hereof by and between the Company
and Wexford Management Corp., a Delaware corporation and as provided for by
the NRG Plan.
"Loan" shall have the meaning set forth in Section 2.01.
"Loan Refinancing" shall mean Indebtedness that is incurred to enable the
Company to prepay the Loan in whole or in part.
"Maturity Date" shall have the meaning assigned thereto in Section 2.04.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but
only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring person of Indebtedness or other
obligations relating to the properties or assets that are the subject of
such Asset Disposition or received in any other noncash form) therefrom, in
each case net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or
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<PAGE>
accrued as a liability under GAAP, as a consequence of such Asset
Disposition, (ii) all payments made on any Indebtedness which is secured by
any assets subject to such Asset Disposition in accordance with the terms
of any Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law
be repaid out of the proceeds from such Asset Disposition, (iii) all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with
the assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds" means, with respect to any issuance or sale of New
Notes by the Company or any Subsidiary, the cash proceeds of such issuance
or sale net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant
and other fees actually incurred in connection with such issuance or sale
and net of taxes paid or payable as a result thereof.
"Note" means the Note substantially in the form attached hereto as
Exhibit A.
"Notice Event" shall have the meaning assigned thereto in Section 5.08.
"NRG Plan" shall have the meaning assigned thereto in the Recitals.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary or Clerk of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Lender. The counsel may be an employee of or counsel to
the Company or the Lender.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary, the Company or a Person which
will, upon the
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making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a
Related Business; (ii) another Person if as a result of such Investment
such other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, the Company or a Restricted
Subsidiary; provided, however, that such Person's primary business is a
Related Business; (iii) Temporary Cash Investments; (iv) receivables owing
to the Company or any Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include
such concessionary trade terms as the Company or any such Restricted
Subsidiary deems reasonable under the circumstances; (v) payroll, travel
and similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business; (vi) loans or advances to
employees made in the ordinary course of business consistent with past
practices of the Company or such Restricted Subsidiary; (vii) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments; and (viii) any Investment
pursuant to and in accordance with the terms of the Co-Investment
Agreement.
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges
not yet delinquent or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or such Subsidiary, as the case
may be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business in respect of obligations which are not yet due or
which are bonded or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or such Subsidiary, as the case
may be, in accordance with GAAP;
(c) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, tenders, trade
or government contracts (other than for
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borrowed money), leases, licenses, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements (including reciprocal easement agreements),
rights-of-way, building, zoning and similar restrictions, utility
agreements, covenants, reservations, restrictions, encroachments,
changes, and other similar encumbrances or title defects incurred, or
leases or subleases granted to others, in the ordinary course of
business, which do not in the aggregate materially detract from the
aggregate value of the properties of the Company and its Subsidiaries,
taken as a whole or in the aggregate materially interfere with or
adversely affect in any material respect the ordinary conduct of the
business of the Company and its Subsidiaries on the properties subject
thereto, taken as a whole;
(f) Bankers' liens arising by operation of law;
(g) Liens on documents of title and the property covered
thereby securing Indebtedness in respect of any Commercial L/Cs;
(h) (i) mortgages, liens, security interests, restrictions or
encumbrances that have been placed by any developer, landlord or other
third party on property over which the Company or any Subsidiary of
the Company has easement rights or on any Leased Property and
subordination or similar agreements relating thereto and (ii) any
condemnation or eminent domain proceedings affecting any real
property;
(i) Liens on goods (and Proceeds thereof) held by the Company
or any of its Subsidiaries to be sold on a consignment basis in the
ordinary course of business;
(j) leases or subleases to third parties;
(k) Liens in connection with workmen's compensation obligations
and general liability exposure of the Company and its Subsidiaries;
and
(l) Liens securing Indebtedness Incurred under Section
6.01(b)(ii) or (iii).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other
entity.
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"Plan" means at any particular time, any employee benefit plan as defined
in Section 3(3) of ERISA and not excluded by Section 4(b) of ERISA and in
respect of which the Company or a Commonly Controlled Entity is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA
be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Preferred Stock" as applied to the Capital Stock of any corporation means
Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances" and
"refinanced" shall have a correlative meaning) any Indebtedness existing on
the Closing Date or Incurred in compliance with this Agreement (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary (to the extent permitted in this Agreement) and Indebtedness of
any Restricted Subsidiary that refinances Indebtedness of another
Restricted Subsidiary) including Indebtedness that refinances Refinancing
Indebtedness; provided, however, that (i) the Refinancing Indebtedness has
a Stated Maturity no earlier than the Stated Maturity of the Indebtedness
being refinanced, (ii) the Refinancing Indebtedness has an Average Life at
the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced and
(iii) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or if
issued with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced; provided further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness
of a Restricted Subsidiary that refinances Indebtedness of the Company or
(y) Indebtedness of the Company or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.
"Register" shall have the meaning assigned thereto in Section 2.10(b).
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"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as from time to time in effect.
"Related Business" means those businesses in which the Company or any of
its Subsidiaries is engaged on the date of this Agreement, or which are
directly related thereto.
"Reorganization" means with respect to a Multiemployer Plan, the condition
that such Plan is in reorganization as such term is used in Section 4241 of
ERISA.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA other than those events as to which the thirty day notice period is
waived under Sections .l3, .14, .16, .18, .19 or .20 of PBGC Reg. 2615.
"Requirement of Law" means, as to any Person, the Articles or Certificate
of Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation, order, or
determination of an arbitrator or a court or other Governmental Authority,
in each case applicable to or binding upon such Person or any of its
property, or to which such Person or any of its property is subject.
"Responsible Officer" means, with respect to any Person, the president,
chief executive officer, the chief operating officer, the chief financial
officer, treasurer, controller or any vice president of such Person.
"Restricted Payment" shall have the meaning assigned thereto in Section
6.02(a).
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Single Employer Plan" means any Plan which is covered by Title IV of ERISA
and which is not a Multiemployer Plan.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of
such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Closing Date or
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thereafter Incurred) which is subordinate or junior in right of payment to
the Note pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power
of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at
the time owned or controlled, directly or indirectly, by (i) such Person or
(ii) one or more Subsidiaries of such Person.
"Successor Company" shall have the meaning assigned hereto in Section
7.01(i).
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or
any agency thereof, (ii) investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 180 days of the date
of acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $300,000,000 (or the
foreign currency equivalent thereof), (iii) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (i) or (ii) above entered into with a bank meeting the
qualifications described in clause (ii) above, and (iv) investments in
commercial paper, maturing not more than six months after the date of
acquisition, issued by the Lender or the parent corporation of the Lender,
and commercial paper with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's Investors
Service, Inc. or A-1" (or higher) according to Standard and Poor's Ratings
Group.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed
or Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Transferee" shall have the meaning set forth in Section 9.06(b).
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
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"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or owns or holds any Lien on any property of, the Company
or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total consolidated assets of $1,000 or
less or (B) if such Subsidiary has consolidated assets greater than $1,000,
then such designation would be permitted under Section 6.02. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, however, that immediately after giving effect to such
designation (x) the Company's Consolidated Coverage Ratio would exceed
1.6:1.00 and (y) no Default shall have occurred and be continuing. Any
such designation by the Board of Directors shall be evidenced to the Lender
by promptly filing with the Lender a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election
of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all
the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) as used herein and in the Note and any certificate or other
document made or delivered pursuant hereto, accounting terms relating
to the Company and its Subsidiaries not defined in Section 1.01 and
accounting terms partly defined in Section 1.01 to the extent not
defined shall have the respective meanings given to them under GAAP.
All computations determining compliance with financial covenants or
terms, including definitions used therein, shall be prepared in
accordance with generally accepted accounting principles in effect at
the time of the preparation of, and in conformity with those used to
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prepare, the historical financial statements of the Company;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to secured Indebtedness merely by virtue of its
nature as unsecured indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP and accretion of principal on such
security shall be deemed to be the Incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be
(i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater;
(9) unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the Note
or any certificate or other document made or delivered pursuant
hereto;
(10) 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, Section, schedule and exhibit references are
to this Agreement unless otherwise specified; and
(11) as used in this Agreement, references to a fiscal year of
the Company identified only by a year refer to the fiscal year of the
Company ended on the Fiscal Date at the end of the fourth fiscal
quarter of the Company which falls in the immediately succeeding
calendar year. References to the last day of any fiscal year or
fiscal quarter of the Company, or to a fiscal year or quarter ended on
a certain date, shall be deemed to refer to the Fiscal Date at the end
of such fiscal year or quarter.
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ARTICLE 2
Loan
SECTION 2.01. Loan. Subject to the terms and conditions hereof, the
Lender agrees to make a loan in Dollars (the "Loan") to the Company on the
Closing Date, in an aggregate principal amount of forty-five million
dollars ($45,000,000).
SECTION 2.02. Use of Proceeds. The proceeds of the Loan shall be used for
the purposes set forth in the NRG Plan and shall be applied in accordance
with the NRG Plan.
SECTION 2.03. Borrowing. The Company shall borrow the entire amount of
the Loan on the Closing Date.
SECTION 2.04. Maturity; Refinancing.
(a) The Loan will mature on the date that is sixty months following the
Closing Date (the "Maturity Date").
(b) The Company hereby covenants and agrees to use its reasonable best
efforts to obtain Loan Refinancing the Net Cash Proceeds of which will
enable and permit the Company to prepay the Loan in its entirety, including
principal and interest thereon.
SECTION 2.05. Optional and Mandatory Prepayments; Repayments of Loans.
(a) The Company may at any time and from time to time prepay the Loan, in
whole or in part, without premium or penalty, upon at least five days
irrevocable notice to the Lender. If such notice is given, the Company
shall make such prepayment, and the payment amount specified in such notice
shall be due and payable, on the date specified therein. Partial
prepayments of the Loan shall be in an aggregate principal amount equal to
the lesser of (A) $2,000,000, or a whole multiple of $1,000,000 in excess
thereof and (B) the aggregate unpaid principal amount of the Loan.
(b) (i) If, subsequent to the Closing Date, the Company or any of its
Subsidiaries shall obtain any Loan Refinancing, 100% of the Net Cash
Proceeds thereof shall be promptly applied toward the prepayment of the
Loan.
(ii) The Company shall give the Lender at least one Business Day's notice
of each prepayment or mandatory reduction pursuant to this Section 2.05(b)
setting forth the date and amount thereof.
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(c) Accrued interest on the amount of any prepayments shall be paid on the
date of such prepayment.
SECTION 2.06. Interest Rate and Payment Dates.
(a) The Loan shall bear interest for the period from and including the
date the Loan is made to, but excluding, the maturity date thereof on the
unpaid principal thereof at a rate per annum equal to the Base Rate.
(b) If all or a portion of (i) the principal amount of the Loan or
(ii) any interest payable thereon shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise) the Loan, and any such
overdue amount shall, without limiting the rights of the Lender under
Section 8, bear interest at a rate per annum which is 2.00% above the Base
Rate from the date of such non-payment until paid in full (as well after as
before judgment).
(c) Interest shall be payable in arrears on each Interest Payment Date.
SECTION 2.07. Computation of Interest and Fees. Interest in respect of
the Loan, shall be calculated on the basis of a 365 (or 366 as the case may
be) day year for the actual days elapsed.
SECTION 2.08. Treatment of Payments.
(a) Whenever any payment received by the Lender under this Agreement or
the Note is insufficient to pay in full all amounts then due and payable to
the Lender under this Agreement or the Note such payment shall be applied
by the Lender in the following order: First, to the payment of fees and
expenses due and payable to the Lender under and in connection with this
Agreement and the Note including the payment of all expenses due and
payable under Section 9.05; Second, to the payment of interest then due and
payable on the Loan; and Third, to the payment of the principal amount of
the Loan which is then due and payable; or
(b) All payments (including prepayments) to be made by the Company on
account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Lender, for the account of the Lender
at the office of the Lender located at 1221 Nicollet Mall, Suite 700,
Minneapolis, MN 55403 in lawful money of the United States of America and
in immediately available funds. If any payment hereunder would become due
and payable on a day other than a Business Day, such payment shall become
due and payable on the next succeeding Business Day and, with respect to
payments of
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principal, interest thereon shall be payable at the then applicable rate
during such extension.
SECTION 2.9. Indemnity. The Company agrees to indemnify the Lender and to
hold the Lender harmless from any loss or expense (but without duplication
of any amounts payable as default interest) which the Lender may sustain or
incur as a consequence of default by the Company in making any prepayment
after the Company has given a notice in accordance with Section 2.05. This
covenant shall survive termination of this Agreement and repayment of the
Loan.
SECTION 2.10. Repayment of the Loan; Evidence of Debt.
(a) The Company hereby unconditionally promises to pay to the Lender the
then unpaid principal amount of the Loan in accordance with the terms
hereof and the Note. The Company hereby further agrees to pay interest on
the unpaid principal amount of the Loan from time to time outstanding from
the date hereof until payment in full thereof at the rates per annum, and
on the dates, set forth in Section 2.06.
(b) The Lender shall maintain a Register (the "Register") in which shall
be recorded (i) the amount of the Loan made hereunder, (ii) the amount of
any principal or interest due and payable or to become due and payable from
the Company to the Lender hereunder and (iii) the amount of any sum
received by the Lender hereunder from the Company.
(c) The entries made in the Register to the extent permitted by applicable
law, shall be prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however, that the
failure of the Lender to maintain the Register, or any error therein, shall
not in any manner affect the obligation of the Company to repay (with
applicable interest) the Loan made to the Company by the Lender in
accordance with the terms of this Agreement.
(d) The Company agrees that, upon the request of the Lender, the Company
will execute and deliver to the Lender the Note evidencing the Loan, with
appropriate insertions as to date and principal amount.
ARTICLE 3
Representations and Warranties
In order to induce the Lender to enter into this Agreement and to make the
Loan, the Company hereby represents and warrants to the Lender, as follows
(all representations
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and warranties are made as of the Closing Date and with respect to the
entire period following the Closing Date during which any amounts are due
and owing from the Company to the Lender hereunder, as if made at any time
during such period):
SECTION 3.01. No Change. There has been no change, and no development or
event involving a prospective change, which has had or could reasonably be
expected to have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of, the Company
and its Subsidiaries taken as a whole.
SECTION 3.02. Corporate Existence; Compliance with Law. Except for those
exceptions to the following which the Lender has actual knowledge of on the
Closing Date, each of the Company and its Subsidiaries (a) is a corporation
duly organized and validly existing under the laws of the jurisdiction of
its incorporation, (b) has full corporate power and authority and possesses
all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to use its corporate name and to own,
lease or otherwise hold its properties and assets and to carry on its
business as presently conducted other than such franchises, licenses,
permits, authorizations and approvals the lack of which, individually or in
the aggregate, would not have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, (c) is duly qualified and
in good standing to do business in each jurisdiction in which the nature of
its business or the ownership, leasing or holding of its properties makes
such qualification necessary, except such jurisdictions where the failure
so to qualify would not have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, and (d) is in compliance
with all applicable statutes, laws, ordinances, rules, orders, permits and
regulations of any Governmental Authority (including those related to
Hazardous Materials and substances), except where noncompliance would not
have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole. Neither the Company nor any of its
Subsidiaries has received any written communication from a Governmental
Authority that alleges that the Company or any of its Subsidiaries is not
in compliance, in all material respects, with all material federal, state,
local or foreign laws, ordinances, rules and regulations.
SECTION 3.03. Corporate Power; Authorization. Each of the Company and its
Subsidiaries has the corporate power and authority to make, deliver and
perform each of the Credit
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Documents to which it is a party, and the Company has the corporate power
and authority and legal right to borrow hereunder. Each of the Company and
its Subsidiaries has taken all necessary corporate action to authorize the
execution, delivery and performance of each of the Credit Documents to
which it is or will be a party and the Company has taken all necessary
corporate action to authorize the borrowings hereunder. No consent or
authorization of, or filing with, any Person (including any Governmental
Authority) is required in connection with the execution, delivery or
performance by the Company or any of the Company's Subsidiaries, or for the
validity or enforceability against the Company or any of the Company's
Subsidiaries, of any Credit Document except for consents, authorizations
and filings (a) which have been obtained or made and are in full force and
effect, and except such consents, authorizations and filings, the failure
to obtain or perform (i) which would not have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole and
(ii) which would not adversely affect the validity or enforceability of any
of the Credit Documents or the rights or remedies of the Lender thereunder.
SECTION 3.04. Enforceable Obligations. This Agreement, and each of the
other Credit Documents has been, duly executed and delivered on behalf of
the Company. This Agreement and each of the other Credit Documents
constitutes the legal, valid and binding obligation of the Company, and is
enforceable against the Company in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
SECTION 3.05. No Legal Bar. The execution, delivery and performance of
each Credit Document and the incurrence or issuance of and use of the
proceeds of the Loan do not violate any Requirement of Law or any
Contractual Obligation applicable to or binding upon the Company or any
Subsidiary of the Company or any of their respective properties or assets,
in any manner which, individually or in the aggregate, (i) would have a
material adverse effect on the ability of the Company or any such
Subsidiary to perform its obligations under the Credit Documents to which
it is a party, (ii) would give rise to any liability on the part of the
Lender, or (iii) would have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, and do not result in the
creation or imposition of any Lien on any of its properties or assets
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pursuant to any Requirement of Law applicable to it, as the case may be,
or any of its Contractual Obligations, except for Permitted Liens.
SECTION 3.06. No Material Litigation. No litigation by, investigation
known to the Company by, or proceeding of, any Governmental Authority is
pending against the Company or any of its Subsidiaries with respect to the
validity, binding effect or enforceability of any Credit Document, the Loan
made hereunder or the use of proceeds thereof. No lawsuits, claims,
proceedings or investigations pending or, to the best knowledge of the
Company, threatened against or affecting the Company or a Subsidiary of the
Company or any of their respective properties, assets, operations or
businesses, in which there is a probability of an adverse determination
that is reasonably likely, if adversely decided, to have a material adverse
effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a
whole.
SECTION 3.07. Investment Company Act. Neither the Company nor any
Subsidiary of the Company is an "investment company" or a company
"controlled" by an "investment company" (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended).
SECTION 3.08. Federal Regulation. No part of the proceeds of the Loan are
being or are to be used for any purpose which violates the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System. Neither the Company nor any of its Subsidiaries is engaged or will
engage, principally or as one of its important activities, in the business
of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the quoted terms
under said Regulation U.
SECTION 3.09. No Default. The Company and each of its Subsidiaries have
performed all material obligations required to be performed by them under
their respective Contractual Obligations on and after the Closing Date and
they are not (with or without the lapse of time or the giving of notice, or
both) in breach or default in any respect thereunder, except to the extent
that such breach or default would not have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole. Neither
the Company nor any of its Subsidiaries is in default under any material
judgment, order or decree of any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or
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foreign, applicable to it or any of its respective properties, assets,
operations or business, except to the extent that any such defaults would
not, in the aggregate, have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole.
SECTION 3.10. Ownership of Property; Liens. Each of the Company and its
Subsidiaries has good and valid title to all of its material tangible and
intangible personal property, in each case free and clear of all mortgages,
liens, security interests or encumbrances of any nature whatsoever except
Permitted Liens. With respect to real property or interests in real
property, as of the Closing Date, each of the Company and its Subsidiaries
has (i) fee title to all of the real property listed on Schedule 3.10
(each, a "Fee Property"), and (ii) good and valid title to the leasehold
estates in all of the real property leased by it and listed on Schedule
3.10 under the heading "Leased Properties" (each, a "Leased Property"), in
each case free and clear of all mortgages, liens, security interests,
easements, covenants, rights-of-way and other similar restrictions of any
nature whatsoever, except (A) Permitted Liens, (B) any conditions that may
be shown by a current, accurate survey or physical inspection of any Fee
Property or Leased Property, (C) as to Leased Property, the terms and
provisions of the respective lease therefor and any matters affecting the
fee title and any estate superior to the leasehold estate related thereto,
and (D) title defects, or leases or subleases granted to others, which are
not material to the Fee Properties or the Leased Properties, as the case
may be, taken as a whole. The Fee Properties and the Leased Properties
(collectively the "Real Properties") constitute, as of the Closing Date,
all of the real property owned in fee or leased by the Company and its
Subsidiaries.
SECTION 3.11. ERISA. None of the Company, any Subsidiary of the Company
or any Commonly Controlled Entity would be liable for any amount pursuant
to Section 4062, 4063, 4064 or 4069 of ERISA, if any Single Employer Plan
were to terminate. Neither the Company nor any Commonly Controlled Entity
has been involved in any transaction that would cause the Company to be
subject to liability with respect to a Plan to which the Company or any
Commonly Controlled Entity contributed or was obligated to contribute
during the six-year period ending on the date this representation is made
or deemed made under Section 4062, 4069 or 4212(c) of ERISA. Neither the
Company nor any Commonly Controlled Entity has incurred any material
liability under Title IV of ERISA which could become or remain a liability
of the Company after the Closing Date. None of the Company, any Subsidiary
of the Company, or any director, officer or employee thereof, or any
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of the Plans (to the best knowledge of the Company with respect to any
Multiemployer Plan), or any trust created thereunder, or any fiduciary
thereof, has engaged in a transaction or taken any other action or omitted
to take any action involving any Plan which could constitute a prohibited
transaction within the meaning of Section 406 of ERISA which is not
otherwise exempted, or would cause it to be subject to either a material
liability or civil penalty assessed pursuant to Section 409 or 502 of ERISA
or a material tax imposed pursuant to Section 4975 or 4976 of the Code.
Each of the Plans (to the best knowledge of the Company with respect to any
Multiemployer Plan) has been operated and administered in all material
respects in accordance with applicable laws, including but not limited to
ERISA and the Code. There are no material pending or, to the best
knowledge of the Company, threatened claims by or on behalf of any of the
Plans or any fiduciary, by any employee or beneficiary covered under any
such Plan, or otherwise involving any such Plan or fiduciary (other than
routine claims for benefits). No condition exists and no event has
occurred with respect to any Multiemployer Plan which presents a material
risk of a complete or partial withdrawal under Subtitle E of Title IV of
ERISA, nor has the Company or any Commonly Controlled Entity been notified
that any such Multiemployer Plan is insolvent or in reorganization within
the meaning of Section 4241 of ERISA. Neither the Company nor any Commonly
Controlled Entity nor any Subsidiary has been a party to any transaction or
agreement to which the provisions of Section 4204 of ERISA were applicable.
Neither the Company nor any Commonly Controlled Entity nor any Subsidiary
is obligated to contribute to a Multiemployer Plan, on behalf of any
current or former employee of the Company, any Commonly Controlled Entity
or any Subsidiary. None of the Plans or any trust established thereunder
has incurred any "accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, as of the
last day of the most recent fiscal year of each of the Plans. No
contribution failure has occurred with respect to any Plan sufficient to
give rise to a lien under Section 302(f) of ERISA.
SECTION 3.12. Copyrights, Patents, Trademarks and Licenses. The Company
or a Subsidiary of the Company owns or has the right to use, without
payment to any other party, all material patents, patent applications,
trademarks (registered or unregistered), trade names, service marks and
copyrights owned, used or filed by or licensed to the Company and its
Subsidiaries. To the best knowledge of the Company, no claims are pending
by any Person with respect to the ownership, validity, enforceability or
the Company's or any Subsidiary's use of any such patents, patent
applications, trademarks (registered or unregistered), trade names, service
marks, copyrights challenging or questioning the validity or
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effectiveness of any of the foregoing, in any jurisdiction, domestic or
foreign.
SECTION 3.13. Environmental Matters.
(a) To the best knowledge of the Company, the Real Properties do not
contain in, on or under including the soil and groundwater thereunder, any
Hazardous Materials in amounts or concentrations that constitute or
constituted a material violation of, or could reasonably give rise to
material liability under, Environmental Laws.
(b) To the best knowledge of the Company, the Real Properties and all
operations and facilities at the Real Properties are in material compliance
with all Environmental Laws, and there is no contamination or violation of
any Environmental Law which could materially interfere with the continued
operation of, or materially impair the fair salable value of, the Real
Properties.
(c) To the best knowledge of the Company, neither the Company nor any of
its Subsidiaries has received or is aware of any complaint, notice of
violation, alleged violation, or notice of investigation or of potential
liability under Environmental Laws with regard to the Real Properties or
the operations of the Company or its Subsidiaries, nor does the Company or
any of its Subsidiaries have knowledge that any such action is being
contemplated, considered or threatened.
(d) To the best knowledge of the Company, Hazardous Materials have not
been generated, treated, stored, disposed of, at, on or under the Real
Properties, nor have any Hazardous Materials been transported from the Real
Properties, in material violation of or in a manner that could reasonably
give rise to liability under any Environmental Laws.
(e) There are no governmental administrative actions or judicial
proceedings pending or, to the knowledge of the Company and its
Subsidiaries, threatened, under any Environmental Law to which the Company
or any of its Subsidiaries is a party with respect to the Real Properties,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements, other than permits authorizing operations at facilities at
the Real Properties, outstanding under any Environmental Law with respect
to the Real Properties.
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ARTICLE 4
Conditions Precedent
SECTION 4.01. Conditions to Loans. The obligation of the Lender to make
the Loan on the Closing Date is subject to the satisfaction, or waiver by
the Lender, immediately prior to or concurrently with the making of the
Loan, of the following conditions:
(a) Note. The Lender shall have received the Note conforming to the
requirements hereof and executed by a duly authorized officer of the
Company.
(b) Consummation of Acquisition and NRG Plan. The Acquisition shall have
been consummated at the Closing (as defined in the Acquisition Agreement)
and concurrently therewith the NRG Plan shall have been consummated on the
Effective Date (as defined in the NRG Plan).
(c) Fees. The Lender shall have received all fees, expenses and other
consideration as required to be paid or delivered pursuant to Section 9.05
on or before the Closing Date.
ARTICLE 5
Affirmative Covenants
The Company hereby agrees that, so long as the Loan remains outstanding and
unpaid, or any other amount is owing to the Lender hereunder or under any
of the other Credit Documents, it shall, and, in the case of the agreements
contained in Sections 5.04 through 5.07 and 5.09, the Company shall cause
each of its Subsidiaries to:
SECTION 5.01. Financial Statements. Furnish to the Lender:
(a) as soon as available after the end of each fiscal year of
the Company, but in any event within 10 days of filing them with the
Securities and Exchange Commission, a copy of the consolidated balance
sheet of the Company and its consolidated Subsidiaries as at the end
of such fiscal year and the related consolidated statements of
stockholders' equity and cash flows and the consolidated statements of
income of the Company and its Subsidiaries for such fiscal year,
setting forth in each case (other than for the financial statements
delivered with respect to the first fiscal year of the Company ended
following the Closing Date) in comparative form the figures for the
previous year, reported on by independent
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certified public accountants of nationally recognized standing; and
(b) as soon as available after the end of each of the first
three quarterly periods of each fiscal year of the Company, but in any
event within 10 days of filing them with the Securities and Exchange
Commission, the unaudited consolidated balance sheet of the Company
and its Subsidiaries as at the end of each such quarter and the
related unaudited consolidated statements of income and cash flows of
the Company and its Subsidiaries for such quarterly period and the
portion of the fiscal year of the Company through such date, setting
forth in each case (other than for the financial statements delivered
with respect to fiscal quarters occurring during the first fiscal year
of the Company ended following the Closing Date) in comparative form
the figures for the corresponding quarter in, and year to date portion
of, the previous year; together with a comparison showing the figures
for such periods in the budget prepared by the Company and furnished
to the Lender, certified by the chief financial officer, controller or
treasurer of the Company as being fairly stated in all material
respects.
SECTION 5.02. Certificates; Other Information. Furnish to the Lender:
(a) concurrently with the delivery of the consolidated
financial statements referred to in Section 5.01(a), so long as not
contrary to the then current recommendations of the American Institute
of Certified Accountants, a letter from the independent certified
public accountants reporting on such financial statements stating that
in making the examination necessary to express their opinion on such
financial statements, nothing has come to their attention which would
lead them to believe that there exists any Default or Event of Default
under Sections 6.01 and 6.02, except as specified in such letter;
(b) within 15 days of the delivery of the financial statements
referred to in Sections 5.01(a) and (b) (except that the certificate
referred to in clause (i) below shall be delivered concurrently with
such financial statements), a certificate of the chief financial
officer of the Company (i) stating that, to the best of such officer's
knowledge, each of the Company and its respective Subsidiaries has
observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Agreement and
the other Credit Documents to be observed, performed or satisfied by
it, and that such officer has obtained no
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knowledge of any Default or Event of Default except as specified in
such certificate, (ii) showing in detail as of the end of the related
fiscal period the figures and calculations supporting such statement
in respect of Sections 6.02 and 6.05 and (iii) if not specified in the
financial statements delivered pursuant to Section 5.01, specifying
the aggregate amount of interest paid or accrued by the Company and
its Subsidiaries, and the aggregate amount of depreciation, depletion
and amortization charged on the books of the Company and its
Subsidiaries, during such accounting period; and
(c) promptly, such additional financial and other information
as the Lender may from time to time reasonably request.
SECTION 5.03. SEC Reports. The Company shall furnish to the Lender,
promptly upon their becoming available, copies of all financial statements,
reports, notices and proxy statements sent or made available to the public
generally by the Company or any of its Subsidiaries, if any, and all
regular and periodic reports and all final registration statements and
final prospectuses, if any, filed by the Company or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission
or any Governmental Authority succeeding to any of its functions.
SECTION 5.04. Payment of Obligations. Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be,
all its obligations and liabilities of whatever nature, except (a) when the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Company or any of its
Subsidiaries, as the case may be, (b) for delinquent obligations which do
not have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole and (c) for trade and other accounts payable
in the ordinary course of business which are not overdue for a period of
more than 90 days or, if overdue for more than 90 days, as to which a
dispute exists and adequate reserves in conformity with GAAP have been
established on the books of the Company or any of its Subsidiaries, as the
case may be.
SECTION 5.05. Conduct of Business and Maintenance of Existence. Except as
otherwise contemplated or permitted by the Co-Investment Agreement or the
Liquidating Asset Management Agreement, continue to engage in business of
the same general type as now conducted by it, and preserve, renew and keep
in full force and effect its corporate existence and
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take all reasonable action to maintain all material rights, material
privileges, franchises, patents, patent applications, copyrights,
trademarks and trade names, necessary or desirable in the normal conduct of
its business except for rights, privileges, franchises, patents, patent
applications, copyrights, trademarks and tradenames the loss of which would
not in the aggregate have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, and comply with all
applicable Requirements of Law except to the extent that the failure to
comply therewith would not, in the aggregate, have a material adverse
effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries taken as a whole.
SECTION 5.06. Maintenance of Property; Insurance.
(a) Keep all property useful and necessary in its business in good working
order and condition (ordinary wear and tear excepted); and
(b) Maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and with only such
deductibles as are usually maintained by, and against at least such risks
(but including, in any event, public liability insurance) as are usually
insured against in the same general area, by companies engaged in the same
or a similar business and furnish to the Lender, upon written request of
the Lender, full information as to the insurance carried; provided that the
Company may implement programs of self-insurance in the ordinary course of
business and in accordance with industry standards for a company of similar
size so long as reserves are maintained in accordance with GAAP for the
liabilities associated therewith.
SECTION 5.07. Inspection of Property; Books and Records; Discussions.
Keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to its
business and activities which permit financial statements to be prepared in
conformity with GAAP and all Requirements of Law; and permit
representatives of the Lender upon reasonable notice (but no more
frequently than monthly), to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be requested upon reasonable
notice, and to discuss the business, operations, assets and financial and
other condition of the Company and its Subsidiaries with officers and
employees thereof and with their independent certified public accountants.
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SECTION 5.08. Notices. Subject to the last sentence of this section
promptly give notice to the Lender of any of the following (a "Notice
Event"):
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any instrument
or other agreement, guarantee or collateral document of the Company or
any of its Subsidiaries which default or event of default has not been
waived and would have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole, or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, or
receipt of any notice of any environmental claim or assessment against
the Company or any of its Subsidiaries by any Governmental Authority
which in any such case would have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole;
(c) of any litigation or proceeding against the Company or any
of its Subsidiaries (i) in which more than $500,000 of the amount
claimed is not covered by insurance or (ii) in which injunctive or
similar relief is sought which if obtained would have a material
adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole;
(d) of the following events, as soon as practicable after, and
in any event within 30 days after, the Company knows or has reason to
know thereof: (i) the occurrence of any Reportable Event with respect
to any Plan which Reportable Event could reasonably result in material
liability to the Company and its Subsidiaries taken as a whole, or
(ii) the institution of proceedings or the taking of any other action
by PBGC, the Company or any Commonly Controlled Entity to terminate,
withdraw or partially withdraw from any Plan and, with respect to a
Multiemployer Plan, the Reorganization or Insolvency of the Plan, in
each of the foregoing cases which could reasonably result in material
liability to the Company and its Subsidiaries taken as a whole, and in
addition to such notice, deliver to the Lender whichever of the
following may be applicable: (A) a certificate of a Responsible
Officer of the Company setting forth details as to such Reportable
Event and the action that the
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Company or such Commonly Controlled Entity proposes to take with
respect thereto, together with a copy of any notice of such Reportable
Event that may be required to be filed with PBGC, or (B) any notice
delivered by PBGC evidencing its intent to institute such proceedings
or any notice to PBGC that such Plan is to be terminated, as the case
may be; and
(e) of a material adverse change known to the Company or its
Subsidiaries in the business, assets, condition (financial or
otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole.
Each notice pursuant to this Section 5.08 shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and (in the cases of clauses (a) through (d)) stating
what action the Company proposes to take with respect thereto. The Company
shall not be deemed in breach or default of its obligations under this
Section 5.08 due to the failure to notify the Lender of any Notice Event of
which the Lender shall have had actual knowledge as of the date notice of
such Notice Event was to have been provided.
SECTION 5.09. Environmental Laws.
(a) Comply with, and use all reasonable efforts to insure compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws
and obtain and comply with and maintain, and require that all tenants and
subtenants obtain and comply with and maintain, any and all licenses,
approvals, registrations or permits required by Environmental Laws, except
to the extent that failure to do so would not have any reasonable
likelihood of having a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company
and its Subsidiaries taken as a whole or on the validity or enforceability
of any of the Credit Documents or the rights and remedies of the Lender
thereunder;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions, required under
applicable Environmental Laws, and promptly comply with all lawful orders
and directives of all Governmental Authorities respecting Environmental
Laws, except to the extent that the same are being contested in good faith
by appropriate proceedings; and
(c) In regard to this Agreement or in any way relating to the Company or
its Subsidiaries or their current or former operations, defend, indemnify
and hold harmless the
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Lender, and its respective employees, agents, officers and directors, from
and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known
or unknown, contingent or otherwise, arising out of, or in any way relating
to Hazardous Material or Environmental Laws, including any orders,
requirements or demands of Governmental Authorities related thereto,
including reasonable attorney's and consultant's fees, investigation and
laboratory fees, remediation costs, court costs and litigation expenses,
except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of the party seeking indemnification
therefor. The agreements in this Section 5.09(c) shall survive repayment
of the Loan and all other amounts payable hereunder.
SECTION 5.10. Further Instruments and Acts. Upon request of the Lender,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Agreement.
SECTION 5.11 Taxes. Each of the Company and its Subsidiaries will file or
cause to be filed all material tax returns which, to the knowledge of the
Company, are required to be filed and will pay all taxes shown to be due
and payable on said returns or on any assessments made against it or any of
its property and all other taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any amount of
which is currently being contested in good faith by appropriate proceeds
and with respect to which reserves (or other sufficient provisions) in
conformity with GAAP have been provided on the books of the Company or its
Subsidiaries, as the case may be).
ARTICLE 6
Negative Covenants
So long as the Loan remains outstanding and unpaid, or any other amount is
owing to the Lender hereunder or under any other Credit Document (it being
understood that each of the permitted exceptions to each of the covenants
in this Article 6 is in addition to, and not overlapping with, any other of
such permitted exceptions except to the extent expressly provided):
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SECTION 6.01. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, Incur any Indebtedness; provided, however, that on or after the first
anniversary of the Closing Date the Company may Incur Indebtedness if on
the date thereof the Consolidated Coverage Ratio would be greater than
1.6:1.0.
(b) Notwithstanding Section 6.01(a), the Company and its Restricted
Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness (A) of the Company to any Subsidiary, and (B)
of any Subsidiary to the Company or any other Subsidiary;
(ii) Indebtedness represented by (w) the Loan, (x) any
Indebtedness outstanding or to be issued or made pursuant to the NRG
Plan, (y) any Co-Investment Indebtedness and (z) any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this
clause (ii) or Section 6.01(a);
(iii) Indebtedness of the Company or any of its Subsidiaries in
an aggregate principal amount at any one time outstanding (excluding
Indebtedness that is permitted to be incurred pursuant to clause (ii)
of this Section 6.01(b)) not in excess of $5,000,000;
(iv) Indebtedness in connection with workmen's compensation
obligations and related general liability exposure of the Company and
its Subsidiaries; and
(v) Capitalized Lease Obligations in respect of (A) sale/leaseback
transactions of property owned by the Company on the Closing Date, and (B)
fixtures and equipment and other personal property acquired after the
Closing Date.
(c) The Company shall not Incur any Indebtedness pursuant to
Section 6.01(b) if the proceeds thereof are used, directly or indirectly,
to repay, prepay, redeem, defease, retire, refund or refinance any
Subordinated Obligations unless such Indebtedness shall be subordinated to
the Loan to at least the same extent as such Subordinated Obligations.
SECTION 6.02. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted Subsidiary,
directly or indirectly, to (i) declare or pay any dividend or make any
distribution on or in respect of its Capital Stock (including any payment
in connection with any merger or consolidation involving the Company)
except
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dividends or distributions payable solely in its Capital Stock (other than
Disqualified Stock) and except dividends or distributions payable to the
Company or another Restricted Subsidiary (and, if such Restricted
Subsidiary is not wholly owned, to its other shareholders on a pro rata
basis), (ii) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of the Company or any Restricted Subsidiary held by Persons
other than the Company or another Restricted Subsidiary, (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior
to scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Subordinated Obligations (other than the purchase, repurchase
or other acquisition of Subordinated Obligations purchased in anticipation
of satisfying a sinking fund obligation, principal installment or final
maturity, or (iv) make any Investment (other than a Permitted Investment)
in any Person (any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition, retirement or Investment being
herein referred to as a "Restricted Payment") if at the time the Company or
such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Consolidated Coverage Ratio of the Company would be
less than 1.6:1.0; or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in
cash, to be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of the
Board of Directors) declared or made subsequent to the Closing Date
would exceed the sum of:
(A) 25% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the beginning of
the fourth fiscal quarter in 1995, to the end of the most recent
fiscal quarter ending at least 45 days prior to the date of such
Restricted Payment (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit); and
(B) the aggregate Net Cash Proceeds received by the Company
from the issue or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the Closing Date (other than an
issuance or sale to a Subsidiary of the Company or an employee
stock ownership plan or other trust established by the Company or
any of its Subsidiaries).
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(b) The provisions of Section 6.02(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock of the Company
or Subordinated Obligations made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital Stock of the
Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary or an employee stock ownership plan or
other trust established by the Company or any of its Subsidiaries);
provided, however, that (A) such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments and
(B) the Net Cash Proceeds from such sale shall be excluded from clause
(3)(B) of Section 6.02(a);
(ii) any purchase or redemption of Subordinated Obligations made
by exchange for, or out of the proceeds of the substantially
concurrent sale of, Indebtedness of the Company which is permitted to
be Incurred pursuant to Section 6.01; provided, however, that such
purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from
Net Available Cash to the extent permitted by Section 6.04; provided,
however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have
complied with Section 6.02(a); provided, however, that such dividend
shall be included in the calculation of the amount of Restricted
Payments; or
(v) so long as the entire amount of the outstanding principal
and accrued interest on the Loan shall not have been accelerated and
become due and payable pursuant to Section 8.02 or so long as such
acceleration shall have been rescinded, the payment of dividends upon
or the redemption of the Company's Class A Preferred Stock in
accordance with the terms of such stock.
SECTION 6.03. Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions
on its Capital Stock or pay any Indebtedness or
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other obligations owed to the Company, (ii) make any Loan or advances to
the Company or (iii) transfer any of its property or assets to the Company,
except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Closing Date;
(2) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (1) of this Section or this clause (2)
or contained in any amendment to an agreement referred to in clause
(1) of this Section or this clause (2); provided, however, that the
encumbrances and restrictions contained in any such refinancing
agreement or amendment are no less favorable to the Lender than
encumbrances and restrictions contained in such agreements;
(3) in the case of clause (iii), any encumbrance or restriction
(A) that restricts in a customary manner the subletting, assignment or
transfer of any property or asset that is subject to a lease, license
or similar contract or (B) contained in security agreements securing
Indebtedness of a Restricted Subsidiary to the extent such encumbrance
or restrictions restrict the transfer of the property subject to such
security agreements; and
(4) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition.
SECTION 6.04. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, make any Asset Disposition unless (i) the Company or such Restricted
Subsidiary receives consideration (including by way of relief from, or by
any other Person assuming sole responsibility for, any liabilities,
contingent or otherwise) at the time of such Asset Disposition at least
equal to the fair market value of the shares and assets subject to such
Asset Disposition, (ii) at least 80% of the consideration thereof received
by the Company or such Restricted Subsidiary is in the form of cash and
(iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as
the case may be) (A) first, to the extent the Company elects (or is
required by the terms of any Senior Indebtedness or Indebtedness of a
Wholly Owned
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Subsidiary), to prepay, repay or purchase such Indebtedness of a Wholly
Owned Subsidiary (in each case other than Indebtedness owed to the Company
or an Affiliate of the Company) within 6 months after the later of the date
of such Asset Disposition or the receipt of such Net Available Cash; (B)
second, to the extent of the balance of Net Available Cash after
application in accordance with clause (A), to the extent the Company or
such Restricted Subsidiary elects, to reinvest in Additional Assets
(including by means of an Investment in Additional Assets by a Restricted
Subsidiary with Net Available Cash received by the Company or another
Restricted Subsidiary) within 6 months from the later of such Asset
Disposition or the receipt of such Net Available Cash; and (C) third, to
the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to repay the Loan, provided, however,
that in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted Subsidiary shall retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section, the Company and
the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this Section exceed $500,000.
For the purposes of this Section, the following are deemed to be cash: (x)
the assumption of Indebtedness of the Company (other than Disqualified
Stock of the Company) or any Restricted Subsidiary and the release of the
Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition and (y) securities
received by the Company or any Restricted Subsidiary from the transferee
that are promptly converted by the Company or such Restricted Subsidiary
into cash.
SECTION 6.05. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or conduct any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") on terms (i) that are less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate and (ii) that, in the event such
Affiliate Transaction involves an aggregate amount in excess of
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$500,000, are not in writing and have not been approved by a majority of
the members of the Board of Directors having no personal stake in such
Affiliate Transaction.
(b) The provisions of Section 6.05(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 6.02, (ii) the
performance of the Company's or Subsidiary's obligations under any
employment contract, collective bargaining agreement, employee benefit
plan, related trust agreement or any other similar arrangement heretofore
or hereafter entered into in the ordinary course of business, (iii) payment
of compensation to employees, officers, directors or consultants in the
ordinary course of business, (iv) maintenance in the ordinary course of
business of benefit programs or arrangements for employees, officers or
directors, including vacation plans, health and life insurance plans,
deferred compensation plans, and retirement or savings plans and similar
plans or (v) any transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries (v) any transaction between
the Lender and the Company and (vi) any transaction pursuant to and in
accordance with the Liquidating Asset Management Agreement.
SECTION 6.06. Limitation on Liens. The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, create or
permit to exist any Lien on any of its property or assets (including
Capital Stock), whether owned on the date of this Agreement or thereafter
acquired, securing any obligation other than Permitted Liens.
SECTION 6.07. Limitation on Lines of Business. The Company shall not, and
shall not permit any Restricted Subsidiary to, engage in any business,
other than (i) those businesses in which the Company or such Restricted
Subsidiary is engaged on the date of this Agreement (or which are directly
related thereto) or (ii) those businesses in which the Company or any of
its Subsidiaries may engage in connection with any Investment made pursuant
to and in accordance with the terms of the Co-Investment Agreement.
ARTICLE 7
Successor Company
SECTION 7.01. When the Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized and existing
under the laws of the United
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States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) shall expressly assume, by
an agreement supplemental hereto, executed and delivered to the
Lender, in form satisfactory to the Lender, all the obligations of the
Company under the Note and this Agreement;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction
as having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Consolidated Coverage Ratio of the Successor Company would be greater
than 1.6:1.0;
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which
is not less than the Consolidated Net Worth of the Company immediately
prior to such transaction; and
(v) the Company shall have delivered to the Lender an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Agreement.
The Successor Company shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement, but
the predecessor Company in the case of a lease of all or substantially all
its assets shall not be released from the obligation to pay the principal
of and interest on the Note.
Notwithstanding, the foregoing clauses (ii), (iii) and (iv), (1) any
Restricted Subsidiary may consolidate with, merge into or transfer all or
part of its properties and assets to the Company and (2) the Company may
merge with an Affiliate incorporated for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits.
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ARTICLE 8
Defaults and Remedies
SECTION 8.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest or any
other amount (other than those specified in (2) below) with respect to
the Loan when the same becomes due and payable and such default
continues for a period of 10 days;
(2) the Company (i) defaults in the payment of the principal of
the Loan when the same becomes due and payable at its Stated Maturity,
upon redemption, upon declaration or otherwise or (ii) fails to redeem
or purchase the Note when required pursuant to this Agreement or the
Note;
(3) at any time during which the Lender shall own less than 26%
of the outstanding common stock of the Company, or, persons designated
by the Lender or which the Lender shall have the right to appoint
shall constitute less than one-half of the Board of Directors: (i)
any representation or warranty made or deemed made by the Company in
any Credit Document shall prove to have been incorrect in any material
respect on or as of the date, or at any time during the period, that
such representation or warrranty is made or deemed made; (ii) the
facts or circumstances giving rise to such incorrect representation or
warranty would have a material adverse effect on the Company's ability
to pay the amounts outstanding under the Loan (including principal and
interest) as they become due and payable; and (iii) both of the
conditions in preceding subclauses (i) and (ii) continue for 30 days
after the notice specified below;
(4) the Company fails to comply with Section 7.01 at any time
during which the Lender shall own less than 26% of the outstanding
common stock of the Company, or persons designated by the Lender or,
which the Lender shall have the right to appoint shall constitute less
than one-half of the Board of Directors;
(5) the Company shall default in the observance or performance
of any agreement contained in Section 5.08(a) or Article 6 of this
Agreement;
(6) the Company fails to comply with any of its agreements in
the Credit Documents (other than those referred to in (1) through (5)
above) and such failure
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continues for 30 days after the notice specified below; provided that,
in the case of Sections 5.04, 5.05 and 5.11, the Lender shall then own
less than 26% of the outstanding common stock of the Company, or,
persons designated by the Lender or which the Lender shall have the
right to appoint shall constitute less than one-half of the Board of
Directors;
(7) Indebtedness of the Company or any Subsidiary is not paid
within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $2,000,000
or its foreign currency equivalent at the time;
(8) the Company or any Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it
in an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(9) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Subsidiary in
an involuntary case;
(B) appoints a Custodian of the Company or any Subsidiary
or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or
any Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(10) any judgment or decree for the payment of money in excess
of $2,000,000 or its foreign currency
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equivalent at the time is entered against the Company or any
Subsidiary and is not discharged and either (A) an enforcement
proceeding has been commenced by any creditor upon such judgment or
decree or (B) there is a period of 60 days following the entry of such
judgment or decree during which such judgment or decree is not
discharged, waived or the execution thereof stayed;
(11) (i) any Person shall engage in any "prohibited transaction"
(as defined in Section 4.06 of ERISA or Section 4975 of the Code)
involving any Plan which is not otherwise exempted, (ii) any
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Lender, likely to result in the termination
of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v)
the Company or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Lender is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization
of, a Multiemployer Plan; and in each case in clauses (i) through (v)
above, such event or condition, together with all other such events or
conditions relating to a Plan, if any, would be reasonably likely to
subject the Company or any of its Subsidiaries to any tax, penalty or
other liabilities in the aggregate material in relation to the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole; or
(12) any Credit Document shall cease, for any reason, to be in
full force and effect or the Company or any of its Subsidiaries shall
so assert in writing.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver,
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trustee, assignee, liquidator, custodian or similar official under any
Bankruptcy Law.
A Default under clauses (3) and (6) is not an Event of Default until the
Lender notifies the Company of the Default and the Company does not cure
such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
SECTION 8.02. Acceleration. If an Event of Default (other than an Event
of Default specified in Section 8.01(8) or (9) with respect to the Company)
occurs and is continuing, the Lender by notice to the Company may declare
the principal of and accrued interest on the Loan to be due and payable.
Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default specified in Section 8.01(8)
or (9) with respect to the Company (but not any Subsidiary) occurs, the
principal of and interest on the Loan Note shall ipso facto become and be
immediately due and payable without any declaration or other act on the
part of the Lender. The Lender by notice to the Company may rescind an
acceleration and its consequences. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 8.03. Other Remedies. If an Event of Default occurs and is
continuing, the Lender may pursue any available remedy to collect the
payment of principal of or interest on the Note or to enforce the
performance of any provision of the Note or this Agreement.
The Lender may maintain a proceeding even if it does not possess the Note
or does not produce it in the proceeding. A delay or omission by the
Lender in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 8.04. Waiver of Past Defaults. The Lender by notice to the
Company may waive an existing Default and its consequences. When a Default
is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 8.05. Priorities. If the Lender collects any money or property
pursuant to this Article 8, it shall pay out the money or property in the
following order:
FIRST: to itself in accordance with the priority set forth in
Section 2.08; and
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SECOND: to the extent of any excess, to the Company.
SECTION 8.06. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Agreement a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant.
SECTION 8.07. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any
stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Agreement;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and shall not hinder,
delay or impede the execution of any power herein granted to the Lender,
but shall suffer and permit the execution of every such power as though no
such law had been enacted.
ARTICLE 9
Miscellaneous
SECTION 9.01. Amendments and Waivers. Except as otherwise expressly set
forth in this Agreement, no Credit Document nor any terms thereof may be
amended, supplemented, waived or modified except in accordance with the
provisions of this Section 9.01.
SECTION 9.02. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy or telex, if one is listed), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when
delivered by hand, or three Business Days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when sent,
confirmation of receipt received, or, in the case of telex notice, when
sent, answerback received, addressed as follows, or to such other address
as may be hereafter notified by the respective parties hereto and any
future holders of the Note:
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The Company: NRG Generating (U.S.) Inc.
1221 Nicollet Mall
Minneapolis, MN 55403
Attention: President or Chief Executive Officer
Telephone: (612) 373-5300
Telecopier:(612) 373-5430
With a copy to: Troutman Sanders
NationsBank Plaza, Suite 5200
600 Peachtree Street N.E.
Atlanta, Georgia 30308
Attention: Hazen Dempster
Telephone: (404) 885-3000
Telecopier:(404) 885-3900
if to Lender NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Vice President, Business
Development
Telephone: (612) 373-5300
Telecopier:(612) 373-5430
With copies to: NRG Energy Inc.
Legal Department
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Vice President and General
Counsel
Telephone: (612) 373-5300
Telecopier (612) 373-5392
provided that any notice, request or demand to or upon the Lender pursuant
to Section 2.05 shall not be effective until received.
SECTION 9.03. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Lender, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights, remedies, powers
and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
SECTION 9.04. Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document,
certificate or statement delivered
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pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the Note.
SECTION 9.05. Payment of Expenses and Taxes. The Company agrees (a) to
pay or reimburse the Lender for all its reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, the Credit
Documents and any other documents prepared in connection herewith, and the
consummation of the transactions contemplated hereby and thereby, including
the reasonable fees and disbursements of counsel to the Lender not to
exceed $100,000, (b) to pay or reimburse the Lender for all its costs and
expenses incurred in connection with, and to pay, indemnify, and hold the
Lender harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever arising out of
or in connection with, the enforcement or preservation of any rights under
any Credit Document and any such other documents, including reasonable fees
and disbursements of counsel to the Lender incurred in connection with the
foregoing, (c) to pay, indemnify, and to hold the Lender harmless from any
and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other similar
taxes (other than withholding taxes), if any, which may be payable or
determined to be payable in connection with the execution and delivery of,
or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under or
in respect of, any Credit Document and any such other documents, and (d) to
pay, indemnify, and hold the Lender and its respective Affiliates, officers
and directors harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including
reasonable fees and disbursements of counsel) which may be incurred by or
asserted against the Lender or such Affiliates, officers or directors
arising out of or in connection with any investigation, litigation or
proceeding related to this Agreement, the other Credit Documents, the
proceeds of the Loan and the transactions contemplated by or in respect of
such use of proceeds, or any of the other transactions contemplated hereby,
whether or not the Lender or such Affiliates, officers or directors is a
party thereto, including any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to
the operations of the Company, any of its Subsidiaries or any of the
facilities and properties owned, leased or operated by the Company or any
of its Subsidiaries (all the foregoing, collectively, the "indemnified
liabilities"); provided that the Company shall have no
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obligation hereunder with respect to indemnified liabilities of the Lender
or any of its respective Affiliates, officers and directors arising from
(i) the gross negligence or willful misconduct of the Lender or its
respective directors or officers; (ii) legal proceedings commenced against
the Lender by any security holder or creditor thereof arising out of and
based upon rights afforded any such security holder or creditor solely in
its capacity as such; (iii) legal proceedings commenced against the Lender
by any Transferee; or (iv) actions taken by the Company either at the
direction of the Board of Directors of the Company or pursuant to the
Management Agreement at such time as persons designated by the Lender or
which the Lender shall have the right to appoint shall constitute at least
one-half of the Board. The agreements in his Section 9.05 shall survive
repayment of the Note and all other amounts payable hereunder.
SECTION 9.06. Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Company, the Lender all future holders of the Note and the Loan, and their
respective successors and assigns, except that the Company may not assign
or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Lender.
(b) The Company hereby agrees that the Lender may, in accordance with
applicable law, at any time and from time to time assign all or any part of
its rights and obligations under this Agreement and the Note to any Person
(a "Transferee"); provided, however, that any rights the Lender may have
pursuant to Article 3 and Section 8.01(3) shall not survive or be effective
as to any Transferee.
(c) The Company authorizes the Lender to disclose to any prospective
Transferee any and all financial information in the Lender's possession
concerning the Company and its Subsidiaries and Affiliates which has been
delivered to the Lender by or on behalf of the Company, subject to receipt
of a confidentiality agreement from such Prospective Transferee in form and
substance reasonably satisfactory to the Company.
SECTION 9.07. Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
SECTION 9.08. Governing Law; No Third Party Rights. This Agreement and
the Note and the rights and obligations of
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the parties under this Agreement and the Note shall be governed by, and
construed and interpreted in accordance with, the law of the State of New
York and applicable laws of the United States of America. This Agreement
is solely for the benefit of the parties hereto and their respective
successors and assigns, and, except as set forth in Section 9.06, no other
Persons shall have any right, benefit, priority or interest under, or
because of the existence of, this Agreement.
SECTION 9.09. Submission to Jurisdiction; Waivers.
(a) Each party to this Agreement hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any of the other Credit
Documents, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be brought
in such courts, and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in Section 9.02; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction.
(b) Each party hereto unconditionally waives trial by jury in any legal
action or proceeding referred to in paragraph (a) above and any
counterclaim therein.
SECTION 9.10. Interest. Each provision in this Agreement and each other
Credit Document is expressly limited so that in no event whatsoever shall
the amount paid, or otherwise agreed to be paid, by the Company for the
use, forbearance or detention of the money to be loaned under this
Agreement or any other Credit Document or otherwise (including
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any sums paid as required by any covenant or obligation contained herein or
in any other Credit Document which is for the use, forbearance or detention
of such money), exceed that amount of money which would cause the effective
rate of interest to exceed the highest lawful rate permitted by applicable
law (the "Highest Lawful Rate"), and all amounts owed under this Agreement
and each other Credit Document shall be held to be subject to reduction to
the effect that such amounts so paid or agreed to be paid which are for the
use, forbearance or detention of money under this Agreement or such Credit
Document shall in no event exceed that amount of money which would cause
the effective rate of interest to exceed the Highest Lawful Rate.
Notwithstanding any provision in this Agreement or any other Credit
Document to the contrary, if the maturity of the Loan or the obligations in
respect of the other Credit Documents are accelerated for any reason, or in
the event of any prepayment of all or any portion of the Loan or the
obligations in respect of the other Credit Documents by the Company or in
any other event, earned interest on the Loan and such other obligations of
the Company may never exceed the Highest Lawful Rate, and any unearned
interest otherwise payable on the Loan or the obligations in respect of the
other Credit Documents that is in excess of the Highest Lawful Rate shall
be cancelled automatically as of the date of such acceleration or
prepayment or other such event and (if theretofore paid) shall, at the
option of the holder of the Loan or such other obligations, be either
refunded to the Company or credited on the principal of the Loan. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Company and the Lender
shall, to the maximum extent permitted by applicable law, amortize,
prorate, allocate and spread, in equal parts during the period of the
actual term of this Agreement, all interest at any time contracted for,
charged, received or reserved in connection with this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
NRG GENERATING (U.S.) INC.
by
/s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President and Chief Executive
Officer
NRG ENERGY, INC.
by
/s/ Craig A. Mataczynski
Name: Craig A. Mataczynski
Title: Vice President, Domestic Business
Development
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EXHIBIT A
New York, New York
April 30, 1996
NOTE
FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order
of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the
"Lender"), at the office of the Lender located at 1221 Nicollet Mall, Suite
700, Minneapolis, MN 55403 in lawful money of the United States of America
and in immediately available funds, the principal amount of FORTY FIVE
MILLION DOLLARS ($45,000,000), or, if less, the aggregate unpaid principal
amount of the loan made by the lender pursuant to Section 2.01 of the Loan
Agreement referred to below (in either case, to be paid together with any
accrued interest not required to be paid currently in cash), which sum
shall be due and payable in such amounts and on such dates as are set forth
in the Loan Agreement, dated as of April 30, 1996 between the Company and
the Lender (the "Loan Agreement"; terms defined therein being used herein
as so defined). The undersigned further agrees to pay interest at said
office, in like money, from the date hereof on the unpaid principally
amount hereof from time to time outstanding at the rates and on the dates
specified in Section 2.06 of the Loan Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever.
The nonexercise by the holder of this Note of any of its rights hereunder
in any particular instance shall not constitute a waiver thereof in that or
any subsequent instance.
This Note is the Note referred to in the Loan Agreement, which Loan
Agreement, among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.
<PAGE>
This Note shall be construed in accordance with and governed by the laws of
the State of New York and any applicable laws of the United States of
America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE
LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT.
NRG GENERATING (U.S.) INC.,
by
_________________________
Name: Leonard A. Bluhm
Title: President and Chief Executive
Officer
2
<PAGE>
Exhibit 10.5.2
New York, New York
April 30, 1996
NOTE
FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order
of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the
"Lender"), at the office of the Lender located at 1221 Nicollet Mall, Suite
700, Minneapolis, MN 55403 in lawful money of the United States of America
and in immediately available funds, the principal amount of FORTY FIVE
MILLION DOLLARS ($45,000,000), or, if less, the aggregate unpaid principal
amount of the loan made by the lender pursuant to Section 2.01 of the Loan
Agreement referred to below (in either case, to be paid together with any
accrued interest not required to be paid currently in cash), which sum
shall be due and payable in such amounts and on such dates as are set forth
in the Loan Agreement, dated as of April 30, 1996 between the Company and
the Lender (the "Loan Agreement"; terms defined therein being used herein
as so defined). The undersigned further agrees to pay interest at said
office, in like money, from the date hereof on the unpaid principally
amount hereof from time to time outstanding at the rates and on the dates
specified in Section 2.06 of the Loan Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever.
The nonexercise by the holder of this Note of any of its rights hereunder
in any particular instance shall not constitute a waiver thereof in that or
any subsequent instance.
This Note is the Note referred to in the Loan Agreement, which Loan
Agreement, among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.
<PAGE>
This Note shall be construed in accordance with and governed by the laws of
the State of New York and any applicable laws of the United States of
America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE
LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT.
NRG GENERATING (U.S.) INC.,
by
/s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President and Chief Executive
Officer
2
<PAGE>
Exhibit 10.6.1
SUPPLEMENTAL LOAN AGREEMENT
dated as of April 30, 1996
Between
NRG ENERGY, INC.
and
NRG GENERATING (U.S.) INC.
<PAGE>
SUPPLEMENTAL LOAN AGREEMENT, dated as of April 30, 1996, between
NRG GENERATING (U.S.) INC., a Delaware corporation formerly known as
O'Brien Environmental Energy, Inc. (the "Company"), and NRG Energy, Inc., a
Delaware corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, immediately prior to the execution and delivery of this
Agreement, the Company was the debtor and the debtor in possession in
Chapter 11 case number 94-26723 (the "Case") pending before the United
States Bankruptcy Court for the District of New Jersey (the "Bankruptcy
Court");
WHEREAS, pursuant to the Composite Fourth Amended and Restated
Plan of Reorganization for the Company proposed by the Company, the Lender,
Wexford Management Corp. and the Official Committee of Equity Security
Holders dated January 31, 1996 (as confirmed by order of the Bankruptcy
Court entered on February 22, 1996, the "NRG Plan"; capitalized terms used
herein without definition shall have the respective meanings assigned to
them in the NRG Plan), and subject to the terms and conditions of the
Amended and Restated Stock Purchase and Reorganization Agreement dated as
of January 31, 1996 between the Lender and the Company, the Lender is
acquiring on the date hereof 41.86% of the outstanding shares of Common
Stock of the Company and in that connection has agreed to make certain
loans to the Company;
WHEREAS, to the extent that (i) the Administrative and Cure
Claims Cash Payment exceeds the sum of the Additional Cash Amount (if any),
any Excess Cash available to be applied pursuant to Section 6.12(c) of the
NRG Plan and the Reserved Administrative and Cure Claims Cash Amount (the
amount by which the Administrative and Cure Claims Cash Payment exceeds
such sum being referred to as the "Administrative Claims Shortfall"), and
(ii) the aggregate amount of proceeds of Designated Receivables received by
the Company or any of its Subsidiaries after November 17, 1995 but before
the date hereof that is available for distribution by the Company on the
date hereof is less than $2.240,000 (the difference between $2,240,000 and
the amount of such proceeds so received by the Company or any of its
Subsidiaries and so available for distribution by the Company being
referred to as the "Designated Receivable Shortfall"), Section 6.10 of the
NRG Plan provides that the Lender shall make a loan (the "NRG Mandatory
Supplemental Loan") to the Company on the Effective Date equal to the sum
of (x) the Administrative Claims Shortfall and (y) the Designated
Receivables Shortfall;
WHEREAS, Section 10.8(b) of the NRG Plan provides that,
notwithstanding anything in Section 6.10 of the NRG Plan to the contrary,
if an Administrative Claims Shortfall exists and, therefore, the Lender is
required to make an NRG Mandatory Supplemental Loan pursuant to
Section 6.10 of the NRG Plan in an amount equal to the Administrative
Claims Shortfall (the "Administrative Shortfall Loan"), the time at which
all or
<PAGE>
a portion of the Administrative Shortfall Loan shall be required to be made
shall be deferred until after the Effective Date, as follows: (i) the
portion of the Administrative Shortfall Loan required to be advanced on the
Effective Date shall equal the amount by which the Effective Date
Administrative and Cure Payments exceeds the sum of the Additional Cash
Amount (if any), any Excess Cash available to be applied pursuant to
Section 6.12(c) of the NRG Plan on the Effective Date and the Reserved
Administrative and Cure Claims Cash Amount (the amount of such excess being
referred to as the "Effective Date Administrative Shortfall Loan)," with
the amount of the Administrative Shortfall Loan in excess of the Effective
Date Administrative Shortfall Loan (the amount of such excess being
referred to as the "Deferred Administrative Shortfall Amount") being
deferred and potentially reduced as provided below, and (ii) at such time
or times as Unresolved Administrative and Priority Claims become Allowed by
Final Order after the Effective Date (or in the case of such Claims that
are Allowed, but not yet due and payable on the Effective Date, at such
times as such Claims become due and payable after the Effective Date), the
Lender is required, within three business days thereafter, to make an
advance to the Company in respect of the Administrative Shortfall Loan
equal to the aggregate amount at which such Unresolved Administrative and
Priority Claims have been so Allowed or becom7e due and payable, reduced by
any amount then available in the Administrative and Priority Claims Reserve
to pay such Claims, in each case subject to the maximum amount thereof
established by the Court prior to the Effective Date in connection with the
fixing of the amount of the Administrative and Priority Claims Reserve
(each such advance being referred to as a "Deferred Administrative
Shortfall Loan");
WHEREAS, the Administrative Claims Shortfall is $15,255,065.50,
the amount of the Effective Date Administrative Shortfall Loan is zero, the
amount of the Administrative and Priority Claims Reserve on the Effective
Date is $1,639,520.25, the Deferred Administrative Shortfall Amount is
$13,615,545.25 and the Designated Receivable Shortfall is $2,240,000;
WHEREAS, pursuant to Sections 6.10 and 10.8(b) of the NRG Plan,
the aggregate amount of the NRG Mandatory Supplemental Loan to be made on
the Effective Date is $2,240,000 and the aggregate amount of the NRG
Mandatory Supplemental Loan to be made following the Effective Date is up
to the Deferred Administrative Shortfall Amount of $13,615,545.25;
WHEREAS, the Lender agrees to make the NRG Mandatory Supplemental
Loan to the Company on the terms and conditions set forth below.
NOW, THEREFORE, the Company and the Lender agree as follows:
2
<PAGE>
ARTICLE 1
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
terms defined in the caption hereto shall have the meanings set forth
therein, and the following terms have the following meanings:
"Acquisition" means the acquisition by the Company pursuant to
the Acquisition Agreement of 41.86% of the issued and outstanding capital
stock of the Company as reorganized under the NRG Plan and all of the
capital stock of each of certain of the Company's subsidiaries.
"Acquisition Agreement" means the Amended and Restated Stock
Purchase and Reorganization Agreement, dated as of January 31, 1996 between
the Lender and the Company.
"Administrative Claims Shortfall" shall have the meaning assigned
thereto in the recitals.
"Administrative Shortfall Loan" shall have the meaning assigned
thereto in the recitals.
"Affiliate" of any specified Person means (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) any Person who
is a director or officer (a) of such Person, (b) of any Subsidiary of such
Person or (c) of any Person described in clause (i) above. For the
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" means this Loan Agreement, as amended, supplemented
or modified from time to time.
"Base Rate" means for any day, a rate per annum equal to 9%.
"Bankruptcy Court" shall have the meaning assigned thereto in the
recitals.
"Bankruptcy Law" means Title 11 of the United States Code.
"Borrowing" means a borrowing under this Agreement consisting of
a Deferred Administrative Shortfall Loan made by the Lender to the Company.
3
<PAGE>
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required
by law to close.
Closing Date" means the date on which the Lender is to make the
Initial Loan, which shall be the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Agreement until a
successor replaces it and, thereafter, means the successor.
"Credit Documents" means the collective reference to this
Agreement and the Note.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Deferred Administrative Shortfall Amount" shall have the meaning
assigned thereto in the recitals.
"Deferred Administrative Shortfall Loan" shall have the meaning
assigned thereto in the recitals.
"Designated Receivable Shortfall" shall have the meaning assigned
thereto in the recitals.
"Dollars" and "$" means dollars in lawful currency of the United
States of America.
"Effective Date" shall have the meaning assigned thereto in the
NRG Plan, which definition is incorporated herein by this reference.
"Effective Date Administrative Shortfall Loan" shall have the
meaning assigned thereto in the recitals.
"Event of Default" shall have the meaning assigned thereto in
Section 8.01.
"Final Maturity Date" shall have the meaning assigned thereto in
Section 2.04.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.
"Highest Lawful Rate" shall have the meaning assigned thereto in
Section 7.09.
4
<PAGE>
"Indemnified liabilities" shall have the meaning assigned thereto
in Section 7.04.
"Initial Loan" means the Loan to be made on the date hereof equal
to the Designated Receivable Shortfall.
"Initial Maturity Date" shall have the meaning assigned thereto
in Section 2.04.
"Interest Payment Date" means the last day of each March, June,
September and December, commencing on the first such day to occur after the
Loan is made.
"Lender" means the party named in this Agreement until one or
more successors replace it, and thereafter means the successor or
successors.
"Loan" means the Initial Loan or any Deferred Administrative
Shortfall Loan and "Loans" means, collectively, the Initial Loan and the
Deferred Administrative Shortfall Loans.
"Net Cash Flow" means for any fiscal quarter of the Company, the
following calculation: Net Income for such quarter; plus
1. non-cash charges which were deducted in computing Net
Income for such quarter, including, without limitation, depreciation and
deferred taxes; plus
2. net cash proceeds received from a sale made by the Company
or its Subsidiaries of assets (other than (a) accounts, (b) inventory or
(c) obsolete or worn out property the proceeds from the sale of which do
not exceed $10,000 in the aggregate) occurring during such quarter less any
gain or plus any loss from such sales included in the computation of Net
Income; less
3. any amounts included as an income item in the computation
of Net Income for such quarter with respect to which the Company and its
Subsidiaries have not received any cash payment or other form of cash
consideration, provided that any cash consideration received by the Company
and its Subsidiaries with respect thereto in any subsequent quarter shall
be included in Net Cash Flow for such subsequent quarter; less
4. debt amortization and other payments of principal
indebtedness of the Company and its Subsidiaries existing on the date
hereof or incurred for the period beginning on and including the first day
of such quarter and ending on and including the first Business Day of the
next succeeding quarter; less
5. capital expenditures for such quarter; less
6. any cash dividends or redemption payments paid during such
quarter to the holders of the New O'Brien Preferred Stock issued by the
Company pursuant to the NRG Plan; and less
5
<PAGE>
7. any income of any Subsidiary included in the computation of
New Income that the Company has not actually received in the form of
dividends or similar distributions because of any limitations set forth in
any debt documents to which such Subsidiary is a party on the date hereof
or any debt documents into which such Subsidiary enters at any time during
which Lender holds in excess of 26% of the outstanding shares of Common
Stock of the Company; and less
8. any other amounts as may be agreed to in writing by the
Lender for such quarter, but the Lender shall have no obligation to so
agree.
It is the expressed intent of the Company and the Lender that in making the
foregoing computation there shall be no duplication of any item of income,
expense or otherwise. If the foregoing computation for any quarter results
in a negative number, Net Cash Flow shall be deemed to be zero for such
quarter.
"Net Income" means the consolidated net income of the Company and its
Subsidiaries for the applicable reporting period after all applicable taxes
on income and profits (and any refunds in respect thereof) and as
determined in accordance with GAAP.
"Note" means the Note substantially in the form attached hereto as
Exhibit A.
"Notice of Borrowing" means an irrevocable notice from the Company to the
Lender, executed by an officer of the Company, requesting the Lender to
make a Deferred Administrative Shortfall Loan, substantially in the form of
Exhibit B hereto, delivered by the Company to the Lender pursuant to
Section 2.07(b) hereof.
"NRG Mandatory Supplemental Loan" shall have the meaning assigned thereto
in the recitals.
"NRG Plan" shall have the meaning specified in the recitals.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other
entity.
"Principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Register" shall have the meaning assigned thereto in Section 2.10(b).
"Senior Indebtedness" means the indebtedness incurred by the Company to
Lender under the Loan Agreement dated the date hereof under which Lender
will loan the Company $45 million on the date hereof and any indebtedness,
the proceeds of which are used, directly or indirectly, to repay, prepay,
redeem, defease, retire, refund or refinance any such indebtedness so
incurred by the Company to Lender.
6
<PAGE>
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power
of shares of capital stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at
the time owned or controlled, directly or indirectly, by (i) such Person or
(ii) one or more Subsidiaries of such Person.
Transferee" shall have the meaning assigned thereto in Section 7.05(b).
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
SECTION 1.02. Rules of Construction. Unless the context otherwise
requires:
1. a term has the meaning assigned to it;
2. "or" is not exclusive;
3. "including" means including without limitation;
4. words in the singular include the plural and words in the
plural include the singular;
5. unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the Note or any
certificate or other document made or delivered pursuant hereto; and
6. 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,
Section, schedule and exhibit references are to this Agreement unless
otherwise specified.
ARTICLE 2
Loan
SECTION 2.01. Loan. Subject to the terms and conditions hereof, the
Lender agrees to make the NRG Mandatory Supplemental Loan in Dollars to the
Company on or after the Closing Date, in an aggregate principal amount of
up to Fifteen Million Eight Hundred Fifty Five Thousand Five Hundred and
Forty Five Dollars and Twenty-Five Cents ($15,855,545.25), consisting of
the Initial Loan in an aggregate principal amount of Two Million Two
Hundred and Forty Thousand Dollars ($2,240,000) to be made on the Closing
Date and Deferred Administrative Shortfall Loans from time to time after
the Closing Date in
7
<PAGE>
an aggregate amount of up to Thirteen Million Six Hundred Fifteen Thousand
Five Hundred and Forty Five Dollars and Twenty-Five Cents ($13,615,545.25).
SECTION 2.02. Use of Proceeds. The proceeds of the NRG Mandatory
Supplemental Loan shall be used for the purposes set forth in the NRG Plan
and shall be applied in accordance with the NRG Plan.
SECTION 2.03. Borrowing. The Company shall borrow the entire amount of
the Initial Loan on the Closing Date and, thereafter, shall borrow Deferred
Administrative Shortfall Loans when and as provided herein.
SECTION 2.04. Maturity. Each Loan will mature on the date that is five
years following the Closing Date (the "Maturity Date").
SECTION 2.05. Optional and Mandatory Prepayments; Repayments of Loan.
(a) The Company may at any time and from time to time prepay any Loan, in
whole or in part, without premium or penalty, upon at least five days
irrevocable notice to the Lender. If such notice is given, the Company
shall make such prepayment, and the payment amount specified in such notice
shall be due and payable, on the date specified therein.
(b) The Company shall pay in reduction of the principal amount of the
Loans then outstanding, promptly after receipt, the amount of any payments
hereafter received by the Company or any of its Subsidiaries in respect of
any Designated Receivables; provided that the Company's mandatory
prepayment obligations under this Section 2.05(b) shall cease at such time
as the Company shall have paid over in reduction of the principal amount of
the Loan under this Section 2.05(b) an aggregate amount equal to the
Designated Receivable Shortfall. The Company shall give the Lender at
least one Business Day's notice of each mandatory prepayment pursuant to
this Section 2.05(b) setting forth the date and amount thereof.
(c) On or before the 45th day after the end of each quarterly period of
each fiscal year of the Company, commencing with the fiscal quarter ending
September 30, 1996, the Company shall prepay the Loans in an amount equal
to 80% of the Net Cash Flow for such quarter.
If any annual audit of the Company prepared in conjunction with the
delivery of the financial statements required to be delivered pursuant to
subsection 5.1(a) shows that Net Cash Flow for any quarterly period of the
fiscal year of the Company covered by such audit exceeds the calculation of
Net Cash Flow previously made at the conclusion of such quarter by more
than $100,000, then the Company shall prepay the Loans in an amount equal
to 80% of such excess for each such quarter. If such audit shows that Net
Cash Flow for such quarterly period was less by more than $100,000 than the
calculation of Net Cash Flow for such quarter on which any prepayment of
the Loans pursuant to subsection 2.6(e)(i) was based, then an amount equal
to 80% of such difference shall be applied to reduce any prepayment due
pursuant to subsection 2.6(e)(i) for any subsequent fiscal quarters.
8
<PAGE>
(d) Accrued interest on the amount of any prepayments shall be paid on the
date of such prepayment.
SECTION 2.06. Interest Rate and Payment Dates.
(a) Each Loan shall bear interest for the period from and including the
date the Loan is made to, but excluding, the maturity date thereof on the
unpaid principal thereof at a rate per annum equal to the Base Rate.
(b) If all or a portion of (i) the principal amount of any Loan or
(ii) any interest payable thereon shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise), each Loan, and any such
overdue amount shall, without limiting the rights of the Lender under
Article 5, bear interest at a rate per annum which is 2.00% above the Base
Rate from the date of such non-payment until paid in full (as well after as
before judgment).
(c) Interest shall be payable in arrears on each Interest Payment Date.
SECTION 2.07 Notice of Borrowing Requirements.
(a) Each Borrowing shall be made on a Business Day.
(b) Each Borrowing shall be made upon written notice, by way of a Notice
of Borrowing, in the form of Exhibit B, attached hereto, given by telecopy,
mail, or personal service, delivered to the Lender at its office at 1221
Nicollet Mall, Minneapolis, Minnesota at least three Business Days prior to
the day on which such Borrowing is to be made and such notice shall specify
that a Borrowing is requested and state the amount thereof (subject to the
provisions of this Article 2).
SECTION 2.08. Computation of Interest and Fees. (a) Interest in respect
of the Loan, shall be calculated on the basis of a 365 (or 366 as the case
may be) day year for the actual days elapsed.
SECTION 2.09. Treatment of Payments.
(a) Whenever any payment received by the Lender under this Agreement or
the Note is insufficient to pay in full all amounts then due and payable to
the Lender under this Agreement or the Note, such payment shall be applied
by the Lender in the following order: First, to the payment of fees and
expenses due and payable to the Lender under and in connection with this
Agreement and the Note, including the payment of all expenses due and
payable under Section 7.04; Second, to the payment of interest then due and
payable on the Loans; and Third, to the payment of the principal amount of
the Loans which is then due and payable; or
(b) All payments (including prepayments) to be made by the Company on
account of principal, interest and fees shall be made without set-off or
counterclaim and shall
9
<PAGE>
be made to the Lender, for the account of the Lender at its office located
at 1221 Nicollet Mall, Minneapolis, Minnesota, in lawful money of the
United States of America and in immediately available funds. If any
payment hereunder would become due and payable on a day other than a
Business Day, such payment shall become due and payable on the next
succeeding Business Day and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
SECTION 2.10. Indemnity. The Company agrees to indemnify the Lender and
to hold the Lender harmless from any loss or expense (but without
duplication of any amounts payable as default interest) which the Lender
may sustain or incur as a consequence of default by the Company in making
any prepayment after the Company has given a notice in accordance with
Section 2.05. This covenant shall survive termination of this Agreement
and repayment of the Loan.
SECTION 2.11. Repayment of the Loan; Evidence of Debt. (a) The Company
hereby unconditionally promises to pay to the Lender the then unpaid
principal amount of the Loans in accordance with the terms hereof and the
Note. The Company hereby further agrees to pay interest on the unpaid
principal amount of the Loan from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the
dates, set forth in Section 2.06.
(b) The Lender shall maintain a Register (the "Register") in which shall
be recorded (i) the amount of each Loan made hereunder, (ii) the amount of
any principal or interest due and payable or to become due and payable from
the Company to the Lender hereunder and (iii) the amount of any sum
received by the Lender hereunder from the Company.
(c) The entries made in the Register to the extent permitted by applicable
law, shall be prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however, that the
failure of the Lender to maintain the Register, or any error therein, shall
not in any manner affect the obligation of the Company to repay (with
applicable interest) the Loan made to the Company by the Lender in
accordance with the terms of this Agreement.
(d) The Company agrees that, on the Closing Date, the Company will execute
and deliver to the Lender the Note evidencing the Loan, with appropriate
insertions as to date and principal amount.
ARTICLE 3
Conditions Precedent
SECTION 3.01. Conditions to Initial Loan. The obligation of the Lender to
make the Initial Loan on the Closing Date is subject to the satisfaction,
or waiver by the
10
<PAGE>
Lender, immediately prior to or concurrently with the making of the Initial
Loan, of the following conditions:
(a) Note. The Lender shall have received the Note conforming to the
requirements hereof and executed by a duly authorized officer of the
Company.
(b) Acquisition and NRG Plan Consummation. The Acquisition shall have
been consummated at the Closing (as defined in the Acquisition Agreement)
and concurrently therewith the NRG Plan shall have been consummated on the
Effective Date.
SECTION 3.02. Condition to Deferred Administrative Shortfall Loans. The
obligation of the Lender to make a Deferred Administrative Shortfall Loan
is subject to the satisfaction, or waiver by the Lender, immediately prior
to or concurrently with the making of such Deferred Administrative
Shortfall Loan, of the condition that Lender shall have received a Notice
of Borrowing, notifying the Lender than an Unresolved Administrative and
Priority Claim has become an Allowed Claim by Final Order (or in the case
of any such Claim that is Allowed, but not yet due and payable on the
Effective Date, has become due and payable in accordance with its terms)
and that insufficient funds are available in the Administrative and
Priority Claims Reserve to pay such Claim and requesting the Lender to make
a Deferred Administrative Shortfall Loan to the Company in the amount
necessary to fund the payment in full of such Claim through the
Administrative and Priority Claims Reserve (in each case subject to any cap
on the Allowed amount of such Claim previously established by order of the
Bankruptcy Court).
ARTICLE 4
Security Interest
SECTION 4.01. Assignment and Grant of Security. To secure the prompt and
unconditional payment, performance and discharge, when due, of all of the
Company's obligations under this Agreement and the Note (collectively, the
"Secured Obligations"), the Company hereby assigns, pledges, conveys, sets
over, delivers and transfers to the Lender and grants a security interest
to the Lender in and to all of the Company's right, title and interest in
and to each and all of the following:
(a) the Designated Receivables; and
(b) all Proceeds of any Designated Receivable; provided that, at such time
as the Lender shall have received either under Section 2.05(b) as a
mandatory reduction of the principal amount of the Loan or as a result of
collecting or otherwise realizing against the Designated Receivables or the
Proceeds hereof, an aggregate amount of payments equal to the Designated
Receivable Shortfall, the Security Interest granted under this Section 4.01
shall terminate and be of no further force and effect (the Designated
Receivables, together with the Proceeds thereof, are referred to as the
"Collateral"). As used herein, the terms
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"Proceeds" shall refer to and include (i) whatever is now or hereafter
received by the Company upon the sale, exchange, collection or other
disposition of any of the Collateral, whether such Proceeds constitute
accounts, accounts receivable, general intangibles, instruments,
securities, credits, documents, deposit accounts, money, or contract
rights; (ii) personal property of any type or nature whatsoever which is
now or hereafter acquired by the Company with any Proceeds of the
Collateral; and (iii) any insurance now or hereafter payable by reason of
any loss, damage or destruction to or of any or all of the Collateral.
SECTION 4.02 Covenants In Respect Of Collateral.
(a) The Company shall not voluntarily, involuntarily or by operation of
law, sell, assign, hypothecate, pledge, encumber, grant any other security
interest or lien in, dispose of or otherwise transfer the Collateral, or
any portion thereof or any interest therein, or permit any of the foregoing
to occur, and shall not otherwise do, suffer or permit anything to be done
or occur that may impair the Collateral as security hereunder or the liens
and security interests therein created hereunder in favor of the Lender.
(b) The Company shall do all such other acts and things as may be
necessary or appropriate or which the Lender may from time to time
reasonably request as necessary in the opinion of the Lender to establish
and maintain a first priority perfected security interest in the
Collateral, including, without limitation, the Proceeds, subject to no
other liens, security interests or encumbrances; and the Company shall pay
the cost of all filings or recordings of this Agreement or any other
document or instrument in all public offices whenever it is reasonably
deemed by the Lender to be necessary or desirable. The Company hereby
irrevocably constitutes and appoints the Lender the attorney-in-fact of the
Company to execute, deliver and, if appropriate, to file with the
appropriate filing officer or office such security agreements, financing
statements, continuation statements, notices to the institutions or other
entities with which the Collateral or any portion thereof is maintained or
such other documents or instruments as the Lender may request or require in
order to confirm, impose, perfect or continue the perfection of the liens
and security interests created hereby. The foregoing power-of-attorney is
coupled with an interest and shall survive any dissolution, bankruptcy, or
insolvency of the Company as an entity.
(c) The Company shall provide to the Lender any information which the
Lender may at any time and from time to time hereafter require, in its sole
and absolute discretion, pertaining to the Collateral. The Company shall
promptly notify the Lender of any change of the Company's place of
business, chief executive office or mailing address.
(d) The Company has made any previous assignment, conveyance, transfer or
agreement in conflict herewith or constituting an assignment, conveyance,
transfer or encumbrance on any Designated Receivable.
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ARTICLE 5
Defaults and Remedies
SECTION 5.01. Events of Default. An "Event of Default" occurs if:
1. the Company defaults in any payment of interest or any
other amount (other than those specified in (2) below) with respect to any
Loan when the same becomes due and payable and such default continues for a
period of 30 days;
2. the Company defaults in the payment of the principal of any
Loan when the same become due and payable on the Maturity Date, upon
mandatory prepayment, or otherwise;
3. the Company fails to comply with any of its agreements
herein (other than those referred to in (1) or (2) above) and such failure
continues for 30 days after the notice specified below;
4. indebtedness of the Company or any Subsidiary is not paid
within any applicable grace period after final maturity or is accelerated
by the holders thereof because of a default and the total amount of such
indebtedness unpaid or accelerated exceeds $2,000,000 or its foreign
currency equivalent at the time;
5. the Company or any Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
A. commences a voluntary case;
B. consents to the entry of an order for relief against it
in an involuntary case;
C. consents to the appointment of a Custodian of it or for
any substantial part of its property; or
D. makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
6. a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
A. is for relief against the Company or any Subsidiary in
an involuntary case;
B. appoints a Custodian of the Company or any Subsidiary
or for any substantial part of its property; or
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C. orders the winding up or liquidation of the Company or
any Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
7. any judgment or decree for the payment of money in excess
of $2,000,000 or its foreign currency equivalent at the time is
entered against the Company or any Subsidiary and is not discharged
and either (A) an enforcement proceeding has been commenced by any
creditor upon such judgment or decree or (B) there is a period of 60
days following the entry of such judgment or decree during which such
judgment or decree is not discharged, waived or the execution thereof
stayed; or
8. this Agreement shall cease, for any reason, to be in full
force and effect or the Company or any of its Subsidiaries shall so
assert in writing.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
A Default under clause (6) is not an Event of Default until the Lender
notifies the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
SECTION 5.02. Acceleration. If an Event of Default (other than an Event
of Default specified in Section 5.01(5) or (6) with respect to the Company)
occurs and is continuing, the Lender by notice to the Company may declare
the principal of and accrued interest on the Loans to be due and payable.
Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default specified in Section 5.01(5)
or (6) with respect to the Company (but not any Subsidiary) occurs, the
principal of and interest on the Loans shall ipso facto become and be
immediately due and payable without any declaration or other act on the
part of the Lender. the Lender by notice to the Company may rescind an
acceleration and its consequences. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 5.03. Default and Remedies.
(a) If an Event of Default occurs and is continuing, the Lender shall have
all of the remedies of a secured party under the Uniform Commercial Code,
including, without limitation, the right, to notify the account debtors
from which the Designated Receivables are owing to pay directly to the
Lender the amount owing from such account debtors to the Company in respect
of the respective Designated Receivable. In addition to and not in
derogation of any or all of the rights and remedies granted hereunder to
the Lender or
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otherwise available to the Lender under applicable law, following such an
Event of Default, the Lender shall have the further right and power, at its
sole option, to sell, or otherwise dispose of, the Collateral (other than
Collateral consisting of cash), or any part thereof, at any one or more
public or private sales as permitted by applicable law, and for that
purpose the Lender may take immediate and exclusive possession of such
Collateral, or any part thereof, to the extent capable of possession.
(b) To the fullest extent permitted by law, the Company irrevocably and
expressly waives any right to receive any notice of sale or notice of any
other disposition of all or any part of the Collateral that does not
consist of cash, except that to the extent the Company may be entitled by
applicable law to any notice of sale or other disposition of such
Collateral, the Company agrees that if such notice is mailed, postage
prepaid, to the Company at the Company's address hereinafter specified not
less than five (5) days before the time of the sale or other disposition
contemplated therein, such notice shall conclusively be deemed commercially
reasonable and shall fully satisfy any requirement for giving of said
notice. The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(c) The proceeds realized upon any such disposition, after deduction for
the expenses of retaking, holding, preparing for sale, selling or the like
and reasonable attorneys' fees, legal expenses and costs incurred by the
Lender, shall be applied in accordance with Section 5.06.
(d) The remedies of the Lender hereunder are cumulative and the exercise
of any one or more of the remedies provided for herein, or under the
Uniform Commercial Code, shall not be construed as a waiver of any other
rights or remedies of the Lender so long as any part of the Secured
Obligations remains unsatisfied or unperformed. The making of this
Agreement shall not waive or impair any other security the Lender may have
or hereafter acquire for the payment or performance of the Secured
Obligations, nor shall the making of any such additional security waive or
impair this Agreement; but the Lender may resort to any security it may
have in the order it may deem proper.
SECTION 5.04. Other Remedies. If an Event of Default occurs and is
continuing, the Lender may pursue any available remedy to collect the
payment of principal of or interest on the Note or to enforce the
performance of any provision of the Note or this Agreement. The Lender may
maintain a proceeding even if it does not possess the Note or does not
produce it in the proceeding. A delay or omission by the Lender in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
SECTION 5.05. Waiver of Past Defaults. The Lender by notice to the
Company may waive an existing Default and its consequences. When a Default
is waived, it is
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deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 5.06. Priorities. If the Lender collects any money or property
pursuant to this Article 5, it shall pay out the money or property in the
following order:
FIRST: to itself in accordance with the priority set forth in
Section 2.08; and
SECOND: to the extent of any excess, to the Company.
SECTION 5.07. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Agreement a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant.
SECTION 5.08. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any
stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Agreement;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and shall not hinder,
delay or impede the execution of any power herein granted to the Lender,
but shall suffer and permit the execution of every such power as though no
such law had been enacted.
ARTICLE 6
Subordination
SECTION 6.01. Agreement To Subordinate. The Company and Lender agree
that, subject to Lender's prior rights as the holder of a security interest
in the Collateral, the indebtedness evidenced by the Note is subordinated
in right of payment, to the extent and in the manner provided in this
Article 6, to the prior payment in full of all Senior Indebtedness and that
the subordination is for the benefit of and enforceable by the holders of
Senior Indebtedness. The Note shall in all respects rank pari passu with
all other indebtedness of the Company and only indebtedness of the Company
which is Senior Indebtedness shall rank senior to the Note in accordance
with the provisions set forth herein.
SECTION 6.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in
a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, subject to the prior
rights of the Lender with respect to its security interest in the
Collateral:
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1. holders of Senior Indebtedness shall be entitled to receive
payment in full of the Senior Indebtedness before Lender shall be entitled
to receive any payment of principal of, or premium, if any, or interest of
the Note; and
2. until the Senior Indebtedness is paid in full, any payment or
distribution to which Lender would be entitled but for this Article 6 shall
be made to holders of Senior Indebtedness as their interests may appear.
SECTION 6.03. Default on Senior Indebtedness. The Company may not pay the
principal of, premium, if any, or interest on, the Note or make any deposit
pursuant to any defeasance provision or otherwise purchase or retire the
Note (collectively, "pay the Note") if (i) any Senior Indebtedness is not
paid when due or (ii) any other default on Senior Indebtedness occurs and
the maturity of such Senior Indebtedness is accelerated in accordance with
its terms unless, in either case, (x) the default has been cured or waived
and any such acceleration has been rescinded or (y) such Senior
Indebtedness has been paid in full; provided, however, that the Company may
pay the Note without regard to the foregoing if Lender is then the sole
holder of Senior Indebtedness or if the Company and the Lender receive
written notice approving such payment from each of the holders of Senior
Indebtedness (or, if applicable, their indenture trustee or other
representative) with respect to which either of the events set forth in (i)
or (ii) above has occurred and is continuing. During the continuance of
any default (other than a default described in clause (i) or (ii) of the
preceding sentence) with respect to any Senior Indebtedness pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration)
or the expiration of any applicable grace periods, the Company may not pay
the Note for a period (a "Payment Blockage Period") commencing upon the
receipt by the Company and the Lender of written notice (a "Blockage
Notice") of such default from the holders of such Senior Indebtedness (or,
if applicable, their indenture trustee or other representative) specifying
an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Lender and the Company from the Person or Persons who
gave such Blockage Notice, (ii) by repayment in full of such Senior
Indebtedness or (iii) because the default giving rise to such Blockage
Notice is no longer continuing). Notwithstanding the provisions described
in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this Section), unless the holders of
such Senior Indebtedness (or the indenture trustee or other representative
of such holders) shall have accelerated the maturity of such Senior
Indebtedness, the Company may resume payments on the Note after such
Payment Blockage Period. Not more than one Blockage Notice may be given in
any consecutive 360-day period, irrespective of the number of defaults with
respect to Senior Indebtedness during such period; provided further,
however, that in no event may the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the
aggregate during any 360 consecutive day period.
SECTION 6.04. Acceleration of Payment of Note. If payment of the Note is
accelerated because of an Event of Default, the Company or the Lender shall
promptly notify
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the holders of the Senior Indebtedness of the acceleration. If any Senior
Indebtedness is outstanding, the Company may not pay the Note until 5
business days after the holders (or their indenture trustee or other
representative) of the Senior Indebtedness receives notice of such
acceleration and, thereafter, may pay the Note only if this Article 6
otherwise permits the payment at that time.
SECTION 6.05. When Distribution Must Be Paid Over. If a distribution is
made to the Lender that because of this Article 6 should not have been
made, the Lender shall hold such distribution in trust for holders of
Senior Indebtedness and pay it over to them as their interests may appear.
SECTION 6.06. Subrogation. After all Senior Indebtedness is paid in full
and until the Note are paid in full, the Lender shall be subrogated to the
rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness. A distribution made under this Article
6 to holders of Senior Indebtedness which otherwise would have been made to
holder of the Note is not, as between the Company and the holder of the
Note, a payment by the Company on Senior Indebtedness.
SECTION 6.07. Relative Rights. This Article 6 defines the relative rights
of the Lender (or a successor holder of the Note) and holders of Senior
Indebtedness. Nothing in this Agreement shall:
1. impair, as between the Company and the Lender, the
obligation of the Company, which is absolute and unconditional, to pay
principal of, premium, if any, and interest on the Note in accordance with
their terms; or
2. prevent the Lender from exercising its available remedies
upon a Default, subject to the rights of holders of Senior Indebtedness to
receive distributions otherwise payable to the Lender.
SECTION 6.08. Subordination May Not Be Impaired by Company. No right of
any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Note shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Agreement.
SECTION 6.09. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to any
indenture trustee or other representative (if any) of such holders.
SECTION 6.10. Article 6 Not To Prevent Events of Default or Limit Right To
Accelerate. The failure to make a payment pursuant to the Note by reason
of any provision in this Article 6 shall not be construed as preventing the
occurrence of a Default. Nothing in this Article 6 shall have any effect
on the right of the Lender to accelerate the maturity of the Note.
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SECTION 6.11. Lender Entitled To Rely. Upon any payment or distribution
pursuant to this Article 6, the Lender shall be entitled to rely (i) upon
any order or decree of a court of competent jurisdiction in which any
proceedings of the nature referred to in Section 6.02 are pending, (ii)
upon a certificate of the liquidating trustee or agent or other Person
making such payment or distribution to the Lender or (iii) upon the
representatives for the holders of Senior Indebtedness for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto
or to this Article 6. In the event that the Lender determines, in good
faith, that evidence is required with respect to the right of any Person as
a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 6, the Lender may request such Person
to furnish evidence to the reasonable satisfaction of the Lender as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article 6, and, if
such evidence is not furnished, the Lender may defer any payment to such
Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 6.12. Reliance by Holders of Senior Indebtedness on Subordination
Provisions. The Lender acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the issuance of
the Note, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Senior Indebtedness.
ARTICLE 7
Miscellaneous
SECTION 7.01. Amendments and Waivers. Except as otherwise expressly set
forth in this Agreement, no Credit Document nor any terms thereof may be
amended, supplemented, waived or modified except in accordance with the
provisions of this Section 7.01.
SECTION 7.02. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy or telex, if one is listed), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when
delivered by hand, or three Business Days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when sent,
confirmation of receipt received, or, in the case of telex notice, when
sent, answerback received, addressed as
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follows, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Note:
If to the Company: NRG Generating (U.S.) Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: President and Chief Executive Officer
Telephone: (612) 373-5300
Telecopier:(612) 373-5430
With a copy to: Troutman Sanders
NationsBank Plaza, Suite 5200
600 Peachtree Street N.E.
Atlanta, Georgia 30308
Attention: Hazen Dempster
Telephone: (404) 885-3000
Telecopier:(404) 885-3900
If to Lender NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Vice President, Business
Development
Telephone: (612) 373-5300
Telecopier:(612) 373-5430
With copies to: NRG Energy Inc.
Legal Department
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Vice President and General
Counsel
Telephone: (612) 373-5300
Telecopier (612) 373-5392
provided that any notice, request or demand to or upon the Lender pursuant
to Section 2.05 shall not be effective until received.
SECTION 7.03. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Lender, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or
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the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
SECTION 7.04. Payment of Expenses and Taxes. The Company agrees (a) to
pay or reimburse the Lender for all its reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and
execution of any amendment, supplement or modification to the Credit
Documents, including the reasonable fees and disbursements of counsel to
the Lender, (b) to pay or reimburse the Lender for all its costs and
expenses incurred in connection with, and to pay, indemnify, and hold the
Lender harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever arising out of
or in connection with, the enforcement or preservation of any rights under
any Credit Document, including reasonable fees and disbursements of counsel
to the Lender incurred in connection with the foregoing, (c) to pay,
indemnify, and to hold the Lender harmless from any and all recording and
filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other similar taxes (other than
withholding taxes), if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, any
Credit Document and any such other documents, and (d) to pay, indemnify,
and hold the Lender and its respective Affiliates, officers and directors
harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including reasonable fees
and disbursements of counsel) which may be incurred by or asserted against
the Lender or such Affiliates, officers or directors arising out of or in
connection with any investigation, litigation or proceeding related to this
Agreement, the other Credit Documents, the proceeds of the Loan and the
transactions contemplated by or in respect of such use of proceeds, or any
of the other transactions contemplated hereby, whether or not the Lender or
such Affiliates, officers or directors is a party thereto, including any of
the foregoing relating to the violation of, noncompliance with or liability
under, any environmental law or regulation applicable to the operations of
the Company, any of its Subsidiaries or any of the facilities and
properties owned, leased or operated by the Company or any of its
Subsidiaries (all the foregoing, collectively, the "indemnified
liabilities"); provided that the Company shall have no obligation hereunder
with respect to indemnified liabilities of the Lender or any of its
respective Affiliates, officers and directors arising from (i) the gross
negligence or willful misconduct of the Lender or its directors or officers
or (ii) legal proceedings commenced against the Lender by any security
holder or creditor thereof arising out of and based upon rights afforded
any such security holder or creditor solely in its capacity as such or
(iii) legal proceedings commenced against the Lender by any Transferee.
The agreements in this Section 7.04 shall survive repayment of the Note and
all other amounts payable hereunder.
SECTION 7.05. Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Company, the
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Lender, all future holders of the Note and the Loans, and their respective
successors and assigns, except that the Company may not assign or transfer
any of its rights or obligations under this Agreement without the prior
written consent of the Lender.
(b) The Company hereby agrees that the Lender may, in accordance with
applicable law, at any time and from time to time assign all or any part of
its rights and interest under this Agreement and the Note to any Person (a
"Transferee").
(c) The Company authorizes the Lender to disclose to any prospective or
Transferee any and all financial information in the Lender's possession
concerning the Company and its Subsidiaries and Affiliates which has been
delivered to the Lender by or on behalf of the Company.
SECTION 7.06. Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
SECTION 7.07. Governing Law; No Third Party Rights. This Agreement and
the Note and the rights and obligations of the parties under this Agreement
and the Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York and applicable laws of
the United States of America. This Agreement is solely for the benefit of
the parties hereto and their respective successors and assigns, and, except
as set forth in Article 7, no other Persons shall have any right, benefit,
priority or interest under, or because of the existence of, this Agreement.
SECTION 7.08. Submission to Jurisdiction; Waivers. (a) Each party to
this Agreement hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any of the other Credit
Documents, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be brought
in such courts, and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in Section 7.02; and
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(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction.
(b) Each party hereto unconditionally waives trial by jury in any legal
action or proceeding referred to in paragraph (a) above and any
counterclaim therein.
SECTION 7.09. Interest. Each provision in this Agreement and each other
Credit Document is expressly limited so that in no event whatsoever shall
the amount paid, or otherwise agreed to be paid, by the Company for the
use, forbearance or detention of the money to be loaned under this
Agreement or any other Credit Document or otherwise (including any sums
paid as required by any covenant or obligation contained herein or in any
other Credit Document which is for the use, forbearance or detention of
such money), exceed that amount of money which would cause the effective
rate of interest to exceed the highest lawful rate permitted by applicable
law (the "Highest Lawful Rate"), and all amounts owed under this Agreement
and each other Credit Document shall be held to be subject to reduction to
the effect that such amounts so paid or agreed to be paid which are for the
use, forbearance or detention of money under this Agreement or such Credit
Document shall in no event exceed that amount of money which would cause
the effective rate of interest to exceed the Highest Lawful Rate.
Notwithstanding any provision in this Agreement or any other Credit
Document to the contrary, if the maturity of the Loans or the obligations
in respect of the other Credit Documents are accelerated for any reason, or
in the event of any prepayment of all or any portion of the Loan or the
obligations in respect of the other Credit Documents by the Company or in
any other event, earned interest on the Loan and such other obligations of
the Company may never exceed the Highest Lawful Rate, and any unearned
interest otherwise payable on the Loans or the obligations in respect of
the other Credit Documents that is in excess of the Highest Lawful Rate
shall be cancelled automatically as of the date of such acceleration or
prepayment or other such event and (if theretofore paid) shall, at the
option of the holder of the Loan or such other obligations, be either
refunded to the Company or credited on the principal of the Loans. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Company and the Lender
shall, to the maximum extent permitted by applicable law, amortize,
prorate, allocate and spread, in equal parts during the period of the
actual term of this Agreement, all interest at any time contracted for,
charged, received or reserved in connection with this Agreement.
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
NRG GENERATING (U.S.) INC.
by: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President and Chief Executive Officer
NRG ENERGY, INC.
by: /s/ Craig A. Mataczynski
Name: Craig A. Mataczynski
Title: Vice President, Domestic Business
Deveopment
24
<PAGE>
EXHIBIT A
New York, New York
April 30, 1996
NOTE
FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order
of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the
"Lender"), at the office of the Lender at 1221 Nicollet Mall, Suite 700,
Minneapolis, MN 55403, in lawful money of the United States of America and
in immediately available funds, the principal amount of up to Fifteen
Million Eight Hundred Fifty Five Thousand Five Hundred and Forty Five
Dollars and Twenty-Five Cents ($15,855,545.25), or, if less, the aggregate
unpaid principal amount of the Loans made by the Lender pursuant to Section
2.01 of the Loan Agreement referred to below (in either case, to be paid
together with any accrued interest not required to be paid currently in
cash), which sum shall be due and payable in such amounts and on such dates
as are set forth in the Supplemental Loan Agreement, dated as of April 30,
1996 between the Company and the Lender (the "Loan Agreement"; terms
defined therein being used herein as so defined). The undersigned further
agrees to pay interest at said office, in like money, from the date hereof
on the unpaid principally amount hereof from time to time outstanding at
the rates and on the dates specified in Section 2.06 of the Loan Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever.
The nonexercise by the holder of this Note of any of its rights hereunder
in any particular instance shall not constitute a waiver thereof in that or
any subsequent instance.
This Note is the Note referred to in the Loan Agreement, which Loan
Agreement, among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.
This Note shall be construed in accordance with and governed by the laws of
the State of New York and any applicable laws of the United States of
America.
<PAGE>
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE
LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT.
NRG GENERATING (U.S.) INC.,
by:
Name: Leonard A. Bluhm
Title: President and Chief Executive Officer
2
<PAGE>
Exhibit 10.6.2
New York, New York
April 30, 1996
NOTE
FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order
of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the
"Lender"), at the office of the Lender at 1221 Nicollet Mall, Suite 700,
Minneapolis, MN 55403, in lawful money of the United States of America and
in immediately available funds, the principal amount of up to Fifteen
Million Eight Hundred Fifty Five Thousand Five Hundred and Forty Five
Dollars and Twenty-Five Cents ($15,855,545.25), or, if less, the aggregate
unpaid principal amount of the Loans made by the Lender pursuant to Section
2.01 of the Loan Agreement referred to below (in either case, to be paid
together with any accrued interest not required to be paid currently in
cash), which sum shall be due and payable in such amounts and on such dates
as are set forth in the Supplemental Loan Agreement, dated as of April 30,
1996 between the Company and the Lender (the "Loan Agreement"; terms
defined therein being used herein as so defined). The undersigned further
agrees to pay interest at said office, in like money, from the date hereof
on the unpaid principally amount hereof from time to time outstanding at
the rates and on the dates specified in Section 2.06 of the Loan Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever.
The nonexercise by the holder of this Note of any of its rights hereunder
in any particular instance shall not constitute a waiver thereof in that or
any subsequent instance.
This Note is the Note referred to in the Loan Agreement, which Loan
Agreement, among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.
This Note shall be construed in accordance with and governed by the laws of
the State of New York and any applicable laws of the United States of
America.
<PAGE>
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE
LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT.
NRG GENERATING (U.S.) INC.,
by: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President and Chief Executive Officer
2
<PAGE>
Exhibit 10.7.2
New York, New York
April 30, 1996
NOTE
FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order
of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the
"Lender"), at the office of the Lender located at 1221 Nicollet Mall, Suite
700, Minneapolis, MN 55403 in lawful money of the United States of America
and in immediately available funds, the principal amount of TWENTY FOUR
MILLION DOLLARS ($24,000,000), or, if less, the aggregate unpaid principal
amount of the loan made by the lender pursuant to Section 2.01 of the Loan
Agreement referred to below (in either case, to be paid together with any
accrued interest not required to be paid currently in cash), which sum
shall be due and payable in such amounts and on such dates as are set forth
in the Loan Agreement, dated as of April 30, 1996 between the Company and
the Lender (the "Loan Agreement"; terms defined therein being used herein
as so defined). The undersigned further agrees to pay interest at said
office, in like money, from the date hereof on the unpaid principally
amount hereof from time to time outstanding at the rates and on the dates
specified in Section 2.06 of the Loan Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive diligence, presentment, demand, protest and notice of any kind
whatsoever. The nonexercise by the holder of this Note of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Note is the Note referred to in the Loan Agreement, which Loan
Agreement, among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.
<PAGE>
This Note shall be construed in accordance with and governed by the
laws of the State of New York and any applicable laws of the United States
of America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS
OF THE LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE
REGISTER MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN
AGREEMENT.
NRG GENERATING (U.S.) INC.,
by
/s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President and Chief Executive
Officer
2
<PAGE>
Exhibit 10.8.1
CREDIT AGREEMENT
by and among
NRG GENERATING (NEWARK) COGENERATION INC.
and
NRG GENERATING (PARLIN) COGENERATION INC.
CREDIT SUISSE, GREENWICH FUNDING CORPORATION AND ANY PURCHASING LENDER
as Lender,
and
CREDIT SUISSE
as Agent
Dated as of May 17, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions 1
ARTICLE II
Amounts and Terms of the Loans 1
Section 2.1 The Loans 1
Section 2.2 The Debt Service Line of Credit
Facility Commitment 2
Section 2.3 Conditions Relating to Borrowings 3
Section 2.4 Interest and Fees 5
Section 2.5 Funding and Yield Protection 7
Section 2.6 Repayment Dates. 11
Section 2.7 Optional Prepayments 13
Section 2.8 Mandatory Prepayments 13
Section 2.9 Optional Termination or Reduction
of Commitments 15
Section 2.10 General Terms of Payment 16
Section 2.11 Note(s) 18
Section 2.12 Replacement of Lender 20
Section 2.13 Limitation on Liability 21
ARTICLE III
Conditions of Commitments 22
Section 3.1 Conditions Precedent to the Making
of Initial Loans 22
Section 3.2 Conditions Precedent to the Making of
Debt Service Loans 30
Section 3.3 Conditions Precedent to the Making of
Additional Loans 31
ARTICLE IV
Representations and Warranties 43
Section 4.1 Organization; Capitalization 43
(i)
<PAGE>
Section 4.2 Authorization of Loan Instruments 44
Section 4.3 Governmental Approvals 44
Section 4.4 No Conflicts 47
Section 4.5 Enforceability of Project Agreements 47
Section 4.6 Title to Property; Sufficiency of Assets48
Section 4.7 Compliance with Laws 48
Section 4.8 No Litigation 49
Section 4.9 Events of Default 49
Section 4.10 Financial Condition 49
Section 4.11 No Material Adverse Effect 50
Section 4.12 Security Interests 50
Section 4.13 No Burdensome Restrictions 51
Section 4.14 Taxes 52
Section 4.15 ERISA and IRC Compliance and Liability 52
Section 4.16 Funding 52
Section 4.17 Prohibited Transactions and Payments 53
Section 4.18 No Termination Event 53
Section 4.19 ERISA Litigation 53
Section 4.20 No Other Obligations 53
Section 4.21 Margin Regulations 54
Section 4.22 Investment Company Act 54
Section 4.23 Environmental Matters 54
Section 4.24 Disclosure 54
Section 4.25 Insurance 55
Section 4.26 Labor Matters 55
Section 4.27 Additional Representations and
Warranties and Conditions Precedent 55
Section 4.28 Transactions With Affiliates 55
Section 4.29 Projections 56
Section 4.30 Patents and Other Similar Property 56
Section 4.31 Bank Accounts 56
Section 4.32 Sources and Uses 56
Section 4.33 Operating Budget 57
Section 4.34 Operation of the Project 57
Section 4.35 Regulation of Parties 57
Section 4.36 EWG Status/Qualifying Cogeneration
Facility Status 58
Section 4.37 Nature of Business 58
Section 4.38 No Material Adverse Change 58
Section 4.39 Private Offering by Borrower 59
Section 4.40 Bankruptcy 59
Section 4.41 On-Site Alternate Fuel 59
Section 4.42 No Liabilities 59
Section 4.43 Levelized Capacity Payments 59
Section 4.44 Ownership 59
(ii)
<PAGE>
ARTICLE V
Covenants of Borrower 60
Section 5.1 The Accounts 60
Section 5.2 Debt Service Coverage Ratio 66
Section 5.3 Maintenance of Existence, Privileges,
Etc. 66
Section 5.4 Performance of Project Documents 67
Section 5.5 Operation and Maintenance 67
Section 5.6 Operating Logs 68
Section 5.7 Compliance with Laws 69
Section 5.8 Information 73
Section 5.9 Bank Accounts 80
Section 5.10 Inspection; Maintenance of Records 80
Section 5.11 Maintenance of Properties, Etc 81
Section 5.12 Maintenance of Insurance 81
Section 5.13 Payment of Taxes, Etc 81
Section 5.14 Syndication Efforts 82
Section 5.15 Interest Rate Hedge Agreements 82
Section 5.16 Other Contracts 83
Section 5.17 Use of Proceeds 84
Section 5.18 Obligations Upon Casualty 84
Section 5.19 Additional Documents; Filings and
Recordings 88
Section 5.20 Assignment by Borrower 88
Section 5.21 Advertising; Press Releases 88
Section 5.22 Negative Pledge and Liens 89
Section 5.23 Limitation on Debt and Contingent
Obligations 89
Section 5.24 Fundamental Changes 89
Section 5.25 Restricted Junior Payments 90
Section 5.26 Investments 90
Section 5.27 Nature of Business 90
Section 5.28 Fiscal Year 90
Section 5.29 Bankruptcy 91
Section 5.30 Transactions with Affiliates 91
Section 5.31 Compliance with ERISA 91
Section 5.32 Other Transactions 92
Section 5.33 Abandonment 93
Section 5.34 Improper Use 93
Section 5.35 Alternative Fuel 94
Section 5.36 Pre-existing Liabilities 94
Section 5.37 Debt Service Coverage Ratio Covenant 94
Section 5.38 Environmental Covenant 95
Section 5.39 Flood Zone Insurance 96
Section 5.40 Additional Consents 96
Section 5.41 Backup Gas Supply 96
(iii)
<PAGE>
ARTICLE VI
Events of Default 96
Section 6.1 Events of Default 96
Section 6.2 Limitation on Representations and
Warranties 104
ARTICLE VII
Relationship of Agent and Lenders 104
Section 7.1 Appointment 104
Section 7.2 Nature of Duties 104
Section 7.3 Lack of Reliance on the Agent 105
Section 7.4 Certain Rights of the Agent 105
Section 7.5 Reliance 106
Section 7.6 Indemnification 106
Section 7.7 The Agent in its Individual Capacity 106
Section 7.8 Resignation by the Agent 106
Section 7.9 No Amendment to Duties of Agent Without
Consent 107
ARTICLE VIII
General Terms And Conditions 107
Section 8.1 Notices 107
Section 8.2 Indemnities and Expenses 109
Section 8.3 Survival 112
Section 8.4 Governing Law; Submission to
Jurisdiction 112
Section 8.5 Successors and Assigns 113
Section 8.6 Assignments and Participations 113
Section 8.7 Counterparts 116
Section 8.8 Right of Setoff 116
Section 8.9 No Waiver; Remedies Cumulative 116
Section 8.10 Severability 117
Section 8.11 Calculation 117
Section 8.12 Payments Pro Rata; Sharing 117
Section 8.13 Headings Descriptive 118
Section 8.14 Amendment or Waiver 118
Section 8.15 Confidentiality 118
(iv)
<PAGE>
SCHEDULES
Schedule 2.6(a) - Repayment of Funding Loans
Schedule 2.8(a) - Required Prepayment Amounts
Schedules 3.1(a)-(e) - List of Obligors
Schedule 3.1(y) - Environmental Reports (Newark)
Schedule 3.3(y) - Environmental Reports (Parlin)
Schedule 4.1(b) - Authorized Stock
Schedule 4.3A - Governmental Approvals (Newark)
Schedule 4.3B - Governmental Approvals (Newark and Parlin)
Schedule 4.8 - Litigation
Schedule 4.12 - Transactions Under Other Names
Schedule 4.20 - Welfare Benefits
Schedule 4.23 - Environmental Matters
Schedule 4.24 - List of Documents
Schedule 4.25 - Insurance
Schedule 4.28 - Transactions With Affiliates
Schedule 4.31 - Bank Accounts
Schedule 4.32 - Sources and Uses Table
Schedule 4.33A - Operating Budget (Newark)
Schedule 4.33B - Operating Budget (Parlin)
Schedule 4.42 - Liabilities
Schedule 5.1(f) - Maintenance Reserve Required Deposit
Schedule 5.1(g) - Capital Improvements Reserve Required
Deposit
Schedule 5.2 - Debt Service Coverage Ratio Calculation
Schedule 5.24 - Assets
Schedule 5.40 - List of Consents, Certificates of
Incorporation, Certificates of Good Standing,
Certificates of Qualification, By Laws,
Incumbency Certificates
Schedule 8.1 - Addresses
Schedule 8.6 - Commitment Schedule
(v)
<PAGE>
EXHIBITS
Exhibit A1 - Form of Initial Loan Note
Exhibit A2 - Form of Funding Loan Note
Exhibit B - Form of Debt Service Loan Note
Exhibit C1 - Form of Opinion of Counsel to Borrower,
Guarantor and NRG
Exhibit C2 - Form of Opinion of Counsel to Third Parties
Exhibit D - Blocked Account Agreement
Exhibit E - Form of Commitment Transfer Supplement
Exhibit F - Form of Compliance Certificate
Exhibit G - Form of PSE&G Consent
Exhibit H - Form of Notice of Borrowing
Exhibit I - Form of Subordination Provisions
Exhibit J - Form of Guaranty
Exhibit K - Form of Tax Indemnification Agreement
Exhibit X - Definitions and Interpretation
(vi)
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of May 17, 1996, is made by and
among (i) NRG Generating (Newark) Cogeneration Inc., a Delaware corporation
("NRG Newark"), and NRG Generating (Parlin) Cogeneration Inc., a Delaware
corporation ("NRG Parlin"), (ii) CREDIT SUISSE, GREENWICH FUNDING
CORPORATION, a Delaware corporation ("GFC"), and each Purchasing Lender
(each, a "Lender" and collectively, the "Lenders"), and (iii) CREDIT
SUISSE, as agent for the Lenders ("Agent").
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Lenders to make credit
facilities available on the terms and subject to the conditions set forth
in this Agreement, for the payment of Qualifying Uses; and
WHEREAS, the Lenders are willing to provide the Loans and the
Commitments to the Borrower on the terms and subject to the conditions set
forth in this Agreement, for the purpose described above.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereby agree as follows:
ARTICLE I
Definitions
For purposes of this Agreement, the terms used in this Agreement
and not otherwise defined herein shall have the respective meanings
assigned to them in Exhibit X hereto (such definitions to be equally
applicable to both singular and plural forms of the terms defined).
<PAGE>
ARTICLE II
Amounts and Terms of the Loans
Section 2.1 The Loans.
(a) The Commitment. Subject to and upon the terms and
conditions of this Agreement, on the Initial Funding Date the Lenders agree
to make available to NRG Newark, as the Borrower, the Initial Loan in the
aggregate amount of the Initial Commitment. Subject to and upon the terms
and conditions of this Agreement, the Lenders agree to make available to
NRG Newark and NRG Palin, jointly and severally, as the Borrower, during
the Additional Commitment Period, the Additional Loan in the aggregate
amount of the Additional Commitment. The proceeds of the Funding Loans
shall be used for the Qualifying Uses. The Initial Loans shall be funded
in one drawing on the Initial Funding Date and shall be made available to
Borrower in immediately available funds in the accounts specified by
Borrower to Agent on or before the Initial Funding Date. The Additional
Loans shall be funded in one drawing on the Additional Funding Date and
shall be made available to Borrower in immediately available funds in the
accounts specified by Borrower to Agent on or before the Additional Funding
Date. Any amount of the Funding Loans which is repaid may not be
reborrowed.
(b) Borrowing Mechanics. The Funding Loans made on the Initial
Funding Date or the Additional Funding Date, as the case may be, shall be
made on a Notice of Borrowing, given not later than 11:00 a.m. (New York
time) in the case of Funding Loans based on LIBOR, on the third Business
Day and, in the case of Funding Loans based on the Base Rate, on the
Business Day prior to the date of the proposed Funding Loans by Borrower to
Agent at the Agent's office indicated in Section 8.1 hereof, and Agent
shall give to each Lender prompt notice thereof by cable or telefacsimile,
but in any event, such notice shall be received by each Lender prior to
1:00 p.m. New York City time on the date Agent receives such Notice of
Borrowing in compliance with this Section 2.1(b). Such Notice of Borrowing
shall be by cable, telefacsimile, or telephone confirmed promptly in
writing, but in no event shall such written confirmation be received by
Agent later than 11:00 a.m. (New York time) on the Business Day prior to
the date the Funding Loans are to be made. Such Notice of Borrowing shall
specify the date of the requested Funding Loans.
2
<PAGE>
Section 2.2 The Debt Service Line of Credit Facility Commitment.
(a) The Debt Service Line of Credit Facility Commitment.
Subject to and upon the terms and conditions of this Agreement, the Lenders
agree to make available to Borrower during the Availability Period, Debt
Service Loans in an aggregate maximum amount at any one time outstanding up
to the Debt Service Line of Credit Facility Commitment. The proceeds of
the Debt Service Loans shall only be used for the payment of Debt Service.
The initial Availability Period shall expire on the fifth anniversary of
the Initial Funding Date. Borrower may, at least one year prior to such
expiration date (as extended from time to time), request Lenders to extend
the Availability Period. Within 60 days of receipt of Borrower's request,
Agent shall notify Borrower of the Lenders' decision regarding Borrower's
request to extend the Availability Period. The Availability Period shall
be extended only with the prior written consent of all the Lenders. If the
Lenders do decide to extend the Availability Period, the Availability
Period shall be extended for such additional term as the Lenders may
decide, which additional term shall not be less than one year; provided,
however, that in no event shall the Availability Period extend beyond the
Maturity Date.
(b) Borrowing Mechanics. The Debt Service Loans shall be made
on a Notice of Borrowing, given not later than 11:00 a.m. (New York time)
in the case of Debt Service Loans based on LIBOR, on the third Business Day
and, in the case of Debt Service Loans based on the Base Rate, on the
Business Day prior to the date of the proposed Debt Service Loans by
Borrower to Agent at the Agent's office indicated in Section 8.1 hereof,
and Agent shall give to each Lender prompt notice thereof by cable or
telefacsimile, but in any event, such notice shall be received by each
Lender prior to 1:00 p.m. New York City time on the date Agent receives
such Notice of Borrowing in compliance with this Section 2.2(b). Such
notice of Borrowing shall be by cable, telefacsimile, or telephone
confirmed promptly in writing, but in no event shall such written
confirmation be received by Agent later than 11:00 a.m. (New York time) on
the Business Day prior to the date the Debt Service Loans are to be made.
Such Notice of Borrowing shall specify the date of the requested Debt
Service Loans.
Section 2.3 Conditions Relating to Borrowings.
(a) Notice of Borrowing Irrevocable. A Notice of Borrowing
shall be irrevocable and binding on Borrower.
3
<PAGE>
Borrower shall indemnify each Lender against any loss, cost or expense
incurred by such Lender as a result of any failure to fulfill on or before
the date specified in the Notice of Borrowing the applicable conditions set
forth in Article III, including, without limitation, any loss, cost or
expense (excluding the loss of the Base Rate Margin or the LIBOR Margin, as
applicable) incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Loans to be
made by such Lender when the Loans, as a result of such failure, are not
made on such date.
(b) Agent's Reliance on Lender Loans. Unless Agent shall have
been notified by any Lender prior to the date of the Loans that such Lender
does not intend to make available to Agent its pro rata portion of such
Loan to be made on such date, Agent may assume that such Lender has made
such amount available to Agent on such date and Agent in its sole
discretion may, in reliance upon such assumption, make available to
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to Agent by such Lender and Agent has made such amount
available to Borrower, Agent shall be entitled to recover such
corresponding amount on demand from such Lender. If such Lender does not
pay such corresponding amount forthwith upon Agent's demand therefor, Agent
shall promptly notify Borrower and Borrower shall immediately repay such
corresponding amount to Agent. Agent shall also be entitled to recover
from such Lender or Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by Agent to Borrower to the date
such corresponding amount is recovered by Agent, at the Federal Funds Rate
until the third Business Day, and at the Base Rate plus the Base Rate
Margin thereafter. Nothing herein shall be deemed to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice
any rights which Borrower may have against any Lender as a result of any
default by such Lender hereunder. Notwithstanding anything contained
herein or in any other Loan Instrument to the contrary, the Agent may,
subject to the rights of the Borrower or the other Secured Parties under
the Security Documents, apply all funds and proceeds of collateral
available for the payment of any Obligations first to repay any amount
owing by any Lender to Agent as a result of such Lender's failure to fund
its pro rata share of any Loan hereunder.
(c) Failure to Make Loan. The failure of any Lender to make the
Loans to be made by it shall not relieve any other Lender of its
obligation, if any, hereunder to make
4
<PAGE>
its Loan, on the date of the Loans, but no Lender shall be responsible for
the failure of any other Lender to make the Loans to be made by such other
Lender on the date of the Loans.
(d) Notice of Interest Rate. Agent shall give prompt notice to
Borrower and the Lenders of the applicable Interest Rate for such Loan
determined by Agent pursuant to Section 2.4 hereof as soon as reasonably
practicable after such rate is determined by Agent and in no event later
than two Business Days (one Business Day in the case of a Loan using the
Base Rate) prior to making such Loan.
Section 2.4 Interest and Fees.
(a) Interest on Loans. On each Interest Payment Date, Borrower shall pay
to Agent for the account of the Lenders interest in respect of each
Interest Period on the daily unpaid principal amounts of any Loans
outstanding during such Interest Period in arrears at the rates per annum
equal to the Interest Rates then in effect. Interest shall be computed on
the basis of the actual number of days elapsed and (A) a year of 360 days
for LIBOR and (B) a year of 365 or 366 days, as appropriate, for the Base
Rate. In the case of an Interest Period using LIBOR, Borrower shall select
each Interest Period and the Interest Rate therefor by giving oral notice
of such selection to Agent by 12:00 noon (New York time) on the date of any
such notice at least three Business Days before the first day of such
Interest Period, and such oral notice shall be confirmed in a written
notice delivered to Agent as soon as practicable, but in no event later
than three Business Days from the date of such oral notice; provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding
Business Day unless, in the case of an Interest Period using LIBOR,
such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period using LIBOR which begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month in which such
Interest Period ends) shall, subject to clause (iv) below, end on the
last Business Day of a calendar month;
5
<PAGE>
(iii) no Loan upon first being made shall be divided into or
allocated among more than six (6) Interest Periods;
(iv) no Interest Period shall extend, with respect to the
Funding Loans, beyond the Maturity Date and with respect to the Debt
Service Loans, beyond the earlier of (a) the expiration of the
Availability Period and (b) the next Repayment Date.
(v) at no time shall the outstanding principal amounts of
the Funding Loans and the Debt Service Loans, in the aggregate, accrue
interest pursuant to more than six (6) Interest Periods (each
variation in time or in the basis upon which interest is calculated
constituting an Interest Period).
Such notice shall specify the Interest Rate and Interest Period selected by
Borrower and the amount or amounts of the Loans that shall bear interest at
such Interest Rate for such Interest Period. In the event Borrower fails
to provide such notice to Agent within such time, the Interest Rate shall
be the Base Rate plus the applicable Base Rate Margin.
(b) Default Interest. Upon written notice from Agent of the occurrence of
an Event of Default, Borrower shall pay interest on the principal amounts
of the Funding Loans and the Debt Service Loans then outstanding, in lieu
of the otherwise applicable Interest Rate, from and including (i) in the
event that Borrower notifies Agent of the Event of Default within ten (10)
Business Days of the occurrence thereof, the date of Agent's written notice
to Borrower and (ii) in the event that Borrower does not notify Agent of
the Event of Default within ten (10) Business Days of the occurrence
thereof, the date of occurrence of the Event of Default, at the Default
Interest Rate and continuing so long as the amount in respect of which such
interest or fees accrue remains unpaid or until such Event of Default is
remedied, whichever shall occur first, which interest and fees shall be due
and payable by Borrower on Agent's demand, provided that upon the
occurrence of an Event of Default specified in Sections 6.1(h), 6.1(i) or
6.1(t) with respect to Borrower, such interest and fees shall be
immediately due and payable without the making of a demand by Agent.
(c) Fees. Borrower shall pay the following fees:
(i) Agency Fee: to Agent for its own account, the non-
refundable "Agency Fee" payable in advance, which shall be $150,000
per annum payable first
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on the Initial Funding Date and thereafter on each anniversary
thereof. Beginning with the second payment, the Agency Fee shall be
increased or decreased as of each date it is payable by the percentage
change in the GNP Implicit Price Deflator for the calendar year
immediately preceding the date on which the Agency Fee was paid. No
decrease of any such fees shall result in any refund of any such fees
previously owed or paid;
(ii) Commitment Fees. Borrower shall pay to Agent for the
account of the Lenders during the Additional Commitment Period a
commitment fee on the Additional Commitment at a rate per annum equal
to 0.375%. Borrower shall also pay to Agent for the account of the
Lenders during the Availability Period a commitment fee on the daily
average unadvanced portion of the Debt Service Line of Credit Facility
Commitment at a rate per annum equal to the applicable LIBOR Margin.
The commitment fees shall be computed on the basis of the actual
number of days elapsed and a year of three hundred and sixty (360)
days and shall be payable quarterly in arrears on each Quarterly Date.
(iii) Borrower hereby authorizes the Lenders to make a Debt
Service Loan if the conditions specified in Section 3.2 (other than
with respect to clauses (c) and (e) thereof) have been satisfied in
the amount of any of the aforesaid fees when due, whether or not a
Notice of Borrowing has been submitted by Borrower and all sums
disbursed hereunder shall be secured by the Loan Instruments. Agent
shall give Borrower written notice of all Debt Service Loans made
pursuant to this section.
Section 2.5 Funding and Yield Protection.
(a) Taxes. (i) Borrower shall make all payments of all amounts payable
or reimbursable to the Lenders under the Notes net, free and clear of and
without deduction for any and all Taxes, and shall reimburse each Lender
for the cost of any Taxes imposed on it or on any payment under or with
respect to any aspect of any Loan or the Notes, as applicable, or the
making, execution or enforcement thereof; provided that the foregoing
obligation to pay such additional amounts shall not apply to any payment to
a Lender hereunder unless such Lender is, on the date hereof (or on the
date it becomes a Lender as provided in Section 8.6(a) hereof) and on the
date of any change in the applicable lending office of such Lender,
entitled to submit either a Form 1001 (relating to such Lender and
entitling it to a complete exemption from
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withholding on all interest to be received by it hereunder in respect of
the Loans) or Form 4224 (relating to all interest to be received by such
Lender hereunder in respect of the Loans).
For the purposes of this Section 2.5(a), (x) "Form 1001" shall mean
Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the
Department of the Treasury of the United States of America, and (y)
"Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States) of the Department of the Treasury of the United States of
America (or in relation to either such Form such successor and related
forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America to document a claim to which
such Form relates).
(ii) If Borrower is prohibited or prevented by Applicable Law or otherwise
from making any such payment net, free and clear of any Taxes or from
reimbursing any Lender for the cost of any such Taxes (as provided above),
then the amount of such payment to be made by Borrower shall be increased
by such additional amount or amounts as may be necessary to ensure that
each Lender shall receive a net amount which after payment of any Taxes
imposed shall be equal to the amount each such Lender would have received
had no such imposition been made.
(iii) Borrower shall, at Agent's request, provide evidence that
all Taxes imposed on all payments under or with respect to the Loans, the
Notes or any related instrument shall have been paid in full to the
appropriate authorities by delivery of official receipts or notarized
copies thereof to Agent within 30 days after payment thereof. Borrower
shall be entitled to make all filings, pursue all remedies and appeals and
take such other lawful action to prevent or challenge the imposition of any
Taxes, or to procure a refund of any Taxes paid, provided that Borrower
shall indemnify and hold the Lenders harmless, to the reasonable
satisfaction of Agent, for such Taxes (and any penalties, interest or other
charges attached thereto) and for any liabilities, costs or expenses
incurred by the Lenders (including reasonable fees and expenses of counsel)
in connection with any such action by Borrower.
(b) Increased Costs. (i) If, with respect to the Loans, the Commitments
or any of the Loan Instruments (including the making or the maintenance by
any Lender of its proportionate share of the Loans),
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(x) the compliance by any Lender with any direction,
requirement or request made, instituted or initially enforced after
the date hereof from any Governmental Authority, whether or not having
the force of Law, with which such Lender must reasonably comply; or
(y) any change, made or initially enforced after the date
hereof, in the interpretation or application of any Law or the
enactment of any Law imposing or modifying any reserve, deposit,
capital adequacy or similar requirement with respect to any class of
assets or liabilities of, deposits with or for the account of, or
loans by any Lender (or with respect to any change therein or in the
amount thereof); or
(z) the occurrence of a change, made or initially enforced
after the date hereof, in any other condition or circumstance with
respect to this Agreement and/or the maintenance by any Lender of its
proportionate share of the Loans or the Commitments;
shall (A) result in any increase in cost to any Lender in connection with
or arising out of the Loans, the Commitments or any Loan Instrument,
(B) result in any reduction in the amount of any payment receivable by such
Lender hereunder or thereunder or (C) result in any reduction of the rate
of the return on any Lender's capital as a consequence of its obligations
hereunder below that which such Lender could have achieved but for such
circumstances (collectively, "Increased Costs"), then in each such case
Borrower shall fully reimburse such Lender the amount of such Increased
Costs promptly after written notification thereof to Borrower and Agent by
such Lender. At Borrower's request, such Lender shall provide Borrower
with evidence of the Increased Costs to such Lender.
(ii) Each Lender shall notify Borrower of any event that will entitle such
Lender to compensation under clause (i) of this Section 2.5(b) within 45
days after such Lender obtains actual knowledge thereof, provided that if
any Lender fails to give such notice within 45 days after it obtains actual
knowledge of such an event, such Lender shall, with respect to compensation
payable under clause (i) of this Section 2.5(b), only be entitled to
payment under this Section 2.5(b) for Increased Costs incurred from and
after the date that is 45 days prior to the date that such Lender does give
such notice. Except as provided in the immediately preceding sentence, the
failure to give any such notice shall
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not release or diminish any of Borrower's obligations to pay any amounts
pursuant to this Section 2.5(b).
(c) Change of Law. After the date hereof if any change in Law or the
interpretation thereof by any Governmental Authority makes it unlawful for
any Lender to make or continue its proportionate interest in the Loans or
the Commitments, as applicable, then such Lender shall promptly give notice
along with evidence thereof to Borrower and Agent, and Borrower shall pay
forthwith in the manner set forth below all amounts outstanding, accrued or
payable under this Agreement and the Notes to such Lender.
(d) Non-Availability.
(i) If at any time the Agent in good faith determines that
deposits are not available in the London interbank market for the next
Interest Period, Agent shall so notify Borrower, and the LIBOR basis for
such Loans shall be suspended, and interest on such Loans for any
subsequent Interest Periods shall accrue at the Base Rate plus the Base
Rate Margin, until such time as such condition no longer exists.
(ii) If at any time the Majority Lenders in good faith determine
that the Interest Rate then in effect based on LIBOR does not serve as an
accurate reference to determine the cost of advancing or maintaining the
Loans on a LIBOR basis during any Interest Period, then the Majority
Lenders shall notify Agent, who shall so notify Borrower, and interest on
such Loans shall for any subsequent Interest Period accrue at the Base Rate
plus the Base Rate Margin.
(iii) Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender to honor its obligation
to make or maintain Loans on a LIBOR basis hereunder, then such Lender
shall promptly notify the Borrower thereof (with a copy to the Agent) and
such Lender's obligation to make or continue Loans on a LIBOR basis shall
be suspended, and such Lender shall make or continue Loans for any
subsequent Interest Periods on a Base Rate basis, until such time as such
Lender may again make and maintain Loans on a LIBOR basis.
(e) Funding Costs. Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any actual loss, cost or out-of-pocket expense
(excluding the loss of the Base Rate Margin or the LIBOR Margin, as
applicable) which such Lender determines is attributable to (i) default by
Borrower in making a borrowing of any Loan having an
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Interest Rate determined using LIBOR after Borrower has selected an
Interest Rate with respect to such Borrowing pursuant to Section 2.4(a)
hereof, (ii) default by Borrower in making any prepayment of any Loan, as
applicable, having an Interest Rate determined using LIBOR after Borrower
has given any notice required hereunder regarding such prepayment or
(iii) the making of a prepayment (including, without limitation, on
acceleration) on a day which is not the last day of an Interest Period with
respect thereto, to the extent any such loss, cost or expense arises from
the reemployment of funds obtained by such Lender to maintain its Loans
having an Interest Rate based on LIBOR or from fees payable to terminate
the deposits from which such funds were obtained.
Section 2.6 Repayment Dates.
(a) Repayment of Funding Loans.
(i) Repayment of Funding Loans.
(A) If the Additional Funding Date does not occur on
or prior to the Initial Maturity Date, then Borrower shall pay to
Agent on the Initial Maturity Date for the pro rata account of the
Lenders the entire outstanding principal amount of the Initial Loans
plus any accrued and unpaid interest and fees thereon plus any other
fees remaining unpaid under this Agreement or any other Loan
Instrument.
(B) If the Additional Funding Date occurs on or prior
to the Initial Maturity Date, then Borrower shall pay on each
Repayment Date to Agent for the pro rata account of the Lenders the
amount (the "Funding Loans Repayment Amount") equal to the percentage,
indicated below for such Repayment Date (or in Schedule 2.6(a) if the
first Repayment Date occurs after September 30, 1996), of the
principal amount of the Funding Loans; provided, however,
notwithstanding the foregoing, to the extent that the Additional
Commitment is reduced in accordance with Section 2.9 (C), Agent shall,
on the Additional Funding Date, deliver to Borrower a revised
amortization schedule which shall preserve the same Debt Service
Coverage Ratios for the period from the Additional Funding Date to the
Maturity Date that existed prior to the reduction of the Additional
Commitment, and Borrower shall pay on each Repayment Date to Agent for
the pro rata account of the Lenders the Funding Loan Repayment Amount
equal to the percentage indicated for such Repayment Date on such
amortization schedule:
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Repayment Funding Loans Repayment Funding Loans
Date Repayment Date Repayment
Amount Amount
1 1.2750% 31 1.4625%
2 1.2750% 32 1.4625%
3 1.2250% 33 1.4625%
4 1.2250% 34 1.4625%
5 1.2250% 35 1.5250%
6 1.2250% 36 1.5250%
7 1.3750% 37 1.5250%
8 1.3750% 38 1.5250%
9 1.3750% 39 1.4375%
10 1.3750% 40 1.4375%
11 1.5500% 41 1.4375%
12 1.5500% 42 1.4375%
13 1.5500% 43 1.7250%
14 1.5500% 44 1.7250%
15 1.3875% 45 1.7250%
16 1.3875% 46 1.7250%
17 1.3875% 47 1.8625%
18 1.3875% 48 1.8625%
19 1.6875% 49 1.8625%
20 1.6875% 50 1.8625%
21 1.6875% 51 1.8750%
22 1.6875% 52 1.8750%
23 1.7625% 53 1.8750%
24 1.7625% 54 1.8750%
25 1.7625% 55 1.8250%
26 1.7625% 56 1.8250%
27 1.5000% 57 3.0750%
28 1.5000% 58 3.0750%
29 1.5000% 59 3.0750%
30 1.5000% 60 3.0750%
(C) All Funding Loan Repayment Amounts shall be
rounded down to the nearest whole dollar, except that the final
Funding Loan Repayment Amount shall be in an amount equal to the
outstanding principal amount of the Funding Loans plus accrued and
unpaid interest and fees thereon, provided that any and all other
Obligations of Borrower in respect of the Funding Loans shall be
deemed immediately due and payable on the Maturity Date, without
demand, and shall be paid by Borrower no later than the close of
business on such date.
(ii) Reborrowing Prohibited. No amount repaid pursuant to
this Section 2.6(a) may be reborrowed by Borrower.
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(b) Repayment of Debt Service Loans.
(i) Repayment of Debt Service Loans. Each Debt Service Loan shall be
due and payable by Borrower, without demand, on the next Repayment Date
from 100% of the Cash Revenues available after making the payments
specified in Sections 5.1(c)(i), 5.1(c)(ii) and 5.1(c)(iii).
Notwithstanding the foregoing, upon the expiration of the Availability
Period, all Debt Service Loans, together with all accrued and unpaid
interest thereon, shall be immediately due and payable without demand.
(ii) Reborrowing. Prior to the last day of the Availability Period,
Debt Service Loans may be borrowed, repaid and reborrowed.
Section 2.7 Optional Prepayments. By giving irrevocable written notice,
which is received by Agent at least 10 but not more than 45 Business Days
in advance, Borrower may, at its option, make prepayments to Agent for the
pro rata account of the Lenders on any Interest Payment Date, of all the
outstanding principal amount of the Funding Loans, or from time to time any
part thereof equal to $5,000,000 or more in integral multiples of
$1,000,000, in each case together with all accrued and unpaid interest
thereon to the date of prepayment and any additional amounts owed by
Borrower pursuant to Section 2.5(e)(iii) or, if applicable, Section
5.15(b), provided that if a Default or Event of Default shall have occurred
and be continuing or shall result from such prepayment, Borrower may not
make prepayments pursuant to this Section 2.7 unless (a) such prepayments
are made from funds other than Cash Revenues, or (b) prepayments are made
of all the outstanding principal amount of the Loans together with all
interest, fees, costs, charges, expenses and other amounts payable by
Borrower to Lenders under any Loan Instrument, including, without
limitation, amounts owed by Borrower pursuant to Section 2.5(e)(iii) or, if
applicable, Section 5.15(b) hereof. All partial prepayments shall be
applied in payment of the Repayment Amounts in inverse order of maturities
and shall be deemed first applied to prepay amounts not subject to the
Interest Rate Hedge Agreements. Amounts prepaid pursuant to this
Section 2.7 may not be reborrowed.
Section 2.8 Mandatory Prepayments
(a) Certain Events. If an Event of Loss shall occur in respect
of a Project, Borrower shall, subject to the provisions of Section 5.18,
prepay the Loans on the earlier to occur of (i) the date occurring 90 days
after the date of
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such Event of Loss and (ii) receipt of the Net Proceeds in respect of such
Event of Loss, in an amount equal to the Required Prepayment Amount for the
affected Project. In addition, if (x) the projections for the remaining
Project, in form and substance satisfactory to Agent, do not demonstrate
the ability of Borrower to maintain at all times during the term of this
Agreement, the Required Coverages (after the prepayment of the Required
Prepayment Amount for the affected Project), or (y) an Event of Default
shall have occurred and be continuing, or (z) the term of any of the
Project Documents for the remaining Project shall expire prior to the date
twelve months after the Maturity Date, then at the same time as the
prepayment pursuant to the preceding sentence, Borrower shall also apply
any Net Proceeds in excess of the Required Prepayment Amount for the
affected Project to prepay the Loans. If the Event of Loss shall occur in
respect of the Parlin Project, the prepayment pursuant to this section
shall be applied pro rata to the payment of the outstanding Funding Loan
Repayment Amounts. If the Event of Loss shall occur in respect of the
Newark Project prior to the Additional Funding Date, then the prepayment
pursuant to this section shall be applied to the payment of the Initial
Loan. If the Event of Loss shall occur in respect of the Newark Project on
or after the Additional Funding Date, then the prepayment pursuant to this
section shall be applied in the following manner: (A) the first
$16,500,000 shall be applied to the payment of the Repayment Amounts in the
inverse order of maturities and (B) the remaining amount shall be applied
pro rata to the payment of the outstanding Funding Loan Repayment Amounts.
(b) Rate Shortfall. (i) If at any time on and after the
Additional Funding Date (x) the Qualifying Cogeneration Facility status of
the Newark Project is not maintained and the rates approved by FERC under
the Newark Power Purchase Agreement are at a level lower than the rates set
forth therein, or (y) the rates approved by FERC under the Parlin Power
Purchase Agreement are at a level lower than the rates previously approved
by FERC under the Parlin Power Purchase Agreement, then in either such case
Borrower shall pay to Agent on the Rate Shortfall Prepayment Date an amount
(the "Rate Shortfall Prepayment Amount") calculated such that after giving
effect to such prepayment (A) the annual Projected Debt Service Coverage
Ratio for each calendar year (or part thereof) for the period from and
excluding the Rate Determination Date to and including the Maturity Date is
at least 1.35:1.00 and (B) the average calendar year Projected Debt Service
Coverage Ratio for the period from and excluding the Rate Determination
Date to and including the Maturity Date is at least 1.45:1.00. For
purposes of calculating such
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Projected Debt Service Coverage Ratio, Projected Debt Service shall not
include the Rate Shortfall Prepayment Amount. The determination of the
Rate Shortfall Prepayment Amount shall be made by Agent in its reasonable
discretion and in good faith, after consultation with the Lenders and the
Independent Engineer. The Rate Shortfall Prepayment Amount shall be due
and payable to Agent on the date which is 30 days after the date Agent
delivers to Borrower the results of such determination ("Rate Shortfall
Prepayment Date").
(ii) Borrower shall also refund to JCP&L, if so ordered by FERC,
any amounts ("Refunded Amount") that are to be refunded due to the higher
rates paid by JCP&L during the period that the rates paid by JCP&L pursuant
to the Newark Power Purchase Agreement were higher than the rates approved
by FERC under the Newark Power Purchase Agreement.
(c) Restricted Payments Escrow Account. On any Repayment Date,
the Funding Loans shall be prepaid by Agent from funds which have remained
on deposit in the Restricted Payments Escrow Account for twelve (12) months
or more as provided in Section 5.1(c)(viii) hereof, together with all
accrued and unpaid interest thereon. All partial prepayments are to be
applied to Repayment Amounts in inverse order of maturities.
(d) BPU Order. If at any time prior to the Additional Funding
Date, the order of the New Jersey Board of Public Utilities ("BPU")
approving the Third Amendment to the Newark Power Purchase Agreement or the
Interim Gas Service Agreement is modified, rescinded or otherwise
invalidated in whole or in part by the BPU or by an appropriate court on
appeal of such BPU order, then Borrower shall immediately prepay the
Initial Loan, together with all accrued and unpaid interest thereon.
(e) Amounts Prepaid. Amounts prepaid pursuant to this
Section 2.8 may not be reborrowed. Any prepayments made pursuant to this
Section 2.8 shall include, in addition to the accrued interest and accrued
unpaid fees to the date of prepayment, any additional amounts owed by
Borrower pursuant to Section 2.5.
Section 2.9 Optional Termination or Reduction of Commitments.
(A) Provided that no Default or Event of Default shall have occurred and be
continuing or shall result therefrom, by giving irrevocable written notice,
which is received by Agent at least 10 but not more than 45 days in
advance, Borrower may, during the Availability Period, terminate or reduce
the Debt Service Line of Credit Facility
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Commitment, provided that (a) any such reduction shall be in integral
multiples of $100,000, (b) prior to any such termination or reduction, the
Borrower shall have demonstrated to the satisfaction of Agent that the
balance in the Debt Service Reserve Account, without taking into account
the terminated or reduced portion of the Debt Service Line of Credit
Facility Commitment, shall be equal to or greater than the Debt Service
Required Balance, and (c) any such termination or reduction shall apply
proportionally to reduce the Debt Service Line of Credit Facility
Commitment of each Lender. Once terminated or reduced pursuant to this
Section 2.9, the Debt Service Line of Credit Facility Commitment may not
thereafter be reinstated or increased.
(B) NRG Newark and NRG Parlin may, by giving irrevocable written
notice, which is received by Agent at least three Business Days in advance
but not more than 45 days in advance, reduce or terminate the Additional
Commitment during the Additional Commitment Period. Once reduced or
terminated, the Additional Commitment may not thereafter be increased or
reinstated.
(C) If, prior to the Additional Funding Date, FERC approves the
rates in the Parlin Power Purchase Agreement on a cost of service basis and
such rates are approved at a level lower than the rates set forth in the
Parlin Power Purchase Agreement, then Borrower shall deliver revised base
case projections to Agent that reflect such approved rates and, based on
such base case projections, the Additional Commitment shall be reduced by
an amount (the "Additional Commitment Reduction Amount") calculated such
that after giving effect to such reduction (A) the annual Projected Debt
Service Coverage Ratio for each calendar year (or part thereof) for the
period from the Additional Funding Date to and including the Maturity Date
is at least 1.35:1.00 and (B) the average calendar year Projected Debt
Service Coverage Ratio for the period from the Additional Funding Date to
and including the Maturity Date is at least 1.45:1.00.
Section 2.10 General Terms of Payment.
(a) General. All sums payable to the Lenders hereunder and
under any other Loan Instrument to which they are a party shall be paid
without condition or deduction for any counterclaim, defense, recoupment or
set-off in New York City in immediately available funds not later than
12:00 noon (New York time) on the day in question to the Federal Reserve
Bank of New York, for credit to the Loan Clearing Account, Account No.
90499602, of Credit Suisse, as Agent,
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ABA No. 026009179, Attention: Project Finance, Reference: NRG
Newark/Parlin.
(b) Distribution of Payments. If at any time Agent makes
available to any Lender amounts due from Borrower hereunder which Borrower
fails to make available to Agent, such Lender shall on request forthwith
refund such amounts to Agent together with interest thereon at the Federal
Funds Rate for such period. In the event that any Lender shall at any time
receive any payment in excess of its rights hereunder to receive payments,
from any source in respect of any of Borrower's Obligations hereunder, in
violation of the requirement of this Agreement that Borrower makes such
payment to Agent, such Lender shall be deemed to have received such payment
as agent for and on behalf of all the Lenders and shall immediately advise
Agent of the receipt of such funds and promptly transmit the full amount
thereof to Agent for prompt distribution among all the Lenders as provided
for in this Agreement, provided that such Lender shall be deemed not to
have received, and Borrower shall be deemed not to have made to such
Lender, any payment transmitted to Agent by such Lender pursuant to this
Section 2.10(b).
(c) Priority of Application. Any payments made to Agent for its
account or for the benefit of the Lenders shall be applied (pro rata within
each of clauses below, unless otherwise specifically required pursuant to
the terms hereof) as follows:
(A) first against costs, expenses and indemnities due under the Loan
Instruments;
(B) then against fees for Agent and the Lenders;
(C) then against payments of accrued and unpaid interest on the Loans
and payments with respect to any Interest Rate Hedge Agreement;
(D) then against principal of the Funding Loans; and
(E) then against principal of the Debt Service Loans.
(d) Non-Business Day. Whenever any payment hereunder shall be
due, or any calculation shall be made, on a day which is not a Business
Day, the date for payment shall be extended to the next succeeding Business
Day, and any interest on any payment shall be payable for such extended
time at the specified rate. In no event shall this Section
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2.10(d) be deemed to modify the definition of Interest Period, Initial
Maturity Date, Maturity Date, Additional Commitment Period or Availability
Period set forth in this Agreement.
(e) Agent's Calculations. All calculations of interest,
commissions, increased costs, funding costs, gross-up costs or other
amounts due hereunder calculated by Agent with respect to the Loans shall
be conclusive and binding for all purposes absent manifest error. Agent
shall, upon request by Borrower, promptly provide Borrower with a
certificate as to the calculation of the amount of any funding, yield
protection or increased cost with respect to the Loans, setting forth the
method of such calculation.
Section 2.11 Note(s).
(a) Initial Loan Notes. The Initial Loans made by each Lender
shall be evidenced by a separate promissory note of Borrower in favor of
each such Lender, substantially in the form of Exhibit A1, with appropriate
insertions as to payee, date and principal amount (individually, an
"Initial Loan Note" and, collectively, the "Initial Loan Notes"), payable
to the order of such Lender and evidencing the obligation of Borrower to
pay a principal amount equal to the aggregate unpaid principal amount of
the Initial Loans made by such Lender under this Agreement, plus interest
due such Lender thereon, all as provided in this Agreement and the other
Loan Instruments.
(b) Funding Loan Notes. On the Additional Funding Date,
Borrower shall execute and deliver separate promissory notes of Borrower in
favor of each Lender, substantially in the form of Exhibit A2 hereto with
appropriate insertions as to payee, date and principal amount
(individually, a "Funding Loan Note" and, collectively, the "Funding Loan
Notes"), payable to the order of such Lender and evidencing the joint and
several obligations of Borrower to pay a principal amount equal to the
aggregate unpaid principal amount of the Funding Loans made by such Lender
under this Agreement plus interest due such Lender thereon, all as provided
in this Agreement and the other Loan Instruments. Simultaneously with the
delivery of a Funding Loan Note to a Lender, such Lender shall cancel and
deliver its Initial Loan Note to NRG Newark. Any Funding Loan Note
executed and delivered in accordance with the foregoing shall carry the
rights to unpaid interest that were carried by the Initial Loan Note(s),
such that no loss of interest shall result from any such exchange. Each
Funding Loan Note executed and delivered in accordance with
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the foregoing shall have set forth thereon a legend substantially in the
following form:
"This Note is issued, in part, in replacement of [describe
canceled Note[s]] and, notwithstanding the date of this
Note, this Note carries all of the rights to unpaid interest
that were carried by such replaced Note[s], such that no
loss of interest shall result from any such replacement."
(c) Debt Service Loan Notes. The Debt Service Loans provided by
each Lender shall be evidenced by a separate promissory note of Borrower in
favor of each such Lender, substantially in the form of Exhibit B hereto,
with appropriate insertions as to payee, date and principal amount
(individually, a "Debt Service Loan Note" and, collectively, the "Debt
Service Loan Notes"), payable to the order of such Lender and evidencing
the obligation of Borrower to pay a principal amount equal to the aggregate
unpaid principal amount of all Debt Service Loans made by such Lender under
this Agreement, plus interest due such Lender thereon, all as provided in
this Agreement.
(d) Certain Terms of the Notes. Each Lender is hereby
authorized to record on its Note (or a schedule or grid attached thereto)
or on its regularly maintained books and records the date, type and amount
of each Loan made or continued by, or arising in favor of, such Lender, and
the date and amount of each payment or prepayment of principal thereof,
and, in the case of Loans subject to an Interest Period using LIBOR, the
Interest Period with respect thereto, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so
recorded. Interest on each Note shall be payable on the dates specified in
Section 2.4 hereof. The principal of each Initial Loan Note shall be
stated to be payable on the Initial Maturity Date and the principal of each
Funding Loan Note shall be stated to be payable on each Repayment Date and
the Maturity Date. The principal of each Debt Service Loan Note shall be
stated to be payable in accordance with the provisions of Section
2.6(b)(i). Each Lender is hereby authorized to record on its Note (or a
schedule or grid attached thereto) or on its regularly maintained books and
records the date, type and amount of each Loan made or continued by, or
arising in favor of, such Lender, and the date and amount of each payment
or prepayment of principal thereof, and, in the case of Loans subject to an
Interest Period using LIBOR, the Interest Period with respect thereto, and
any such
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recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. At any time, at the reasonable request of any
Lender, Borrower (at its expense) shall execute and deliver one or more of
the applicable Notes in substitution of the Note(s) held prior thereto,
which latter Note(s) shall be canceled and simultaneously delivered to
Borrower. Any Note executed and delivered in accordance with the foregoing
shall carry the rights to unpaid interest that were carried by the Note(s)
canceled and delivered to Borrower in exchange therefor, such that no loss
of interest shall result from any such exchange. Each Note executed and
delivered in accordance with the foregoing shall have set forth thereon a
legend substantially in the following form:
"This Note is issued, in part, in replacement of [describe
canceled Note[s]] and, notwithstanding the date of this
Note, this Note carries all of the rights to unpaid interest
that were carried by such replaced Note[s], such that no
loss of interest shall result from any such replacement."
Section 2.12 Replacement of Lender. (a) In the event that (i)
any Lender requests compensation pursuant to Section 2.5 hereof, (ii) the
obligation of any Lender to make or continue its proportionate interest in
the Loans or the Commitments is terminated pursuant to Section 2.5(c)
hereof, (iii) the obligation of any Lender to make or continue Loans on a
LIBOR basis shall be suspended pursuant to Section 2.5(d) hereof, or (iv)
any Lender becomes insolvent or fails to make any Loan in response to a
request for borrowing by the Borrower where the Majority Lenders have made
the respective Loans to be made by them in response to such request, then,
so long as such condition exists, Borrower may either (x) designate another
financial institution (such financial institution being herein called a
"Replacement Lender") acceptable to Agent (which acceptance shall not be
unreasonably withheld) and which is not an Affiliate of the Borrower or
Guarantor, to assume such Lender's Commitments hereunder and to purchase
the Loans of such Lender and such Lender's rights under this Agreement and
the Notes and any other Loan Instruments held by such Lender, all without
recourse to or representation or warranty by, or expense to, such Lender,
for a purchase price equal to the outstanding principal amount of the Loans
payable to such Lender plus any accrued but unpaid interest on such Loans
and accrued but unpaid fees owing to such Lender, and upon such assumption,
purchase and substitution, and subject to the execution and delivery to the
Agent by the Replacement Lender
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of documentation satisfactory to the Agent (pursuant to which such
Replacement Lender shall assume the obligations of such original Lender
under this Agreement and any other Loan Instruments), the Replacement
Lender shall succeed to the rights and obligations of such Lender
hereunder, or (y) pay to such Lender the outstanding principal amount of
the Loans payable to such Lender under this Agreement and any other Loan
Instruments plus any accrued but unpaid interest on such Loans and accrued
but unpaid fees owing to such Lender under this Agreement and any other
Loan Instruments. In the event that Borrower exercises its rights under
the preceding sentence, the Lender against which such rights were exercised
shall no longer be a party hereto or have any rights or obligations
hereunder. If Borrower exercises its rights under clause (y) above against
any Lender, then the outstanding Loans and the Commitments shall be reduced
to the extent of such Lender's pro rata share of the Loans and the
Commitments.
(b) If the Borrower exercises its rights under clause (y)
of Section 2.12(a) hereof, the Borrower may, not later than the first
anniversary of such exercise, designate another financial institution (such
financial institution being herein called a "Substitute Lender") acceptable
to the Agent (which acceptance will not be unreasonably withheld) and which
is not an Affiliate of the Borrower or Guarantor, to assume the Commitments
of the Lender against which such rights were exercised and, subject to the
execution and delivery to the Agent by the Substitute Lender of
documentation satisfactory to the Agent, the Substitute Lender shall become
party to this Agreement as a Lender. Upon the Substitute Lender so
becoming a party hereto, the Borrower shall borrow Loans from the
Substitute Lender in such a manner and in such amounts as will result in
the outstanding principal amount of the Loans held by the Lenders being pro
rata according to the amounts of their respective Commitments.
Section 2.13. Limitation on Liability. Notwithstanding any
other term of this Agreement or any of the other Loan Instruments to the
contrary, (a) prior to the Additional Funding Date, (i) NRG Parlin shall
not be liable in any respect for the payment of principal, interest, fees,
expenses or other amounts in respect of the Initial Loan or for the payment
of any other amounts under this Agreement or any other Loan Instrument;
(ii) NRG Parlin shall not be obligated under any covenant contained in this
Agreement (other than in Section 5.7(a)) or any other Loan Instrument; and
(b) commencing on the Additional Funding Date, (i) NRG Parlin shall be
jointly and severally liable with NRG Newark
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with respect to the Obligations; and (ii) all covenants contained in this
Agreement or in any other Loan Instruments shall be applicable to NRG
Parlin as well as NRG Newark.
ARTICLE III
Conditions of Commitments
Section 3.1 Conditions Precedent to the Making of Initial Loans.
The obligations of each Lender to make its pro rata share of the Initial
Loans on the Initial Funding Date is subject to the satisfaction of Agent
of all the conditions precedent set forth below:
(a) Certificate of Incorporation or Organizational Documents.
Borrower shall have delivered and shall have caused each of the Obligors
other than those listed on Schedule 3.1(a) to have delivered to Agent a
copy of the certificate of incorporation or other organizational documents
of such Obligors, and each amendment thereto, certified by the Secretary of
State of its state of incorporation or other appropriate Governmental
Authority as being a true and correct copy thereof, such certificate or
document to be dated a recent date prior to the Initial Funding Date.
(b) Certificate of Good Standing. Borrower shall have delivered
and shall have caused each of the Obligors other than those listed on
Schedule 3.1(b) to have delivered to Agent a certificate or other
appropriate document from the Secretary of State of its state of
incorporation or other governmental authority of such Obligor, listing the
certificate of incorporation or other organizational documents and each
amendment thereto on file in its office and, if available, certifying that
(i) such amendments are the only amendments to each such certificate of
incorporation or other organizational documents on file in its office,
(ii) such Obligor has paid all franchise taxes to the date of such
certificate and (iii) such Obligor as appropriate, is duly incorporated and
in good standing under the laws of such jurisdiction, such certificates to
be dated a recent date prior to the Initial Funding Date.
(c) Certificate of Qualification. Borrower shall have delivered
and shall have caused each of the Obligors other than those listed on
Schedule 3.1(c) to have delivered to Agent certificates or equivalent
documents from all states in which it is necessary for such Obligor to be
qualified and/or licensed to do business for the purposes of the
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transactions contemplated hereunder or under any of the Project Agreements,
certifying that such Obligor has duly qualified to do business in such
jurisdiction as a foreign corporation and is in good standing under such
qualification, such certificates or equivalent documents to be dated a
recent date prior to the Initial Funding Date.
(d) By-Laws and Resolutions. Borrower shall have delivered and
shall have caused each of the Obligors other than those listed on
Schedule 3.1(d) to have delivered to Agent copies of the By-Laws or other
equivalent organizational documents of such Obligor, the resolutions of its
Board of Directors approving each Project Agreement to which it is a party
(other than the DuPont Power Purchase Agreement), and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to each such Project Agreement to which it is a party
(other than the DuPont Power Purchase Agreement), certified as of the
Initial Funding Date as true and correct in each case by an Authorized
Officer of such Obligor.
