Amendment No. 3
to
SEC File No. 70-8311
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
OLS ACQUISITION CORPORATION ("Acquisition Corp.")
OLS ENERGY - BERKELEY ("Berkeley")
One Upper Pond Road
Parsippany, New Jersey 07054
(Names of companies filing this statement and addresses
of principal executive offices)
GENERAL PUBLIC UTILITIES CORPORATION ("GPU")
(Name of top registered holding company parent of applicants)
Don W. Myers, Vice President Douglas E. Davidson, Esq.
and Treasurer Berlack, Israels & Liberman
M.A. Nalewako, Secretary 120 West 45th Street
GPU Service Corporation New York, New York 10036
100 Interpace Parkway
Parsippany, New Jersey 07054
B.L. Levy, President
K.A. Tomblin, Secretary
Energy Initiatives, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
________________________________________________________________
(Names and addresses of agents for service)
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Acquisition Corp. and Berkeley hereby amend their
Application on Form U-1, docketed in SEC File No. 70-8311, as
follows:
1. By completing Item II thereof to read as follows:
"ITEM II FEES, COMMISSIONS AND EXPENSES.
The estimated fees, commissions and expenses
incurred and to be incurred in connection with the
transactions which are the subject hereof are as
follows:
SEC Filing Fee $ 2,000
Legal Fees
Berlack, Israels & Liberman 40,000
Morrison & Foerster 9,000
Special Counsel to GECC 150,000
Miscellaneous 5,000
206,000
2. By filing the following exhibits in ITEM VI hereof:
(a) Exhibits:
A-1 - Form of Note evidencing borrowings made
under the Overhaul Loan Facility --
Incorporated by reference to form of
note contained in Exhibit B.
A-2 - Form of Note pursuant to Revolving
Credit Agreement -- Incorporated by
reference to form of note contained in
Exhibit B.
A-3 - Form of Pledge Agreement.
B - Form of amended and restated Credit
Agreement.
G - Source and Application of Funds State-
ment.
F-1 - Opinion of Berlack, Israels & Liberman.
F-2 - Opinion of Morrison & Foerster.
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANIES HAVE DULY
CAUSED THIS STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
OLS ACQUISITION CORPORATION
OLS ENERGY-BERKELEY
By:__________________________
Bruce L. Levy, President
Date: April 4, 1994
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EXHIBIT FILED BY EDGAR
A-3 - Form of Pledge Agreement.
B - Form of amended and restated Credit
Agreement.
F-1 - Opinion of Berlack, Israels & Liberman.
F-2 - Opinion of Morrison & Foerster.
G - Source and Application of Funds State-
ment.
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Exhibit A-3
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of ___________, 1994 by and
between OLS ACQUISITION CORPORATION, a Delaware corporation
("Pledgor"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New
York corporation, as Owner Trustee ("U.S. Trust") and GERARD F.
GANEY, as Co-Trustee ("Ganey"), not in their respective
individual capacities (except as expressly provided in the Trust
Agreement) but solely as Owner Trustee and Co-Trustee,
respectively, under the Trust Agreement (U.S. Trust and Ganey are
collectively referred to hereinafter as "Pledgee"),
W I T N E S S E T H:
WHEREAS, O.L.S. Energy-Berkeley ("OLS Berkeley"), Pledgee
and UNIVERSITY have entered into the First Amended and Restated
Cogeneration Lease (the "Berkeley Lease"), dated as of
__________, 1994, pursuant to which UNIVERSITY leased the real
property described in Exhibit A to the Berkeley Lease (the
"Berkeley Premises") and granted certain licenses and easements
to OLS Berkeley. OLS Berkeley has caused the construction of the
Cogeneration Plant (the "Berkeley Cogeneration Plant") defined in
that certain Restructuring Agreement among OLS Berkeley, Pledgor,
UNIVERSITY, GECC, Pledgee and Escrow Agent, dated as of
_________, 1994 (the "Berkeley Restructuring Agreement"). OLS
Berkeley has entered into the Energy Contract with UNIVERSITY
defined in the Berkeley Restructuring Agreement pursuant to which
OLS Berkeley supplies thermal energy to UNIVERSITY. OLS Berkeley
has entered into the PG&E Agreement with PG&E defined in the
Berkeley Restructuring Agreement pursuant to which PG&E purchases
electrical energy from the Berkeley Cogeneration Plant. To
finance the construction of the Cogeneration Plant, OLS Berkeley
borrowed money from GECC pursuant to the Prior Operative
Documents defined in the Restructuring Agreement.
WHEREAS, upon completion of construction of the Berkeley
Cogeneration Plant, OLS Berkeley sold the Berkeley Cogeneration
Plant and assigned its rights under the Berkeley Lease and the
Contracts defined in the Berkeley Restructuring Agreement (the
"Berkeley Contracts") to Pledgee, and Pledgee leased the Berkeley
Cogeneration Plant and subleased the Berkeley Premises to OLS
Berkeley pursuant to the GECC Lease defined in the Berkeley
Restructuring Agreement. In connection with such sale and
leaseback, GECC entered into the Trust Agreement defined in the
Berkeley Restructuring Agreement with Pledgee, cancelled
promissory notes in its favor made by OLS Berkeley and released
its security interest in the Berkeley Premises, Berkeley
Cogeneration Plant and the Berkeley Contracts.
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WHEREAS, Pledgor is the owner of [one thousand (1,000)
shares] of the issued and outstanding common stock of OLS
Berkeley. Such shares are referred to as the Pledged Shares.
WHEREAS, OLS Berkeley, Parent, Pledgor, Pledgee, GECC,
UNIVERSITY and Escrow Agent have entered into the Berkeley
Restructuring Agreement. The Berkeley Restructuring Agreement
requires, among other things, that Pledgor enter into this Pledge
Agreement.
WHEREAS, the purpose of this Pledge Agreement is to provide
the terms and conditions upon which the Secured Obligations are
secured by the pledge of the Pledged Shares.
NOW THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration,
receipt of which is hereby acknowledged, and in reliance upon the
representations and warranties of each party set forth herein,
the parties hereto agree as follows:
1. Definitions.
Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to them in Appendix A to the
Berkeley Restructuring Agreement (such definitions to be equally
applicable to the singular and plural forms of the terms
defined). The following terms shall have the following meanings
(such definitions to be equally applicable to the singular and
plural forms of the terms defined):
"Collateral" shall have the meaning set forth in Section 2
of this Pledge Agreement.
"Collateral Agent" means the Person designated, from time to
time, by Pledgee to take and maintain possession of the
Collateral for and on behalf of Pledgee as Pledgee's agent.
"Default" shall have the meaning set forth in Section 13(a)
of this Pledge Agreement.
"Event of Default" shall have the meaning set forth in
Section 13(b) of this Pledge Agreement.
"Pledge Agreement" means this Pledge Agreement, as the same
may, from time to time, be amended, modified or supplemented and
shall refer to this Pledge Agreement as in effect on the date
such reference becomes operative.
"Pledged Shares" shall have the meaning set forth in
Paragraph E of the Recitals.
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"Proceeds" means "proceeds," as such term is defined in
Section 9-306(1) of the UCC and, in any event, shall include,
without limitation, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Pledgor from time to
time with respect to the Collateral, (ii) any and all payments
(in any form whatsoever) made or due and payable to Pledgor from
time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental body, authority, bureau or agency
(or any person acting under color of any governmental authority)
and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral. In
addition, the term "Proceeds" shall include, without limitation,
all accounts, chattel paper, deposit accounts, instruments,
equipment, inventory, consumer goods, farm products, documents,
general intangibles and other proceeds which arise from the sale,
lease, transfer, or other use or disposition of any kind of
Collateral or proceeds and all proceeds of any type described
above acquired with cash proceeds. Notwithstanding anything in
this definition to the contrary, "Proceeds" shall not include the
proceeds of, or any amounts received on account of, any claim by
Pledgor, any of its Affiliates, or any of their respective
successors or assigns against any Person, which claim arises out
of or in connection with the acquisition of the Pledged Shares by
Pledgor, whether on account of breach of contract, indemnity,
warranty, fraud, claims under federal or state securities laws or
otherwise.
"Secured Obligations" means (i) all obligations of OLS
Berkeley to Pledgee or GECC under the Operative Documents, as
defined in the Berkeley Restructuring Agreement, and (ii) all
obligations of Pledgor under this document.
"UCC" means the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of California;
provided, however, in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or
priority of Pledgee's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of California, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to
such attachment, perfection or priority and for purposes of
definitions related to such provisions.
2. Grant and Description of Security Interest.
In consideration of the foregoing recitals and the mutual
covenants contained in this Pledge Agreement, and to induce
Pledgee to enter into those Operative Documents, as defined in
the Berkeley Restructuring Agreement, to which it is a party,
Pledgor, pursuant to the UCC, hereby pledges to Pledgee, and
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grants to Pledgee a security interest in (i) the Pledged Shares;
(ii) all cash, property, stock dividends, stock splits,
securities, Proceeds, and other property paid or distributed with
respect to or received on account of said Pledged Shares; and,
(iii) except as provided in this Pledge Agreement, all rights and
privileges of Pledgor with respect to the foregoing
(collectively, the "Collateral") to secure the prompt and
complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Secured
Obligations.
Pledgor herewith delivers to pledgee, Certificate No. ,
representing the Pledged Shares, together with a Stock Assignment
Separate From the Certificate (the "Assignment"), relating to the
Pledged Shares, duly endorsed in blank, to be held by Pledgee
subject to the terms and conditions of this Pledge Agreement.
3. Stock Adjustments.
In the event that, during the term of this pledge, any stock
dividend, reclassification, readjustment or other changes are
declared or made in the capital structure of OLS Berkeley or
additional stock of OLS Berkeley is issued to Pledgor, all new,
substituted and additional shares or other securities issued by
reason of any such change shall be delivered to and held by the
Pledgee under the terms of this Pledge Agreement in the same
manner as the Pledged Shares. In the event of substitution of
such securities, Pledgor and Pledgee shall cooperate and execute
such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution,
references to "Pledged Shares" in this Pledge Agreement shall
include the substituted shares of capital stock of Pledgor as a
result thereof.
4. Warrants and Rights.
In the event that, during the term of this pledge, subscrip-
tion warrants or other rights or options shall be issued in
connection with the Pledged Shares, such rights, warrants and
options shall be the property of Pledgor and, if exercised by
Pledgor, all new stock or other securities so acquired by Pledgor
as it relates to the Pledged Shares then held by Pledgee shall be
immediately delivered to Pledgee, to be held under the terms of
this Pledge Agreement in the same manner as the Pledged Shares.