(e) Incumbency Certificate. Borrower shall have delivered and
shall have caused each of the Obligors other than those listed on
Schedule 3.1(e) to have delivered to Agent a certificate of an Authorized
Officer of such Obligor dated as of the Initial Funding Date certifying the
names and true signatures of the officers authorized to sign each Project
Agreement to which it is a party (other than the DuPont Power Purchase
Agreement) and the other documents to be delivered by it pursuant to the
Project Agreements (other than the DuPont Power Purchase Agreement).
(f) Opinions of Counsel. Borrower shall have delivered to Agent
a favorable opinion of (a) Troutman Sanders LLP, as counsel to Borrower and
Guarantor, substantially in the form of Exhibit C1 hereto, and as to such
other matters as Agent may reasonably request, (b) Michael Young, Esq.,
counsel to NRG, substantially in the form of Exhibit C1 hereto, and as to
such other matters as Agent may reasonably request, (c) Greenbaum, Rowe,
Smith, Ravin and Davis, New Jersey counsel to Borrower and Guarantor,
substantially in the form of Exhibit C1 hereto, and as to such other
matters as Agent may reasonably request, (d) Gibson, Dunn & Crutcher, New
York counsel to Borrower, Guarantor and NRG, substantially in the form of
Exhibit C1 hereto, and as to such other matters as Agent may reasonably
request, and (e) counsel to each of JCP&L, Newark Group, Stewart &
Stevenson, and Stewart & Stevenson Services, substantially in the form of
Exhibit C2 hereto, and as to such other matters as Agent may reasonably
request, in each case dated as of the Initial Funding Date and addressed to
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the Agent, the Secured Parties and the Lenders, in form and substance
satisfactory to Agent.
(g) Fees. Payment in full by NRG and NRG Newark of all fees and
expenses which are to be paid on or before the Initial Funding Date,
including, without limitation, the fees provided for in the letter
agreement dated May 17, 1996 among NRG Newark, NRG Parlin and Agent and the
expenses provided for in the letter agreement dated February 13, 1996
between NRG and Agent.
(h) Loan Instruments. Borrower shall have delivered to Agent
fully executed counterparts of this Agreement, the NRG Guaranty, the
Initial Loan Notes, the Pledge Agreement, the Security Agreement, the
Blocked Account Agreements, the Mortgage, all financing statements, stock
certificates, guarantees, assignments, instruments and agreements required
by Agent to be executed on or prior to the Initial Funding Date by or on
behalf of Borrower to guaranty or provide collateral security with respect
to the Obligations, and such other certificates, opinions, documents and
instruments evidencing, securing or pertaining to the Loans and the
Commitments as shall be required by Agent to be delivered to the Secured
Parties by Borrower or any other Person prior to the Initial Funding Date,
in each case in form and substance satisfactory to Agent and signed by all
parties thereto (other than Agent) and in full force and effect. In
addition, Agent shall have received pay-off letters, UCC termination
statements and other documents, in each case, in form and substance
satisfactory to Agent, evidencing the release and termination of all prior
Liens on the Collateral. All representations and warranties contained in
Section 4.1 and each other Loan Instrument shall be true and correct as of
the Initial Funding Date.
(i) Borrower's Shares. Borrower shall have caused Guarantor to
deliver to Agent stock certificates representing 100% of the issued and
outstanding shares of capital stock of Borrower registered in the name of
Guarantor, together with irrevocable undated stock powers duly endorsed in
blank.
(j) [Intentionally Omitted].
(k) NRG Energy Investment. Borrower shall have delivered to
Agent evidence satisfactory to Agent that not less than $29 million has
been paid by NRG by way of cash equity or payment of the purchase price of
stock.
(l) Security Interest. Except to the extent Consents are
required to create a first priority perfected
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security interest in the Project Documents other than the Power Purchase
Agreement, the Steam Sales Agreement and the Ground Lease (which Consents
shall be obtained in accordance with Section 5.40), Borrower shall have
provided Agent with evidence satisfactory to Agent that it has, for the
benefit of the Secured Parties, a valid and perfected first priority
security interest in the Collateral on the Initial Funding Date (subject
only to Permitted Liens).
(m) Financial Statements of Obligors. Agent shall have received
the most recent year-end audited financial statements and unaudited
quarterly financial statements which are available for each Obligor (or, in
the case of each of JCP&L and PSE&G, the most recent Form 10-K filed with
the SEC and, to the extent that the most recent Form 10-Q filed with the
SEC is dated a more recent date than the most recent Form 10-K for such
Obligor, the most recent Form 10-Q filed with and available from the SEC).
In the opinion of Agent, there shall have been no material adverse change
in the business operations, results of operations, condition (financial or
otherwise), prospects or property of any Obligor (except as previously
disclosed to Agent in a writing delivered by or on behalf of Borrower or
such Obligor) since (i) the date of such Obligor's most recent audited
financial statements (or Forms 10-Q or 10-K, as appropriate) previously
delivered to Agent, if such Obligor's financial statements have been
previously delivered to Agent and (ii) the date which is six months prior
to the Initial Funding Date, if such Obligor's financial statements have
not previously been delivered to Agent.
(n) Notice of Borrowing. Borrower shall have delivered to Agent
a Notice of Borrowing in accordance with Section 2.1(b).
(o) Officer's Certificate. Borrower shall have delivered to
Agent a certificate executed by an Authorized Officer, stating that:
(a) on such date, and after giving effect to the funding of the Initial
Loans, the provision of the Commitment and the other transactions
contemplated hereby or under any of the Project Agreements, no Default or
Event of Default has occurred and is continuing or would arise as a result
of the consummation of the transactions contemplated hereby or under any of
the Project Agreements; (b) no Material Adverse Effect has occurred since
June 30, 1995; (c) the representations and warranties set forth in
Article IV are true and correct in all material respects on and as of such
date with the same effect as though made on and as of such date; and (d) it
is not in default under any
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material agreement, indenture, credit agreement or other document to which
it is a party.
(p) Confirmation of Agent for Service. Borrower shall have
delivered to Agent confirmation from CT Corporation System of its
acceptance of its appointment as agent for service of process for Borrower
required under Section 8.4 and similar provisions in the other Loan
Instruments.
(q) [Intentionally Omitted].
(r) Government Approvals, Litigation and Project Documents. (i)
Borrower shall have delivered to Agent evidence satisfactory to Agent
that all Governmental Approvals and filings and consents from third
parties, except such Consents as are set forth in Schedule 5.40 hereof,
required in connection with the transactions contemplated hereby in
connection with the Newark Project have been obtained, to the extent
reasonably obtainable (including, without limitation, all filings required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
New Jersey Industrial Site Recovery Act (N.J. Rev. Stat. 13:1K-6 et seq.)
and all New Jersey asset transfer approvals required under the
environmental regulations). Agent shall have received evidence or copies
of all Governmental Approvals for the Newark Project that are set forth in
Part I of Schedule 4.3A hereto (including, without limitation, those
necessary for the operation of the Project at levels satisfactory to Agent
after consultation with the Independent Engineer and the approvals),
certified by an Authorized Officer of Borrower as being (except in the case
of the BPU orders approving the Third Amendment to the Newark Power
Purchase Agreement and the Interim Gas Service Agreement) complete and in
full force and effect and not subject to appeal, and copies of all
correspondence referred to in such Governmental Approvals and all
applications for such Governmental Approvals, certified by an Authorized
Officer of Borrower as complete. Agent shall have received evidence
satisfactory to Agent that (x) neither the Borrower nor the Project is in
violation of any Governmental Approval, (y) no additional Governmental
Approvals are required for the operation of the Project as contemplated in
the Project Documents, and (z) there is no litigation arising from or
relating to the transactions contemplated hereby which could reasonably be
expected to result in a Material Adverse Effect.
(ii) Each of the Project Documents shall be in form and
substance reasonably satisfactory to Agent. Agent
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shall have received evidence satisfactory to it that each of such Project
Documents is in full force and effect and that Borrower is not, and to the
best knowledge of Borrower, no other party to any such Project Document is,
in default in the performance, observance or fulfillment of any of its
obligations, covenants or conditions contained therein and that the
Effective Date (as defined in the Power Purchase Agreement) has occurred.
Agent shall have received executed Consents, in the form and substance
satisfactory to Agent (other than those Consents referred to in Schedule
5.40 hereof). Agent shall have received an executed copy of each Project
Document, certified in the case of each such document to which Agent is not
a party by an Authorized Officer of Borrower as being complete (including
all exhibits, schedules and disclosure or other material letters referred
to therein or delivered pursuant thereto, and all amendments thereto) and
in full force and effect and that no force majeure has occurred thereunder.
(s) Acquisition Documents. Borrower shall have delivered to
Agent a certificate executed by an Authorized Officer stating that, prior
to or concurrently with the making of the Initial Loans and the provision
of the Commitments, the Acquisition has been or shall be consummated in
accordance with the Acquisition Documents and all Laws, and no term or
provision of any Acquisition Document has been amended or waived (except
any amendments or waivers approved by Agent in writing). Borrower shall
have delivered executed copies of each of the Acquisition Documents (and
all exhibits and schedules thereto) certified as being true and correct
copies by an Authorized Officer of Borrower, together with copies of all
certificates, opinions and other documents executed and delivered
thereunder or in connection therewith.
(t) Material Adverse Effect. Since June 30, 1995, there shall
not have occurred any Material Adverse Effect.
(u) Pro Forma, the Operating Budget and Projections. Agent
shall have received the Pro Forma Balance Sheets for the Project, the
Sources and Uses Table, the Operating Budget for the Project and, at least
five Business Days prior to the Initial Funding Date, the Projections for
the Newark Project and Parlin Project, in each case satisfactory to Agent;
provided that such Projections demonstrate the ability of NRG Newark and
NRG Parlin to maintain, at all times during the term of this Agreement, an
annual Debt Service Coverage Ratio of at least 1.35:1.00 and an average
annual Debt Service Coverage Ratio of at least 1.45:1.00.
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(v) Title Insurance; Surveys. Agent shall have received an ALTA
lender's paid policy of title insurance issued by the Title Company, in
form and substance satisfactory to Agent, with such endorsements and
affirmative coverage as Agent may reasonably request, with such ALTA direct
facultative reinsurance agreements (with direct access provisions) as Agent
may reasonably request, (i) insuring the Secured Parties for their ratable
benefit in an amount not less than $60,000,000, that good and marketable
leasehold title to the Project is vested in the Borrower pursuant to the
Ground Lease and good and marketable easements in that portion of the
Property consisting of easements is vested in the Borrower and that the
Mortgage constitutes a valid and enforceable first mortgage lien on the
Project subject only to Permitted Liens and (ii) providing full coverage
against all mechanics' and materialmen's liens (including any relating to
environmental remediation) as well as coverage against survey exceptions
(except as specifically approved by Agent). Agent shall also have received
a currently dated ALTA/ASCM Class A certified survey of the Project and all
easements affecting the Project by a licensed surveyor in the State of New
Jersey satisfactory to Agent and the Title Company, certified to the
Secured Parties and the Title Company, showing outlines of the Project,
location of all improvements, set back lines, encroachments (if any),
rights of way, and showing no state of facts unsatisfactory to any of them
and showing such details as Agent may reasonably require. The legal
descriptions on the survey shall coincide exactly with that on the title
insurance policies to be furnished to Agent.
(w) Insurance. Agent shall have received (i) a certified copy
of, or binder for, each of the insurance policies for the Project that are
required by Section 4.25 hereof, such policies to be in form and substance,
and issued by companies, satisfactory to Agent, together with evidence
satisfactory to Agent that such insurance complies with the provisions of
Section 4.25 hereof and with the provisions of each of the Project
Documents, and that all premiums then due with respect to such insurance
have been paid and (ii) a written report of the Insurance Consultant
describing the insurance obtained by Borrower as of the Initial Funding
Date with respect to the Project and stating that the insurance required to
be obtained as of the Initial Funding Date pursuant to the Loan Instruments
and the Project Documents is in full force and effect and provides
reasonable and adequate coverage for the Project.
(x) EWG/QF Status. The Project shall be a Qualifying
Cogeneration Facility and Borrower shall have
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maintained and established by filing the QF Certificate, which shall be in
full force and effect and shall reflect operation and ownership of the
Project consistent with the Project Documents and the Governmental
Approvals. NRG Newark and NRG Parlin shall each have filed good faith
applications for certification as an EWG with FERC, which applications
shall reflect NRG Newark and NRG Parlin as the owner of the Newark Project
and the Parlin Project, respectively, and which shall reflect the operation
and ownership of the Newark Project and the Parlin Project consistent with
the Newark Project Documents and the Parlin Project Documents and the
Governmental Approvals, and which shall have been served on all of the
entities required to have been served under FERC regulations.
(y) Environmental Status. Agent shall have received (i) the
environmental reports listed in Schedule 3.1(y) as well as a reliance
letter with respect to such reports and such reports and reliance letter
shall be in form and substance satisfactory to Agent and such reports shall
contain the results of the review of the environmental audit of the
Project, permitting issues and other matters of environmental concern with
respect to the Project and (ii) such other information as to the past
ownership and use and the present condition of the Project as Agent may
have requested; and such reports shall not disclose, in the opinion of
Agent, any unusual or significant risks associated with the Project
relating to any Environmental Requirements.
(z) Independent Engineer's Report; Gas Consultant Report. Agent
shall have received a report of the Independent Engineer and Gas Consultant
detailing to the satisfaction of Agent such matters as Agent may reasonably
request, including without limitation, the technical and economic
feasibility of the Project and the availability of Alternative Fuel and
Backup Gas for the Project.
(aa) Regulation as Utility. None of the making of any Loan or
any Commitment, the securing of any obligation by Liens pursuant to the
Security Documents, any other transaction contemplated by any of the Loan
Instruments, nor the ownership or operation of the Newark Project or the
Parlin Project by NRG Newark or NRG Parlin shall cause Borrower or, solely
on the basis of this transaction, any Secured Party to become subject to
regulation by any Governmental Authority as a "public utility", an
"electric utility", an "electric utility holding company", a "public
utility holding company", or a subsidiary or affiliate of any of the
foregoing under any Law or Governmental Requirements (including, without
limitation, PUHCA and FPA).
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(bb) Filing, Registration and Recording Fees. Agent shall have
received evidence satisfactory to it that all filing, recordation,
subscription and inscription fees, and all taxes and other expenses related
thereto, necessary for the consummation of the transactions contemplated by
the Project Agreements have been paid or provided for in full by or on
behalf of Borrower.
(cc) Transfer and Stamp Taxes. Agent shall have received
evidence that all transfer, stamp, documentary, intangible personal
property or similar taxes, levies, imposts, assessments or charges imposed
by any Governmental Authority and any and all interest, penalties or other
liabilities arising under or relating thereto, in respect of this
Agreement, any other Loan Instrument, any Loans or Obligations or the
transactions contemplated herein or therein which are due and payable have
been paid or provided for in full.
(dd) [Intentionally Omitted].
(ee) Operations and Maintenance Agreement; Operating Guaranty.
Borrower shall have delivered to Agent certified copies of the executed
Operations and Maintenance Agreement and the Operating Guaranty, each in
form and substance satisfactory to Agent.
(ff) Assignment of Gas Contract With PSE&G. The Gas Service
Agreement, dated May 13, 1993, between O'Brien (Newark) Cogeneration, Inc.
and PSE&G shall have been assigned to JCP&L and the Borrower shall have no
obligation or liability under such agreement, and the Borrower shall have
delivered to Agent a certificate to this effect. Further, Borrower shall
have delivered to Agent a certified copy of the Assignment of Gas Service
Agreement dated as of April 30, 1996 by and among O'Brien (Newark)
Cogeneration, Inc., PSE&G and JCP&L.
(gg) Interim Gas Service Agreement. Borrower shall have
delivered to Agent certified copies of the executed Interim Gas Service
Agreement which shall be in full force and effect.
Section 3.2 Conditions Precedent to the Making of Debt Service
Loans;. The obligations of each Lender to make its pro rata share of each
Debt Service Loan is subject to the satisfaction of Agent of all the
conditions precedent set forth below:
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(a) Funding Loans. All the conditions precedent to the making
of Funding Loans set forth in Section 3.1 and 3.3 shall have been satisfied
and the Initial Loans shall have been made on the Initial Funding Date and
the Additional Loans shall have been made on the Additional Funding Date to
Borrower.
(b) Insufficient Funds to Repay Debt Service. Debt Service
shall be due and payable by the Borrower to the Lenders and the Cash
Revenues available to the Borrower plus the balance existing at the time in
the Debt Service Reserve Account after making the payments specified in
Section 5.1(c)(i) shall be insufficient to pay such Debt Service.
(c) Debt Service Loans to be Used to Pay Debt Service. Borrower
shall have delivered to Agent a certificate certifying that the proceeds of
the proposed Debt Service Loan shall be used only to pay Debt Service due
and payable by the Borrower to the Lenders.
(d) Debt Service Loans not to exceed Debt Service Line of Credit
Facility Commitment. The amount of the proposed Debt Service Loan shall
not exceed an amount equal to the Debt Service Line of Credit Facility
Commitment.
(e) Notice of Borrowing. Borrower shall have delivered to Agent
a Notice of Borrowing in accordance with Section 2.2(b).
Section 3.3 Conditions Precedent to the Making of Additional
Loans. The obligations of each Lender to make its pro rata share of the
Additional Loans on the Additional Funding Date is subject to the
satisfaction of Agent of all the conditions precedent set forth below:
(a) Certificate of Incorporation or Organizational Documents.
NRG Parlin shall have delivered and shall have caused each of DuPont,
Guarantor and NPI to have delivered to Agent a copy of the certificate of
incorporation or other organizational documents of such Parlin Obligors,
and each amendment thereto, certified by the Secretary of State of its
state of incorporation or other appropriate Governmental Authority as being
a true and correct copy thereof, such certificate or document to be dated a
date during, or a recent date prior to, the Additional Commitment Period.
(b) Certificate of Good Standing. NRG Parlin shall have
delivered and shall have caused each of DuPont, Guarantor and NPI to have
delivered to Agent a certificate or
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other appropriate document from the Secretary of State of its state of
incorporation or other governmental authority of such Parlin Obligor,
listing the certificate of incorporation or other organizational documents
and each amendment thereto on file in its office and, if available,
certifying that (i) such amendments are the only amendments to each such
certificate of incorporation or other organizational documents on file in
its office, (ii) such Parlin Obligor has paid all franchise taxes to the
date of such certificate and (iii) such Parlin Obligor as appropriate, is
duly incorporated and in good standing under the laws of such jurisdiction,
such certificates to be dated a date during, or a recent date prior to, the
Additional Commitment Period.
(c) Certificate of Qualification. NRG Parlin shall have
delivered and shall have caused each of DuPont, Guarantor and NPI to have
delivered to Agent certificates or equivalent documents from all states in
which it is necessary for such Parlin Obligor to be qualified and/or
licensed to do business for the purposes of the transactions contemplated
hereunder or under any of the Project Agreements, certifying that such
Parlin Obligor has duly qualified to do business in such jurisdiction as a
foreign corporation and is in good standing under such qualification, such
certificates or equivalent documents to be dated a date during, or a recent
date prior to, the Additional Commitment Period.
(d) By-Laws and Resolutions. NRG Parlin shall have delivered
and shall have caused each of DuPont, Guarantor and NPI to have delivered
to Agent copies of the by-laws or other equivalent organizational documents
of such Parlin Obligor, the resolutions of its Board of Directors approving
each Parlin Project Agreement to which it is a party, and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to each such Parlin Project Agreement to which it is a
party, certified as of a date during, or a recent date prior to, the
Additional Commitment Period as true and correct in each case by an
Authorized Officer of such Parlin Obligor.
(e) Incumbency Certificate. NRG Parlin shall have delivered and
shall have caused each of DuPont, Guarantor and NPI to have delivered to
Agent a certificate of an Authorized Officer of such Parlin Obligor dated
as of a date during, or a recent date prior to, the Additional Commitment
Period certifying the names and true signatures of the officers authorized
to sign each Parlin Project Agreement (other than the DuPont Power Purchase
Agreement) to which it is a party
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and the other documents to be delivered by it pursuant to the Parlin
Project Agreements (other than the DuPont Power Purchase Agreement).
(f) Opinions of Counsel. NRG Parlin shall have delivered to
Agent a favorable opinion of (a) Troutman Sanders LLP, as counsel to NRG
Parlin and Guarantor, substantially in the form of Exhibit C1 hereto,
including all federal regulatory matters and such other matters as Agent
may reasonably request based on any facts, information, circumstances or
matters that arise, or that the Agent becomes aware of, with respect to the
Parlin Project after the Initial Funding Date, (b) in house counsel to NRG
and NPI, substantially in the form of Exhibit C1 hereto, including all
federal regulatory matters, and such other matters as Agent may reasonably
request based on any facts, information, circumstances or matters that
arise, or that the Agent becomes aware of, with respect to the Parlin
Project after the Initial Funding Date, (c) Greenbaum, Rowe, Smith, Ravin
and Davis, or other New Jersey counsel to NRG Parlin, NPI and Guarantor,
substantially in the form of Exhibit C1 hereto, including all state
regulatory matters and such other matters as Agent may reasonably request
based on any facts, information, circumstances or matters that arise, or
that the Agent becomes aware of, with respect to the Parlin Project after
the Initial Funding Date, (d) Gibson, Dunn & Crutcher, New York counsel to
NRG Parlin, Guarantor, NPI and NRG, substantially in the form of Exhibit C1
hereto, and as to matters set forth in Section 3.3(s)(i) and such other
matters as Agent may reasonably request based on any facts, information,
circumstances or matters that arise, or that Agent becomes aware of, with
respect to the Parlin Project after the Initial Funding Date, and (e)
counsel to each of JCP&L, DuPont, Stewart & Stevenson, Stewart & Stevenson
Services, and NPI, substantially in the form of Exhibit C2 hereto, in each
case dated a date during, or a recent date prior to, the Additional
Commitment Period and addressed to the Agent, the Secured Parties and the
Lenders, in form and substance satisfactory to Agent.
(g) Fees. Payment in full by NRG and NRG Parlin of all fees and
expenses which are to be paid on or before the Additional Funding Date,
including, without limitation, the fees provided for in the letter
agreement dated May 17, 1996 among NRG Newark, NRG Parlin and Agent and the
expenses provided for in this Agreement.
(h) Loan Instruments. NRG Parlin and NRG Newark shall have
delivered to Agent fully executed counterparts of the Guaranty, the Funding
Loan Notes, the Debt Service Loan
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Notes, the Tax Indemnification Agreement, the Parlin Pledge Agreement, the
Parlin Security Agreement, the Blocked Account Agreements with respect to
the Parlin Project, the Parlin Mortgage, an amended and restated Newark
Mortgage substantially in the form of the Newark Mortgage and securing up
to $160,000,000 of the outstanding principal amount of the Funding Loan
Notes and the Debt Service Loan Notes, all financing statements, stock
certificates, guarantees, assignments, instruments and agreements required
by Agent to be executed on or prior to the Additional Funding Date by or on
behalf of NRG Parlin or NRG Newark to guaranty or provide collateral
security with respect to the Obligations (other than the DuPont Power
Purchase Agreement), and such other certificates, opinions, documents and
instruments evidencing, securing or pertaining to the Loans and the
Commitments as shall be required by Agent to be delivered to the Secured
Parties by Borrower or any other Person prior to the Additional Funding
Date, in each case in form and substance satisfactory to Agent and signed
by all parties thereto (other than Agent) and in full force and effect. In
addition, Agent shall have received pay-off letters, UCC termination
statements and other documents, in each case, in form and substance
satisfactory to Agent, evidencing the release and termination of all prior
Liens on the Collateral intended to be subject to the Parlin Security
Documents.
(i) NRG Parlin's and NPI's Shares. NRG Parlin shall have caused
Guarantor to deliver to Agent stock certificates representing 100% of the
issued and outstanding shares of capital stock of NRG Parlin registered in
the name of Guarantor together with irrevocable undated stock powers duly
endorsed in blank.
(j) [Intentionally Omitted].
(k) NRG Investment. NRG Parlin shall have delivered to Agent a
certificate of an Authorized Officer of Guarantor that, after taking into
account the Funding Loans and the application of proceeds thereof, NRG's
equity investment in Guarantor will not be less than $29 million.
(l) Security Interest. NRG Parlin shall have provided Agent
with evidence satisfactory to Agent that it has, for the benefit of the
Secured Parties, a valid and perfected first priority security interest in
the Collateral (intended to be subject to the Parlin Security Documents) on
or prior to the Additional Funding Date (subject only to Permitted Liens).
NRG Parlin and NRG Newark shall have delivered to Agent each of the items
required to be obtained in accordance with Section 5.40, including, without
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limitation, an executed copy of the PSE&G Consent substantially in the form
of Exhibit G attached hereto.
(m) Financial Statements of Parlin Obligors. Agent shall have
received the most recent year-end audited financial statements and
unaudited quarterly financial statements which are available for NRG
Parlin, Guarantor and NPI and the most recent Form 10-K filed with the SEC
and, to the extent that the most recent Form 10-Q filed with the SEC is
dated a more recent date than such Form 10-K, the most recent Form 10-Q
filed with and available from the SEC, which are available for DuPont. In
the opinion of Agent, there shall have been no material adverse change in
the business operations, results of operations, condition (financial or
otherwise), prospects or property of any such Parlin Obligor (except as
previously disclosed to Agent in a writing delivered by or on behalf such
Parlin Obligor) since (i) the date of such Parlin Obligor's most recent
audited financial statements (or Forms 10-Q or 10-K, as appropriate)
previously delivered to Agent, if such Parlin Obligor's financial
statements have been previously delivered to Agent and (ii) the date which
is six months prior to the Additional Funding Date, if such Parlin
Obligor's financial statements have not previously been delivered to Agent.
(n) Notice of Borrowing. NRG Parlin shall have delivered to
Agent a Notice of Borrowing in accordance with Section 2.1(b).
(o) Officer's Certificate. NRG Parlin shall have delivered to
Agent a certificate executed by an Authorized Officer, stating that:
(a) on such date, and after giving effect to the making of the Funding
Loans, the provision of the Commitments and the consummation of the other
transactions contemplated hereby or under any of the Parlin Project
Agreements, no Default or Event of Default has occurred and is continuing
or would arise as a result of the consummation of the transactions
contemplated hereby or under any of the Parlin Project Agreement; (b) no
Material Adverse Effect has occurred since the Initial Funding Date;
(c) the representations and warranties set forth in Article IV are true and
correct in all material respects on and as of the date such representations
and warranties are made; and (d) it is not in default under any material
agreement, indenture, credit agreement or other document to which it is a
party.
(p) Confirmation of Agent for Service. NRG Parlin shall have
delivered to Agent confirmation from CT Corporation System of its
acceptance of its appointment as agent for service of process for NRG
Parlin required under
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Section 8.4 and similar provisions in the other Loan Instruments.
(q) Flood Zone. NRG Parlin shall have delivered to Agent
evidence, in form and substance satisfactory to Agent, that the Parlin
Project does not and will not include any improved real property that is
located within an area that has been identified by the Director of the
Federal Emergency Management Agency as an area having special flood hazards
and for which flood insurance has been made available under the National
Flood Insurance Act of 1968, as amended.
(r) Government Approvals, Litigation and Project Documents. (i)
NRG Parlin shall have delivered to Agent evidence satisfactory to Agent
that all Governmental Approvals and filings and consents from third parties
required in connection with the transactions contemplated hereby have been
obtained, to the extent reasonably obtainable (including, without
limitation, all filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, New Jersey Industrial Site Recovery
Act (N.J. Rev. Stat. 13:1K-6 et seq.) and all New Jersey asset transfer
approvals required under the environmental regulations). Agent shall have
received evidence or copies of all Governmental Approvals set forth in Part
I of Schedule 4.3B hereto (including, without limitation, those necessary
for the operation of the Parlin Project at levels satisfactory to Agent
after consultation with the Independent Engineer), certified by an
Authorized Officer of NRG Parlin as being complete and in full force and
effect and not subject to appeal, and copies of all correspondence referred
to in such Governmental Approvals and all applications for such
Governmental Approvals, certified by an Authorized Officer of NRG Parlin as
complete. Agent shall have received evidence satisfactory to Agent that
(x) neither NRG Parlin nor the Parlin Project is in violation of any
Governmental Approval and that the Parlin Project has not been in material
violation of any Governmental Approval since the Initial Funding Date,
(y) no additional Governmental Approvals are required for the operation of
the Parlin Project as contemplated in the Parlin Project Documents, and (z)
there is no litigation arising from or relating to the transactions
contemplated hereby which could reasonably be expected to result in a
Material Adverse Effect.
(ii) Each of the Parlin Project Documents shall be in form and
substance reasonably satisfactory to Agent. Agent shall have received
evidence satisfactory to it that each of such Parlin Project Documents is
in full force and effect and that NRG Parlin is not, and to the best
knowledge
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of NRG Parlin, no other party to any such Parlin Project Document is, in
default in the performance, observance or fulfillment of any of its
obligations, covenants or conditions contained therein and that the
Effective Date (as defined in each Power Purchase Agreement) has occurred.
Agent shall have received executed Parlin Consents, in the form and
substance satisfactory to Agent. Agent shall have received an executed
copy of each Parlin Project Document, certified in the case of each such
document to which Agent is not a party by an Authorized Officer of NRG
Parlin as being complete (including all exhibits, schedules and disclosure
or other material letters referred to therein or delivered pursuant
thereto, and all amendments thereto) and in full force and effect and that
no force majeure has occurred thereunder.
(s) Bankruptcy Court Orders. NRG Parlin shall have delivered to
Agent (i) an unqualified opinion of Gibson, Dunn & Crutcher, in form and
substance satisfactory to Agent, stating that no order of the Bankruptcy
Court and no notice, hearing or other pleading in the Bankruptcy Case are
required in connection with the Loans, the Commitments, the Loan
Instruments and the obligations of the Guarantor or either Borrower
thereunder, or (ii) a final and non-appealable order of the Bankruptcy
Court authorizing and approving the Commitments and the Loans and the Loan
Instruments or a final and non-appealable order of the Bankruptcy Court
stating that it has no jurisdiction over such transactions.
(t) Material Adverse Effect. Since the Initial Funding Date
there shall not have occurred any Material Adverse Effect; provided that
for purposes of this Section 3.3(t), in determining whether a Material
Adverse Effect has occurred, in all provisions of this Agreement "Borrower"
shall be deemed to have included NRG Parlin, "Project" shall be deemed to
have included the Parlin Project, "Obligor" shall be deemed to have
included Parlin Obligors, "Project Agreements" shall be deemed to have
included Parlin Project Agreements, and "Security Documents" shall be
deemed to have included Parlin Security Documents during the Additional
Commitment Period.
(u) Pro Forma; the Operating Budget. Agent shall have received
the Pro Forma Balance Sheets for the Parlin Project, the Sources and Uses
Table, and the Operating Budget for the Parlin Project.
(v) Title Insurance; Surveys. Agent shall have received an ALTA
lender's paid policy of title insurance issued by the Title Company, in
form and substance
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satisfactory to Agent, with such endorsements and affirmative coverage as
Agent may reasonably request, with such ALTA direct facultative reinsurance
agreements (with direct access provisions) as Agent may reasonably request,
(i) insuring the Secured Parties for their ratable benefit in an amount not
less than $160,000,000 for each of the Newark Project and the Parlin
Project, that good and marketable leasehold title to the Parlin Project and
the Newark Project is vested in NRG Parlin and NRG Newark, respectively,
pursuant to the Parlin Ground Lease and the Newark Ground Lease,
respectively, and good and marketable easements in that portion of the
Parlin Property and the Newark Property consisting of easements is vested
in NRG Parlin and NRG Newark, respectively, and that the Parlin Mortgage
and the Newark Mortgage constitute a valid and enforceable first mortgage
lien on the Parlin Project and the Newark Project, respectively, subject
only to Permitted Liens and (ii) providing full coverage against all
mechanics' and materialmen's liens (including any relating to environmental
remediation) as well as coverage against survey exceptions (except as
specifically approved by Agent). Agent shall also have received currently
dated ALTA/ASCM Class A certified surveys of the Parlin Project and all
easements affecting the Parlin Project by a licensed surveyor in the State
of New Jersey satisfactory to Agent and the Title Company, certified to the
Secured Parties and the Title Company, showing outlines of the Parlin
Project, location of all improvements, set back lines, encroachments (if
any), rights of way, and showing no state of facts unsatisfactory to any of
them and showing such details as Agent may reasonably require. The legal
descriptions on the surveys shall coincide exactly with that on the title
insurance policies to be furnished to Agent.
(w) Insurance. Agent shall have received (i) a certified copy
of, or binder for, each of the insurance policies required for the Parlin
Project by Section 4.25 hereof, such policies to be in form and substance,
and issued by companies, satisfactory to Agent, together with evidence
satisfactory to Agent that such insurance complies with the provisions of
Section 4.25 hereof and with the provisions of each of the Parlin Project
Documents, and that all premiums then due with respect to such insurance
have been paid and (ii) a written report of the Insurance Consultant
describing the insurance obtained by NRG Parlin with respect to the Parlin
Project and stating that the insurance required to be obtained by NRG
Parlin as of the Additional Funding Date pursuant to the Loan Instruments
and the Parlin Project Documents is in full force and effect and provides
reasonable and adequate coverage for the Parlin Project.
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(x) EWG/QF Status. The Newark Project shall be a Qualifying
Cogeneration Facility. NRG Parlin shall have received approval from the
FERC of its applications for certification as an EWG, which application
shall reflect NRG Parlin as the owner of the Parlin Project, and which
shall reflect the operation and ownership of the Parlin Project consistent
with the Parlin Project Documents and Governmental Approvals, and which
shall have been served on all of the entities required to have been served
under the FERC regulations. NRG Parlin shall have received approval from
FERC for the transactions contemplated by the Credit Agreement and the
other Loan Instruments to which it is a party. NRG Parlin shall have
received approval of its rates from FERC without reduction from the rates
set forth in the Parlin Power Purchase Agreement, or, if such rates are
reduced or there are additional costs in obtaining other approvals, the
Additional Commitment shall be reduced as provided in Section 2.9(C).
(y) Environmental Status. Agent shall have received (i) the
environmental reports listed in Schedule 3.3(y) as well as a reliance
letter with respect to such reports and such reports and reliance letter
shall be in form and substance satisfactory to Agent and such reports shall
contain the results of the review of the environmental audit of the Parlin
Project, permitting issues and other matters of environmental concern with
respect to the Parlin Project and (ii) such other information as to the
past ownership and use and the present condition of the Parlin Project as
Agent may have requested; and such reports shall not disclose, in the
opinion of Agent, any unusual or significant risks associated with the
Parlin Project relating to any Environmental Requirements.
(z) Independent Engineer's Report; Gas Consultant Report. Agent
shall have received a report of the Independent Engineer and Gas Consultant
detailing to the satisfaction of Agent such matters as Agent may reasonably
request, including without limitation, the technical and economic
feasibility of the Parlin Project and the availability of Alternative Fuel
and Backup Gas for the Parlin Project.
(aa) Regulation as Utility. None of the making of any Loan or
any Commitment, the securing of any obligation by Liens pursuant to the
Security Documents, any other transaction contemplated by any of the Loan
Instruments, nor the ownership or operation of the Newark Project or the
Parlin Project by NRG Newark or NRG Parlin shall cause NRG Newark or NRG
Parlin or, solely on the basis of this
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transaction, any Secured Party to become subject to regulation by any
Governmental Authority as a "public utility", an "electric utility", an
"electric utility holding company", a "public utility holding company", or
a subsidiary or affiliate of any of the foregoing under any Law or
Governmental Requirements (including, without limitation, PUHCA and the
FPA); provided, however, that NRG Parlin alone shall be subject to
regulation as a public utility under the FPA.
(bb) Filing, Registration and Recording Fees. Agent shall have
received evidence satisfactory to it that all filing, recordation,
subscription and inscription fees, and all taxes and other expenses related
thereto, necessary for the consummation of the transactions contemplated by
the Parlin Project Agreements have been paid or provided for in full by or
on behalf of NRG Parlin.
(cc) Transfer and Stamp Taxes. Agent shall have received
evidence that all transfer, stamp, documentary, intangible personal
property or similar taxes, levies, imposts, assessments or charges imposed
by any Governmental Authority and any and all interest, penalties or other
liabilities arising under or relating thereto, in respect of this
Agreement, any other Loan Instrument, any Loans or Obligations or the
transactions contemplated herein or therein which are due and payable have
been paid or provided for in full.
(dd) Operations and Maintenance Agreement. NRG Parlin shall
have delivered to Agent the Parlin Operations and Maintenance Agreement and
the Parlin Operating Guaranty, each in form and substance satisfactory to
Agent.
(ee) Debt Service Reserve Account. The Debt Service Reserve
Account shall have been funded with Cash Revenues in an amount which when
added to the Debt Service Line of Credit Facility Commitment is equal to
the Debt Service Reserve Required Balance.
(ff) Maintenance Reserve Account; Capital Improvements Reserve
Account. The Maintenance Reserve Account shall have been funded in an
amount equal to the Maintenance Reserve Required Deposit, and the Capital
Improvements Reserve Account shall have been funded in an amount equal to
the Capital Improvements Reserve Required Deposit.
(gg) [Intentionally Omitted].
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(hh) [Intentionally Omitted].
(ii) Assignment of DuPont Power Purchase Contract; Agreements
and Approvals Pursuant to Parlin Power Purchase Agreement. The Electricity
Purchase Contract, dated January 18, 1988 between DuPont and O'Brien
(Parlin) Cogeneration, Inc. (as the same may be assigned by NRG Parlin to
NPI, the "DuPont Power Purchase Agreement") shall have been assigned by NRG
Parlin in its entirety to NPI and NPI shall have entered into a wholesale
power purchase agreement with NRG Parlin (the "Wholesale Power Purchase
Agreement"), substantially on the same terms as the DuPont Power Purchase
Agreement, and NRG Parlin shall have delivered to Agent a certificate to
the effect of the foregoing. Further, the Parlin Power Purchase Agreement
shall have been amended to reflect, or JCP&L shall have consented in
writing to, the assignment by NRG Parlin of the DuPont Power Purchase
Agreement and the entering into of the Wholesale Power Purchase Agreement.
NRG Parlin shall also have obtained all required approvals contemplated
under Article 2 of the Parlin Power Purchase Agreement, including, without
limitation, approval from the BPU.
(jj) Inventories. NRG Parlin and NRG Newark shall have
delivered to Agent a list of inventories and spare parts existing for their
respective Projects, along with a certificate of Operator as to the
accuracy of such lists, which lists shall be satisfactory to the
Independent Engineer.
(kk) Assignment of Gas Contract With PSE&G. The Gas Service
Agreement, dated May 13, 1993, between O'Brien (Parlin) Cogeneration, Inc.
and PSE&G shall have been assigned to JCP&L and NRG Parlin shall have no
obligation or liability under such agreement, and NRG Parlin shall have
delivered to Agent a certificate to this effect. Further, NRG Parlin shall
have delivered to Agent a certified copy of the Assignment of Gas Service
Agreement dated as of April 30, 1996 by and among O'Brien (Parlin)
Cogeneration, Inc., PSE&G and JCP&L.
(ll) Environmental Permits. NRG Parlin shall have delivered to
Agent a plan for the discharge of stormwater from the Parlin Plant in the
event that the Parlin Plant is prevented from continuing to use the DuPont
stormwater management system. Such plan shall include the reasonable cost
and time necessary to effect the changes described in the plan and shall be
in form and substance satisfactory to Agent.
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(mm) Default. No Default or Event of Default shall have
occurred and be continuing as of the Additional Funding Date nor shall the
making of the Initial Loan, the Additional Loan or the Commitments result
in a Default or Event of Default, and Borrower shall have delivered to
Agent a certificate to this effect; provided that notwithstanding any other
provision to the contrary, any event, occurrence, condition, act or
omission relating to the Parlin Project, NRG Parlin, Parlin Obligors or
Parlin Project Agreements that occurred during the Additional Commitment
Period and that would have constituted a Default or Event of Default
hereunder if it had occurred after the Additional Funding Date shall be
deemed to constitute a Default or Event of Default, as the case may be, for
purposes of this Section 3.3.
(nn) EWG. NRG Parlin shall have received certification from the
FERC of EWG status in a final order.
(oo) FERC Approvals. NRG Parlin shall have filed at FERC for
approval of the rates in the Parlin Power Purchase Agreement and the
Wholesale Power Purchase Agreement, on a market-rate or cost of service
basis and shall have received FERC approval for the effectiveness of the
rates in a final and non-appealable order (provided that such order may be
appealable by Borrower). NRG Parlin shall also have filed at FERC for
approval to incur obligations under this Agreement pursuant to Section 204
of the FPA and shall have obtained such approval from the FERC in a final
and non-appealable order, or shall have otherwise obtained a blanket
approval from FERC to issue securities or assume liabilities under
Section 204 of the FPA in a final and non-appealable order. NRG and
Guarantor shall jointly have filed at FERC for approval under Section 203
of the FPA for NRG to appoint a fourth director to the board of the
directors of Guarantor and shall have obtained such approval from the FERC.
(pp) No Action Letter. NPI shall have obtained a no-action
letter from the SEC staff in connection with the sale by NPI of electricity
to DuPont.
(qq) Initial Funding. The Initial Funding Date shall have
occurred.
(rr) Violations of Air Permit. If, as of the Additional Funding
Date, NRG Parlin has not entered into an administrative consent order with,
or shall have received a settlement letter or similar document from, the
New Jersey Department of Environmental Protection (the "NJDEP")
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evidencing the NJDEP's final terms and conditions for resolving all matters
relating to the letter dated April 22, 1996 from Robert Evans to Iclal Atay
and Harold Christiff of the NJDEP (the "NOx Exceedances"), NRG Parlin shall
have delivered to Agent a full report on the status of such matters,
including all information concerning (i) potential future penalties, and
(ii) any other conditions or requirements which the NJDEP has revealed it
is considering. There shall have been no settlement or resolution of the
NOx Exceedances which could reasonably be expected to result in a Material
Adverse Effect on the Parlin Project, nor in the reasonable judgment of the
Agent shall there be a significant risk arising out of any facts,
circumstances or matters that occur, or that Agent becomes aware of, with
respect to the Parlin Project after the Inital Funding Date, that any such
settlement or resolution will occur in the future.
(ss) Five-year Operating Certificates. If NRG Parlin has not
yet obtained five-year operating certificates for the Parlin Plant, NRG
Parlin shall have delivered to Agent evidence satisfactory to Agent that it
has taken all steps necessary for obtaining such certificates, other than
with respect to resolution of issues in connection with the NOx
Exceedances, and that the temporary operating certificates for the Parlin
Plant remain in full force and effect. NRG Parlin shall also submit a plan
of action for obtaining five-year operating certificates for the Parlin
Plant, which plan shall be satisfactory to Agent.
(tt) Amended Emissions Reports. NRG Parlin shall have filed
with the NJDEP amended emission reports and, as required, new emissions
reports reflecting the information known about the NOx Exceedances.
(uu) NPI Account. (i) NPI shall have established with Agent an
account into which DuPont shall directly deposit all amounts payable to NPI
under the DuPont Power Purchase Agreement, and such amounts shall
thereafter be withdrawn and transferred by Agent into the Project Account
as an item of Cash Revenues or (ii) NPI shall have established an account
with any bank or financial institution into which DuPont shall directly
deposit all amounts payable to NPI under the DuPont Power Purchase
Agreement, and NPI, Agent and such bank or financial institution shall have
entered into a blocked account agreement, in form and substance
satisfactory to Agent, which shall provide for the transfer of all amounts
in such blocked account to the Project Account only.
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ARTICLE IV
Representations and Warranties
In order to induce Agent and each Lender to enter into this
Agreement and to induce each Lender to make the Loans hereunder, each
Borrower represents and warrants to Agent and each Lender that the
following statements, after giving effect to the making of the Loans and
the Commitments and the consummation of the Acquisition, will be true,
correct and complete on and as of the Initial Funding Date, except with
respect to Sections 4.1(b)(ii), 4.2, 4.3(b), 4.4(b), 4.5(b), 4.6(b),
4.9(b), 4.12(b), 4.39 and 4.44, which representations and warranties will
be true, correct and complete with respect to NRG Parlin, the Parlin
Project, the Parlin Project Agreements and the Parlin Obligors on and as of
the Additional Funding Date:
Section 4.1 Organization; Capitalization. (a) Borrower is duly
organized and validly existing under the Laws of the jurisdiction of its
formation, and is properly qualified to do business and in good standing in
every jurisdiction where the failure to maintain such qualification or good
standing could reasonably be expected to result in a Material Adverse
Effect.
(b)(i) The authorized capital stock or other equity interests of
NRG Newark is as set forth on Schedule 4.1(b). All issued and outstanding
shares of capital stock of NRG Newark are duly authorized and validly
issued, fully paid, nonassessable, free and clear of all Liens other than
those granted under the Newark Security Documents, and such shares were
issued in compliance with all applicable state, federal and foreign Laws
concerning the issuance of securities or, if the issuance of such shares is
not is compliance with such Laws, such non-compliance could not reasonably
be expected to result in a Material Adverse Effect. No shares of the
capital stock of or other equity interests of NRG Newark, other than those
described above, are issued and outstanding. There are no preemptive or
other outstanding rights, options, warrants, conversion rights or similar
agreements or understandings for the purchase or acquisition from NRG
Newark of any shares of capital stock or other securities or other equity
interests of NRG Newark.
(ii) As of the Additional Funding Date, the authorized capital
stock or other equity interests of NRG Parlin is as set forth on
Schedule 4.1(b). As of the Additional Funding Date, all issued and
outstanding shares of capital stock of NRG Parlin are duly authorized and
validly
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issued, fully paid, nonassessable, free and clear of all Liens other than
those granted under the Parlin Security Documents, and such shares were
issued in compliance with all applicable state, federal and foreign Laws
concerning the issuance of securities or, if the issuance of such shares is
not is compliance with such Laws, such non-compliance could not reasonably
be expected to result in a Material Adverse Effect. As of the Additional
Funding Date, no shares of the capital stock of or other equity interests
of NRG Parlin, other than those described above, are issued and
outstanding. As of the Additional Funding Date, there are no preemptive or
other outstanding rights, options, warrants, conversion rights or similar
agreements or understandings for the purchase or acquisition from NRG
Parlin of any shares of capital stock or other securities or other equity
interests of NRG Parlin.
Section 4.2 Authorization of Loan Instruments. The execution,
delivery and performance of each of the Project Agreements to which a
Borrower is a party are within its respective corporate powers and have
been duly authorized. Each of the Newark Project Agreements to which NRG
Newark is a party has been validly executed and delivered by NRG Newark.
As of the Additional Funding Date, each of the Parlin Project Agreements to
which NRG Parlin is a party shall have been validly executed and delivered
by NRG Parlin.
Section 4.3 Governmental Approvals. (a) The execution, delivery
and performance of each of the Newark Project Agreements to which NRG
Newark is a party, the granting of the Liens by NRG Newark and the making
of the Loans and the Commitments do not and will not require any
registration with, consent or approval of, or notice to, or other action
with or by, any Governmental Authority, regulatory body or any other Person
which has not been made or obtained and in full force and effect, except
for filings required by federal or state securities laws (which filings
have been made and true and complete copies of which have been delivered to
Agent, including, without limitation, all filings under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and all New Jersey
asset transfer approvals) and, until the earlier of the Additional Funding
Date and the Initial Maturity Date, set forth in Schedule 5.40 hereof. All
Governmental Approvals, other than ministerial Governmental Approvals,
required under Law in connection with the operation, maintenance and
ownership of the Newark Project (including, without limitation, (i) those
necessary for the operation of the Newark Project at levels satisfactory to
Agent after consultation with the Independent Engineer and (ii) those
necessary for the installation and
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operation of an auxiliary boiler on the Newark Group plant site as required
in the Stipulation of Settlement, but excluding those required for the
initial construction or the restoration of the Newark Project after the
fire at the Newark Project) now, or to the knowledge of NRG Newark, in the
future, are set forth in Schedule 4.3A. Except for the Governmental
Approvals set forth in Part II of Schedule 4.3A with respect to the Newark
Project, each of such Governmental Approvals has been obtained, is validly
issued, is in full force and effect, is not subject to appeal by any Person
other than NRG Newark (other than the orders of the BPU approving the Third
Amendment to the Newark Power Purchase Agreement and the Interim Gas
Service Agreement on and as of the Initial Funding Date) and, to the best
of NRG Newark's knowledge, is free from conditions or requirements
compliance with which could reasonably be expected to result in a Material
Adverse Effect. There is no proceeding pending or, to the best knowledge
of NRG Newark, threatened which is reasonably likely to result in the
rescission, revocation, material modification, suspension or determination
of invalidity or limitation of effectiveness of any such Governmental
Approval. The information set forth in each application and other written
material submitted by or on behalf of NRG Newark or, to the best knowledge
of NRG Newark, submitted by or on behalf of each Newark Obligor (other than
NRG Newark) to the applicable Governmental Authority in connection with
each such Governmental Approval is accurate and complete in all material
respects. NRG Newark has no reason to believe that any Governmental
Approval that has not been obtained, but which will be required in the
future, for the Newark Project, will not be granted in due course, on or
prior to the date when required (unless the failure to obtain such
Governmental Approvals could not reasonably be expected to result in a
Material Adverse Effect), and such Governmental Approvals shall be free
from any condition or requirement, the compliance with which could
reasonably be expected to result in a Material Adverse Effect or which NRG
Newark does not reasonably expect to be able to satisfy. The Newark Project
complies in all respects with all covenants, conditions, restrictions and
reservations in the Governmental Approvals relating to the Newark Project
and the Newark Project Documents applicable thereto and all Laws applicable
thereto, all to the extent necessary to avoid a Material Adverse Effect.
(b) As of the Additional Funding Date, the execution, delivery
and performance of each of the Parlin Project Agreements to which either
NRG Parlin or Guarantor is a party, the granting of the Liens by either NRG
Parlin or Guarantor and the making of the Loans and the Commitments do
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not and will not require any registration with, consent or approval of, or
notice to, or other action with or by, any Governmental Authority,
regulatory body or any other Person which has not been made or obtained and
in full force and effect, except for filings required by federal or state
securities laws (which filings have been made and true and complete copies
of which have been delivered to Agent, including, without limitation, all
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and all New jersey asset transfer approvals). As of the
Additional Funding Date, all Governmental Approvals, other than ministerial
Governmental Approvals, required under Law in connection with the
operation, maintenance and ownership of the Parlin Project (including,
without limitation, those necessary for the operation of the Parlin Project
at levels satisfactory to Agent after consultation with the Independent
Engineer) now, or to the knowledge of NRG Newark, in the future, are set
forth in Schedule 4.3B. As of the Additional Funding Date, except for the
Governmental Approvals set forth in Part II of Schedule 4.3B with respect
to the Parlin Project, each of such Governmental Approvals has been
obtained, is validly issued, is in full force and effect, is not subject to
appeal by any Person except Borrower and, to the best of NRG Parlin's
knowledge, is free from conditions or requirements compliance with which
could reasonably be expected to result in a Material Adverse Effect. As of
the Additional Funding Date, there is no proceeding pending or, to the best
knowledge of NRG Parlin, threatened which is reasonably likely to result in
the rescission, revocation, material modification, suspension or
determination of invalidity or limitation of effectiveness of any such
Governmental Approval. As of the Additional Funding Date the information
set forth in each application and other written material submitted by or on
behalf of NRG Parlin or, to the best knowledge of NRG Parlin, submitted by
or on behalf of each Parlin Obligor (other than the NRG Parlin) to the
applicable Governmental Authority in connection with each such Governmental
Approval is accurate and complete in all material respects. As of the
Additional Funding Date, NRG Parlin has no reason to believe that any
Governmental Approval that has not been obtained, but which will be
required in the future, for the Parlin Project, will not be granted in due
course, on or prior to the date when required (unless the failure to obtain
such Governmental Approvals could not reasonably be expected to result in a
Material Adverse Effect), and such Governmental Approvals shall be free
from any condition or requirement, the compliance with which could
reasonably be expected to result in a Material Adverse Effect or which NRG
Parlin does not reasonably expect to be able to satisfy. As of the
Additional Funding Date the
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Parlin Project complies in all respects with all covenants, conditions,
restrictions and reservations in the Governmental Approvals relating to the
Parlin Project and the Parlin Project Documents applicable thereto and all
Laws applicable thereto, all to the extent necessary to avoid a Material
Adverse Effect.
Section 4.4 No Conflicts. (a) The execution, delivery and
performance of the Newark Project Agreements to which NRG Newark is a party
and the Governmental Approvals and the Insurance Policies and the
transactions contemplated hereunder and the making of the Loans and the
provision of the Commitments will not (i) violate (A) the certificate of
incorporation or by-laws (or comparable documents) of NRG Newark, (B) any
Law applicable to NRG Newark, violation of which could reasonably be
expected to result in a Material Adverse Effect or (C) any provision of any
contract, agreement, indenture or instrument to which NRG Newark is a party
or by which any of its respective properties is bound, the violation of
which could reasonably be expected to result in a Material Adverse Effect
or (ii) be in conflict with, or result in a breach of or constitute a
default under, any contract, agreement, indenture or instrument referred to
in Section 4.4(a)(i)(C) above or (iii) violate the provisions of the Newark
Project Agreements or (iv) result in the creation or imposition of any Lien
on the Newark Project, except Permitted Liens or (v) give to any Person
rights to cancel, terminate or suspend performance of its obligations to
NRG Newark under, or accelerate payments of amounts owed by NRG Newark to
others under, any contract, agreement, indenture or instrument referred to
in Section 4.4(a)(i)(C).
(b) As of the Additional Funding Date, the execution, delivery
and performance of the Project Agreements to which NRG Parlin is a party
and the Governmental Approvals and the Insurance Policies and the
transactions contemplated hereunder and the making of the Loans and the
provision of the Commitments will not (i) violate (A) the certificate of
incorporation or by-laws (or comparable documents) of NRG Parlin, (B) any
Law applicable to NRG Parlin, violation of which could reasonably be
expected to result in a Material Adverse Effect or (C) any provision of any
contract, agreement, indenture or instrument to which NRG Parlin is a party
or by which any of its respective properties is bound, the violation of
which could reasonably be expected to result in a Material Adverse Effect
or (ii) be in conflict with, or result in a breach of or constitute a
default under, any contract, agreement, indenture or instrument referred to
in Section 4.4(b)(i)(C) above or (iii) violate any provision of the Parlin
Project Agreements or (iv) result in the creation
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or imposition of any Lien on the Parlin Project, except Permitted Liens or
(v) give to any Person rights to cancel, terminate or suspend performance
of its obligations to NRG Parlin under, or accelerate payments of amounts
owed by NRG Parlin to others under, any contract, agreement, indenture or
instrument referred to in Section 4.4(b)(i)(C).
Section 4.5 Enforceability of Project Agreements. (a) Each
Newark Project Agreement to which NRG Newark is a party is a legal, valid
and binding agreement of NRG Newark enforceable against NRG Newark in
accordance with its respective terms, except to the extent enforceability
may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of
creditors' rights (other than the Bankruptcy Case) and subject to general
equitable principles.
(b) As of the Additional Funding Date, each Parlin Project
Agreement to which NRG Parlin is a party is a legal, valid and binding
agreement of NRG Parlin enforceable against NRG Parlin in accordance with
its respective terms, except to the extent enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights (other than the
Bankruptcy Case) and subject to general equitable principles.
Section 4.6 Title to Property; Sufficiency of Assets. (a) NRG
Newark has good, valid and sufficient (i) leasehold estate in and to the
Leasehold Premises (as such term is defined in the Newark Mortgage), (ii)
right to use and enjoy the Easements (as such term is defined in the Newark
Mortgage), (iii) title to the Improvements and Equipment (such terms are as
defined in the Newark Mortgage), and (iv) title to all other portions of
the Mortgaged Property (as such term is defined in the Newark Mortgage), in
each case free and clear of all Liens, except for Permitted Liens. The
services to be performed, the materials to be supplied and the easements,
licenses and other rights granted or to be granted to NRG Newark pursuant
to the terms of the Newark Project Documents and Governmental Approvals for
the Newark Project provide or will provide NRG Newark with all rights and
property interests required to enable NRG Newark to obtain all services,
materials or rights (including access) required for the operation and
maintenance of the Newark Project, including NRG Newark's full and prompt
performance of its obligations, and full and timely satisfaction of all
conditions precedent to the performance by others of their obligations,
under the Newark Project Documents and Governmental Approvals for the
Newark Project,
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other than those services, materials or rights that reasonably can be
expected to be obtainable in the ordinary course of business without
material additional expense or material delay.
(b) As of the Additional Funding Date, NRG Parlin has good,
valid and sufficient (i) leasehold estate in and to the Leasehold Premises
(as such term is defined in the Parlin Mortgage), (ii) right to use and
enjoy the Easements (as such term is defined in the Parlin Mortgage), (iii)
title to the Improvements and Equipment (such terms are as defined in the
Parlin Mortgage), and (iv) title to all other portions of the Mortgaged
Property (as such term is defined in the Parlin Mortgage), in each case
free and clear of all Liens, except for Permitted Liens. As of the
Additional Funding Date, the services to be performed, the materials to be
supplied and the easements, licenses and other rights granted or to be
granted to NRG Parlin pursuant to the terms of the Parlin Project Documents
and Governmental Approvals for the Parlin Project provide or will provide
NRG Parlin with all rights and property interests required to enable NRG
Parlin to obtain all services, materials or rights (including access)
required for the operation and maintenance of the Parlin Project, including
NRG Parlin's full and prompt performance of its obligations, and full and
timely satisfaction of all conditions precedent to the performance by
others of their obligations, under the Parlin Project Documents and
Governmental Approvals for the Parlin Project, other than those services,
materials or rights that reasonably can be expected to be obtainable in the
ordinary course of business without material additional expense or material
delay
Section 4.7 Compliance with Laws. Each Borrower is in
compliance with all Laws, other than those Laws the non compliance with
which could not reasonably be expected to result in a Material Adverse
Effect.
Section 4.8 No Litigation. Except as disclosed on Schedule 4.8,
there are no actions, suits, proceedings, claims or disputes pending or, to
the best of Borrower's knowledge, threatened against or affecting either
Borrower or any of their respective properties or assets before any
arbitrator or other Governmental Authority. There is no injunction, writ,
preliminary restraining order or any order of any nature issued by an
arbitrator or other Governmental Authority directing that any material
aspect of the transactions provided for in any of the Loan Instruments or
Acquisition Documents not be consummated as herein or therein provided.
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Section 4.9 Events of Default. (a) No event has occurred or
would result from the incurring of obligations under any Newark Loan
Instrument which is, or upon the lapse of time or notice or both would
become, an Event of Default. NRG Newark is not in default under or with
respect to any contractual obligation in any respect, the default of which
could reasonably be expected to result in a Material Adverse Effect. NRG
Newark is not in default under any order, award or decree of any court,
arbitrator or Governmental Authority binding upon or affecting it or by
which any of its properties or assets is bound or affected, the default of
which could reasonably be expected to result in a Material Adverse Effect.
NRG Newark has not received notice of, and neither Borrower is aware of,
the occurrence of any event of force majeure with respect to the Newark
Project.
(b) As of the Additional Funding Date, no event has occurred or
would result from the incurring of obligations under any Parlin Loan
Instrument which is, or upon the lapse of time or notice or both would
become, an Event of Default. As of the Additional Funding Date, NRG Parlin
is not in default under or with respect to any contractual obligation in
any respect, the default of which could reasonably be expected to result in
a Material Adverse Effect. As of the Additional Funding Date, NRG Parlin
is not in default under any order, award or decree of any court, arbitrator
or Governmental Authority binding upon or affecting it or by which any of
its properties or assets is bound or affected, the default of which could
reasonably be expected to result in a Material Adverse Effect. As of the
Additional Funding Date, NRG Parlin has not received notice of, and neither
Borrower is aware of, the occurrence of any event of force majeure with
respect to the Parlin Project.
Section 4.10 Financial Condition.
(a) The consolidated draft unaudited balance sheet of Guarantor
as at June 30, 1994 and June 30, 1995 and the related consolidated
statements of operations and retained earnings and changes in financial
position for the fiscal years ended on such dates, prepared by the chief
financial officer of Guarantor as of the date of such financial statements,
copies of which have heretofore been furnished to Agent, with sufficient
copies for each Lender, are complete and correct and present fairly the
consolidated financial condition of Guarantor and each Borrower as at such
dates, and the consolidated results of its operations and changes in
financial position for the fiscal years then ended. The separate draft
unaudited balance sheets of each Borrower as at December 31, 1995 and June
30, 1995 and the related
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statements of operations and retained earnings and changes in financial
position for the fiscal years ended on such dates, prepared by the chief
financial officer of such Borrower as of the date of such financial
statements, copies of which have heretofore been furnished to Agent, with
sufficient copies for each Lender, are complete and correct and fairly
present the financial condition of such Borrower as at such dates, and the
results of its operations and changes in financial position for the fiscal
years then ended. Such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by
such accountants and as disclosed therein). Each Borrower is (and after
giving effect to the transactions contemplated by the Loan Instruments and
the Acquisition Documents will be) Solvent.
(b) Except as fully reflected in the financial statements
referred to above and agreements entered into in the ordinary course of
business which are not required to be reflected in such financial
statements in accordance with GAAP, or as contemplated by this Agreement,
there are no liabilities or obligations with respect to either Borrower or
Guarantor of any nature whatsoever (whether absolute, accrued, contingent
or otherwise and whether or not due) for the period to which such financial
statements relate.
Section 4.11 No Material Adverse Effect. Since June 30, 1995,
there has been no Material Adverse Effect.
Section 4.12 Security Interests. (a) Except to the extent
Consents set forth in Schedule 5.40 are required to create a first priority
perfected security interest in the Newark Project Documents, the security
interests created in favor of Agent on behalf of the Secured Parties
hereunder and under the Newark Security Documents are valid and perfected,
first-priority security interests (subject only to Permitted Liens)
superior and prior to the rights of all Persons (except those rights of the
holders of Permitted Liens), whether the property subject to the security
interests is now owned by NRG Newark or Guarantor or is hereafter acquired.
The Newark Security Documents (including the UCC financing statements) have
been duly filed, recorded and/or registered in each office and in each
jurisdiction where required to create and perfect the lien and security
interest described above. The chief executive office of each of NRG Newark
and Guarantor, as such term is used in the uniform commercial code adopted
in the State of New Jersey, is located in the State of Minnesota, the
principal place of business of each of NRG Newark and Guarantor is located
in the States of New
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Jersey, Delaware or Minnesota, and the offices where each of NRG Newark and
Guarantor keeps its records regarding the Collateral covered by the
Security Documents are located in the States of New Jersey, Delaware or
Minnesota, and such locations are the sole offices or places of business
maintained by each of them as of the date hereof. To the best of NRG
Newark's knowledge none of NRG Newark or Guarantor have transacted any
business under any name other than those set forth in Schedule 4.12.
(b) As of the Additional Funding Date, the security interests
created in favor of Agent on behalf of the Secured Parties hereunder and
under the Parlin Security Documents are valid and perfected, first-priority
security interests (subject only to Permitted Liens) superior and prior to
the rights of all Persons (except those rights of the holders of Permitted
Liens), whether the property subject to the security interests is now owned
by NRG Parlin or Guarantor or is hereafter acquired. As of the Additional
Funding Date, the Security Documents (including the UCC financing
statements) have been duly filed, recorded and/or registered in each office
and in each jurisdiction where required to create and perfect the lien and
security interest described above. As of the Additional Funding Date, the
chief executive office of each of NRG Parlin and Guarantor, as such term is
used in the uniform commercial code adopted in the State of New Jersey, is
located in the State of Minnesota, the principal place of business of each
of NRG Parlin and Guarantor is located in the States of New Jersey,
Delaware or Minnesota, and the offices where each of NRG Parlin and
Guarantor keeps its records regarding the Collateral covered by the
Security Documents are located in the States of New Jersey, Delaware or
Minnesota, and such locations are the sole offices or places of business
maintained by each of them as of the date hereof. As of the Additional
Funding Date, to the best of NRG Parlin's knowledge none of NRG Parlin or
Guarantor have transacted any business under any name other than those set
forth in Schedule 4.12.
Section 4.13 No Burdensome Restrictions;. No Contractual
Obligation of either Borrower and no Requirement of Law has, or is
reasonably expected to have, in light of all facts and circumstances of
which either Borrower has actual knowledge, a Material Adverse Effect, it
being understood that the mere existence of traditional project finance
contractual provisions which provide lenders with security interests and
restrictive covenants, including the ability to restrict cash
distributions, would not constitute a burdensome restriction hereunder.
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Section 4.14 Taxes. All tax returns which are required to be
filed in respect of each Borrower, and all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than those the amount or
validity of which is currently being contested in a Good Faith Contest and
with respect to which reserves in conformity with GAAP have been provided
on the books of such Borrower) have been filed and paid on behalf of the
Borrower; and no tax Liens have been filed and, to the knowledge of
Borrower, no claims are being asserted with respect to any such taxes, fees
or other charges which are material either as to amount or potentially
adverse effect when considered with respect to the financial and business
condition of such Borrower. As of the Additional Funding Date, Guarantor,
Borrower and Agent have entered into an indemnification agreement ("Tax
Indemnification Agreement") substantially in the form of Exhibit K attached
hereto, whereby Guarantor has unconditionally and irrevocably agreed to
indemnify Borrower for all income and franchise taxes that may be imposed
on either Borrower by any Governmental Authority.
Section 4.15 ERISA and IRC Compliance and Liability. To the
best of its knowledge and belief, each Borrower and each ERISA Affiliate is
in compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder with respect to all Employee
Benefit Plans and, to the extent that such compliance is required of such
Borrower or such ERISA Affiliate, with respect to all Multiemployer Plans
except for any required amendments for which the remedial amendment period
as defined in Section 401(b) of the IRC has not yet expired. Each Employee
Benefit Plan and Multiemployer Plan that is intended to be qualified under
Section 401(a) of the IRC has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the IRC or an application
for determination letter confirming such qualification and exemption is
pending or will be filed prior to the expiration of the applicable remedial
amendment period as defined in Section 401(b) of the IRC. To the best of
its knowledge and belief, no material liability has been incurred by either
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan.
Section 4.16 Funding. No Pension Plan has been terminated, nor
has any accumulated funding deficiency (as defined in Section 412 of the
IRC) been incurred (without
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regard to any waiver granted under Section 412 of the IRC), nor has any
funding waiver from the IRS been received or requested with respect to any
Pension Plan, nor, to the best of its knowledge and belief, has either
Borrower or any ERISA Affiliate failed to make any contributions or to pay
any amounts due and owing as required by Section 412 of the IRC,
Section 302 of ERISA or the terms of any Pension Plan prior to the due
dates of such contributions under Section 412 of the IRC or Section 302 of
ERISA, nor has there been any event requiring any disclosure under
Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan.
Section 4.17 Prohibited Transactions and Payments. None of
Borrower and Guarantor or, in the case of clauses (b) through (d) hereof,
any ERISA Affiliate has, to the best of its knowledge and belief:
(a) engaged in a nonexempt prohibited transaction described in Section 406
of ERISA or Section 4975 of the IRC; (b) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid; (c) failed to make a required
contribution or payment to a Multiemployer Plan; or (d) failed to make a
required installment or other required payment under Section 412 of the
IRC.
Section 4.18 No Termination Event. No Termination Event has
occurred or is reasonably expected to occur.
Section 4.19 ERISA Litigation. No proceeding, claim, lawsuit
and/or investigation is existing or, to the knowledge of either Borrower,
threatened concerning or involving any (a) employee welfare benefit plan
(as defined in Section 3(1) of ERISA) currently maintained or contributed
to by either Borrower or any ERISA Affiliate to which either Borrower or
Guarantor may have liability, (b) Pension Plan or (c) to the knowledge of
either Borrower, Multiemployer Plan which could reasonably be expected to
have a Material Adverse Effect.
Section 4.20 No Other Obligations. Except as set forth on
Schedule 4.20, none of Borrower and Guarantor has any obligation to provide
post-retirement welfare benefits under any Employee Benefit Plan or other
plan or agreement, except for benefits due (i) under employee pension
benefit plans (as defined in Section 3(2) of ERISA), (ii) to its disabled
employees, (iii) under Section 4980B of the IRC or Section 601 et seq. of
ERISA, or (iv) as otherwise required by law.
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Section 4.21 Margin Regulations. Neither Borrower is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation G, T, U, or X of the Board
of Governors of the Federal Reserve System) and no proceeds of any Loan
will be used in a manner which would violate, or result in a violation of,
such Regulation G, T, U, or X.
Section 4.22 Investment Company Act. Neither Borrower is an
"investment company" nor a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Section 4.23 Environmental Matters. (i) Except as described in
Schedule 4.23 hereto, no Hazardous Material has been or is currently
located at, in, on, under or about the Property (or any other property with
respect to which either Borrower has or may have liability either
contractually or by operation of law) in a manner which violates any
applicable Environmental Requirement, or for which cleanup or corrective
action of any kind is required or authorized under any applicable
Environmental Requirement;
(ii) no substantial risk to human health or the environment
exists as a result of any condition on the Property; no Release of any
Hazardous Material from the Property onto or into any other property or
from any other property onto or into the Property has occurred or is
occurring in violation of any applicable Environmental Requirement except
as described in Schedule 4.23 hereto, or which could pose a substantial
risk to human health or the environment;
(iii) no notice of violation, Lien, complaint, suit, order or
other notice with respect to the environmental condition of the Property
(or any other property with respect to which either Borrower has or may
have liability either contractually or by operation of law) is outstanding
or anticipated, nor has any such notice been issued which has not been
fully satisfied and complied with in a timely fashion so as to bring the
Property (or any other property with respect to which either Borrower has
or may have retained or assumed liability either contractually or by
operation of law) into full compliance with every applicable Environmental
Requirement except as described in Schedule 4.23 hereto.
Section 4.24 Disclosure. No representation or warranty of
either Borrower contained in any Loan Instrument, or any other document,
certificate or written statement set
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forth on Schedule 4.24 contained as of the date made any untrue statement
of a fact or omitted, omits or will omit to state a fact necessary in order
to make the statements contained herein or therein, when taken as a whole,
not misleading in any respect in light of the circumstances in which, and
on the date on which, the same were made. There is no fact known to either
Borrower which has not been disclosed in writing to Agent and which
materially adversely affects, or which could reasonably be expected in the
future to materially adversely affect, the properties, business, prospects
or financial condition of either Borrower or either Project.
Section 4.25 Insurance. Schedule 4.25 hereto sets forth a
complete and accurate description of all material policies of insurance
that will be in effect as of the Initial Funding Date for NRG Newark and as
of the Additional Funding Date for NRG Newark and NRG Parlin. To the best
of Borrower's knowledge, such policies are with companies rated "A-" or
better by Best's Insurance Guide and Key Rating or other insurance
companies of recognized responsibility satisfactory to Agent, and the
coverages provided by such policies are in amounts and cover such risks as
are usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which each Borrower
operates and, in any event the insurance coverages shall not be less than
the insurance coverages set forth in Schedule 4.25.
Section 4.26 Labor Matters. There are no strikes or other labor
disputes or grievances or charges or complaints with respect to any
employee or group of employees pending or, to the best of either Borrower's
knowledge, threatened against a Borrower.
Section 4.27 Additional Representations and Warranties and
Conditions Precedent. All representations and warranties set forth in each
Project Agreement and each writing delivered to any of the Secured Parties
pursuant hereto or thereto made by either Borrower, or to the best of
either Borrower's knowledge, any other Obligor are true and correct as
though made as of the date hereof or, if not true and correct, could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.28 Transactions With Affiliates. Set forth on
Schedule 4.28 is a true, accurate and complete description of all
transactions between a Borrower and any Affiliate of either Borrower or
Guarantor since June 30, 1995 which required or which will require in the
case of either
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Borrower, the payment by such Borrower of an amount equal to or greater
than $100,000 during any twelve-month period.
Section 4.29 Projections. The Projections have been prepared by
Borrower and Guarantor on the basis of assumptions which are set forth
therein and which are acceptable to Agent, and (i) the assumptions related
thereto have been made in good faith with due care, (ii) the Projections,
taken as a whole, represent the best estimates of Borrower and Guarantor as
of the date such Projections are delivered to Agent pursuant to Article III
and based on the assumptions set forth therein, which assumptions are, to
the best of Borrower's and Guarantor's knowledge, realistic and achievable,
as to the matters covered thereby as of such date, it being understood and
acknowledged that the Projections do not represent a guarantee that the
Borrower will be able to achieve the results described in the Projections,
(iii) the Projections are based on reasonable assumptions as to all factual
and legal matters material to the estimates therein (including interest
rates and costs), (iv) the Projections are in all material respects
consistent with, and will be in all material respects consistent with, the
material provisions of Project Agreements and the Governmental Approvals,
and (v) the Projections reflect the transactions contemplated by the
Project Agreements. Each Borrower intends to conduct its business, to the
extent reasonably practicable, in order to achieve the Projections.
Section 4.30 Patents and Other Similar Property. Each Borrower
owns or has the right to use all patents, trademarks, service marks, trade
names, copyrights, licenses and other rights, which are necessary for the
ownership, operation and maintenance of its Project. No product, process,
method, substance, part or other material presently contemplated to be sold
by or used or employed by either Borrower in connection with its business
does or will infringe any patent, trademark, service mark, trade name,
copyright, license or other right owned by any other Person; there is no
claim or litigation pending or, to the best of each Borrower's knowledge,
threatened against or affecting either Borrower contesting its right to
sell, use or employ any such product, process, method, substance, part or
other material.
Section 4.31 Bank Accounts. Schedule 4.31 sets forth the
account numbers and location of all bank accounts of each Borrower.
Section 4.32 Sources and Uses. The Sources and Uses Table
delivered to Agent on or prior to the Initial
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Funding Date accurately specifies, to the best of each Borrower's
knowledge, all Qualifying Costs and costs incurred in connection with each
Project during the period through and including the Initial Funding Date.
As of the Additional Funding Date, the Sources and Uses Table delivered to
Agent during the Additional Commitment Period accurately specifies, to the
best of each Borrower's knowledge, all Qualifying Costs and costs incurred
in connection with each Project during the period through and including the
Additional Funding Date.
Section 4.33 Operating Budget. The proposed Newark Operating
Budget prepared for each month of the period commencing on the Initial
Funding Date and ending on December 31, 1996 is attached hereto as Schedule
4.33A and is, to the best of Borrower's knowledge, a complete, fair and
accurate projection of projected Gross Revenues and projected Operating
Costs for the Newark Project for such period, it being understood and
acknowledged that the projected Gross Revenues and projected Operating
Costs set forth in the Newark Operating Budget do not represent a guarantee
that NRG Newark will be able to achieve the results described in the Newark
Operating Budget. The proposed Parlin Operating Budget, prepared for each
month of the period commencing on the Initial Funding Date and ending on
December 31, 1996 is attached hereto as Schedule 4.33B and is, to the best
of Borrower's knowledge, a complete, fair and accurate projection of
projected Gross Revenues and projected Operating Costs for the Parlin
Project for such period, it being understood and acknowledged that the
projected Gross Revenues and projected Operating Costs set forth in the
Parlin Operating Budget do not represent a guarantee that Borrower will be
able to achieve the results described in the Parlin Operating Budget.
Section 4.34 Operation of the Project. Each Project will be
able to be operated on a safe and commercially sound basis in compliance
with all Governmental Requirements and applicable Project Agreements,
except in cases where the non-compliance with such Governmental
Requirements and Project Agreements could not reasonably be expected to
result in a Material Adverse Effect, so that the performance and facility
guarantees and specifications provided for in the applicable Project
Agreements and Governmental Approvals can be substantially met during the
term of this Agreement and each Borrower can duly and punctually meet its
obligations under the applicable Project Agreements and Governmental
Approvals in accordance with the terms thereof. Each Borrower has adequate
inventories and spare parts to operate its respective Project in accordance
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with the Project Agreements and the Governmental Requirements.
Section 4.35 Regulation of Parties. None of NRG Newark, NRG
Parlin, Guarantor or the Secured Parties is or will be, solely as a result
of the participation by such parties separately or as a group in the
transactions contemplated hereby or by any other Project Agreement, or by
the ownership, use or operation of either Project, subject to regulation by
any Governmental Authority as a "public utility", "electric utility", an
"electric utility holding company", a "public utility holding company", a
"holding company", or a subsidiary or affiliate of any of the foregoing
under any Governmental Requirements (including, without limitation, PUHCA
and the FPA); provided, however, that NRG Parlin alone shall be subject to
regulation as a public utility under the FPA. So long as the Newark
Project remains a Qualifying Cogeneration Facility, none of the Secured
Parties will by reason of its or their ownership or operation of the Newark
Project upon the exercise of remedies under the Newark Security Documents
be subject to financial, organizational or rate regulation by any
Governmental Authority as a "public utility", an "electric utility", and
"electric utility holding company", "holding company", or a subsidiary or
affiliate of any of the foregoing under any Governmental Requirements
(including, without limitation, PUHCA and the FPA).
Section 4.36 EWG Status/Qualifying Cogeneration Facility Status.
Each of NRG Newark and NRG Parlin is an Exempt Wholesale Generator and the
Newark Project is a Qualifying Cogeneration Facility. As of the Initial
Funding Date, each of NRG Newark and NRG Parlin has made a good faith
application for a certification of EWG status, and NRG Newark has
maintained and established by filing the QF Certificate for the Newark
Project, with such filings reflecting the intended ownership and operation
of the Newark Project or the Parlin Project, as the case may be. As of the
Initial Funding Date, the Newark Project is owned and operated in the
manner contemplated in the QF Certificate.
Section 4.37 Nature of Business. Neither Borrower (a) has
engaged in any business other than the operation of its respective Project
and (b) is a party to any contract, operating lease, agreement or
commitment which, either individually, or in the aggregate is material to
the operation of its respective Project, other than the applicable Project
Agreements.
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Section 4.38 No Material Adverse Change. To the best knowledge
of Borrower, no material adverse change in the business, operations,
results of operations, condition (financial or otherwise), prospects or
property of any Obligor has occurred (except as previously disclosed to
Agent in a writing delivered by or on behalf of Borrower or such Obligor)
since (A) the date of such Obligor's most recent audited financial
statements previously delivered to Agent, if such Obligor's financial
statements have been delivered to Agent and (B) the date which is six
months prior to the Initial Funding Date, if such Obligor's financial
statements have not been delivered to Agent.
Section 4.39 Private Offering by Borrower. It is not necessary
in connection with the initial offering, sale or delivery of any of the
Initial Loan Notes to register such Initial Loan Notes under the Securities
Act. As of the Additional Funding Date, it is not necessary in connection
with the initial offering, sale or delivery of any of the Funding Loan
Notes and the Debt Service Loan Notes to register such Funding Loan Notes
and Debt Service Loan Notes under the Securities Act.
Section 4.40 Bankruptcy. The sale price for the Acquisition was
not arrived at by collusion among the buyer and potential bidder, and the
orders of the Bankruptcy Court authorizing the Acquisition and the
transactions contemplated by the Project Agreements were not obtained
through means such as mistake, inadvertence or fraud.
Section 4.41 On-Site Alternate Fuel. Each Project includes
facilities for the storage of Alternative Fuel (including kerosene)
sufficient to meet its obligations under the applicable Project Documents
and Governmental Requirements.
Section 4.42 No Liabilities. Except as disclosed on Schedule
4.23 or Schedule 4.42, to the best of Borrower's knowledge, there are no
Liabilities above $100,000, in the aggregate, existing or threatened
against either Borrower or such Borrower's respective properties or assets
that could reasonably be expected to result in a Material Adverse Effect.
Section 4.43 Levelized Capacity Payments. NRG Parlin has
elected levelized capacity payments under the Parlin Power Purchase
Agreement.
Section 4.44 Ownership. (i) NRG Newark is the sole owner of the
Newark Project free and clear of all Liens
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(other than Permitted Liens), (ii) as of the Additional Funding Date, NRG
Parlin is the sole owner of the Parlin Project free and clear of all Liens
(other than Permitted Liens) (ii) Guarantor owns 100% of the outstanding
common stock of each Borrower free and clear of all Liens (other than
Permitted Liens), and (iii) NRG owns at least 41.86% of the outstanding
common stock of Guarantor free and clear of all Liens (other than Permitted
Liens).
ARTICLE V
Covenants of Borrower
Each Borrower hereby covenants and agrees that until payment in
full in cash of all of the Obligations or so long as any of the Commitments
shall remain available hereunder, Borrower will observe and fulfill, and
will cause to be observed and fulfilled (other than with respect to
Guarantor prior to the Additional Funding Date), each and all of the
following covenants unless Majority Lenders shall otherwise consent in
writing.
Section 5.1 The Accounts.
(a) Contingency Account. Borrower shall maintain a special
depository account (the "Contingency Account") (Account No. 376620-01) (and
such account shall be titled appropriately so as to identify the nature of
such account). Borrower agrees and shall cause the Contingency Account to
be funded with all insurance and condemnation proceeds payable to Agent in
accordance with Section 5.18.
(b) Project Account. Borrower shall maintain a special
depository account (the "Project Account") (Account No. 376620-02) (and
such account shall be titled appropriately so as to identify the nature of
such account). All Cash Revenues shall be deposited in the Project
Account. Borrower has irrevocably instructed all parties making payments
to either Borrower under the Project Documents, and shall instruct all
other parties at any time making cash payments to either Borrower, to make
such payments directly to the Project Account. Neither Borrower shall make
any withdrawal or transfer from the Project Account except in strict
adherence to the provisions of this Agreement and the Security Documents.
(c) Withdrawals from Project Account. Borrower shall make
withdrawals from the Project Account pursuant to
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the terms of this Agreement and for the purposes of satisfying the
provisions of this Section 5.1, in the following order of priority:
(i) Payment of Operating Costs: on any day after the
Initial Funding Date, withdraw and transfer directly to such payees as
Borrower specifies or to the Local Bank Account, but not more
frequently than once per month, all amounts that Borrower reasonably
determines are necessary in order to pay Operating Costs (including
Cash Expenses and the management fees payable to Operator pursuant to
the Operations and Maintenance Agreement); provided that prior written
consent of the Agent shall be required (which consent shall not be
unreasonably withheld) to transfer amounts exceeding 110% of the
amounts allocated therefor in the approved Operating Budget for such
month and, provided, further, that Borrower shall have provided a
written notice to Agent for any such transfer (whether or not Agent's
consent is required for such transfer hereunder) at least five
Business Days prior to the date of withdrawal and transfer. At the
end of each fiscal year, Agent shall withdraw all amounts in the Local
Bank Account in excess of $200,000 that are not required to pay
current Operating Costs and deposit such amounts in the Project
Account;
(ii) Payments of Fees; Interest on the Loans and Other Debt
Service: after making the withdrawals specified in clause (i) above,
on each Interest Payment Date or any other date as required, withdraw
and transfer amounts to pay (A) accrued interest on the Loans, (B)
accrued commitment fees on the Commitments, (C) any amounts payable
pursuant to the Interest Rate Hedging Agreement, (D) the Agency Fee,
and (E) any other Debt Service (other than principal on the Loans) in
each instance then due;
(iii) Principal of the Credit Facility: after making the
withdrawals specified in clauses (i) and (ii) above, (A) if the
Additional Funding Date does not occur on or prior to the Initial
Maturity Date, then on the Initial Maturity Date withdraw and transfer
amounts necessary to repay the outstanding principal amount of the
Initial Loans, plus accrued and unpaid interest and fees thereon and
(B) if the Additional Funding Date occurs on or prior to the Initial
Maturity Date, then on each Repayment Date withdraw and transfer
amounts necessary to repay Funding Loan Repayment Amounts.
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(iv) Principal of the Debt Service Line of Credit Facility:
after making the withdrawals specified in clauses (i), (ii) and (iii)
above, on each Repayment Date withdraw and transfer amounts necessary
to repay all outstanding principal amounts of the Debt Service Loans.
(v) Funding of Maintenance Reserve Account: after making
the withdrawals specified in clauses (i) through (iv) above, on each
Repayment Date withdraw and transfer for deposit in the Maintenance
Reserve Account an amount equal to the Maintenance Reserve Required
Deposit;
(vi) Funding of Debt Service Reserve Account: after making
the withdrawals specified in clauses (i) through (v) above, (A) on the
Additional Funding Date and on each Repayment Date withdraw and
transfer for deposit in the Debt Service Reserve Account (x) at all
times prior to the initial withdrawal of funds from the Debt Service
Reserve Account, fifty percent (50%) of the Available Cash Flow and
(y) at all times after the initial withdrawal of funds from the Debt
Service Reserve Account, one hundred percent (100%) of the Available
Cash Flow, in each case until such time that the amount on deposit in
the Debt Service Reserve Account, when taken together with the undrawn
portion of the Debt Service Line of Credit Facility Commitment, equals
the Debt Service Required Balance and, (B) if on any Repayment Date
the Debt Service Coverage Ratio, delivered on the immediately
preceding Calculation Delivery Date pursuant to Section 5.2 is less
than 1.25:1.00, withdraw and transfer for deposit in the Debt Service
Reserve Account, in addition to the amounts deposited pursuant to
clause (A) above, fifty percent (50%) of the Available Cash Flow
remaining after making the withdrawals specified in clause (A) above,
up to such amounts as shall cause the Additional Debt Service Required
Balance to be deposited in the Debt Service Reserve Account (not
including amounts that are counted towards the Debt Service Required
Balance); provided, however, that amounts on deposit in the Debt
Service Reserve Account representing the Additional Debt Service
Required Balance shall be withdrawn from the Debt Service Reserve
Account for deposit in the Project Account if the Debt Service
Coverage Ratio is at least 1.25:1.00 for two consecutive Calculation
Delivery Dates occurring after such amounts have been deposited into
the Debt Service Reserve Account; otherwise, the amount
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of the Additional Debt Service Required Balance shall be recalculated
(and if necessary funded pursuant to this Section 5.1(c)(vi)) on each
succeeding Repayment Date. For purposes of this Agreement, the term
"Available Cash Flow" means, as of any Repayment Date, Cash Revenues
for the period ending on such Repayment Date and commencing on the
date which is three (3) months prior to such ending date plus any
other amounts on deposit in the Project Account on such Repayment
Date, less the sum of all payments made for such period pursuant to
clauses (i) through and including (v) of this Section 5.1(c);
(vii) Funding of Capital Improvements Reserve Account: after
making the withdrawals specified in clauses (i) through (vi) above, on
each Repayment Date, withdraw and transfer for deposit in the Capital
Improvements Reserve Account an amount equal to the Capital
Improvements Reserve Required Deposit;
(viii) Restricted Payments Escrow Account: after making the
withdrawals specified in clauses (i) through (vii) above, on each
Repayment Date, if the Debt Service Coverage Ratio delivered on the
immediately preceding Calculation Delivery Date pursuant to
Section 5.2 is less than 1.15:1.00, withdraw and transfer amounts
otherwise distributable to the Borrower pursuant to clause (x) below
for deposit in the Restricted Payments Escrow Account, provided,
however, that amounts on deposit in the Restricted Payments Escrow
Account shall be withdrawn from the Restricted Payments Escrow Account
for deposit in the Project Account if the Debt Service Coverage Ratio
is at least 1.20:1.00 for two consecutive Calculation Delivery Dates
occurring after such amounts have been deposited into the Restricted
Payments Escrow Account, provided, further, however, that in the event
amounts in the Restricted Payments Escrow Account are not transferred
to the Project Account within 12 months of being deposited into the
Restricted Payments Escrow Account, then such amounts shall be
withdrawn and made available for prepayment of the Loans in accordance
with Section 2.8(c) hereof;
(ix) Pre-Existing Liabilities: after making the withdrawals
specified in clauses (i) through (viii) above, on any Repayment Date,
withdraw and transfer directly to such payees as Borrower specifies
amounts that are necessary to pay Pre-Existing Liabilities; and
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(x) Distribution to Borrower: (A) if the Debt Service
Coverage Ratio delivered on the immediately preceding Calculation
Delivery Date pursuant to Section 5.2 is at least 1.20:1.00 and (B) if
the Additional Funding Date has occurred on or prior to the Initial
Maturity Date and (C) so long as no Default or Event of Default has
occurred and is continuing, and (D) so long as none of the events
specified in clause (d) of the "Change of Control" definition have
occurred and (E) after making the withdrawals and retentions specified
in clauses (i) through (ix) above, then on each Repayment Date,
withdraw and transfer the monies remaining in the Project Account to
such account as Borrower shall direct, or for such other use as
Borrower shall direct.
(d) Debt Service Reserve Account; Restricted Payments Escrow
Account. Commencing on the Initial Funding Date, Borrower shall maintain a
special depository account (the "Debt Service Reserve Account") (Account
No. 376620-03) (and such account shall be titled appropriately so as to
identify the nature of such account). On the Additional Funding Date the
balance in the Debt Service Reserve Account shall be $5 million
(represented by the undrawn portion of the Debt Service Reserve Line of
Credit Facility Commitment). After the Additional Funding Date, to the
extent the balance in the Debt Service Reserve Account is less than the
Debt Service Required Balance, and, if applicable, the Additional Debt
Service Required Balance, the Debt Service Reserve Account shall be funded
as set forth in Section 5.1(c)(vi) on each Repayment Date in an amount up
to the Debt Service Required Balance and, if applicable, the Additional
Debt Service Required Balance. During the Availability Period the Debt
Service Reserve Account will be deemed to be funded to the extent of the
undrawn portion of the Debt Service Reserve Line of Credit Facility
Commitment plus the actual amounts on deposit in the Debt Service Reserve
Account. Lenders shall be entitled to use the balance in the Debt Service
Reserve Account to satisfy payment obligations of Borrower under this
Agreement and the other Loan Instruments. So long as no Event of Default
has occurred and is continuing, on each Repayment Date, Agent shall
withdraw any amount in the Debt Service Reserve Account in excess of the
sum of (A) the Debt Service Required Balance and (B) the Additional Debt
Service Required Balance (if required to be funded) for deposit in the
Project Account.
Commencing on the Initial Funding Date, Borrower shall maintain a
special depository account (the "Restricted
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Payments Escrow Account") (Account No. 376620-05) (and such account shall
be titled appropriately so as to identify the nature of such account). The
Restricted Payments Escrow Account shall be funded as set forth in
Section 5.1(e)(vii).
(e) Pre-Existing Liabilities Account. Commencing on the Initial
Funding Date, Borrower shall maintain a special depository account (the
"Pre-Existing Liabilities Account") (Account No. 376620-06) (and such
account shall be titled appropriately so as to identify the nature of such
account). Amounts in the Pre-Existing Liabilities Account shall be used to
satisfy Pre-Existing Liabilities.
(f) Maintenance Reserve Account. Commencing on the Initial
Funding Date, Borrower shall maintain a special depository account (the
"Maintenance Reserve Account") (Account No. 376620-07) (and such account
shall be titled appropriately so as to identify the nature of such
account). Borrower shall fund the Maintenance Reserve Account on the
Additional Funding Date in an amount equal to the Maintenance Reserve
Required Deposit. After the Additional Funding Date, the Maintenance
Reserve Account shall be funded as set forth in Section 5.1(c)(v) on each
Repayment Date in an amount equal to the Maintenance Reserve Required
Deposit or as otherwise instructed by Agent based on consultation with the
Independent Engineer and Borrower, if Agent reasonably believes that any
such amount needs to be adjusted due to the necessity to overhaul the
Newark Project's or the Parlin Project's material equipment earlier or
later than expected. Agent shall provide Borrower with ninety (90) days'
prior written notice of any adjustment in such amount. Borrower may, with
the consent of Agent based upon consultation with the Independent Engineer,
not to be unreasonably withheld, from time to time withdraw funds from the
Maintenance Reserve Account to pay expenses associated with major equipment
inspection and major overhaul, with respect to either Project.
(g) Capital Improvements Reserve Account. Commencing on the
Initial Funding Date, Borrower shall maintain a special depository account
(the "Capital Improvements Reserve Account") (Account No. 076620-04) (and
such account shall be titled appropriately so as to identify the nature of
such account). Borrower shall fund the Capital Improvements Reserve
Account on the Additional Funding Date in an amount equal to the Capital
Improvements Reserve Required Deposit. After the Additional Funding Date,
the Capital Improvements Reserve Account shall be funded as set forth in
Section 5.1(c)(vii) on each Repayment Date in an
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amount equal to the Capital Improvements Reserve Required Deposit or as
otherwise instructed by Agent based on consultation with the Independent
Engineer and Borrower, if Agent reasonably believes that any such amount
needs to be adjusted due to the necessity to repair any of the Newark
Project's or Parlin Project's material equipment earlier or later than
expected. Agent shall provide Borrower with ninety (90) days' prior
written notice of any adjustment in such amount. Borrower may, with the
consent of Agent based upon consultation with the Independent Engineer, not
to be unreasonably withheld, from time to time withdraw funds from the
Capital Improvements Reserve Account to pay expenses associated with
capital improvements, major repair and major component part replacement
with respect to either Project.
(h) Permitted Investments. Pending the application of funds in
the Project Account, Debt Service Reserve Account, Restricted Payments
Escrow Account, Pre-Existing Liabilities Account, Maintenance Reserve
Account or Capital Improvements Reserve Account in accordance with
Sections 5.1(c), (d), (e), (f) or (g) hereof, respectively, such funds
shall be invested, reinvested and liquidated (at the risk and expense of
Borrower) in accordance with instructions given by Borrower (except upon
the occurrence and during the continuance of an Event of Default when such
investments, reinvestments and liquidations shall, at Agent's option, be
determined by Agent); provided, however, that no such investment shall be
made other than in Permitted Investments. Agent shall not be required to
take any action with respect to investing the funds in any Account in the
absence of written instructions by Borrower. Agent shall not be liable for
any loss resulting from any Permitted Investment or the sale or redemption
thereof (other than such loss resulting from Agent's gross negligence or
willful misconduct). If and when cash is required for disbursement in
accordance with Section 5.1(c), (d), (e), (f) or (g) hereof, Agent is
authorized, without instructions from Borrower, to the extent necessary, to
cause Permitted Investments to be sold or otherwise liquidated into cash
(without regard to maturity) in such manner as Agent shall deem reasonable
and prudent under the circumstances. Any funds held by Agent, and all such
Permitted Investments made in respect thereof, shall be held by Agent, and
the interest of Borrower therein, until withdrawn, shall constitute part of
the security subject to the security interests created by the Security
Documents.
Section 5.2 Debt Service Coverage Ratio. On each Calculation
Delivery Date, Borrower shall deliver to Agent
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the Debt Service Coverage Ratio calculated for the four consecutive
quarterly periods ending on the Repayment Date immediately preceding such
Calculation Delivery Date. A sample calculation of the ratio to be
provided hereunder is contained in Schedule 5.2. Such calculation shall be
made by Borrower reasonably and in good faith.
Section 5.3 Maintenance of Existence, Privileges, Etc. Each
Borrower shall, and shall cause NPI to, at all times (i) preserve and
maintain in full force and effect (A) its existence as a corporation in
good standing under the laws of the State of Delaware, (B) its
qualification to do business in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its
business as conducted or proposed to be conducted makes such qualification
necessary and where the failure to maintain such qualification could
reasonably be expected to result in a Material Adverse Effect and (C) all
of its powers, rights, privileges and franchises necessary for the
ownership, maintenance and operation of each Project and the maintenance of
its existence, except, in the case of clause (C) only, where the failure to
do so could not reasonably be expected to result in a Material Adverse
Effect and (ii) obtain and maintain in full force and effect all
Governmental Approvals and other consents and approvals required at any
time in connection with the maintenance, ownership or operation of each
Project and where the failure to obtain and maintain in full force and
effect such Governmental Approvals, consents and approvals could reasonably
be expected to result in a Material Adverse Effect.
Section 5.4 Performance of Project Documents. Each Borrower
will, and will cause NPI to, (i) perform and observe all of its covenants
and agreements contained in the Governmental Approvals, Insurance Policies
and any of the Project Agreements to which it is a party, unless the
failure to perform or observe such covenants and agreements could not
reasonably be expected to result in a Material Adverse Effect,
(ii) preserve, protect and defend the rights of each of Borrower and NPI
contained in the Governmental Approvals, Insurance Policies and any of the
Project Agreements to which it is a party, unless the failure to preserve,
protect or defend such rights could not reasonably be expected to result in
a Material Adverse Effect and (iii) maintain in full force and effect each
of the Project Agreements and all contracts, permits and approvals relating
thereto which are necessary for the maintenance and operation of each
Project.
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Section 5.5 Operation and Maintenance.
(a) Operations. Each Borrower will use, maintain and operate
its respective Project in compliance with Prudent Electrical Practices (as
defined in the relevant Power Purchase Agreement), all Project Documents,
this Agreement, the Operating Budget and all applicable Governmental
Approvals and Laws, the non-compliance with which could reasonably be
expected to result in a Material Adverse Effect. Each Borrower will
inspect, maintain, service and repair its respective Project so as to keep
such Project (i) in good order, operating condition (normal wear and tear
excepted) and repair in conformity with prudent industry standards and
commercial practice, (ii) in compliance with all requirements under the
Project Documents, the non-compliance with which could reasonably be
expected to result in a Material Adverse Effect and (iii) in such condition
that such Project will have the capacity and functional ability to perform,
in normal commercial operation, the functions and at the ratings set forth
in the Project Documents and all applicable Governmental Approvals for the
remaining useful life of such Project, except where such failure could not
reasonably be expected to result in a Material Adverse Effect. Each
Borrower shall cause its respective Project to be operated so as to
preserve and enforce all warranties and guaranties regarding such Project
and to which such Borrower is a beneficiary, unless the failure to preserve
and enforce such warranties and guaranties could not reasonably be expected
to result in a Material Adverse Effect.
(b) Repair and Replacement. Each Borrower will keep its
respective Project and all other property necessary for its business in
good repair, working order and condition, normal wear and tear excepted.
In the event of any damage to or destruction of either Project, or any part
thereof, by fire or other casualty not resulting in a prepayment under
Section 2.8(a), each respective Borrower shall, at its own expense and
whether or not such damage or destruction is covered by an insurance
policy, but subject to the release by Agent of and having the benefit of
any insurance proceeds released pursuant to Section 5.18, with reasonable
promptness, repair, restore, replace or rebuild the same so that upon the
completion of such repair, restoration, replacement or rebuilding, such
Project shall be in the condition required by the foregoing provisions of
this Section 5.5 and so that the productive capacity, value, utility and
remaining useful life of such Project shall be at least equal to the
greater of (i) the actual productive capacity, value, utility and remaining
useful life of such Project immediately prior to the happening of such
casualty
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or (ii) the productive capacity, value, utility and remaining useful life
that such Project would have had if such Project were used, maintained and
operated in accordance with the requirements of this Section 5.5.
Section 5.6 Operating Logs. Each Borrower will, at its sole
cost and expense, (a) maintain at its respective Project daily operating
logs showing, among other things, the electrical output of such Project,
(b) keep maintenance and repair reports in sufficient detail to indicate
the nature and date of all work done, (c) maintain a current operating
manual and a complete set of plans, accounting records and specifications
reflecting all alterations and (d) maintain all other records, logs and
other materials required by the relevant Project Documents or any
Governmental Requirements.
Section 5.7 Compliance with Laws.
(a) Generally. Each Borrower shall make such alterations to its
respective Project as may be required for compliance with all applicable
Governmental Requirements, except where non-compliance could not reasonably
be expected to result in a Material Adverse Effect. NRG Newark and NRG
Parlin shall take no action which would have an adverse impact upon the
status of NRG Newark or NRG Parlin as an EWG or, until the Rate Approval
Date, of the Newark Project as a Qualifying Cogeneration Facility, and
shall ensure that each EWG certification and, until the Rate Approval Date
for NRG Newark, the QF Certificate for the Newark Project is maintained.
Upon the request of Agent, each Borrower shall deliver to Agent evidence of
such Borrower's compliance with all applicable Governmental Requirements
and, if such evidence is not reasonably available to such Borrower, certify
to Agent that such Borrower is in full compliance, except where the non-
compliance with such Governmental Requirements could not reasonably be
expected to result in a Material Adverse Effect.
(b) Resistance of Regulatory Change. If any litigation,
investigation or proceeding specifically directed to either Borrower or
either Project is commenced which causes, or may cause, any Governmental
Authority to issue (or propose to issue) any order, judgment, regulation,
decision or interpretation specifically directed to such Borrower or such
Project the effect of which is, or may cause (i) a Material Adverse Effect
or (ii) a rescission, termination, repeal, invalidation, suspension,
injunction, or a material amendment or modification of any license, permit,
authorization or Project Agreement, or any part thereof, with respect to
such Borrower, and, if in the opinion of such
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Borrower, there is a reasonable likelihood that such litigation,
investigation or proceeding or action by any Governmental Authority could
reasonably be expected to result in a Material Adverse Effect, such
Borrower will use commercially reasonable efforts, in light of all
circumstances at the time, to (A) contest and resist any such litigation,
investigation or proceeding or such action by any Governmental Authority,
(B) pursue all remedies and appeals as necessary in connection therewith
and (C) take such other lawful action, in each case as such Borrower shall
determine to be necessary or, in the opinion of Agent, is desirable in
light of all relevant circumstances to prevent such litigation,
investigation or proceeding or such action by any Governmental Authority
from becoming final and nonappealable or otherwise irrevocable, to attempt
to postpone the effectiveness of such litigation, investigation or
proceeding or such action by any Governmental Authority, and to cause such
litigation, investigation or proceeding or such action by any Governmental
Authority to be terminated, revoked, amended or modified so as to eliminate
the reasonable likelihood of such effect.
(c) Compliance with Margin Stock Rules. No part of the proceeds
of the Commitments will be used to purchase "margin stock" (as defined in
the regulations referred to below) or for any other purpose which would
result in a violation (whether by a Borrower, Agent or the Lenders) of
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System or to extend credit to others for any such purpose. Neither
Borrower nor any of its Affiliates is engaged in, nor will any of them
engage in, the business of extending credit for the purpose of purchasing
or carrying any "margin stock."
(d) Environmental Matters. Each Borrower will comply, and shall
cause all tenants, licensees, invitees, any subcontractor, operator, and
occupants of its respective Project to comply in all material respects with
all applicable Environmental Requirements. Each Borrower will use its best
efforts to cause all other Obligors to comply in all material respects with
all Environmental Requirements applicable to its respective Project. Each
Borrower will not, and will not permit any such other party to, generate,
store, handle, process, transport, ship, dispose, or otherwise use
Hazardous Materials at, in, on, under or from its respective Project, or
onto any other property, in a manner that could lead to the imposition on
such Borrower, any of the Secured Parties or such Project of any cleanup
obligation, corrective action, liability, judgment, order or Lien under any
Environmental Requirement. Each Borrower
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shall promptly notify Agent when it learns of any information that would
have resulted in a breach hereunder if such information had been known but
not disclosed at the time such representation was made, or when it becomes
aware of any Release of any Hazardous Material (whether or not such Release
occurred prior to, on or after the Initial Funding Date) at, in, on, under
or from its respective Project which is required to be reported to a
Governmental Authority, or which could result in any cleanup obligation,
corrective action, liability, judgment, order or Lien under any
Environmental Requirement. Each Borrower shall immediately forward to
Agent copies of any notices, complaints or summonses received by such
Borrower relating to alleged violations of any Environmental Requirement or
potential adverse actions in any way involving environmental or health
matters. Each Borrower will promptly pay when due any fine, penalty,
judgment, or assessment arising under any Environmental Requirement against
such Borrower, its respective Project or against any of the Secured Parties
to the extent the same arises in connection with such Project, except to
the extent (x) any such fine, penalty, judgment or assessment is being
contested in good faith by appropriate proceedings under applicable Laws,
(y) the pendency of such proceedings is not likely to interfere with the
operation of such Project by such Borrower and does not involve a material
risk that such Project or any part thereof may be sold, lost or forfeited,
and (z) adequate reserves in the judgment of Agent have been set aside with
respect thereto to satisfy any adverse determination. If at any time the
condition, operation or use of either Project violates or could result in
liability under any applicable Environmental Requirement, or there are
Hazardous Materials located at, in, on, under or from either Project for
which cleanup or corrective action of any kind is required under any
applicable Environmental Requirement or, because of any Release of any
Hazardous Material, cleanup of or corrective action with respect to such
Hazardous Material is authorized under CERCLA or any similar state or local
Law, each respective Borrower shall, within 10 days after discovering such
condition, operation or use, notify Agent and immediately initiate and
thereafter diligently pursue, at its sole cost and expense, such actions as
shall expeditiously result in full compliance in all material respects with
and, to the maximum extent possible, elimination of any liability under all
Environmental Requirements. If an Event of Default exists, Agent may cause
an environmental audit of either Project or any portion thereof to be
conducted at Borrower's expense, and each Borrower shall cooperate in all
reasonable ways with any such audit. If either Mortgage is foreclosed or
either Borrower tenders a deed or assignment in lieu of foreclosure, such
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Borrower shall deliver the applicable Project to the purchaser at
foreclosure or to Agent or the nominee of either, as the case may be, in a
condition that complies in all respects with all applicable Environmental
Requirements, and that does not contain Hazardous Materials for which
cleanup or corrective action is required under any applicable Environmental
Requirements or, because of any Release of Hazardous Material, cleanup of
or corrective action with respect to such Hazardous Material is authorized
under CERCLA or any similar state or local Law or may be necessary to
prevent or eliminate a material risk to human health or the environment.
(e) Changes in Laws; Compliance with Environmental Requirements.
If (A) there shall occur any change effective after the Initial Funding
Date in any Governmental Requirement that, in the reasonable judgment of
the Majority Lenders, could reasonably be expected to result in a Material
Adverse Effect on the ability of either Borrower to meet its obligations
under the Loan Instruments or (B) in order to comply with any Environmental
Requirements, including, without limitation, any regulations promulgated by
the U.S. Environmental Protection Agency and any state implementing
authority pursuant to the Clean Air Act Amendments of 1990, either Borrower
is required to acquire pollution allowances, offsets or similar emission
approvals, or is required to make other expenditures that could reasonably
be expected to result in a Material Adverse Effect (including the
installation or modification of equipment or technologies) to comply with
such Environmental Requirements, then, in the case of any event described
in the foregoing clause (A) or (B) such Borrower shall develop a plan of
action ("Plan") for the purpose of (x) in the case of any event described
in clause (A), (i) causing its respective Project to comply with such
change, no later than the effective date thereof or (ii) otherwise curing
the Material Adverse Effect, which Plan shall include (A) the proposed
method for effecting changes required to such Project or for effecting such
cure, (B) the schedule for implementation of any such changes or any such
cure and (C) the method for financing the required changes to such Project
or such cure and (y) in the case of any event described in clause (B),
acquiring such allowances, offsets or approvals or otherwise complying with
such Environmental Requirements. Any such Plan shall be reasonably
acceptable in form and substance to Agent, in consultation with the
Independent Engineer, and shall be submitted to Agent and the Independent
Engineer for their review and approval within 90 days of such event or of
recognition by such Borrower or Agent of the actual or potential
applicability of such Environmental Requirements or such shorter period as,
in the
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reasonable judgment of Agent, in consultation with such Borrower and the
Independent Engineer, may be necessary in order to effectively mitigate any
Material Adverse Effect or otherwise comply with the change in the
Governmental Requirement or Environmental Requirement. No funds shall be
distributed pursuant to Section 5.1(c)(x) hereof until Agent and Borrower
mutually agree as to the amounts, if any, needed to be reserved to
implement any such Plan and upon such agreement Borrower shall, if
required, establish a reserve account in such amounts and in accordance
with a schedule to be determined by the Secured Parties, for the purpose of
funding the anticipated cost of implementing such Plan. Such reserve
account shall be funded from monies in the Project Account after making the
withdrawals and retentions specified in Section 5.1(c)(i) through (vi)
hereof.
(f) Operating Reports. Each Borrower will provide to Agent and
the Independent Engineer, on or before the 20th day of each month and at
any other time when so requested by Agent, a report setting forth the
principal operating data for its respective Project for the previous month,
including, without limitation, (x) until the Rate Approval Date, evidence
that NRG Newark is maintaining the Newark Project's status as a Qualifying
Cogeneration Facility, (y) any reports as to significant operating,
maintenance and management events, pursuant to the Operations and
Maintenance Agreement, or otherwise, and (z) such other information as
Agent may request. Each Borrower shall monitor the activities of its
respective Project pertinent to the maintenance of its status as an EWG (or
a Qualifying Cogeneration Facility, if applicable) in the manner deemed
necessary or advisable from time to time by any Governmental Authority or
Agent.
(g) Intellectual Property Infringement. In the event that any
product, process, method, substance, part or other material sold, used or
employed, or contemplated to be sold, used or employed, by either Borrower
in connection with its business or its respective Project does or will
infringe any patent, trademark, service mark, trade name, copyright,
license or other right owned by any other Person or any claim or litigation
is pending or threatened against or affecting such Borrower contesting its
right to sell, use or employ any such product, process, method, substance,
part or other material, such Borrower shall give Agent notice promptly, but
in no event more than five days after obtaining knowledge thereof and such
Borrower shall effectively eliminate such infringement within 30 days of
giving such notice to Agent (unless subject to a Good Faith Contest) or
such longer period as in the reasonable judgment of Agent could not
reasonably be expected to have a Material Adverse Effect.
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(h) Tracking of Permits. Each Borrower shall maintain a
tracking system to monitor the status of, the conditions contained in, and
compliance with, Governmental Approvals required to be obtained by such
Borrower, the non-compliance with which could reasonably be expected to
result in a Material Adverse Effect, in form and substance reasonably
satisfactory to the Independent Engineer.
Section 5.8 Information. Borrower will furnish to Agent with
sufficient copies for each Lender (as designated by Agent) the following
information:
(a) Quarterly Financial Statements of Borrower. As soon as
available and in any event within 60 days after the end of each of the
first three fiscal quarters of each fiscal year of Borrower and Guarantor,
consolidated balance sheets of Borrower and Guarantor as of the end of such
quarter and consolidated (and consolidating) statements of operations,
stockholders' equity and cash flows of Borrower and Guarantor for the
period commencing at the beginning of such fiscal year and ending with the
end of such quarter, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by an Authorized Officer of Borrower and
Guarantor as having been prepared in accordance with GAAP, consistently
applied, together with a Compliance Certificate as of the end of such
fiscal quarter. Prior to the termination of the NRG Guaranty, Borrower
shall also deliver, as soon as available and in any event within 60 days
after the end of each of the first three fiscal quarters of each fiscal
year of NRG, the balance sheets of NRG as of the end of such quarter and
statements of operations, stockholders' equity and cash flows of NRG for
the period commencing at the beginning of such fiscal year and ending with
the end of such quarter, all in reasonable detail and duly certified
(subject to year-end audit adjustments) by an Authorized Officer of NRG as
having been prepared in accordance with GAAP consistently applied, together
with a Compliance Certificate as of the end of such fiscal quarter. Agent
and Lenders agree to keep such financial statements of NRG confidential in
accordance with the provisions of Section 8.15. At the same time as such
quarterly financial statements are delivered, Borrower shall also deliver
an operating statement in the same form as the Operating Budget which shall
list in comparative form the approved Operating Costs and Operating
Revenues as set forth in the approved Operating Budget for the year in
which such quarterly financial statements are delivered and the actual
Operating Costs and Operating Revenues for such quarter as set forth in
such quarter's consolidated statements of operations;
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(b) Annual Financial Statements of Borrower. As soon as
available and in any event within 105 days after the end of each fiscal
year of Borrower and Guarantor, the consolidated balance sheets of Borrower
and Guarantor as of the end of such fiscal year and the consolidated (and
consolidating) statements of operations, stockholders' equity and cash
flows of Borrower and Guarantor for such fiscal year, in the case of such
consolidated financial statements, certified, without material
qualifications or limitations as to scope of the audit by independent
public accountants of recognized standing, as having been prepared in
accordance with GAAP, consistently applied, together with a Compliance
Certificate as of the end of such fiscal year for Borrower and Guarantor.
Prior to the termination of the NRG Guaranty, Borrower shall also deliver,
as soon as possible and in any event within 105 days after the end of each
fiscal year of NRG, the balance sheets of NRG as of the end of such fiscal
year and the statements of operations, stockholders' equity and cash flows
of NRG for such fiscal year, certified, without material qualifications or
limitations as to the scope of the audit by independent public accountants
of recognized standing, as having been prepared in accordance with GAAP,
consistently applied, together with a Compliance Certificate as of the end
of such fiscal year for NRG. Agent and Lenders agree to keep such
financial statements of NRG confidential in accordance with the provisions
of Section 8.15.
(c) Accountants' Reports. Promptly upon receipt thereof,
Borrower will deliver copies of all significant reports submitted to
Borrower by independent public accountants in connection with each annual,
interim or special audit of the financial statements of Borrower made by
such accountants;
(d) Notice of Defaults. As soon as possible and in any event
within five days after obtaining actual knowledge of the occurrence of each
Event of Default and each event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default, a statement of an
Authorized Officer of Borrower setting forth details of such Event of
Default or event and the action which Borrower has taken and proposes to
take with respect thereto;
(e) PBGC Notices. Promptly and in any event within ten Business
Days after receipt thereof by either Borrower or any ERISA Affiliate from
the PBGC, copies of each notice received by such Borrower or any such ERISA
Affiliate of the intention of the PBGC to terminate any Pension Plan or to
have a trustee appointed to administer any Pension Plan;
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(f) Litigation. Subject to the terms of Section 5.7(d) hereof,
notice (i) promptly after the commencement thereof, in the case of either
Borrower, of all actions, suits and proceedings before any Governmental
Authority affecting a Borrower or any of its respective assets or
properties; (ii) promptly upon receipt by either Borrower of written notice
thereof from an Obligor, of all actions, suits and proceedings before any
Governmental Authority affecting such Obligor or any of its assets or
properties; (iii) promptly after the commencement thereof, in the case of
Guarantor, of all actions, suits and proceedings before any Governmental
Authority affecting Guarantor or any of its respective assets or properties
involving an amount greater than $100,000; and (iv) in any such case,
promptly after the occurrence thereof, or (in the case of an Obligor) upon
receipt of notice thereof, notice of any material development in any such
actions, suits or proceedings;
(g) Quarterly Officer's Certificate. Together with the
financial statements referred to in Sections 5.8(a) and 5.8(b), a
certificate signed by an Authorized Officer of Borrower or Guarantor as the
case may be, in form and substance reasonably satisfactory to Agent,
(x) certifying (i) as to the absence of any Default or Event of Default
(or, if any exists, describing the nature thereof) and (ii) the absence of
a Material Adverse Effect (or, if any exists, describing the nature
thereof) and (y) setting forth a list, if applicable, of any and all
unaccrued and unwaived payment defaults by either Borrower aggregating more
than $100,000, or by Guarantor aggregating more than $250,000, on any Debt
as of the last day of the prior fiscal quarter;
(h) Employee Benefit Plans. With reasonable promptness, and in
any event within thirty (30) days of the time that either Borrower
reasonably becomes aware of such event or circumstance, such Borrower will
give notice of and/or deliver to Agent and each Lender copies of:
(1)(a) the establishment of any new Pension Plan or Multiemployer Plan,
(b) the commencement of contributions to any Pension Plan or Multiemployer
Plan to which such Borrower or any of its ERISA Affiliates were not
previously contributing or becomes obligated to contribute or (c) any
material increase in the benefits of any existing Pension Plan or
Multiemployer Plan or (d) the establishment or amendment of any Employee
Benefit Plan or other plan or agreement which creates or increases
liability of such Borrower or any of its ERISA Affiliates with respect to
health or welfare benefits to retirees and which could reasonably be
expected to result in a Material Adverse Effect; (2) each funding waiver
request filed with respect to
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any Employee Benefit Plan and all communications received or sent by such
Borrower or any ERISA Affiliate with respect to such request; and (3) the
failure of such Borrower or any ERISA Affiliate to make a required
installment or payment under Section 302 of ERISA or Section 412 of the IRC
by the due date.
(i) Termination Events. Promptly and in any event within ten
(10) days of becoming aware of the occurrence of or forthcoming occurrence
of any (1) Termination Event or (2) nonexempt material "prohibited
transaction," as such term is defined in Section 406 of ERISA or
Section 4975 of the IRC, in connection with any Pension Plan or any trust
created thereunder, Borrower will deliver to Agent and each Lender a notice
specifying the nature thereof, what action Borrower or any ERISA Affiliate
have taken, are taking or propose to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(j) ERISA Notices. With reasonable promptness but in any event
within ten (10) days for purposes of clauses (1), (2) and (3), Borrower
will deliver to Agent and each Lender copies of: (1) any favorable or
unfavorable determination letter from the Internal Revenue Service
regarding the qualification of an Employee Benefit Plan or Multiemployer
Plan under Section 401(a) of the IRC; (2) all notices received by either
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer any Pension Plan;
(3) each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by either Borrower or any ERISA Affiliate with the Internal
Revenue Service with respect to each Pension Plan; and (4) all notices
received by either Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA; provided that such notice shall be
required for the event described in clause (1) above with respect to
Multiemployer Plans only after either Borrower has obtained knowledge or
has reason to know of such event. Borrower will notify Agent and each
Lender in writing within two (2) Business Days of either Borrower obtaining
knowledge or reason to know that such Borrower or any ERISA Affiliate have
filed or intends to file a notice of intent to terminate any Pension Plan
under a distress termination within the meaning of Section 4041(c) of
ERISA;
(k) Transactions With Affiliates. Within 10 days after the end
of each fiscal quarter of Borrower, Borrower will deliver to Agent a
description of any transaction
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(except for transactions undertaken pursuant to the Management Agreement as
in effect on the date hereof and transactions undertaken pursuant to an
operations and maintenance agreement entered into with any Affiliate of a
Borrower in accordance with Sections 5.32 or 6.1(o)), that occurred during
such fiscal quarter between either Borrower and any Affiliate of such
Borrower requiring payments by such Borrower in excess of $100,000 for any
12-month period;
(l) Annual Projections; Operating Budget. Within 30 days prior
to the commencement of each fiscal year of Borrower, Borrower will deliver
to Agent (with sufficient copies for each Lender and after consultation
with Agent) (A) consolidated and consolidating projections of the
operations of each Borrower for the immediately succeeding fiscal year,
such projections to contain the types of information set forth on the
Projections and (B) an annual Operating Budget for each Project which shall
establish that each Borrower will be in compliance, on a pro forma
projected basis, with the term of this Agreement, such projections and
budgets to be accompanied by the certificate set forth in paragraph (m)
below. If such budgets are not within 10% of the base case projections,
then such budgets must be approved by Agent;
(m) Projections and Budget Certificate. Together with the
projections and budgets to be delivered pursuant to paragraph (l) above, a
certificate executed by the chief financial officer of Borrower certifying
that (i) the assumptions related thereto have been made in good faith with
due care, (ii) the projections or budgets as applicable, taken as a whole,
represent the best estimates of the Borrower as of the date thereof and
based on the assumptions set forth therein, which assumptions are, to the
best of Borrower's knowledge, realistic and achievable, of matters covered
thereby for the periods covered thereby, it being understood and
acknowledged that such projections and budgets do not represent a guarantee
that the Borrower will be able to achieve the results described therein,
(iii) the projections or budgets, as applicable, are based on reasonable
assumptions as to all factual and legal matters material to the estimates
therein (including interest rates and costs) and (iv) the projections or
budgets as applicable, are in all respects consistent with, and will be in
all respects consistent with, the provisions of the Project Agreements;
(n) Debt Service Coverage Ratio Compliance Certificate. No
later than 90 days after each fiscal year of Borrower, Borrower shall
deliver to Agent (with sufficient
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copies for the Lenders) a certificate, executed by an Authorized Officer of
Borrower, stating that no event has occurred and neither Borrower has any
reason to believe that any event will occur which would cause Borrower not
to be in compliance with Section 5.37 for the then current fiscal year,
such certificate to be in form and substance satisfactory to Agent;
(o) Other Financial Statements. A copy of the annual and
quarterly financial statements (consisting of a balance sheet and the
related statements of income, equity and cash flows or, in the case of
DuPont, JCP&L and PSE&G, Forms 10-K and 10-Q, respectively, filed with the
SEC) of each of the Obligors, consolidated where any such party has
subsidiaries, within 30 days of publication of such statements; provided
that in the case of all Obligors other than Borrower, Guarantor and Newark
Group, such quarterly financial statements shall be furnished to the extent
publicly available or otherwise available to either Borrower or Guarantor;
(p) Additional Project Information. Without duplication of any
of the foregoing:
(i) as soon as available and in any event within five Business
Days after either Borrower (or in the case of clause (a) below an
Authorized Officer of either Borrower or the plant manager of either
Project) have knowledge thereof, written notice of:
(a) any information, development or knowledge of any adverse
change in the business, properties, condition (financial or
otherwise) or operations of any party to any of the Project
Documents which has had or could reasonably be expected to result
in a Material Adverse Effect;
(b) any fire or other casualty affecting either Project in
any material respect; and
(c) any actual or proposed termination, rescission,
discharge (otherwise than by performance), amendment or waiver
under, any material provision of any Project Agreement;
(q) Additional Information. Such other information respecting
the condition or operations, financial or otherwise, of either Borrower or,
to the extent reasonably available, any other Obligor or any other party,
as any
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Lender through Agent may from time to time reasonably request; and
(r) Significant Events. Promptly upon either Borrower's
knowledge thereof, a written statement from an Authorized Officer of
Borrower describing the details of:
(A) any substantial dispute which may exist between either
Borrower and any governmental regulatory body or law enforcement
authority that could reasonably be expected to result in a
Material Adverse Effect;
(B) any labor controversy resulting in or reasonably likely
to result in a strike or work stoppage or slowdown against either
Borrower that could reasonably be expected to result in a
Material Adverse Effect;
(C) any proposal by any public authority to condemn or
acquire any material assets or business of either Borrower;
(D) any event or occurrence with respect to either Borrower
or any of its respective businesses, assets or properties which
gives rise to a claim in excess of $250,000 under any insurance
policy insuring such Borrower or any of its respective
businesses, assets or properties; and
(E) any change of any Law, which change is reasonably likely
to result in a Material Adverse Effect.
Section 5.9 Bank Accounts. Each Borrower will maintain all of
its bank accounts with Credit Suisse, except that (a) one or more bank
accounts may be maintained at one or more commercial banks in Minnesota
reasonably acceptable to Agent (the "Local Bank Accounts") for the sole
purpose of paying Cash Expenses and management fees under the Operations
and Maintenance Agreement, provided, that prior to depositing any funds in
any Local Bank Account, such Borrower, Agent and such bank shall have
entered into a blocked account agreement, each substantially in the form of
Exhibit D ("Blocked Account Agreement") with respect to each such account
and (b) one or more bank accounts may be maintained by Borrower for the
deposit of funds transferable by Borrower pursuant to Section 5.1(c).
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Section 5.10 Inspection; Maintenance of Records.
(a) Inspection Rights. At any reasonable time and from time to
time upon reasonable notice, each Borrower will permit Agent or any agents
or representatives thereof, to examine (at the location where normally
kept) and make abstracts from the records and books of account of, and
visit the properties of such Borrower and to, upon reasonable notice to
such Borrower, discuss the affairs, finances and accounts of such Borrower
with any of its officers and discuss the affairs, finances and accounts of
such Borrower with its independent certified public accountants (at which
discussion, if such Borrower so requests, a representative of such Borrower
shall be permitted to be present) and permit such accountants to disclose
to Agent any and all financial statements and other reasonably requested
information of any kind that they may have with respect to such Borrower.
(b) Keeping of Books. Each Borrower will keep proper books of
record and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of such Borrower in a
form such that such Borrower may readily produce no less frequently than at
the end of each of its fiscal quarters, financial statements in accordance
with GAAP consistently applied.
Section 5.11 Maintenance of Properties, Etc. Each Borrower will
preserve and maintain good and marketable title to all of its properties
and assets which are necessary in the conduct of its business in good
working order and condition, ordinary wear and tear excepted, subject to no
Liens other than Permitted Liens.
Section 5.12 Maintenance of Insurance. Each Borrower will
maintain or cause to be maintained with insurance companies rated "A-" or
better by Best's Insurance Guide and Key Ratings or other insurance
companies of recognized responsibility satisfactory to Agent, insurance in
such amounts and covering such risks as are usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which such Borrower operates (the "Industry Standard"),
and in any event the insurance coverages shall not be less than the
insurance coverages set forth on Schedule 4.25. Each Borrower shall, upon
the request of Agent, promptly provide a schedule indicating the policies
maintained by such Borrower, coverage limits of liability, effective dates
of coverage, insurance carrier names and policy numbers. Each Borrower
shall cause Agent to be named as loss payee or as an additional named
insured, for the account of the Lenders and Agent itself.
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Evidence of payment of premiums for Insurance Policies shall be delivered
to Agent at least 30 days prior to the expiration thereof and each Borrower
shall deliver the Insurance Policies to Agent promptly upon its request.
Section 5.13 Payment of Taxes, Etc. Each Borrower will cause to
be paid and discharged all taxes, assessments and governmental charges upon
it, its income and properties prior to the date on which penalties are
attached thereto, and all lawful claims which, if unpaid, might become a
Lien upon the property of such Borrower (or any part thereof), except where
failure to pay could not reasonably be expected to result in a Material
Adverse Effect and such Borrower shall have the right, however, to commence
a Good Faith Contest with respect to the validity or amount of any such
tax, assessment or governmental charge, and may permit the taxes,
assessments or governmental charges so contested to remain unpaid during
the period of such Good Faith Contest if (a) such Borrower diligently
prosecutes such contest, (b) adequate reserves, in the reasonable
determination of Agent, are maintained with respect thereto and (c) during
the period of such contest, the enforcement of any contested item is
effectively stayed. Each Borrower will promptly pay or cause to be paid
any valid, final judgment enforcing any such tax, assessment and
governmental charge and cause the same to be satisfied of record.
Guarantor shall, and each Borrower shall cause Guarantor to, indemnify such
Borrower pursuant to the Tax Indemnification Agreement in an amount equal
to any income and franchise taxes paid by such Borrower.
Section 5.14 Syndication Efforts. Each Borrower will make
itself reasonably available to assist Agent in syndicating the Commitments
and the Loans. Without limiting the generality of the foregoing, each
Borrower will, at the request of Agent, assist Agent and otherwise
cooperate with Agent in the preparation of an information memorandum (which
assistance may include reviewing and commenting on drafts of such
information memorandum and drafting portions thereof) to facilitate the
preparation and printing of such information memorandum and shall make its
chief financial officer and the appropriate personnel having knowledge of
either Project and the financing thereof available to attend a bank group
meeting among prospective banks.
Section 5.15 Interest Rate Hedge Agreements. (a) On or prior
to the date which is 30 days after the Additional Funding Date, Borrower
shall have entered into Interest Rate Hedge Agreements for a term ending on
the Maturity Date with respect to at least 50% of the aggregate outstanding
principal amount of the Notes. All obligations of Borrower
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to make payments to the Hedge Parties pursuant to any Interest Rate Hedge
Agreement shall be secured by the Security Documents pari passu with
Borrower's obligations under this Agreement and the other Loan Instruments.
Concurrently with the execution and delivery of any Interest Rate Hedge
Agreement, Agent shall receive a legal opinion, in form and substance
reasonably satisfactory to Agent, with respect to such Interest Rate Hedge
Agreement.
(b) If, upon making any prepayment pursuant to Section 2.7
(optional) and Section 2.8 (mandatory), the aggregate notional amount
listed in all Interest Rate Hedge Agreements then in effect exceeds the
aggregate outstanding principal amount of Funding Loans ("Excess Amount"),
Borrower shall make corresponding adjustments to the notional amounts
listed in all such Interest Rate Hedge Agreements and shall pay all
settlement amounts due in accordance therewith; provided, however, that
instead of making such adjustments to the notional amounts listed in the
Interest Rate Hedge Agreements, Borrower may, with the prior written
consent of each counterparty to each of the affected Interest Rate Hedge
Agreements and at no cost to the Lenders, assign the Excess Amount listed
in one or more Interest Rate Hedge Agreements to any other Person. In
addition, upon making any prepayment pursuant to Section 2.7 or Section
2.8, Borrower shall pay all breakage expenses and other amounts, if any,
due under any Interest Rate Hedge Agreement, provided that all such
prepayments shall be deemed first applied against amounts not covered by
any Interest Rate Hedge Agreement.
Section 5.16 Other Contracts.
(a) Additional Contracts. Except as provided for in
Sections 5.32 and 6.1(o), neither Borrower shall become a party to any
contract, operating lease, agreement or commitment, except upon such terms
and with such parties as shall be approved in writing by the Independent
Engineer and the Majority Lenders, other than (i) the agreements identified
in the definition of the term Project Documents, but not replacements
thereof and (ii) any Permitted Contract.
(b) Project Document Amendment, Termination, Waiver, Etc.
Except as provided for in Sections 5.32 and 6.1(o), without the prior
written consent of the Agent, neither Borrower shall, or shall permit NPI
to, directly or indirectly, terminate, cancel or suspend, or permit or
consent to any termination, cancellation or suspension of, or enter into or
consent to or permit the assignment of the rights or obligations of any
party to, any of the Project Documents, Governmental Approvals or Insurance
Policies
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(unless and until, in the case of Insurance Policies, Borrower has entered
into replacement Insurance Policies prior to such termination, cancellation
or suspension, and such replacement Insurance Policies are in accordance
with the provisions of Section 5.12). Neither Borrower shall, or shall
permit NPI to, directly or indirectly, amend, modify, supplement or waive,
or permit or consent to the amendment, modification, supplement or waiver
of, any of the provisions of, or give any consent under, any of the Project
Documents, Governmental Approvals or Insurance Policies without (i) first
submitting to Agent a copy of such proposed amendment, modification,
supplement, waiver or consent and (ii) if in the reasonable judgment of
Agent, such proposed amendment, supplement, waiver, or consent could
reasonably be expected to result in a Material Adverse Effect, the express
prior written consent of the Majority Lenders thereto. Neither Borrower
shall, or shall permit NPI to, directly or indirectly, amend, modify,
supplement or waive, or permit or consent to the amendment, modification,
supplement or waiver of, any of the provisions of, or give any consent
under, any of the Project Documents, Governmental Approvals or Insurance
Policies which does not require consent of the Majority Lenders, without
the prior written consent of Agent which consent shall not be unreasonably
withheld. Neither Borrower shall, or shall permit NPI to, directly or
indirectly, exercise or refuse to exercise or waive any option or right to
purchase any property or assets, nor exercise, or refuse to exercise or
waive any right of first refusal pursuant to any of the Project Documents
which does not require the consent of the Majority Lenders, without the
prior written consent of Agent, which consent shall not be unreasonably
withheld or delayed.
(c) Acquisition of Property. If either Borrower shall at any
time acquire any real property or leasehold or other interests therein not
covered by the relevant Mortgage, such Borrower shall, in addition to
fulfilling the requirements set forth in Section 5.16(a), promptly upon
such acquisition notify Agent and promptly upon the request of Agent
execute, deliver and record a supplement to such Mortgage satisfactory in
form and substance to Agent, subjecting such real property or leasehold or
other interests to the loan and security interest created by such Mortgage,
as appropriate.
Section 5.17 Use of Proceeds. Borrower will use the proceeds of
all Funding Loans only for Qualifying Uses.
Section 5.18 Obligations Upon Casualty. If an Event of Loss
occurs in respect of a Project to an extent
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that such Project would, in the reasonable determination of the Borrower as
approved by Agent, be unable to operate on a commercially feasible basis
(i.e., the Project would not be able to satisfy the Debt Service Coverage
Ratios contained herein and in the Projections), and Restoration of such
Project would, in the reasonable judgment of the Borrower as approved by
Agent, be commercially feasible (i.e., after the Restoration, such Project
would be able to achieve the Debt Service Coverage Ratios that existed
immediately prior to the Event of Loss, such Debt Service Coverage Ratios
not to be less than 1.30:1.00), then after deducting from any insurance
proceeds (other than business interruption insurance proceeds) or
condemnation proceeds (collectively, the "Proceeds") the reasonable
expenses incurred by Agent and Borrower in collecting and disbursing such
Proceeds or otherwise in connection therewith, the Proceeds shall be
released to Borrower from time to time in installments sufficient to pay
for restoration as it progresses upon the conditions set forth below
(except that the following provisions shall not apply to the extent such
proceeds aggregate less than $1,000,000 in which case such proceeds shall
be released to Borrower directly for the prompt payment of the costs of
repair or restoration of the damage giving rise to such proceeds):
(a) Agent shall have received satisfactory assurances that all
payments required to be made hereunder in connection with the Loan
Instruments continue to be made by Borrower in a timely manner and that no
Event of Default shall occur during or as a result of such restoration.
(b) Agent, prior to the initial release of Proceeds, receives
evidence satisfactory to it and the Independent Engineer that:
(i) the Proceeds are sufficient to complete within a
reasonable period of time the restoration of such Project to the
equivalent condition that existed immediately prior to the casualty,
or Borrower provide assurances reasonably acceptable to Agent and the
Independent Engineer that the amount of any deficiency will be
available to Borrower when needed for such completion;
(ii) the capability of such Project to operate in a manner so
as to allow Borrower to fulfill its obligations under the Project
Documents, and the productive capacity, utility and remaining useful
life of such Project after restoration (after taking into account
relevant factors including without limitation
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any cancellations, terminations or other consequences of such casualty
loss with respect to any Project Document) will not be materially less
than such capability immediately prior to the casualty; and
(iii) a restoration budget and work plan reasonably
satisfactory to Agent and the Independent Engineer has been prepared
for the complete restoration of such Project.
(c) For each subsequent release of Proceeds, in addition to
evidence and certification required by paragraphs (a) and (d) hereof, Agent
receives:
(i) a certificate in form and substance satisfactory to
Agent and the Independent Engineer (the "Certificate") of Borrower
dated not more than 10 days prior to the application for such release
stating the progress of the work up to the date of the Certificate and
certifying that:
(AA) the sum then requested to be released either has been
paid by Borrower and/or is due to contractors, subcontractors,
materialmen, engineers, architects or other named persons who
have rendered services or furnished materials in connection with
the approved restoration budget and work plan;
(BB) the sum then requested to be released, plus all sums
previously withdrawn, does not exceed the cost of the work
actually finished up to the date of the Certificate, and that the
remainder of the funds then held by Agent will be sufficient to
pay in full for the completion of the work (or Borrower provides
assurances reasonably acceptable to Agent that the amount of any
deficiency will be available to Borrower when needed for such
completion);
(CC) no part of the cost of the services and materials
described in the Certificate has been the basis for the release
of any funds in any previous application;
(DD) all materials and all property described in the
Certificate are free and clear of all Liens (other than Permitted
Liens), except for Liens securing indebtedness due to Persons
specified in such Certificate and which will be
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discharged upon payment of such indebtedness and Liens for
retainage; and
(EE) there is no outstanding indebtedness known, after due
inquiry, which is then due and payable for work, labor, services
or materials in connection with the work which, if unpaid, might
become the basis of a vendor's, mechanic's, laborer's or
materialman's statutory or other similar Lien upon such Project,
except for amounts due and payable as retainage or to
contractors, subcontractors, materialmen, engineers, architects
or other persons for services rendered or materials furnished in
connection with the approved restoration budget and work plan for
which such Proceeds are to be released;
(ii) evidence reasonably satisfactory to Agent and the
Independent Engineer that Borrower has fulfilled such additional
conditions as Independent Engineer may reasonably impose to provide
assurance that the Proceeds will be used to restore such Project to
the equivalent (but not necessarily identical) condition as existed
prior to the damage, and Agent's and the Independent Engineer's prior
approval of plans, specifications and construction contracts for such
restoration and Agent's and the Independent Engineer's periodic
inspections of such restoration work as it progresses.
(d) Prior to the final release (in addition to evidence and
certification required by Section 5.18(c) hereof) Agent receives:
(i) evidence reasonably satisfactory to Agent and the
Independent Engineer that the restoration has been completed and such
Project conforms to all applicable Governmental Requirements, unless
the failure to conform to such Governmental Requirements could not
reasonably be expected to result in a Material Adverse Effect; and
(ii) a certification by the Independent Engineer that the
restoration has been completed in accordance with the budget and the
work plan delivered pursuant to Section 5.18(b)(iii) hereof (as such
budget and work plan may have been modified from time to time with the
approval of Agent) and that the quality of such restoration work is
good.
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(e) The release of Proceeds received by Agent shall be made
within three Business Days after Agent receives a proper application
therefor.
(f) If the amount of Proceeds exceeds the amount necessary to
effect restoration and reimburse Agent for its expenses, then such excess
Proceeds shall be deposited in the Project Account; provided, however, if
(x) after the completion of the Restoration, the projections, in form and
substance satisfactory to Agent, do not demonstrate the ability of Borrower
to maintain at all times during the remaining term of this Agreement, the
Required Coverages, or (y) an Event of Default shall have occurred and be
continuing, then such excess Proceeds shall be paid over to Agent and shall
be applied in the following order of priority:
(A) first, to prepay all Debt Service Loans;
(B) then, to fund the Debt Service Reserve Account, without
taking into account the Debt Service Line of Credit Facility
Commitment, up to the amounts specified in Section 5.1(c)(vi);
and
(C) then, to prepay Funding Loans in the same manner as a
voluntary prepayment under Section 2.7.
To the extent that the Debt Service Reserve Account is funded pursuant to
clause (B) above, the Debt Service Line of Credit Facility Commitment shall
be reduced by an amount equal to the amount so funded pursuant to clause
(B) above.
Section 5.19 Additional Documents; Filings and Recordings. Each
Borrower shall execute and deliver from time to time as reasonably
requested by Agent, at Borrower's expense, such other documents in
connection with the rights and remedies of the Secured Parties granted or
provided for by the Project Agreements, as applicable, which are necessary
to consummate the transactions contemplated therein. Each Borrower shall,
at its own expense, take all reasonable actions that have been or shall be
requested by Agent to establish, maintain, protect, perfect and continue
the perfection of the first priority security interests of the Secured
Parties created by the Security Documents including the execution of such
instruments, and providing such other information as may be required to
enable Agent and any other appropriate Secured Party to effect any such
action. Without limiting the generality of the foregoing, each Borrower
shall execute or cause to be executed and shall file or cause to be filed
such financing statements, continuation statements,
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fixture filings and mortgages or deeds of trust in all places necessary or
advisable (in the opinion of counsel for Agent) to establish, maintain and
perfect such security interests and in all other places that Agent shall
reasonably request.
Section 5.20 Assignment by Borrower. Except for assignments to
Agent for the benefit of the Secured Parties and except as provided in
Section 5.24, neither Borrower shall assign any of its rights or
obligations under any Project Agreement without the prior written consent
of the Majority Lenders.
Section 5.21 Advertising; Press Releases. Except as may be
required by Law, none of Borrower, any Secured Party nor any Affiliate of
Borrower shall issue or consent to the issuance of any press release or
other announcement or advertisement that refers to the provision of
financing by the Secured Parties without the prior written consent of
Borrower and Agent, which consent shall not be unreasonably withheld or
delayed.
Section 5.22 Negative Pledge and Liens. Neither Borrower will
create, incur, assume or suffer to exist any material Lien, except
Permitted Liens, upon or with respect to any assets or property of such
Borrower.
Section 5.23 Limitation on Debt and Contingent Obligations.
Neither Borrower will create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Debt, except (a) Debt
incurred pursuant to this Agreement or under any Interest Rate Hedge
Agreement; or (b) unsecured Debt that is fully subordinated to all of
Borrower's obligations under this Agreement and the other Loan Instruments
pursuant to documents in form and substance satisfactory to Agent and
containing the subordination provisions set forth in Exhibit I hereto; or
(c) Debt incurred in connection with speciality handtools pursuant to the
Agreement dated May 13, 1996 by and among Operator, NRG Newark, NRG Parlin,
Guarantor and Stewart and Stevenson Services.
Section 5.24 Fundamental Changes. (a) Neither Borrower will
(i) enter into any transaction of consolidation or acquisition into any
other Person; (ii) wind up, liquidate or dissolve its affairs; (iii) sell,
lease, transfer or otherwise dispose of directly or indirectly (or agree to
any of the foregoing at any future time), assets with a fair market value
in excess of $50,000, except for (1) obsolete, worn or replaced property
not used or useful in such Borrower's business unless Agent shall have
consented to such
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sale, lease, transfer or other disposition and (2) assets set forth in
Schedule 5.24 hereto (unless such assets are sold, leased, transferred or
disposed of pursuant to the Stipulation of Settlement or after the
transactions contemplated by Stipulation of Settlement have been
consummated); (iv) form any Subsidiary; or (v) purchase or otherwise
acquire (in one or a series of related transactions) any material portion
of the property or assets of any Person out of the ordinary course of
business; and
In the event that Agent consents to any sale, assignment or
transfer of any ownership interest in either Borrower, such sale,
assignment or transfer shall be only to a Qualified Transferee. For
purposes of this Section, a "Qualified Transferee" means any person (i) who
(a) has, or who is majority-owned by a person who has, a long term credit
rating of at least BBB by S&P or Baa2 by Moody's or (b) is a substantially
well-capitalized organization acceptable to Agent in its reasonable
discretion; (ii) who has, in Agent's judgment, a reasonable amount of
experience in the ownership or operation of energy facilities and (iii)
who, in the reasonable discretion of the Agent, does not have a reputation
either within the banking industry or in prior dealings with Agent for
having failed to honor its obligations in a reasonable manner.
Section 5.25 Restricted Junior Payments. Neither Borrower will
make any Restricted Junior Payments except (i) from the proceeds of the
Initial Loan for the purpose of (A) redeeming preferred stock of Guarantor
issued in connection with the Acquisition or (B) repaying Debt or other
obligations incurred by Guarantor in connection with the Acquisition;
(ii) prior to the Additional Funding Date, in amounts necessary to permit
Guarantor to make payments of state income taxes required to be made by
Guarantor in respect of NRG Newark; (iii) prior to the Additional Funding
Date, an amount, not to exceed $200,000 per month, sufficient to permit
Guarantor to pay reasonable and normal operating expenses of Guarantor,
provided that such amounts shall not be used to pay Pre-Existing
Liabilities and, provided, further, that Borrower shall have delivered to
Agent a certificate of an Authorized Officer of Guarantor certifying that
such expenses are legitimate operating expenses of Guarantor; (iv) from the
proceeds of the Additional Loan for the purpose of (A) redeeming preferred
stock of Guarantor issued in connection with the Acquisition or
(B) repaying Debt or other obligations incurred by Guarantor in connection
with the Acquisition; and (v) following the Additional Funding Date, from
monies withdrawn and transferred pursuant to Section 5.1(c)(x).
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Section 5.26 Investments. Neither Borrower shall make any
Investments except Permitted Investments or Cash Equivalents.
Section 5.27 Nature of Business. Neither Borrower will
(i) engage in any business activity, except (A) the ownership of its
respective Project and (B) other related activities incident to any of the
foregoing or (ii) have any employees.
Section 5.28 Fiscal Year. Neither Borrower will not change its
fiscal year except that a Borrower may change its fiscal year to a fiscal
year ending on December 31.
Section 5.29 Bankruptcy. Except with the prior written consent
of Agent, neither Borrower will, or will permit NPI to, commence, or join
with or solicit any other Person in commencing, any case or other
proceeding seeking liquidation, reorganization or other relief with respect
to either Borrower, Guarantor, NPI or NRG or their debts, under any
bankruptcy, insolvency or other similar Law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of either Borrower, Guarantor, NPI or NRG.
Section 5.30 Transactions with Affiliates. Neither Borrower
will enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service,
with any Affiliate of either Borrower or with any director, officer or
employee of either Borrower, except for (i) transactions contemplated by
any Operations and Maintenance Agreement entered into with an Affiliate of
Borrower in accordance with Sections 5.32 or 6.1(o), (ii) transactions
contemplated by the Management Agreement as in effect as of the date
hereof, (iii) transactions contemplated by the DuPont Power Purchase
Agreement and (iv) other transactions in the ordinary course of and
pursuant to the reasonable requirements of such Borrower's business and
upon fair and reasonable terms no less favorable to such Borrower than
would be obtained in an comparable arm's length transaction with a Person
not an Affiliate of either Borrower.
Section 5.31 Compliance with ERISA. Borrower will not and will
cause Guarantor not to:
(i) Permit the occurrence of any Termination Event; or
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(ii) Permit the present value of all benefit liabilities
(based on the then most recent actuarial assumptions) under all
Pension Plans to exceed the current value of the assets of such
Pension Plans; or
(iii) Permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the IRC) with respect to any
Pension Plan, whether or not waived; or
(iv) Fail to make any contribution or payment to any
Multiemployer Plan which such Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(v) Engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction under Section 406 of ERISA or Section 4975 of
the IRC for which a civil penalty pursuant to Section 502(i) of ERISA
or a tax pursuant to Section 4975 of the IRC is imposed; or
(vi) Permit the establishment of any Employee Benefit Plan or
other plan or agreement providing post-retirement welfare benefits,
except as may be required pursuant to Section 4980B of the IRC or
Section 601 et seq. of ERISA or as otherwise required by law or
establish or amend any Employee Benefit Plan which establishment or
amendment could result in liability to such Borrower or Guarantor or
increase the obligation of such Borrower or Guarantor, whether
directly or indirectly through an ERISA Affiliate, to a Multiemployer
Plan which liability or increase, is material to such Borrower or
Guarantor; or
(vii) Fail to establish, maintain and operate each Employee
Benefit Plan or permit any ERISA Affiliate to fail to establish,
maintain and operate each Pension Plan in compliance in all material
respects with the provisions of ERISA, the IRC and all other
applicable laws and the regulations and interpretations thereof;
which in any such case in (i) through (vii) results in or could reasonably
be expected to result in a Material Adverse Effect; provided, however, that
any covenant made pursuant to this Section 5.31 with respect to any plan of
any ERISA Affiliate shall be limited to events over which such Borrower or
Guarantor have actual control or in which such Borrower or Guarantor have
authority to engage or refrain from engaging.
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Section 5.32 Other Transactions. Neither Borrower will enter
into any partnership, profit-sharing, or royalty agreement or other similar
arrangement whereby such Borrower's income or profits are, or might be,
shared with any other Person, or enter into any management contract or
similar arrangement (other than the Operation and Maintenance Agreement)
whereby its business or operations are managed by any other Person, except
that such Borrower may enter into an operating and maintenance agreement
with any Affiliate of NSP or, with the prior written consent of Agent (such
consent not to be unreasonably withheld), other experienced and reputable
operator; provided that (i) any such replacement operator provides to Agent
and the Lenders substantially the same instruments, documents or agreements
as are required from Operator pursuant to Article III hereof, (ii) except
with the prior written consent of Agent, the fees payable to any such
replacement operator shall not exceed the amount specified therefor in the
base case projections, (iii) at no time shall more than one operations and
maintenance agreement exist for a Project, and (iv) (a) prior to
terminating either Operations and Maintenance Agreement pursuant to
Article XII(1)(d) of such Operations and Maintenance Agreement, NRG, the
relevant Borrower and Agent shall enter into an indemnification agreement
in form and substance satisfactory to Agent, whereby NRG shall agree to
indemnify such Borrower for all costs and expenses incurred in connection
with the termination of the Operations and Maintenance Agreement, or
(b) prior to terminating either Operations and Maintenance Agreement
pursuant to the second sentence of Article XII(1)(e) of such Operations and
Maintenance Agreement, NRG shall unconditionally and irrevocably indemnify
such Borrower in full for all costs and expenses incurred in connection
with the termination of the Operations and Maintenance Agreement.
Section 5.33 Abandonment. Neither Borrower will abandon or
agree to abandon its respective Project or place it or agree to place it on
a "care and maintenance basis" for more than 14 days in any calendar year,
provided, however, that (i) nothing in this Section 5.33 shall prevent such
Project from shut-downs necessary for repairs and maintenance or from
putting such Project on a "care and maintenance basis" during any force
majeure not within the control of such Borrower, which force majeure
prevents such Borrower from operating such Project, (ii) nothing in this
Section 5.33 shall prevent such Project from being shut down to the extent
necessary during any restoration undertaken pursuant to Section 5.18 or
required by Section 5.5(b), and (iii) nothing in this Section 5.33 shall be
deemed to waive or limit in any way the right of any of the Lenders or
Agent
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to declare an Event of Default under any other provision of this Agreement.
Section 5.34 Improper Use. Neither Borrower will use, maintain,
operate or occupy, or allow the use, maintenance, operation or occupancy
of, any portion of its respective Project for any purpose (to the extent
that the same could reasonably be expected to result in a Material Adverse
Effect):
(i) which may be dangerous, unless safeguarded as required
by Law (provided, however, that this clause (a) shall not be deemed to
prohibit such Borrower from operating such Project in accordance with
the terms of any Project Document in a reasonable and prudent manner);
(ii) which violates any Law;
(iii) which constitutes a public or private nuisance;
(iv) which may make void, voidable, or cancelable or increase
the premium of, any insurance then in force with respect to such
Project or any part thereof unless, in the case of an increase in
premium, such Borrower give proof of payment of such increase; or
(v) otherwise than for the intended purpose thereof in the
operation and maintenance of such Project.
Section 5.35 Alternative Fuel. Each Borrower covenants and
agrees that, with respect to the supply of Alternative Fuel for its
respective Project (i) each year on September 30, the tanks for storage of
Alternative Fuel for such Project shall be filled to its capacity with
Alternative Fuel and such Borrower shall use its best efforts to keep such
storage tanks filled to capacity from September 30 of such year through
March 30 of the succeeding year; (ii) such Project shall maintain a supply
of Alternative Fuel in its on-site fuel storage facilities adequate to meet
any obligations under the Project Documents or under any Governmental
Requirements; and (iii) such Borrower shall enter into Additional
Contracts, approved by Agent in consultation with the Gas Consultant and/or
the Independent Engineer, that will ensure a continuous supply of
Alternative Fuel is available to enable such Borrower to meet its
obligations under its Power Purchase Agreement when supplies of gas are not
made available to such Borrower by JCP&L.
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Section 5.36 Pre-Existing Liabilities. Borrower will pay,
discharge or otherwise satisfy to the extent not adequately covered by
insurance or amounts deposited in the Pre-Existing Liabilities Account, any
Pre-Existing Liabilities in an amount greater than $100,000 in the
aggregate before they become delinquent, except when the amount or validity
thereof is the subject of a Good Faith Contest by Borrower, Guarantor or
NRG.
Section 5.37 Debt Service Coverage Ratio Covenant. Until
payment in full in cash of all of the Obligations and the expiration or
termination of the Commitments, Borrower agrees that the Debt Service
Coverage Ratio delivered pursuant to Section 5.2 for any four consecutive
quarterly periods shall not be less than 1.0 to 1.0 provided, however, that
with respect to Section 5.37, if (A) within thirty days after the
occurrence of a breach of Section 5.37, Borrower provide Agent with a
business plan (satisfactory to Agent), including, without limitation, the
projections for the immediately succeeding twelve month period, which
incorporate the assumptions set forth in the business plan, describing the
steps Borrower will take to cause the Debt Service Coverage Ratio to be 1.0
to 1.0 or better (together with such information as Agent may reasonably
request) and (B) Borrower is proceeding with diligence and good faith to
implement such business plan, then Borrower shall have up to ninety days
after the occurrence of such breach to bring the Debt Service Coverage
Ratio to a level of at least 1.0 to 1.0.
Section 5.38 Environmental Covenant. NRG Parlin shall work
diligently to obtain five-year operating certificates with respect to all
regulated air emissions units at the Parlin Plant. NRG Parlin shall work
diligently to resolve any and all issues upon which the NJDEP may condition
the issuance of the five-year operating certificates for Stack No. 1, Stack
No. 2, and the auxiliary boiler at the Parlin Plant. If the five-year
operating certificates are not obtained within three months after the
Additional Funding Date, NRG Parlin shall submit a status report to Agent
describing what further steps, if any, must be taken by NRG Parlin to
obtain such certificates and explaining the reasons for the delay in
issuance of the certificates. NRG Parlin will continue to provide such
status reports to Agent every two months thereafter until the five-year
operating certificates have been issued for the Parlin Plant. Borrower
shall also take all steps necessary under applicable Environmental
Requirements to obtain a Clean Air Act Title V Operating Permit for the
Plant and shall maintain the applicable permit shield throughout the
application process and shall comply with all intermediate
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deadlines, requirements and requests of Governmental Authorities under
applicable Environmental Requirements in connection with the application
for said operating permits. In addition, NRG Newark shall take all steps
necessary to comply with New Jersey Reasonably Available Control Technology
("RACT") requirements at New Jersey Administrative Code Subchapter 7:27-19
with respect to the auxiliary boiler at the Newark Plant, including all
necessary physical changes and modifications to said boiler and additional
stack testing or other requirements to establish that said boiler is in
compliance with RACT prior to the regulatory deadline of May 31, 1996.
However, if NRG Newark fails to establish RACT compliance for the auxiliary
boiler prior to May 31, 1996, there shall be no Event of Default hereunder,
provided that NRG Newark shall, by June 10, 1996, submit to Agent a plan
satisfactory to Agent describing all steps necessary to achieve compliance
with and resolve all issues under such RACT requirements as soon as
possible.
Section 5.39 Flood Zone Insurance. In the event it is
determined that either Project does or will include any improved real
property that is located within an area that has been identified by the
Director of the Federal Emergency Management Agency as an area having
special flood hazards, then the relevant Borrower shall immediately
thereafter obtain flood hazard insurance under the National Flood Insurance
Act of 1968, as amended.
Section 5.40 Additional Consents. Prior to the earlier to occur
of (a) the Additional Funding Date and (b) the Initial Maturity Date,
Borrower shall have obtained each item set forth on Schedule 5.40 hereto,
including, without limitation, the PSE&G consent, substantially in the form
of Exhibit G attached hereto.
Section 5.41 Backup Gas Supply. If in any calendar year, either
Project experiences 120 hours of forced outage resulting from a failure of
such Project's gas supply and an inability to operate such Project using
Alternative Fuel as a result of the terms of any Governmental Requirement,
within 30 days of the 120th hour of forced outage, the Borrower
experiencing such forced outages shall provide Agent with a plan for
preventing such forced outages in the future (the "Backup Gas Plan").
After reviewing the Backup Gas Plan, and in consultation with the Gas
Consultant, the Lenders may require such Project to enter into an
Additional Contract(s) with gas suppliers and transporters as is necessary
to ensure that a reliable supply of Backup Gas will be available to such
Borrower to meet its obligations under its Power Purchase Agreement.
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ARTICLE VI
Events of Default
Section 6.1 Events of Default. If any of the following events
("Events of Default") shall occur and be continuing (other than any event
with respect to Guarantor occurring prior to the Additional Funding Date):
(a) Payments. Borrower shall fail to pay any principal of, or
interest on, any of the Loans within three Business Days of the date
when the same becomes due and payable, or Borrower shall fail to pay
any other sum due under this Agreement or any other Loan Instruments,
including, without limitation, prepayments required pursuant to
Section 2.8 hereof, within five Business Days of the date when the
same becomes due and payable; or
(b) Representations and Warranties. Any statement,
representation or warranty made, deemed made or confirmed by either
Borrower or Guarantor or NRG in any Project Agreement, financial
statement or any other statement furnished at any time to any of the
Secured Parties in connection with any of the Project Agreements and
the transactions contemplated thereby shall prove to have been false,
incorrect, incomplete or misleading on or as of the date made, deemed
made or confirmed and could reasonably be expected to result in a
Material Adverse Effect and such default is not cured within 30 days
after written notice thereof; or
(c) Particular Credit Agreement and Guaranty Covenant Defaults.
Either Borrower shall fail to perform or observe any covenant
contained in Section 5.1 (Accounts), Section 5.3 (Maintenance of
Existence), Section 5.16 (Other Contracts), Section 5.17 (Use of
Proceeds), Section 5.22 (Negative Pledge and Liens), Section 5.23
(Limitation on Debt and Contingent Obligations), Section 5.24
(Fundamental Changes), Section 5.26 (Investments), Section 5.27
(Nature of Business), Section 5.31 (Compliance with ERISA) or Section
5.38 (Environmental/Permitting Matters), or Guarantor shall fail to
perform or observe any covenant contained in Section 7(a) of the
Guaranty; or
(d) Compliance with Laws; Insurance and Taxes Covenants. Either
Borrower shall fail to perform or observe any covenant contained in
Sections 5.7, 5.12 and 5.13 and such failure shall remain unremedied
for ten
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Business Days after the earlier of (i) such failure shall first become
known to either Borrower or (ii) a written notice thereof shall have
been given to either Borrower by Agent or any Lender; or
(e) Other Covenants. Either Borrower or Guarantor or NRG shall
fail to perform or observe any term, covenant or agreement contained
herein, in any Project Agreement or in any other Loan Instrument
(other than those referred to in paragraphs (a)-(d) above) on its part
to be performed or observed and any such failure shall remain
unremedied for 30 days or, if (i) such failure is incapable of being
remedied in 30 days, and (ii) Borrower or Guarantor or NRG is
proceeding with diligence and good faith to remedy such failure and
such failure could not reasonably be expected to result in a Material
Adverse Effect, and (iii) no distributions are made to Borrower
pursuant to Section 5.1(c)(x) during the cure period provided in this
paragraph (e), 90 days after the earlier of (i) such failure shall
first become known to either Borrower or Guarantor or NRG, or (ii) a
written notice thereof shall have been given to such Borrower or
Guarantor or NRG by Agent or any Lender; or
(f) Other Debts. Either Borrower or Guarantor shall fail to
make any payment of $100,000 or more on any Debt (individually or in
the aggregate) (other than the Loans or any refinancing, renewals,
extensions or restructurings thereof) or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue
after the applicable notice and grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other default
under any agreement or instrument relating to any Debt of a principal
amount of, in the case of Borrower and Guarantor, $250,000 or more, or
any other event, shall occur, if the effect of such default or event
is to accelerate the maturity of such Debt of a principal amount of,
in the case of Borrower and Guarantor, $250,000 or more; or any such
Debt shall be declared to be due and payable prior to the stated
maturity thereof; or
(g) Judgments and Orders. Any judgment or order for the payment
of money in excess of $250,000 shall be rendered against, and not be
paid by, either Borrower or Guarantor and either (i) enforcement
proceedings shall have been commenced by any creditor upon such
judgment or order and are not promptly stayed or enjoined or
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(ii) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(h) Insolvency or Voluntary Proceedings. Either Borrower or
Guarantor is generally not paying or admits in writing its inability
to pay its debts as such debts become due, or files any petition or
action for relief under any bankruptcy, reorganization, insolvency, or
moratorium Law or any other Law for the relief of, or relating to,
debtors, now or hereafter in effect, or makes any assignment for the
benefit of creditors, liquidates or dissolves, or takes any action in
furtherance of any of the foregoing; or
(i) Involuntary Proceedings. An involuntary petition is filed
against either Borrower or Guarantor under any bankruptcy,
reorganization, insolvency, or moratorium Law now or hereafter in
effect, or a custodian, receiver, trustee, assignee for the benefit of
creditors (or other similar official) is appointed to take possession,
custody or control of any property of such Borrower or Guarantor, and
(i) such petition or appointment is not dismissed, set aside or
withdrawn or otherwise ceases to be in effect within 60 days from the
date of said filing or appointment, or (ii) an order for relief is
entered against such Borrower or Guarantor with respect thereto, or
(iii) such Borrower or Guarantor shall take any action indicating its
consent to, approval of, or acquiescence in, any such petition or
appointment; or
(j) ERISA - Pension Plans. (1) Either Borrower or any ERISA
Affiliate fails to make full payment when due of all amounts which,
under the provisions of any Pension Plan or Section 412 of the IRC,
such Borrower or any ERISA Affiliate is required to pay as
contributions thereto and such failure results in or could reasonably
be expected to result in a Material Adverse Effect; or (2) an
accumulated funding deficiency occurs or exists, whether or not
waived, with respect to any Pension Plan which results in, or could
reasonably be expected to result in, a Material Adverse Effect; or
(3) a Termination Event occurs which results in or could reasonably be
expected to result in a Material Adverse Effect; or
(k) ERISA - Multiemployer Plans. Either Borrower or any ERISA
Affiliate as employers under one or more
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Multiemployer Plans makes a complete or partial withdrawal from such
Multiemployer Plans and the plan sponsor of such Multiemployer Plans
notifies such withdrawing employer that such employer has incurred a
withdrawal liability requiring payments in an amount which results in
or could reasonably be expected to result in a Material Adverse
Effect; or
(l) ERISA - General Liability. Either Borrower or Guarantor
incurs liability under or relating to any Employee Benefit Plan or
Multiemployer Plan resulting from a violation of ERISA, the IRC and/or
any other applicable federal, state or local law which results in, or
could reasonably be expected to result in, a Material Adverse Effect;
or
(m) Loan Instruments. Any provision of any Loan Instrument
shall for any reason cease to be valid and binding on either Borrower
or Guarantor, or either Borrower or Guarantor or any Governmental
Authority shall so state in writing, and such is reasonably expected
to result in a Material Adverse Effect; or
(n) Change of Control. A Change of Control (other than a Change
of Control resulting from any of the events specified in clause (d) of
the "Change of Control" definition) shall occur; or
(o) Failures Under Project Documents, Etc. Any Project
Document, any applicable Law, any Governmental Approval or any of the
requirements of the Insurance Policies are not fully and timely
complied with or are the subject of a breach or an event of default,
in each case by any party thereto and such failure to comply, breach
or default could reasonably be expected to result in a Material
Adverse Effect and such failure to comply, breach or default shall not
be remediable or, if remediable, shall continue unremedied for a
period terminating on the last day of the applicable cure period, if
any, specified in the relevant Project Document, Law, Governmental
Approval or Insurance Policy, or shall not be waived by the
appropriate party, provided that either Borrower, prior to waiving any
failure to comply, breach or default, shall have obtained the written
consent of Agent, provided, further, that each Borrower hereby
irrevocably constitutes and appoints Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact (which appointment as attorney-in-fact shall be
coupled with an interest),
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with full authority in the place and stead of Borrower and in the name
of Borrower or otherwise, from time to time upon the delivery of a
notice of default to NRG Newark by the Newark Group pursuant to
Section 16.2(i) of the Newark Steam Sales Agreement or to NRG Parlin
by DuPont pursuant to Article 14(A) of the Parlin Steam Sales
Agreement, as the case may be, to take any action and to execute any
documents which Agent may deem necessary or advisable to cure the
default, and Borrower shall defend, indemnify and hold harmless Agent
and its officers, directors employees and agents ("Indemnified
Parties") from any and all costs, expenses, liabilities, losses,
damages, claims, penalties, fines, suits, judgments or demands (except
to the extent caused by the gross negligence or willful misconduct of
the Indemnified Parties) which are occasioned by or result from any
actions of the Indemnified Parties to cure the default under the Steam
Sales Agreement; or any material provision in any Project Document
shall for any reason cease to be valid and binding on any party
thereto (or any such party shall so state in writing) or shall be
declared null and void, or the validity or enforceability thereof
shall be contested by any party thereto (other than any of the Secured
Parties) or any Governmental Authority, or any party thereto shall
deny that it has any liability or obligation thereunder, except upon
fulfillment of its obligations thereunder; provided that to the extent
caused by the failure to comply, breach or default by a Person other
than Borrower or Guarantor with respect to a Project Document other
than the Power Purchase Agreement or the Ground Lease, such failure to
comply, breach or default shall not be an Event of Default under this
Section 6.1(o) if (A) such failure to comply, breach or default is
cured within 60 days of the date of occurrence of such failure to
comply, breach or default, or (B)(1) such Project Document is replaced
within 60 days of the date of such failure to comply, breach or
default with a substitute Project Document in form and substance
reasonably satisfactory to Agent, (2) the party or parties (other than
the Borrower) to such substitute Project Document are acceptable to
Agent, and, in the opinion of Agent, are capable of performing their
obligations under such substitute Project Document, (3) Agent shall
have been granted a security interest in such substitute Project
Document (other than in the case of the DuPont Power Purchase
Agreement) for the benefit of the Secured Parties to the same extent
as the Project Document being replaced, (4) in the case of
substitution of either Operations and Maintenance Agreement, prior to
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substituting such Operations and Maintenance Agreement, NRG, the
relevant Borrower and Agent shall have entered into an indemnification
agreement, in form and substance satisfactory to Agent, whereby NRG
shall have agreed to indemnify such Borrower for all costs and
expenses incurred in connection with the termination of such
Operations and Maintenance Agreement and (5) in the case of
replacement of either Steam Sales Agreement, the Ground Lease for the
applicable Project shall not be terminable as a result of the
termination of such Steam Sales Agreement; or
(p) [Intentionally Omitted].
(q) Non-Maintenance of Governmental Approvals. Failure of
either Borrower to obtain during the required period and to maintain
thereafter all Governmental Approvals which are then required under
Law for the operation of its respective Project or to ensure the
continued rights of such Borrower under the Project Documents and
failure to obtain or maintain such Governmental Approvals could
reasonably be expected to result in a Material Adverse Effect; or
(r) Modifications of Governmental Approvals. Any modification
not previously approved by Agent (including, but without limitation,
establishment of new requirements or revocation of any exemption or
waiver) of any Governmental Approval or the inclusion of terms in any
Governmental Approval issued after the date hereof, which has had or
could reasonably expected to result in a Material Adverse Effect; or
(s) Qualifying Cogeneration Facility and EWG Status. Failure of
NRG Newark either to maintain the Newark Project's status as a
Qualifying Cogeneration Facility until the Rate Approval Date or the
failure of either Borrower to maintain its status as an EWG or any
action by either Borrower, or any Affiliate thereof, which would have
an adverse impact upon the Qualifying Cogeneration Facility status of
the Newark Project until the Rate Approval Date or the status of
either Borrower as an EWG; or
(t) Dissolution of Borrower; Others. The liquidation,
dissolution, termination, acquisition or consolidation of either
Borrower, Guarantor any other Obligor or any other party to any of the
Project Documents, or the transfer of all or substantially all of the
assets of either Borrower, or Guarantor to any
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other Person, except, in the case of any such other Obligor or other
party to any Project Document, if the acquisition or consolidation is
by a Person with (i) an investment grade rating or equivalent or
better credit as such other Obligor or other party to a Project
Document and (ii) equivalent or better ability to perform and
reputation in the relevant area as such other Obligor or other party
to a Project Document; or
(u) Transfer of Collateral. Title to or any right in all or any
part of either Project, any collateral purported to be covered by the
Security Documents (other than obsolete or worn personal property
promptly replaced by adequate substitutes of equal or greater value
than the replaced items when new) shall become vested in any party
other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of Law or
otherwise; or
(v) Diminution of Property Rights. Without the prior written
consent of Agent, either Borrower hereafter grants any easement or
dedication, files any plat, declaration or restriction or enters into
any lease or sub-lease concerning either Project and the effect
thereof could reasonably be expected to result in a Material Adverse
Effect; or
(w) Impairment of Security Interests. Except to the extent
caused by the termination of any Project Document in accordance with
the terms of this Agreement, any provision in any Security Document
shall for any reason cease to be valid and binding on the Obligors
party thereto and the effect thereof is to materially impair the
security purported to be created thereby, or any such Obligors shall
so state in writing, or any Security Document shall cease to be in
full force and effect, or shall for any reason cease to create a valid
security interest having the priority and perfected in the manner
contemplated hereunder in any of the collateral purported to be
covered thereby, or either Borrower, or Guarantor shall default in the
due performance or observance of any term, covenant or agreement on
its part to be performed or observed pursuant to any of the Security
Documents and the effect thereof is to materially impair the security
purported to be created thereby.
then, (i) automatically upon the occurrence of any event specified in
Section 6.1(h) or Section 6.1(i) or, with respect to Borrower only,
Section 6.1(t) and at the option of
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Majority Lenders, by notice from Agent to Borrower, in any other event,
(A) the obligation of each Lender hereunder or under any other Loan
Instruments to make any Loans, shall be immediately terminated, and (B) the
total outstanding principal amount of all Loans, all interest thereon and
all other amounts payable under this Agreement or under any other Loan
Instrument shall be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and (ii) Agent shall upon the request, or may with the
consent, of Majority Lenders take such actions under and exercise such
rights and remedies pursuant to the Loan Instruments, or any of them, as
Agent may deem appropriate.
Section 6.2. Limitation on Representations and Warranties.
Notwithstanding any other term or provision of this Agreement or the Loan
Instruments to the contrary, if any statement, certificate or
representation or warranty made herein or in connection herewith is later
determined to have been incorrect as of the date made or given as a result
of a Pre-Existing Liability, which neither Borrower nor Guarantor was aware
of as of such date, then such statement, certificate, representation or
warranty shall be deemed to have been correct, and no Default or Event of
Default shall exist hereunder as a result of such statement, certificate,
representation or warranty having been incorrect so long as (a) such
incorrectness can be cured by the payment of such Pre-Existing Liability
and (b) NRG or Guarantor either pays such Pre-Existing Liability or funds
the Pre-Existing Liability Account to the extent necessary to pay such Pre-
Existing Liability within sixty (60) days of either Borrower, Guarantor or
NRG becoming aware of such Pre-Existing Liability.
ARTICLE VII
Relationship of Agent and Lenders
Section 7.1 Appointment. Each Lender hereby designates Credit
Suisse, as Agent to act as specified herein and in any other Loan
Instrument and hereby irrevocably authorizes the Agent to take such action
on its behalf under the provisions of this Agreement, the other Loan
Instruments and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the Agent by
the terms hereof and thereof and such other powers as are reasonably
incidental thereto.
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The Agent may perform any of its duties hereunder by or through its
officers, directors, agents or employees.
Section 7.2 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Loan Instruments. Neither the Agent nor any of its officers,
directors, agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Loan Instrument, or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason
of this Agreement or any other Loan Instrument a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any other Loan
Instrument, expressed or implied, is intended to or shall be so construed
as to impose upon the Agent any obligations in respect of this Agreement or
any other Loan Instrument except as expressly set forth herein or therein.
Section 7.3 Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Lender, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Borrower and
Guarantor in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of each Borrower and
Guarantor and, except as expressly provided in this Agreement, the Agent
shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any document, certificate or
other writing delivered in connection herewith or any other Loan Instrument
or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this Agreement or
any other Loan Instrument or the financial condition of any Borrower or
Guarantor or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of
this Agreement or any other Loan Instrument or the financial condition of
any Borrower or Guarantor or the existence or possible existence of any
Default or Event of Default.
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Section 7.4 Certain Rights of the Agent. If the Agent shall
request instructions from the Majority Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any
other Loan Instrument, the Agent shall be entitled to refrain from such act
or taking such action unless and until the Agent shall have received
instructions from the Majority Lenders; and the Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the
Agent as a result of the Agent acting or refraining from acting hereunder,
under any other Loan Instrument in accordance with the instructions of the
Majority Lenders.
Section 7.5 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or
made by any Person that the Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement or any other
Loan Instrument and its duties hereunder and thereunder, upon advice of
counsel selected by it.
Section 7.6 Indemnification. To the extent the Agent is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Agent in proportion to their respective Commitment
Percentages for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Agent in performing its duties
hereunder or under any other Loan Instrument or in any way relating to or
arising out of this Agreement or any other Loan Instrument; provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful
misconduct.
Section 7.7 The Agent in its Individual Capacity. With respect
to any obligation the Agent may have to make Loans under this Agreement,
the Agent shall have the rights and powers specified herein for a "Lender",
and a Secured Party and may exercise the same rights and powers as though
it were not performing the duties of the Agent specified herein; and the
term "Lenders", "Majority Lenders", "Secured Parties" or any similar terms
shall, unless the context clearly otherwise indicates, include the Agent in
its
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individual capacity. The Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with
the Borrower or any Affiliate of the Borrower as if it were not performing
the duties specified herein, and may accept fees and other consideration
from the Borrower or Guarantor for services in connection with this
Agreement and otherwise without having to account for the same to the
Lenders.
Section 7.8 Resignation by the Agent. (a) The Agent may resign
from the performance of all their respective functions and duties hereunder
and/or under the other Loan Instruments at any time by giving thirty (30)
days' prior written notice to the Borrower and the Secured Parties. Such
resignation shall take effect upon the appointment of a successor Agent
pursuant to clause (b) or (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within
such thirty (30) day period, the Agent, with the consent of the Borrower,
may then appoint a successor Agent who shall serve as Agent hereunder or
thereunder until such time, if any, as the Majority Lenders appoint a
successor Agent, as provided above.
(d) If no successor Agent has been appointed pursuant to
clause (b) or (c) above by the forty-fifth (45th) day after the date such
notice of resignation was given by the Agent, the Agent or any Lender may
petition any court of competent jurisdiction for the appointment of a
successor Agent. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor Agent who shall serve
as Agent hereunder until such time, if any, as the Majority Lenders appoint
a successor Agent.
Section 7.9 No Amendment to Duties of Agent Without Consent.
The Agent shall not be bound by any waiver, amendment, supplement or
modification of this Agreement which affects its rights or duties under
this Agreement unless it shall have given its prior written consent, as
Agent thereto.
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ARTICLE VIII
General Terms And Conditions
Section 8.1 Notices. Except as otherwise expressly provided
herein, (a) all notices and other communications provided for hereunder
shall be provided in writing (including telegraphic, facsimile or cable
communication) and shall be sent by telecopy, telegraph or cable with the
original of such communication dispatched by (if inland) overnight or (if
overseas) international courier and, if such courier service is not
available, by registered airmail (or, if inland, registered first-class
mail) with postage prepaid to the Borrower and the Agent at their
respective addresses specified below and to the Lenders, at their
respective addresses specified in Schedule 8.1, or at such other address as
shall be designated by such party in a written notice to the other parties
hereto and (b) all such notices and communications shall, when mailed,
telegraphed, telecopied, or cabled or sent by overnight courier, be
effective seven (7) days after being deposited in the mails in the manner
as aforesaid, when delivered to the telegraph company or cable company (if
inland), one (1) day or (if overseas) three (3) days after delivery to a
courier in the manner as aforesaid, as the case may be, or when sent by
telecopier:
Addresses:
If to NRG Newark:
NRG Generating (Newark) Cogeneration Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attn.: Leonard A. Bluhm
Tel. : (612) 373-5305
Fax : (612) 373-5312
with a copy to:
NRG Energy, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attn.: James T. Hemphill
Tel. : (612) 373-5451
Fax : (612) 373-5312
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If to NRG Parlin:
NRG Generating (Parlin) Cogeneration Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attn.: Leonard A. Bluhm
Tel. : (612) 373-5305
Fax : (612) 373-5312
with a copy to:
NRG Energy, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attn.: James T. Hemphill
Tel. : (612) 373-5451
Fax : (612) 373-5312
If to the Agent:
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
Attn.: Project Finance
Tel. : (212) 238-5462
Fax : (212) 238-5390
Section 8.2 Indemnities and Expenses. (a) Borrower agrees to
pay on demand, subject to the proviso set forth below, (i) all costs and
expenses of Agent in connection with the syndication by Agent of the credit
facility provided hereunder and in connection with the preparation,
execution, delivery, administration, modification and amendment of the Loan
Instruments and the other documents to be delivered under the Loan
Instruments, including, without limitation, the reasonable fees and
expenses of counsel (excluding allocated costs for in-house legal services)
for Agent with respect thereto and with respect to advising Agent as to its
rights and responsibilities under the Loan Instruments, (ii) all costs and
expenses of Agent and each of the Lenders, if any (including, without
limitation, reasonable counsel fees and expenses, but limited to costs and
expenses of the same counsel and local counsel for Agent and the Lenders
(excluding allocated costs for in-house legal services)), in
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connection with the enforcement (whether through negotiations, legal
proceedings or otherwise), restructuring (whether or not in the nature of a
"work-out"), and the administration of the Loan Instruments and the other
documents to be delivered under the Loan Instruments, (iii) all costs and
expenses of Agent in connection with the disbursements of the Loans, and
(iv) the fees of the Independent Engineer and the Insurance Consultant;
provided that Borrower shall only be liable for costs or expenses incurred
in connection with the initial syndication of the credit facility provided
hereunder to any Lender that is or becomes party to this Agreement on or
prior to the Initial Funding Date or within 90 days from the date of
commencement of the initial syndication process.
(b) Borrower shall, whether or not the transactions herein
contemplated are consummated, (i) pay and hold each of the Lenders and the
Agent harmless from and against any and all present and future stamp and
other similar taxes with respect to the foregoing matters and save each of
the Lenders and the Agent harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to the Lenders) to pay such taxes; and (ii) indemnify
each of the Lenders and the Agent and each of their respective officers,
directors, employees, representatives, attorneys and agents from and hold
each of them harmless against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses and
disbursements incurred by any of them as a result of, or arising out of, or
in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not any Lender or the Agent is a party
thereto) related to the entering into and/or performance of this Agreement,
each other Loan Instrument or any Project Document or the use of the
proceeds of any Loans or the consummation of any transactions contemplated
herein, each other Loan Instrument, in any Project Document or in the base
case projections, including, without limitation, the reasonable fees and
disbursements of counsel selected by such indemnified party incurred in
connection with any such investigation, litigation or other proceeding or
in connection with enforcing the provisions of this Section 8.2(b) (but
excluding any such liabilities, obligations, losses, to the extent incurred
by reason of the gross negligence or willful misconduct of the Person to be
indemnified or its officers, directors, employees, representatives,
attorneys or agents, as the case may be as determined by a court of
competent jurisdiction). The Agent or such Lender, as the case may be,
shall (1) use its best efforts to, upon its becoming aware of
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any event which may result in the Borrower being required to perform any of
its indemnity obligations under this paragraph (b), promptly notify the
Borrower (provided that failure to so notify shall not mitigate the
obligations of the Borrower hereunder), (2) upon request from the Borrower
consult the Borrower regarding any step (including any step which may
mitigate the effect of such event) it proposes to take in respect of such
event and (3) obtain the prior written consent of the Borrower before
entering into any settlement or compromise in relation to any such claims,
actions or suits.
(c) Without limitation to the provisions of paragraph (b) above,
each Borrower agrees to defend, protect, indemnify and hold harmless each
of the Lenders and the Agent and each of their respective officers,
directors, employees, representatives, attorneys and agents from and hold
each of them harmless against any and all liabilities (including removal
and remedial actions), obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) imposed on
or asserted against any such Persons directly or indirectly based on, or
arising or resulting from, (i) the actual or alleged presence of Hazardous
Materials on, under or at either Project or either Property, (ii) any
Environmental Claim relating to either Borrower or either Project or
arising out of the use of either Project or either Property, or (iii) the
exercise of the Agent's or the Lenders' rights under any of the provisions
of this Section 8.2 regardless of when any such matters arise, but
excluding (A) the Release by Agent or a Lender of any Hazardous Material on
the Property and (B) any matter based solely on the gross negligence or
willful misconduct of the Agent or any Lender or its officers, directors,
employees, representatives, attorneys or agents, as the case may be. Such
Lender or the Agent shall (1) use its best efforts to, upon its becoming
aware of any event which may result in either Borrower being required to
perform any of its obligations under this paragraph (c), promptly notify
such Borrower (provided that failure to so notify shall not mitigate the
obligations of such Borrower hereunder), (2) upon request from either
Borrower consult such Borrower regarding any step (including any step which
may mitigate the effect of such event) it proposes to take in respect of
such event and (3) obtain the prior written consent of the Borrower before
entering into any settlement or compromise in relation to any such claims,
actions or suits.
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(d) To the extent that the undertaking in the preceding
paragraphs of this Section may be unenforceable because it is violative of
any law or public policy, each Borrower will contribute the maximum portion
that they are permitted to pay and satisfy under applicable law to the
payment and satisfaction of such undertakings.
(e) All sums paid and costs incurred by the Agent or the Lenders
in respect to any matter indemnified hereunder shall bear interest at the
Default Interest Rate from the date 35 days after the date of the invoice
therefor provided by the Agent or such Lenders to the Borrower until
reimbursed by the Borrower, and all such sums and costs not paid within
such 35 day period shall be added to the debt and be secured by the
Security Documents and shall be immediately due and payable on demand.
(f) If any amount owing to the Agent or the Lenders under this
Agreement shall be collected through any process of law or shall be placed
in the hands of attorneys for collection, the Borrower shall pay (in
addition to all monies then due in respect of the Loans otherwise payable
under this Agreement) reasonable attorneys' and other fees and expenses
incurred in respect of such collection.
Section 8.3 Survival. All indemnities set forth herein, shall
survive the execution and delivery of this Agreement and the Notes and the
making and repayment of the Loans.
Section 8.4 Governing Law; Submission to Jurisdiction. (a)
This Agreement is a contract made under the laws of the State of New York
of the United States and shall for all purposes be governed by and
construed in accordance with the laws of such State without regard to the
conflict of law rules thereof.
(b) Any legal action or proceeding against the
Borrower with respect to this Agreement or any Loan Instrument may be
brought in the courts of the State of New York in the County of New York or
of the United States for the Southern District of New York and, by
execution and delivery of this Agreement, each Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Borrower
agrees that a judgment, after exhaustion of all available appeals, in any
such action or proceeding shall be conclusive and binding upon the
Borrower, and may be enforced in any other jurisdiction by a suit upon such
judgment, a certified copy of which shall be conclusive
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evidence of the judgment. Each Borrower hereby irrevocably designates,
appoints and empowers CT Corporation System, 1633 Broadway, New York, New
York, 10019, as its designee, appointee and agent to receive and accept
service of any and all legal process, summons, notices and documents
arising out of this Agreement. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Borrower agrees
to designate a new designee, appointee and agent in New York City on the
terms and for the purposes of this provision satisfactory to the Agent.
Each Borrower further irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
to such Borrower, at its respective addresses set forth in Section 8.1
hereof, such service to become effective 30 days after such mailing.
Nothing herein shall affect the right of any Secured Party to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against either Borrower in any other jurisdiction.
(c) Each Borrower hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
or any other Loan Instrument brought in the courts referred to in
clause (b) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum.
Section 8.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto, except that neither Borrower may assign or
otherwise transfer all or any part of their rights or obligations under
this Agreement without the prior written consent of the Lenders.
Section 8.6 Assignments and Participations.
(a) Additional Lenders. Any Lender may at any time sell to one
or more financial institutions, with the consent of Agent and with the
consent of Borrower, such consent not to be unreasonably withheld (a
"Purchasing Lender"), all or any part of its rights and obligations under
this Agreement and the Notes pursuant to a Commitment Transfer Supplement,
executed by such Purchasing Lender, such transferor Lender and Agent.
Borrower's consent shall not be deemed to have been unreasonably withheld
if there is a
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material risk that any such assignment would result in Borrower being
liable to pay increased costs or other amounts pursuant to Section 2.5
hereof which the Borrower would not otherwise be obligated to pay. Upon
(x) such execution of such Commitment Transfer Supplement, and (y) delivery
of an executed copy thereof to Borrower and payment of the amount of its
participation to Agent, such Purchasing Lender shall for all purposes be a
Lender, party to this Agreement and shall have all the rights and
obligations of a Lender, under this Agreement, to the same extent as if it
were an original party hereto with the percentage of the Loans, Additional
Commitment and the Facility Debt Service Line of Credit Facility Commitment
as set forth in such Commitment Transfer Supplement, which shall be deemed
to amend this Agreement (including, without limitation, Schedule 8.6
hereto) to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of
percentage shares of the Loans, Additional Commitment and Debt Service Line
of Credit Facility Commitment arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Notes. Upon the consummation of any
transfer pursuant to this Section 8.6(a), the transferor Lender, Agent and
Borrower shall make appropriate arrangements so that, if required,
replacement Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchasing Lender, in
each case in principal amounts reflecting their percentage shares of the
Loans, the Additional Commitment and the Debt Service Line of Credit
Facility Commitment. Except as otherwise agreed to, or consented by, Agent
and Borrower, no Lender shall assign at any one time less than a
$10,000,000 interest in this Agreement and the Notes, unless and until such
Lender assigns all of its interest in this Agreement and the Notes.
(b) Participations. Any Lender may, from time to time, sell or
offer to sell any Loans owing to such Lender, any Notes held by such
Lender, any commitment of such Lender or any other interests and
obligations of such Lender hereunder, to one or more participants (each, a
"Participant"), on such terms and conditions as may be determined by the
selling party, without the consent of or notice to Borrower or any other
Secured Party, and the grant of such participation shall not relieve any
Lender of its obligations, or impair the rights of any Lender hereunder. A
Participant shall not have any right to approve any amendment,
modification, supplement or waiver of any provision of this Agreement;
provided that the Lender selling its interest to the Participant may agree
not to consent to
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any amendment, modification, supplement or waiver of this Agreement of the
type specified in clauses (i), (ii), (iii) and (iv) of Section 8.14 without
the prior written consent of the Participant. Except as specified in the
immediately preceding sentence, no Participant shall have any rights under
this Agreement other than to receive payment of principal of and interest
through such Lender.
(c) Assignments to Federal Reserve Bank. Any Lender may at any
time (without obtaining the consent of Agent or any other Person) assign
and pledge all or any portion of its rights and obligations under this
Agreement and the Notes to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors and any Operating Circular issued by such Federal Reserve Bank.
No such assignment shall release the assigning Lender from its obligations
hereunder.
(d) Qualified Loan Assignment by Credit Suisse. Notwithstanding
anything to the contrary contained in this Agreement, but subject to the
terms and conditions set forth in this Section, Credit Suisse may from time
to time elect to grant to GFC, an option to (A) provide all or any part of
the Debt Service Loans from Credit Suisse to the Borrower (a "Qualified
Loan Assignment"), and (B) assign to GFC all or any undivided interest in
the right of Credit Suisse to receive and collect payments from the
Borrower respecting the Loans and the other applicable provisions of the
Loan Instruments. No additional Note shall be issued with regard to a
Qualified Loan Assignment; provided, however, to the extent GFC shall fund
any Debt Service Loans, Credit Suisse shall be deemed to hold the Note in
its possession as an agent for GFC to the extent of the Debt Service Loans
funded by GFC. Notwithstanding any such Qualified Loan Assignment, (x) to
the extent of any Loans funded or maintained by Credit Suisse, Credit
Suisse individually, and to the extent of any Loans funded or maintained by
GFC, Credit Suisse, as administrative agent for GFC, shall remain obligated
for all obligations under this Agreement to the Agent, including, without
limitation, any indemnity and expense reimbursement obligations under
Section 7.6 hereof (which shall be solely for the account of Credit
Suisse), the obligations of Credit Suisse under this Agreement to the Agent
shall remain unchanged, except Credit Suisse shall be excused pro tanto
from its payment obligations under Section 7.6 hereof to the extent any
payments on such Loans are made to the Agent by GFC, (y) Credit Suisse
shall remain primarily responsible for the performance of its obligations
hereunder, and (z) the Agent may continue to deal solely and directly with
Credit Suisse, as administrative agent for GFC, in connection with
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all of GFC's rights and obligations under this Agreement, unless and until
the Agent is notified that Credit Suisse has been replaced as
administrative agent for GFC.
(e) No Proceedings. Each of Credit Suisse, the Purchasing
Lenders, the Borrower and the Agent hereby agrees that, at any time a
Qualified Loan Assignment is in effect, it shall not institute against, or
join any other person in instituting against, GFC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law, for one
year and a day after the latest maturing commercial paper note issued by
GFC is paid. This Section 8.6(e) shall survive the termination of this
Agreement.
Section 8.7 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
Section 8.8 Right of Setoff. In addition to any rights now or
hereafter granted under Applicable Law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
the Agent is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to any Borrower or
to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and apply any and all deposits (general or special)
and any other Debt at any time held or owing by any Lender (including
without limitation by branches and agencies of any Lender, wherever
located), to or for the credit or the account of the Borrower against and
on account of the Obligations of the Borrower under this Agreement and
liabilities of the Borrower to such Lender under this Agreement or any of
the other Loan Instruments, including, without limitation, all interests in
Obligations of the Borrower under this Agreement purchased by any Lender
pursuant to Section 8.6, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Loan
Instrument, irrespective of whether or not the Agent shall have made any
demand hereunder and although said Obligations, liabilities or claims, or
any of them, shall be contingent or unmatured.
Section 8.9 No Waiver; Remedies Cumulative. No failure or delay
on the part of the Agent or any Lender in exercising any right, power or
privilege hereunder or under any Loan Instrument and no course of dealing
between the Borrower and the Agent or any Lender shall impair any such
right, power or privilege or operate as a waiver thereof; nor
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shall any single or partial exercise of any right, power or privilege
hereunder or under any Loan Instrument preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein, in any
Loan Instrument expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Agent, or any Lender would otherwise
have. No notice to or demand on any Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or any
Lender to any other or further action in any circumstances without notice
or demand.
Section 8.10 Severability. Any provision of this Agreement, any
Note and any other Loan Instrument which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability but that shall not
invalidate the remaining provisions of this Agreement, any Note or any
other Loan Instrument or affect such provision in any other jurisdiction.
Section 8.11 Calculation. All financial calculations to be made
under, or for the purposes of, this Agreement shall be determined in
accordance with generally accepted accounting principles, applied on a
consistent basis and, except as otherwise required to conform to the
definitions contained in Exhibit X of this Agreement or any other
provisions of this Agreement, shall be calculated from the then most
recently issued quarterly financial statements which the Borrower is
obligated to furnish to the Agent from time to time, as provided hereunder;
provided, however, that (a) if the relevant quarterly financial statements
should be in respect of the last quarter of a Fiscal Year then, at the
option of the Majority Lenders, such calculations may instead be made from
the audited financial statements for the relevant Fiscal Year, and (b) if
there should occur any material adverse change in the financial condition
or results of operations of the Borrower after the end of the period
covered by the relevant financial statements, then such material adverse
change shall also be taken into account in calculating the relevant
figures.
Section 8.12 Payments Pro Rata; Sharing. (a) Subject to
Sections 2.10(c) (Priority of Application) and 2.12 (Replacement of a
Lender), the Agent agrees that promptly after its receipt of each payment
from or on behalf of the Borrower in respect of any Obligations of the
Borrower to the Lenders hereunder, it shall distribute such payment to
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the Lenders pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Loan Instruments or any Note or otherwise), which is applicable to the
payment of the principal of, or interest on, the Loans of a sum which with
respect to the related sum or sums received by the other Lenders is in a
greater proportion than the total amount of such Obligation then owed and
due to such Lender bears to the total amount of such Obligation then owed
and due to all the Lenders immediately prior to such receipt, then such
Lender receiving such excess payment shall purchase for cash without
recourse or warranty from the other Lenders an interest in the Obligations
of the Borrower to such Lenders in such amount as shall result in a
proportional participation by all the Lenders in such amount; provided,
however, that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without
interest.
Section 8.13 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
Section 8.14 Amendment or Waiver. Neither this Agreement nor
any terms hereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing signed by the
Majority Lenders and the Agent; provided, however, that no such change,
waiver, discharge or termination shall, without the consent of each of the
Lenders (i) extend the final maturity of any Loan or reduce the rate or
extend the time of payment of interest or fees thereon, or reduce the
principal amount thereof, or increase the commitments of any of the Lenders
over the amount thereof then in effect (it being understood that a waiver
of any Default or Event of Default shall not constitute a change in the
terms of the commitments of any Lender), (ii) amend, modify or waive any
provision of this Section 8.14 or Sections 8.2(b) and 8.2(c), (iii) reduce
the percentage specified in the definition of Majority Lenders set forth in
Exhibit X hereto or (iv) consent to the
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assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement.
Section 8.15 Confidentiality. Each Lender and the Agent agrees
(on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) to keep confidential, in accordance with
their customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices, any and all
projected financial information relating to the Borrower, Guarantor or NRG,
and any other non-public information supplied to it by the Borrower,
Guarantor or NRG pursuant to this Agreement; provided that nothing herein
shall limit the disclosure of any such information (i) to the extent
required by Law, statute, rule, regulation or judicial process, (ii) to
counsel for any of the Lenders or Agent, (iii) to bank examiners, auditors
or accountants, (iv) to Agent or any other Lender, (v) in connection with
any litigation to which any one or more of the Lenders is a party
(provided, that each such Lender will promptly notify the Company of such
litigation and of such proposed disclosure prior to the disclosure of such
information (unless prohibited from doing so by the relevant court)), (vi)
to any assignee or participant (or prospective assignee or participant) so
long as such assignee or participant (or prospective assignee or
participant) first executes and delivers to the respective Lender an
agreement to be bound by this Section 8.15, (vii) to any consultant of
Agent or any
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other Lender so long as such consultant first executes and delivers to
Agent or such Lender an agreement to be bound by this Section 8.15, or
(viii) to any Affiliates, directors, officers or employees of Agent or any
other Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
CREDIT SUISSE, as Agent and Lender
By: /s/ Guy R. Cirincione
Name: Guy R. Cirincione
Title: Member of Senior Management
By: /s/ Louis D. Iaconetti
Name: Louis D. Iaconetti
Title: Associate
NRG GENERATING (NEWARK) COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
NRG GENERATING (PARLIN) COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
<PAGE>
GREENWICH FUNDING CORPORATION, as Lender
By: Credit Suisse, New York Branch, as
Attorney-In-Fact
By: /s/ Carin L. Okita
Name: Carin L. Okita
Title: Associate
By: /s/ Thomas Meier
Name: Thomas Meier
Title: Associate
<PAGE>
Exhibit 10.8.2
AMENDMENT NUMBER 1 TO
CREDIT AGREEMENT
by and among
NRG GENERATING (NEWARK) COGENERATION INC.
and
NRG GENERATING (PARLIN) COGENERATION INC.
CREDIT SUISSE, GREENWICH FUNDING CORPORATION AND ANY PURCHASING LENDER
as Lender,
and
CREDIT SUISSE
as Agent
Dated as of June 28, 1996
<PAGE>
AMENDMENT NUMBER 1 TO CREDIT AGREEMENT
This AMENDMENT NUMBER 1 TO CREDIT AGREEMENT, dated as of June
28, 1996 ("Amendment"), is made by and among (i) NRG Generating (Newark)
Cogeneration Inc., a Delaware corporation, and NRG Generating (Parlin)
Cogeneration Inc., a Delaware corporation, (ii) CREDIT SUISSE, GREENWICH
FUNDING CORPORATION, a Delaware corporation, and each Purchasing Lender
(each, a "Lender" and collectively, the "Lenders"), and (iii) CREDIT
SUISSE, as agent for the Lenders ("Agent").
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into the Credit
Agreement dated as of May 17, 1996 (the "Credit Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement
in certain respects on the terms and conditions set forth in this
Amendment.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereby agree as follows:
1. Definitions. For purposes of this Amendment, the terms used
herein and not otherwise defined herein shall have the respective meanings
assigned to them in Exhibit X to the Credit Agreement.
2. Amendment to the Credit Agreement.
(a) Section 5.40 of the Credit Agreement is hereby amended by
deleting the phrase "earlier to occur of (a) the Additional Funding Date
and (b) the Initial Maturity Date," in such section and inserting in its
place, "date occurring thirty days after the Additional Funding Date,".
(b) Section 2.8(b)(ii) of the Credit Agreement is hereby amended
by inserting after the phrase "Newark Power Purchase Agreement", in each
place such phrase occurs, the phrase "or the Parlin Power Purchase
Agreement".
3. Amendment to Exhibit X and Schedule 4.3B to the Credit
Agreement.
(a) The definition of "Base Rate Margin" is hereby amended by
inserting after the phrase "1.000% per annum" in such definition the
following phrase: ";provided, however, that if on any Calculation Delivery
Date the Debt Service Coverage Ratio exceeds 1.40, then for the quarterly
period ending on the Repayment Date immediately preceding such Calculation
Delivery Date, the Base Rate Margin shall be the percentage specified in
clause (i), (ii) or (iii) above, as applicable, minus 0.125%".
(b) The definition of "LIBOR Margin" is hereby amended by
inserting after the phrase "1.75% per annum" in
<PAGE>
such definition the following phrase: ";provided, however, that if on any
Calculation Delivery Date the Debt Service Coverage Ratio exceeds 1.40,
then for the quarterly period ending on the Repayment Date immediately
preceding such Calculation Delivery Date, the Base Rate Margin shall be the
percentage specified in clause (i), (ii) or (iii) above, as applicable,
minus 0.125%".
(c) The definition of "Maturity Date" is hereby amended by
deleting the phrase "the date which is 15 years after the Initial Funding
Date" in such definition and inserting in its place "June 30, 2011".
(d) Schedule 4.3B to the Credit Agreement is hereby deleted as
of the Additional Funding Date and is replaced as of the Additional Funding
Date with a new Schedule 4.3B attached hereto as Annex A.
4. Governing Law. This Amendment is a contract made under the
laws of the State of New York of the United States and shall for all
purposes be governed by and construed in accordance with the laws of such
State without regard to the conflict of law rules thereof.
5. Effectiveness of Credit Agreement. Except as expressly
provided in this Amendment, the Credit Agreement shall continue and remain
in full force and effect in all respects.
<PAGE>
6. Counterparts;. This Amendment may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
CREDIT SUISSE, as Agent and Lender
By: /s/ Louis Iaconetti
Name: Louis D. Iaconetti
Title: Associate
By: /s/ Steven Dowe
Name: Steven Dowe
Title: Associate
NRG GENERATING (NEWARK) COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
NRG GENERATING (PARLIN) COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
<PAGE>
GREENWICH FUNDING CORPORATION, as Lender
By: Credit Suisse, New York Branch, as
Attorney-In-Fact
By: /s/ Carin Okita
Name: Carin L. Okita
Title: Associate
By: /s/ Thomas Meier
Name: Thomas Meier
Title: Associate
<PAGE>
Exhibit 10.8.3
STOCK PLEDGE AGREEMENT
between
NRG GENERATING (U.S.) INC.
(as Pledgor)
and
CREDIT SUISSE
(as Agent)
Dated as of June 28, 1996
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions 2
2. Grant of Security Interest 2
3. Delivery of Collateral 3
4. Representations and Warranties 4
5. Covenants and Agreements 6
6. Voting Power, Dividends; Pledgor's
Obligations Upon Event of Default 10
7. Remedies; Rights Upon Event of Default 10
8. Application of Proceeds 13
9. Security Interest Absolute 13
10. Agent Appointed Attorney-in-Fact 14
11. Agent May Perform 15
12. No Duty on Agent's Part; Limitation on Agent's
Obligations 16
13. Reasonable Care 16
14. Role of Agent 17
15. Notices 17
16. Subrogation, etc. 17
17. Absence of Fiduciary Relation 18
18. Survival of Representations and Warranties 18
19. No Waiver; Cumulative Remedies 18
20. Severability 18
21. Exculpatory Provisions; Reliance by Agent 19
22. Amendment 20
23. Successors and Assigns 20
24. Number and Gender 20
25. Headings Descriptive 20
26. Governing Law; Jurisdiction; Waiver of Trial
by Jury 20
27. Continuing Pledge and Security
Interest; Termination 21
28. Payments Set Aside 21
29. Counterparts 22
Schedule
Schedule A: Pledged Shares
Schedule B: Financing Statement Filings
<PAGE>
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (the "Stock Pledge Agreement"), dated
as of June 28, 1996, by and between NRG GENERATING (U.S.) INC., a Delaware
corporation ("Pledgor"), and CREDIT SUISSE, as agent ("Agent") on behalf of
and for the benefit of the Secured Parties under the Credit Agreement (as
defined below).
W I T N E S S E T H :
WHEREAS, Pledgor is the sole stockholder of NRG Generating
(Parlin) Cogeneration Inc., a Delaware corporation ("Borrower");
WHEREAS, Borrower has entered into the Credit Agreement, dated as
of May 17, 1996, by and among (i) Borrower and NRG Generating (Newark)
Cogeneration Inc., a Delaware corporation ("NRG Newark"), (ii) Credit
Suisse, Greenwich Funding Corporation and each Purchasing Lender and (iii)
Agent (as the same may be amended, modified or supplemented from time to
time, the "Credit Agreement"), pursuant to which the Lenders are willing to
provide the Loans and Commitments to Borrower and NRG Newark on the terms
and subject to the conditions set forth in the Credit Agreement;
WHEREAS, pursuant to this Stock Pledge Agreement, the Parlin
Security Agreement, the Parlin Mortgage and certain other Loan Instruments,
Agent is being appointed to assume and undertake, among other things, the
rights and obligations conferred herein and therein on Agent for the equal
and ratable benefit of the Secured Parties;
WHEREAS, Pledgor shall derive substantial benefit from the making
of the Additional Loan to Borrower and NRG Newark by the Lenders pursuant
to the Credit Agreement; and
WHEREAS, it is a condition precedent to the Lenders making of the
Additional Loan under the Credit Agreement that Pledgor enter into this
Stock Pledge Agreement and pledge the Pledged Shares (as defined below) to
the Secured Parties in order to secure the obligations of Borrower and NRG
Newark under the Credit Agreement and the other Loan Instruments;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
induce the Lenders and Agent to make the Additional Loan and to make
available the Debt Service Line of Credit Facility Commitment under the
Credit Agreement, the parties hereto hereby agree as follows:
<PAGE>
1. Definitions. Unless otherwise defined herein, all
capitalized terms used herein which are defined in the Credit Agreement
shall have their respective meanings as therein defined. For purposes of
this Stock Pledge Agreement, all other terms used herein and not otherwise
defined herein which are defined in Article 9 of the Uniform Commercial
Code (as the same may be in effect in the State of New York or any other
applicable jurisdiction, the "Code"), shall have their respective meanings
as therein defined.
2. Grant of Security Interest.
(a) Collateral. As security for the prompt and complete payment
and performance when due (whether at stated maturity, by acceleration or
otherwise) of any and all of the Obligations (as defined below) now
existing or hereafter arising, Pledgor hereby pledges, collaterally
assigns, conveys, mortgages, hypothecates, transfers and delivers to Agent,
and grants and creates a lien on and first priority security interest (the
"Security Interest") in favor of Agent, for the equal and ratable benefit
of the Secured Parties, in all right, title and interest of Pledgor in, to
and under the following, whether now existing or hereafter acquired (the
"Collateral"):
(i) all shares of capital stock of Borrower now owned by Pledgor
(as set forth on Schedule A) or hereafter acquired, directly or
indirectly, by Pledgor (the "Pledged Shares");
(ii) any cash dividends or other cash payments, additional
shares or securities or other property at any time receivable or
otherwise distributable in respect of, in exchange for, or in
substitution of, any and all of the Pledged Shares (other than any
cash dividends or other cash payments which are derived from
distributions permitted under Section 5.1(c)(ix) of the Credit
Agreement); and
(iii) to the extent not otherwise included, all proceeds,
products and accessions of and to any and all of the foregoing,
including, without limitation, "proceeds" as defined in Section
9-306(l) of the Code, including whatever is received upon any sale,
exchange, collection or other disposition of any of the Collateral,
and any property into which any of the Collateral is converted,
whether cash or noncash proceeds, and any and all other amounts paid
or payable under or in connection with any of the Collateral.
(b) Obligations. This Stock Pledge Agreement secures, in
accordance with the provisions hereof, the following obligations, now
existing or hereafter arising (collectively, the "Obligations"):
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(i) payment and performance of the Obligations (as defined in
the Parlin Security Agreement) and each and every obligation,
indebtedness, covenant and agreement of Pledgor now or hereafter
existing contained in any Loan Instrument to which Pledgor is a party,
including, without limitation, this Stock Pledge Agreement and any
amendments or supplements thereto, extensions or renewals thereof or
replacements therefor;
(ii) payment of all sums advanced in accordance herewith or in
accordance with any other Parlin Security Document by or on behalf of
the Secured Parties (or any of them), to protect, retake, hold,
prepare for sale or lease or otherwise dispose of or realize upon any
of the collateral purported to be covered hereby or thereby,
including, without limitation, those fees and expenses described in
Section 5(c), with interest thereon at a rate equal to the Default
Interest Rate from the date of demand therefor;
(iii) performance of every obligation, indebtedness, covenant
and agreement of Pledgor contained in any agreement now or hereafter
executed by Pledgor which recites that the obligations thereunder are
secured by this Stock Pledge Agreement; and
(iv) payment of all sums, with interest thereon at the Default
Interest Rate, that may become due and payable to or for the benefit
of the Secured Parties (or any of them) pursuant to the terms of this
Stock Pledge Agreement;
in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, renewed
or restructured, reinstated, created or incurred, and including, without
limitation, all indebtedness of Pledgor under any instrument now or
hereafter evidencing or securing any of the foregoing.
3. Delivery of Collateral. On or prior to the Initial Funding
Date, the certificates evidencing the Pledged Shares pledged hereunder
shall be delivered to Agent, duly endorsed in blank or with stock powers
executed in blank annexed to each certificate. Agent shall have the right
(a) to hold any certificate(s) representing the Pledged Shares in its own
name, or in the name of Pledgor endorsed or assigned in blank or in favor
of Agent, or (b) to have the Pledged Shares or any part thereof registered
in the name of Agent or in the name or names of Agent's nominees.
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<PAGE>
4. Representations and Warranties. Pledgor hereby represents
and warrants to each of the Secured Parties as follows:
(a) Organization and Existence. Pledgor is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business and is in good
standing in each other jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its
business as presently conducted or proposed to be conducted makes such
qualification necessary. Pledgor has the full power and authority to own
its property and to carry on its business as now being conducted and as
proposed to be conducted.
(b) Authority, Enforceability. Pledgor has full power and
authority to enter into and perform this Stock Pledge Agreement and any
other Project Agreement to which it is a party and the entering into and
performance of each such agreement by Pledgor has been duly authorized by
all proper and necessary corporate action. This Stock Pledge Agreement and
any other Project Agreement to which it is a party, when executed and
delivered, will constitute the legal, valid and binding obligation of
Pledgor, and the other parties thereto, enforceable in accordance with
their respective terms.
(c) No Breach. The execution, delivery and performance by
Pledgor of this Stock Pledge Agreement do not and will not (i) require any
Governmental Approval or any consent, filing or approval of any party which
has not been obtained or made, (ii) violate any organization documents of
Pledgor, (iii) violate any provisions of any Governmental Requirement
applicable to Pledgor or any of its assets or the Parlin Project, (iv)
contravene, violate or result in any breach of any provision of, or
constitute a default under, any mortgage, indenture, contract, agreement or
other undertaking to which Pledgor is a party or which purports to be
binding upon Pledgor or upon any of Pledgor's assets or (v) result in the
creation or imposition of any Lien (other than the Lien created pursuant to
this Stock Pledge Agreement) on any of the assets of Pledgor pursuant to
the provisions of any mortgage, indenture, contract, agreement or other
undertaking to which Pledgor is a party or which purports to be binding
upon Pledgor or upon any of Pledgor's assets.
(d) No Litigation. There is no action, suit, investigation or
proceeding by or before any court, arbitrator, administrative agency or
other Governmental Authority pending or, to the best knowledge of Pledgor,
threatened, against or affecting Pledgor or any of its property, revenues
or assets or either Project that could have a Material Adverse Effect.
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<PAGE>
Pledgor is not in default with respect to any order of any court,
arbitrator, administrative agency, or other Governmental Authority.
(e) Regulation of Pledgor. Pledgor is not now nor will it be,
solely as a result of the participation by Pledgor or any of its
Affiliates, separately or as a group, in the transactions contemplated
hereby or any other Project Agreement to which it is a party, subject to
regulation by any Governmental Authority as a "public utility," an
"electric utility," an "electric utility holding company," a "public
utility holding company," a "holding company," or a subsidiary or affiliate
of any of the foregoing under any Governmental Requirements (including,
without limitation, PUHCA and PURPA); provided, however, that Borrower
alone shall be subject to regulation as a public utility under the FPA.
(f) Compliance with Laws; Governmental Requirements. Pledgor is
in compliance in all material respects with all Governmental Requirements.
No Governmental Approvals are required in connection with the execution and
delivery of this Stock Pledge Agreement or any other Project Agreement to
which Pledgor is a party or the performance by Pledgor of its obligations
hereunder or thereunder other than those which have been duly obtained or
made and are in full force and effect, are final and are not subject to
appeal or subject to any pending or, to Pledgor's knowledge, threatened
judicial or administrative proceeding.
(g) Title; No Other Liens. Pledgor is the legal and beneficial
owner of the Collateral in existence on the date hereof and will be the
sole owner of the Collateral hereafter acquired, free and clear of any and
all Liens or claims of others (other than Permitted Liens), and Pledgor has
full power and authority to grant the liens and security interests in and
to the Collateral hereunder.
(h) Perfection. Financing Statements or other appropriate
instruments have been filed in the public offices set forth in Schedule B
as may be necessary to perfect any Security Interest granted or purported
to be granted hereby to the extent any such Security Interest may be
perfected by the filing of a Financing Statement. All action necessary or
desirable to perfect the Security Interest in each item of the Collateral
will have been duly taken. Upon delivery of the Collateral to Agent, this
Stock Pledge Agreement will constitute a valid and continuing Lien on and
perfected Security Interest in the Collateral in favor of Agent for the
equal and ratable benefit of the Secured Parties, superior and prior to the
rights of all Persons, whether the Collateral subject to the Security
Interest is now owned by Pledgor or is hereafter acquired.
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(i) No Default. Pledgor is not in any material respect in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions applicable to Pledgor contained in any
Project Agreement to which it is a party.
(j) Governmental Authority. No authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority, any
regulatory body or any other Person is required of Pledgor with respect to
the exercise by Agent of the rights provided in this Stock Pledge Agreement
or the remedies in respect of the Collateral pursuant to this Stock Pledge
Agreement.
(k) Taxes. Pledgor has filed or caused to be filed all tax
returns that are required to be filed by it and has paid all taxes shown to
be due and payable on said returns or on any assessments made against it or
any of its assets and properties and all other taxes, fees or other charges
imposed on it by any Governmental Authority (except taxes, fees and charges
which are the subject of a Good Faith Contest by Pledgor), and Pledgor has
no knowledge of any actual or additional assessment in connection therewith
for which adequate provision is not made, and there is no assessment in
connection therewith which is delinquent, unless it is the subject of a
Good Faith Contest by Pledgor.
(l) Chief Executive Office and Principal Place of Business.
Pledgor's chief executive office is located in the State of Minnesota and
its principal place of business and the place where Pledgor's records
concerning the Collateral are kept is located in the States of New Jersey,
Delaware or Minnesota.
(m) Pledgor's Total Shares. The Pledged Shares pledged
hereunder represent the total number of Pledged Shares owned by Pledgor and
all of the issued and outstanding capital stock of Borrower, in each case,
as of the date hereof.
5. Covenants and Agreements. Pledgor hereby covenants and
agrees that Pledgor shall faithfully observe and fulfill, and shall cause
to be observed and fulfilled, each and all of the following covenants until
all Obligations have been paid and performed in full:
(a) Notice of Adverse Claims. Pledgor shall, promptly and in no
event later than five days after Pledgor becomes aware of any information
or knowledge of any adverse claim against the Collateral which could have a
Material Adverse Effect, deliver to Agent and each of the Lenders notice of
each such claim.
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(b) Further Assurances. Pledgor shall, from time to time, at
Pledgor's expense, and upon request by Agent on behalf of the Secured
Parties, promptly execute and deliver all further instruments and
documents, and take all further action that Agent determines may be
necessary, advisable or desirable in order to perfect and protect the
Security Interest granted or purported to be granted hereby or to enable
Agent to exercise and enforce its rights and remedies hereunder with
respect to the Collateral.
(c) Fees and Expenses. Pledgor shall upon demand pay or cause
to be paid to Agent the amount of any and all out-of-pocket costs and
expenses (including, without limitation, the fees and expenses of its
counsel and of any experts, any special consultants engaged, and any local
counsel who might be retained by Agent, in connection with the transactions
contemplated hereby) which Agent may incur in connection with (i) the sale
of, collection from, custody or preservation of or other realization upon,
any of the Collateral pursuant to the exercise or enforcement of any of the
rights of Agent hereunder or (ii) the failure by Pledgor to perform or
observe any of the provisions hereof, together with interest thereon at the
Default Interest Rate or (iii) the execution, delivery and performance of
this Stock Pledge Agreement, any agreement supplemental hereto and any
instruments of further assurance. Any amounts payable by Pledgor pursuant
to this Section 5(c) shall be payable on demand and shall constitute
Obligations; provided, that recourse with respect to the obligations of
Pledgor under this Section 5(c) shall be limited to the Collateral.
(d) Filing Fees, Taxes, etc. Pledgor shall pay or cause to be
paid all filing, registration and recording fees or re-filing, re-
registration and re-recording fees, and all federal, state, county and
municipal stamp taxes and other similar taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery
of this Stock Pledge Agreement, any agreement supplemental hereto and any
instruments of further assurance; provided, that recourse with respect to
the obligations of Pledgor under this Section 5(d) shall be limited to the
Collateral.
(e) Certificated Interest. If Pledgor shall become entitled to
receive or shall receive any certificate, instrument, option or rights,
whether as an addition to, in substitution of, or in exchange for the
Collateral or any part thereof, or otherwise, Pledgor shall accept any such
certificate, instrument, option or rights as Agent's agent, shall hold them
in trust for Agent, and shall deliver them forthwith to Agent in the exact
form received, with Pledgor's endorsement when necessary, or accompanied by
duly executed instruments of transfer or assignment in blank or, if
requested
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<PAGE>
by Agent, an additional pledge agreement or security agreement executed and
delivered by Pledgor, all in form and substance reasonably satisfactory to
Agent, to be held by Agent, subject to the terms hereof, as further
Collateral for the Obligations.
(f) Change in Location, Name, etc. Pledgor shall not change its
name, including, without limitation, any trade name or fictitious business,
name or the location of its chief executive office, principal place of
business or the place where its records concerning the Collateral are kept
without giving Agent 30 days' advance written notice of such change.
(g) Maintenance of Existence, Privileges, etc. Pledgor shall at
all times (i) preserve and maintain in full force and effect (A) its
existence as a corporation in good standing under the laws of the State of
Delaware, (B) its qualification to do business in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business as conducted or proposed to be conducted makes
such qualification necessary and where the failure to maintain such
qualification could reasonably be expected to result in a Material Adverse
Effect and (C) all of its powers, rights, privileges and franchises
necessary for the ownership, maintenance and operation of the Project and
the maintenance of its existence, except, in the case of clause (C) only,
where the failure to do so could not reasonably be expected to result in a
Material Adverse Effect and (ii) obtain and maintain in full force and
effect all Governmental Approvals and other consents and approvals required
to be obtained and maintained by Pledgor at any time in connection with the
maintenance, ownership or operation of the Borrower and where the failure
to obtain and maintain in full force and effect such Governmental
Approvals, consents and approvals could reasonably be expected to result in
a Material Adverse Effect; provided, however, Pledgor may be merged or
consolidated with or into another Person if: (i) either (x) Pledgor shall
be the surviving Person or (y) the Person (if other than Pledgor) formed by
such consolidation or into which Pledgor is merged shall be a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia and shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Lenders and
the Agent in form and substance satisfactory to the Majority Lenders and
the Agent, all of the obligations of Pledgor under this Stock Pledge
Agreement, (ii) immediately before and immediately after giving effect to
such transaction, no Default shall have occurred and be continuing, (iii)
immediately after, and giving effect to, such transaction and the
assumption contemplated by clause (i)(y) above, and the incurrence or
anticipated incurrence of any Indebtedness to be incurred in connection
therewith, the surviving Person shall have a Net Worth (as defined in the
Tax
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<PAGE>
Indemnification Agreement) equal to or greater than the Net Worth of
Pledgor immediately preceding such transaction and Pledgor shall have
delivered to the Agent a certificate of an Authorized Officer of Pledgor
stating that such consolidation or merger and such supplemental agreement
comply with this Section 5(g) and that all conditions precedent herein
provided relating to such transaction have been complied with.
(h) Limitations on Liens on the Collateral. Pledgor shall not
create, incur or permit to exist, shall defend the Collateral now owned or
hereafter acquired by it against, and shall take such other action as is
necessary to remove, any Lien or claim (other than Permitted Liens) on or
to the Collateral, and shall defend the right, title and interest of Agent
in and to any of the Collateral against the claims and demands of all
Persons whomsoever.
(i) Prohibition Against Transfers of Collateral. Without the
prior written consent of the Majority Lenders, Pledgor shall not exchange,
sell, transfer, pledge, hypothecate, assign, convey or otherwise dispose
of, or permit to be exchanged, sold, transferred, pledged, hypothecated,
assigned, conveyed or disposed of, any of the Pledged Shares.
(j) No Additional Shares. Pledgor shall cause the Pledged
Shares pledged hereunder to constitute at all times not less than all of
the total number of shares of capital stock of Borrower then issued and
outstanding (including treasury shares, if any), and shall not permit
Borrower to issue or have outstanding any shares of any other class of its
capital stock or to have outstanding any subscription agreements, warrants,
rights or options to acquire any shares of any class of its capital stock.
(k) Governmental Authority Requirements. Pledgor shall not
take, or omit to take, any action (unless ordered to do so by a competent
Governmental Authority having jurisdiction) in respect of Borrower and its
business if, as a consequence directly or indirectly of such action or
omission, Borrower becomes subject to regulation by any Governmental
Authority as a "public utility," an "electric utility," an "electric
utility holding company," a "public utility holding company" or a
subsidiary or affiliate of any of the foregoing under any Governmental
Requirement (including, without limitation, PUHCA, FPA and PURPA) or as a
"holding company" within the meaning of PUHCA; provided, however, that
Borrower shall be subject to regulation as a public utility under the FPA.
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6. Voting Power, Dividends; Pledgor's Obligations Upon Event of
Default.
(a) Voting Power, Dividends. Notwithstanding any other
provision contained in this Stock Pledge Agreement to the contrary, unless
an Event of Default shall have occurred and be continuing, Pledgor shall be
entitled to receive all dividends and other payments payable with respect
to the Pledged Shares and exercise all voting and other consensual rights
and take all action permitted to a stockholder of Borrower in its capacity
as such, and Agent, upon the written request of Pledgor, shall promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by Pledgor which are necessary to allow Pledgor to exercise
voting power with respect to any of the Pledged Shares; provided, Pledgor
(i) shall not vote such Pledged Shares in any manner that would violate the
terms of this Stock Pledge Agreement, the Credit Agreement or any other
Loan Instrument or that would cause an Event of Default and (ii) agrees
that any dividends and other payments paid by Borrower to Pledgor where
such dividends and other payments, as the case may be, are derived from
distributions made to Borrower in violation of the Credit Agreement shall
be restored to Borrower by deposit into an account designated by Agent
promptly upon demand by Agent or upon Pledgor becoming aware of receipt of
such dividends made from a non-complying distribution.
(b) Pledgor's Obligations Upon Event of Default. If an Event of
Default shall occur and be continuing then, following notice from Agent to
Pledgor, (i) all payments received by Pledgor under or in connection with
any of the Collateral shall be held by Pledgor in trust for Agent, shall be
segregated from other funds of Pledgor and shall, forthwith upon receipt by
Pledgor, be turned over to Agent or its designee in the same form as
received by Pledgor (duly endorsed by Pledgor to Agent, if requested), and
(ii) any and all such payments so received by Agent or its designee
(whether from Pledgor or otherwise) may, in the sole discretion of Agent or
its designee, be held by Agent or such designee as collateral security for,
and/or then or at any time thereafter be applied, subject only to the
relevant provisions of the Credit Agreement or as otherwise may be required
by applicable law, in whole or in part by Agent or its designee in the
manner specified in Section 8 hereof, unless otherwise agreed to by the
Majority Lenders in a writing delivered to Agent.
7. Remedies; Rights Upon Event of Default. Pledgor hereby
relinquishes to Agent upon the occurrence and during the continuance of an
Event of Default all right, title and interest which Pledgor has in the
Collateral. Upon the occurrence and during the continuance of an Event of
Default Agent, for the
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<PAGE>
equal and ratable benefit of and on behalf of the Secured Parties, may do
one or more of the following:
(a) Declare, without presentment, demand, protest or notice of
any kind, all of which Pledgor hereby expressly waives, all Obligations to
be immediately due and payable, whereupon all of such Obligations declared
due and payable shall be and become immediately due and payable; provided,
however, if an Event of Default occurs pursuant to Section 6.1(h), (i) or
(t) of the Credit Agreement the acceleration provided for in this Section
7(a) shall be deemed to have been made upon the occurrence of such Event of
Default without declaration or any other action by Agent;
(b) Upon notice to Pledgor, which notice need not be in writing,
make such payments and do such acts as Agent may deem necessary to protect,
perfect or continue the perfection of the Secured Parties' Security
Interest in the Collateral including, without limitation, paying,
purchasing, contesting or compromising any Lien which is, or purports to
be, prior to or superior to the Security Interest granted hereunder, and
commencing, appearing or otherwise participating in or controlling any
action or proceeding purporting to affect the Secured Parties' Security
Interest in or ownership of the Collateral;
(c) Foreclose on the Collateral as herein provided or in any
manner permitted by law and exercise any and all of the rights and remedies
conferred upon the Secured Parties by any of the Project Agreements either
concurrently or in such order as Agent may determine without affecting the
rights or remedies to which the Secured Parties may be entitled under the
Credit Agreement or any other Loan Instrument. Pledgor hereby waives, to
the extent permitted by applicable law, notice and judicial hearing in
connection with Agent's taking possession or collection, recovery, receipt,
appropriation, repossession, retention, set-off, sale, leasing, conveyance,
assignment, transfer or other disposition of or realization upon any or all
of the Collateral, including, without limitation, any and all prior notice
and hearing for any prejudgment remedy or remedies and any such right which
Pledgor would otherwise have under the constitution or any statute or other
law of the United States of America or of any state;
(d) Without notice, except as specified below, sell the
Collateral, or any part thereof, in one or more parcels at public or
private sale, at any of Agent's offices or elsewhere, at such time or
times, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as Agent may deem commercially reasonable.
Pledgor agrees that, to the extent notice of sale shall be required by law,
at least
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10 days' notice to Pledgor of the time and the place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. At any sale of the Collateral, if permitted by
law, Agent may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for the purchase of the Collateral or any
portion thereof for the account of Agent on behalf of the Secured Parties.
Agent shall not be obligated to make any sale of the Collateral regardless
of notice of sale having been given. Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Agent shall incur no liability as
a result of the manner of sale of the Collateral, or any part thereof, at
any private sale conducted in a commercially reasonable manner. Agent may,
in its sole discretion, at any such sale restrict the prospective bidders
or purchasers as to their number, nature of business and investment
intention, including a requirement that the prospective bidders or
purchasers represent and agree, to the satisfaction of Agent, that they are
purchasing the Collateral for their own account, for investment, and not
with a view to the distribution or resale of any thereof. Pledgor hereby
waives, to the extent permitted by applicable law, any claims against Agent
arising by reason of the fact that the price at which the Collateral, or
any part thereof, may have been sold at a private sale was less than the
price which might have been obtained at public sale or was less than the
aggregate amount of the Obligations, even if Agent accepts the first offer
received which Agent in good faith deems to be commercially reasonable
under the circumstances and does not offer the Collateral to more than one
offeree. To the full extent permitted by law, Pledgor shall have the
burden of proving that any such sale of the Collateral was conducted in a
commercially unreasonable manner. To the extent permitted by law, Pledgor
hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter enacted.
Pledgor authorizes Agent, at any time and from time to time, to execute, in
connection with a sale of the Collateral pursuant to the provisions of this
Stock Pledge Agreement, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral;
(e) At any time, upon notice to Pledgor, register the Collateral
in the name of Agent or its nominee as pledgee or otherwise take such
action as Agent shall in its sole discretion deem necessary or desirable
with respect to the Collateral, and Agent or its nominee may thereafter, in
its sole discretion, without notice, exercise all voting and other rights
relating to the Collateral and exercise any and all rights, privileges or
options pertaining to the Collateral as if it were the absolute owner
thereof, and exchange, at its sole discretion, any and all
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of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of either Borrower, all without
liability except to account for property actually received by Agent, but
Agent shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any failure to do so
or delay in so doing, except to the extent that such failure or delay
constitutes gross negligence or willful misconduct;
(f) Exercise such voting and other consensual rights and rights
to receive and hold as Collateral dividends and other payments which
Pledgor would otherwise be entitled to receive or exercise, as the case may
be, pursuant to Section 6(a) and all such voting and consensual rights and
rights to receive the dividends and other payments which Pledgor would
otherwise be authorized to exercise, receive and retain pursuant to Section
6(a) shall cease and all such rights shall thereupon become vested in
Agent; and
(g) Exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party after default under the Code.
8. Application of Proceeds. The net proceeds of any
foreclosure, collection, recovery, receipt, appropriation, realization or
sale of the Collateral shall be applied in the following order:
(a) To the repayment of the costs and expenses of retaking,
holding and preparing for the sale and the selling of the Collateral
(including, without limitation, attorneys' fees and expenses and court
costs and those amounts payable to Agent pursuant to Section 5(c)) and
the discharge of all assessments, encumbrances, charges or liens, if
any, on the Collateral prior to the lien hereof;
(b) To the payment in full of the Obligations in accordance with
the priority of application specified in Section 2.10(c) of the Credit
Agreement; and
(c) If all Obligations have been indefeasibly paid, satisfied
and discharged in full, any surplus then remaining shall be paid to
Pledgor, subject, however, to the rights of the holders of any then
existing liens on the Collateral of which Agent has actual notice
(without investigation).
9. Security Interest Absolute. All the rights of Agent and
Secured Parties hereunder and the Security Interest
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and all obligations of Pledgor hereunder shall be absolute and
unconditional irrespective of:
(i) any lack of validity or enforceability of any of the Project
Agreements or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from any of the
Project Agreements or any of the Collateral or any other agreement or
instrument related thereto;
(iii) any exchange or release of any Collateral or any other
collateral, or the non-perfection of any of the Security Interest, or
any release or amendment or waiver of or consent to or departure from
any guaranty, for all or any of the Obligations; or
(iv) to the full extent permitted by law, any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, Pledgor or any third party pledgor other than payment in full of
the Obligations.
10. Agent Appointed Attorney-in-Fact.
(a) Powers. Pledgor hereby irrevocably constitutes and appoints
Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact (which appointment as attorney-in-fact
shall be coupled with an interest), with full authority in the place and
stead of Pledgor and in the name of Pledgor or otherwise, from time to time
upon the occurrence and during the continuance of an Event of Default in
Agent's discretion, to take any action and to execute any and all documents
and instruments which Agent may deem necessary or advisable to accomplish
the purposes of this Stock Pledge Agreement, without notice to Pledgor,
including, without limitation:
(i) to exercise all rights, powers and privileges of a
stockholder of Borrower;
(ii) to receive, endorse and collect all instruments made
payable to Pledgor representing any dividends, payments or other
distributions in respect of the Collateral or any part thereof and to
give full discharge for the same and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by Agent for the purpose of
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<PAGE>
collecting any and all of such dividends, or other distributions;
(iii) to pay or discharge taxes and liens levied or placed on
the Collateral; and
(iv) (A) to direct any party liable for any payment under or in
respect of or arising out of any of the Collateral to make payment of
any and all moneys due or to become due in connection therewith
directly to Agent or as Agent shall direct, (B) to ask or demand for,
collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect
of or arising out of any Collateral, (C) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral, (D) to
defend any suit, action or proceeding brought against Pledgor with
respect to any Collateral, (E) to settle, compromise or adjust any
suit, action or proceeding described in clauses (C) and (D) above and,
in connection therewith, to give such discharges or releases as Agent
acting in good faith may deem appropriate and (F) generally, to sell,
transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though
Agent were the absolute owner thereof for all purposes, and (G) to do,
at Agent's option and at Pledgor's expense, at any time, or from time
to time, all acts and things which Agent deems necessary to protect,
preserve or realize upon the Collateral and the Security Interest
granted herein and to effect the intent of this Stock Pledge
Agreement, all as fully and effectively as Pledgor might do.
(b) Other Powers. Pledgor further authorizes Agent, at any time
and from time to time (i) to execute, in connection with any sale provided
for hereunder, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral and (ii) to the full
extent permitted by applicable law, to file one or more financing or
continuation statements, and amendments thereto, relative to all or any
part of the Collateral without the signature of Pledgor.
11. Agent May Perform. Upon the occurrence and during the
continuance of an Event of Default, Agent, without releasing Pledgor from
any obligation, covenant or condition hereof, itself may make any payment
or perform, or cause the performance of, any such obligation, covenant,
condition or agreement or any other action in such manner and to such
extent as Agent may deem necessary to protect, perfect or continue the
15
<PAGE>
perfection of the Secured Parties' Security Interest in the Collateral.
Any costs or expenses incurred by Agent in connection with the foregoing
shall be governed by the Loan Instruments, constitute a part of the Debt
secured by the Parlin Security Documents, shall bear interest at a rate
equal to the Default Interest Rate and be payable by Pledgor upon demand by
Agent.
12. No Duty on Agent's Part; Limitation on Agent's Obligations.
(a) No Duty on Agent's Part. The powers conferred on Agent
hereunder are solely to protect Agent's and the other Secured Parties'
interests in the Collateral and shall not impose any duty upon Agent to
exercise any such powers. Agent shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers.
(b) Limitations on Agent's Obligations. Anything herein to the
contrary notwithstanding, Pledgor shall remain liable with respect to the
Collateral, and with respect to this Stock Pledge Agreement and any other
Project Agreement to which it is a party to the extent set forth therein,
to perform all of its duties and obligations in connection therewith or
thereunder, to the same extent as if this Stock Pledge Agreement had not
been executed. The exercise by Agent of any of the rights or remedies
hereunder shall not release the Pledgor from any of its duties or
obligations under this Stock Pledge Agreement or any other Project
Agreement to which it is a party. All of the Collateral is hereby assigned
to Agent solely as security, and Agent shall have no duty, liability or
obligation whatsoever with respect to any of the Collateral, unless Agent
so elects in writing consistent with its rights under this Stock Pledge
Agreement.
13. Reasonable Care. Agent shall exercise the same degree of
care hereunder as it exercises in connection with similar transactions for
its own account. Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which Agent
accords or would accord collateral held by Agent in similar transactions
for its own account. Without limiting the generality of the foregoing and
except as otherwise provided by applicable law, Agent shall not be required
to marshall any collateral, including, without limitation, the Collateral
subject to the Security Interest created hereby and any guaranties of the
Obligations, or to resort to any item of Collateral or guaranties in any
particular order; and all of Agent's rights hereunder and in respect of
such Collateral and guaranties shall be cumulative and in addition to all
other
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<PAGE>
rights, however existing or arising. To the extent that Pledgor lawfully
may, Pledgor hereby (a) agrees that it will not invoke any law relating to
the marshalling of collateral which might cause delay in or impede the
enforcement of Agent's rights under this Stock Pledge Agreement or under
any other instrument evidencing any of the Obligations or under which any
of the Obligations is outstanding or by which any of the Obligations is
secured or guaranteed and (b) irrevocably waives the benefits of all Laws
and any and all rights to equity of redemption or other rights of
redemption that it may have in equity or at law with respect to the
Collateral.
14. Role of Agent. The rights, duties, liabilities and
immunities of Agent and its appointment and replacement hereunder shall be
governed by Article 7 of the Credit Agreement.
15. Notices. All notices, demands, requests and other
communications required or permitted hereunder shall be in writing, and
shall be given and deemed to have been given in accordance with Section 8.1
of the Credit Agreement and the information set forth immediately below
shall apply to Pledgor:
If to Pledgor:
NRG Generating (U.S.) Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, MN 55403
Attn: Leonard A. Bluhm
Tel: (612) 373-5305
Fax: (612) 373-5312
16. Subrogation, etc. Notwithstanding any payment or payments
made by Pledgor or the exercise by Agent of any of the remedies provided
under this Stock Pledge Agreement, the Credit Agreement or any other Loan
Instrument, until all amounts owing to the Secured Parties by Borrower for
or on account of the Obligations are indefeasibly paid in full, Pledgor
shall not be entitled to be subrogated to any of the rights of the Secured
Parties against Borrower or any collateral security or guaranty held by the
Secured Parties for the satisfaction of any of the Obligations, nor shall
Pledgor seek any reimbursement, indemnity, exoneration or contribution from
Borrower in respect of payments made by Pledgor hereunder. Notwithstanding
the foregoing, if any amount shall be paid to Pledgor on account of such
subrogation, reimbursement, indemnity, exoneration or contribution rights
at any time prior to such time as all Obligations are indefeasibly paid in
full, such amount shall be held by Pledgor in trust for the Secured
Parties, segregated from other funds of Pledgor, and shall be turned over
to Agent
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for the benefit of the Secured Parties, in the exact form received by
Pledgor (duly endorsed by Pledgor to Agent for the benefit of the Secured
Parties, if required), to be applied against such amounts in such order as
Agent may elect.
17. Absence of Fiduciary Relation. Agent undertakes to perform
or to observe only such of its agreements and obligations as are
specifically set forth in this Stock Pledge Agreement or any other Loan
Instrument, and no implied agreements, covenant or obligations with respect
to Pledgor, any Affiliate of Pledgor or any other party to any of the
Project Agreements shall be read into this Stock Pledge Agreement against
Agent or any of the Secured Parties. Neither Agent nor any of the Secured
Parties in its and their capacity as such is a fiduciary of and shall not
owe or be deemed to owe any fiduciary duty to Pledgor or any Affiliate of
Pledgor or any other party to any of the Project Agreements, except as
otherwise specifically provided by applicable law.
18. Survival of Representations and Warranties. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Stock Pledge Agreement and the other Loan Instruments, and
shall be deemed to be material and to have been relied upon by Agent and
the Secured Parties, regardless of any investigation made by or on behalf
of Agent or the Secured Parties.
19. No Waiver; Cumulative Remedies. By exercising or failing to
exercise any of its rights, options or elections hereunder (without also
expressly waiving the same in writing), Agent, on behalf of the Secured
Parties, shall not be deemed to have waived any breach or default on the
part of Pledgor or to have released Pledgor from any of its obligations
secured hereby. No failure on the part of Agent to exercise, and no delay
in exercising (without also expressly waiving the same in writing) any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. Agent,
acting on behalf of the Secured Parties, shall have all of the rights and
remedies granted under the Credit Agreement or any other Loan Instrument,
and available at law or in equity, and these same rights and remedies may
be pursued separately, successively or concurrently against Pledgor or any
Collateral, at the discretion of Agent with the consent of the Majority
Lenders.
20. Severability. Any provision of this Stock Pledge Agreement
which is prohibited, unenforceable or not authorized in any jurisdiction
shall, as to such jurisdiction, be
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<PAGE>
ineffective to the extent of such prohibition, unenforceability or non-
authorization, without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction. Where provisions of any law or regulation resulting in
such prohibition or unenforceability may be waived they are hereby waived
by Pledgor and Agent to the full extent permitted by law so that this Stock
Pledge Agreement shall be deemed a valid, binding agreement, and the
Security Interest created hereby shall constitute a continuing first lien
on and first perfected security interest in the Collateral, in each case
enforceable in accordance with its terms.
21. Exculpatory Provisions; Reliance by Agent.
(a) Exculpatory Provisions. Subject to Section 13 hereof,
neither Agent nor any Secured Party, nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be
liable to Pledgor for any action taken or omitted to be taken by it or them
under or in connection with this Stock Pledge Agreement or any other
Project Agreement, or responsible in any manner to any Person for any
recitals, statements, representations or warranties made by Pledgor or any
officer thereof contained in this Stock Pledge Agreement or any other
Project Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent or any
Secured Party under or in connection with, this Stock Pledge Agreement or
any other Project Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Stock Pledge Agreement
or any other Project Agreement or for any failure of Pledgor to perform any
of the Obligations. Neither Agent nor any Secured Party shall be under any
obligation to any Person to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Stock Pledge Agreement or any other Project Agreement, or to inspect the
properties or records of Pledgor.
(b) Reliance by Agent. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to
Pledgor), independent accountants and other experts selected by Agent.
Agent shall have no obligation to any Person to act or refrain from acting
or exercising any of its rights under this Stock Pledge Agreement.
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<PAGE>
22. Amendment. This Stock Pledge Agreement may be amended,
modified or rescinded only by a writing expressly referring to this Stock
Pledge Agreement and signed by all the parties hereto.
23. Successors and Assigns. This Stock Pledge Agreement shall
be binding upon and inure to the benefit of Pledgor and Agent for the
benefit of the Secured Parties and their respective successors and
permitted assigns. In the event of any assignment or transfer by any
Secured Party of any instrument evidencing all or any part of the
Obligations, the holder of such instrument shall, subject to the Credit
Agreement, be entitled to the benefits of this Stock Pledge Agreement.
24. Number and Gender. Whenever used in this Stock Pledge
Agreement, the singular number shall include the plural and the plural the
singular, and the use of any gender shall be applicable to all genders.
25. Headings Descriptive. The captions or headings of the
several sections and subsections and the table of contents of this Stock
Pledge Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Stock Pledge
Agreement.
26. Governing Law; Jurisdiction; Waiver of Trial by Jury.
(a) Governing Law. This Stock Pledge Agreement shall be
governed by and construed in accordance with the internal laws of the State
of New York as to interpretation, enforcement, validity, construction,
effect and in all other respects, but excluding perfection, which shall be
governed by the laws of the jurisdiction relevant thereto.
(b) Jurisdiction. With respect to any legal action or
proceeding brought by Agent or the Secured Parties against Pledgor arising
out of or in connection with this Stock Pledge Agreement, Pledgor hereby
irrevocably (i) consents to the jurisdiction of any state or federal court
located in the State of New York, (ii) consents to the service of process
outside the territorial jurisdiction of said courts in any such action or
proceeding by mailing copies thereof by registered United States mail,
postage prepaid, to the address specified by Pledgor for the receipt of
notices if such address is outside such territorial jurisdiction and (iii)
waives any objection to the venue of the aforesaid courts. Pledgor hereby
irrevocably designates, appoints and empowers CT Corporation System, 1633
Broadway, New York, NY, 10019, as its designee, appointee and agent to
receive and accept service of any and all legal
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process, summons, notices and documents arising out of this Stock Pledge
Agreement. Pledgor agrees it will at all times continuously maintain
either a registered office or an agent to receive service of process in the
State of New York on behalf of itself and its properties with respect to
this Stock Pledge Agreement.
(c) Waiver of Trial by Jury. WITH REGARD TO THIS STOCK PLEDGE
AGREEMENT, EACH OF THE PARTIES HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
27. Continuing Pledge and Security Interest; Termination.
This Stock Pledge Agreement shall create a continuing assignment, pledge
and first priority Security Interest in the Collateral and shall remain in
full force and effect for the benefit of Agent and the Secured Parties
until all Obligations have been paid and performed in full. Upon the
happening of such event, the Security Interest granted hereby shall
terminate. Upon such termination, Agent shall, upon the request and at the
expense of Pledgor, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination or
expiration.
28. Payments Set Aside. To the extent that Pledgor or Borrower
or any other Person on behalf of Pledgor or Borrower makes a payment or
payments to Agent and/or any Secured Party, or Agent and/or any Secured
Party enforce the Security Interests or exercise their rights of set-off,
and such payment or payments or the proceeds of such enforcement or set-off
or any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
Obligations or any part thereof originally intended to be satisfied, and
this Stock Pledge Agreement and all Liens, rights and remedies therefor,
shall be revived and continued in full force and effect as if such payment
had not been made or such enforcement or set-off had not occurred.
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29. Counterparts. This Stock Pledge Agreement may be executed
in several counterparts, each of which shall be an original, but all of
which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Stock Pledge
Agreement to be duly executed as of the day and year first written above.
NRG GENERATING (U.S.) INC., as Pledgor
By:
Name: Leonard A. Bluhm
Title: President
CREDIT SUISSE, as Agent
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
Schedule A
to the
Stock Pledge Agreement
Pledged Shares
Issuer Class No. of Shares
NRG Generating Common 100
(Parlin)
Cogeneration, Inc.
<PAGE>
Schedule B
to the
Stock Pledge Agreement
FINANCING STATEMENT FILINGS
1. Secretary of State, Delaware
2. Secretary of State, Minnesota
3. County Clerk, Hennepin County, Minnesota
4. Secretary of State, New Jersey
5. County Clerk, Middlesex County, New Jersey
6. Secretary of the Commonwealth, Pennsylvania
7. Prothanatary, Philadelphia County, Pennsylvania
<PAGE>
Exhibit 10.8.4
GUARANTY
This GUARANTY dated as of May 17, 1996 by NRG Energy, Inc., a
Delaware corporation ("Guarantor"), to Credit Suisse, as Agent for the
benefit of the Lenders ("Agent") under the Credit Agreement referred to
below.
WHEREAS, pursuant to the Credit Agreement dated as of May 17,
1996 by and among (i) NRG Generating (Newark) Cogeneration Inc., a Delaware
corporation ("NRG Newark"), and NRG Generating (Parlin) Cogeneration Inc.,
a Delaware corporation ("NRG Parlin"; NRG Newark and NRG Parlin are
hereinafter collectively referred to as the "Borrowers"), (ii) Credit
Suisse and each Purchasing Lender (each, a "Lender" and, collectively, the
"Lenders"), and (iii) Agent (as amended, supplemented or otherwise modified
from to time, the "Credit Agreement"), the Lenders have agreed, among other
things, to make available to Borrowers certain Loans as well as a Debt
Service Line of Credit Facility on the terms and subject to the conditions
set forth in the Credit Agreement;
WHEREAS, a portion of the proceeds of the Loans made to the
Borrowers by the Lenders will be distributed to NRG Generating (U.S.) Inc.,
a Delaware corporation ("NRG Generating"), and used by NRG Generating to
repay certain obligations of NRG Generating to Guarantor;
WHEREAS, Guarantor will benefit from the Loans and the Debt
Service Line of Credit Facility to be made available to NRG Newark and NRG
Parlin by the Lenders pursuant to the Credit Agreement; and
WHEREAS, the Credit Agreement requires as a condition precedent
to the making available of the Loans and the Debt Service Line of Credit
Facility that Guarantor shall have executed and delivered this Guaranty to
Agent;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to make available and maintain the Loans and the Debt Service
Line of Credit Facility under the Credit Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor hereby agrees with Agent as follows:
1. Definitions. Unless otherwise defined herein, any
capitalized terms used herein shall have the meaning assigned to such term
in the Credit Agreement. As used herein, the following terms shall have
the following meanings and such meanings shall be applicable to the
singular and plural form thereof giving effect to the numerical difference:
<PAGE>
"Appropriate NJDEP Notification" means either (a) a No Further
Action Letter from NJDEP or (b) a Conditional No Further Action Letter from
NJDEP accompanied by (i) a classification exception area determination from
NJDEP in respect of the area which includes the Newark Project or (ii)
institutional controls (including, without limitation, a Declaration of
Environmental Restrictions) agreed to by NRG Newark and NJDEP and approved
by Agent (such approval not to be unreasonably withheld).
"Excess Amounts" means the sum of (a) amounts paid by Guarantor
pursuant to Section 2.1(c) hereof to discharge Non-ISRA Environmental Pre-
Existing Liabilities in excess of $1,000,000, (b) amounts paid by Guarantor
pursuant to Section 2.1(c) hereof to discharge ISRA Related Pre-Existing
Liabilities in excess of $2,000,000 and (c) amounts paid by Guarantor
pursuant to Section 2.1(c) hereof to discharge General Pre-Existing
Liabilities in excess of $2,000,000.
"NJDEP" means the New Jersey Department of Environmental
Protection.
"Pre-Existing Liabilities Guaranty Amount" means an amount equal
to (a) prior to the earlier of (i) the date NRG Newark receives an
Appropriate NJDEP Notification and (ii) the fifth anniversary of the
Initial Funding Date, $2,000,000, plus (b) prior to the third anniversary
of the Initial Funding Date, $2,000,000, plus (c) prior to the fifth
anniversary of the Initial Funding Date, $1,000,000, less (d) the Pre-
Existing Liabilities Credit Amount; provided, however, that in no event
shall the Pre-Existing Liabilities Guaranty Amount be less than zero;
provided, further, however, (A) Guarantor's liability under, and the period
set forth in, the foregoing clause (a) shall be extended if, and to the
extent that, any formal proceeding or investigation by any Governmental
Authority has been instituted against NRG Newark with respect to any ISRA
Related Pre-Existing Liabilities until such proceeding or investigation has
been resolved to the reasonable satisfaction of Agent, (B) Guarantor's
liability under, and the period set forth in, the foregoing clause (b)
shall be extended if, and to the extent that, any claim has been asserted
in writing against either Borrower by a third party or any formal
proceeding or investigation by any Governmental Authority has been
instituted against either Borrower with respect to any General Pre-Existing
Liabilities until such claim, proceeding or investigation has been resolved
to the reasonable satisfaction of Agent and (C) Guarantor's liability
under, and the period set forth in, the foregoing clause (c) shall be
extended if, and to the extent that, any claim has been asserted in writing
against either Borrower by a third party or any formal proceeding or
investigation by any Governmental Authority has been instituted against
either Borrower with respect to any
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<PAGE>
Non-ISRA Environmental Pre-Existing Liabilities until such claim,
proceeding or investigation has been resolved to the reasonable
satisfaction of Agent.
"Pre-Existing Liabilities Credit Amount" means as of any date (a)
prior to the third anniversary of the Initial Funding Date, the sum of (i)
amounts paid by Guarantor pursuant to Section 2.1(c) hereof to discharge
Non-ISRA Environmental Pre-Existing Liabilities and General Pre-Existing
Liabilities, (ii) any Excess Amounts and (iii) amounts paid by Guarantor to
discharge ISRA Related Pre-Existing Liabilities pursuant to Section 2.1(c)
hereof prior to the date NRG Newark receives an Appropriate NJDEP
Notification and (b) after the third anniversary of the Initial Funding
Date, the sum of (i) amounts paid by Guarantor pursuant to Section 2.1(c)
hereof to discharge Non-ISRA Environmental Pre-Existing Liabilities, (ii)
any Excess Amounts and (iii) amounts paid by Guarantor to discharge ISRA
Related Pre-Existing Liabilities pursuant to Section 2.1(c) hereof prior to
the date NRG Newark receives an Appropriate NJDEP Notification.
2. Guaranty.
2.1 Guaranty Unconditional. (a) Guarantor hereby
unconditionally and irrevocably guaranties, as a primary obligor and not
merely as a surety, to the Lenders and their successors, indorsees,
transferees and assigns, the prompt and complete payment of the Obligations
on the Initial Maturity Date if on such date (i) the New Jersey Board of
Public Utilities order approving the Third Amendment to the Newark Power
Purchase Agreement has been appealed to an appropriate court and such
appeal has not been dismissed on or prior to such date or (ii) the New
Jersey Board of Public Utilities order approving the Interim Gas Service
Agreement has been appealed to an appropriate court and such appeal has not
been dismissed on or prior to such date.
(b) Guarantor hereby unconditionally and irrevocably guaranties,
as a primary obligor and not merely as a surety, to the Lenders and their
successors, indorsees, transferees and assigns, the prompt and complete
payment when due of any amount due pursuant to Section 2.8(d) of the Credit
Agreement.
(c) Guarantor hereby unconditionally and irrevocably guaranties,
as a primary obligor and not merely as a surety, to the Lenders and their
successors, indorsees, transferees and assigns, the prompt and complete
payment when due of any Pre-Existing Liabilities; provided, however, that
the obligations of Guarantor under this Section 2.1(c) shall be limited to
the Pre-Existing Liabilities Guaranty Amount.
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<PAGE>
(d) Guarantor hereby unconditionally and irrevocably guaranties,
as a primary obligor and not merely as a surety, to the Lenders and their
successors, indorsees, transferees and assigns, the prompt and complete
payment within five days following receipt by Guarantor of written notice
by Agent containing a demand for payment of any damage, loss, cost or
expense (including, without limitation, any loss of revenues under the
Newark Power Purchase Agreement and reasonable legal fees) suffered or
incurred by NRG Newark or the Secured Parties arising out of, relating to
or resulting from the failure of NRG Newark to deliver to Agent each of the
items required to be delivered pursuant to Section 5.40 of the Credit
Agreement within the time period required thereby.
2.2 Payments by Guarantor. (a) All payments owing by Guarantor
hereunder shall be made in cash in immediately available funds and shall be
payable directly to Agent, for application as provided in the Credit
Agreement.
(b) Upon receipt of all payments owing by Guarantor pursuant to
Section 2.1(a) or (b) hereof, each Lender shall endorse and deliver to
Guarantor, without recourse to such Lender, the Initial Loan Note executed
in favor of such Lender and shall, at Guarantor's expense, execute and
deliver such instruments, documents, agreements or stock certificates as
Guarantor shall reasonably request to transfer of record or otherwise
perfect a lien in, all collateral security for, and other rights relating
to, the Initial Loan Note to Guarantor.
(c) Any payments owing by Guarantor pursuant to Section 2.1(c)
hereof may be made, as between Guarantor and Borrowers, in the form of
subordinated loans by Guarantor to Borrowers or its Affiliates, provided
that any such loans shall be fully subordinated to all of Borrowers'
obligations under the Loan Instruments pursuant to documents in form and
substance reasonably satisfactory to Agent and containing the subordination
provisions set forth in Exhibit I to the Credit Agreement.
2.3 No Effect on Guaranty. The obligations of Guarantor under
this Guaranty shall not be altered, limited, impaired or otherwise affected
by:
(a) any rescission of any demand for payment of any of the
Obligations or any failure by Agent or any of the other Lenders to make any
such demand on Borrower or on any other guarantor or to collect any
payments from Borrower or from any other guarantor or any release of
Borrower or any other guarantor;
(b) any renewal, extension, modification, amendment,
acceleration, compromise, waiver, indulgence, rescission,
4
<PAGE>
discharge, surrender or release, in whole or in part, of the Credit
Agreement or any other Loan Instrument or the Obligations, or the liability
of any party to any of the foregoing or for any part thereof or any
collateral security therefor or guaranty thereof;
(c) the validity, regularity or enforceability of any of the
Obligations or of the Credit Agreement or any other Loan Instrument;
(d) any failure by Agent or any of the other Lenders to protect,
secure, perfect, record, insure or enforce any Security Document or
Collateral subject thereto at any time constituting security for the
Obligations;
(e) any act or omission of Agent or any of the other Lenders
relating in any way to the Obligations or to Borrower, including, without
limitation, any failure to bring an action against any party liable on the
Obligations, or any party liable on any guaranty of the Obligations, or any
party which has furnished security for the Obligations, or to apply any
funds of any such party held by Agent or any of the other Lenders, or to
resort to any Collateral or collateral of any other guarantor;
(f) any defense, set-off or counterclaim which may at any time
be available to or be asserted by or on behalf of Borrower or Guarantor
against Agent or any of the other Lenders or any circumstance which
constitutes, or might be construed to constitute, an equitable or legal
discharge of Borrower or of any other guarantor for any of the Obligations,
in bankruptcy or in any other instance;
(g) any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Borrower or any other guarantor or any defense which
Borrower or any other guarantor may have by reason of the order, decree or
decision of any court or administrative body resulting from any such
proceeding; or
(h) any change, whether direct or indirect, in the Guarantor's
relationship to Borrower, including, without limitation, any such change by
reason of any merger or any sale, transfer, issuance, or other disposition
of any stock of Borrower, Guarantor or any other entity.
2.4 Continuing Guaranty. This Guaranty shall be construed as a
continuing, absolute and unconditional guaranty of payment when due, and
not of collection only, and the obligations of Guarantor hereunder shall
not be conditioned or contingent upon the pursuit by Agent or any of the
other
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Lenders at any time of any right or remedy against Borrower or against any
other Person which may be or become liable in respect of all or any part of
the Obligations or against any Collateral or guaranty therefor. This
Guaranty shall remain in full force and effect until all of the Obligations
shall have been satisfied by payment in full.
2.5 Reinstatement of Guaranty. This Guaranty shall continue to
be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of the Obligations is avoided, rescinded or must
otherwise be restored or returned by Agent or any of the other Lenders to
Borrower or its representative or to any other guarantor for any reason
including as a result of any insolvency, bankruptcy or reorganization
proceeding with respect to Borrower or Guarantor, all as though such
payment had not been made.
2.6 Financial Condition of Borrower. Loans under the Credit
Agreement may be granted to Borrower or continued from time to time without
notice to or authorization from Guarantor regardless of the financial or
other condition of Borrower at the time of any such grant or continuation.
Neither Agent nor any of the other Lenders shall have any obligation to
disclose or discuss with Guarantor its assessment of the financial or other
condition of Borrower.
3. Right of Set-Off. Agent and the other Lenders are hereby
authorized to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not such Lender shall have made any demand under this Guaranty
and although such deposits, indebtedness, or obligations may be unmatured
or contingent. Such Lender agrees to notify Guarantor promptly of any such
set-off and the application thereof, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
4. Taxes. Any and all payments or reimbursements made
hereunder shall be made net, free and clear of and without deduction for
any and all Taxes, and all liabilities with respect thereto. If Guarantor
shall be required by law to deduct any such Taxes from or in respect of any
sum payable hereunder to Agent or any other Lender, then the sum payable
hereunder shall be increased as may be necessary so that, after making all
required deductions, the Lender receives an amount equal to the sum it
would have received had no such deductions been made. Guarantor hereby
indemnifies and agrees to hold
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Agent and each other Lender harmless from and against all Taxes
attributable to the transactions made under this Guaranty.
5. Subrogation. Guarantor hereby agrees that, notwithstanding
anything to the contrary in this Guaranty or any other Loan Instrument,
until all Obligations are paid in full Guarantor shall not be entitled to
be subrogated to any of the rights of the Lenders against Borrower or any
collateral security or guaranty held by the Lenders for the satisfaction of
any of the Obligations, nor shall Guarantor seek any reimbursement,
indemnity, exoneration or contribution from Borrower in respect of payments
made by Guarantor hereunder. Notwithstanding the foregoing, if any amount
shall be paid to Guarantor on account of such subrogation, reimbursement,
indemnity, exoneration or contribution rights, such amount shall be held by
Guarantor in trust for the Lenders, segregated from other funds of
Guarantor, and shall be turned over to Agent for the benefit of the
Lenders, in the exact form received by Guarantor (duly endorsed by
Guarantor to Agent for the benefit of the Lenders, if required), to be
applied against such amounts in such order as Agent may elect. This
Section 5 shall inure to the benefit of the Agent and the other Lenders and
their respective successors and assigns.
6. Representations and Warranties. The Guarantor represents
and warrants to Agent and the other Lenders that:
(a) Guarantor (i) is a corporation duly organized and
validly existing under the Laws of its jurisdiction of incorporation and
(ii) has all requisite corporate power and authority to execute, deliver
and perform this Guaranty and each other Loan Instrument to which it is a
party.
(b) Guarantor is duly qualified and in good standing in
each jurisdiction where the failure to maintain such qualification or good
standing could reasonably be expected to result in a Material Adverse
Effect.
(c) The execution, delivery and performance by Guarantor of
this Guaranty and each other Loan Instrument to which it is a party has
been duly authorized by all necessary corporate action and shareholder
action.
(d) The execution, delivery and performance by Guarantor of
this Guaranty and each other Loan Instrument to which it is a party does
not and will not: (1) violate any provision of Law applicable to
Guarantor, where such violation could reasonably be expected to result in a
Material Adverse Effect; (2) violate the certificate of incorporation or by-
laws of Guarantor, (3) violate, conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a
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default under any contract, agreement, indenture or instrument to which
Guarantor is a party or by which its respective properties are bound, where
such violation, conflict, breach or default could reasonably be expected to
result in a Material Adverse Effect; (4) result in or require the creation
or imposition of any Lien upon any of the properties or assets of Guarantor
(other than Permitted Liens); or (5) require any approval or consent of any
Person under any contractual obligation of Guarantor.
(e) The execution, delivery and performance by Guarantor of
this Guaranty and each other Loan Instrument to which it is a party does
not and will not require any filing or registration with, consent or
approval or authorization of, or notice to, or other action to, with or by,
any Governmental Authority, regulatory body or any other Person, except
where the failure to so file or register could not reasonably be expected
to result in a Material Adverse Effect.
(f) This Guaranty and each other Loan Instrument to which
Guarantor is a party are the legal, valid and binding obligation of
Guarantor enforceable against Guarantor, in accordance with their terms
except to the extent enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditor rights and subject to general
equitable principles.
7. Costs and Expenses. Guarantor shall pay all reasonable
costs and expenses of Agent and the other Lenders (including, without
limitation, attorneys' fees and disbursements) incurred in connection
with the enforcement of, or collection of any amounts due under, this
Guaranty. Guarantor shall pay all reasonable costs and expenses of Agent
(including, without limitation, attorneys' fees and disbursements) incurred
in connection with (a) any waiver, extension, amendment or modification of
any provision of this Guaranty, or (b) the administration of this Guaranty.
8. Termination of Guaranty. (a) Guarantor's obligations under
Sections 2.1(a) and (b) hereof shall terminate at such time as the New
Jersey Board of Public Utilities orders approving the Third Amendment to
the Newark Power Purchase Agreement and the Interim Gas Service Agreement,
as such orders are in effect on the date hereof, become final and
nonappealable.
(b) Guarantor's obligations under Section 2.1(c) hereof shall
terminate on the date on which the Pre-Existing Liabilities Guaranty Amount
is equal to zero.
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(c) Guarantor's obligations under Section 2.1(d) hereof shall
terminate upon receipt by Agent of each of the items required to be
delivered by NRG Newark pursuant to Section 5.40 of the Credit Agreement
within the time period required thereby.
(d) From time to time upon written request of Guarantor, Agent
shall provide written confirmation to Guarantor regarding the extent to
which Guarantor's obligations under this Guaranty have terminated.
9. Renewals, Extensions, Modifications, etc. Guarantor hereby
consents and agrees that, without the necessity of any reservation of
rights against Guarantor, (a) any demand for payment of any of the
Obligations made by Agent or any of the other Lenders may be rescinded and
any of the Obligations continued; (b) the Obligations or the liability of
any party upon or for any part thereof or any collateral security thereof
or guaranty thereof, may from time to time, in whole or in part, be
renewed, extended, modified, accelerated, compromised, waived, surrendered
or released by Agent or any of the other Lenders; (c) the Credit Agreement,
the Notes, and any other instrument or agreement evidencing, relating to,
securing or guaranteeing any of the Obligations, may be amended, modified,
supplemented or terminated, in whole or in part, as Agent or any of the
other Lenders may deem advisable from time to time; and (d) any collateral
security at any time held by Agent for the payment of any of the
Obligations may be sold, exchanged, waived, surrendered or released, all
without notice to or further assent by Guarantor, who will remain bound
hereunder as specified herein notwithstanding any such renewal, extension,
modification, acceleration, compromise, amendment, supplement, termination,
sale, exchange, waiver, surrender or release. Guarantor acknowledges and
agrees that neither Agent nor any of the other Lenders has any obligation
to provide Guarantor with any information regarding Borrower or any other
guarantor of the Obligations and that Guarantor has the ability to obtain
without the assistance of Agent or any other Lender all such information.
10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Agent or any other Lender in the exercise
of any power, right or privilege under this Guaranty or any other Loan
Instruments to which Guarantor is a party and no course of dealing with
respect thereto shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single
or partial exercise of any power, right or privilege thereunder preclude
any other or further exercise thereof or the exercise of any other power,
right or privilege. All rights and remedies existing under this Guaranty
and the other Loan Instruments to which Guarantor is a
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party are cumulative to, and not exclusive of, any rights and remedies
provided by law or otherwise available.
11. Waiver of Demand, Protest, Notice, etc. Guarantor waives
presentment, demand and protest and notice of presentment, protest,
default, nonpayment, maturity, release, compromise, settlement, extension
or renewal of any or all notes, commercial paper, accounts, contract
rights, documents, instruments, chattel paper and guaranties at any time
held by Agent or any of the other Lenders on which Guarantor may in any way
be liable.
12. Amendment; Assignment. No amendment, modification,
termination, or waiver of any provision of this Guaranty or any other Loan
Instrument to which Guarantor is a party, or consent to any departure by
Guarantor therefrom shall in any event be effective unless the same shall
be in writing and signed by Agent. Guarantor hereby consents to any
Lender's sale, assignment, transfer or other disposition (including
participations and obtaining co-lenders) at any time and from time to time
hereafter, of this Guaranty, the Loan Instruments or of any portion
thereof, including, without limitation, Lender's rights, titles, interests,
remedies, powers, duties and/or obligations hereunder or thereunder, in
each case, to the extent permitted in Section 8.6 of the Credit Agreement.
13. Severability. The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation
under this Guaranty, or any other Loan Instrument to which Guarantor is
party, shall not affect or impair the validity, legality or enforceability
of the remaining provisions or obligations under this Guaranty or any other
Loan Instrument to which Guarantor is a party or of such provision or
obligation in any other jurisdiction.
14. Successors and Assigns. This Guaranty shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns, except that Guarantor may not assign its rights or
obligations hereunder or any portion hereof without the prior written
consent of Agent.
15. Applicable Law. This Guaranty shall be governed and
controlled by, and shall be construed and enforced in accordance with, the
Laws of the State of New York, without regard to the principles of conflict
of laws.
16. Consent to Jurisdiction and Service of Process. (a) Any
legal action or proceeding against Guarantor with respect to this Guaranty
or any other Loan Instrument may be brought in the courts of the State of
New York in the County of New York or of the United States for the Southern
District of New York and, by execution and delivery of this Guaranty,
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Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor agrees that a judgment, after exhaustion of all
available appeals, in any such action or proceeding shall be conclusive and
binding upon the Borrowers, and may be enforced in any other jurisdiction
by a suit upon such judgment, a certified copy of which shall be conclusive
evidence of the judgment. Guarantor hereby irrevocably designates,
appoints and empowers CT Corporation System, 1633 Braodway, New York, NY,
10019, as its designee, appointee and agent to receive and accept service
of any and all legal process, summons, notices and documents arising out of
this Guaranty. If for any reason such designee, appointee and agent shall
cease to be available to act as such, Guarantor agrees to designate a new
designee, appointee and agent in New York City on the terms and for the
purposes of this provision satisfactory to Agent. Guarantor further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to
Guarantor, at its address set forth in Section 18 hereof, such service to
become effective 30 days after such mailing. Nothing herein shall affect
the right of any Lender to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against Guarantor
in any other jurisdiction.
(b) Guarantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Guaranty
or any other Loan Instrument brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum.
17. Waiver of Jury Trial. Guarantor and Agent hereby waive
their respective rights to a jury trial of any claim or cause of action
based upon or arising out of this Guaranty, any other documents, the
Collateral or any dealings between them relating to the subject matter of
this Guaranty and the other Loan Instruments and the lender/guarantor
relationship that is being established. Guarantor and Agent also waive any
bond or surety or security upon such bond which might, but for this waiver,
be required of secured parties. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Guarantor and Agent each
acknowledge that this waiver is a
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material inducement to enter into a business relationship, that each has
already relied on the waiver in entering into this Guaranty and that each
will continue to rely on the waiver in their related future dealings.
Guarantor and Agent further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel.
This waiver is irrevocable, meaning that it may not be modified either
orally or in writing, and the waiver shall apply to any subsequent
amendments, renewals, supplements or modifications to this Guaranty, the
other Loan Instruments, or to any other documents or agreements relating
thereto. In the event of litigation, this Guaranty may be filed as a
written consent to a trial by the court.
18. Notices. Except as otherwise expressly provided herein,
(a) all notices and other communications provided for hereunder shall be
provided in writing (including telegraphic, facsimile or cable
communication) and shall be sent by telecopy, telegraph or cable with the
original of such communication dispatched by (if inland) overnight or (if
overseas) international courier and, if such courier service is not
available, by registered airmail (or, if inland, registered first-class
mail) with postage prepaid to Guarantor and Agent at their respective
addresses specified below, or at such other address as shall be designated
by such party in a written notice to the other party hereto and (b) all
such notices and communications shall, when mailed, telegraphed,
telecopied, or cabled or sent by overnight courier, be effective seven
(7) days after being deposited in the mails in the manner as aforesaid,
when delivered to the telegraph company or cable company (if inland), one
(1) day or (if overseas) three (3) days after delivery to a courier in the
manner as aforesaid, as the case may be, or when sent by telecopier:
Addresses:
If to Guarantor:
NRG Energy, Inc.
1221 Nicollet Mall
Minneapolis, MN 55403-2445
Attn : Chief Financial Officer
Tel : (612) 373-5391
Fax : (612) 373-5312
with a copy to:
NRG Energy, Inc.
1221 Nicollet Mall
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Suite 700
Minneapolis, MN 55403
Attn : General Counsel
Tel : (612) 373-5367
Fax : (612) 373-5392
If to Agent:
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
Attn : Project Finance
Tel : (212) 238-5462
Fax : (212) 238-5390
19. Headings. All headings in this Guaranty are included herein
for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
20. Financial Statements; Reports. Guarantor agrees that it
will provide to the Agent on a timely basis all financial statements,
reports, letters and certificates of Guarantor which Borrower is required
to deliver to Agent pursuant to Section 5.8 of the Credit Agreement, and
agrees that all such financial statements, reports, letters and
certificates will be prepared in accordance with and conform to the
provisions of such Section of the Credit Agreement.
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21. Monitoring of Appeals. Guarantor hereby agrees to use
reasonable efforts to monitor, and agrees to cause NRG Generating (U.S.)
Inc. and NRG Newark to monitor, the filing of, and the progress of, any
appeal of the New Jersey Board of Public Utilities orders approving the
Third Amendment to the Newark Power Purchase Agreement and the Interim Gas
Service Agreement. Upon obtaining actual knowledge thereof, Guarantor
hereby agrees to provide to Agent and to cause NRG Generating (U.S.) Inc.
and NRG Newark to provide to Agent, prompt notice of the filing of any
appeal of the New Jersey Board of Public Utilities orders approving the
Third Amendment to the Newark Power Purchase Agreement and the Interim Gas
Service Agreement and to keep Agent reasonably informed of the progress of
any such appeal.
22. Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided under any other Loan Instrument or
by law. Agent and the Lenders shall have all of the rights and remedies
granted under the other Loan Instruments, and available under law or in
equity, and these same rights and remedies may be pursued separately,
successively or concurrently.
23. Counterparts. This Guaranty and any amendments, waivers,
consents or supplements hereto may be executed in any number of
counterparts and by the different parties in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all
of which counterparts together shall constitute one and the same
instrument. This Guaranty shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
24. No Third Party Beneficiaries. Nothing contained in this
Guaranty shall be deemed to indicate that this Guaranty has been entered
into for the benefit of any person other than the Agent and the Lenders.
This Guaranty shall inure to the
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sole benefit of the Agent and the Lenders and no other person or entity
shall be entitled to rely thereon.
IN WITNESS WHEREOF, this Guaranty has been duly executed as of
the date and year first above written.
NRG ENERGY, INC.
By:/s/ Valorie A. Knudsen
Name: Valorie A. Knudsen
Title: V.P. Finance & Controller
Agreed and Accepted as of this
20th day of May, 1996
CREDIT SUISSE, as Agent
By: /s/ Guy Cirincione
Name: Guy R. Cirincione
Title: Member of Senior Management
By: /s/ Louis Iaconetti
Name: Louis D. Iaconetti
Title: Associate
<PAGE>
Exhibit 10.8.5
GUARANTY
This GUARANTY dated as of June 28, 1996 by NRG Generating (U.S.)
Inc., a Delaware corporation ("Guarantor"), to Credit Suisse, as Agent for
the benefit of the Lenders ("Agent") under the Credit Agreement referred to
below.
WHEREAS, pursuant to the Credit Agreement dated as of May 17,
1996 by and among (i) NRG Generating (Newark) Cogeneration Inc., a Delaware
corporation ("NRG Newark"), and NRG Generating (Parlin) Cogeneration Inc.,
a Delaware corporation ("NRG Parlin"), (ii) Credit Suisse and each
Purchasing Lender (each, a "Lender" and, collectively, the "Lenders"), and
(iii) Agent (as amended, supplemented or otherwise modified from to time,
the "Credit Agreement"), the Lenders have agreed, among other things, to
make available to Borrower certain Loans and Commitments on the terms and
subject to the conditions set forth in the Credit Agreement;
WHEREAS, each of NRG Newark and NRG Parlin is a wholly owned
subsidiary of Guarantor; and
WHEREAS, Guarantor will benefit from the Loans and the
Commitments made or to be made available to NRG Newark and NRG Parlin by
the Lenders pursuant to the Credit Agreement; and
WHEREAS, the Credit Agreement requires as a condition precedent
to the making available of the Additional Loan and the Debt Service Line of
Credit Facility Commitment that Guarantor shall have executed and delivered
this Guaranty to Agent;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to make available and maintain the Additional Loan and the Debt
Service Line of Credit Facility Commitment under the Credit Agreement, and
for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Guarantor hereby agrees with Agent as
follows:
1. Definitions. Unless otherwise defined herein, any
capitalized terms used herein shall have the meaning assigned to such term
in the Credit Agreement. As used herein, the following terms shall have
the following meanings and such meanings shall be applicable to the
singular and plural form thereof giving effect to the numerical difference:
"Bankruptcy Event" means (a) either Borrower is generally not
paying or admits in writing its inability to pay its debts as such debts
become due, or files any petition or action for relief under any
bankruptcy, reorganization,
<PAGE>
insolvency, or moratorium Law or any other Law for the relief of, or
relating to, debtors, now or hereafter in effect, or makes any assignment
for the benefit of creditors, liquidates or dissolves, or takes any action
in furtherance of any of the foregoing; or (b) an involuntary petition is
filed against either Borrower under any bankruptcy, reorganization,
insolvency, or moratorium Law now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of any
property of such Borrower, and (i) such petition or appointment is not
dismissed, set aside or withdrawn or otherwise ceases to be in effect
within 60 days from the date of said filing or appointment, or (ii) an
order for relief is entered against such Borrower with respect thereto, or
(iii) such Borrower shall take any action indicating its consent to,
approval of, or acquiescence in, any such petition or appointment.
"Payment Amount" has the meaning set forth in Section 2.2 hereof.
"Payment Default" means an Event of Default pursuant to Section
6.1(a) of the Credit Agreement.
2. Guaranty.
2.1 Guaranty Unconditional. Guarantor hereby unconditionally
and irrevocably guaranties, as a primary obligor and not merely as a
surety, to the Lenders and their successors, indorsees, transferees and
assigns, the prompt and complete payment when due, whether at the stated
maturity or on acceleration or otherwise, of the Obligations; provided,
however, that the maximum aggregate liability of Guarantor hereunder with
respect to the Obligations shall in no event exceed $25,000,000 which
maximum amount shall be reduced from time to time in proportion to
reductions, as a result of repayments and prepayments in accordance with
the terms of the Credit Agreement, of the outstanding principal amount of
the Funding Loans.
2.2 Payments by Guarantor. Subject to the limitation set forth
in Section 2.1 hereof, Guarantor shall, immediately upon notice by Agent to
Guarantor of the occurrence of a Payment Default, pay to Agent such portion
of the Obligations ("Payment Amount") as is equal to the sum of (i) any
principal of, or interest on, any of the Loans, or any other amounts, in
each case due and payable at such time to the Lenders or Agent under the
Credit Agreement or any other Loan Instruments, plus (ii) the amount
required to fund the Debt Service Reserve Account up to the amounts
specified in Section 5.1(c)(vi) of the Credit Agreement, without taking
into account the Debt Service Line of Credit Facility Commitment. Each and
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every Payment Default by Borrower shall give rise to a separate liability
of Guarantor hereunder to pay the Payment Amount to Agent, subject,
however, to the limitation set forth in Section 2.1 hereof of the maximum
aggregate amount payable hereunder. For the avoidance of doubt, if an
Event of Default has occurred and Agent exercises the remedies specified in
Section 6.1(i)(B) of the Credit Agreement, the Guarantor shall, immediately
upon notice by Agent to Guarantor, pay to Agent any principal of, or
interest on, any of the Loans, or any other amounts, in each case due and
payable at such time to the Lenders or Agent under the Credit Agreement or
any other Loan Instruments, subject, however, to the limitation set forth
in Section 2.1 hereof of the maximum aggregate amount payable hereunder.
(b) Notwithstanding the provisions of Section 2.2(a) hereof, if
an Event of Default has occurred and is continuing, and Agent notifies
Guarantor of such Event of Default and, upon the request or with the
consent of the Majority Lenders, requests Guarantor to pay to Agent all of
Borrower's Obligations outstanding at such time, then Guarantor shall,
subject to the proviso in Section 2.1 hereof, immediately pay to Agent all
such amounts.
(c) If a Bankruptcy Event has occurred and Agent notifies
Guarantor of such Bankruptcy Event, Guarantor shall, subject to the proviso
in Section 2.1 hereof, immediately pay to Agent all of Borrower's
Obligations outstanding at such time.
2.3 No Effect on Guaranty. The obligations of Guarantor under
this Guaranty shall not be altered, limited, impaired or otherwise affected
by:
(a) any rescission of any demand for payment of any of the
Obligations or any failure by Agent or any of the other Lenders to make any
such demand on either Borrower or on any other guarantor or to collect any
payments from either Borrower or from any other guarantor or any release of
either Borrower or any other guarantor;
(b) any renewal, extension, modification, amendment,
acceleration, compromise, waiver, indulgence, rescission, discharge,
surrender or release, in whole or in part, of the Credit Agreement or any
other Loan Instrument or the Obligations, or the liability of any party to
any of the foregoing or for any part thereof or any collateral security
therefor or guaranty thereof;
(c) the validity, regularity or enforceability of any of the
Obligations or of the Credit Agreement or any other Loan Instrument;
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(d) any failure by Agent or any of the other Lenders to protect,
secure, perfect, record, insure or enforce any Security Document or
Collateral subject thereto at any time constituting security for the
Obligations;
(e) any act or omission of Agent or any of the other Lenders
relating in any way to the Obligations or to either Borrower, including,
without limitation, any failure to bring an action against any party liable
on the Obligations, or any party liable on any guaranty of the Obligations,
or any party which has furnished security for the Obligations, or to apply
any funds of any such party held by Agent or any of the other Lenders, or
to resort to any Collateral or collateral of any other guarantor;
(f) any defense, set-off or counterclaim which may at any time
be available to or be asserted by or on behalf of either Borrower or
Guarantor against Agent or any of the other Lenders or any circumstance
which constitutes, or might be construed to constitute, an equitable or
legal discharge of either Borrower or of any other guarantor for any of the
Obligations, in bankruptcy or in any other instance;
(g) any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of either Borrower or any other guarantor or any defense which
either Borrower or any other guarantor may have by reason of the order,
decree or decision of any court or administrative body resulting from any
such proceeding; or
(h) any change, whether direct or indirect, in the Guarantor's
relationship to either Borrower, including, without limitation, any such
change by reason of any merger or any sale, transfer, issuance, or other
disposition of any stock of either Borrower, Guarantor or any other entity.
2.4 Continuing Guaranty. This Guaranty shall be construed as a
continuing, absolute and unconditional guaranty of payment when due, and
not of collection only, and the obligations of Guarantor hereunder shall
not be conditioned or contingent upon the pursuit by Agent or any of the
other Lenders at any time of any right or remedy against either Borrower or
against any other Person which may be or become liable in respect of all or
any part of the Obligations or against any Collateral or guaranty therefor.
This Guaranty shall remain in full force and effect until all of the
Obligations shall have been satisfied by payment in full.
2.5 Reinstatement of Guaranty. This Guaranty shall continue to
be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of the Obligations
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is avoided, rescinded or must otherwise be restored or returned by Agent or
any of the other Lenders to either Borrower or its representative or to any
other guarantor for any reason including as a result of any insolvency,
bankruptcy or reorganization proceeding with respect to either Borrower or
Guarantor, all as though such payment had not been made.
2.6 Financial Condition of Borrower. Loans under the Credit
Agreement may be granted to Borrower or continued from time to time without
notice to or authorization from Guarantor regardless of the financial or
other condition of Borrower at the time of any such grant or continuation.
Neither Agent nor any of the other Lenders shall have any obligation to
disclose or discuss with Guarantor its assessment of the financial or other
condition of Borrower.
3. Right of Set-Off. Upon the occurrence and during the
continuation of an Event of Default, Agent and the other Lenders are hereby
authorized to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not such Lender shall have made any demand under this Guaranty
and although such deposits, indebtedness, or obligations may be unmatured
or contingent. Such Lender agrees to notify Guarantor promptly of any such
set-off and the application thereof, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
4. Taxes. Subject to the proviso contained in Section
2.5(a)(i) of the Credit Agreement, any and all payments or reimbursements
made hereunder shall be made net, free and clear of and without deduction
for any and all Taxes, and all liabilities with respect thereto. Subject
to the proviso contained in Section 2.5(a)(i) of the Credit Agreement, if
Guarantor shall be required by law to deduct any such Taxes from or in
respect of any sum payable hereunder to Agent or any other Lender, then the
sum payable hereunder shall be increased as may be necessary so that, after
making all required deductions, the Lender receives an amount equal to the
sum it would have received had no such deductions been made. Subject to
the proviso contained in Section 2.5(a)(i) of the Credit Agreement,
Guarantor hereby indemnifies and agrees to hold Agent and each other Lender
harmless from and against all Taxes attributable to the transactions made
under this Guaranty.
5. Subrogation. Guarantor hereby agrees that, notwithstanding
anything to the contrary in this Guaranty or any other Loan Instrument,
until all Obligations are paid in
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full Guarantor shall not be entitled to be subrogated to any of the rights
of the Lenders against either Borrower or any collateral security or
guaranty held by the Lenders for the satisfaction of any of the
Obligations, nor shall Guarantor seek any reimbursement, indemnity,
exoneration or contribution from either Borrower in respect of payments
made by Guarantor hereunder. Notwithstanding the foregoing, if any amount
shall be paid to Guarantor on account of such subrogation, reimbursement,
indemnity, exoneration or contribution rights, such amount shall be held by
Guarantor in trust for the Lenders, segregated from other funds of
Guarantor, and shall be turned over to Agent for the benefit of the
Lenders, in the exact form received by Guarantor (duly endorsed by
Guarantor to Agent for the benefit of the Lenders, if required), to be
applied against such amounts in such order as Agent may elect. This
Section 5 shall inure to the benefit of the Agent and the other Lenders and
their respective successors and assigns.
6. Representations and Warranties. The Guarantor represents
and warrants to Agent and the other Lenders that:
(a) Guarantor (i) is a corporation duly organized and validly
existing under the Laws of its jurisdiction of incorporation and (ii) has
all requisite corporate power and authority to execute, deliver and perform
this Guaranty and each other Loan Instrument to which it is a party.
(b) Guarantor is duly qualified and in good standing in each
jurisdiction where the failure to maintain such qualification or good
standing could reasonably be expected to result in a Material Adverse
Effect.
(c) The execution, delivery and performance by Guarantor of this
Guaranty and each other Loan Instrument to which it is a party has been
duly authorized by all necessary corporate action and shareholder action.
(d) The execution, delivery and performance by Guarantor of this
Guaranty and each other Loan Instrument to which it is a party does not and
will not: (1) violate any provision of Law applicable to Guarantor, where
such violation could reasonably be expected to result in a Material Adverse
Effect; (2) violate the certificate of incorporation or by-laws of
Guarantor, (3) violate, conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any contract,
agreement, indenture or instrument to which Guarantor is a party or by
which its respective properties are bound, where such violation, conflict,
breach or default could reasonably be expected to result in a Material
Adverse Effect; (4) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Guarantor (other than
Permitted Liens); or (5) require any
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approval or consent of any Person under any contractual obligation of
Guarantor.
(e) The execution, delivery and performance by Guarantor of this
Guaranty and each other Loan Instrument to which it is a party does not and
will not require any filing or registration with, consent or approval or
authorization of, or notice to, or other action to, with or by, any
Governmental Authority, regulatory body or any other Person, except where
the failure to so file or register could not reasonably be expected to
result in a Material Adverse Effect.
(f) This Guaranty and each other Loan Instrument to which
Guarantor is a party are the legal, valid and binding obligation of
Guarantor enforceable against Guarantor, in accordance with their terms
except to the extent enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditor rights and subject to general
equitable principles.
(g)Guarantor is in compliance with all Laws, other than those
Laws the non compliance with which could not reasonably be expected to
result in a Material Adverse Effect.
(h) Except as disclosed on Schedule A hereto, there are no
actions, suits, proceedings, claims or disputes pending or, to the best of
the Guarantor's knowledge, threatened against or affecting Guarantor or any
of its respective properties or assets before any arbitrator or other
Governmental Authority. There is no injunction, writ, preliminary
restraining order or any order of any nature issued by an arbitrator or
other Governmental Authority directing that any material aspect of the
transactions provided for in any of the Loan Instruments or Acquisition
Documents not be consummated as herein or therein provided.
(i) No event has occurred or would result from the incurring of
obligations under this Guaranty or any other Loan Instrument to which
Guarantor is a party or the consummation of the Acquisition which is, or
upon the lapse of time or notice or both would become, an Event of Default.
Guarantor is not in default under or with respect to any contractual
obligation in any respect, the default of which could reasonably be
expected to result in a Material Adverse Effect. Guarantor is not in
default under any order, award or decree of any court, arbitrator or
Governmental Authority binding upon or affecting it or by which any of its
properties or assets is bound or affected, the default of which could
reasonably be expected to result in a Material Adverse Effect. Guarantor
has not received notice of, and is not aware of, the occurrence of any
event of force majeure with respect to either Project.
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<PAGE>
(j) Guarantor is (and after giving effect to the transactions
contemplated by the Loan Instruments and the Acquisition Documents will be)
Solvent.
(k) No Contractual Obligation of Guarantor and no Requirement of
Law has, or is reasonably expected to have, in light of all facts and
circumstances of which Guarantor has actual knowledge, a Material Adverse
Effect, it being understood that the mere existence of traditional project
finance contractual provisions which provide lenders with security
interests and restrictive covenants, including the ability to restrict cash
distributions, would not constitute a burdensome restriction hereunder.
(l) All tax returns which are required to be filed in respect of
each Borrower and Guarantor, and all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its property
and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than those the amount or
validity of which is currently being contested in a Good Faith Contest and
with respect to which reserves in conformity with GAAP have been provided
on the books of such Borrower) have been filed and paid by Guarantor; and
no tax Liens have been filed and, to the knowledge of Guarantor, no claims
are being asserted with respect to any such taxes, fees or other charges
which are material either as to amount or potentially adverse effect when
considered with respect to the financial and business condition of such
Borrower or Guarantor.
(m) Guarantor is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning
of Regulation G, T, U, or X of the Board of Governors of the Federal
Reserve System) and no proceeds of any Loan will be used in a manner which
would violate, or result in a violation of, such Regulation G, T, U, or X.
(n) No representation or warranty of Guarantor contained in any
Loan Instrument or Acquisition Document, or any other document, certificate
or written statement set forth on Schedule 4.24 of the Credit Agreement
contains any untrue statement of a fact or omitted, omits or will omit to
state a fact necessary in order to make the statements contained herein or
therein, when taken as a whole, not misleading in any respect in light of
the circumstances in which the same were made. There is no fact known to
Guarantor which has not been disclosed in writing to Agent and which
materially adversely affects, or which could reasonably be expected in the
future to materially adversely affect, the properties, business, prospects
or financial condition of either Borrower or Guarantor or either Project.
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7. Covenants. The Guarantor hereby covenants and agrees that
until payment in full in cash of all of the Obligations or so long as any
of the Commitments shall remain available pursuant to the Credit Agreement,
the Guarantor will observe and fulfill each and all of the following
covenants unless the Majority Lenders shall otherwise consent in writing:
(a) The Guarantor shall at all times (i) preserve and maintain
in full force and effect (A) its existence as a corporation in good
standing under the laws of the State of Delaware, (B) its qualification to
do business in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business as
conducted or proposed to be conducted makes such qualification necessary
and where the failure to maintain such qualification could reasonably be
expected to result in a Material Adverse Effect and (C) all of its powers,
rights, privileges and franchises necessary for the ownership, maintenance
and operation of each Project and the maintenance of its existence, except,
in the case of clause (C) only, where the failure to do so could not
reasonably be expected to result in a Material Adverse Effect and (ii)
obtain and maintain in full force and effect all Governmental Approvals and
other consents and approvals required to be obtained and maintained by the
Guarantor at any time in connection with the maintenance, ownership or
operation of each Borrower and where the failure to obtain and maintain in
full force and effect such Governmental Approvals, consents and approvals
could reasonably be expected to result in a Material Adverse Effect;
provided, however, Guarantor may be merged or consolidated with or into
another Person if: (i) either (x) Guarantor shall be the surviving Person
or (y) the Person (if other than Guarantor) formed by such consolidation or
into which Gurantor is merged shall be a corporation organized and existing
under the laws of the United States or any State thereof or the District of
Columbia and shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Lenders and the Agent in form and substance
satisfactory to the Majority Lenders and the Agent, all of the obligations
of Guarantor under this Guaranty, (ii) immediately before and immediately
after giving effect to such transaction, no Default shall have occurred and
be continuing, (iii) immediately after, and giving effect to, such
transaction and the assumption contemplated by clause (i)(y) above, and the
incurrence or anticipated incurrence of any Indebtedness to be incurred in
connection therewith, the surviving Person shall have a Net Worth (as
defined in the Tax Indemnification Agreement) equal to or greater than the
Net Worth of Guarantor immediately preceding such transaction and Guarantor
shall have delivered to the Agent a certificate of an Authorized Officer of
Guarantor stating that such consolidation or merger and such supplemental
agreement comply with this Section 7(a) and that all conditions
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precedent herein provided relating to such transaction have been complied
with.
(b) Guarantor is not engaged in, nor will it engage in, any
activity which would cause the Loans to be in violation of Regulation G, T,
U, or X of the Board of Governors of the Federal Reserve System.
(c) Promptly upon receipt thereof, Guarantor will deliver copies
of all significant reports submitted to Guarantor by independent public
accountants in connection with each annual, interim or special audit of the
financial statements of Guarantor made by such accountants.
(d) Guarantor will furnish to Agent with sufficient copies for
each Lender (as designated by Agent) such information respecting the
condition or operations, financial or otherwise, of Guarantor as any Lender
through Agent may from time to time reasonably request.
(e) Guarantor will furnish to Agent with sufficient copies for
each Lender (as designated by Agent) promptly upon Guarantor's knowledge
thereof, a written statement from an Authorized Officer of Guarantor
describing the details of any substantial dispute which may exist between
Guarantor and any governmental regulatory body or law enforcement authority
that could reasonably be expected to result in a Material Adverse Effect.
8. Costs and Expenses. Guarantor shall pay all reasonable
costs and expenses of Agent and the other Lenders (including, without
limitation, attorneys' fees and disbursements) incurred in connection with
(a) the enforcement of, or collection of any amounts due under, this
Guaranty, (b) any waiver, extension, amendment or modification of any
provision of this Guaranty, or (c) the administration of this Guaranty.
9. Indemnity. Guarantor shall indemnify Agent and each of the
other Lenders and their respective officers, directors, employees,
representatives and agents from and against any and all damages, losses,
liabilities, costs and expenses (including, without limitation, attorneys'
fees and disbursements) arising out of or resulting from, or otherwise in
connection with, this Guaranty.
10. Renewals, Extensions, Modifications, etc. Guarantor hereby
consents and agrees that, without the necessity of any reservation of
rights against Guarantor, (a) any demand for payment of any of the
Obligations made by Agent or any of the other Lenders may be rescinded and
any of the Obligations continued; (b) the Obligations or the liability
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<PAGE>
of any party upon or for any part thereof or any collateral security
thereof or guaranty thereof, may from time to time, in whole or in part, be
renewed, extended, modified, accelerated, compromised, waived, surrendered
or released by Agent or any of the other Lenders; (c) the Credit Agreement,
the Notes, and any other instrument or agreement evidencing, relating to,
securing or guaranteeing any of the Obligations, may be amended, modified,
supplemented or terminated, in whole or in part, as Agent or any of the
other Lenders may deem advisable from time to time; and (d) any collateral
security at any time held by Agent for the payment of any of the
Obligations may be sold, exchanged, waived, surrendered or released, all
without notice to or further assent by Guarantor, who will remain bound
hereunder as specified herein notwithstanding any such renewal, extension,
modification, acceleration, compromise, amendment, supplement, termination,
sale, exchange, waiver, surrender or release. Guarantor acknowledges and
agrees that neither Agent nor any of the other Lenders has any obligation
to provide Guarantor with any information regarding Borrower or any other
guarantor of the Obligations and that Guarantor has the ability to obtain
without the assistance of Agent or any other Lender all such information.
11. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Agent or any other Lender in the exercise
of any power, right or privilege under this Guaranty or any other Loan
Instruments to which Guarantor is a party and no course of dealing with
respect thereto shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single
or partial exercise of any power, right or privilege thereunder preclude
any other or further exercise thereof or the exercise of any other power,
right or privilege. All rights and remedies existing under this Guaranty
and the other Loan Instruments to which Guarantor is a party are cumulative
to, and not exclusive of, any rights and remedies provided by law or
otherwise available.
12. Waiver of Demand, Protest, Notice, etc. Guarantor waives
presentment, demand and protest and notice of presentment, protest,
default, nonpayment, maturity, release, compromise, settlement, extension
or renewal of any or all notes, commercial paper, accounts, contract
rights, documents, instruments, chattel paper and guaranties at any time
held by Agent or any of the other Lenders on which Guarantor may in any way
be liable.
13. Amendment; Assignment. No amendment, modification,
termination, or waiver of any provision of this Guaranty or any other Loan
Instrument to which Guarantor is a party, or consent to any departure by
Guarantor therefrom shall in any event be effective unless the same shall
be in writing
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and signed by Agent. Guarantor hereby consents to any Lender's sale,
assignment, transfer or other disposition (including participations and
obtaining co-lenders) at any time and from time to time hereafter, of this
Guaranty, the Loan Instruments or of any portion thereof, including,
without limitation, Lender's rights, titles, interests, remedies, powers,
duties and/or obligations hereunder or thereunder, in each case, to the
extent permitted in Section 8.6 of the Credit Agreement.
14. Severability. The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation
under this Guaranty, or any other Loan Instrument to which Guarantor is
party, shall not affect or impair the validity, legality or enforceability
of the remaining provisions or obligations under this Guaranty or any other
Loan Instrument to which Guarantor is a party or of such provision or
obligation in any other jurisdiction.
15. Successors and Assigns. This Guaranty shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns, except that Guarantor may not assign its rights or
obligations hereunder or any portion hereof without the prior written
consent of Agent.
16. Applicable Law. This Guaranty shall be governed and
controlled by, and shall be construed and enforced in accordance with, the
Laws of the State of New York, without regard to the principles of conflict
of laws.
17. Consent to Jurisdiction and Service of Process. (a) Any
legal action or proceeding against Guarantor with respect to this Guaranty
or any other Loan Instrument may be brought in the courts of the State of
New York in the County of New York or of the United States for the Southern
District of New York and, by execution and delivery of this Guaranty,
Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor agrees that a judgment, after exhaustion of all
available appeals, in any such action or proceeding shall be conclusive and
binding upon the Guarantor, and may be enforced in any other jurisdiction
by a suit upon such judgment, a certified copy of which shall be conclusive
evidence of the judgment. Guarantor hereby irrevocably designates,
appoints and empowers CT Corporation System as its designee, appointee and
agent to receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process, summons,
notices and documents which may be served in any such action or proceeding.
If for any reason such designee, appointee and agent shall cease to be
available to act as such, Guarantor agrees to designate a new designee,
appointee and agent in New York City on the terms and for the purposes of
this provision
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<PAGE>
satisfactory to Agent. Guarantor further irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to Guarantor, at its address set forth in
Section 19 hereof, such service to become effective __ days after such
mailing. Nothing herein shall affect the right of any Lender to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Guarantor in any other
jurisdiction.
(b) Guarantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Guaranty
or any other Loan Instrument brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum.
18. Waiver of Jury Trial. Guarantor and Agent hereby waive
their respective rights to a jury trial of any claim or cause of action
based upon or arising out of this Guaranty, any other documents, the
Collateral or any dealings between them relating to the subject matter of
this Guaranty and the other Loan Instruments and the lender/guarantor
relationship that is being established. Guarantor and Agent also waive any
bond or surety or security upon such bond which might, but for this waiver,
be required of secured parties. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Guarantor and Agent each
acknowledge that this waiver is a material inducement to enter into a
business relationship, that each has already relied on the waiver in
entering into this Guaranty and that each will continue to rely on the
waiver in their related future dealings. Guarantor and Agent further
warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. This waiver is
irrevocable, meaning that it may not be modified either orally or in
writing, and the waiver shall apply to any subsequent amendments, renewals,
supplements or modifications to this Guaranty, the other Loan Instruments,
or to any other documents or agreements relating thereto. In the event of
litigation, this Guaranty may be filed as a written consent to a trial by
the court.
19. NOTICES.
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Except as otherwise expressly provided herein, (a) all notices
and other communications provided for hereunder shall be provided in
writing (including telegraphic, facsimile or cable communication) and shall
be sent by telecopy, telegraph or cable with the original of such
communication dispatched by (if inland) overnight or (if overseas)
international courier and, if such courier service is not available, by
registered airmail (or, if inland, registered first-class mail) with
postage prepaid to Guarantor and Agent at their respective addresses
specified below, or at such other address as shall be designated by such
party in a written notice to the other party hereto and (b) all such
notices and communications shall, when mailed, telegraphed, telecopied, or
cabled or sent by overnight courier, be effective seven (7) days after
being deposited in the mails in the manner as aforesaid, when delivered to
the telegraph company or cable company (if inland), one (1) day or (if
overseas) three (3) days after delivery to a courier in the manner as
aforesaid, as the case may be, or when sent by telecopier:
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Addresses:
If to Guarantor:
NRG Generating (US) Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, MN 55403
Attn : Leonard A. Bluhm
Tel : (612) 373-5305
Fax : (612) 373-5312
If to Agent:
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
Attn : Project Finance
Tel : (212) 238-5462
Fax : (212) 238-5390
20. Headings. All headings in this Guaranty are included herein
for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose or be given any substantive effect.
21. Financial Statements; Reports. Guarantor agrees that it
will provide to the Agent on a timely basis all financial statements,
reports, letters and certificates of Guarantor which Borrower are required
to deliver to Agent pursuant to Section 5.8 of the Credit Agreement, all
such financial statements, reports, letters and certificates will be
prepared in accordance with and conform to the provisions of such Section
of the Credit Agreement.
22. Loan Instruments. Guarantor will perform and observe all of
its covenants and agreements contained in any of the Loan Instruments to
which it is a party.
23. Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided under any other Loan Instrument or
by law. Agent and the Lenders shall have all of the rights and remedies
granted under the other Loan Instruments, and available under law or in
equity, and these same rights and remedies may be pursued separately,
successively or concurrently.
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24. Counterparts. This Guaranty and any amendments, waivers,
consents or supplements hereto may be executed in any number of
counterparts and by the different parties in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all
of which counterparts together shall constitute one and the same
instrument. This Guaranty shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
IN WITNESS WHEREOF, this Guaranty has been duly executed as of
the date and year first above written.
NRG GENERATING (U.S.) INC.
By:/s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
Agreed and Accepted as of this
28th day of June, 1996
CREDIT SUISSE, as Agent
By: /s/ Louis Iaconetti
Name: Louis D. Iaconetti
Title: Associate
By: /s/ Steven Dowe
Name: Steven Dowe
Title: Associate
<PAGE>
Exhibit 10.8.6
TAX INDEMNIFICATION AGREEMENT
among
NRG GENERATING (NEWARK) COGENERATION INC.,
NRG GENERATING (PARLIN) COGENERATION INC.,
NRG GENERATING (U.S.) INC.
and
CREDIT SUISSE, as Agent
Dated as of June 28, l996
<PAGE>
TABLE OF CONTENTS
1. Definitions 1
2. Obligations with respect to Taxes 2
3. Method of Payment 4
4. No Setoff 4
5. Nature of Obligations 5
6. Representations and Warranties 6
7. Covenants and Agreements 6
8. Enforcement 7
9. Notices 7
10. Survival of Representations and
Warranties 7
11. Severability 7
12. Amendment 8
13. Successors and Assigns 8
14. Number and Gender 8
15. Headings Descriptive 8
16. Governing Law; Jurisdiction; Waiver of
Trial by Jury 8
17. Counterparts 9
18. Term 10
(i)
<PAGE>
TAX INDEMNIFICATION AGREEMENT
This TAX INDEMNIFICATION AGREEMENT, dated as of June 28, 1996
(this "Agreement"), is made by and among (i) NRG GENERATING (NEWARK)
COGENERATION INC., a Delaware corporation ("NRG Newark"), NRG GENERATING
(PARLIN) COGENERATION INC., a Delaware corporation ("NRG Parlin") (each
of the foregoing parties, individually, a "Borrower" and, collectively,
"Borrowers"), (ii) NRG GENERATING (U.S.) INC., a Delaware corporation
("NRG Generating"), and (iii) CREDIT SUISSE, as agent ("Agent") on behalf
of and for the benefit of the Secured Parties (as defined in the Credit
Agreement referred to below).
W I T N E S S E T H :
WHEREAS, Borrowers and Agent have previously entered into the
Credit Agreement, dated as of May 17, 1996, by and among (i) each of
the Borrowers (ii) Credit Suisee and each Purchasing Lender and
(iii) Agent (as the same may be amended, modified or supplemented from
time to time, the "Credit Agreement"), pursuant to which the Lenders
are willing to provide the Loans and the Commitments to Borrowers on
the terms and subject to the conditions set forth in the Credit
Agreement;
WHEREAS, NRG Generating owns 100% of the issued and
outstanding capital stock of each Borrower and is willing to pay on
behalf of, and defer collection of, certain tax-related obligations of
each Borrower due to NRG Generating; and
WHEREAS, it is a condition precedent to the making of the
Additional Loans and the availability of the Debt Service Line of Credit
Facility Commitment by the Lenders under the Credit Agreement that NRG
Generating and Borrowers shall have entered into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, and in order to induce
the Lenders and Agent to enter into the Credit Agreement with Borrowers,
the parties hereto hereby agree as follows:
1. DEFINITIONS.
Unless otherwise defined herein, all capitalized terms used
herein which are defined in the Credit Agreement shall have their
respective meanings as therein defined and the terms set forth immediately
below shall have the respective meanings assigned thereto.
<PAGE>
"Income Tax" or "Income Taxes" means any Tax based upon, measured
by, or calculated with respect to (i) net income or profits (including, but
not limited to, any capital gains, minimum tax and any Tax on items of tax
preference, but not including sales, use, real property gains, real or
personal property, gross or net receipts, transfer or similar Taxes) or
(ii) multiple bases (including, but not limited to, corporate franchise,
doing business or occupation Taxes) if one or more of the bases upon which
such Tax may be based upon, measured by, or calculated with respect to, is
described in clause (i) above.
"Income Tax Return" means any return, filing, questionnaire,
information return or other document required to be filed, including
requests for extensions of time, filings made with estimated tax payments,
claims for refund and amended returns that may be filed, for any period
with any taxing authority (whether domestic or foreign) in connection with
any Income Tax or Income Taxes (whether or not a payment is required to be
made with respect to such filing).
"Minimum Net Worth" means the Net Worth of NRG Generating as set
forth in the June 30, 1996 audited financial statements of NRG Generating.
"Net Worth" means, as to any Person, all items which in conformity
with GAAP would be included under stockholders' equity on a balance sheet
of such Person.
"Tax" or "Taxes" means all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed
by a local, municipal, governmental, state, foreign, federal or other body,
together with any related interest, penalties and additions to any such
tax, or additional amounts imposed by any taxing authority (domestic or
foreign) upon NRG Generating and any of its Subsidiaries.
2. OBLIGATIONS WITH RESPECT TO INCOME TAXES.
(a) Filing of Income Tax Returns. Until all Obligations have
been indefeasibly paid in full, NRG Generating shall prepare and timely
file or shall cause to be prepared and timely filed all appropriate
Federal, state, local or foreign Income Tax Returns that are required to be
filed which include either of the Borrowers. Each Borrower hereby
irrevocably designates NRG Generating as its agent to take any and all
actions necessary or incidental to the preparation and filing of such
Income Tax Returns and agrees to cooperate in good faith with NRG
Generating in the preparation of such Income Tax Returns. Neither Borrower
shall file any amended Income Tax Return for which such Borrower is not
obligated to prepare or cause to be prepared the original of such Income
Tax Return pursuant to this Section 2(a) without the prior written consent
of NRG Generating.
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(b) Payment of Income Taxes. NRG Generating shall timely pay or
cause to be paid, without contribution from either of the Borrowers (except
out of amounts distributed or distributable pursuant to Section 5.1(c)(x)
of the Credit Agreement), all Income Taxes (including estimated Income
Taxes) with respect to Income Tax Returns which include either of the
Borrowers and which NRG Generating is required to prepare and file or cause
to be prepared and filed pursuant to this Agreement.
(c) Refunds. NRG Generating shall be entitled to retain or
receive immediate payment from the Borrowers of any refund or credit
arising with respect to either of the Borrowers (including, without
limitation, refunds and credits arising by reason of amended Income Tax
Returns or otherwise) relating to Income Taxes paid by NRG Generating
pursuant to this Agreement.
(d) Tax Cooperation. Each of the Borrowers agrees to provide
NRG Generating with such cooperation, information and records as NRG
Generating shall reasonably request in connection with the preparation or
filing of any Income Tax Return or claim for refund or in conducting any
audit or other proceeding in respect of Taxes. Such cooperation and
information shall include, without limitation, making such officers,
directors, employees and agents available as may reasonably be requested by
NRG Generating in connection with the preparation of any Income Tax Return
or any Income Tax audit or other Income Tax proceeding that relates to such
Borrower, promptly forwarding copies of appropriate notices and forms or
other communications received from or sent to any taxing authority which
relate to Income Taxes of such Borrower, providing copies of all relevant
Income Tax Returns, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by taxing
authorities, and records concerning the ownership and Tax basis of
property. Each Borrower shall prepare or cause to be prepared prior to the
due date for filing any Income Tax Return or the making of any Income Tax
payment (including estimated payment thereof) the tax workpaper preparation
package or packages and calculations necessary to enable NRG Generating to
prepare the Income Tax Returns NRG Generating is required to prepare or
cause to be prepared and to pay the Income Taxes NRG is required to pay or
cause to be paid pursuant to this Agreement.
(e) Indemnity. NRG Generating shall indemnify, defend and hold
harmless each Borrower from and against (A) all liability for Income Taxes
("Tax Liabilities") of such Borrower, whether incurred as a result of the
filing of a consolidated Federal Income Tax Return in which such Borrower
is included or a separate state Income Tax Return on behalf of such
Borrower or otherwise and (B) all claims, damages, losses, liabilities,
costs or expenses (including, without limitation, reasonable legal,
accounting and appraisal fees and expenses) arising out of, relating to or
resulting from any Income Tax Liability.
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(f) Tax Contests.
(i) If a claim shall be made by any taxing authority which, if
successful, might result in an indemnity payment under this Agreement, the
relevant Borrower shall promptly notify NRG Generating of such claim (a
"Tax Claim"); provided, however, that the failure to give such notice shall
not affect the indemnification provided hereunder.
(ii) NRG Generating shall control all proceedings and make all
decisions taken in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in its sole discretion
pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with any taxing authority with respect thereto, and may, in
its sole discretion, either pay the Tax claimed and sue for a refund where
applicable law permits such refund suits or contest the Tax Claim in any
permissible manner. NRG Generating shall keep the relevant Borrower
informed and shall consult in good faith with such Borrower prior to making
decisions with regard to such proceedings.
(iii) Each of NRG Generating and the Borrowers shall cooperate in
contesting any Tax Claim, which cooperation shall include the retention and
(upon request) the provision to the requesting party of records and
information which are reasonably relevant to such Tax Claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify
at proceedings relating to such Tax Claim.
3. Method of Payment. Any payment required to be made pursuant
to Section 2(e) hereof shall be paid in cash in immediately available funds
within 10 Business Days after the affected Borrower or Agent makes written
demand upon NRG Generating, together with reasonable documentation of the
liability to be indemnified pursuant to Section 2(e)(A) or the expense to
be indemnified pursuant to Section 2(e)((B). Any such payment shall be
made directly to the appropriate taxing authorities, if such liability has
not yet been paid by Borrowers, or, to the extent Borrowers have incurred
an out-of-pocket expense as a result of such liability, to Agent for
deposit in the Project Account. Nothing contained in this Agreement shall
require either Borrower to pay or expend any sums with respect to this
Agreement at any time before or after the making of a claim under this
Agreement.
4. No Setoff. The payment obligations of NRG Generating
hereunder shall be satisfied in all events at the times and in the amounts
set forth herein without offset, abatement, withholding or reduction of any
kind.
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5. Nature Of Obligations.
(a) Subrogation, etc. Notwithstanding any payment or payments
made by NRG Generating hereunder or the exercise by Agent of any of the
remedies provided under any Project Agreement, until all Obligations have
been paid in full, NRG Generating shall not seek any reimbursement,
indemnity, exoneration or contribution from either Borrower in respect of
payments made by NRG Generating hereunder (other than from amounts
distributed or distributable pursuant to Section 5.1(c)(x) of the Credit
Agreement). Notwithstanding the foregoing, if any amount shall be paid to
NRG Generating on account of such subrogation, reimbursement, indemnity,
exoneration or contribution rights at any time prior to such time as all
Obligations are indefeasibly paid in full (other than from distributed or
distributable pursuant to Section 5.1(c)(x) of the Credit Agreement), such
amount shall be held by NRG Generating in trust for the Secured Parties,
segregated from other funds of NRG Generating, and shall be turned over to
Agent for the benefit of the Secured Parties, in the exact form received by
NRG Generating (duly endorsed to Agent for the benefit of the Secured
Parties, if required), to be applied against such amounts in such order as
Agent may elect.
(b) Unconditional Obligations. The obligations of NRG
Generating hereunder are absolute and unconditional, without regard to any
circumstance of any nature whatsoever that constitutes or might constitute
an equitable or legal discharge of either Borrower of any of its respective
obligations under the Loan Instruments, in bankruptcy or in any other
instance. NRG Generating hereby waives diligence, presentment, protest,
demand for payment and notice of default or non-payment to or upon either
Borrower or itself with respect to any amounts due under the Credit
Agreement or any other Loan Instrument. NRG Generating shall remain
obligated hereunder notwithstanding that, without any reservation of rights
by or against NRG Generating and without notice to or further assent by NRG
Generating, any demand for payment of any amount due pursuant to the Credit
Agreement or any other Loan Instrument may be rescinded by the Secured
Parties, or any of the loans or other extensions of credit thereunder
continued or such amounts, or the liability of any other Person upon or for
any part thereof, or any collateral security or guaranty therefor or right
of offset with respect thereto, may, from time to time, in whole or part,
be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Secured Parties, or the Credit Agreement,
the Notes or any other Loan Instrument or any other document executed in
connection therewith may be amended, modified, supplemented or terminated,
in whole or in part, as the Secured Parties may deem advisable from time to
time, or any collateral security or guaranty or right of offset at any time
held by the Secured Parties for the payment of such amounts may be sold,
exchanged, waived, surrendered or released.
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(c) Reinstatement. The obligations of NRG Generating set forth
herein shall continue to be effective or reinstated, as the case may be, if
at any time and for any reason, any payment made hereunder by NRG
Generating is rescinded or otherwise returned by either Borrower or the
Secured Parties, all as though such payment had not been made. Without
limiting the generality of the foregoing NRG Generating agrees that, to the
extent that NRG Generating makes a payment or payments hereunder, which
payment or payments or any part thereof are subsequently invalidated or
repaid to NRG Generating, its estate, trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such payment or repayment, the obligations of
NRG Generating hereunder or part thereof which has been paid, reduced or
satisfied by such amount shall be reinstated and the obligations set forth
herein shall be continued in full force and effect as though such payment,
reduction or satisfaction had not been made or occurred.
6. REPRESENTATIONS AND WARRANTIES.
NRG Generating hereby makes each and every representation and
warranty made by it in Section 6 of the Guaranty to the same extent as if
each such representation and warranty had been set forth in full herein,
and each such representation and warranty is hereby incorporated by
reference in this Section 6.
7. COVENANTS AND AGREEMENTS.
NRG Generating hereby covenants and agrees that it shall
faithfully observe and fulfill, and shall cause to be observed and
fulfilled, each and all of the following covenants until all
Obligations have been paid and performed in full; provided, that
compliance with such covenants shall not be required for so long as NRG
Generating maintains an investment grade rating by a nationally
recognized rating agency; provided, further, that if NRG Generating
subsequently fails to maintain an investment grade rating by a
nationally recognized rating agency, it shall have a period of up to
six months from the time of such failure to comply with such covenants:
(a) Net Worth. NRG Generating shall not permit its Net Worth to
be less than (i) the Minimum Net Worth on December 31, 1996; (ii) the
Minimum Net Worth plus $2,000,000 on December 31, 1997; (iii) the Minimum
Net Worth plus $6,000,000 on December 31, 1998; (iv) the Minimum Net Worth
plus $11,000,000 on December 31, 1999; (v) the Minimum Net Worth plus
$16,000,000 on December 31, 2000; (vi) the Minimum Net Worth plus
$21,000,000 on December 31, 2001; and (vii) the Minimum Net Worth plus
$26,000,000 on December 31 of each year thereafter. For purposes of this
Section 7(a), Net Worth shall be reduced by any repayments or prepayments
of the principal amount of subordinated debt owed by NRG Generating in
excess of $15,000,000.
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(b) Liquidity. NRG Generating shall not permit at any time its
cash on hand (including short-term investments and other investments which
are catergorized as cash under GAAP) to be less than the amount of all
Income Taxes which is projected to be due and payable for the following
twelve months.
(c) Working Capital. NRG Generating shall not permit at any time its
current assets minus current liabilities as determined in
conformity with GAAP to be less than the amount of all Income
Taxes which is projected to be due and payable for the following
twelve months.
8. ENFORCEMENT.
NRG Generating hereby agrees that Agent on behalf of the
Secured Parties and/or Borrowers shall have the right to directly
enforce the provisions hereof against it and NRG Generating agrees to
pay all costs, including reasonable attorneys' fees, incurred by Agent
with respect to any such enforcement.
9. Notices.
All notices, demands, requests and other communications required
or permitted hereunder shall be in writing, and shall be given and deemed
to have been given in accordance with Section 8.1 of the Credit Agreement
and the information set forth immediately below shall apply to NRG
Generating:
If to NRG Generating:
NRG Generating (U.S.) Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attention: President
Telecopy: (612) 373-5312
10. Survival of Representations and Warranties.
All agreements, representations and warranties made herein or
made in writing by NRG Generating in connection herewith shall survive the
execution and delivery of this Agreement and the performance of the
obligations contained herein, and shall be deemed to be material and to
have been relied upon by Agent and the Secured Parties, regardless of any
investigation made by or on behalf of Agent or the Secured Parties.
11. Severability.
Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to
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such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization, without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction. Where provisions of any law or
regulation resulting in such prohibition or unenforceability may be waived
they are hereby waived by NRG Generating and Agent to the full extent
permitted by law so that this Agreement shall be deemed a valid, binding
agreement, enforceable in accordance with its terms.
12. Amendment.
This Agreement may be amended, modified or rescinded only by a
writing expressly referring to this Agreement and signed by all the parties
hereto.
13. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
In the event of any assignment or transfer by any Secured Party of any
instrument evidencing all or any part of the Obligations, the holder of
such instrument shall, subject to the Credit Agreement, be entitled to the
benefits of this Agreement.
14. Number and Gender.
Whenever used in this Agreement, the singular number shall
include the plural and the plural the singular, and the use of any gender
shall be applicable to all genders.
15. Headings Descriptive.
The captions or headings of the several sections and subsections
and the table of contents of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
16. Governing Law; Jurisdiction; Waiver of Trial by Jury.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
regard to the conflict of law rules thereof.
(b) Jurisdiction. With respect to any legal action or
proceeding brought by Agent or the Secured Parties against NRG Generating
arising out of or in connection with this Agreement, NRG Generating hereby
irrevocably (i) consents to the jurisdiction of any state or federal court
located in the State of New York, (ii) consents to the service of process
outside the territorial jurisdiction of said courts in any such action or
proceeding by
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mailing copies thereof by registered United States mail, postage prepaid,
to the address specified by NRG Generating for the receipt of notices if
such address is outside such territorial jurisdiction and (iii) waives any
objection to the venue of the aforesaid courts. NRG Generating hereby
irrevocably designates, appoints and empowers CT Corporation System (the
"Process Agent", which has consented thereto) as agent to receive for and
on behalf of NRG Generating service of process in the State of New York.
NRG Generating agrees it will at all times continuously maintain either a
registered office or an agent to receive service of process in the State of
New York on behalf of itself and its properties with respect to this
Agreement.
(c) Waiver of Trial by Jury. WITH REGARD TO THIS AGREEMENT,
EACH OF THE PARTIES HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
17. Counterparts.
This Agreement may be executed in several counterparts, each of
which shall be an original, but all of which together shall constitute one
and the same agreement.
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18. Term.
This Agreement shall continue in effect until repayment in full
of all Obligations.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement through their duly authorized representatives as of the date
first written above.
NRG GENERATING (NEWARK) COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
NRG GENERATING (PARLIN) COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
NRG GENERATING (U.S.) INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
CREDIT SUISSE, as Agent
By: /s/ Louis Iaconetti
Name: Louis D. Iaconetti
Title: Associate
By: /s/ Steven Dowe
Name: Steven Dowe
Title: Associate
<PAGE>
Exhibit 10.8.7
ASSIGNMENT AND SECURITY AGREEMENT
by and between
NRG GENERATING (PARLIN) COGENERATION INC.
and
CREDIT SUISSE, as Agent
Dated as of June 28, 1996
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions 1
2. Creation of Security Interest 2
3. Delivery of Collateral; Perfection and Use
of Accounts 6
4. Representations and Warranties 6
5. Covenants and Agreements 7
6. Use of the Accounts 10
7. Debtors' Obligations upon Event of Default 10
8. Remedies; Rights Upon Event of Default 10
9. Application of Proceeds 13
10. Assignment of Permits 13
11. Security Interest Absolute 13
12. Agent Appointed Attorney-in-Fact 14
13. Agent May Perform 15
14. No Duty on Agent's Part; Limitation
on Agent's Obligations 16
15. Reasonable Care 16
16. Role of Agent 17
17. Absence of Fiduciary Relation 17
18. Survival of Representations and Warranties 17
19. Notices 17
20. No Waiver; Cumulative Remedies 17
21. Severability 18
22. Exculpatory Provisions; Reliance by Agent 18
23. Amendment 19
24. Successors and Assigns 19
25. Number and Gender 19
26. Headings Descriptive 19
27. Governing Law; Jurisdiction 19
28. Counterparts 19
29. Continuing Security Interest; Termination 19
30. Payments Set Aside 20
Schedule
Schedule A: Financing Statement Filings
(i)
<PAGE>
ASSIGNMENT AND SECURITY AGREEMENT
This ASSIGNMENT AND SECURITY AGREEMENT (this "Security
Agreement"), dated as of June 28, 1996 by and between NRG GENERATING
(PARLIN) COGENERATION INC., a Delaware corporation ("Debtor"), and
CREDIT SUISSE, as agent ("Agent"), on behalf of and for the benefit of
the Secured Parties under the Credit Agreement (as defined below).
W I T N E S S E T H :
WHEREAS, Debtor is the owner of a power plant located in
Parlin, New Jersey;
WHEREAS, Debtor has entered into the Credit Agreement, dated
as of May 17, 1996, by and among (i) Debtor and NRG Generating (Newark)
Cogeneration Inc., a Delaware corporation ("NRG Newark"), (ii) Credit
Suisse, Greenwich Funding Corporation and each Purchasing Lender and
(iii) Agent (as the same may be amended, modified or supplemented from
time to time, the "Credit Agreement"), pursuant to which the Lenders
are willing to provide the Loans and the Commitments to Debtor and NRG
Newark on the terms and subject to the conditions set forth in the
Credit Agreement;
WHEREAS, it is a condition precedent to the making of the
Additional Loan by the Lenders under the Credit Agreement that Debtor
shall have granted the security interest contemplated by this Security
Agreement to Agent for the equal and ratable benefit of the Secured
Parties to secure the obligations of Debtor and NRG Newark under the
Credit Agreement and the other Loan Instruments;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and in order to induce the Lenders to make the
Additional Loan and to make available the Debt Service Line of Credit
Facility Commitment under the Credit Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
For purposes of this Security Agreement and unless the
context otherwise requires, all capitalized terms used herein which are
defined in the Credit Agreement (and not otherwise defined herein)
shall have their respective meanings as therein defined. For purposes
of this Security Agreement, all other terms used herein and not
otherwise defined herein which are defined in Article 9 of the Uniform
Commercial Code (as the same may be in effect in the State of New York
or any other applicable jurisdiction, the "Code"), shall have their
respective meanings as therein defined.