5. Limitations on Pledgee's Obligations.
It is expressly agreed by Pledgor that, anything herein to
the contrary notwithstanding, Pledgee shall have no obligation or
liability for the performance by Pledgor of its obligations as a
shareholder of OLS Berkeley by reason of or arising out of this
Pledge Agreement or the granting to Pledgee of the security
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interests provided for herein or the receipt by Pledgee of any
payment relating hereto, nor shall Pledgee be required or
obligated in any manner to perform or fulfill any of the
obligations of Pledgor in its capacity as a shareholder of OLS
Berkeley or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of
any performance by any other party of any obligation owed to OLS
Berkeley, as the case may be, or to present or file any claim, or
to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
6. Representations and Warranties.
Pledgor represents and warrants that:
(a) Except for the security interest granted to Pledgee
pursuant to this Pledge Agreement, Pledgor is the sole owner of
each item of the Collateral in which it purports to grant a
security interest hereunder, having good and marketable title
thereto, free and clear of any and all Liens, except for
Permitted Liens.
(b) No effective pledge agreement, security agreement,
financing statement, equivalent security or lien instrument or
continuation statement covering all or any part of the Collateral
is on file or of record in any public office, except such as may
have been filed by Pledgor in favor of Pledgee pursuant to this
Pledge Agreement.
(c) So long as Pledgee or the Collateral Agent remains in
continuous possession of the certificates representing the
Pledged Shares and all Collateral with respect to which a
security interest may be perfected by possession, this Pledge
Agreement is effective to create a valid and continuing first
priority lien on and first priority perfected security interest
in the Collateral with respect to which a security interest may
be perfected by possession pursuant to the UCC in favor of
Pledgee, prior to all other Liens, and is enforceable as such
against creditors of and purchasers from Pledgor. Subject to
Pledgee or the Collateral Agent obtaining possession of
certificates representing the Pledged Shares and subject to the
filing of any financing statements necessary to perfect a
security interest in Proceeds and other Collateral, all action
necessary to perfect such security interest in the Collateral has
been duly taken.
(d) The Pledged Shares are all of the issued and outstand-
ing shares of any type of OLS Berkeley, and there are no other
equity securities of any type of OLS Berkeley.
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(e) Pledgor's principal place of business and the place
where its records concerning the Collateral are kept is located
at Upper Pond Road, Parsippany, New Jersey 07054, in care of
Energy Initiatives, Inc. Pledgor will not change such principal
place of business, remove such records or change the location of
its Collateral unless it has taken such action as is necessary,
if any, to cause the security interest of Pledgee in the
Collateral to continue to be perfected. Pledgor will not change
its principal place of business or the place where its records
concerning the Collateral are kept or keep Collateral at any
other location without giving thirty (30) days' prior written
notice thereof to Pledgee.
(f) Pledgor has full power and authority to execute,
deliver and perform this Pledge Agreement and to incur the
obligations provided for herein, all of which have been duly
authorized by all proper and necessary corporate or partnership
action. No consent or approval of (i) any partners, sharehold-
ers, directors or officers of OLS Berkeley or (ii) any partners,
shareholders, directors or officers of Pledgor, is required as a
condition to the validity or performance of, or the exercise by
Pledgee of any of its rights and remedies under this Pledge
Agreement, except as already have been obtained.
(g) This Pledge Agreement constitutes the valid and legally
binding obligation of Pledgor, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(h) There is no statute, regulation, rule, order or
judgment, and no provision of any agreement or instrument binding
on Pledgor or affecting its properties and no provision of the
certificate of incorporation or bylaws or any partnership
agreement of Pledgor or affiliate thereof which would prohibit,
conflict with or prevent the execution, delivery or performance
of this Pledge Agreement or result in or require the creation or
imposition of any material Lien on any of the properties of
Pledgor as a consequence of the execution, delivery and perfor-
mance of this Pledge Agreement or the transactions contemplated
hereby; and the execution, delivery and performance by Pledgor of
this Pledge Agreement do not (i) violate any provision of law
applicable to Pledgor or its certificate of incorporation or
bylaws or partnership agreement, or any other, judgment or decree
of any court or other agency of government binding on Pledgor,
(ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any material
agreement or instrument binding on Pledgor or affecting its
properties or (iii) require any approval of partners, share-
holders, directors or officers of OLS Berkeley or Pledgor or any
approval or consent of any Person under any agreement or instru-
ment binding on Pledgor or affecting its properties, except for
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authorization by the Securities and Exchange Commission under the
Public Utility Holding Company Act of 1935, which authorization
has already been obtained.
7. Covenants. Pledgor covenants and agrees with Pledgee
that from and after the date of this Pledge Agreement and until
the Secured Obligations are fully satisfied:
(a) Payment Over of Certain Distributions. Except as
provided in Section 10 hereof, if Pledgor shall, as a result of
its ownership of the Pledged Shares, become entitled to receive
or shall receive any noncash distribution, whether in addition
to, in substitution of, as a conversion of, or in exchange for
such Pledged Shares, or otherwise in respect thereof, Pledgor
shall accept the same as Pledgee's agent, hold the same in trust
for Pledgee and deliver the same forthwith to Pledgee in the
exact form received, to be held by Pledgee hereunder as addi-
tional collateral security for the Secured Obligations. Except
as provided in Section 10 hereof, any sums paid upon or in
respect of the Pledged Shares upon the dissolution or winding up
of OLS Berkeley shall be paid over to Pledgee to be held by it
hereunder as additional collateral security for the Secured
Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Shares or any property shall
be distributed upon or with respect to the Pledged Shares
pursuant to the recapitalization or reclassification of the
capital of OLS Berkeley or pursuant to the reorganization
thereof, the property so distributed shall be delivered to
Pledgee to be held by it, subject to the terms hereof, as
additional collateral security for the Secured Obligations.
Except as provided in Section 10 hereof, if any sums of money or
property so paid or distributed in respect of the Pledged Shares
shall be received by Pledgor, Pledgor shall, until such money or
property is paid or delivered to Pledgee, hold such money or
property in trust for Pledgee, segregated from other funds of
Pledgor, as additional collateral security for the Secured
Obligations.
(b) Limitation on Certain Actions. Without the prior
written consent of Pledgee, Pledgor will not (i) vote to enable,
or take any other action to permit, OLS Berkeley to issue any
shares or other equity interest of any nature or to issue any
other securities convertible into or granting the right to
purchase or exchangeable into any shares or other equity interest
or (ii) sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to, the Collateral.
(c) Further Assurances. At any time and from time to time,
upon the written request of Pledgee, and at the sole expense of
Pledgor, Pledgor will promptly and duly execute and deliver any
and all such further instruments and documents and take such
further action as Pledgee may reasonably deem necessary to obtain
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the full benefits of this Pledge Agreement and of the rights and
powers herein granted, and such action to include, without
limitation, the filing of any financing or continuation
statements under the UCC with respect to the liens and security
interests granted hereby, and transferring Collateral to
Pledgee's possession (if a security interest in such Collateral
can be perfected by possession). Pledgor also hereby authorizes
Pledgee to file any such financing or continuation statement
without the signature of Pledgor to the extent permitted by
applicable law. Subject to the provisions of Section 10 hereof,
if any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any instrument (other
than checks representing payments received in the ordinary course
of business), such instrument shall be immediately pledged to
Pledgee hereunder, and shall be duly endorsed in a manner
satisfactory to Pledgee and delivered to Pledgee.
(d) Maintenance of Records. Pledgor will keep and maintain
at its own cost and expense satisfactory and complete records of
the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the
Collateral and all other dealings with the Collateral. Pledgor
will mark its books and records pertaining to the Collateral to
evidence this Pledge Agreement and the security interest granted
hereby. For Pledgee's further security and at Pledgee's request,
Pledgor agrees that upon the occurrence and during the
continuation of any Default or Event of Default, Pledgor shall
deliver and turn over any such books and records and other
documents to Pledgee or to its representatives.
(e) [Reserved]
(f) Compliance With Laws, etc. Pledgor will comply, in all
material respects, with all acts, rules, regulations, orders,
decrees and directions of any governmental authority, applicable
to the Collateral or any part thereof or to the operation of
Pledgor's business to the extent that the operation of Pledgor's
business may affect the Collateral or Pledgee's rights in the
Collateral; provided, however, that Pledgor may contest any act,
regulation, order, decree or direction in any reasonable manner
which shall not, in the sole opinion of Pledgee, materially
adversely affect the rights of Pledgee hereunder or adversely
affect the first priority of its security interest in the
Collateral taken as a whole.
(g) Payment of Obligations. Pledgor will pay promptly when
due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or
profits therefrom and all claims of any kind (including, without
limitation, claims for labor, materials and supplies), subject to
the right of Pledgor to contest such taxes, assessments,
governmental charges or levies and claims in good faith and by
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appropriate proceedings, after posting bonds or establishing
adequate reserves at least equal to such taxes, assessments and
governmental charges or levies and claims and any interest and
penalty that may be payable thereon.
(h) Limitation on Liens on Collateral. Pledgor will not
create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove, any
Lien on the Collateral, and will defend the right, title and
interest of Pledgee in and to any of Pledgor's rights under the
Collateral against the claims and demands of all Persons
whomsoever.
(i) Limitations on Disposition. Pledgor will not sell,
lease, transfer or otherwise dispose of any of the Collateral, or
attempt or contract to do so.
(j) Further Identification of Collateral. Pledgor will, if
so requested by the Collateral Agent, furnish to the Collateral
Agent, as often as the Collateral Agent reasonably requests,
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
(k) Notices. Pledgor will advise Pledgee promptly, in
reasonable detail, (i) of any Lien, security interest, encum-
brance or claim made or asserted against any of the Collateral
(other than any Collateral which, individually or in the
aggregate, is immaterial), (ii) of any material change in the
composition of the Collateral, and (iii) of the occurrence of any
other event which would have a material adverse effect on the
aggregate value of the Collateral or on the security interests
created hereunder.
(l) [Reserved]
(m) Continuous Perfection. Pledgor will not change its
name, identity or corporate structure in any manner which might
make any financing or continuation statement filed in connection
herewith seriously misleading within the meaning of section 9-
402(7) of the UCC (or any other then applicable provision of the
UCC) unless Pledgor shall have given the Collateral Agent at
least thirty (30) days' prior written notice thereof and shall
have taken all action (or made arrangements to take such action
substantially simultaneously with such change if it is impossible
to take such action in advance) necessary or reasonably requested
by the Collateral Agent to amend such financing statement or
continuation statement so that it is not seriously misleading.
8. Pledgee's Appointment as Attorney-in-Fact.
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(a) Subject to the provisions of subsection 8(b) below,
Pledgor hereby irrevocably constitutes and appoints Pledgee and
any executive officer of Pledgee and any agent designated by such
executive officer, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Pledgor and in the name of
Pledgor or in its own name, from time to time in Pledgee's
discretion, for the purpose of carrying out the terms of this
Pledge Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this
Pledge Agreement and, without limiting the generality of the
foregoing, hereby gives Pledgee the power and right, on behalf of
Pledgor, without notice to or assent by Pledgor to do the
following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due
and to become due under any Collateral and, in the name
of Pledgor or its own name or otherwise, to take
possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the
payment of moneys due under any Collateral 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 Pledgee for the purpose of collecting
any and all such moneys due under any Collateral
whenever payable 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 Pledgee for
the purpose of collecting any and all such moneys due
under any Collateral whenever payable;
(ii) to pay or discharge taxes, liens, security
interests or other encumbrances levied or placed on or
threatened against the Collateral;
(iii) (A) to direct any party liable for any
payment under any of the Collateral to make payment of
any and all moneys due, and to become due thereunder,
directly to Pledgee or as Pledgee shall direct; (B) to
receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any
time, in respect of or arising out of any Collateral;
(C) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts
and other documents constituting or relating to the
Collateral; (D) 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
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any part thereof and to enforce any other right in
respect of any Collateral; (E) to defend any suit,
action or proceeding brought against Pledgor with
respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges
or releases as Pledgee may deem appropriate; and
(G) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though
Pledgee were the absolute owner thereof for all
purposes, and to do, at Pledgee's option and Pledgor's
expense, at any time, or from time to time, all acts
and things which Pledgee reasonably deems necessary to
protect, preserve or realize upon the Collateral and
Pledgee's Lien therein, in order to effect the intent
of this Pledge Agreement, all as fully and effectively
as Pledgor might do; and
(iv) to receive any and all distributions paid in
respect of the Pledged Shares and to make application
thereof to the Secured Obligations, and Pledgee or its
nominee may exercise (A) all voting, partnership and
other rights pertaining to the Pledged Shares and
(B) any and all rights, privileges or options pertain-
ing to the Pledged Shares as if it were the absolute
owner thereof, all without liability except to account
for property actually received by it, but Pledgee shall
have no duty to exercise any such right, privilege or
option and shall not be responsible for any failure to
do so or delay in so doing.
(b) Pledgee agrees that the power of attorney and any
rights granted to Pledgee pursuant to this Section 8 shall not
become effective except upon the occurrence and during the
continuation of an Event of Default. Pledgor hereby ratifies, to
the extent permitted by law, all that said attorneys shall
lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to this Section 8 is a power coupled
with an interest and shall be irrevocable until the Secured
Obligations are indefeasibly paid in full.
(c) The powers conferred on Pledgee hereunder are solely to
protect Pledgee's interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. Pledgee
shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers and neither it nor any
of its officers, directors, employees or agents shall be
responsible to Pledgor for any act or failure to act, except for
its own gross negligence or willful misconduct.
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(d) Pledgor also authorizes Pledgee, at any time and from
time to time upon the occurrence and during the continuation of
an Event of Default, to execute, in connection with the sale
provided for in Section 11 hereof, any endorsements, assignments
or other instruments of conveyance or transfer with respect to
the Collateral.
(e) Pledgee agrees to release promptly to the Pledgor any
cash distributions on the Collateral which it may receive
hereunder (and any Proceeds of such cash distributions) during
the continuation of any Event of Default, to the extent not
applied to the Secured Obligations, following the waiver or
curing of such Event of Default.
9. Performance by Pledgee of Pledgor's Obligations.
If Pledgor fails to perform or comply with any of its
agreements contained herein and Pledgee, as provided for by the
terms of this Pledge Agreement, shall itself perform or comply,
or otherwise cause performance or compliance, with such
agreement, the reasonable expenses of Pledgee incurred in
connection with such performance or compliance, together with
interest thereon at the rate then in effect in respect of the
Loan Agreement defined in the Berkeley Restructuring Agreement,
shall be payable by Pledgor to Pledgee on demand and shall
constitute Secured Obligations secured hereby.
10. Cash Distributions; Voting Rights.
Unless an Event of Default shall have occurred and be
continuing, Pledgor shall be permitted to receive all cash
dividends and cash distributions paid in respect of the Pledged
Shares free of the lien of this Pledge Agreement and to exercise
all voting and shareholder rights with respect to the Pledged
Shares; provided, however, that no vote shall be cast or
shareholder right exercised or other action taken which, in
Pledgee's reasonable judgment, would impair the Collateral or
which would be inconsistent with or result in any violation of
any provision of the Operative Documents, including, without
limitation, dissolution.
11. Remedies.
(a) If an Event of Default has occurred and is continuing,
in addition to all other rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations,
Pledgee shall have all rights and remedies of a secured party
under the UCC. Without limiting the generality of the fore-
going, Pledgee, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind,
(except any notice required by law referred to below) to or upon
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<PAGE>
Pledgor or any other Person (all and each of which demands,
defenses, advertisement and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-
counter market, at any exchange, broker's board or office of
Pledgee or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any
credit risk. Pledgee shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in
Pledgor, which right or equity is hereby waived or released.
Pledgee shall apply any Proceeds from time to time held by it and
the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of Pledgee
hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment or performance in whole or
in part of the Secured Obligations, and only after such
application and after the payment by Pledgee of any other amount
required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the UCC, need Pledgee account for the
surplus, if any, to Pledgor. To the extent permitted by
applicable law, Pledgor waives all claims, damages and demands it
may acquire against Pledgee of any of its rights hereunder. If
any notice of a proposed sale or other disposition of the
Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale
or other disposition. Pledgor further waives and agrees not to
assert any rights or privileges which it may acquire under
Section 9-112 of the UCC.
(b) The Proceeds of any sale, disposition or other
realization upon all or any part of the Collateral shall be
distributed by Pledgee in the following order of priority:
First, to Pledgee in an amount sufficient to pay
in full the expenses of Pledgee in connection with such
sale, disposition or other realization, including all
expenses, liabilities and advances incurred or made by
Pledgee in connection therewith, including, without
limitation, reasonable attorneys' fees;
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Second, to Pledgee in an amount equal to the
aggregate amount of Secured Obligations which are then
unpaid or unperformed;
Finally, upon payment and performance in full of
all of the Secured Obligations, to any person entitled
by law to receive such amounts or to Pledgor, or its
representatives or as a court of competent jurisdic-
tion may direct, any surplus then remaining from such
Proceeds.
(c) Pledgor recognizes that Pledgee may be unable to effect
a public sale of any or all of the Pledged Shares, by reason of
certain prohibitions in the Securities Act of 1933, as amended
(the "Securities Act"), and applicable state securities laws or
otherwise, and may be compelled to resort to one or more public
or private sales thereof to a restricted group of purchasers
which will be obligated to agree, among other things, to acquire
such securities for their own account for investment and not with
a view to the distribution or resale thereof. Pledgor
acknowledges and agrees that any such private sale or restricted
public sale may result in prices and other terms less favorable
to Pledgee than if such sale were an unrestricted public sale and
agrees that such circumstances shall not, in and of themselves,
result in a determination that such sale was not made in a
commercially reasonable manner. Pledgee shall be under no
obligation to delay a sale of any Pledged Shares for the period
of time necessary to permit the registration thereof under the
Securities Act, or under applicable state securities laws.
(d) If Pledgee shall determine to exercise its right to
sell the Pledged Shares, and if in the opinion of counsel for
Pledgee it is necessary, or if in the opinion of Pledgee it is
advisable, to have the Pledged Shares registered under the
provisions of the Securities Act of 1933, Pledgor agrees, at its
own expense (as more fully provided in paragraph (g) below),
(i) to use its best efforts to cause OLS Berkeley, and its
officers, directors and shareholders to execute and deliver, all
such instruments and documents, and to do or cause to be done all
other such acts and things, as may be necessary or, in the
opinion of Pledgee, advisable to register the Pledged Shares
under the provisions of the Securities Act of 1933 and to cause
the registration statement relating thereto to become effective
and to remain effective for such period as prospectuses are
required by law to be furnished, and to make or cause to be made
all amendments and supplements thereto and to any related
prospectus which, in the opinion of Pledgee, are necessary or
advisable, all in conformity with the requirements of the
Securities Act of 1933 and the rules and regulations of the
Securities and Exchange Commission applicable thereto, (ii) to
use its best efforts to cause OLS Berkeley to agree to make, and
to make available to its security holders as soon as practicable,
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an earning statement (which need not be audited) covering a
period of at least 12 months, beginning with the first month
after the effective date of any such registration statement,
which earning statement will satisfy the provisions of Section
11(a) of the Securities Act of 1933, (iii) to use its best
efforts to qualify the Pledged Shares under state Blue Sky or
securities laws and to obtain the approval of any governmental
authorities for the sale of the Pledged Shares as requested by
Pledgee, and (iv) at the request of Pledgee, to indemnify and
hold harmless Pledgee, and any underwriters (and any person
controlling any of the foregoing) (but, as provided in subsection
11(i) below, only to the extent of its interest in the
Collateral) from and against any loss, liability, claim, damage
and expense (and reasonable counsel fees incurred in connection
therewith) under the Securities Act of 1933 or otherwise insofar
as such loss, liability, claim, damage or expense arises out of
or is based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement or
prospectus or in any preliminary prospectus or any amendment or
supplement thereto, or arises out of or is based upon any
omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein
not misleading, such indemnification to remain operative regard-
less of any investigation made by or in behalf of Pledgee or any
underwriters (or any person controlling any of the foregoing),
provided that Pledgor shall not be liable in any case to the
extent that any such loss, liability, claim, damage or expense
arises out of or is based on an untrue statement or alleged
untrue statement or an omission or an alleged omission (i) made
in reliance upon and in conformity with written information
furnished to such corporation by Pledgee or any underwriter or
(ii) that was not negligently, knowingly, intentionally or
fraudulently made by Pledgor.
(e) Upon any public or private sale of the Pledged Shares
pursuant to this Section 11, Pledgee shall have the right to
deliver, assign and transfer to the purchaser thereof the
Collateral so sold. Each purchaser at such sale shall hold the
Collateral so sold absolutely free from any claim or right of
redemption of Pledgor, which, to the extent permitted by law,
hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any rule or law or
statute now existing or hereafter in force. In the case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Pledgee
until the selling price is paid by the purchaser thereof, but the
Pledgee shall not incur any liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold and,
in case of any such failure, such Collateral may again be sold
upon ten days' written notice.
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(f) The Pledgee, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law
or in equity to foreclose the security interests granted herein
and sell the Collateral, or any portion thereof, under a judgment
or decree of a court or courts of competent jurisdiction.