<PAGE>
2. Creation of Security Interest.
(a) As security for the full payment or performance when due
(whether at stated maturity, by acceleration or otherwise) of any and
all of the Obligations (as defined below) now existing or hereafter
arising, Debtor hereby grants to and creates in favor of Agent, for the
equal and ratable benefit of the Secured Parties, a lien on and first
priority security interest (the "Security Interest") in all right,
title and interest of Debtor in, to and under the following collateral,
whether now existing or hereafter acquired (the "Collateral"):
(A) The following agreements:
(i) the Parlin Power Purchase Agreement;
(ii) the Parlin Steam Agreement;
(iii) the Parlin Ground Lease;
(iv) the Parlin Operations and Maintenance
Agreement;
(v) the Wholesale Power Purchase Agreement;
(vi) the Agreement, dated as of May 1, 1996, by
and among Stewart & Stevenson Operations, Inc.,
NRG Generating (Newark) Cogeneration Inc., Debtor,
NRG Generating (U.S.) Inc. and Stewart & Stevenson
Services, Inc.;
(vii) the Parlin Operating Guaranty;
(viii) the consent of each party (other than
Debtor) to each of the Project Documents, where
applicable, to the assignment thereof by either
Debtor to Agent for the benefit of the Secured
Parties;
(ix) the Insurance Policies applicable to the
Parlin Project;
(x) each Parlin Permitted Contract which does
not, by its terms, prohibit the assignment thereof
as security in the manner contemplated herein or
the assignment of which (as contemplated herein)
would constitute a breach of or a default under
such Parlin Permitted Contract;
(xi) the Tax Indemnification Agreement;
(xii) each Interest Rate Hedge Agreement; and
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(xiii) any other agreement, commitment or
understanding executed by (or on behalf of) Debtor
in connection with the Parlin Project or any of
the Parlin Project Documents (other than Parlin
Permitted Contracts not assigned pursuant to
clause (x) above);
as each such document may be amended, supplemented or otherwise
modified from time to time (said documents, as amended,
supplemented or modified, being individually referred to herein as
an "Assigned Agreement" and collectively referred to herein as the
"Assigned Agreements"), including, without limitation, (1) all
rights of Debtor to receive moneys due and to become due under or
pursuant to the Assigned Agreements, (2) all rights of Debtor to
receive proceeds of any performance or payment bond, insurance,
indemnity, warranty or guaranty with respect to the Assigned
Agreements, (3) all claims of Debtor for damages arising out of or
for breach of or default under the Assigned Agreements and (4) all
rights of Debtor to take any action to terminate, amend,
supplement, modify or waive performance of the Assigned
Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder; provided, however,
unless an Event of Default shall have occurred and be continuing,
Debtor may exercise all rights, interests and benefits under the
Assigned Agreements to which it is a party in any lawful manner
not inconsistent with this Security Agreement, the Credit
Agreement or any of the other Loan Instruments;
(B) (i) the Accounts (and any sub-accounts opened within any
Account) and each cash collateral account or other bank account,
if any, established by Agent (and designated by Agent as an
Account) on behalf of Debtor in connection with the Loan
Instruments, all sums of money, from any source whatsoever, now or
hereafter transferred to and comprising the Accounts, including,
without limitation, all credit balances therein, any and all
funds, cash, investments, instruments and securities at any time
on deposit in the Accounts, and any and all interest and dividends
or other income derived from any such monies, credit balances,
funds, cash, investments, instruments and securities, and (ii) all
statements, certificates, passbooks and instruments representing
the Accounts and all other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for the Accounts;
(C) All automobiles, trucks, boats and other rolling stock
or moveable personal property ("Rolling Stock"), including Rolling
Stock for which the title thereto is evidenced by a certificate of
title issued by the United States or a state which permits or
requires a lien thereon to be evidenced upon such certificate, in
which Debtor now or at any time in the future may have an
interest;
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(D) All authorizations, consents, approvals, waivers,
exemptions, variances, registrations, leases, tariffs,
certifications, franchises, permissions, permits and licenses now
or hereafter of, and filings and declarations now or hereafter
with, and rulings now or hereafter by, any Governmental Authority
(including, without limitation, the QF Certificate), including
those with respect to the reconstruction, repair, alteration,
addition, improvement, replacement, use, operation or management
of the Parlin Project (including, without limitation, all
Government Approvals now or hereafter held in the name or for the
benefit of Debtor) (collectively, the "Permits"); provided that
any of the Permits which by their terms or by operation of law
would become void, voidable, terminable or revocable or would
constitute a breach or default thereunder if pledged or assigned
hereunder or if a security interest therein were granted hereunder
are expressly excepted and excluded from the lien and terms of
this Security Agreement to the extent necessary to avoid such
voidness, violability, terminability or revocability;
(E) All equipment, machinery, apparatus, installations,
facilities and other tangible property (the "Equipment") in which
Debtor has an interest in on the date hereof or which is hereafter
acquired by Debtor;
(F) All accounts (other than the Accounts) now or hereafter
owned by Debtor, including, without limitation, any and all of
Debtor's currently existing and future accounts receivable and
contract rights and all agreements, rights, interests, inventory,
goods, chattel paper, documents, instruments, general intangibles,
fixtures, trade fixtures, consumer goods, money and other assets
owned by Debtor on the date hereof or hereafter arising or
acquired, including, without limitation, the improvements and
equipment associated with the Parlin Project, and designs, plans
and specifications relating to the Parlin Project owned by Debtor
on the date hereof or hereafter acquired, all acid rain allowances
under the Clean Air Act Amendments of 1990 and any implementing
state Laws and any right, title or interest of Debtor under any
insurance, indemnity, warranty or guaranty in respect of the
Parlin Project or of any of the foregoing and any rents, revenues,
incomes and profits in respect of the Parlin Project; and
(G) To the extent not included in the foregoing, all
Permitted Investments of Debtor and proceeds, products and
accessions of and to any and all of the foregoing, including,
without limitation, "proceeds," as defined in Section 9-306(1) of
the Code, including, without limitation, whatever is received upon
any collection, exchange, sale or other disposition of any of the
Collateral, and any property into which any of the Collateral is
converted, whether cash
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or non-cash proceeds, and any and all other amounts paid or
payable under or in connection with any of the Collateral.
It is the intention of the parties that the foregoing
description of the Collateral be sufficient, together with the
description of the Mortgaged Property (as defined in the Parlin
Mortgage), to enable Agent on behalf of the Secured Parties to
take possession of, or foreclose upon, all of the right, title and
interest of Debtor in and to the Parlin Project and any and all
real property and personal property, tangible and intangible, used
or usable in connection therewith, and to enable Agent or its
designee to operate, sell or otherwise dispose of the entire
interest of Debtor in and to the Parlin Project or any part
thereof, in each case upon the occurrence and during the
continuance of an Event of Default; provided, however, that all of
the Collateral is hereby assigned to Agent solely as security, and
Agent shall have no duty, liability or obligation whatsoever with
respect to any of the Collateral, unless Agent so elects in
writing consistent with its rights under this Security Agreement.
(b) This Security Agreement secures, in accordance with the
provisions hereof, the following obligations, now existing or hereafter
arising (collectively, the "Obligations"):
(i) payment and performance of each and every obligation,
indebtedness, covenant and agreement of Debtor now or hereafter
existing contained in the Credit Agreement and any of the other
Loan Instruments, including, without limitation, any obligation to
any of the Secured Parties pursuant to any Interest Rate Hedge
Agreement with a Secured Party, in each case whether for
principal, interest, fees, expenses or otherwise pursuant thereto,
and any amendments or supplements thereto, extensions or renewals
thereof or replacements therefor;
(ii) payment of all sums advanced in accordance herewith or
in accordance with the other Parlin Security Documents by or on
behalf of the Secured Parties (or any of them) to protect any of
the collateral purported to be covered hereby or thereby, with
interest thereon at a rate per annum equal to the Default Interest
Rate from the date of demand therefor;
(iii) performance of every obligation, indebtedness,
covenant and agreement of Debtor contained in any agreement now or
hereafter executed by Debtor which recites that the obligations
thereunder are secured by this Security Agreement or any of the
other Parlin Security Documents; and
(iv) payment of all sums, with interest thereon at a rate
per annum equal to the Default Interest Rate that may become due
and payable to or for the benefit of the Secured
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Parties (or any of them) pursuant to the terms of this Security
Agreement or any of the other Parlin Security Documents;
in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing,
renewed or restructured, reinstated, created or incurred, and
including, without limitation, all indebtedness of Debtor under any
instrument now or hereafter evidencing or securing any of the
foregoing.
3. Delivery of Collateral; Perfection and Use
of Accounts.
(a) Delivery of Collateral. All sums of money, funds and
cash, from time to time constituting the Collateral together with all
certificates, instruments, investments and securities representing or
evidencing such Collateral, shall be delivered to, dealt with and held
by Agent pursuant to the terms of the Credit Agreement and the terms
hereof. All such certificates, investments, securities and instruments
shall be in suitable form for transfer by delivery or otherwise, or
shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Agent.
(b) Perfection of Accounts. For the purpose of perfecting the
Security Interest of the Secured Parties in and to the Accounts and all
funds, cash, investments, instruments and securities at any time on deposit
in the Accounts, the Agent shall be deemed to be holding the Accounts and
all such funds, cash, investments, instruments and securities as agent for
Agent and the Secured Parties (other than the Local Bank Accounts (if any)
and all funds, cash, investments, instruments and securities therein, which
shall be held by the Local Bank as agent for Agent and the Secured
Parties).
4. Representations and Warranties.
Debtor hereby represents and warrants as follows:
(a) Debtor is the legal and beneficial owner of the Collateral
in existence on the date hereof and will be the only owners of the
Collateral hereafter acquired, free and clear of any and all Liens or
claims of others except for Permitted Liens, and Debtor has full power and
authority to grant the liens and security interests in and to the
Collateral hereunder. Except with respect to the Secured Parties and with
respect to National Westminster Bank PLC, New York Branch and otherwise as
required or permitted under this Security Agreement, no security agreement,
financing statement or other public notice with respect to all or any part
of the Collateral is on file or of record in any public office which could
reasonably be expected to result in a Material Adverse Effect.
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(b) Chief Executive Office and Principal Place of Business.
Debtor's chief executive office and principal place of business and the
place where Debtor's records concerning the Collateral and the originals of
the Assigned Agreements to which it is a party are kept is:
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Telecopy: (612) 373-5312
(c) Perfection. Financing Statements or other appropriate
instruments have been filed pursuant to the Code in the public offices set
forth in Schedule A as may be necessary to perfect any Security Interest
granted or purported to be granted hereby to the extent any such Security
Interest may be perfected by the filing of a Financing Statement. All
other action requested by Agent which is necessary or desirable to protect
and perfect the Security Interest in each item of the Collateral has been
duly taken. Subject to the requirements contained in the Code with respect
to the filing of continuation statements, this Security Agreement
constitutes a valid and continuing Lien on and perfected Security Interest
in the Collateral in favor of the Agent for the equal and ratable benefit
of the Secured Parties, prior to all other Liens (other than Permitted
Liens), and is enforceable as such against creditors of and purchasers from
Debtor and against any owner, lessee or mortgagee of the real property
where any of the Collateral is located or to which any of the Collateral
relates and against any purchaser of such real property and any present or
future creditor obtaining a Lien on such real property.
5. Covenants and Agreements. Debtor hereby covenants and
agrees that it shall faithfully observe and fulfill, and shall cause to be
observed and fulfilled, each and all of the following covenants until all
Obligations to be paid or performed by Debtor under the Loan Instruments
have been paid and performed in full:
(a) Notice of Adverse Claims. Debtor shall, promptly and in no
event later than five days after Debtor becomes aware of any information or
has knowledge of any adverse claim against the Collateral which could have
a Material Adverse Effect, deliver to Agent and each of the Lenders notice
of each such claim.
(b) Further Assurances. Debtor shall, from time to time at
Debtor's expense, and upon request by Agent on behalf of the Secured
Parties, promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or advisable,
or that Agent determines may be necessary, in order to perfect and protect
any Security Interest granted or purported to be granted hereby or to
enable Agent to exercise and enforce its rights and remedies hereunder with
respect to the Collateral. Without limiting the generality of the
foregoing, Debtor shall (i) if any Collateral shall be evidenced by a
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promissory note or other instrument, deliver and pledge to Agent hereunder
such note or instrument duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and reasonable substance
satisfactory to Agent and (ii) execute and file such financing and
continuation statements, or amendments thereto, and such other instruments,
endorsements and notices, as may be necessary, or as Agent may request, in
order to perfect and preserve the Security Interest granted or purported to
be granted hereby, including, without limitation, consents, assignments,
notices and other documentation reasonably requested by Agent.
(c) Prohibition Against Transfer of Collateral. Debtor shall
not sell, transfer, lease or otherwise dispose of any of the Equipment, or
attempt, offer or contract to do so except as permitted pursuant to the
Credit Agreement.
(d) Fees and Expenses. Debtor shall upon demand pay to Agent
the amount of any and all out-of-pocket costs and expenses (including,
without limitation, the fees and expenses of its counsel and of any
experts, any special consultants engaged, and any local counsel who might
be retained by Agent, in connection with the transactions contemplated
hereby) which Agent may incur in connection with (i) the sale of,
collection from, custody or preservation of or other realization upon, any
of the Collateral pursuant to the exercise or enforcement of any of the
rights of Agent hereunder or (ii) the failure by Debtor to perform or
observe any of the provisions hereof, together with interest thereon at the
Default Interest Rate. Any amounts payable by Debtor pursuant to this
Section 5(e) shall be payable on demand and shall constitute Obligations.
(e) Filing Fees, Taxes, etc. Debtor shall pay all filing,
registration and recording fees or re-filing, re-registration and re-
recording fees, and all federal, state, county and municipal stamp taxes
and other similar taxes, duties, imposts, assessments and charges arising
out of or in connection with the execution and delivery of this Security
Agreement, any agreement supplemental hereto and any instruments of further
assurance.
(f) Maintenance of Records; Inspection. At all times Debtor
shall keep and maintain at its own cost and expense records of the
Collateral in accordance with prudent industry practice as determined in
the reasonable judgment of Agent. Such records will be kept at Debtor's
principal place of business set forth in Section 4(c) or at the Parlin
Project. Debtor shall notify Agent immediately in writing of any change in
the location of its chief executive office, principal place of business or
the office where such records and the originals of the Assigned Agreements
to which it is a party are kept, or the establishment by Debtor of any
other office or place of business, or the adoption or change of its name or
any trade name or fictitious business name and, upon written request of
Agent, shall execute any additional documents or certificates necessary to
reflect the adoption of or change in its name or any trade name or
fictitious business name. Debtor shall
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furnish to Agent statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Agent may reasonably request, all in reasonable detail.
Subject to Section 5.10 of the Credit Agreement, Agent and the Secured
Parties may inspect the Collateral.
(g) Limitation on Liens on the Collateral. Debtor shall not
create, incur or permit to exist, shall defend the Collateral against, and
shall take such other action as is necessary to remove, any Lien or claim
on or to the Collateral, other than Permitted Liens, and shall defend the
right, title and interest of Agent in and to any of the Collateral against
the claims and demands of all Persons whomsoever.
(h) Additional Collateral. Debtor shall notify Agent promptly
and in no event later than five Business Days after Debtor becomes aware
that any of the Equipment, or any items that are to become Equipment (other
than Rolling Stock), are to be stored for any length of time (other than
temporary storage incident to transportation to the Parlin Project or
repair or maintenance of such Collateral) in any location other than the
Parlin Project. The notice shall specify, in such detail as is reasonably
required by Agent (i) the items that are to be stored, (ii) the location at
which such items are to be stored and the name and addresses of the owner
and operator of the storage facility, (iii) the approximate length of time
that such items are to be stored at that location and (iv) the name of the
Person or entity who is the owner of such items. If required by Agent,
Debtor shall execute additional financing statements and other related
documents, all in form reasonably satisfactory to Agent, covering the items
of Equipment that are to be stored at such other location. If for any
reason Agent, on behalf and for the benefit of the Secured Parties, cannot
perfect a first priority security interest in the items stored or to be
stored at such other location, then upon instructions from Agent, Debtor
shall promptly transport such items to the Parlin Project or to another
location with respect to which Agent will be able to so perfect its
security interest upon the request of Agent. Upon instructions from Agent,
Debtor shall obtain such additional insurance on the Collateral stored at
any location other than the Parlin Project as Agent deems reasonably
necessary consistent with the requirements of the Credit Agreement to
protect the Secured Parties' interests in the Collateral.
(i) Indemnification. Debtor shall defend, indemnify and hold
harmless Agent and each of the Secured Parties and their officers,
directors and employees, from and against any and all costs, expenses,
disbursements, liabilities, obligations, losses, damages, injunctions,
judgments, suits, actions, causes of action, fines, penalties, claims and
demands, of every kind or nature (including, without limitation, attorney's
fees and expenses) (herein collectively called, the "Indemnified
Liabilities") which are occasioned by or result from (i) any failure by
Debtor or any party thereto to perform any of the terms, agreements, or
covenants
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to be performed by it under this Security Agreement or under any Assigned
Agreement and (without duplication) (ii) this Security Agreement or any
Assigned Agreement other than Indemnified Liabilities resulting from such
Secured Party's gross negligence or willful misconduct.
(j) Consents to Assignment. Debtor has obtained and provided to
Agent executed copies of all consents to this Security Agreement from each
of the parties (other than Debtor) to the Assigned Agreements to which
Debtor is a party requested by Agent (the "Consenting Parties"), and agrees
to obtain such consents from each future or successor Consenting Party
requested by Agent, which consents shall be in form and substance
satisfactory to Agent.
6. Use of the Accounts. Agent shall have exclusive possession
of and sole dominion and control over the Accounts (with respect to any
Local Bank Account, such possession, dominion and control shall be
exercised through the Local Bank, as agent for Agent and the Secured
Parties); provided, however, if no Event of Default shall have occurred and
be continuing, Agent shall direct the disbursement of, and permit the
disbursement by any Local Bank of, funds from each of the Accounts in
accordance with the terms providing for the use of each of the Accounts set
forth in the Credit Agreement or any other Loan Instrument. Upon the
occurrence and during the continuance of an Event of Default, Agent shall
have no further obligation to disburse or direct or permit the disbursement
by any Local Bank of funds from the Accounts and any Local Bank Account.
7. Debtor's Obligations upon Event of Default. If an Event of
Default shall occur and be continuing (a) all payments received by Debtor
under or in connection with any of the Collateral shall be held by Debtor
in trust for Agent, shall be segregated from other funds of Debtor and
shall, forthwith upon receipt by Debtor, be turned over to Agent or its
designee in the same form as received by Debtor (duly endorsed by Debtor to
Agent, if requested), and (b) any and all such payments so received by
Agent or its designee (whether from Debtor or otherwise) may, in the sole
discretion of Agent or its designee, be held by Agent or such designee as
collateral security for, and/or then or at any time thereafter be applied,
subject only to the relevant provisions of the Credit Agreement or as
otherwise may be required by applicable law, in whole or in part by Agent
or its designee in the manner specified in Section 9 hereof, unless
otherwise agreed to by the Majority Lenders in a writing delivered to
Agent.
8. Remedies; Rights Upon Event of Default. Upon the occurrence
and during the continuance of an Event of Default Agent, for the equal and
ratable benefit of and on behalf of the Secured Parties, may do one or more
of the following:
(a) Declare, without presentment, demand, protest or notice of
any kind, all of which Debtor hereby expressly
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waives, the entire amount of Obligations to be immediately due and
payable, whereupon all of such Obligations declared due and payable
shall be and become immediately due and payable; provided, however, if
an Event of Default occurs pursuant to Section 6.1(h), (i) or (t) of
the Credit Agreement, the acceleration provided for in this Section
8(a) shall be deemed to have been made upon the occurrence of such
Event of Default without declaration or any other action by Agent;
(b) Take all cash held by it and by any Local Bank as agent for
Agent and the Secured Parties (including any resulting from the
liquidation of Permitted Investments) as Collateral, including any
credit balances in the Accounts, and all cash proceeds received or
receivable by it and by any Local Bank as agent for Agent and the
Secured Parties in respect of the Collateral and, at the Majority
Lenders' option, use such cash for such purposes as Agent and the
Majority Lenders deem appropriate and in the interest of either
Project and/or apply the same, in whole or in part, for the equal and
ratable benefit of the Secured Parties in satisfaction of all or any
part of the Obligations (whether or not due and payable) in the manner
specified in Section 9 hereof, unless otherwise agreed to by the
Majority Lenders in a writing delivered to Agent;
(c) Upon notice to Debtor, which notice need not be in writing,
make such payments and do such acts as Agent may deem necessary to
protect, perfect or continue the perfection of the Security Interest,
including, without limitation, paying, purchasing, contesting or
compromising any Lien which is, or purports to be, prior to or
superior to the Security Interest granted hereunder, and commencing,
appearing or otherwise participating in or controlling any action or
proceeding purporting to affect the Security Interest in or ownership
of the Collateral;
(d) Foreclose on the Collateral as herein provided or in any
manner permitted by law and exercise any and all of the rights and
remedies conferred upon the Secured Parties by any of the Parlin
Project Agreements either concurrently or in such order as Agent may
determine without affecting the rights or remedies to which the
Secured Parties may be entitled under the Credit Agreement or any
other Loan Instrument. Debtor hereby waives, to the extent permitted
by applicable law, notice and judicial hearing in connection with
Agent's taking possession or collection, recovery, receipt,
appropriation, repossession, retention, set-off, sale, leasing,
conveyance, assignment, transfer or other disposition of or
realization upon any or all of the Collateral, including, without
limitation, any and all prior notice and hearing for any prejudgment
remedy or remedies and any such right which Debtor would otherwise
have under the constitution or any statute or other law of the United
States of America or of any state;
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(e) Require Debtor to, and Debtor hereby agrees that it shall,
at its expense and upon request of Agent, forthwith assemble as
directed by Agent such part of the Collateral as may be reasonably
assembled and make it available to Agent at a place to be designated
by Agent;
(f) Without notice or demand or legal process, enter upon any
premises of Debtor and take possession of the Collateral;
(g) Without notice, except as specified below, sell the
Collateral, or any part thereof, in one or more parcels at public or
private sale, at any of Agent's offices or elsewhere, at such time or
times, for cash, on credit or for future delivery, and at such price
or prices and upon such other terms as Agent may deem commercially
reasonable. Debtor agrees that, to the extent notice of sale shall be
required by law, at least 10 days' notice to Debtor of the time and
the place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. At any sale
of the Collateral, if permitted by law, Agent may bid (which bid may
be, in whole or in part, in the form of cancellation of indebtedness)
for the purchase of the Collateral or any portion thereof for the
account of Agent on behalf of the Secured Parties. Agent shall not be
obligated to make any sale of the Collateral regardless of notice of
sale having been given. Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. Agent shall incur no
liability as a result of the manner of sale of the Collateral, or any
part thereof, at any private sale conducted in a commercially
reasonable manner. Debtor hereby waives, to the extent permitted by
applicable law, any claims against Agent arising by reason of the fact
that the price at which the Collateral, or any part thereof, may have
been sold at a private sale was less than the price which might have
been obtained at public sale or was less than the aggregate amount of
the Obligations, even if Agent accepts the first offer received which
Agent in good faith deems to be commercially reasonable under the
circumstances and does not offer the Collateral to more than one
offeree. To the full extent permitted by law, Debtor shall have the
burden of proving that any such sale of the Collateral was conducted
in a commercially unreasonable manner. To the extent permitted by
law, Debtor hereby specifically waives all rights of redemption, stay
or appraisal which it has or may have under any law now existing or
hereafter enacted. Debtor authorizes Agent, at any time and from time
to time, to execute, in connection with a sale of the Collateral
pursuant to the provisions of this Security Agreement, any
endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(h) Exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise
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available to it, all the rights and remedies of a secured party after
default under the Code.
9. Application of Proceeds. The net proceeds of any
foreclosure, collection, recovery, receipt, appropriation, realization or
sale of the Collateral shall be applied in the following order:
(a) To the repayment of the costs and expenses of retaking,
holding and preparing for the sale and the selling of the Collateral
(including, without limitation, reasonable attorneys' fees and
expenses and court costs and those amounts payable to Agent pursuant
to Section 5(f)) and the discharge of all assessments, encumbrances,
charges or liens, if any, on the Collateral prior to the lien hereof;
(b) To the payment in full of the Obligations in accordance with
the priority of application specified in Section 2.10(c) of the Credit
Agreement; and
(c) If all Obligations have been indefeasibly paid, satisfied
and discharged in full, any surplus then remaining shall be paid to
Debtors, subject, however, to the rights under applicable law of the
holders of any then existing liens on the Collateral of which Agent
has actual notice (without investigation).
10. Assignment of Permits. Debtor shall, upon the occurrence
and during the continuance of an Event of Default at the request of Agent,
contemporaneously with and at any other time in connection with any
foreclosure by Agent on any part of the Parlin Project covered by the
Parlin Mortgage assign, transfer or otherwise furnish to Agent or to any
transferee of the interest of Agent (to the extent so assignable or
transferable), all of Debtor's rights and interest in, to and under all
Governmental Approvals, including, without limitation, all offsets,
allowances and similar rights issued under or in connection with
Governmental Requirements (including, without limitation, with respect to
Environmental Requirements), which are required to permit the Parlin
Project to be operated in accordance with all Governmental Requirements.
Upon the request of Agent upon the occurrence and during the continuance of
an Event of Default following foreclosure by Agent on the Parlin Project,
Debtor agrees to use its diligent efforts to have renewed or extended in
the name of Agent (or any other Person operating the Parlin Project) or
otherwise to obtain for Agent (or any such other Person) the benefits of
all of the Governmental Approvals and other rights referred to in the
immediately preceding sentence to the extent that such Governmental
Approvals and other rights shall not be assignable or transferable.
11. Security Interest Absolute. All the rights of Agent and the
Secured Parties hereunder and the Security Interest and all
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obligations of Debtor hereunder shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of any of the Project
Agreements or any of the Collateral or any other agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from any
Project Agreement or any of the Collateral or any other agreement or
instrument related thereto;
(iii) any exchange or release of any Collateral or any other
collateral, or the non-perfection of any of the Security Interest, or
any release or amendment or waiver of or consent to or departure from
any guaranty, for all or any of the Obligations; or
(iv) to the full extent permitted by law, any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, Debtor or any third party pledgor other than payment and
performance in full of the Obligations.
12. Agent Appointed Attorney-in-Fact.
(a) Powers. Debtor hereby irrevocably constitutes and appoints
Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact (which appointment as attorney-in-fact
shall be coupled with an interest), with full authority in the place and
stead of Debtor and in the name of Debtor or otherwise, from time to time
upon the occurrence and during the continuance of an Event of Default in
Agent's discretion, to take any action and to execute any and all documents
and instruments which Agent may deem necessary or advisable to accomplish
the purposes of this Security Agreement, without notice to Debtor,
including, without limitation:
(i) to receive, endorse and collect all instruments made payable
to Debtor representing any dividends, interest payments or other
distributions constituting Collateral or any part thereof and to give full
discharge for the same and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
Agent for the purpose of collecting any and all of such dividends, payments
or other distributions;
(ii) to enforce any provision of any Assigned Agreement;
(iii) to pay or discharge taxes and liens levied or placed on
the Collateral; and
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(iv) (A) to direct any party liable for any payment under or in
respect of or arising out of any of the Collateral to make payment of any
and all moneys due or to become due thereunder or with respect thereto
directly to Agent or as Agent shall direct, (B) to ask or demand for,
collect, receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out
of any Collateral, (C) to commence and prosecute any suits, action or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right
in respect of any Collateral, (D) to defend any suit, action or proceeding
brought against Debtor with respect to any Collateral, (E) to settle,
compromise or adjust any suit, action or proceeding described in clauses
(C) and (D) above and, in connection therewith, to give such discharges or
releases as Agent acting in good faith may deem appropriate, (F) generally,
to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though
Agent were the absolute owner thereof for all purposes, and (G) to do, at
Agent's option and at Debtor's expense, at any time, or from time to time,
all acts and things which Agent deems necessary to protect, preserve or
realize upon the Collateral and the Security Interest granted herein and to
effectuate the intent of this Security Agreement, all as fully and
effectively as Debtor might do.
(b) Other Powers. Debtor further authorizes Agent, at any time
and from time to time to (i) to execute, in connection with any sale
provided for hereunder, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral, (ii) communicate
in its own name with any party to any agreement or instrument included in
the Collateral, at any time, with regard to any matter relating to such
agreement or instrument and (iii) to the full extent permitted by
applicable law, to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Collateral
without the signature of Debtor.
13. Agent May Perform. Upon the occurrence and during the
continuance of an Event of Default, Agent, without releasing Debtor from
any obligation, covenant or condition hereof, may itself make any payment
or perform, or cause the performance of, any such obligation, covenant,
condition or agreement or any other action in such manner and to such
extent as Agent may deem necessary to protect, perfect or continue the
perfection of the Security Interest. Any costs or expenses incurred by
Agent in connection with the foregoing shall be governed by the Loan
Instruments, constitute a part of the Debt secured by the Parlin Security
Documents, shall bear interest at a rate per annum equal to the Default
Interest Rate and be payable by Debtor upon demand by Agent.
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14. No Duty on Agent's Part; Limitation on Agent's Obligations.
(a) No Duty on Agent's Part. The powers conferred on Agent
hereunder are solely to protect Agent's and the other Secured Parties'
interests in the Collateral and shall not impose any duty upon Agent to
exercise any such powers. Agent shall be accountable only for amounts that
it receives as a result of the exercise of such powers.
(b) Limitations on Obligations. Anything herein to the contrary
notwithstanding, Debtor shall remain liable under the Assigned Agreements
and any other agreements to which it is a party included in the Collateral
to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Security Agreement had
not been executed. The exercise by Agent of any of the rights or remedies
hereunder shall not release Debtor from any of its duties or obligations
under the Assigned Agreements or any other Project Agreement to which it is
a party. All of the Collateral is hereby assigned to Agent solely as
security, and Agent shall have no duty, liability or obligation whatsoever
with respect to any of the Collateral, unless Agent so elects in writing
consistent with its rights under this Security Agreement.
15. Reasonable Care. Agent shall exercise the same degree of
care hereunder as it exercises in connection with similar transactions for
its own account. Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which Agent
accords or would accord collateral held by Agent in similar transactions
for its own account; provided, however, in respect of any Collateral
constituting "instruments" or "chattel paper" under the Code, Agent shall
have no duty to preserve any rights therein against prior parties. Without
limiting the generality of the foregoing and except as otherwise provided
by applicable law, Agent shall not be required to marshall any collateral,
including, without limitation, the Collateral subject to the Security
Interest created hereby and any guaranties of the Obligations, or to resort
to any item of Collateral or guaranties in any particular order; and all of
Agent's rights hereunder and in respect of such Collateral and guaranties
shall be cumulative and in addition to all other rights, however existing
or arising. To the extent that Debtor lawfully may, Debtor hereby (a)
agrees that it will not invoke any law relating to the marshalling of
collateral which might cause delay in or impede the enforcement of Agent's
rights under this Security Agreement or under any other instrument
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or guaranteed and
(b) irrevocably waives the benefits of all Laws and any and all rights to
equity of redemption or other rights of redemption that it may have in
equity or at law with respect to the Collateral.
16
<PAGE>
16. Role of Agent. The rights, duties, liabilities and
immunities of Agent and its appointment and replacement hereunder shall be
governed by Article 7 of the Credit Agreement.
17. Absence of Fiduciary Relation. Agent undertakes to perform
or to observe only such of its agreements and obligations as are
specifically set forth in this Security Agreement or any other Loan
Instrument, and no implied agreements, covenants or obligations with
respect to Debtor, any Affiliate of Debtor or any other party to any of the
Project Agreements shall be read into this Security Agreement against Agent
or any of the Secured Parties. Neither Agent nor any of the Secured
Parties in its and their capacity as such is a fiduciary of and shall not
owe or be deemed to owe any fiduciary duty to Debtor, any Affiliate of
Debtor or any other party to any of the Project Agreements, except as
otherwise specifically required by applicable law.
18. Survival of Representations and Warranties. All agreements,
representations and warranties made herein or incorporated by reference
herein shall survive the execution and delivery of this Security Agreement
and the other Loan Instruments and repayment of the Obligations, and shall
be deemed to be material and to have been relied upon by Agent and the
Secured Parties, regardless of any investigation made by or on behalf of
Agent or the Secured Parties.
19. Notices. All notices, demands, requests and other
communications required or permitted hereunder shall be in writing and
shall be given and deemed to have been given in accordance with Section 8.1
of the Credit Agreement.
20. No Waiver; Cumulative Remedies. By exercising or failing to
exercise any of its rights, options or elections hereunder (without also
expressly waiving the same in writing), Agent, on behalf of the Secured
Parties, shall not be deemed to have waived any breach or default on the
part of Debtor or to have released Debtor from any of its obligations
secured hereby. No failure on the part of Agent to exercise, and no delay
in exercising (without also expressly waiving the same in writing) any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. Agent,
acting on behalf of the Secured Parties, shall have all of the rights and
remedies granted under the Credit Agreement or any other Loan Instrument,
and available at law or in equity, and these same rights and remedies may
be pursued separately, successively or concurrently against Debtor or any
Collateral, at the discretion of Agent with the consent of the Majority
Lenders. The application of the Collateral to satisfy the Obligations
pursuant to the terms hereof shall not operate to
17
<PAGE>
release Debtor from the Obligations until payment in full of any deficiency
has been made in cash.
21. Severability. Any provision of this Security Agreement
which is prohibited, unenforceable or not authorized in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or non-authorization, without invalidating
the remaining provisions hereof or affecting the validity, enforceability
or legality of such provision in any other jurisdiction. Where provisions
of any law or regulation resulting in such prohibition or unenforceability
may be waived they are hereby waived by Debtor and Agent to the full extent
permitted by law so that this Security Agreement shall be deemed a valid,
binding agreement, and the Security Interest created hereby shall
constitute a continuing first lien on and first perfected security interest
in the Collateral, in each case enforceable in accordance with its terms.
22. Exculpatory Provisions; Reliance By Agent.
(a) Exculpatory Provisions. Neither Agent nor any Secured
Party, nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be liable to either Debtor for any
action taken or omitted to be taken by it or them under or in connection
with this Security Agreement or any other Project Agreement, or responsible
in any manner to any Person for any recitals, statements, representations
or warranties made by Debtor or any officer thereof contained in this
Security Agreement or any other Project Agreement or in any certificate,
report, statement or other document referred to or provided for in, or
received by Agent or any Secured Party under or in connection with, this
Security Agreement or any other Project Agreement or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Security Agreement or any other Project Agreement or for any failure of
Debtor to perform any of the Obligations. Neither Agent nor any Secured
Party shall be under any obligation to any Person to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Security Agreement or any other
Project Agreement, or to inspect the properties or records of Debtor.
(b) Reliance by Agent. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation,
counsel to Debtor), independent accountants and other experts selected by
Agent. Agent shall have no obligation to any Person to act or refrain from
acting or exercising any of its rights under this Security Agreement.
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<PAGE>
23. Amendment. This Security Agreement may be amended, modified
or rescinded only by a writing expressly referring to this Security
Agreement and signed by all the parties hereto.
24. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of Debtor and Agent for the benefit
of the Secured Parties and their respective successors and permitted
assigns. In the event of any assignment or transfer by any Secured Party
of any instrument evidencing all or any part of the Obligations, the holder
of such instrument shall, subject to the Credit Agreement, be entitled to
the benefits of this Security Agreement.
25. Number and Gender. Whenever used in this Security
Agreement, the singular number shall include the plural and the plural the
singular, and the use of any gender shall be applicable to all genders.
26. Headings Descriptive. The captions or headings of the
several sections and subsections and the table of contents of this Security
Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Security Agreement.
27. Governing Law; Jurisdiction.
(a) Governing Law. This Security Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
as to interpretation, enforcement, validity, construction, effect and in
all other respects, but excluding perfection, which shall be governed by
the laws of the jurisdiction relevant thereto.
(b) Jurisdiction. With respect to any legal action or
proceeding brought by Agent or the Secured Parties against Debtor arising
out of or in connection with this Security Agreement, Debtor hereby
irrevocably (i) consents to the jurisdiction of any state or federal court
located in the State of New York, (ii) consents to the service of process
outside the territorial jurisdiction of said courts in any such action or
proceeding by mailing copies thereof by registered United States mail,
postage prepaid, to the address specified by Debtor for the receipt of
notices if such address is outside such territorial jurisdiction and (iii)
waives any objection to the venue of the aforesaid courts.
28. Counterparts. This Security Agreement may be executed in
several counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
29. Continuing Security Interest; Termination. This Security
Agreement shall create a continuing assignment, pledge and first priority
security interest in the Collateral and shall remain
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<PAGE>
in full force and effect for the benefit of Agent and the Secured Parties
until all Obligations to be paid or performed by Debtor under the Loan
Instruments have been paid and performed in full. Upon the happening of
such event, the Security Interest granted hereby shall terminate. Upon
such termination, Agent shall, upon the request and at the expense of
Debtor, execute and deliver to Debtor such documents as Debtor shall
reasonably request to evidence such termination or expiration.
30. Payments Set Aside. To the extent that Debtor or any other
Person on behalf of Debtor makes a payment or payments to Agent and/or any
Secured Party, or Agent and/or any Secured Party enforce their security
interests or exercise their rights of set-off, and such payment or payments
or the proceeds of such enforcement or set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the Obligations or
any part thereof originally intended to be satisfied, and this Security
Agreement and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as
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<PAGE>
if such payment had not been made or such enforcement or set-off had not
occurred.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed as of the day and year first written above.
NRG GENERATING (PARLIN)
COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
CREDIT SUISSE, as Agent
By: /s/ Louis Iaconetti
Name: Louis D. Iaconetti
Title: Associate
By: /s/ Steven Dowe
Name: Steven Dowe
Title: Associate
<PAGE>
Schedule A to
Assignment and
Security Agreement
FINANCING STATEMENT FILINGS
1. Secretary of State, Delaware
2. Secretary of State, Minnesota
3. County Clerk, Hennepin County, Minnesota
4. Secretary of State, New Jersey
5. County Clerk, Middlesex County, New Jersey
6. Secretary of State, New York
7. County Clerk, New York County, New York
8. Secretary of the Commonwealth, Pennsylvania
9. Prothanatary, Philadelphia County, Pennsylvania
<PAGE>
Exhibit 10.8.10
Via Facsimile
August 2, 1996
Attn: Louis Iaconetti
Telephone No.: 212/238-5387
Facsimile No.: 212/238-5461
Subject: Swap Transaction between NRG Generating (Newark) Cogeneration
Inc. ("Newark") and NRG Generating (Parlin) Cogeneration Inc.
("Parlin") and Credit Suisse, New York Branch ("Credit Suisse")
Dear Sirs:
The purpose of this telecopy agreement (this "Confirmation") is to confirm
the terms and conditions of the Transaction entered into between us on the
Trade Date specified below (the "Transaction"). This confirmation
constitutes a "Confirmation" as referred to in the Agreement specified
below.
1. This confirmation supplements, forms part of, and is subject to, the
1992 ISDA Master Agreement dated as of August 2, 1996 as amended and
supplemented from time to time (the "Agreement"), between you and us.
All provisions contained in the Agreement govern this Confirmation
except as expressly modified below.
Party A and Party B each represents to the other that it has entered
into this Transaction in reliance upon such tax, accounting,
regulatory, legal and financial advice as it deems necessary and not
upon any view expressed by the other except as expressly set forth in
the Agreement.
Party A and Party B expressly acknowledge that, in reliance upon the
other party's entering into the Transaction evidenced by this
Confirmation, each party has made (or refrained from making) other
material actions.
In this Confirmation, "Party A" means Credit Suisse and "Party B"
means Newark and Parlin.
2. The terms of the particular Swap Transaction to which this
Confirmation relates are as follows:
Notional Amount: USD 77,500,000, subject to amortization as set out in
Appendix A attached hereto
Trade Date: 2 August 1996
Effective Date: 6 August 1996
Termination Date: 23 May 2011, subject to adjustment in accordance with
the Modified Following Business Day Convention
<PAGE>
Fixed Amount:
Fixed Rate Payer Party B
Fixed Rate Payer
Payment Dates: The last day of March, June, September, and
December, commencing on the last day of September
1996 and ending on the last day of March 2011,
inclusive, thereafter on 23 May 2011, subject to
adjustment in accordance with the Modified
Following Business Day Convention.
Fixed Rate: 6.90%
Fixed Rate Day Count
Fraction: Actual 360
Compounding: Inapplicable
Floating Amounts:
Floating Rate Payer: Party A
Floating Rate Payer Payment
Date: The last day of March, June, September, and
December, commencing on the last day of September
1996 and ending on the last day of March 2011,
inclusive, thereafter on 23 May 2011, subject to
adjustment in accordance with the Modified
Following Business Day Convention.
Floating Rate for initial
Calculation Period: 5,49141%
Floating Rate Option: USD-LIBOR-BBA: provided.
(i) in respect of the first Calculation Period
the Designated Maturity shall be 2 months;
(ii) the rate for the final Calculation Period
shall be determined by Linear Interpolation
of the rate for 1 month and the rate for 2
month.
Designated Maturity: 3 months (except as noted above)
Spread: None
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Business Days: New York
Calculation Agent: Party A
<PAGE>
3. Account Details:
Payments to Party A Credit Suisse
Loan Department
One Liberty Plaza
165 Broadway
New York, New York 10006
Acct No. 904996-02
(Loan Department Clearing Account)
Ref.: NRG Newark Parlin Swap
ABA No. 026009179
Payment to Party B Holder: NRG Generating (Newark) Cogeneration, Inc.
Bank: Norwest Bank Minnesota N.A.
Acct. No. 6355 03 7096
ABA No. 091 000 019
Please confirm that the foregoing correctly set forth the terms of our
agreement by signing and returning this Confirmation to us via facsimile at
212/238-5461.
Yours sincerely,
CREDIT SUISSE
By: /s/ Louis Iaconetti
LOUIS D. IACONETTI
ASSOCIATE
By: /s/ Steven Dowe
STEVEN DOWE
ASSOCIATE
Accepted and confirmed as of the Trade Date:
NRG Generating (Newark) Cogeneration, Inc.
By:/s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
NRG Generating (Parlin) Cogeneration, Inc.
By:/s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
<PAGE>
APPENDIX A
TO A TRANSACTION
BETWEEN
NRG GENERATING (NEWARK) COGENERATION, INC.
and
NRG GENERATING (PARLIN) COGENERATION, INC.
and
CREDIT SUISSE, NEW YORK BRANCH
Period up to, but excluding
the Fixed and Floating Rate
Payer Payment Date Scheduled Notional Amount
to occur on: Outstanding (USD):
30-Sep-96 77,500,000
31-Dec-96 76,511,875
31-Mar-97 75,523,750
30-Jun-97 74,574,375
30-Sep-97 73,625,000
31-Dec-97 72,675,625
31-Mar-98 71,726,250
30-June-98 70,660,625
30-Sep-98 69,595,000
31-Dec-98 68,529,375
31-Mar-99 67,463,750
30-Jun-99 66,262,500
30-Sep-99 65,061,250
31-Dec-99 63,860,000
31-Mar-2000 62,658,750
30-Jun-2000 61,583,438
29-Sep-2000 60,508,125
29-Dec-2000 59,432,813
30-Mar-2001 58,357,500
29-Jun-2001 57,049,688
28-Sep-2001 55,741,875
31-Dec-2001 54,434,063
29-Mar-2002 53,126,250
28 Jun-2002 51,760,313
30-Sep-2002 50,394,375
31-Dec-2002 49,028,438
31-Mar-2003 47,662,500
30-Jun-2003 46,500,000
30-Sep-2003 45,337,500
31-Dec-2003 44,175,000
<PAGE>
Period up to, but excluding
the Fixed and Floating Rate
Payer Payment Date Scheduled Notional Amount
to occur on: Outstanding (USD):
31-Mar-2004 43,012,500
30-Jun-2004 41,879,063
30-Sep-2004 40,745,625
31-Dec-2004 39,612,188
31-Mar-2005 38,478,750
30-Jun-2005 37,296,875
30-Sep-2005 36,115,000
30-Dec-2005 34,933,125
31-Mar-2006 33,751,250
30-Jun-2006 32,637,188
29-Sep-2006 31,523,125
29-Dec-2006 30,409,063
30-Mar-2007 29,295,000
29-Jun-2007 27,958,125
28-Sep-2007 26,621,250
31-Dec-2007 25,284,375
31-Mar-2008 23,947,500
30-Jun-2008 22,504,063
30-Sep-2008 21,060,625
31-Dec-2008 19,617,188
31-Mar-2009 18,173,750
30-Jun-2009 16,720,625
30-Sept-2009 15,267,500
31-Dec-2009 13,814,375
31-Mar-2010 12,361,250
30-Jun-2010 10,946,875
30-Sep-2010 9,532,500
31-Dec-2010 7,149,375
31-Mar-2011 4,766,250
23-May-2011 2,383,125
/bhs
<PAGE>
(Multicurrency-Cross Border)
ISDAr
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of August 2, 1996
Credit Suisse, New York Branch and NRG Generating (Newark) Cogeneration,
Inc., and NRG Generating (Parlin) Cogeneration, Inc. have entered and/or
anticipate entering into one or more transactions (each a "Transaction")
that are or will be governed by this Master Agreement, which includes the
schedule (the "Schedule"), and the documents and other confirming evidence
(each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows: --
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master
Agreement.
(b) Inconsistency. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master
Agreement, the Schedule will prevail. In the event of any inconsistency
between the provisions of any Confirmation and this Master Agreement
(including the Schedule), such confirmation will prevail for the purpose of
the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this
"Agreement"), and the parties would not otherwise enter into any
Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is,
other than by payment), such delivery will be made for receipt on the
due date in the manner customary for the relevant obligation unless
otherwise specified in the relevant confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(I) is
subject to (1) the condition precedent that no Event of Default or
Potential Event of Default with respect to the other party has
occurred and is continuing, (2) the condition precedent that no Early
Termination Date in respect of the relevant Transaction has occurred
or been effectively designated and (3) each other applicable condition
precedent specified in this Agreement.
<PAGE>
(b) Change of Account. Either party may change its account for receiving
a payment or delivery by giving notice to the other party at least five
Local Business Days prior to the scheduled date for the payment or delivery
to which such change applies unless such other party gives timely notice of
a reasonable objection to such change.
(c) Netting. If on any date amounts would otherwise be payable: --
(i) in the same currency; and
(ii) in respect of the same Transaction.
By each party to the other, then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have been
payable by one party exceeds the aggregate amount that would otherwise have
been payable by the other party, replaced by an obligation upon the party
by whom the larger aggregate amount would have been payable to pay to the
other party the excess of the larger aggregate amount over the smaller
aggregate amount.
The parties may elect in respect of two or more Transactions that a net
amount will be determined in respect of all amounts payable on the same
date in the same currency in respect of such Transactions, regardless of
whether such amounts are payable in respect of the same Transaction. The
election may be made in the Schedule or a Confirmation by specifying that
subparagraph (ii) above will not apply to the Transactions identified as
being subject to the election, together with the starting date (in which
case subparagraph (ii) above will not, or will cease to, apply to such
Transactions from such date). This election may be made separately for
different groups of Transactions and will apply separately to each pairing
of Offices through which the parties make and receive payments or
deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without
any deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as
modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will: --
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to
be deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d)) promptly upon the earlier of determining
that such deduction or withholding is required or receiving
notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition
to the payment to which Y is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure that
the net amount actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y) will equal
the full amount Y would have received had no such deduction or
withholding been required. However, X will not be required to pay
any additional amount to Y to the extent that it would not be
required to be paid but for -
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(I), 4(a)(iii) or 4(d);
or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (I) any action taken by a
taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.
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<PAGE>
(ii) Liability. If: --
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to make
any deduction or withholding in respect of which X would not be
required to pay an additional amount to Y under Section
2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X.
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d).
(e) Default Interest: Other Amounts. Prior to the occurrence or
effective designation of an Early Termination Date in respect of the
relevant Transaction, a party that defaults in the performance of any
payment obligation will, to the extent permitted by law and subject to
Section 6(c), be required to pay interest (before as well as after
judgment) on the overdue amount to the other party on demand in the same
currency as such overdue amount, for the period from (and including) the
original due date for payment to (but excluding) the date of actual
payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If,
prior to the occurrence or effective designation of an Early Termination
Date in respect of the relevant Transaction, a party defaults in the
performance of any obligation required to be settled by delivery, it will
compensate the other party on demand if and to the extent provided for in
the relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be
deemed to be repeated by each party on each date on which a Transaction is
entered into and, in the case of the representations in Section 3(f), at
all times until the termination of this Agreement) that: --
(a) Basic Representations.
(i). Status. It is duly organized and validly existing under the laws
of the jurisdiction of its organization or incorporation and, if
relevant under such laws, in good standing:
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it
has under any Credit Support Document to which it is a party and has
taken all necessary action to authorize such execution, delivery and
performance;
(iii) No validation or Conflict.. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment
of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it
or any of its assets;
(iv) Consents. All governmental and other consents that are required
to have been obtained by it with respect to this Agreement or any
Credit Support document to which it is a party have been obtained and
are in full force and effect and all conditions of any such consents
have been complied with and;
(v) Obligations Binding. Its obligations under this Agreement and
any Credit Support Document to which it is a party constitute its
legal, valid and binding obligations, enforceable in accordance with
their respective terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).
3
<PAGE>
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as
a result of its entering into or performing its obligations under this
Agreement or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates, any action, suit or
proceeding at law or in equity or before any court, tribunal, governmental
body, agency or official or any arbitrator that is likely to affect the
legality, validity or enforceability against it of this Agreement or any
Credit Support Document to which it is a party or its ability to perform
its obligations under this Agreement or such Credit Support Documents.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of
the date of the information, true, accurate and complete in every material
respect.
(e) Payer Tax Representation. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is
accurate and true.
(f) Payer Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is
accurate and true.
4. Agreements
Each party with the other that, so long as either party has or may have any
obligation under this Agreement or under any Credit Support Document to
which it is a party: --
(a) Furnish Specified Information. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or
taxing authority as the other party reasonably directs: --
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to make
a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of any
Tax or with such deduction or withholding at a reduced rate (so long
as the completion, execution or submission of such form or document
would not materially prejudice the legal or commercial position of the
party in receipt of such demand), with any such form or document to be
accurate and completed in a manner reasonably satisfactory to such
other party and to be executed and to be delivered with any reasonably
required certification.
In each case by the date specified in the Schedule or such Confirmation or,
if none is specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party and will
use all reasonable efforts to obtain any that may become necessary in the
future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations under
this Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon
learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp
Tax levied or imposed upon it or in respect of its execution or performance
of this Agreement by a jurisdiction in which it is incorporated,
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organized, managed and controlled, or considered to have its seat, or in
which a branch or office through which it is acting for the purpose of this
Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the
other party against any Stamp Tax levied or imposed upon the other party or
in respect of the other party's execution or performance of this Agreement
by any such Stamp Tax Jurisdiction which is not also a Stamp Tax
Jurisdiction with respect to the other party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any of the following events constitutes
an event of default (an "Event of Default") with respect to each party: --
(i) Failure to Pay or Deliver. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section
2(a)(I) or 2(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(I), 4(a)(ii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party'
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of this
Agreement (in either case other than in accordance with its
terms) prior to the satisfaction of all obligations of such party
under each Transaction to which such Credit Support Document
relates without the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support document;
(iv) Misrepresentation. A representation (other than a representation
under Section 3(e) or (f) made or repeated or deemed to have been made
or repeated by the party or any Credit Support Provider of such party
in this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated
or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grade period,
there occurs a liquidation of, an acceleration of obligations under,
or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace
period, in making any payment or delivery due on the last payment,
delivery or exchange date of, or any payment on early termination of,
a Specified Transaction (or such default continues for at least three
Local Business Days if there able source requirement or grace period)
or (3) disaffirms, disclaims, repudiates or rejects, in whole or in
part, a Specified Transaction (or such action is taken by any person
or entity appointed or empowered to operate it or act on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (1) a
default, event of default or other similar conditions or event
(however
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described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness
of any of them (individually or collectively) in an aggregate amount
of not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof
in an aggregate amount of not less than the applicable Threshold
Amount under such agreements or instruments (after giving effect to
any applicable notice requirement or grace period;
(vii) Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party: --
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors' rights, or a
petition is presented for its winding-up or liquidation, and, in
the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) results in
a judgment of insolvency or bankruptcy or the entry of an order
for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its winding-
up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its
assets; (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced
or sued on or against all or substantially all its assets and
such secured party maintains possession, or any such process is
not dismissed, discharged, stayed or restrained, in each case
within 30 days thereafter; (8) causes or is subject to any event
with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events
specified in clauses (1) to (7) (inclusive); or (9) takes any
action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets to,
another entity and, at the time of such consolidation, amalgamation,
merger or transfer: --
(1) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit Support
Provider under this Agreement or any Credit Support Document to
which it or its predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to the other
party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its obligations
under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any event specified below constitutes an
Illegality if the event is specified in (i) below , a Tax Event if the
event is specified in (ii) below or a Tax Event Upon Merger if the event is
specified in (iii) below, and, if specified to be applicable, a Credit
Event
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upon Merger if the event is specified pursuant to (iv) below or an
Additional Termination Event if the event is specified pursuant to (v)
below: --
(i) Illegality. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after such date, it becomes
unlawful (other than as a result of a breach by the party of Section
4(b)) for such party (which will be the Affected Party): --
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other material
provision of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party
(or such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the ate on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y)
a Change in Tax Law, the party (which will be the Affected Party)
will, or there is a substantial likelihood that it will, on the next
succeeding Scheduled Payment Date (1) be required to pay to the other
party an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(I)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or (2) receive a payment from which an amount is required to
be deducted or withheld for or on account of a Tax (except in respect
of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional
amount is required to be paid in respect of such Tax under Section
2(d)(I)(4) (other than by reason of Section 2(d)(I)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on
the next succeeding Scheduled Payment Date will either (1) be required
to pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(I)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax
in respect of which the other party is not required to pay an
additional amount (other than by reason of Section 2(d)(I)(4)(A) or
(B)), in either case as a result of a party consolidating or
amalgamating with, or merging with or into, or transferring all or
substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entry is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) Additional Termination Event. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party
or Affected Parties shall be as specified for such Additional
Termination Event in the Schedule or such Confirmation.)
(c) Event of Default and Illegality. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also
constitutes an Illegality, it will be treated as an Illegality and will not
constitute an Event of Default.
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6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an
Event of Default with respect to a party (the "Defaulting Party") has
occurred and is then continuing, the other party (the "Non-defaulting
Party") may, by not more than 20 days notice to the Defaulting Party
specifying the relevant Event of Default, designate a day not earlier than
the day such notice is effective as an Early Termination Date in respect of
all outstanding Transactions. If, however, "Automatic Early Termination"
is specified in the Schedule as applying to a party, then an Early
Termination Date in respect of all outstanding Transactions will occur
immediately upon the occurrence with respect to such party of an Event of
Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent
analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of
Default specified in Section 5(a)(vii)(4) or, to the extent analogous
thereto. (8).
(b) Right to Terminate following Termination Event
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality
under Section 5(b)(I)(1) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition
to its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such
party to incur a loss, excluding immaterial, incidental expenses) to
transfer within 20 days after it gives notice under Section 6(b)(i)
all its rights and obligations under this Agreement in respect of the
Affected Transactions to another of its Offices or Affiliates so that
such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) Two Affected Parties. If an illegality under Section
5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
each party will use all reasonable efforts to reach agreement within
30 days after notice thereof is given under Section 6(b)(i) on action
to avoid that Termination Event.
(iv) Right to Terminate. If: --
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party.
Either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and
will provide to the other party a statement (1) showing in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e) and (2) giving
details of the relevant account to which any amount payable to it is
to be paid. In the absence of written confirmation from the source of
a quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect in
any Early Termination Date under Section 6(e) will be payable on the
day that notice of the amount payable is effective (in the case of an
Early Termination Date which is designated or occurs as a result of an
Event of Default) and on the day which is two Local Business Days
after the day on which notice of the amount payable is effective ( in
the case of an Early Termination Date which is designated as a result
of a Termination Event). Such amount will be paid together with (to
the extent permitted under applicable law) interest thereon (before as
well as after judgment) in the Termination Currency, from (and
including the relevant Early Termination Date to (but excluding) the
date such amount is paid, at the Applicable Rate. Such interest will
be calculated on the basis of daily compounding and the actual number
of days elapsed.
(c) Payments on Early Termination. If an Early Termination Date occurs,
the following provisions shall apply based on the parties' election in the
Schedule of a payment measure, either "Market Quotation" or "Loss", and a
payment method, either the "First Method" or the "Second Method". If the
parties fail to designate a payment measure or payment method in the
Schedule, it will be deemed that "Market Quotation" or the "Second Method",
as the case may be, shall apply. The amount, if any, payable in respect of
an Early Termination Date and determined pursuant to this Section will be
subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from an
Event of Default --
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the Non-
defaulting Party the excess, if a positive number, of (A) the sum
of the Settlement Amount (determined by the Non-defaulting Party)
in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the Non-
defaulting Party over (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method
and Market Quotation apply, an amount will be payable equal to
(A) the sum of the Settlement Amount (determined by the
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Non-Defaulting Party) in respect of the Terminated Transactions
and Termination Currency Equivalent of the Unpaid Amounts owing
to the Non-defaulting Party less (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party.
If that amount is a positive number, the Defaulting Party will
pay it to the Non-defaulting Party; if it is a negative number,
the Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the Non-
defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to the
Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event: --
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed
to be references to the Affected Party and the party which is not
the Affected Party, respectively, and, if Loss applies and fewer
than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties: --
(A) if Market Quotation applies, each party will determine
a Settlement Amount in respect of the Terminated
Transactions, and an amount will be payable equal to (f) the
sum of (1) one-half of the difference between the Settlement
Amount of the party with the higher Settlement Amount ("X")
and the Settlement Amount of the party with the lower
Settlement Amount ("Y") and (b) the Termination Currency
Equivalent of the Unpaid Amounts owing to X less (II) the
Termination Currency Equivalent of the Unpaid Amounts owing
to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with
the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X;
if it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an
Early Termination Date occurs because "Automatic Early Termination"
applies in respect of a party, the amount determined under this
Section 6(e) will be subject to such adjustments as are appropriate
and permitted by law to reflect any payments or deliveries made by one
party to the other under this Agreement (and retained by such other
party) during the period from the relevant Early Termination Date to
the date (or payment determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable pre-
estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
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7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of
the other party, except that: --
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of
all or substantially all its assets to, another entity (but without
prejudice to any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this
Agreement will be made in the relevant currency specified in this Agreement
for that payment (the "Contractual Currency"). To the extent permitted by
applicable law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in
any currency other than the Contractual Currency, except to the extent such
tender results in the actual receipt by the party to which payment is owed
acting in a reasonable manner and in good faith in converting the currency
so tendered into the Contractual Currency, of the full amount in the
contractual Currency of all amounts payable in respect of this Agreement.
If for any reason the amount in the Contractual Currency so received falls
short of the amount in the Contractual Currency payable in respect of this
Agreement, the party required to make the payment will, to the extent
permitted by applicable law, immediately pay such additional amount in the
Contractual Currency as may be necessary to compensate for the shortfall.
If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount
of such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the contractual Currency is
rendered (i) for the payment of any amount owing in respect of this
Agreement, (ii) for the payment of any amount relating to any early
termination in respect of this Agreement or (iii) in respect of a judgment
or order of another court for the payment of any amount described in (i) or
(ii) above, the party seeking recovery, after recovery in full of the
aggregate amount to which such party is entitled pursuant to the judgment
or order, will be entitled to receive immediately from the other party the
amount of any shortfall of the Contractual Currency received by such party
as a consequence of sums paid in such other currency and will refund
promptly to the other party any excess of the Contractual Currency received
by such party as a consequence of sums paid in such other currency if such
shortfall or such excess arises or results from any variation between the
rate of exchange at which the Contractual Currency is converted into the
currency of the judgment or order for the purposes of such judgment or
order and the rate of exchange at which such party is able, acting in a
reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with
the amounts of the currency of the judgment or order actually received by
such party. The term "rate of exchange" includes, without limitation, any
premiums and costs of exchange payable in connection with the purchase of
or conversion into the Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law,
these indemnities constitute separate and independent obligations from the
other obligations in this Agreement, will be enforceable as separate and
independent causes of action, will apply notwithstanding any indulgence
granted by the party to which any payment is owed and will not be affected
by judgment being obtained or claim or proof being made for any other sums
payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss
had an actual exchange or purchase been made.
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9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and
supersedes all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing
evidenced by a facsimile transmission) and executed by each of the parties
or confirmed by an exchange of telexes or electronic messages on an
electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive
the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement are
cumulative and not exclusive of any rights, powers, remedies and privileges
provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be deemed an
original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right,
power or privilege in respect of this Agreement will not be presumed to
operate as a waiver, and a single or partial exercise of any right, power
or privilege will not be presumed to preclude any subsequent or further
exercise, of that right, power or privilege or the exercise of any other
right, power or privilege.
(g) Headings. The hearings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken
into consideration in interpreting this Agreement.
10. Offices: Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or
home office represents to the other party that, notwithstanding the place
of booking office or jurisdiction of incorporation or organization of such
party, the obligations of such party are the same as if it had entered into
the Transaction through its head or home office. This representation will
be deemed to be repeated by such party on each date on which a Transaction
is entered into.
(b) Neither party may change the Office through which it makes and
receives payments or deliveries for the purpose of a Transaction without
the prior written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office
through which it makes and receives payments or deliveries with respect to
a Transaction will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including
legal fees and Stamp Tax, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement or any Credit
Support Document
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to which the Defaulting Party is a party or by reason of the early
termination of any Transaction, including, but not limited to, costs of
collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice
or other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated: --
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient in
legible form (it being agreed that the burden of proving receipt will
be on the sender and will not be met by a transmission report
generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received.
unless the date of that delivery (or attempted delivery) or that receipt,
as applicable, is not a Local Business Day or that communication is
delivered (or attempted) or received, as applicable, after the close of
business on a Local Business Day, in which case that communication shall be
deemed given and effective on the first following day that is a Local
Business Day.
(b) Change of Addresses. Either party may by notice to the other change
the address, telex or facsimile number or electronic messaging system
details at which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and consorted in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party irrevocably: --
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the non-
exclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objections which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any
claim that such Proceedings have been brought in an inconvenient forum
and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party from bringing Proceedings
in any other jurisdiction (outside, if this Agreement is expressed to be
governed by English law, the Contracting States, as defined in Section 1(3)
of the Civil Jurisdiction and Judgments Act 1982 or any modification,
extension or for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and
on its behalf, services of process in any Proceedings. If for any
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<PAGE>
reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute
process agent acceptable to the other party. The parties irrevocably
consent to service of process given in the manner provided for notices in
Section 12. Nothing in this Agreement will affect the right of either
party to serve process in any other manner permitted by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues
and assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (I) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution of enforcement
of any judgment to which it or its revenues or assets might otherwise be
entitled in any Proceedings in the courts of any jurisdiction and
irrevocably agrees, to the extent permitted by applicable law, that it will
not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement: --
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a)A with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b)
with respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, director or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose,
"control" of any entity or person means ownership of a majority of the
voting power of the entity or person.
"Applicable Rate" means: --
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii) by a Defaulting Party, the Default Rate:
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate:
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(ii) by a Non-defaulting Party, the Non-
default Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after
the date on which the relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is
specified as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if
it were to fund or of funding the relevant amount plus 1% per annum.
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<PAGE>
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with
Section 6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be
imposed in respect of a payment under this Agreement but for a present or
former connection between the jurisdiction of the government or taxation
authority imposing such Tax and the recipient of such payment or a person
related to such recipient (including, without limitation, a connection
arising from such recipient or related person being or having been a
citizen or resident of such jurisdiction, or being or having been
organized, present or engaged in a trade or business in such jurisdiction,
or having or having had a permanent establishment or fixed place of
business in such jurisdiction, but excluding a connection arising solely
from such recipient or related person having executed, delivered, performed
its obligations or received a payment under, or enforced, this Agreement or
a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the
case of tax matters, by the practice of any relevant governmental revenue
authority) and "lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which
commercial banks are open for business (including dealings in foreign
exchange and foreign currency deposits) (a) in relation to any obligation
under Section 2(a)(I), in the place(s) specified in the relevant
confirmation or, if not so specified, as otherwise agreed by the parties in
writing or determined pursuant to provisions contained, or incorporated by
reference, in this Agreement, (b) in relation to any other payment, in the
place where the relevant account is located and, if different, in the
principal financial center, if any, of the currency of such payment, (c) in
relation to any notice or other communication, including notice
contemplated under Section 5(a)(I), in the city specified in the address
for notice provided by the recipient and, in the case of a notice
contemplated by Section 2(b), in the place where the relevant new account
is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant
locations for performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one of more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to
be its total losses and costs (or gain, in which case expressed as a
negative number) in connection with this Agreement or that Terminated
Transaction or group of Terminated Transactions, as the case may be,
including any loss of bargain, cost of funding or, at the election of such
party but without duplication, loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related
trading position (or any gain resulting from any of them). Loss includes
losses and costs (or gains) in respect of any payment or delivery required
to have been made (assuming satisfaction of each applicable condition
precedent) on or before the relevant Early Termination Date and not made,
except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or
6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-
of-pocket expenses referred to under Section 11. A party will determine
its Loss as of the relevant Early Termination Date, or, if that is not
reasonably practicable, as of the earliest date thereafter as is reasonably
practicable. A party may (but need not) determine its Loss by reference to
quotations of relevant rates or prices from one or more leading dealers in
the relevant markets.
"Market Quotation" means, with respect to one or more Terminated
Transactions and a party making the determination, an amount determined on
the basis of quotations from Reference Market-makers. Each quotation will
be for an amount, if any, that would be paid to such party (expressed as a
negative number) or by such party (expressed as a positive number) in
consideration of an agreement between such party (taking into account any
existing Credit Support Document with respect to the obligations of such
party) and the quoting Reference Market-maker to enter into a transaction
(the "Replacement Transaction") that would have the effect of preserving
for such party the economic equivalent of any payment or delivery (whether
the underlying obligation was absolute or contingent and assuming the
satisfaction of each applicable condition precedent) by the parties under
Section 2(a)(I) in respect of such Terminated Transaction or group of
Terminated Transactions that would, but for the occurrence of the relevant
Early Termination Date,
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<PAGE>
have been required after that date. For this purpose, Unpaid Amounts in
respect of the Terminated Transaction or group of Terminated Transactions
are to be excluded but, without limitation, any payment or delivery that
would, but for the relevant Early Termination Date, have been required
(assuming satisfaction of each applicable condition precedent) after that
Early Termination Date is to be included. The Replacement Transaction
would be subject to such documentation as such party and the Reference
Market-maker may, in good faith, agree. The party making the determination
(or its agent) will request each Reference Market-maker to provide its
quotation to the extent reasonably practicable as of the same day and time
(without regard to different time zones) on or as soon as reasonably
practicable after the relevant Early Termination Date. The day and time as
of which those quotations are to be obtained will be selected in good faith
by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than
three quotations are provided, the Market Quotation will be the arithmetic
mean of the quotations, without regard to the quotations having the highest
and lowest values. If exactly three such quotations are provided, the
Market Quotation will be the quotation remaining after disregarding the
highest and lowest quotations. For this purpose, if more than one
quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are
provided, it will be deemed that the Market Quotation in respect of such
Terminated Transaction or group of Terminated Transactions cannot be
determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof
or evidence of any actual cost) to the Non-defaulting Party (as certified
by it) if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's
head or home office.
"Potential Event of Default" means any event which, with the giving of
notice or the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer
or to make an extension of credit and (b) to the extent practicable, from
among such dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions
(a) in which the party is incorporated, organized, managed and controlled
or considered to have its seat, (b) where an Office through which the party
is acting for purposes of this Agreement is located, c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to
be made under Section 2(a)(i) with respect to a Transaction.
"set-off" means set-off, offset, combination of accounts, right of
retention or withholding or similar right or requirement to which the payer
of an amount under Section 6 is entitled or subject (whether arising under
this Agreement, another contract, applicable law or otherwise) that is
exercised by, or imposed on, such payer.
"Settlement Amount" means, with respect to a party and any Early
Termination Date, the sum of: --
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of
Terminated Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of
Terminated Transactions for which a Market Quotation cannot be determined
or would not (in the reasonable belief of the party making the
determination) produce a commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
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<PAGE>
"Specified Indebtedness" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety
or otherwise) in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter
entered into between one party to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such party)
and the other party to this Agreement (or any Credit Support Provider of
such other party or any applicable Specified Entity of such other party)
which is a rate swap transaction, basis swap, forward rare transaction,
commodity swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect
to any of these transactions), (b) any combination of these transactions
and (c) any other transaction identified as a Specified Transaction in this
Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any government or other taxing
authority in respect of any payment under this Agreement other than a
stamp, registration, documentation or similar tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date
(a) if resulting from a Termination Event, all Affected Transactions and
(b) if resulting from an Event of Default, all Transactions (in either
case) in effect immediately before the effectiveness of the notice
designating that Early Termination Date (or, if "Automatic Early
Termination" applies, immediately before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount
denominated in the Termination Currency, such Termination Currency amount
and, in respect of any amount denominated in a currency other than the
Termination Currency (the "Other Currency"), the amount in the Termination
Currency determined by the party making the relevant determination as being
required to purchase such amount of such Other Currency as at the relevant
Early Termination Date, or, if the relevant Market Quotation or Loss (as
the case may be), is determined as of a later date, that later date, with
the Termination currency at the rate equal to the spot exchange rate of the
foreign exchange agent (selected as provided below) for the purchase of
such Other Currency with the Termination Currency at or about 11:00 a.m.
(in the city in which such foreign exchange agent is located) on such date
as would be customary for the determination of such a rate for the purchase
of such Other Currency for value on the relevant Early Termination Date or
that later date. The foreign exchange agent will, if only one party is
obliged to make a determination under Section 6(e), be selected in good
faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon
Merger or, if specified to be applicable Credit Event Upon Merger or an
Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of
the cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(ii9) to such party under Section 2(a)(i) on or
prior to such Early Termination Date and which remain unpaid as at such
Early Termination Date and (b) in respect of each Terminated Transaction,
for each obligation under Section 2(a)(i) which was (or would have been but
for Section 2(a)(iii) required to be settled by delivery to such party on
or prior to such Early Termination Date and which has not been so settled
as at such Early Termination Date, an amount equal to the fair market
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<PAGE>
value of that which was (or would have been) required to be delivered as of
the originally scheduled date for delivery, in each case together with (to
the extent permitted under applicable law) interest, in the currency of
such amounts, from (and including) the date such amounts or obligations
were or would have been required to have been paid or performed to (but
excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will e calculated on the basis of daily compounding and
the actual number of days elapsed. The fair market value of any obligation
referred to in clause (b) above shall be reasonably determined by the party
obliged to make the determination under Section 6(e) or, if such party is
so obliged, it shall be the average of the Termination Currency Equivalents
of the fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the
respective dates specified below with effect from the date specified on the
first page of this document.
Credit Suisse, New York Branch NGR Generating (Newark)
Cogeneration Inc.
By: /s/ Louis Iaconetti By: /s/ Leonard Bluhm
Name: Louis D. Iaconetti Name: Leonard A. Bluhm
Title: Associate Title: President
Date: Date: 8-8-96
By: /s/ Steven Dowe
Name: Steven Dowe
Title: Associate
Date:
NGR Generating (Parlin)
Cogeneration Inc.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
Date: 8-8-96
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<PAGE>
SCHEDULE to the MASTER AGREEMENT
dated as of August 2, 1996 between
CREDIT SUISSE acting through its
New York Branch ("Party A") and
NGR GENERATING (NEWARK) COGENERATION INC.
and NGR GENERATING (PARLIN) COGENERATION INC.
(collectively, "Party B")
PART 1 Termination Provisions and Certain Other Matters
(a) "Specified Entity" means, in relation to Party A, for the
purpose of:
Section 5(a)(v), none;
Section 5(a)(vi), none;
Section 5(a)(vii), none; and
Section 5(b)(iv), none;
and in relation to Party B, for the purpose of:
Section 5(a)(v), none;
Section 5(a)(vi), none;
Section 5(a)(vii), none; and
Section 5(b)(iv), none.
(b) "Specified Transaction" will have the meaning specified in
Section 14, which meaning specified in Section 14, which meaning shall be
limited to "Interest RateHedge Agreements" (as defined in the Credit
Agreement (as defined in Park 4(k) of this Schedule)).
(c) The "Cross-Default" provisions of Section 5(a)(vi) of this
Agreement will not apply to Party A. The "Cross-Default" provisions of
Section 5(a)(vi) of this Agreement will apply to Party B. In connection
therewith, "Specified Indebtedness" means all "Obligations", means $100,000
(or its "Equivalent"), as defined in the Credit Agreement).
(d) The "Credit Support Default" provisions of Section 5(a)(iii)
of this Agreement shall apply.
<PAGE>
(e) The "Credit Event Upon Merger" provisions of Section
5(b)(iv) of this Agreement will not apply to Party A. The "Credit Event
Upon Merger" provisions of Section 5(b)(iv) will apply to Party B.
(f) The "Automatic Early Termination" provision of Section 6(a)
will not apply to Party A and Party B.
(g) Payments on Early Termination. For the purpose of Section
6(e):
(i) Market Quotation.
(ii) The Second Method will apply.
(h) "Termination Currency" means United States Dollars.
(i) Additional Termination Events. The following shall
constitute Additional Termination Event.
(i) It shall constitute an Additional Termination Event
under this Agreement if (1) the Credit Agreement shall have expired or
terminated or shall have otherwise ceased to be in full force and
effect (other than as a result of an Event of Default (as such term is
defined in the Credit Agreement) with respect to Party B (in which
event Party B will be the Affected Party), or (2) Party B shall cease
to be a party to the Credit Agreement (in which event Party B will be
the Affected Party).
(ii) It shall also constitute an Additional Termination
Event under this Agreement if due to the occurrence of a natural or
man-made disaster, armed conflict, act of terrorism, riot, labor
disruption or any other circumstance beyond its control after the date
on which a Transaction is entered into, it becomes impossible (an
"Impossibility"), (other than as a result of its own misconduct) for
such a party (which will be the Affected Party):
(1) to perform any absolute or contingent obligation, to
make a payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other material
provision of this Agreement relating to such Transaction; or
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<PAGE>
(2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which the
party (or such Credit Support Provider) has under any Credit
Support Document relating to such Transaction. An Impossibility
shall be treated as an Illegality for all purposes of this
Agreement.
(j) Partial Termination. The aggregate notional amount of all
Transactions may be reduced as set forth in Section 5.5(b) of the Credit
Agreement. In the event of any such reduction, Party B will be deemed to
have designated an Early Termination Date only with respect to the amount
by which the Notional Amounts are so reduced on the date of such partial
prepayment. In any such event, Party B shall be the Affected Party.
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PART 2: Tax Representations
Payer Tax Representation. For the purpose of Section 3(e), each
of Party A and Party B will make the following representation:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or on
account of any Tax from any payment (other than interest under Section
2(e), 6(d) or 6(e)) to be made by it to the other party under this
Agreement. In making this representation, it may rely on:
(i) the accuracy of any representation made by the other
party pursuant to Section 3(f);
(ii) the satisfaction of the agreement of the other party
contained in Section 4(a)(iii) and the accuracy and effectiveness
of any document provided by the other party pursuant to Section
4(a)(i) or 4(a)(iii); and
(iii) the satisfaction of the agreement of the other
party contained in Section 4(d); provided that it shall not be a
breach of this representation where reliance is placed on clause
(ii) and the other party does not deliver a form or document
under Section 4(a)(iii) by reason of a material prejudice to its
legal or commercial position.
Payee Tax Representations. For the purpose of Section 3(f),
Party A shall make the following representation:
Each payment received or to be received by it in connection with
this Agreement will be effectively connected with its conduct of a trade or
business in the United States.
Party B makes no representations.
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PART 3: Agreement to Deliver Documents
For the purpose of Sections 4(a)(i) and (ii) of this Agreement,
each party agrees to deliver the following documents:
(a) Tax forms, documents or certificates to be delivered are:
Party required to Form/Document/ Date by which
deliver document Certificate to be delivered
Party A An Internal Revenue (A) Before the
Service form 4224 or First Scheduled
any successor form Payment Date; (B)
to such Form 4224, promptly upon
completed in a reasonable demand by
manner reasonably Party B; and (C)
satisfactory to promptly upon
Party B learning that any
Form 4224 or any
successor form to
such Form 4224
previously provided
by Party A become
obsolete or
incorrect
For purposes of Section 2(d)(i)(4)(A), Party A shall be deemed to
have failed to comply with Section 4(a)(i) if the Internal Revenue Service
Form 4224 (or any successor form) delivered to Party B is or becomes
incomplete, obsolete or incorrect until such time as (i) Party A delivers a
new tax form as required by Section 4(a)(i) or (ii) such previously
delivered tax form is no longer incomplete, obsolete or incorrect.
(b) Other documents to be delivered are:
Party required Date by which Covered by
to Form/Document/ to be Section 3(d)
Deliver Certificate delivered Representation
document
Party B Opinion of Upon execution No
counsel and delivery
satisfactory to of this
Party A Agreement
Party B Certified Upon execution Yes
copies of all and delivery
corporate of this
authorizations Agreement
and any other
documents with
respect to the
execution,
delivery and
performance of
this Agreement.
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Party B Certificate of Upon execution Yes
authority and and delivery
specimen of this
signatures of Agreement and
individuals thereafter
executing this upon request
Agreement and of Party A
Confirmations
6
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PART 4: Miscellaneous
(a) Address for Notices. For the purpose of Section 12(a) of
this Agreement.
Address for notice or communications to Party A:
Any notice shall be delivered to the address or facsimile or
telex number specified in the relevant Confirmation of a Transaction.
For purposes of Section 5 and 6 of this Agreement, any notice shall
also be delivered to the following address:
Credit Suisse, New York Branch
Tower 49
12 East 49th Street
New York, New York 10017
Attention: Project Finance
Tel: (212) 238-2000
Fax No.: (212) 238-5390
Address for notice of communications to Party B:
NRG Generating (Newark) Cogeneration Inc.
NRG Generating (Parlin) Cogeneration Inc.
1221 Nicollet Mall
Suite 610
Minneapolis, Minnesota 55403
Attention: Leonard A. Bluhm
Tel: (612) 373-5305
Fax No.: (612) 373-8833
(b) Process Agent. For the purpose of Section 1(c):
Party A appoints as its Process Agent: Not applicable.
Party B appoints as its Process Agent: See Section 5(j) of this
Schedule.
(c) Offices. This provisions of Section 10(a) will not apply to
this Agreement.
(d) Multibranch Party. For the purpose of Section 10 of this
Agreement.
Party A is not a Multibranch Party.
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Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party A, unless
otherwise specified in a Confirmation in relation to the relevant
Transaction.
(f) Credit Support Provider. Details of any Credit Support
Document:
Each of the "Security Documents" (as defined in the Credit
Agreement), together with any and all other documents which by their
terms secure, guarantee or otherwise support Party B's obligations
hereunder from time to time, shall be Credit Support Documents for the
benefit of Party A.
(g) Credit Support Provider. None.
(h) Governing Law. This Agreement is a contract made under the
laws of the State of New York of the United States and for all
purposes shall be governed by and construed in accordance with the
laws of such State without regard to any conflicts of laws provisions
thereof.
(i) Netting of Payments. Subparagraph (ii) of Section 2(c) will
not apply to any Transaction unless specified in the relevant
Confirmation.
(j) "Affiliate" will have the meaning specified in Section 14 of
this Agreement.
(k) "Credit Agreement" shall mean the Credit Agreement, dated as
of May 17, 1996, among Party B, Party A, as a lender and Agent for the
benefit of the Secured Parties, Greenwich Funding Corporation as a
Lender and any Purchasing Lender thereunder, as the same may be
amended, supplemented or modified from time to time.
8
<PAGE>
PART 5: Other Provisions
(a) Set off; Counterclaim. In addition to the provisions set
forth in Section 8.8 of the Credit Agreement, without affecting the
provisions of this Agreement requiring the calculation of certain net
payment amounts, all payments under this Agreement shall be made without
set off or counterclaim and will not be subject to any conditions except as
provided in Section 2 and 6(c) of this Agreement and except if Party B is a
Defaulting Party and Party A is a Noon-defaulting Party, Party A will have
the right to set off, counterclaim or withhold payment of any obligation,
whether matured or unmatured, under this Agreement or any other agreement
between or involving the parties against any payment or performance of any
obligation, whether matured or unmatured, of Party A under this Agreement
or any other agreement between or involving the parties or their Affiliates
regardless of the office or branch through which a party is acting, and
Party A's obligations hereunder or thereunder to Party B shall be deemed to
be satisfied and discharged to the extent of such set off, counterclaim or
withholding.
(b) Notice of Facsimile Transmission. Section 12(a) is hereby
amended by inserting the words "or 13(c)" between the number "6" and the
word "may" in the second line thereof.
(c) Additional Events of Default. With respect to Party B only,
it shall constitute an Event of Default under the Agreement if an Event of
Default, as such term is defined in the Credit Agreement, shall occur and
be continuing.
(d) Further Agreements of Party B. Party B agrees with Party A
that, so long as it has or may have any obligation under this Agreement, it
will comply with the covenants set forth in the Credit Agreement and
Financing Documents (as defined in the Credit Agreement), to which it is a
party.
(e) Further Representations. In addition to the representations
contained in Section 3, Party B represents to Party A (which
representations will be deemed to be repeated by Party B on each date on
which a Transaction is entered into) that each of the representations and
warranties contained in Article IV of the Credit Agreement are true and
correct.
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<PAGE>
(f) Interest Rate Hedge Agreement. The parties hereto
acknowledge and agree that the Schedule and any confirmation and the
Agreement of which it forms a part shall constitute an "Interest Rate Hedge
Agreement", as such term is defined in the Credit Agreement, and Party A is
and shall be deemed, and shall be entitled to the benefits and security
accruing to, a party to such an Interest Rate Hedge Agreement and a
"Secured Party" under the Credit Support Documents and the other Financing
Documents, in each case to the extent expressly set forth therein.
(g) Application of Payments. Section 2 of this Agreement is
hereby amended to insert the following clause (f) thereto:
"(f) With respect to Party B only, Party B agrees (1) to
apply any payments made by Party A to Party B on any Scheduled
Payment Date (after giving effect to the netting provisions of
Section 2(c) of this Agreement) to the payment of interest then
due or soon to become due, on the relevant due date, under the
Dollar Loan Notes (as defined under the Credit Agreement) or any
instrument that replaces the Dollar Loan Notes and to any other
Obligations under the Credit Agreement then due or soon to become
due on the relevant due date under the Credit Agreement and (2)
that, if any such interest or other Obligation is due and owing
on a date on which Party A is obligated to make a payment
hereunder to Party B and if an Event of Default has occurred and
is continuing under the Credit Agreement, Party A shall make any
payment to the Agent (as defined in the Credit Agreement)."
(h) Submission to Jurisdiction.
(i) Any legal action or proceeding against Party B with
respect to this Agreement and any Credit Support Document or the
transactions in connection with or relating hereto or thereto,
may be brought in the courts of the State of New York in the
County of New York or of the United States for the Southern
District of New York and, by execution and delivery of this
Agreement, Party B hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Party B agrees that a
judgment, after exhaustion of all available appeals, in any such
action or proceeding shall conclusive and binding upon
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Party B, and may be enforced in any other jurisdiction, including
without limitation Chile, by a suit upon such judgment, a
certified copy of which shall be conclusive evidence of the
judgment.
(ii) Party B hereby irrevocably designates, appoints and
empowers CT Corporation System, Inc. (the "Process Agent"), with
offices on the date hereof at 1633 Broadway, New York, NY 10019,
as its designee, appointee and agent to receive and accept
service of any and all legal process, summons, notices and
documents arising out of this Agreement. If for any reason such
designee, appointee and agent shall cease to be available to act
as such, Party B agrees to designate a new designee, appointee
and agent in New York City on the terms and for the purposes of
this provision satisfactory to Party A. Party B further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to such Borrower, at its respective addresses
set forth herein such service to become effective 30 days after
such mailing. Nothing herein shall affect the right of Part A to
serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against Party B in any
other jurisdiction.
(iii) Party B hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any Credit Support Document or
the transactions in connection with, or relating hereto or
thereto brought in the courts referred to in clause (i) above and
hereby further irrevocably waives and agrees not to plead or
claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient
forum.
(iv) WITH REGARD TO THIS AGREEMENT AND THE CREDIT SUPPORT
DOCUMENTS TO WHICH IT IS A PARTY, EACH OF THE PARTIES HERETO
WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
AND FOR ANY COUNTERCLAIM THEREIN.
(v) Party A and Party B agree, regardless of cause, not to
assert any claim whatsoever against the
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<PAGE>
other party for loss of anticipatory profits or consequential
damages.
(j) Confirmations. Notwithstanding anything to the contrary in
the Agreement:
(i) The parties hereto agree that with respect to each
Transaction hereunder a legally binding agreement shall exist
from the moment that the parties hereto agree on the essential
terms of such Transaction, which the parties anticipate will
occur by telephone.
(ii) For each Transaction Party A and Party B agree to enter
into hereunder, Party A shall promptly send to Party B a
Confirmation, setting forth the terms of such Transaction. Party
B shall execute and return the Confirmation to Party A or request
correction of any error within three Business Days of receipt.
Failure of Party B to respond within such period shall not affect
the validity of enforceability of such Transaction and shall be
deemed to be an affirmation of such terms.
(k) ISDA Definitions. Unless otherwise specified in a
Confirmation, this Agreement incorporates, and is subject to and
governed by the 1991 ISDA Definitions (the "1991 Definitions")
published by the International Swap Dealers Association Inc. ("ISDA").
In the event of any inconsistency among the provisions of this
Agreement and the 1991 Definitions, this Agreement will prevail.
(l) Transfers. The parties agree that Party A may transfer its
rights and obligations under this Agreement (with such modifications
and representations relating to Taxes as shall be reasonably requested
by Party B to preserve the position of Party B), in whole but not in
part, to any other Affiliate of Party A with a guarantee by Party A or
to any other branch or agency of Credit Suisse, provided that such
assignment will not give rise to a Termination Event or an Event of
Default with respect to such assignee of Party A or to Party B.
Additionally, notwithstanding the provisions of Section 12 of this
Agreement, Party A may sell and assign one or more participation
interests in one or more Transactions.
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<PAGE>
(m) Section 3. Section 3 of the Agreement is hereby amended by
adding at the end thereof the following subsections (g) and (h):
(g) Eligible Swap Participant. It is an "eligible swap
participant" as that term is defined by the Commodity Futures Trading
Commission at 17 C.F.R. 35.1(b)(2).
(h) No Reliance, etc. (i) the other party hereto is not
acting as a fiduciary or financial or investment advisor for it; (ii)
it is not relying (for purposes of making any investment decision or
otherwise) upon any advice, counsel or representations (whether
written or oral) of the other party hereto; (iii) the other party
hereto has not given to it (directly or indirectly through any other
person) any assurance, guarantee, or representation whatsoever as to
the expected or projected success, profitability, return, performance,
result, effect, consequence, or benefit (either legal, regulatory,
tax, financial, accounting, or otherwise) of this transaction; (iv) it
has consulted with its own legal, regulatory, tax business,
investment, financial and accounting and other advisors to the extent
it has deemed necessary, and it has made its own investment, hedging
and trading decisions (including decisions regarding transaction)
based upon its own judgment and upon any advice from such advisors as
it has deemed necessary and not upon any view expressed by the other
party hereto; and (v) it is entering into this transaction and any
other documentation relating hereto with a full understanding of all
of the terms, conditions and risks hereof and thereof (economic and
otherwise) and it is capable of assuming and willing to assume
(financially and otherwise) those risks.
(n) Escrow Payments. If by reason of the time difference
between the cities in which payments are to be made, it is not possible for
simultaneous payments to be made on any date on which both parties are
required to make payments hereunder, either party may at its option and in
its sole discretion notify the other party at its option and in its sole
discretion notify the other party that payments on that date are to be made
in escrow. In this case deposit of the payment due earlier on that date
shall be made by 2:00 p.m. (local time at the place for earlier payment) on
that date with an escrow agent selected by the party giving the notice,
accompanied by irrevocable payment
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<PAGE>
instructions (i) to release the deposited payment to the intended recipient
upon receipt by the escrow agent of the required deposit of the
corresponding payment from the other party o the same date accompanied by
irrevocable payment instructions to the same effect or (ii) if the required
deposit of the corresponding payment is not made on that same date, to
return the payment deposited to the party that paid it into escrow. The
party that elects to have payments made in escrow shall pay the costs of
the escrow arrangements and shall cause those arrangements to provide that
the intended recipient of the payment due to be deposited first shall be
entitled to interest on that deposited payment for each day in the period
of its deposit at the rate offered by the escrow agent for that day for
overnight deposits in the relevant currency in the office where it holds
that deposited payment (at 11:00 a.m. local time on that day) if that
payment is not released by 5:00 p.m. local time on the date it is deposited
for any reason other than the intended recipient's failure to make the
escrow deposit it is required to make hereunder in a timely fashion.
(o) Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of the
Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction. The parties hereto shall endeavor in good faith
negotiations to replace the prohibited or unenforceable provision with a
valid provision, the economic effect of which comes as close as possible to
that of the prohibited or enforceable provision.
(p) Telephonic Recording. The parties agree that, with respect
to Transactions, each party may electronically record all telephonic
conversations between them and that any such tape recordings may be
submitted in evidence to any court or in any proceedings relating to this
Agreement.
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<PAGE>
(q) Joint and Several Obligations. The obligations of each of
the two counterparties collectively referred to herein as Party B are joint
and several. References to "Party B, "it" and similar terms when used in
this Agreement shall be deemed to refer NRG Generating (Newark)
Cogeneration Inc. and NRG Generating (Parlin) Cogeneration Inc. both
singularly and collectively.
Accepted and agreed:
CREDIT SUISSE, NRG GENERATING (NEWARK)
acting through its New York COGENERATION INC.
Branch
By: /s/ Leonard Bluhm
By: /s/ Louis Iaconetti Name: Leonard A. Bluhm
Name: Louis D. Iaconetti Title: President
Title: Associate
By: /s/ Leonard Bluhm
By: /s/ Steven Dowe Name: Leonard A. Bluhm
Name: Steven Dowe Title: President
Title: Associate
15
<PAGE>
Exhibit 10.11.2
Agreement entered into this Second Day of June, 1986 by and
between O'Brien Energy Systems (Seller) and Jersey Central Power
& Light Co., a New Jersey Corporation (collectively referred to
as "parties").
Whereas, the parties agreed to certain terms and conditions
concerning the sale of electricity to JCP&L from O'Brien as set
forth in a contractual agreement dated 3/10/86, and
Whereas, the parties desire to amend Article 4.1.8 as set
forth below:
Notwithstanding the preceding paragraph, if the date of
Initial Commercial Operation has not occurred prior to
July 1, 1988 JCP&L may thereafter terminate this Agreement
by providing Seller forty-five (45) days' written notice,
unless prior to such date, Seller has commenced a program of
continuous construction of the Facility such that the
Initial Delivery Date will not be later than December 31,
1988, and does not, of its own volition, subsequently
discontinue such construction program and subject to force
majeure provisions of Article 11.
Now therefore, in witness whereof, the parties have caused
this amendment to be signed by their respective officers
thereunto duly authorized as of the day and year set forth above:
Attest: /s/ Sanders Newman O'Brien Energy Systems, Inc.
/s/ Jeffrey Baines
Executive Vice President
Attest: /s/ C.A. Marks Jersey Central Power & Light
Co.
/s/ E.J. McCarthy
<PAGE>
Exhibit 10.11.3
SECOND AMENDMENT
TO
POWER PURCHASE AGREEMENT
_________________
This SECOND AMENDMENT, dated as of March 1, 1988 ("Second
Amendment"), to the Power Purchase Agreement, dated March 10,
1986, between O'Brien Energy Systems, Inc. ("Seller") and Jersey
Central Power & Light Company ("JCP&L").
W I T N E S S E T H :
WHEREAS, the Power Purchase Agreement provides for the
purchase by JCP&L of the capacity and energy from Seller's
Cogeneration Facility with a nameplate rating of 52 MW/Hr. to be
constructed by Seller at the Newark Boxboard plant in Newark, New
Jersey;
WHEREAS, by letter agreement dated June 2, 1986 ("First
Amendment"), the Parties have amended the Power Purchase
Agreement in certain respects (the Power Purchase Agreement, as
so amended by the First Amendment being hereinafter referred to
as the "Agreement");
WHEREAS, Seller has advised JCP&L that construction of the
Facility has been delayed and has requested that the Date of
Initial Commercial Operation as provided in the Agreement
therefore be extended;
<PAGE>
WHEREAS, JCP&L is willing to extend the Date of Initial
Commercial Operation as requested by Seller, subject, however, to
the terms and conditions hereof; and
WHEREAS, the Parties desire to amend the Agreement in
certain other respects.
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the Parties hereby agree as
follows:
1. Article III - Definitions. Article III of the Agreement is
hereby amended as follows:
(a) By revising the definition of "Contract Capacity" in
Article 3.6 to read in its entirety as follows:
3.6 "Contract Capacity" means the maximum summer Peak
Period producing capability the Generating Facility shall
demonstrate according to GPU/PJM guidelines, as in effect
from time to time, in MWH/Hr. which, in any event, shall not
be less than 52 MWH/Hr.
(b) By adding the following defined term therein:
3.16(a) "Major Facility Overhaul" means an outage of
the Cogeneration Facility for a complete replacement or
reconditioning of the Cogeneration Facility's electrical
prime mover, one or more of its turbine-generators or its
related boiler(s) due to ordinary wear and tear. Each such
outage may occur not more often than once every five (5)
years for a period of up to ninety (90) days each.
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<PAGE>
(c) By revising the definition of "On-Peak Period" in
Article 3.19 to read in its entirety as follows:
3.19 "On-Peak Period" means all hours from 8:00 A.M.
to 8:00 P.M. prevailing time Monday through Friday, other
than on New Year's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
(d) By adding definitions of the terms "Off-Peak Season"
and "On-Peak Season" as follows:
3.18(a) "Off-Peak Season" means the months of March,
April, May, October and November.
3.19(a) "On-Peak Season" means the months of December
through February and June through September.
2. Article 4.1 - Duration of Agreement. Paragraph B of Article
4.1 of the Agreement is hereby amended in its entirety and
new Paragraphs (C) through (H) are hereby added thereto to
read in full as follows:
(B) Seller has furnished JCP&L with a revised detailed
engineering, permitting and construction schedule identifying all
critical path items for project development and providing for
Initial Commercial Operation of the Facility by April 1, 1990.
Seller shall promptly advise JCP&L of any material revisions,
modifications or changes to such schedules.
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<PAGE>
(C) Seller shall furnish JCP&L with quarterly status
reports describing the progress of the engineering,
permitting and construction of the Facility. Such reports
shall include, in reasonably sufficient detail, explanations
of any delays in meeting scheduled dates for commencement or
completion of any listed item.
(D) Seller shall immediately notify JCP&L if Seller
has not (i) obtained all critical path Federal, State and
local environmental construction permits and authorizations
to construct and operate the Facility and (ii) issued a
purchase order, or entered into a legally binding
commitment, for the Facility's principal energy conversion
device on or prior to the dates specified in the schedules
as initially submitted to JCP&L or as such schedules may
subsequently be revised.
(E) If the Initial Delivery Date has not occurred on
or prior to April 1, 1990, JCP&L may terminate this
Agreement upon written notice to Seller unless prior to such
date, (1) Seller demonstrates to JCP&L's reasonable
satisfaction that Seller has (a) commenced and there is
ongoing a program of continuous construction of the Facility
pursuant to which Seller has incurred or legally obligated
itself to pay for direct construction expenses of not less
than fifty (50%) percent of the projected direct
construction costs of the Facility (which Seller shall
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<PAGE>
certify to JCP&L on the basis of appropriate documentation)
and (b) furnished JCP&L with a revised construction schedule
for the Facility under which the Facility will be in
Commercial Operation not later than April 1, 1991 and
(2) Seller pays to JCP&L the full amount of liquidated
damages set forth in Article XXII hereof, subject to refund
as provided in paragraph (G) below. In such event, the
Initial Delivery Date shall be extended to April 1, 1991, or
such earlier date as Seller shall specify in such revised
construction schedule.
(F) If the Initial Delivery Date has not occurred on
or prior to April 1, 1991, JCP&L may terminate this
Agreement upon written notice to Seller unless prior to such
date (a) Seller demonstrates to JCP&L's reasonable
satisfaction that a continuous program of construction of
the Facility is ongoing pursuant to which Seller has
incurred or legally obligated itself to pay for direct
construction expenses of not less than seventy-five (75%)
percent of the projected direct construction costs of the
Facility (which Seller shall certify to JCP&L on the basis
of appropriate documentation) and (b) Seller has furnished
JCP&L with a revised construction schedule for the Facility
under which the Facility will be in Commercial Operation not
later than April 1, 1992. In such event, the Initial
Delivery Date shall be extended to April 1, 1992, or such
earlier date as Seller shall specify in such revised
construction schedule.
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<PAGE>
(G) In the event this Agreement is not otherwise
terminated pursuant to the provisions of this Article IV and
Seller pays to JCP&L the liquidated damages amount as
provided in Paragraph (E) above, then within thirty (30)
days of the end of the billing period following the Initial
Delivery Date, JCP&L shall credit Seller for amounts due to
JCP&L hereunder or otherwise reimburse Seller for the full
amount of such liquidated damage payment but without
interest thereon.
(H) If the Initial Delivery Date has not occurred for
any reason, including but not limited to Force Majeure, on
or prior to April 1, 1992, this Agreement may be terminated
by JCP&L upon written notice to Seller.
3. Article V - Operation and Maintenance.
Article V of the Agreement is hereby amended in the
following respects:
(a) Paragraph A of Article 5.5 is amended to read in
its entirety as follows:
A. Each Party shall keep the other Party's Operating
Representative informed as to the operating schedules of their
respective facilities affecting each other's obligations
hereunder, including any reduction in availability of Contract
Capacity. In addition, Seller shall furnish JCP&L with an annual
forecast not later than January 1 of each year following the
Initial Delivery Date setting forth the expected dates
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<PAGE>
and anticipated duration of each scheduled outage for
the succeeding twelve (12) months. Seller shall notify
JCP&L not less than thirty (30) days prior to the
commencement of any scheduled outage, and of the
anticipated duration thereof, and as soon as possible
with respect to any unscheduled outage.
(b) Article 5.7 is hereby amended to read in its
entirety as follows:
5.7 Seller shall use its best efforts to schedule and
conduct routine maintenance outages of the
Facility only during the Off-Peak Season except
that Seller may conduct such scheduled outages of
the Facility up to a total of thirty (30) hours
during On-Peak Periods in the On-Peak Season in
any year, exclusive, however, of a Major Facility
Overhaul and any inspections required by law.
(c) Article 5.8 is amended by adding the following at
the end thereof:
Seller shall furnish to JCP&L on each January 1
following the Initial Delivery Date reasonably
satisfactory evidence that Seller has performed or
caused to be performed all manufacturer-recommended
maintenance and testing with respect to the Facility
and any protective apparatus and interconnection
equipment, including circuit breakers, relays and
auxiliary equipment. Seller shall provide JCP&L with
7
<PAGE>
at least thirty (30) days prior written notice of its
intent to test such equipment and JCP&L personnel may,
if JCP&L desires, observe such testing.
(d) Article 5.10 of is amended to read in its entirety
as follows:
5.10 (a) Seller shall generate and sell
electric energy to JCP&L throughout the term of
this Agreement and any extensions or renewals
hereof at an annual level for On-Peak Periods
which, commencing on January 1 of the fourth full
year of operation of the Facility following the
Initial Delivery Date and for each year thereafter
("Production Year"), shall be not less than 85% of
the average annual generation output achieved for
On-Peak Periods during the three (3) immediately
preceding years of operation of the Facility
("Average Generation").
(b) If the actual annual amount of electric
energy delivered from the Facility to JCP&L during
On-Peak Periods for any Production Year ("Actual
Generation") is less than 85% of the Average
Generation, then Seller shall pay JCP&L a
performance deficiency payment equal to the number
of kwh by which (x) 85% of the Average Generation
exceeds (y) the Actual Generation, multiplied by
the then variable pricing component as paid during
On-Peak Periods in cents per kwh.
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<PAGE>
(c) For purposes of calculating the Actual
Generation of the Facility during a Production
Year, there shall be added to the actual amount of
electricity delivered from the Facility to JCP&L
during On-Peak Periods 85% of any kwh which the
Facility does not deliver (based upon the Contract
Capacity of the Facility) during On-Peak Periods
during such Production Year due to (i) Force
Majeure as provided in Article XI hereof, (ii) a
Major Facility Overhaul and (iii) a disconnection
of the Facility or an interruption, curtailment or
reduction of purchases of electricity by JCP&L
pursuant to Articles 5.3 or 7.6 hereof, other than
pursuant to Article 7.6(e) hereof.
(d) Seller shall make any performance
deficiency payment due to JCP&L in six (6) equal
monthly payments by applying said monthly payments
against amounts due from JCP&L for electric energy
delivered during the first six (6) months of the
year following the year for which the performance
deficiency payment statement applies. If Seller
does not deliver sufficient electric energy to
JCP&L in any month to allow the full set-off of
the monthly payment as provided herein, Seller
shall pay to JCP&L within ten (10) days after the
end of such month, any amount which cannot be set-
off. Any and all amounts due and owing to JCP&L
under this Article V shall be immediately due
9
<Page
and payable by Seller in the event of a
termination of this Agreement.
(e) JCP&L shall submit to Seller a
performance deficiency payment statement setting
forth the amount of any performance deficiency
payment to be made by Seller to JCP&L pursuant to
this Article V within thirty (30) days after the
close of each year for which a performance
deficiency payment has been incurred.
(f) If JCP&L does not receive written notice
from Seller of any objection to the performance
deficiency payment statement within fifteen (15)
days from the date of Seller's receipt thereof,
said statement shall be deemed conclusive and
binding on the Parties absent manifest error.
(g) Seller shall demonstrate the ability of
the Facility to provide JCP&L with the specified
Contract Capacity within thirty (30) days after
the Initial Delivery Date. Thereafter, twice
annually at JCP&L's request, Seller shall once,
during On-Peak summer months (June through
September) and once during On-Peak winter months
(December through February), demonstrate the
ability of the Facility to provide Contract
Capacity for such period of time as is required by
PJM from time to time for all PJM suppliers.
Demonstration of Contract Capacity shall
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<PAGE>
be at Seller's expense and conducted at a time and
pursuant to procedures as may be required by
applicable PJM rules, regulations and guidelines
and, to the extent not inconsistent therewith, as
mutually agreed upon by the Parties. If Seller
fails to demonstrate the ability of the Facility
to provide Contract Capacity, the Contract
Capacity component (fixed price component) of the
price to be paid for energy, as set forth in
Appendix A hereto, shall be reduced to the
following amount for so long as Seller is unable
to demonstrate the ability of the Facility to
provide Contract Capacity:
Demonstrated Capacity x Capacity Component of Price
Contract Capacity (fixed price component)
4. Articles 5.11, 5.15 and 5.16. Articles 5.11, 5.15, and 5.16
of the Agreement are hereby deleted in their entirety and
shall have no further force or effect.
5. Article VI - Measurement and Metering.
Paragraph A of Article 6.5 is hereby amended by
revising the first sentence thereof to read in full as
follows:
A. The accuracy of the Wheeling Utility's measuring
equipment shall be tested and verified by Seller or the
Wheeling Utility at reasonable intervals, but not less
often than once annually, and, if requested, in JCP&L's
presence.
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<PAGE>
6. Article VII - Terms of Sale.
(a) Article 7.1 is hereby amended by including the
language at the end thereof before the period: "up to a
maximum of 52 MWH/Hr.; provided, however, that if offered by
Seller, JCP&L may agree to purchase additional energy from
the Facility up to a maximum of 56 MWH/Hr. except that
notwithstanding anything contained in this Agreement or
Appendix A to the contrary, the price paid for such
additional energy shall be 90% of the On-peak or Off-peak,
as applicable, PJM billing rate as then in effect".
(b) Article 7.3(c) is hereby amended to read in full
as follows:
(c) On or before Thursday of each week, Seller
shall also furnish to JCP&L estimates of the Facility's
energy production for that week. Actual performance
information as required from time to time for PJM
reporting purposes will be supplied by Seller to JCP&L
upon request.
(c) Article 7.6(d) is hereby amended by changing the
reference "400 kwh" in the penultimate line thereof to "400
hours".
7. Article IX - Billings and Records.
Article 9.1 is hereby amended by replacing the phrase
"the end of each monthly billing period" in the third line
thereof with the phrase "receipt by JCP&L of an official
billing statement from the Wheeling Utility showing the
12
<PAGE>
amount of Electricity delivered from the Facility to JCP&L
during a monthly billing period in sufficient detail for
JCP&L to calculate amounts due to Seller hereunder."
8. Article XII - Insurance, Liability and Indemnification.
Article 12.1 is hereby amended to read in full as
follows:
12.1 Insurance.
(A) Seller agrees to keep the Facility continuously
insured with reputable insurance companies against loss or
damage in the amounts and for the risks that property of
similar character is usually so insured by entities owning
and operating like properties.
(B) Seller shall maintain in effect insurance coverage
for the Facility with initial minimum limits as follows:
Insurance Limits
1.a. Worker's Compensation As required by
Insurance statute
b. Employer's Liability $500,000
Insurance
2.Comprehensive General Liability (Public Liability)
Insurance including:
a. Bodily Injury $1,000,000 per
occurrence
and
Property Damage $1,000,000 combined
single limit per
occurrence
13
<PAGE>
b. Bodily Injury and Property $1,000,000 combined
Damage single limit per
occurrence
c. Personal Injury $500,000 per
occurrence
3.Automobile Liability Insurance (owned, hired & non-
owned):
a. Bodily Injury $500,000 per Accident
b. Property Damage $500,000 per Accident
4. Seller shall also procure and maintain in effect
business interruption and property hazard insurance in
sufficient amounts to cover and otherwise insure against
reasonable business risks associated with damage to or other
interruption or loss of use of the Facility and appurtenant
equipment.
5. JCP&L may, upon ninety (90) days prior written notice,
require Seller and Seller shall, from time to time, increase
the foregoing initial limits to amounts which shall be
reasonable, based upon commercial availability of such
increased limits at commercially reasonable terms and the
location, size and type of the Facility, to meet changed
circumstances and then current industry practice.
(C) Seller's liability insurance (other than its
worker's compensation insurance) shall include provisions or
endorsements providing that such policies shall not be
cancelled or their limits of liability reduced without
thirty (30) days prior written notice to JCP&L.
14
<PAGE>
(D) A copy of each such insurance policy, certified as
a true copy by an authorized representative of the issuing
insurance company or in lieu thereof, a certificate in form
satisfactory to JCP&L certifying to the issuance of such
insurance, shall be furnished to JCP&L on or before the
Initial Delivery Date and fifteen (15) days prior to the
expiration date of each such policy.
9. Article 13.2 - Remedies for Breach. Article 13.2 is hereby
amended to read in its entirety as follows:
13.2(A) Remedies for Breach.
(i) In the event of a breach of this Agreement, as
defined in Article 13.1 hereof, the non-breaching Party may
terminate this Agreement by giving written notice of such
breach and termination to the Party in breach, whereupon the
non-breaching Party shall be excused and relieved of all
further liability and obligations hereunder.
(ii) Notwithstanding the foregoing, in the event of a
breach of this Agreement the non-breaching Party shall be
entitled (x) to commence an action in the nature of specific
performance to require the breaching Party to cure such
breach and specifically perform its duties and obligations
under this Agreement in accordance with the terms and
conditions hereof and (y) to exercise such other rights and
remedies as it may have at equity or at law.
15
<PAGE>
13.2(B) JCP&L's Right to Operate.
If at any time during the term of this Agreement Seller
breaches this Agreement, or Seller fails to operate and
maintain the Facility in accordance with the terms and
conditions hereof for a period of sixty (60) days after
written notice from JCP&L and during such period Seller does
not take or has not taken reasonable steps to cure such
breach or correct such failure, JCP&L may, at its sole
election and without any obligation to so do, assume
management control of, and otherwise operate, the Facility
and all the appurtenant equipment necessary to deliver
electricity to JCP&L's system. Such right to assume
operation of the Facility shall be limited by and subject to
the following:
(1) JCP&L may exercise its option to assume management
control and operation of the Facility and the appurtenant
equipment after having given ten (10) days written notice of
its intentions to Seller.
(2) JCP&L shall promptly return operation and
management control of the Facility to Seller at such time as
Seller demonstrates to JCP&L's satisfaction that Seller is
able to resume performance of its obligations, duties, and
responsibilities under this Agreement.
(3) Seller shall at all times retain legal title to
and ownership of the Facility.
16
<PAGE>
(4) JCP&L's assumption of management control and/or
operation of the Facility and appurtenant equipment shall
not be construed as creating any duty or responsibility on
JCP&L's part for the continued or economic operation of the
Facility for the benefit of Seller or any third party.
(5) Seller shall indemnify, defend, and hold JCP&L
harmless from and against all damages, claims, actions, and
lawsuits (including but not limited to legal fees and
expenses) which JCP&L may suffer or incur as a result of
assuming management control and operation of the Facility.
(6) Seller shall reimburse JCP&L for any and all costs
and expenses reasonably incurred by JCP&L in assuming
operation of and operating the Facility, or at its sole
discretion, JCP&L may set off such costs and expenses
against any amounts due Seller under this Agreement.
(7) Seller hereby waives any and all claims, damages,
actions and lawsuits which it may have against JCP&L (other
than claims for damages arising out of JCP&L's gross
negligence) as a result of any personal injury, damage to or
impairment of the environment, or damage resulting to any
property (including but not limited to the Facility) during
such time that JCP&L has undertaken management control and
operation of the Facility pursuant hereto; provided,
however, that JCP&L shall at all times take such reasonable
steps as may be necessary to operate the Facility in
accordance with all applicable laws, governmental
regulations and regulatory requirements.
17
<PAGE>
(8) Notwithstanding the foregoing, should JCP&L assume
management control and operation of the Facility hereunder,
JCP&L may at any time return operation and control of the
Facility to Seller without any further liability or
obligation on the part of JCP&L.
10. Article 15.2 - Service of Notice.
Article 15.2(l) is hereby amended to provide that
notices to Seller shall be addressed as follows:
O'Brien Energy Systems, Inc.
225 South Eighth Street
Philadelphia, Pennsylvania 19106
Attention: Jeffrey Barnes,
Executive Vice President
11. A new Article 22 is hereby added to the Agreement to provide
as follows:
ARTICLE 22
LIQUIDATED DAMAGES
22.1 If Seller shall abandon or fail to complete the
Facility before the Initial Delivery Date and this Agreement
is therefore terminated, it is acknowledged and agreed that
JCP&L will suffer damages which, as the result of JCP&L's
dependence upon the delivery of the Facility's energy and
capacity hereunder, JCP&L would be unable to mitigate fully.
JCP&L and Seller agree that the amount of actual damages
suffered by JCP&L under the foregoing circumstances would be
difficult or impossible to measure. Therefore, JCP&L and
Seller agree that
18
<PAGE>
if the Facility shall fail to commence Commercial Operation
on or before the Initial Delivery Date, as the same may be
extended, set forth in Article 4 of this Agreement, Seller
shall pay to JCP&L a one-time liquidated damage amount equal
to ten dollars ($10.00) per kw of the anticipated Contract
Capacity of the Facility as set forth in Preface A (Project
Summary) to this Agreement. Seller will secure payment of
this amount by providing to JCP&L not later than thirty (30)
days following the issuance of an order by the New Jersey
Board of Public Utilities approving the Second Amendment to
the Agreement, a non-cancellable surety bond or irrevocable
bank letter of credit in form and substance reasonably
acceptable to JCP&L upon which JCP&L can draw if the
Facility does not achieve Commercial Operation by the
Initial Delivery Date. Said surety bond or letter of credit
will be renewed by Seller not later than 10 days prior to
its stated expiration date. At Seller's option, the surety
bond or letter of credit may be replaced with other security
acceptable to JCP&L. Notwithstanding anything contained in
this Agreement to the contrary, if Seller should fail to
renew the surety bond, letter of credit or other security
accepted by JCP&L on or before the tenth day prior to its
stated expiration date, JCP&L shall be entitled, without
further notice to Seller, to draw on such surety bond,
letter of credit or other security. Upon receipt of payment
thereunder, JCP&L shall hold the funds pending (i) a renewal
of the surety bond, letter of credit or
19
<PAGE>
other security, in which event JCP&L shall refund such funds
to Seller or (ii) a termination of this Agreement as herein
provided in which case JCP&L shall retain the funds in
accordance with the terms hereof.
12. A new Article 23 is hereby added to the Agreement
to provide as follows:
ARTICLE 23
COVENANTS
23.1 Seller hereby covenants and agrees that prior to
the Initial Delivery Date, Seller shall at its own cost and
expense obtain all material permits, licenses and other
authorizations from governmental authorities as may be
required to construct, operate and maintain the Facility and
to perform its obligations hereunder, and during the term
hereof, Seller shall furnish to JCP&L copies of each such
permit, license and authorization promptly following receipt
thereof. Seller shall maintain in full force and effect all
such governmental permits, licenses and authorizations as
may be necessary for the construction, operation or
maintenance of the Facility.
13. Appendix A - Schedule of Electricity Purchase Prices.
Paragraph A.1 of Appendix A is hereby amended to
read in its entirety as follows:
Price: Buyer shall pay the following amounts to
Seller for electricity delivered to Buyer:
20
<PAGE>
A. For electricity delivered in an On-Peak
Period prior to January 1, 2000, 120% of the
applicable rate times the electricity delivered in
the On-Peak Period. For electricity delivered in
the On-Peak Period after January 1, 2000, 110% of
the applicable rate times the electricity
delivered in the On-Peak Period.
B. For electricity delivered in an Off-Peak
Period prior to January 1, 2000, 88.9% of the
applicable rate times the electricity delivered in
the Off-Peak Period. For electricity delivered in
an Off-Peak Period after January 1, 2000, 92% of
the applicable rate times the electricity
delivered in the Off-Peak Period.
14. Paragraph A.2B of Appendix A is hereby amended and a
new Paragraph A.2C is hereby added to read in their
entirety as follows:
B. The Adjusted Base Rate (as determined
pursuant to Article A.3) for deliveries on or
after April 1, 1986, excluding deliveries prior to
the demonstration of Contract Capacity as provided
in this Agreement.
C. The applicable On-Peak or Off-Peak PJM
billing rate to GPU minus 10% for energy delivered
prior to the demonstration of Contract Capacity as
provided in this Agreement.
21
<PAGE>
15. Effectiveness; Regulatory Approval. This Second
Amendment shall become effective and binding upon the
Parties hereto upon execution hereof and issuance of a
final order by the New Jersey Board of Public Utilities
approving this Second Amendment as so executed, and
without terms and conditions unreasonably to either
Party.
16. Captions; Miscellaneous.
All indexes, titles, subject headings, section
titles and similar items are provided for the purpose
of reference and convenience only and are not intended
to be inclusive, definitive or to affect the meaning of
the contents or scope of this Second Amendment. Unless
otherwise defined in this Second Amendment, capitalized
terms shall have the meaning ascribed to them in the
Agreement.
17. Choice of Law.
This Second Amendment shall be governed by and
construed in accordance with the laws of the State of
New Jersey applicable to contracts made and to be
performed in that State.
18. Entire Agreement; Severability.
The Agreement, as further amended by this Second
Amendment, supersedes any and all oral or written
agreements and understandings heretofore made relating
to the subject matter hereof, and constitutes the
entire agreement and understanding of the Parties
relating
22
<PAGE>
hereto. Should any provision of this Amendment be held
invalid or unenforceable, such provision shall be
invalid or unenforceable only to the extent of such
invalidity or unenforceability without invalidating or
rendering unenforceable any other provision thereof.
Except as amended by this Second Amendment, the
Agreement shall remain in full force and effect.
19. Counterparts.
This Second Amendment may be executed in any number of
counterparts, and all such counterparts executed and
delivered, each as an original, shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties by their authorized
representatives have executed this Second Amendment as of
the day and year first set forth above.
ATTEST: JERSEY CENTRAL POWER & LIGHT
COMPANY
/s/ C.A. Marks By: /s/ E.J. McCarthy
Asst. Secretary
ATTEST: O'BRIEN ENERGY SYSTEMS, INC.
/s/ C.B. Balickie By: /s/ Sanders Newman
Secretary Sr. V.P. - Sec. & Gen. Counsel
23
<PAGE>
Exhibit 10.11.4
April 30, 1996
O'Brien (Newark) Cogeneration, Inc.
O'Brien (Parlin) Cogeneration, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Re: Amended and Restated Agreement for Purchase and
Sale of Electric Power (the "Parlin PPA") between
O'Brien (Parlin) Cogeneration, Inc. ("Parlin") and
Jersey Central Power & Light Company ("JCP&L") and
the Third Amendment to Power Purchase Agreement
("Newark Third Amendment") between O'Brien
(Newark) Cogeneration, Inc. ("Newark") and JCP&L
Gentlemen:
Please refer to the above-referenced Parlin PPA and Newark
Third Amendment and to the Other of Approval dated April 29, 1996
in docket numbers EM8804-396 and EM88121345, of the State of New
Jersey Board of Public Utilities (the "BPU Approval"), a copy of
which is attached hereto.
This letter is to confirm our mutual understanding and
agreement that, the BPU Approval having been received, executed
signature pages to the Third Amendment and the Parlin PPA having
been exchanged, the bankruptcy court order approving the NRG Plan
(as defined in the Parlin PPA and the Newark Third Amendment)
having been entered on February 23, 1996 and the gas supply
agreement between JCP&L and Public Service Electric and Gas
Company having been entered into and approved by the New Jersey
Board of Public Utilities, air conditions precedent to the Newark
Third Amendment and the Parlin PPA have been satisfied and the
Parlin PPA and the Newark Third Amendment have become effective
as of April 30, 1996.
<PAGE>
If the foregoing accurately sets forth our agreement, please
so indicate by executing this letter in the space provided below
and sending it to us by facsimile transmitter.
JERSEY CENTRAL POWER & LIGHT
COMPANY
By: /s/ M.P. Morrell
Name: Michael P. Morrell
Title: Vice President
AGREED:
O'BRIEN (NEWARK) COGENERATION,
INC.
By: /s/ Leonard Bluhm
Leonard A. Bluhm
President
O'BRIEN (PARLIN) COGNERATION,
INC.
By: /s/ Leonard Bluhm
Leonard A. Bluhm
President
<PAGE>
Exhibit 10.11.5
THIRD AMENDMENT
TO
POWER PURCHASE AGREEMENT
This Third Amendment, dated as of April 30, 1996 ("Third
Amendment") is made and entered into by and O'Brien (Newark)
Cogeneration, Inc. ("Seller") and Jersey Central Power & Light
Company ("JCP&L") with respect to the Agreement, dated March 10,
1986, between O'Brien Energy Systems, Inc. ("O'Brien") and JCP&L.
WHEREAS, the Power Purchase Agreement as heretofore amended
(the "Agreement") provides for the purchase by JCP&L of the
capacity and energy from the Cogeneration Facility having a
nameplate rating of 52 MW and located at the Newark Boxboard
plant in Newark, New Jersey;
WHEREAS, O'Brien has, with JCP&L's consent, assigned the
Agreement to Seller;
WHEREAS, NRG Energy Inc. ("NRG") is seeking approval of its
proposed Plan of Reorganization (the "NRG Plan") of O'Brien
Environmental Energy, Inc. ("OEE") which provides for the
acquisition by NRG of 49% of the outstanding stock of OEE;
<PAGE>
WHEREAS, Seller is a wholly owned subsidiary of OEE; and
WHEREAS, JCP&L and Seller now desire further to amend the
Agreement in the manner and subject to the terms and conditions
hereinafter set forth and intend that the Agreement, as amended
by this Third Amendment, become effective and govern the purchase
by JCP&L of the capacity and energy from the Cogeneration
Facility from and after the Effective Date (as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and conditions hereinafter set forth and other good and
valuable consideration, the receipt of which is hereby
acknowledged, the Parties hereby agree as follows:
1. Definitions. Capitalized terms used in this Third
Amendment shall have the meaning given to them in the Agreement
unless otherwise defined herein.
2. Exempt Wholesale Generator Status. Promptly following
entry of the Approval Order (as hereinafter defined), Seller will
file with the Federal Energy Regulatory Commission ("FERC") an
appropriate application for determination that Seller is an
"exempt wholesale generator" ("EWG") under Section 32(a)(1) of
the Public Utility Holding Company Act of 1935, as amended, and
the regulations of the FERC thereunder. If requested by Seller,
JCP&L shall, at no cost to JCP&L, use reasonable efforts to
support Seller's filing with the FERC for approval of the rates
provided in the Agreement. In the event the FERC grants Seller's
application, Seller shall have no further obligation under the
Agreement, as further amended by this Third Amendment, to
maintain the Facility as a Qualifying Facility for so long as
Seller maintains EWG
2
<PAGE>
status. JCP&L agrees that, until either the Effective Date has
occurred or it has been definitively established that the
Effective Date will not occur (e.g., the time period for the
occurrence of the Effective Date under Section 7 shall have
expired), JCP&L will not pursue any rights or remedies that it
may have against Seller, OEE or its or their predecessors in
interest with respect to any past failure or inability of Seller
or the Facility to satisfy applicable FERC requirements for
Qualifying Facilities and further agrees that, if the Effective
Date does occur, on and after the Effective Date, it shall have
no further rights or remedies against Seller, OEE or its or their
predecessors in interest with respect to any past failure or
inability of Seller or the Facility to satisfy applicable F~RC
requirements for Qualifying Facilities, all of which shall be
deemed to be waived by JCP&L. Seller shall, however, maintain
the Facility as a Qualifying Facility in the event the FERC
denies Seller's EWG application or revokes Seller's EWG status.
If the Effective Date does occur as provided herein and the FERC
denies Seller's EWG application or revokes Seller's EWG status,
JCP&L will allow Seller a reasonable period of time, not to
exceed 180 days, to make such modifications to the Facility
and/or to enter into or modify such contracts as may be necessary
to meet the applicable FERC requirements for Qualifying
Facilities, and, if Seller does so, JCP&L shall have no further
rights or remedies against Seller with respect to any past
failure or inability (including any failure or inability during
such cure period) of Seller or the Facility to satisfy such
requirements.
3
<PAGE>
3. A new paragraph (g) is hereby added to Section 7.6 of
the Agreement to read in its entirety as follows:
In addition to JCP&L's rights set forth in paragraph
(d) of this Section 7.6, JCP&L shall have the right, in
its sole and absolute discretion, to disconnect,
interrupt, curtail or otherwise refuse to accept or
purchase energy and capacity from the Facility for a
total of 700 hours each calendar year during the term
hereof; provided, however, that such discretionary
disconnections, curtailments, interruptions and
refusals may occur only during Saturdays, Sundays and
Holiday periods and shall, in each case, be of a
duration of not less than six (6) hours each.
Curtailment occurring on Sundays and Holidays may be
extended through 4:00 a.m. the following morning. For
purposes of the foregoing calculation, it is understood
and agreed that the time during which Facility output
moves between full output and net zero output
(including both startup and shutdown periods) shall
not be considered in the calculation. JCP&L shall use
its reasonable best efforts to provide Seller with
prior notice of any such disconnection, interruption,
curtailment or refusal to the extent practicable under
the circumstances.
4. Section A.3 of Appendix A is hereby amended to read in
its entirety as follows:
Adjusted Base Rate. The Adjusted Base Rate for each Rate
Year beginning April 1, 1996, shall be the sum of the Rate
Components for such year, rounded to the nearest one-thousandth
of one cent. The Rate Components, the 1995 Rate Year Values and
Index Factors are as follows:
Rate Component 1995 Rate Index Factor
Year Value
Fixed Component $.03085 None
Retail Rate Component $.01240 Retail Rate Index Factor
Total $.04325
5. Paragraph (B) of Section A.5 of Appendix A is hereby
deleted in its entirety.
4
<PAGE>
6. Sections A.8 through A.l0 of Appendix A are hereby
added to read in their entirety as follows:
A.8 Fuel Related Charges
The cost for all natural gas fuel consumed by the Facility's
combustion turbine and duct burners will be borne by JCP&L
which shall also be responsible for the supply of, and which
shall supply, such fuel to the Facility subject to the terms
and conditions hereinafter provided.
A.9 Heat Rate Adjustment
The Average Heat Rate, as defined below, will be used to
calculate the Heat Rate Adjustment. This adjustment will be
reflected as either an increase or decrease in the payments
to be made by JCP&L to Seller hereunder for energy and
capacity, depending upon whether the Average Heat Rate is
below or above 9750 BTU/kWh HHV (High Heating Value). Any
such adjustment shall be applied to JCP&L's payments to
Seller beginning the second calendar month following each
anniversary of the Effective Date (as defined below).
At the conclusion of each Contract Year (as defined in
Section B.2.5 of Appendix B hereto), JCP&L will calculate
the Facility's Average Heat Rate ("AHR") for the previous12
months using the following formula:
AHR = Total Fuel Input
AG
where:
Total Fuel Input represents the fuel supplied and paid for by
JCP&L. This includes fuel used during startup and shutdown.
AG, or the Annual Generation, is the annual total of kWhs
produced by the Facility, exported to, registered at the billing
meter and purchased by JCP&L.
The Heat Rate Adjustment ("HRA") will be calculated at the end of
each contract year as follows:
HRA= 9750 BTU/kWh - AHR x AAFC x AG
1,000,000
where:
AAFC, or the Average Annual Fuel Cost, is the average cost for
fuel supplied by JCP&L to the Facility in
5
<PAGE>
$/MMBTU for the period corresponding to the Average Heat Rate
calculation.
For example, by way of illustration only, if:
AHR = 9550 Btu/kWh
AAFC = $2. 60/MMBtu
AG = 350,000,000 kWh [7000 hours at 50MW]
HRA = (9750-9530) BTU/ kWh x $2.60/MMBtu 1
1000,000
x 350,000,000 kWh = $182,000
JCP&L will provide Seller with an average Heat Rate
Adjustment statement not later than 15 days after each
anniversary of the Effective Date. The Heat Rate
Adjustment payment, if any, will be made by Seller or by
JCP&L (as either an increase in or offset t~ payments
otherwise made by JCP&L to Seller hereunder) in six equal
monthly installments (without interest) commencing the
second calendar month following each anniversary of the
Effective Date; provided, however, that any remaining Heat
Rate Adjustment payment for the last full Contract Year
during the term hereof and for the partial Contract Year
commencing on the last anniversary of the Effective Date
during the term hereof and ending on November 10, 2015 shall
be invoiced by JCP&L on or before December 1, 2015, and the
net amount thereof shall be paid, in cash, by Seller or
JCP&L, as the case may be, within 30 days of submission of
such invoice.
A.l0 Fuel Procurement
(a) JCP&L will be responsible for the supply of, and shall
supply, the natural gas required for use by the
Facility (including, without limitation, the auxiliary
boilers and, notwithstanding anything in Section
5.10(g) of the Agreement to the contrary, all fuel used
in connection with capacity tests and demonstrations of
Contract Capacity performed pursuant to Section
5.10(g)) and will bear all the costs thereof other than
the costs to supply such fuel as may be necessary to
generate steam from the Facility's auxiliary boiler.
Seller shall maintain on the Facility site kerosene
inventories for fuel when gas supply to the Facility is
interrupted. JCP&L shall reimburse Seller for the cost
of kerosene used during periods of gas interruptions at
the replacement price thereof (except for kerosene
used to generate steam from the Facility's
6
<PAGE>
auxiliary boiler) at the then prevailing market rate
therefor in the area in which the Facility is located.
However, if the conditions in the Facility's air permit
or other permits or regulatory requirements would limit
or prohibit the further use of kerosene, and if JCP&L
is unable to obtain appropriate waivers from the
applicable permitting or regulatory authorities to
permit the additional kerosene use, Seller may procure
gas from third parties for use by the Facility for SQ
long as JCP&L is unable to provide the necessary gas
for the Facility. JCP&L shall allow Seller to use
transportation capacity which JCP&L may have available
(taking into account JCP&L's system-wide needs) for
such third party gas and shall reimburse Seller for
such gas (except for gas used to generate steam from
the Facility's auxiliary boiler) and all related
transportation costs (except any transportation made
available without charge by JCP&L) at a rate equal to
the lesser of (i) Seller's actual costs for such gas
and transportation or (ii) the maximum reimbursement to
which Seller would be entitled pursuant to the last
sentence of Section B.2.l of Appendix B hereto.
(b) Fuel procurement and supply shall be on the terms and
conditions set forth in Appendix B hereto.
7. Effective Date; Regulatory Approval. This Third
Amendment shall become effective and binding upon the Parties
hereto ("Effective Date") upon the last to occur of (a) the date
on which the New Jersey Board of Public Utilities ("BPU") issues
a final order (which order shall be acceptable in form and
substance to JCP&L in its sole discretion) approving this Third
Amendment and the full recovery by JCP&L from its customers of
all amounts payable under the Agreement, as so amended, through
JCP&L's levelized energy adjustment clause or similar rate
recovery mechanism, (b) 10 days following the entry of a final
order ("Approval Order") by the United States Bankruptcy Court
for the District of New Jersey approving the NRG Plan, (c) the
existing Gas Service Agreement dated May 13, 1993 between Seller
and Public Service Electric & Gas
7
<PAGE>
Company ("PSE&G") shall have been terminated or assigned to JCP&L
without any liability to Seller or the Facility, (d) JCP&L shall
have executed a gas supply agreement for the Facility with PSE&G
or, if the existing Gas Supply Agreement described in clause (c)
shall have been assigned to JCP&L, such agreement shall have been
amended or modified to JCP&L's satisfaction, in its sole
discretion, and in either case such agreement shall have received
all necessary regulatory approvals and shall otherwise have
become effective in accordance with its terms, and (e) that
certain Amended and Restated Agreement For Purchase and Sale of
Electric Power dated as of December 1995 by and between O'Brien
(Parlin) Cogeneration, Inc. and JCP&L shall have become effective
in accordance with its terms.
If the Effective Date does not occur by the earlier of (a)
75 days after the date of entry of the Approval Order or (b) June
15, 1996, this Third Amendment shall, unless otherwise mutually
agreed by the Parties, automatically terminate and be of no force
or effect and the Parties shall thereupon have no further rights,
liabilities or obligations hereunder.
8. Captions; Miscellaneous. All indexes, titles, subject
headings, section titles and similar items are for convenience of
reference and are not intended to affect the meaning or contents
hereof.
9. Governing Law. This Third Amendment shall be governed
by and construed in accordance with the laws of the State of New
Jersey applicable to contracts made and to be performed in that
State.
8
<PAGE>
10. Entire Agreement. The Agreement, as further amended by
this Third Amendment, supersedes any and all prior understanding
and agreements made between the Parties regarding the subject
matter hereof, and constitutes the entire agreement and
understanding of the Parties relating thereto.
11. Counterparts. This Third Amendment may be executed in
any number of counterparts, each of which shall be an original
but all of which, when taken together, shall constitute one and
the same agreement.
IN WITNESS WHEREOF, the Parties have caused this Third
Amendment to be signed by their respective officers thereunto
duly authorized as of the date and year first above written.
Attest: O'BRIEN (NEWARK) COGENERATION,
INC.
By: /s/ Leonard Bluhm
Title: Title:
Attest: JERSEY CENTRAL POWER & LIGHT
COMPANY
By: /s/ M.P. Morrell
Assistant Secretary Title: Vice President
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Newark Boxboard
Appendix B
Facility Fuel Management Services
B. 1 GPU Natural Gas Private Pooling Point ("PPP")
B.1.1 GPU Service Corporation ("GPUSC") is authorized to
act on behalf of and as agent for JCP&L in all matters pertaining
to the procurement and delivery of natural gas for consumption by
those participating gas-fired generating facilities owned by
JCP&L or certain facilities owned by an Independent Power
Producer with a Power Purchase Agreement with JCP&L, including
the Facility. JCP&L and GPUSC shall hereafter collectively be
referred to as the "Company".
B.1.2 GPUSC has established a Natural Gas Private Pooling
Point ("PPP"), which is a portfolio of natural gas supply and
transportation
assets, that is managed collectively by New Jersey Natural Energy
Corporation
("NJNE") and GPUSC pursuant to a Master Fuel Management Agreement. NJNE is
a
wholly owned subsidiary of New Jersey Resources Corporation.
B.1.3 Facilities served by the PPP, including the Facility,
will be provided a comprehensive natural gas management service
such that neither the Facility's owners nor operator shall be
responsible nor held liable for procuring, transporting,
scheduling, nominating or delivering natural gas to the
Facility's burner tip. In the case of the Facility, this shall
include serving the full requirements of the Facility (including
the Facility's auxiliary boilers) provided that Seller both
complies with the explicit notification requirements set forth
herein and elects to accept delivery of such natural gas at the
price specified in Section B.2.4 below.
B.1.4 GPUSC has designated a full time employee assigned to
the PPP, and officed at GPUSC's dispatch center, to coordinate
all natural gas procurement and scheduling for PPP facilities
including the Facility. Such employee shall hereafter be referred
to as the "Fuel Manager". The Fuel Manager or his designee shall
be available twenty-four hours per day, seven days per week.
B.2 Operations
B.2.1 The PPP shall provide natural gas to the Facility's
Burner Tip to operate the Facility unless the Seller notifies the
GPUSC dispatcher that the Facility is not available as a
consequence of a planned or forced outage. In the event of a
forced outage, the Seller shall immediately notify the Company
dispatcher of the outage condition and its anticipated duration.
The Seller shall notify JCP&L of a major Planned Outage, i.e.,
scheduled outages expected to last longer than seven (7)
consecutive days, at least two (2) months prior to the planned
start of said outage. Further, the Seller shall notify JCP&L of
its intent to resume
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operation of the Facility at least one (1) week prior to the
completion of a major Planned Outage. Seller shall use reasonable
best efforts to notify the Company of Maintenance Outages and
short duration Planned Outages, i.e., unscheduled Planned Outages
or Planned Outages expected to take less than seven (7) days,
within one day of the decision to conduct such an outage. If the
PPP fails to properly procure and cause to be delivered an
adequate supply of natural gas to operate the Facility during
periods when PSE&G has not interrupted Or recalled the interstate
or intrastate transportation that it supplies to the PPP pursuant
to its agreement with the Company to support, among other things,
the operation of the Facility, then the Seller shall,
nonetheless, ensure that an adequate supply of kerosene is
available at all times and agree to operate the Facility on
kerosene provided that the Company shall pay for said kerosene
pursuant to Section A. 10 of Appendix A to the Agreement and that
operation of the Facility on kerosene does not cause the Facility
to violate its air permits. Alternatively, the Seller may
procure and cause to be delivered a supply of natural gas to the
facility from third party supplier to operate the Facility during
such periods. The Company shall reimburse the Seller for the all-
in cost of such natural gas up to the sum of the mid-point of the
range of the most recent price to Mid-Atlantic Citygates,
Transco, Zone 6, or Texas Eastern, Zone M-3, whichever is
greater, as published in the following day's Gas Daily, Eastern
Edition, and PSE&G's reasonable charge to transport said natural
gas to the Facility.
B.2.2 In accordance with Section A. 10 of Appendix A to the
Agreement, the PPP shall be responsible for tendering natural gas
to the Facility's auxiliary boilers to produce steam for Newark
Boxboard during periods when the Facility is not operating,
either because 3CP&L has elected to exercise its rights to
curtail. operation or because of a full or partial outage. The
Seller shall notify the Fuel Manager of its intention to operate
the auxiliary boilers and the amount of natural gas required
prior to 0900 hours of the preceding day or, If notice by such
time is not feasible (e.g., because notice of curtailment was not
given by JCP&L by that time or because of the sudden occurrence
of a full or partial forced outage), as much notice as is
feasible under the circumstances. The Fuel Manager shall fax
confirmation of the Seller's request by 1200 hours on that day
(or, if response by that time is not feasible because shorter
notice was given by Seller as permitted under the previous
sentence, as soon as is feasible). Seller shall pay for such
additional gas at the rate provided in Section B.2.4 below.
B.2.3 Once nominated, the Seller is obligated to consume
within plus or minus five percent (5%) of any additional gas
requested pursuant to Section B.2.2 hereof in the aggregate
during each calendar month, unless other arrangements can be made
at the time between the Seller and the Fuel Manager. In the event
the Facility, for whatever reason, is unable or fails to consume
the additional gas that it had previously requested, the Company
shall use reasonable efforts to redirect, place into storage, or
remarket such excess gas so as to mitigate the cost of disposing
of said excess gas. Should the Facility consume an amount of
natural gas greater than one hundred and five percent (105%) of
the aggregate amount requested during any calendar month, then
the Company shall use reasonable efforts to remedy any resulting
imbalances including, when practicable, withdrawal of natural gas
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reserves from storage, if an adequate supply of such natural gas
exists and can be accessed. However, the incremental cost of such
gas along with any and all penalties or claims that may
nonetheless be applied by a third party, including but not
limited to an interstate pipeline company or PSE&G, as a result
of an imbalance, shall be paid by the Seller.
B.2.4 The Fuel Manager shall provide the Company and the
Seller with a monthly weighted average cost of gas ("WACOG") to
the PSE&G city gate that shall be combined with the cost of
variable intrastate transportation charged to the PPP by PSE&G to
deliver gas to the Facility's burner tip. The combined WACOG and
intrastate transportation charges will be used in the calculation
of Seller3s reimbursement to JCP&L for steam sales to Newark
Boxboard when the auxiliary boiler is used. The WACOG shall be
the PPP's overall WACOG at PSE&G's city gate and shall be
reported to the Company and the Seller no later than three (3)
business days after the end of the month. Upon receipt of the
Seller's written request, the Fuel Manager shall provide
documentation supporting the calculation of the WACOG and shall
provide access, as required, to relevant supporting detail
including invoices and LDC metering summaries.
B.2.5 Unless otherwise advised by the Seller, the Fuel
Manager shall utilize the Average Heat Rate of the preceding
"Contract Year' (which shall mean each twelve month period during
the term of the Agreement commencing on the Effective Date and
each anniversary of the Effective Date), or 9750 BTU/kWh (HHV),
to determining the natural gas requirements of the Facility.
Seller shall use reasonable efforts to maintain an accurate
estimate of the Facility's Heat Rate and shall report any
significant variations (i.e., +/- 5%) from the Average Heat Rate
then in effect, either due to the materiel condition of the
Facility or temperature conditions. Seller shall not be
responsible for any cost or charges, including storage or
remarketing costs or imbalance charges, resulting from any
difference between such estimates and the Facility's actual usage
provided that (i) Seller operates the Facility as contemplated
and (ii) Seller has properly notified the Fuel Manager of any
significant variations in the Heat Rate used by the Fuel Manager
in calculating the natural gas requirements of the Facility.
B.2.6 From time to time, the Company may direct the Seller
to operate the Facility on kerosene instead of natural gas during
periods when natural gas is either unavailable or prohibitively
expensive. The Company shall reimburse Seller for the cost of
kerosene as provided in Section A. 10 of Appendix A to the
Agreement. The Company shall provide at least a comparable level
of natural gas service to the Facility for the purpose of
operating the Facility to that provided by PSE&G to its QF
customers under its prevailing CIG Tariff.
B.3 Metering of Natural Gas Flows to the Facility
B.3.1 Both Seller and JCP&L shall maintain meters for
measuring the quantity of fuel used by the Facility. The meters
shall be capable of recording total MCFs and associated
calculated BTUs delivered to the Facility on a continuous, real
time basis and shall be calibrated at regular intervals based on
manufacturer's recommendations. The parties will
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use these meter readings to cheek the readings obtained by PSE&G.
In the event of a discrepancy between meters, the readings
obtained by PSE&G shall prevail until such time as all of the
meters can be recalibrated. If such recalibration demonstrates
that the PSE&G meter data was in error, an appropriate adjustment
shall be made for the period in question. It is contemplated by
the Parties at the time of this Agreement that ~CP&L shall be
afforded ~ to PSE&G's billing meter and shall further be
permitted to connect its remote telemetering unit ("RTU") to such
billing meter for the purpose of electronically transmitting real
time fuel consumption data to the GPUSC's dispatch center. In the
event that, for whatever reason, access to PSE&G's billing meter
is denied or deemed to be impracticable, then the 3CP&L shall
have the right to cause to be installed at its own expense a
meter capable of recording and electronically transmitting
required real time fuel consumption data at the Facility.
B.3.2 The Fuel Manager will monitor the consumption of
natural gas at the Facility to ensure that an adequate supply of
natural gas is available to operate Facility. In the event that
the Fuel Manager determines that, during periods when PSE&G has
not interrupted or recalled the interstate or intrastate
transportation that it supplies to the PPP pursuant to its
agreement with the Company to support, among other things, the
operation of the Facility, an insufficient quantity of natural
gas remains to continue to operate the Facility at its current
level of output, provided that the insufficiency is not the
result of a material change in the Facility's performance or
output, the PPP may request the Company to exercise, and the
Company may exercise, the Company's right to curtail Facility
output under the Agreement in order to conserve the remaining
supply of natural gas until additional quantities of natural gas
can arranged. If the shortfall is substantial i.e., greater than
5% variation from anticipated consumption at the point in time
that the comparison is made and cannot be readily explained), the
Company and/or the Seller may request that any or all gas
measuring meters be recalibrated. If it is determined that the
additional fuel consumption is the result of a material change in
the Facility's performance or output, the Fuel Manager shall
notify the Seller in writing immediately, who shall, in turn,
confirm receipt of such notification and explain the cause or
causes of the change in performance and what steps will be taken
to remedy the situation. The extent of the change in performance
may necessitate that the Facility be declared to be in a full or
partial forced outage until the condition is remedied. In such
circumstances where the additional fuel consumption is the result
of a material change in the Facility's performance or output, the
Seller shall be responsible for paying the reasonable incremental
cost of either operating the Facility on kerosene, or on a
supplemental supply of "no notice" natural gas that the Fuel
Manager may arrange until such time as the Fuel Manager, using
reasonable efforts, is able to nominate additional quantities of
natural gas. In any event, the provisions set forth in Section
A.9 of Appendix A to the Agreement shall apply.
B.3.3 The Company shall seek to cause PSE&G to deliver
natural gas of interstate pipeline quality to the Facility at its
system operating pressure.
B.4 Title
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B.4.l Title to the natural gas supply used to fuel the
Facility shall remain with
GPUSC.
B.4.2 Title to the natural gas requested by the Seller to
fuel the auxiliary boiler shall transfer to the Seller at the
PSE&G billing meter. Such tide transfer shall create an
obligation on the part of the Seller to reimburse the Company the
full cost of the natural gas as provided herein.
B.4.3 At all times, tide to any interstate transportation
which may be used from time to time to transport natural gas to
the PSE&G city gate for the purpose of operating the Facility
including the auxiliary boiler shall remain with GPUSC.
B.4.4 The Company warrants that it will have good and
marketable tide to all natural gas supplied to Seller and full
authority to deliver such natural gas to Seller free and clear of
any liens, claims or encumbrances of any third party.
B.5 Liability
B.5.1 The Seller shall have no responsibility to procure
natural gas for the Facility, nor shall it be liable for any
claims or penalties resulting from the supply and or
transportation of natural gas to the Facility when operation of
the Facility is within the prescribed terms of the Agreement.
Such operation shall include operating the Facility and operating
the auxiliary boiler either during periods when the Facility is
in an outage condition or, during periods when the Company elects
to exercise its rights pursuant to Section 7.6(g) of the
Agreement.
B.5.2 The Seller shall be liable for the unmitigated cost
of disposing of additional gas supplies previously requested by
the Seller referenced in Section B.2.3 of this Appendix but not
consumed at the Facility pursuant to the terms and limitations
set forth in that Section.
B.5.3 The Seller shall be liable for the entire cost of any
natural gas consumed by the auxiliary boiler. Further, in
addition to the full cost of the natural gas consumed, the Seller
shall be entirely liable for any penalties or claims that might
result as a consequence of its failure to properly notify the
Fuel Manager of its intention to operate the auxiliary boiler.
B.5.4 The Company shall not be held liable for any fines
imposed by the New Jersey Department of Environmental Protection
on the Seller resulting from the Facility exceeding the
authorized level of operations on kerosene. It is the Seller's
responsibility to ensure compliance with all of its permits.
However, Seller shall not be obligated to operate the Facility if
the PPP has not provided adequate natural gas for such production
during periods when PSB&G has not interrupted or recalled the
interstate or intrastate transportation that it supplies to the
PPP, pursuant to its agreement with the Company, to support,
among other things, the operation of the Facility, if such
production would cause the Facility to exceed
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authorized levels of operation on kerosene. Such failure to
operate the Facility shall not be considered a forced outage
under the Agreement.
B.5.5 Pursuant to Section B.2.6 of this Appendix, the PPP
shall provide a level of service comparable to PSE&G's CIG Tariff
which contemplates some number of days of interruption during
periods when the ambient air temperature falls below some
predetermined contract level. During such periods of natural gas
interruption, the Seller may operate the Facility on kerosene,
provided that such operation does not exceed the authorized
levels of operation on kerosene under the Facility's permit. The
Company shall reimburse the Seller the cost of said kerosene
pursuant to Section A.10 of Appendix A to the Agreement.
However, if the Seller is unable to operate the Facility due to
the unavailability of kerosene or, because the Facility has
exceeded the authorized number of hours of operation under the
air permit, the Company shall not be liable to the Seller for any
lost revenue that would otherwise be paid pursuant to Article 8
and Appendix A to the Agreement and the Facility shall be
considered to be in a forced outage and all provisions related
thereto shall apply.
B.6 Conflicts
B.6.1 Nothing contained in this Appendix shall supersede or
nullify any portion or provision of the Agreement. In the event
of conflict between this Appendix and the Agreement, the terms
and conditions set forth in the Agreement shall always prevail.
B.7 Billing and Payments
B.7.1 The Parties shall establish and maintain guidelines
which shall govern the billing and subsequent payment for natural
gas volumes supplied by the Company and delivered to the Seller
at the PSE&G billing meter. Such guidelines shall be established
and amended, as required, through letter agreement.
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Exhibit 10.15.2
AMENDMENT TO STEAM PURCHASE AGREEMENT
BETWEEN
O'BRIEN CONGENERATION IV, INC.
AND
NEWARK BOXBOARD CO.
WHEREAS, O'Brien Cogeneration IV, Inc., a Delaware
corporation, and Newark Boxboard Co., a New Jersey corporation,
signed a Steam Purchase Agreement dated October 3, 1986 under
which O'Brien intends to supply steam to the paperboard plant
located in Newark, new Jersey; and
WHEREAS, the parties desire to ratify said Agreement and
make certain modifications thereto;
NOW THEREFORE, in consideration of the mutual covenants
container herein, the sufficiency of which is acknowledged by
both parties, the parties do hereby agree as follows:
1) Modification to Section 5.1 (Effective Date and Term):
The first sentence in Section 5.1 (A) is modified to read as
follows: "Except as otherwise provided in Article 15 or 16,
the term of this Agreement shall begin upon the execution of
this Agreement, and shall terminate on June 30, 1988 unless
the conditions precedent as specified in Section 5.4 are
then satisfied in Section 5.4 are then satisfied or
compliance therewith waived."
2) Modification to Section 5.4:
The first sentence of Section 5.4 is replaced in its
entirety as follows: "The Parties' respective obligations
under this Agreement are conditioned upon, and subject to
the satisfaction of each of the following conditions
precedent or on prior to June 30, 1988: (i) Seller's
executing an amendment to its Electricity Contract with
JCP&L, reasonably satisfactory to Seller, covering an
extension of the Facility completion deadline: (ii) Seller's
obtaining all remaining necessary permits, authorizations
and certifications, including,, but not limited to the
following permits: (a) soil erosion, (b) FAA permit, (c)
preliminary and final site plan approval, (d) approval of
the Facility's sewer connection (e) building permit and any
required DOT permits; (iii) Seller obtaining FERC approval
of the Wheeling Contract signed with PSE&G; (iv) Seller's
obtaining financing that Seller, in its reasonable
discretion, deems acceptable; (v) Seller's entering into a
turnkey contract, to design, construct, startup and test the
Cogeneration Facility; and (vi) Seller obtaining a long-term
fuel supply either, at its option, (a) through contracting
for gas under the CIG tariff or (b) obtaining a long-term
fuel contract of at least fifteen (15) years in duration
plus necessary transportation commitments where the price of
fuel escalates on essentially the same terms and conditions
as the variable component of Seller's electricity sales to
JCP&L."
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3. Modification to Section 9.1:
"Buyer agrees to lease to Seller, for a term expiring 120
days after the termination of this Agreement, the Site, as
described in Appendix E attached hereto, upon the timely
satisfaction of all of the conditions precedent specified in
Section 5.4, at an annual lease rate of $1.00 per year. The
lease shall be on terms mutually acceptable to Buyer and
Seller. The Site shall consist of approximately 1.02 acres,
as more fully described in Appendix E attached hereto. In
addition, Buyer shall provide all necessary easements, with
respect to property owned by Buyer, for as long as Seller
operates the Facility, to permit the installatin9 of the
Steam Interconnection Facilities; and to permit Seller to
install and maintain such electrical and steam transmission
facilities as shall be necessary to deliver steam or
electricity or both from the Cogeneration Facility to any
person other than the Buyer so long as the same do not
interfere with the operation of the Plant."
4, Elimination of Section 9.2
This Section is eliminated in its entirety.
5. Modification to Appendix E:
The original Appendix E is eliminated and replaced with
modified Appendix E (attached: E-SP81-Y-102 dated January
18, 1988 entitled "Proposed Site Location for Newark
Boxboard").
6. Complete Agreement:
This Amendment along with the Steam Purchase Agreement
constitutes the complete Agreement between the parties and
may only be further modified by a written amendment signed
by both parties.
AGREED AND ACCEPTED:
NEWARK BOXBOARD CO. O'BRIEN COGENERATION IV, INC.
By: /s/ William D. Harper By: /s/ Sanders Newman
Title: Vice President Title: Secretary
Dated: March 8, 1988 Dated: March 15, 1988
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GUARANTY OF O'BRIEN ENERGY SYSTEMS, INC.
Guarantor agrees to and acknowledges the terms and
provisions of the attached Amendment and confirms that its
Guaranty shall continue in full force and effect and that all of
its obligations thereunder shall be valid and enforceable and
shall not be impaired or affected by the execution of said
Amendment.
O'BRIEN ENERGY SYSTEMS, INC.
By: /s/ Sanders Newman
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Exhibit 10.15.3
AMENDMENT TO STEAM PURCHASE AGREEMENT
between
O'BRIEN (NEWARK) COGENERATION, INC.
and
NEWARK GROUP INDUSTRIES, INC.
Amendment dated July 18, 1988 to Steam Purchase Agreement
between O'Brien (Newark) Cogeneration, Inc. (formerly know as
O'Brien Energy Systems IV, Inc.) ("Seller") and Newark Group
Industries, Inc. (as assignee of Newark Boxboard Co.) (the
"Buyer").
WHEREAS, Seller and Buyer are parties to a Steam Purchase
Agreement dated as of October 3, 1986, as amended on March 8,
1988 (as so amended, "the Agreement"); and
WHEREAS, Seller and Buyer desire to ratify said Agreement
and to make certain modifications thereto.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged by both
parties, the parties hereto hereby agree as follows:
1. Section 5.1B(1) of the Agreement is hereby amended by
adding the following sentence at the end thereof:
"In the event of a sale of the Plant to the
Seller pursuant to this Section, Buyer shall be
released from any and all liabilities and obligations
hereunder arising on or after the sale date."
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2. Section 5.1B(3) is hereby amended by adding the
following at the end of the first paragraph thereof:
"If the Seller does purchase the Plant
pursuant to this paragraph, then the Buyer shall be
released from any and all liabilities and obligations
hereunder arising on and after the sale date."
3. The first sentence of Section 5.4 of the Agreement is
hereby amended by changing the date referred to therein to August
30, 1988 rather than June 30, 1988.
4. Section 11.2 of the Agreement is hereby amended by
adding the following sentence at the end thereof:
"Nothing in this Section 11.2 is intended or
shall be construed as amending, diminishing or
otherwise affecting Buyer's obligation to purchase
steam under Article 3 of, and Appendix A to, this
Agreement."
5. Article 17 of the Agreement is hereby amended to
provide as follows:
"Buyer agrees to provide to Seller and to one
or more financial institutions providing Seller with
financing annual income statements with regard to the
operation by Buyer by its Plant if, and only if, all of
such financial institutions covenant and agree to keep
confidential all information provided to them pursuant
to t his provision. Seller covenants and agrees to
keep any and all such information confidential and not
to release it to any third party without the prior
written consent of the Buyer."
6. Article 24 of the Agreement is hereby amended to
provide as follows:
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Article 24
Governing Law
This Agreement will be governed by and interpreted
in accordance with the laws of the State of New
Jersey."
7. The first two sentences in Appendix A to the Agreement
are hereby amended to provide as follows:
"Required Maximum Output of Steam:
75,000 pounds per hour, except during
scheduled maintenance outages at the
Facility, during which times the required
maximum output of Steam shall be that capable
of being produced by the back-up facility.
"Minimum Required Purchase of Steam Per Annum:
250,000,000 pounds."
8. Notwithstanding any provision to the contrary in the
Agreement, in the event of a sale of the Plant by the Buyer to
the Seller, then the Plant shall be conveyed from the Buyer to
the Seller subject to such mortgages, liens or encumbrances as
may have been placed by the Buyer on the Plant as permitted by
the Ground Lease between the Buyer and the Seller. In the event
of a sale of the Cogeneration Facility to the Buyer pursuant to
the terms of the Agreement, then the Cogeneration Facility shall
be conveyed to the Buyer subject to the liens, encumbrances and
mortgage, if then outstanding, granted by O'Brien to National
Westminister Bank PLC on the Cogeneration Facility and all
mortgages consented to in writing by the Buyer or permitted by
the Ground Lease.
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9. Except as amended hereby, the Steam Purchase Agreement
remains in full force and effect. O'Brien hereby acknowledged
its liability for any and all obligations of the Seller under the
Agreement, as hereby amended. The Company hereby acknowledges
its liability for any and all obligations of the Buyer under the
Agreement, as hereby amended.
10. Capitalized terms defined in the Agreement and not
otherwise defined herein shall have the same meanings herein as
in the Agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Amendment this 8 day of July, 1988.
O'BRIEN (NEWARK) COGENERATION, INC.
By: /s/ Sanders D. Newman
Sanders D. Newman, Secretary
NEWARK GROUP INDUSTRIES, INC.
By: /s/ Connie B. Smith
Connie B. Smith, V.P.
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Exhibit 10.17.3
AMENDED AND RESTATED
AGREEMENT FOR PURCHASE AND SALE OF ELECTRIC POWER
BETWEEN
O'BRIEN (PARLIN) COGENERATION, INC.
AND
JERSEY CENTRAL POWER & LIGHT COMPANY
AMENDED AND RESTATED AGREEMENT entered into this 30 day of
April 1996 by and between O'BRIEN (PARLIN) COGENERATION, INC., a
Delaware corporation (the "Seller"), and JERSEY CENTRAL POWER &
LIGHT COMPANY, a New Jersey corporation ("JCP&L") (collectively
referred to as "Parties").
ARTICLE 1
RECITALS
WHEREAS, JCP&L and Seller have entered into a certain
Agreement for the Purchase and Sale of Electric Power, dated
October 20, 1986, covering the purchase and sale of electrical
output from the cogeneration facility constructed by Seller at
the DuPont facility in Parlin, New Jersey which facility is a
"qualifying cogeneration facility" as defined in the Public
Utility Regulatory Policies Act of 1978 and the applicable
regulations of the Federal Energy Regulatory Commission
thereunder;
WHEREAS, JCP&L and Seller have entered into a First
Amendment dated as of April 9, 1991 to that Agreement amending
the Agreement in certain respects (the Agreement as so amended
being referred to herein as the "Power Purchase Agreement");
WHEREAS, the New Jersey Board of Public Utilities or its
predecessors has entered appropriate orders approving the Power
Purchase Agreement and the recovery by JCP&L of all payments to
Seller thereunder from JCP&L's customers through JCP&L's.
levelized energy adjustment clause;
WHEREAS, NRG Energy Inc. ("NRG") is seeking approval of its
proposed Plan of Reorganization (the "NRG Plan") of O'Brien
Environmental Energy, Inc. ("O'Brien") which provides for the
acquisition by NRG of 49% of the outstanding stock of O'Brien;
WHEREAS, Seller is a wholly owned subsidiary of O'Brien; and
WHEREAS, the Parties now desire, subject to satisfaction of
the conditions set forth below, further to amend
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and to restate the Power Purchase Agreement in order to provide,
among other things, that the Facility shall be operated subject
to the partial dispatching control of JCP&L and that JCP&L shall
assume responsibility for the Facility's fuel supply and intend
that this Amended and Restated Agreement become effective and
govern the purchase and sale of electrical output from the
aforesaid cogeneration facility from and after the Effective Date
(as hereinafter defined).
NOW THEREFORE, in consideration of the mutual covenants
contained herein and other valuable consideration, receipt of
which is hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE 2
CONVERSION OF FACILITY TO EWG STATUS
Promptly following entry of the Approval Order (as
hereinafter defined), Seller will file with the FERC an
appropriate application for determination that Seller is an
"exempt wholesale generator" ("EWG") under Section 32(a) (1) of
the Public Utility Holding Company Act of 1935, as amended, and
the regulations of the FERC thereunder. JCP&L will cooperate
with Seller in connection with Seller's application to become an
EWG and will, in order to enable Seller to become an EWG, agree,
subject to receipt of requisite regulatory approvals (which JCP&L
will use reasonable efforts to pursue and obtain), to purchase
from Seller and sell to DuPont such electrical energy as DuPont
may require under its agreement with Seller, in addition to
JCP&L's purchase of the Base Capacity and Dispatchable Capacity
as provided herein, provided that the terms of such purchase from
Seller and sale to DuPont do not result in any net increase in
cost to JCP&L (e.g., the purchase price of such energy from
Seller shall equal the sale price of such energy to DuPont) and
provided, further, that Seller promptly reimburse JCP&L for any
and all reasonable expenses incurred by JCP&L in carrying out its
obligations as set forth in this sentence, including, without
limitation, the expenses incurred in obtaining requisite
regulatory approval of the sale of electrical energy to DuPont.
Seller and JCP&L shall enter into such amendments and
modifications to this Amended and Restated Agreement as may be
reasonably necessary, and not detrimental to JCP&L, to implement
such change. If requested by Seller, JCP&L shall, at no cost to
JCP&L, use reasonable efforts to support Seller's filing with the
FERC for approval of the rates provided for in this Amended and
Restated Agreement. In the event the FERC grants Seller's EWG
application, Seller shall have no further obligation under the
Agreement to maintain the Facility as a Qualifying Facility for
so long as Seller maintains EWG status. JCP&L agrees that, until
either the Effective Date has occurred or it has been definitely
established that the Effective Date will not occur (e.g., the
time period for the occurrence of the Effective Date
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under Section 4.1(b) shall have expired), JCP&L will not pursue
any rights or remedies that it may have against Seller, O'Brien
or its or their predecessors in interest with respect to any past
failure or inability of Seller or the Facility to satisfy
applicable FERC requirements for Qualifying Facilities and
further agrees that, if the Effective Date does occur, on and
after the Effective Date, it shall have no further rights or
remedies against Seller, O'Brien or its or their predecessors in
interest with respect to any past failure or inability of Seller
or the Facility to satisfy applicable FERC requirements for
Qualifying Facilities, all of which shall be deemed to be waived
by JCP&L. Subject to the next sentence, Seller shall, however,
maintain the Facility as a Qualifying Facility in the event that
the FERC denies Seller's EWG application or revokes Seller's EWG
status. If the Effective Date does occur as provided herein and
the FERC denies Seller's EWG application or revokes Seller's EWG
status, JCP&L will allow Seller a reasonable period of time, not
to exceed 180 days, to make such modifications to the Facility
and/or to enter into or modify such contracts as may be necessary
to meet the applicable FERC requirements for Qualifying
Facilities, and, if Seller does so, JCP&L shall have no further
rights or remedies against Seller with respect to any past
failure or inability (including any failure or inability during
such cure period) of Seller or the Facility to satisfy such
requirements.
ARTICLE 3
DEFINITIONS
The following terms when used herein and in any
appendices hereto shall have the following meanings, unless a
different meaning shall be expressly stated or shall be apparent
from the context:
3.1 "Affiliate" means a corporation or other entity that
directly, or indirectly, through one or more
intermediaries, controls or is controlled by, or is under
common control with, another corporation or other entity.
3.2 "Agreement" means this Amended and Restated Agreement
including all appendices attached hereto and all
amendments thereto that may be made from time to time.
3.3 "Anniversary Date" means the date in every year that the
Effective Date recurs.
3.4 "Base Capacity" means that portion of the Facility which
shall be operated as base load or must run. The Base Capacity
shall be 41 MW, rated and demonstrated at 92
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Degrees F. The output of the Base Capacity will not vary
with changes in ambient temperature.
3.5 "Billing Period" means the approximate 30 day period
between monthly meter readings.
3.6 "BPU" means the New Jersey Board of Public Utilities or
successor agency thereto.
3.7 "BPU Order" means the order issued by the BPU approving
the Amended and Restated Agreement in the form executed
by the Parties and permitting JCP&L fully to recover all
payments made to Seller thereunder or otherwise in
respect thereof from JCP&L's customers through JCP&L's
levelized energy adjustment clause or similar rate
recovery mechanism, which Order shall in form and
substance be satisfactory to JCP&L.
3.8 "Capacity Test" means a test pursuant to applicable PJM
guidelines during the Initial Test Period or subsequent
test periods, conducted to measure the output of the
Facility at ambient conditions in order to determine the
Facility Capacity at 92 Degrees F.
3.9 "Cogeneration Facility" means the waste heat boiler, gas
and steam turbines, reciprocating engine, fuel cell,
generators and all appurtenant structures, equipment,
including Seller's interconnection facilities, and real
property interests owned or leased and operated by Seller
at Parlin, New Jersey, for the purposes of sequentially
generating electricity and steam and other forms of
useful thermal output.
3.10 "Commercial Operation" means the sale of Electricity by
Seller to JCP&L from Seller's Facility.