(g) Expenses payable by Pledgor in connection with any
disposition under paragraph (a), (c) or (d) above shall include,
but shall not be limited to, all costs of a registration under
the Securities Act of 1933 of the Pledged Shares or of sale of
Pledged Shares pursuant to Regulation A under said Act, brokers'
or underwriters' commissions, fees or discounts, accounting and
legal fees, costs of printing and other expenses of transfer and
sale. Pledgor agrees to pay to Pledgee, on demand following any
Event of Default and in advance of any such registration, sale or
other realization on the Pledged Shares, such reasonable amount
estimated by counsel for Pledgee which will cover all of such
costs and expenses described above, and all other costs and
expenses of enforcing Pledgor's obligations and of realizing on
the Collateral, including reasonable attorneys' fees and legal
expenses. Pledgor shall be liable for the entire amount of any
deficiency remaining after the disposition of the Pledged Shares.
(h) Pledgor hereby agrees that any disposition of Pledged
Shares by way of a private placement or other method which in the
opinion of Pledgee is required or advisable under federal and
state securities laws is commercially reasonable.
(i) Pledgor and Pledgee hereby acknowledge and agree that
Pledgor's obligations hereunder are nonrecourse and that
Pledgor's liability hereunder upon the occurrence of an Event of
Default shall be limited to the Collateral.
12. Limitation on Pledgee's Duty in Respect of
Collateral.
Pledgee's sole duty with respect to the custody, safekeep-
ing and physical preservation of the Collateral in its posses-
sion, under Section 9-207 of the UCC or otherwise, shall be to
deal with it in the same manner as Pledgee deals with similar
securities and property for its own account. Neither Pledgee nor
any of its directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any
Obligation to sell or otherwise dispose of any Collateral upon
the request of Pledgor or otherwise.
13. Default.
(a) "Default" means an Event of Default or an event or
condition that, with the giving of notice or the lapse of time or
both, would become an Event of Default.
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(b) "Event of Default" means any of the following:
(i) A Loan Default;
(ii) A Lease Default;
(iii) The failure of OLS Berkeley to pay or
perform any of the Secured Obligations;
(iv) Any material noncompliance with or
nonperformance of any of Pledgor's obligations,
agreements or affirmations under this Pledge Agreement;
(v) Any levy or seizure against any of the
Collateral; or
(vi) Termination of business, assignment for
creditors, insolvency, appointment of receiver, or the
filing of any petition under bankruptcy or debtor's
relief laws of, by or against Pledgor.
14. Reinstatement.
This Pledge Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or
against Pledgor for liquidation or reorganization, should Pledgor
become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or
any significant part of Pledgor's assets, and shall continue to
be effective or be reinstated, as the case may be, if at any time
payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee
of the Secured Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored or returned,
the Secured Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored
or returned.
15. Subrogation.
Notwithstanding any payment by any Pledgor pursuant hereto,
Pledgor irrevocably waives any right it now has or may hereafter
acquire by way of subrogation or by any indemnity, reimbursement
or other agreement.
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16. Renewal and Extension.
Pledgor authorizes Pledgee, without notice to, demand of, or
consent from Pledgor, and without affecting its liability to
Pledgee hereunder, from time to time to (a) renew, extend, accel-
erate or otherwise change the time or place for payment of, or
otherwise change the terms of, the Secured Obligations or any
part thereof including, without limitation, increase or decrease
of the rate of interest thereon; (b) take and hold security for
the payment or performance of the Secured Obligations or this
Pledge Agreement, and exchange, enforce, waive, surrender,
modify, impair, change, alter, renew, continue, compromise or
release in whole or in part any such security, or fail to perfect
its interest in any such security or to establish its priority
with respect thereof; (c) apply such security and direct the
order or manner of sale thereof as Pledgee in its sole discretion
may determine; (d) release OLS Berkeley, in whole or in part,
from any or all of the Secured Obligations or substitute any or
all of the Secured Obligations; (e) settle or compromise any or
all of the Secured Obligations with OLS Berkeley or any endorser
or guarantor of the Secured Obligations; and (f) subordinate any
or all of the Secured Obligations to any other obligations of or
claim against OLS Berkeley, whether owing to or existing in favor
of Pledgee or any other party. Pledgor shall be and remain bound
hereunder notwithstanding any such renewal, extension, acceler-
ation, change, taking, holding, exchange, enforcement, waiver,
surrender, modification, impairment, alteration, renewal,
continuation, compromise, release, failure, application, direc-
tion, substitution, settlement, or subordination. Pledgee may
without notice assign this Pledge Agreement in whole or in part.
17. Rights and Remedies.
Pledgor waives any and all rights which Pledgor may other-
wise have to require Pledgee to (a) proceed against OLS Berkeley;
(b) proceed against or exhaust any security held from OLS
Berkeley; or (c) pursue any other remedy in Pledgee's power what-
soever. Pledgee may exercise any right or remedy it may have
against OLS Berkeley or any security now or hereafter held by or
for the benefit of Pledgee, including, without limitation, the
right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the
liability of Pledgor hereunder except to the extent the Secured
Obligations may thereby be paid. In the event of a judicial
foreclosure sale, the Secured Obligations shall be reduced only
by the amount bid and actually received by Pledgee at such sale,
and not by the fair market value of the property sold at that
sale or any other amount that Pledgee may be deemed to have paid
under law (the parties having agreed that Pledgor's sole remedy
if Pledgor believes that any property is being sold at a fore-
closure sale for less than its fair value is to bid at that
sale). Pledgor waives any defense arising out of the absence,
impairment or loss of any right of reimbursement or subrogation
or other right or remedy of Pledgor against OLS Berkeley or any
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such security, whether resulting from the election by Pledgee to
exercise any right or remedy it may have against OLS Berkeley,
any defect in, failure of, or loss or absence of priority with
respect to Pledgee's interest in such security, or otherwise. In
the event that any foreclosure sale is deemed to be not com-
mercially reasonable, Pledgor waives any right that it may have
to have any portion of the obligations discharged except to the
extent of the amount actually bid and received by Grantee at any
such sale. Pledgee shall not be required to institute or
prosecute proceedings to recover any deficiency as a condition of
payment hereunder or enforcement hereof.
18. Separate Obligation.
The obligations hereunder are joint and several, and
independent of the obligations of OLS Berkeley, and a separate
action or actions may be brought and prosecuted against Pledgor
whether or not action is brought against OLS Berkeley. Pledgor
waives the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof, to the extent
permitted by law. Pledgor understands that Pledgee would not
consent to restructure the obligations of OLS Berkeley or enter
into those Operative Documents, to which it is a party in the
absence of the foregoing covenants by Pledgor and the other
covenants of Grantor contained in this Pledge Agreement.
19. Waiver of Notices and Demands.
Pledgor waives all presentments, demands for performance,
notices of nonperformance, protests, notices of protest, notices
of dishonor, notices of default, and notices of acceptance of
this Pledge Agreement and of the existence, creation or incur-
ring of new or additional indebtedness or obligation. At the
option of Pledgee, Pledgor may be joined in any action or
proceeding commenced by Pledgee against OLS Berkeley, in con-
nection with or based upon the Secured Obligations or any
security therefor and recovery may be had against Pledgor in such
action or proceeding, without any requirement that Pledgee first
assert, prosecute or exhaust any remedy or claim against OLS
Berkeley. Without limiting the foregoing, Pledgor acknowledges
that repeated and successive demands may be made and payments or
performance made hereunder in response to such demands as and
when, from time to time, OLS Berkeley, may default in performance
of the Secured Obligations. Notwithstanding any such performance
hereunder, this Pledge Agreement shall remain in full force and
effect and shall apply to any and all subsequent defaults by OLS
Berkeley in payment or performance of the Secured Obligations.
20. Waiver of Defenses.
Pledgor waives any defense arising by reason of any
disability or other defense of OLS Berkeley or by reason of the
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cessation from any cause whatsoever of the liability of OLS
Berkeley. Pledgor waives any setoff, defense or counterclaim
which Pledgor may have or claim to have against Pledgee.
21. Termination of Pledge Agreement, Events Upon
Termination.
(a) This Pledge Agreement shall terminate upon the earliest
of the following occurrences:
(i) the payment or performance in full of the
Secured Obligations;
(ii) the written agreement of Pledgor and Pledgee.
(b) Upon termination of this Pledge Agreement as the result
of the occurrence of any event specified in Section 21(a) above,
the Pledgee shall deliver to Pledgor all stock certificates
representing the Pledged Shares then being held by the Pledgee
under this Pledge Agreement and not previously delivered to
Pledgor.
22. Rights of Pledgee.
The rights, powers, and remedies given to the Pledgee by
this Pledge Agreement shall be in addition to all rights, powers,
and remedies given to the Pledgee by virtue of any statute or
rule of law. Any forbearance or failure or delay by Pledgee in
exercising any right, power, or remedy hereunder shall not be
deemed to be a waiver of such right, power, or remedy, and any
single or partial exercise of any right, power, or remedy
hereunder shall not preclude the further exercise thereof; and
every right, power, and remedy of Pledgee shall continue in full
force and effect until such right, power, or remedy is
specifically waived by an instrument in writing executed by
Pledgee.
23. Duty to Keep Informed.
Pledgor assumes the responsibility for being and keeping
itself informed of the financial condition of OLS Berkeley until
the termination of all of the Secured Obligations, and of all
other circumstances bearing upon the risk of nonpayment or
default under the Secured Obligations which diligent inquiry
would reveal, and agrees that Pledgee shall have no duty to
advise Pledgor of information known to it regarding such
condition or any such circumstances.
24. Costs and Attorneys' Fees.
If any suit or action be instituted to enforce the rights of
either party under this Pledge Agreement, the prevailing party
20
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shall be entitled to reasonable attorneys' fees and court costs.
All such costs and expenses incurred or to be paid by Pledgor to
Pledgee shall become part of the Indebtedness, secured hereunder
and shall be paid by Pledgor or repaid from the proceeds of the
sale of the Pledged Shares hereunder.
25. Notices.
Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or
served upon any of the parties by any other party, or whenever
any of the parties desires to give or serve upon any other party
any other communication with respect to this Pledge Agreement,
each such notice, demand, request, consent, approval, declaration
or other communication shall be deemed to have been fully given
when made in accordance with Section [5.3] of the Berkeley
Restructuring Agreement.
26. Severability.
Any provision of this Pledge Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdic-
tion, 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.
27. No Waiver by Pledgee; Cumulative Remedies.
Pledgee shall not by any act, delay, omission or otherwise
be deemed to have waived any of its rights or remedies here-
under, and no waiver shall be valid unless in writing, signed by
Pledgee, and then only to the extent therein set forth. A waiver
by Pledgee of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which
Pledgee would otherwise have had on any future occasion. No
failure to exercise nor any delay in exercising on the part of
Pledgee, any right, power or privilege hereunder, shall operate
as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or
future exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are
in addition to any rights and remedies provided by law. None of
the terms or provisions of this Pledge Agreement may be waived,
altered, modified or amended except by an instrument in writing,
duly executed by Pledgee and, where applicable by Pledgor. The
prior written approval of UNIVERSITY shall be required with
respect to certain amendments or supplements to this Pledge
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Agreement as set forth in Section [5.5] of the Berkeley
Restructuring Agreement.
28. Successors and Assigns; Governing Law.
(a) This Pledge Agreement and all obligations of Pledgor
hereunder shall be binding upon the successors and assigns of
Pledgor, and shall, together with the rights and remedies of
Pledgee hereunder, inure to the benefit of Pledgee, and to
Pledgee's successors and assigns. No sales of participations,
other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Secured
Obligations or any portion thereof or interest therein shall in
any manner affect the security interest granted to Pledgee
hereunder.
(b) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA.
29. Further Indemnification.
Pledgor agrees to pay, and to save Pledgee harmless from,
any and all liabilities with respect to, or resulting from any
delay in paying, any and all excise, sales or other similar taxes
which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
30. Entire Agreement.
This Pledge Agreement constitutes the entire Pledge
Agreement between Pledgor and Pledgee concerning the subject
matter hereof and supersedes any and all prior negotiations and
discussions, written or oral.
31. Counterparts.
This Pledge Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which,
taken together, shall constitute but one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Pledge Agreement as of the day and year first above written.
Pledgor: OLS ACQUISITION CORPORATION,
a Delaware corporation
By ______________________________
Its _____________________________
Pledgee: UNITED STATES TRUST COMPANY OF NEW
YORK, a New York corporation, not
in its individual capacity but
solely as Owner Trustee
By ______________________________
Its _____________________________
GERARD F. GANEY, not in his
individual capacity but solely as
Co-Trustee
By ______________________________
Gerard F. Ganey
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Exhibit B
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
by and between
O.L.S. ENERGY-BERKELEY
and
GENERAL ELECTRIC CAPITAL CORPORATION
Dated as of ___________, 1994
Cogeneration Facility at
the University of California, Berkeley
1
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TABLE OF CONTENTS
Page
ARTICLE 1 Definitions 1
1.1 Certain Definitions 1
1.2 Terms Defined Elsewhere 5
ARTICLE 2 Commitment of GECC, Borrowing Procedures and
Conditions 5
2.1 Commitments 5
2.1.1 Working Capital Commitment 5
2.1.2 Overhaul Commitment 5
2.2 Borrowing Procedures 6
2.3 Method of Advances 6
2.4 Conditions to Each Advance 7
ARTICLE 3 Notes Evidencing Loans 7
3.1 Revolving Notes 7
3.2 Due Date Extension 7
ARTICLE 4 Interest and Payment of Advances 7
4.1 Interest 7
4.1.1 Interest on Notes 7
4.1.2 Interest Payment Dates 8
4.2 Basis of Computation 8
4.3 Payment of Advances 8
4.4 Effect of Payment of Advances on Overhaul Loan 8
ARTICLE 5 Reduction or Termination of the Commitments,
Prepayments 9
5.1 Voluntary Reduction or Termination of the Commitments 9
5.2 Mandatory Termination of the Overhaul Commitment 9
5.3 Optional Prepayment 9
5.4 Mandatory Prepayment 9
5.5 Interest on Principal Prepaid 10
5.6 Effect of Prepayment of Overhaul Loan 10
ARTICLE 6 Making of Payments 10
ARTICLE 7 Representations and Warranties 10
7.1 Financing Agreement 10
ARTICLE 8 Borrower's Covenants 10
8.1 Financing Agreement 10
8.2 Use of Proceeds 11
8.3 Further Assurances 11
8.4 General Indemnity 11
8.5 Expenses 11
2
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ARTICLE 9 Conditions of Lending 11
9.1 Initial Advances 11
9.1.1 Notes 12
9.1.2 Resolutions 12
9.1.3 Consents, etc. 12
9.1.4 Incumbency and Signatures 12
9.1.5 Certificate of Incorporation and By-Laws 12
9.1.6 Financing Statements 12
9.1.7 Other 12
9.2 Additional Condition to Overhaul Commitment Advances 12
9.3 Both Commitments 13
9.3.1 Representations Correct 13
9.3.2 Notice of Borrowing 13
9.3.3 No Default Under Operative Documents 13
9.3.4 Other 13
ARTICLE 10 Events of Default, Remedies 13
10.1 Events of Default 13
10.1.1 Nonpayment of Notes, etc. 13
10.1.2 Bankruptcy, Insolvency, etc. 14
10.1.3 Default Under Operative Documents 14
10.1.4 Noncompliance With This Loan Agreement 14
10.1.5 Representations and Warranties 14
10.1.6 Condition of Borrower 15
10.2 Effect of Loan Event of Default 15
10.3 Remedies 15
ARTICLE 11 Issuance and Repayment of Letters of Credit 16
11.1 Issuance of Letters of Credit 16
11.2 Conditions Precedent to Issuance of a Letter of
Credit 16
11.2.1 Representations Correct 16
11.2.2 Notice of Request to Issue L/C 16
11.2.3 No Default Under Operative Documents 17
11.2.4 Other 17
11.3 Letter of Credit Fee 17
11.4 Obligations to Repay Letter of Credit
Disbursements 17
ARTICLE 12 General 18
12.1 Amendments 18
12.2 Notices 18
12.3 Severability 18
12.4 Term 18
12.5 Independence of Covenants 19
12.6 Survival 19
12.7 Successors and Assigns 19
12.8 Entire Agreement, Waiver 19
12.9 Governing Law 20
12.10 Consent to Jurisdiction 20
12.11 Headings, Section References 20
12.12 Counterparts 20
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TABLE OF EXHIBITS
Exhibit
A L/C
B Working Capital Note
C Overhaul Note
D Notice of Borrowing
E Notice of Request to Issue L/C
F Pro Forma Projections
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FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT (as hereafter
amended from time to time, the "Loan Agreement"), made
and entered into as of the ____ day of _________, 1994 by and
between O.L.S. ENERGY-BERKELEY, a California corporation
("Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation ("GECC"),
W I T N E S S E T H:
WHEREAS, GECC and Borrower entered into that certain Revolving
Credit Agreement dated as of August 7, 1987; and
WHEREAS, the parties now desire to extend the Revolving Credit
Agreement, to amend the Revolving Credit Agreement to increase
the amount Borrower can borrow from GECC for working capital
purposes to an amount not to exceed one million five hundred
thousand dollars ($1,500,000) and to permit Borrower to borrow
from GECC an additional amount not to exceed one million dollars
($l,000,000) for the payment of Overhaul Costs, and to otherwise
amend and restate the Revolving Credit Agreement:
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration,
receipt of which is hereby acknowledged, and in reliance upon the
representations and warranties of Borrower set forth in the
Financing Agreement, as amended, the parties hereto intending to
be legally bound hereby, agree as follows:
ARTICLE 1
Definitions
1.1 Certain Definitions. Unless the context otherwise
requires, for all purposes of this Agreement the following terms
shall have the following meanings:
"Advance" means a loan hereunder or any amount paid by GECC
under or pursuant to an L/C issued hereunder.
"Advance Date" means the date on which the proceeds of Advances
pursuant to a Notice of Borrowing are delivered or otherwise made
available to Borrower or, in the case of any drawing under an
L/C, the date upon which GECC makes a payment under or pursuant
to such L/C.
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"Borrower" means O.L.S. Energy-Berkeley, a California
corporation, acting solely on its own behalf and not on behalf of
any shareholder or officer of Borrower.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in
the State of California or the State of New York are authorized,
or obligated, by law or executive order, to close.
"Collateral Security" shall have the meaning set forth in
Section [3.1] of the Escrow Agreement.
"Commitment" shall have the meaning set forth in Section 2.1
hereof.
"Default" means any Loan Event of Default or any event which
with the giving of notice or passage of time or both would become
a Loan Event of Default.
"Energy Service Agreement" means the First Amended and Restated
Energy Service Agreement dated as of __________, 1994, among
Borrower, Owner Trustee and UNIVERSITY, as it may be amended,
modified or supplemented from time to time in accordance with the
terms thereof.
"Escrow Agent" means Shawmut Bank, a national banking
association, in its capacity as escrow agent pursuant to the
Escrow Agreement, and its permitted replacements, successors and
assigns.
"Escrow Agreement" means the First Amended and Restated Escrow
Agreement dated as of __________, 1994 among Borrower, Owner
Trustee, GECC and the Escrow Agent, as it may be amended,
modified or supplemented from time to time in accordance with its
terms and the Financing Agreement.
"Financing Agreement" means the First Amended and Restated
Financing Agreement dated as of __________, 1994, between
Borrower and GECC, as it may be amended, modified or supple-
mented from time to time in accordance with the terms thereof.
"GECC" means General Electric Capital Corporation, a New York
corporation, formerly named "General Electric Credit Corporation"
and its successors and assigns.
"L/C" means a letter of credit in favor of any gas supplier
approved by GECC (which approval shall not be unreasonably
withheld), as beneficiary, substantially in the form of Exhibit A
hereto, issued by GECC pursuant to Article 11 of this Loan
Agreement.
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"Loan" means either the Overhaul Loan or the Working Capital
Loan, and "Loans" means the Overhaul Loans and Working Capital
Loans at any time outstanding.
"Loan Event of Default" shall have the meaning set forth in
Section 10.1 of this Loan Agreement.
"Loan Instruments" means each and all of this Loan Agreement,
the Notes, the L/C's and any other document or instrument made
and given in connection with the obligations of Borrower
hereunder.
"Maturity Date" means August 7, 2007.
"Note" means a promissory note substantially in the form of
Exhibit B or C hereto, completed in accordance with Section 3.1
of this Loan Agreement.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit D attached hereto and made a part hereof.
"Notice of Request to Issue L/C" means a notice substantially
in the form of Exhibit E hereto.
"Operating Account" shall have the meaning set forth in
[Article 2] of the Escrow Agreement.
"Overhaul Advance" means an Advance under the Overhaul Loan.
"Overhaul Costs" shall have the meaning set forth in Appendix A
to the Restructuring Agreement.
"Overhaul Note" shall have the meaning set forth in
Section 2.1.2 hereof.
"Overhaul Reference Interest Rate" means a monthly interest
rate determined as set forth below:
(1) At the time of each Overhaul Advance, the
Overhaul Reference Interest Rate for the period up to and
including the last Business Day of the month in which the
Advance is made shall be the Reference Rate in effect at the
time of the Advance plus two percent (2%);
(2) For each month after the month in which the
Overhaul Advance is made, the Overhaul Reference Interest
Rate shall be the Reference Rate in effect at 5:00 P.M. New
York time on the last Business Day of the month preceding the
month for which the rate is being calculated plus two percent
(2%).