3.11 "Contract Availability" is the measure of Facility
Availability as calculated pursuant to the formula set
forth in Article 8.3. Contract Availability shall be
measured on an annual basis.
3.12 "Contract Capacity" shall be 114 MW, rated and
demonstrated at 92 Degrees F.
3.13 "Contract Year" shall mean each twelve month period
during the term hereof commencing on the Effective Date
and each anniversary of the Effective Date; provided that
the last Contract Year shall end on June 17, 2011 even if
less than a twelve month period.
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3.14.1 "Dispatchable Capacity" shall mean that portion of the
Facility which shall operate and export electricity to
JCP&L only when called for by JCP&L. The Dispatchable
Capacity shall be 73 MW at 92 Degrees F., as adjusted for
ambient temperature.
3.14.2 "Dispatch Capacity (Second Combined Cycle)" shall mean
the temperature adjusted output of the second combined
cycle train above the Base Capacity, shown in the Base
Combined Cycle Temperature vs. Capacity curve contained
in Appendix C, to be mutually agreed upon and attached to
this Amended and Restated Agreement after the completion
of testing to be conducted by Seller within 90 days after
the Effective Date pursuant to test procedures and
protocols mutually agreed upon by Seller and JCP&L. Only
the Combined Cycle portion of the Facility, without using
the duct burners, shall be used to achieve this output.
This shall be the first level of dispatch requested by
JCP&L.
3.14.3 "Dispatch Capacity (Duct Fired)" shall mean the
temperature adjusted output of the combined cycle with
duct firing for additional power output, shown in the
Combined Cycle with Duct Firing Temperature vs. Capacity
curve contained in Appendix C, to be mutually agreed upon
and attached to this Amended and Restated Agreement after
the completion of testing to be conducted by Seller
within 90 days after the Effective Date pursuant to test
procedures and protocols mutually agreed upon by Seller
and JCP&L. The Combined Cycle portion of the Facility,
using the duct burners, shall be used to achieve this
output. This shall be the second level of dispatch
requested by JCP&L.
3.14.4 "Dispatch Capacity (Max Output)" shall mean the
temperature adjusted output of the combined cycle with
duct firing and Combustion Turbine overfiring for
additional power output, shown in the Max Output
Temperature vs. Capacity curve contained in Appendix C,
to be mutually agreed upon and attached to this Amended
and Restated Agreement after the completion of testing to
be conducted by Seller within 90 days after the Effective
Date pursuant to test procedures and protocols mutually
agreed upon by Seller and JCP&L. This shall be the third
and final level of dispatch requested by JCP&L. Dispatch
Capacity (Max Output) will only be requested during a
System Emergency.
3.15 "DuPont" means the E.I. DuPont de Nemours Company, the
owner of the leased premises occupied by the Facility,
and Seller's steam purchaser.
3.16 "Effective Date" shall mean the last to occur of (a) the
date on which the BPU issues the BPU Order, (b) ten (10)
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days following the entry of an order (the "Approval
Order") by the United States Bankruptcy Court for the
District of New Jersey ("Bankruptcy Court") approving
the NRG Plan, (c) the date on which the existing Gas
Service Agreement dated May 13, 1993 between Seller and
PSE&G shall have been terminated or assigned to JCP&L
without any liability to Seller or the Facility, (d) the
date on which JCP&L shall have entered into the PSE&G
Gas Supply Agreement, or, if the existing Gas Service
Agreement described in clause (c) shall have been
assigned to JCP&L, such agreement shall have been
amended or modified to JCP&L's satisfaction, in its sole
discretion, and in either case such agreement shall have
received all necessary regulatory approvals and
otherwise shall have become effective in accordance with
its terms, and (e) the date on which that certain Third
Amendment to Power Purchase Agreement dated as of
December ___, 1995 by and between O'Brien (Newark)
Cogeneration, Inc. and JCP&L shall have become effective
in accordance with its terms.
3.17 "Emergency" or a "System Emergency" means a condition or
situation which in JCP&L's sole judgment affects JCP&L
Electric System Integrity, which judgment shall not be
capriciously or arbitrarily exercised. Such conditions
include but are not limited to forced outages, potential
overloading of JCP&L's transmission and distribution
circuits, unusual operation conditions on either JCP&L's
or Seller's system, conditions such that JCP&L is unable
to back down its own generation sufficiently to accept
electricity from the facility without jeopardizing the
integrity of JCP&L's system, or conditions on the PJM
system are such that JCP&L has received a request from
the PJM Interconnection Dispatcher to reduce or interrupt
purchases from generation external to PJM.
3.18 "Exempt wholesale Generator" or "EWG" shall have the
meaning given to that term in Section 32(a) (1) of the
Public Utility Holding Company Act of 1935, as amended,
and the regulations of the FERC thereunder.
3.19 "Facility Heat Rate" means the quantity of fuel (HHV),
expressed in British Thermal Units (BTUs), required to
generate one kWh of output from the Facility at a known
temperature.
3.20 "FERC" means the Federal Energy Regulatory Commission or
successor agency thereto.
3.21 "Fixed Capital Payment" shall have the meaning given to
such term in Article 8.2 hereof.
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3.22 "Fixed O&M Payment" shall have the meaning given to such
term in Article 8.2 hereof.
3.23 "Forced Outage" means the unscheduled removal of the
Facility or a portion thereof from service or the
inability of the Facility to operate in accordance with
the Temperature vs. Capacity Tables of Appendix C.
3.24 "Generating Facility" or "Facility" means the
Cogeneration Facility or the Exempt wholesale Generator
as required by the context.
3.25 "GPU System" means the integrated electric generating
system of General Public Utilities Corporation, a
Pennsylvania corporation, which is the parent of JCP&L.
3.26 "Gross Domestic Product Deflator Index" or "GDPDI" means
the value of the average of the four quarters ending on
September 30 of the previous year divided by the value of
the average of the four quarters ending on September 30
of the year preceding the previous year of the Implicit
Price Deflator for Gross Domestic Product as reported by
the United States Department of Commerce with a 1987
index value of 100.
3.27 "Interconnection Facilities" means all apparatus required
and associated equipment installed to interconnect and
deliver power from the Facility to JCP&L's electric
system including, but not limited to, connection,
transformation, switching, metering, communication, and
safety equipment, such as equipment required to protect
(1) JCP&L's electric system and its customers from faults
occurring at the Facility, and (2) the Facility from
faults occurring on JCP&L's electric system or on the
systems of others to which JCP&L's electric system is
directly or indirectly connected. Interconnection
Facilities also include any necessary additions and
reinforcements by JCP&L to JCP&L's electric system
required as a result of the interconnection of the
Facility to JCP&L's electric system.
3.28 "JCP&L" means Jersey Central Power & Light Company.
3.29 "JCP&L Electric System Integrity" or "System Integrity"
means the state of operation of JCP&L's electric system
which is deemed to minimize the risk of injury to persons
and/or property and enable JCP&L to provide adequate and
reliable electric service to its customers.
3.30 "kWh" means kilowatt hours of Electricity, the unit of
measure of energy.
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3.31 means reactive kilovolt-ampere, the unit of measure of
reactive power.
3.32 "Maintenance Outage" means the scheduled removal of the
Facility from service in order to perform necessary
repairs on specific components of the Facility where
removal of the Facility could have been postponed to the
weekend past the immediately succeeding weekend. A
Maintenance Outage must be scheduled with PJM through
JCP&L and accepted by JCP&L and PJM, which approval shall
not unreasonably be withheld or delayed by JCP&L. The
duration of the outage will initiate with the removal of
the Facility from service and last until notice is given
that the Facility is available for dispatch.
3.33 "Major Facility Overhaul" means any Planned Outage of the
Facility, or a portion thereof, for replacement or
reconditioning of the Facility's gas turbine(s), turbine
generator(s) or related boiler(s) due to ordinary wear
and tear.
3.34 "Maximum Emergency Generation" means placing all
available JCP&L generating capacity in service and
generating the maximum net plant output to meet peak load
demands or to safeguard the operation of JCP&L's electric
system and/or the PJM Interconnection.
3.35 "MWh" means megawatt hours or one thousand kWhs.
3.36 "Electric Energy" or "Electricity" means the amount of
electricity in MWH generated by the Facility, less any
transformation and transmission line losses and station
usage, delivered by the Seller to JCP&L at the Point of
Interconnection.
3.37 "Non Dispatch Periods" means the uninterrupted interval,
measured in time, during which there is no request for
Output of the Dispatchable Capacity.
3.38 "Operate" means to provide the engineering, purchasing,
repair, supervision, training, inspection, testing,
protection, operation, use, management, replacement and
maintenance of and for the Facility in accordance with
applicable industry standards and Prudent Electrical
Practices.
3.39 "Output" means the net amount of electrical energy (MWH),
as metered by JCP&L, generated by the Facility and
delivered to JCP&L at the Point of Interconnection.
Output excludes transformation losses and station usage.
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3.40.1 "Off-Peak Hours" means all hours other than "On-Peak
Hours."
3.40.2 "Off-Peak Period" means all hours not falling within an
"On-Peak Period."
3.40.3 "On-Peak Hours" means all hours from 8:00 a.m. to 8:00
p.m. prevailing time Monday through Friday 52 weeks per
year other than New Years Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas.
3.40.4 "On-Peak Period" means all hours from 8:00 a.m. to 8:00
p.m. prevailing time Monday through Friday, December -
February and June - September, minus four (4) Holidays:
New Years Day, Independence Day, Labor Day and Christmas.
3.41 "Party" or "Parties" means the signatories to this
Agreement and their permitted successors and assigns.
3.42 "PJM" or "PJM System" means the Pennsylvania/New
Jersey/Maryland Interconnected Power Pool cooperatively
operated under the Pennsylvania/New Jersey/Maryland
Interconnection Agreement dated as of September 26, 1956
as amended or supplemented from time to time.
3.43 "Planned Outage" means the scheduled removal of the
Facility from service for inspection or repair. A
Planned Outage must be scheduled by the Seller two (2)
months in advance and approved by JCP&L and PJM, which
approval shall not be unreasonably withheld by JCP&L. A
Planned Outage will initiate with the removal of the
Facility from service and will terminate when the Seller
notifies JCP&L that it is available for dispatch.
3.44 "Point of Interconnection" means the point at which the
Electrical Interconnection Facilities of Seller connect
with JCP&L's electric system.
3.45 "Project" means the Generating Facility, the Protective
Apparatus and Interconnection Facilities required to
permit operation of Seller's generator in parallel with
JCP&L's electrical system.
3.46 "Protective Apparatus" means that equipment and apparatus
which shall be installed by Seller as required by JCP&L
in accordance with Section 10 of the Standard Terms and
Conditions, entitled, "General Interconnect Requirements
for Customer's Generation" forming part of JCP&L's Tariff
for Electric Service on file with the BPU.
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3.47 "Prudent Electrical Practices" means those practices,
methods, standards, and equipment commonly used, from
time to time, in prudent electrical engineering and
operations to operate electrical equipment lawfully and
with safety, dependability, and efficiency and in
accordance with the National Electrical Safety Code, the
National Electrical Code or any other applicable federal,
state and local codes.
3.48 "PSE&G" means Public Service Electric & Gas Company.
3.49 "PSE&G Gas Supply Agreement" means the Gas Supply
Agreement to be entered into between PSE&G and JCP&L
providing for the supply of natural gas to the Facility.
3.50 "Qualifying Facility" means a Cogeneration or Small Power
Production Facility which meets the criteria set forth in
Title 13, Code of Federal Regulations, Part 292, Subpart
B, Section 292.203 through 292.207, inclusive.
3.51 "Scheduled Dispatch Period" or "SD" means the time
duration of a request for delivery of Output beginning
and ending at the time specified by JCP&L. Such periods
are exclusive of Start Up and Shut Down Periods and shall
require at least thirty (30) minutes notice in advance of
commencement of a Start Up Period.
3.52 "Shut-Down Period" means the period necessary to shut
down the Facility in accordance with good engineering
practices and manufacturer's recommendations immediately
following a Scheduled Dispatch Period, which may not
exceed 30 minutes.
3.53 "Special Facilities" means those additions and
reinforcements to JCP&L's electric system which are
needed to accommodate the maximum delivery of energy and
capacity from the Facility as provided herein and those
parts of the Interconnection Facilities which are owned
and maintained by JCP&L at Seller's request, including
metering and data processing equipment. All Special
Facilities shall be owned, operated, and maintained by
JCP&L pursuant to Section 4.05 of JCP&L's Electric Tariff
Standard Terms and Conditions.
3.54 "Standby Demand" means Seller's electrical load
requirement that JCP&L is expected to supply when
Seller's Generating Facility is not in operation.
3.55 "Start-Up Period" means the one and a half hour period
necessary to ramp up the gas turbines and the steam
turbines (if such steam turbines are "hot") in order for
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these turbines to reach steady state operation during
the period preceding a Scheduled Dispatch Period.
3.56 "Supplemental Start-Up Period" means the three (3)
additional hours required to bring the steam turbine(s)
up to full load prior to the commencement of a Scheduled
Dispatch Period, where such steam turbines are "cold" at
the beginning of a Scheduled Dispatch Period. Under such
conditions, references herein to the "Start-Up Period"
shall be understood to mean the Start-Up Period defined
above plus the Supplemental Start-Up Period. For the
purposes of the definition, a steam turbine shall be
considered to be "cold" if it has not been kept in a
state of readiness, i.e., maintained at 500 Degrees F
with a vacuum on the exhaust and steam to steam turbine
glands.
3.57 "Temperature" means the ambient dry bulb temperature in
degrees Fahrenheit measured at the monitoring station at
Newark Airport.
3.58 "Unit" means a single gas turbine train and associated
steam turbine.
3.59 "Unscheduled Outage" means the unscheduled removal of a
Unit of the Facility from service for inspection or
repair.
ARTICLE 4
TERM
4.1 Duration of Agreement
a) This Amended and Restated Agreement shall be
effective upon the Effective Date, as herein
provided, and shall continue in full force and effect
until June 17, 2011. (the "Initial Term").
b) If the Effective Date does not occur by the earlier
of (i) 75 days after the date of entry of the
Approval Order or (ii) June 15, 1996, this Amended
and Restated Agreement shall, unless otherwise
mutually agreed by the Parties, immediately terminate
and be of no further force or effect, and neither
Party shall have any further rights, obligations, or
liabilities hereunder.
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4.2 Renewal of Agreement
This Amended and Restated Agreement shall be
automatically renewed for a period of three (3)
additional years, commencing with the expiration of the
Initial Term pursuant to Article 4.1, unless either
Party elects to terminate this Amended and Restated
Agreement as of the expiration of the Initial Term.
Such termination shall be valid only if the terminating
Party provides written notice of its intent to terminate
to the other Party at least three (3) full years prior
to the expiration of the Initial Term.
4.3 Electrical Services Supplied by JCP&L
This Amended and Restated Agreement does not provide for
any electric service by JCP&L to Seller. If Seller
requires supplemental or standby electric service from
JCP&L, Seller shall enter into separate contract
arrangements with JCP&L in accordance with JCP&L's
applicable electric tariffs on file with and authorized
by the BPU.
ARTICLE 5
CONSTRUCTION
5.1 Land Rights
Seller hereby grants to JCP&L for the term hereof all
necessary rights of way and easements to install, operate,
maintain, replace and remove JCP&L's metering and other
Interconnection Facilities and Special Facilities, including
adequate and continuing access rights on property of Seller
and Seller agrees to execute such other grants, deeds or
documents as JCP&L may require to enable it to record such
rights of way and easements. If any part of JCP&L's
facilities are to be installed on property owned by others
than Seller, Seller shall, if JCP&L is unable to do so
without cost to JCP&L, procure from the owners thereof, all
necessary permanent rights of way and easements for the
construction, operation, maintenance and replacement of
JCP&L's facilities upon such property in a form satisfactory
to JCP&L. In the event Seller is unable to secure them (i)
by condemnation proceedings or (ii) by other means at such
cost as may be agreeable to Seller, Seller shall reimburse
JCP&L for all costs incurred by JCP&L in securing such
rights, it being understood however, that JCP&L shall have
no obligation to do so.
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5.2 Facility and Equipment Design and Construction
Seller shall design, construct, install, own, operate and
maintain the Facility and all equipment needed to generate
and deliver energy or energy and capacity specified herein,
except for any Special Facilities constructed, installed and
maintained by JCP&L pursuant to JCP&L's Electric Tariff
Standard Terms and Conditions. Such Facility and equipment
shall meet all requirements of applicable codes and all
standards of Prudent Electrical Practices. Seller also
agrees to meet reasonable JCP&L requirements for Seller's
Facility and equipment.
5.3 Interconnection Facility and Protective Apparatus Design and
Construction
JCP&L will coordinate with Seller in Seller's development of
an electrical interconnect system for the supply of
electrical service by Seller to DuPont, and for the
interlock of such system with JCP&L's interconnect system to
be installed for the supply of stand-by electrical service
to DuPont. Seller shall construct, install, own and
maintain the Interconnection Facilities and Protective
Apparatus as required for JCP&L to receive energy or energy
and capacity from Seller's Facility. Seller shall also
reimburse JCP&L for all reasonable costs associated with the
routine maintenance of interconnection equipment on JCP&L's
side of the Point of Interconnection. Upon thirty days
notice by Seller, prior to the planned Effective Date and on
each subsequent anniversary of such Effective Date, JCP&L
shall provide an estimate (for planning purposes only) and a
description of the work to be performed in the succeeding
year to conduct routine maintenance of interconnection
equipment on JCP&L's side of the Point of Interconnection.
Except for the metering facilities pursuant to Article 7,
Seller's ownership of the Interconnection Facilities shall
begin at the point of connection to the JCP&L service line.
Seller's Interconnection Facilities shall be of a size to
accommodate the delivery of the energy or energy and
capacity in the form of three (3) phase, 60 cycle
alternating current at 230 KV and shall conform to the
requirements of Section 10 of JCP&L's Electric Tariff
Standard Terms and Conditions concerning interconnection
requirements attached hereto and made a part hereof. In the
event it is necessary for JCP&L to install Special
Facilities or other Interconnection Facilities or to
reinforce its electric system for purposes of this Amended
and Restated Agreement, Seller shall reimburse JCP&L its
costs in accordance with JCP&L's Electric Tariff Standard
Terms and Conditions. Any reinforcements, Special
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Facilities and other Interconnection Facilities required by
JCP&L shall be justified by Prudent Electrical Practices and
applicable industry standard.
5.4 Special Facilities constructed or installed by JCP&L shall
be paid for by Seller in accordance with the provisions of
Section 4.05 of JCP&L's Electric Tariff Standard Terms and
Conditions
5.5 Seller shall indemnify, hold harmless and agrees to defend
JCP&L from and against any and all liability, loss, cost and
expense, associated with any and all Federal, State and/or
Local income tax liability, arising out of or connected with
the transfer from Seller to JCP&L of Seller's
Interconnection Facilities, Protective Apparatus, Special
Facilities and/or any and all associated and/or related
structures, equipment, facilities and devices in performance
of, pursuant to and/or in connection herewith. JCP&L and
Seller intend that such transfer shall be a Qualifying
Facility transfer pursuant to IRS Advance Notice 88-129.
Accordingly, Seller shall obtain, at its own expense, the
report of an independent engineer regarding electricity
sales by JCP&L to Seller as provided by that Advance Notice.
ARTICLE 6
OPERATION AND MAINTENANCE
6.0 The Generating Facility, the Interconnection Facilities and
the Protective Apparatus shall be operated and maintained in
accordance with applicable New Jersey utility industry
standards and Prudent Electrical Practices with respect to
the operation and maintenance of such equipment generally
and in particular with respect to synchronizing, voltage and
reactive power control. JCP&L shall have the right to
monitor operation of the Project and may require changes in
Seller's method of operation if such changes are, in JCP&L's
sole judgment, necessary to maintain JCP&L Electric System
Integrity.
Seller agrees to operate the Facility in parallel with
JCP&L's electric system and, subject to its right to sell
electric energy to DuPont if Seller is not an EWG, and
except as otherwise agreed in writing by JCP&L, to deliver
the Net Electric Energy of the Facility to JCP&L at the
Point of Interconnection in the form of three (3) phase, 60
cycle alternating current at 230 KV. Momentary voltage
fluctuations shall be permitted, provided they neither
disturb service provided by JCP&L to its customers, nor
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hinder JCP&L in maintaining proper voltage conditions of its
electric system. Unless otherwise requested by JCP&L,
Seller shall operate the Facility at a unity power factor or
supply reactive power to JCP&L's electric system. At
JCP&L's request, Seller shall to the fullest extent
practicable operate the Facility at any excitation level
within the range of the Facility's capability as determined
from the equipment manufacturer's recommendations. Seller
agrees to use its best efforts to comply with any such
request made by JCP&L.
6.1 At JCP&L's request, Seller shall use its best efforts to
deliver power at an average rate of delivery at least equal
to the Contract Capacity during periods when Maximum
Emergency Generation is required by PJM or JCP&L. In the
event that Seller has previously scheduled an outage during
a period of Maximum Emergency Generation or coincident with
an Emergency, Seller shall use its best efforts to
reschedule the outage.
6.2 Conditions Requiring Curtailment or Interruption of
Deliveries of Electricity
a) JCP&L shall have the right upon reasonable notice to
Seller when it can reasonably be given to require
Seller to disconnect the generator from JCP&L's
electric system or to reduce the electrical output of
the generator and deliveries of Electricity into
JCP&L's electric system, whenever JCP&L determines, in
its sole judgment, that such a disconnection or
reduction is necessary to facilitate construction,
installation, maintenance, repair, replacement or
inspection of any of JCP&L's facilities, or equipment,
or to maintain JCP&L's Electric System Integrity, or
because of emergencies, forced outages, potential
overloading of JCP&L's transmission and distribution
circuits, force majeure, operating conditions on either
JCP&L's or Seller's system, or conditions on the PJM
System are such that generators of all PJM member
utilities are required to reduce generation to minimum
levels during periods of low load in accordance with
the applicable GPU/PJM emergency operating procedures
and JCP&L has received a request from the PJM
Interconnection Dispatcher to reduce or interrupt
purchases from generation external to PJM; provided,
however, that any such PJM requirement to reduce or
interrupt such purchases of Base Capacity may not
exceed 600 hours in any calendar year, of which no more
than 400 such hours shall occur during On-Peak Periods.
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b) If at any time Seller fails to operate and maintain the
Project as provided in Article 6 or the operation of
the Project endangers the safety of JCP&L's personnel
or the safe operation of JCP&L's electric system1 JCP&L
may disconnect from the Seller's Facility until such
condition has been corrected.
c) If JCP&L requires Seller to disconnect the generator
from JCP&L's electric system or reduce deliveries of
Electricity pursuant to Article 6.2, Seller shall have
the right, during such time period, to continue to
serve Seller's native load, if any, and to sell
electric energy to DuPont if Seller is not an EWG.
d) In the event of a force majeure, Seller shall not be
obligated to deliver, and may curtail, interrupt or
reduce deliveries of energy to JCP&L. Seller shall
promptly notify JCP&L of any such curtailment,
interruption or reduction of deliveries.
e) Each Party shall endeavor to correct, within a
reasonable period, the condition on its system which
necessitates the disconnection or the reduction of
electrical Output. The duration of the disconnection
or the reduction in electrical Output shall be limited
to the period of time such a condition exists.
6.3 The Generating Facility shall be operated with all of
Seller's Protective Apparatus in service whenever the
generator is connected to or operating in parallel with
JCP&L's electric system. Any deviation for brief periods of
emergency or maintenance shall only be by agreement of the
Parties.
6.4 Seller shall furnish JCP&L with an annual forecast not later
than December 15 of each year setting forth the expected
dates and anticipated duration of each Planned Outage for
the succeeding 36 months, provided that the dates and
anticipated duration of such Planned Outages may be changed
as hereinafter provided. Seller shall update, on a monthly
basis, the outage request schedule by the 15th day of each
month. Such updates shall be transmitted to JCP&L by
telephone and promptly confirmed in writing. JCP&L shall
forward its response to an outage request not later than 10
days following JCP&L's receipt of such outage request.
Seller shall notify JCP&L's dispatcher approximately 15
minutes prior to the approved outage period of its intent to
remove the Generating Facility from service. Seller shall
also notify JCP&L concerning the cause and duration of any
Forced Outage.
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6.5 Seller shall not schedule or conduct Planned Outages during
On-Peak Periods.
a) Seller shall keep and maintain accurate and complete
records for the Generating Facility containing such
information regarding operation and maintenance of the
Generating Facility and all associated equipment as is
appropriate and consistent with industry practice and
as may be necessary for JCP&L to comply with its
applicable requirements. JCP&L will advise Seller of
such requirements as are in effect from time to time.
Seller shall make such records available to JCP&L for
inspection and copying from time to time as JCP&L may
reasonably request.
b) Seller shall maintain and classify outage statistics
for the Generating Facility in accordance with the GPU
System outage classification procedures as the same may
be in effect from time to time. Seller shall supply
such statistics to JCP&L upon request. In addition,
Seller shall maintain or cause to be maintained such
other records relating to the Generating Facility as
may be reasonably required by the GPU System of
cogeneration projects, and, upon written notice from
JCP&L, will maintain or cause to be maintained such
other records as the NJBPU, FERC or other regulatory
body having jurisdiction, may from time to time
require.
6.7 If, at any time, JCP&L doubts the integrity of any of
Seller's Protective Apparatus and believes that such loss of
integrity would impair the JCP&L Electric System Integrity,
Seller shall demonstrate, to JCP&L's satisfaction, the
correct calibration and operation of the equipment in
question.
6.8 Seller shall furnish to JCP&L on each January 1 following
the Effective Date satisfactory evidence that during the
previous calendar year, Seller has performed or caused to be
performed all manufacturer-recommended maintenance and
testing of the Generating Facility and the Protective
Apparatus and interconnection equipment, including circuit
breakers, relays and auxiliary equipment. Seller shall
provide JCP&L with at least 30 days prior written notice of
its intent to test such equipment and JCP&L personnel or
their representatives may, if JCP&L desires, observe such
testing.
6.9 Seller shall provide reactive power for its own requirements
and the reactive power losses of interfacing transformers.
Seller shall not deliver excess reactive
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power to JCP&L unless otherwise agreed upon between the
Parties.
6.10 The Generating Facility shall at all times be operated and
maintained to conform to all applicable laws and
regulations. Seller shall obtain and maintain any
governmental authorizations and permits for the continued
operation of the Generating Facility.
6.11 Dispatch of the Facility
a) Seller agrees to deliver, or cause to be delivered, and
sell to JCP&L, and JCP&L agrees to accept and purchase
from Seller the electric energy associated with the
Base Capacity which is produced by the Facility and
delivered to JCP&L whenever it is made available, and
the electric energy associated with the Dispatchable
Capacity which is produced and delivered to JCP&L
during Start Up, Supplemental Start Up, Shut Down, and
Scheduled Dispatch Periods up to the Dispatch Capacity
at the rates set forth herein. Seller and JCP&L
further agree that, except for the energy which Seller
may sell to DuPont if Seller is not an EWG, all energy
associated with the Contract Capacity will be fully
committed to JCP&L and may not be sold to any other
entity unless otherwise agreed by JCP&L in writing.
Subject to the terms and conditions set forth below,
JCP&L shall have the right to request any of the three
Dispatch Capacity levels above the Base Capacity.
Dispatch of the Facility shall be in accordance with
the rules and procedures of JCP&L and PJM. The first
level of dispatch above the Base Capacity which JCP&L
may call for is the Dispatch Capacity (Second Combined
Cycle). At any time while the Facility is at the
Dispatch Capacity (Second Combined Cycle) level, JCP&L
shall have the option to request the next level of
dispatch which is Dispatch Capacity (Duct Fired). JCP&L
shall have the option to request the Facility to return
to the Dispatch Capacity (Second Combined Cycle) level
without requesting the Facility to shut down entirely.
During a System Emergency, JCP&L may request the third
level of dispatch which is Dispatch Capacity (Max
Output). Notwithstanding anything in this Amended and
Restated Agreement to the contrary, Seller shall not be
obligated to provide more than 73 MW, as may be
adjusted to reflect temperature variations from 92
Degrees F, of Dispatch Capacity at any time. JCP&L
further recognizes that the Seller is only capable of
firing the duct burners on natural gas; it has no
capacity to fire said duct burners on kerosene.
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When the Facility must burn kerosene, JCP&L agrees not
to request more Scheduled Dispatch Hours than are
authorized under the Facility's air permit issued by
the New Jersey Department of Environmental Protection.
Accordingly, should JCP&L wish to dispatch the Facility
on kerosene in excess of such maximum permitted hours,
it shall obtain an appropriate variance from the New
Jersey Department of Environmental Protection prior to
making a request for additional dispatch hours on
kerosene.
b) On or about the twenty-seventh day of each month, JCP&L
will supply a weekly operating plan for the following
month. Thereafter, JCP&L will provide a weekly
operating plan to the Seller by 3:00 p.m. Friday of
each week for implementation the following Monday.
Nothing in any weekly operating plan provided by JCP&L
pursuant to the two preceding sentences shall preclude
JCP&L from modifying any such plan at any time and for
any reason and from scheduling Scheduled Dispatch
Periods at such time or times as JCP&L, in its sole
discretion, deems necessary or appropriate.
Nonetheless, the weekly operating plan as amended shall
be used by Seller to plan maintenance and work
schedules. Unless otherwise agreed, Seller will be
prepared to commence a Start-Up Period within thirty
(30) minutes of receiving a Scheduled Dispatch Period
request from JCP&L between 5:00 a.m. and 10:00 p.m. on
weekdays. During other periods, JCP&L will use
reasonable efforts except during System Emergencies to
provide Seller with two (2) hours between the
communication of a Scheduled Dispatch Period request
and the commencement of a Start-Up Period. No change
in a Scheduled Dispatch Period request will become
effective unless Seller is provided with at least
thirty (30) minutes notice before being required to
commence a Start-Up Period. Shut-Down Periods will
commence immediately upon notification by JCP&L.
d) If JCP&L requests that the Dispatch Capacity (Second
Combined Cycle) be dispatched, it shall have the right
during the same day to request the shut down of one (1)
Unit, and shall have the further right to restart such
Unit on one additional occasion during the same
calendar day.
e) No Contract Availability penalties shall apply during
Start-Up Periods except any partial or full outage
condition which may exist at the time the Start-Up
Period begins. If the Facility is in a partial outage
at the commencement of a Start-Up Period and the
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Facility fails to reach an output level which would end
such partial outage, the Facility will only be entitled
to the appropriate partial level of availability credit
for the Start-Up Period.
f) Seller shall be permitted a Shut-Down Period not to
exceed 30 minutes in order to shut down the Facility in
accordance with good engineering practice and
manufacturer's recommendations immediately following a
Scheduled Dispatch Period. No Contract Availability
penalties shall apply during Shut-Down Periods except
any partial or full outage condition which may exist at
the time the Shut-Down Period begins.
6.12 Any review by JCP&L of the design, construction, operation,
or maintenance of the Project is solely for the information
of JCP&L. By making such reviews, JCP&L makes no
representation as to the economic and technical feasibility,
operational capability, or reliability of the Project.
Seller shall in no way represent to any third party that any
such review by JCP&L of the Project, including, but not
limited to, any review of the design, construction,
operation, or maintenance of the Project by JCP&L is a
representation by JCP&L as to the economic and technical
feasibility, operational capability, or reliability of said
facilities. Seller is solely responsible for economic and
technical feasibility, operational capability, or
reliability of said facilities.
6.13 Generation in Excess of Base Capacity During Periods of Non-
Dispatch
Seller will not be paid for the export of any generation of
electricity in excess of 41 MW (the Base Capacity, which
will be 41 MW during all hours of the year) at times when
JCP&L has not called for any portion of the Dispatchable
Capacity to be operated. Notwithstanding the foregoing, the
Seller may, at its option, generate up to 50 MW during
periods of non-dispatch; provided, however, that Seller
shall pay JCP&L for the proportional amount of natural gas
fuel expense for fuel required to generate such excess
energy, and JCP&L will pay Seller the hourly PJM billing
rate for any such excess energy so delivered between 41 MW
and 50 MW. No other payments (fixed energy or capacity)
will be made for energy in excess of 41 MW. The foregoing
shall not, however, effect JCP&L's right to curtail all
Facility output during System Emergencies. Seller must give
proper advance notice as provided in Appendix A and operate
the Facility consistently with the requirements of Appendix
A.
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ARTICLE 7
DELIVERY AND METERING
7.0 Delivery and Metering
All Electricity shall be delivered to JCP&L at the Point of
Interconnection with the characteristics and at the voltage
level specified in Article 6.0. All meters and equipment
used for the measurement of electric power for determining
JCP&L's payments to Seller hereunder shall be provided,
owned, maintained, inspected and tested by JCP&L. Seller
shall reimburse JCP&L for the reasonable costs of all meters
and equipment used for the measurement of Electricity, and
shall also reimburse JCP&L for costs involved with the
inspection and periodic testing of such meters.
7.1 Meters will be read monthly by JCP&L to determine the amount
of Electricity delivered to it. Seller may install
additional metering for its own use, but the determination
of delivered Electricity will be measured by JCP&L's meters
for billing purposes.
7.2 For purposes of monitoring the generator operation, JCP&L
shall have the right to require, at Seller's expense, the
installation of generation telemetering and control of
selected breakers and switching equipment. Seller will also
be responsible for the operating and maintenance costs
associated with the metering and telemetering equipment.
7.3 JCP&L's meters shall be sealed and the seals shall be broken
only when the meters are to be inspected, tested, or
adjusted by JCP&L. Seller shall be given reasonable notice
of testing and have the right to have its Operating
Representative present on such occasions.
7.4 If, upon testing, any electrical measuring equipment is
found to be in error by not more than plus or minus two
percent (2%), previous recordings of such equipment shall be
considered accurate in computing deliveries of Electricity
hereunder, but such equipment shall be promptly adjusted to
record correctly. If, upon testing, any electrical measuring
equipment shall be found to be inaccurate by an amount
exceeding plus or minus two percent(2%), then such equipment
shall be promptly adjusted to record properly and any
previous recordings by such equipment shall be corrected to
zero error. If no reliable informationexists as to when the
equipment became inaccurate, it shall be assumed for
correction
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purposes hereunder that such inaccuracy began at a point in
time midway between the testing date and the last previous
date on which the equipment was tested and found to be
accurate.
Should the primary meter equipment at any time fail to
register, or should the registration thereof be so erratic
so as to be meaningless, the energy deliveries shall be
determined from the best information available, including,
but not limited to, operator's log and telemetry data of the
meter results.
ARTICLE 8
TERMS OF SALE
8.1 Base Capacity Pricing
The price for Base Capacity delivered to JCP&L shall consist
of an energy component and a capacity component.
The energy component shall be a Fixed component equal to
1.362 cents per kWh and shall be paid from and after the
Effective Date through June 17, 2003.
The energy component of the price for Base Capacity shall be
varied according to the time of delivery as follows:
(i) during On-Peak Hours, the Fixed energy component
of price shall be multiplied by 127%.
(ii) during Off-Peaks Hours, the Fixed energy component
of price shall be multiplied by 85%.
The Fixed energy component of price shall not be paid from
and after June 18, 2003 through the end of the Initial Term.
The capacity component for Base Capacity
shall be as follows:
(iii) 1.21 cents per kWh averaged over all hours.
The capacity component will, however, be paid only for kWh
delivered during the On-Peak Period at the rate of 5.97
cents per kWh.
(iv) There will be no capacity component payment during
the Off-Peak Period.
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8.2 Full Fixed Payment Components for Dispatchable Capacity.
(a) Fixed Capital Payment:
The Fixed Capital Payment (Based on 100% Contract
Availability) is equal to $9.90/kW-month through June 17,
2003, and shall be $6.40/kW-month for the remaining term of
the Agreement. Prior to March 1, 1996, Seller may elect to
convert the foregoing Fixed Capital Payments to a levelized
rate of $9.02/kW-month for the remaining duration of the
term commencing with the month immediately following the
months in which Seller provides written notification thereof
to JCP&L.
(b) Fixed O&M Payment:
The Fixed O&M Payment (based on 100% Contract Availability)
is equal to $3.50/kW per month in 1996. This payment shall
be adjusted annually by the change in the GDPDI upon the
anniversary of the Effective Date.
The annual Full Fixed Payment shall mean the sum of the
Fixed Capital Payment and the Fixed O&M Payment.
8.3 Fixed Payment Procedure.
A Fixed Payment shall be made to Seller in each Billing
Period during the term hereof commencing with the Effective
Date, in accordance with the procedures described below.
The Fixed Payment is dependent upon the Contract
Availability and Dispatchable Capacity, as described in
Section 8.3(d).
The Full Fixed Payment is composed of the following
components:
a) Fixed Capital Payment. This component of the Full
Fixed Payment shall be equal to the values listed in
Section 8.2(a).
b) Fixed O&M Payment. The 1996 value of this component
shall equal to the value listed in Section 8.2(b).
Commencing with the first anniversary of the Effective
Date and on each subsequent anniversary thereof through-
out the term of this Agreement, this component shall be
calculated as the product of the prior year's Fixed O&M
Payment and the ratio of the average of the four
quarterly GDPDI values ending with the third quarter of
the prior year, to the average of the four quarterly
GDPDI values ending with the third quarter of the year
prior to such prior year. All eight GDPDI
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<PAGE>
values will be referenced from the January publication of
the Survey of Current Business.
Illustrative Example of Fixed O&M Payment.
Assume that the Fixed O&M Payment for 1998 is $4.00/kW
month and the Effective Date is January 1, 1996.
Assume also that the GDPDI values are as follows:
Quarter GDPDI Index
4th Quarter, 1996 150.4
1st Quarter, 1997 152.1
2nd Quarter, 1997 153.5
3rd Quarter, 1997 156.2
4th Quarter, 1997 157.8
1st Quarter, 1998 160.1
2nd Quarter, 1998 162.0
3rd Quarter, 1998 164.3
Then the Fixed O&M Payment for 1999 is computed as:
= ($4.00) * (161.1)
(153.1)
= ($4.00) * (1.0523)
= $4.21/kW month
c) Estimated Fixed Payment: An Estimated Fixed Payment
shall be made to the Seller in each Billing Period of
the Term of this Agreement commencing with the
Effective Date which is equal to the product of the (a)
Full Fixed Payment; (b) the Dispatchable Capacity; and
(c) the Target Availability Multiplier defined below.
d) Actual Fixed Payment: The annual Actual Fixed Payment
is the sum of the monthly Full Fixed Payments for each
Contract Year, adjusted for Dispatchable Capacity and
Contract Availability, that will be paid to Seller on
an annual basis. It is equal to the product of: (a)
the sum of the monthly Full Fixed Payments, (b) the
Dispatchable Capacity; and (c) the Contract
Availability. A single adjustment to the monthly
Estimated Fixed Payment due to Seller (the "Fixed
Payment Adjustment") will be made with the first
payment to Seller of each Contract Year, commencing
with the second Contract Year and for each Contract
Year thereafter.
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The Fixed Payment Adjustment will be equal to the
annual Actual Fixed Payment for the prior Contract Year
less the sum of the twelve (12) monthly Fixed Payments
for the prior Contract Year. If the Fixed Payment
Adjustment is a debit to Seller, then such amount shall
be fully set off against amounts owed to Seller
pursuant to this Agreement during the next Billing
Period. If following such setoff, a net amount is
still due JCP&L, such payment will be made to JCP&L
within thirty (30) days of receipt of JCP&L's invoice
for such payment. If the Fixed Payment Adjustment is a
credit to Seller, this credit shall be included with
the first payment of each Contract Year, commencing
with the second Contract Year. In all cases, the Fixed
Payment Adjustment shall have no interest component
added.
e) The Target Availability Multiplier. The Target
Availability Multiplier shall equal:
i) For the first Contract Year, the Target
Availability Multiplier will be equal to 95%.
ii) Commencing with the second Contract Year and for
each subsequent Contract Year, the Target
Availability Multiplier will equal the Contract
Availability for the prior Contract Year unless
modified by the Parties' mutual agreement to
reflect an unusual occurrence.
NOTE: Target Availability Multiplier shall never be
greater than one (l.0).
f) Contract Availability. The Contract Availability is
calculated as follows:
Total Hours - Equivalent contract Unavailable Hours
Total Hours
where:
i) Total Hours = total hours in the Contract Year.
(ii) Equivalent Contract Unavailable Hours = total of all
hours during the Contract Year during which there
occurred a full or partial Planned, Forced, or
Maintenance Outage, as those terms are defined in
Article 3 of this Agreement (including outages
resulting from Force Majeure events, but excluding
outages resulting from (x) JCP&L's failure to supply
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<PAGE>
natural gas to the Facility during periods when
PSE&G has not interrupted or recalled the
interstate or intrastate transportation that it
supplies under the PSE&G Gas Supply Agreement and
(y) JCP&L's failure to accept available Output
from the Facility). Partial outages are measured
on an equivalency basis, e.g., a 50% outage for
one hour would be equivalent to a full outage for
one-half hour, and so forth.
NOTE: The Contract Availability Multiplier shall never
be greater than one (1.0).
g) Measurement of Contract Availability.
For purposes of determining Contract Availability, the
following procedure will be used to measure periods of
unavailability:
When a Scheduled Dispatch Period has been requested by
JCP&L in accordance with the terms of this Amended and
Restated Agreement, Seller shall have until the end of
the Start-Up Period (plus the Supplemental Start-Up
Period, in the case of "cold" start-ups) to produce the
requested Dispatch Capacity. If, at the end of the
Start-Up Period (plus the Supplemental Start-Up Period,
in the case of "cold" start-ups), the Facility is
unable to produce the requested Dispatch Capacity, the
Facility is then considered to be in a full or partial
Forced Outage, as the case may be, provided, however,
that Seller shall not be obligated to, and the Facility
shall not be considered to be in a full or partial
Forced Outage as a result of any failure to, produce
Dispatch Capacity in excess of 73 MW, as may be
adjusted to reflect temperature variations from 92
Degrees F, at any time. If the Dispatch Capacity
(Second Combined Cycle) is requested and is
successfully responded to, the remaining Dispatchable
Capacity will be considered available unless a partial
outage had existed at the time Start-up Period was
requested. If the Dispatch Capacity (Second Combined
Cycle) is requested and is not successfully responded
to, the Facility operators and System dispatchers must
use Prudent Electric Practices to assess the effects on
the availability of the remaining Dispatchable
Capacity.
The Facility will remain in a full or partial Forced
Outage until such time as JCP&L is notified by Seller
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that the Facility is again available for full or
partial dispatch and, at JCP&L's option, can
demonstrate this availability over a two (2) hour
period. At the end of a fully or partially successful
demonstration, the Facility will be considered to be
fully or partially available, respectively.
If, however, JCP&L elects not to dispatch the Facility
when Seller notifies JCP&L of the Facility's
availability, the Seller may at its own cost, choose to
demonstrate Facility availability as specified above
subject to Seller being responsible for any energy
costs above the current PJM billing rate related to
such demonstration; provided, however, that JCP&L is
able to accept the energy so produced. If JCP&L, in
its sole judgment, would not be able to accept the
energy produced during such a demonstration, then JCP&L
will recognize the Facility as being available;
provided, however, that if the Facility is unavailable
at the next Scheduled Dispatch Period request, the
Facility will then be considered to have been
continuously unavailable from the time of the Original
Request.
No Dispatchable Capacity will be considered available
unless the full 41 MW of Base Capacity (or so much
thereof as has not been curtailed or interrupted by
JCP&L) is being exported to the JCP&L System.
Notwithstanding the foregoing, if Seller notifies JCP&L
that the Base Capacity is being curtailed for Seller's
economic benefit and Seller wishes the Facility to be
considered available, JCP&L will consider the Base
Capacity and balance of Facility available if Seller
agrees to make the Base Capacity available along with
the balance of the Facility should JCP&L desire it. In
each event, Seller will receive no payments for Base
Capacity when it is not delivered and only the prices
associated with Base Capacity should JCP&L request the
Facility to run.
h) Heat Rate Incentive
The Average Heat Rate, as defined below, will be used
to calculate the Heat Rate Adjustment depending upon
whether the Average Heat Rate is above or below 9500
BTU/kWh HHV (High Heating Value).
At the conclusion of each Contract Year, JCP&L will
calculate the Average Heat Rate (AHR) for the Facility
over the past 12 months using the following formula
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which will result in either an increase or decrease to
the payments made by JCP&L to Seller hereunder:
AHR = Net Fuel Input
AG
where:
Net Fuel Input is all the fuel paid for by JCP&L less
fuel associated with and paid for by Seller with
respect to (a) its steam and electric sales made to
DuPont and (b) the fuel used during Facility startup
and shutdown (with the amount of fuel to be deducted
pursuant to (b) to be determined within 90 days after
the Effective Date pursuant to test procedures and
protocols mutually agreed upon by Seller and JCP&L).
AG, or the Annual Generation, is the annual total of
kWhs produced by the Facility, exported to, registered
at the billing meter and purchased by JCP&L.
The Heat Rate Adjustment (HRA) will be calculated at the
conclusion of each Contract Year as follows:
HRA = 0.25 x GHR - AHR x AAFC x AG
1,000,000
where
GHR, or the Guaranteed Heat Rate, is 9500 BTU/kWh for
l996. Thereafter, GHR shall be adjusted in accordance
with the degradation curves supported by the
manufacturer's data as set forth in Appendix D, to be
mutually agreed upon and attached to this Amended and
Restated Agreement within 90 days after the Effective
Date. Such degradation adjustment, however, shall in
no event result in an increase in GHR of more than 2%
above 9500 Btu/kWh.
AAFC, or the Average Annual Fuel Cost, is the average
cost for fuel paid for by JCP&L for the Facility in
$/MMBTU for the time period corresponding to the
Average Heat Rate calculation.
For example, by way of illustration only, if during
1996:
AHR = 9300 Btu/kWh
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AAFC = $2.60 MMBtu
AG = 700,000,000 kWh [7000 hours at 100MW]
HRA = 0.25 x (9500-9300) BTU/kWh x $2.60/MMBtu
1,000,000
x 700,000,000 kWh = $91,000
JCP&L will provide Seller with an average Heat Rate
Adjustment statement not later than 15 days after each
anniversary of the Effective Date. The Heat Rate
Adjustment payment, if any, will be made by Seller or
by JCP&L (as either an increase in or offset to
payments otherwise made by JCP&L to Seller hereunder)
in six equal monthly installments (without interest)
commencing the second calendar month following each
anniversary of the Effective Date; provided, however,
that any remaining Heat Rate Adjustment payment for the
last full Contract Year during the term hereof and for
the partial Contract Year commencing on the last
anniversary of the Effective Date during the term
hereof and ending on June 17, 2011 shall be invoiced by
JCP&L on or before July 1, 2011, and the net amount
thereof shall be paid, in cash, by Seller or JCP&L, as
the case may be, within 30 days of submission of such
invoice.
8.4 Demonstration of Contract Capacity
Seller shall demonstrate the ability of the Generating
Facility to provide JCP&L Base Capacity within 30 days after
the Effective Date. Thereafter, twice annually at JCP&L's
request, Seller shall, once during On-Peak Period summer
months and once during On-Peak Period winter months
demonstrate the ability of the Generating Facility to
provide Base Capacity for such period of time as is required
by PJM from time to time for all PJM suppliers. Seller's
demonstration of Base Capacity shall be at Seller's expense
(except for the cost of fuel) and conducted at a time and
pursuant to procedures as may be required by applicable GPU
System rules, regulations and guidelines. JCP&L and Seller
agree to use their reasonable best efforts to cause the
capacity demonstration to be scheduled as early as
practicable in each peak period. If Seller fails to
demonstrate the ability of the Generating Facility to
provide at least 90% of the Base Capacity, the Capacity
Component of the price
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to be paid for Electricity pursuant to Article 8.1 thereof
shall be reduced to the following amount until Seller is
able to demonstrate the ability to provide at least 90% of
the Base Capacity:
Demonstrated Capacity x 5.97 cents/kWh
Base Capacity
If Seller does not demonstrate the ability of the Generating
Facility to provide at least 90% of the Base Capacity during
the applicable On-Peak Period, then a retroactive reduction
of the Capacity Component of the price to be paid for
Electricity pursuant to Article 8.1 based upon the above
formula will be applied to the entire applicable On-Peak
Period.
However, should Seller's failure to demonstrate the ability
of the Generating Facility to provide 90% of Base Capacity
be caused by a "force majeure" event as defined in Article
12 hereof, the provisions of this Article 8.4 for Base
Capacity shall not apply until the "force majeure" has
ceased to exist.
As part of the foregoing Capacity Test, Seller shall
demonstrate the ability of the Generating Facility to
provide JCP&L the Dispatchable Capacity. This test shall be
conducted pursuant to procedures as may be required by
applicable GPU System rules, regulations and guidelines. If
Seller fails to demonstrate the ability of the Generating
Facility to provide the sum of the Base Capacity and 90% of
the Dispatchable Capacity, the Facility will be considered
in either a full or partial Forced Outage for Contract
Availability calculation purposes. This Forced Outage will
remain in effect until the sum of the Base Capacity and 90%
of the Dispatchable Capacity is demonstrated. If the
Facility is unable to demonstrate the sum of the Base
Capacity and 90% of the Dispatchable Capacity at least once
during the entire On-Peak Period summer months in any year,
a penalty will be applied which is equal to:
[Dispatchable Capacity - Demonstrated Capacity In Excess of Base
Capacity] x PJM Capacity Deficiency ($/kW year
A penalty for failure to demonstrate Dispatchable Capacity during
an entire annual On-Peak Period can be collected only one time
per Contract Year.
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Note: The data used to temperature correct the Capacity
Test will be taken from the temperature provided by
Newark Airport to the National Weather Agency.
However, should Seller's failure to demonstrate the ability
of the Generating Facility to provide the sum of the Base
Capacity and 90% of the Dispatchable Capacity be caused by a
"force majeure" event as defined in Article 12 hereof, the
provisions of this Article 8.4 relating to demonstration of
the availability of at least the sum of the Base Capacity
and 90% of the Dispatchable Capacity shall not apply until
the "force majeure" has ceased to exist.
8.5 Variable O&M and Start-up Payments
A) Variable O&M Payment
A Variable O&M Payment, whose initial 1996 value shall
be $0.004/kWh, shall be paid for the Net Electrical
Energy associated with the Dispatchable Capacity. The
Variable O&M Payment shall be adjusted upon each
anniversary of the Effective Date by the change in the
GDPDI.
B) Seller shall be paid a Start-up Payment for each
requested and successfully completed Start-up Period of
a gas turbine train associated with the Dispatch
Capacity (this payment will not be made for the unit-
used to satisfy the Base Capacity output). The initial
1996 values of the Start-up Payments are contained in
the table below. Start-up fuel costs shall be borne by
JCP&L pursuant to the terms of Article 9 hereof and
Appendix A hereto.
The first 150 starts/year $1500/Start
All starts over 150 starts/year $4,000/Start
These values shall be adjusted by the GDPDI annually.
These payments are intended to compensate the Seller
for the increased O&M costs associated with Start-ups,
ramp ups, ramp downs and stops.
8.6 DuPont Service
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Seller will supply electricity (but only if Seller is
not an EWG) and steam to DuPont during all periods when
the Facility is supplying Base Capacity and/or
Dispatchable Capacity to JCP&L. To the extent JCP&L is
not providing all required electric energy to DuPont
(i.e., if Seller is not an EWG), standby service for
electricity will be supplied by JCP&L to service
Depot's needs during all other periods under the
applicable tariff rates that are in effect at the time
of service. Seller will be responsible for providing
Depot's steam needs during periods of Facility
downtime.
8.7 In recognition of the understanding of the Parties
hereto that any payments made pursuant hereto are
intended by the Parties to be treated as received in
the year in which such payments are due, Seller
acknowledges that the Parties intend that JCP&L shall
have a deductible expense, and Seller shall have
taxable income or expense, as the case may be, with
respect to any payments made to Seller under this
Agreement. Seller shall not take a contrary or
inconsistent position with respect to the foregoing on
any federal, state or local tax return, before any
taxing authority or in any related tax proceeding.
ARTICLE 9
FUEL MANAGEMENT
9.1 JCP&L Responsibility for Facility Fuel Requirements
From and after the Effective Date, JCP&L will be
responsible for the supply of, and shall supply to
Seller, the natural gas required for use by the
Facility including the natural gas required by the
auxiliary boiler to supply DuPont with steam when steam
is not available from the heat recovery steam
generators, on the terms and conditions set forth
in Appendix A hereto. Seller will be responsible for
maintaining on site kerosene inventories for periods of
gas interruption. All costs for the supply of natural
gas shall be borne by JCP&L; provided, however, that
Seller shall reimburse JCP&L for the cost of any fuel
used to generate steam from the auxiliary boiler.
JCP&L will reimburse Seller for any kerosene used
during periods of gas curtailment at the replacement
price of kerosene (except for kerosene used to generate
steam for DuPont from the auxiliary boiler) at the then
prevailing market rate therefor in the area in which
the Facility is located.
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Seller will reimburse JCP&L, at the average monthly
price for natural gas, for the cost of fuel necessary
to provide DuPont with a quantity of BTU/lb of steam
from the Facility which shall be determined within 90
days of the Effective Date pursuant to the methodology
set forth in Appendix B. Until such determination has
been made, such quantity shall be deemed to be 500
BTU/lb of steam. Seller will also reimburse JCP&L the
proportional amount of fuel used to supply DuPont
electricity using the following formula:
DEFP = DEC x FS x FC
[DEC + JCEE]
Where:
DEFP is the DuPont electric fuel payment, in dollars,
which would be made monthly to JCP&L.
DEC is the DuPont electrical consumption, measured in
MWH, for the month in question.
JCEE is the JCP&L electrical exports, measured in MWH,
made by the Facility to JCP&L for the month in
question.
FS is the fuel supplied by JCP&L, measured in MMBTU
HHV, to Facility less the fuel Seller pays for due to
steam sales for the month in question.
FC is the average monthly fuel cost, measured in
$/MMBTU, to the facility for the month in question.
9.2 Natural Gas Fuel Unavailability
During periods when JCP&L is unable to provide gas to
the Facility, it is the responsibility of Seller to
maintain an on-site supply of kerosene to fuel the
Facility. If this fuel is used by Seller, Seller will
be reimbursed for the replacement cost of the kerosene
(except for kerosene used to generate steam for DuPont
from the auxiliary boiler) at the then prevailing
market rate therefor in the area in which the Facility
is located. However, if the Facility's air permit
would limit or prohibit the use of kerosene (e.g., if
the allowed number of hours of kerosene use has already
been exceeded) and JCP&L has been unable to obtain an
appropriate variance from the New Jersey Department of
Environmental protection which would permit the
necessary additional kerosene use, Seller may procure
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gas from third parties for use by the Facility for so
long as JCP&L is unable to provide the necessary gas
for the Facility. JCP&L shall allow Seller to use
transportation capacity which JCP&L may have available
(taking into account JCP&L's system-wide needs) for
such third party gas and shall reimburse Seller for
such gas (except for gas used to generate steam for
DuPont from the auxiliary boiler) and all related
transportation costs (excluding any transportation made
available without charge by JCP&L) at a rate equal to
the lesser of (i) Seller's actual costs for such gas
and transportation or (ii) the maximum reimbursement to
which Seller would be entitled pursuant to the last
sentence of Section A.2.l of Appendix A hereto.
9.3 Metering Responsibilities
Both Seller and JCP&L shall maintain meters for
measuring the quantity of fuel used by the Facility.
The meters shall be capable of recording total MCFs and
associated calculated BTUs delivered to the Facility on
a continuous, real time basis and shall be calibrated
at regular intervals based on manufacturer's
recommendations. The Parties will use these meter
readings to check the readings obtained by PSE&G. In
the event of a discrepancy between meters, the readings
obtained by PSE&G shall prevail until such time as all
of the meters can be recalibrated. If such
recalibration demonstrates that the PSE&G meter data
was in error, an appropriate adjustment shall be made
for the period in question.
ARTICLE 10
BILLINGS AND RECORDS
10.1 Billing
JCP&L shall mail to Seller not later than thirty (30)
days after the end of each monthly billing period (1) a
statement showing the Electricity delivered to JCP&L
from the Facility for that monthly billing period, (2)
JCP&L's computation of the amount due Seller, (3) such
other amounts as may then be due and payable by Seller
to JCP&L hereunder. Together with such monthly
statement, JCP&L shall mail to Seller JCP&L's check in
payment of the said amount shown due Seller. If Seller
desires a wire transfer, such wire transfer shall be
made within 33 days after the end of the related
monthly billing period.
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10.2 Records
Both Seller and JCP&L shall keep a record of all
invoices, receipts, charts, computer printouts, punch
cards or magnetic tapes related to the volume or price
of Electricity sales made hereunder. Such records
shall be made available for inspection by either Party
upon reasonable notice. All such materials shall be
kept on record for a minimum of six (6) years from the
date of their preparation.
10.3 Commencing with the Effective Date, Seller shall pay to
JCP&L a monthly administration fee in the amount of
$1,440, as such amount shall have been adjusted
annually on each June 18 commencing June 18, 1991 based
upon the change in the GDPDI. Such fee shall be offset
against JCP&L's payment to Seller pursuant to Section
10.1. This fee is to be further adjusted annually on
each June 18 after the Effective Date based upon the
change in the GDPDI.
10.4 JCP&L shall have the right to set off at any time
against any and all amounts which may be due and owing
from JCP&L to Seller under this Amended and Restated
Agreement the full cost of any and all materials,
equipment, services and supplies for which payment is
past due.
10.5 a) In the event adjustments or corrections to
billing statements are required as a result of
inaccurate meters or other errors in computation or
billing, the Parties shall recompute amounts due from
or to JCP&L during the period of inaccuracy as provided
in Article 7 hereof and otherwise correct any errors in
such billing statement. If the total amount, as
recomputed, due from a Party for the period of
inaccuracy varies from the total amount due as
previously computed, and payment of the previously
computed amount has been made, the difference shall be
paid to the Party entitled to it within thirty (30)
days after the recomputation.
b) If JCP&L or Seller does not receive written notice from
the other Party of an objection to a billing statement
within thirty (30) days from the rendering thereof,
said billing statement shall be deemed correct.
ARTICLE 11
ACCESS TO SELLER'S FACILITY
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Properly accredited representatives of JCP&L shall, at
reasonable times, with reasonable notice to Seller and subject to
compliance with all of Seller's reasonable safety rules, have
access to Seller's Facility for any purpose reasonably connected
with this Amended and Restated Agreement or the exercise of any
right secured to JCP&L by law or its Tariff for Electric Service.
ARTICLE 12
FORCE MAJEURE
12.1 a) The term "force majeure" as used herein means
unforeseeable causes beyond the reasonable control of
and without the fault or negligence of the party
claiming "force majeure", including but not limited to
acts of God, strike, flood, earthquake, storm, fire,
lightening, epidemic, war, riot, civil disturbance,
sabotage, change in law or applicable regulation
subsequent to the date thereof and action or inaction
by any federal, state or local legislative, executive,
administrative or judicial agency or body which, in any
of the foregoing cases, by exercise of due foresight
such party could not reasonably have been expected to
avoid, and which by the exercise of due diligence, it
is unable to overcome.
b) Anything to the contrary contained in Section
12.1(a) or otherwise herein notwithstanding, except as
may expressly be provided in Section 12.1(a), the term
"force majeure" shall not include any of the
following:'
i) Any reduction, curtailment or interruption of
generation or operation of the Generating Facility,
whether in whole or in part, or the ability of
JCP&L to accept or transmit electricity generated
by the Generating Facility which reduction,
curtailment or interruption is caused by or arises
from the action or inaction of any third party,
including without limitation, any vendor or
supplier to the Generation Facility or JCP&L of
material, equipment, supplies or services, unless,
and then only to the extent that, any such action
or inaction would itself be excused hereunder as a
"force majeure"; provided, however, that failure
of JCP&L to supply natural gas to the Facility
during periods when PSE&G has not interrupted or
recalled the interstate or intrastate transporta-
tion that it supplies under the PSE&G Gas Supply
Agreement and to accept available Output from the
Facility shall be considered a "force majeure"
event with respect
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to the obligations of Seller hereunder, provided,
further, that the non-supply of natural gas by
JCP&L during periods when PSE&G has interrupted or
recalled the interstate or intrastate
transportation that it supplies under the PSE&G
Gas supply Agreement shall not be considered a
"force majeure" event hereunder;
ii) Any outage, whether or not due to the fault
or negligence of JCP&L or Seller, of the
Generating Facility or JCP&L's electric system
attributable to a defect or inadequacy in the
manufacture, design or installation of the
Generating Facility or JCP&L's facilities or
equipment or to a breakdown of their mechanical or
electrical equipment that prevents, curtails,
interrupts or reduces the ability of the
Generating Facility to generate electricity or the
ability of JCP&L to perform its obligations
hereunder; or
iii) Changes in market conditions that affect the
cost or availability of the Generating Facility's
primary or alternate fuel supply or demand for
Seller's products or affect JCP&L's fuel supplies
or alternate supplies of electric energy or
customer demand therefor.
12.2 Except for the obligation of either Party to make any
required payments hereunder, the Parties shall be excused
from performing their respective obligations under this
Amended and Restated Agreement and shall not be liable in
damages or otherwise if and to the extent that they are
unable to so perform or are prevented from performing by a
"force majeure", provided that:
a) the non-performing Party, as promptly as practicable
after the occurrence of the "force majeure", but in no
event later than 14 days thereafter, gives the other
Party written notice describing the particulars of the
occurrence;
b) the suspension of performance is of no greater scope
and of no longer duration than is reasonably required
by the "force majeure";
c) the non-performing Party uses its best efforts to
remedy its inability to perform; and
d) as soon as the non-performing Party is able to resume
performance of its obligations excused as a result of
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the occurrence, it shall give prompt written
notification thereof to the other Party.
12.3 Neither Party shall be required to settle any strike,
walkout, lockout or other labor dispute on terms which, in
the sole judgment of the Party involved in the dispute, are
contrary to its interest, it being understood and agreed
that the settlement of strikes, walkouts, lockouts or other
labor disputes shall be entirely within the discretion of
the Party having such dispute.
12.4 a) Either Party may terminate this Amended and
Restated Agreement upon 10 days written notice if,
following the Effective Date (1) the Generating
Facility is either destroyed or substantially damaged
and Seller advises JCP&L that it does not intend
promptly to reconstruct or repair the Generating
Facility, or (2) an event of "force majeure" hereunder
prevents either Party from substantial performance of
its respective obligations hereunder for a period of 24
consecutive months; provided, however, that this
Amended and Restated Agreement may not be so terminated
if the Party prevented from performing due to such
"force majeure" event (i) is, to the reasonable
satisfaction of the other Party, unable despite the use
of its best efforts to overcome the effects of such
"force majeure" during such 24 months and (ii)
demonstrates to the reasonable satisfaction of the
other Party that the effects of such "force majeure"
can nevertheless be overcome and that it is diligently
applying its best efforts to do so. The Party
prevented from performing shall at its expense provide
the other Party not later than 60 days following a
request therefor or with an opinion of an independent
engineering firm, reasonably acceptable to such other
Party, supporting the matters set forth in (ii) above.
Failure to provide such an opinion shall be adequate
ground for termination of this Amended and Restated
Agreement.
b) Upon termination of this Amended and Restated
Agreement as provided in subparagraph (a) above, the
Parties shall have no further liability or obligation
to each other except for any obligations arising prior
to the date of such termination.
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ARTICLE 13
INSURANCE LIABILITY AND INDEMNIFICATION
13.1 Insurance
a) Seller agrees to keep, or cause its contractors to
keep, the Generating Facility continuously insured with
reputable insurance companies against loss or damage in
the amounts and for the risks that property of similar
character is usually so insured by entities owning and
operating like properties.
b) Seller shall maintain, or cause its contractors to
maintain, in effect insurance coverage for the
Generating Facility with initial minimum limits as
follows:
Insurance Limits
1. a. Worker's Compensation
Insurance As required by statute
b. Employer's Liability
Insurance $1,000,000
2. Comprehensive General Liability
(Public Liability) Insurance
including:
a. Bodily Injury $5,000,000 per occurrence
and
Property Damage $5,000,000 per occurrence
or
b. Bodily Injury $5,000,000 combined
and single occurrence
Property Damage
c. Personal Injury $5,000,000 per occurrence
3. Automobile Liability Insurance
(Owned, hired and non-owned):
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a. Bodily Injury $2,000,000 per Accident
b. Property Damage $2,000,000 per Accident
c) Seller shall also procure or cause to be procured and
maintain in effect business interruption insurance (or
in lieu thereof, an operation and maintenance agreement
for the Generating Facility with a reputable equipment
manufacturer containing availability guarantees for the
Generating Facility which agreement shall be
satisfactory to JCP&L).
d) JCP&L may, upon 90 days prior written notice, require
Seller and Seller shall, from time to time, increase
the foregoing initial limits to amounts which shall be
reasonable, based upon. (a) commercial availability of
such increased limits on commercially reasonable terms,
and (b) the location, size and type of the Generating
Facility, to meet changed circumstances and then
current industry practice.
e) Seller's liability insurance (other than its worker's
compensation insurance) shall include provisions or
endorsements (a) naming JCP&L as an additional insured,
(b) stating that such insurance is primary insurance
with respect to the interest of JCP&L and that any
insurance maintained by JCP&L is excess and not
contributory insurance with the insurance required
hereunder, and providing that such policies shall not
be canceled or their limits of liability reduced except
upon 30 days prior written notice to JCP&L.
f) A copy of each such insurance policy, certified as a
true copy by an authorized representative of the
issuing insurance company or in lieu thereof, a
certificate in form satisfactory to JCP&L certifying
that such insurance is in effect, shall be furnished to
JCP&L not less than 30 days prior to the commencement
of construction of the Interconnection Facilities and
15 days prior to the expiration date of each such
policy.
13.2 Liability
Neither JCP&L nor Seller, nor their respective officers,
directors, agents, employees, parent or affiliates, or their
respective officers, directors, agents or employees shall be
liable to the other Party or its parent, subsidiaries,
affiliates, officers, directors, agents, employees,
successors, or assigns, for claims for incidental, special,
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indirect or consequential damages of any nature connected
with or resulting from performance or non-performance of
this Amended and Restated Agreement, including, without
limitation, claims in the nature of lost revenues, income or
profits (other than payments properly due under this Amended
and Restated Agreement) irrespective of whether such claims
are based upon warranty, negligence, strict liability,
contract operation of law or otherwise.
Seller shall be liable to JCP&L for any and all direct
damage caused to JCP&L's facilities and property resulting
from or caused by the presence, operation, maintenance,
condition, electrical output or removal of Seller's
Facility.
Nothing in this Amended and Restated Agreement shall be
construed to create any duty to, any standard of care with
reference to, or any liability to, any person not a Party
hereto.
Except where specifically stated in the Amended and Restated
Agreement to be otherwise, the duties, obligations and
liabilities of the Parties are intended to be several and
not joint or collective. Nothing contained herein shall
ever be construed to create an association, trust,
partnership, or joint venture or impose a trust or
partnership duty, obligation or liability on or with regard
to either Party. Each Party shall be individually and
severally liable for its own obligation hereunder.
13.3 Seller hereby indemnifies and agrees to defend JCP&L, its
Affiliates, officers, directors, partners, agents and. employees
against all loss, damage, expense, and liability to third persons
for injury to or death of persons or damage to property,
proximately caused by the negligent design, construction,
ownership, operation or maintenance of any of Seller's works or
facilities used in connection with this Amended and Restated
Agreement, and JCP&L indemnifies and agrees to defend Seller, its
Affiliates, officers, directors, agents, partners, and employees
against all loss, damage, expense and liability to third persons
for injury to or death of persons or injury to property
proximately caused by the negligence of JCP&L, in connection
therewith; provided, however, that neither Party, nor their
respective Affiliates, officers, agents, directors, partners, or
employees shall be liable to the other Party, its Affiliates,
agents, officers, directors, partners, or employees for
incidental, special, indirect or consequential damages of any
nature connected with or resulting from performance or non-
performance of this Amended and Restated Agreement. Each Party
hereto shall furnish the other Party with written notification as
soon as practicable (but in no event later than ten (10) days
prior to
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the time any response is required by law) after such Party
becomes aware of any event of circumstances, or the threat
thereof, which might give rise to such indemnification. At
the indemnified Party's request, the indemnifying Party
shall defend any suit asserting a claim covered by this
indemnity and shall pay all costs and expenses (including
the cost of investigation and attorney's fees and expenses)
that may be incurred in enforcing this indemnity. The
indemnified Party may, at its own expense, retain separate
counsel and participate in the defense of any such suit or
action.
ARTICLE 14
EVENTS OF DEFAULT
14.1 Definition
The following shall constitute an Event of Default
hereunder:
a) JCP&L fails to make payment of any amount undisputed
due Seller hereunder, which failure continues for a
period of thirty (30) days after notice of such
nonpayment;
b) JCP&L or Seller fails to perform fully any material and
essential obligation hereunder, which failure is not
excused by force majeure or the non-performance of the
other Party and such failure continues for more than
thirty (30) days after notice of such failure to
perform. However, the notice and thirty (30) day grace
period of the Paragraph (b) shall not apply to the
breaches covered by paragraphs (c), (d) and (e) below;
c) Except for sales of electricity to DuPont as may be
specifically provided herein, Seller sells or supplies
any Electricity from the Facility to a party other than
JCP&L without JCP&L's prior written consent;
d) By order of a court of competent jurisdiction, a
receiver or liquidator or trustee of either Party or of
any of the property of either Party shall be appointed,
and such receiver or liquidator or trustee shall not
have been discharged within a period of sixty (60) days;
or if by decree of such a court, a Party shall be adjud-
icated bankrupt or insolvent or any substantial part of
the property of such Party shall have been sequestered,
and such decree shall have continued undischarged and
unstayed for a period of sixty (60) days after the
entry thereof; or if a petition to declare bankruptcy
or to reorganize a Party pursuant to any of the
provisions of
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the Federal Bankruptcy Act, as it now exits or as it
may hereafter be amended, or pursuant to any other
similar state statute applicable to such Party, as now
or thereafter in effect, shall be filed against such
Party and shall not be dismissed within sixty (60) days
after such filing; or
e) If either Party shall file a voluntary petition in
bankruptcy under any provision of any federal or state
bankruptcy law or shall consent to the filing of any
bankruptcy or reorganization petition against it under
any similar law; or, without limitation of the
generality of the foregoing, if a Party shall file a
petition or answer or consent seeking relief or
assisting in seeking relief in a proceeding under any
of the provisions of the Federal Bankruptcy Act, as it
now exists or as it may hereafter be amended, or
pursuant to any other similar state statute applicable
to such Party, as now or hereafter in effect, or an
answer admitting the material allegation of a petition
filed against it in such a proceeding; or if a Party
shall make an assignment for the benefit of its
creditors; or if a Party shall admit in writing its
inability to pay its debts generally as they become
due; or if a Party shall consent to the appointment of
a receiver or receivers, or trustees, or liquidator or
liquidators of it or of all or any part of its
property.
14.2 Remedies for Breach
a) If the defaulting Party fails to cure any default
within thirty (30) days of receipt of notice of said
default, the non-defaulting Party may seek all
available remedies at law or in equity, including
without limitation the right to recover damages caused
by such default; provided, however, that neither Party,
nor their respective Affiliates, officers, agents,
directors, partners or employees shall be liable to the
other Party, its Affiliates, officers, agents,
directors, partners or employees for incidental,
special, indirect or consequential damages of any
nature connected with or resulting from performance or
non-performance of this Amended and Restated Agreement.
b) Secured Party's Option
In the event that Seller has assigned this Amended and
Restated Agreement as a security interest to a lender
pursuant to and in accordance with Article 18 hereof,
then such lender shall be entitled to receive notice of
any breach hereof by Seller and such lender shall have
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the same opportunity as Seller to cure such breach to
the extent Seller has agreed to give such right to its
lender.
c) If either Party breaches this Amended and Restated
Agreement, the other Party has the right (but not the
duty) to bring an action in a court of competent
jurisdiction to require the breaching Party to
terminate such breach and to specifically perform the
breaching Party's obligation in accordance with the
terms and conditions of the Amended and Restated
Agreement.
14.3 JCP&L's Rights and Obligations
Except as herein. otherwise provided, unless and until this
Amended and Restated Agreement has been terminated, JCP&L
shall not, as a result of any breach or alleged breach by
Seller, refuse to make, suspend or delay any of the payments
due Seller hereunder.
14.4 Waiver of Breach
Either Party may waive breach by the other Party, provided
that no waiver by or on behalf of either JCP&L or Seller of
any breach of any of the covenants, provisions, conditions,
restrictions or stipulations contained herein shall take
effect or be binding on JCP&L or Seller unless the waiver is
reduced to writing and executed by JCP&L or Seller, and any
such waiver shall be deemed to extend only to the particular
breach waived and shall not limit or otherwise affect any
rights that JCP&L or Seller may have with respect to any
other or future breach.
ARTICLE 15
REGULATORY APPROVAL
15.1 This Amended and Restated Agreement shall not become
effective until each of the following shall have occurred:
a) the BPU Order shall have been issued;
b) the Bankruptcy Court shall have issued the Approval
Order;
c) the existing Gas Service Agreement dated May l3, 1993
between Seller and PSE&G shall have been terminated or
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assigned to JCP&L without any liability to Seller or
the Facility;
d) JCP&L shall have entered into the PSE&G Gas Supply
Agreement or, if the existing Gas Service Agreement
described in clause (c) shall have been assigned to
JCP&L, such agreement shall have been amended or
modified to JCP&L's satisfaction, in its sole
discretion, and in either case such agreement shall
have received all necessary regulatory approvals and
otherwise become effective in accordance with its
terms; and
e) that certain Third Amendment to Power Purchase
Agreement dated as of December ___, 1995 by and between
O'Brien (Newark) Cogeneration, Inc. and JCP&L shall
have become effective in accordance with its terms.
The Parties agree to use all reasonable efforts to obtain
such approvals in a timely manner, and if requested by
Seller, agree to negotiate in good faith any changes which
the BPU may request as a condition to the issuance of the
BPU Order. Any changes herein which may be requested by
Seller's Lenders will be negotiated by Seller and JCP&L in
good faith.
ARTICLE 16
NOTICES AND SERVICE
16.1 All notices required or permitted hereunder shall be in
writing and shall be personally delivered or sent by
certified United States mail, postage prepaid, telex,
facsimile transmission, or overnight express mail or courier
service addressed as follows:
If to Seller to:
O'Brien (Parlin) Cogeneration, Inc.
c/o NRG Energy
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
If to the Company to:
Jersey Central Power & Light Company
Attn: Manager -Cogeneration
300 Madison Avenue
Morristown, New Jersey 07962-1911
or to other person at such other address as a Party shall
designate by like notice to the other Party.
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16.2 Unless otherwise provided herein, all notices hereunder
shall be deemed to be given when sent or personally
delivered.
ARTICLE 17
AMENDMENTS
No amendment or modification of the terms of this
Amended and Restated Agreement shall be binding on either JCP&L
or Seller unless reduced to writing and signed by both Parties.
Unless otherwise agreed by the Parties, no such amendment or
modification shall become effective unless approved by the BPU in
form and substance satisfactory to each Party.
ARTICLE 18
RIGHT OF FIRST REFUSAL AND CONSENT
FOR THIRD PARTY INTERESTS
Neither Party shall transfer, assign, merge or delegate
its rights, interest or duties hereunder without the prior
written consent of the other Party, nor shall Seller sell or
transfer all or any part of the Project facilities covered by
this Amended and Restated Agreement, without the prior written
consent of JCP&L. Such prior written consent will not be
unreasonably withheld, but will, in addition to any other
reasonable conditions, require that: (1) the proposed
transferee, purchaser, assignee, delegatees or acquirer has
agreed in writing to be bound by all the terms and conditions
hereby, and (2) in the case of a proposed sale or transfer by
Seller of part or all of the Project facilities covered hereby,
Seller shall have first offered in writing to sell or transfer
such facilities to JCP&L pursuant to the same terms and
conditions that Seller will enter into with the proposed
transferee or purchaser, and JCP&L in writing has rejected such
offer. Upon presentation of said offer to JCP&L by Seller, JCP&L
shall have thirty (30) days to review and approve said offer. If
Seller does not receive written notification from JCP&L within
said thirty (30) days, it shall be presumed that JCP&L has no
objection to the proposed transaction and has rejected such
offer. Any sale, transfer, assignment, merger or delegation made
without such prior written consent shall be null and void.
It is specifically understood and agreed by and between
the Parties that JCP&L may at any time, without Seller's consent,
assign this Amended and Restated Agreement to any successor to
JCP&L, or to Pennsylvania Electric Company, Metropolitan Edison
Company, or any other electric utility which is part of the
General Public Utilities' System, provided that such assignee
agrees to be
46
<PAGE>
bound by all of the terms and conditions of the Amended and
Restated Agreement.
ARTICLE 19
CHOICE OF LAW
The Parties hereto hereby agree that all disputes
arising under the Amended and Restated Agreement not resolved
between the Parties shall be decided by a court of competent
jurisdiction in the State of New Jersey and Seller hereby submits
itself to the jurisdiction of such court for such purposes.
ARTICLE 20
CERTAIN JCP&L COSTS
Seller hereby agrees to reimburse JCP&L for JCP&L's
costs and expenses (including reasonable fees and expenses of
JCP&L's counsel) incurred in connection with JCP&L's review,
execution and delivery of any instruments agreements, or
documents necessary in connection with Seller's assignment,
transfer, sale or other disposition of this Amended and Restated
Agreement or any interest in the Facility.
ARTICLE 21
OTHER AGREEMENTS
From and after the Effective Date, this Amended and
Restated Agreement shall supersede any and all oral or written
agreements and understandings heretofore made relating to the
subject matter hereof, including without limitation the Power.
Purchase Agreement, and this Amended and Restated Agreement
constitutes the entire agreement and understanding of the Parties
relating to the subject matter hereof.
ARTICLE 22
CAPTIONS
All indices, titles, subject headings, section titles
and similar items are provided for the purpose of reference and
convenience and are not intended to be inclusive, definitive or
to affect the meaning, content or scope hereof.
47
<PAGE>
ARTICLE 23
PARTIES
Wherever in the Amended and Restated Agreement any
Party shall be designated or referred to by name or general
reference, such designation is intended to and shall have the
same effect as if the words, "heirs, executors, administrators,
personal or legal representatives, and permitted successors,
purchasers, transferees, grantees, delegatees, and assignees" had
been inserted after each and every such designation and all the
terms, covenants and conditions herein contained shall be for and
shall inure to the benefit of and shall bind the respective
Parties hereto, and their heirs, executors, administrators,
personal or legal representatives, and their permitted
successors, purchasers, transferees, grantees, delegatees and
assignees, respectively.
In all references herein to any parties, persons,
entities or corporations the use of any particular gender or the
plural or singular number is intended to include the appropriate
gender or number as the text hereof may require.
ARTICLE 24
COUNTERPARTS
This Amended and Restated Agreement may be executed in
any number of counterparts, and all such counterparts executed
and delivered, each as an original, shall constitute but one and
the same instrument.
ARTICLE 25
WAIVER
Any waiver at any time by either Party of its rights
with respect to a default hereunder, or with respect to any other
matters arising in connection with this Amended and Restated
Agreement, shall not be deemed a waiver with respect to any
subsequent default or any other matter.
ARTICLE 26
DISPUTES
Should a dispute between the Parties arise hereunder,
the Parties hereto shall continue in good faith to perform their
respective obligation hereunder. The Parties shall negotiate
with
48
<PAGE>
each other in a bona fide effort to resolve any such dispute
without resorting to judicial proceeding, and failing settlement,
they shall submit any unresolved dispute for settlement by
alternative dispute resolution techniques. If the dispute
remains unresolved for more than ninety (90) days after formal
commencement of such efforts to resolve the dispute, either Party
may seek judicial enforcement of its rights and remedies
hereunder as herein provided. Notwithstanding the foregoing, the
rights and remedies of the Parties hereto set forth in Article 14
shall in no way be impaired, restricted or otherwise affected.
ARTICLE 27
GRATUITIES
JCP&L shall prohibit its employees from using their
official position for personal financial gain, or from accepting
any personal advantage from anyone under circumstances which
might reasonably be interpreted as an attempt to influence the
recipients in the conduct of their duties. Seller and its
employees and representatives shall not, under circumstances
which might reasonably be interpreted as an attempt to influence
the recipients in the conduct of their duties, extend any
gratuity or special favor to employees of JCP&L.
IN WITNESS WHEREOF, the Parties hereto have caused this Amended
and Restated Agreement to be signed by their respective officers
thereunto duly authorized as of the day and year first set forth
above.
IN WITNESS
ATTEST: O'BRIEN (PARLIN) COGENERATION, INC.
By: /s/ Leonard Bluhm
Title: Title:
ATTEST: JERSEY CENTRAL POWER & LIGHT COMPANY
By: /s/ M. P. Morell
Assistant Secretary Title: Vice President
49
<PAGE>
Appendix A
Facility Fuel Management Services
A.1 GPU Natural Gas Private Pooling Point ("PPP")
A.1.1 GPU Service Corporation ("GPUSC") is authorized to
act on behalf of and as agent for JCP&L in all matters pertaining
to the procurement and delivery of natural gas for consumption by
those participating gas-fired generating facilities owned by
JCP&L or certain facilities owned by an Independent Power
Producer with a Power Purchase Agreement with JCP&L, including
the Facility. JCP&L and GPUSC shall hereafter collectively be
referred to as the "Company".
A.l.2 GPUSC has established a Natural Gas Private
Pooling Point ("PPP"), which is a portfolio of natural gas supply
and transportation assets, that is managed collectively by New
Jersey Natural Energy Corporation ("NJNE") and GPUSC pursuant to
a Master Fuel Management Agreement. NJNE is a wholly owned
subsidiary of New Jersey Resources Corporation.
A.1.3 Facilities served by the PPP, including the
Facility, will be provided a comprehensive natural gas management
service such that neither the Facility's owners nor operator
shall be responsible nor held liable for procuring, transporting,
scheduling, nominating or delivering natural gas to the
Facility's burner tip. In the case of the Facility, this shall
include serving the requirements of the base load portion of the
Facility, the additional loads when the Facility's dispatchable
operation is directed by the Company's dispatchers, or the
additional loads and requirements for producing steam (and, if
applicable, electricity) for DuPont (including the Facility's
auxiliary boilers) provided that Seller both complies with the
explicit notification requirements set forth herein and elects to
accept delivery of such natural gas at the price specified in
Sections A.2.2 and A.2.3 below, as appropriate.
A.l.4 GPUSC has designated a full time employee assigned
to the PPP, and officed at GPUSC's dispatch center, to coordinate
all natural gas procurement and scheduling for PPP facilities
including the Facility. Such employee shall hereafter be
referred to as the "Fuel Manager". The Fuel Manager or his
designee shall be available twenty-four hours per day, seven days
per week.
A.2 Operations
A.2.l The PPP shall provide natural gas to the
Facility's Burner Tip to operate the Base Capacity of the
Facility unless the Seller notifies the GPUSC dispatcher that
such Base Capacity is not available as a consequence of a planned
or forced outage. In the event of a forced outage, the Seller
shall immediately notify the Company dispatcher of the outage
condition and its anticipated duration. The Seller shall notify
JCP&L of a major Planned
<PAGE>
Outage, i.e., scheduled outages expected to last longer than
seven (7) consecutive days, at least two (2) months prior to the
planned start of said outage. Further, the Seller shall notify
JCP&L of its intent to resume operation of the Base Capacity at
least one (1) week prior to the completion of a major Planned
Outage. Seller shall use best efforts to notify the Company of
Maintenance Outages and short duration Planned Outages, i.e.,
unscheduled Planned Outages or Planned Outages expected to take
less than seven (7) days, within one day of the decision to
conduct such an outage. If the PPP fails to properly procure and
cause to be delivered an adequate supply of natural gas to
operate the Base Capacity of the Facility during periods when
PSE&G has not interrupted or recalled the interstate or
intrastate transportation that it supplies to the PPP pursuant to
its agreement with the Company to support, among other things,
the operation of the Facility, then the Seller shall,
nonetheless, ensure that an adequate supply of kerosene is
available at all times and agree to operate the Base Capacity of
the Facility on kerosene provided that the Company shall pay for
said kerosene pursuant to Article 9 of the Agreement and that
operation of the Facility on kerosene does not cause the Facility
to violate its air permits. Alternatively, the Seller may Procure
and cause to be delivered a supply of natural gas to the Facility
from a third party supplier to operate the Base Capacity of the
Facility during such periods. The Company shall reimburse the
Seller for the all-in cost of such natural gas up to the sum of
the mid-point of the range of the most recent price to Mid-
Atlantic Citygates, Transco, Zone 6, or Texas Eastern, Zone M-3,
whichever is greater, as published in the following day's Gas
Daily, Eastern Edition, and PSE&G's reasonable charge to
transport said natural gas to the Facility.
A.2.2 In accordance with Section 6.13 of the Agreement,
the Seller may elect to generate up to 50 MW during periods of
non-dispatch if it agrees to pay for the proportional amount of
fuel to generate such excess. The Seller shall notify the Fuel
Manager by telephone and fax of its intention to generate such
excess prior to 0900 hours of the day preceding Seller's proposed
generation in order for the PPP to make proper arrangements for
additional supplies and delivery of natural gas. The Fuel
Manager shall fax confirmation of the Seller's request by 1200
hours on that day and shall also provide to the Seller a firm
price quote for the additional fuel. The Fuel Manager shall use
reasonable efforts to procure and cause to be delivered such gas
at a competitive, market based price. Upon receipt of such firm
price quote, Seller shall have the option, to be exercised by
telephone or fax notice by 1300 hours on that day, (i) to accept
such firm price quote, or (ii) to elect not to take the requested
gas from the PPP, but instead to procure and pay for other gas
directly from a third party supplier, or (iii) to elect not to
generate additional energy above the Base Capacity. In the event
Seller elects to procure and pay for gas from a third party
supplier, JCP&L shall seek to cause such gas to be delivered to
the Facility through its intrastate transportation agreement with
PSE&G, at the contract rates provided therein, all at Seller's
expense.
A.2.3 In accordance with Section 9.1 of the Agreement,
the PPP shall be responsible for tendering natural gas to the
Facility for production of steam (and, if applicable,
electricity) for DuPont, including natural gas required for the
Facility's auxiliary boiler which shall be operated, from time to
time, by the Seller to produce steam for sale to DuPont. The
Seller shall notify the Fuel Manager of its intention to operate
the Facility to
2
<PAGE>
produce steam and electricity, if applicable, for DuPont, if such
operation would require operating the Facility at a greater load
than would otherwise be required to provide Base Capacity and/or
Dispatch Capacity to JCP&L under the Agreement, including
Seller's intention to operate the auxiliary boiler, and the
amount of natural gas required prior to 0900 hours of the day
preceding Seller's proposed operation in order for the PPP to
make proper arrangements for additional supplies and delivery of
natural gas or, if notice by such time is not feasible (e.g.,
because notice of reduction in the Dispatch Capacity was not
given by JCP&L by that time or because of the sudden occurrence
of a full or partial Forced Outage), as much notice as is
feasible under the circumstances. The Fuel Manager shall fax
confirmation of the Seller's request by 1200 hours on that day
(or, if response by that time is not feasible because shorter
notice was given by Seller as permitted under the previous
sentence, as soon as is feasible). Seller shall pay for such
additional natural gas at the rate provided in Section A.2.5
below.
A.2.4 Once nominated, the Seller is obligated to consume
within plus or minus five percent (5%) any additional gas
requested pursuant to Sections A.2.2 and A.2.3 hereof, in the
aggregate during each calendar month, unless other arrangements
can be made at the time between the Seller and the Fuel Manager.
In the event the Facility, for whatever reason, is unable or
fails to consume the additional gas that it had previously
requested, the Company shall use reasonable efforts to redirect,
place into storage, or remarket such excess gas so as to mitigate
the cost of disposing of said excess gas. Should the Facility
consume an amount of natural gas greater than one hundred and
five percent (105%) of the aggregate amount requested during the
calendar month, then the Company shall use reasonable efforts to
remedy any resulting imbalances including, when practicable,
withdrawal of natural gas reserves from storage if an adequate
supply of such natural gas exists and can be accessed. However,
the incremental cost of such gas along with any and all penalties
or claims that may nonetheless be applied by a third party,
including but not limited to an interstate pipeline company or
PSE&G, as a result of an imbalance, shall be paid by the Seller.
A.2.5 The Fuel Manager shall provide the Company and the
Seller with a monthly weighted average cost of gas ("WACOG") to
the PSE&G city gate that shall be combined with the cost of
variable intrastate transportation charged to the PPP by PSE&G to
deliver gas to the Facility's burner tip. The combined WACOG and
intrastate transportation charges will be used in the calculation
of Seller's reimbursement to ICP&L for steam (and, if applicable,
electric) sales to DuPont. The WACOG shall be the PPP's overall
WACOG at PSE&G's city gate and shall be reported to the Company
and the Seller no later than three (3) business days after the
end of the month. Upon receipt of the Seller's written request,
the Fuel Manager shall provide documentation supporting the
calculation of the WACOG and shall provide access, as required to
relevant supporting detail including invoices and LDC metering
summaries.
A.2.6 The Company may request that the Seller operate
the Dispatch Capacity of the Facility. A Scheduled Dispatch
Period shall require a minimum of thirty (30) minutes advanced
notice prior to the commencement of a Start-up Period which shall
not exceed one and one half hours (plus the supplemental Start-up
period in the case of a cold start). The PPP shall provide all
natural gas required by the Facility during a Start-Up Period
(plus the
3
<PAGE>
supplemental Start-up period in the case of a cold start), the
Scheduled Dispatch Period and the subsequent Shut-Down Period.
It is the responsibility of the PPP to ensure that an adequate
supply of natural gas is available to operate the Dispatch
Capacity of the Facility, subject to the adjustments contemplated
in Sections 6.11. The Fuel Manager shall estimate the amount of
natural gas required based upon the anticipated duration of the
Scheduled Dispatch Period, the level of Dispatch requested (i.e.,
second combined cycle, duct firing, or maximum output), the
typical natural gas consumption during regular Start-Ups and Shut-
Downs and the expected heat rate of the Facility. Unless
otherwise advised by the Seller, the Fuel Manager shall utilize
the Average Heat Rate of the preceding Contract Year, or 9500
BTU/kWh, to determining the natural gas requirements of the
Facility. Seller shall use reasonable efforts to maintain an
accurate estimate of the Facility's Heat Rate and shall report
any significant variations (i.e., +1-5%) from the Average Heat
Rate then in effect, either due to the material condition of the
Facility or temperature conditions. Seller shall not be
responsible for any cost or charges, including storage or
remarketing costs or imbalance charges, resulting from any
difference between such estimates and the Facility's actual usage
provided that (i) Seller operates the Facility as contemplated
and (ii) Seller has properly notified the Fuel Manager of any
significant variations in the Heat Rate used by the Fuel Manager
in calculating the natural gas requirements of the Facility. If
the PPP fails to properly procure and cause to be delivered an
adequate supply of natural gas to operate the Dispatch Capacity
of the Facility during periods when PSE&G has not interrupted or
recalled the interstate or intrastate transportation that it
supplies to the PPP pursuant to its agreement with the Company to
support, among other things, the operation of the Facility, then
the Seller shall, nonetheless, ensure that an adequate supply of
kerosene is available at all times and agree to operate the
Dispatch Capacity of the Facility on kerosene provided that the
Company shall pay for said kerosene and that operation of the
Facility on kerosene, as provided in the Agreement, does not
cause the Facility to violate its air permits. In either event,
should the Company not elect to operate the Dispatch Capacity on
kerosene either because of cost or air permit restrictions, not
withstanding anything else herein to the contrary, the Seller
shall be entitled to receive compensation pursuant to Article 8
of the Agreement.
A.2.7 From time to time, the Company may direct the
Seller to operate the Facility on kerosene instead of natural gas
during periods when natural gas is either unavailable or
prohibitively expensive. In accordance with Section 6.11(a) of
the Agreement, the Company shall not request the Seller to
operate the Dispatch Capacity for more hours than is currently
authorized under the Facility's air permit without first
obtaining an appropriate variance from the New Jersey Department
of Environmental Protection. The Company shall reimburse Seller
for the cost of kerosene as provided in Article 9 of the
Agreement. The Company shall provide at least a comparable level
of natural gas service to the Facility for the purpose of
operating the Base Capacity to that provided by PSB&G to its QF
customers under its prevailing CIG Tariff.
4
<PAGE>
A.3 Metering of Natural Gas Flows to the Facility
A.3.l In accordance with Section 9.3 of the Agreement,
both Seller and JCP&L shall maintain meters for measuring the
quantity of fuel used by the Facility. It is contemplated by the
Parties at the time of this Agreement that JCP&L shall be
afforded access to PSE&G's billing meter and shall further be
permitted to connect its remote telemetering unit ("RTU") to such
billing meter for the purpose of electronically transmitting real
time fuel consumption data to GPUSC's dispatch center. In the
event that, for whatever reason, access to PSE&G's billing meter
is denied or deemed to be impracticable, then JCP&L shall have
the right to cause to be installed at its own expense a meter
capable of recording and electronically transmitting required
real time fuel consumption data at the Facility.
A.3.2 The Fuel Manager will monitor the consumption of
natural gas at the Facility to ensure that an adequate supply of
natural gas is available to operate both the Facility's Base
Capacity and, when requested by ICP&L, the Dispatch Capacity. In
the event that the Fuel Manager determines that an insufficient
quantity of natural gas remains to continue to operate the
Facility at its current level of output, it may request the
Company, and the Company may direct the Seller, that the a
Scheduled Dispatch Period be shortened unless additional supplies
can be secured. If the shortfall is substantial (i.e., greater
than 5% variation from anticipated consumption at the point in
time that the comparison is made and cannot be readily
explained), the Company and/or the Seller may request that any or
all gas measuring meters be recalibrated. If it is determined
that the additional fuel consumption is the result of a material
change in the Faci1ity's performance, the Fuel Manager shall
notify the Seller in writing immediately, who shall, in turn,
confirm receipt of such notification and explain the cause or
causes of the change in performance and what steps will be taken
to remedy the situation. The extent of the change in performance
may necessitate that the Facility be declared to be in a full or
partial Forced Outage until the condition is remedied.. In any
event, the provisions set forth in Section 8.3h of the Agreement
shall apply.
A.3.3 The Company shall seek to cause PSE&G to deliver
natural gas of interstate pipeline quality to the Facility at its
system operating pressure.
A.4 Title
A.4. 1 Title to the natural gas supply used to fuel the
Base Capacity and Dispatch Capacity of the Facility shall remain
with GPUSC.
A.4.2 Title to the natural gas requested by the Seller
to fuel the auxiliary boiler, to provide steam (and, if
applicable, electricity) to DuPont, or to operate the Base
Capacity above the 41 MW contractual limit pursuant to Section
6.13 of the Agreement shall transfer to the Seller at the PSE&G
billing meter. Such title transfer shall create an obligation on
the part of the Seller to reimburse the Company the full cost of
the natural gas as provided herein.
5
<PAGE>
A.4.3 At all times, tide to any interstate
transportation which may be used from to time to transport
natural gas to the PSE&G city gate for the purpose of operating
the Facility including the auxiliary boiler shall remain with
GPUSC.
A.4.4 The Company warrants that it will have good and
marketable tide to all natural gas supplied to Seller and full
authority to deliver such natural gas to Seller free and clear of
any liens, claims or encumbrances of any third party.
A.5 Liability
A.5.1 The Seller shall have no responsibility to procure
natural gas for the Facility, nor shall it be liable for any
claims or penalties resulting from the supply and or
transportation of natural gas to the Facility when operation of
the Facility is within the prescribed terms of the Agreement.
Such operation shall include operating the Base Capacity of the
Facility at the 41 MW limit, operating the Dispatch Capacity of
the Facility when done so in the prescribed manner in response to
a request made by the Company, operating the auxiliary boiler
during Non-Dispatch Periods upon proper notification by the
Seller to the Fuel Manager, and generating any additional output
above the Base Capacity up to 50 MW upon proper notification by
the Seller to the Fuel Manager.
A.5.2 The Seller shall be liable for the unmitigated
cost of disposing of additional gas supplies previously requested
by the Seller referenced in Section A.2.4 of this Appendix but
not consumed at the Facility pursuant to the terms and
limitations set forth in that Section.
A.5.3 The Seller shall be liable for the entire cost of
any natural gas consumed by the Base Capacity of the Facility in
excess of 41 MW or by the auxiliary boiler during Non-Dispatch
Periods as provided in Sections A.2.2 and A.2.3 above. Further,
in addition to the full cost of the natural gas consumed, the
Seller shall be entirely liable for any penalties or claims that
might result as a consequence of its failure to properly notify
the Fuel Manager of its intention to operate the Base Capacity at
a level greater than 41 MW or to operate the auxiliary boiler.
Under no circumstances shall the Seller operate the Dispatch
Capacity without the direct knowledge and consent of the Company.
Such an action on the part of the Seller shall constitute a
breach of the Agreement. Further, the Seller shall be entirely
liable for the full cost of the natural gas consumed as well as
any and all penalties or claims that might result as a
consequence of its actions.
A.5.4 The Company shall not be held liable for any fines
imposed by the New Jersey Department of Environmental Protection
on the Seller resulting from the Facility exceeding the
authorized level of operations on kerosene. It is the Seller's
responsibility to ensure compliance with all of its permits.
However, Seller shall not be obligated to produce either the Base
Capacity or the Dispatch Capacity if the PPP has not provided
adequate natural gas for such production during periods when
PSB&G has not interrupted or recalled the interstate or
intrastate transportation that it supplies to the PPP, pursuant
to its agreement with the Company, to support, among other
things, the operation of the Facility, if such production would
cause the Facility to exceed authorized levels of operation on
kerosene. Such failure
6
<PAGE>
to produce either Base Capacity or Dispatch Capacity shall not be
considered a Forced Outage under the Agreement.
A.5.5 Pursuant to Section A.2.7 of this Appendix, the
PPP shall provide a level of service comparable to PSE&G's CIG
Tariff which contemplates some number of days of interruption
during periods when the ambient air temperature falls below some
predetermined contract level. During such periods of natural gas
interruption, the Seller may operate the Facility on kerosene,
provided that such operation does not exceed the authorized
levels of operation on kerosene under the Facility's permit. The
Company shall reimburse the Seller the cost of said kerosene
pursuant to Sections 9.1 and 9.2 of the Agreement. However, if
the Seller is unable to operate the Base Capacity due to the
unavailability of kerosene or because the Facility has exceeded
the authorized number of hours of operation under the air permit,
the Company shall not be liable to the Seller for any lost
revenue that would otherwise be paid pursuant to Section 8.1 of
the Agreement and the Base Capacity shall be considered to be in
a Forced Outage and all provisions related thereto shall apply.
If the Seller is unable to operate the Dispatch Capacity on
kerosene because Seller has failed to maintain an adequate supply
of kerosene available, then the Dispatch Capacity shall be
considered to be in a Forced Outage and all provisions related
thereto shall apply.
A.6 Conflicts
A.6.1 Nothing contained in this Appendix shall supersede
or nullify any portion or provision of the Agreement. In the
event of conflict between this Appendix and the Agreement, the
terms and conditions set forth in the Agreement shall always
prevail.
A.7 Billing and Payments
A.7.1 The Parties shall establish and maintain
guidelines which shall govern the billing and subsequent payment
for natural gas volumes supplied by the Company and delivered to
the Seller at the PSB&G billing meter. Such guidelines shall be
established and amended, as required, through letter agreement.
7
<PAGE>
Appendix B
Sample DuPont Steam Credit Calculation
Actual value will be determined by plant test
<TABLE>
<CAPTION>
Plant Plant STG GTG GTG GTG Fuel HHV HHV DuPont Net
GMC NMW GMW GMW LOAD as % Consumption Fuel Fuel Steam Ht Rate
of Use Reduction BTU/kWh
GMW MMBTU MMBTU
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Full Load 5325 4825 1491 3834 100% 720% 100% 4612 9,558
40 MW & 20,000 46 41 1288 3312 864% 720% 8975% 4139 20,000 10.095 lb/hr
No Extraction 476 426 14.5 3312 864% 696% 8975% 4139 0 9.716
Loan Reduction 160 05 1.1
40 MW & no 46 41 140 320 835% 696% 8756% 4038 101 0 9,849
Extraction
<FN>
DuPont Steam Credit 504.2 BTU/l.b
Assumptions
12.500 lb/MWh calculated by (3413 BTU/kWh)/(303 BTU/lb)/098 (for
gen)/092 (for mechanical)
1.60 MW steam electric value
0753 fuel reduction/loan reduction
</TABLE>
<PAGE>
Exhibit 10.17.4
April 30, 1996
O'Brien (Newark) Cogeneration, Inc.
O'Brien (Parlin) Cogeneration, Inc.
1221 Nicollet Mall
Minneapolis, Minnesota 55403
Re: Amended and Restated Agreement for Purchase and Sale of
Electric Power (the "Parlin PPA") between O'Brien (Parlin)
Cogeneration, Inc. ("Parlin") and Jersey Central Power &
Light Company ("JCP&L") and the Third Amendment to Power
Purchase Agreement ("Newark Third Amendment") between
O'Brien (Newark) Cogeneration, Inc. ("Newark") and JCP&L.
Gentlemen:
Please refer to the above-referenced Parlin PPA and Newark Third
Amendment and to the Order of Approval dated April 29, 1996 in docket
numbers EM6604396 and EM66121345, of the State of New Jersey Board of
Public Utilities (the "BPU Approval"), a copy of which is attached hereto.
This letter is to confirm our mutual understanding and agreement that,
the BPU Approval having been received, executed signature pages to the
Third Amendment and the Parlin PPA having been exchanged, the bankruptcy
court order approving the NRG Plan (as defined in the Parlin PPA and the
Newark Third Amendment) having been entered on February 23, 1996 and the
gas supply agreement between JCP&L and Public Service Electric and Gas
Company having been entered into and approved by the New Jersey Board of
Public Utilities, all conditions precedent to the Newark Third Amendment
and the Parlin PPA have been satisfied and the Parlin PPA and the Newark
Third Amendment have become effective as of April 30, 1996.
<PAGE>
O'Brien (Newark) Cogeneration, Inc.
O'Brien (Parlin) Cogeneration, Inc.
April 30, 1996
Page 2
If the foregoing accurately sets forth our agreement, please so
indicate by executing this letter in the space provided below and sending
it to us by facsimile transmitter.
Jersey Central Power & Light Company
By: /s/ M. P. Morrell
Name: Michael P. Morrell
Title: Vice President
Agreed:
O'Brien (Newark) Cogeneration, Inc.
By: /s/ Leonard Bluhm
Leonard A. Bluhm
President
O'Brien (Parlin) Cogeneration, Inc.
By: /s/ Leonard Bluhm
Leonard A. Bluhm
President
<PAGE>
Exhibit 10.20.1
STEAM PURCHASE CONTRACT
This STEAM PURCHASE CONTRACT [the "Agreement"], dated as of
December 8th, 1986, by and between E. I. DU PONT DE NEMOURS AND
COMPANY, a Delaware Corporation with its principal office located
at 1007 Market Street, Wilmington, Delaware 19898 ["Du Pont"] and
O'BRIEN ENERGY SYSTEMS, INC., a Delaware corporation with its
principal office located at 225 South 8th Street, Philadelphia,
Pennsylvania 19106 ["O'BRIEN"].
RECITALS:
A. Du Pont owns and operates a plant at Parlin, New
Jersey, ["Du Pont's Plant"] which uses substantial quantities of
steam.
B. O'Brien is engaged in the business of building and
operating cogeneration facilities which produce steam for sale to
industries companies.
C. O'Brien wishes to provide Du Pont with all steam
required for use in the operation of Du Pont's Plant up to the
maximum quantities and in accordance with the specifications set
forth herein, and will finance, design, construct, own, operate
and maintain a cogeneration facility [the "Facility"] to be
located adjacent to Du Pont's Plant and has on even date herewith
entered into a Lease with Du Pont covering certain
<PAGE>
real property on which the Facility will be constructed [the
"Ground Lease"].
NOW, THEREFORE, in consideration of the mutual
covenants and promises herein contained and other good and
valuable consideration, the receipt of which is hereby
acknowledged, Du Pont and O'Brien hereby agree as follows:
Article 1. Representations and Warranties
A. Du Pont represents that it is a corporation
organized, validly existing and in good standing under the laws
of Delaware with full power and authority to enter into this
agreement.
B. Du Pont represents that the person executing and
delivering this agreement on Du Pont's behalf is acting pursuant
to proper authorization and that this agreement is the valid and
binding obligation of Du Pont and is enforceable in accordance
with its terms.
C. O'Brien represents that it is a corporation
organized, validly existing and in good standing under the laws
of Delaware with full power and authority to enter into this
agreement.
D. O'Brien represents that the person executing and
delivering this agreement on O'Brien's behalf is acting pursuant
to proper authorization and that this agreement is the valid and
binding obligation of O'Brien and is enforceable in accordance
with its terms.
<PAGE>
Article 2. Construction and Operation of Cogeneration Facility.
A. O'Brien agrees to construct the Facility with a
capacity adequate to deliver at least 120,000 pounds per hour of
steam to Du Pont on a continuous uninterrupted basis. To insure
this capacity, O'Brien will build two heat recovery boilers
(including supplemental firing capability) associated with the
gas turbines and a back-up boiler, each of which will be capable
of producing at least 120,000 pounds per hour. The Facility will
be capable of using natural gas or fuel oil. The back-up boiler
shall be capable of burning 0.3% sulphur No. 6 fuel oil, and
O'Brien shall provide storage tank capable of holding at least a
14 day inventory of the fuel oil. As part of the construction
process, O'Brien will dismantle and remove, at its cost, Du Pont
buildings numbered 145, 826, 1939, and such foundations, supports
underground lines and any other items which the parties agree are
required to be removed in order to build the Facility. The
Facility will be located on land leased to O'Brien by Du Pont
consisting of approximately four (4) acres pursuant to the terms
and description set out in the Ground Lease for the nominal rent
of $10.00 per annum for a term expiring 120 days after the
expiration of this Agreement. The Facility Site is described
more fully in the Ground Lease.
B. O'Brien shall operate the Facility twenty-four
hours per day, seven days a week.
C. O'Brien will obtain all permits and variances
necessary for the lawful construction and operation of the
Facility and will apply to the Federal Energy Regulatory
Commission ["FERC"] for a certificate stating that the Facility
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is a Qualifying Facility under the Public Utility Regulatory
Policies Act of 1978, as amended ["PURPA"]. If O'Brien has been
unable to obtain all necessary permits or the Facility has not
been certified as a Qualifying Facility by FERC by October 1,
1987, or within twelve months of the signing of this Agreement,
whichever is later, either party may, by written notice to the
other, terminate this Agreement without liability to the other.
D. All costs associated with the Facility, including
without limitation costs associated with engineering, licensing,
construction and operation of the Facility will be the
responsibility of O'Brien. Du Pont's sole responsibilities shall
be: (1) to provide land and provide easements as are necessary
for the construction and operation of the Facility both pursuant
to the attached Ground Lease, (2) to purchase steam as
hereinafter provided, and (3) to supply treated mainswater, at
cost.
E. O'Brien shall obtain all governmental licenses and
permits needed for the sale of steam under this Agreement, and Du
Pont will cooperate with O'Brien and take any reasonable actions
requested by O'Brien, at O'Brien's expense, in obtaining such
licenses and permits.
Article 3. Sale and Purchase of Steam
A. O'Brien agrees to sell steam to Du Pont for use in
Du Pont's Plant in quantities required by Du Pont up to a maximum
of 120,000 pounds of steam per hour in accordance with
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the terms and conditions hereof and the pressures, temperatures
and other specifications set forth in Exhibit A, Water and Steam
Supply Specifications, for a period of twenty (20) years
commencing with the Initial Delivery Date as defined in Article 4
below. If Du Pont's needs exceed 120,000 pounds per hour for
short duration peaks (less than 4 hours), O'Brien will supply up
to 150,000 pounds per hour for such short duration peaks at the
contract price. So long as Du Pont materially complies with the
terms and conditions of this Agreement and continues to purchase
during each Operating Year, O'Brien will deliver the steam at
pressures and at such temperatures and according to such other
specifications as set forth in Exhibit A hereto or as are
otherwise mutually agreed to in writing by Du Pont and O'Brien.
"Operating Year" as used herein shall be the period beginning
with the Initial Delivery Date as defined in Article 4 hereof and
ending one year thereafter, and yearly thereafter shall mean each
one year period from the anniversary of the Initial Delivery
Date.
B. O'Brien will install, maintain, operate and own such meters
as shall be necessary to measure and record the steam delivered
and received in accordance with the terms and conditions of this
Agreement and any other data necessary for the sale of steam to
Du Pont and the computation of appropriate invoices. Meters
utilized for this purpose shall meet the specifications and shall
be subject to calibration and testing as set forth in Exhibit B
hereto. Upon request, O'Brien will allow Du Pont access to this
instrumentation at reasonable
<PAGE>
hours, but all instrument reading, calibrating and adjustment
will be done only by O'Brien.
C. Du Pont will not be required to take or pay for
any steam not required for its operations at the Du Pont plant.
Insofar as Du Pont has requirements for steam at the Plant during
a twenty (20) year period beginning with the Initial Delivery
Date, it will purchase from O'Brien its requirements for steam
for the Plant up to the minimum quantity necessary for O'Brien toQualifying
Facility Status under PURPA as of the date of
this Agreement ("Minimum PURPA Obligation"), which quantity is
equal to 48,000 pounds of steam per hour, annual average. If Du
Pont has requirements greater than the Minimum PURPA Obligation,
it may elect to purchase the additional requirements from O'Brien
up to a maximum total amount of 120,000 pounds per hour.
D. Should Du Pont not take the annual Minimum PURPA
Obligation and after a one-year cure period, and if O'Brien is
unable to obtain relief from the regulatory authorities as regards
its minimum Qualifying Facility status under PURPA, O'Brien shall
have the right to conduct an affiliated thermal consuming
business acceptable to Du Pont on the property leased from Du
Pont under the Ground Lease. If required by O'Brien, Du Pont
will grant continued necessary and reasonable access across its
property to allow O'Brien to continue to operate the cogeneration
Facility and the affiliated thermal consuming business for the
term of this Agreement or any extension thereof. Du Pont will
also continue to provide the water
<PAGE>
supply for the Facility, as provided in Article 9 hereof, if Du
Pont's plant remains in operation.
E. O'Brien agrees that so long as Du Pont purchases
the Minimum PURPA Obligation in each Operating Year (except to
the extent limited by Force Majeure). O'Brien will not sell
steam from the Facility to any other person. Furthermore,
O'Brien's commitment to supply steam to Du Pont shall take
priority over any obligation to use steam to provide electricity
to any other party.
F. O'Brien shall maintain a fuel oil supply
sufficient to meet Du Pont's maximum steam requirement for
fourteen days.
Article 4. Initial Delivery Date
A. The parties will begin to deliver and receive steam under
this Agreement within five (5) business days after O'Brien has
notified Du Pont that the Facility is commercially operational
(such date of commencement of delivery is herein referred to as
the "Initial Delivery Date"). O'Brien represents that the
Initial Delivery Date shall be on or before November 30, 1989,
provided that the Initial Delivery Date shall be extended by the
occurrence and the continuation of an event of Force Majeure as
defined in Article 7 below. Should O'Brien fail to commence
delivery of steam by the Initial Delivery Date (or the Extended
Initial Delivery Date as a result of an event of Force Majeure),
O'Brien agrees to pay Du Pont as liquidated damages a sum equal
to the difference
<PAGE>
between what Du Pont would have had to pay to produce steam for
itself and the price which Du Pont is obligated to pay under this
Agreement. These liquidated damages shall be calculated pursuant
to the formula set out in Exhibit C. In lieu of accepting these
liquidated damages, or in the event that O'Brien should fail to
pay them, Du Pont shall have the right to pursue all available
remedies at law or in equity.
B. At least six months prior to the Initial Delivery
Date, O'Brien shall deliver to Du Pont steam from the back-up
boiler which will allow Du Pont to evaluate the steam condensate
from that boiler. With respect to condensate from the steam
turbine and heat recovery boiler systems, Du Pont's evaluation
will begin at start up and be completed within three months after
the Initial Delivery Date.
Article 5. Term; Termination
A. This Agreement shall be effective as of the date
of its execution and shall continue in effect thereafter for a
period of twenty (20) years beyond the Initial Delivery Date, and
remain in effect thereafter unless terminated by three years
notice by either party.
B. Upon expiration or if the Agreement is terminated
pursuant to Paragraph 5.A, Du Pont shall have the option to buy
part or all of the Facility equipment at its then fair market
value. In constructing the Facility, O'Brien shall install the
back-up boiler and all necessary auxiliaries in such a way that
it and the land on which it is located can be severed from the
rest of the Facility in the event of termination.
<PAGE>
C. If the Agreement expires or is terminated for any
reason, O'Brien shall remove at its expense that part of the
Facility not purchased by Du Pont from the Parlin site within
twelve months unless the parties otherwise agree in writing.
Article 6. Purchase Price
A. Throughout the term of this Agreement, the price
Du Pont shall pay O'Brien for the purchase of steam shall be as
provided in Exhibit D, the Purchased Steam Rate Schedule.
B. If Du Pont can secure or otherwise provide gas
equivalent to its steam demand (as defined in Exhibit A) at a
price lower than the cost of the gas supply being used by
O'Brien, then O'Brien will contract with Du Pont for such gas if
O'Brien's existing gas supply agreement does not prohibit or
penalize O'Brien for taking such gas. Assuming the Du Pont gas
can be used by O'Brien, the parties will negotiate in good faith
to arrive at a mutually acceptable price for the gas and steam.
Article 7. Force Majeure; Contingency
A. As used in this Agreement, "Force Majeure" shall be
an event by which either party shall be prevented from delivering or
receiving steam by reason of or through flood, earthquake, storm,
tornado, lightning, fire, explosion, war, riot, civil
disturbances, strikes or other labor stoppage, sabotage,
restraint by governmental authority (including any delay or
failure by a governmental authority to issue any
<PAGE>
necessary permit or license), major equipment breakdown not due
to the sole negligence of O'Brien or Du Pont, inability to obtain
necessary labor or unforeseen shortages in materials or work from
subcontractors, and other like events beyond the control of the
parties, but shall not include economic hardship, the price
O'Brien receives for electricity, the price O'Brien pays for
natural gas or other fuel, or lack of a customer for the
electricity.
B. If an event of Force Majeure results in a party's
being unable to perform in full or in part its obligations under
this Agreement, that party shall not be deemed to be in breach of
this Agreement if the hindered party used its best efforts to
perform its obligations under this Agreement and to reduce the
losses to the other party arising from the event of Force
Majeure. If an event of Force Majeure shall occur, the hindered
party shall promptly notify the other party of its extent and
probable duration and the parties shall meet to decide if this
Agreement should be revised in light of the impact of the event
upon the implementation hereof. In the event of an O'Brien
strike or other work stoppage, O'Brien will use its supervisory
personnel to maintain full steam supply to Du Pont.
Article 8. Interconnection with Du Pont's Plant
A. O'Brien shall be responsible for all required auxiliary
equipment and systems required to supply steam to the point of
interconnection with Du Pont's Plant as indicated in
<PAGE>
Exhibit B. The meter shall be located at or near the point of
interconnection. O'Brien will supply and maintain, at its cost,
all piping systems and interconnection points with Du Pont's
Plant specified on Exhibit B hereto.
B. Du Pont will be responsible for the construction,
operation and maintenance, at its cost, of the piping and other
equipment and apparatus to be located in Du Pont's Plant and
required to receive the delivery of steam from the Facility to Du
Pont's Plant at the point of interconnection.
C. Both Du Pont's and O'Brien's interconnection
facilities shall be designed to generally accepted engineering
standards. Du Pont and O'Brien agree to cooperate in determining
appropriate and compatible equipment specifications for
interconnection facilities, provided, however, that
notwithstanding anything to the contrary herein, Du Pont shall
not be responsible for any damage to the Facility due to demand
from du Pont's systems. O'Brien will deliver steam at the
interconnection point at 155 psig dry and saturated. O'Brien
will provide necessary safety valves and control equipment that
will limit steam to a maximum of 165 psig and a maximum steam
temperature of 398 DEGREES. O'Brien shall cause these valves to be
tested once each year by persons holding a Relief Valve (RV)
Stamp from the National Board of Boiler and Pressure Vessel
Inspectors and the results of such test shall be supplied to Du
Pont.
D. O'Brien accepts responsibility for all necessary
cleanup and correction of all environmental contamination of
<PAGE>
Du Pont's property that may result from O'Brien's operations.
O'Brien shall not be responsible for any environmental
contamination on or within the leased Facility Site if such
contamination originated prior to the effective date of the
lease.
Article 9. Water Supply Facilities; Provisions for Disposal
of Waste Water
Du Pont will supply 1,000 gallons per minute peak and
702 gallons per minute average of treated mainswater and bill
O'Brien at Du Pont's actual cost on a monthly basis. The current
cost range as of the execution of this Agreement is $1.20-$1.50
per 1,000 gallons. In order to permit routine maintenance of Du
Pont's water supply system, O'Brien will provide, as part of its
Facility, water storage capacity adequate to sustain the Facility
operation for a period of twelve hours. Waste water will be
disposed of into the Borough of Sayreville's sanitary sewer,
hence to the Middlesex County Utilities Authority Systems.
O'Brien will bear all disposal costs based on current and future
regulations (which at the time of execution of this Agreement
include flow, biological oxygen demand, suspended solids,
chlorine demand) and sampling and analysis costs. Waste water pH
must be maintained between 5 and 9 and no toxic or corrosive
effluents will be permitted in the waste water. Any future
discharge parameter imposed by any regulatory agency must be met
by O'Brien. O'Brien shall be responsible for all treatment of
waste water and all permits required for discharge thereof.
O'Brien will provide flow
<PAGE>
meters for the mainswater and the waste water and a 24-hour
composite sampling system for the waste water. Monthly supplies
and daily flow data will be provided to Du Pont for analysis and
billing purposes. Waste water flow and constituents will be
provided to the Borough of Sayreville for billing purposes.
O'Brien will be responsible for the design, construction,
operation and maintenance of these water supply and waste water
disposal facilities.
Article 10. Service Interruptions
A. O'Brien shall exercise all reasonable effort to
provide a continuous supply of steam to Du Pont at the quantities
described in Article 3. In this connection O'Brien agrees to
consult with Du Pont on a regular basis and to schedule to the
extent reasonably possible all routine boiler maintenance to
coincide with periods when Du Pont's operations are shut down or
steam needs are reduced. O'Brien agrees to keep at least one
heat recovery boiler in operation at all times when Du Pont's
Plant is requiring steam.
O'Brien agrees to conduct monthly tests of the back-up
boiler which it will install as part of the Facility. Du Pont
shall have a right to witness such tests and will be provided
with a copy of the report of such tests. If both heat recovery
boilers are out of service, O'Brien shall operate the back-up
boiler and move in an additional boiler of equal size through its
Mobile Power Division at no cost to Du Pont.
B. If for reasons other than Force Majeure events
O'Brien fails to supply steam to equal Du Pont's requirements
<PAGE>
(up to a maximum of 120,000 pounds per hour), Du Pont shall have
the right immediately to take over operation of the auxiliary
boiler installed by O'Brien in order to provide steam to meet its
requirements, and to operate said boiler until such time as
O'Brien or its successor can resume steam deliveries on a
reliable basis pursuant to this Agreement. Du Pont may retrofit
one of the heat recovery boilers in order that the boiler can
operate independently of the gas turbine. In such event, Du Pont
shall also have the right to operate the retrofitted heat
recovery boiler to provide additional back up. O'Brien shall
obtain in its loan agreement any necessary waiver from its lender
to permit Du Pont to exercise the foregoing option.
In addition to the above rights, Du Pont shall also
have the right either (1) to recover from O'Brien liquidated
damages calculated pursuant to the formula in Exhibit C or (2) to
pursue any available remedies at law or in equity.
Article 11. Billings
On or immediately after Du Pont's monthly closing date
(which shall be supplied O'Brien by Du Pont at the beginning of
the year) O'Brien will bill Du Pont for the steam purchased by Du
Pont during the previous month. Each invoice will include all
necessary information for calculation of the payment pursuant to
Article 4 hereof. Payment for such invoices shall be made by Du
Pont within thirty (30) days after receipt. Payments made
thereafter shall be subject to a late payment charge on the
unpaid amount of such invoice of one percent per
<PAGE>
month. Should Du Pont fail to pay any invoice within thirty (30)
days after receipt, O'Brien, in addition to collecting the
interest set out herein, may pursue any available remedy at law
or in equity.
Article 12. Assignment and Subcontracting
A. Neither party may assign this Agreement in whole
or in part, or any rights granted hereunder, or delegate or
subcontract to another party any of the duties hereunder, without
the prior written consent of the other party, which consent shall
not be unreasonably withheld. Any transfer, assignment,
delegation, or attempted transfer, assignment or delegation under
this Agreement or of any of the rights or duties herein granted
or imposed, whether voluntary, by operation of law or otherwise,
without consent in writing, shall, at the option of the party
whose written consent shall have been obtained, cause this
Agreement to be terminated.
B. O'Brien may mortgage, hypothecate, pledge or
encumber its interest in this Agreement to any financial
institution lending funds for construction of the Facility,
provided that such lender does not reassign its interest in the
Agreement without Du Pont's prior written consent.
C. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their successors and assigns.
D. If Du Pont should elect to sell its Parlin
operations or site, it agrees to make assumption of its
obligations under this Agreement a condition to the purchase of
such operations. If Du Pont elects to close down or abandon
<PAGE>
the Parlin operations or site, its obligations under this
Agreement shall terminate except for (1) the lease of the
Facility Site and the adjoining land described in the Ground
Lease to O'Brien, (2) the provision of continued access to the
Facility Site and adjoining plot, and (3) provision of the water
supply pursuant to this agreement assuming that Du Pont is still
operating its water treatment plant.
Article 13. Preconditions to Performance
The parties' obligations under this Agreement are
conditioned upon and subject to (1) the execution of a mutually
acceptable Ground Lease covering the Facility Site:
(2) O'Brien's executing a contract, satisfactory to O'Brien,
requiring Public Service Electric and Gas or some other supplier
to supply O'Brien with all natural gas necessary for O'Brien's
operation of the Facility; (3) O'Brien's arranging necessary
financing for construction of the Facility; (4) O'Brien's
obtaining all required permits for construction and operation of
the Facility; and (5) O'Brien's executing a contract,
satisfactory to O'Brien, with Jersey Central Power and Light
Company for the purchase of electricity generated by the
Cogeneration Facility.
Article 14. Remedies
A. Should either O'Brien or Du Pont breach this
Agreement, the other party shall give written notice of such
breach, and if such breach is not cured within thirty (30) days
of receiving such notice, the non-breaching party may seek any
<PAGE>
remedy available at law or in equity. Where this Agreement
provides for the payment of specific liquidated damages to Du
Pont, Du Pont shall have the option of either accepting such
damages or pursuing available remedies at law or in equity.
B. The parties agree that if one party brings an
action against the other with respect to this Agreement, or any
act or representation made herein, the successful party will be
indemnified by the unsuccessful party for all court costs, legal
fees and other expenses. The party will be deemed successful in
any action if (1) a final applicable order has been entered by
the court or government agency having jurisdiction over such
action and (2) all appeals have been exhausted or rights to
appeal have elapsed.
Article 15. Compliance with Laws, Rules and Regulations
A. In all matters pertaining to the subject matter of
this Agreement, both parties shall comply with all applicable
laws, rules and regulations of all governmental authorities
having control over either party of this Agreement.
B. O'Brien warrants and represents that throughout
the term of this Agreement and any renewals thereof it shall
maintain and operate the Facility in compliance with all federal,
state and local statutes, ordinances, rules and regulations
including but not limited to statutes, ordinances, rules and
regulations pertaining to human safety, protection of property,
and protection of the environment. Without limiting in any way
the foregoing, O'Brien shall comply with (1) the New Jersey
Department of Labor's Division of Workplace Standards,
<PAGE>
Rules and Regulations for Boilers, Pressure Vessels and
Refrigeration, as amended from time to time, and (2) those
applicable noise control standards specified by the New Jersey
State Department of Environmental Protection, Title 7,
Chapter 29, subchapter 1, as amended from time to time, a copy of
which has been supplied to O'Brien.
Article 16. Indemnification
A. O'Brien agrees to defend, indemnify and hold
harmless Du Pont (including, its officers, directors, employees,
subcontractors and agents) from and against any and all
liability, claim, injury (including death resulting therefrom),
property damage, fine, penalty or assessment by any public
agency, cost or expense (including costs of defense, settlement
and reasonable attorneys' fees), which (1) are solely and
directly or indirectly caused by any act or omission of O'Brien,
its agents, employees or subcontractors associated with, or
arising from the performance of this Agreement, including any
failure to comply with any pertinent Federal, state or local law,
statute, regulation, rule or (2) are caused jointly by any such
act or omission by O'Brien, its agents, employees or
subcontractors and any such act or omission by any third party or
parties. The term "liabilities" employed in the preceding
sentence, and O'Brien's indemnification obligation, includes any
strict liability and other liability without fault, however
named, asserted against Du Pont.
B. Du Pont agrees to defend, indemnify and hold
harmless O'Brien (including its officers, directors, employees
<PAGE>
and agents) from and against any and all liability, claim, injury
(including death resulting therefrom), property damage, fine,
penalty or assessment by any public agency, cost or expense,
(including costs of defense, settlement and reasonable attorneys'
fees) which (1) are solely and directly or indirectly caused by
any act or omission of Du Pont, its agents, employees or
subcontractors associated with, or arising from Du Pont's
obligations under this Agreement, or (2) are caused jointly by
any such act or omission by Du Pont, its agents, employees or
subcontractors and any such act or omission by any third party or
parties.
C. Where acts or omissions of the nature referred to
above by both O'Brien and Du Pont (including their respective
officers, directors, employees, subcontractors or agents) have
caused any liabilities, damages, fines, penalties, costs, claims,
demands and expenses, whether or not a third party's acts or
omissions also were causal, O'Brien and Du Pont shall contribute
to their common liability a pro rata share based upon the
relative degree of fault of each. In such a case, O'Brien shall
bear all costs (including attorneys' fees and other costs of
defense, if the parties choose common counsel; but if Du Pont
selects its own counsel, Du Pont shall bear its own attorneys'
fees and cost of defense, subject to reimbursement by O'Brien
pursuant to the last sentence of this paragraph) until (i) there
is a final court judgment allocating fault between the parties,
or (ii) the parties agree to such an allocation. If neither (i)
nor (ii) occurs within one (1) year
<PAGE>
of the date on which O'Brien first incurs such costs (or within
such other period to which the parties agree in writing), then
(iii) either party may require submission of the issue of
allocation or arbitration, pursuant to the rules of the American
Arbitration Association, of two disinterested and competent
persons mutually chosen, and a third person whom the two shall
select. A majority decision by the three arbitrators shall be
conclusive and binding on both parties. Upon the concurrence of
(i), (ii) or (iii), Du Pont shall reimburse O'Brien for that
portion of the past costs paid by O'Brien which is equal to Du
Pont's share of the allocation; O'Brien shall reimburse Du Pont
for that portion of any attorneys' fees and defense costs paid by
Du Pont which is equal to O'Brien's share of the allocation; and
the parties shall share the costs of any arbitration and any
future costs according to the allocation.
Article 17. Insurance
At all times during the term of this Agreement, O'Brien
shall obtain and keep in force a Comprehensive General Liability,
Bodily Injury and Property Damage policy in an amount not less
than $5 million to cover O'Brien's obligations under this
Agreement. This policy shall name Du Pont as an additional
insured, and O'Brien shall furnish Du Pont as an additional
insured, and O'Brien shall furnish Du Pont with certificates of
insurance evidencing the coverage for the period of the
Agreement. O'Brien shall also obtain and keep in force Workers
Compensation Insurance in the statutory amount and Employer's
Liability insurance of $100,000 per accident,
<PAGE>
which policies shall provide a waiver of subrogation against Du
Pont. In the event any subcontractor is employed, with or
without Du Pont's consent, for the services covered in this
Agreement, then O'Brien assumes full responsibility to insure
that the subcontractor's services are covered by the same
insurance limits as set forth herein.
Article 18. Amendments; Waiver
This Agreement may not be terminated, amended,
supplemented, waived or modified except by an instrument in
writing signed by both of the parties hereto. Any failure by
either party to enforce any provisions hereof shall not
constitute a waiver by that party of its right subsequently to
enforce the same or any other provision hereof.
Article 19. Severability
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
Article 20. Governing Law
This Agreement is executed and delivered in the State
of Delaware and shall in all respects be governed and construed
in accordance with the laws of the State of Delaware including
all matters of construction, validity and performance.
<PAGE>
Article 21. Employee Displacement
In an effort to assist Du Pont in minimizing employee
layoffs or discharges which may result from the parties entering
into this Agreement, O'Brien shall make a good faith effort to
employ or cause its contractors to employ those employees of Du
Pont directly displaced due to Du Pont's discontinuing its own
steam production where such employees have the requisite skills
and experience to be considered for available positions at the
Cogeneration Facility.
Article 22. Possible Supply of Electricity
O'Brien has expressed an interest in supplying
electricity to Du Pont. The parties will explore the feasibility
of O'Brien's providing electricity to Du Pont under mutually
acceptable conditions.
Article 23. Notices
All notices and other communications hereunder shall be
in writing and shall become effective, if sent by first class
certified or registered mail with postage prepaid and return
receipt requested, three (3) days after deposit in the mails, or
when received (whichever is earlier), and shall be directed
(a) if to Du Pont, to E. I. du Pont de Nemours and Company,
Wilmington, Delaware 19898, Attention: Manager-Chemicals and
Energy Section, Materials and Logistics Department; (b) if to
O'Brien, to O'Brien Energy Systems, Inc., 225 South 8th Street,
Philadelphia, Pennsylvania 19106, Attention: Executive Vice
<PAGE>
President; or (c) to such other address as any such person may
designate by notice given to the other party hereto.
IN WITNESS WHEREOF, this Agreement is executed by the
duly authorized officers of the parties, pursuant to the
authority vested in them by the lawful action of their Boards of
Directors, on the date and year first above written.
E. I. du Pont de Nemours and Company
By /s/ W. E. Datum
Title Sr. Vice President, Materials
and Logistics
O'Brien Energy Systems, Inc.
By /s/ Jeffrey Barnes
Title Exec. V. P.
<PAGE>
EXHIBIT A
WATER AND STEAM SUPPLY SPECIFICATIONS
Water Quality
Treated mainswater supplied to O'Brien by Du Pont will meet
Du Pont Specification 29-279, dated August 21, 1979, a copy
of which has been supplied to O'Brien.
Boiler feedwater treatment by O'Brien must meet Du Pont
Specification 29-427, dated September 12, 1979, a copy of
which has been supplied to O'Brien.
Condensate from steam delivered to the point of
interconnection must meet Du Pont Specification 29-317,
dated August 23, 1979, a copy of which has been supplied to
O'Brien.
No organic additive shall be introduced into the feedwater,
condensate or steam systems without prior approval from Du
Pont.
Steam Quality
155 psig plus 10 or minus 0 psig, dry and saturated at the
point of interconnection. The quality of the steam
delivered shall have no more than 25 degrees F superheat.
Steam, at the point of interconnection, shall have at total
solids content not in excess of 3 parts per million, as
determined in accordance with Method A of the latest
published edition of "Methods of Testing for Suspended and
Dissolved Solids in Industrial Waters," by the American
Society for Testing Materials, or a similar method embodying
the same essential principles of that specification.
<PAGE>
EXHIBIT B
STEAM SUPPLY METER SPECIFICATIONS
POINT OF INTERCONNECTION
O'Brien guarantees the accuracy of its instruments for
measuring the quantity of steam to within + 1 percent.
Instruments will be tested periodically as necessary, but
not less than semiannually.
If Du Pont requests that any meter be tested between
O'Brien's normal testing dates, O'Brien will arrange for the
meter to be promptly tested. All instrument testing will be
arranged by O'Brien and conducted by an independent testing
service satisfactory to both parties. O'Brien will pay the
expense of normal periodic tests; the expense of any test
requested by Du Pont will be paid by Du Pont, if the meters are
within the guaranteed accuracy.
O'Brien will give Du Pont sufficient notice of any periodic
or special instrument test to enable Du Pont to witness the test.
If any test reveals that O'Brien's instruments for measuring
the quantity of steam are inaccurate by + 1 percent or more, and
underpayment or overpayment occurs, the aggrieved party is
entitled to a retroactive adjustment. Any instrument inaccuracy
will be deemed to have commenced on the date which fell exactly
halfway between the date of the test revealing the inaccuracy and
the date of the last previous instrument test. The amount of
underpayment or overpayment will be calculated daily by Du Pont
in good faith commencing on the date on which O'Brien's
instruments are deemed to have been inaccurate. Amounts
reflecting underpayments and overpayments are payable immediately
upon receipt of the payment invoice.
The point of interconnection for steam shall be at a point
agreed upon by the parties.
<PAGE>
EXHIBIT C
LIQUIDATED DAMAGES
Liquidated Damages shall be calculated according to the
following formula:
LDS = T X C - (T X S)
Where:
1) LDS equals liquidated damages sustained by Du Pont
during an unexcused supply interruption; and
2) T equals million BTU's of steam not provided Du
Pont during an unexcused supply interruption
(limited to Du Pont's requirements-not to exceed
120,000 lbs/hr) the enthalpic value of steam used
to compute T shall be 1,096 BTU's per pound; and
3) C equals Du Pont's rolled up cost for steam per
million BTU's [costs include operation,
maintenance, fuel, and rental (calculated on a
monthly rental basis unless the parties agree to a
longer term) of any steam producing equipment];
and
4) S equals cost of steam per million BTU's under
this Agreement (calculated pursuant to Exhibit D).
<PAGE>
EXHIBIT D
STEAM PURCHASE RATE
The Base Steam Charge shall be $1.00 per thousand pounds for 155
psig, 368 degree Fahrenheit steam.
The steam charge per billing month shall be determined according
to the following formula:
SC = BSC x LBS
where:
1. SC equals the steam charge per billing month;
2. BSC equals the base steam charge of $1.00 per thousand
pounds for 155 psig, 368 degree Fahrenheit steam;
3. LBS equals thousands of pounds of steam delivered per
billing month.
When the most recent quarterly average spot purchase cost of
No. 6 oil received at New Jersey utility facilities of 50 MW or
larger, as reported in the Electric Power Quarterly, exceeds
$4.55 per million BTU's, the steam charge per billing month shall
be determined according to the following formula:
SC = BSC x MFC x LBS
BFC
where:
1. SC equals the steam charge per billing month;
2. BSC equals the base steam charge of $1.00 per thousand
pounds for 155 psig, 368 degree Fahrenheit steam;
3. MFC equals the most recent quarterly average spot
purchase cost of No. 6 oil received at New Jersey
Electric Utility Facilities of 50 MW capacity or
larger, as reported in Electric Power Quarterly,
published by the Energy Information Administration. If
the data upon which this pricing component is based
ceases to be published by the Electric Power Quarterly,
the parties shall mutually agree upon another source of
comparable information on fuel price changes;
<PAGE>
4. BFC equals $4.55 per million BTU's as derived from the
facility base delivered fuel cost of $28/BBL No. 6 oil
at 6.15 MM BTU/BBL; and
5. LBS equals thousands of pounds of steam delivered per
billing month.
If condensate is returned to the facility, Du Pont will be
credited according to the following:
CRCR = SC X 1000
1196 BTU/lb
1. CRCR equals the condensate return credit rate $/MM BTU,
to Du Pont,
2. SC equals the steam charge per billing month, $/M lb;
and,
3. 1196 BTU/lb equals the number of BTU's per pound of 155
psig, 368 degree Fahrenheit steam.
The energy return to Du Pont will be determined as follows:
ER = W x Cp x T
where:
1. W equals the return flow of condensate, lb/month;
2. Cp equals the specific heat of water. 1 BTU/lb, degree
Fahrenheit, and;
3. T equals condensate return temperature in degrees
Fahrenheit.
4. ER equals the energy returns per month, MM BTU/month.
Finally, the condensate credit to Du Pont would then be
determined by:
DCC = CRCR x ER
where:
1. DCC equals the Du Pont condensate credit, $/month;
2. CRCR equals the condensate return credit rate, $/MM
BTU; and
3. ER equals the energy return; MM BTU/month.
<PAGE>
[E.I. Du Pont de Nemours & Company letterhead]
Mr. Robert A. Shinn
Vice President
O'Brien Energy Systems
225 S. Eighth St.
Philadelphia, PA 19106
Dear Bob:
This letter hereby acknowledges that O'Brien Energy Systems
and E. I. du Pont de Nemours & Co. mutually agree to extend the
required date by which O'Brien must obtain all necessary permits
to October 1, 1988, as is defined in Paragraph 2 of Amendment #1
to the Steam Purchase contract for the proposed Parlin, NJ
Cogeneration Project, dated January 12, 1988.
If you have any questions or need additional information,
please call.
Sincerely,
/s/ G. R. Carson
G. R. Carson
Senior Purchasing Agent
cc: Chet George - Du Pont
<PAGE>
Exhibit 10.20.2
AGREEMENT
BETWEEN
O'BRIEN ENERGY SYSTEMS, INC.
AND
E. I. DU PONT DE NEMOURS AND COMPANY
AMENDMENT 1 TO TEAM PURCHASE CONTRACT
O'Brien Energy Systems, Inc. ("O'Brien") and E. I. du Pont
de Nemours and Company ("Du Pont") entered a steam purchase
contract dated December 8, 1986, pursuant to which O'Brien will
supply steam from its Cogeneration Facility to Du Pont's Parlin,
New Jersey plant. The Parties now desire to amend that Contract.
Therefore, in consideration of the mutual covenants contained
herein, the sufficiency of which is acknowledged by both parties,
Du Pont and O'Brien hereby agree that the Steam Purchase Contract
of December 8, 1986, is amended as follows:
1. Article 2, Section A is revised to read as follows:
O'Brien agrees to construct the Facility with a
capacity adequate to deliver at least 120,000 pounds per
hour of steam to Du Pont on a continuous uninterrupted
basis. To insure this capacity, O'Brien will build two heat
recovery boilers (including supplemental firing capability)
associated with the gas turbines and a backup boiler, each
of which will be capable of producing at least 120,000
pounds per hour. The Facility will be capable of using
natural gas or fuel oil. Space will be provided in the
facility design to accommodate all equipment necessary to
bur #6, 0.3% sulfur fuel oil in the backup boiler. The
backup boiler shall be capable of burning oil whose sulfur
content is low enough to satisfy air quality permit
requirements, and O'Brien shall provide a storage tank
capable of holding at least a fourteen day inventory of the
fuel oil. If air quality emission requirements applicable
to the Facility are changed to allow the use of #6, 0.3%
sulfur fuel oil, O'Brien will obtain a permit to use such
fuel. O'Brien will obtain approval for the installation of
such equipment from the New Jersey Department of
Environmental Protection (NJDEP), and when obtained, O'Brien
will provide and install the equipment and modifications
<PAGE>
required to burn #6 oil. As part of the construction
process, O'Brien will dismantle and remove, at its cost, Du
Pont buildings numbered 145, 826, 1939, and such
foundations, supports, underground lines and any other items
which the parties agree are required to be removed in order
to build the Facility. The Facility will be located on land
leased to O'Brien consisting of approximately four (4) acres
pursuant to the terms and description set out in the Ground
Lease for the nominal rent of $10.00 per annum for a term
expiring 120 days after the expiration of this Agreement.
The Facility Site is described more fully in the Ground
Lease.
2. Article 2, Section C is amended to read as follows:
O'Brien will obtain all permits and variances necessary for
the lawful construction and operation of the Facility and
will apply to the Federal Energy Regulatory Commission
("FERC") for a certificate stating that the Facility is a
qualifying Facility under the Public Utilities Regulatory
Policies Act of 1978, as amended ("PURPA"). If O'Brien is
unable to obtain all necessary permits or the Facility has
not been certified as a Qualifying Facility by NERC by June
1, 1988, either party may, by written notice to the other
party, terminate this Agreement without liability to the
other.
3. A new Section is added to Article 2, and shall be designated
Section F. It shall read as follows:
a) SAFETY AND HEALTH: O'Brien acknowledges that
safety, health and security are priority concerns of Du Pont
and agrees that as a condition for Du Pont's allowing
O'Brien employees, contractors, employees or subcontractors
of such contractors or anyone else providing services for
O'Brien or its contractors to come upon Du Pont's premises
at any time, O'Brien shall comply with and contractually
obligate its contractors and others acting on its behalf to
comply with (1) all federal, state and local occupational
safety and health laws and regulations and (2) such other
special safety provisions as may be provided by Du Pont in
writing to O'Brien from time to time, including those set
forth in Du Pont's Safety Information and Instructions for
Contractors, the most recent copy of which has been
furnished to O'Brien.
b) O'Brien shall designate one person to be
responsible for carrying out its obligations under this
2
<PAGE>
Section. O'Brien shall promptly report to Du Pont cases of
death, occupational disease and OSHA-recordable injury
caused by work on the job. O'Brien shall also arrange for
first-aid treatment of job-incurred injuries in accordance
with requirements of its insurer. O'Brien shall defend,
indemnify and hold Du Pont harmless with respect to any
claim or lawsuit as provided in Article 16 of this
Agreement.
c) If Du Pont notifies O'Brien of any noncompliance
with the provisions of this Section and the action to be
taken, O'Brien shall make all reasonable efforts to correct
or have corrected the existing conditions immediately, if
directed by Du Pont to do so, or, if not so directed, no
later than forty-eight (48) hours after receipt of such
notice. If O'Brien fails to do so, Du Pont may forthwith
refuse entry on Du Pont premises to O'Brien, its employees,
contractors or anyone else acting on behalf of O'Brien or
its contractors until such time as such noncompliance has
been remedied.
d) Although O'Brien must arrange for first-aid
treatment of its employees, its contractors or anyone else
acting on behalf of O'Brien or its contractors while on Du
Pont's premises, Du Pont may provide first-aid to such
persons, in consideration for which O'Brien, its successors
and assigns assume full and complete responsibility and
liability for all injuries and damagaes to any of its
employees arising out of or allegedly attributable to such
first-aid treatment. O'Brien, further, shall indemnify and
save harmless Du Pont, its employees, contractors,
successors, and assigns from any and all actions, rights of
action, suits, debts, claims, damages, expenses and demands
with respect to or any account of any injury to or the death
of any employee of O'Brien or its Contractors attributable
to or in connection with the performance by Du Pont of such
first-aid treatment, whether or not such injury or death is
caused by or alleged to have been caused by the negligence
of Du Pont. Nothing contained herein shall be construed as
imposing any duty upon Du Pont to provide first-aid
treatment to O'Brien's employees or those of its Contractors
or of anyone else acting on behalf of O'Brien or its
contractors while on Du Pont's premises.
e) O'Brien shall advise its employees, contractors or
anyone acting on behalf of O'Brien or its contractors that
(I) it is the policy of the Du Pont Company to prohibit use,
possession, sale, and distribution of alcohol, drugs, or
other controlled substances on
3
<PAGE>
Du Pont's premises, and to prohibit the presence of an
individual with such substances in the body for nonmedical
reasons in the workplace; (ii) entry onto Du Pont property
constitutes consent to an inspection of O'Brien's employees'
or its contractors' employees' person, vehicle, and
personal effects when entering, while on, or upon leaving Du
Pont property; and 9iii) any employee of O'Brien or its
contractors who is found in violation of the policy or who
refuses to permit inspection may be removed and barred from
Du Pont property at the direction of Du Pont.
f) HAZARDS: As there may be hazards involved in
providing the services which O'Brien and its contractors'
and their employees undertake on Du Pont's premises, O'Brien
shall perform and shall cause its contractors or anyone else
providing services for O'Brien or its contractors to perform
all services in a careful, workmanlike manner and, in the
event that the services to be provided involve processing,
handling, transporting, or disposing hazardous materials or
products, shall take all precautions necessary to avoid an
unhealthy or unsafe work environment, injuries to persons,
or damage to property or the environment. O'Brien shall
submit and shall cause its contractor to submit Material
Safety Data Sheets complying with the Federal Hazard
Communication Standard and obtain Du Pont's approval before
introducing any hazardous materials onto Du Pont's property.
Such materials shall be properly labeled and strictly
controlled by Contractor as to use and disposal. Storage
and use of and personal protection for handling such
materials must comply with the instructions in the Material
Safety Data Sheets.
g) EMPLOYEES: While on Du Pont's property, O'Brien's
employees, its Contractors and their employees and anyone
else providing services for O'Brien or its contractors (I)
shall confine themselves to areas designated by Du Pont and
(ii) will be subject to Du Pont's badge and pass
requirements in effect at the site of the work.
4. The sentence in Article 4 (A) beginning "O'Brien represents
that ." is modified to read as follows:
O'Brien represents that the Initial Delivery Date shall be
on or before April 30, 1990, provided that the Initial
Delivery Date shall be extended by the occurrence and
continuation of an event of Force Majeure as defined in
Article 7 below.
4
<PAGE>
5. As amended, the Steam Purchase Contract of December 8, 1986,
remains in full force and effect.
O'Brien Energy Systems, Inc.
By /s/ Jeffrey D. Baines
E. I. du Pont de Nemours and Company
By /s/ G.R. Carson
5
<PAGE>
Exhibit 10.20.3
July 25, 1988
Mr. Robert A. Shinn
Vice President
O'Brien Energy Systems
225 S. Eighth Street
Philadelphia, PA 19106
Dear Bob:
This letter hereby acknowledges the O'Brien Energy Systems and E. I.
du Pont de Nemours & Co. mutually agree to extend the required date by
which O'Brien must obtain all necessary permits to October 1, 1988, as is
defined in Paragraph 2 of the Amendment #1 to the Steam Purchase contract
for the proposed Parlin, NJ Cogeneration Project, dated January 12, 1988.
If you have any questions or need additional information, please call.
Sincerely,
/s/ G. R. Carson
G. R. Carson
Senior Purchasing Agent
cc: Chet George - Du Pont
<PAGE>
Exhibit 10.20.4
AGREEMENT
BETWEEN
O'BRIEN ENERGY SYSTEMS, INC.
AND
E. I. DU PONT DE NEMOURS AND COMPANY
AMENDMENT NO. 3 TO STEAM PURCHASE CONTRACT
O'Brien Energy Systems, Inc. ("O'Brien") and E. I. du
Pont de Nemours and Company ("DuPont") entered into a Steam
Purchase Contract dated December 8, 1986, as amended by
Amendment No. 1 to Steam Purchase Contract dated January 12,
1988, and by a letter agreement dated July 25, 1988 (Amendment
2), pursuant to which O'Brien has agreed to supply steam to
DuPont's Parlin, New Jersey plant, from a cogeneration facility
which O'Brien will build on land leased from Du Pont. Du Pont
and O'Brien now desire to amend further that Contract.
Therefore, in consideration of the mutual covenants contained
herein, the sufficiency of which is acknowledged by both parties,
DuPont and O'Brien hereby agree that the Steam Purchase Contract
of December 8, 1986, as previously amended, is further amended as
follows:
1. The sentence in Article 4(A) beginning "O'Brien
represents that." is modified to read as follows:
O'Brien represents that the Initial Delivery Date
shall be on or before August 31, 1990, provided that
the Initial Delivery Date shall be extended by the
occurrence and continuation of an event of Force
Majeure as defined in Article 7 below.
2. The sentence in Article 4(A) beginning "In lieu of
accepting these." is modified to read as follows:
In lieu of accepting these liquidated damages, or
in the event that O'Brien should fail to pay them,
DuPont shall have the right topursue all available
remedies at law or in equity, provided, however, that
in the event construction of the Facility has begun
prior to August 31, 1989 and O'Brien can demonstrate a
program of continuous construction that is at least 75
percent complete by August 31, 1990, unless excused by
Force Majeure, DuPont agrees not to exercise any remedy
which could result in termination of this Agreement
prior to February 1, 1992.
<PAGE>
3. Four new Sections are added to Article 9. The
current paragraph in Article 9 beginning "DuPont will supply
1,000 gallons." shall be designated Section A and three new
Sections to be added shall be designated Sections B, C, D and E.
They shall read as follows:
B. Du Pont agrees, subject to DuPont's
determination that it has available adequate capacity
to do so, to permit O'Brien to interconnect the
Facilitie's waste water disposal system with DuPont's
existing sanitary sewer system. The discharges from
the Facility are estimated to be an average flow of 120
gallons per minute. O'Brien agrees to construct the
necessary interconnection and shall install monitoring
as required by the Middlesex County Utilities
Authority. O'Brien further agrees to indemnify DuPot
in accordance with Article 16 of this Agreement should
such indemnity be required in connection with waste
generated by O'Brien into the sanitary sewer system.
If O'Brien connects to DuPont's sanitary sewer system,
it agrees to pay its proportionate share of any
maintenance costs or costs related to blockage repair
on that portion of the sewer sanitary system being
utilized by O'Brien, such costs to be computed by
determining the pro-rata usage by DuPont and O'Brien
for that shared portion.
C. Du Pont agrees to permit O'Brien to provide a
storm water detention basin and connect into the
existing plant storm sewer piping system, so that rain
water maybe discharged from the site.
D. Du Pont agrees to provide temporary parking
and access to the O'Brien site during construction and
operation of the Facility until such time as a proposed
traffic light at the intersection of Washington Road,
Lakeview Drive, and the O'Brien entrance is
operational.
E. DuPont agrees, subject to Du Pont's
determination that it has available adequate capacity
to do so, to permit O'Brien, at O'Brien's option, to
provide a new supply line from the fire pump house to
the Facility and to connect the Facility with DuPont's
fire protection water supply system for the purpose of
designing and developing a fire protection system for
the Facility. If O'Brien exercises this option,
O'Brien will be responsible
2
<PAGE>
at it expense for maintaining, repairing and, if
necessary, upgrading that portion of the fire
protection water supply system beginning at the
existing DuPont fire pump station (including the fire
lake reservoir) and ending at the Facility. DuPont
shall have the right to do this work itself, but at
O'Brien's expense. DuPont agrees not to repair or
alter its fire protection water supply system in a
manner which would deprive O'Brien of a sufficient
water supply for its fire protection system without the
consent of O'Brien. O'Brien further agrees to
indemnify DuPont in accordance with Article 16 of this
Agreement should such indemnity be required in
connection with a failure of DuPont's fire protection
water supply system to put out a fire at the Facility.
If O'Brien connects the Facility to DuPont's fire
protection water supply system, it agrees to pay its
proportionate share of any repair costs due to a
failure of the fire protection water supply system on
that portion of the fire protection water supply system
being utilized by O'Brien, such costs to be computed on
a pro-rata basis with reference to the percentage of
square footage comprising buildings at O'Brien's
Facility as compared to square footage comprising
buildings owned or occupied by duPont at the Parlin
site. O'Brien further agrees to design the Facility
fire protection system via a fire "loop" which will tie
into the DuPont fire protection water supply system at
both connection points at the outer boundaries of the
leased premises and which will eliminate the existing
DuPont fire protection water supply system piping on
the leased premises.
4. The sentence in Article 12(D) beginning "If DuPont
elects to close down." is modified to read as follows:
If DuPont elects to close down or abandon the
Parlin operations or site, its obligations under this
Agreement shall terminate except for (1) the lease of
the Facility site and the adjoining land described in
the Ground Lease to O'Brien, (2) the provision of
continued access to the Facility Site and adjoining
plot, (3) provision of the water supply pursuant to
this agreement assuming that DuPont is still operating
its water treatment plant, (4) the allocation of
responsibility for environmental contamination set
forth in Article 8(D) of this Agreement, and (5) the
provisions
3
<PAGE>
regarding the rebuilding of the Facility set forth in
Article 17(B) of this Agreement.
5. A new Section is added to Article 17. The current
paragraph in Article 17 beginning "At all times during." shall be
designated Section A and the new Section shall be designated
Section B. Section B to Article 17 shall read as follows:
B. Notwithstanding anything contained in this
Agreement or in Section 17 of the Ground Lease between
O'Brien and DuPont, dated January 2, 1987, in the event
that any part of the Facility shall be destroyed or
damaged in whole or in part by fire or other cause
covered within the extended coverage of the fire
insurance policies carried by O'Brien, O'Brien may, but
shall not be required to repair, replace or rebuild any
such portion of the Facility except as is hereinafter
provided. If the back-up boiler and all necessary
auxiliaries or both heat recovery boilers or any such
greater part of the Facility including, either or both
of the back-up boiler and all necessary auxiliaries and
both heat recovery boilers, shall be destroyed or
damaged in whole or in part by fire or other causes
within the extended coverage of the fire insurance
policies carried by O'Brien, in such event, if DuPont
continues to require steam in accordance with the terms
of this Agreement, O'Brien agrees to dedicate such
portion of the insurance proceeds paid under applicable
policies as may be necessary to repair or replace or
rebuild the back-up boiler, one of the heat recovery
boilers and the electrical interconnection facilities
necessary to supply electricity to DuPont.
In addition, in the event that the Facility is not
replaced following destruction thereof by fire or other
cause covered within the extended coverage of the fire
insurance policy carried by O'Brien, insurance proceeds
sufficient to pay for the cost of demolition, removal
of equipment from site (excluding foundation) and
restoration to a safe condition will be dedicated by
O'Brien for such purposes.
* * * *
4
<PAGE>
As amended by this Amendment 3, the Steam Purchase Contract as
earlier amended, remains in full force and effect.
O'BRIEN ENERGY SYSTEMS, INC.
BY: /s/ Sanders Newman
Title: Senior V.P. Secretary & General Counsel
Date: 12/14/88
E. I. DU PONT DE NEMOURS AND COMPANY
BY: /s/ George R. Carson
Title: Sr. Purchasing Agent
Date: 12/12/88
5
<PAGE>
Exhibit 10.20.5
AMENDMENT NUMBER FOUR TO STEAM PURCHASE CONTRACT
BETWEEN O'BRIEN ENERGY SYSTEMS, INC. AND
E. I. DUPONT DE NEMOURS & COMPANY
(Parlin Cogeneration Facility)
WHEREAS, O'Brien Energy Systems, Inc. (O'Brien") and E. E.
DuPont de Nemours & Company ("DuPont") entered into a Steam
Purchase Contract dated December 8, 1986, which was subsequently
modified by Amendment Number One, dated January 12, 1988, but
Amendment Number Two in the form of a Letter Agreement dated July
25, 1988, and by Amendment Number Three, dated December 12, 1988;
and
WHEREAS, the Steam Purchase Contract was assigned by O'Brien
Energy systems to O'Brien (Parlin) Cogeneration Inc. on December
12, 1988, which assignment was consented to by DuPont on the same
date; and
WHEREAS, the Parties desire to ratify said Agreement, as
amended, and make certain further modifications thereto;
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the sufficiency of which is acknowledged by
both Parties, the Parties do hereby agree as follows:
1. Agreement Regarding Disposal of Process Waste Water,
Storm Water, and Domestic Water from the Cogeneration Facility:
Paragraphs 3 (B) and (C) of the Third Amendment to the Steam
Purchase Agreement, are hereby replaced with the following
language:
"(B) DuPont agrees to permit O'Brien to provide a storm
water detention basin and connect into the existing plant
industrial/storm piping system, so that rain water may be
discharged from the site. Additionally, DuPont agrees to
permit O'Brien to discharge non-contact process water from
the Facility into the industrial/storm sewer piping system
subject to the following terms and conditions:
(1) O'Brien shall conduct a detailed analysis of the
existing piping system to certify that the piping
system has the capacity to handle all of the existing
flow, including storm water and non-contact process
water from the Fabricated Products portion of the
DuPont Plant, in addition to projected storm water and
non-contact process water flows from the Cogeneration
Facility. In the event that the existing piping system
is inadequate to handle all the foregoing flows,
O'Brien shall have the right, at its cost, to implement
remedial measures such as a storage tank, to ensure
adequate capacity.
1
<PAGE>
(2) The maximum non-contact process water, i.e. cooling
tower and boiler blowdown, and water treatment
regeneration, flow from O'Brien shall be 193 gpm.
(3) The water discharged into the DuPont system from the
Facility shall meet all current, proposed, and future
government regulations.
(4) O'Brien shall provide a continuous monitoring system to
measure flow and collect a sample for analysis of
constituents, in order to audit O'Brien's discharges.
DuPont shall be responsible at its costs for obtaining
operating permits, sampling and testing.
(5) O'Brien and DuPont shall share costs, prorated based on
projected respective volumes, for permitting,
maintenance, sampling and testing. This will include
an initial TV camera survey of the line and any
necessary repairs to the line.
(6) DuPont shall obtain written assurances from the New
Jersey Department of Environmental Protection that
O'Brien's flow may be discharged under DuPont's permit.
Specifically, DuPont shall obtain authorization for the
discharge of up to 193 gpm of non-contact process waste
water from O'Brien's Facility. Dupont agrees, during
the term of the Steam Purchase Agreement, to allocate
to O'Brien, 193 gpm of capacity under its permit.
The Parties further agree that, as long as the process waste
water discharged by O'Brien does not exceed the contaminant
parameters set out in Exhibit A, O'Brien's discharge falls
within the requirements of DuPont's existing permit. Should
DuPont's permit conditions change, the Parties agree to
amend Exhibit A to assure continued compliance. DuPont
shall use its best efforts to keep its discharges within
permit requirements, and will use its best efforts to make
certain that O'Brien's ability to discharge is not impaired
due to the failure of DuPont's discharge to meet applicable
standards.
(C) DuPont hereby agrees that it has adequate available
capacity to handle the discharge of the Facility's domestic
wastes into the DuPont sanitary sewer system. O'Brien shall
bear the cost of connecting to that system, and shall
provide sampling and monitoring facilities to continuously
test effluent flows. DuPont has represented to O'Brien that
2
<PAGE>
the Middlesex County Utility Authority (MCUA) has stated
that the estimated 2 GPM of additional flow will not require
any changes to DuPont's MCUA permit. DuPont agrees to
obtain a letter from MCUA to this effect. DuPont will be
responsible for any operation, maintenance and permitting
costs associated with the sanitary sewer line for the
discharge of domestic wastes."
2. Agreement Concerning Fire Protection System: The
parties agree to replace Paragraph 3 (E) of Amendment Number
Three with the following new sections 3 (E) and (F):
"(E) Dupont hereby confirms that it has available adequate
capacity to supply 2500 gpm at 90 psig of water and agrees
to permit O'Brien to connect the Facility to DuPont's
existing fire protection water supply system, in order to
provide fire protection for the Facility, subject to O'Brien
undertaking the following improvements. First, O'Brien
shall replace the existing eight inch line from DuPont's
feed point with a new line which is adequate to carry 2500
gallons per minute. Second, O'Brien will provide an
automatic flow control valve. Third, O'Brien agrees to pay
DuPont for the cost of repairing the fire water lake bottom.
This cost shall not exceed $25,000, and DuPont assumes
responsibility for an any liability associated with disposal
of dredged soil. Design and construction of the above
additions and modifications to the fire protection system
and the certification that the system has the capacity to
meet O'Brien's needs will be O'Brien's responsibility and
expense. O'Brien agrees to an annual test by DuPont in
accordance with DuPont standards, of the piping system on
the Facility site.
(F) DuPont agrees not to repair or alter its fire
protection water supply system in a manner which would
deprive O'Brien of a sufficient water supply for its fire
protection system without the consent of O'Brien. O'Brien
further agrees to indemnify DuPont in accordance with
Article 16 of this Agreement should such indemnity be
required in connection with a failure of DuPont's fire
protection water supply system to put out a fire at the
Facility. If O'Brien connects the Facility to DuPont's
fireprotection water supply system, it agrees to pay its
proportionate share of any repair costs due to a failure of
the fire protection water supply system on that portion of
the fire protection water supply system being utilized by
O'Brien, such costs to be computed on a pro-rata basis with
reference to the percentage of square footage comprising
buildings at O'Brien's Facility as compared to square
footage comprising buildings owned by DuPont at the Parlin
site. O'Brien further agrees to design the Facility fire
protection system via a fire "loop" which will tie into the
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DuPont fire protection water supply system at both
connection points at the outer boundaries of the leased
premises and which will eliminate the existing DuPont fire
protection water supply system piping on the leased
premises."