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"Reference Rate" means the rate of interest per annum publicly
announced by Morgan Guaranty Trust Company (or any successor) as
its commercial reference rate (whether used or not, it being
understood that the Reference Rate may be one of several rates
used by Morgan Guaranty Trust Company (or any successor) to
calculate interest on loans that it may make or, if Morgan
Guaranty Trust Company (or any successor) ceases to announce a
commercial reference rate, by Manufacturers Hanover Trust Company
of New York (or any successor), in New York, New York, from time
to time as its commercial reference rate, or if Morgan Guaranty
Trust Company and Manufacturers Hanover Trust Company of New York
(or any successor) both cease to announce a commercial reference
rate, the substitute or equivalent rate of Morgan Guaranty Trust
Company (or any successor) or, if Morgan Guaranty Trust Company
(or any successor) ceases to announce a substitute or equivalent
rate, of Manufacturers Hanover Trust Company of New York (or any
successor), with the understanding that the reference or
substitute or equivalent rate of Morgan Guaranty Trust Company or
Manufacturers Hanover Trust Company of New York (or any
successor) is one of its base rates and serves as the basis upon
which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording
thereof, after its announcement, in such internal publication or
publications as Morgan Guaranty Trust Company or Manufacturers
Hanover Trust Company of New York (or any successor) may
designate. Any change in the Reference Rate shall be effective
on the effective date announced for such change by Morgan
Guaranty Trust Company or Manufacturers Hanover Trust Company of
New York (or any successor), and if no effective date is
announced, on the date on which the change is announced.
"Restructuring Agreement" means the Restructuring Agreement
dated as of ___________, 1994 by and among OLS, OLS Acquisition,
GECC, Owner Trustee, UNIVERSITY and Escrow Agent, as it may be
amended, modified or supplemented from time to time in accordance
with its terms.
"Scheduled Loan Payments" means, as of any date, all payments
due and payable by Borrower hereunder including, without
limitation, on the last day of each month, accrued and unpaid
interest on all Advances and Scheduled Overhaul Principal
Payments as defined in Section 4.3 below.
"Working Capital Advance" means an Advance under the Working
Capital Loan or an amount paid by GECC under or pursuant to an
L/C issued hereunder.
"Working Capital Note" shall have the meaning set forth in
Section 2.1.1 hereof.
"Working Capital Reference Interest Rate" means an interest
rate determined as set forth below:
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(1) At the time of each Working Capital Advance, the
Working Capital Reference Interest Rate for the period up to
and including the last Business Day of the month in which the
Advance is made shall be the Reference Rate in effect at the
time of the Advance plus three percent (3%);
(2) For each month after the month in which the
Working Capital Advance is made, the Working Capital
Reference Interest Rate shall be the Reference Rate in effect
at 5:00 P.M. New York time on the last Business Day of the
month preceding the month for which the rate is being
calculated plus three percent (3%).
1.2 Terms Defined Elsewhere. Unless the context otherwise
requires, capitalized terms used but not defined herein shall
have the meanings assigned to them in Appendix A to the Restruc-
turing Agreement (such definitions to be equally applicable to
the singular and plural forms of the terms defined).
ARTICLE 2
Commitment of GECC,
Borrowing Procedures and Conditions
2.1 Commitments.
2.1.1 Working Capital Commitment. Subject to the terms and
conditions of this Loan Agreement, GECC agrees to make Working
Capital Advances to Borrower in an aggregate principal amount at
any time outstanding not to exceed one million five hundred
thousand dollars ($1,500,000) (the "Working Capital Commitment");
provided, however, that in no event shall the principal amount of
Working Capital Advances outstanding in the form of loans to
Borrower hereunder exceed one million two hundred fifty thousand
dollars ($1,250,000) at any time. Subject to the terms and
conditions of this Loan Agreement, Borrower may from time to
time, from the date hereof until the Maturity Date, borrow, and
upon repayment, reborrow from GECC amounts at any one time not
exceeding the unborrowed portion of the Working Capital
Commitment minus amounts available, as of the time of each
borrowing, in the Lease Reserve Account and the Operating Account
and minus the amount of any issued and outstanding L/Cs
hereunder. The Working Capital Advances shall be evidenced by
the Working Capital Note, substantially in the form of Exhibit B
hereto. The Borrower shall use the proceeds of the Working
Capital Advances to fund its Permitted Expenses; provided,
however, that if funds are not available under the Overhaul
Commitment, the Borrower may use the proceeds of the Working
Capital Advances for Overhaul Costs.
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2.1.2 Overhaul Commitment. Subject to the terms and
conditions of this Loan Agreement, GECC agrees to make Overhaul
Advances to Borrower in an aggregate principal amount at any time
outstanding not to exceed one million dollars ($l,000,000) (the
"Overhaul Commitment"). Subject to the terms and conditions of
this Loan Agreement, Borrower may, from time to time, from the
date hereof until the Maturity Date, borrow, and upon repayment,
reborrow from GECC amounts at any one time not exceeding the
unborrowed portion of the Overhaul Commitment minus the amounts
available, as of the time of each borrowing, in the Lease Reserve
Account and the Operating Account on such date. The Overhaul
Advances shall be evidenced by the Overhaul Note substantially in
the form of Exhibit C hereto.
The Borrower shall use the proceeds of the Overhaul Advances to
fund Overhaul Costs; provided, however, that if UNIVERSITY agrees
that withdrawals from any of the accounts under the Prior Escrow
Agreement which are (i) used to fund Borrower's then-existing
working capital deficit or (ii) transferred to the Lease Reserve
Account will not result in a Supplemental Rebate or Percentage
Rebate payable to UNIVERSITY nor any rebate otherwise payable
pursuant to the Original Energy Contract, Borrower may, in GECC's
discretion, on execution of this Loan Agreement, borrow up to the
Overhaul Commitment as an initial Overhaul Advance and use such
Advance to pay outstanding amounts due to fuel suppliers, the
Operator under the Operation and Maintenance Contract,
Transaction Costs, amounts due under the Working Capital
Commitment and Basic Rent.
2.2 Borrowing Procedures. Whenever Borrower desires to obtain
an Advance (other than an Advance resulting from payment under an
L/C), Borrower shall notify GECC at least two (2) Business Days
prior to the date of the requested Advance by irrevocable written
notice pursuant to a Notice of Borrowing. The Notice of
Borrowing shall specify the date, which shall be a Business Day,
of the requested Advance, the type of Advance (whether Working
Capital or Overhaul) requested, the aggregate principal amount
thereof, and such additional information as is requested by GECC
or required by the Notice of Borrowing. All Advances shall be
conclusively presumed to have been made to or for the benefit of
Borrower when made in accordance with such Notice of Borrowing
signed by a Responsible Officer of Borrower. Borrower agrees to
indemnify and hold GECC harmless from any and all loss or
liability suffered or incurred in acting or relying upon such
Notice of Borrowing so signed and the directions therein and to
reimburse GECC upon demand for the amount (including, without
limitation, the amount, with interest, advanced by GECC pursuant
to any such Notice of Borrowing so signed and the directions
therein) of any and all losses, liabilities, attorneys' fees,
charges and expenses reasonably paid or incurred by GECC or any
of its employees or agents pursuant to such a Notice of Borrowing
not given with authority of Borrower. Each Advance hereunder
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shall be in an aggregate amount of at least ten thousand dollars
($10,000), except that each Advance hereunder consisting of an
amount paid by GECC under or pursuant to an L/C issued hereunder
may be in an amount less than ten thousand dollars ($10,000).
2.3 Method of Advances. GECC shall make each Advance (other
than an Advance resulting from payment under an L/C) by
transferring the amount of such Advance directly to the Escrow
Agent for deposit in the Operating Account.
2.4 Conditions to Each Advance. Notwithstanding any other
provision of this Loan Agreement, no Advance shall be required to
be made hereunder if the conditions precedent to the making of
such Advance specified in Article 9 have not been satisfied.
ARTICLE 3
Notes Evidencing Loans
3.1 Revolving Notes. The Working Capital Advances shall be
evidenced by the Working Capital Notes, and the Overhaul Advances
shall be evidenced by the Overhaul Notes, which shall be dated
the initial Advance Date (or such other date prior thereto as
shall be satisfactory to GECC), payable to the order of GECC on
or before the Maturity Date. The date and amount of each Advance
made by GECC and of each repayment of principal thereon received
by GECC shall be recorded by GECC in its records, or, at its
option, on the schedule attached to the Note. The aggregate
unpaid principal amount so recorded shall be rebuttable presump-
tive evidence of the principal amount owing and unpaid on the
Note. The failure to so record any such amount or any error in
so recording any such amount shall not, however, limit or
otherwise affect the obligations of Borrower hereunder or under
the Note to repay the principal amount of the Advances together
with all interest accruing thereon.
3.2 Due Date Extension. Each Note shall provide for the
payment of interest as provided in Article 4. If any payment of
principal or interest under a Note falls due on a Saturday,
Sunday or other day which is not a Business Day, then such due
date shall be extended to the next following Business Day, and
additional interest shall accrue and be payable for the period of
such extension.
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ARTICLE 4
Interest and Payment of Advances
4.1 Interest.
4.1.1 Interest on Notes. The unpaid principal amount from
time to time outstanding on the Working Capital Note shall bear
interest at the Working Capital Reference Interest Rate until the
Maturity Date, and after the Maturity Date (whether scheduled or
accelerated), the unpaid principal amount shall bear interest
until paid at a rate per annum equal to the sum of the Working
Capital Reference Interest Rate plus two percent (2%).
The unpaid principal amount from time to time outstanding on
the Overhaul Note shall bear interest at the Overhaul Reference
Interest Rate until the Maturity Date, and after the Maturity
Date (whether scheduled or accelerated), the unpaid principal
amount shall bear interest until paid at a rate per annum equal
to the sum of the Overhaul Reference Interest Rate plus two
percent (2%).
4.1.2 Interest Payment Dates. Accrued interest shall be
payable on the Working Capital Advances on the last Business Day
of each calendar month and on the Maturity Date. Payments of
accrued interest shall bear interest after the date that such
payments are due and payable (whether scheduled or accelerated),
at a rate per annum equal to the sum of the Working Capital
Reference Interest Rate plus two percent (2%), and shall be
payable upon demand.
Interest on each Overhaul Advance shall be payable on the last
Business Day of each calendar month and on the Maturity Date.
Payments of accrued principal and interest shall bear interest
after the date that such payments are due and payable (whether
scheduled or accelerated), at a rate per annum equal to the sum
of the Overhaul Reference Interest Rate applicable to such
Advance plus two percent (2%).
4.2 Basis of Computation. Interest hereunder shall be
computed on the basis of a year consisting of three hundred
sixty-five (365) days and actual days elapsed.
4.3 Payment of Advances. Borrower shall pay the entire
outstanding principal amount of the Advances, together with any
accrued but unpaid interest thereon, on the Maturity Date. On
the last Business Day of each month for which any Overhaul
Advance is outstanding, commencing with the last Business Day of
the month next succeeding the month in which such Overhaul
Advance is made, Borrower shall make a principal payment on such
Overhaul Advance (a "Scheduled Overhaul Loan Principal Payment")
in an amount such that equal monthly payments of accrued and
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unpaid interest (calculated on the basis of the Overhaul Loan
Reference Rate in effect on the date of such Overhaul Advance) on
such Overhaul Advance plus Scheduled Overhaul Loan Principal
Payments fully amortize the Overhaul Advance over a period equal
to the lesser of (a) three years from the last Business Day of
the month next succeeding the month in which such Overhaul
Advance is made, or (b) the length of time between the date of
the Overhaul Advance and the Maturity Date.
Lender shall provide Borrower an amortization schedule for each
Overhaul Advance no later than ten (10) days prior to the date on
which the first Scheduled Overhaul Loan Principal Payment is due
for such Overhaul Advance, which amortization schedule shall show
the aggregate amount of all Scheduled Overhaul Loan Principal
Payments for all Overhaul Advances made on or prior to such date.
4.4 Effect of Payment of Advances on Overhaul Loan. Each
optional or Scheduled Overhaul Loan Principal Payment made by
Borrower during any Fiscal Year shall reduce Operating Margin for
such Fiscal Year by an amount equal to such optional or Scheduled
Overhaul Loan Principal Payment; provided, however, that
prepayments shall be applied against the Overhaul Note and reduce
the Operating Margin for such Fiscal Year in the inverse order of
maturity.
ARTICLE 5
Reduction or Termination of the
Commitments, Prepayments
5.1 Voluntary Reduction or Termination of the Commitments.
Borrower may from time to time on at least ten (10) days' prior
written notice received by GECC permanently reduce the amount of
either the Working Capital Commitment or the Overhaul Commitment
but only upon repayment of the amount, if any, by which the
aggregate unpaid principal amount of the respective Note exceeds
the then reduced amount of such Commitment. Any such reduction
shall be in an aggregate amount of one hundred thousand dollars
($100,000) or an integral multiple thereof. Borrower may at any
time on like notice terminate either the Working Capital
Commitment or the Overhaul Commitment upon payment in full of the
respective Note and other obligations of Borrower hereunder.
5.2 Mandatory Termination of the Overhaul Commitment. On the
110% PV Shortfall Recovery Date, Borrower shall repay to GECC in
full all amounts then outstanding on the Overhaul Note and the
Overhaul Commitment shall thereupon terminate.
5.3 Optional Prepayment.
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(a) Borrower may, at any time and from time to time, prepay a
Working Capital Note in whole or in part without premium or
penalty.
(b) Borrower may, from time to time, with the consent of GECC,
prepay an Overhaul Note in whole or in part, without premium or
penalty; provided that if Borrower prepays an Overhaul Note
without GECC's consent, then, at GECC's option, the Overhaul
Commitment shall be reduced by the amount of such prepayment.
5.4 Mandatory Prepayment. All Available Cash of Borrower not
used by Borrower for reasonable operation, maintenance and
overhaul expenses shall be used to prepay principal and interest
under the Working Capital Loan. On each Application Date, prior
to the payment of the Supplemental Rebate and the Supplemental
Management Fee, pursuant to [Section 5.01(d)(ii) and (iii)] of
the Escrow Agreement, Borrower shall prepay in full the outstand-
ing balance of the Working Capital Loan.
5.5 Interest on Principal Prepaid. Any prepayment of
principal on a Working Capital or Overhaul Note shall include
accrued interest to the date of prepayment on the principal
amount being prepaid.
5.6 Effect of Prepayment of Overhaul Loan. Each prepayment of
principal on the Overhaul Loan if made after the last day of any
Fiscal Year but on or prior to the Application Date immediately
following such Fiscal Year shall reduce the Percentage Cash Flow
for such Fiscal Year by the amount of such prepayment.
ARTICLE 6
Making of Payments
All payments (including those made pursuant to Article 5) of
principal of, or interest on, a Working Capital or Overhaul Note
shall be made free of any taxes, rights of set-off or counter-
claims in immediately available funds by Borrower to GECC. All
such payments shall be made from the revenues generated by the
Facility; provided, however, that Borrower may make payments from
other sources if use of such sources does not (i) result in
Borrower encumbering the Collateral or any other asset of
Borrower, or (ii) in the good faith belief of GECC, adversely
affect the first priority security position of GECC granted here-
under or under any of the Operative Documents. All such payments
shall be applied first to interest on past due interest and
principal, if any, second to interest due on the outstanding
principal balances of the respective Note, and the balance, if
any, shall be applied to the reduction of principal under the
applicable Note. All such payments shall be made to GECC by
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transfer of immediately available funds to the account of GECC
designated pursuant to the Escrow Agreement.
ARTICLE 7
Representations and Warranties
7.1 Financing Agreement. The representations and warranties
from [Article 3] of the Financing Agreement are incorporated
herein by reference and shall bind Borrower hereunder mutatis
mutandis.
ARTICLE 8
Borrower's Covenants
Borrower hereby covenants and agrees as follows:
8.1 Financing Agreement. The following covenants from the
Financing Agreement are hereby incorporated herein by reference
and shall bind Borrower hereunder mutatis mutandis: (Sections
4.1(a), 4.1(b), 4.1(c), 4.1(d), 4.1(e), 4.1(f), 4.1(g), 4.1(h),
4.1(i), 4.1(k) and 4.2.)
8.2 Use of Proceeds. Borrower shall use the proceeds of the
Working Capital Advances only for the payment of Permitted
Expenses, and shall use Overhaul Advances, except as otherwise
provided in [Section 2.1.2] with respect to the initial Overhaul
Advance, only for the payment of Overhaul Costs.
8.3 Further Assurances. Borrower shall promptly and duly
execute and deliver to GECC such documents and assurances and
take such further action as GECC may from time to time reason-
ably request in order to carry out more effectively the intent
and purpose of this Loan Agreement and to establish and protect
the rights and remedies created or intended to be created in
favor of GECC.
8.4 General Indemnity. Borrower agrees to indemnify GECC and
its successors, assigns, servants, directors, officers, employees
and agents (referred to herein collectively as "Indemnitees")
against and hold them harmless from any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits,
costs, taxes (other than taxes measured by net income), expenses
and disbursements, including legal fees and expenses, of whatso-
ever kind and nature imposed on, incurred by or asserted against
any Indemnitee in any way relating to or arising out of this Loan
Agreement or any of the transactions provided for herein.
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8.5 Expenses. Borrower agrees to pay, or reimburse GECC for,
all GECC's costs and expenses (including any properly allocable
portion of fixed, internal costs and expenses) incident to the
preparation, execution and delivery of this Loan Agreement and
the consummation of the transactions contemplated herein or
incident to any consent, waiver, amendment, supplement or Advance
in connection herewith.
ARTICLE 9
Conditions of Lending
The obligation of GECC to make its Advances is subject to the
following conditions precedent in addition to any conditions
precedent under the Restructuring Agreement:
9.1 Initial Advances. The obligation of GECC to make an
initial Advance on either the Working Capital Commitment or the
Overhaul Commitment is, in addition to the conditions precedent
specified in Section 9.3, subject to the condition precedent that
GECC shall have received all of the following, each duly executed
and dated the date of each such initial Advance (or such other
date prior thereto as shall be satisfactory to GECC), in form and
substance satisfactory to GECC:
9.1.1 Notes. The Working Capital Note or the Overhaul Note
of Borrower, as appropriate, payable to the order of GECC.
9.1.2 Resolutions. Certified copies of resolutions of the
Board of Directors of Borrower authorizing or ratifying the
execution, delivery and performance, respectively, of this Loan
Agreement, the appropriate Note, and the other documents provided
for in this Loan Agreement.
9.1.3 Consents, etc. Certified copies of all documents
evidencing any necessary corporate action, consents and
governmental approvals (if any) with respect to this Loan
Agreement and the respective Note.
9.1.4 Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of Borrower certifying the
names of the officer or officers of Borrower authorized to sign
this Loan Agreement and the Note and the other documents provided
for in this Loan Agreement, together with a sample of the true
signature of each such officer. GECC may conclusively rely on
such certificate until formally advised by a like certificate of
any changes therein.
9.1.5 Certificate of Incorporation and By-Laws. Copies of
the certificate of incorporation and by-laws of Borrower,
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together with all amendments thereto, certified as of such date
by the Secretary or Assistant Secretary of Borrower.
9.1.6 Financing Statements. Acknowledgment copies or other
evidence of proper filing in the State of California of duly
executed Uniform Commercial Code financing statements on form
UCC-1 naming Borrower as debtor and GECC as secured party with
respect to the Collateral together with a certificate of the
Secretary of State of California showing no other financing
statements on file naming Borrower as debtor other than financing
statements in favor of GECC and Owner Trustee.
9.1.7 Other. Such other documents, certificates and opinions
as GECC may reasonably request.
9.2 Additional Condition to Overhaul Commitment Advances. [If
the initial Overhaul Advance occurs on a date later than the
Restructure Closing Date, then the obligation of GECC to make its
initial Overhaul Advance shall be subject to the condition
precedent that, at the time Borrower files its Notice of
Borrowing, there shall not have occurred any material change in
the operations or financial condition of Borrower as reflected on
the proforma projections supplied by Borrower to GECC and dated
____________, 1993 and a copy of which is attached hereto as
Exhibit F.] The obligation of GECC to make each subsequent
Overhaul Advance is subject to the condition precedent that
Borrower, at the time of filing its Notice of Borrowing, provide
GECC with a cash flow forecast in form and substance satisfac-
tory to GECC showing that Borrower's cash flow for the period
through the scheduled amortization period of such Advance will be
sufficient to fully amortize the full amount outstanding under
the Overhaul Loan pursuant to its scheduled amortization.
9.3 Both Commitments. The obligation of GECC to make its
initial Advance on either the Working Capital Commitment or the
Overhaul Commitment and to make each subsequent Advance on either
is subject to the fulfillment (or waiver in writing by GECC) of
the following further conditions precedent:
9.3.1 Representations Correct. (i) No Default has occurred
and is continuing or will result from the making of such Advance,
and (ii) the representations and warranties of Borrower contained
in the Financing Agreement are true and correct in all material
respects as of the date of such requested Advance, with the same
effect as though made on the date of such Advance.
9.3.2 Notice of Borrowing. GECC shall have received a Notice
of Borrowing dated the date of such requested Advance and
completed in accordance with the provisions of Section 2.2, and
the statements certified in the Notice of Borrowing shall not be
untrue or incorrect.