3. Complete Agreement: This Fourth Amendment, combined
with the original contract, as amended, constitutes the complete
agreement between the Parties. Any further amendment shall be in
writing, and signed by both Parties.
AGREED AND ACCEPTED:
E. I. DUPONT DE NEMOURS & COMPANY O'BRIEN (PARLIN)
COGENERATION INC.
By: /s/ George R. Carson By: /s/ Joel D. Cooperman
Date: 7/26/89 Date: 7/14/89
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Exhibit 10.20.6
AMENDMENT NO. 5
TO STEAM PURCHASE CONTRACT
WHEREAS, E. I. DuPont de Nemours and company ("Du
Pont") and O'Brien Energy Systems, Inc. ("O'Brien") entered into
a Steam Purchase Contract dated December 8, 1986, as amended by
Amendment No. 1 dated January 12, 1988 (Amendment No. 2),
Amendment No. 3 dated December 14, 1988, and Amendment No. 4
dated July 6, 1989 pursuant to which O'Brien has agreed to supply
steam to Du Pont's Parlin, New Jersey plant from a cogeneration
facility which O'Brien has constructed on land leased from Du
Pont; and
WHEREAS, said Agreement, as amended, was assigned with
Du Pont's consent to O'Brien (Parlin) Cogeneration, Inc. on
December 12, 1988; and
WHEREAS, Steam delivery to Du Pont by O'Brien was
delayed beyond the amended and agreed upon Initial Delivery Date,
and the Parties wish to resolve a dispute concerning the amount
of liquidated damages to be paid to Du Pont; and
WHEREAS, the Parties desire to ratify said Agreement,
as amended, and to make certain further modifications thereto:
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, the sufficiency of which is
<PAGE>
acknowledged by both Parties, the Parties do hereby agree as
follows:
1. Modifications to Article 2:
A new Paragraph 2.G, entitled Option to Lease
Additional Land; Permitted Uses is hereby added to Article 2 as
follows:
(1) Du Pont hereby grants O'Brien a five-year option
commencing January 1, 1993) to lease from Du Pont an
additional two acres of land, contiguous to O'Brien's
existing leasehold, subject to the conditions set out below.
As consideration for this option, O'Brien agrees to pay Du
Pont the sum of $1,000 on February 1, of each year
(beginning February 1, 1993) until such time as the option
is exercised or O'Brien terminates the option, or it
expires.
(2) Du Pont shall have no obligation to lease the
additional two acres unless it has received a Certificate of
Non-applicability from the State of New Jersey evidencing
that the proposed transaction is not subject to New
Jersey'/s Environmental Clean-up Responsibility Act
("ECRA"). In the event the proposed lease is subject to
ECRA, Du Pont shall repay to O'Brien the option payments
provided in the preceding subparagraph.
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(3) If the option is exercised, the additional two
acres leased to O'Brien will be used by O'Brien and only for
the following purposes:
(a) a depot for mobile generator sets;
(b) additional office space for training or
other corporate purposes acceptable to Du Pont, such
approval not to be unreasonably withheld;
(c) a replacement steam customer acceptable
to Du Pont, in its reasonable discretion, in the event Du
Pont does not take the annual minimum quantity of steam
required to maintain Qualified Facility status under the
Public Utility Regulatory Act, as amended;
(d) an expanded cogeneration facility,
provided that Du Pont and O'Brien can reach agreement on an
amount to be paid to Du Pont as additional, reasonable
compensation for Du Pont's consent to erection of an
expanded cogeneration facility. (It is the intent of the
Parties that "reasonable compensation" as used herein shall
mean a share of the value of the new or expanded
cogeneration facility and is in no way limited to the fair
market lease value of the two acre site.); and
(e) such other uses as are approved in
writing by Du Pont, such approval not to be unreasonably
withheld.
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(4) If O'Brien exercises the option to lease the
additional two acres, O'Brien shall pay Du Pont fair market
lease rates for the additional leasehold. Fair market value
shall be established by an independent appraiser familiar
with industrial real estate values in the Parlin, New Jersey
area who is acceptable to both Du Pont and O'Brien. If the
Parties cannot agree on a neutral appraiser, each Party
shall select an appraiser and the two appraisers shall then
agree on a third appraise. If no two of the appraisers
agree on a fair market vale, then the three appraisals shall
be averaged, and the result shall be the fair market value.
(5) If O'Brien exercises its option, the parties shall
execute a separate lease agreement for the two acres which
shall have terms and conditions identical to the Ground
Lease for the Facility, except as specifically modified by
this Article 2. The term of the additional Lease, if
O'Brien exercises the option for the additional two
contiguous acres, shall equal the remaining term of this
Steam Purchase Contract. In the event that Du Pont chooses
not to exercise its option to purchase the Facility under
Paragraph 5.B at the end of the initial twenty-year term,
the term of the original lease covering the Cogeneration
Facility as well as the term of any lease executed by
O'Brien
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for the additional two contiguous acres shall be extended an
additional ten years, without any further action being
required of the Parties. In the event that Du Pont does
choose to exercise its option to purchase the Facility at
the end of the initial twenty-year term, the lease of the
additional contiguous two acres shall terminate, unless the
Parties otherwise mutually agree."
2. Modifications to Article 4, "Initial Delivery Date":
A new Paragraph 4.C is added to Article 4 as follows:
"(1) O'Brien agrees to pay Du Pont a portion, as set
out more fully in subparagraph (2) of this paragraph, of
certain liquidated damages which O'Brien expects to receive
from Hawker Siddeley Power Engineering Inc., ("HSPE"), the
contractor for the Parlin Cogeneration Facility, due to
delayed completion of the Facility. De Pont acknowledges
that HSPE is contesting these liquidated damages in similar
cases now pending in New Jersey and Texas state courts, and
that, with respect to the expected award in those cases,
O'Brien shall be obligated to pay Du Pont only that portion
of such damages as is set out in this Paragraph 4.C.
(2) If the damages awarded to O'Brien in the same
litigation exceed
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(a) the total amount withheld by O'Brien from
Hawker Siddeley under the Turnkey Construction Contract
for the Parlin project (which O'Brien represents to be
$5.1 million) and
(b) any contingent legal fees paid to O'Brien's
attorneys, Sills, Cummis, Zuckerman, Radin, Tischman,
Epstein & Gross ("Sills Cummis") for that firm's
representation of O'Brien in the said HSPE litigation
as set forth in the next sentence,
O'Brien shall pay fifty percent (50%) of such remainder of
the award to Du Pont, up to a maximum payment to Du Pont of
$1 million. O'Brien represents that it has agreed to pay
Sills Cummis as part of its fee for representing O'Brien in
the said litigation (but not for sums which O'Brien may owe
Sills Cummis for any services other than in the said HSPE
liquidated damages litigation) a contingent component of
twenty percent (20%) of the first million dollars of damages
received from HSPE (without regard to the $5.1 million which
O'Brien represents that it has retained from payment to
HSPE), and fifteen percent (15%) of any subsequent award up
to a total ceiling on all such litigation fees (both current
and contingent) equal to 150% of Sills Cummis' normal hourly
billing rates.
(3) O'Brien shall pay Du Pont the amount agreed upon
in this paragraph within thirty (30) days of
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<PAGE>
receipt by O'Brien, and O'Brien shall furnish Du Pont an
accounting of all damages received from Hawker Siddeley for
the said Parlin case."
3. Waiver of Liquidated Damage Claims:
Du Pont hereby agrees to waive any and all claims which
it may have against O'Brien under Article 4 for alleged delays in
the delivery of steam by the Initial Delivery Date. Du Pont also
waives any alternative right to pursue available remedies at law
or in equity in lieu of such damages.
4. Modifications to Article ;5, "Term; Termination:.
Paragraph 5.A is modified to read as follows:
"This Agreement shall be effective as of the d ate of its
execution and shall continue in effect thereafter for a
period of thirty (30) years beyond the Initial Delivery
Date, unless Du Pont exercises its purchase option at the
end of Year Twenty pursuant to Article 5.B. Assuming Du
Pont does not exercise this purchase option or the option at
the end of Year Thirty, the Agreement shall remain in
effect after the initial thirty-year term unless terminated
by three year's notice by either party."
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<PAGE>
Paragraph 5.B is modified to read as follows:
"At the end of twenty (20) years following the Initial
Delivery Date, Du Pont shall have the option; to buy the
Facility at the greater of its then fair market value or $34
million. In the event of a dispute regarding the fair
market value, each side shall appoint an appraiser
experienced in valuing cogeneration facilities, and if the
two appraisers cannot agree, they shall appoint a third
appraiser. If not two of the appraisers agree on a fair
market value, then the three appraisals shall be averaged,
and the result shall be the fair market value. Du Pont
shall have sixty (60) days from the end of the twentieth
year following the Initial Delivery D ate (extended for the
period necessary to establish fair market value) to exercise
the option to purchase the Facility; if the option is not
exercised within that period, the Agreement shall continue
for an additional ten (10) years at the expiration of which
Du Pont shall have the option to purchase the Facility at
its then fair market value. In constructing the Facility,
O'Brien shall install the back-up boiler and all necessary
auxiliaries in such a way that it and the land on which it
is located can be severed from the rest of the Facility in
the event of termination."
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<PAGE>
5. Modifications to Article ;6, "Purchase Price":
A new paragraph 6.C is added to Article 6 as follows:
"On or before February ;1, 1993, O'Brien will pay Du
Pont One Hundred Seventy Five Thousand Dollars ($175,000) in
cash or as a credit on steam or electricity purchased by Du
Pont during January 1993. Beginning January 1, 1993, and
each month thereafter for a total of nineteen 919) years, Du
Pont shall receive a credit against steam purchases equal to
$14,583.33 per month. Prior to the end of the Nineteenth
Year, if Du Pont does not utilize the full amount of the
credit in any given month for steam purchases, any unused
credit may be carried over to the following month or months
or, at Du Pont's option, applied to electricity purchases
from under the separate Electricity Purchase Contract
between the Parties. In the event that Du Pont exercises
its option to purchase the Facility at the end of Year 20,
any remaining unused credit (based on the full nineteen
years) may be applied by Du Pont against the purchase price,
as determined under Article 5.B."
6. Modifications to Exhibit D (Steam Purchase Rate):
Exhibit D is modified by adding to the end of the
current Exhibit D the following language:
"Assuming that the contract continues beyond Year 20,
as provided in Paragraph 5.A, the price of steam
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<PAGE>
delivered to Du Pont at the beginning of Year 21 shall be
determined as follows: The ending steam price for the last
month of Contract Year 20 shall be the Base Price for Years
21 through 30; the Base Price shall be adjusted monthly (up
or down) by the percentage change in the U. S. Producer
Price Index for All Commodities (or its successor); and any
credits for condensate returned by Du Pont shall be
calculated in accordance with this Exhibit, based on the
adjusted price.
7. Complete Agreement: This Amendment No. 5 combined with
the original Steam Purchase Contract as previously amended,
constitutes the complete agreement between the Parties as to the
subject matter thereof. Any further amendment shall be in
writing and shall be executed by both Parties.
AGREED AND ACCEPTED
E. I. Du Pont de Nemours & Company
By: /s/ Frank Wright
Date: 1/22/93
O'Brien (Parlin) Cogeneration, Inc.
By: /s/ Joel Cooperman
Date: 2/16/93
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<PAGE>
Exhibit 10.21.1
ELECTRICITY PURCHASE CONTRACT
This Electricity Purchase Contract, dated as of Jan.
18, 1988, is by and between E. I. DU PONT DE NEMOURS AND
COMPANY, a Delaware corporation with its principal office located
at 1007 Market Street, Wilmington, Delaware 19898 ("Du Pont"),
and O'BRIEN ENERGY SYSTEMS INC., a Delaware corporation with its
principal office located at 225 South Eighth Street,
Philadelphia, Pennsylvania 19106 ("O'BRIEN").
RECITALS
A. O'Brien and Du Pont entered a Steam Purchase
Contract (the "Steam Purchase Contract") on December 8, 1986, in
which O'Brien agreed to supply Du Pont with s team from a
cogeneration facility (the "Facility") which O'Brien will build
and operate on a site leased from Du Pont adjacent to Du Pont's
Parlin, New Jersey, Plant (the "Plant").
B. O'Brien and Du Pont now want to enter into an
electricity purchase contract in accordance with the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual
covenants and promises herein contained, Du Pont and O'Brien
agree as follows:
ARTICLE I. Definitions
A. Unless otherwise specified in this Contract, the
terms used herein shall have the same meanings as those used
<PAGE>
in the Steam Purchase Contract. Where the word "steam" is used
in the definition in the Steam Purchase Contract, for purposes of
this Contract, the word "electricity" shall be understood unless
the context requires otherwise.
B. "JCP&L" shall mean Jersey Central Power & Light
Company.
ARTICLE II. Sale and Purchase of Electricity
A. Quantity:
O'Brien agrees to sell electricity to Du Pont for use
in Du Pont's Plant in quantities required by Du Pont up to a
maximum of 9MW and Du Pont agrees to buy its purchase
requirements for electricity up to 9MW in accordance with the
terms and conditions hereof for a twenty (20) year period
commencing with the Initial Delivery Date. If Du Pont should
require more than 9M, O'Brien will supply the additional
requirements on such terms and conditions as the parties shall
agree at the time, but under no circumstances will the price be
greater and the terms more stringent than those covering the
initial 9MW under this agreement.
B. Type and Character of Service:
The electrical energy furnished by O'Brien shall be of
the type known as t twenty four hundred (2400) volts, three (3)
phase, three (3)( wire, sixty (60) cycles, alternating current.
he variation of the voltage shall remain within plus or minus 5%
of 2400 volts.
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<PAGE>
C. Description of the System:
All equipment (except the 2.4kv switchgear and feeders)
will be owned, operated and maintained by O'Brien. This
configuration and ownership is shown on the Functional Diagram to
Define Operation of Equipment attached as Exhibit A. O'Brien
will supply, design, install, and interconnect the 2.4kv
switchgear and feeders, which upon start-up will be conveyed to
Du Pont. Upon Du Pont's acceptance of O'Brien's conveyance of
the 2.4kv switchgear and feeders, Du Pont shall be responsible
for their operation and maintenance and shall indemnify O'Brien
against any liability or claims which may arise out of operation
thereafter of said equipment. O'Brien shall provide Du Pont with
any warranties obtained by O'Brien on such equipment upon
conveyance.
ARTICLE III. Term and Termination
The term and termination provisions of the Steam
Purchase Contract, as may be amended from time to time, shall be
applicable to this Contract.
ARTICLE IV. Purchase Price
o Du Pont shall pay O'Brien for purchased electricity as
follows:
EC = JCP&L rate x 0.65
Where:
EC == The Electricity Charge per ;month;
and
JCP&L rate = The applicable Jersey Central Power &
Light General Service Primary Rate at the
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<PAGE>
then current delivered voltage or its applicable
successor, including all demand charges, energy
charges, fuel adjustments, taxes, and any other charges
that would have been paid to JCP&L if Du Pont had
purchased a comparable amount of power from JCP&L.
o In the event that Du Pont does not have any
requirement for electricity, the bill for that month,
or any such period, will be zero.
ARTICLE V. Construction and Operation of the Cogeneration
Facility.
A. O'Brien has agreed in the Steam Purchase Contract
to construct and operate the Facility to furnish steam to Du
Pont. In addition to the commitments made in that document,
O'Brien agrees to the further provisions in this Article V to
allow O'Brien to supply Du Pont with the electricity covered buy
this Electricity Purchase Agreement.
B. O'Brien agrees to construct the facility with a
capacity adequate to deliver at least 9MW of electricity to D
Pont on a continuous basis. To ensure this capacity, O'Brien
will install two Frame Six Combustion Turbine Combined Cycle
Systems, each of which is more than capable of meeting Du Pont's
projected demand.
C. In the event O'Brien fails to supply Du Pont's
electricity requirements for a period of six consecutive months
or, in the alternative, if O'Brien notifies Du Pont that it can
no longer meet such requirements, O'Brien will immediately make
available to du Pont for Du Pont's use all equipment necessary to
serve Du Pont from the 230kv system until Du Pont's service can
be returned to the 34.5kv system or Du Pont finds other electric
service acceptable to Du Pont.
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<PAGE>
O'Brien shall obtain in its loan agreement any necessary waiver
from its lender to permit Du Pont to exercise the foregoing
option. Furthermore, the two 13.8kv to 2.4kv transformers shall
be installed in such a way that they can be replaced with 34.5kv
to 2.4kv transformers and reconnected to the existing JCP&L
34.5kv feeders. To the extent JCP&L requires Du Pont to pay for
this conversion, O'Brien agrees to contribute up to $ 500,000
toward the cost of such conversion and will secure such
obligation by establishing at the time the cogen facility starts
up either an escrow account or a letter of credit with a credit
worthy bank in the amount of $500,000.
ARTICLE VI. Interconnection with Du Pont's Plant
A. O'Brien shall provide at its expense all equipment
and systems necessary to supply electricity to Du Pont's Plant as
shown on Exhibit A. Upon completion of construction, O'Brien
will convey to Du Pont all of the equipment below the Point of
Interconnection as shown on Exhibit A. O'Brien will be
responsible for maintenance of all equipment and systems above
the Point of Interconnection, and Du Pont will be responsible for
maintenance of all equipment and systems below the Point of
Interconnection.,
B. The interconnection facilities shall be designed
to generally accepted engineering standards. Du Pont and
O'Brien agree to cooperate in determining appropriate and
compatible equipment specifications for interconnection
5
<PAGE>
facilities; provided, however, that notwithstanding anything to
the contrary herein, Du Pont shall not be responsible for any
damage to the Facility due to demand from Du Pont's systems.
O'Brien will give Du Pont at least forty-five days notice prior
to commencing operation and interconnection. Du Pont and
O'Brien shall develop written procedures for interconnection,
prior to interconnection. Du Pont shall have the right to
witness testing and start up of all interconnection facilities.
C. O'Brien shall at its expense, and in accordance
with Exhibit B, dismantle and remove, including transportation to
JCP&L's facilities for storage or disposal in accordance with
appropriate regulations, JCP&L's existing 34.5kv substations and
transmission lines, and the 2.4kv metering installations from the
Parlin Site.
D. The existing 34.5kv feeders supplying the Du Pont
plant shall be maintained in operation throughout the
construction of the Facility. Shutdowns during feeder
relocations should be limited to one feeder at a time and to a
maximum duration of twelve (12) hours for any one shutdown.
Switchover from the JCP&L a34.5 feeders to O'Brien's 13.8kv
feeders shall not be made until O'Brien's generating facility is
fully on line and has demonstrated for a sixty (60) day period a
100% ability to meet Du Pont's electric requirements.
ARTICLE VII. Service Interruptions
A. Subject to force majeure and normal maintenance
requirements, O'Brien agrees to provide a continuous supply
6
<PAGE>
of electricity to Du Pont at the quantities and characteristics
described in Article II hereof.
B. O'Brien agrees to consult with Du Pont on a
regular basis and to schedule, to the extent reasonably possible,
all routine maintenance of the electrical generating system to
coincide with periods when Du Pont's operations are shut down or
Du Pont's electricity needs are reduced.
C. If for any reason other than force majeure O'Brien
fails to provide Du Pont with the contract amounts of electricity
and replacement power is not received from JCP&L due to the fault
of O'Brien, O'Brien will reimburse Du Pont for its losses
incurred (including out-of-pocket cost, loss of product, raw
materials, direct labor and any damaged equipment) up to a
maximum of $10,000 per hour, but not to exceed $250,000 for any
one incident and furthermore not to exceed in any contract year
the total electricity revenues received from Du Pont in any such
year.
ARTICLE VIII. Priority of Service
If at any time O'Brien is unable to supply the contract
amounts of electricity to both Du Pont and to JCP&L, it shall
first supply Du Pont's needs up to the contractual amount before
supplying any other customer for its electricity.
7
<PAGE>
ARTICLE IX. Standby Power
A. O'Brien and Du Pont agree that Du Pont will enter
an agreement with JCP&L whereby JCP&L will sell standby power
directly to Du Pont, in accordance with a letter agreement from
JCP&L to Du Pont dated October 9, 1987, copy attached as
Exhibit B. This standby Power Agreement will be maintained by Du
Pont during the life of this agreement. O'Brien will compensate
Du Pont for the amount Du Pont pays JCP&L for the standby power,
that is, the flat charge per ;month whether power is used or not,
but Du Pont will pay for any power when used.
B. O'Brien guarantees that the bill paid by Du Pont
to JCP&L will be capped at the then current General Service
Primary Rate as defined in Article 4.
C. If at any time O'Brien's performance is such that
JCP&L, in accordance with its Standby Tariff in other applicable
rules, requires Du Pont to sign a firm power contract in order to
continue receiving power, Du Pont shall have the right to
terminate Du Pont's obligation to purchase electricity from
O'Brien, effective as of the same date that JCP&L requires Bu
Pont to sign a contract for the firm power. Such termination
shall not affect Du Pont's right or O'Brien's obligation to
continue the electrical interconnection parts of this contract,
and O'Brien will take all reasonable steps to assure
uninterrupted electrical service from JCP&L to Du Pont.
D. If JCP&L's tariffs or the rules of the New Jersey
Board of Public Utilities change so that Du Pont cannot
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<PAGE>
receive the equivalent of firm power without signing a new
contract with JCP&L, Du Pont shall have the right to reduce
purchases from O'Brien to the e extent power is purchased from
JCP&L under such new contract.
ARTICLE X. Metering
A. O'Brien will own, operate, and maintain all
necessary meters and associated equipment, including, without
limitation, generation metering and the telemetering equipment,
utilized for measuring energy deliveries and for determining Du
Pont's payments to O'Brien. The metering point will be at the
Point as shown on Exhibit A. Du Pont can install
check meters at their expenses, if deemed necessary by Du Pont./
B. O`Brien shall permit Du Pont employees to enter
upon its leased premises at any reasonable time for the purpose
of inspecting and/or testing or witnessing the testing of the
accuracy of the metering equipment.
C. The owners of meters and metering equipment shall
inspect, test, and calibrate their equipment at regular intervals
of not more than one 91) year, as agreed between the parties, and
any inaccuracy disclosed by such tests shall be promptly
corrected. Either party shall have the right to have any meter
tested at any time at its expense. Representatives of the other
party shall be afforded a reasonable opportunity to be present at
all meter inspections and tests. If at any time a meter is found
inaccurate by more than 1%, an adjustment shall be made in
settlements between the parties to
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<PAGE>
compensate for the effect of such inaccuracy over a preceding
period of thirty (30) days from removal or testing of the meter
or over any shorter period during which such inaccuracy may be
determined to have existed. If at any time a meter should fail
to register or its registration should be so erratic as to be
meaningless, the quantities such meter was intended to record
shall be determined from check meters, if available, or otherwise
from the best obtainable data.
ARTICLE XI. Billings, Credits and Payments
On or immediately after Du Pont's monthly closing data
(which shall be supplied O'Brien by Du Pont at the beginning of
the year) O'Brien will prepare a monthly bill and bill Du Pont
for the electricity purchased by Du Pont during the previous
month. Each invoice will include all necessary information for
calculation of the payment pursuant to Article IV hereof, and
credit Du Pont each month for an amount equal to the contracted
power times the standby rate plus any applicable taxes. Payment
for such invoices shall be made by Du Pont within thirty (30)
days after receipt. Payments made thereafter shall be subject to
a late payment charge on the unpaid amount of such invoice of one
percent per month. Should DuPont fail to pay any invoice within
thirty (30) days after receipt, O'Brien, in addition to
collecting the interest set out herein, may pursue any available
remedy at law or in equity.
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ARTICLE XII. Other Provisions
The following Provisions of the Steam Purchase Contract
are hereby incorporated by reference into this Contract and shall
be applicable to this Contract as if they were fully set forth
herein:
Article 7. Force Majeure; Contingency]
Article 12. Assignment and Subcontracting
Article 13. Preconditions to Performance
Article 14. Remedies
Article 15. Compliance with Laws, Rules and
Regulations
Article 16. Indemnification
Article 17. Insurance
Article 18. Amendments; Waiver
Article 19. Severability
Article 20. Governing Law
Article 21. Notices
IN WITNESS WHEREOF, Du Pont and O'Brien have caused
this Agreement to be executed by their duly authorized
representatives on the date and year first above written.
E. I. DU PONT DE NEMOURS AND COMPANY
By /s/ W. Datum
Title: Senior Vice President - Materials and Logistics
O'BRIEN ENERGY SYSTEMS, INC.
By: /S/ Jeffrey Baines
Title: Executive Vice President
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EXHIBIT A
FUNCTIONAL DIAGRAM TO DEFINE EQUIPMENT OPERATION
[DIAGRAM INSERT]
<PAGE>
Exhibit 10.21.2
ELECTRICITY PURCHASE CONTRACT
This Electricity Purchase Contract (the "Contract"), dated as of April
30, 1996, is by and between O'BRIEN (PARLIN) COGENERATION INC. ("O'Brien")
and NRG PARLIN INC. ("NPI").
RECITALS:
A. O'Brien and E. I. Du Pont Nemours and Company ("Du Pont") entered
that certain Electricity Purchase Contract (the "Electricity Purchase
Contract") dated January 18, 1988, under which O'Brien agreed to supply Du
Pont with electricity from O'Brien's cogneration facility (the "Facility")
adjacent to DuPont's Parlin, New Jersey plant (the "Plant").
B. Whereas O'Brien's rights and obligations under the Electricity
Purchase Contract were assigned to NPI; and
C. Whereas O'Brien and NPI wish to enter into this Contract to
provide for the sale from O'Brien to NPI of the electricity required for
NPI to fulfill its obligations to Du Pont under the Electricity Purchase
Contract by and between Du Pont and O'Brien, as assigned by O'Brien Energy
Systems, Inc., dated January 18, 1988, as amended from time to time (the
"Du Pont Contract").
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, O'Brien and NPI agree as follows:
<PAGE>
ARTICLE I. Definitions
A. Unless otherwise specified in this Contract, the terms used herein
shall have the same meanings as those used in the Steam Purchase
Contract (as defined below). Where the word "steam" is used in the
relevant definition in the Steam Purchase Contract, for the purposes
of this Contract, the word "electricity" shall be understood unless
the context requires otherwise.
B. "JCP&L" shall mean Jersey Central Power & Light Company.
C. "Steam Purchase Contract" shall mean that certain Steam Purchase
Contract between O'Brien and Du Pont on December 8, 1986, as amended
from time to time.
ARTICLE II. Sale and Purchase of Electricity
A. Quantity:
O'Brien agrees to sell electricity to NPI for resale to Du Pont the
quantities required by Du Pont under Article II A. of the Du Pont
Contract, up to a maximum of 9MW and NPI agrees to buy this
electricity (up to 9MW), inaccordance with the terms and conditions
hereof for a period commencing on the date hereof. If Du Pont should
require more than 9MW from NPI, O'Brien will supply NPI with the
additional requirements on such terms and conditions as the parties
shall agree at the time, but under no circumstances will the price be
greater of the terms more stringent than those covering the initial
9MW under this Contract (or than the terms agreed for the sale of this
additional electricity between NPI and Du Pont under Article II A. of
the Du Pont Contract).
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B. Type and Character of Service:
The electrical energy furnished by O'Brien shall be of the type
known as twenty four hundred (2400) volts, three (3) phase, three (3) wire,
sixty (60) cycles, alternating current. The variation of the voltage shall
remain within plus or minus 5% of 2400 volts.
C. O'Brien will provide any and all assistance and support required
by [NPI] in order for NPI to fulfill the obligations it has to Du Pont to
operate and maintain the equipment under Article II.C of the Du Pont
Contract.
ARTICLE III. Term: Termination
This agreement shall terminate upon the termination of the Du Pont
Contract.
ARTICLE IV. Purchase Price
NPI shall pay O'Brien for purchased electricity as follows:
EC = JCP&L rate x 0.65
Where:
EC = The Electricity Charge per month;
and,
JCP&L rate = The applicable Jersey Central Power & Light General
Service Primary Rate at the then current delivered voltage or its
applicable successor, including all demand charges, energy charges,
fuel adjustments, taxes, and any other charges that would have been
paid to JCP&L if NPI or Du Pont had purchased a comparable amount of
power from JCP&L.
In the event that NPI does not have any requirement for electricity,
the bill for that month, or any such period, shall be zero.
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ARTICLE V. Operation of the Cogeneration Facility.
A. O'Brien has agreed with Du Pont in the Steam Purchase Contract to
operate the Facility to furnish steam to Du Pont. In addition to the
commitments made in the Steam Purchase Contract, O'Brien agrees to the
further provisions in this Article V to allow O'Brien to supply NPI with
the electricity covered by this Contract.
B. O'Brien agrees to maintain the Facility with a capacity adequate
to deliver at least 9MW of electricity to NPI for resale to Du Pont on a
continuous basis. To ensure this capacity, O'Brien will operate and
maintain the two Frame Six Combustion Turbine Combined Cycle Systems
installed in the Facility pursuant to Article V.B of the Du Pont Contract.
C. In the event O'Brien fails to supply NPI's electricity
requirements for a period of six consecutive months or, in the alternative,
if O'Brien notifies NPI that it can no longer meet such requirements,
O'Brien will immediately make available to NPI for NPI's or Du Pont's use
all equipment necessary for NPI to serve Du Pont from the 230kv system
until the service hereunder can be returned to the 34.5kv system or until
Du Pont finds other electric service acceptable to Du Pont. O'Brien shall
obtain in its loan agreement any necessary waiver from its lender to permit
NPI to exercise the foregoing option. Furthermore, O'Brien shall maintain
the two 13.8kv to 2.4kv transformers referred to in Article V.C of the Du
Pont Contract in such way that they can be replaced with 34.5kv to 2.4v
transformers and reconnected to the existing JCP&L feeders. To the extent
JCP&L requires Du Pont to pay for this conversion, O'Brien agrees to
reimburse NPI for any contribution it is required to make toward the cost
of such conversion under Article V.C. of the Du Pont Contract.
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ARTICLE VI. Interconnection with Du Pont's Plant
A. O'Brien will be responsible for the maintenance of all equipment
and systems above the Point of Interconnection as shown on Exhibit "A" to
the Du Pont Contract.
B. O'Brien will provide any reasonable assistance and support
required by NPI to enable NPI to implement and further develop the written
operating procedures referred to in Article VI.B of the Du Pont Contract.
ARTICLE VII. Service Interruptions
A. Subject to force majeure and normal maintenance requirements,
O'Brien agrees to provide a continuous supply of electricity to NPI at the
quantities and characteristics described in Article II hereof.
B. O'Brien agrees to consult with NPI and Du Pont on a regular basis
and to schedule, to the extent reasonably possible, all routine maintenance
of the electrical generating system to coincide with periods when Du Pont's
operations are shut down or Du Pont's electricity needs are reduced.
C. If for any reason other than force majeure O'Brien fails to
provide NPI with the contract amounts of electricity and replacement power
is not received by Du Pont from JCP&L due to the fault of O'Brien, O'Brien
will reimburse NPI for any liability to Du Pont or NPI suffers under
Article VII.C of the Du Pont Contract.
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ARTICLE VIII. Priority of Service
If at any time O'Brien is unable to supply the contract amounts of
electricity to both NPI and to JCP&L, it shall first supply NPI needs up to
the contractual amount before supplying any other customer for its
electricty.
ARTICLE IX. Standby Power
A. O'Brien will compensate NPI for any amount that NPI pays Du Pont
under Article IX.A of the Du Pont Contract.
B. O'Brien guarantees to NPI that the bill paid by Du Pontn to JCP&L
will be capped at the then current General Service Primary Rate defined in
Article IV of the Du Pont Contract.
C. If at any time O'Brien's performance hereunder effects NPI's
performance under the Electricity Purchase Contract such that JCP&L, in
accordance with its Standby Tariff and other applicable rules, requires Du
Pont to sign a firm power contract in order to continue receiving power,
and O'Brien terminates the Du Pont Contract, NPI shall have the right to
terminate its obligation to purchase electricity from O'Brien, effective as
of the same date that Du Pont terminates the Du Pont Contract. Such
termination shall not affect Du Pont's or NPI's right or O'Brien's
obligation to continue the electrical interconnection parts of this
Contract, and O'Brien will take all reasonable steps to assure
uninterrupted electrical service from JCP&L to Du Pont.
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D. If JCP&L's tariffs or the rules of the New Jersey Board of Public
Utilities change so that Du Pont cannot receive the equivalent of firm
power without signing a new contract with JCP&L, and Du Pont exercises the
right contained in Article IX.C of the Du Pont Contract to reduce purchases
from NPI to the extent power is purchased from JCP&L under such new
contract, NPI may make a corresponding reduction in its purchases from
O'Brien hereunder.
ARTICLE X. Metering.
A. O'Brien will own, operate, and maintain all necessary meters and
associated equipment, including, without limitation, generation metering
and telemetering equipment, utilized for measuring energy deliveries and
for determining NPI payments to O'Brien. The metering point will be at the
point as shown on Exhibit "A" to the Du Pont Contract. O'Brien will
provide Du Pont with such access and other reasonable assistance Du Pont
requires should Du Pont decide to install check meters as provided in
Article X.A of the Du Pont Contract.
B. O'Brien shall permit Du Pont employees and NPI's employees to
enter upon its leased premises at any reasonable time for the purpose of
inspecting and/or testing or witnessing the testing of the accuracy of the
metering equipment.
C. O'Brien shall (and shall permit Du Pont to) inspect, test, and
calibrate their respective equipment at regular intervals of not more than
one (1) year, as agreed between the parties, and any inaccuracy in the
O'Brien meters disclosed by such tests shall be promptly corrected.
O'Brien shall allow Du Pont any required access to enable Du Pont to
promptly correct inaccurate Du Pont meters disclosed by such tests.
O'Brien, NPI and Du Pont shall have the right to have any meter tested at
any time at its expense. Representatives of teh other party
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and of Du Pont shall be afforded a reasonable opportunity to be present at
all meter inspections and tests. If at any time a meter is found
inaccurate by more than 1% an adjustment shall be made in settlements
between the parties to compensate for the effect of such inaccuracy over a
preceding period of thirty (30) days from removal or testing of the meter
or over any shorter period during which such inaccuracy may be determined
to have existed. It at any time a meter should fail to register or its
registration should be so erratic as to be meaningless, the quantities such
meter was intended to record shall be determined from check meters, if
available, or otherwise from the best obtainable data.
ARTICLE XI. Billings, Credits and Payments
At the time that it would have billed Du Pont under the Du Pont
Contract, O'Brien will prepare a monthly bill and bill NPI for the
electricity purchased by NPI during the previous month. Each invoice will
include all necessary information for calculation of the payment pursuant
to Article IV hereof, and credit NPI each month for any credits due to Du
Pont under Article XI of the Du Pont Contract. Payment shall be made by
NPI contemporaneously with each receipt of payment by NPI from Du Pont
pursuant to the Du Pont Contract. Should NPI fail to pay any invoice
within thirty (30) days after receipt, O'Brien, in addition to collecting
the interest set out herein, may pursue any viable remedy at law or in
equity.
ARTICLE XII. Notices
All notices and other communications hereunder shall be in writing and
shall become effective, if sent by first class certified or registered mail
with postage prepaid and return receipt
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requested three (3) days after deposit in the mails, or when received
(whichever is earlier), and shall be directed (a) if to NPI, to NPI,
O'Brien (Parlin) Cogeneration, Inc., c/o NRG Energy, Inc., 1221 Nicollet
Mall, Suite 700, Minneapolis, MN 55403, Attention: David H. Peterson, with
a copy to E.I. Du Pont Nemours and Company, Wilmington, Delaware 19898; (b)
if to O'Brien, to O'Brien (Parlin) Cogeneration, Inc., c/o NRG Energy,
Inc., 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403, Attention:
Leonard H. Bluhm, with a copy to E.I. Du Pont De Nemours and Company,
Wilmington, Delaware 19898, Attention: Manager-Chemicals and Energy
Section, Materials and Logistics Department; or (c) to such other address
as any such person may designate by notice given to the other party hereto.
ARTICLE XIII. Other Provisions
The following Provisions of the Steam Purchase Contract are hereby
incorporated by reference in to this Contract (as modified below) and shall
be applicable to this Contract as if they were fully set forth herein.
Article 7. Force Majeure; Contingency
(a) The reference to "steam" contained therein shall be understood as
a reference to "electricity" for the purposes hereof.
Article 12. Assignment and Subcontracting
(a) Neither the consent of Du Pont nor NPI shall be required for any
action by O'Brien referred to in Article 12 B.
Article 14. Remedies
(a) References to Du Pont shall be taken as a reference to NPI.
Article 15. Compliance with Laws, Rules and
Regulations
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Article 16. Indemnification
(a) References to Du Pont shall be taken as references to NPI.
Article 17. Insurance
Article 18. Amendments; Waiver
Article 19. Severability
Article 20. Governing Law
IN WITNESS WHEREOF, O'Brien and NPI have caused this Agreement to be
executed by their duly authorized representatives on the date and year
first above written.
NRG PARLIN INC.
By: /s/ Craig A. Mataczynski
Craig A. Mataczynski
Vice President
O'BRIEN (PARLIN) COGENERATION, INC.
By: /s/ Leonard Bluhm
Leonard A. Bluhm
President
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Exhibit 10.21.3
ASSIGNMENT OF ELECTRICITY PURCHASE CONTRACT
The ASSIGNMENT OF ELECTRICITY PURCHASE CONTRACT ("Assignment"), dated
as of April 30, 1996, by and between E.I. DU PONT DE NEMOURS AND COMPANY, a
Delaware corporation ("DuPont"), O'BRIEN (PARLIN) COGENERATION, INC., a
Delaware corporation ("O'Brien"), and NRG PARLIN INC. ("NPI").
RECITALS
A. O'Brien and DuPont entered into that certain Electricity Purchase
Contract dated January 18, 1988 (the "Electricity Purchase Contract").
B. O'Brien and NPI desire that O'Brien's rights and obligations
under the Electricity Purchase Contract be assigned to NPI, and DuPont is
prepared to consent to the assignment.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. Assignment of Electricity Purchase Contract. O'Brien's rights
and obligations under the Electricity Purchase Contract are hereby assigned
to NPI.
<PAGE>
2. Consent of DuPont. DuPont hereby consents to this assignment
pursuant to Article XII of the Electricity Purchase Contract, which
incorporates by reference the consent requirements of Article 12 of that
certain Steam Purchase Contract between O'Brien and DuPont dated December
8, 1986.
3. Acknowledgment by DuPont. DuPont acknowledges and agrees that
this Assignment is being made "without recourse". DuPont hereby releases
O'Brien from all obligations under the Electricity Purchase Contract, and
NPI hereby agrees to assume O'Brien's rights and obligations under said
Electricity Purchase Contract.
4. Amendments; Waiver. This Agreement may not be terminated,
amended, supplemented, waived or modified except by an instrument in
writing signed by both of the parties hereto. Any failure by either party
to enforce any provisions hereof shall not constitute a waiver by that
party of its right subsequently to enforce the same or any other provision
hereof.
5. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
<PAGE>
6. Governing Law. This Assignment shall, in all respects, be
governed and construed under the laws of Delaware, including all matters of
construction, validity and performance.
7. Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts, and by each of the parties on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all of which shall constitute but one and the same
instrument. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of a manually
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile also shall deliver a
manually executed counterpart of this Agreement, but the failure to deliver
a manually executed counterpart shall not affect the validity,
enforceability or binding effect of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first written above.
E.I. DU PONT DE NEMOURS AND COMPANY
By: /s/ G. Kenneth Towe
Name: G. Kenneth Towe
Title: Energy Sourcing Manager
O'BRIEN (PARLIN) COGENERATION, INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
NRG PARLIN INC.
By: /s/ Craig A. Mataczynski
Name: Craig Mataczynski
Title:
<PAGE>
Exhibit 10.23
AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
OF
GRAYS FERRY COGENERATION PARTNERSHIP
This Amended and Restated Partnership Agreement
("Agreement") is executed this 1st day of March, 1996, by and
among O'Brien (SCHUYLKILL) COGENERATION, INC., a Delaware
corporation, with its principal offices located at 225 South
Eighth Street, Philadelphia, Pennsylvania (hereinafter
"O'Brien"), ADWIN (SCHUYLKILL) COGENERATION, INC., a Pennsylvania
corporation, with its principal offices located at 300 Stevens
Drive, Airport Business Center, Lester, Pennsylvania (hereinafter
"Adwin"), and TRIGEN-SCHUYLKILL COGENERATION, INC., a
Pennsylvania corporation, with its principal offices located at
2600 Christian Street, Philadelphia, Pennsylvania (hereinafter
"Trigen"). All three parties are sometimes collectively
referred to as "the Partners."
BACKGROUND
A. As of October 28, 1991, O'Brien and Adwin Equipment
Company ("AEC"), the parent company of Adwin, formed a general
partnership know as the Grays Ferry Cogeneration Partnership (the
"Partnership") pursuant to a Partnership Agreement of Grays Ferry
Cogeneration Partnership dated as of such date, which agreement
was amended by the First Amendment to Partnership Agreement of
Grays Ferry Cogeneration Partnership dated as of September 17,
19193, and the Second Amendment to Partnership Agreement of Grays
Ferry Cogeneration Partnership, dated September 27, 1994
(collectively the "Partnership Agreement").
B. AEC has assigned all of its right, title and interest
in and to the Partnership to Adwin pursuant to the Third
Amendment to Partnership Agreement of Grays Ferry Cogeneration
Partnership, dated January 23, 1996, and, simultaneously
therewith, Adwin has been admitted to the Partnership as a
partner, has assumed the Managing Partner position, and AEC has
withdrawn from the Partnership as a Partner.
C. O'Brien is a wholly owned subsidiary of O'Brien
Environmental Energy, Inc., which is a corporation involved in
the development, ownership, operation, and management of
cogeneration facilities which produce steam and electric power
for sale to industrial and commercial users and public utilities.
<PAGE>
D. Adwin is a wholly owned subsidiary of AEC, which, in
turn, is a wholly owned subsidiary of Eastern Pennsylvania
Development Company, which, in turn, is a wholly-owned subsidiary
of PECO Energy Company ("PECO").
E. Philadelphia United Power Corporation ("PUPCO") has
agreed to terminate its option to purchase a one-third interest
in the Partnership in consideration of Trigen's purchase of such
interest directly from the Partnership.
F. The terms of the acquisition of the Partnership
interest by Trigen are set out in the Acquisition Agreement among
Adwin, O'Brien, and Trigen dated March __, 1996 (the "Acquisition
Agreement").
G. Adwin, O'Brien and Trigen wish to amend and restate the
Partnership Agreement in its entirety for the purpose of
continuing development of a qualifying cogeneration facility to
be located at the Schuylkill Station of the Trigen-Philadelphia
Energy Corporation ("TPEC") in Philadelphia, Pennsylvania, and to
provide for the ownership, operation and maintenance of said
cogeneration facility by the Partnership once completed.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the sufficiency of which is acknowledged by all
parties, Adwin, O'Brien and Trigen, intending to be legally
bound, hereby agree as follows:
SECTION 1. DEFINITIONS
Except as otherwise expressly stated, the singular includes
the plural and the plural includes the singular; a reference to
any law or rule includes any amendment or modification to such
law or rule and all regulations, rulings and other governmental
interpretations promulgated thereunder; a reference to any person
includes such person's permitted successors and permitted
assigns; the words "include," "includes" and "including" are not
limiting, and references to any document includes all amendments,
modifications and supplements thereto.
The capitalized terms used in this Agreement shall have the
meanings set forth below:
"Affiliate" means, with respect to any Partner, any other
Person who, directly or indirectly, controls, is controlled by,
or is under common control with (including, but not limited to,
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any Person that, directly or indirectly, is a beneficial owner of
fifty percent (50%) or more of any class of equity securities of)
such Partner.
"Affiliated Party Decision" is defined in Section 7.03.
"As Adjusted" means with respect to any dollar amount
specified as such in the Agreement, such dollar amount as
adjusted for inflation on an annual basis measured by the change
in the Consumer Price Index (Philadelphia, for all urban
Consumers) (1982 - 1984 equals 100) since the execution and
delivery of this Agreement.
"Agreement Date" means the date of this Agreement.
"Capital Account" means the account maintained for each
partner pursuant to Section 12.
"Carrying Value" of any asset means its adjusted basis for
federal income tax purposes, except that the initial Carrying
Value of any property contributed to the Partnership by a partner
shall be its Fair Value at the time of contribution. Carrying
Value of assets shall be adjusted to Fair Value at the following
times: (I) acquisition of an additional interest in the
Partnership by a new or existing Partner in exchange for more
than a de minimis capital contribution, (ii) disposition by the
Partnership of assets to a partner in exchange for more than a de
minimis amount of money or Partnership property as consideration
for an interest in the Partnership, and (iii) upon liquidation of
the Partnership. Carrying Value of an asset shall be reduced for
depreciation, amortization, and other cost recovery deductions
allowable for federal income tax purposes, but to the extent that
the Carrying Value of an asset differs from its adjusted tax
basis, such Carrying Value shall be reduced by the same ratio
used to compute depreciation of the asset's adjusted basis for
tax purposes.
"Code" means the Internal Revenue Code of 1986, as amended.
"Credit Agreement" means the Construction and Term Loan
Agreement between the Lenders and the Partnership dated March 1,
1996.
"Disbursable Assets" means the sum of (a) all Gross Receipts
of the Partnership less Operating Expenses plus (b) any other
assets of the Partnership that the Partnership determines to be
in excess of the current needs of the Partnership.
"Disinterested Partner" is defined in Section 7.02.
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"Electric Contract" means collectively (1) the Agreements
for Purchase of Electric Output (Phase 1) and (Phase 2) dated as
of July 8, 1992, between the Partnership and PECO, and (2) the
Phase 1 and Phase 2 Contingent Capacity Purchase Addendums, dated
as of September 17, 1993, between the Partnership and PECO, as
well as the Letter Agreement, dated March 30, 1995, pursuant to
which PECO tendered its Activation Notice under Section 3.3 of
the Phase 1 and Phase 2 Electric Capacity Contractors, as the
foregoing Agreements may be amended, modified, or supplemented
from time-to-time.
"Event of Default" is defined in Section 20.
"Fair Value" of any property, other than of interests in the
Partnership, means the fair market value of such property as
determined by the Partners through the same procedure provided
for in Section 22.04.
"FERC" means the Federal Energy Regulatory Commission.
"Financial Closing Date" means the date on which the
Partnership closes on construction financing for the Project.
"GAAP" means generally accepted accounting principles,
consistently applied.
"Gross Receipts" means, collectively, all receipts from
operations of the Partnership, receipts from the sale, exchange,
transfer, assignment or other disposition of property of the
Partnership, proceeds of insurance and receipts from any other
source by the Partnership.
"Lenders" means Chase Manhattan Bank, N.A., and such other
participating lenders as are signatories to the Credit Agreement,
or participate in any additional financing or re-financing of the
Project.
"Major Decision" has the meaning set forth in Section 7.04.
"Management Committee" means the committee established
pursuant to Section 7.01(b).
"Managing Partner" means the partner responsible for day-to-
day administration of the Partnership's business, as more fully
described in Section 6.01.
"Operating Expenses" means all expenses necessary for the
construction, repair, operation, and maintenance of the Project
including, without limitation, payments, if any, required to be
made to any Affiliate of the Partnership pursuant to the Project
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Documents, debt service, capital expenditures, amounts used for
the creation or restoration of reserves, and taxes.
"Overdue Rate" means the prime rate of the Chase Manhattan
Bank, N.A., as announced from time-to-time, plus three percent.
"Partner" means each of Adwin, O'Brien and Trigen, as long
as it remains a Partner of the Partnership and each other Person
or entity who becomes a partner of the partnership pursuant to
the terms of this Partnership Agreement.
"Partnership" means the Grays Ferry Cogeneration
Partnership, the partnership formed by the Partners pursuant to
this Agreement.
"Partner Percentage" means the respective percentage
interest of each Partner in the Partnership, initially as set
forth in Section 3.01, as such percentage may be adjusted in
connection with the assignment, from time-to-time, by a Partner
of its interest I the Partnership pursuant to the terms hereof.
"PECO" means the PECO Energy Company, a Pennsylvania
corporation, its successors and permitted assigns.
"Person" means any individual, corporation, partnership,
association, joint stock company, limited liability company,
unincorporated organization, or other entity.
"Project" means the cogeneration facility to be developed,
constructed, owned and operated by the Partnership, located at
2600 Christian Street, Philadelphia, Pennsylvania, of at least
150 megawatts of nominal capacity.
"Project Documents" means the Credit Agreement, all
agreements, permit applications, final permits, surety bonds, and
other documents material to the development, financing,
construction and operation of the Project, including, without
limitation, those set out in Exhibit B.
"Project Equity Contribution" means the amount required by
the Lenders for the construction of the Project to be contributed
as equity by the Partners to the Partnership.
"Project Services and Development Agreement" means the
Amended and Restated Project Services and Development Agreement,
dated as of September 17, 1993, by and between the Partnership
and PUPCO, as clarified by the Acquisition Agreement and as
further amended, modified or supplemented from time-to-time
pursuant to the terms thereof.
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"PUPCO" means Philadelphia United Power Corporation, a
Delaware Corporation, its successors and permitted assigns.
"PURPA" means the Public Utility Regulatory Policies Act of
1978, as amended.
"Steam Venture Agreement" means the Amended and Restated
Steam Venture Agreement, dated September 17, 1993, by and among
AEC, O'Brien Environmental Energy, Inc., TPEC and PUPCO (which
Agreement has been assigned by AEC and O'Brien Environmental
Energy, Inc. to the Partnership), as clarified by the Acquisition
Agreement and as the same may be further amended, supplemented,
and modified from time-to-time pursuant to the terms thereof.
"TPEC" means Trigen-Philadelphia Energy Corporation,
formerly known as Philadelphia Thermal Energy Corporation, its
successors and permitted assigns.
"Turnkey Contractor" means Westinghouse, or such substitute
contractor as may be engaged by the Partnership to complete
construction of the Project.
"Unreimbursed Development Costs" means those costs to
develop the Project incurred by O'Brien and AEC and/or Adwin, as
set out in Exhibit A.
"Westinghouse" means Westinghouse Electric Corporation, its
successors and assigns.
"Work Product" means all work products produced by, or on
behalf of, a Partner prior to the Agreement Date that relate to
the development, construction and operation of the Project,
including without limitation, engineering drawings and
feasibility studies, plans and specifications, construction costs
estimates, financial studies, surveys, and governmental approvals
and permits.
SECTION 2. FORMATION OF PARTNERSHIP
2.01 Adwin and O'Brien hereby continue the Partnership
for the purposes set forth in this Agreement, and Trigen hereby
joins the Partnership for said purposes. The Partnership will be
governed by the Uniform Partnership Act of the Commonwealth of
Pennsylvania ("the Act) as from time-to-time amended.
2.02 A duly executed application for registration of
fictitious name will be filed with the offices of the Secretary
of State of Pennsylvania. The Managing Partner shall execute and
cause to be filed amended applications for registration of
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fictitious name and shall take any and all other actions as may
be necessary or advisable to perfect and maintain the Partnership
as qualified to do business in accordance with this Agreement in
any state which may be required from time-to-time.
2.03 The name of the Partnership is Grays Ferry
Cogeneration Partnership.
2.04 The principal office of the Partnership shall be
located at the offices of the Managing Partner.
2.05 Title to any assets acquired to effectuate or
implement the purposes of the Partnership shall be held in the
name of the Partnership or at any time, from time-to-time, in the
name of a nominee of the Partnership selected by the Managing
partner, and approved by the other Partners. The Managing
Partner shall obtain such documents as may be necessary to
reflect the Partnership's ownership of such assets.
SECTION 3. PARTNER PERCENTAGES; CAPITAL CONTRIBUTIONS
3.01 The Partner Percentage of each Partner is set
forth below:
Partner Partner Percentage
Adwin 33 1/3%
O'Brien 33 1/3%
Trigen 33 1/3%
3.02 Simultaneously with the execution of this
Agreement, Adwin and O'Brien shall be deemed to have contributed
to the capital of the Partnership the Unreimbursed Development
Costs set out in Exhibit A.
3.03 Trigen will have no obligation to contribute to
development expenses paid prior to the Financial Closing Date.
Certain development costs listed in Schedule 3.03 have been
incurred, but not paid prior to Financial Closing Date. These
will be paid by the Partnership at or after the Financial Closing
Date.
3.04 Each Partner shall contribute Ten Million Dollars
($10,000,000) as its share of the Project Equity Contribution,
for a total of Thirty Million Dollars ($30,000,000). Such
Project Equity Contributions shall be made after all construction
loan proceeds under the Credit Agreement have been utilized, or
at such time as is required by the Lenders under the Credit
Agreement, and prior to any drawdowns under the subordinated debt
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to be provided by Westinghouse. On, or prior to, the Financial
Closing Date, each Partner shall post one or more letters of
credit, corporate guarantees or other security, in each case
acceptable to the Lenders, to secure its obligation under this
paragraph.
3.05 (a) Following completion of the Project and
except as provided in subparagraph (b), any subsequent equity
contributions shall be subject to the unanimous approval of the
Partners, and unless otherwise agreed, shall be in accordance
with the Partner Percentage of each Partner.
(b) In the event that one or more Partners fail
to make part or all of any subsequent equity contributions
approved pursuant to subparagraph (a) or approved by the
Management Committee in order to avoid default under the Project
Documents, or which, in the reasonable judgment of the Management
Committee, may be necessary to avoid default under such Project
Documents, the interest of each such non-contributing Partner
shall be subject to the following restrictions until such time as
the default is cured:
(i) loss of all voting rights under this
Agreement, and
(ii) suspension of all distributions to which
such Partner would otherwise be entitled, with the stipulation
that such distributions shall be placed in escrow by the
Management Committee until such time as the default is either
cured or the interest of the non-contributing Partner is
purchased pursuant to the procedures set out below.
(c) A non-contributing Partner under this Section
3.05 shall have six (6) months from the date the Management
Committee sets for payment of the subsequent equity contribution
to cure any default. Cure shall consist of payment in full of
the subsequent equity contribution required of the Partner plus
interest on the unpaid amount at the Default Rate applicable to
late payments under the Credit Agreement. If any such Partner
has failed to cure the default within said six (6) month period,
the remaining Partners shall have the opportunity, pro rata to
their respective Partner Percentages, to purchase the Partnership
interest of the non-contributing Partner, pursuant to the
provisions of Section 22, except that the purchase price shall
equal the amount of the subsequent equity contribution which the
non-contributing Partner failed to make.
(d) As a condition to participating in any such
buyout, a Partner shall have paid to the Partnership, pro rata
to its Partner Percentage, that part of the capital shortfall
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created by the non-contributing Partner either through an
additional equity contribution to the Partnership (which shall be
added to the Partner's Capital Account) or, if approved by the
Management Committee, and permitted by the Credit Agreement,
through a loan to the Partnership. To the extent that a partner
fails to pay its pro rata share of the subsequent equity
contribution required of the non-contributing Partner, the
remaining Partners shall have the opportunity, pro rata to their
respective Partner Percentages, to make up the shortfall, and
thereby be eligible to participate in the purchase of the non-
contributing Partner's interest should a cure not be effected by
such non-contributing Partner within the six (6) months set out
herein. If none of the Partners make up the shortfall created by
the non-contributing Partner, the contributing Partners shall
take action as they deem appropriate.
(e) In addition to its other obligations under
subparagraphs (a) and (b) of this Section, each Partner agrees to
contribute additional capital to the Partnership pursuant to the
provisions of this Section 3.05 to satisfy obligations owed third
parties if, as a result of such obligations, the Partnership's
liabilities exceed its assets.
SECTION 4. PURPOSE AND POWERS
4.01 The purpose of the Partnership is to develop,
construct, own, maintain, and operate the Project. Unless all of
the Partners otherwise agree, the Project shall at all times be a
"qualifying cogeneration facility" within the meaning of Section
3(18)(B) of the Federal Power Act, as amended by Section 201 of
PURPA and the applicable rules and regulations of FERC.
4.02 The Partnership shall have the following powers:
(a) To buy, lease, own or sell any personal or
real property useful or necessary for the development,
construction and operation of the Project;
(b) To borrow money and issue evidences of
indebtedness in furtherance of any or all of the objects of the
Partnership's business or for the refinancing of any
indebtedness, and to secure the same by mortgage, pledge or other
liens on any or all of the Partnership's property;
(c) To enter into, perform and carry out
contracts of any kind necessary to, or in connection with, or
incidental to, the accomplishment of the foregoing purposes;
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(d) Negotiate for and conclude agreements for
the sale, exchange or other disposition of all, or substantially
all, of the property of the Partnership;
(e) Make Permitted Investments of Partnership
funds, as such Permitted Investments are defined in the Credit
Agreement;
(f) Bring or defend actions at law or in equity;
(g) Sell, purchase, cancel, or otherwise dispose
of, the interest of any Partner in the Partnership in accordance
with the terms of this Agreement; and
(h) Undertake any other action or thing
reasonably necessary to carry out the purposes set forth in this.
4.03 Partners may not engage in or possess interests in
business ventures of any kind other than in accordance with this
Agreement. Affiliates of a Partner may engage in or possess
interests in other business ventures of any kind for their own
account including, without limitation, owning or participating in
or serving as a partner or other owner of other entities that
own, either directly or through interests in other Persons,
projects similar to, or that compete with, the Project. Neither
the Partnership nor any of the Partners shall have any rights by
virtue of this Agreement in, or to, such other business ventures
or to the income or profits derived from Affiliate activities.
SECTION 5. DESCRIPTION OF THE PROJECT;
RELEASE OF CERTAIN PRIOR FINANCIAL COMMITMENTS
5.01 Initially, the Project will consist of a
Westinghouse 501D5A Econopac combustion turbine, a heat recovery
steam generator, a condensing-extraction steam turbine which, in
combination with the combustion turbine, is expected to be
capable of generating 170 MW at 90 degrees Fahrenheit, and an
auxiliary boiler whose capacity shall be approximately 730,000
pounds of steam per hour, and shall be capable of burning both
No. 2 oil and natural gas.
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SECTION 6. MANAGEMENT OF PARTNERSHIP BUSINESS;
ROLE OF THE MANAGING PARTNER
6.01 (a) The day-to-day responsibility to administer
the business of the Partnership shall be vested in the Managing
Partner, pursuant to guidelines and policies issued by the
Management Committee established by Section 7.01(b) herein. The
Managing partner shall report on a regular basis to the
Management Committee. The intent of the Partners is that policy
decisions be referred to the Management Committee by the Managing
Partner, but that the Managing partner perform all administrative
or ministerial duties of the Partnership within the guidelines
and policies approved by the Partnership. Subject to any
requirement under Section 7.02 that a Disinterested Partner
handle such activities, the Managing Partner shall have the
authority and responsibility to undertake the following actions
without the need to seek approval from the Management Committee:
(i) prepare for the Partnership an annual
budget for approval by the Partners (to be presented to the
Partnership no later than ninety (90) days prior to the beginning
of each year), which budget shall include a narrative description
of construction, repair, operating and maintenance activities
proposed to be undertaken by the Partnership during such year and
a description of such other information, plans, agreements and
other matters as are necessary to inform the Partners of matters
materially relevant to the operation and management of the
Partnership and the Project during such year;
(ii) recommend staffing and compensation to
the Management Committee for consultants, attorneys, accountants
and other professionals utilized by the Partnership;
(iii) pursue all permits required for the
development, financing, construction and operation of the
Project;
(iv) except as specifically provided herein
with respect to transactions with Affiliates, negotiate and
administer the Partnership's obligations under the Project
Documents;
(v) provide the other Partners with copies
of new Project Documents promptly after each has been executed by
the Partnership;
(vi) promptly notify the other Partners of
any material impediments to the expected completion of
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construction of the Project within the proposed capital budget
which is attached hereto as Schedule 6.01;
(vii) monthly notify the Partnership of
any anticipated deviations of five percent (5%) or more from any
line item of the annual approved budget;
(viii) invest and re-invest the funds of
the Partnership in accordance with Section 4.02(e);
(ix) execute and deliver in accordance with
the terms of this Agreement, on behalf of the Partnership,
construction contracts, instruments for the transfer of real
property, loan agreements, any and all instruments and documents
which shall be required by the Lenders, or any other document or
instrument in any way related thereto or necessary or appropriate
in connection therewith;
(x) provide all required risk management
services, including development of an indemnity program and
maintenance of adequate insurance to insure compliance by the
Partnership with the Project Documents;
(xi) provide administration of the
Partnership including, without limitation, its accounting
requirements, and administration for the Project while under
construction and, after completion, for its operation;
(xii) handle all public relations
matters; and
(xiii) handle all environmental,
regulatory and contractual reporting requirements.
(b) Any Person dealing with the Partnership may
rely (without duty of further inquiry) upon a certificate signed
by the Managing Partner as to the identity of any Partner; the
existence or nonexistence of any fact or facts which constitute a
condition precedent to acts by the Partnership or which are in
any other manner germane to the affairs of the Partnership; the
Persons who are authorized to execute and deliver any instrument
or document of the Partnership; and any act or failure to act by
the Partnership or any other matter whatsoever involving the
Partnership; subject in each case to any requirements under
Section 7.02 that a Disinterested partner handle such activity.
(c) Subject to the Managing Partner's compliance
with Sections 7 and 17 herein, the signature of the Managing
Partner shall be sufficient to convey title to any assets or
property owned by the Partnership, or to lease, mortgage, lien or
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encumber the same, and all of the Partners agree that a copy of
this Agreement may be shown to the appropriate parties in order
to confirm the same, and further agree that the signature of the
Managing Partner shall be sufficient to execute any "statement of
partnership' or other documents necessary to effectuate this or
any other provision of this Agreement or to satisfy any
requirement of the Act or of other applicable law.
(d) The Managing Partner may not, except with
approval of the Partnership under Section 7.04:
(i) Knowingly take any action in
contravention of this Agreement;
(ii) Deal with or assign rights in any
Partnership property for other than Partnership purposes;
(iii) Confess judgment against the
Partnership or make an assignment for the benefit of creditors;
(iv) Take any action which would make it
impossible to carry on the business of the Partnership; or
(v) Cause the Partnership to cease to be a
partnership for any reason, including federal income tax
purposes.
6.02 Adwin shall serve as the Managing Partner until
the Financial Closing Date, at which time, it shall automatically
be replaced by O'Brien. O'Brien shall serve as the Managing
Partner until care, custody and control of the Project is turned
over to the Partnership by the turnkey Contractor, (or at such
earlier time as the Management Committee determines is necessary
to avoid ownership problems under PURPA), at which point O'Brien
will automatically be replaced by Trigen as the Managing Partner
until it resigns or is replaced pursuant to Section 6.03, or
until it ceases to be a Partner.
6.03 If an Event of Default by the Managing partner
occurs, the non-Managing Partners may elect to remove the
Managing Partner by serving notice of the election on the
Managing Partner. If, at the time of removal, there is only one
other Partner, such Partner will become the Managing Partner. If
there is more than one non-Managing Partner, the non-Managing
Partners shall jointly agree on a substitute Managing partner.
The substituted Managing Partner shall be formally designated by
an amendment to this Agreement signed by all the non-Managing
Partners.
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6.04 Notwithstanding any other provision of this
Agreement, no Partner shall become Managing partner or remain in
such position if fulfillment of such responsibilities will
jeopardize the Project's qualifying facility status under PURPA.
6.05 Any Partner (including the Managing Partner) may
appoint, employ, or contract with any Person to assist it in
fulfilling its duties hereunder, but may not delegate its powers,
rights or obligations hereunder to such Person, and only so long
as any such appointment, employment, contract, or other dealing
is at no cost to the other Partners or to the Partnership.
6.06 Each Partner hereby makes, constitutes, and
appoints the Managing Partner its true and lawful attorney-in-
fact for the express purposes contained in this Section 6.06 (and
no others) and authorizes it to act in its name, place, and stead
and for its use and benefit, to sign, execute, certify,
acknowledge, swear to, file, publish and record (i) all amended
name certificates to be filed by the Partnership under the laws
of any jurisdiction in which the Partnership is doing business;
(ii) any amendments and the instruments described in clause (i),
as now or hereafter amended, which are required to admit any
substituted Partner in accordance with the terms of this
Agreement; and (iii) all certificates of cancellation and other
instruments which shall be required by applicable law to effect
the dissolution and termination of the Partnership; provided that
any such actions are taken in accordance with the terms and
provisions of this Agreement. The power of attorney granted
herein may be exercised by any such attorney-in-fact by listing
the Partners executing any agreement, certificate, instrument, or
other document with the single signature of any such attorney-in-
fact acting as attorney-in-fact for such Partners.
6.07 To reimburse the Managing Partner for all of its
internal costs incurred in performing its responsibilities
hereunder, the Partnership shall provide the Managing Partner
with an annual fee of One Hundred fifty Thousand Dollars
($150,000), As Adjusted, which fee shall be pro-rated on a
monthly basis for any periods less than a year during which a
Partner serves as Managing Partner. Third party expenses,
including legal and accounting costs, shall be payable by the
Partnership, consistent with the annual budget approved by the
Partners.
SECTION 7. PARTNERSHIP DECISION MAKING; MAJOR DECISIONS
7.01 (a) For those decisions requiring a vote of the
Partners (i.e., those decisions for which the Managing Partner
does not have sole authority under paragraph 6.01), the Partners
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shall have a vote equal to their respective Partner Percentage.
The Partnership shall execute its decision making through a
Management Committee, established pursuant to sub-paragraph (b)
below.
(b) The Management Committee shall consist of one
non-voting General Manager appointed by the Managing Partner, and
one voting member from each of Adwin, O'Brien and Trigen. The
Management Committee shall be chaired by the General Manager, and
shall meet quarterly at the offices of the Managing Partner, or
at such other location as may be mutually agreeable. The agenda
for each meeting of the Management Committee will consist of an
Operations Report (which shall address Project availability,
efficiency, net projection, equipment runtime, PURPA
calculations, equipment condition, permit compliance, and
explanation of any downtime), a Financial Report (which shall
address net income, balance sheet, available cash, deviations
from approved budgets, loan balances, and recommendations for
distributions), a Third Party Relationships Report (which shall
address relations with lenders, customers, contractors/vendors,
permitting and regulatory bodies, neighbors and the press), and a
Major Decision Report, with recommendations on Major Decisions to
be made. Minutes of the meetings of the Management Committee
shall be maintained by the General Manager and a copy served on
each Partner within five (5) business days after any meeting of
the Committee. The General Manager shall ensure that (1)
unaudited annual financial statements are ready for review and
approval by the end of February of each year and that audited
financial statements are ready for approval by the end of March
of each year, (2) annual tax returns are ready for review and
approval by April 1 of each year, and (3) annual staffing plans
and proposed annual budgets are ready for review by October 1 of
each year. To the extent possible, the Management Committee will
seek to make "Major Decisions" (as defined in Section 7.04) by
consensus. In the absence of a consensus, the provisions of
Section 7 shall control.
(c) Special meetings of the Management Committee
may be called by Partners holding at least thirty-three and one-
third percent (33 1/3%) of the voting interests in the
Partnership upon reasonable written or telephonic notice to the
other Partners. Meeting of the Management Committee shall be
authorized if a quorum representing fifty0one percent (51%) or
more of the voting interests in the Partnership is represented
either in person or by proxy. Any meeting of the Management
Committee may be held by conference telephone or similar
telecommunications arrangement whereby all Partners in attendance
may hear one another. Any action that may betaken at a meeting
of the Partners may be taken, without a meeting, by the unanimous
written consent of those Partners holding voting interests
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sufficient to approve such action pursuant to the terms of this
Agreement.
7.02 To avoid the appearance of any conflict of
interest, the Management Committee shall assign primary
responsibility for the negotiation and monitoring of any
agreements, or amendments thereto, between the Partnership and a
Partner (or an Affiliate thereof) to a Disinterested Partner
unless there is no Disinterested Partner. For purposes of this
Agreement, a "Disinterested partner" as to a particular decision
is one which neither (1) is a contracting party or an Affiliate
of such contracting party with respect to said decisions, nor (2)
has a financial interest in the agreement that is the subject of
the decision which is materially different from the financial
interest of the remaining partners or the Partnership, due to a
separate agreement with the contracting party or its Affiliate.
The Disinterested Partner shall have no authority to make final
decisions with respect to said agreements, but shall have the
primary responsibility for negotiating or monitoring the terms of
such agreements or amendments, subject to approval by the
Partnership, as set out in Sections 7.03 and 7.04. If the
Managing Partner is not a Disinterested Partner and is,
therefore, not assigned to any such negotiation or monitoring
responsibility, it shall nevertheless assist and consult with the
assigned Disinterested Partner, including attendance at
negotiation sessions, if requested.
7.03 With the exception of those decisions set out in
Sections 7.04, any decisions which is supported by fifty-one
percent (51%) or more of the voting interests of the Partners
shall be deemed to be a decision or act of the Partnership.
Unless there is no Disinterested Partner, and notwithstanding any
provisions herein to the contrary, the vote of a majority of the
voting interests held by the Disinterested Partners (or the
unanimous consent of the voting interests held by the
Disinterested Partners for decisions covered by Section 7.04)
shall be required for those actions of the Partnership which
specially affect the interests of one Partner, either because
such Partner or an Affiliate thereof has a separate contract with
the Partnership involving such decision or has a financial
interest in the decision which is materially different from the
financial interests of the remaining Partners or the Partnership,
due to a separate agreement with the contracting party or its
Affiliate (such a decision is hereinafter referred to as
"Affiliated party Decision"). Without limiting the foregoing, an
Affiliated party Decision shall include waivers, elections,
default notices and the initiation of enforcement actions under,
and the execution, modification, or termination or, contracts
between the Partnership and a Partner or Affiliate of such
Partner.
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7.04 Any of the actions specified below (each, a "Major
Decision") may be taken only if agreed upon by a unanimous vote
of the Disinterested Partners with respect to any such decision
if such decision involves an "Affiliated party Decision";
otherwise, the unanimous vote of all partners shall be required.
The following actions shall be covered by this paragraph:
(a) Any action which would change or materially
or adversely affect the purpose or business of the Partnership as
specified in Section 4;
(b) Any issuance of additional interests in the
Partnership or the admission of any Person as a Partner;
(c) Any material modification to the Project
Documents, including any modification which involves an
expenditure or incurrence of liability, or a potential liability,
on the part of the Partnership in excess of an annual aggregate
total of Two Hundred Thousand Dollars ($20,000), As Adjusted;
(d) Any execution by the Partnership of any
unbudgeted agreement with a term greater than one year or
involving the expenditure or incurrence of liability, or a
potential liability, in excess of One Hundred Thousand Dollars
($100,000), As Adjusted, in the aggregate;
(e) Any sale, assignment, or grant of mortgage or
other encumbrance involving all or substantially all of the
assets of the Partnership; provided, however, that this clause
shall not apply to the leasing or installment purchase of office
and related equipment and vehicles;
(f) The incurring of unbudgeted indebtedness, or
a potential indebtedness, by the Partnership in excess of One
Hundred Thousand Dollars ($100,000), As Adjusted, per occurrence
or Five Hundred Thousand ($500,000), As Adjusted, in the
aggregate on an annual basis;
(g) The determination of compensation for
professionals and consultants retained by the Partnership;
(h) Any material modifications to an insurance
and indemnity program for the Partnership, including any
modification which involves an expenditure or the incurrence of
liability, or a potential liability, in excess of Two Hundred
Thousand Dollars ($200,000), As Adjusted, in the aggregate;
(i) Approval of the annual operating budget for
any calendar year and approval of any action or actions, which
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in the aggregate result is an increase than five percent (5%) in
the expenditures or a decrease of greater than five percent (5%)
in the revenues of or to the Partnership as set forth in the
approved annual operating budget;
(j) The dissolution of the Partnership, except
under Section 21.01(iv);
(k) Disposition of assets of the Partnership upon
dissolution or termination of the Partnership;
(l) The distribution of cash or other assets to
the Partners, the establishment of any reserves not required by
the Lenders or the determination of Disbursable Assets;
(m) The merger or consolidation of the
Partnership with or into any Person; and
(n) The decisions identified in Section 6.01(d).
7.05 Whenever any Partner is requested to evidence its
approval of or agreement to any decision or action of any nature
whatsoever that requires consent of the Partners, the Partner to
whom such request has been made shall respond to such request
with reasonable promptness. Commensurate with the nature of the
approval, action or agreement being sought, the partner to whom
the request is made shall advise the requesting Partner(s) of its
approval or its reasons for withholding the same. If the request
for approval, agreement or other action is in writing, the
response must also be in writing.
SECTION 8. TERM; TERMINATION
8.01 The Partnership shall continue in existence until
the first to occur of the following events: (a) the date
determined by unanimous decision of the Partners to dissolve the
Partnership; (b) the sale of all or substantially all of the
assets of the Partnership; (c) the withdrawal by any Partner
resulting in less than two remaining Partners, unless, if there
is a sole remaining Partner, a second Partner is admitted within
the time required by applicable law; (d) the occurrence of an
event specified under applicable law resulting in a dissolution
of the Partnership unless, pursuant to applicable law, the
Partners elect to continue the business of the Partnership; (e)
December 31, k2035; or (f) the dissolution of the Partnership due
to an Event of Default or otherwise in accordance with this
Agreement.
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8.02 Upon termination of this Agreement, none of the
Partners shall have any further liability to each other, except
any liability which expressly survives pursuant to Section 30.02
of this Agreement.
SECTION 9. SCOPE OF AUTHORITY
9.01 Except as otherwise expressly provided in this
Agreement, no Partner shall have any authority to bind or act
for, or in the name of, or assume any obligations or
responsibilities on behalf of, the other Partners or the
Partnership. Neither the Partnership nor any Partner shall be
responsible or liable for any indebtedness of a Partner, whether
incurred or arising before or after the execution of this
Agreement, except those responsibilities, liabilities,
indebtedness or obligations expressly assumed by such Partner or
the Partnership in writing. This Agreement shall not be deemed
to create a general partnership among the Partners with respect
to any activities whatsoever, other than activities within the
scope and purpose of the Partnership.
SECTION 10. INDEMNIFICATION
10.01 Each Partner hereby indemnifies and holds
harmless the partnership as well as the other Partners(s) and
their or its Affiliates, officers, directors, employees and
agents from and against any and all claims, demands, losses,
damages, liabilities, lawsuits and other proceedings, judgments
and awards, and costs and expenses (including but not limited to
reasonable attorneys' fees) arising directly or indirectly, in
whole or in part, out of any breach of the provisions of this
Agreement by such Partner or its Affiliate, director, officer,
employee or agent.
10.02 Except as provided in non-waivable provisions
of applicable law:
(a) The Partnership hereby indemnifies each
Partner (and its officers, directors, employees and agents) from
and against any liability resulting from any act omitted or
performed by such Partner (or its officer, director, employee or
agent) in good faith on behalf of the Partnership and in a manner
reasonably believed by such Partner (or its officer, director,
employee, or agent) to be within the scope of the authority
conferred upon such Partner by this Agreement and in the best
interests of the Partnership.
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(b) No Partner (and no officer, director,
employee or agent of a Partner) shall be liable, responsible or
accountable, in damages or otherwise, to the Partnership or the
partners for or as a result of any act, omission or error in
judgment which was taken, omitted or made by it in good faith on
behalf of the Partnership and in a manner reasonably believed by
it to be within the scope of the authority granted to it by this
Agreement and in the best interests of the Partnership. A
Partner may consult with such legal or other professional counsel
as it may select. Any action taken or omitted by it in good
faith reliance on, and in accordance with, the opinion or advice
of such counsel shall afford full protection and justification to
it with respect to the action taken or omitted.
(c) The Partnership may reimburse a partner for
all expenses, including reasonable legal fees, and losses in
connection with any suit or action involving Partnership business
(but no in connection with any action brought by one Partner
against another). Any such indemnification and advancement of
expenses agreed to by the Partnership shall not be exclusive of
any other right available to the Partners, unless otherwise
provided in extending the offer thereof. The Partnership shall
purchase and maintain insurance on behalf of the Partners against
liability.
SECTION 11. LIMITATION OF LIABILITIES
11.01 No Partner, except as provided in Section
3.05, shall be liable to any third Person for losses, liabilities
or obligations of the Partnership (except as otherwise expressly
agreed to in writing by such Partner) unless the assets of the
Partnership shall first have been exhausted.
11.02 Unless otherwise decided by the Partnership,
the Partnership shall not enter into any contract, lease,
sublease, note, deed of trust, or other agreement unless there is
contained in such instrument an appropriate provision which (a)
limits the claims of all parties to, and beneficiaries under,
such instrument to the assets of the Partnership and (b)
expressly waives any rights of such parties and other
beneficiaries to proceed against the Partners individually. To
the extent the Partnership has entered into any contract, lease,
sublease, note or other agreement in violation of this
requirement prior to the date of this Agreement, the Partners
hereby waive any violation of the provisions of this Section.
11.03 Unless due to a Partner's willful misconduct,
gross negligence, actions taken in bad faith, or actions taken by
a Partner for which there was no basis for the Partner to form a
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reasonable belief that such actions were in compliance with the
Affiliated Party Decision requirements of Section 7.03, in no
event shall any Partner be liable to any other Partner for
indirect, incidental, special or consequential damages including,
but not limited to loss of revenue, loss of profit, cost of
capital, or loss of opportunity, regardless of whether such
liability arises out of contract, tort (including negligence),
strict liability, or otherwise.
SECTION 12. CAPITAL ACCOUNTS
12.01 A separate "Capital Account" shall be
maintained for each Partner in accordance with applicable United
States Treasury regulations. Upon execution of this Agreement,
the Capital Accounts of Adwin and O'Brien shall consist of the
Unreimbursed Development Costs set out in Exhibit A plus their
respective shares of the Project Equity Contribution set out in
Section 3.03. The Capital Account of Trigen shall consist of its
share of the Project Equity Contribution. The resulting initial
Capital Accounts of the Partners are set out in Exhibit A.
Following execution of this Agreement, the Capital Account of
each Partner shall be:
(a) increased by (i) the amount of cash and Fair
Value of any property (net of liabilities assumed by the
Partnership and liabilities to which the property is subject)
contributed by such Partner to the Partnership pursuant to this
Agreement; (ii) the items of income and gain allocated to such
Partner in accordance with Section 13.01; and (iii) any positive
adjustment to such Capital Account by reason of an adjustment to
the Carrying Value of Partnership Assets;
(b) decreased by (i) the amount of case and Fair
Value of any property (net of liabilities assumed by the Partner
and liabilities to which the property is subject) distributed to
such Partner by the Partnership pursuant to this Agreement; (ii)
the items of loss and deduction allocated to such Partner in
accordance with Section 13.01; and (iii) any negative adjustment
to such Capital Account by reason of an adjustment to the
Carrying Value of Partnership Assets.
12.02 Immediately prior to the distribution of any
property (other than cash) to a Partner, the Capital Account of
each Partner shall be increased or decreased, as the case may be,
to reflect the manner in which the unrealized income, gain, loss
and deduction inherent in such property (that has not previously
been reflected in the Capital Accounts of the Partners) would be
allocated among the Partners in accordance with GAAP as if there
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had been a taxable disposition of such property for its Fair
Value.
SECTION 13. ALLOCATION
13.01 For purposes of making allocations to Capital
Accounts, all items of income, gain, loss, deduction and credit
of the Partnership shall be allocated among the Partners in
accordance with their respective Partner Percentages.
13.02 Any allocation pursuant to Section 13.01
will, however, be subject to any adjustment required to comply
with Sections 704(b) and 704(c) of the Code and the Treasury
Regulations thereunder including, without limitation, adjustments
with respect to any nonrecourse deduction or minimum gain
chargeback within the meaning of Treasury regulation Section
1.704-2. Any special allocations of items pursuant to this
Section 13.02 shall be taken into account, to the extent
permitted by the Treasury Regulations, in computing subsequent
allocations of income, gain, loss or deductions pursuant to
Section 13.01 or 13.03 so that the net amount of any items so
allocated and all other items allocated to each Partner over the
life of the Partnership shall, to the extent possible, be equal
to the amount that would have been allocated to each Partner
pursuant to Section 13.02 had such special allocation not
occurred.
13.03 For purposes of making allocations for
federal, state, and local income tax purposes, all items of
income, gain, loss, deduction and credit realized by the
Partnership shall, for each fiscal period, be allocated, among
the Partners in the same manner as the correlative items of
income, gain, loss, deduction and credit were allocated pursuant
to Section 13.01.
SECTION 14. DISTRIBUTIONS TO PARTNERS
14.01 Subject to Section 24, and as permitted by
the Partnership's Lenders, the Partnership shall distribute its
Disbursable Assets, if any, for each fiscal quarter to the
Partners simultaneously in accordance with the Partner Percentage
of each Partner.
SECTION 15. BOOKS, RECORDS AND ACCOUNTS
15.01 The Partnership shall maintain, at its
principal office, full and accurate accounts and financial
records which all Partners shall have the right to inspect and
examine during
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reasonable business hours. In addition, each Partner may
designate a Person or Persons to inspect, examine and audit such
accounts and financial records and to make copies of documents
deemed appropriate during regular business hours at such
Partner's sole cost and expense. The Managing Partner shall keep
or cause such books to be kept and shall fully and accurately
enter all transactions of the Partnership in the books. Such
books and records of account shall be maintained on the accrual
basis and shall be adequate to provide each partner with all
financial information that may be needed buy such Partner or any
of its Affiliates for purposes of satisfying the financial and
tax reporting obligations of such Partner or Affiliate. Such
books shall be closed and balanced at the end of each fiscal
year. The Managing Partner will furnish financial statements,
prepared in accordance with GAAP, to each Partner within thirty
(30) days following the end of each quarter. On or before March
1 of each year, the partnership will furnish each Partner, for
the prior calendar year, audited financial statements of the
Partnership. At the request of any Partner, the Partnership
shall give specific answers to questions upon which information
is desired from time-to-time relative to the income, assets,
liabilities, contracts, operations, condition of the property,
status of any loans and any other data with respect to the
Partnership or its property.
15.02 The Partnership shall engage as independent
auditors for the Partnership the firm recommended by the Managing
Partner, and approved by the Management Committee. The
independent auditors shall at the end of each fiscal year (i)
audit the records and accounts of the Partnership and (ii) render
their opinion on the statements of financial condition of the
Partnership as of the end of each fiscal year and related
statements of income and changes in financial condition for each
fiscal year.
SECTION 16. TAX RETURNS; TAX ACCOUNTING; TAX ELECTIONS
16.01 It is the intention of the parties that the
relationship created by this Agreement will, for federal, state,
local and foreign purposes, be treated as a partnership. The
Partners agree to take all action, including the amendment of
this Agreement and the execution of other documents, as may be
required to qualify for and receive such tax treatment. Subject
to the provisions of Section 16.04, all of the Partnership's
elections for federal and state tax purposes, except those
specifically reserved by the Code to be made by the individual
Partners, shall be determined by the "Tax Matters Partner" (as
defined in Section 16.05) and approved by the other Partners.
Subject to the provisions of this Section 16.01, the
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Partnership's federal and state tax returns of the Partnership
shall be reviewed and approved by each Partner. Any Partner who
objects to the presentation of any Partnership item on any such
return shall so notify the Managing partner in writing within
fifteen (15) days after the date on which the income tax return
in question was furnished to such Partner by the Partnership's
independent auditors. Such notice shall set forth in reasonable
detail the nature of, and basis for, each such objection. Copies
of such notice shall be provided to the other Partners and to the
independent auditors. If the Partners cannot agree upon a
mutually satisfactory resolution of any disputed item, any
Partner who objects to the majority decision of the Partners
shall be entitled to take an inconsistent position with respect
to any unresolved items on its own income tax return. In all
other respects each partner shall report the results of the
operation of the partnership on its own returns in a manner
consistent with the manner in which such results were reported by
the Partnership.
16.02 Income tax returns of the Partnership shall
be prepared by the independent auditors. Copies of all income
tax returns of the Partnership shall be furnished to each of the
Partners for review and approval by April 1 of each year for
filing such returns, including extensions, if any. If any
Partner shall fail to approve any such return, an application for
an extension of time to file shall be timely filed. If all
Partners fail to approve the return prior to the expiration of
the extension period, the Managing Partner shall file the return
as approved by a majority-in-interest of the Partners, subject to
the provisions of Section 16.01.
16.03 The fiscal year and the tax year of the
Partnership shall end on December 31 of each year.
16.04 The Partnership shall, if requested by any
Partner, make the election provided under Section 754 of the
Code.
16.05 The Managing Partner is hereby designated as
the "Tax Matters Partner," pursuant to Section 6231 of the Code
and the applicable regulations thereunder.
16.06 Prompt notice shall be given to the Partners
upon receipt of notice that the Internal Revenue Service or any
other taxing authority intends to examine partnership tax returns
for any period. The Tax Matters partner shall promptly supply to
the other Partners copies of any communications with any taxing
authority relating to any audit of any tax returns filed by or on
behalf of the Partnership which involve any material issue and
shall take such other steps as may be appropriate to keep the
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other Partners fully informed about the course of the audit and
any other administrative or judicial proceeding relating thereto.
The Tax Matters partner shall not settle any material claim for
additional taxes, interest or penalties, or other adjustments to
the Partnership's tax returns without first obtaining the
approval of the Management Committee.
SECTION 17. BANK ACCOUNTS
17.01 Except as otherwise required by the Lenders,
all funds shall be deposited in the name of partnership in such
account or accounts as shall be designated by the Managing
Partner. Except as provided below or as otherwise required by
the Partnership's Lenders, all withdrawals therefrom shall be
made upon checks signed (i) by the chief executive officer, the
chief operations office, or the chief financial officer of the
Managing Partner and (ii) by such additional person or persons as
shall be designated by the Managing Partner from time-to-time.
Any withdrawal in excess of Twenty Thousand Dollars ($20,000)
which is out of the ordinary course of business of the
Partnership or outside the scope of the approved annual budget,
shall be approved in writing by the Managing Partner and at least
one other Partner. The Managing Partner shall have no authority
to approve withdrawals to itself or its Affiliates that are
outside the scope of the approved annual budget, without the
approval of the Partnership, which decision shall not be
unreasonably delayed.
SECTION 18. TRANSFER OF A PARTNER'S INTEREST
18.01 No Partner may sell, assign or encumber all
or any part of its interest in the partnership unless each of the
conditions set forth herein are satisfied or waived by consent of
the partners; provided, however, that each partner may transfer
all or a portion of its interest in the Partnership to an
Affiliate without the consent of, but with notice to the other
Partner(s); provided, however, that such transfer does not cause
the Project to lose its status as a "qualifying cogeneration
facility" under PURPA. Notwithstanding any other provision of
this agreement, no partner may sell or assign all or any part of
its interest in the Partnership if such sale or assignment would
result in a total of more than three (3) Partners in the
Partnership, unless to remedy a failed capital call under Section
3.05, or to remedy a potential violation of the ownership
requirements under PURPA, pursuant to Section 18.02 below.
18.02 If it is determined that the ownership of
interests in the Partnership by any Partner would cause the
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Project to cease being a "qualifying cogeneration facility" under
PURPA or would cause the Partnership to be regulated pursuant to
the Public Utility Holding Company Act, each Partner agrees,
consistent with the provisions of the Agreement, to reduce its
Partnership Interest, pro rata to its Partner Percentage, to a
level which avoids loss of "qualifying facility" status. Each
Partner agrees that it will not transfer any interest in the
Partnership, the result of which transfer would cause a loss of
"qualify facility" status. No transfer shall be allowed or be
effective unless an opinion of counsel satisfactory to the
Management Committee is obtained stating that such transfer would
not (i) cause the Partnership to be classified as an entity other
than a partnership for purposes of the Code or to be treated as a
publicly traded partnership within the meaning of Section 7704 of
the Code, (ii) require registration under the Securities Act of
1933 and would not violate or cause the Partnership to violate
any applicable law, and (iii) adversely affect the status of the
Project as a qualifying facility under PURPA.
18.3 As a condition to the transfer of any interest,
the transferee shall execute and deliver to each remaining
Partner an instrument pursuant to which it agrees to be bound by
the terms of this Agreement and such additional instruments and
documents as may be reasonably required by the remaining
Partners.
SECTION 19. FIRST RIGHT OF PURCHASE
19.01 If, at any time, any Partner desires to sell
all or any portion of its interest (other than a sale by a
Partner to any Affiliate), such Partner shall give the other
Partners notice of its intention to seek a purchaser for such
interest promptly after making the determination to do so. Such
Partner, upon securing a bona fide offer to purchase such
interest intended to be sold shall give the other Partners notice
of (a) the price (which shall be a dollar sum), (b) the identity
of the proposed purchaser (if then known to the seller) and (c)
all other terms of sale. The Remaining Partners shall have the
right pro rata to their Partner Percentage, during the forty-five
(45) day period after the giving of the notice of the proposed
sale and its terms to enter into agreement to purchase all of the
interest specified in the notice (which price shall be prorated
if the Remaining Partners want o purchase only a portion of the
interest being offered for sale) and upon the terms set forth in
the notice. In the event less than all of the Remaining Partners
determine to purchase the interest to be sold within the said
forty-five (45) day period, those Remaining Partners who elect to
purchase shall have the right within the ten (10) day period to
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purchase the interest to be sold in the same proportion as the
Partner Percentage of each purchasing Remaining Partner bears to
the total Partner Percentage of all such purchasing Remaining
Partners. If none of the remaining Partners elect to purchase
the seller Partner's interest to be sold within the said time
periods, the selling Partner shall be free for a period of thirty
(30) days thereafter to sell the interest to be sold to the
proposed purchaser on the same terms and conditions contained in
the notice to the Remaining Partners of the proposed sale. If
the said sale is not effected within the said thirty (30) day
period, any subsequent sale must again comply with the
requirements of this Section. Settlement under any purchase
agreement entered into by one or more of the Remaining Partners
pursuant to this Section shall occur within ninety (90) days of
the execution of a written purchase agreement.
SECTION 20. EVENTS OF DEFAULT
20.01 Each of the following shall be considered to
be an "Event of Default" by a partner:
(a) such Partner shall be named a debtor in any
petition, whether voluntary or involuntary, in any bankruptcy or
insolvency proceeding, whether state or federal, and such
petition is not stayed or dismissed within sixty days;
(b) such Partner shall enter into an assignment
for the benefit of creditors;
(c) such Partner shall have a receiver appointed
to administer its interest in the Partnership;
(d) such Partner shall have its Partnership
interest seized by a general creditor;
(e) it shall become unlawful for such Partner to
carry on the business of owning an interest in the Partnership;
(f) Except for a failure to make a capital call
pursuant to Section 3.05, such Partner defaults in the
performance of, or fails to comply with, any material obligation
or agreement set out in this Agreement, and has not cured such
default within thirty (30) days after notice from any of the
remaining Partners of such default;
(g) such Partner commits fraud, is convicted of a
crime, or violates the Affiliated Party provisions of Section
7.02; or
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(h) such Partner is either dissolved or
liquidated.
20.02 Upon the occurrence of an Event of Default,
the nondefaulting Partner(s) may, in addition to all other
remedies at law or in equity to which such Partner(s) may be
entitled, elect to purchase the defaulting Partner's interest in
the Partnership pursuant to the provisions of Section 22.
SECTION 21. DISSOLUTION
21.01 The Partnership shall dissolve upon the first
to occur of (i) termination of the Partnership pursuant to
Section 8.01, (ii) such time as the last Project Document expires
by its terms and no longer requires, or prospectively could
require, administration by the Partnership, (iii) upon the
withdrawal of a Partner or upon the occurrence of an Event of
Default as to a Partner under Sections 20.01(a), (b), (c), (d),
or (e), unless all of the remaining, non-defaulting Partners
agree, in writing, to continue the business of the Partnership,
or (iv) upon an Event of Default as to Partner under Section
20.01(f) if the non-defaulting Partners elect to dissolve the
Partnership.
SECTION 22. PURCHASE OF DEFAULTING PARTNER'S INTEREST
22.01 Upon the occurrence of any Event of Default
by any Partner (the "Defaulting Partner"), the other Partner(s)
(the "Remaining Partner(s)") shall have the right to acquire the
Partnership interest of the Defaulting Partner for cash, in
proportion to the respective Partner Percentage of the Remaining
Partners, or if only one Partner remains, all of the Defaulting
Partner's interest, at a price determined pursuant to the
procedure set forth in Section 22.04. If any Remaining Partner
should elect not to purchase its pro rata share of the Defaulting
Partner's interest, the remaining Partner(s) may purchase the pro
rata share of the Defaulting Partner's interest to which the
Partner who chooses not to participate in the buy out of the
Defaulting Partner's interest would otherwise be entitled. The
Remaining Partner(s) may notify the Defaulting Partner at any
time within thirty (3) days of their knowledge of an Event of
Default of its or their election to institute the procedures set
forth in Section 22.04. Upon receipt of notice of the
determination of the Net Fair Market Value of the Defaulting
Partner's interest, the Remaining Partner(s) may notify the
Defaulting Partner of its or their election to purchase the
interest of the Defaulting Partner.
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22.02 The closing of any purchase pursuant to this
Section 22 shall take place at the principal office of the
Partnership, unless otherwise mutually agreed by the Remaining
Partner(s), on a date specified by the Remaining Partner(s) that
is not less than ten (10) days following receipt of notice of
determination of the Net Fair Market Value of the Defaulting
Partner's Partnership interest pursuant to Sections 22.04 or
22.05. Upon closing of such purchase, the Remaining Partner or
Partners may elect to offset against the purchase price the
amount of any loss, damage or injury, the amount of which has
been established by a final nonappealable judgment, suffered by
it or incurred as a result of the default of the Defaulting
Partner.
22.03 The right of a single Remaining Partner to
elect to acquire the entire interest of the Defaulting Partner as
set forth in this Section 22, is independent of the Remaining
Partner' s right to elect to dissolve and terminate the
Partnership pursuant to Section 21 of this Agreement by sixty
(60) days written notice to the Defaulting Partner.
22.04 The "Net Fair Market Value" of an interest in
the Partnership for purposes of a purchase pursuant to this
Section 22 shall be determined as follows:
(a) The Partners shall first attempt to agree
upon the "Net Fair Market Value" of the Partnership as a whole.
The "Net Fair Market Value" of the Partnership shall mean the
cash price at which a sophisticated purchaser would purchase, and
a sophisticated seller would sell, one hundred percent (100%) of
the interests in the Partnership, with neither party being under
any compulsion to effect such transaction and with both parties
being reasonably informed as to all material facts.
(b) In the event the Partners are unable to
mutually agree upon the Net Fair Market Value of the Partnership
for purposes of Section 22.04 within thirty (30) days of the date
the remaining Partners notify the Defaulting Partner to institute
the procedures set forth in Section 22.04, the Partners shall
then attempt to agree upon the appointment of two disinterested
appraisers who shall be members of the American Institute of
Appraisers. If the Partners are unable to agree upon the
selection of two appraisers within seventy five days, then each
partner shall, within ten (10) days thereafter, select a single
appraiser so qualified and such two appraisers shall select a
third appraiser so qualified. Each appraiser so selected shall
furnish the Partners with a written appraisal within ninety (90)
days of the selection, setting forth such appraiser's
determination of the Net Fair Market Value of the Partnership.
The average of the two closest valuation of such appraisers
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shall be treated as the Net Fair Market Value of the Partnership,
and such amount shall be final and binding on the Partners. The
cost of such appraisal shall be an expense of the Defaulting
Partner.
(c) The Net Fair Market Value of the Defaulting
Partner's Interest to be purchased pursuant to this Section 22
shall equal the greater of the positive balance, if any, in the
defaulting Partner's "Adjusted Capital Account" or $100. For
this purpose, the Defaulting Partner's Adjusted Capital Account
shall equal such Partner's Capital Account on the date of the
valuation of the Net Fair Market Value plus or minus the net gain
or loss which would have been credited or debited to such account
if: (i) the Partnership's assets had been sold on such date at a
price equal to the Net Fair Market Value of the Partnership and
(ii) the net gain or net loss so determined were allocated among
the Partners in accordance with the provisions of Section 13.
SECTION 23. WINDING UP
23.01 Upon dissolution of the Partnership pursuant
to Section 21 the Partnership shall immediately commence to wind
up its affairs and the Managing Partner shall proceed with
reasonable promptness to liquidate the business of the
Partnership and take account of the assets and liabilities of the
Partnership as promptly as is consistent with obtaining the Fair
Value of such assets. During the period of the winding up of the
affairs of the Partnership, the rights and obligations of the
Partners set forth herein with respect to the management of the
Partnership shall continue to act as such subject to Section
7.02, unless Section 6.04 applies.
SECTION 24. DISTRIBUTIONS ON TERMINATION
24.01 The proceeds from a liquidation, together
with assets distributed in kind, shall be applied and distributed
in the following order:
(a) First, to the payment of debts and
liabilities of the third-party creditors of the Partnership, in
the order of priority provided by law and to the expenses of
liquidation;
(b) Second, to the establishment of any reserve
that the Partnership may deem reasonably necessary for any
contingent or unforeseen liabilities of the Partnership or of the
Partners arising out of or in connection with the Partnership.
Such reserves shall be paid to a trust to be held for the purpose
of disbursing such reserves in payment of any contingencies, and,
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at the expiration of such period as the Partnership shall deem
advisable, to distribute the balance thereafter remaining in the
manner provided by this Section 25;
(c) Third, to the payment of any net indemnity
obligations owed Trigen by either Adwin and/or O'Brien under
Section 13 of the Acquisition Agreement, subject to the
requirement that any such indemnity payments be deducted from the
Unreimbursed Development Costs otherwise payable to Adwin and/or
O'Brien under subparagraph (d) below;
(d) Fourth, to the payment of any Unreimbursed
Development Costs as set out in Exhibit A (as adjusted pursuant
to subparagraph (c)), pro rata to the amounts owed to individual
Partners;
(e) Fifth, to the payment of any indebtedness
owed to the Partners by the Partnership, pro rata to the amounts
owed to individual Partners;
(f) Any balance then remaining shall be
distributed to the Partners (i) to the extent of the positive
balances of their Capital Accounts (after adjustments, if any,
for payments under (c) and (d) and any net indemnity payments
owed Adwin and O'Brien by Trigen pursuant to Section 14 of the
Acquisition Agreement, which amounts, if any, shall be deducted
from Trigen's Capital Account and credited to Adwin's and
O'Brien's Capital Accounts, as the case may be), as determined
after taking into account all adjustments to Capital Accounts for
the Partnership taxable year during which the liquidation occurs,
in the proportion of such positive balances and (ii) any excess
over Capital Account balances being distributed according to the
Partner Percentage of each Partner, by the end of such taxable
year or, if later, within ninety (90) days after the date of such
liquidation. For purposes of determining Capital Accounts on
liquidation, all unrealized gains, losses and accrued income and
deductions are treated as realized and recognized immediately
before the date of distribution; and
(g) Every reasonable effort shall be made to
dispose of the assets of the Partnership so that all
distributions may be made to the Partners in cash. To the extent
such assets are not disposed of for cash, they will be offered
to each Partner and the Partner offering the highest cash price
for such assets shall have the right to purchase them, and the
proceeds from such sale(s) distributed to the Partners as
otherwise provided herein.
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SECTION 25. DOCUMENTS AND RECORDS
25.01 All documents and records of the Partnership
including, without limitation, all financial records, vouchers,
canceled checks and bank statements shall be delivered to the
Managing Partner upon termination of the Partnership. Unless
otherwise approved by the Partnership, the Managing partner shall
retain such documents and records for a period of not less than
seven (7) years and shall make such documents and records
available during normal business hours to the other Partners for
inspection and copying at the other Partners' cost and expense;
provided, however, that if there is an audit or threat of audit,
such documents and records shall be retained until the audit is
completed and any tax liability finally determined.
SECTION 26. COMPLIANCE WITH LEGAL REQUIREMENTS
26.01 This Agreement, and the obligations and
rights of the Partners under this Agreement, shall be construed
and applied, so as to be in conformity with all environmental,
regulatory and other laws and rules and regulations of
governmental bodies applicable to the Partnership, or any
Partner, or any Affiliate of a Partner. In the event that this
Agreement, or the performance by any party of its obligations
hereunder, shall conflict with, or be contrary to, any such law,
rule or regulation, the parties agree to negotiate in good faith
to amend or modify this Agreement so as to comply with such law,
rule or regulation. In furtherance thereof, the Partners
acknowledge their intent to have the Project be and remain a
"qualifying cogeneration facility" under PURPA. Accordingly and
except for the provisions of Section 18.02 as to the transfer of
interests in the Partnership to maintain" qualifying cogeneration
facility" status, if the operation of any provision in this
Agreement results or, with the passage of time, will result in
the loss of such "qualifying cogeneration facility" status, the
Partners agree to negotiate in good faith to amend or modify this
Agreement so as to retain and continue such "qualifying
cogeneration facility" status.
SECTION 27. RESOLUTION OF DISPUTES
27.01 In the event of a dispute under this
Agreement involving (1) the legal interpretation of the terms of
this Agreement, or (2) an amount of money owed a Partner under
this Agreement:
(a) Each Partner involved in the dispute and/or
the Partnership shall appoint a senior manager from its
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management, or in the case of the Partnership, the Chief
Executive Officer of the Managing Partner, or of a Disinterested
Partner if required under Section 7.02, who shall meet within ten
(10) days of notice of such a dispute in an effort to resolve the
matter.
(b) If the matter has not been resolved within
ten (10) days of the first meeting of the managers, or if the
managers fail to meet within ten (10) days, the parties will
attempt in good faith to resolve the dispute or claim by
mediation administered by the American Arbitration Association
("AAA") under its Commercial Mediation Rules, before resorting to
arbitration. Either party may initiate mediation by filing a
submission to mediation with the AAA. The mediation shall be
conducted in Philadelphia, Pennsylvania.
(c) (i) If the matter has not been resolved
pursuant to mediation within sixty (60) days of the initiation of
mediation, or if either party fails to participate in the
mediation, the controversy shall be resolved by binding
arbitration under the commercial Arbitration Rules of the
American Arbitration Association. Where no disclosed claim or
counterclaim exceeds One Million Dollars ($1,000,000), exclusive
of interest and arbitration costs, the arbitration shall be heard
and determined by one neutral arbitrator. Where any disclosed
claim or counterclaim exceeds One Million Dollars ($1,000,000),
exclusive of interest and arbitration costs, the arbitration
shall be heard and determined by three neutral arbitrators and
shall be conducted under the Supplementary Procedures of Large,
Complex Disputes then in effect.
(ii) Either party may initiate arbitration
under this Section 27.01 by filing a demand for arbitration with
the AAA or the parties may jointly initiate arbitration by filing
a submission to arbitration. The arbitration shall be conducted
as a common law arbitration under Pennsylvania law, 42 Pa. Cons.
Stat Ann. Section 7341, and judgment upon the award rendered by
the arbitrator(s) may be entered by any court having
jurisdiction thereof. The arbitrator(s) shall have no authority
to award punitive or treble damages. The arbitration process
shall be concluded not later than three (3) months after the date
that it is initiated and the award of the arbitrator(s) shall be
accompanied by a reasoned opinion if requested by either party.
The arbitration shall be conducted in Philadelphia, Pennsylvania.
(d) (i) All deadlines specified in this Section
27 may be extended by mutual agreement of the parties.
(ii) The procedures specified in this Section
27 shall be the sole and exclusive procedures for the
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resolution of disputes covered by this Section 27; provided,
however, that a party may seek a preliminary injunction or other
preliminary judicial relief if, in its judgment, such action is
necessary to avoid irreparable damage or to preserve the status
quo. Despite such action, the parties will continue to
participate in good faith in the procedures specified in this
Section 27.
(iii) All applicable statutes of
limitation and defenses based upon the passage of time shall be
tolled while the procedures specified in this Section 27 are
pending. The parties will take such actions, if any, required to
effectuate such tolling.
(iv) All negotiations pursuant to this
Section 27 shall be confidential and shall be treated as
compromise and settlement negotiations for purposes of the
Federal Rules of Evidence and state rules of evidence.
(e) (i) Pending final resolution of any dispute,
the parties shall continue to fulfill their respective
obligations under this Agreement.
(ii) During any dispute concerning the
payment of money due under the Agreement, the amount in
controversy shall not be paid unless and until the dispute is
resolved in favor of the party claiming entitlement to the
disputed payment.
SECTION 28. NOTICES
28.01 All notices, requests and other
communications to any Partner shall be in writing (including bank
wire, telecopier or similar writing) and shall be given to such
party at its address or telecopier number set forth at the
heading of this Agreement or such other address or telecopier
number as such Partner may specify for the purpose by notice to
such Partner. Each such notice, request or other communication
shall be effective (a) if given by telecopier, when such telecopy
is transmitted to the telecopier number specified in this Section
and the appropriate answer back is received, (b) if given by
mail, seventy-two (72) hours after such communication is
deposited in the mail with first class postage prepaid, addressed
as required, or (c) if given by any other means, when delivered
at the address specified in this section.
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SECTION 29. CONFIDENTIALITY
29.01 (a) Confidential Information consists of:
(i) information identified at the time of
disclosure as confidential, proprietary or secret by the provider
or its partners, employees, agents, attorneys or consultants;
(ii) information involving the economic
plans, development, construction, permitting, financing,
equipment procurement, fuel procurement, power sales, feasibility
assessments of, or parties involved with, the Project;
(iii) the terms or proposed terms of any
existing or proposed agreement between or among the Partners; and
(iv) analyses, computations, studies,
documents and records, prepared by either party or its employees,
agents or representatives which contain or otherwise reflect or
are generated from information furnished by the other party, its
partners, employees, agents, attorneys or consultants with
respect to the Partnership or the Project.
(b) Confidential Information shall not include:
(i) information which is in the public
domain at the time of disclosure;
(ii) information which becomes publicly known
through no wrongful act of the receiver, its Affiliates,
attorneys, consultants or other third party;
(iii) information which is or becomes
known to the receiver from a third party without a similar
confidentiality obligation to the provider, and without breach of
this Agreement;
(iv) information which is approved for
release in writing by the provided; or
(v) information which the Partners
unanimously agree should be made public as part of the financing
or development or operation of the Project.
29.02 Confidential Information may be disclosed as
required to carry out the purpose of the Partnership; provided,
however, that any Confidential Information disclosed, to or
obtained by, any Partner with respect to the Project and all
other Confidential Information obtained by any Partner shall be
held in the strictest confidence by the receiver. The receiver
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shall not disclose, make public, or disseminate in any way any
Confidential Information except as expressly permitted by this
Agreement. The receiver shall take the strictest precautions to
protect against unauthorized and inadvertent disclosure of
Confidential Information and shall not disclose Confidential
Information to any party without the prior written consent of the
provider.
SECTION 30. GENERAL CONTRACT TERMS
30.01 Further Assurances. Each of the Partners
will execute and deliver such further instruments, and do such
further acts and things as may be reasonably requested to carry
out the intent and purposes of this Agreement.
30.02 Survival. All payment obligations which
shall have arisen under this Agreement shall survive termination
of this Agreement. The indemnification obligations of the
Partners under this Agreement shall survive termination of this
Agreement.
30.03 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
Commonwealth of Pennsylvania. Subject to the provisions of
Section 27, for the purposes of any suit, action or proceeding
arising out of the Project, this Agreement, or any of the Project
Documents, each Partner hereby consents and submits to the
exclusive jurisdiction and venue of any of the courts of the
Commonwealth of Pennsylvania and the United States District Court
for the Eastern District of Pennsylvania and irrevocably agrees
that service of process by certified mail, return receipt
requested addressed as provided in Section 28 shall be deemed in
every respect effective and valid personal service of process.
Each Partner irrevocably waives any objection which it may now or
hereafter have to the laying of venue in such courts and any
claim that such suit, action or proceeding has been brought in an
inconvenient forum.
30.04 Complete Agreement; Amendments. This
Agreement represents the complete agreement and understanding of
the parties with respect to the Project and there are no other
agreements, oral or written, with respect to the subject matter
hereof. With the exception of an amendment pursuant to Section
6.03, this Agreement may not be modified or amended except by
written consent of all Partners.
30.05 Successors in Interest. All provisions of
this Agreement shall be binding upon, inure to the benefit of,
and be enforceable by and against the successors and permitted
assigns of any of the parties to this Agreement.
36
<PAGE>
30.06 Severability. Each provision of this
Agreement shall be considered severable, and if for any reason
any provision which is not essential to the effectuation of the
basic purposes of the Agreement is determined to be invalid and
contrary to any existing or future law, such invalidity shall not
impair the operation of or affect those provisions of this
Agreement that are valid.
IN WITNESS WHEREOF, the Partners have executed this Amended
and Restated Partnership Agreement as of the date written above.
O'BRIEN (SCHUYLKILL) COGENERATION, TRIGEN-SCHUYLKILL
INC. COGENERATION, INC.
By: /s/ Sanders Newman By: /s/ S.B. Smith
Date March 1, 1996 Date March 1, 1996
ADWIN (SCHUYLKILL) COGENERATION, INC.
By: /s/ William Brady
Date March 1, 1996
37
<PAGE>
Exhibit A
Partner Capital Accounts
Unreimbursed Project Equity Total
Development Costs Contribution
Adwin $3,599,666 $10,000,000 $13,599,666
O'Brien $3,473,988 $10,000,000 $13,473,988
Trigen -0- $10,000,000 $10,000,000
1
<PAGE>
Exhibit B
List of Project Documents
Amended and Restated Project Services and Development
Agreement, dated as of September 17, 1993, by and between Grays
Ferry Cogeneration Partnership and Philadelphia United Power
Corporation.
Amended and Restated Site Lease dated December 17, 1993,
between Philadelphia Thermal Energy Corporation and Grays Ferry
Cogeneration Partnership.
Amended and Restated Steam Venture Agreement dated September
17, 1993, by and among Philadelphia Thermal Energy Corporation,
Philadelphia United Power Corporation, Adwin Equipment Company,
and O'Brien Environmental Energy, Inc.
Agreement Relating to Amended and Restated Steam Venture
Agreement and Amended and Restated Project Services and
Development Agreement dated September 29, 1995, by and among
Trigen-Philadelphia Energy Corporation, Philadelphia United Power
Corporation, Adwin Equipment Company, O'Brien Environmental
Energy, Inc., and Grays Ferry Cogeneration Partnership.
Dock Facility Service Agreement dated as of November 11,
1991, by and among Philadelphia Thermal Development Corporation,
Philadelphia Thermal Energy Corporation, and Grays Ferry
Cogeneration Partnership.
Fuel Management Agreement dated ___, by and between Adwin
(Schuylkill) Cogeneration, Inc. and Grays Ferry Cogeneration
Partnership.
Construction Management Agreement dated February 20, 1996,
by and between NRG Generating Company and Grays Ferry
Cogeneration Partnership.
Agreement for Engineering, Procurement, and Construction
Services, as amended by Amendments Nos. 1 through 4, between
Grays Ferry Cogeneration Partnership and Westinghouse Electric
Corporation, dated as of August 31, 1995.
Agreement for Purchase of Electric Output (Phases I and II)
dated as of July 28, 1992, between Grays Ferry Cogeneration
Partnership and PECO Energy Company.
Contingent Capacity Purchase Addendum to the Agreement for
Purchase of Electric Output (Phases I and II) dated as of
B-1
<PAGE>
September 17, 1993, between Grays Ferry Cogeneration Partnership
and PECO Energy Company.
Letter Agreement dated March 30, 1995, pursuant to which
PECO Energy Company tendered its Activation Notice under Section
3.3 of the Agreement for Purchase of Electric Output (Phases 1
and 2).
Amended and Restated Steam Purchase Agreement dated
September 17, 1993, among Grays Ferry Cogeneration Partnership,
Adwin Equipment Company, O'Brien Environmental Energy, Inc. and
Trigen-Philadelphia Energy Corporation.
Credit Agreement by and between Grays Ferry Cogeneration
Partnership and Westinghouse Electric Corporation dated as of
August 31, 1995.
Credit Agreement dated March 1, 1996, by and between Grays
Ferry Cogeneration Partnership and Chase Manhattan Bank, and its
participating Lenders.
Acquisition Agreement dated March 1, 1996, by and among
Adwin (Schuylkill) Cogeneration, Inc., O'Brien (Schuylkill)
Cogeneration, Inc., and Trigen-Schuylkill Cogeneration, Inc.
Gas Sales Agreement dated March 1, 1996, by and among Aquila
Energy Marketing Corporation, Utilicorp United, Inc., and Grays
Ferry Cogeneration Partnership.
Amended and Restated Utility Relocation Agreement for
Engineering and Construction Services dated as of September 27,
1995, by and between Grays Ferry Cogeneration Partnership and
Westinghouse Electric Corporation.
Gas Service Agreement dated March 1, 1996; by and between
Philadelphia Facilities Management Corporation and Grays Ferry
Cogeneration Partnership.
Relocation Agreement dated February 28, 1996, by and between
Grays Ferry Cogeneration Partnership and PECO Energy Company.
Equipment Subcontract Agreement dated as of August 31, 1995,
by and between Grays Ferry Services Partnership and Ferry
Services Partnership and Westinghouse Electric Corporation.*
* To be terminated pursuant to Termination Agreement dated
March 1, 1996, by and between Grays Ferry Services Partnership
and Westinghouse Electric Corporation.
B-2
<PAGE>
Agreement for Assignment and Assumption of Option to
Purchase Combusion Turbine dated as of August 31, 1995, by and
among Westinghouse Electric Corporation, Adwin Equipment Company,
O'Brien (Schuylkill) and Cogeneration, Inc. and O'Brien
Environmental Energy, Inc.**
Agreement for Use In Commonn of Water Conveyance System
dated March 1, 1996, by and between PECO Energy Company, Trigen-
Philadelphia Energy Corporation and Grays Ferry Cogeneration
Partnership.
Amended and Restated Option to Purchase Capacity
Agreement between Grays Ferry Cogeneration Partnership and Adwin
Equipment Company, dated March 1, 1996.
Consent with respect to the Project Services Agreement
between PUPCO and Grays Ferry Cogeneration Partnership dated
March 1, 1996.
Consent with respect to the Steam Venture Agreement among
PUPCO, TPEC, AEC and O'Brien Environmental Energy dated March 1,
1996.
Consent with respect to the Steam Purchase Agreement between
the Partnership and TPEC dated March 1, 1996.
Consent with respect to the Dock Facility Agreement among
Philadelphia Thermal Development Corporation, TPEC, and the
Partnership dated March 1, 1996.
Assignment and Assumption Agreement among the Partnership,
O'Brien, and Adwin dated March 1, 1996.
Escrow Agreement among O'Brien, Adwin, Purchaser and
Ballard, Spahr, Andrews & Ingersoll.
** To be terminated pursuant to Termination Agreement dated
February , 1996, by and among Westinghouse Electric Corporation,
Adwin Equipment Company, O'Brien (Schuylkill) Cogeneration, Inc.
and O'Brien Environmental Energy, Inc.
B-3
<PAGE>
Schedule 3.03
Grays Ferry Congeneration Partnership
Current Liabilities
C.C. Pace 616.73
826.62 1,443.35
R. Raufer 2,163.54
4,271.87
2,829.74
2,500.00 11,765.15
Schnader, Harrison 58,370.00
1,318.50
57,890.50
4,658.09 122,237.09
Dames & Moore 1,988.75
1,462.94
1,525.81
894.86
1,335.05 7,207.41
Dilworth 177,782.10
14,282.00
2,536.18
65,000.00 259,600.28
Skadden, Arps 1,016,465.00
150,000.00
600,000.00 1,766,465.00
Chadbourne Park 850,000.00
Calpine 8,255.00
2,839.31
755.00
2,585.84
3,840.84
250,000.00 268,275.99
Stone & Webster 61,493.13
PECO - Raytheon 5,238.19
Westinghouse 88,000.00
Clark Ladner 84,731.98
Sedgewick & James 7,000.00
Glass & Associates 4,406.11
5,902.23 10,308.34
J. Stewart 1,500.00
Total A/P at 2/29/96 3,545,265.91
<PAGE>
Schedule 3.03
Grays Ferry Cogeneration Partnership
Contingent Liabilities
WEC a) $550,000 due upon termination, per EPC AM #2
b) $100,000 due upon termination, per EPC AM #3
Chase a) $500,000 Cancellation Payment, per 10/23/95
Commitment Letter
Trigen a) $55,176 Legal Reimbursement, per 9/93
negotiations
b) $300,000 Past Due Development Fees, per 9/93
SNA
Reserve Against Phase Ia) $300,000 Development work and other
minor liabilities
<PAGE>
GRAYS FERRY COGENERATION PARTNERSHIP
Estimated Project Budget
$103,000 Base EPC Price
2,000 Phantom (Subdebt Contingent Rebate)
5,670 Options
670 Amendment #2
1,230 Amendment #3
1,414 Amendment #4; Underground
550 Technical Changes in Letter Agreement
1,434 Time Value for NRG milestones, less umbrella insr
$116,017 Estimated as of 3/1/96
WESTINGHOUSE EPC BUDGET $116,100 $110,295
DRAWDOWN SCHEDULE
Retainage = 5% 5,805
PECO INTERCONNECT 3,800
PECO 11/10 Letter
OWNER'S COSTS
FUEL OIL LINE CONSTR $ 1,200
NGR CONSTR MGMT COSTS 964
+ MGP COSTS
CLOSING LEGAL COSTS 2,200
CLOSING & POST CLOSING G & A 525
CIBC Consultants 850
TETCO Res Charge 378
$.07 X 15000 X 390 DAYS - Worst
PROJECT CONTINGENCY 10,000
START UP COST 2,000
GFCP Liability Contingency 300
LENDER FEES:
Up - Front fee (Arrangement & Advisory)1.75% $ 2,978
Cost Reimbursement 1,250
Commitment Fee 0.38% 249
Agency Fee 150
LOC Comm Fee 63
WEC Up - Front Fee (Sub Debt) $515
ACQUILA Up Front Fee 500
Calpine Financial Advisory 250
PUPCO FEES:
Up - front Fee and Pipeline Reimbursement $860
Pre-Occupational Development Fees 900
Mobilization Fees 200
DEBT SERVICE RESERVE FUND $ 0
O&M SPARE PARTS INVENTORY $2,500
6.10%
148,731
1.10%
7.20% 8,772
$157,503
<PAGE>
Exhibit 10.24.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT is entered into this 1st day
of March, 1996, by and among ADWIN (SCHUYLKILL) COGENERATION,
INC., a Pennsylvania corporation ("Adwin"), O'BRIEN (SCHUYLKILL)
COGENERATION, INC., a Delaware corporation ("O'Brien"), and
TRIGEN-SCHUYLKILL COGENERATION, INC., a Pennsylvania corporation
(the "Purchaser"). (Adwin and O'Brien are sometimes hereinafter
referred to collectively as the "Partners")
BACKGROUND
WHEREAS, on October 29, 1991, the Partners entered into
a Partnership Agreement to form Grays Ferry Cogeneration
Partnership, a Pennsylvania general partnership (hereinafter the
"Partnership"), which Partnership Agreement was amended by the
First Amendment to Partnership Agreement, dated September 17,
1993, the Second Amendment to Partnership Agreement dated
September 27, 1994, and the Third Amendment to Partnership
Agreement dated January 23, 1996; and
WHEREAS, the Partnership was formed to develop a
cogeneration facility to be located at 2600 Christian Street,
Philadelphia, Pennsylvania, such facility to be known as the
"Grays Ferry Cogeneration Project" (the "Project"); and
WHEREAS, on September 17, 1993, the Partnership and
Philadelphia United Power Corporation ("PUPCO") entered into an
Amended and Restated Project Services and Development Agreement
(the "Project Services Agreement"); and
WHEREAS, on September 17, 1993, PUPCO, Trigen-
Philadelphia Energy Corporation (then known as Philadelphia
Thermal Energy Corporation) ("Trigen Philadelphia"), Adwin
Equipment Company ("AEC"), and O'Brien Environmental Energy, Inc.
entered into an Amended and Restated Steam Venture Agreement (the
"Steam Venture Agreement"); and
WHEREAS, Purchaser desires to purchase a one-third
interest in the Partnership, pursuant to the terms of this
Agreement; and
<PAGE>
WHEREAS, in consideration of the Purchaser's purchase of
a one-third interest in the Partnership, PUPCO has agreed to
terminate its option to purchase an interest directly from the
Partnership; and
WHEREAS, contemporaneously with the closing under this
Acquisition Agreement, the Purchaser desires to be admitted to
the Partnership as an equal partner, and Adwin and O'Brien desire
that the Purchaser be so admitted, with each of Adwin, O'Brien
and the Purchaser having a one-third interest in the Partnership
following the consummation of the transactions contemplated by
this Agreement; and
WHEREAS, as a condition to the closing hereunder, the
parties contemplate that the Partnership Agreement shall be
amended by an Amended and Restated Partnership Agreement that
will be executed by all of the parties hereto, which Amended and
Restated Partnership Agreement is attached as Exhibit A to this
Agreement (the "Restated Partnership Agreement"); and
WHEREAS, in connection with the execution of this
Agreement, the Partnership, the Partners, PUPCO and Trigen-
Philadeiphia desire to clarify certain matters contained in the
Project Services Agreement and the Steam Venture Agreement; and
WHEREAS, the parties have agreed that the Purchaser's
participation in the Partnership shall be on the terms set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants
and agreements herein contained, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. The Transaction.
1.1 Purchase Price; Purchaser Partnership
Interest. Closing Date (as hereinafter defined), the Purchaser
shall pay an aggregate amount of $2,000,000 (the "Purchase
Price") for a one third interest in the Partnership, one-half of
which shall be paid to O'Brien and one-half to Adwin. Upon paying
the Purchase Price hereunder, the Purchaser shall receive a one-
third interest in the Partnership as provided in the Restated
Partnership Agreement (the "Partnership Interest").
2
<PAGE>
1.2 Certain Understandings with Regard to
the Project Services Agreement. PUPCO and the Partnership agree
that the Project Services Agreement is clarified as follows:
(a) Sections 19.1, 19.4, 19.5, 19.6 and 19.7
are no longer effective.
(b) Section 19.2 shall be interpreted as if
the Equity Purchase Option (as defined in the Project Services
Agreement) has been exercised.
(c) Section 19.3 remains in full force and
effect.
1.3 Certain Payments to PUPCO Under the
Steam Venture Agreement. The Partnership shall continue to pay
PUPCO the quarterly development fees of $150,000 per month
described in Section 7D(i) of the Steam Venture Agreement through
the date of commercial operation of the Project.
1.4 Fees Due PUPCO at Financial Closing. The
Partnership agrees that the following fees due PUPCO shall be
paid on the Financial Closing Date (as defined in the Restated
Partnership Agreement): (a) the $600,000 fee identified in
Section 7F of the Steam Venture Agreement, (1) the reimbursement
of $55,176 in legal costs and $300,000 in past due development
fees due PUPCO under the Steam Venture Agreement and, (c)
development costs associated with the alternative natural gas
pipeline in the amount of $259,200.
1.5 Restated Partnership Agreement. In
connection with the consummation of the transactions contemplated
hereby and as a condition precedent thereto, the Restated
Partnership Agreement shall be executed by all of the parties
hereto at Closing.
1.6 Construction Manager. The Purchaser
acknowledges that the Partnership will retain NRG Energy, Inc.
("NRG") as the Construction Manager of the Project, pursuant to
the terms of a Construction Management Agreement dated February
20, 1996, entered into by and between the Partnership and NRG
with respect thereto.
3
<PAGE>
2. Closing. The closing of the transactions
contemplated by this Agreement shall be held at the offices of
Ballard Spahr Andrews & Ingersoll, counsel for Adwin, on or
before the Financial Closing Date, but in no event later than
March 9,1996 (the "Expiration Date"), or at such other place as
the parties may agree (the "Closing"). (The date of the Closing
shall be referred to herein as the "Closing Date.") Ballard Spahr
Andrews & Ingersoll shall serve as Escrow Agent for the parties
pursuant to a letter agreement among Ballard Spahr Andrews &
Ingersoll, the Partners and the Purchaser dated the same date as
this Agreement (the "Escrow Agreement"). All Deliverables
received from the parties by the Escrow Agent, pursuant to
Section 9 of this Agreement on the Closing Date, shall be held in
escrow until delivered or disposed of by the Escrow Agent in
accordance with the terms of the Escrow Agreement.
3. Joint Representations and Warranties of the
Partners. For purposes of the following representations and
warranties which are based on the Partners' knowledge, the
knowledge of the Partners shall be deemed to include, but is not
necessarily limited to, that of Reed Wills, who was formerly
employed by O'Brien Environmental Energy, Inc. The Partners,
jointly and severally, represent and warrant to the Purchaser as
follows:
3.1 Organization and Standing; Qualification.
The Partnership is a general partnership duly constituted,
validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The Partnership has all requisite
partnership power and authority under its Partnership Agreement
to: (a) own or lease its properties and assets; (b) conduct its
business as currently conducted; (c) develop, construct, own,
operate and manage the Project, as contemplated by the Restated
Partnership Agreement; and (d) enter into and perform this
Agreement and all other agreements entered into in connection
with the transactions contemplated hereby. Copies of the
Partnership's Partnership Agreement, as amended or restated to
date, have been delivered by the Partnership to the Purchaser and
are complete and correct. The Partnership has not qualified to do
business in any other jurisdiction and neither the ownership of
its properties nor the conduct of its business requires such
qualification.
3.2 Conflict with Partnership Documents.
None of the execution, delivery and performance of, and
compliance with, this Agreement nor the consummation of the
transactions contemplated hereby will (with or without the giving
4
<PAGE>
of notice or lapse of time, or both) contravene or violate the
Partnership Agreement, or, to the best knowledge of the Partners,
conflict with, result in a breach or violation of, be in conflict
with, entitle any party to terminate, or constitute a default
with respect to, any contract, bond, note, indenture or other
agreement or any restriction on the Project, the Partnership, or
its properties or assets, or any judgment, decree, order,
statute, rule or regulation to which the Project, the
Partnership, or its properties or assets, are subject or by which
they may be bound, or result in the creation of any liens,
mortgages, pledges, prior assignments, encumbrances, claims,
charges, restrictions or security interests of any kind or
character (collectively, "Encumbrances") upon the Project, the
Partnership or any of its properties or assets. The Partnership
is not a party to, nor subject to, nor bound by any judgment,
injunction or decree of any court or governmental authority and
no judgment, action or proceeding in law is pending or, to the
knowledge of the Partners, threatened against or involving the
Partnership, which may restrict or interfere with the performance
of this Agreement by the Partnership.
3.3 Investments. The Partnership does not
own any material amount of stock in and has made no material
equity investment in or material acquisition of any other
interest in, nor has it made any material advances or loans to,
any corporation, association, partnership, joint venture or other
entity.
3.4 Financial Statements. Attached hereto as
Exhibit B are copies of the Partnership's unaudited financial
statements as of and for each of the calendar years ended
December 31, 1995, and 1994 (December 31, 1995 being hereinafter
referred to as the "Balance Sheet Date"), with each of the
financial statements consisting of a balance sheet as of December
31 of each such year, an Income Statement as of December 31 of
each such year, and a General Ledger for the years then ended.
Attached hereto as Exhibit C is a copy of an unaudited financial
statement of the Partnership for the two-month period ended
February 29, 1996, and a General Ledger for the period then
ended. (Exhibits B and C are hereinafter referred to as the
"Financial Statements.") To the best knowledge of the Partners,
the Financial Statements are true, correct and complete in all
material respects and, to the best knowledge of the Partners,
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis for the
period covered by such statements, and, to the best knowledge of
the Partners, fairly and accurately present the financial
condition and operating results of the Partnership as of the
dates and for the period thereof. To the best knowledge of the
Partners, all transactions between
5
<PAGE>
the Balance Sheet Date and the Closing Date shall be or have been
accounted for on the Partnership's books and records of original
entry in accordance with generally accepted accounting
principles, consistently applied.
3.5 Business Condition; Absence of Certain
Changes. Since February 29, 1996, there has not been:
(a) Any material adverse change in the
financial condition, properties, assets, liabilities, business
operations or, to the knowledge of the Partners, prospects of the
Partnership taken as a whole (hereinafter referred to as the
Partnership's "Business or Condition");
(b) Any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting
the Partnership's Business or Condition;
(c) Any declaration, setting aside, or
payment of any distribution (whether in cash, securities,
property or otherwise) by the Partnership;
(d) Any discharge or satisfaction of any
Encumbrance, or any payment or satisfaction of any liability,
absolute or contingent, other than those performed in the
ordinary course of business;
(e) Any secured or unsecured borrowing or
any guaranty of the borrowing of any money by the Partnership or
the issuance or creation of (or any commitment with respect
thereto) any bonds, debentures, notes or other obligations for
the payment of money by the Partnership, other than those
performed in the ordinary course of business; person or entity;
(f)Any loans or advances made by the
Partnership to any person or entity.
(g) Any cancellation, modification or waiver
of any evidence of indebtedness for borrowed money held by the
Partnership;
(h) Any change in any method of accounting
or accounting practice of the Partnership;
6
<PAGE>
(i) Any sale, assignment, transfer,
mortgage, pledge or other Encumbrance by the Partnership of any
assets (real, personal or mixed, tangible or intangible), or
waiver by the Partnership of any rights of the Partnership; or
(j) Any agreement or commitment by the
Partnership to take any of the actions described in clauses (c)
through (i) above, except those actions required in connection
with the Financial Closing.
3.6 Permits. Except as set forth in Schedule
3.6, and specifically excluding building permits, the Partnership
has, to the best of the Partners' knowledge, all governmental
permits, licenses and authorizations issued by any federal, state
or local governmental authority (hereinafter referred to,
collectively, as the "Permits") that are required to commence
construction of the Project. To the best of the Partners'
knowledge, all such Permits were validly issued and are in full
force and in effect, have not been suspended or revoked, nor are
there proceedings pending or threatened to suspend or revoke any
of such Permits.
3.7 Contracts.
(a) Schedule 3.7 sets out a list of the
material contracts to which the Partnership is currently a party.
(b) The Partners have delivered to the
Purchaser a true, correct and complete copy of (or, if oral, a
true, correct and complete description of) each material
agreement, contract, plan, instrument, arrangement and commitment
listed on Schedule 3.7, including all amendments thereto, whether
written or oral. To the best of Partners' knowledge, all of such
agreements were duly authorized and approved by appropriate
action of the Partnership and, to the best of the Partners'
knowledge, each such agreement is valid and in full force and
effect. To the best of the Partners' knowledge, neither the
Partnership nor the Partners is in default under any such
agreement in a manner which could have a material adverse effect
on the Project, the Partnership or the Partnership's future
activities, and, to the best of Partners' knowledge, there exists
no condition or event which, with the lapse of time or notice,
would constitute any such default by the Partnership. To the best
of the Partners' knowledge, there is no outstanding notice of
cancellation or termination in connection with any such
agreement.
7
<PAGE>
3.8 Environmental Reports. To the best of the
Partners' knowledge, the Partners have delivered to the Purchaser
all environmental reports commissioned by the Partners regarding
the Project.
3.9 Liabilities. Except as and to the extent
reflected or reserved against in the Financial Statements, and
except those incurred subsequent to the Balance Sheet Date that
are fully recorded and reflected on the books of original entry
of the Partnership, to the best of the Partners' knowledge, the
Partnership does not have any liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise.
3.10 Books and Records. The books and accounts
and other records of the Partnership relating to the Project and
the Partnership's properties and assets are complete and correct
in all material respects and have been maintained in accordance
with good business practices. All transactions of the Partnership
relating to the Project and the properties and assets of the
Partnership have been recorded in all material respects in such
books and records. The Partnership's principal place of business
is 300 Stevens Drive, Lester, Pennsylvania.
3.11 Compliance with Laws. To the best of the
Partners' knowledge, the Partnership is in compliance with all
existing requirements of all laws, statutes, rules, regulations
and orders, federal, state and local, and all existing
requirements of all governmental bodies or agencies having
jurisdiction over the Project, the Partnership, its properties or
assets, except where such failure to be in compliance will not
have a material adverse effect on the Partnership's Business or
Condition or on its ability to perform its obligations under this
Agreement or any other agreement to which it is a party. To the
best of the Partners' knowledge, neither the Partnership nor the
Project are in violation 6f, nor have they received any notice of
any violation or alleged violation of, or claim under any
federal, state or local law, statute, rule, regulation or order,
nor do the Partners have any knowledge of any pending or
threatened governmental proceeding or investigation.
3.12 Employees. The Partnership does not now have
nor has it ever had any employees or any commitment to hire or
engage any employees.
3.13 Litigation. The Partnership is not a party
to, nor, to the knowledge of the Partners, threatened with any
suit, action, arbitration or other legal
8
<PAGE>
or governmental proceeding relating to or affecting the Project,
the Partnership or its properties or assets. There is no material
judgment, decree, award or order outstanding or unsatisfied
against the Partnership relating to or affecting the Project, the
Partnership or its properties or assets, nor, to the knowledge of
the Partners, is there any basis for any such suit, action,
arbitration or other legal or governmental proceeding. To the
best of the Partners' knowledge, no notice, citation, summons or
order has been issued, no complaint has been filed, no penalty
has been assessed, and no investigation, review or proceeding is
pending or, to the best of the Partners' knowledge, threatened,
of any kind, by any person, firm or entity, with respect td the
Project, the Partnership or its properties or assets.
3.15 Exhibits and Schedules. To the best of the
Partners' knowledge, all exhibits, schedules and other documents
relating to the Partnership which are attached to this Agreement
are accurate and shall constitute an integral part of this
Agreement with the same force and effect as if such exhibits,
schedules and documents were set forth in their entirety herein.
4. Individual Representations and Warranties of the
Partners. For purposes of the following individual
representations and warranties made by O'Brien which are based on
the knowledge of O'Brien, such knowledge shall be deemed to
include, but is not necessarily limited to, the knowledge of Reed
Wills, who was formerly employed by O'Brien Environmental Energy,
Inc. Each Partner individually (but not jointly and severally)
represents and warrants to the Purchaser as follows:
4.1 Organization and Standing; Qualification.
Such Partner is a corporation duly organized, validly existing
and in good standing under the laws of its state of
incorporation. Such Partner has all requisite corporate power and
authority to own or lease its properties and assets, to conduct
its business as currently conducted and to enter into and perform
this Agreement and all other agreements entered into by it in
connection with the transactions contemplated hereby. Copies of
the Articles or Certificate of Incorporation, as amended to date,
and By-Laws, as amended to date, of such Partner have been
delivered to the Purchaser and are complete and correct. Such
Partner, if such Partner is Adwin, is not qualified to do
business as a foreign corporation in any jurisdiction and neither
the ownership of its properties nor the conduct of its business
requires such qualification. If such Partner is O'Brien, it is
qualified to do business in Pennsylvania.
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4.2 Authority; Binding Effect. Such Partner has
the full corporate power and authority to make, execute, deliver
and perform this Agreement, and the other instruments and
documents required or contemplated hereunder to which it is a
party, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement, and all documents and
instruments required to be executed, delivered and performed
hereunder or thereunder by such Partner, have been duly and
validly authorized and approved by all necessary action by it,
and have been duly and validly executed and delivered by such
Partner. This Agreement constitutes, and all other documents and
instruments to be executed, delivered, and performed hereunder by
such Partner will constitute, the valid and binding obligation of
such Partner, enforceable against it in accordance with their
respective terms.
4.3 Performance of this Agreement. Such Partner
is not a party to, nor subject to, nor bound by any judgment,
injunction or decree of any court or governmental authority and
no judgment, action or proceeding in law is pending or, to the
knowledge of such Partner, threatened against or involving such
Partner, which may restrict or interfere with the performance of
this Agreement by such Partner.
4.4 Compliance with Laws. To the best of such
Partner's knowledge, it is in compliance with all existing
requirements of all laws, statutes, rules, regulations and
orders, federal, state and local, and all existing requirements
of all governmental bodies or agencies having jurisdiction over
it or its properties or assets, except where such failure to be
in compliance will not have a material adverse affect on such
Partner's business or financial condition or on its ability to
perform its obligations under this Agreement or any other
agreement to which it is a party. To the best knowledge of such
Partner, it has received no notice of any violation of, or claim
under any federal, state or local law, statute, rule, regulation
or order, nor does it have any knowledge of any pending or
threatened governmental proceeding or investigation.
4.5 No Consents. Except as set forth on Schedule
4.5, no consent of any governmental or judicial authority or
agency, or of any bank, other financial institution or other
third party, is required in connection with the execution and
delivery by such Partner of this Agreement and the other
documents and instruments required or contemplated herein or the
consummation of the transactions contemplated hereunder by such
Partner.
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4.6 Ownership of Partnership Interests. The only
ownership interests in the Partnership in existence on the date
hereof are those owned by the Partners, each of which owns a one-
half interest in the Partnership. Upon the consummation of the
transactions contemplated hereby, each of Adwin, O'Brien and the
Purchaser shall own a one-third interest in the Partnership. The
partnership interests outstanding on the date hereof have been,
and such Partner's portion of the Partnership Interest, when
delivered in accordance with the terms of this Agreement and
based upon the representations of Purchaser set forth in Sections
5.7 and 5.8 will be issued in compliance with applicable federal
and state securities laws. No action has been taken by the
Partnership, the Partners or, to the best of the Partners'
knowledge, any third party that would cause the Partnership to be
deemed to be a publicly-traded partnership within the meaning of
Section 7704(b) of the Internal Revenue Code of 1986, as amended.
Neither the Partnership nor such Partner has issued, nor is the
Partnership or such Partner bound by, any outstanding
subscriptions, options, warrants, contracts, calls, rights or
commitments of any character relating to the issuance of or
granting of a right in or to acquire any interest of or in the
Partnership, whether equitable or otherwise, nor, to the
knowledge of such Partner, is there any basis for any third party
making a claim to or against its interest in the Partnership.
4.7 Partnership Contributions and Loan. Except
as set forth on Schedule 4.7 hereto, such Partner has not made
any capital contributions to the Partnership, loaned any money to
the Partnership, borrowed any money from the Partnership,
guaranteed any obligation of the Partnership or been the
beneficiary of any guarantee made by the Partnership.
4.8 Partnership Interest. Following the
consummation of the transactions contemplated hereby, such
Partner shall have transferred to the Purchaser title to one-half
(1/2) of the Partnership Interest conveyed hereunder, free and
clear of any liens, claims or encumbrances, excepting only those
created or granted by or arising through the Purchaser.
4.9 Litigation. Such Partner is not a party to,
nor to its knowledge, threatened with any suit, action,
arbitration or other legal or governmental proceeding relating to
or affecting the Project, the Partnership or its properties or
assets. There is no material judgment, decree, award or order
outstanding or unsatisfied against such Partner relating to, or
affecting, the Project, the Partnership, or its properties or
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assets, nor to the knowledge of such Partner, is there any basis
for any such suit, action, arbitration or other legal or
governmental proceeding. To the best knowledge of such Partner,
no notice, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed, and no
investigation, review or proceeding is pending, or to the best of
such Partner's knowledge, threatened, of any kind, by any person,
firm or entity, with respect to the Project, the Partnership or
its properties or assets
5. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Partners as follows:
5.1 Organization: Existence and Authority. The
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of
Pennsylvania. The Purchaser has all requisite corporate power and
authority to own or lease its properties and asserts, to conduct
its business as currently conducted and to enter into and.
perform this Agreement and all other agreements entered into in
connection with the transactions contemplated hereby. Copies of
the Purchaser's Articles of Incorporation, as amended to date,
and By-Laws, as amended to date, have been delivered by the
Purchaser to the Partners, and are complete and correct.
5.2 Authority: Binding Effect. The Purchaser has
the full corporate power and authority to make, execute, deliver
and perform this Agreement, and the other instruments and
documents required or contemplated hereunder, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and
performance of this Agreement, and all documents and instruments
required to be executed, delivered and performed hereunder or
thereunder by the Purchaser, have been duly and validly
authorized and approved by all necessary action by it, and have
been duly and validly executed and delivered by the Purchaser.
This Agreement constitutes, and all other documents and
instruments to be executed, delivered and performed hereunder or
thereunder by the Purchaser shall constitute, the valid and
binding obligation of the Purchaser, enforceable against it in
accordance with its terms.
5.3 Conflict with Documents. Neither the
execution, delivery and performance of, and compliance with, this
Agreement nor the consummation of the transactions contemplated
hereby will (with or without the giving of notice of lapse of
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time, or both) contravene or violate the Articles of
Incorporation or By-Laws of the Purchaser, or, to the best
knowledge of Purchaser, conflict with, result in a breach or
violation of, entitle any party to terminate, or constitute a
default with respect to any contract, bond, notice, indenture or
other agreement or any restriction on the Purchaser or its
properties or assets, or any judgment, decree, order, statute,
rule or regulation to which the Purchaser or its properties or
assets are subject or by which they may be bound or result in the
creation of any Encumbrance upon the Purchaser or any of its
properties or assets. The Purchaser is not a party to, nor
subject to, nor bound by any judgment, injunction or decree of
any court or governmental authority and no judgment, action or
proceeding in law is pending or, to the knowledge of the
Purchaser, threatened against or involving the Purchaser, which
may restrict or interfere with the performance of this Agreement
by the Purchaser.
5.4 Litigation. The Purchaser is not a party to
nor, to its knowledge, threatened with any suit, action,
arbitration or other legal or governmental proceeding relating to
or affecting it or its properties or assets. There is no material
judgment, decree, award or order outstanding or unsatisfied
against the Purchaser relating to or affecting it or its
properties or assets, nor, to the knowledge of the Purchaser, is
there any basis for any such suit, action, arbitration or other
legal or governmental proceeding. To the best of Purchaser's
knowledge, no notice, citation, summons or order has been issued,
no complaint has been filed, no penalty has been assessed, and no
investigation, review or proceeding is pending or, to the best of
the Purchaser's knowledge, threatened, of any kind, by any
person, firm or entity, with respect to the Purchaser, its
properties or assets.
5.5 Compliance with Laws. To the best knowledge
of Purchaser's knowledge, Purchaser is in compliance with all
existing requirements of all laws, statutes, rules, regulations
and orders, federal, state and local, and all existing
requirements of all governmental bodies or agencies having
jurisdiction over it or its properties or assets, except where
such failure to be in compliance will not have a material adverse
affect on the Purchaser's business or financial condition or on
its ability to perform its obligations under this Agreement or
any other agreement to. which it is a party. To the best
knowledge of Purchaser, the Purchaser has received no notice of
any violation or alleged violation of, or claim under any
federal, state or local law, statute, rule, regulation or order,
nor does the Purchaser have knowledge of any pending or
threatened governmental proceeding or investigation.
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5.6 No Consents. Except as set forth on Schedule
5.6, no consent of any governmental or judicial authority or
agency, or of any bank, other financial institution or other
third party, is required in connection with the execution and
delivery by the Purchaser of this Agreement and the other
documents and instruments required or contemplated herein or the
consummation of the transactions contemplated hereunder by the
Purchaser.
5.7 No Distribution. The Partnership Interest
being acquired by the Purchaser hereunder is being acquired for
its own account for investment and not with a view to
distribution or resale of such Partnership Interest to others,
and Purchaser recognizes that it may not transfer such
Partnership Interest in violation of securities laws.
5.8 Requisite Knowledge; Undertaking of Risks.
The Purchaser possesses the requisite knowledge and experience in
business and financial matters to be capable of evaluating the
merits and risks of investment in the Partnership, and is not
relying on any representations and warranties of the Partners
except those explicitly set out herein. The Purchaser recognizes
that participation in the Partnership involves a substantial
degree of risk, and that it may lose some or all of its
investment in the Partnership.
6. Covenants of the Partners. The Partners covenant
to and with the Purchaser as follows:
6.1 Conduct of Business. From the date hereof
through the Financial Closing Date, the Partnership and each of
the Partners will conduct their operations according to their
normal course of business, including without limitation their
reasonable efforts to preserve intact their respective business
organizations, and to maintain satisfactory relationships with
third parties having business relationships with them. The
Partners shall confer on a regular and frequent basis with the
Purchaser to report operational matters of a material nature and
to report the general status of the ongoing operations of the
business of the Partnership. The Partners shall promptly notify
the Purchaser of: (a) any fact or event, the existence or
occurrence of which would render any of the Partners'
representations or warranties untrue or inaccurate; (b) any fact
or event, the existence or occurrence of which would have a
material adverse impact on the Project, the Partnership or the
Partnership's future activities; (c) any unexpected emergency or
other material change in the normal course of
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business or in the operations of the business of the Partnership
or the Partners; and (d) any investigation or review, pending or
threatened, by any governmental entity involving any material
business, asset or property of the Partnership or the Partners.
The Partners shall keep the Purchaser fully informed of all
developments with respect to any such facts and events and shall
permit the Purchaser's representatives access to all materials
prepared in connection therewith or relevant thereto.
6.2 Forbearance by the Partnership. Prior to the
Financial Closing Date, the Partners shall be required to obtain
the Purchaser's approval of major decisions affecting the
Partnership. These "Major Decisions" shall include, but are not
necessarily limited to, a decision to do any of the following:
(a) Issue additional partnership interests
or any options, warrants or other rights to acquire an interest
in the Partnership;
(b) Declare or pay any distribution;
(c) Sell any of its properties or assets;
(d) Extend credit, or issue, incur or prepay
any indebtedness for borrowed money;
(e) Mortgage, pledge or otherwise encumber
any of its properties or assets;
(f) Make any investment in third parties of
a capital nature either by purchasing stock or securities,
contributing to capital, transferring property or otherwise;
(g) Enter into any employment agreement or
any incentive compensation, profit sharing, partnership interest
purchase, option, savings, consulting, deferred compensation,
retirement, pension or other employee benefit plan or arrangement
with or for the benefit of any Partner, officer, employee or
other person;
(h) Terminate or voluntarily allow to lapse
any insurance policy naming the Partnership as a beneficiary or a
loss payee unless, simultaneously with
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such termination or lapse, replacement policies providing
substantially the same coverage are in full force and effect;
(i) Amend the Partnership Agreement; or
(j) Enter into any agreement to do any of
the things described in clauses (a) through (i) above
6.3 Investigations and Purchaser Due Diligence.
Purchaser acknowledges that it has had the opportunity to conduct
due diligence regarding the proposed acquisition of the
Partnership Interest, and to investigate the business and
properties of the Partnership, as well as its financial and legal
condition. Purchaser has satisfied itself with respect to such
investigations. Notwithstanding completion of Purchaser's due
diligence, no investigation by or on behalf of the Purchaser
heretofore or hereafter made shall affect the representations and
warranties of the Partners contained herein, and such
representations and warranties shall survive any such
investigation as and to the extent provided in this Agreement.
6.4 Negotiations with Others. From the date
hereof through the Financial Closing Date, the Partners shall
not, directly or indirectly, without the prior written consent of
the Purchaser, initiate or engage in discussions or negotiations
with any corporation, partnership, person or other entity (other
than the Purchaser) concerning any sale of an interest in the
Partnership or any merger, sale of assets, or similar transaction
involving the Partnership.
7. Conditions of the Purchaser to the Breaking of
Escrow. The obligations of the Purchaser under this Agreement,
and the authority of the Escrow Agent to break escrow, are
subject to the satisfaction and fulfillment, or waiver by the
Purchaser, at or before the Expiration Date, of each of the
following conditions:
7.1 Bankruptcy Court Approval Opinion. The
Purchaser shall have received from counsel to O'Brien reasonably
satisfactory to the Purchaser an opinion to the effect that the
approval of the bankruptcy court is not necessary or required for
the execution, delivery and/or performance by O'Brien of this
Agreement or the other Instruments and documents required or
contemplated hereunder to perform O'Brien's obligations hereunder
or to consummate the transactions contemplated hereby, or, if
required, any necessary approval has been obtained.
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7.2 Financial Closing. The Financial Closing
shall have been consummated on terms satisfactory to Purchaser.
7.3 Deliverables. Escrow Agent shall have
received, on behalf of Purchaser, the documents required to be
delivered to Purchaser under Section 9.1 below.
7.4 Payments Due PUPCO. PUPCO shall have
received at Financial Closing those payments due PUPCO under
Section 1.4 hereof.
7.5 Letter or Credit or Corporate Guaranty. The
Escrow Agent shall have received a letter of credit or a
corporate guaranty securing the Project Equity Contribution under
the Restated Partnership Agreement of each of the Partners in a
form satisfactory to the Lenders under the Credit Agreement.
7.6 Certain Consents. The Lender shall have
received Consents executed by the Partners and other necessary
parties with respect to the Steam Purchase Agreement, the Steam
Venture Agreement, the Project Services Agreement, and the Dock
Facility Services Agreement in form satisfactory to Lender.
7.7 Opinion. Insofar as counsel to O'Brien
delivers an opinion to the Lenders on the Financial Closing Date
(as each such term is defined in the Restated Partnership
Agreement) which addresses matters of law which are also
addressed directly or by implication in the opinion delivered at
the Closing by O'Brien's general counsel, Purchaser shall receive
the permission of counsel delivering such opinion to the Lenders
to rely on the portions of such opinion addressing such matters
of law.
7.8 Lien Searches. To the extent lien searches
are received prior to the Financial Closing, they shall not
reveal anything inconsistent with the representations and
warranties made by the Partners herein.
8. Conditions of the Partners to the Breaking of
Escrow. The obligations of the Partners under this Agreement,
and the authority of the Escrow Agent to break escrow, are
subject to the satisfaction and fulfillment, or waiver by the
Partners, at or before the Expiration Date, of each of the
following conditions:
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8.1 Financial Closing. The Financial Closing
shall have been consummated on terms satisfactory to each of the
Partners.
8.2 Deliverables. The Escrow Agent shall have
received, on behalf of the Partners, documents required to be
delivered to the Partners under Section 9.2 below.
8.3 Letter of Credit. The Escrow Agent shall
have received a letter of credit from Purchaser in a form
satisfactory to the Lenders under the Credit Agreement
guaranteeing the Project Equity Contribution of Purchaser under
the Restated Partnership Agreement.
8.4 Certain Consents. The Lender shall have
received Consents executed by the Purchaser and other necessary
parties with respect to the Steam Purchase Agreement, the Steam
Venture Agreement, the Project Services Agreement, and the Dock
Facility Services Agreement in form satisfactory to Lender.
8.5 Opinion. Insofar as counsel to O'Brien
delivers an opinion to the Lenders on the Financial Closing Date
(as each such term is defined in the Restated Partnership
Agreement) which addresses matters of law which are also
addressed directly or by implication in the opinion delivered at
the Closing by O'Brien's general counsel, Adwin shall receive the
permission of counsel delivering such opinion to the Lenders to
rely on the portions of such opinion addressing such matters of
law.
9. Closing; Deliverables at Closing. All Deliverables
required of the Purchaser and the Partners set out below shall be
delivered on or before the Closing to Escrow Agent and Escrow
Agent shall hold the Deliverables in escrow until such time as
the conditions to the breaking of escrow set out in Paragraphs 7
and 8 herein have been fulfilled. If the conditions to the
breaking of escrow set out in Paragraphs 7 and 8 have not been
satisfied by the Expiration Date, or if this Agreement is
terminated by mutual consent of the Purchaser and the Partners
under Section 10 hereof, Escrow Agent shall return all
Deliverables to the parties, pursuant to the terms of the Escrow
Agreement, and the rights and obligations of the parties shall be
determined in accordance with Paragraph 11 herein. Upon
satisfaction of all of the conditions to the breaking of escrow
set out in Paragraphs 7 and 8 or upon such termination, Escrow
Agent shall deliver or dispose of the Deliverables in accordance
with the terms of the Escrow Agreement.
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9.1 Deliverables from the Partners. At or prior
to the Closing, the Partners shall execute and/or deliver to the
Escrow Agent:
(a) Restated Partnership Agreement. The
Restated Partnership Agreement, in the form of Exhibit A hereto,
duly executed by the Partners.
(b) PUPCO Side Letter. A side letter
agreement dated date the hereof, duly executed by the
Partnership, the Partners, the Purchaser and PUPCO (the "PUPCO
Side Letter").
(c) Acknowledgement. An acknowledgement
letter dated the date hereof duly executed by Trigen-
Philadelphia, PUPCO, AEC, O'Brien and the Partnership.
(d) Updated Balance Sheet. An updated,
unaudited balance sheet of the Partnership, effective as of
February 29, 1996.
(e) Opinion Letter. An opinion of counsel to
each of the Partners, dated the Closing Date, in the form set
forth in Exhibit D hereto.
(f) Certificate Regarding Continuous
Validity of Representations and Warranties. A certificate
executed by the respective President or Chief Executive Officer
of each of the Partners certifying that all representations and
warranties of such Partner made in or pursuant to this Agreement
are true and correct at and as of the Closing Date.
(g) Certificate Regarding Fulfillment of
Obligations and Conditions. A certificate from each of the
Partners signed by its respective President or Chief Executive
Officer certifying that such Partner has performed, observed, and
complied with all the obligations and conditions required of it
by this Agreement to be performed, observed or completed at or
prior to the Closing Date.
(h) Other Documents. A Certificate of Good
Standing with respect to each of the Partners from the Secretary
of State of its incorporation; (ii) certified copies of
resolutions duly adopted by the Board of Directors of each of the
Partners respectively authorizing the execution and delivery of
this Agreement and the consummation of the transactions
contemplated herein by such Partner; (iii) certified
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copies of the Articles of Incorporation and by-laws, as amended,
of each of the Partners; and (iv) the Escrow Agreement in a form
satisfactory to the Escrow Agent, Purchaser, and the Partners.
(i) Consents of Third Parties. The consents
or approvals of any third parties whose consent is required for
each of the Partners to consummate the transactions contemplated
by this Agreement.
(j) Governmental Approvals. All necessary
consents, authorizations and approvals of all governmental
agencies, commissions and similar bodies, the consent,
authorization or approval of which is required under any
applicable law, rule, order or regulation for the consummation by
each of the Partners of the transactions contemplated by this
Agreement.
9.2 Deliverables from the Purchaser. At or prior
to the Closing, the Purchaser shall execute and/or deliver to the
Escrow Agent:
(a) Restated Partnership Agreement. The
Restated Partnership Agreement in the form of Exhibit A hereto,
duly executed by the Purchaser.
(b) Purchase Price. The sum of $2,000,000,
$1,000,000 of which shall be represented by a cashier's check,
payable to O'Brien, drawn on a bank reasonably acceptable to
O'Brien, and $1,000,000 of which shall be represented by a
cashier's check payable to Adwin, drawn on a bank reasonably
acceptable to Adwin, representing the amount of the Purchase
Price to be paid by the Purchaser under Section 1.1.
(c) PUPCO Side Letter. The PUPCO Side
Letter, duly executed by the Partnership, the Partners, the
Purchaser and PUPCO.
(d) Opinion Letter. An opinion of counsel
to the Purchaser, dated the Closing Date, in the form set forth
in Exhibit I hereto.
(e) Certificate Regarding Continuing
Validity of Purchaser's Representations and Warranties. A
Certificate executed by the President of
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Purchaser certifying that all representations and warranties of
the Purchaser made in or pursuant to this Agreement are true and
correct at and as of the Closing Date.
(f) Certificate Regarding Fulfillment of
Obligations and Conditions. A Certificate signed by the
President of Purchaser certifying that Purchaser has performed,
observed and complied with all the obligations and conditions
required by this Agreement to be performed, observed, or complied
with prior to the Closing Date.
(g) Other Documents. Purchaser shall have
delivered to the Escrow Agent:
(i) A certificate of Good Standing with
respect to the Purchaser from the Secretary of the Commonwealth
of Pennsylvania;
(ii) Certified copies of resolutions
duly adopted by the Board of Directors of the Purchaser,
authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein;
(iii) Certified copies of the Articles
of Incorporation and by-laws, as amended, of the Purchaser; and
(iv) The Escrow Agreement in a form
satisfactory to the Escrow Agent, Purchaser and the Partners.
(h) Consents of Third Parties. The consents
or approvals of any third parties whose consent is required for
the Purchaser to consummate the transactions contemplated by this
Agreement.
(i) Governmental Approvals. All necessary
consents, authorizations and approvals of all governmental
agencies, commissions and similar bodies, the consent,
authorization or approval of which is required under any
applicable law, rule, order or regulation for the consummation by
the Purchaser of the transactions contemplated by this Agreement.
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10. Termination. This Agreement and the transactions
contemplated hereby may be terminated as follows:
10.1 Mutual Termination. By written mutual consent
of the Purchaser and the Partners on or prior to the Expiration
Date.
10.2 Expiration Date. By the Purchaser, on the one
hand, or by the Partners, on the other hand, if the conditions to
the breaking of escrow set out in Sections 7 and 8 hereby have
not been satisfied by the Expiration Date.
11. Effect of Termination. If this Agreement and the
transactions contemplated hereby are terminated on or before the
Expiration Date, then, except as set forth in this Section 11, no
party hereto shall be liable to any other party hereto under this
Agreement or otherwise and this Agreement shall become void and
be without any force of effect. Notwithstanding the foregoing,
upon any such termination, the rights and obligations of the
parties shall be governed by the other agreements in effect
between and among them, including, without limitation, the
Project Services Agreement, the Steam Venture Agreement, and the
Escrow Agreement.
12. Survival. The right to make a claim for breach of
the representations and warranties made as of the Closing Date
shall survive the Closing Date for a period of three years from
and after the Closing Date, with the exception of those
representations and warranties set out in Sections 3.1, 3.2, 4.1,
4.2, 4.8, 5.1, and 5.2, as to which the right to make a claim
shall survive for a period as is provided under applicable
Pennsylvania law. Any claim by the Purchaser for indemnification
under Section 13 for a breach of any representation or warranty
made as of the Closing Date, or by the Partners under Section 14
for a breach of any representation or warranty made as of the
Closing Date, must be made on or prior to the date on which the
survival period for such representation or warranty expires, it
being understood that the indemnity obligations of the Purchaser
and the Partners, as the case may be, with respect to claims that
are asserted on or prior to such expiration date shall survive
such expiration date.
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13. Indemnification of the Purchaser.
13.1 Indemnification of the Purchaser. The
Partners shall, up to an aggregate maximum of $3,000,000 per
Partner, indemnify, defend and hold harmless Purchaser (and its
directors, officers, employees and affiliates) from and against
any and all "Purchaser Losses" as hereafter defined. "Purchaser
Losses" means any and all claims, liabilities, losses, damages,
reasonable costs and expenses, including reasonable attorneys'
fees and court costs incurred (i) by the Partnership where the
result is a diminution of the Fair Value (as defined in the
Restated Partnership Agreement) of the Purchaser's interest in
the Partnership including, without limitation, a diminution in
cash distributions, or (ii) by the Purchaser, that results in
either case, from the breach of a representation or warranty of a
Partner under this Agreement. The $3,000,000 limit per Partner
shall apply even if the aggregate indemnity obligation of such
Partner for joint representations and warranties made under
Section 3 herein, plus its liability for individual
representations and warranties made under Section 4, exceeds
$3,000,000. Notwithstanding the foregoing, no indemnification
obligation of any Partner for Purchaser Losses shall arise under
this Section 13.1 until such time as the Purchaser Losses, in the
aggregate, exceed $300,000.
13.2 Notice of Claim by the Purchaser. Within ten
business days after the Purchaser receives notice of any claim,
in respect of which the Partners may be liable under this Section
13, the Purchaser shall give written notice thereof to the
Partners. The Purchaser may at its option give notice and claim
indemnity under this Section 13 as soon as a claim has been
threatened by a third party, regardless of whether a loss has
been suffered, so long as the Purchaser shall in good faith
determine that such claim is not frivolous and that the Purchaser
may be liable or otherwise incur a loss as a result thereof and
shall give notice of such determination to the Partners. The
Purchaser shall permit the Partners, at the sole option and
expense of the Partners, to assume the defense of any such claim
by counsel satisfactory to the Purchaser and to settle or
otherwise dispose of the same. In any such event, the Purchaser
will cooperate with the Partners and may at all times participate
in such defense, at its own expense; provided, however, that the
Partners shall not, in defense of any such claim, except with the
prior written consent of the Purchaser, consent to the entry of
any judgment or enter into any settlement that does not include
the giving by the claimant or plaintiff in question to the
Purchaser a release of all liabilities in
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respect of such claims, or that does not result solely in the
payment of money damages by the Partners.
13.3 Purchaser's Remedy Upon Dissolution. As
Purchaser's exclusive remedy for Purchaser Losses under Section
13.1, Purchaser shall have the right, upon liquidation of the
assets of the Partnership pursuant to Section 24 of the Restated
Partnership Agreement, to receive priority payment of any Net
Indemnity Obligations, as defined below, which are owed to it by
either Adwin and/or O'Brien pursuant to the provisions of Section
13.1. For purposes of this Section, "Net Indemnity Obligations"
shall mean all Purchaser Losses under Section 13.1, the amount of
which shall have been established by mutual agreement or a final,
nonappealable judgment of a court of competent jurisdiction, and
which shall represent the excess of the indemnity obligations of
Adwin and/or O'Brien owed Purchaser under Section 13.1, over any
indemnity obligations owed by Purchaser to Adwin and/or O'Brien
pursuant to Section 14.1. Such "Net Indemnity Obligations" shall
be deducted from the Unreimbursed Development Costs otherwise due
Adwin and/or O'Brien under Section 24 of the Restated Partnership
Agreement, and shall be paid prior to the reimbursement of such
Unreimbursed Development Costs due Adwin and/or O'Brien, pursuant
to the provisions of Section 24 of the Restated Partnership
Agreement. The indemnity cap, calculation of Net Indemnity
Obligation, and calculation of Net Indemnity Amount shall be
applied and made on a per Partner basis, and neither Partner
shall be liable for the other Partners' indemnity obligation. In
the event of a dispute over any indemnity claims of Purchaser,
the parties agree to mediate the dispute initially pursuant to
the Commercial Mediation Rules of the American Arbitration
Association, but if such mediation efforts have not produced a
settlement within ninety (90) days, any party may refer the
matter to a court of competent jurisdiction for resolution.
14. Indemnification of the Partners.
14.1 Indemnification of the Partners. The
Purchaser shall, up to an aggregate maximum of $3,000,000,
indemnify, defend and hold harmless the Partners (and their
respective directors, officers, employees and affiliates) from
and against any and all "Partner Losses" as hereafter defined.
"Partner Losses" means any and all claims, liabilities, losses,
damages, reasonable costs and expenses, including reasonable
attorneys' fees and court costs and expenses incurred (i) by the
Partnership where the result is a diminution of the Fair Value
(as defined in the Restated
24
<PAGE>
Partnership Agreement) of the Partners' interest in the
Partnership including, without limitation, a diminution in cash
distributions, or (ii) by the Partners, that results in either
case, from the breach of a representation or warranty of the
Purchaser under this Agreement. Notwithstanding the foregoing, no
indemnification obligation of the Purchaser for Partner Losses
shall arise under this Section 14.1 until such time as the
Partner Losses, in the aggregate, exceed $300,000.
14.2 Notice of Claims by the Partners. Within ten
business days after the Partners receive notice of any claim, in
respect of which the Purchaser may be liable under this Section
14, the Partners shall give written notice thereof to the
Purchaser. The Partners and the Partnership may at their option
give notice and claim indemnity under this Section 14 as soon as
a claim has been threatened by a third party, regardless of
whether an actual loss has been suffered, so long as the Partners
shall in good faith determine that such claim is not frivolous
and that the Partners may be liable or otherwise incur a loss as
a result thereof and shall give notice of such determination to
the Purchaser. The Partners shall permit the Purchaser, at its
sole option and expense, to assume the defense of any such
claixi~ by counsel satisfactory to the Partners and to settle or
otherwise dispose of the same. In any such event, the Partners
will cooperate with the Purchaser and may at all times
participate in such defense, at its own expense; provided,
however, that the Purchaser shall not, in defense of any such
claim, except with the prior written consent of the Partners,
consent to the entry of any judgment or enter into any settlement
that does not include the giving by the claimant or plaintiff in
question to the Partners a release of all liabilities in respect
of such claims, or that does not result solely in the payment of
money damages by the Purchaser.
14.3 The Partners' Remedy Upon Dissolution. As
the Partners' exclusive remedy for Partner Losses under Section
14.1, the Partners shall have the right, upon liquidation of the
assets of the Partnership pursuant to Section 24 of the Restated
Partnership Agreement, to collect from Purchaser's share of
distributions under Section 24.01(e) of the Restated Partnership
Agreement any "Net Indemnity Amounts Owed by Purchaser,,' as
defined below, owed to the Partners by Purchaser pursuant to the
provisions of Section 14.1. For the purposes of this Section,
"Net Indemnity Amounts Owed by Purchaser" shall mean the excess
of all Partner Losses under Section 14.1 owed to the Partners by
Purchaser over any indemnity amounts owed by the Partners to
Purchaser pursuant to the provisions of Section 13.1. Such "Net
Indemnity Amounts Owed by Purchaser" shall be established through
either
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<PAGE>
mutual consent of the parties, or by a final, nonappealable order
of a court of competent jurisdiction, and once established, shall
be deducted from the Capital Account of Purchaser, pursuant to
the provisions of Section 24.01(e) of the Restated Partnership
Agreement. In the event of a dispute over any indemnity claims of
the Partners, the parties agree to mediate the dispute initially
pursuant to the Commercial Mediation Rules of the American
Arbitration Association, but if such mediation efforts have not
produced a settlement within ninety (90) days, any party may
refer the matter to a court of competent jurisdiction for
resolution.
15. Agreement to Consummate; Further Assurances.
Subject to the terms and conditions herein provided, including
the termination rights under Section 10 hereof, each of the
parties hereto agrees to use commercially reasonable efforts to
do all things necessary, proper or advisable under this Agreement
(including satisfaction of the conditions set forth in Sections 7
and 8 hereof), applicable laws and regulations to consummate and
make effective, as soon as reasonably practicable, the
transactions contemplated by this Agreement, including without
limitation the acquisition of all consents, authorizations,
orders and approvals of any governmental commission, board of
other regulatory body required in connection therewith. The
parties hereto shall execute and deliver all such other
instruments and take all such other actions as any party may
reasonably request from time-to-time, before or after the date
hereof and without any further consideration, in order to
effectuate the transactions provided for herein. The parties
shall cooperation fully with each other and with their respective
counsel in connection with any steps required to be taken as part
of their respective obligations under this Agreement.
16. Miscellaneous.
16.1 Amendments. No change, amendment, waiver or
modification of any provisions of this Agreement will be
effective unless it is in writing and signed by the party against
whom enforcement of the waiver, change or amendment is sought.
16.2 Waiver. No waiver of any right under this
Agreement will be deemed effective unless contained in writing
signed by the party charged with such waiver, and no waiver of
any right arising from any breach or failure to perform will be
deemed to be a waiver of any future such right or of any right
arising under this Agreement.
26
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16.3 Successors and Assigns. None of the parties
hereto may assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of all of
the other parties hereto. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs,
representatives, successors and permitted assigns.
16.4 Titles. The titles of the Sections and
subsections of this Agreement are for convenience of reference
only and are not to be considered in construing the terms and
provisions hereof.
16.5 Notices. All notices, requests, demands and
other communications required or permitted to be made hereunder
shall be in writing and shall be deemed duly given if hand
delivered against a signed receipt therefor, sent by registered
or certified mail, return receipt requested, first class postage
prepaid, or sent by nationally recognized overnight delivery
service, in each case addressed to the party entitled to receive
the same at the address specified below:
(a) If to Adwin, then to:
William J. Brady, Vice President
Adwin (Schuylkill) Cogeneration, Inc.
300 Stevens Drive
Suite 155
Lester, PA 19113
With a copy, sent in the manner prescribed above,
to:
John Halderman, Esquire
PECO Energy Company
2301 Market Street
Philadelphia, PA 19101
27
<PAGE>
(b) If to O'Brien, then to:
Peter Ford
O'Brien (Schuylkill) Cogeneration, Inc.
225 South Eighth Street
Philadelphia, PA 19106
With a copy, sent in the manner
prescribed above, to:
Robert J. Rauch, Esquire
17 Glen Andrew Road
White Sulphur Springs, WV 24986
(c) If to the Purchaser, then to:
Steve Smith, President
Trigen-Schuylkill Cogeneration, Inc.
2600 Christian Street
Schuylkill Station
Philadelpliia, PA 19146
With a copy, sent in the manner prescribed above,
to:
Barnett Satinsky, Esquire
Fox, Rothschild, O'Brien & Frankel
2000 Market Street
10th Floor
Philadelphia, PA 19103
And, with an additional copy, sent in the manner
prescribed above, to:
Eugene E. Murphy, Esquire
Trigen Energy Corporation
1 Water Street
White Plains, NY 10601
28
<PAGE>
Any party may alter the address to which communications are to be
sent by giving notice of such change of address in conformity
with the provisions of this Section providing for the giving of
notice. Notice shall be deemed to be effective, if personally
delivered, when delivered; if mailed, at midnight on the third
business day after being sent by registered or certified mail;
and if sent by nationally recognized overnight delivery service,
on the next business day following delivery to such delivery
service.
16.6 Provisions Separable. The provisions of this
Agreement are' independent of and separable from each other, and
no provision shall be affected or rendered invalid or
unenforceable by virtue of the fact that for any reason any other
or others of them may be invalid or unenforceable in whole or in
part.
16.7 Exhibits; Schedules. All exhibits and
schedules to this Agreement are hereby incorporated by reference
into, and made a part of, this Agreement.
16.8 Execution; Counterparts. This Agreement may
be executed in any number of counterparts, each of which shall be
deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one
and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon
as the signatories hereto.
16.9 Expenses. Whether or not the transactions
contemplated by this Agreement shall be consummated and except as
otherwise provided herein, each party shall pay its own expenses
incident to the negotiation, execution and performance of this
Agreement and the transactions contemplated hereby. The
Partnership shall each be solely responsible for, and shall
timely pay in accordance with applicable law, all transfer taxes
and other similar taxes, in either case, imposed by any taxing
authority, federal, state or local, with respect to the
Partnership Interest issued to the Purchaser under this Agreement
(if any).
16.10 Entire Agreement. This Agreement and
the other documents delivered pursuant hereto shall constitute
the full and entire understanding and agreement among the parties
with regard to. the subject matter hereof and thereof, and
supersede all prior agreements, understandings, inducements or
conditions, express or
29
<PAGE>
implied, oral or written, except as herein contained. The express
terms hereof shall control and supersede any course of
performance and/or usage of trade inconsistent with any of the
terms hereof.
16.11 Governing Law. This Agreement and all
questions relating to its validity, interpretation, performance
and enforcement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
16.12 Conflict Among Documents. In the event
of any conflict between or among the terms of this Agreement and
the terms of the Project Services Agreement or the Steam Venture
Agreement, such conflict shall be controlled and governed by the
terms of this Agreement. In the event of any conflict between any
other documents, the later dated document shall control and
govern. All terms and provisions of the Project Services
Agreement and the Steam Venture Agreement that are not expressly
amended or modified by this Agreement or any other document
entered into by the parties after the date thereof shall remain
in full force and effect.
30
<PAGE>
IN WITNESS WHEREOF, the authorized representatives of each
party hereby execute this Agreement as of the date first set
forth above.
ADWIN (SCHUYLKILL) O'BRIEN (SCHUYLKILL)
COGENERATION, INC. COGENERATION, INC.
By: /s/ William Brady By: /s/ Sanders Newman
Date: March 1, 1996 Date: March 1, 1996
TRIGEN-SCHUYLKILL
COGENERATION, INC.
By: /s/ S.B. Smith
Date: March 1, 1996
Agreeing and intending to be legally bound only with respect 1.2
through 1.4 of this Agreement as of the date of this Agreement:
PHILADELPHIA UNITED POWER GRAYS FERRY COGENERATION
CORPORATION PARTNERSHIP
By: /s/ S.B. Smith By: Adwin (Schuykill)
Cogeneration, Inc.
By: William Brady
<PAGE>
Exhibit 10.24.2
SIDE AGREEMENT
This SIDE AGREEMENT (the "Agreement") is entered into as of
March 1, 1996 by and among O'Brien (Schuylkill) Cogeneration,
Inc., a Delaware corporation ("O'Brien"), Adwin (Schuylkill)
Cogeneration, Inc., a Pennsylvania corporation ("Adwin"), and
Trigen-Schuylkill Cogeneration, Inc., a Pennsylvania corporation
("Trigen"). O'Brien, Adwin and Trigen will sometimes be referred
to collectively as the "Partners" and individually as a
"Partner."
BACKGROUND
WHEREAS, the Partners have as of the date hereof entered
into that certain Acquisition Agreement (the "Acquisition
Agreement"), pursuant to which O'Brien and Adwin are together
selling to Trigen a one-third general partnership interest in
Grays Ferry Cogeneration Partnership (the "Partnership");
NOW, THEREFORE, the Partners, intending to be legally bound
agree as follows:
1. Sections 7 and 8 of the Acquisition Agreement set forth
certain conditions to the obligations of the Partners and the
authority of the Escrow Agent (as defined in the Acquisition
Agreement) to break escrow. The Partners agree that it shall be
an additional condition to the obligations of the Partners and to
the breaking of escrow that the partners shall have executed an
agreement with regard to the consents referenced in Sections 7.6
and 8.4 of the Acquisition Agreement and similar consents, in
form and substance satisfactory to the Partners, in which the
partners agree to use their best efforts to preserve the benefit
of such consents for the Partners unless partnership counsel
advises that it is legally imprudent to execute such an
agreement.
IN WITNESS WHEREOF, the Partners have signed this Agreement
letter as of the date set forth above.
O'Brien (Schuylkill) Cogeneration, Inc.
By: /s/ Sanders Newman
Adwin (Schuylkill) Cogeneration, Inc.
By: /s/ William Brady
Trigen-Schuylkill Cogeneration, Inc.
By: /s/ S.B. Smith
<PAGE>
Exhibit 10.25.1
CONTINGENT CAPACITY PURCHASE ADDENDUM
TO THE
AGREEMENT FOR PURCHASE OF ELECTRIC OUTPUT (PHASE 1)
This ADDENDUM is made as of this 17th day of September,
1993, by and between Grays Ferry Cogeneration Partnership, a
Partnership with offices located at 225 South Eighth Street,
Philadelphia, Pennsylvania 19106 ("SELLER"), and Philadelphia
Electric Company, a Pennsylvania corporation with offices located
at 2301 Market Street, Philadelphia, Pennsylvania 19101 ("PECO").
BACKGROUND
PECO is a regulated public utility engaged in, among other
things, the generation, purchase, transmission, distribution and
sale of electric power within the Commonwealth of Pennsylvania
and the State of Maryland.
SELLER intends to design, construct, own and operate an
electric generation facility and certain associated equipment
located at 2600 Christian Street, Philadelphia, Pennsylvania
19146 ("FACILITY") of up to 31 MW in size which will be
constructed as Phase I of the entire project.
SELLER intends to design, construct, own and operate another
electric generation facility and certain associated equipment
also located at 2600 Christian Street, Philadelphia, Pennsylvania
19146 ("FACILITY"), which will be constructed as Phase II of the
entire project, of up to 119 MW in size.
PECO and SELLER entered into an Agreement for Purchase of
Electric Output dated July 28, 1992, as amended and revised,
regarding PECO'S purchase of the net electric output from the
FACILITY ("AGREEMENT").
PECO and SELLER desire further to provide for the purchase
by PECO, under certain circumstances, of electric capacity from
the FACILITY through this Contingent Capacity Purchase Addendum
to the AGREEMENT ("ADDENDUM").
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, the PARTIES, intending to be legally bound hereby,
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Agreement Definitions. Terms, when used herein with
capitalization, shall have the meaning specified in Article I of
the AGREEMENT, unless added or modified pursuant to Section 1.2
hereof.
1.2 Definitions. The following terms, when used herein
with capitalization, shall have the following meanings:
<PAGE>
ACTIVATION NOTICE means a written notice from PECO to SELLER
that PECO elects to purchase some or all of the NOMINATED
CAPACITY of the FACILITY as described in Article III hereof.
ADDENDUM means this Contingent Capacity Purchase Addendum to
the Agreement for Purchase of Electric Output (Phase I).
AVAILABLE CAPACITY means the NOMINATED CAPACITY of the
FACILITY minus any outages or miscellaneous adjustments reported
from time to time to PECO's System Operations Group pursuant to
Article VI hereof.
CALENDAR YEAR means any twelve month period beginning on the
first day of January and ending on the last day of the subsequent
December.
CAPACITY CREDIT means the price per MW-day paid by PECO to
SELLER for DESIGNATED CAPACITY under this ADDENDUM.
DESIGNATED CAPACITY means the portion of NOMINATED CAPACITY
of the FACILITY which PECO elects to purchase from SELLER under
Section 3.4 hereof.
EFOR means the demand-based Equivalent Forced Outage Rate,
Calculated using data developed during the three (3) preceding
CALENDAR YEARS, as defined in the "GUS Reference Manual" issued
by the PJM INTERCONNECTION and as revised from time to time.
FACILITY EFOR means the EFOR of the FACILITY calculated with
respect to the summer NOMINATED CAPACITY.
GREEN BOOK means the PJM INTERCONNECTION's "Rules and
Procedures for Determination of Generating Capacity" as revised
from time to time.
MW means megawatt.
NOMINATED CAPACITY means the FACILITY's ability to provide
power, expressed in MW, as determined under Article V hereof.
PEAK SEASON means the weeks containing the 24th through 36th
Wednesdays of a CALENDAR YEAR. Each such week shall begin on a
Monday.
2
<PAGE>
PECO EFOR means the weighted average EFOR for generating
units, exclusive of the FACILITY, for which PECO receives credit
in meeting its installed capacity obligations under the PJM
INTERCONNECTION AGREEMENT.
PERFORMANCE STANDARD means the PECO EFOR calculated using
plant data developed during the three (3) preceding CALENDAR
YEARS.
PLANNING PERIOD means any twelve (12) month period beginning
on the first day of June and ending on the last day of the
subsequent May.
ARTICLE II
EFFECTIVE DATE AND TERM
2.1 Effective Date. This ADDENDUM shall be effective as of
the date first above written, subject to SELLER and PECO
obtaining all necessary regulatory approvals for this ADDENDUM
without change or condition, to which end the PARTIES agree to
support this ADDENDUM in its original form.
2.2 Term. This ADDENDUM shall have the same term as the
AGREEMENT.
ARTICLE III
PURCHASES
3.1 Availability. Throughout the term of this ADDENDUM,
SELLER, shall make available to PECO the NOMINATED CAPACITY of
the FACILITY, as determined in Article V hereof, for purchase by
PECO exclusively.
3.2 Conditions. PECO shall be obligated to tender an
ACTIVATION NOTICE pursuant to Section 3.3 hereof when the
following conditions are satisfied:
(a) PECO delivers capacity or capacity and energy to
cooperative utility under a contract with (i) an
effective date after the effective date of this
ADDENDUM and (ii) a term of ten (10) years or
greater ("EXTERNAL SALE"), and
(b) the amount of the EXTERNAL SALE exceeds the amount
of capacity PECO can purchase under the contingent
capacity purchase agreements listed in Appendix A
of this ADDENDUM ("OTHER SOURCES").
3
<PAGE>
Additionally, PECO may at its sole discretion purchase NOMINATED
CAPACITY for any reason at any time.
3.3 Activation. If the conditions of Section 3.2
hereof are satisfied or PECO otherwise desires to purchase some
or all of the NOMINATED CAPACITY, then PECO shall tender to
SELLER an ACTIVATION NOTICE specifying the commencement date,
duration, amount of NOMINATED CAPACITY which PECO elects to
purchase from SELLER as DESIGNATED CAPACITY and the initial value
of the CREDIT described in Section 4.2 hereof. In no case shall
the elected duration extend beyond the term of this ADDENDUM. In
the event of an EXTERNAL SALE, the proposed DESIGNATED CAPACITY
shall be the lesser of the NOMINATED CAPACITY of the FACILITY or
the amount by which the EXTERNAL SALE exceeds OTHER SOURCES, and
the duration shall, subject to the condition specified in the
preceding sentence, be no less than that of the EXTERNAL SALE.
(a) If tendered after the COMMERCIAL OPERATION DATE,
the ACTIVATION NOTICE shall be deemed to be
immediately accepted by SELLER for any proposed
amount of DESIGNATED CAPACITY up to the NOMINATED
CAPACITY then in operation, and shall initiate
certain obligations of the SELLER contained in
Sections 4.1, 4.2, 6.5 and 6.9 of this ADDENDUM.
(b) If tendered before the COMMERCIAL OPERATION DATE,
the ACTIVATION NOTICE then applies to NOMINATED
CAPACITY which SELLER has not yet constructed or
otherwise put in operation. Within ninety (90)
days from receipt of such ACTIVATION NOTICE,
SELLER shall notify PECO in writing whether it
will or will not accept the ACTIVATION NOTICE,
thereby committing to provide PECO all or part of
the proposed DESIGNATED CAPACITY and by what date.
Acceptance by SELLER of an ACTIVATION NOTICE shall
initiate certain obligations of the SELLER
contained in Sections 4.1, 4.2, 6.5 and 6.9 of
this ADDENDUM.
(c) If SELLER informs PECO it will provide NOMINATED
CAPACITY beginning on a date after the date
requested by PECO in the ACTIVATION NOTICE, then
PECO may procure capacity from alternate sources
for the period between the specified date and
available date. If SELLER informs PECO it will
not provide NOMINATED CAPACITY in the total amount
specified in the ACTIVATION NOTICE, then PECO may
procure capacity not provided by SELLER from
alternate sources, and SELLER shall have no rights
4
<PAGE>
to supply capacity for such purpose at any time in
the future, except at the sole discretion of PECO,
the provisions of Section 3.2 notwithstanding.
3.4 Purchases. When (a) the conditions specified in
Section 3.2 hereof are satisfied, (b) an ACTIVATION NOTICE is
tendered and accepted per Section 3.3 hereof, and (c) SELLER
otherwise complies with its obligations under this ADDENDUM, then
the amount of NOMINATED CAPACITY accepted by SELLER according to
Section 3.3 hereof shall be DESIGNATED CAPACITY, which SELLER
shall provide to PECO under the terms of this ADDENDUM. PECO may
specify levels of DESIGNATED CAPACITY that vary over different
time periods, but in no event shall DESIGNATED CAPACITY exceed
NOMINATED CAPACITY. Pursuant to Section 3.3(b) hereof, SELLER
and PECO may commit to a purchase of DESIGNATED CAPACITY in
excess of NOMINATED CAPACITY at the time the commitment is made,
but not exceeding the maximum NOMINATED CAPACITY according to
Section 5.1 hereof.
3.5 Capacity Credit. PECO shall establish annually,
at the beginning of a PLANNING PERIOD, a CAPACITY CREDIT for such
PLANNING PERIOD in the following manner. Except as provided in
Section 6.5 hereof, the CAPACITY CREDIT shall be $178 per NW day
for DESIGNATED CAPACITY received by PECO from the FACILITY less
the product of:
(a) $178 per MW day;
(b) 1.5; and
(c) the greater of:
(i) zero (0); or
(ii) the most recently calculated FACILITY
EFOR less the PERFORMANCE STANDARD.
In no event shall the CAPACITY CREDIT be less than $0 or more
than $178 per MW.
3.6 Initial EFOR. For any CALENDAR YEAR covering a
period of time preceding the COMMERCIAL OPERATION DATE, the
FACILITY EFOR shall be deemed to be ten percent (10%) or the PECO
EFOR for that CALENDAR YEAR, whichever is less. After the
COMMERCIAL OPERATION DATE, the FACILITY EFOR shall be calculated
according to the "GUS Reference Manual," using such deemed
FACILITY EFOR together with actual FACILITY data until three (3)
CALENDAR YEARS following the COMMERCIAL OPERATION DATE.
3.7 PJM Acceptance. SELLER shall operate the FACILITY
in accordance with PJM INTERCONNECTION requirements for operating
capacity and installed capacity and installed capacity credit,
including those rules
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<PAGE>
specified in the GREEN BOOK. PECO shall not be obligated to
purchase DESIGNATED CAPACITY or pay any CAPACITY CREDIT under
this ADDENDUM if PECO is prohibited from using such DESIGNATED
CAPACITY in meeting its installed capacity obligations under the
PJM INTERCONNECTION AGREEMENT. If such use of DESIGNATED
CAPACITY is limited, PECO shall only be required to pay CAPACITY
CREDIT for the portion of DESIGNATED CAPACITY which is deemed to
satisfy PECO's installed capacity obligation under the PJM
INTERCONNECTION AGREEMENT.
3.8 Planning. PECO may, at its sole discretion,
include the NOMINATED CAPACITY of the FACILITY in PECO's future
planning. Such inclusion shall not obligate PECO to purchase
any of said NOMINATED CAPACITY. Any purchase of NOMINATED
CAPACITY by PECO from FACILITY after the term of this ADDENDUM
shall be at prices, terms and conditions agreed upon by PECO and
SELLER.
ARTICLE IV
DAMAGES AND SECURITY
4.1 Liquidated Damages. The PARTIES agree that after
acceptance of an ACTIVATION NOTICE, IF (A) SELLER defaults under
the AGREEMENT, (B) the FACILITY fails to deliver energy and PECO
does not reasonably expect the FACILITY to be able to resume or
to begin deliveries of energy within three (3) years, or (C) the
COMMERCIAL OPERATION DATE has not occurred within one (1) year
after the date on which SELLER committed to supply DESIGNATED
CAPACITY pursuant to Section 3.3(b) hereof, then SELLER shall pay
liquidated damages to PECO in the amount of the product of:
(a) the greater of:
(i) then DESIGNATED CAPACITY, or
(ii) the maximum capacity SELLER agreed to supply
within the next three (3) years by accepting an
ACTIVATION NOTICE.
(iii)the maximum capacity SELLER agreed to supply
within the next three (3) years by accepting an
ACTIVATION NOTICE,
(b) three (3),
(c) three hundred sixty-five (365), and
(d) the greater of:
(i) zero (0), or
(ii) the then-effective PJM INTERCONNECTION capacity
credit in $/MWk-day calculated under Schedule 4.01
of the PJM INTERCONNECTION AGREEMENT less $178.
Notwithstanding any of the above, if the FACILITY returns to
service and is able to deliver DESIGNATED CAPACITY in the manner
set forth in t his ADDENDUM within three (3) years, PECO shall
repay a share of any liquidated damages received by PECO under
6
<PAGE>
this Section 4.1 or Section 4.2. Such share shall be the amount
of liquidated damages actually received by PECO in excess of the
amount obtained by applying the method of this Section 4.1 to the
actual duration and amount of DESIGNATED CAPACITY not available
to PECO for purchase.
4.2 Security. To guarantee SELLER's performance of its
obligations under Section 4.1 hereof, SELLER shall provide a
CREDIT within thirty (30) days of accepting an ACTIVATION NOTICE,
in the amount designated by PECO in the ACTIVATION NOTICE, from
which PECO shall be entitled to draw any sum due as liquidated
damages under Section 4.1 hereof. The CREDIT shall be payable by
an ISSUER in the City of Philadelphia on terms and conditions
acceptable to PECO. PECO shall not unreasonably withhold
approval of any ISSUER or CREDIT. The CREDIT shall be
established and structured to permit PECO to make multiple
demands for payment from the ISSUER, and shall require the ISSUER
to honor on sight, in immediately available funds and without
demand for payment, any written demand by PECO for payment. The
CREDIT shall be reviewed at the end of each PLANNING PERIOD.
PECO may designate a change at that time in the amount of the
CREDIT, which amount shall not exceed the then current amount of
potential liquidated damages calculated under Section 4.1 hereof.
Upon the failure of SELLER to provide such CREDIT within ninety
(90) days after PECO designates a new CREDIT amount during the
term of this ADDENDUM, PECO shall have the right to withhold
payment to SELLER for DESIGNATED CAPACITY that SELLER delivers to
PECO and to apply such amounts to an escrow account until the
balance in the escrow account, when added to the amount of the
CREDIT established hereunder, equals the required CREDIT amount.
Any amount remaining in such escrow account at the termination or
expiration of this ADDENDUM upon which PECO has no claim under
the terms of this ADDENDUM, shall be paid to SELLER with interest
at the prime rate specified in Section 14.4(a) of the AGREEMENT.
4.3 Additional Remedies. In addition to PECO's right to
liquidated damages provided in Sections 4.1 and 4.2 hereof, upon
the occurrence of any of the events set forth in Section 4.1
hereof PECO shall have the further right to obtain capacity from
alternate sources and to cease payments to SELLER under this
ADDENDUM. If SELLER cures the event causing action under this
Section 4.3, SELLER shall be restored to its full privileges
under this ADDENDUM.
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ARTICLE V
CAPACITY
5.1 Nomination of Capacity. SELLER plans to construct a
FACILITY expected to produce NET ELECTRIC OUTPUT of up to 31 MW
with a COMMERCIAL OPERATION DATE of :July 1, 1995. SELLER shall
inform PECO of the status of and any changes to this plan. After
the COMMERCIAL OPERATION DATE THE nominated capacity OF THE
facility SHALL BE 31 MW winter. The NOMINATED CAPACITY may be
revised at any time by agreement of the PARTIES. Prior to the
COMMERCIAL OPERATION DATE, PECO shall not purchase any
DESIGNATED CAPACITY from the FACILITY.
5.2 Capacity Tests. SELLER shall conduct capacity tests
twice a year, once during the summer (June through August) and
once during the winter (December through February) periods, in
accordance with procedures specified by PECO. The procedures
shall be based on and consistent with the GREEN BOOK. PECO shall
have the right to require additional tests to meet specific PECO
needs that are not required by the GREEN BOOK. PECO shall pay
all costs incurred by the SELLER for such additional tests. PECO
shall be the sole judge of the tests required.
5.3 Test Results. If any test performed pursuant to
Section 5.2 hereof demonstrates that the FACILITY cannot achieve
the appropriate summer or winter NOMINATED CAPACITY set forth in
Section 5.1 hereof, a partial forced outage shall be recorded
from the beginning of the relevant test period prescribed in
Section 5.2 hereof and continuing until the FACILITY
satisfactorily proves the appropriate NOMINATED CAPACITY>
5.4 Retest. If SELLER is dissatisfied with the result of a
test described in Section 5.2, SELLER may request permission to
conduct a retest within ten (10) days of being notified of the
test result. PECO shall not unreasonably withhold permission for
such a retest. The result of the retest shall be binding upon
SELLER. If such retest is not performed within fourteen (14)
days of PECO granting permission, then the result of the previous
test shall be binding upon SELLER. The SELLER may request as
many retests as the test period permits.
5.5 Failure to Test. If SELLER fails to perform an
acceptable test required by Section 5.2 hereof, PECO may at its
sole discretion reduce the DESIGNATED CAPACITY of the FACILITY
which PECO purchases for one year after the latest date upon
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which an acceptable test could have been performed, or until the
FACILITY completes an acceptable test.
5.6 Information Requirements. SELLER shall, from time to
time, provide PECO with any information regarding operation of
the FACILITY required by PECO to fulfill its PJM INTERCONNECTION
obligations or other operating needs, and shall endeavor to
provide an historical information requested by PECO on intervals
as short as a quarter hour.
The information required includes but is not limited to:
(a) During a Test Period
(i) Gross Generation
(ii) Auxiliary Loads
(iii) Process Electrical Loads
(iv) Net generation to PECO
(b) During Normal Operation
(i) Gross Generation
(ii) Auxiliary Loads
(iii) Net Generation to PECO
(iv) Fuel Consumption
ARTICLE VI
OUTAGE COORDINATION AND REPORTING
6.1 Redundancy. Certain sections of this ADDENDUM and this
Article VI in particular require actions or information from the
SELLER which are redundant to provisions of the AGREEMENT.
Restating requirements here does not imply a need to take
redundant actions or to provide redundant information, but is
done to collect in one location all the actions and information
required to implement the requirements of this ADDENDUM.
6.2 Outage Coordination. SELLER shall coordinate all
planned and maintenance outages with PECO.
6.3 Outage Scheduling. Unless otherwise directed by PECO,
SELLER shall periodically submit for PECO's approval, such
approval not to be unreasonably withheld, its planned maintenance
schedule conforming to Section 6.5 hereof, for the subsequent
thirty-six (36) months of operation. SELLER shall revise its
planned and maintenance outage dates upon PECO's request for such
changes.
6.4 Operating Information. Except for forced outages which
require the immediate removal of equipment from service to avoid
either damage to equipment or risk to personnel or the
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public, SELLER shall coordinate daily operation of the FACILITY
with PECO, as required by Section 6.2 hereof and good electrical
system operating practice. This includes notifying PECO's System
Operations Group of any change in operating capability or removal
of equipment from service which results in full or partial
reductions of FACILITY operating capability.
6.5 Peak Season Outages. After accepting an ACTIVATION
NOTICE, SELLER shall schedule planned outages so that no portion
of any such planned outage shall occur during the PEAK SEASON,
without the prior written consent of PECO. PECO shall not be
obligated to approve requests for planned outages during such
periods. PECO shall have the right, upon one (1) year's notice,
to revise the months or days during which SELLER shall not
schedule a planned outage. If the FACILITY is wholly or
partially unavailable due to a planned or maintenance outage
during the PEAK SEASON, PECO shall not be required to pay SELLER
for any DESIGNATED CAPACITY purchased by PECO from the FACILITY
during such an outage.
6.6 Reporting. SELLER shall comply with all PECO and PJM
INTERCONNECTION generating unit outage reporting requirements as
revised form time to time. PECO will advise SELLER of such
requirements and any changes. PECO shall have the right to audit
FACILITY operating and maintenance logs upon twenty-hour (4)
hours notice.
6.7 Forced Outage Reporting. SELLER shall notify PECO's
System Operations Group of the occurrence, nature and expected
duration of any forced outage as soon as practical but not later
than one (1) hour after the forced outage begins. SELLER shall
thereafter promptly inform PECO's System Operations Croup of any
change in the expected duration of the forced outage unless
relieved of this obligation by PECO's System Operations Group for
the duration of that forced outage.
6.8 Monthly Outage Reporting. Within five (5) working days
after the end of each month, SELLER shall report to PECO all full
or partial planned, maintenance or forced outages and any
miscellaneous adjustments that occurred during the preceding
month. Data shall be presented according to the PJM
INTERCONNECTION's "Generating Unit Outage Data Reporting
Instructions," as revised from time to time.
6.9 Dispatch. SELLER shall, within thirty (30) minutes
after notification by PECO, deliver energy to PECO at the
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AVAILABLE CAPACITY level, and shall continue to deliver energy at
that level until released by PECO. Each such period, commencing
thirty (30) minutes after such a notification and ending upon
such a release by PECO, shall be known as a DISPATCH PERIOD. The
scheduling of DISPATCH PERIODS shall be at the sole discretion of
PECO, except that (A) a DISPATCH PERIOD shall not exceed sixteen
(16) hours in duration and (B) PECO shall not schedule more than
twenty (20) DISPATCH PERIODS in a CALENDAR YEAR. After accepting
an ACTIVATION NOTICE, if SELLER files to attain and maintain the
level of its AVAILABLE CAPACITY during any DISPATCH PERIOD, the
payment under Section 7;.1 for the month in which such failure
occurs shall be reduced by:
(a) the CAPACITY CREDIT, multiplied by
(b) the number of days in that month, multiplied by
(c) the greatest UNDISPATCHED CAPACITY during any
DISPATCH PERIOD in that month. UNDISPATCHED
CAPACITY means:
(i) AVAILABLE CAPACITY in effect at the time PECO
notifies SELLER of a DISPATCH PERIOD, minus
(ii) the total amount of energy delivered during
that DISPATCH PERIOD divided by the duration of
the DISPATCH PERIOD.
In addition to such reduction in payments and regardless of
whether or not SELLER has accepted an ACTIVATION NOTICE, SELLER
shall record a forced outage for the difference between the
AVAILABLE CAPACITY and the level of delivery actually attained.
Such forced outage shall remain in effect until the FACILITY
delivers energy at the AVAILABLE CAPACITY.
6.10 Minimum Generation. During a LIGHT LOAD CONDITION,
SELLER shall, upon notice from PECO, reduce FACILITY output
during the LIGHT LOAN CONDITION to zero or such other level
designated by PECO. If FACILITY output exceeds the level
designated by PECO during the LIGHT LOAD CONDITION to zero or
such other level designated by PECO. If FACILITY output exceeds
the level designated by PECO during any day or part thereof
during the LIGHT LOAN CONDITION, the payment due SELLER under
Section 7.1 hereof shall be reduced on a daily basis by the
product of:
(a) $178 per MKW day; and
(b) the greater of:
(i) zero (0); or
(ii) the average output of the FACILITY during the
LIGHT LOAD CONDITION, less the FACILITY output
level designated by PECO under this Section 6.10.
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6.11 Waiver. PECO ;may waive any of the testing or
reporting requirements under this Article VI by providing written
;notice to SELLER.
ARTICLE VII
BILLING AND PAYMENT
7.1 Billing and Payment. Within 30 days of the end of each
BILLING MONTH, PECO shall prepare a statement showing for each
day in the BILLING MONTH at least:
(a) the capacity purchased, being the DESIGNATED
CAPACITY as adjusted by Sections 3.7 and 6.5
hereof;
(b) the CAPACITY CREDIT as determined in Section 3.4
hereof; and
(c) the product of (a) and (b) above.
With each such statement, PECO shall include payment in the sum
of (c) above, less (i) the administrative charge specified in
Section 7.2 hereof, (ii) any UNDISPATCHED CAPACITY charge
specified in Section 6.9 hereof, and (iii) any minimum generation
charge specified in Section 6.10 hereof.
7.2 Administrative Charge. PECO shall reduce its payments
under this ADDENDUM by an administrative charge of $200 per
month, which shall be updated and increased periodically by a
percentage related to the annual percentage change in PECO's
wages for regular and probationary employees. In the event the
administrative charge is greater than the payment for DESIGNATED
CAPACITY, SELLER shall be responsible for and pay to PECO the
difference within thirty (30) days of the issuance of the billing
statement. No administrative charge shall be assessed for months
during which PECO purchases no DESIGNATED CAPACITY from SELLER.
7.3 Late Charges. Interest on unpaid amounts shall accrue
according to Section 14.4 of the AGREEMENT.
ARTICLE VIII
RELATIONSHIP TO AGREEMENT
8.1 General. This ADDENDUM is ;an addition or supplement
to the AGREEMENT and shall be governed by all the terms and
conditions of the AGREEMENT, unless specifically provided
otherwise in this ADDENDUM.
8.2 Regulatory Approval. The effectiveness of this
ADDENDUM is contingent upon the PUC allowing PECO to recover the
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costs incurred under the AGREEMENT pursuant to the COST RECOVERY
PETITION as specified in Section 2.2 of the Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Affiliated Interest. The effectiveness of this
ADDENDUM is contingent upon the PUC approving an affiliated
interest filing with respect to this ADDENDUM. PECO will submit
such filing with the PUC within sixty (60) days of the effective
date of this ADDENDUM with a request it be promptly approved.
9.2 Non-Reliance. After the eighth anniversary of the
effective date of this ADDENDUM, the SELLER may terminate this
ADDENDUM without any further obligation to PECO by ninety (90)
days written notice to PECO, if PECO has never tendered an
ACTIVATION NOTICE to the SELLER>
IN WITNESS WHEREOF, the PARTIES have caused t his ADDENDUM
to be executed as of the day and year first above written.
PHILADELPHIA ELECTRIC COMPANY:
Attest: /s/ By: /s/ William H. Smith
William H. Smith, III
Secretary Vice President
GRAYS FERRY COGENERATION PARTNERSHIP
Attest: /s/ By: /s/ Robert A. Shinn
Robert A. Shinn
Vice President
O'Brien (Schuylkill)
Cogeneration, Inc.
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Appendix A
Contingent Capacity Purchase Addendum
To The
Agreement For Purchase Of Electric Output
with
Grays Ferry Cogeneration Partnership
No Contracts Signed Prior to This Addendum
14
<PAGE>
Exhibit 10.25.2
CONTINGENT CAPACITY PURCHASE ADDENDUN
TO THE
AGREEMENT FOR PURCHASE OF ELECTRIC OUTPUT (PHASE II)
This ADDENDUM is made as of this l7th day of September,
1993, by and between Grays Ferry Cogeneration Partnership, a
Partnership with offices located at 225 South Eighth Street,
Philadelphia, Pennsylvania 19106 ("SELLER"), and Philadelphia
Electric Company, a Pennsylvania corporation with offices located
at 2301 Market Street, Philadelphia, Pennsylvania 19101
("PECO").
BACKGROUND
PECO is a regulated public utility engaged in, among
other things, the generation, purchase, transmission,
distribution and sale of electric power within the Commonwealth
of Pennsylvania and the State of Maryland.
SELLER intends to design, construct, own and operate an
electric generation facility and certain a5sociated equipment
located at 2600 Christian Street, Philadelphia, Pennsylvania
19146 ("FACILITY") of up to 119 MW in size which will be
constructed as Phase II of the entire project.
SELLER intends to design, construct, own and operate
another electric generation facility and certain associated
equipment also located at 2600 Christian Street, Philadelphia,
Pennsylvania 19146 ("FACILITY"), which will be constructed as
Phase I of the entire project, of up to 31 MW in size.
PECO and SELLER entered into an Agreement for Purchase
of Electric Output dated July 28, 1992, as amended and revised,
regarding PECO's purchase of the net electric output from the
FACILITY ("AGREEMENT").
PECO and SELLER desire further to provide for the
purchase by PECO, under certain circumstances, of electric
capacity from the FACILITY through this Contingent Capacity
Purchase Addendum to the AGREEMENT ("ADDENDUM").
NOW THEREFORE, in consideration of the mutual covenants
set forth herein, the PARTIES, intending to be legally bound
hereby, agree as follows:
ARTICLE I
DEFINITIONS
1.1 Agreement Definitions. Terms, when used herein
with capitalization, shall have the meaning specified in Article
I of the AGREEMENT, unless added or modified pursuant to Section
1.2 hereof.
1.2 Definitions. The following terms, when used
herein with capitalization, shall have the following meanings:
<PAGE>
ACTIVATION NOTICE means a~ written notice from PECO to SELLER
that PECO elects to purchase some or all of the NOMINATED
CAPACITY of the FACILITY as described in Article III hereof.
ADDENDUM means this Contingent Capacity Purchase
Addendum to the Agreement for Purchase of Electric Output
(Phase II).
AVAILABLE CAPACITY means the NOMINATED CAPACITY of the
FACILITY minus any outages or miscellaneous adjustments reported
from time to time to PECO'S System Operations Group pursuant to
Article VI hereof.
CALENDAR YEAR means any twelve month period beginning
on the first day of January and ending on the last day of the
subsequent December.
CAPACITY CREDIT means the price per MW-day paid by PECO
to SELLER for DESIGNATED CAPACITY under this ADDENDUM.
DESIGNATED CAPACITY means the portion of NOMINATED
CAPACITY of the FACILITY which PECO elects to purchase from
SELLER under Section 3,4 hereof.
EFOR means the demand-based Equivalent Forced Outage
Rate, calculated using data developed during the three (3)
preceding CALENDAR YEARS, as. defined in the "GUS Reference
Manual" issued by the PJM INTERCONNECTION and as revised from
time to time.
FACILITY EFOR means the EFOR of the FACILITY calculated
with respect to the summer NOMINATED CAPACITY.
GREEN BOOK means the PJM Interconnection's "Rules and
Procedures for Determination of Generating Capacity" as revised
from time. to time.
MW means megawatt.
NOMINATED CAPACITY means the Facility's ability to
provide power, expressed in MW, as determined under Article V
hereof.
PEAK SEASON means the weeks containing the 24th through
36th Wednesdays of a CALENDAR YEAR. Each such week shall begin
on a Monday.
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<PAGE>
PECO EFOR means the weighted average EFOR for
generating units, exclusive of the FACILITY, for which PECO
receives credit in meeting its installed capacity obligations
under the PJM INTERCONNECTION AGREEMENT.
PERFORMANCE STANDARD means the PECO EFOR calculated
using plant data developed during the three (3) preceding
CALENDAR YEARS.
PLANNING PERIOD means any twelve (12) month period
beginning on the first day of June and ending on the last day of
the subsequent May.
ARTICLE II
EFFECTIVE DATE AND TERM
2.1 Effective Date. This ADDENDUM shall be effective
as of the date first above written, subject to SELLER and PECO
obtaining all necessary regulatory approvals for this ADDENDUM
without change or condition, to which end the PARTIES agree to
support this ADDENDUM in its original form.
2.2 Term. This ADDENDUM shall have the same term as
the AGREEMENT.
ARTICLE III
PURCHASES
3.1 Availability. Throughout the term of this
ADDENDUM., SELLER shall make available to PECO the NOMINATED
CAPACITY of the FACILITY, as determined in Article V hereof, for
purchase by PECO exclusively.
3.2 Conditions. PECO shall be obligated to tender an
ACTIVATION NOTICE pursuant to Section 3.3 hereof when the
following conditions are satisfied:
(a) PECO delivers capacity or capacity and energy to an
unaffiliated investor-owned, municipal, or
cooperative utility under a contract with (i) an
effective date after the effective date of this
ADDENDUM and (ii) a term of ten (10) years or
greater ("EXTERNAL SALE"), and
(b) the amount of the EXTERNAL SALE exceeds the amount
of capacity PECO can purchase under the contingent
capacity purchase agreements listed in Appendix A
of this ADDENDUM ("OTHER SOURCES").
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<PAGE>
Additionally, PECO may at its sole discretion purchase NOMINATED
CAPACITY for any reason at any time.
3,3 Activation. If the conditions of Section 3.2
hereof are satisfied or PECO otherwise desires to purchase some
or all of the NOMINATED CAPACITY, then PECO shall tender to
SELLER an ACTIVATION NOTICE specifying the commencement date,
duration, amount of NOMINATED CAPACITY which PECO elects to
purchase from SELLER as DESIGNATED CAPACITY and the initial value
of the CREDIT described in Section 4.2 hereof. In no case shall
the elected duration extend beyond the term of this ADDENDUM. In
the event of an EXTERNAL SALE, the proposed DESIGNATED CAPACITY
shall be the lesser of the NOMINATED CAPACITY of the FACILITY or
the amount by which the EXTERNAL SALE exceeds OTHER SOURCES, and
the duration shall, subject to the condition specified in the
preceding sentence, be no less than that of the EXTERNAL SALE.
(a) If tendered after the COMMERCIAL OPERATION DATE,
the ACTIVATION NOTICE shall be deemed to be
immediately accepted by SELLER for any proposed
amount of DESIGNATED CAPACITY up to the NOMINATED
CAPACITY then in operation, and shall initiate
certain obligations of the SELLER contained in
Sections 4.1, 4.2, 6.5 and 6.9 of this ADDENDUM.
(b) If tendered before the COMMERCIAL OPERATION DATE,
the ACTIVATION NOTICE then applies to NOMINATED
CAPACITY which SELLER has not yet constructed or
otherwise put in operation. Within ninety (90)
days from receipt of such ACTIVATION NOTICE,
SELLER shall notify PECO in writing whether it
will or will not accept the ACTIVATION NOTICE,
thereby committing to provide PECO all or part of
the proposed DESIGNATED CAPACITY and by what date.
Acceptance by SELLER of an ACTIVATION NOTICE shall
initiate certain obligations of the SELLER
contained in Sections 4.1, 4.2, 6.5 and 6.9 of
this ADDENDUM.
(c) If SELLER informs PECO it will provide NOMINATED CAPACITY
beginning on a date after the date requested by PECO in the
ACTIVATION NOTICE, then PECO may procure capacity from
alternate
sources for the period between the specified date and
available
date. If SELLER informs PECO it will not provide NOMINATED
CAPACITY in the total amount specified in the ACTIVATION
NOTICE,
then PECO may procure capacity not provided by SELLER from
alternate sources, and SELLER shall have no rights
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to supply capacity for such purpose at any time
in the future1 except at the sole discretion of
PECO, the provisions of Section 3.2
notwithstanding.
3.4 Purchases. When (a) the conditions specified in
Section 3.2 hereof are satisfied,.(b) an ACTIVATION NOTICE is
tendered and accepted per Section 3.3 hereof, and (c) SELLER
otherwise complies with its obligations under this ADDENDUM, then
the amount of NOMINATED CAPACITY accepted by SELLER according to
Section 3.3 hereof shall be DESIGNATED CAPACITY, which SELLER
shall provide to PECO under the terms of this ADDENDUM. PECO may
specify levels of DESIGNATED CAPACITY that vary over different
time periods, but in no event shall DESIGNATED CAPACITY exceed
NOMINATED CAPACITY. Pursuant to Section 3.3(b) hereof, SELLER
and PECO may commit to a purchase of DESIGNATED CAPACITY in
excess of NOMINATED CAPACITY at the time the commitment is made,
but not exceeding the maximum NOMINATED CAPACITY according to
Section 5.1 hereof.
3.5 Capacity Credit. PECO shall establish annually,
at the beginning of a PLANNING PERIOD, a CAPACITY CREDIT for such
PLANNING PERIOD in the following manner. Except as provided in
Section 6.5 hereof, the CAPACITY CREDIT shall be $179 per MW day
for DESIGNATED CAPACITY received by PECO from the FACILITY less
the product of:
(a) $178 per MW day;
(b) 1.5; and
(c) the greater of:
(i) zero (0); or
(ii) the most recently calculated FACILITY EFOR
less the PERFOLMANCE STANDARD.
In no event shall the CAPACITY CREDIT be less than
$0 or more than $178 per MW.
3.6 Initial EFOR For any CALENDAR YEAR covering a
period of time preceding the COMMERCIAL OPERATION DATE, the
FACILITY EFOR shall be deemed to be ten percent (l0%) or the PECO
EFOR for that CALENDAR YEAR, whichever is less. After the
COMMERCIAL OPERATION DATE, the FACILITY EFOR shall be calculated
according to the "GUS Reference Manual," using such deemed
FACILITY EFOR together with actual FACILITY data until three (3)
CALENDAR YEARS following the COMMERCIAL OPERATION DATE.
3.7 PJM Acceptance. SELLER shall operate the FACILITY
in accordance with PJ,M INTERCONNECTION requirements for
operating capacity and installed capacity credit, including those
rules
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specified in the GREEN BOOK. PECO shall not b; obligated to
purchase DESIGNATED CAPACITY or pay any CAPACITY CREDIT under
this ADDENDUM if PECO is prohibited from using such DESIGNATED
CAPACITY in meeting its installed capacity obligations under the
PJM INTERCONNECTION AGREEMENT. If such use of DESIGNATED
CAPACITY is limited1 PECO shall only be required to pay CAPACITY
CREDIT for the portion of DESIGNATED CAPACITY which is deemed to
satisfy PECO's installed capacity obligation under the PJM
INTERCONNECTION AGREEMENT.
3.8 Planning. PECO may, at its sole discretion,
include the NOMINATED CAPACITY of the FACILITY in PECO's future
planning. Such inclusion shall not obligate PECO to purchase any
of said NOMINATED CAPACITY. Any purchase of NOMINATED CAPACITY
by PECO from FACILITY after the term of this ADDENDUM shall be at
prices, terms and conditions agreed upon by PECO and SELLER.
ARTICLE IV
DAMAGES AND SECURITY
4.1 Liquidated Damages The PARTIES agree that after
acceptance of an ACTIVATION NOTICE, if (A) SELLER defaults under
the AGREEMENT, (B) the FACILITY fails to deliver energy and PECO
does not reasonably expect the FACILITY to be able to resume or
to begin deliveries of energy within three (3) years, or (C) the
COMMERCIAL OPERATION DATE has not occurred within one (1) year
after the date on which SELLER committed to supply DESIGNATED
CAPACITY pursuant to Section 3.3(b) hereof, then SELLER shall pay
liquidated damages to PECO in the amount of the product of:
(a) the greater of:
(i) then DESIGNATED CAPACITY, or
(ii) the maximum capacity SELLER agreed to supply
within the next three (3) years by accepting
an ACTIVATION NOTICE,
(b) three (3),
(c) three hundred sixty-five (365), and
(d) the greater of:
(i) zero (0), or
(ii) the then-effective PJM INTERCONNECTION
capacity credit in S/MW-day calculated under
Schedule 4.01 of the PJK INTERCONNECTION
AGREEMENT less $178.
Notwithstanding any of the above, if the FACILITY returns to
service and is able to deliver DESIGNATED CAPACITY in the manner
set forth in this ADDENDUM within three (3) years, PECO shall
repay a share of any liquidated damages received by PECO under
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<PAGE>
this Section 4.1 or Section 4.2. Such share shall be the amount
of liquidated damages actually received by PECO in excess of the
amount obtained by applying the method of this Section 4.1 to the
actual duration and amount of DESIGNATED CAPACITY not available
to PECO for purchase.
4.2 Security. To guarantee SELLER's performance of
its obligations under Section 4.1 hereof. SELLER shall provide a
CREDIT within thirty (30) days of accepting an ACTIVATION NOTICE,
in the amount designated by PECO in the ACTIVATION NOTICE. From
which PECO shall be entitled to draw any sum due as liquidated
damages under Section 4.1 hereof. The CREDIT shall be payable by
an ISSUER in the City of Philadelphia on terms and conditions
acceptable to PECO. PECO shall not unreasonably withhold
approval of any ISSUER or CREDIT. The CREDIT shall be
established and structured to permit PECO to make multiple
demands for payment from the ISSUER, and shall require the ISSUER
to honor on sight. in immediately available funds and without
requiring PECO to submit documents to accompany PECO's draft or
demand for payment, any written demand by PECO for payment. The
CREDIT shall be reviewed at the end of each PLANNING PERIOD. PECO
may designate a change at that time in the amount of the CREDIT1
which amount shall not exceed the then current amount of
potential liquidated damages calculated under Section 4.1 hereof.
Upon the failure of SELLER to provide such a CREDIT within ninety
(90) days after PECO designates a new CREDIT amount during the
term of this ADDENDUM, PECO shall have the right to withhold
payment to SELLER for DESIGNATED CAPACITY that SELLER delivers to
PECO and to apply such amounts to an escrow account until the
balance in the escrow account, when added to the amount. of the
CREDIT established hereunder, equals the required CREDIT amount.
Any amount remaining in such escrow account at the termination or
expiration of this ADDENDUM upon which PECO has no claim under
the terms of this ADDENDUM, shall be paid to SELLER with interest
at the prime rate specified in Section 14.4(a) of the AGREEMENT.
4.3 Additional Remedies In addition to PECO's right
to liquidated damages provided in Sections 4.1 and 4.2 hereof,
upon the occurrence of any of the events set forth in Section 4.1
hereof PECO shall have the further right to obtain capacity from
alternate sources and to cease payments to SELLER under this
ADDENDUM. If SELLER cures the event causing action under this
Section 4.3, SELLER shall be restored to its full privileges
under this ADDENDUM.
7
<PAGE>
ARTICLE V
CAPACITY
5.1 Nomination of Capacity. SELLER plans to construct
a FACILITY expected to produce NET ELECTRIC OUTPUT of up to 119
MW with a COMMERCIAL OPERATION DATE of July 1, 1996. SELLER
shall inform PECO of the status of and any changes to this plan.
After the COMMERCIAL OPERATION DATE the NOMINATED CAPACITY of the
FACILITY shall be 119 MW summer and 119 MW winter. The NOMINATED
CAPACITY may be revised at any time by agreement of the PARTIES.
Prior to the COMMERCIAL OPERATION DATED PECO shall not purchase
any DESIGNATED CAPACITY from the FACILITY.
5.2 Capacity Tests SELLER shall conduct capacity
tests twice a year, once during the summer (June through August)
and once during the winter (December through February) periods,
in accordance with procedures specified by PECO. The procedures
shall be based on and consistent with the GREEN BOOK. PECO shall
have the right to require additional tests to meet specific PECO
needs that are not required by the GREEN BOOK. PECO shall pay
all costs incurred by the SELLER for such additional tests. PECO
shall be the sole judge of the tests required.
5.3 Test Results. If any test performed pursuant to
Section 5.2 hereof demonstrates that the FACILITY cannot achieve
the appropriate summer or winter NOMINATED CAPACITY set forth in
Section 5.1 hereof, a partial forced outage shall be recorded
from the beginning of the relevant test period prescribed in
Section 5.2 hereof and continuing until the FACILITY
satisfactorily proves the appropriate NOMINATED CAPACITY.
5.4 Retest. If SELLER is dissatisfied with the result
of a test described in Section 5.2, SELLER may request permission
to conduct a retest within ten (10) days of being notified of the
test result. PECO shall not unreasonably withhold permission for
such a retest. The result of the retest shall be binding upon
SELLER. If such retest is not performed within fourteen (14)
days of PECO granting permission, then the result of the previous
test shall be binding upon SELLER. The SELLER may request as
many retests as the test period permits.
5.5 Failure to Test. If SELLER fails to perform an
acceptable test required by Section 5.2 hereof, PECO may at its
sole discretion reduce the DESIGNATED CAPACITY of the FACILITY
which PECO purchases for one year after the latest date upon
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which an acceptable test could have been performed, or until the
FACILITY completes an acceptable test.
5.6 Information Requirements. SELLER shall, from time
to time, provide PECO with any information regarding operation of
the FACILITY required by PECO to fulfill its PJM INTERCONNECTION
obligations or other operating needs, and shall endeavor to
provide any historical information requested by PECO on intervals
as short as a quarter hour. The information required includes
but is not limited to:
(a) During a Test Period
(i) Gross Generation
(ii) Auxiliary Loads
(iii)Process Electrical Loads
(iv) Net Generation to PECO
(b) During Normal Operation
(i) Gross Generation
(ii) Auxiliary Loads
(iii)Net Generation to PECO
(iv) Fuel Consumption
ARTICLE VI
OUTAGE COORDINATION AND REPORTING
6.1 Redundancy. Certain sections of this ADDENDUM and
this Article VI in particular require actions or information from
the SELLER which are redundant to provisions of the AGREEMENT.
Restating requirements here does not imply a need to take
redundant actions or to provide redundant information, but is
done to collect in one location all the actions and information
required to implement the requirements of this ADDENDUM.
6.2 Outage Coordination. SELLER shall coordinate all
planned and maintenance outages with PECO.
6.3 Outage Scheduling. Unless otherwise directed by
PECO, SELLER shall periodically submit for PECO's approval, such
approval not to be unreasonably withheld, its planned maintenance
schedule conforming to Section 6.5 hereof, for the subsequent
thirty-six (36) months of operation. SELLER shall revise its
planned and maintenance outage dates upon PECO's request for such
changes
6.4 Operating Information. Except for forced outages
which require the immediate removal of equipment from service to
avoid either damage to equipment or risk to personnel or the
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public, SELLER shall coordinate daily operation of the FACILITY
with PECO, as required by Section 592 hereof and good electrical
system operating practice. This includes notifying PECO's System
Operations Group of any change in operating capability or removal
of equipment from service which results in full or partial
reductions of FACILITY operating capability.
6.5 Peak Season Outages. After accepting an
ACTIVATION NOTICE, SELLER shall schedule planned outages so that
no portion of any such planned outage shall occur during the PEAK
SEASON, without the prior written consent of PECO. PECO shall
not be obligated to approve requests for planned outages during
such periods. PECO shall have the right, upon one (1) year's
notice, to revise the months or days during which SELLER shall
not schedule a planned outage. If the FACILITY is wholly or
partially unavailable due to a planned or maintenance outage
during the PEAK SEASON, PECO shall not be required to pay SELLER
for any DESIGNATED CAPACITY purchased by PECO from the FACILITY
during such an outage.
6.6 Reporting. SELLER shall comply with all PECO and
PJM INTERCONNECTION generating unit outage reporting requirements
as revised from time to time. PECO will advise SELLER of such
requirements and any changes. PECO shall have the right to audit
FACILITY operating and maintenance logs upon twenty-four (24)
hours notice.
6.7 Forced Outage Reporting. SELLER shall notify
PECO's System. Operations Group of the occurrence, nature and
expected duration of any forced outage as soon as practical but
not later than one (1) hour after the forced outage begins.
SELLER shall thereafter promptly inform PECO1s System Operations
Group of any change in the expected duration of the forced outage
unless relieved of this obligation by PECO's System Operations
Group for the duration of that forced outage.
6.8 Monthly Outage Reporting. Within five (5) working
days after the end of each month, SELLER shall report to PECO all
full or partial planned, maintenance or forced outages and any
miscellaneous adjustments that occurred during the preceding
month. Data shall be presented according to the PJM
INTERCONNECTION'S "Generating Unit Outage Data Reporting
Instructions," as revised from time to time.
6.9 Dispatch. SELLER shall, within thirty (30)
minutes after notification by PECO, deliver energy to PECO at the
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AVAILABLE CAPACITY level, and shall continue to deliver energy at
that level until released by PECO. Each such period, commencing
thirty (30) minutes after such a notification and ending upon
such a release by RECO, shall be known as a DISPATCH PERIOD. The
scheduling of DISPATCH PERIODS shall be at the sole discretion of
PECO, except that (A) a DISPATCH PERIOD shall not exceed sixteen
(16) hours in duration and (B) shall not schedule more than
twenty (20) DISPATCH PERIODS in a Calendar Year. After accepting
an ACTIVATION NOTICE, if SELLER fails to attain and maintain the
level of its AVAILABLE CAPACITY during any DISPATCH PERIOD, the
payment under Section 7.1 for the month in which such failure
occurs shall be reduced by:
(a) the CAPACITY CREDIT, multiplied by
(b) the number of days in that month, multiplied
by
(c) the greatest UNDISPATCHED CAPACITY curing any
DISPATCH PERIOD in that month. UNDISPATCHED
CAPACITY means:
(i) AVAILABLE CAPACITY in effect at the time
PECO notifies SELLER of a DISPATCH
PERIOD, minus
(ii) the total amount of energy delivered
during that DISPATCH PERIOD divided by
the duration of the DISPATCH PERIOD.
In addition to such reduction in payments and regardless of
whether or not SELLER has accepted an ACTIVATION NOTICE, SELLER
shall record a forced outage for the difference between the
AVAILABLE CAPACITY and the level of delivery actually attained.
Such forced outage shall remain in effect until the FACILITY
delivers energy at the AVAILABLE CAPACITY.
6.10 Minimum Generation. During a LIGHT LOAD
CONDITION, SELLER shall, upon notice from PECO, reduce FACILITY
output during the LIGHT LOAD CONDITION to zero or such other
level designated by PECO. If FACILITY output exceeds the level
designated by PECO during any day or part thereof during the
LIGHT LOAD CONDITION, the payment due SELLER under Section 7.1
hereof shall be reduced on a daily basis by the product of:
(a) $178 per MW; and
(b) the greater of:
(i) zero (0); or
(ii) the average output of the FACILITY during the
output level designated by PECO under this
Section 6.10.
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6.11 Waiver. PECO may waive any of the testing or
reporting requirements under this Article VI by providing written
notice to SELLER.
ARTICLE VII
BILLING AND PAYMENT
7.1 Billing and Payment. Within 30 days of the end of
each BILLING MONTH, PECO shall prepare a statement showing for
each day in the BILLING MONTH at least:
(a) the capacity purchased, being the DESIGNATED
CAPACITY as adjusted by Sections 3.7 and 6.5
hereof;
(b) the CAPACITY CREDIT as determined in Section 3.4
hereof; and
(c) the product of (a) and (b) above.
With each such statement, PECO shall include
payment in the sum of (c) above, less (i) the
administrative charge specified in Section 7.2
hereof, (ii) any UNDISPATCHED CAPACITY charge
specified in Section 6.9 hereof, and (iii) any
minimum generation charge specified in Section
6.10 hereof.
7.2 Administrative Charge. PECO shall reduce its
payments under this ADDENDUM by an administrative charge of $200
per month, which shall be updated and increased periodically by a
percentage related to the annual percentage change in PECODS
wages or regular and probationary employees. In the event the
administrative charge is greater than the payment for DESIGNATED
CAPACITY, SELLER shall be responsible for and pay to PECO the
difference within thirty (30) days of the issuance of the billing
statement. No administrative charge shall be assessed for months
during which FECO purchases no DESIGNATED CAPACITY from SELLER.
7.3 Late Charges. Interest on unpaid amounts shall
accrue according to Section 14.4 of the AGREEMENT.
ARTICLE VIII
RELATIONSHIP TO AGREEMENT
8.1 General. This ADDENDUM is an addition or
supplement to the AGREEMENT and shall be governed by all the
terms and conditions of the AGREEMENT, unless specifically
provided otherwise in this ADDENDUM.
8.2 Regulatory Approval. The effectiveness of this
ADDENDUM is contingent upon the PUC allowing PECO to recover the
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costs incurred under the AGREEMENT pursuant to the COST RECOVERY
PETITION as specified in Section 2.2 of the AGREEMENT.
ARTICLE IX
MISCELLANEOUS
9.1 Affiliated Interest. The effectiveness of this
ADDENDUM is contingent upon the PUC approving an affiliated
interest filing with respect to this ADDENDUM. PECO will submit
such filing with the PUC within sixty (60) days of the effective
date of this ADDENDUM with a request it be promptly approved.
9.2 Non-Reliance. After the eighth anniversary of the
effective date of this ADDENDUM, the SELLER may terminate this
ADDENDUM without any further obligation to PECO by ninety (90)
days written notice to PECO, if PECO has never tendered an
ACTIVATION NOTICE to the SELLER.
IN WITNESS WHEREOF, the PARTIES have ADDENDUM to be
executed as of the day and year first above written.
PHILADELPIA ELECTRIC COMPANY
Attest: /s/ By: /s/ William Smith III
William R. Smith, III
Secretary Vice President
GRAYS FERRY COGENERATION PARTNERSHIP:
Attest: /s/ By: /s/ Robert A. Shinn
Robert A. Shinn
Vice President
O'Brien (Schuylkill)
Cogeneration, Inc.
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Appendix A
Contingent Capacity Purchase Addendum
To The
Agreement For Purchase Of Electric Output
with
Grays Ferry Cogeneration Partnership
1. CCP Addendum dated as of September 17, 1993 between GFCP and
PECO regarding Phase I, with a capacity of 31 MW.
2. No Other Contracts.
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Exhibit 10.26.1
AMENDED AND RESTATED STEAM PURCHASE AGREEMENT
This Amended and Restated Steam Purchase Agreement is made
this 17th day of September, 1993 by and among PHILADELPHIA
THERMAL ENERGY CORPORATION ("PTEC"), ADWIN EQUIPMENT COMPANY
("Adwin"), O'BRIEN ENVIRONMENTAL ENERGY, INC. (O'Brien") and
GRAYS FERRY COGENERATION PARTNERSHIP, a Pennsylvania general
partnership ("Seller").
BACKGROUND TO RESTATEMENT
PTEC, Philadelphia United Power Corporation. formerly known
as United Thermal Development Corporation ("PUPC0"), Adwin,
O'Brien and Seller are parties to some or all of a series of
agreements1 each dated November 11, 1991. as follows
(collectively1 "Original Agreements"):
(1) Steam Venture Agreement by and among O'Brien, Adwin,
PUPCO and PTEC ("Original Venture Agreement");
(2) Site Lease by and between PTEC and Seller ("Original
Lease");
(3) Steam Purchase Agreement by and among PTEC1 Adwin,
O'Brien and Seller ("Original Purchase Agreement");
(4) Project Services and Development Agreement by and
between Seller and PUPCO ("Original Development Agreement");
(5) Penn Selection Agreement by and among PTEC1 PUPCO,
Adwin, O'Brien and Seller ("Original Penn Agreement"); and
(6) Dock Facilities by and among PTEC, Seller and
Philadelphia Thermal Development Corporation ("Original Dock
Agreement").
<PAGE>
The Original Agreements set forth the terms and conditions
under which Adwin and O'Brien formed Seller for the purpose. of
constructing and owning a Cogeneration Facility (as defined
hereafter). which will be located on a portion of PTEC's
Schuylkill Station site. The Cogeneration Facility will produce
steam and electrical power, and will be operated and maintained
by PUPCQ. Steam from the Cogeneration Facility will be purchased
by PTEC for use in PTEC's steam distribution system. The parties
have subsequently agreed to terminate the Original Penn
Agreement.
The original Agreements contemplated that the Cogeneration
Facility would consist of a Phrase 7 Gas Turbine, a Heat Recovery
Steam Generator9 a steam turbine and high pressure auxiliary
boiler with a minimum 500,000 lbs/hour of capacity (No. 6 oil
rating) which would be capable of burning both No. 6 oil and
natural gas. The Original Agreements further contemplated that
the auxiliary boiler would, under certain circumstances, be
constructed on an accelerated basis prior to the remainder of the
equipment described above.
Adwin and O'Brien have now requested, and PTEC and PUPCO
have agreed. that the installation of the Cogeneration Facility
("Project") be restructured in certain ways, including the
development of the Project in two discrete phases, consisting of
(i) installation in Phase I of a high pressure auxiliary boiler
with a 40 megawatt steam turbine ("Phase I Project"), and
(ii) installation in Phase II of the Frame 7 Gas Turbine and
related equipment ("Phase II Project"). The parties intend that
the Phase I Project be completed on an expedited basis.
The parties have further agreed to amend certain of the
Original Agreements and to restate those Original Agreements,. so
amended, in their entirety, to reflect the changes to. the
Project described above.
Now, therefore, intending to be legally bound hereby, the
parties hereby amend the Original Purchase Agreement and restate
the Original Purchase Agreement in its entirety, as follows:
BACKGROUND
Seller is a general partnership formed by Adwin and O'Brien.
Adwin and O'Brieen are parties to an Amended and Restated Steam
Venture Agreement with PTEC of even date herewith ("Amended Steam
Venture Agreement"), pursuant to which Adwin and O'Brien will,
together, through Seller, develop, construct, own and operate a
cogeneration facility for the production of steam and electric
energy (the "Project"). The Project will be located in the
Schuylkill Station facility owned or leased by PTEC, a portion of
which will be leased to Seller under an Amended and Restated Site
Lease of even date herewith ("Amended Site Lease"). The Project
will be owned by Seller and operated by PUPCO, under an Amended
and Restated Project Services and Development Agreement of even
date herewith ("Amended Project Services Agreement", and with the
Amended Site Lease, the Amended Steam Venture Agreement and this
Agreement, collectively the "Amended Project Documents").
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PTEC is a public utility certificated by the Pennsylvania
Public Utility Commission to sell steam in a defined area of the
City of Philadelphia consisting of portions of Center City and
West Philadelphia ("PTEC's Service Area") through a steam
distribution system ("Steam Loop").
Seller is willing to sell and PTEC is willing to purchase
the steam produced by Seller, on the terms and conditions -
hereunto set forth.
All capitalized terms not otherwise defined herein shall
have the same meanings as in the Amended Project Services
Agreement.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. Steam Purchase by PTEC
A. During Phase I Project testing and prior to the Phase I
Project Acceptance Date, PTEC 8hall not be obliged to purchase
any minimum amount or requirement of steam, but shall purchase
Project steam flow to the extent such purchases are consistent
with prudent operation and system reliability of the Steam Loop,
and any steam purchased by PTEC during such Phase I Project
testing and prior to the Phase I Project Acceptance Date shall be
at PTEC's Avoided Cost of Steam (as defined in Appendix 1
hereto). However, after the Phase I Project Acceptance Date,
PTEC shall pay the full price for steam delivered from Phase I as
provided in Section 2 below. The Project will supply and PTEC
shall be obligated to purchase Distribution Sendout Steam (low
pressure steam) as defined in Appendix 2 of this Agreement (210-
240 psi, 40 degrees F above saturation, but not greater than 450
degrees F) from the Phase I Project for the full term of this
Agreement, in the amounts and at the prices specified herein,
until the Phase II Project Acceptance Date. All references in
this Agreement and the other Amended Project Agreements to the
purchase of "steam" prior to the Phase II Project Acceptance
Date shall refer to Distribution Sendout Steam.
B. During Phase II Project testing and prior to the Phase II
Project Acceptance Date, PTEC shall not be obliged to purchase
any minimum amount or requirement of steam in excess of the
minimum take requirement for Phase I, but shall purchase such
excess Project steam flow to the extent such purchases are
consistent with prudent operation and system reliability of the
Steam Loop, and any steam in excess of the Phase I minimum take
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requirement purchased by PTEC during such Phase II Project
testing and prior to the Phase II Project Acceptance Date shall
be at PTEC's Avoided Cost of Steam (as defined in Appendix 1
hereto). However, after the Phase II Project Acceptance Date.,
PTEC shall pay the full price for steam delivered from Phase II
as provided in Section 2 below.
C. During the term of this Agreement, (i) after the Phase I
Project Acceptance Date, PTEC shall be obliged to purchase steam
at the minimum take obligations as described in subsection E(i)
below, and (ii) after the Phase II Project Acceptance Date, PTEC
shall be obliged to purchase steam at the minimum take
obligations as described in subsection E(ii) below.
D. During the term of this Agreement, following Phase I
Project Acceptance and following Phase II Project Acceptance, Seller
will sell all steam produced by the Project (net of the Project's
internal requirements) to PTEC, and PTEC will purchase all of its
steam requirements from Seller, except that PTEC shall be free to
utilize other sources of steam when necessary (i) to operate
boilers at other PTEC facilities to meet the minimum loading
requirements for maintaining adequate pressure and to provide
system reliability, or (ii) to satisfy PTEC steam send out
requirements above and beyond the capabilities of the Project.
E. (i) Beginning on the Phase I Project Acceptance Date,
PTEC will pay on an annual basis for the greater of (i) the amount of
steam actually accepted by or (ii) 3.0 million thousand pounds
("Mlbs."). If the Project is unable to deliver at least 3.0
million Mlbs. of steam in any year, for reasons other than a
default by PTEC under any agreement to supply demineralized water
to Seller, the 3.0 million Mlbs. minimum requirement will be
reduced to the amount of steam actually delivered by the Project.
The 3.0 million Mlbs. minimum take requirement will also be
reduced in the event of a Penn Event by an amount equal to the
volume of steam PTEC is unable to purchase from the Project
directly attributable to the reduction in purchases by the
University of Pennsylvania.
(ii) Beginning on the Phase II Project Acceptance Date, PTEC
will pay on an annual basis for the greater of (i) the amount of
steam actually accepted by PTEC or (ii) 3.3 million Mlbs. If the
Project is unable to deliver at least 3.3-million Mlbs. of steam
in any year, for reasons other than a default by PTEC under any
agreement to supply demineralized water to Seller, the 3.3
million Mlbs. minimum requirement will be reduced to the amount
of steam actually delivered by the Project. The 3.3 million
Mlbs. minimum take requirement will also be reduced in
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<PAGE>
the event of a Penn Event by an amount equal to the volume of
steam PTEC is unable to purchase from the Project directly
attributable to the reduction in purchases by the University of
Pennsylvania.
F. If neither PUPCO nor any of its affiliates is serving as
operator of the Project, then PTEC's obligation to purchase steam
hereunder is conditional on the steam produced by Seller
conforming fully with the minimum requirements for temperature.
pressure. p55 content and other specifications set forth in
Appendix 2 hereto.
G. All Project equipment will be designated for continuous
utility grade service and designed for a useful life of at least
thirty (30) years. PTEC shall have the right to approve in
advance the equipment selection and the location of the equipment
on the site, such approval not to be unreasonably withheld.
2. Price
A. The price for low-pressure steam in dollars per Mlb. For
each month following the Phase I Project Acceptance Date shall be
calculated according to the following formula:
SP = (BF x 1.69) + ($0.31 x CWT/PWT) + ($1.00 x CPIC/CPIb)
where,
SP = Steam price for the current month
BF = weighted Average Price of Fuel (natural
gas, No. 6 oil, and No.2 oil) in U.S. dollars per MMBtu (higher
heating value) utilized by the Project at the Burner Tip of the
gas turbine and Auxiliary Boiler in each month following the
Phase I Project Acceptance Date or the Phase II Project
Acceptance Date, as the case may be.
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CPIc = The Consumer Price Index - Urban, All
Items for Philadelphia recorded for the current month.
CPIb = The Consumer Price Index - Urban, All
Items for Philadelphia for the first month following the Phase I
Project Acceptance date or the Phase II Project Acceptance Date,
as the case may be.
CWT = Current City of Philadelphia Tariff
Water & Sewer Rate for Domestic and Commercial Customers
effective in the first month following the Phase I Project
Acceptance Date or the Phase II Project Acceptance Date, as the
case may be.
PWT = City of Philadelphia Tariff Water &
Sewer Rate for Domestic and Commercial Customers effective
January 10, 1986.
The steam price shall not be increased as a result of the use of
different fuels or fuel mixes by Seller or b any change in steam
production efficiency associated with the two-Phase approach set
forth in the preamble to this Agreement.
B. Notwithstanding the provisions of Section 2.A, the price to
be paid by PTEC for steam under any renewal or extension of the
Amended Project Documents beyond the Initial Term shall be equal
to or less than the Avoided Cost of Steam (as defined in
Appendix 1) available to PTEC (including the unamortized capital
costs of the Project's steam generating equipment, fuel, water,
chemicals and any other appropriate costs).
C. PTEC will pay for high pressure steam from Phase II at an
auxiliary high pressure steam price equal to the Base Price plus
$0.50 per Mlb. The auxiliary high pressure steam price shall be
adjusted monthly in accordance with the Steam Price adjustment
set forth in subsection B above. If, after the Phase I Project
Acceptance Date but prior to the Phase II Project Acceptance
Date, Seller sells electrical capacity to the Philadelphia
Electric Company or any other utility or any party purchasing
capacity for its own direct end use, PUPCO's fee as set forth in
Section 6.4 of the Amended Project Development Agreement shall be
modified as set forth therein.
6
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3. Term and Extension
A. This agreement will be for an initial term ("Initial Term")
equal to (a) the period commencing on the Commencement Date (as
defined in the Site Lease) and ending on the Full Operation Date
(as defined in the Site Lease), plus (b) twenty-five (25) years,
commencing on the Full Operation Date and ending on the date
which is twenty-five (25) years thereafter, Seller shall have the
option to extend the term hereof as set forth in more detail in
Section 5 of the Amended Steam venture Agreement.
B. Seller will have the right to extend the terms hereof beyond
the Initial Term only if Seller agrees to adjust the steam price
charged to PTEC to be equal to or less than PTEC's Avoided Cost
of Steam (including the unamortized capital cost of the Project's
steam generating equipment, fuel, water, chemicals, and any other
appropriate costs).
4. Additional Charges. In contemplation of the "all
requirements" provisions and "minimum take" provisions of this
Agreement, if, during the life of the Project, O'Brien, whether
directly or indirectly, whether through Seller or otherwise,
whether as an owner or a developer, and whether through a
cogeneration facility or other steam producing facility, sells or
makes available steam to any entity, and such act causes or would
cause a reduction in the steam required from the Project to serve
the then current system steam load, then O'Brien shall pay to
PTEC for each thousand pounds of steam sold or generated by such
other project or facility, an amount equal to the sum PTEC pays
for equivalent amounts and quality of steam from the Project.
5. Default and Remedies.
A. Seller shall be in default under this Agreement (a "Major
Seller Default") if an Owner's Major Default occurs under the
Amended Project Services Agreement.
B. PTEC shall be in default under this Agreement (a "Major PTEC
Default") if in any Agreement Year PTEC fails to pay in full for
at least the minimum take requirements set forth in Section 1.D
of steam (as adjusted in accordance with the terms of Section 1.D
and as a result of Force Majeure as described in Section 11.1 the
Amended Project Services Agreement) within thirty (30) days after
the end of such Agreement Year.
C. PTEC shall be in default under this Agreement (a "Minor PTEC
Default"). if PTEC fails to pay for any steam purchased within
thirty (30) days after payment is due.
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<PAGE>
D. Upon the occurrence of a Major Seller Default, PTEC shall
have the rights and remedies available to equity, but not the
right to terminate.
E. Upon the occurrence of a Major PTEC Default, Seller shall
have the right to (i) recover from PTEC the difference between
(x) the sale price for the minimum annual take requirement set
forth in Section 1.D, and (y) the actual amount paid by PTEC to
Seller for steam during that year, less (z) the marginal cost of
fuel. water and other supplies which Seller would have incurred
had PTEC purchased the minimum required amount of steam. Upon
the occurrence of a Minor PTEC Default, Seller shall have the
right to recover from PTEC the unpaid amount due for steam sold
plus interest at two percent (2%) over the Prime Rate.
6. Miscellaneous
A. No change, amendment or modification of this Agreement shall
be valid or binding on the parties unless made in a writing
signed by all parties.
B. All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and vice
versa. Titles of Sections are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
C. Notices. Any notice, demand, offer, consent, report,
approval or other written instrument required or permitted to be
given pursuant to this Agreement shall be in writing signed by
the party giving such notice and shall be hand delivered, or sent
by overnight delivery or by certified mail to the other parties
at the following addresses and shall be effective upon receipt.
PTEC: President
Philadelphia Thermal Energy Corporation
2600 Christian Street
Philadelphia, PA 19146
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With a copy to: President
Philadelphia United Power Corporation
2600 Christian Street
Philadelphia, Pa 19146
Seller: Grays Furry Cogeneration Partnership
225 S. 8th Street
Philadelphia, PA 19106
O'Brien: Vice President, Operations
O'Brien Environmental Energy. Inc.
225 S. 8th Street
Philadelphia, PA 19106
Adwin: Vice President
Adwin Equipment Company
300 Stevens Drive
Lester, PA 19113
Each party shall have the right to change the place to which
notice shall be sent or delivered by notice to the other parties.
The effective date of any notice issued pursuant to this
Agreement shall be as of the addressee's receipt of such notice.
D. Assignment. No party shall either assign or otherwise
transfer this Agreement (or any right or obligation contained
herein) without the prior written consent of the other parties,
and any assignment, subletting or other transfer without such
consent shall be void. Notwithstanding the foregoing, this
Agreement may be assigned by Seller for security purposes to any
construction or permanent lender for the Project or to any entity
purchasing electricity from the Project.
E. No Waiver. No consent or waiver, express or implied, by a
party to or of any breach or default by the party in the
performance by it of any of its obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other
breach or default in the performance by such party of the same or
any other obligation of such party hereunder.
F. Applicable Law. This Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania, exclusive of conflicts
of laws provisions.
G. Successors and Assigns. Subject to the restrictions on
transfers set forth herein, this Agreement shall inure to the
benefit of, be binding upon and be enforceable by
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and against the parties and their respective successors and
assigns.
H. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all
of which when taken together shall constitute but one agreement.
It shall not be necessary that any counterpart be signed by all
parties so long as each party shall have executed two
counterparts.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized representatives
on the date first above written.
PTEC:
PHILADELPHIA THERMAL ENERGY
CORPORATION
By:/s/ S. G. Smith
SELLER:
GRAYS FERRY COGENERATION
PARTNERSHIP
By: O'Brien Environmental Energy,
Inc.
By: /s/ Robert A. Shinn
By: Adwin Equipment Company
By: /s/ Daniel A. Neely
ADWIN:
ADWIN EQUIPMENT COMPANY
By:/s/ Daniel A. Neely
O'BRIEN:
O'BRIEN ENVIRONENNTAL ENERGY, INC.
By: /s/ Robert A. Shinn
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LIST OF APPENDICES
APPENDIX 1 Avoided Cost of Steam
APPENDIX 2 Usable Steam Requirements
<PAGE>
APPENDIX 1 TO STEAM PURCHASE AGREEMENT
AVOIDED COST OF STEAM
<PAGE>
APPENDIX 1
Avoided Cost of Steam
PTEC's avoided cost of steam to be used in accordance with
section 1A of the Steam Purchase Agreement shall be calculated as
follows:
Avoided Cost per Mlb = F + W + C
Mlb
Where:
F = Actual gallons of fuel consumed by PTEC during the
month for steam production (net of TG 3 usage) times
average purchased cost per gallon for the month (or
previous month if no current purchase made).
W = Actual gallons of water consumed by PTEC during
the month for steam production times the current City
of Philadelphia water and sewer tariff rate.
C = Actual quantity of chemicals used by PTEC during
the month for steam production times the current month
chemical unit cost purchase price.
Mlb = PTEC Schuylkill plant boiler out.
<PAGE>
APPENDIX 2 TO STEAM PURCHASE AGREEMENT
USABLE STEAM REQUIREMENTS
<PAGE>
APPENDIX 2
USABLE STEAM REQUIREMENTS
High Pressure Steam
Pressure 1300 max - 1200 psi min
Temperature 925F max - 900F min
Sodium < 15 ppb
Chloride < 10 ppb
Silica < 15 ppb
Cation Conductivity < 0.35 umhos
Distribution Sendout Steam
Pressure 240 psi max - 210 psi min
Temperature Steam temperature shall be 40F
above saturation temperature but
not higher than 450F.
M Alkalinity < 1.0 ppm
Free CO2 < 1.5 ppm
TDS < 0.2 ppm
All chemicals carried over into the distribution steam system
must be suitable for use in the preparation of food,
humdification and sterilization of surgical instruments as
specified by the FDA and USDA.
All desuperheating spray water must meet the same criteria
established for boiler feed water.
<PAGE>
Exhibit 10.26.2
AMENDED AND RESTATED STEAM VENTURE AGREEMENT
This Amended and Restated Steam Venture Agreement is made
this 17th day of September, 1993 by, between and among
Philadelphia Thermal Energy Corporation ("PTEC"), Philadelphia
United Power Corporation, formerly known as United Thermal
Development Corporation ("PUPCO"), Adwin Equipment Company
("Adwin") and O'Brien Environmental Energy, Inc. ("O'Brien").
BACKGROUND TO RESTATEMENT
PTEC, PUPCO, Adwin, O'Brien and Grays Ferry Cogeneration
Partnership, a general partnership formed by Adwin and O'Brien
("Project Developer"), are parties to some or all of a series of
agreements, each dated November 11, 1991, as follows
(collectively, "Original Agreements"):
(1) Steam Venture Agreement by and among O'Brien, Adwin,
PUPCO and PTEC ("Original Venture Agreement");
(2) Site Lease by and between PTEC and Project Developer
("Original Lease");
(3) Steam Purchase Agreement by and among PTEC, Adwin,
O'Brien and Project Developer ("Original Purchase Agreement");
(4) Project Services and Development Agreement by and
between Project Developer and PUPCO ("Original Development
Agreement");
(5) Penn Selection Agreement by and among PTEC, PUPCO,
Adwin, O'Brien and Project Developer ("Original Penn Agreement");
and
(6) Dock Facilities by and among PTEC, Project Developer
and Philadelphia Thermal Development Corporation ("Original Dock
Agreement").
The Original Agreements set forth the terms and conditions
under which Adwin and O'Brien formed the Project Developer for
the purposes of constructing and owning a Cogeneration Facility
(as defined hereafter), which will be located on a portion of
PTEC's Schuylkill Station site. The Cogeneration Facility will
produce steam and electrical power, and will be operated and
maintained by PUPCO. Steam from the Cogeneration Facility will
be purchased by PTEC for use in PTEC's steam distribution system.
The parties have subsequently agreed to terminate the Original
Penn Agreement.
The Original Agreements contemplated that the Cogeneration
Facility would consist of a Frame 7 Gas Turbine, a Heat Recovery
Steam Generator, a steam turbine and a high pressure auxiliary
boiler with a minimum 500,000 lbs/hour of capacity (No. 6 oil
<PAGE>
rating) which would be capable of burning both No. 6 oil and
natural gas ("Auxiliary Boiler"). The Original Agreements
further contemplated that the Auxiliary Boiler would, under
certain circumstances, be constructed on an accelerated basis
prior to the remainder of the equipment described above.
Adwin and O'Brien have now requested, and PTEC and PUPCO
have agreed, that the installation of the Cogeneration Facility
("Project") be restructured in certain ways, including the
development of the Project in two discrete phases, consisting of
(i) installation in Phase I of a high pressure auxiliary boiler
with a 40 megawatt steam turbine ("Phase I Project"), and (ii)
installation in Phase II of the Frame 7 Gas Turbine and related
equipment ("Phase II Project"). The parties intend that the
Phase I Project be completed on an expedited basis.
The parties have further agreed to amend certain of the
Original Agreements and to restate those Original Agreements, as
so amended, in their entirety, to reflect the changes to the
Project described above.
Now, therefore, intending to be legally bound hereby, the
parties hereby amend the Original Venture Agreement and restate
the Original Venture Agreement in its entirety, as follows:
BACKGROUND
PTEC is a public utility certificated by the Pennsylvania
Public Utility Commission ("PUC") to sell steam in certain
portions of a defined area of the City of Philadelphia consisting
of Center City and West Philadelphia ("Service Area").
Adwin is a wholly-owned subsidiary of the Eastern
Pennsylvania Development Company, which itself is a wholly-owned
subsidiary of the Philadelphia Electric Company ("PECO").
O'Brien is a developer, owner and operator of cogeneration,
alternative fuel and waste heat recovery projects that produce
steam and electric energy for sale to industrial and commercial
users and public utilities.
PTEC is the only certificated utility authorized to sell
steam to the public for compensation in PTEC's Service Area.
However, customers and potential customers located therein may,
individually, produce steam and other forms of energy for their
own use.
PTEC presently has a need to both upgrade and add to its
steam production facilities to continue generating steam in the
quantities and with the reliability needed to serve the public in
its Service Area.
PTEC, PUPCO, Adwin and O'Brien each believes that it can
participate in the steam market for the Service Area and realize
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<PAGE>
significant efficiencies by the joint development of a facility
(the "Cogeneration Facility") which would (i) provide new
capacity and base steam load for PTEC, and (ii) provide steam
energy to PECO or other utility.
The parties believe that an agreement which provides, among
other things, for the construction and operation of a steam
production facility which would supply steam exclusively to PTEC
on a "take or pay with minimum takes" basis which PTEC could then
resell to customers within PTEC's Service Area would be in their
mutual best interests.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. Project Description
A. O'Brien and Adwin acting together through a
Pennsylvania general partnership known as Grays Ferry
Cogeneration Partnership (the "Project Developer") will design,
construct, start-up, test and own the Cogeneration Facility (as
defined below) to be located at PTEC's existing Schuylkill
Station site (the "Project") or at another mutually acceptable
site owned by PTEC or an affiliate of PTEC.
B. Prior to the Project Developer entering into
contracts for the construction of the Project, PTEC will be
entitled to review and approve a list of prospective steam
generating equipment options and, if approval by an independent
engineer engaged by any lender to the Project is also required,
PTEC's review will be prior to such approval as well. PTEC will
not unreasonably withhold its approval of the Project Developer's
nominees or selections for these lists. Project Developer has
provided, and PTEC has approved, the list of prospective project
engineering and construction firms attached hereto as Exhibit F.
C. The Project will be constructed in two phases, based, inter
alia, on the availability of financing. Phase I of the Project,
("Phase I" or the "Phase I Project") will include the
installation of a high pressure auxiliary boiler with a 40
megawatt steam turbine. Phase II of the Project ("Phase II" or
the "Phase II Project") will include the installation of a Frame
7 Gas Turbine and a Heat Recovery Steam Generator (as used
herein, the term "Cogeneration Facility" shall refer to Phase I
of the Project and, if completed, Phase II of the Project).
Phase II of the Project will have the capacity to deliver to PTEC
at least 1,000,000 pounds per hour of steam in accordance with
the technical specifications of PTEC attached hereto as Exhibit
A. PUPCO and PTEC agree that the Project Developer may purchase
and utilize a used steam turbine that is approved in advance of
acquisition by PTEC. The Project will supply and PTEC shall be
obligated to purchase Distribution Sendout Steam (low pressure
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<PAGE>
steam) as defined in Appendix 2 of the Amended Steam Purchase
Agreement (210-240 psi, 40 degrees F) from the Phase I Project
for the term of this Agreement, in the amounts and at the prices
specified herein, until the Phase II Project Acceptance Date.
All references in this Agreement and the other Amended Project
Agreements to the purchase of "steam" prior to the Phase II
Project Acceptance Date shall refer to Distribution Sendout
Steam.
2. Project Schedule; Amended Project Services and
Development Agreement
A. The target date for completion of the
construction, testing and make ready for the Phase II Project
("Phase II Project Acceptance Date") shall be thirty (30) months
from the date Phase II Project financing is closed.
B. The Project Developer has delivered to PUPCO, and
PUPCO has approved, the following: (i) a list of major pieces of
equipment to be purchased for Phase I and Phase II of the Project
and (ii) a schematic and simplified single line diagram showing
how the equipment is to be arranged. Before financing closing
for Phase I, Project Developer will deliver to PUPCO the
following: (i) the control systems for the equipment, (ii) the
mechanical and electrical interconnection points, and (iii) the
vendor warranties and guarantees that are standard and which will
be requested in soliciting equipment bids, as further described
in the Project Services Agreement (as defined below).
C. The parties shall hereafter promptly negotiate the
Availability Standards to be attached to the Amended Project
Services and Development Agreement among PTEC, PUPCO and the
Project Developer of even date herewith attached hereto as
Exhibit B ("Amended Project Services Agreement"), pursuant to
which the Project Developer will, inter alia, retain PUPCO to
operate the Cogeneration Facility and agree to make certain
payments to PUPCO.
D. Phase I will be constructed by Project Developer
on an accelerated basis.
E. The parties hereto shall diligently expedite and
assist Project contractors in the completion and submission of
all applications for Permits (as defined in Section 7(D))
necessary for the construction of the Project ("Construction
Permits").
3. Amended Site Lease
A. Schuylkill Station, which is PTEC's main plant
within the existing steam system owned and operated by PTEC, is
situated on real estate located at 2600 Christian Street,
Philadelphia, Pennsylvania ("Land") which is owned by PECO and
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<PAGE>
leased to PTEC under a long-term lease which may impose upon PTEC
at the end of the term (either 50 or 100 years) the obligation to
purchase the property at the current market value (the "PECO
Lease"). Schuylkill Station was used by PECO prior to 1987 to
generate both electric energy and steam energy; now Schuylkill
Station has been divided into two sections, and, with some
exceptions, PTEC owns or leases and operates the sections of the
buildings located on the Land (the "Buildings") which relate to
steam production.
B. Under the terms of the PECO Lease, certain of the
modifications to be made by PTEC to the Schuylkill Station is
connection with this Agreement will require the prior consent of
PECO.
C. The lease for the site from PTEC to the Project
shall otherwise be on the terms and conditions set forth in
Exhibit C attached hereto ("Amended Site Lease").
4. Sales of Steam by the Project
A. During the term of this Agreement and following
Phase I Project Acceptance (as defined in the Amended Project
Services Agreement), the Project will sell all steam produced by
the Project (net of the Project's requirements) to PTEC, and
PTEC will purchase all of its steam requirements from the
Project, except that PTEC shall have the right to access
alternate sources of steam when necessary (i) to operate boilers
at other PTEC facilities to meet minimum loading requirements for
maintaining adequate pressure and to provide system reliability,
or (ii) to satisfy PTEC steam send out requirements above and
beyond the capabilities of the Project.
B. On an annual basis, PTEC will pay for the greater
of (i) the amount of steam actually accepted by PTEC, or (ii) as
follows:
(x) after the Phase I Project Acceptance Date (as
defined in the Amended Project Services Agreement) and before the
Phase II Project Acceptance Date, 3.0 million Mlbs., subject to
adjustment as set forth in the Amended Project Services
Agreements and the Amended Steam Purchase Agreement; and
(y) after the Phase II Project Acceptance Date, 3.3
million Mlbs., subject to adjustment as set forth in the Amended
Project Services Agreements and the Amended Steam Purchase
Agreement.
C. The sale of steam by the Project shall otherwise be on
the terms and conditions set forth in Exhibit D attached hereto
("Amended Steam Purchase Agreement").
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<PAGE>
5. Term
A. The term of this Agreement and of the Amended Site
Lease, Amended Project Services Agreement and Amended Steam
Purchase Agreement (collectively, "Amended Project Agreements")
will be for a minimum term consisting of (i) the period
commencing on the date hereof and ending on t he date ("Full
Operation Date") which will be the Phase II Project Acceptance
Date unless construction of the Phase II Project has not been
initiated (as described in Section 9 below) within one (1) year
after the Phase I Acceptance Date, in which event the Full
Operation Date will be the Phase I Project Acceptance Date, plus
(ii) twenty-five (25) years commencing on the Full Operation Date
("Initial Term"), with the Project Developer having the option to
extend the term of the Amended Steam Purchase Agreement, the
Amended Project Services Agreement and the Amended Site Lease for
an additional term of ten (10) years, such option to be exercised
no earlier than the twentieth anniversary, and no later than the
twenty-third anniversary, of the Full Operation Date. If the
Project Developer does not elect to extend for an additional
term, then PUPCO shall have the option to purchase the Project
pursuant to Section 5C; if PUPCO does not so elect by notice
given no later than eighteen (18) months before the expiration of
the Initial Term, Project Developer shall have the option to
extend the term of the Project Documents for an additional term
of fifteen (15) years. If Project Developer does not so elect
by notice given no later than twelve (12) months before the
expiration of the Initial Term, this Agreement and all the
Amended Project Documents shall terminate at the expiration of
the Initial Term.
B. Extension of the term of this Agreement and the
Amended Project Agreements beyond the Initial Term shall be
permitted only if agreement is reached among the parties to
adjust the steam price charged to PTEC to be equal to or less
than PTEC's avoided cost of steam (including the unamortized
capital cost of the Project's steam generating equipment, fuel,
water, chemicals, and any other appropriate costs) as of the
commencement of each extended term.
C. If PUPCO elects to purchase the Project pursuant
to Section 5A, PUPCO shall purchase the Project pursuant to
Section 19.3 of the Amended Project Services Agreement.
6. Access
During the term of the Amended Project Agreements,
including any extensions thereof, and for a period of three (3)
years thereafter, the Project Developer, upon reasonable notice,
shall grant PTEC or its auditors access to such of the Project's
books and records and audit workpapers as shall in the reasonable
opinion of TEC or its auditors be necessary for them to prepare
and support filings which PTEC may be obligated to make with
regulatory agencies, including but not limited to the PUC, with
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<PAGE>
respect to PTEC's ownership interest in, operation of, or
contractual agreements with, the Project.
7. Fees
A. O'Brien and Adwin shall each have the right to
recover their actual development expenses incurred with respect
to the Project and to earn a development fee ("Development Fee")
equal to three percent (3%) of total Project costs, except that
the interest costs during construction shall not exceed $9
million for the purpose of calculating the Development Fee. The
$9 million interest allowance shall be allocated pro rata between
the financing for the Phase I Project and the financing for the
Phase II Project, based on the relative amount of each financing.
Notwithstanding the preceding sentence, however, the maximum
allowable interest for the financing of the Phase I Project shall
not exceed nine percent (9%) of the debt incurred for the Phase I
Project. Since PUPCO will receive a services and deferred
development fee, PUPCO and its affiliates shall have no right or
interest in the Development Fee.
B. O'Brien and Adwin have heretofore paid $150,000 to
PUPCO for PUPCO's development services in connection with the
Cogeneration Facility.
C. O'Brien and Adwin have paid to PUPCO an additional
sum of $150,000 upon the execution of the Original Agreement.
D. O'Brien and Adwin will cause the Project Developer
to pay to PUPCO the following payments:
(i) beginning on December 17, 1992, the sum of
$150,000, and each quarter thereafter (i.e., the 17th day of each
subsequent March, June, September and December), the sum of
$150,000, pro-rated monthly until the Phase I Project Acceptance
Date;
(ii) after the Phase I Project Acceptance Date,
beginning on the Phase II Project Acceptance Date, annual
payments equal to the sum of (1) $1,200,000 plus (2) the product
of (x) $2,000 times (y) the number of full or partial calendar
months between the Phase I Project Acceptance Date and the Phase
II Project Acceptance Date ("Phase II Fee"), subject to the
installments, for so long as (1) neither PUPCO or PTEC are
currently in default under any of the terms and conditions of any
amended Project Agreement to which they are a party and (2) Penn
remains a PTEC steam system customer and (3) the minimum take
provisions in the Amended Steam Purchase Agreement have remained
unadjusted. This payment will be divided as follows: one-third
of the Phase II Fee shall be a fixed annual payment and two-
thirds of the Phase II Fee shall be escalated at three percent
(3%) per year.
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E. If, prior to the date any party terminates the
Amended Project Agreements in accordance with Section 9, any of
the parties or their affiliates seeks to participate in or
facilitate any project which will primarily serve, the energy
needs of Penn, that party will make a binding offer to the other
parties to this Agreement to participate on an equal basis in
such project. For purposes of this section, PUPCO AND PTEC shall
be considered one party. Nothing in this section shall be deemed
to refer to contractual arrangements between Penn and
Philadelphia Electric Company or PTEC which would be required to
be entered into by law, and this Section E will not apply to the
execution by Penn and PTEC of a long-term steam purchase
agreement under PTEC's Large Volume Rider.
F. O'Brien and Adwin, jointly, will pay to PUPCO the
sum of (i) $550,000 at financial closing for the construction of
Phase I of the Project, and (ii) $50,000 at financial closing for
the construction of Phase II of the Project.
8. Confidentiality
O'Brien, Adwin, PUPCO, and PTEC each agree that the
technical and financial information and materials which may be
disclosed to the other party during the course of negotiations
shall be treated by the receiving party as confidential.
9. Termination
If construction of the Phase II Project has not been
initiated (i) within six (6) months after the date PECO, or
another utility, becomes unconditionally contractually bound to
pay the equivalent of $65 per kilowatt per year ($65/kw/year) for
a minimum of twenty (20) years, for a minimum of 120 megawatts of
capacity ("Capacity Contract"), or (ii) in any event within two
(2) years after the Phase I Project Acceptance Date, either party
may terminate Phase II of the Project, and any party hereto shall
have the right, by written notice to the other parties, to
terminate all obligations contained in any of the Amended Project
Agreements regarding Phase II, including, without limitation, any
obligations to develop, construct, operate or purchase steam from
Phase II, and, at PUPCO's option and request, Project Developer
will use its best efforts to have all agreements with PECO and
other agreements and permits affecting the Phase II Project
assigned to PUPCO (upon which assignment Project Developer,
O'Brien and Adwin shall each be released from any further
liability hereunder). In the event that the Phase II Project is
terminated as set forth above and the Project Developer is
unable, despite its best efforts, to obtain PECO's consent to the
assignments required in this Section 9, O'Brien, Adwin and
Project Developer shall be released from any further liability
with respect to the Phase II Project. For purposes of this
Agreement, construction will only be deemed to have been
initiated if (i) a building permit for Phase II has been obtained
by the Project Developer, (ii) a general construction contract
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has been executed for such construction, and (iii) work has
started on the site for Phase II.
10. Withdrawal Penalty
If any party withdraws from the negotiations relating
to the Project or from the Amended Project Agreements at any time
prior to the Phase I Project Acceptance Date, the remaining
parties will receive the withdrawing party's equity interest on a
pro-rata basis and will assume all responsibilities and benefits
flowing from such equity interest. The withdrawing party shall
pay all direct out-of-pocket costs, up to an aggregate of $50,000
to all other parties together, incurred by the remaining parties
and the Project as a result of such withdrawal. For purposes of
this Paragraph 10, PTEC shall be deemed not to be a party.
11. Miscellaneous
A. Amendments. No change, amendment of
modification of this Agreement shall be valid or binding upon the
parties unless made in a writing signed by all parties.
B. Terminology. All personal pronouns used in
this Agreement, whether used in the masculine, feminine or neuter
gender, shall include all other genders; the singular shall
include the plural, and vice versa. Titles of Sections are for
convenience only, and neither limit nor amplify the provisions of
this Agreement. This Agreement shall always be deemed to mean
this Agreement and the Exhibits and Schedules hereto.
C. Notices. Any notice, demand, offer, consent,
report, approval or other written instrument required or
permitted to be given pursuant to this Agreement shall be in
writing signed by the party giving such notice and shall be hand
delivered, or sent by overnight delivery or by certified mail to
the other parties at the following addresses and shall be
effective upon receipt.
PTEC: President
Philadelphia Thermal Energy
Corporation
2600 Christian Street
Philadelphia, PA 19146
PUPCO: President
Philadelphia United Power
Corporation
2600 Christian Street
Philadelphia, PA 19146
O'Brien: Vice President
O'Brien Environmental Energy, Inc.
225 S. 8th Street
Philadelphia, PA 19106
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Adwin: Vice President
Adwin Equipment Company
300 Stevens Drive
Lester, PA 19113
Each party shall have the right to change the place to which
notice shall be sent or delivered by notice to the other parties.
The effective date of any notice issued pursuant to this
Agreement shall be as of the addressee's receipt of such notice.
D. Severability. If any provision of this
Agreement or the application thereof to any persons or
circumstances shall be invalid or unenforceable to any extent,
(a) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected
thereby and (b) each such provision shall be enforced to the
greatest extent permitted by law.
E. Assignment. No party shall either assign or
otherwise transfer this Agreement (or any right or obligation
contained herein) without the prior written consent of the other
parties, and any assignment, subletting or other transfer without
such consent shall be void. Notwithstanding the foregoing, Adwin
and O'Brien may assign this Agreement as security for or as
required by any lender of funds to the Project Developer.
F. No Waiver. No consent or waiver, express or
implied, by a party to or of any breach or default by the party
in the performance by it of any of its obligations hereunder
shall be deemed or construed to be a consent or waiver to or of
any other breach or default in the performance by such party of
the same or any other obligation of such party hereunder.
G. Applicable Law. This Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania,
exclusive of conflicts of laws provisions.
H. Successors and Assigns. Subject to the
restrictions on transfers set forth herein, this Agreement shall
inure to the benefit of, be binding upon and be enforceable by
and against the parties and their respective successors and
assigns.
I. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an
original, but all of which when taken together shall constitute
but one agreement. It shall not be necessary that any
counterpart be signed by all parties so long as each party shall
have executed two counterparts.
J. Proprietary Information. If any party
transmits to any other party information (including, without
limitation, drawings, technology, reports and designs) which the
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disclosing party designated in writing as "proprietary
information", the receiving party shall receive and hold such
proprietary information in confidence, shall use it exclusively
in connection with the Project (including necessary disclosures
on a proprietary basis to others directly engaged in the
operation or financing of the Project such as consultants,
trustees and lenders engaged for that purpose provided that such
third party shall consent in writing to be bound by the provision
of this Section 11.J, but in any event avoiding any disclosures
to other Project suppliers) and shall not publish or otherwise
disclose it to others. Notwithstanding the foregoing
restrictions, any party will have the right to disclose
proprietary information furnished hereunder to a governmental
authority to the extent required by such governmental authority;
provided, however, that if such party undertakes to so disclose
such proprietary information, it agrees to give the other parties
advance written notice of such undertaking, to make reasonable
efforts to secure confidential treatment of such proprietary
information by the governmental authority in question and to
permit such other parties to participate in discussions with the
governmental authority with regard to confidential treatment. In
the event that efforts to secure confidential treatment are
unsuccessful, the owner of the proprietary information shall have
the right, if legally permissible, to revise such proprietary
information to make it nonproprietary or to minimize the loss of
its proprietary value.
K. Assignment of electric Purchase Agreement.
(i) Upon the occurrence of a Phase I Project
Termination Event (as defined below), Project Developer shall
assign to PUPCO (subject to PECO's prior consent) Project
Developer's interest in (a) the Electric Output Purchase
Agreement dated July 28, 1992 ("Electric Purchase Agreement") and
(b) and capacity related addendum to the Electric Purchase
Agreement or other agreement that Project Developer executes with
PECO or any other utility, and (c) the "Permit to Construct,
Install and Operate the Cogeneration Process" granted by the City
of Philadelphia Department of Public Health dated November 4,
1992.
(ii) A Phase I Project Termination Event
shall occur hereunder upon the earlier to occur of (a)
termination of the Project by O'Brien, Adwin or Project Developer
for any reason, or (b) failure by Project Developer to obtain
construction financing for the Phase I Project, as evidenced by a
binding executed commitment letter from a reputable lender
subject only to conditions accepted in writing by Project
Developer, consistent with the Amended Project Documents and not
requiring any amendment to the price of steam payable by PTEC or
imposing any additional financial obligations on PTEC ("Binding
Commitment"), by the later to occur of the following ("Commitment
Deadline"): (a) January 1, 1994 or (b) ninety (90) days after
the date on which the Pennsylvania Public Utility Commission
approves
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the Amended Project Agreements, provided that Project Developer
may extend the Commitment Deadline for an additional three months
by making payments to PUPCO on the first day of each extension
month in the amount of $50,000 for each full or partial month
extended.
(iii) In the event that the Project
Developer has not executed a noncontingent contract to receive
the Contract Capacity as defined in Section 9 above for the Phase
II portion of the Project by January 1, 1995, or the Project
Developer terminates Phase II for any reason, PUPCO may terminate
the Phase II Project and Project Developer shall assign to PUPCO
(subject to PECO's consent) Project Developer's interest in (a)
110 megawatts of the 150 megawatt Electric Purchase Agreement and
(b) any remaining capacity in excess of 31.5 megawatts available
under any capacity-related addendum to the Electric Purchase
Agreement or other or agreement Project Developer executes.
O'Brien and Adwin may extend the January 1, 1995 date an
additional three months by making payments to PUPCO on the first
day of each extension month in the amount of $50,000 for each
full or partial month extended.
L. Reimbursement of Expenses. O'Brien and Adwin
will reimburse PUPCO and PTEC for all approved out of pocket
costs associated with the change in Project configuration
evidenced by the Amended Project Agreements up to a maximum
amount of $75,000 for legal, environmental and engineering costs.
Such payments will be made on a quarterly basis with the first
payment on March 23, 1993. O'Brien and Adwin agree to negotiate
an increased maximum amount if the $75,000 is exceeded.
M. Conversion of PTEC Boiler. If necessary to
obtain an AMS permit for the Project, Adwin and O'Brien will pay
all of the cost to convert PTEC's Boiler No. 26 to a low NOx dual
fuel (natural gas and No. 6 oil). This obligation of Adwin and
O'Brien is limited to the first $500,000 expended for this
conversion plus 50% of any costs in excess of the $500,000.
O'Brien and Adwin are entitled to 50% of any environmental
allowances received by PTEC for emission offsets associated with
this conversion, up to a maximum amount equal to the amount in
excess of $500,000 paid by O'Brien and Adwin for the conversion.
Project Developer will use its best efforts to ensure that the
air permit will be assignable to PTEC in whole or part consistent
with Section 11.K.
N. PECO Consent. This Amended Steam Venture
Agreement is contingent upon Project Developer using its best
efforts, as provided in Section 9 above, to obtain on or before
January 1, 1994 PECO's agreement to allow PTEC to utilize the
Schuylkill site to construct a cogeneration project (Phase I and
Phase II) and to utilize any approved interconnection agreement
obtained by the Project Developer if (a) either subsection of
Section 11.K is effected or (b) Phase II of the Project is
terminated. The Project Developer will provide to PTEC all
design,
12
<PAGE>
engineering and any other work products associated with the
electric interconnection between the cogeneration project Phase I
and Phase II) and the PECO interconnection point/s if (a) either
subsection of Section 11.K is effected or (b) Phase II of the
Project is terminated. The Project Developer will allow PTEC to
utilize these work products for any purpose subject only to
restrictions which may be imposed by PECO.
O. Release. Each of the parties hereto, for
themselves, their successors and assigns, hereby remises,
releases and forever discharges the other Parties and their
respective successors and assigns of and from all, and all manner
of, actions and causes of actions, suits, debts, dues, accounts,
bonds, covenants, contracts, agreements, judgments, claims and
demands whatsoever in law or equity (collectively, "Claims") by
reason of any cause, matter or thing whatsoever, from the
beginning of the world until the date of this Agreement. The
parties hereby acknowledge that, except as expressly set forth
herein, (i) no party has any Claim of any nature or sort against
any other party as of the date hereof, (ii) there are no defaults
of any kind by any party under the Original Agreements, and (iii)
each party expressly waives the right to initiate or pursue any
action of any kind against any other party based on any act or
omission occurring prior to the date hereof. Each party shall
indemnify, defend and hold the other parties harmless from any
violation of this Section 11.O by such party.
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized representatives on the
date first above written.
PHILADELPHIA THERMAL ENERGY CORPORATION
By: /s/ S. B. Smith
PHILADELPHIA UNITED POWER CORPORATION
By: /s/ S. G. Smith
ADWIN EQUIPMENT COMPANY
By: /s/ Daniel A. Neely
O'BRIEN ENVIRONMENTAL ENERGY, INC.
By: /s/ Robert A. Shinn
14
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
EXHIBIT A Steam Purity Requirements
EXHIBIT B Amended Project Services Agreement
EXHIBIT C Amended Site Lease
EXHIBIT D Amended Steam Purchase Agreement
EXHIBIT E List of Project Engineering and
Construction Firms
15
<PAGE>
EXHIBIT E
ENGINEERING AND CONSTRUCTION FIRMS
Raytheon Corp. (United Engineers)
Dick Corp. (Gilbert Commonwealth)
Walsh Construction (Black & Veetch)
16
<PAGE>
EXHIBIT A to STEAM VENTURE AGREEMENT
STEAM PURITY REQUIREMENTS
<PAGE>
EXHIBIT "A"
Steam Purity Requirement
High Pressure Steam
Pressure 1300 max - 1200 psi min
Temperature 925 max - 900 min
Sodium < 15 ppb
Chloride < 10 ppb
Silica < 15 ppb
Cation-Conductivity < 0.35 umhos
Distribution Sendout Steam
Pressure 240 psi max - 210 psi min
Temperature Steam temperature shall be
40 F above sanitation
temperature but not higher than
450 F.
M Allcalinity < 1.0 ppm
Free CO2 < 1.5 ppm
TDS < 0.2 ppm
All chemicals carried over into the distribution steam system
must be suitable for use in the preparation of food,
humidification and sterilization of surgical instruments as
specified by the FDA and USDA
All desuperheating spray water must meet the same criteria
established for boiler feed water.
<PAGE>
Exhibit 10.27.2
CONSENT TO ASSIGNMENT OF AGREEMENT
This CONSENT TO ASSIGNMENT OF AGREEMENT ("Consent to
Assignment"), dated as of March 1, 1996, is executed by
PHILADELPHIA UNITED POWER CORPORATION, a Pennsylvania
corporation, ("PUPCO"), GRAYS FERRY COGENERATON PARTNERSHIP, a
Pennsylvania general partnership ("Assignor"), and THE CHASE
MANHATTAN BANK, N.A., ("Assignee"), as agent for the Banks under
the Credit Agreement (as defined below).
RECITALS
A. Pursuant to the Amended and Restated Project Services
Agreement, dated September 17, 1993, by and between PUPCO and
Assignor, as modified by that certain Agreement Relating to
Amended and Restated Steam Venture Agreement and Amended and
Restated Project Services Agreement, dated September 29, 1995 (as
the same may be amended from time to time as permitted hereby
(the "Project Services Agreement"), the parties thereto have set
forth certain agreements regarding, inter alia, operation and
maintenance of the Project. The Project Services Agreement is
referred to herein as the "Assigned Agreement".
B. Pursuant to the Credit Agreement, as the same may be
amended from time to time, dated as of March 1, 1996 (the "Credit
Agreement"), by and among Assignor, Assignee and the financial
institutions named therein (the "Banks"), Assignee shall make
available to Assignor certain construction and term loans and
issue certain letters of credit as described therein, each on the
terms and conditions set forth therein, to enable Assignor to
finance the development, construction and equipping of the
Facility (as defined therein).
<PAGE>
It is a condition precedent to the funding by Assignee under
the Credit Agreement that PUPCO execute and deliver this Consent
to Assignment to Assignee.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties
hereto agree as follows:
1. Definitions. Capitalized terms used but not defined
herein shall have the meaning specified in the Assigned Agreement
or, if not defined therein, as defined in the Credit Agreement.
2. Consent to Assignment.
PUPCO acknowledges receipt of the Security Agreement dated
as of March 1, 1996 (as the same may be amended from time to
time, "Security Agreement"), by and between Assignor and
Assignee, pursuant to which Assignor has assigned its interest
under the Assigned Agreement to Assignee on behalf of Assignee
and the Banks and consents to the Assignor's transfer,
assignment, grant of a security interest and all other provisions
described therein, and agrees with Assignee for the Benefit of
the Banks as follows:
(a) Assignee shall be entitled (but not obligated) to
exercise all rights and to cure any defaults of Assignor under
the Assigned Agreement. Upon receipt of notice from Assignee,
PUPCO agrees to accept such exercise and cure by Assignee and to
render all performance due by it under the Assigned Agreement and
this Consent to Assignment to the Banks. PUPCO agrees to make all
payments to be made by It under the Assigned Agreement directly
to Assignee for the benefit of the Banks upon receipt of
Assignee's written instructions.
(b) PUPCO will not, without the prior written consent
of Assignee (such consent not to be unreasonably withheld), (i)
cancel or terminate the Assigned Agreement except as provided in
the Assigned Agreement and in accordance with paragraph 2(c)
hereof, or consent to or accept any cancellation or termination
thereof by Assignor, (ii) sell, assign or otherwise dispose (by
operation of law or otherwise) of any part of its interest in the
Assigned Agreement, or (iii) amend or modify the Assigned
Agreement in any material respect. PUPCO agrees to deliver
duplicates or copies of all notices of default delivered under or
pursuant to the Assigned Agreement to Assignee promptly upon
receipt or delivery thereof and will advise Assignee of any non-
material amendments to the Assigned Agreement.
2
<PAGE>
(c) PUPCO will not terminate the Assigned Agreement on
account of any default or breach of Assignor thereunder without
written notice to Assignee and first providing to Assignee (i)
thirty (30) days from the date notice of default or breach is
delivered to Assignee to cure such default if such default is the
failure to pay amounts to PUPCO which are due and payable under
the Assigned Agreement or (ii) a reasonable opportunity, but not
fewer than ninety (90) days following the date notice of default
or breach is delivered to Assignee to cure such breach or default
if the breach or default cannot be cured by the payment of money
to PUPCO so long as Assignee or its designee shall have commenced
to cure the breach or default within such ninety day period and
thereafter diligently pursues such cure to completion and
continues to perform any monetary obligations under the Assigned
Agreement and all other obligations under the Assigned Agreement
are performed by Assignor or Assignee. If possession of the
"Project" (as defined in the Credit Agreement) is necessary to
cure such breach or default, and Assignee or its designee(s) or
assignee(s) declare Assignor in default and commence foreclosure
proceedings, Assignee or its designee(s) or assignee(s) (will be
allowed a reasonable period to complete such proceedings. If
Assignee or its designee(s) or assignee(s) are prohibited by any
court order or bankruptcy or insolvency proceedings from curing
the default or from commencing or prosecuting foreclosure
proceedings, the foregoing time periods shall be extended by the
period of such prohibition. PUPCO consents to the transfer of
Assignor's interest under the Assigned Agreement to the Banks or
any of them or a purchaser or grantee at a foreclosure sale by
judicial or nonjudicial foreclosure and sale or by a conveyance
by Assignor in lieu of foreclosure and agrees that upon such
foreclosure, sale or conveyance, PUPCO shall recognize the Banks
or any of them or other purchaser or grantee as the applicable
party under the Assigned Agreement (provided that such Banks or
purchaser or grantee assumes the obligations of Assignor under
the Assigned Agreement).
(d) In the event that the Assigned Agreement is
rejected by a trustee or debtor-in-possession in any bankruptcy
or insolvency proceeding, or if the Assigned Agreement is
terminated for any reason other than a default which could have
been but was not cured by Assignee as provided in paragraph 2(c)
above, and if, within forty-five (45) days after such rejection
or termination, the Banks or their successors or assigns shall so
request, PUPCO will execute and deliver to the Banks, and if
applicable, their successors and assigns, a new Assigned
Agreement, which Assigned Agreement shall be on the terms and
conditions as the original Assigned Agreement for the remaining
term of the Assigned Agreement before giving effect to such
termination.
3
<PAGE>
(e) In the event the Banks or their designee(s) or
assignee(s) elect to perform Assignor's obligations under the
Assigned Agreement or to enter into a new Assigned Agreement as
provided in subparagraph (c) or (d) respectively above, the
Banks, their designee(s) and assignee(s), shall have no personal
liability to PUPCO for the performance of such obligations, and
the sole recourse of PUPCO in seeking the enforcement of such
obligations shall be to such parties' interest in the Project.
(f) In the event the Banks or their designee(s) or
assignee(s) succeed to Assignor's interest under the Assigned
Agreement, the Banks or their designee(s) or assignee(s) shall
cure any defaults for failure to pay amounts owed under the
Assigned Agreement, but shall not otherwise be required to
perform or be subject to any defenses or offsets by reason of any
of Assignor's other obligations under the Assigned Agreement that
were unperformed at such time. The Banks shall have the right to
assign all or a pro rata interest in the Assigned Agreement or a
new Assigned Agreement entered into pursuant to subparagraph (d)
to a person or entity to whom the Project is transferred,
provided such transferee assumes the obligations of Assignor (or
the Banks) under the Assigned Agreement. Upon such assignment,
Assignee and, if applicable, the Banks (including their agents
and employees) shall be released from any further liability
thereunder to the extent of the interest assigned.
(g) The parties hereto agree that this Consent to
Assignment is given by PUPCO on the condition that if there are
any inconsistencies between this Consent to Assignment and the
Assigned Agreement, this Consent to Assignment shall control.
3. Specific Provisions Related to the Assigned Agreement.
(a) The Section of the Assigned Agreement entitled
"Background to Restatement" is deleted in its entirety and
replaced by the following:
"[Intentionally Omitted]"
(b) The Section of the Assigned Agreement entitled
"Recitals" is deleted in its entirety and replaced by the
following:
4
<PAGE>
RECITALS
Owner is a general partnership owned by O'Brien (Schuylkill)
Cogeneration, Inc. ("O'Brien"), a wholly owned subsidiary of
O'Brien Environmental Energy, Adwin (Schuylkill)
Cogeneration, Inc. ("Adwin"), a wholly owned subsidiary of
Adwin Equipment Company, and Trigen-Schuylkill Cogeneration,
Inc. ("TSC"), a wholly owned subsidiary of Trigen Energy
Corporation and an affiliate of Trigen-Philadelphia Energy
Corporation ("Trigen"), formerly known as Philadelphia
Thermal Energy Corporation ("PTEC"). All references
hereinafter to PTEC shall mean Trigen. O'Brien, Adwin and
TSC each hold 1/3 interests in Owner. The steam will be sold
to Trigen pursuant to an Amended and Restated Steam Purchase
Agreement dated September 17, 1993 (the "Amended Steam
Purchase Agreement"), and Owner is leasing space for the
cogeneration facility pursuant to an Amended and Restated
Site Lease between Owner and Trigen dated September 17,
1993. Owner now wishes to retain Operator to operate and
maintain the cogeneration facility."
(c) The definition of "Agreement Year" is amended to
delete the "Phase I" throughout the definition.
(d) The definition of "Auxiliary Boiler" is deleted in
its entirety and replaced by the following:
"means the high-pressure boiler to
be constructed by Owner pursuant to
the Steam Venture Agreement."
(e) The following is inserted at the end of the
definition of "Credit Agreement":
", as such agreement may be
amended, restated or supplemented
from time to time."
5
<PAGE>
(f) The definition of "Electricity Purchase Agreement"
is deleted in its entirety and replaced by the following:
"means, collectively, (a) the Agreement
for Purchase of Electric Output (Phase
I) dated as of July 28, 1992, ~) the
Agreement for Purchase of Electric
Output Phase II) dated as of July 28,
1992, (c) the Contingent Capacity
Purchase Addenda Phase I), dated as of
September 17, 1993, and (d) the
Contingent Capacity Purchase Addenda
Phase II), dated as of September 17,
1993, (e) Amendment Agreement to Power
Purchase Agreements, dated January 31,
1994, each between Assignor and PECO, as
such agreements may be amended, restated
or supplemented from time to time."
(g) The following is added to the definition of
"Energy Revenues" after Steam Purchase Agreement":
"in respect of sales of electricity
and/or steam generated by the Project".
(h) The definition of "Final Acceptance" is deleted in
its entirety and replaced by the following:
"'Final Acceptance' shall have the
meaning ascribed thereto in the Turnkey
Construction Contract."
(i) The word "formal" is deleted from the definition
of "Fuel".
(j) The definition of "Full Operation Date" is deleted
in its entirety and replaced by the following:
"'Full Operation Date' means the Project Acceptance
Date."
6
<PAGE>
(k) The definition of "Interconnection Facilities" is
amended to add the following in the second line after the word
"facilities":
"which are to be maintained by Owner,
except for facilities which are the
property of PECO";
and the words in the fourth line beginning "which are
maintained..." through the end of the sentence are deleted and
replaced by the following:
"(including the Project's transmission lines)."
(l) The definition of "lender" is deleted in its
entirety and replaced by the following:
"'Lender' means the lending
institution(s) holding the senior
secured debt of the Project from time to
time."
(m) In the fourth line of the definition of "Manuals"
after the word "Operator" insert the following:
"and approved by the Independent
Engineer (with respect to the original
issue of Manuals only)".
(n) The following definitions are added to the
Assigned Agreement in alphabetical order:
"'Availability' means has the meaning as
defined in Appendix 2 of the Assigned
Agreement.
'Independent Engineer' means Stone &
Webster or its successors and assigns.
'Project Acceptance' has the meaning
given in the Steam Purchase Agreement.
'Project Acceptance Date' has the
meaning given in the Steam Purchase
Agreement."
7
<PAGE>
(o) The definition of "Gas Turbine" is deleted in its
entirety and replaced by the following:
"'Gas Turbine' means a Westinghouse
501D5A combustion turbine."
(p) The following definitions are deleted in their
entirety: "Phase I"; "Phase II"; "Phase I Availability"; "Phase
II Availability"; "Phase I Minimum Take Requirement"; "Phase H
Minimum Take Requirement"; "Phase I Project Acceptance Date"; and
"Phase H Project Acceptance Date".
(q) The last sentence of the definition of "Project"
is deleted and the following is inserted in the fourth line of
such definition after the word "Site":
",including the Interconnection
Facilities to the extent such facilities
do not belong to PECO".
(r) The definition of "Project Agreements" is amended
to include the Electricity Purchase Agreement and the Turnkey
Construction Contract and the following is inserted at the end of
such definitions:
",as any of the same may be modified or
amended from time to time".
(s) The following is inserted at the end of the
definition of "PTEC":
",including any successor(s) to the assets of PTEC."
(t) The following is inserted at the end of the
definition of Site:
", including any easements with respect
to the Project related thereto."
(u) The definition of "Substantially Completed" is
deleted in its entirety and replaced by the following:
"'Substantially Complete' means that
Provisional Acceptance, as such term is
defined in the Turnkey Construction
Contract, has been achieved."
8
<PAGE>
(v) Section 2.1 is deleted in its entirety and
replaced by the following:
"[Intentionally Omitted]"
(w) In Section 2.2, all references to "Phase I" and
"Phase II" are deleted.
(x) In Section 2.3, delete the word "each" in the
first line; in the fifth line after the word "hours" insert ",
capacity revenues; in the tenth line after the word "Operator"
insert ",after consultation with Owner"; in the eleventh line
after the word "Revenues" insert "and capacity revenues"; and at
the end of the Section add the following:
"Operator shall perform the foregoing
services in accordance with the
requirements of all insurance policies,
warranties, specifications and
guarantees of Operator and Owner and of
their respective suppliers, contractors,
subcontractors and vendors."
(y) In Section 2.4, the reference to "Phase II" is
deleted and the word "either" is deleted in both places in the
last sentence of such Section and replaced with the word "the".
In addition, the following language is added to the end of the
fourth sentence in such section:
", after Operator providing Owner and
lender's independent engineer with a
reasonable opportunity to approve the
bid documentation prepared by Operator".
(z) In Section 2.5.1, the word "each" in the third
line is deleted.
(aa) In Section 2.5.2, in the second line the words
"each Phase of" are deleted; in the fourth line the words "for
each Phase" (as hereinafter defined) are deleted; in the sixth
line the words "either Phase of" are deleted; and in the ninth
line the words "that Phase of' are deleted.
9
<PAGE>
(bb) In Section 2.9, delete the words "described in
Appendix 1 hereto which shall be prepared within sixty (60) days
after execution of the Electricity Purchase Agreement" and insert
the words "as described herein".
(cc) The following is added to the end of Section 2.10:
"provided that, where the subject matter
in the Manual which is being revised had
previously been approved by Owner,
revision of such subject matter shall
not be made without the prior written
approval of Owner."
(dd) The following parenthetical is added to the first
sentence of Section 2.11:
"(in the case of subcontracts having a
value of $100,000 or more, after Owner's
prior written consent)".
(ee) Section 2.12 is deleted in its entirety and
replaced with the following:
"During the Mobilization Period,
Owner shall be responsible for
reimbursing Operator for all costs of
staffing and start-up in accordance with
a phased staffing plan to be agreed by
the Parties and for a fee equal to
twenty-five thousand dollars
($25,000.00) per month to a maximum
aggregate total of one hundred fifty
thousand dollars ($150,000)."
(ff) The words "Phase I" are deleted from Section 2.13.
10
<PAGE>
(gg) Section 3.1 is deleted in its entirety and
replaced with the following:
"3.1 Acceptance of Project. The
responsibility for the continuous
operation of the Project, as provided in
Section 2.3, shall belong to Operator,
and Operator shall accept and shall be
deemed to have accepted such
responsibility on the Project Acceptance
Date, or in the event neither
Provisional Acceptance nor Final
Acceptance under the Turnkey
Construction Agreement occurs, the date
Owner takes over the operation of the
Project and commences to utilize the
Project for its intended use. Any
defects in the Project and the
performance levels achieved in each
Final Performance Test of the Project
shall be noted on a schedule (the
"Acceptance Schedule") to be executed by
Owner and Operator as of the date of
Final Acceptance. If Owner elects to
accept or occupy the Project from
Construction Contractor in a less than
Substantially Completed condition,
appropriate adjustments may be made in
the Annual Operating Plans to reflect
increased costs reasonably expected to
be incurred by Operator in operating the
Project in a less than Substantially
Completed condition and such adjustments
shall be included on the Acceptance
Schedule. Execution of the Acceptance
Schedule shall not constitute a waiver
or release of any claim, right or remedy
which Owner may have against
Construction Contractor pursuant to the
Turnkey Construction Agreement nor shall
it otherwise affect the obligations of
the Parties pursuant hereto."
11
<PAGE>
(hh) In Section 4.2, in the third sentence after the
word "visitors" the following is inserted:
"(including lender or lender's independent engineer)".
(ii) Section 4.3 is deleted in its entirety and
replaced by the following:
"4.3 Annual Operating Plan. Attached
hereto as Appendix 6 is the first Annual
Operating Plan. Not later than 95 days
prior to the first day of each Agreement
Year, Operator shall submit to Owner and
Independent Engineer for approval a
proposed Annual Operating Plan for the
upcoming Agreement Year. Each Annual
Operating Plan shall describe in detail
projected maintenance and overhaul
schedules, capital expenditure
requirements, equipment acquisitions and
spare parts and consumables inventories
(including a breakdown of capital items
and expense items), hours of operation,
purchased electricity, projected Fuel
usage and other variable costs,
projected electricity and steam
generated for sale, projected capacity
revenues and Energy Revenues, staffing
plans, data regarding expected
environmental performance and such other
matters as Owner may reasonably require.
The proposed Annual Operating Plan shall
also include a budget for operation and
maintenance of the Project, including
the estimated prices based on time and
materials for all anticipated operating
and maintenance costs for the upcoming
Agreement Year. Owner and Independent
Engineer shall indicate in writing their
approval or disapproval of the Annual
Operating Plan within fifteen (15) days
of such submission, and in the event of
disapproval by either Owner or
12
<PAGE>
Independent Engineer, the Parties shall
meet and resolve in good faith any areas
of disagreement. If a new Agreement Year
begins without an Annual Operating Plan
having been accepted by Owner,
Independent Engineer and Operator, the
Annual Operating Plan for the prior
Agreement Year shall continue in effect,
with all costs set forth therein
increased monthly by the Consumer Price
Index Percentage for the most recent
month for which the Consumer Price Index
is available. Any actions proposed under
the Annual Operating Plan shall be
consistent with the Manuals and
Operator's obligations as described in
Sections 2.2 and 2.3. Operator shall
notify Owner and Independent Engineer as
soon as reasonably possible of any
significant deviations or discrepancies
from the projects contained in the
Annual Operating Plan. Any material
adjustment proposed by Operator shall be
subject to Owner's and Independent
Engineer's prior written approval (the
Parties agree that a deviation or
discrepancy of 10% will constitute a
significant deviation or discrepancy for
purposes of this section)."
(jj) The words "and the Independent Engineer" are
inserted after the word "Owner" both times such word appears in
line six of Section 4.4.
(kk) The words "Phase I Availability and Phase II" are
deleted from the thirteenth line of such section.
(ll) The first sentence of Section 4.6 is deleted in
its entirety and replaced by the following:
"Operator shall maintain the Project in
accordance with the requirements of all
manufacturer's warranties, which
warranties shall be owned by Owner and
enforced by Operator on behalf of
Owner.".
13
<PAGE>
(mm) The words "and 2B (For Phase I and Phase II,
respectively)" are deleted from the seventh line of Section
5.5(a); the words "for Phase I and for Phase II are" in the
eighth line of such section are deleted and replaced by the word
"is"; the word "collectively" is deleted from the ninth line of
such section; and the word "PUPCO" in the nineteenth line is
deleted and replaced by "Trigen".
(nn) The last sentence of Section 5.5(b) is deleted in
replaced by the following:
"Except to the extent Liquidated Damages
include a component of consequential
damages, Operator shall not be liable to
Owner for consequential damages for
Operator's failure to achieve the
Performance Standards. In addition to
collecting such Liquidated Damages,
Owner may terminate this Agreement as
provided in Section 5.5(a).
Notwithstanding the foregoing, the
parties agree and acknowledge that
Owner's sole remedies shall be limited
to Liquidated Damages and termination of
the Assigned Agreement."
(oo) The words "or otherwise undesirable" are deleted
from Section 5.6 and the "," between the words ";illegal" and
"uneconomical" in the eighth line is deleted and replaced by the
word "or".
(pp) In the first sentence of Section 5.8, the words
"for each Phase" are deleted.
(qq) Attached hereto as Appendix 2 is the Appendix 2
referred to in the Assigned Agreement.
(rr) Section 6.1(a) is deleted in its entirety and
replaced by the following:
"[Intentionally Omitted]".
(ss) In Section 6.1(1)), the words "Subject to ....
Phase I Annual Fee," are deleted and all references to "Phase II"
are deleted. The last paragraph of Section 6.1(1)) is also
deleted.
14
<PAGE>
(tt) Section 6.1(c), (d) and (e) are each deleted in
their entirety and replaced by the following:
"[Intentionally Omitted]".
(uu) The references to "Phase I" and "Phase II" in each
of Sections 6.1(f), (g) and (h) and 6.2(a), (b) and (e) are
deleted.
(vv) In the second sentence of Section 6.2(1), the
words "Phase I Minimum Take Requirement or the Phase II" are
deleted.
(ww) Section 6.2(d) is deleted in its entirety and
replaced with the following:
"[Intentionally Omitted]"
(xx) The following language is added to the end of
Section 6.2(e):
", subject to the provisions of Article
7 of the Credit Agreement and the terms
of the PUPCO Subordination Agreement"
(yy) The following language is added to the end of
Section 6.3(d):
",unless such failure is due to Owner's
inability to pay such amount pursuant to
the provisions of Article 7 of the
Credit Agreement, an Event of Default
under the Credit Agreement or the terms
of the PUPCO Subordination Agreement."
(zz) Section 6.3(e) is deleted in its entirety and
replaced with the following:
"[Intentionally Omitted]"
15
<PAGE>
(aaa) Section 6.4 is deleted in its entirety and
replaced with the following:
"6.4 Electric Capacity Fee. In addition
to the Annual Fees set forth above,
Owner shall pay PUPCO thirty percent
(30%) of all payment received by Owner
pursuant to the Contingent Capacity
Purchase Addendum, payable within five
(5) days after Owner receives each such
payment, unless Owner is unable to make
such payment due to the provisions of
Article 7 of the Credit Agreement, an
Event of Default under the Credit
Agreement or the terms of the PUPCO
Subordination Agreement."
(bbb) In Section 8.1, the references to "Phase I"
and deleted and the following is added:
"8.1.5 Reimbursable Costs shall not
include taxes based on Operator's income
or gross receipts."
(ccc) The reference to Section 6.1(e) in Section
9.1(a) is deleted.
(ddd) Section 9.1 is deleted in its entirety and
replaced by the following:
"[Intentionally Omitted]"
(eee) The reference to "Phase I" in Section
12.1(1,) is deleted.
(fff) In Section 16.7, the reference to "Phase I"
is deleted and the word "either" in the seventh line is deleted.
(ggg) The reference to "Phase I" in Section 17.5 is
deleted and the word "either" in the seventh line is deleted and
replaced with the word "the".
(hhh) The reference to "Phase I" in Section 17.6 is
deleted.
16
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(iii) Section 19.1 is hereby deleted in its
entirety and replaced with the following:
"19.1 Option to Acquire Interest.
Operator confirms that it has exercised
its option to acquire a one third (1/3)
interest ("Acquired Interest") in Owner
and has no further rights under Section
19.1."
Section 19.2 is hereby deleted in its entirety and
replaced by the following:
"19.2 Effect on Annual Fee. The portion
of the Annual Fee described in Section
6.1(11) is no longer due or payable.
Notwithstanding anything to the contrary
contained herein, Operator shall have no
claim to any portion of the purchase
price paid for the Acquired Interest."
(jjj) The following language is added following
Section 19.4(c):
"(d) This Section 19.4 shall not apply
to Lender's assumption of any
Partnership interest pursuant to the
Project Agreements or sale of any
interest in the Project or Partnership."
(kkk) The reference to "Phase I" in Section 19.5(a)
is deleted. The words "or the Entire Project Option Period (as
defined in Section 19.1)" are deleted.
(lll) The words "Phase I Option Period or the
Entire Project" are hereby deleted from Section 19.6.
(mmm) The last sentence of Section 19.7 is deleted
in its entirety.
(nnn) The second reference to "Operator" in the
ninth line of Section 20.21(c) and the reference to "Operator" in
the tenth line of such Section shall be amended to refer to
"Owner".
17
<PAGE>
(ooo) Operator represents that, other than the
Steam Venture Agreement, the Assigned Agreement and the other
Project Agreements, it has not entered into any other agreement
with Assignor relating to the subject matter addressed in the
Assigned Agreement.
4. PUPCO hereby represents and warrants that:
(a) The execution, delivery and performance by PUPCO
of this Consent to Assignment (i) has been duly authorized by all
necessary corporate action, (ii) does not and will not require
any further consents or approvals which have not been obtained
(provided that, with respect to this clause (a) (ii), Trigen
makes no representation with respect to future consents and
approvals of the Pennsylvania Public Utility Commission), and
(iii) does not violate any provision of any law, regulation,
order, judgment, injunction or similar matters or breach any
agreement presently in effect with respect to or binding on
PUPCO;
(b) This Consent to Assignment is a legal, valid and
binding obligation of PUPCO, enforceable against PUPCO in
accordance its terms; and
(c) All permits, authorizations, licenses and
government approvals necessary for the execution, delivery and
performance by PUPCO of its obligations under this Consent to
Assignment have been obtained and are in full force and effect;
5. All notices required or permitted hereunder shall be in
writing and shall be effective (a) upon receipt if hand
delivered, (1) upon telephonic verification of receipt if sent by
facsimile and (c) if otherwise delivered, upon the earlier of
receipt or two (2) "Banking Days," (as defied in the Credit
Agreement) after being sent registered or certified mail, return
receipt requested, with proper postage affixed thereto, or by
private courier or delivery service with charges prepaid, and
addressed as specified below:
18
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If to PUPCO:
PHILADELPHIA UNITED POWER CORPORATION
2600 Christian Street
Philadelphia, PA 19146
Attn: President
Telecopy No: (202) 875-691O
Telephone No: (215) 875-6900
If to Assignee:
THE CHASE MANHATTAN BANK, N.A.
One Chase Plaza, Sixth Floor
New York, New York 10081
Attn: Project Finance Group
Telecopy No.: (212) 552-4276
Telephone No.: (212) 552-5813
If to Assignor:
GRAYS FERRY COGENERATION PARTNERSHIP
c/o Adwin (Schuylkill) Cogeneration, Inc.
300 Stevens Drive
Airport Business Center
Lester, PA 19113
Telecopy No.: (610) 595-1068
Telephone No.: (610) 595-1072
6. This Consent to Assignment shall be binding upon and
inure to the benefit of PUPCO, the Assignor, the Assignee, the
Banks and their respective successors, transferees and assigns.
PUPCO agrees to confirm such continuing obligation in writing
upon the reason-able request of Assignor, Assignee, the Banks or
any of their respective successors, transferees or assigns. No
termination, amendment, variation or waiver of any provisions of
this Consent shall be effective unless in writing and signed by
PUPCO, Assignor and Assignee. This Consent to Assignment shall be
governed by the internal laws of the State of New York, without
reference to principles of conflict of laws (other than Section 5-
1401 of the New York General Obligations law).
19
<PAGE>
7. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the patties
listed below, shall constitute a single binding agreement.
IN WITNESS WHEREOF, PUPCO by its officer thereunto duly
authorized, has duly executed this Consent to Assignment as of
the date first set forth above.
PHILADELPHIA UNITED POWER CORPORATION
a Pennsylvania corporation
By: /s/ S. G. Smith
Name: Steven G. Smith
Title: President
Accepted and agreed to:
THE CHASE MANHATTAN BANK, N.A.,
as Agent for the Banks
By: /s/ James G. Brown, Jr.
Name: James G. Brown, Jr.
Title: Vice President
GRAYS FERRY COGENERATION PARTNERSHIP,
a Pennsylvania general partnership
By: Adwin (Schuylkill) Company,
managing general partner
By: /s/ William J. Brady III
Name: William Brady III
Title: Vice President
<PAGE>
Exhibit 10.28
AMENDED AND RESTATED SITE LEASE
This Amended and Restated Lease is dated September 17, 1993,
and made by and between PHILADELPHIA THERMAL ENERGY CORPORATION,
a Pennsylvania corporation (herein called "Lessor") and GRAYS
FERRY COGENERATION PARTNERSHIP, a Pennsylvania general
partnership (herein called "Lessee").
BACKGROUND TO RESTATEMENT
Lessor, Philadelphia United Power Corporation, formerly
known as United Thermal Development Corporation ("PUPCO"), Adwin
Equipment Company ("Adwin"), O'Brien Environment Energy, Inc.
("O'Brien") and Leasee are parties to some or all of a series of
agreements, each dated November 11, 1991, as follows
(collectively, "Original Agreement"):
(1) Steam Venture Agreement by and among O'Brien, Adwin,
PUPCO and Lessor ("Original Venture Agreement");
(2) Site Lease by and between Lessor and Lessee ("Original
Lease");
(3) Steam Purchase Agreement by and among Lessor, Adwin,
O'Brien and Leasee ("Original Purchase Agreement");
(4) project Services and Development Agreement by and
between Lessee and PUPCO ("Original Development Agreement");
(5) Penn Selection Agreement by and among Lessor, PUPCO,
Adwin, O'Brien and Lessee ("Original Penn Agreement"); and
(6) Dock Facilities by and among Lessor, Lessee and
Philadelphia Thermal Development Corporation ("Original Dock
Agreement").
The Original Agreements set forth the terms and condition
under which Adwin and O'Brien formed Lessee for the purposes of
constructing and owning a Cogeneration Facility (as defined
hereafter), which will be located on a portion of Lessor's
Schuylkill Station site. The Cogeneration Facility will produce
steam and electrical power, and will be operated and maintained
by PUPCO. Steam from the Cogeneration Facility will be purchased
by Lessor for use in Lessor's steam distribution system. The
parties have subsequently agreed to terminate the Original Penn
Agreement.
The Original Agreements contemplated that the Cogeneration
Facility would consist of a Frame 7 Gas Turbine, a Heat Recovery
<PAGE>
Steam Generator, a steam turbine and a high pressure auxiliary
boiler with a minimum 500,000 lbs/hour of capacity (No. 6 oil
natural gas. The Original Agreements further contemplated that
the auxiliary boiler would, under certain circumstances, be
constructed on an accelerated basis prior to the remainder of the
equipment described above.
Adwin and O'Brien have now requested, and Lessor and PUPCO
have agreed, that the installation of the Cogeneration Facility
("Project") be restructured in certain ways, including the
development of the Project in two discrete phases, consisting of
(i) installation in Phase I of a high pressure auxiliary boiler
with a 40 megawatt steam turbine ("Phase I Project"), and
(ii) installation in Phase II of the Frame 7 Gas Turbine and
related equipment ("Phase II Project"). The parties intend that
the Phase I Project be completed on an expedited basis.
The parties have further agreed to amend certain of the
Original Agreements and to restate those Original Agreements, as
so amended, in their entity, to reflect the changes to the
Project described above.
Now, Therefore, intending to be legally bound hereby, the
parties hereby amend the Original Lease and restate the Original
Lease in its entirety, as follows:
BACKGROUND
Lessor is the owner of a portion of a building erected on
land ("Land") owned by the Philadelphia Electric Company ("PECO")
located at 26th and Christian Streets, Philadelphia, Pennsylvania
and known as Schuylkill Station ("Building"). The Land is
described more particularly on the legal description attached
hereto as Exhibit A. Lessor utilizes the Building to operate a
steam generation and distribution system ("Steam Loop"). Lessee
is an entity formed by O'Brien and Adwin to design, construct,
start-up, test and own a cogeneration facility to produce steam
and electricity, as described in more detail in Section 5.1
hereof ("Cogeneration Facility"). The steam will be sold to
Lessor pursuant to an Amended and Restated Steam Purchase
Agreement of even date herewith between Lessor and lessee
("Amended Steam Purchase Agreement"), and the electricity will be
sold to PECO or another utility. The cogeneration facility will
be owned by Lessee and operated by PUPCO, an affiliate of Lessor,
pursuant to an Amended and Restated Project Services and
Development Agreement of even date herewith ("Amended Project
Services Agreement"). The agreements among Lessor, Adwin,
2
<PAGE>
O'Brien and PUPCO are further set forth in an Amended and
Restated Steam Venture Agreement of even date herewith ("Amended
Steam Venture Agreement"). Lessor and Lessee have now agreed
that Lessor will lease a portion of the Building to Lessee for
the construction and operation of the cogeneration facility
pursuant to the terms and conditions set forth below.
NOW, THEREFORE, intending to be legally bound hereby, the
parties agree as follows:
1. Premises.
1.1 Premises.
(a) Lessor hereby leases to Lessee and Lessee
leases from Lessor for the term, at the rental, and upon all of
the conditions set forth herein, (i) that certain portion of the
Land as designated on the plan attached hereto as Exhibit B
("Phase I Premises") and (ii) that certain portion of the
Building as designated on the plan attached hereto as Exhibit B
extending from the base of the foundation of the Building (and
including any underground utilities) to the exterior surface of
the roof of the Building and inward from the exterior surface of
each outside well of the Building ("Phase II Premises"). For
purposes of this Lease, the term "Premises" shall refer only to
the Phase I Premises effective as of the Commencement Date, and,
effective as of the Phase II Commencement Date (as defined
below), to the Phase I Premises and the Phase II Premises
collectively, and the term "Cogeneration Facility" shall refer
only to Phase I of the Project effective as of the Commencement
Date and, effective as of the Phase II Commencement Date, to the
Phase I Project and the Phase II Project collectively.
(b) Lessee acknowledges that, subject to the
provisions of Section 14.1, Lessee has inspected the Premises and
determined that the premises is suitable for installation and
operation of the cogeneration 7acility with respect to its
dimensions, weight-carrying capacity. construction access and
environmental condition. and Lessee is not relying on any
representation by Lessor except as expressly set forth herein.
Lessee further acknowledges that the Premises currently contains
several inoperative boilers and associated Systems and equipment,
some of which may be inoperative, which were neither installed
nor operated by Lessor, which has no specific knowledge of the
condition of the premises or such equipment except for
information received by Lessor from PECO.
3
<PAGE>
1.2 Parking. The use end occupation by Lessee of the
premises shall include the use in common with others entitled
thereto of the common areas, service areas, sidewalks and other
facilities on or appurtenant to the Lend or the Building. subject
to the terms of this Lease and to reasonable rules and
regulations established by Lessor from time to time. Notice of
changes shall be provided by Lessor to Lessee in writing. Lessee
shall have the right to utilize up to eight (8) parking spaces in
the parking areas designated by Lessor from time to time, of
which six (6) shall be used by the operator of the Cogeneration
Facility. Lessee shall be responsible for limiting parking on the
Lend by Lessee's employees, invitees, licensees, agents and
visitors to those parking spaces specifically designated by
Lessor from time to time. Lessee acknowledges that the Lend is
owned by PECO and the availability of parking is subject to the
terms of the lease between PECO and Lessor, as such lease may be
modified from time to time, and any rules or regulations issued
by PECO from time to time.
1.3 Shared Facilities. Lessee shall have the right to
utilize existing stacks. doorways. rail facilities, engines.
cranes and similar facilities owned by Lessor and described in
Exhibit C (collectively. "Lessor's Facilities") as necessary or
appropriate for the construction. operation and maintenance of
the Cogeneration Facility, provided that (i) such use does not
unreasonably interfere with Lessor' a ongoing operation of the
Steam Loop, and (ii) Lessee's use of Lessor's Facilities shall
comply with reasonable rules and regulations promulgated by
Lessor in writing. Lessee acknowledges that many of Lessor's
Facilities are old and may not be suitable for use in their
present condition for construction or operation of the Cogenera
tion Facility. Any of Lessor's Facilities that require
replacement or substantial repair as a result of Lessee's use
shall be replaced or repaired by Lessee and the cost thereof
(except as otherwise set forth in Exhibit C) shall be divided as
follows: if the equipment in question has not previously been in
regular use by Lessor, Lessee shall bear the full cost of such
repair or replacement; if the equipment in question is in regular
use by Lessor at the time the repair or replacement becomes
necessary, the cost thereof shall be shared by Lessor and Lessee
based on projected relative use of the equipment during the
expected lifetime of the equipment. The operating cost of using
Lessor's Facilities by Lessee shall be determined by Lessor on
the basis of (i) the actual incremental cost of such use, if such
can be readily determined, or (ii) Lessor's reasonable estimate
of the relative use made by Lessee of various Lessor's Facilities
in proportion to Lessor's use thereof, based on market rental
value of the equipment where possible. utility charges and
maintenance, repair and replacement costs shall be included in
calculating the cost of Lessee's use of Lessor's Facilities.
4
<PAGE>
1.4 Permits.
(a) To the extent available to Lessor from
existing facilities owned by Lessor. or from the operation of the
cogeneration Facility (through the displacement of steam
production from other boilers), Lessor shall assign emission
offsets and allowances available at Schuylkill Station to Lessee
without charge1 to the extent reasonably required by Lessee to
permit the construction and operation of the Cogeneration
Facility. without interfering with Lessor's ability to meet the
steam requirements of its customers. Lessee shall request such
offsets and allowances in writing9 accompanied by appropriate
engineering reports supporting Lessee's requirements. Lessee
shall be solely responsible for acquiring any additional offsets
or allowances required by Lessee for the Cogeneration Facility
beyond those available from Lessor under this Section 1.4.
(b) Lessee shall not violate and this Lease shall
be subject to any applicable zoning ordinances and any municipal.
county and state constitution1 laws and regulations governing and
regulating the use of the Premises and the Building. The Land is
currently zoned G-2. Lessor expressly makes no representation or
warranty that. the use of the Premises contemplated by Lessee
does not conflict with or violate any applicable zoning
ordinances or municipal, county or state laws and regulations
regarding the use of the Premises. Lessor represents to Lessee
that Lessor's present use of the Building for operation of the
Steam Loop is not in violation of any applicable zoning or other
use-related ordinance, law or regulation.
1.5 Ground Lease. Lessee acknowledges that the
Building is located on land which Lessor leases from PECO
pursuant to a Schuylkill Station Lease Agreement dated
January 30, 1987 ("Ground Lease"), a copy of which is attached
hereto as Exhibit D. Any conflict between the terms of this
Lease and the terms of the Ground Lease shall be controlled by
the terms of the Ground Lease.
2. Term.
2.1 This Lease shall be for an initial term ("Initial
Term") consisting of (a) the period commencing on the
Commencement Date (as defined hereinafter) and ending on the date
("Full Operation Date") which will be the Phase II Project
Acceptance Date (as defined in the Amended Project Services
Agreement) unless construction of the Phase II Project has not
been initiated (as described in Section 9 of the Amended Steam
Venture Agreement) within one (1) year after the Phase I
Acceptance Date, in which event the Full Operation Date will be
5
<PAGE>
the Phase I Project Acceptance Date. plus (b) twenty-five (25)
years. commencing on the Full Operation Date and ending on the
date which is twenty-five (25) years thereafter. or. if the Full
Operation Date is not the first day of a month, twenty-five (25)
years after the last day of the month in. which the Full
Operation Date occurs, unless sooner terminated pursuant to any
provision hereof (the "Expiration Date"). Any Philadelphia or
Pennsylvania transfer tax due and payable as a result of this
Lease shall be paid by Lessee.
2.2 Commencement Date. The term of this Lease shall
commence on the date construction of Phase I of the Cogeneration
Facility begins, but in no event later than the date set forth in
the Amended Steam Venture Agreement (herein called the
"Commencement Date"). The Premises leased hereunder shall be
extended to include the Phase II Premises on the date
construction of Phase II of the Cogeneration Facility begins
("Phase II Commencement Date"). but not later than the date set
forth in the Steam Venture Agreement. The Commencement Date and
the Phase II Commencement Date shall each be recorded in an
addendum tc this Lease to be prepared by Lessor and executed by
both parties.
2.3 Options to Extend. Lessee shall have the option
to renew this Lease under the terms and conditions set forth in
Section 5 of the Steam Venture Agreement.
3. Rent; Additional Rent
3.1 Minimum Annua1 Rent. Lessee shall pay a minimum
annual rent of One Dollar ($l.00) in advance, on each anniversary
of the Commencement Date. In addition, Lessee shall pay Lessor
without set-off the Additional Rent as hereinafter set forth.
Unless otherwise specifically provided, all sums shall be paid to
Lessor at the address set forth on the signature page.
3.3 Additional Rent.
(a) As used herein, the term "Additional Rent
shall refer to any and all sums payable by Lessee to Lessor
hereunder, including, without limitation, those sums specifically
described as Additional Rent in this Lease. All Additional Rent
shall be payable within thirty (30) days following written demand
from Lessor, unless a different period is specified elsewhere in
this Lease.
(b) Lessee shall be solely responsible for, and
shall pay Lessor as Additional Rent, all increases in real estate
taxes, use and occupancy taxes or other taxes1 impositions,
levies, fees or governmental impositions and charges of any kind
6
<PAGE>
incurred by Lessor or imposed against the Lend9 the Building Or
the premises as a direct result of the installation and operation
Cf the cogeneration Facility (including. without limitation. real
estate taxes resulting from any increase in the assessment of the
Building due to the installation of the Cogeneration Facility)
Lessor shall give Lessee notice of any such increase in taxes,
and Lessee shall pay all amounts due hereunder to Lessor within
thirty (30) days following receipt of such notice by Lessor;
provided, however, that Lessee may contest any such tax increase
with the taxing authority in good faith so long as such contest
prevents any lien for unpaid taxes from being levied against
Lessor or the Premises. To the extent feasible. all sums due from
Lessee under this Section 3.2(b) shall be paid directly to the
taxing entity.
(c) Lessee shall be solely responsible for all
incremental site costs incurred because of the restructuring of
the project into two distinct phases.
4. Construction of Cogeneration Facility.
4.1 Construction by Lessee. The Cogeneration Facility
shall be constructed in accordance with the terms of the Amended
Project Services Agreement. Lessee shall be solely responsible
to repair any underground or other utilities or systems damaged
by Lessee or Lessee's contractors, employees or agents.
4.2 Access During Construction Period. During
Lessee's construction of the Cogeneration Facility, Lessor shall
provide reasonable access to the Premises for Lessee's workers
and equipment and make available (or request PECO to make
available) additional space on the Lend for staging. laydown and
storage to facilitate the construction process, in the area
outlined and identified as. "laydown area" on Exhibit B, or such
additional area as may be reasonably required by Lessee's
contractors without materially interfering with Lessor's
operations. Lessee's workers shall not park in the parking lot
unless authorized in writing by Lessor, which shall have no
obligation to provide such parking.
5. Use; Compliance with Law.
5.1 Use. Except as set forth in Section 5.1(b), the
Premises shall be used and occupied only for (i) the
construction, hookup, testing, operation, maintenance and repair
of the Cogeneration Facility, as described in plans and
specifications prepared by Lessee pursuant to the Amended Project
Services Agreement, and (ii) office and control room space for
7
<PAGE>
operation of the Cogeneration Facility end other uses associated
with operating the Cogeneration Facility (including, without
limitation, the construction, hookup, testing, operation
maintenance and repair of a water demineralization plant which
Lessee may deem necessary in lieu of the existing Water Plant
(hereinafter defined)) that do not interfere with Lessor's use of
the Building. Except as set forth in Section 5.1(b), the
Premises shall be used for no other purpose.
5.2 Compliance with Law.
With regard to all or. any part of the Premises or to
the use or manner of use of the Premises. or to the fixtures and
equipment in the Premises, throughout the term of this Lease, and
at its sole cost and expense, Lessee shall: (i) comply promptly
with all laws, ordinances, notices. orders; rules, regulations
and requirements of all federal, state and municipal governments
and all departments. commissions, boards and officers thereof,
and of the ?1ational Board of Fire Underwriters or any other body
now or hereafter constituted exercising similar functions; and
(ii) keep in force at all times all licenses, consents and
permits necessary for the lawful use of the Premises for the
purposes herein provided. Lessee shall have the right to contest
the validity of any purported violation, provided that such
contest operates to prevent enforcement of any remedy by any
party for such purported violation. Lessee shall not use nor
permit the use of the Premises in any manner that will tend to
create waste or a nuisance, or shall tend to unreasonably disturb
Lessor or PECO in their respective operations. Lessee shall
comply with all reasonable rules and regulations established by
Lessor from time to time.
6. Maintenance, Repairs and Alterations.
6.1 Maintenance, Repairs and Alterations.
(a) Except as specifically otherwise provided in
Paragraph 6.1(c) hereof, Lessee, at its sole cost and expense,
shall maintain, repair and replace, and keep in good order,
condition and repair the Premises, including, without limitation,
(i) all heating, air conditioning, ventilating, plumbing and
electrical systems servicing the Premises (as described in
subsection (b) below) and (ii) the portion of the Building roof,
walls (external and internal) and foundation located within the
Premises. Lessee shall also be responsible for any repairs,
replacements or maintenance necessary or appropriate to render
existing systems and utilities located in the Premises available
and operative for use by Lessee.
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(b) Exhibit C attached hereto lists certain
systems, equipment and services (collectively. "Services") which
will be required by the cogeneration Facility, and describes the
scope of Lessee's maintenance. repair and replacement
responsibilities for each of the Services.
(c) Lessor, throughout the term of this lease and
at Lessor's sole cost and expense. shall make all necessary
repairs to the footings and foundations and the structural steel
columns and girders forming a part of the Building outside the
Premises. and to exterior walls outside the Premises; provided.
however, that Lessor shall have no responsibility to make any
repair unless and until Lessor receives written notice of the
need for such repair. and provided further that Lessor shall have
no responsibility to repair any damage (other than ordinary wear
and tear) which arises out of or is caused by Lessee's use,
manner of use or occupancy of the Premises, or by Lessee's
installations in or upon the Premises, or by any act or omission
of Lessee or any employee, agent, contractor or invitee of
Lessee. Lessor shall initiate repair of any problems described
in this section that materially affect the operation of the
Cogeneration Facility within seven (7) business days following
receipt of notice, and shall diligently pursue such repairs
thereafter to completion, subject to delays for circumstances
beyond Lessor's reasonable control.
6.2 Surrender. On the last day of the term hereof, or
on any sooner termination, Lessee shall surrender the Premises to
Lessor in the condition required by the Amended Project Services
Agreement. Lessee shall repair any structural damage to the
Premises occasioned by the removal of Lessee's equipment.
6.3 Lessor's Rights. If Lessee fails to perform any
of Lessee's obligations under this Section 6. Lessor may at its
option (but shall not be required to) enter upon the Premises,
after five (5) days prior written notice to Lessee, and put the
same in good order, condition and repair consistent with its
condition on the date that the Cogeneration Facility begins
operation, and the cost thereof together with interest thereon
shall become due and payable as Additional Rent to Lessor
immediately upon demand.
6.4 Lessee's Remedies. If Lessor shall fail to
perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Lessor pursuant to this Lease,
and any such failure shall remain uncured for a period of thirty
(30) days after Lessee shall have served upon Lessor notice of
such failure, then Lessee may at Lessee's option perform any such
term, provision, covenant or condition, and the cost entailed
shall immediately be owing by Lessor to Lessee; provided,
9
<PAGE>
however, that Lessee proceeds to perform any such term,
provision, covenant or condition in strict accordance with the
following procedure:
(a) Lessee shall serve notice upon Lessor of
Lessor's failure to perform any of the terms, provisions,
covenants or conditions to be performed or complied with by
Lessor pursuant to this Lease and Lessor shall have thirty (30)
days after service of such notice to cure;
(b) If Lessor has not cured such failure or has
not commenced to cure such failure within said 30-day period,
Lessee shall notify Lessor that Lessee intends to engage in
independent consulting engineer, or other appropriate consulting
personnel, to advise Lessee of the nature of work which should be
undertaken to effect a long-term care;
(c) If at the time Lessee receives a report from
the consulting engineer, or other appropriate consulting
personnel, Lessor has not cured such failure or has not commenced
to cure such failure, Lessee shall notify Lessor of the nature of
work which was recommended to be performed to effect a long-term
cure and that Lessee intends to seek competitive bids for the
performance of the work;
(d) Upon receiving such bids, Lessee shall send
Lessor a copy of the bids received and if Lessor has not cured or
commenced to cure such failure within ten (10) days of Lessor's
receipt of the copy of bids, Lessee my proceed to cure Lessor's
failure and recover the cost thereof from Lessor with interest of
two percent (2%) over the Prime Rate (as defined in the Project
Services Agreement). In the event a dispute arises between
Lessor and Lessee regarding either party's performance under any
provision of this Section 6,4, the aggrieved party shall promptly
notify the other party to this Lease of the dispute within ten
(10) business days after such dispute arises. If the parties
shall have failed to resolve the dispute within ten (10) business
days after delivery of such notice, each party shall, within five
(5) business days thereafter. nominate a senior officer of its
management to meet at the Premises, or at any other mutually
agreed location, to resolve the dispute. Should the parties be
unable to resolve the dispute to their mutual satisfaction within
ten (10) business days after such nomination, each party shall
have the right to pursue any and all remedies available at law or
in equity. Without limiting the validity of the foregoing
covenants, the failure or inability of either party to give the
required notice or make the required nomination shall never be
construed to stop or deny such party's right to pursue any and
all remedies otherwise available to such party at law or in
equity.
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(e) Notwithstanding the foregoing Lessee may take
reasonable immediate action, with telephone notice to Lessor, to
cure any default by Lessor if necessary to prevent imminent
danger to persons or imminent material damage to property.
6.5 Alteration and Additions.
(a) Following installation of the cogeneration
Facility pursuant to Section 4, Lessee shall not, without
Lessor's prior written consent (not to be unreasonably withheld),
make any alterations. improvements, or additions on or about the
premises. except for minor nonstructural alterations.
(b) Any alterations9 improvements or additions in
or about the Premises that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in
written form with proposed plans. If Lessor shall give its
consent. the consent shall be deemed conditioned upon Lessee
acquiring all permits required to do so from appropriate
governmental agencies, the furnishing of a copy thereof to Lessor
prior to the commencement of the work and the compliance by
Lessee with all conditions of the permits in a prompt and expedi
tious manner.
(c) Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to
or for Lessee at or for use in the Premises which claims are or
may be secured by any mechanics' or materialmen's lien against
the Premises or any interest therein. If Lessee shall, in good
faith, contest the validity of any such lien, claim or demand,
then Lessee shall, at its sole expense, defend itself and Lessor
against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises, upon the condition
that if Lessor or its mortgagee shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor in an
amount equal to such contested lien, claim or demand indemnifying
Lessor; against liability for the same and holding the Premises
free from the effect of such lien or claim. In addition, Lessor
may require Lessee to pay Lessor's reasonable attorneys' fees and
costs if Lessor is named as a party in such action.
(d) All alterations, improvements, and additions
which may be made on the Premises shall become the property of
Lessor and remain upon and be surrendered with the Premises at
the expiration of the term, as the term may be extended under
Section 2.3. Notwithstanding the provisions of this Section
6.5(d), the Cogeneration Facility, other than that portion which
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is affixed to the Premises so that it cannot be removed without
material damage to the Premises, shall remain the property of
Lessee and may be removed by Lessee, unless Lessee's interest or
a portion thereof in the Cogeneration Facility has previously
been acquired by PUPCO pursuant to the Amended Project Services
Agreement.
7. Insurance; Indemnity.
7.1 Casualty Insurance. Lessee, at Lessee's sole cost
and expense, shall maintain and keep in effect throughout the
term of this Lease insurance against loss or damage to the
premises by fire and such other casualties as may be included
within all-risk insurance and other insurance as may be reason
ably needed, for not less than the cost of replacing the Premises
with a utility grade permanent structure ("Replacement
Structure") which is (a) in compliance with all applicable
governmental and quasi-governmental laws, rules and regulations
(including, without limitation, all applicable building codes),
and (b) otherwise sufficient so that the Replacement Structure
contains the same number of square feet as the Premises and it
can be used for all of the purposes set forth in Section 5.
Lessor and Lessee acknowledge that the Replacement Structure need
not be constructed using the same materials which are currently a
part of the Premises, provided. the Replacement Structure is
otherwise in compliance with the requirements set forth in this
Section 7.1. Such insurance shall include rental coverage in an
amount equal to one year's Additional Rent hereunder (as
reasonably estimated by Lessor from time to time, based on actual
results once available). Lessor and Lessee shall both be named
as insured and as loss payee AS their interests may appear. The
aforesaid insurance shall be in companies and in form, substance
and amount (where not stated above) reasonably satisfactory to
Lessor and any mortgagee of Lessor. and shall contain standard
mortgage clauses satisfactory to Lessor's mortgagee. The
aforesaid insurance shall not be subject to cancellation except
after at least thirty (30) days prior written notice to Lessor
and any mortgagee of Lessor. At least thirty (30) days prior to
the Commencement Date, and thirty (30) days prior to any
subsequent date on which the insurance would expire by its term,
a certificate evidencing the required coverage shall be provided
to Lessor, and original insurance policies shall be delivered
Lessor within sixty (60) days following the date on which
certificates are due hereunder. Lessor shall also maintain
similar all-risk insurance for the Building, and shall name
Lessor and Lessee as insured as their interests may appear.
7.2 Liability Insurance. Lessee, at Lessee's sole
cost and expense, shall maintain and keep in effect throughout
the term of this Lease insurance against liability for bodily
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injury (including death) or property damage in or about the
Premises, under a policy of comprehensive general public
liability insurance, naming Lessor and Lessee as insured parties,
with such limits as to each as may reasonably be required by
Lessor from time to time but not less than $25,000,000 for each
person and $25,000,000 for each occurrence of bodily injury
(including death) and for property damage. Lessee shall also
maintain Workers' Compensation in statutory amounts, and
employer's liability and automobile liability coverage in the
amount of $10,000,000 each. Each such policy of insurance shall
provide that it shall not be canceled without at least thirty
(30) days prior written notice to Lessor. At least thirty (30)
days prior to the Commencement Date, and thirty (30) days prior
to any subsequent date on which the insurance would expire by its
terms, a certificate evidencing the required coverage shall be
delivered to Lessor by Lessee. If Lessee shall fail, refuse or
neglect to obtain or to maintain any insurance that it is
required to provide, or to furnish Lessor with satisfactory
evidence of coverage within the time required, Lessor shall have
the right to purchase such insurance. All payments for such
insurance made by Lessor shall be recoverable by Lessor from
Lessee, together with interest thereon, as Additional Rent
promptly upon being billed therefor.
7.3 Waiver of Subrogation. Each of the parties hereto
releases the other. to the extent of the releasing party's
insurance coverage. from all liability for any loss or damage
covered by such insurance which may be inflicted upon the
property of such party even if such loss or damage shall be
brought about by the fault or negligence of the other party. its
agents or employees; provided. however, that this release shall
be. effective only with respect to loss or damage occurring
during such time as the appropriate policy of insurance shall
contain a clause to the effect that this release shall not affect
said policy or the right of the insured to recover thereunder.
If any policy does not permit such a waiver, and if the party to
benefit therefrom requests that such a waiver be obtained, the
other party agrees to obtain an endorsement to its insurance
policies permitting such waiver of subrogation if it is
available. If an additional premium is charged for such waiver,
the party benefiting therefrom agrees to pay the amount of such
additional premium promptly upon being billed therefor.
7.4 Equipment, Etc. Lessee shall, at its expense,
insure its fixtures, equipment and improvements.
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7.5 Indemnity.
(a) Lessee shall indemnify and hold harmless
Lessor from and against any and all claims arising from Lessee' a
use of the Premises or from the conduct of Lessee's business or
from any activity. work, or things done1 permitted, or suffered
by Lessee in or about the Premises or elsewhere and shall further
indemnify and hold harmless Lessor from and against any and all
claims arising from any breach or default in the performance of
any obligation on Lessee's part to be performed under the terms
of this lease, or arising from any negligence of the Lessee or
any of Lessee's agents. contractors or employees, and from and
against all costs, attorney's fees, expenses and liability
incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or proceeding
be brought against Lessor by reason of any such claim, Lessee
upon notice from Lessor shall defend the same at Lessee's expense
by counsel satisfactory to Lessor.
(b) Lessor shall indemnify and hold harmless
Lessee from and against any and all claims arising from. Lessor's
use of the Building or from the conduct of Lessor's business or
from any activity. work, or things done. permitted. or suffered
by Lessor in or about the Building or elsewhere and shall further
indemnify and hold harmless Lessee from and against any and all
claims arising from any breach or default in the performance of
any obligation on Lessor's part to be performed under the terms
of this lease, or arising from any negligence of Lessor or any of
Lessor's agents, contractors or employees. and from and against
all costs, attorney's fees. expenses and liability incurred in
the defense of any such claim or any action or proceeding brought
thereon; and in case any action or proceeding be brought against
Lessee by reason of any such claim. Lessor upon notice from
Lessee shall defend the same at Lessor's expense by counsel
satisfactory to Lessee.
7.6 Exemption. Neither Lessor nor its agents shall be
liable for injury to Lessee's business, for loss of income
therefrom or for injury or damage which may be sustained by the
person or property of Lessee, its employees. invitees, customers,
agents or contractors, or any other person in or about the
Premises caused by or resulting from fire, explosion, falling
wall and/or ceiling materials, steam, electricity, gas, dampness,
water or rain which may leak or flow from or into any part of the
Premises from the roof, street or subsurface condition or from
any other place, or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or by any other
cause of any nature, whether such damage or injury results from
conditions arising upon the Premises or from other sources or
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places, and regardless of whether the cause of such damage or
injury or the means of repairing same is inaccessible to Lessee,
except for claims for which Lessor is liable to indemnify Lessee
under Section 7.5(b). Neither Lessor nor its agents shall be
liable for any damage caused by other tenants or persons in the
Premises, occupants of adjacent property of the Building. or the
public. or caused by operations in construction of any private,
public or quasi-public work. Lessor shall not be liable for any
latent defect in the Premises.
8. Damage by Fire or Other Casualty.
8.1 Restoration. If the Premises shall be damaged or
destroyed by fire or other casualty, Lessee shall promptly notify
Lessor, and Lessor shall elect. by notice to Lessee within ten
(10) business days following receipt of Lessee's notice. to (i)
terminate this Lease. (ii) subject to any mortgagee's consent and
to the conditions set forth in this Section 8, to repair.
rebuild, replace such damage and restore the Premises to
substantially the same condition in which they were immediately
prior to such damage or destruction. or (iii) subject to any
mortgagee's consent and to the conditions set forth in this
Section 8, to construct a Replacement Structure. In the event
Lessor elects not to make such restoration or construct a
Replacement Structure, as applicable. Lessee shall have the
right, but not the obligation, to (i) reject the termination of
this Lease, whereupon the Lease shall remain in effect but the
parties' maintenance obligations shall be suspended during
reconstruction, and (ii) repair. rebuild or replace such damage
or construct a Replacement Structure. and Lessor shall in either
such event release to Lessee any portion of any insurance
proceeds received by Lessor for the portion of the Premises
damaged or destroyed.
8.2 Time for Repair. If Lessor or Lessee elects to
rebuild and restore the Premises. the work shall be commenced
promptly with due diligence. taking into account the time
required by Lessor or Lessee to effect a settlement with, and
procure insurance proceeds from, the insurer, and for delays
beyond Lessor's or Lessee's reasonable control.
8.3 Lessee's Property. Lessor's election to restore
the Premises under this Section shall not include the repair.
restoration or replacement of the cogeneration Facility.
fixtures, alterations, furniture or any other property owned,
installed, made by. or in the possession of Lessee.
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9. Utilities.
9.1 Oil.
(a) Lessee shall have the right to receive No. 2
and No. 6 oil throughput required for operation of the
Cogeneration Facility on the terms and conditions set forth in
the agreement attached hereto as Exhibit E.
(b) All costs and expenses associated with making
No.2 oil available to the Cogeneration Facility shall be the sole
responsibility of Lessee. provided that Lessor shall cooperate in
providing at no charge easements and/or licenses for the
installation of pipes, storage tanks, pumps and related
facilities so long as such installation does not interfere with
Lessor's operations. Any easement or licenses required from PECO
as owner of the Land or from any other party except Lessor shall
be obtained by Lessee at Lessee's expense. and Lessor shall have
no liability of any kind for PECO's or such other party's failure
or refusal to grant any easement. Oil shall only be delivered to
Lessee by truck during emergencies. such as adverse weather
preventing barge delivery.
9.2 Natural Gas. All costs and expenses associated
with making natural gas available to the Cogeneration Facility
shall be the sole responsibility of Lessee provided that Lessor
shall provide at no charge easements and/or licenses for the
installation of pipes and related facilities so long as such
installation does not interfere with Lessor's operations. Any
easement or licenses required from PECO as owner of the Land, or
from any party other than Lessor shall be obtained by Lessee at
Lessee's expense. and Lessor shall have no liability of any kind
for PECO's or such other party's failure or refusal to grant any
easement. If Lessee elects to make natural gas available to the
Cogeneration Facility. Lessor shall have the right to purchase
natural gas from Lessee, or to utilize gas piping installed by or
at the request of Lessee to obtain natural gas from any supplier
provided (i) that such gas is available above and beyond Lessees
reasonable requirements, and (ii) Lessor shall pay for such
natural gas at the same rate paid by Lessee plus any additional
cost incurred by Lessee for such additional use including a pro
rata portion of any local distribution pipeline transportation
costs, including losses if applicable. If Lessor's existing
Boiler 26 is converted to burn natural gas and oil (or Lessee is
advised in writing by Lessor o( Lessor's intention to so convert
Boiler 26), Lessee shall ensure that the natural gas distribution
pipeline installed to supply the Project, from the
interconnection with an interstate pipeline to the burner tip,
will be of sufficient size so that both the Project (Phase I and
Phase II) and Boiler 26 can utilize natural gas alone when
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operating simultaneously at their respective maximum output
levels. Unless otherwise agreed by the parties in writing, Lessor
shall not be obligated to purchase natural gas from Lessee and
Lessee shall not be obligated to contract for or supply natural
gas to Lessor. Lessee shall utilize high pressure gas pipelines
to the extent required by Phase II of the Project and
economically practical. Lessee shall use its best .efforts to
obtain fuel for the Project at the lowest price consistent with
system reliability, long term availability, and the needs of the
Project (as defined in the Amended Project Services Agreement) to
maintain reasonably predictable fuel prices and shall not enter
into any agreements with suppliers that will contain terms 3ore
onerous to Lessee (with consideration for price, contract terms,
duration, reliability and delivery), than are available in the
marketplace at the time any such agreement for fuel is executed
on behalf of the Project. Lessee shall make available to Lessor
all information and documentation with respect to gas purchases
as Lessor may be required to provide to the Pennsylvania Public
utility Commission. In addition, Lessee shall give to Lessor
reasonable prior notice of any meetings, discussions, or
negotiations that Lessee may have with the Philadelphia Gas Works
("PGW") which relate to the Project and Lessor shall be permitted
to attend and participate in any such meetings, discussions, or
negotiations. Lessee shall provide to Lessor copies of all
correspondence and documents related to such meetings,
discussions, or negotiations. Lessee represents. warrants and
covenants that neither Lessee, O'Brien, Adwin nor any affiliate
of any of them (collectively, "Lessee's Group") has executed or
will execute any contract or arrangement in connection with
supplying natural gas to the Project under which any other
property or project owned, operated or controlled by any of
Lessee's Group would receive beneficial terms (including, without
limitation, a more favorable price) gained solely by the Lessee's
Group's acceptance of less beneficial terms for the Project.
9.3 Demineralized Water.
(a) Lessee shall have the right to purchase water
treated at Lessor's existing demineralization plant ("Water
Plant") in accordance with the terms of this Section 9.3. All
modifications, additions or expansions to the Water Plant
required to produce demineralized water for Lessee's use shall be
performed by Lessor at Lessee's sole expense pursuant to plans,
specifications and construction contracts obtained by Lessor at
Lessee's expense and approved in advance by Lessee in Lessee's
reasonable judgment. Lessor shall use its best efforts to secure
regulatory approval to increase the price of steam to recover the
cost of modifying or expanding the Water Plant over the shortest
possible cost recovery period. All significant contracts in
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connection with such construction shall be chosen from at least
three bids and Lessor shall select the lowest qualified bid.
(b) Lessee shall initially pay the amounts for
demineralized water for Phase I and for Phase II of. the Project
as set forth in Exhibit F attached hereto, such price to increase
proportionately from time to time as Lessor's cost of production
increases ("water Price"). Lessor shall bill Lessee for all
demineralized water used by Lessee on a monthly basis. and the
water Price shall constitute Additional Rent. To the extent
reasonably feasible. electricity from the Cogeneration Facility
shall be used to operate the Water Plant and the cost of the
electricity shall be offset against the Water Price. Any
electrical interconnection cost required to enable the
Cogeneration Facility to provide power for the Water Plant or any
other use by Lessor shall be prorated between Lessee and Lessor
based on relative cost savings. Back-up electricity for the
water Plant will be obtained by Lessor, and the expense thereof
prorated between Lessor and Lessee. If Lessor obtains such back-
up electricity from the Cogeneration Facility, Lessor's prorated
portion of the expense therefor shall be offset against the Water
Price.
9.4 Other Utilities. Potable water and sanitary sewer
for Lessee's use shall be supplied by Lessor to the extent
currently available at the Building, provided that Lessor shall
not be liable for any failure to provide such utilities not
within Lessor's reasonable control. All usage charges and all
connection fees for all utilities shall be paid for by Lessee.
9.5 Electricity.
(a) Lessee shall bear the cost of all electricity
used by Lessee or by the Cogeneration Facility based on a sub-
meter, at the same rate paid by Lessor plus any additional cost
incurred by Lessor for such additional use. All billing by
Lessor for electricity shall constitute Additional Rent payable
by Lessee.
(b) As a condition to Lessor's obligations
hereunder, Lessee shall obtain PECO's consent to connecting the
Cogeneration Facility's electric bus to Lessor's electrical
system and provide evidence to Lessor of such consent, such
connection to be paid for by Lessor. When such connection
occurs, Lessor shall pay for electricity at the same rate as PECO
or any other purchasing utility pays to Lessee for electric
power. Any standby charges associated with Lessor'' connection
to the Cogeneration Facility'' electrical bus shall be paid by
Lessor on a pro rata basis.
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9.6 Cost. The cost of all utilities used by Lessee
shall be the sole responsibility of Lessee and shall be the sole
directly to the supplier (if separately metered) or to Lessor as
Additional Rent upon demand, if not separately metered. All
interconnect costs for all utilities. including any required
demolitions and site modifications. will be paid by Lessee,
except that Lessee shall be responsible only for those
interconnection costs that Lessee would have to incur' if Lessor
elected not to interconnect with the Cogeneration Facility's
electric bus. Such demolitions and modifications will not
unreasonably interfere with Lessor's operations in the Building.
10. Assignment and Subletting.
10.1 Lessor's Consent Required. Except as set forth in
the Amended Project Services Agreement and except for security
assignments to any construction or permanent lender to Lessee or
to any electricity purchaser, Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise
transfer or encumber all or any part of Lessee's interest in this
Lease or in the Premises without Lessor's prior written consent,
which Lessor may unreasonably withhold. Any attempted
assignment, transfer, mortgage, encumbrance or subletting without
such consent shall be void, and shall constitute a breach of this
Lease, at Lessor's option. Notwithstanding the foregoing, Lessee
may assign this Agreement as security for or as required by any
lender of funds to the Lessee.
10.2 No Release of Lessee. Except as set forth in the
Amended Project Services Agreement, no subletting or assignment,
regardless of Lessor's consent, shall release Lessee from
Lessee's obligations hereunder or alter the primary liability of
Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of Additional Rent
by Lessor from any other person shall not be deemed to be a
waiver by Lessor of any provision hereof. Consent to one
assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by
any assignee of Lessee or any successor of Lessee in the
performance of any of the terms hereof, Lessor may proceed
directly against Lessee without the necessity of exhausting
remedies against such assignee. Lessor may consent to amendments
or modifications to this Lease with assignees of Lessee after
notice thereof to Lessee if Lessee is still liable hereunder, and
such action shall not relieve Lessee of liability under this
Lease. No notice to Lessee of such amendments or modifications
shall be required. Any permitted assignee shall assume the
obligations of Lessee hereunder, by a writing satisfactory to
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Lessor, and a copy thereof shall be delivered to Lessor and to
Lessee.
10.3 Attorney's Fees. In the event Lessee shall assign
this Lease or sublet the Premises (subject to Lessor's consent as
set forth in Section 10.1) or request the consent of Lessor to
any assignment or subletting or if Lessee shall request the
consent of Lessor for any act that Lessee proposes to do, then
Lessee shall pay Lessor's reasonable attorneys fees incurred in
connection therewith.
10.4 Conflict. In the event of any conflict between
the terms of this Section 10 and the terms of the Amended Project
Services Agreement, the terms of the Amended Project Services
Agreement shall control.
11. Defaults; Remedies.
11.1 Lessee's Major Default. The occurrence of a
Seller's Major Default under the Amended Steam Purchase Agreement
or an Owner's Major Default under the Amended Project Services
Agreement shall constitute a Lessee's Major Default hereunder and
entitle Lessor to terminate this Lease and to re-enter the
Premises. together with all additions, alterations and
improvements. and, at the option of Lessor. remove all persons
and all or any property therefrom. either by summary dispossess
proceedings or by any suitable action or proceeding at law,
without being liable for prosecution or damages therefor (other
than those arising from Lessor's gross negligence or willful
misconduct), and repossess and enjoy the Premises.
11.2 Lessee's Minor Default. The occurrence of any one
or more of the following events shall constitute a Lessee's Minor
Default:
(a) The failure by Lessee to make any payment of
Additional Rent when due or any other payment required to be made
by Lessee hereunder when due.
(b) The failure by Lessee to observe or perform
any of the covenants, conditions or provisions of this Lease to
be observed or performed by Lessee, other than as described in
paragraph (a) above, where such failure shall continue for a
period of 30 days after written notice thereof from Lessor to
Lessee; provided. however, that if the nature of Lessee's default
is such that more than 30 days are reasonably required for its
cure, then Lessee shall not be deemed to be in default if Lessee
commences such cure within said 30 day period and thereafter
diligently pursues such cure to completion.
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(c) (i) The making by Lessee of any general
assignment. or general arrangement for the benefit of creditors;
(ii) the. filing by or against Lessee of a case or petition to
have Lessee adjudged a bankrupt or a case or petition for
reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a case or petition filed
against Lessee, the same is dismissed within 60 days); (iii)
the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the premises or
of Lessee's interest in this Lease, where possession is not
restored to Lessee within 30 days; or (iv) the attachment,
execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest.
in this Lease, where such seizure is not discharged within 30
days.
(d) The abandonment or vacating of the Premises
by Lessee, which shall include any cessation of operation of the
Cogeneration Facility for a period in excess of ten (10)
consecutive days other than for repair or scheduled maintenance.
11.03 Remedies. In the event of a Lessee's Minor
Default, Lessor shall have the right (i) to collect from Lessee
by legal action all amounts owing with interest at two percent
over Prime Rate (as defined in the Amended Project Services
Agreement), or (ii) to seek injunctive relief.
11.4 Default by Lessor.
(a) Lessor's Events of Default. The occurrence
of any one or more of the following events shall constitute an
Event of Default by Lessor:
(b) The failure by Lessor to observe or perform
any of the covenants, conditions or provisions of this Lease to
be observed or performed by Lessor. where such failure shall
continue for a period of 30 days after written notice thereof
from Lessee to Lessor; provided, however, that if the nature of
Lessor's default is such that more than 30 days are reasonably
required for its cure, then Lessor shall not be deemed to be in
default if Lessor commences such cure within such 30 day period
and thereafter diligently pursues such cure to completion.
(c) Upon the occurrence of an Event of Default by
Lessor hereunder, Lessee may exercise Lessee's rights under
Section 6.4(a)-(d), or if such Event of Default is persistent
and is continuing and threatens irreparable harm to Lessee, to
seek injunctive relief. Upon the occurrence of an Event of
Default under the Amended Steam Purchase Agreement, the Amended
Steam Venture Agreement or the Amended Project Services Agreement
that
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would permit Lessee to terminate these agreements, Lessee shall
also be entitled to terminate this Agreement.
11.5 Late Charges. Lessee hereby acknowledges that late
payment by Lessee to Lessor of Additional Rent will cause Lessor
to incur costs not contemplated by this Lease. the exact amount
of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting
charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of Additional Rent shall not be
received by Lessor or Lessor's designee or within thirty (30)
days after any such amount shall otherwise be due, Lessee shall
pay to Lessor a late charge equal to 3% of such overdue amount.
The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Lessor will incur by reason
of late payment of Lessee. Acceptance of such late charge by
Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted
hereunder.
11.6 Curing Defaults. If Lessee shall be in default in
the performance of any of its obligations hereunder, Lessor,
without any obligation to do so, in addition to any other rights
it may have in law or equity, may elect to cure such default on
behalf of Lessee after ten (10) days' written notice (except in
the case of emergency) to Lessee. Lessee shall reimburse Lessor
upon demand for any sums paid or costs actually incurred by
Lessor in curing such default, including interest thereon from
the respective dates of Lessor's making the payments and
incurring such costs, which sums and costs together with interest
thereon shall be deemed Additional Rent payable promptly upon
being billed therefor.
11.7 Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserve to Lessor is intended to
be exclusive of any other right or remedy herein or by law, but
each shall be cumulative and in addition to every other right or
remedy given herein or now or hereafter existing at law or in
equity or by statute.
12. Condemnation.
12.1 Termination. (i) If all of the Premises are
taken by a condemnation; or (ii) if any portion of the Premises
is taken by a condemnation and, in Lessor's reasonable opinion,
it would be impractical or the condemnation proceeds will be
insufficient to restore the remainder of the Premises; or (iii)
if any portion of the Premises is taken by a condemnation and, in
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Lessee's reasonable opinion, the taking is so extensive or
constitutes the taking of a part of the Premises so vital to its
operation that such partial taking has the same practical effect
as a total taking, then, in any such event, this Lease and the
other Project Agreements shall terminate and all obligations
hereunder shall cease as of the date upon which possession is
taken by the condemnor.
12.2 Partial Condemnation. If there is a partial
condemnation and this Lease has not been terminated pursuant to
Section 12.1 hereof, Lessor shall restore the Building and the
improvements which are part of the Premises to a condition and
size as nearly comparable as reasonably possible to the condition
and size thereof immediately prior to the date upon which
possession shall have been taken by the condemnor. If the
condemnation proceeds are more than adequate to cover the cost of
the restoration and Lessor's expenses in collecting the
condemnation proceeds, any excess proceeds shall be retained by
Lessor or applied to repayment of any mortgage secured by the
Premises.
12.3 Award. In the event of a condemnation affecting
Lessee, Lessee shall have the right to make a claim against the
condemnor for removal expenses, business dislocation damages,
moving expenses, and the value of special purpose equipment
installed by Lessee; provided and to the extent, however, that
such claims or payments do not reduce the sums otherwise payable
by the condemnor to Lessor.
12.4 Mortgagee. If the first mortgagee of the Premises
in the reasonable exercise of its judgment deems it impractical
or the condemnation proceeds insufficient to restore the
Premises, the decision of the mortgagee shall be binding upon
Lessor and Lessee.
13. General Provisions.
13.1 Estoppel Certificate. Lessee shall at any time
upon not less than ten (10) days' prior written notice from
Lessor execute, acknowledge and deliver to Lessor a written
instrument in recordable form certifying that this Lease is
unmodified and in full force and effect (or, if there have been
modifications, that it is in full force and effect as modified
and stating the modifications); certifying that Lessee has
accepted possession of the Premises (if true); stating the date
on which the term of the Lease commenced and the dates to which
minimum rent, Additional Rent and other charges have been paid in
advance, if any; stating that to the best knowledge of the signer
of such instrument Lessor is not in default of this Lease (or
specifying any default); stating any other fact or certifying any
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<PAGE>
other condition reasonably requested by Lessor or reasonably
required by any mortgagee or prospective mortgagee or purchaser
of the Premises or any interest therein; and stating that it is
understood that such instrument may be relied upon by any
mortgagee or prospective mortgagee or purchaser of the Premises
or any interest therein or by any assignee of Lessor's interest
in this Lease or by any assignee of any mortgagee. The foregoing
instrument shall be addressed to Lessor and to any mortgagee,
prospective mortgagee, purchaser or other party specified by
Lessor.
13.2 Certain Definitions.
(a) "Lessor". The word "Lessor" is used herein
to include the Lessor named above as well as its successors and
assigns, each of whom shall have the same rights, remedies,
powers, authorities and privileges as he would have had he
originally signed this lease as Lessor. Any such person, whether
or not named herein, shall have no liability hereunder after it
ceases to hold title to the Premises. Neither Lessor nor any
principal of Lessor shall have any personal liability with
respect to any of the provisions of this Lease or the Premises,
and if Lessor is in breach or default with respect to Lessor's
obligations under this Lease or otherwise, Lessee shall look
solely to the equity of Lessor in the Premises for the
satisfaction of Lessee's claims.
(b) "Lessee". The word "Lessee" is used herein
to include the Lessee named above as well as its successors and
assigns, each of which shall be under the same obligations and
liabilities and each of which shall have the same rights,
privileges and powers as it would have possessed had it
originally signed this lease as Lessee. Each and every of the
persons named above as Lessee shall be bound, jointly and
severally, by the terms, covenants and agreements contained
herein. However, no such rights, privileges or powers shall
inure to the benefit of any assignee of Lessee, immediate or
remote, unless the assignment to such assignee is permitted or
has been approved in writing by Lessor.
(c) "Mortgage" and "Mortgagee". The word
"mortgage" is used herein to include any lien or encumbrance on
the Land, the Premises or any part of or interest in or
appurtenance to the Premises. The word "mortgagee" is used
herein to include the holder of any mortgage. The term "first
mortgage" refers to the holder of the most senior lien on the
Premises. Wherever any right is given to a mortgagee, that right
may be exercised on behalf of such mortgagee by a representative
or servicing agent of such mortgagee.
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13.3 Severability. If any provision of this Agreement
or the application thereof to any Person or circumstance(s) shall
be invalid or unenforceable to any extent, (a) the remainder of
this Agreement and the application of such provision to other
Person(s), entity(ies) or circumstance(s) shall not be affected
thereby and (b) each such provision shall be enforced to the
greatest extent permitted by law.
13.4 Time of Essence. Time is of the essence of all
provisions hereof.
13.5 Captions. Article and paragraph captions are not a
part hereof.
13.6 Amendments. This Lease may be modified in writing
only, signed by both of the parties.
13.7 Notices. Any notice required or permitted to be
given hereunder shall be in writing and may be given by personal
delivery, overnight delivery or certified mail. If given
personally, such notice shall be deemed to be given on the date
delivered; if sent by overnight delivery, such notice shall be
deemed to be given as of the day it is delivered; or if sent by
certified mail, such notice shall be deemed to be given three (3)
days after mailing. If given personally, by overnight delivery
or by certified mail, notice shall be deemed sufficiently given
if addressed to Lessee or to Lessor at the address noted below
the signature line of the respective parties, as the case may be,
and to each party's counsel as set forth on the signature page.
Either party may by notice to the other specify a different
address for notice purposes.
13.8 Waivers. No waiver by Lessor of any provision
hereof shall be deemed a waiver of any other provision hereof or
of any subsequent breach by Lessee of the same or any other
provision. Lessor's consent to or approval of any act shall not
be deemed to render unnecessary the obtaining of Lessor's consent
to or approval of any subsequent act by Lessee. The acceptance
of rent or Additional Rent hereunder by Lessor shall not be a
waiver of any preceding breach by Lessee of any provision hereof,
other than the failure of Lessee to pay the particular rent so
accepted, regardless of Lessor's knowledge of such preceding
breach at the time of acceptance of such rent. The payment of
any rent or Additional Rent hereunder by Lessee shall not be a
waiver of any preceding breach by Lessor of any provision hereof,
regardless of Lessee's knowledge of such preceding breach at the
time of acceptance of such rent.
13.9 Recording. Lessee or Lessor, at any time and from
time to time and within five(5) days after the other party's
written request, shall execute, acknowledge and deliver
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to the other party a short form or memorandum of this Lease for
recording purposes.
13.10 Holding Over. If Lessee remains in
possession of the Premises or any part thereof after the
expiration of the term hereof without the express written consent
of Lessor, such occupancy shall be a tenancy from month to month
under the same terms and conditions set forth in this Lease.
Anything to the contrary notwithstanding, any holding over by
Lessee without Lessor's prior written consent shall constitute
Lessee's Major Default hereunder without notice or cure period
and shall be subject to all the remedies set forth herein.
13.11 Cumulative Remedies. No remedy or election
hereunder shall be deemed exclusive but shall, wherever possible,
be cumulative with all other remedies at law or in equity.
13.12 Binding Effect: Choice of Law. Subject to
any provisions hereof restricting assignment or subletting by
Lessee, this Lease shall bind the parties and their successors
and assigns. This Lease shall be governed by the laws of the
commonwealth of Pennsylvania.
13.13 Subordination and Attornment.
(a) This Lease and the estate, interest and
rights hereby created are subordinate to any mortgage now or
hereafter placed upon the Land, the Building or any interest
therein, and to all renewals, modifications, consolidations,
replacements and extensions of same as well as any substitutions
therefor. Lessee agrees that in the event any person, firm,
corporation or other entity acquires the right to possession of
the Land and the Building including any mortgages, Lessee shall,
if requested, attorn to and become the tenant of such person,
firm, corporation or other entity, upon the same terms and
conditions as are set forth herein for the balance of the Lease
term. The foregoing shall be operative with respect to any lien
hereafter created only if Lessor shall deliver to Lessee the
written agreement of the lienholder that such lienholder shall
not disturb Lessee's possession under this Lease, in the event of
foreclosure, transfer in lieu thereof, or other enforcement
proceedings, provided that Lessee shall not be in default
hereunder. Any such agreement shall be in reasonable form, may
require Lessee to confirm the subordination of this Lease and to
agree to attorn to the lienholder, and may provide that the
lienholder is not bound by the acts or omissions of Lessor, and
Lessee shall not unreasonably withhold or delay execution or
delivery of such agreement. Lessee, if requested by Lessor,
shall execute any such instruments in recordable form as may be
reasonably required by Lessor in order to confirm or effect the
subordination of this
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Lease and the attornment of Lessee to future landlords in
accordance with the terms hereof.
(b) Lessor has obtained the consent of lessor's
mortgage lender to transaction contemplated in this Lease.
13.14 Lessor's Access. Lessor and Lessor's agents
shall have the right to enter the Premises at all reasonable
times for the purposes of inspecting the Premises, showing the
Premises to prospective lenders and making required alterations,
repairs, improvements or additions to the Premises or to the
Building.
13.15 Signs. Except for signs which are located
wholly within the interior of the Building and which are not
visible from the exterior of the Building, no signs shall be
placed, erected, maintained or painted at any place upon the
Premises without the prior written consent of lessor as to the
size, design, color, location, content, illumination,
composition, or material and mobility thereof, which consent
shall not be unreasonably withheld. All signs shall be installed
and maintained by by Lessee, at its cost, in good condition
during the term of this Lease, and Lessee shall remove all signs
at the termination of this lease and shall repair and restore any
damage caused by the installation or removal thereof.
13.16 Merger. The voluntary of other surrender of
this Lease by Lessee, or a mutual cancellation thereof, or a
termination by Lessor, shall not work a merger unless lessor so
stipulates in writing, and shall, at the option of lessor,
terminate all or any existing subtenancies or may, at the option
of Lessor, operate as an assignment to Lessor of any or all of
such subtenancies.
13.17 Corporate Authority. If Lessee or any
partner of Lessee is a corporation, each individual executing
this Lease on behalf of said corporation represents and warrants
that he is duly authorized to execute and deliver this Lease on
behalf of the corporation, in accordance with a duly adopted
resolution of the Board of Directors of the corporation or in
accordance with the Bylaws of the corporation, and that this
Lease is binding upon the corporation as a partner of lessee in
accordance with its terms. If lessee or any partner of Lessee is
a corporation, lessee shall, upon execution of this Lease,
deliver to Lessor a certified copy of a resolution of the Board
of Directors of the corporation authorizing or ratifying the
execution of this Lease.
13.18 Interest. Wherever interest is required to
be paid hereunder, such interest shall be at the rate two percent
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(2%) in excess of the Prime Rate in effect from time to time by
the first mortgages of the Premises.
13.19 Quiet Possession. Upon Lessee paying the
rent reserved hereunder and observing and performing all of the
covenants, conditions and provisions on lessee's part to be
observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to
all of the provisions of this lease.
13.20 Entire Agreement. This Lease and the Related
Agreements represent the entire agreement between the parties
hereto and there are no collateral or oral agreements or
understandings between Lessor and Lessee with respect to the
Premises. Lessee agrees to make such changes to this lease as
are reasonably required by any mortgagee, provided such changes
do not substantially affect Lessee's rights and obligations
hereunder. The masculine (or neuter) pronoun, singular number,
shall include the masculine, feminine and neuter genders and the
singular and plural number.
13.21 Brokers. Lessor and lessee each represent
and warrant to the other that it has caused or incurred no claims
for brokerage commissions, finder's fees of similar claims in
connection with this Lease, and each party shall indemnify,
defend and hold the other harmless from any liabilities arising
from any such claim caused or incurred by it.
13.22 Waiver of Trial of Jury. Lessor and Lessee
each waive trial by jury in any action or counterclaim brought by
either party against the other under this Lease.
14. Hazardous Waste.
14.1 Inspection Contingency.
(a) Lessee shall have the right to conduct an
environmental inspection of the Premises at Lessee's expense,
provided that Lessee shall release, defend, indemnify and hold
Lessor harmless from any injury to person or property arising
from such inspection, and shall restore the Premises to its
condition prior to the inspection to the extent reasonably
possible. In the event lessee is dissatisfied with the results
of such inspection, Lessee may terminate this Agreement and all
the Project Agreements by notice to Lessor received no later than
ninety (90) days after Lessor's receipt of the environmental
inspection report. Lessee shall provide Lessor with copies of
all reports generated by any inspection.
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(b) If any such environmental inspection reveals
contamination on the Premises by Hazardous Material (as defined
in Section 14.6), or, if subsequent to the commencement of
construction of the Cogeneration Facility, further inspection
reveals contamination of the Premises by Hazardous Material,
(i) Lessee will be entitled to relocate the Cogeneration Facility
to the parking lot of the Schuylkill Station ("Parking Lot"), or,
subject to the terms of this Section 14.1(b), to another location
"Alternate Site") owned by Lessor or any of its affiliates which
is mutually acceptable to Lessee, Lessor and the affiliate of
Lessor which is the owner of the Alternate Site, if applicable,
and (ii) all dates set forth in Sections 7(D)(i and ii) of the
Steam Venture Agreement shall be revised to provide for an
extension of the time for performance by the respective parties
to the Steam Venture Agreement required under such Sections
7(D)(i and ii) for a period equal to the length of the delay
resulting from such contamination of the Premises by Hazardous
Material, provided, however, in no event shall such extension
exceed six (6) months. If Lessee so elects, Lessee will be
entitled to perform an environmental inspection of the Parking
Lot and/or alternate Site at Lessee's sole cost and expense. If
such environmental inspection reveals contamination of the
Parking Lot or Alternate site by Hazardous Material, or, if
subsequent to the commencement of construction of the
Cogeneration Facility on the Parking Lot or Alternate Site,
further inspection reveals contamination of the Parking Lot or
Alternate site by Hazardous Material, Lessee may terminate this
Lease and all Project Agreements without further liability to
lessor. If Lessee elects to relocate the Cogeneration Facility
to the Parking Lot or Alternate Site, the appropriate
modifications will be made to this Lease through written
amendment, which modifications (if the Alternate Site is
selected) shall include, without limitation, revising the minimum
annual rent due to Lessor to be a rent equivalent to that which
Lessor would otherwise be able to command for the Alternate site
in the marketplace.
(c) Lessor shall be responsible for making all
notifications required by applicable law to all applicable
governmental bodies which become necessary as a result of any
inspection of the Premises or Alternate Site, as applicable, in
accordance with the terms of this Section 14.1. Notwithstanding
the foregoing, Lessee shall advise Lessor of all issues related
to the environmental condition of the Premises or Alternate Site,
as applicable, which may require notification to any
governmental bodies.
14.2 Acknowledgment. Lessee acknowledges that Lessor
has advised Lessee that (i) Lessor acquired a portion of the
Building from PECO, (ii) PECO had previously used a portion
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of the Building for operation of the Steam Loop, and (iii) PECO
has used and continues to use a portion of the Building for
generating electrical power. Any environmental problem or
liability created by any use of the Building or the Land, prior
to Lessor's acquisition or lease thereof, shall not be imputed to
either Lessor or Lessee.
14.3 Lessee's Representations and Warranties. Lessee
represents and warrants to Lessor that it will:
(a) not store, use, release, produce, install or
dispose of any Hazardous Material on the Premises except in full
compliance with all applicable laws and regulations and with
Lessor's prior written consent;
(b) provide Lessor with written notice; (i) upon
Lessee obtaining knowledge of any potential or known release, or
threat or release, of any Hazardous Material at or from the
Premises; (ii) upon Lessee's receipt of any notice to such effect
from any federal, state, or other governmental authority; and
(iii) upon the Lessee obtaining knowledge of any incurring of any
expense or loss by such governmental authority in connection with
the assessment, containment, or removal of any Hazardous Material
for which such expense or loss Lessee may be liable or for which
such expense or loss a lien may be imposed on the Premises;
(c) provide Lessor with written notice of all
Hazardous material brought onto the Premises and fully cooperate
with lessor in complying with all tracking and monitoring
requirements of any governmental agency.
14.4 Lessee's Indemnity. Lessee shall indemnify,
defend, and hold Lessor harmless of and from any claim brought or
threatened against lessor on account of the introduction by
Lessee of Hazardous Material onto the Premises, or the release of
such Hazardous Material on or from the Premises, or the release
of such Hazardous Material on or from the Premises, or the
failure by Lessee to comply with the terms and provisions hereof
(each of which may be defended, compromised, settled, or pursued
by Lessor with counsel of Lessor's selection, but at the expense
of Lessee). This indemnification shall survive any termination
of this Lease.
14.5 Inspection. Lessor shall have the right to enter
the Premises at any time to inspect the Premises to ascertain
whether they are clean and free of Hazardous Material.
14.6 Definition. The term "Hazardous Material" is used
in this Lease in its broadest sense and includes but is not
limited to (i) "hazardous substances" as that term is defined in
Section 101(14) of the comprehensive Environmental Response,
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Compensation and Liability Act, 42 U.S.C. 9601(14), (ii)
"hazardous waste" or "solid waste" as defined in 40 CFR 261,
(iii) "hazardous waste," "residual waste" and "solid waste," as
defined in Section 103 of the Pennsylvania solid Waste Management
Act, 35 P.S. 6018.103 or 25 Pa. Code 75.260 and 75.261; and
(iv) petroleum base products, paint and solvents, lead, cyanide,
DDT, printing inks, acids, pesticides, ammonium compounds,
asbestos, PCB's and other chemical products.
14.7 Lessor's Representation and Warranties. Lessor
represents and warrants to Lessee that Lessor has no actual
knowledge of any Hazardous Material stored, used, released,
produced, installed or disposed of in the Building except in
compliance with all applicable laws and regulations.
14.8 Lessor's Indemnity. Lessor shall indemnify,
defend, and hold Lessee harmless of and from any claim brought or
threatened against Lessee on account of the introduction by
Lessor of Hazardous Material, onto the Premises or the Building,
or the release of such Hazardous Material, on or from the
Premises, or the failure by Lessor to comply with the terms and
provisions hereof (each of which may be defended, compromised,
settled, or pursued by Lessee with counsel of Lessee's selection,
but at the expense of Lessor). This indemnification shall
survive any termination of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease the day and year first above written.
Address: LESSEE:
225 S. 8th Street GRAYS FERRY COGENERATION
Philadelphia, PA 19106 PARTNERSHIP
By: O'Brien Environmental Energy, Inc.
By: /s/ Robert A. Shinn
Attest: /s/
By: Adwin Equipment Company
By: /s/ Daniel A. Neely
Attest: /s/
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Address: LESSOR:
2600 Christian Street
Philadelphia, PA 19146 PHILADELPHIA THERMAL ENERGY
CORPORATION
By: /s/ S.B. Smith
Attest: /s/
COUNSEL FOR LESSOR:
Barnett Satinsky, Esquire
Fox, Rothschild, O'Brien & Frankel
2000 Market Street, 10th Floor
Philadelphia, PA 19103
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EXHIBITS AND SCHEDULES
EXHIBIT A Site Plan
EXHIBIT B Building Plan (Laydown and Interconnect)
EXHIBIT C Lessor's Facilities and Services
EXHIBIT D Ground Lease
EXHIBIT E Dock Facility Service Agreement
EXHIBIT F Demineralized Water Charges
<PAGE>
EXHIBIT A TO SITE LEASE
LEGAL DESCRIPTION OF LAND
<PAGE>
PARCEL C-1 BLOCK 156 LOT 1 EXHIBIT F 172
ALL THAT CERTAIN lot or piece of ground with the building and
improvements thereon erected, described as follows to wit:
SITUATE in the 30th Ward of the said City of Philadelphia.
BEGINNING at the Southwest corner of Christian Street and 26th
(formerly called Burnett) Street; thence extending Southwardly
along the said 26th Street; 349 feet 7 inches to the South side
of Carpenter Street; thence Eastward along the South side of said
Carpenter Street 12 feet 6-5/8 inches to the Northwesterly side
of Grays Ferry Road; thence along the Northwesterly side of said
Grays Ferry Road 250 feet 11-5/6 inches to a point in the said
Northwesterly side of Grays Ferry Road which point is at the
distance of 32 more or less Northeastwardly from the limit line
of the right of way of the Delaware Extension of the Penna.
Railroad co. Northeastwardly 165 feet be the same more or less by
a line running parallel with and at the distance of 32 feet more
or less from the said Northwesterly limit line of the said right
of way of the Delaware Extension of the Penna. Railroad Co.;
thence Northward 70 feet more or less to Christian Street
aforesaid by a line running parallel with and in a Westerly
direction 240 feet from the Westernmost building line of said
26th Street and thence Eastwardly along the Southerly building
line of said Christian Street 240 feet to the place of beginning.
PARCEL C-2 BLOCK 156 LOT 3
ALL THAT CERTAIN tract or piece of land with the buildings and
improvements composing the Electric Light and Power Plant and
other buildings and improvements thereon erected.
SITUATE in the 30th Ward of the City of Philadelphia, described
as follows to wit:
BEGINNING at a point on the South side of Christian Street at the
distance of 240 feet Westward from the West side of 26th
(formerly called Burnett) Street; thence extending Westward along
the South side of said Christian Street 638 feet 10/1-2 inches to
the Southeasterly side of Schuylkill (formerly called Sutherland)
Avenue; thence Southwestwardly along the said side of Schuylkill
Avenue 53 feet more or less to a point thence Northwestwardly 73
feet more or less to a point on the Northwesterly side of said
Schuylkill Avenue the distance of 22 feet 9-7/8 inches
Southweswardly from the Southerly line of Christian Street
extended; thence North 59 degrees, 45 minutes West by ground now
or ___ of Charles Robb 320 feet 7-5/8 inches to the Port Wardens
line in the River Schuylkill; thence Southwestwardly along the
said Port Wardens line 211 feet; thence South 55 degrees East by
ground of the United States Arsenal 276 feet 7-1/4 inches to the
Southwesterly side of said Schuylkill Avenue; thence
Southeastwardly along the said side of Schuylkill Avenue 52 feet
8-7/8 inches to a point; thence South 55 degrees East recrossing
the said Schuylkill Avenue and along tract of ground used by the
Pennsylvania Railroad co., said railroad 1071 feet 7-1/2 inches
more or less to the Northwesterly side of Grays Ferry Road;
thence Northeastwardly along the said side of Grays Ferry Road 32
feet to a point; thence Northwestwardly on a line parallel with
and at the distance of 32 feet Northeastwardly from the said
strip of ground used by the Penna. Railroad Co. as a railroad 164
feet 1-1/2 inches to a point and thence Northwesterly on a line
parallel with the said 26th Street 475 feet 6-5/8 inches to the
place of beginning.
<PAGE>
RESERVING AND EXCEPTING THEREOUT: EXHIBIT F
ALL THAT CERTAIN strip or piece of land with the buildings
and improvements thereon erected.
SITUATE in the 30th Ward of the said City of Philadelphia
and State of Pennsylvania bounded and described as follows
viz:
BEGINNING at a point in the Northeasterly line of land
conveyed by Edward Harris and wife to The Penna. Railroad
Co. by Deed dated 2/23/1860 at the distance of 764 feet 8-
1/2 inches Northwestwardly measured along said line from the
West Side of Grays Ferry Road as said road is laid down on
the general plan of the said City of Philadelphia and
extending: thence Northwestwardly by said land 235 feet 3-
2/4 inches to a point in the Southeasterly line of the strip
of land formerly known as Schuylkill Avenue; thence
Northeastwardly along said lines of land 25 feet 6-3/4
inches to a point; thence Southeastwardly by other land of
the said Southern Electric Light and Power Co. 228 feet 8-
1/4 inches to the place of beginning.
CONTAINING 2740.66 square feet more or less.
PARCEL C-3 BLOCK 156 LOT 7
ALL THAT CERTAIN triangular lot or piece of ground described
according to a survey thereof made by John M. Dobre the 3rd day
of July A.D., 1901 as follows:
BEGINNING at a point at the intersection of the South house line
of Christian Street with the center line of Schuylkill Avenue
(now vacated) in the 30th Ward of the City of Philadelphia;
thence extending Westward; along the Southerly line of Christian
Street extended 115 feet 8-1/8 inches to the line of land
formerly of the Southern Electric Light and Power co. and
hereinabove described and granted; thence extending
Southeastwardly along the said line making an angle of 17
degrees, 32 minutes, 26 seconds with the above described line 95
feet 10-3/8 inches to a point in the center line of said
Schuylkill Avenue (now vacated); thence Northeastwardly along the
center line of said Schuylkill Avenue (now vacated) 37 feet 8-3/4
inches to the first mentioned point and place of beginning.
BEING as to Premises C-1 the and premises which Southern Electric
Light and Power Company, a Pennsylvania Corporation by Deed dated
11-16-16 and recorded 1-30-17 in the County of Philadelphia in
Deed Book JMH 140 page 420 conveyed unto The Philadelphia
Electric Company, a Pennsylvania Corporation in fee.
BEING as to Premises C-2 and C-3 the same premises which The
Southern Electric Light and Power Company, a Pennsylvania
Corporation by Deed dated 4-8-04 and recorded 1-16-06 in the
County of Philadelphia in Deed Book WSY 561 page 470 conveyed
unto The Philadelphia Electric Company, a Pennsylvania
Corporation, in fee.
<PAGE>
EXHIBIT B to the Site Lease
Building Plan
(Laydown & Interconnect)
<PAGE>
EXHIBIT C
LESSOR'S FACILITIES AND SERVICES
Service Shared Facilities & Lessee's
Maintenance/Repair/Replacement
Responsibility
1. 1.200 PSI Header Lessor to maintain up to (but
not including) valve separating
the Project from the existing
Lessor system. Project will
install and maintain metering
system.
2. 250 PSI Header Lessor to maintain up to (but
not including) valve separating
the Project from the existing
Lessor system. Project will
install and maintain metering
system.
3. Condensate Project will install and
maintain its own condensate
system. Lessor may
interconnect to and/or utilize
the Project's condensate system
but must maintain piping and
equipment not related to the
installation of the Project.
4. Treated Feedwater Lessor to maintain up to (but
not including) valve separating
the Projet from the existing
Lessor system.
5. River Cooling Water Lessee solely responsible for
the costs of the system from
Schuylkill River channel
throughout Premises.
6. Bearing Cooling Water Lessee solely responsible for
the cost of the system
servicing Project.
7. Power and Loan Centers Lessee solely responsible for
the cost of the system
servicing Project.
8. DC System and/or UPS Lessee solely responsible for
the cost of the system
servicing Project.
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9. Plant Master Steam Control Leases solely responsible for
the cost of the system
servicing Project.
10. Chemical Feed Control Leases solely responsible for
the cost of the system
servicing Project.
11. Exhaust Gas Stacks Stack for #25 & #26 boilers
will be common to both
facilities. Maintenance costs
will be shared proportional to
the total steam production
through #25 and #26 boilers for
the prior year, with the first
year based on a pro forma heat
and material balance.
12. station Air Lessee will own and maintain
compressed air system for
Project.
13. Instrument Air Lessee solely responsible for
the cost of the system
servicing Project.
14. Control Room To be extended to include
Lessee's system. Lessee shall
be solely responsible for all
costs associated with the
maintenance of equipment and
control room facilities
installed to operate the
Cogeneration Facility and the
Auxiliary Boiler. Lessor shall
be responsible for all
maintenance costs associated
with all other equipment and
control room facilities.
15. Fire Projection Lessor to maintain up to the
valve separating the existing
fire system from the new system
to be installed for the
Project.
Existing fire pump, motor,
breaker and other miscellaneous
equipment, if adequate to
service both Lessor and
Project, to be cost shared on a
50/50 basis.
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<PAGE>
16. Lighting Lessor to service existing
lighting. Project to service
Project-related lighting.
17. Exhaust Steam from Project to provide its own
Auxiliaries exhaust system.
18. Boiler Blowdown Project will install and
maintain its own boiler
blowdown system. Lessor may
interconnect to and/or utilize
system but must maintain piping
and equipment not related to
the installation of the
Project.
19. Boiler Wash Drains Lessee solely responsible for
the cost of connecting Boiler
Wash Drains to the system
servicing the Project and shall
be responsible for all costs in
proportion to its use of the
system.
20. #3 T-G Electrical Lessor's responsibility.
Excitation, Synchronizing
& Indication
21. New Turbine Extraction Lessee solely responsible for
Point the cost of the system
servicing Project.
22. Central Data Collection Lessee solely responsible for
System Project. the cost of the system
servicing.
23. #6 Fuel Oil System Lessee solely responsible for
the cost of the system up to
valve separating the Project
from shared facilities. Any
shared facilities to be cost-
shared based on ratio of:
Total Oil Burned By Project
Total Oil Received in #2 Tank
24. #2 Fuel Oil System Lessee solely responsible for
the cost of the system
servicing Project including
tank, piping, pumps,
instrumentation and controls
and most enclosures.
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25. Gas Fuel System Lessee solely responsible for
the cost of the system
servicing Project. Lessor may
interconnect to and/or utilize
system. Lessor to share costs
of common system based on
Lessor's gas use in relation to
total gas use.
26. Demineralized Water Supply Costs for pumping and piping to
be shared proportional with
steam production.
27. Boiler Fill Lessee solely responsible for
the cost of the system
servicing Project. Lessor may
interconnect to and/or utilize
the system.
28. Crane If the Lessee elects to use the
crane, Lessee solely
responsible for the cost to
overhaul/upgrade and maintain.
29. Rail Project to overhaul/upgrade and
maintain.
30. P.A. System/Telephone Project to install any new
equipment and interconnect to
existing system. Operating and
maintenance costs to be shared
proportional with steam
production.
31. 500,000 Gallon Oil Storage Lessee to convert Oil Storage
Tank Tank for storage of #2 oil and
to construct piping to tie in
to Cogeneration Facility, at
Lessee's sole cost and expense.
Lessor may tie in to Oil
Storage Tank for Lessor's use
at Lessor's sole cost and
expense. Upon termination of
this Lease, Lessee to convert
Oil Storage Tank for storage of
#6 oil at Lessee's sole cost
and expense.
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<PAGE>
EXHIBIT D TO SITE LEASE
GROUND LEASE
<PAGE>
SCHULKILL STATION LEASE AGREEMENT
SCHULKILL STATION LEASE AGREEMENT made this 30th day of
January, A.D., 1987 by and between PHILADELPHIA ELECTRIC COMPANY,
a Pennsylvania corporation, hereinafter called Lessor, of the one
part and PHILADELPHIA THERMAL CORPORATION, a Pennsylvania
corporation, hereinafter called Lessee, of the other part.
WHEREAS, Lessor is the owner of certain property situated on
the northwest side of Grays Ferry Avenue in the Thirtieth Ward of
the City of Philadelphia, Pennsylvania more fully described by
metes and bounds on Exhibit "D1" attached hereto and made a part
hereof, together with the buildings and improvements thereon
erected and other appurtenant facilities and equipment used in
the operation of Lessor's Schuylkill Generating Station,
hereinafter called "Station", as more particularly shown on
Exhibit "02" attached hereto and made a part hereof; AND
WHEREAS, Lessor by Deed bearing even date herewith has
transferred the A-2 Building, the Water Treatment Building, the
Office and Shop building and by Bill of Sale bearing even date
herewith has transferred, inter alis, certain equipment,
facilities, and other related appurtenances, located upon those
portions of Lessor's Station identified by shading on the
aforesaid Exhibit "D2" and
WHEREAS, Lessee wishes to take and hire from Lessor and
Lessor wishes to lease to Lessee (i) the land shaded on
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Exhibit "D2" constituting part of the Station and (ii) that
portion identified by shading on attached Exhibit "D3" of the
building located at the Station known as the A-1 Building
(jointly, the "Demised Premises");
NOW, THEREFORE, for and in consideration of the mutual
covenants herein set forth, and intending to be legally bound
hereby the parties hereto for themselves, their respective
successors and assigns, agree as follows:
1. LEASED AREA: Lessor hereby demises unto Lessee the
Demised Premises aforesaid containing 305,347 square feet, more
or less, together with the right of ingress, egress and regress
for the maintenance and operation thereof.
2. OWNERSHIP: Lessee understands and agrees that
Lessor's ownership of the Station includes but is not limited to
all of the real property, equipment, facilities or improvements
not specifically sold to Lessee in the aforementioned Deed and
Bill of Sale and Lessee has only the right to possession and use
of the Demised Premises upon the terms, covenants and conditions
set forth herein.
3. TERM: FIFTY (50) YEARS beginning the day and year
first above written and ending the 29th day of January A.D. 2037,
subject to renewal as extended pursuant to paragraph 4, unless
sooner terminated pursuant to any conditions or limitations or
other provision of this Lease or pursuant to law.
4. RENEWAL OPTIONS: Provided there does not exist
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<PAGE>
any default hereunder which has not been effectively cured or
expressly waived by Lessor in writing, Lessee shall have the
option to renew this Lease for five successive periods of ten
(10) years each under the same terms and conditions hereof,
except for the rent which shall be determined in the manner
hereinafter set forth; provided, however, that Lessee shall have
notified Lessor in writing, by certified mail, at least six (6)
months prior to the then current expiration date of this Lease,
of Lessee's intention so to do.
5. (a) OBLIGATION TO PURCHASE: If at any time during the
term of this Lease or any renewal or extension thereof, the
Lessor shall determine and notify Lessee that its property at the
Station, possibly excluding the 66 kv Substation, is not longer
required for Lessor's current or anticipated needs, then the
Lessee shall have the obligation within one year of notification
hereof to purchase the entire Station property, including the
herein Demised Premises but excluding, at Lessor's option, the 66
kV Substation, subject to such easements as Lessor may require,
in its own name or in the name of a nominee, for a purchase price
equal to the then current fair market value of the underlying
land as raw land without regard to the buildings or improvements
thereon ("Fair Market Value"). If Lessor and Lessee are unable
to agree upon the then current Fair Market Value of the land
within thirty (30) days after Lessor's notice, Lessor and Lessee
shall each appoint an MAI appraiser having at least ten years of
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<PAGE>
experience in Pennsylvania ("Appraiser") to conduct a Fair Market
Value appraisal of the premises to be sold and the purchase price
shall be the statistical mean of the two appraisals unless the
difference between the two appraisals shall be greater than ten
percent of the smaller thereof, in which case the two appraisers
shall appoint a third Appraiser, whose Fair Market Value
appraisal shall determine the purchase price. The cost of all
appraisals shall be shared equally. At such time, any
improvements or personal property belonging to Lessor or the land
to be sold and no longer required for Lessor's current or
anticipated needs shall be purchased by Lessee concurrent with
its aforementioned purchase of the raw land, at a price equal to
the commercial value thereof, if any, as determined by
negotiation of the parties. In the event of such purchase by
lessee, this Lease shall thereupon be terminated. Lessor may
sell or dispose of the underlying land and equipment to a third
party, and the purchaser or transferee shall be subject to this
Lease.
(b) OPTION TO PURCHASE. If Lessor has not sold the
Demised Premises to Lessee pursuant to paragraph (a) hereof by
the end of the fifth ten (10) year renewal period provided for
under paragraph A hereof, and further provided that there does
not exist at that time any default hereunder which has not been
effectly cured or expressly waived by Lessor in writing, then at
the end of the said fifth ten (10) year renewal period Lessee
shall have the
4
<PAGE>
right at its option to purchase portion of Lessor's property at
the Station consisting of the Demised Premises plus such other
land, improvements, and personal property as Lessor no longer
required, for a purchase price determined by the same procedure
specified in paragraph 5(a) hereof.
6. ANNUAL MINIMUM RENT: Lessee covenants to pay Lessor
without notice, deduction, setoff or previous demand therefor, a
minimum annual rent of $98,283 payable annually in advance on the
first day of April of each calendar year of this Lease, or any
renewal or extension thereof, subject to adjustment as
hereinafter provided, with the first installment-prorated from
the date of execution to the following thirty-first day of Hatch
- - to be paid upon the execution hereof, all installments to be
paid to Lessor on the Sixteenth Floor, 2301 Market Street,
Philadelphia, Pennsylvania, 19101, or at such other place as
lessor may from time to time designate.
Each and every payment and expenditure, other than Minimum
Rental, which are required to be paid by Lessee under this Lease
shall be deemed to be additional rent hereunder, whether or not
the provision requiring payment of such amounts specifically so
states, and shall be payable, unless otherwise provided in this
Lease, within thirty (30) days of demand by lessor.
7. UTILITY CHARGES: Lessee shall furnish, at its own
expense, all utilities of every type and nature required by
5
<PAGE>
it in its use of the Demised Premises and shall pay or cause to
be paid, when due, all bills for water, sewerage, electricity and
other utilities, if any, used on in connection with or chargeable
against the Demised Premises until the termination of this lease
and the Lessee shall indemnify and save harmless the Lessor from
and against any loss, cost and expense in connection therewith.
Until such time as metering is installed or isolation is
accomplished, Lessor and Lessee each agree to accept the other's
estimate of the use of unmetered services, such as electricity,
water, auxiliary steam, fuel oil, etc., supplied by the other,
and to pay for such services at the fully-allocated direct costs
based on relative use or consumption.
8. TAXES: Lessee shall be required to pay, prior to
delinquency, all taxes levied upon or assessed against the
Demised Premises or its personal property or operations and
activities thereon, and Lessee's proportionate shares of local
real estate taxes and/or Lessee's proportionate share of any
taxes due the Commonwealth of Pennsylvania by virtue of the
Pennsylvania Utility Realty Tax Act on the larger parcel of which
Demised Premises is a part.
9. NET LEASE: All costs, expenses and obligations of
every kind and nature whatsoever, relating to the Demised
Premises but not the portion of the Station other than the
Demised Premised which may arise or become due during the term of
this lease or any renewals hereof, or as a result
6
<PAGE>
of Lessee's occupancy, shall be paid by Lessee and Lessee hereby
indemnifies and saves Lessor harmless from and against the same.
It is further understood that except as may separately be agreed
Lessor shall not be required or obligated to furnish any services
or facilities or to make any repairs or alternations in or to the
Demised Premises, or to comply with any notice from the
constituted authorities. Lessee hereby assumes all of the
responsibilities normally identified with the ownership of the
Demised Premises, such as, but not limited to, responsibility for
the condition of the premises, such as operation, repair,
replacement, maintenance and management of the Demised Premises,
including, without limitation, repairs to the paved areas and
driveways on the Demised Premises.
10. NO REPRESENTATINS: Lessor has leased the Demised
Premises in its present condition without any representations on
the part of the lessor, its officers, employees, servants and/or
agents, except as follows:
(a) All taxes levied upon or assessed against the
Demised Premises which may be due or payable prior to the date
hereof have been paid.
(b) Except as disclosed in writing to Lessee, there is
no action, suit, investigation or proceeding pending or, to the
knowledge of Lessor threatened, against Lessor before any court
or administrative or governmental body which questions title to
the Station, the right of
7
<PAGE>
Lessor, or any assignee of Lessor, to own, operate, lease or sell
the Station, the validity of this Lease or any action taken or to
be taken pursuant hereto.
(c) No notice has been received by Lessor from any
governmental authority of any proceeding to condemn, purchase or
otherwise acquire the Station through the power of eminent domain
or otherwise and, to Lessor's knowledge, no such proceeding is
contemplated or threatened.
(d) Except as previously disclosed in writing, Lessor
has received no notice of non-compliance with laws, ordinances
and governmental rules and regulations to which it is subject
with respect to the ownership and operation of the Station.
11. USE OF PREMISES: (a) Lessee shall not use or occupy
the premises for any other purpose whatsoever than for the
maintenance and operation of Lessee's facilities in connection
with the production of steam for Lessee's Steam Heating System
and related activities.
(b) PLANS: Lessee shall submit detailed plans to
Lessor showing any proposed improvements or alterations,
including removals. Lessee shall not commence the construction
or installation of any improvements by - alternations upon the
Demised Premises now or at any future time until Lessee has
received written approval from Lessor of Lessee's plans and
notified Lessor as required in paragraph NO. 29(f). Such
approval shall not be unreasonably withheld or delayed. Lessee
shall notify
8
<PAGE>
Lessor immediately upon the completion of any approved
construction in order that a final inspection can be made by
Lessor to insure compliance with plans approved by Lessor.
(c) RELOCATION OF FACILITIES: Any relocation of
lessor's facilities, if acceptable to Lessor, to accommodate
Lessee's improvements upon the Demised Premises shall be
performed by Lessor at the sole cost and expense of Lessee.
12. MECHANICS' LIENS: (a) it is understood that no
materialman, mechanic or contractor shall have the right as a
result of any action by Lessee to file any lien against the
estate of Lessor in the said premises, by reason of any work or
materials furnished to the Demised Premises and in the event that
as a result of any action by Lessee any lien against the estate
of either Lessor or Lessee is filed, Lessee within 15 days
thereof will cause the said lien to be discharged or satisfied or
record or in any other manner, pursuant to Law, removed from the
records so that the same shall not any longer be a lien against
the said premises. Lessee agrees to hold Lessor harmless and
indemnify Lessor against any and all loss, liability, costs,
damage, counsel fees and expenses suffered or incurred by reason
of any such liens.
(b) Lessee further agrees that Lessee will cause the
work to be done in a good and workman like manner and to Lessor's
reasonable satisfaction, and will cause any and
9
<PAGE>
all costs and charges in connection therewith to be paid
forthwith upon submission of bills therefor, unless the same is
being contested in good faith. It is understood that in causing
the said work to be done, Lessee is not acting as the agent of
Lessor but that Lessee shall cause the same to be made for
Lessee's own use in the Demised Premises.
13. MAINTENANCE, REMOVAL AND RESTORATION: (a) Lessee shall
keep and deliver up the Demised Premises in good order and
condition at the end of the term hereof or sooner termination,
reasonable wear and tear excepted. It is understood and agreed
that, at Lessor's option, any or all said steam facilities and
any alterations and improvements thereto shall be removed by
Lessee at the expiration of this Lease, subject to Lessor's
written approval of plans pursuant to Paragraph 11(b) hereof, in
which event Lessee shall remove the same promptly and shall
restore any part of the premises injured by such removal at
Lessee's sole cost and expense; should Lessee fail to remove the
said improvements Lessor shall have the right to do so at the
sole cost and expense of Lessee which cost and expense Lessee
agrees to pay promptly upon demand. The above notwithstanding,
Lessee may with the written consent of Lessor, abandon in place
any of the said steam facilities, alterations, and improvements
thereto.
(b) Lessee shall have an obligation to operate its
facilities in a manner which does not interfere with or
10
<PAGE>
cause direct hazard to the facilities and operations of Lessor.
Lessor shall have the right to repair any of Lessee's steam
facilities which in the opinion of Lessor violates this provision
if reasonable time has been allowed and Lessee has not performed
or if any emergency exists threatening Lessor's equipment or
personnel. In either case, Lessee agrees to reimburse Lessor for
the cost of any work performed.
(c) Lessee agrees that should Lessor sustain any
damages to its facilities or to the premises or adjoining
property of Lessor or be required to expend any monies as a
result of a rupture to Lessee's steam facilities or any other
cause whatsoever resulting from Lessee's occupancy of said
premises to reimburse Lessor, in full, promptly upon demand.
14. NOTIFICATION: (a) Any formal notification (i.e.,
notice to terminate, extend the term of Lease or to exercise an
option, etc.) given by either party to the other shall be deemed
to have been effected when written notice or other written
statement or document, as the case may be, has been served either
personally upon the other party, or has been deposited in the
United States mail in a postpaid, sealed, return receipt
requested, certified envelope addressed to the other party at its
address (in the case of service upon Lessor): PHILADELPHIA
ELECTRIC COMPANY, Attention Manager, Real Estate Department, 2301
Market Street, Philadelphia, Pennsylvania 19101, and (in
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<PAGE>
the case of service upon Lessee): PHILADELPHIA THERMAL
CORPORATION, 2600 Christian Street, Philadelphia, Pennsylvania
19146 or to such address as either party shall designate by
notice in writing to the other.
(b) Lessor and Lessee shall share a mutual
responsibility to give prompt, format notification to the other
of any problems, hazards, or changes which may affect the
operations or safety of the parties hereto.
15. COMPLIANCE WITH LAWS: Lessee shall comply with any
requirements of any of the constituted public authorities, and
with the terms of any state or federal statute or local ordinance
or regulation including the National Electrical Safety Code,
applicable to Lessee or its use of the Demised Premises, and save
Lessor harmless from penalties, fines, costs, or damages
resulting from failure so to do. This Lease and all the terms ,
covenants and conditions hereof are in all respects subject and
subordinate to all zoning laws and ordinances affecting the
Demised Premises. Lessee agrees to be bound by the same. Lessor
does not represent or warrant that any Licenses or permits which
may be required for Lessee's use of the premises will be granted.
With respect to discharges into the Schuylkill River via the
Station river water discharge tunnel, which is a common discharge
conduit for plant facilities or by any other means, Lessor and
Lessee agree that all such
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<PAGE>
discharges shall continue under the Lessor's National Pollution
Discharge Elimination System discharge permit. Lessor and Lessee
agree that should any discharge occur in violation of that
permit, the party responsible for the violation shall bear all
costs associated therewith, including but not limited to control,
cleanup and remediation of the violation or spill, and any fines,
assessments or penalties assessed therefor. Lessor and Lessee
agree to cooperate in determining responsibility. In the event
that responsibility cannot be determined, Lessor and Lessee agree
to share equally all such costs.
16. MUTUAL RELEASE: Each of the parties hereto assumes all
risk of loss, injury or damage to its property, its business and
its business operations from any cause other than the willful
fault of the other party. Each of the parties hereto releases
the other from any and all liability for any loss, injury or
damage which may be inflicted upon the property, business and
business operations of the releasing party arising from any cause
other than the willful fault of the other party.
17. INSURANCE: Lessee agrees that it shall carry insurance
with limits not less than indicated below, for the duration of
Lessee's occupancy and use of the premises:
Comprehensive General Liability Insurance
including Broad Form Contractual Liability
with a
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<PAGE>
combined single limit for bodily injury and
property damage of not less than $10,000,000
per occurrence. Such insurance shall name
the Lessor, its officers, agents and
employees as additional insured, be primary
insurance for all purposes and contain cross-
liability provisions.
Evidence of the above insurance shall be forwarded to Lessor
and contain a provision that Lessor be notified with at least ten
(10) days prior notice, in the event of cancellation of
insurance. The amount of insurance required shall from time to
time be revised, commensurate with levels of coverage normally
carried by comparable operations.
18. WORKMEN'S COMPENSATION INSURANCE: In addition to the
above insurance requirements Lessee shall carry all necessary
Workmen's Compensation Insurance on its own employees and shall
furnish Lessor with evidence of any and all such coverage.
19. ASSIGNMENT: Lessee shall not assign or transfer this
Lease nor underlet the said premises without the written consent
of the Lessor first obtained, except to an entity which
simultaneously acquires and is authorized to operate essentially
all the steam system of Lessee. Any lawful levy, sale, execution
or other legal process or any assignment or sale in bankruptcy,
insolvency or any
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<PAGE>
compulsory procedure, may, at the option of the Lessor, be deemed
and taken to be an assignment within the meaning of this Lease.
20. (a) MAJOR CONDEMNATION: In the event all of the said
premises should be taken by right of eminent domain, for public
or quasi-public use, or in the event of a partial taking which
effectively prevents the use of the said premises for the
purposes herein, then this lease shall terminate as of the date
possession is required by the condemning authority and all
unearned rent and prepaid charges, if any, shall be refunded to
the Lessee and Lessee shall surrender possession of said premises
to Condemnor.
(b) MINOR CONDEMNATION: In the event of partial
taking which will not prevent the use of the Demised Premises for
the purposes aforesaid, this Lease shall continue in full force
and effect upon the same terms and conditions hereof.
(c) AWARD: If there are not separate awards available
upon any major condemnation for the interests of Lessor and
Lessee, then Lessor and Lessee will cooperate in negotiating with
the condemnor, neither party will execute any settlement without
the consent of the other, and the parties will share the award on
an equitable basis.
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<PAGE>
21. COST OF LIVING INCREASE: Effective with the
commencement date of the Fifth (5th) year of this Lease and every
five (5) years thereafter throughout the initial term or any
renewal or extensions hereof, the annual minimum rent set forth
in Paragraph 6 shall be increased by an amount computed to offset
any net decline in the purchasing power of the dollar, as
reflected in the U.S. Department of Labor Consumer Price Index,
hereinafter referred to as CPI, with a minimum rental increase of
15% for each five (5) year adjustment as more particularly shown
in the following examples:
1. April 91 = 160% = 1.185 x $ 98,283 =
April 86 = 135% (New Annual Rental) $116,465
(CPI exceeds 15% minimum increase)
2. April 96 = 180% = 1.125
April 91 = 160% therefore use (1.15) x $116,465 =
(New Annual Rental) $133,935
(governed by 15% minimum increase)
AND SO FORTH
all such figures being stated in terms of a basic dollar value
compared to the CPI Index for the same month five (5) years prior
thereto. These figures will be calculated by Lessor and written
notice will be forwarded by Lessor to Lessee. If the CPI or a
successor or substitute index is
16
<PAGE>
not available, a reliable governmental or other non-partisan
publication evaluating the information therefore used in
determining the CPI shall be used. In no event, however, shall
the provisions of this paragraph be construed to reduce the
increase in rental hereunder to an amount less than 15% above the
rental calculated five (5) years prior thereto.
Payments of adjusted hereunder shall be made to Lessor
within ten (10) days after the date of notification said
increases are due in accordance with Lessor's calculations.
22. COST: Throughout this lease agreement, "cost" shall be
understood to compromise all applicable components thereof set
forth in Exhibit "D4" attached hereto.
23. NOTICE AND GRACE PERIODS:
(a) Subject to subparagraphs (b) below, Lessor shall
not exercise any right or remedy provided for in this lease
because of any default of Lessee unless Lessor shall have first
given Lessee written notice of the default sent by Registered
Mail, specifying the nature and extent of it, and (I) in the
event of a monetary default, Lessee shall have failed to pay the
outstanding sums within a period of thirty calendar days after
the date of Lessor's notice of default or (ii) in the event of a
non-monetary default, Lessee shall have failed within a period of
thirty days
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<PAGE>
after the date of Lessor's notice of default to begin correcting
the non-monetary default, and to proceed diligently with its
efforts to cure the default until it shall be fully cured.
(b) Notwithstanding anything to the contrary in this
Lease, Lessor shall be permitted to make any payment which Lessee
shall be permitted to make any payment which Lessee should have
paid, or perform any act which Lessee should have performed,
without giving any such notice or allowing any part of the grace
period, if Lessor determines, in its sole judgment, that by
reason of default (I) the Station may be jeopardized; (ii) there
is a serious potential for significant injury to persons or
property on or in the vicinity of the Station; (iii) there is
material interference with Lessor's operations on the Station.
24. LESSOR'S RIGHT TO CURE: Subject to the notice and
grace periods provided in Paragraph 23 above, if Lessee shall be
in default in the performance of any of its obligations under
this Lease, Lessor may (but shall not be obligated to do so) cure
such default on behalf of Lessee, and Lessee shall reimburse
lessor upon demand for all costs incurred by Lessor in curing
such default, together with interest thereon at the prime rate of
interest per annum publicly announced from time to time by First
Pennsylvania Bank, National Association, or its successor,
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<PAGE>
which costs and interest thereon shall be deemed to be additional
rent under this Lease.
25. NON-WAIVER:
(a) Neither a failure by the Lessor to exercise any of
its operations hereunder, nor failure to enforce its right or
seek its remedies upon any default, nor the acceptance by the
Lessor of any rent accruing before or after any default, shall
effect or constitute a waiver of the Lessor's rights to exercise
such option, to enforce such right, or seek such remedy with
respect to that default or to any prior or subsequent default.
The remedies provided in this Lease shall be cumulative and the
exercise of one shall not in any way abridge, modify or preclude
any other rights or remedies to which Lessor may be entitled
either at law or in equity.
(b) Neither a failure by the Lessee to exercise any of
its options hereunder, nor failure to enforce its right or seek
its remedies upon any default shall effect or constitute a waiver
of the Lessee's rights to exercise such option, to enforce such
right, or seek such remedy with respect to that default or to any
prior or subsequent default. The remedies of Lessee shall be
cumulative and the exercise of one shall not in any way abridge,
modify or preclude any other rights or remedies to which Lessee
may be entitled either at law or in equity.
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26. QUIET ENJOYMENT: If the Lessee pays the rent it is
obligated hereunder to pay, and observes all other terms,
covenants and conditions hereof, it may peaceably and quietly
have, hold and enjoy the Demised Premises during the term of this
Lease, subject, however, to all the conditions of this Lease.
Failure by Lessor to comply with the foregoing covenant shall
give Lessee the right to cancel or terminate this Lease, provided
Lessee gives Lessor notice of disruption of its quiet enjoyment
and gives Lessor thirty (30) days to effect a cure, or in the
event more than thirty (30) days are required, then Lessor shall
begin within thirty (30) days. The foregoing right of
termination shall not be deemed to exclude any remedies available
to Lessee at law or in equity.
27. WAIVER AND DISTRAINT: :Lessee hereby waives all right
to the benefit of all laws now made or hereafter to be made
exempting its personal property from levy and sale for arrears of
rent, and hereby agrees that all of its personal property on said
premises shall be liable to distress and sale for rent, and that
all of its personal property, if removed therefrom, shall for
thirty (30) after removal, be liable to distress and may be
distrained and sold for said rent in arrears.
28. EJECTMENT: In the event that Lessee (i) fails to pay
any sum of money due Lessor for any reason hereunder,
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<PAGE>
or (ii) takes any action which violates the provisions of
paragraph 13(b) hereof, and in the further event that any such
action has not been cured within the grace period following
notice as specified in paragraph 23 hereof, then this Lease shall
at Lessor's discretion thereupon cease and absolutely determine.
No such termination of this Lease, nor taking or recovering
possession of the premises, shall deprive Lessor of any other
action against Lessee for possession, for rent or for damages,
nor shall any distress or suit for rent or damages prevent Lessor
from proceeding to recover possession on a breach of any of the
terms or conditions hereof.
29. ADDITION CONDITIONS: (a) It is understood by the
parties hereto that the business of the Lessor involves, among
other things, the construction, installation, maintenance,
operation, and use of structures, fixtures, facilities and
instrumentalities with appurtenances, now or which may hereafter
be erected or installed on the Demised Premises, or property
adjacent thereto, which are used or useful in connection with the
generation, conversion, transmission or distribution of
electricity. The Lessee covenants and agrees (as a specific
condition of this Lease) that Lessee and Lessee's agents,
employees, invitees, and others will not, under any circumstances
whatsoever, touch, handle, tamper with or
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<PAGE>
contact, directly or indirectly any of the said structures,
fixtures, facilities and instrumentalities of the Lessor and
Lessee further covenants and agrees that Lessor shall not be held
responsible for and Lessor is hereby especially relieved from all
liability by reason of injury or damage of any nature whatsoever
to Lessee or to its agents, employees, invitees, customers and
others who are on the premises under, through or by the authority
of the Lessee, or other property in, upon or about the Demised
Premises.
(b) The Lessor covenants and agrees (as a specific
condition of this Lease) that Lessor and Lessor's agents,
employees, invitees, and others will not under any circumstances
whatsoever, touch, handle, tamper with or contact, directly or
indirectly any of the structures, fixtures, facilities and
instrumentalities of the Lessee and Lessor further covenants and
agrees that Lessee shall not be held responsible for and Lessee
is hereby especially relieved from all liability by reason of
injury or damage of any nature whatsoever to Lessor or to its
aents, employees, invitees, customers and others who are on the
Demised Premises under, through or by the authority of Lessor.
(c) This Lease is under and subject to the right of
Lessor, its successors and assigns, at any time hereafter to
erect, construct, install, operate, maintain, renew, add
22
<PAGE>
to, relocate, and remove facilities, and grant easements on, over
and under the Demised Premises as necessary for the performance
of its corporate business and Lessor reserves the right of
continuous access to and from its facilities located upon said
premises and those adjacent thereto. In exercising these rights,
Lessor will endeavor to cooperate with Lessee so as to minimize
interference with Lessee's operations to the extent possible.
(d) Neither Lessor nor Lessee shall use or keep
explosives in any form on the premises without prior notice to
and permission of the other.
(e) In the event it should be deemed necessary to
Lessor to take precautionary measures based on Lessee's use of
the Demised Premises such as, but not limited to relocating its
facilities, supplying safety inspectors to insure that any work
performed is done in a safe and proper manner, or de-energizing
conductors due to the rental, removal, or maintenance of Lessee's
improvements, then Lessee shall pay for the cost of any such
measures taken by Lessor, it being understood and agreed that
this shall, in no way, relieve Lessee from any liability in
connection with this Lease.
(f) Prior to the commencement of any proposed
improvements or alteration, Lessee shall contact Lessor's
Superintendent of Schuylkill Station to make arrangements
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<PAGE>
with Lessor's representatives to review Lessee's plans and
determine what precautionary measures are required. Lessee shall
again contact Lessor as hereinabove required as notice that work
is to commence and to confirm previously made precautionary
measures and other arrangements. Prior approval of Lessee's
plans by Lessor does not constitute notice to or approval by
Lessor for Lessee to commence work on Lessor's property. Lessee
agrees that absolutely no work shall begin on Lessor's property,
initially or at any future time, unless Lessee has made proper
arrangements and given the required notice.
(g) All work on the premises shall be performed in
accordance with accepted engineering practices including, if
necessary, the bonding and/or grounding of Lessee's improvements
if required by Lessor pursuant to its review and approval of
plans, as herein provided, to eliminate the effects of induced
voltage.
30. SUBORDINATION TO CORPORATE MORTGAGE: Lessee shall
subordinate this Lease to the lien of the First and Refunding
Mortgage dated May 1, 1923, of the Counties Gas and Electric
Company (to which Philadelphia Electric Company is successor) to
Fidelity Trust Company, (to which Fidelity Bank, National
Association, is successor) as the same has been heretofore and
may hereafter be amended and supplemented, and to the lien of any
mortgage which may
24
<PAGE>
hereafter be placed upon the demised premises, without the
necessity of any further instrument or act on the part of the
Lessee to effectuate such subordination, provided that the holder
of any such mortgage shall execute and deliver a non-disturbance
agreement with Lessee in substantially the form attached hereto
as Exhibit "D5".
31. INVALIDITY OF PARTICULAR PROVISIONS: If any term or
provision of this Lease or the application thereof to any person
or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not
be affected thereby and each term and provision of this lease
shall be valid and be enforced to the fullest extent permitted by
law.
32. CONSENTS: Lessor and Lessee understand and agree that
it will be necessary for both parties hereto to gain access to
certain areas under the control of the other party, from time to
time (i.e. access, use of railroad sidings, parking areas,
delivery of fuel, etc.) and both the Lessor and Lessee hereby
agree that whenever the consent of party hereto is required such
consent shall not be unreasonably withheld or used to extract any
concessions from the requesting party.
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<PAGE>
33. RELATIONSHIP OF THE PARTIES: It is the intention of
the parties hereto to create the relationship of Lessor and
Lessee, and no other relationship whatsoever, and nothing herein
shall be construed to make the parties hereto liable for any of
the debts, liabilities or obligations of the other party by
reason of this Lease.
34. CAPTIONS: The captions of this lease are for
convenience only and shall not be construed as defining or
limiting in any way the scope or intent of the provision hereof.
35. AMENDMENT: Except as herein otherwise provided, no
subsequent alteration, amendment, change or addition to this
Lease shall be binding upon Lessor or Lessee unless reduced to
writing and signed by the parties hereto.
36. SUCCESSORS AND ASSIGNS: The parties hereto further
agree, subject to the provisions aforesaid, that the covenants
and agreements herein contained shall inure to the benefit of and
be binding upon the successors and assigns of the parties hereto,
respectively.
37. LEASEBACK OF PORTION OF A-2 BUILDING: Lessee hereby
leases to Lessor and Lessor hereby takes and hires from Lessee
the portion ("Leaseback Space") shaded on attached Exhibit "D6"
of the building identified on Exhibit "D2" as the A-2 Building,
for a term commencing on the date
26
<PAGE>
hereof and expiring on the termination of this Lease, for rent
for the entire term of $1, receipt whereof is hereby
acknowledged. Lessor in its capacity as tenant hereunder will
perform all maintenance which it desires to have performed in the
Leaseback Space at its own expense, and Lessee in its capacity as
landlord hereunder will have no responsibility therefor. If in
the opinion of Lessor Lessee takes any action inconsistent with
this leaseback or with Lessor's use of and access to the
Leaseback Space, then Lessor shall have all remedies hereunder
including specifically those of paragraph 13(b) hereof.
IN WITNESS WHEREOF, .Lessor and Lessee have caused this
agreement to be executed the day and year first above written.
PHILADELPHIA ELECTRIC COMPANY
Attest: /s/ By: /s/ R. Holman
Vice President
PHILADELPHIA THERMAL CORPORATION
Attest: /s/ By: /s/
Vice President
<PAGE>
Exhibit D2
Diagram and Legal Description of
Leased Land, Schuylkill Station
<PAGE>
Exhibit D3
Leased Space, A-1 Building
Schuylkill Station
<PAGE>
Exhibit D4
Components of Cost
The following components shall be included in the charges
computed under Article 22 of the Schuylkill Station Lease
Agreement.
Direct Costs
Labor - hours worked at PECo hourly charge rate
Material
Transportation
Contract Services
Overheads
Administration and General - 25% additive to
labor, material, transportation and contract
services. (This includes pensions and benefits,
indirect labor and supervision and other indirect
costs normally charged to Administrative and
General Accounts).
<PAGE>
Exhibit D5
Non-Disturbance Agreement
THIS NON-DISTURBANCE AGREEMENT, dated the _____ day of
__________, A.D. 19__, between and among PHILADELPHIA ELECTRIC
COMPANY, hereinafter called Owner; FIDELITY BANK, NATIONAL
ASSOCIATION, hereinafter called Trustee and PHILADELPHIA THERMAL
CORPORATION, hereinafter called Tenant.
WITNESSETH:
WHEREAS, Owner has leased to Tenant property situated on the
northwest side of Grays Ferry Avenue in the Thirteenth Ward of
the City of Philadelphia, Pennsylvania, containing 303,347 square
feet, more or less, hereinafter called "Premises", as more
particularly set forth in a Lease Agreement between Owner and
Tenant dated __________, 19__; and
WHEREAS, Trustee has a first lien on said premises by virtue
of the First and Refunding Mortgage (Mortgage) dated May 1, 1923,
of the Counties Gas and Electric Company, to which Owner is
successor, to Fidelity Trust Company, to which Trustee is
successor, to which said lease is subordinate; and
WHEREAS, Tenant desires to be assured of continued occupancy
of such premises under the terms of said lease and subject to the
terms of the Mortgage;
1
<PAGE>
NOW, THEREFORE, in consideration of the sum of ONE HUNDRED
DOLLARS ($100.00) paid by Tenant to Owner, the receipt of which
is hereby acknowledged (which sum shall be deposited by Owner
with Trustee), the parties intending to be legally bound agree as
follows:
1. Said lease is and shall be subject and subordinate to
the Mortgage insofar as the Mortgage affects the property of
which the said premises form a part and to any advances,
renewals, extensions, replacement, modifications, consolidations
or supplements thereto.
2. In the event it should become necessary to foreclose
the Mortgage during the term of said lease, Trustee shall
foreclose said Mortgage subject to Tenant's lease and in the
event Trustee comes into possession as a result of a foreclosure
sale during the term of said lease, Trustee shall recognize said
lease as being in full force, so long as Tenant is not in default
under any of the terms, covenants and conditions of said lease.
3. In the event that Trustee shall, in according with the
foregoing, succeed to the interest of Owner under said lease,
Tenant and Trustee agree to be bound to one another under all of
the terms, covenants and conditions of said lease and Trustee and
Tenant shall, from and after such event, have the same remedies
against one another for the breach of an agreement contained in
the lease that Owner
2
<PAGE>
and Tenant might have had under the lease against one
another if Trustee had not succeeded to the interest of Owner,
provided however, that Trustee shall not be;
a. liable for any act or omission of Owner; or
b. subject to any defenses or right of offset which
Tenant might have against Owner;
c. bound by any rent or additional rent which Tenant
might have paid for more than the current month to
Owner;
d. bound by any agreement or modification of the
Lease made without Trustee's consent.
4. Although the foregoing provisions of this Agreement
shall be self-operative , Tenant agrees to execute and deliver to
Trustee or to any person to whom Tenant herein agrees to attorn,
such other instrument or instruments as Trustee or such other
person shall from time to time request in order to confirm said
provisions.
5. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their successors and assigns
and without limiting such, it is expressly understood that all
references herein to Trustee shall be deemed to include also any
subsequent holder of the mortgage and/or any other persons
succeeding to title to the premises encumbered by the mortgage,
or any part
3
<PAGE>
thereof, whether by virtue of foregoing of foreclosure, or sale
or transfer in lieu of foreclosure, or pursuant to the exercise
of any rights and remedies under the mortgage, or otherwise.
6. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed these
presents the day and year first above written.
PHILADELPHIA ELECTRIC COMPANY
ATTEST:
By:
Secretary Vice President
FIDELITY BANK,
NATIONAL ASSOCIATION
ATTEST:
By:
Secretary President
PHILADELPHIA THERMAL CORPORATION
ATTEST:
By:
Secretary President
5
<PAGE>
COMMONWEALTH OF PENNSYLVANIA :
: SS.
COUNTY OF PHILADELPHIA :
On the _____ day of __________, 19__, before me, the
subscriber, a Notary Public in and for the Commonwealth and
County aforesaid, personally appeared _______________, who
acknowledged himself/herself to be the _____ President of
PHILADELPHIA ELECTRIC COMPANY, a corporation, and that he/she, as
such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name
of the corporation by himself/herself as such officer, and
desired that the same instrument be recorded as such.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal the day and year aforesaid.
Notary Public
My Commission Expires
COMMONWEALTH OF PENNSYLVANIA :
: SS.
COUNTY OF PHILADELPHIA :
On the _____ day of __________, 19__, before me, the
subscriber, a Notary Public in and for the Commonwealth and
County aforesaid, personally appeared _______________, who
acknowledged himself/herself to be the _____ President of
PHILADELPHIA THERMAL CORPORATION, a corporation, and that he/she,
as such officer, being authorized to do so, executed the
foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself/herself as such
officer, and desired that the same instrument be recorded as
such.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal the day and year aforesaid.
Notary Public
My Commission Expires
5
<PAGE>
STATE OF PENNSYLVANIA :
: SS.
COUNTY OF PHILADELPHIA:
I, the undersigned, a Notary Public in and for the County
and State aforesaid, DO HEREBY CERTIFY, that _______________
personally known to me to be a Vice President of the Fidelity
Bank, National Association, and _______________ personally known
to me to be an Assistant Secretary of said corporation, and
personally known to me to be the same persons whose names are
subscribed to the foregoing instrument, appeared before me this
day in person and severally acknowledged that as such Vice
President and Assistant Secretary, they signed and delivered the
said instrument and caused the corporate seal of said corporation
to be affixed thereto, pursuant to authority given by the Board
of Directors of said corporation, as their free and voluntary
act, and as the free and voluntary act and deed of said
corporation, for the uses and purposes therein set forth.
Given under my hand and official seal, the _____ day of
__________, 19__. Commission expires ______________, 19__.
Notary Public
6
<PAGE>
Exhibit D6
Diagram and Legal Description of
Leaseback Space, A-2 Building
Schuylkill Station
<PAGE>
EXHIBIT E to the SITE LEASE
DOCK FACILITY SERVICE AGREEMENT
<PAGE>
DOCK FACILITY SERVICE AGREEMENT
This Dock Facility Service Agreement ("Agreement") is made
as of the 11th day of November, 1991, by and among Philadelphia
Thermal Development Corporation, a Pennsylvania Corporation
("PTDC"), Philadelphia Thermal Energy Corporation, a Pennsylvania
corporation ("PTEC") and Grays Ferry Cogeneration Partnership, a
Pennsylvania joint venture partnership ("GFCP").
BACKGROUND
PTDC is the current owner of certain lands situated at 2900-
2960 and 2901-2953 Alter Street, 2900-2944 Peltz Street and 2929
Ellsworth Street, Philadelphia, Pennsylvania (collectively, the
"Land"), including, without limitation, (a) all of the buildings
and improvements erected on the Land (together with the Land, the
"Real Property"), and (b) the dock located on the Schuylkill
River adjacent to the Land, together with the facilities,
machinery and equipment appurtenant to such dock or used in
connection with the interconnection and forwarding of oil into
the existing piping system that connects the dock with oil
storage facilities located at PTEC's Schuylkill Station
(collectively, the "Dock").
PTEC and PTDC are parties to a Dock Facility Service
Agreement dated October 8, 1990 ("PTEC/PTDC Agreement") pursuant
to which PTDC agreed to provide certain services to PTEC in
connection with the receipt, delivery and storage of oil. The
PTEC/PTDC Agreement expires by its terms on October 8, 1997,
<PAGE>
whereupon PTEC has the right to acquire from PTDC the Dock and,
under certain conditions, the Real Property.
PTEC and GFCP are parties to a Site Lease of even date
herewith ("Site Lease"), pursuant to which PTEC has leased to
GFCP a portion of PTEC's building located at Schuylkill Station,
2600 Christian Street, Philadelphia, Pennsylvania. GFCP intends
to install a cogeneration facility ("Cogeneration Facility") in
the leased portion of Schuylkill Station, and to burn No. 2 oil
and/or No. 6 oil to produce steam and electricity. GFCP will
utilize the existing piping system owned by PTDC to transport No.
6 oil from the Dock to the Cogeneration Facility. GFCP further
intends to install all piping and related equipment necessary to
transport GFCP's No. 2 oil from the Dock to the Cogeneration
Facility.
PTDC, PTEC and GFCP now desire to enter into this Agreement
to document their relationship regarding the receipt of oil at
the Dock, the transportation of oil from the Dock to a designated
storage tank at Schuylkill Station, the storage of oil by PTDC on
behalf of GFCP, and certain other rights and obligations of the
parties with respect to this arrangement. Accordingly, in
consideration of the mutual promises contained herein and
intending to be legally bound hereby, the parties hereto agree as
follows:
1. Definition. In addition to the terms defined elsewhere
in this Agreement, the following terms shall have the following
meanings:
(a) The term "Barrel" shall mean forty-two (42)
2
<PAGE>
U.S. gallons, corrected to sixty (60) degrees Fahrenheit.
(b) The term "Force Majeure" shall mean acts of God,
acts of any governmental body, whether civil or military, foreign
or domestic, acts of a public enemty, riots, strikes, labor
disputes, all perils and accidents on the seas or other waters,
fires, explosions, floods, other casualties, breakdown of or
damage to production or transportation facilities, embargoes or
any cause whatsoever beyond the control of the party to whom the
term is being applied.
(c) The term "GFCP Piping System" means the piping
system and related machinery and equipment necessary or
appropriate to transport No. 2 oil (i) from the Dock to the GFCP
Tank, or (ii) from the Storage Tanks to the Cogeneration
Facility.
(d) The term "GFCP Product" shall mean Product to be
purchased by GFCP.
(e) The term "GFCP Tank" shall mean the 500,000 gallon
oil storage tank owned by PTEC in Schuylkill Station.
(f) The term "Index" shall mean the Consumer Price
Index for Fuel and Other Utilities (1982-1984=100) issued for the
Philadelphia region from time to time by the Federal Bureau of
Labor Statistics ("BLS") or any successor agency that shall issue
the Index, or any other measure hereafter employed by the BLS or
any successor agency in lieu of the Index.
(g) The term "All Items Index" shall mean the Consumer
Price Index for All Items (1982-1984=100) issued for the
Philadelphia region from time to time by the BLS or any successor
3
<PAGE>
agency that shall issue the All Items Index, or any other measure
hereafter employed by the BLS or any other measure hereafter
employed by the BLS or any successor agency in lieu of the All
Items Index.
(h) The term "Product" shall mean fuel oil with
quality characteristics falling within the limits set forth in
the Fuel Oil Specifications for No. 2 oil and No. 6 oil attached
hereto as Exhibit "A" and made a part hereof, as modified by
mutual agreement of PTDC and GFCP from time to time.
(i) The term "PTEC Product" shall mean Product to be
purchased by PTEC for use by PTEC or by Philadelphia Electric
Company.
(j) The term "Storage Tanks" shall mean the tanks
located on the Real Property which may be used to store GFCP
Product.
2. Procedure for Receipt and Delivery of Product by PTDC.
(a) Procedure for Receipt of Product. PTDC agrees to
make berth space at the Dock available for barges delivering GFCP
Product, no later than twenty-four (24) hours after the arrival
at the Dock of any barge carrying GFCP Product. Barges shall be
given priority in the order needed to maintain optimal steam
production in accordance with the Steam Purchase Agreement
between PTEC and GFCP of even date herewith. GFCP shall give
PTDC notice by telephone of (i) scheduled arrival of GFCP Product
at the Dock at least forty-eight (48) hours prior to such
arrival, with such notice to include the name and specifications
of the barge, the quantity and specifications of the arriving
GFCP Product to be unloaded, and the expected day and hour of
4
<PAGE>
such arrival; (ii) such confirmation of the time of such arrival
not more than eighteen (18) hours and not less than twelve (12)
hours prior to such arrival; (iii) readiness of the barge to
discharge, and (iv) either that GFCP is ready to accept GFCP
Product upon such arrival for transmission to the GFCP Tank
through the GFCP Piping System, or that the GFCP Product is to be
stored in the Storage Tanks (if available pursuant to Section 3
hereof) on behalf of GFCP ( collectively, the "Notice
Requirements"). PTDC agrees that PTDC shall be responsible for
any demurrage charges arising from any delay caused by PTDC in
the receipt of GFCP Product and its delivery into the GFCP Piping
System or Storage Tanks (as the case may be) beyond the twenty-
four (24) hour period specified in the first sentence of this
Paragraph 2(a), provided that GFCP has fulfilled all of the
Notice Requirements. In the event that the berth time for any
barge shall exceed (20) hours for any reason other than the
negligence of PTDC or a default by PTDC under this Agreement,
PTDC may, in its discretion, (A) permit the barge to continue to
lie at berth, provided, however, that PTDC shall not be
responsible for any demurrage charges by or on behalf of any
vessel or vessels delayed beyond such twenty (20) hour period or
(B) require GFCP to cause the barge to leave the Dock.
(b) Title to Product. The parties agree that GFCP
shall at all times have title to and ownership of all GFCP
Product delivered at the Dock on behalf of GFCP from the point
the Product enters the discharge flange on the barge. GFCP shall
indemnify, defend and hold PTDC harmless from and against any and
5
<PAGE>
all causes of action, damages, liabilities, costs and expenses
arising out of a claim of title to or ownership of any Product
delivered to the Dock on behalf of GFCP.
(c) Delivery of Product to GFCP. PTDC shall receive
at the Dock and implement the interconnection and forwarding into
the GFCP Piping System of all GFCP Product; provided, however,
that (i) PTDC shall have no obligation to handle any lines, make
any hose connections or perform any related services on board any
barge in connection with the delivery of GFCP Product to GFCP,
and (ii) at GFCP's request (made in accordance with Paragraph
2(a) hereof), PTDC shall store GFCP Product in the Storage Tanks
(if available pursuant to Section 3) and implement the forwarding
and interconnection of such stored GFCP Product into the GFCP
within twenty-four (24) hours after GFCP's request (which may be
made by telephone) to do so. Barge unloading at the Dock shall
be by PTDC personnel assisted by barge company personnel and/or
personnel supplied by the contract operator of the Cogeneration
Facility ("Operator"). Operator personnel shall be responsible
for, and coordinate with PTDC personnel, barge unloading to
ensure safe operation of the Schuylkill Station fuel oil systems,
including monitoring of tank levels. Upon completion of barge
unloading, GFCP may request that the pipeline be flushed. All
flush oil utilized to flush lines after GFCP Product is delivered
shall be accounted for as a delivery to GFCP into the GFCP No. 6
oil system of Schuylkill Station.
(d) Standard of Care. PTDC agrees to exercise the
established industry standards of care in receiving, handling and
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<PAGE>
storing GFCP Product; product, however, that PTDC shall have no
liability for any claims, causes of action, liabilities, damages,
costs or expenses which, as a result of Force Majeure, could not
have been avoided by the exercise of such care.
(e) Regulatory Requirements. PTDC represents and
warrants to GFCP that the Dock and the Storage Tanks (if
available) shall be maintained and operated by PTDC in accordance
with all applicable laws, statutes, ordinances, rules and
regulations.
(f) Pollution. In the event that GFCP Product is
discharged upon or beneath the Dock, or upon or beneath any
waters or land, GFCP shall indemnify, defend and hold PTDC
harmless from and against any and all claims, causes of action,
damages, liabilities, costs and expenses arising out of such
discharge, unless such discharge was caused by the negligence of
PTDC or PTDC's failure to fulfill its obligations under this
Agreement. In the event of any such discharge, PTDC shall
promptly notify PTDC's Fuels Section Dispatcher and take
reasonable measures to effectuate containment or removal of the
GFCP Product. Any such measures taken by PTDC shall be at the
sole cost and expenses of GFCP unless the discharge was caused by
PTDC's failure to fulfill its obligations under this Agreement.
3. Storage Tanks. PTDC has advised GFCP that the Storage
Tanks sold or leased on a long-term basis to one or more buyers
or lessees. So long as PTDC or PTEC owns the Storage Tanks and
has available unleased capacity therein, GFCP shall be entitled
to store GFCP Product in the available Storage Tanks on
7
<PAGE>
the terms set forth herein. Nothing contained herein, however,
shall in any way limit PTDC or PTEC from selling or leasing the
Storage Tanks, and GFCP shall not be entitled to any damages or
other remedies of any kind if the Storage Tanks are unavailable
at any time or from tie to time for GFCP use because of such sale
or lease.
4. Installation and Maintenance Obligations.
(a) GFCP shall, at GFCP's expense, construct, install
and interconnect the GFCP and acquire all permits, easements and
rights of way necessary for the GFCP Piping System. Any
easements or rights of way required from PTDC shall be at no
additional charge to GFCP.
(b) PTDC shall maintain and repair the Dock and the
Storage Tanks so as to keep the same in good operating condition
throughout the term of this Agreement, and so as to permit barges
carrying GFCP Product to arrive at the Dock, discharge GFCP
Product, and depart in an orderly manner and in accordance with
the terms of this Agreement. GFCP shall maintain, repair and
replace he GFCP Piping System .
5. Charges Payable by GFCP.
(a) Operating Charge. In consideration of PTDC's
performance of its obligations under this Agreement, GFCP agrees
to pay to PTDC (i) through October 31, 1997, GFCP's Proportional
Share (as defined below) of PTDC's estimated operating costs
("Estimated Operating Charge") with respect to the Real Property
and Dock (collectively, the "Facility") which shall consist of
the following items (collectively, "Costs"): (A) utility
8
<PAGE>
services consumed in connection with the Facility, (B) operation,
maintenance and repair of the Facility, (C) demurrage,
interconnecting and forwarding and inspection charges associated
with GFCP Product, (D) insurance and taxes related to the
Facility, and (E) principal and interest due (amortized over
fifteen (15) years in accordance with the amortized over fifteen
(15) years in accordance with the amortization table attached as
Exhibit "C") on that certain loan in the amount of $2,850,000
from Fidelity Bank, National Association ("Fidelity") to PTDC,
evidenced by that certain Mortgage Note, dated October 8, 1990,
executed by PTDC in favor of Fidelity, (ii) for the period
beginning November 1, 1997 and ending December 31, 1998, $.50 per
barrel of GFCP Product received at the Dock ("Base Operating
Charge"), and (iii) for any calendar year thereafter, a sum equal
to the product of the Base Operating Charge during the prior
calendar year multiplied by a fraction (not less than one), the
numerator of which shall equal the All Items Index for one prior
Numerator Year (hereinafter defined in Section 5(e)(ii) below)
and the denominator of which shall equal the All Items Index for
November of the calendar year prior to the Numerator Year. The
Estimated Operating Charge shall be based on a calendar year
operating budget ("Budget") for the Costs to be submitted by PTDC
to GFCP on January 1 of each calendar year this Agreement is in
effect (except that the Budget for the first calendar year this
Agreement is in effect shall be submitted by PTDC to GFCP on the
date hereof).
(b) Proportional Share. GFCP's Proportional Share of the
Costs shall be determined annually based on the relative
9
<PAGE>
projected annual Product to be handled by PTDC on behalf of GFCP
in relation to the projected annual Project to be handled by PTDC
on behalf of PTEC. GFCP and PTEC shall each provide one another
and PTDC with estimated Project Projections no later than thirty
(30) days before the Commencement Date and thirty (30) days
before the Commencement Date and thirty (30) days before each
anniversary of the Commencement Date of this Lease, and GFCP's
Proportional Share shall be determined by PTDC based on the
amount of projected GFCP Product in relation to the amount of
projected PTEC Product. Within thirty (30) days following each
anniversary of the Commencement Date, the actual Product usage of
GFCP and PTEC for the previous twelve (12) month period shall be
determined by PTDC, and PTEC and GFCP shall thereafter, within
thirty (30) days following receipt of PTDC's determination, make
appropriate adjustments to reconcile any discrepancy between the
amounts paid by each of them based estimated usage and the amount
actually used by each of them.
(c) Monthly Payments. On the first day of each
calendar month during the portion of the term of this Agreement
prior to October 31, 1997, GFCP shall pay to PTDC, in advance,
one-twelfth (1/12) of GFCP's Proportional Share of the Estimated
Operating Charge ("Estimated Monthly Operating Payment").
Thereafter, during the term of this Agreement, GFCP shall pay to
PTDC or its successor in interest, as applicable, the Base
Operating Charge, as adjusted pursuant to Section 5(a) above
within thirty (30) days after receipt of a bill therefor ("Billed
Monthly Operating Payment", and together with each Estimated
Monthly Operating Payment, each, a "Monthly Operating Payment").
10
<PAGE>
If the date hereof is not the first day of a calendar month,
GFCP' payment of the Monthly Operating Payment for the fractional
month between the date hereof and the first day of the first full
calendar month in the term of this Agreement shall be prorated on
a per diem basis (calculated on a thirty (30) day month).
(d) Monthly Adjustments to Estimated Operating Charge.
Following the end of each calendar month during the portion of
the term of this Agreement prior to October 31, 1997, PTDC shall
furnish to GFCP a written statement ("Adjustment Statement")
showing the actual Costs for a specified period prior to the date
of such Adjustment Statement, which Costs have not been verified
in any previous Adjustment Statement ("Actual Operating Charge").
If GFCP's Proportional Share of the Actual Operating Charge
exceeds GFCP's payment with respect to the period covered by the
Adjustment Statement, GFCP shall pay to PTDC the deficiency
("Deficiency Payment") within ten (10) days after the date of the
furnishing of the Adjustment Statement from PTDC. If GFCP's
Monthly Operating Payment exceeds GFCP's Proportional Share of
the Estimated Operating Charges for the balance of the term of
this Agreement, PTDC shall refund to GFCP the amount of such
excess.
11
<PAGE>
(e) Monthly Storage Fees.
(i) Determination of Storage Fee. In addition to
the Monthly Operating Payments and Deficiency Payments paid by
GFCP to PTDC under this Agreemet, GFCP shall pay PTDC a monthly
charge obtained by multiplying the Base Storage Charge
(hereinafter defined) by each barrel of GFCP Product stored by
PTDC in the Storage Tanks ("Storage Fee"). The Base Storage
Charge for the calendar year 1991 shall be agreed to within ten
(10) days after the date of the Agreement, and the Base Storage
Charge for each subsequent calendar year of the term of this
Agreement shall be agreed to by the parties prior to January 1,
of each such calendar year. The Base Storage Charge shall be
consistent with the market commercial rate for storing fuel oil
in the City of Philadelphia ("Industry Rate"), and if the parties
do not agree upon the Base Storage Charge for any calendar year,
either party apply to the American Arbitration Association (in
Philadelphia) for a determination of the Industry Rate, which,
when determined by arbitration, shall be binding upon the parties
(and a judgment with respect to such determination may be entered
by a court of competent jurisdiction) as the Base Storage Charge
for the calendar year in question. Each party hereby consents to
arbitration of the Industry Rate and Base Storage Charge as
aforesaid, and agrees to pay one-half of the cost of any such
arbitration proceeding. The Base Storage Charge shall be
prorated (based on the number of days in the calendar month in
question) as applied to any Barrels of GFCP Product which are
stored in the Storage Tanks for a portion of a calendar month.
12
<PAGE>
(ii) Maximum Base Storage Charge. Notwithstanding
anything to the contrary set forth in this Paragraph 5(d), in no
event shall the Base Storage Charge exceed (A) $.50 for calendar
year 1991, or (B) for any calendar year thereafter, a sum equal
to the product of the Base Storage Charge during the prior
calendar year multiplied by a fraction (not less than one), the
numerator of which shall equal the Index for November of the
prior calendar year ("Numerator Year"), and the denominator of
which shall equal the Index for November of the calendar year
prior to the Numerator Year.
(iii) Method of Payment. All Storage Fees shall be
billed by PTDC and paid by GFCP fifteen (15) days after receipt
of each monthly invoice.
(f) Separate Calendar Years. Each calendar year of
the term of this Agreement shall be treated separately for
the purposes of the calculations described in this Paragraph 5.
(g) PTDC Purchase of Facility. Upon acquisition of
the Facility by PTEC, PTEC shall assume PTDC's right and
obligations hereunder, and GFCP shall make all payments due to
PTDC hereunder to PTEC.
6. Term of Agreement. This Agreement shall commence on
thirty (30) days written notice from GFCP to PTDC ("Commencement
Date"), and shall expire on the same date as the Site Lease, as
the term thereof may be extended pursuant to the terms thereof.
13
<PAGE>
7. Access to PTDC Property.
(a) General Access. Throughout the term of this
Agreement, GFCP and its agents and employees shall have access to
the Dock for the purposes of observation, testing and inspection
of (i) berthing and fuel unloading activities upon the arrival of
barges carrying GFCP Product at the Dock berth and during such
times as GFCP Product is being unloaded, and (ii) the performance
of PTDC's maintenance and repair obligations described in
Paragraph 4 hereof. PTDC shall arrange for independent quality
and quantity inspections of barges unloading at the Dock. The
independent inspector will be mutually satisfactory to GFCP and
PTDC.
(b) Emergency Access. In the event that the Storage
Tanks then in use by GFCP contain less than twenty-four (24)
hours live storage of GFCP Product, and PTDC fails, refuses or is
unable to implement the interconnection and forwarding into the
GFCP Piping System of GFCP Product, then GFCP may take such
measures as are required to accomplish such interconnection and
forwarding of GFCP Product into the GFCP Piping System, provided,
however, that if such failure, refusal or inability of PTDC to
implement the interconnection and forwarding into the GFCP Piping
System of GFCP Product was justified under other provisions of
this Agreement, then GFCP shall pay any and all costs, expenses,
damages and liabilities incurred by PTDC as a result of any
action taken by GFCP pursuant to this Paragraph 7(b).
14
<PAGE>
8. Insurance.
(a) PTDC's Insurance. Throughout the term of this
Agreement, PTDC shall maintain the following insurance at its
sole cost and expense:
(i) Workmen's compensation insurance (or its
statutorily required equivalent with respect to employees working
at the dock) for all labor employed by PTDC in connection with
the Agreement who may come within the protection of workmen's
compensation, as required by the laws of the Commonwealth of
Pennsylvania, and employer's liability insurance for the benefit
of its employees not protected under such workmen's compensation
laws. Employer's liability insurance shall be in an amount not
less than $1,000,000.
(ii) Comprehensive general liability and property
damage insurance, including contractual liability, non-owned
water craft and automobile liability endorsements, in an amount
not less than $2,000,000, for injuries, including death, to any
one person, and subject to the same limits per person, in an
amount not less than $5,000,000 on account of one accident, and
in an amount not less than $2,000,000 for property damage on
account of one accident.
(iii) Fire and extended coverage casualty
insurance with respect to the Dock and the Storage Tanks, in an
amount equal to no less than the replacement cost thereof.
(iv) Environmental impairment liability insurance
with respect to the discharge of any GFCP Product on, in or
beneath any bodies of water or land, from any vessel
15
<PAGE>
berthed at the Dock, the Storage Tanks or any portion of the
Dock, in an amount not less than $2,000,000.
(b) GFCP's Insurance. Throughout the term of this
Agreement, GFCP shall maintain the following insurance at its
sole cost and expense:
(i) Workmen's compensation insurance (or its
statutorily required equivalent with respect to employees working
at the Dock) for all labor employed by GFCP in connection with
this Agreement who may come within the protection of workmen's
compensation, as required by the laws of the Commonwealth of
Pennsylvania, and employer's liability insurance for the benefit
of its employees not protected under such workmen's compensation,
as required by the laws of the Commonwealth of Pennsylvania, and
employer's liability insurance for the benefit of its employees
not protected under such workmen's compensation laws. Employer's
liability insurance shall be in an amount not less than
$1,000,000.
(ii) Comprehensive general liability and property
damage insurance, including contractual liability, non-owned
water craft and automobile liability endorsements, in an amount
not less than $2,000,000, for injuries, including death, to any
one person, and subject to the same limits per person, in an
amount not less than $5,000,000 on account of one accident, and
in an amount not less than $2,000,000 for property damage on
account of one accident.
(iii) Environmental impairment liability
insurance with respect to the discharge of any GFCP Product from
the GFCP Piping System on, in or beneath any bodies of water or
land, in an amount not less than $2,000,000.
16
<PAGE>
(c) Evidence of Coverage. Within ten (10) days after
financial closing, with respect to Section 8(b)(i) and (ii), and
at least ten days prior to the delivery of GFCP Product to the
Dock with respect to Section 8(b)(iii), and prior to the
expiration of any of the insurance coverage required of any party
hereunder, each party shall furnish the other party with a
certificate of insurance evidencing in particular that (i) the
party who is required to maintain the insurance and the other
party to this Agreement are both named insureds, as their
interests may appear, (ii) the extent of the insurance, (iii) the
amount of the insurance, (iv) the location and operations to
which the insurance applies, and (v) the effective date and the
date of expiration of the insurance. Such certificate shall also
provide that the coverages evidenced thereby shall not be
cancelled or changed in any manner for any reason, except upon
thirty (30) days prior written notice to the party who is
maintaining the insurance and the other party to this Agreement.
9. Defaults and Remedies.
(a) Defaults. The occurrence of any one of the
following events shall constitute an "Event of Default" under
this Agreement:
(i) The failure of GFCP to pay any Monthly
Operating Payments, Deficiency Payments or Storage Fees due to
PTDC or PTEC or GFCP of such failure.
(ii) The failure of PTDC, PTEC or GFCP to perform
any of their respective material obligations under this
17
<PAGE>
Agreement within thirty (30) days after delivery of written
notice to the party who has failed to perform its obligation by
another party to this Agreement; provided, however, that such
thirty (30) day period shall be extended by any period of time
during which a party has failed to perform an obligation under
this Agreement due to Force Majeure.
(iii) Any assignment by PTDC, PTEC or GFCP for
the benefit of creditors, the appointment of a receiver,
liquidator or trustee of PTDC, PTEC or GFCP, or of any of their
respective property, the insolvency of PTDC, PTEC or GFCP or the
adjudication of PTDC, PTEC or GFCP (or against PTDC, PTEC or GFCP
if the same shall not be discharged within sixty (60) days) of
any case for the bankruptcy, reorganization or arrangement of
such party pursuant to the Federal Bankruptcy Code or any similar
statute, or the institution of any proceeding for the dissolution
or liquidation of PTDC, PTEC or GFCP.
(iv) The occurrence of an Event of Default by GFCP
or PTEC under the Site Lease, if such Event of Default would
permit the termination of the Site Lease by the non-defaulting
party under the terms thereof.
(b) Remedies. If an Event of Default occurs, the
party not in default shall have the right to terminate this
Agreement, seek specific performance of this Agreement, and
exercise all of the rights and remedies, including, without
limitation, all rights and remedies for damages caused by the
Event of Default and/or occasioned by the termination of this
18
<PAGE>
Agreement resulting from such Event of Default, which are
available to the party not in default at law or in equity.
10. Notices. All notices, requests, and demands upon
either party hereto shall be in writing (except as provided in
Paragraphs 2(a) and (c) hereof) and deemed effective (a) if
personally delivered, on the date delivered, (b) if mailed by
United States registered or certified mail, postage prepaid, on
the second business day after the date on which it is mailed, or
(c) if mailed by private overnight courier service, such as
Federal Express, on the next business day after the date on which
it is mailed, when addressed to the part to receive such notice,
request or demand as follows:
If to PTDC: Philadelphia Thermal Development Corporation
Schuylkill Station
2600 Christian Street
Philadelphia, PA 19146
If to PTEC: Philadelphia Thermal Energy Corporation
Schuylkill Station
2600 Christian Street
Philadelphia, PA 19146
If to GFCP: Grays Ferry Cogeneration Partnership
225 S. 8th Street
Philadelphia, PA
Attention:
or to such other address as either party may notify the other
party of in the foregoing manner.
11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania.
12. No Waiver. No delay or failure of any party to
exercise any right, option or remedy herein given or reserved
19
<PAGE>
shall constitute a waiver of such right or prevent the party from
afterwards shall constitute a waiver of such right or prevent the
party from afterwards exercising such right, option or remedy.
The rights, options and remedies provided herein shall be
cumulative and no one or more of them shall be exclusive of the
other or others, or of any other right, option or remedy now or
hereafter given or allowed by law or equity.
13. Successors and Assigns. This Agreement shall be
binding upon, and the benefits hereof shall inure to, the parties
hereto and their respective successors and assigns; provided,
however, that no party hereto may assign this Agreement or any
rights or obligations hereunder without the prior written consent
of the other parties except that in the event PTEC acquires the
Dock, the Storage Tanks and any other assets of PTDC in
accordance with the terms of the PTEC/PTDC Agreement
(collectively, the "PTDC Assets") from PTDC, GFCP's consent shall
not be required for PTEC to assume certain applicable obligations
or enjoy certain applicable benefits accruing to PTDC hereunder.
In the event PTEC acquires any of the PTDC Assets from PTDC, PTEC
shall be deemed to have assumed certain obligations of PTDC and
PTDC shall be deemed to have assigned to PTEC certain benefits
accruing to PTDC under this Agreement, which obligations and
benefits are more fully set forth in the PTEC/PTDC Agreement.
Upon PTEC's acquisition of the Dock, all applicable references to
PTDC in this Agreement shall be deemed referenced to PTEC.
14. Entire Agreement. This Agreement contains the entire
Agreement and understanding of the parties hereto with respect to
the subject matter hereof, and may not be changed, modified or
amended in any manner except by a written agreement signed by the
20
<PAGE>
party against whom enforcement of the change, modification or
amendment is sought.
15. Headings. The headings and captions appearing in the
text of this Agreement are used for convenience of reference only
and shall not affect the meaning or interpretation of this
Agreement in any manner.
IN WITNESS WHEREOF, the parties hereto have executed this
Dock Facility Service Agreement as of the day and year first
above written.
PHILADELPHIA THERMAL
DEVELOPMENT CORPORATION
ATTEST: By: /s/ S.G. Smith
(Assistant) Secretary) Steven G. Smith, President
PHILADELPHIA THERMAL
ENERGY CORPORATION
ATTEST: By:/s/
(Assistant) Secretary) Steven G. Smith, President
GRAYS FERRY COGENERATION
PARTNERSHIP
By: O'Brien Environmental
Energy, Inc.,
General Partner
ATTEST: By: /s/ Robert A. Shinn
(Assistant) Secretary) Title: Vice President
By: Adwin Equipment Company,
General Partner
ATTEST: By: /s/ Daniel A. Neely
(Assistant) Secretary) Title: Vice President
21
<PAGE>
EXHIBIT "A"
Any No. 2 or No. 6 oil meeting the requirements of GFCP's
air quality permits and equipment manufacturers' recommendations,
but excluding recycled oil.
<PAGE>
EXHIBIT B TO DOCK FACILITY SERVICE AGREEMENT
INTENTIONALLY OMITTED
<PAGE>
EXHIBIT C TO DOCK FACILITY SERVICE AGREEMENT
AMORTIZATION SCHEDULE
<PAGE>
[PHILADELPHIA THERMAL DEVELOPMENT CORPORATION
PETRO PROPERTY PURCHASE
LOAN AMORTIZATION SCHEDULE
ASSUMED INTEREST RATE: PRIME + 1/4% = 10.25%]
<PAGE>
Exhibit F to the Site Lease
Demineralized Water Charges
<PAGE>
EXHIBIT F
Per Thousand Pounds of Water As of 1/1/93
Water & Sewer $ 0.33
Chemicals $ 0.18
Labor $ 0.09
Repairs & Maintenance $ 0.05
Electricity from Utility $ 0.03
Depreciation $ 0.05
Cost of Modifications,
Additions & Expansion required $ 0.00
by GFCP*
Electricity from GFCP $ 0.00
Back-up Electricity from $ 0.00
Utility
Cost of Electrical $ 0.00
Interconnect*
Less:
Cost of Electric from GFCP ($ 0.00)
Total $ 0.73
* Includes Financing Costs
<PAGE>
Exhibit 10.31.2
NRG GENERATING (U.S.) INC.
1996 STOCK OPTION PLAN
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: ______________________
THIS GRANT, dated as of the date of grant first stated above (the
"Date of Grant"), is delivered by NRG Generating (U.S.) Inc. (the
"Company") to _____________________ ("Grantee"), who is an Employee of the
Company or a Subsidiary.
WHEREAS, the Board of Directors of the Company (the "Board") on
September 20, 1996 adopted the NRG Generating (U.S.) Inc. 1996 Stock Option
Plan (the "Plan"), and the shareholders of the Company approved the Plan on
, 1996;
WHEREAS, the Plan provides for the granting of Incentive Stock Options
by the Board to directors, officers and key employees of the Company
(excluding officers and directors who are not employees) to purchase shares
of the Common Stock of the Company (the "Stock"), in accordance with the
terms and provisions thereof; and
WHEREAS, the Board considers Grantee to be a person who is eligible
for a grant of Incentive Stock Options under the Plan, and has determined
that it would be in the best interest of the Company to grant the Incentive
Stock Options documented herein.
NOW THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
<PAGE>
1. Grant of Option.
Subject to the terms and conditions hereinafter set forth, the Company,
with the approval and at the direction of the Board, hereby grants to
Grantee, as of the Date of Grant, an option to purchase up to __________
shares of Stock at a price of $___________ per share, its Fair Market Value
as of the Date of Grant. The shares of stock purchasable upon exercise of
the Option are hereinafter sometimes referred to as the "Option Shares."
The Option is intended by the parties hereto to be, and shall be treated
as, an Incentive Stock Option under Code Section 422.
2. Installment Exercise.
Subject to such further limitations as are provided herein, the Option
shall become exercisable in three (3) installments, Grantee having the
right hereunder to purchase from the
Company the following number of Options Shares upon exercise of the Option,
on and after the following dates, in cumulative fashion:
(i) on and after the first anniversary of the Date of Grant up to one-
third (ignoring fractional shares) of the total number of Option Shares;
(ii) on and after the second anniversary of the Date of Grant, up to an
additional one-third (ignoring fractional shares) of the total number of
Option Shares; and
(iii) on and after the third anniversary of the Date of Grant, the
remaining Option Shares.
<PAGE>
3. Termination of Option.
(a) The Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall terminate and
become null and void after the expiration of ten (10) years from the Date
of Grant (the "Option Term").
(b) Upon the occurrence of Grantee's ceasing for any reason to be
employed by the Company, the Option, to the extent not previously
exercised, shall terminate and become null and void immediately upon the
Separation Date, except in a case where the termination of Grantee's
employment is by reason of retirement, Disability or death or otherwise as
follows. Upon a termination of Grantee's employment by reason of
Disability or death, all unexercised portions of the Option shall become
immediately exercisable and the Option may be exercised during the period
beginning upon such termination and ending one year after such date. In
the event of any other termination, the Option may be exercised within the
three-month period following the date of retirement, but only to the extent
that the Option was outstanding and exercisable upon the date of such
retirement. In no event, however, shall any such period extend beyond the
Option Term.
(c) In the event of Grantee's death, the Option may be exercised by
Grantee's legal representative(s) as and to the extent that the Option
would otherwise have been exercisable by Grantee, subject to the provisions
of Section 3(b) hereof.
(d) A transfer of Grantee's employment between the Company and its
Parents or Subsidiaries shall not be deemed to be a termination of
Grantee's employment.
(e) Notwithstanding any other provisions set forth herein or in the Plan,
if Grantee shall: (I) commit any act of malfeasance or wrongdoing affecting
the Company, its Parents or Subsidiaries, (ii) breach any covenant not to
compete, or employment contract, with the Company, its Parents or
Subsidiaries), or
(iii) engage in conduct that would warrant Grantee's discharge for cause
(excluding general dissatisfaction with the performance of Grantee's
duties, but including any act of disloyalty or any conduct clearly tending
to bring discredit upon the Company, its Parents or Subsidiaries), any
unexercised portion of the Option shall immediately terminate and be void.
4. Exercise of Options.
(a) Grantee may exercise the Option with respect to all or any part of
the number of Option Shares that are exercisable hereunder by giving the
Secretary of the Company written notice of intent to exercise. The notice
of exercise shall specify the number of Option Shares as to which the
Option is to be exercised and date of exercise thereof, which date shall be
at least five (5) days after the signing of such notice unless an earlier
time shall have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by Grantee of the Option Price for
Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise in cash, or [insert alternative payment
provisions if desired]. On the exercise date specified in Grantee's notice
or as soon thereafter as is practicable, the Company shall cause to be
delivered to Grantee, a certificate or certificates for the Option Shares
then being purchased (out of theretofore unissued Stock or reacquired
Stock, as the Company may elect) upon full payment for such Option Shares.
The obligation of the Company to deliver Stock shall, however, be subject
to the condition that if at any time the Board shall determine in its
discretion that the listing, registration or qualification of the Option or
the Option Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with,
the Option or the issuance or purchase of Stock thereunder, the Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Board.
(c) If Grantee fails to pay for any of the Option Shares specified in
such notice or fails to accept delivery thereof, Grantee's right to
purchase such Option Shares may be terminated by the Company or the
exercise of the Option may be ignored, as the Board in its sole discretion
may determine. The date specified in Grantee's notice as the date of
exercise shall be deemed the date of exercise of the Option, provided that
payment in full for the Option Shares to be purchased upon such exercise
shall have been received by such date.
5. Adjustment of and Changes in Stock.
In the event of a reorganization, recapitalization, change of shares, stock
split, spin-off, stock dividend, reclassification, subdivision, or
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure of shares of capital stock of the
Company, the Board shall make such adjustment as it deems appropriate in
the number and kind of shares of Stock subject to the Option or in such
option price; provided, however, that no such adjustment shall give Grantee
any additional benefits under the Option.
6. Fair Market Value.
As used herein, the term "Fair Market Value" shall mean:
(a) If the Common Stock is listed on any established stock exchange or a
national market system, including, without limitation, the Nasdaq National
Market, its fair market value shall be the closing selling price for such
stock on the principal securities exchange or national market system on
which the Common Stock is at the time listed for trading. If there are no
sales of Common Stock on that date, then the closing selling price for the
Common Stock on the next preceding day for which such closing selling price
is quoted shall be determinative of fair market value; or,
(b) If the Common Stock is not traded on an exchange or a national market
system, its fair market value shall be determined in good faith by the
Board, and such determination shall be conclusive and binding on all
persons.
In no event shall the Fair Market Value equal less than the par value of
the Common Stock.
7. No Rights as Shareholders.
Grantee shall have no rights as a shareholder with respect thereto unless
and until certificates for shares of Common Stock are issued to him.
8. Non-Transferability of Option.
During Grantee's lifetime, this Option shall be exercisable only by
Grantee or his or her guardian or legal representative.
9. Employment Not Affected.
The grant of the Option hereunder shall not be construed as conferring on
Grantee any right to continued employment, and Grantee's employment may be
terminated without regard to the effect which such action might have upon
him as a holder of this Option.
10. Amendment of Option.
The Option may be amended by the Board at any time (I) if the Board
determines, in its sole discretion, that amendment is necessary or
advisable in light of any addition to or change in the Code or in the
regulations issued thereunder, or any federal or state securities law or
other law of regulation, which change occurs after the Date of Grant and by
its terms applies to the Option; or (ii) other than in the circumstances
described in clause (I), with the consent of Grantee.
11. Notice.
Any notice to the Company provided for in this instrument shall be
addressed to it in care of its Secretary at its executive offices and any
notice to Grantee shall be addressed to Grantee at the current address
shown on the payroll records of the Employer. Any notice shall be deemed
to be duly given if and when properly addressed and posted by registered or
certified mail, postage prepaid.
12. Incorporation of Plan by Reference.
The Option is granted pursuant to the Plan, the terms and definitions of
which are incorporated herein by reference, and the Option shall in all
respects by interpreted in accordance with the Plan.
13. Governing Law.
To the extent that federal law shall not be held to have preempted local
law, this Option shall be governed by the laws of the State of Delaware.
If any provision of the Option shall be held invalid or unenforceable, the
remaining provisions hereof shall continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Grant of Incentive Stock Option, and Grantee has placed his
or her signature hereon, effective as of the Date of Grant.
NRG Generating (U.S.) Inc.
By:
GRANTEE
Signature
Name:
(Print)
Address:
<PAGE>
Exhibit 10.31.3
NRG GENERATING (U.S.) INC.
1996 STOCK OPTION PLAN
GRANT OF EMPLOYEE NONQUALIFIED STOCK OPTION
Date of Grant:
THIS GRANT, dated as of the date of grant first stated above (the
"Date of Grant"), is delivered by NRG Generating (U.S.) Inc. (the
"Company") to ________________ (the "Grantee"), who is an Employee of the
Company or a Subsidiary.
WHEREAS, the Board of Directors of the Company (the "Board") on
September 20, 1996, adopted the NRG Generating (U.S.) Inc. 1996 Stock
Option Plan (the "Plan");
WHEREAS, the Plan provides for the granting of Nonqualified Stock
Options by the Board to directors of the Company and to officers and key
employees of the Company and its Subsidiaries to purchase shares of the
Common Stock of the Company (the "Stock"), in accordance with the terms and
provisions thereof; and
WHEREAS, the Board considers Grantee to be a person who is eligible
for a grant of Nonqualified Stock Options under the Plan, and has
determined that it would be in the best interest of the Company to grant
the Nonqualified Stock Options documented herein.
NOW THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
<PAGE>
1. Grant of Option.
Subject to the terms and conditions
hereinafter set forth, the Company, with
the approval and at the direction of the
Board, hereby grants to Grantee, as of
the Date of Grant, an option to purchase
up to _____ shares of Stock at a price
of _____ per share. The shares of stock
purchasable upon exercise of the Option
are hereinafter sometimes referred to as
the "Option Shares." The Option is
intended by the parties hereto to be,
and shall be treated as, a Nonqualified
Stock Option which is not subject to the
provisions of Code Section 422.
2. Installment Exercise.
Subject to such further limitations as
are provided herein, the Option shall
become exercisable in three (3)
installments, Grantee having the right
hereunder to purchase from the Company
the following number of Options
Shares upon exercise of the Option, on
and after the following dates, in
cumulative fashion:
(i) on and after the first anniversary
of the Date of Grant up to one-third
(ignoring fractional shares) of the
total number of Option Shares;
(ii) on and after the second
anniversary of the Date of Grant, up to
an additional one-third (ignoring
fractional shares) of the total number
of Option Shares; and
(iii) on and after the third
anniversary of the Date of Grant, the
remaining Option Shares.
3. Termination of Option.
(a) The Option and all rights
hereunder with respect thereto, to the
extent such rights shall not have been
exercised, shall terminate and become
null and void after the expiration of
ten (10) years from the Date of Grant
(the "Option Term").
(b) Upon the occurrence of Grantee's
ceasing for any reason to be employed by
the Company, the Option, to the extent
not previously exercised, shall
terminate and become null and void
immediately upon the Separation Date,
except in a case where the termination
of Grantee's employment is by reason of
retirement, Disability or death or
otherwise as follows. Upon a
termination of Grantee's employment by
reason of Disability or death, all
unexercised portions of the Option shall
become immediately exercisable and the
Option may be exercised during the
period beginning upon such termination
and ending one year after such date.
Upon termination of Grantee's
employment, the Option may be exercised
during the three-month period following
the date of retirement, but only to the
extent that the Option was outstanding
and exercisable on the date of such
retirement. In no event, however, shall
any such period extend beyond the Option
Term.
(c) In the event of Grantee's death,
the Option may be exercised by Grantee's
legal representative(s) as and to the
extent that the Option would otherwise
have been exercisable by Grantee,
subject to the provisions of Section
3(b) hereof.
(d) A transfer of Grantee's employment
between the Company, its parents,
subsidiaries or affiliates, shall not be
deemed to be a termination of Grantee's
employment.
(e) Notwithstanding any other provisions
set forth herein or in the Plan, if
Grantee shall: (i) commit any act of
malfeasance or wrongdoing affecting the
Company, its Parents or Subsidiaries,
(ii) breach any covenant not to compete,
or employment contract, with the
Company, its Parents or Subsidiaries, or
(iii) engage in conduct that would
warrant Grantee's discharge for cause
(excluding general dissatisfaction with
the performance of Grantee's duties, but
including any act of disloyalty or any
conduct clearly tending to bring
discredit upon the Company, its Parents
or Subsidiaries), any unexercised
portion of the Option shall immediately
terminate and be void.
4. Exercise of Options.
(a) Grantee may exercise the Option
with respect to all or any part of the
number of Option Shares that are
exercisable hereunder by giving the
Secretary of the Company written notice
of intent to exercise. The notice of
exercise shall specify the number of
Option Shares as to which the Option is
to be exercised and date of exercise
thereof, which date shall be at least
five (5) days after the signing of such
notice unless an earlier time shall have
been mutually agreed upon.
(b) Full payment (in U.S. dollars)
by Grantee of the Option Price for
Option Shares purchased shall be made on
or before the exercise date specified in
the notice of exercise in cash or as the
Company may otherwise permit as further
set forth in the Plan. On the exercise
date specified in Grantee's notice or as
soon thereafter as is practicable, the
Company shall cause to be delivered to
Grantee, a certificate or certificates
for the Option Shares then being
purchased (out of theretofore unissued
Stock or reacquired Stock, as the
Company may elect) upon full payment for
such Option Shares. The obligation of
the Company to deliver Stock shall,
however, be subject to the condition
that if at any time the Board shall
determine in its discretion that the
listing, registration or qualification
of the Option or the Option Shares upon
any securities exchange or under any
state or federal law, or the consent or
approval of any governmental regulatory
body, is necessary or desirable as a
condition of, or in connection with, the
Option or the issuance or purchase of
Stock thereunder, the Option may not be
exercised in whole or in part unless
such listing, registration,
qualification, consent or approval shall
have been effected or obtained free of
any conditions not acceptable to the
Board.
(c) If Grantee fails to pay for any of
the Option Shares specified in such
notice or fails to accept delivery
thereof, Grantee's right to purchase
such Option Shares may be terminated by
the Company or the exercise of the
Option may be ignored, as the Board in
its sole discretion may determine. The
date specified in Grantee's notice as
the date of exercise shall be deemed the
date of exercise of the Option, provided
that payment in full for the Option
Shares to be purchased upon such
exercise shall have been received by
such date.
5. Adjustment of and Changes in Stock.
In the event of a reorganization,
recapitalization, change of shares,
stock split, spin-off, stock dividend,
reclassification, subdivision, or
combination of shares, merger,
consolidation, rights offering, or any
other change in the corporate structure
of shares of capital stock of the
Company, the Board shall make such
adjustment as it deems appropriate in
the number and kind of shares of Stock
subject to the Option or in such option
price; provided, however, that no such
adjustment shall give Grantee any
additional benefits under the Option.
6. No Rights as Shareholders.
Grantee shall have no rights as a
shareholder with respect thereto unless
and until certificates for shares of
Common Stock are issued to him.
7. Non-Transferability of Option.
During Grantee's lifetime, this Option
shall be exercisable only by Grantee or
his or her guardian or legal
representative.
8. Employment Not Affected.
The grant of the Option hereunder
shall not be construed as conferring on
Grantee any right to continued
employment, and Grantee's employment may
be terminated without regard to the
effect which such action might have upon
him as a holder of this Option.
9. Amendment of Option.
The Option may be amended by the Board
at any time (i) if the Board determines,
in its sole discretion, that amendment
is necessary or advisable in light of
any addition to or change in the Code or
in the regulations issued thereunder, or
any federal or state securities law or
other law of regulation, which change
occurs after the Date of Grant and by
its terms applies to the Option; or (ii)
other than in the circumstances
described in clause (i), with the
consent of Grantee.
10. Notice.
Any notice to the Company provided for
in this instrument shall be addressed to
it in care of its Secretary at its
executive offices and any notice to
Grantee shall be addressed to Grantee at
the current address shown on the payroll
records of the Employer. Any notice
shall be deemed to be duly given if and
when properly addressed and posted by
registered or certified mail, postage
prepaid.
11. Incorporation of Plan by Reference.
The Option is granted pursuant to the
Plan, the terms and definitions of which
are incorporated herein by reference,
and the Option shall in all respects by
interpreted in accordance with the Plan.
12. Governing Law.
To the extent that federal law shall
not be held to have preempted local law,
this Option shall be governed by the
laws of the State of Delaware. If any
provision of the Option shall be held
invalid or unenforceable, the remaining
provisions hereof shall continue in full
force and effect.
<PAGE>
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Grant of Nonqualified Stock Option, and Grantee has placed
his or her signature hereon, effective as of the Date of Grant.
NRG Generating (U.S.) Inc.
By:
Its: President and CEO:
GRANTEE
Signature____________________________
Name:
Address:
<PAGE>
Exhibit 10.31.4
NRG GENERATING (U.S.) INC.
1996 STOCK OPTION PLAN
GRANT OF NONEMPLOYEE DIRECTOR
NONQUALIFIED STOCK OPTION
Date of Grant: ______________________
THIS GRANT, dated as of the date of grant first stated above (the
"Date of Grant"), is delivered by NRG Generating (U.S.) Inc. (the
"Company") to _____________________ (the "Grantee"), who is a director of
the Company who is not an Employee of the Company or a Subsidiary.
WHEREAS, the Board of Directors of the Company (the "Board") on
September 20, 1996 adopted the NRG Generating (U.S.) Inc. 1996 Stock Option
Plan (the "Plan");
WHEREAS, the Plan provides for the granting of Nonqualified Stock
Options by the Board to directors of the Company to purchase shares of the
Common Stock of the Company (the "Stock"), in accordance with the terms and
provisions thereof; and
WHEREAS, the Board considers Grantee to be a person who is eligible
for a grant of Nonqualified Stock Options under the Plan, and has
determined that it would be in the best interest of the Company to grant
the Nonqualified Stock Options documented herein.
NOW THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
<PAGE>
1. Grant of Option.
Subject to the terms and conditions
hereinafter set forth, the Company, with
the approval and at the direction of the
Board, hereby grants to Grantee, as of
the Date of Grant, an option to purchase
up to __________ shares of Stock at a
price of $___________ per share. The
shares of stock purchasable upon
exercise of the Option are hereinafter
sometimes referred to as the "Option
Shares." The Option is intended by the
parties hereto to be, and shall be
treated as, a Nonqualified Stock Option
which is not subject to the provisions
of Code Section 422.
2. Installment Exercise.
Subject to such further limitations as
are provided herein, the Option shall
become exercisable in three (3)
installments, Grantee
having the right hereunder to purchase
from the Company the following number of
Options Shares upon exercise of the
Option, on and after the following
dates, in cumulative fashion:
(i) on and after the first anniversary
of the Date of Grant up to one-third
(ignoring fractional shares) of the
total number of Option Shares;
(ii) on and after the second
anniversary of the Date of Grant, up to
an additional one-third (ignoring
fractional shares) of the total number
of Option Shares; and
(iii) on and after the third
anniversary of the Date of Grant, the
remaining Option Shares.
3. Termination of Option.
(a) The Option and all rights
hereunder with respect thereto, to the
extent such rights shall not have been
exercised, shall terminate and become
null and void after the expiration of
ten (10) years from the Date of Grant
(the "Option Term").
(b) When the Grantee ceases to be a
director of the Company, the Option, to
the extent not previously exercised,
shall terminate and become null and void
immediately upon the Separation Date,
except in a case where the Grantee's
service as a director of the Company
ceases by reason of Disability or death
or otherwise as follows. If the Grantee
ceases to be a director of the Company
by reason of Disability or death, all
unexercised portions of the Option shall
become immediately exercisable and the
Option may be exercised during the
period beginning upon such termination
and ending one year after such date. In
no event, however, shall any such period
extend beyond the Option Term. If the
Participant's service as a director of
the Company terminates for any other
reason prior to the exercise of all
portions of the Option, the Participant
shall have the right within three (3)
months of his Separation Date, but not
beyond the expiration date of the
Option, to exercise such unexercised
portions of the Option.
(c) In the event of Grantee's death,
the Option may be exercised by Grantee's
legal representative(s) as and to the
extent that the Option would otherwise
have been exercisable by Grantee,
subject to the provisions of Section
3(b) hereof.
(d) Notwithstanding any other
provisions set forth herein or in the
Plan, if Grantee shall: (i) commit any
act of malfeasance or wrongdoing
affecting the Company, its Parents or
Subsidiaries, or (ii) engage in conduct
that would warrant Grantee's removal for
cause (excluding general dissatisfaction
with the performance of Grantee's
duties, but including any act of
disloyalty or any conduct clearly
tending to bring discredit upon the
Company, its
Parents or Subsidiaries), any
unexercised portion of the Option shall
immediately terminate and be void.
4. Exercise of Options.
(a) Grantee may exercise the Option
with respect to all or any part of the
number of Option Shares that are
exercisable hereunder by giving the
Secretary of the Company written notice
of intent to exercise. The notice of
exercise shall specify the number of
Option Shares as to which the Option is
to be exercised and date of exercise
thereof, which date shall be at least
five (5) days after the signing of such
notice unless an earlier time shall have
been mutually agreed upon.
(b) Full payment (in U.S. dollars)
by Grantee of the Option Price for
Option Shares purchased shall be made on
or before the exercise date specified in
the notice of exercise in cash or as the
Company may otherwise permit as further
set forth in the Plan. On the exercise
date specified in Grantee's notice or as
soon thereafter as is practicable, the
Company shall cause to be delivered to
Grantee, a certificate or certificates
for the Option Shares then being
purchased (out of theretofore unissued
Stock or reacquired Stock, as the
Company may elect) upon full payment for
such Option Shares. The obligation of
the Company to deliver Stock shall,
however, be subject to the condition
that if at any time the Board shall
determine in its discretion that the
listing, registration or qualification
of the Option or the Option Shares upon
any securities exchange or under any
state or federal law, or the consent or
approval of any governmental regulatory
body, is necessary or desirable as a
condition of, or in connection with, the
Option or the issuance or purchase of
Stock thereunder, the Option may not be
exercised in whole or in part unless
such listing, registration,
qualification, consent or approval shall
have been effected or obtained free of
any conditions not acceptable to the
Board.
(c) If Grantee fails to pay for any of
the Option Shares specified in such
notice or fails to accept delivery
thereof, Grantee's right to purchase
such Option Shares may be terminated by
the Company or the exercise of the
Option may be ignored, as the Board in
its sole discretion may determine. The
date
specified in Grantee's notice as the
date of exercise shall be deemed the
date of exercise of the Option, provided
that payment in full for the Option
Shares to be purchased upon such
exercise shall have been received by
such date.
5. Adjustment of and Changes in Stock.
In the event of a reorganization,
recapitalization, change of shares,
stock split, spin-off, stock dividend,
reclassification, subdivision, or
combination of shares, merger,
consolidation, rights offering, or any
other change in the corporate structure
of shares of capital stock of the
Company, the Board shall make such
adjustment as it deems appropriate in
the number and kind of shares of Stock
subject to the Option or in such option
price; provided, however, that no such
adjustment shall give Grantee any
additional benefits under the Option.
6. No Rights as Shareholders.
Grantee shall have no rights as a
shareholder with respect thereto unless
and until certificates for shares of
Common Stock are issued to him.
7. Non-Transferability of Option.
During Grantee's lifetime, this Option
shall be exercisable only by Grantee or
his or her guardian or legal
representative.
8. Amendment of Option.
The Option may be amended by the Board
at any time (i) if the Board determines,
in its sole discretion, that amendment
is necessary or advisable in light of
any addition to or change in the Code or
in the regulations issued thereunder, or
any federal or state securities law or
other law of regulation, which change
occurs after the Date of Grant and by
its terms applies to the Option; or (ii)
other than in the circumstances
described in clause (i), with the
consent of Grantee.
9. Notice.
Any notice to the Company provided for
in this instrument shall be addressed to
it in care of its Secretary at its
executive offices and any notice to
Grantee shall be addressed to Grantee at
the address below. Any notice shall be
deemed to be duly given if and when
properly addressed and posted by
registered or certified mail, postage
prepaid.
10. Incorporation of Plan by Reference.
The Option is granted pursuant to the
Plan, the terms and definitions of which
are incorporated herein by reference,
and the Option shall in all respects by
interpreted in accordance with the Plan.
11. Governing Law.
To the extent that federal law shall
not be held to have preempted local law,
this Option shall be governed by the
laws of the State of Delaware. If any
provision of the Option shall be held
invalid or unenforceable, the remaining
provisions hereof shall continue in full
force and effect.
<PAGE>
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Grant of Nonqualified Stock Option, and Grantee has placed
his or her signature hereon, effective as of the Date of Grant.
NRG Generating (U.S.) Inc.
By:
Its: President and CEO
GRANTEE
Signature____________________________
Name:
Address:
<PAGE>
Exhibit 10.32
LEASED EMPLOYEE AGREEMENT
This Agreement is made and entered into on this 30th day of April,
1996, by and between NRG Generating (U.S.) Inc. ("Generating"), a Delaware
corporation, and NRG Energy, Inc. ("Energy"), a Delaware corporation.
RECITALS
1. Generating needs a qualified executive to temporarily serve as
its president and chief executive officer.
2. Leonard A. Bluhm ("Bluhm") is an executive employee of Energy.
3. Generating and Energy, with Bluhm's concurrence, desire that
Energy lease the services of Bluhm to Generating pursuant to the terms and
conditions of this agreement.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. Agreement to Lease Bluhm. Energy hereby leases to Generating the
services of Bluhm to serve as the president and chief executive officer of
Generating and its related entities, and to perform such other duties
commensurate with the position of president and chief executive officer of
Generating, as Generating, in its sole discretion, directs or authorizes
(collectively referred to herein as the "Work").
2. Duration and Termination. This agreement shall be for an
indefinite term. It will terminate upon the earliest of any of the
following events:
a) Bluhm's death.
b) As permitted by applicable law, because of Bluhm's
disability, as determined by a qualified medical provider of
Generating's choice, whose opinion it is that Bluhm cannot
perform the duties of his position for a period of 90
consecutive days or longer because of disability.
c) Bluhm's completion of the Work.
d) Either Generating or Energy serves written notice
on the other terminating this agreement. Such termination
may be with or without cause.
e) Duties on Termination. Upon termination of this
agreement, Energy shall immediately cause Bluhm to
discontinue his performance of the Work. Energy shall also
cause Bluhm to immediately
<PAGE>
surrender any and all of Generating's property in
his possession, including all copies of same. Any remaining
portion of the Contract Price due and owing for the lease of
Bluhm's services up to the date of termination of this
agreement shall be due and payable thirty (30) days
thereafter.
3. Contract Price and Time of Payment.
(a) Generating will pay to Energy for the leasing of
Bluhm's services the actual total payroll and benefit cost
of Bluhm.
(b) Energy will periodically submit to Generating a
request for payment setting forth the portion of the
Contract Price then due and owing. Generating shall pay
such amount within thirty (30) days of receipt of such
request.
4. Status of Parties.
(a) The status of Energy is that of an independent
contractor, and not of an agent or employee, of Generating.
As such, Energy shall have no authority to enter into
contracts or any other commitments on behalf of Generating.
(b) The status of Bluhm in performing the Work is that
of an employee of Energy and of an independent contractor of
Generating. Energy will be solely responsible for the
hiring, dismissal, and control of Bluhm. As such,
Generating shall have no liability to any individual or
entity arising from Bluhm's employment by Energy except as
provided in section 5 below.
(c) Generating and Energy shall not in any manner make
any representations that an employer/employee relationship
exists between them or between Generating and Bluhm. Energy
shall cause Bluhm to covenant that he shall not in any
manner make any representations that such employer/employee
relationships exist.
5. Indemnification.
(a) Generating hereby indemnifies and holds harmless
Energy, its officers, directors and shareholders from and
against any and all liabilities, suits, actions, judgments,
costs, losses, damages or claims of whatsoever nature,
arising out of any acts or omissions of Bluhm while he is
acting on behalf of Generating in performance of the Work
hereunder, including, without limitation, any injuries to or
deaths of persons or any damage to
2
<PAGE>
property or equipment. In the event any liability
of Generating shall arise by reason of the sole negligence
of Energy or Energy I s employees or agents, excluding
Bluhm, then Generating shall not be liable under the
provisions of this subparagraph (a) of this section five (5)-
2
(b) Notwithstanding anything herein to the contrary,
in the event that liability is incurred as a result of the
actions or inactions of Bluhm while he is acting on behalf
of Energy, then Energy hereby indemnities and holds harmless
Generating, its officers, directors and shareholders against
any and all suits, actions, judgments, costs, losses,
damages or claims of whatsoever nature arising out of or
related to such actions or inaction of Bluhm, including,
without limitation, any injuries to or deaths of persons or
any damage to property or equipment.
(c) In case any claim, demand, action, suit or
proceeding shall be made, asserted or brought against any
party entitled to indemnity under this section five (5)
("Indemnified Party") , such Indemnified Party shall notify
the party obligated to indemnify under this section five (5)
("Indemnifying Party") in writing of the commencement
thereof within fifteen (15) days, and the Indemnifying Party
shall be entitled, at its expense and through counsel
reasonably acceptable to such Indemnified Party, to
participate in and, to the extent that the Indemnifying
Party desires, to assume and control the defense thereof;
provided, however, that the Indemnifying Party shall not be
entitled to assume and control the defense of any such
claim, demand, action, suit or proceeding, if and to the
extent that, in the reasonable opinion of such Indemnified
Party, such action, suit or proceeding involves the
potential imposition of criminal liability on such
Indemnified Party or a conflict of interest between such
Indemnified Party and the Indemnifying Party; and provided,
further, that the Indemnifying Party shall not agree to any
settlement or compromise with respect to such claim, demand,
action, suit or proceeding unless such settlement or
compromise is concluded without expense to the Indemnified
Party and includes a full release from liability of the
Indemnified Party from such claim, demand, action, suit or
proceeding, and all related claims, liabilities and causes
of action. The Indemnified Party shall have no liability
under this subsection (c) of section five (5) with respect
to any claim, demand, action, suit or proceeding for which
the required 15 day notice is not provided, to the extent
that the failure to give such notice prejudices the
Indemnifying Party. The
3
<PAGE>
Indemnified Party shall supply the Indemnifying
Party with such information and documents requested by such
Indemnifying Party as are necessary or advisable for such
Indemnifying Party to participate in the defense of any
claim, demand, action, suit or proceeding to the extent
permitted by this section five (5). No Indemnified Party
shall enter into any settlement or other compromise with
respect to any such claim, demand, action, suit or
proceeding without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld, unless such Indemnified Party waives its right to
indemnification therefor. Notwithstanding anything to the
contrary contained in this section five (5), with respect to
any claim, demand, action, suit or proceeding the defense of
which an Indemnifying Party shall have assumed, if any
Indemnified Party determines that such Indemnifying Party is
not conducting such defense in a diligent and reasonable
manner, such Indemnified Party may assume and control such
defense at the cost and expense of the Indemnifying Party;
provided, however, that in the event such Indemnified Party
assumes such defense:
(1) such Indemnified Party shall
conduct such defense in a diligent and reasonable
manner with a view to incurring only such expenses as
are reasonable in light of the claim, demand, action,
suit or proceeding;
(2) such Indemnified Party shall advise the
Indemnifying Party of all settlement offers received in respect
thereof; and
(3) such Indemnified Party shall agree in writing
that the Indemnifying Party shall not have liability in respect of the
related claim, demand, action, suit or proceeding in excess of the
amount of any settlement offer (which settlement offer shall include a
full release from liability of the Indemnified Party from the claim,
demand, action, suit or proceeding and all related claims, liabilities
and causes of action) proposed to such Indemnified Party or to the
Indemnifying Party, which the Indemnifying Party shall have offered to
fund.
6. Duties as Employer. As Bluhm's employer, Energy shall be solely
responsible for all expenses, costs, liabilities, assessments, taxes,
insurance, and other obligations arising from and incidental to its
employment of Bluhm. This includes, without limitation, payment of Bluhm's
wages, benefits, and payroll and other employment-related taxes. Bluhm
shall be covered under any
4
<PAGE>
of Energy's liability and workers compensation insurance policies as Energy
obtains in connection with its employment of employees similarly situated
to Bluhm or as required by applicable law.
7. Proprietary Information. As a material condition of the lease of
Bluhm's services hereunder, Energy shall cause Bluhm to execute any and all
appropriate agreements with Generating for protecting against
misappropriation or unauthorized disclosure of Generating's intellectual
property, and its confidential information and other trade secrets. Energy
will not employ Bluhm in any capacity which causes or requires him to
disclose such material except as necessary for him to perform the Work. In
the course of leasing Bluhm's services hereunder, Generating shall not
cause or require him to disclose or misappropriate in any manner Energy's
intellectual property, or confidential information and other trade secrets.
In the event either Energy or Generating intentionally or unintentionally
comes into possession of any of the other's foregoing property or
information, it shall immediately surrender the originals and all copies of
same.
8. Miscellaneous.
(a) Each signatory hereto represents and warrants that he/she
has the requisite legal and corporate authority to enter into
this agreement on behalf of the party he/she represents, and that
any necessary corporate action for the execution and performance
of the obligations hereunder has been taken.
(b) Neither party may assign this agreement or any rights,
duties, obligations, or covenants herein without the prior
written consent of the other. Any purported assignment without
such consent shall have no force or effect.
(c) Failure by either party hereto on any occasion to enforce
and require the strict keeping and performance of any of the
terms and conditions of this agreement shall not constitute a
waiver of any such terms and conditions at any future time and
shall not prevent such party from insisting on the strict keeping
and performance of such terms and conditions at any time.
(d) The provisions of sections 4, 5 and 7 of this agreement
shall survive its termination and remain in full force and
effect.
(e) The unenforceability or invalidity of any provision of this
agreement shall not affect the validity or enforceability of the
remaining provisions hereof.
(f) This agreement and its terms shall be
5
<PAGE>
governed by, construed, and enforced in accordance
with the laws of the State of Delaware.
(g) Any modification of this agreement shall be binding
only if evidenced in a writing signed by each party through
its authorized representative.
(h) This agreement constitutes the entire agreement between
Generating and Energy concerning the leasing of Bluhm's
services for the performance of the Work. Any prior
agreements or understandings of any kind or nature
whatsoever preceding the effective date of this agreement
shall not be binding on either party except as incorporated
herein.
IN WITNESS WHEREOF, the parties have each caused this agreement to be
executed by their duly authorized representatives below.
Date: 10-25-96 NRG Energy, Inc.
By:/s/ David H. Peterson
Its: President
Date: 10-25-96 NRG Generating (U.S.), Inc.
By:/s/ Leonard Bluhm
Its: President & CEO
6
<PAGE>
STATE OF MINNESOTA )
COUNTY OF Hennepin)
On October 25, 1996 before me, Karen A. Brennan, a Notary Public in and
for said State, personally appeared Leonard A. Bluhm personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature /s/ Karen A. Brennan