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9.3.3 No Default Under Operative Documents. Each Operative
Document is in full force and effect on and as of the date of
such Advance and no event has occurred and is continuing and no
condition exists (including an event of force majeure) that
constitutes or, with the giving of notice or passage of time or
both would constitute, a breach thereof or a default thereunder
or gives any party thereto the right to terminate, or not to
perform, any material obligation under any thereof.
9.3.4 Other. GECC shall have received such other documents,
certificates and opinions as GECC may reasonably request.
ARTICLE 10
Events of Default, Remedies
10.1 Events of Default. Each of the following shall consti-
tute an Event of Default under this Loan Agreement (a "Loan Event
of Default"):
10.1.1 Nonpayment of Notes, etc. Failure to pay when due, any
principal of or interest on either the Working Capital Note or
the Overhaul Note or any fees or other amounts payable by
Borrower hereunder.
10.1.2 Bankruptcy, Insolvency, etc. Borrower shall (i) become
insolvent, or cease, be unable, or admit in writing its inability
to pay its debts as they mature, or make a general assignment for
the benefit of, or enter into any composition or arrangement
with, creditors; (ii) apply for, or consent (by admission of
material allegations of a petition or otherwise) to, the
appointment of a receiver, trustee or liquidator of it or of a
substantial part of its assets, or authorize such application or
consent (or proceedings seeking such appointment shall be
commenced without such authorization, consent or application
against it and continue undismissed for a period of fifty-five
(55) days); (iii) authorize or file a voluntary petition under or
apply for or consent (by admission of material allegations of a
petition or otherwise) to the application of any bankruptcy,
reorganization, readjustment of debt, insolvency, dissolution,
liquidation or other similar law of any jurisdiction, or
authorize such application or consent (or proceedings to such end
shall be instituted against it without such authorization,
application or consent) and remain undismissed for fifty-five
(55) days, or result in the entry of an order for relief or
adjudication of insolvency); or (iv) permit or suffer all or any
substantial part of its property to be sequestered or attached by
court order and such order remains undismissed for thirty (30)
days.
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10.1.3 Default Under Operative Documents. The occurrence of
any Lease Event of Default.
10.1.4 Noncompliance With This Loan Agreement. Failure by
Borrower in any material respect to comply with or to perform any
provision of this Loan Agreement (and not constituting a Loan
Event of Default under any of the preceding provisions of this
Article 10); provided, however, that if such failure can be
remedied and all consequences thereof can be cured within the
time allowed for cure in this proviso, such failure shall not be
a default if such failure shall be remedied within twenty-five
(25) days after written notice from GECC to Borrower, or if such
failure cannot be remedied in twenty-five (25) days, the remedy
of such failure is commenced within twenty-five (25) days after
written notice from GECC to Borrower and is diligently prosecuted
to completion.
10.1.5 Representations and Warranties. Any representation or
warranty made by Borrower in connection with any Loan Instrument
is breached or is false or misleading in any material respect as
of the date made, or any schedule, certificate, financial state-
ment, report, notice, or other writing furnished by Borrower to
GECC in connection with this Loan Agreement is false or
misleading in any material respect on the date as of which the
facts therein set forth are stated or certified; provided,
however, that if such representation or warranty is made in the
good faith belief that it is correct and if the representation or
warranty can be made correct within the time allowed by this
proviso and all consequences of the incorrectness of such
representation or warranty can be cured within the time allowed
for cure in this proviso, such incorrectness shall not be a
default if it shall be remedied within twenty-five (25) days
after written notice from GECC to Borrower, or if it cannot be
remedied in twenty-five (25) days, the remedy is commenced within
twenty-five (25) days after written notice from GECC to Borrower
and is diligently prosecuted to completion; provided, further,
however, that any period to cure default under this
Section 10.1.5 shall run simultaneously (and not sequentially)
with any cure period provided by law or in any Operative
Document.
10.1.6 Condition of Borrower. There occurs any event which
materially adversely affects (i) the ability of Borrower to
perform any of its obligations hereunder or under any of the
Operative Documents; (ii) the business or financial condition of
Borrower; or (iii) the operations or value of the Facility in the
good faith belief of GECC.
10.2 Effect of Loan Event of Default. If any Loan Event of
Default described in Section 10.1.2 shall occur, both the Working
Capital Commitment and the Overhaul Commitment (if they have not
theretofore terminated) shall immediately terminate and both the
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Working Capital Note and Overhaul Note shall become immediately
due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived; GECC shall
be under no further obligation to issue any L/C; and Borrower
shall immediately deposit with GECC, as collateral for Borrower's
obligation to reimburse GECC for any amounts drawn under or
pursuant to an L/C, an amount in cash equal to the undrawn amount
of any L/C or L/C's that have not terminated. In the case of any
other Loan Event of Default, GECC may declare the Working Capital
Commitment or the Overhaul Commitment, or both (if they have not
theretofore terminated), to be terminated and both the Working
Capital Note or the Overhaul Note, or both, to be due and
payable, whereupon the Working Capital Commitment or the Overhaul
Commitment, or both (if they have not theretofore terminated),
shall immediately terminate and the Working Capital Note or the
Overhaul Note, or both shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived; GECC shall have no further
obligation to issue any L/C; and Borrower shall immediately
deposit with GECC, as collateral for Borrower's obligation to
reimburse GECC for any amounts drawn under or pursuant to an L/C,
an amount in cash equal to the undrawn amount of any L/C or L/C's
that have not terminated. GECC shall promptly advise Borrower of
any such declaration, but failure to do so shall not impair the
effect of such declaration.
10.3 Remedies. If a Loan Event of Default exists, GECC may
exercise, in addition to all other rights and remedies given GECC
by this Loan Agreement, the rights and remedies of a secured
party under the Uniform Commercial Code as enacted in any
jurisdiction in which Collateral may be located, and any right,
power or remedy permitted to it otherwise by law, either by suit
in equity or by action at law, or both, whether for specific
performance of any covenant or agreement contained in this Loan
Agreement or in aid of the exercise of any power granted in this
Loan Agreement, or GECC may proceed to enforce payment of the
Notes and all other obligations of Borrower hereunder or to
enforce any other legal or equitable right of GECC. No course of
dealing on the part of GECC or any delay or failure on the part
of GECC to exercise any right shall operate as a waiver of such
right or otherwise prejudice GECC's rights, powers and remedies.
If a Loan Event of Default exists, then Borrower shall pay to
GECC, to the extent permitted by law, such further amount as
shall be sufficient to cover the cost and expenses of collection
or other proceedings, including, but not limited to, reasonable
attorneys' fees. Remedies provided under this Loan Agreement
shall be cumulative and in addition to other remedies provided by
law or equity.
In the event that Borrower fails to deposit with GECC pursuant
to Section 10.2 an amount equal to the undrawn amount of any L/C
or L/C's issued by GECC hereunder that have not terminated, GECC
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may realize upon any Collateral in which GECC has a security
interest pursuant to this Loan Agreement or the Escrow Agreement
for such amount.
ARTICLE 11
Issuance and Repayment of Letters of Credit
11.1 Issuance of Letters of Credit. Subject to the conditions
precedent set forth in Section 11.2, GECC shall, prior to the
Maturity Date, issue and deliver one or more L/C's to such gas
suppliers as Borrower shall designate, subject to GECC's
approval, which shall not be unreasonably withheld. The L/C's
outstanding at any time shall have an aggregate amount of no
greater than eight hundred thousand dollars ($800,000). Each L/C
shall expire no later than the earlier of (a) one year after
issuance or (b) 10 days prior to the Maturity Date.
11.2 Conditions Precedent to Issuance of a Letter of Credit.
The obligation of GECC to issue an L/C is subject to fulfillment
(or waiver in writing by GECC) of the following conditions
precedent:
11.2.1 Representations Correct. (i) No Default has occurred
and is continuing or will result from the issuance of the L/C,
and (ii) the representations and warranties of Borrower contained
in the Financing Agreement are true and correct in all material
respects as of the date of such requested L/C, with the same
effect as though made on the date of such L/C.
11.2.2 Notice of Request to Issue L/C. GECC shall have
received a Notice of Request to Issue L/C dated the date of such
requested L/C and completed in accordance with the provisions
hereof, and the statements certified in the Notice of Request to
Issue L/C shall not be untrue or incorrect.
11.2.3 No Default Under Operative Documents. Each Operative
Document shall be in full force and effect on and as of the date
of such L/C and no event shall have occurred and be continuing
and no condition shall exist (including an event of Force
Majeure) that constitutes, or with the giving of notice or
passage of time or both would constitute, a breach thereof or a
default thereunder or gives any party thereto the right to termi-
nate, or not to perform, any material obligation under any
thereof.
11.2.4 Other. GECC shall have received such other documents,
certificates and opinions as GECC may reasonably request.
11.3 Letter of Credit Fee. As to each L/C issued after the
date hereof, Borrower shall pay to GECC (a) a L/C issuance fee of
two thousand five hundred dollars ($2,500), and (b) an annual fee
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equal to one percent (1%) of the amount of the L/C, payable
monthly; provided, however, that Borrower shall not be required
to pay to GECC an L/C issuance fee of two thousand five hundred
dollars ($2,500) (but shall be required to pay to GECC an annual
fee equal to one percent (1%) of the amount of the L/C) in the
event that (y) the L/C that is issued is a renewal of an L/C
previously issued and delivered to a gas supplier pursuant to
this Loan Agreement, and (z) the L/C that is issued is in an
amount no greater than the L/C previously issued.
11.4 Obligations to Repay Letter of Credit Disbursements.
Borrower's obligation to repay GECC for payments and disburse-
ments made by GECC pursuant to a drawing under any L/C shall, to
the fullest extent permitted by law, be absolute and uncondi-
tional under any and all circumstances, including but not limited
to:
11.4.1 any lack of validity or enforceability of the L/C or
any of the Loan Instruments;
11.4.2 any amendment or waiver of or any consent to departure
from all or any of the Loan Instruments;
11.4.3 any payment demand, statement, certificate or any other
document presented under or pursuant to the L/C proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
11.4.4 payment by GECC, absent gross negligence or willful
misconduct by GECC, under or pursuant to any L/C against
presentation of a payment demand, statement or certificate which
does not comply with the terms of such L/C;
11.4.5 any failure of Borrower to receive any goods or
services (including gas) that it contracted to receive from the
beneficiary or any non-application or misapplication of the
proceeds of any drawing under any L/C by the beneficiary;
11.4.6 the occurrence or continuance of any Default or Event
of Default or the termination of the Loan Agreement;
11.4.7 the suspension or termination of all or any portion of
the Commitment, or the exercise of any remedy by GECC; and
11.4.8 any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing.
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ARTICLE 12
General
12.1 Amendments. No amendment, modification or consent with
respect to any provision of this Loan Agreement or either of the
Notes shall in any event be effective unless the same shall be in
writing and signed and delivered by GECC and then any such
amendment, modification or consent shall be effective only in the
specific instance and for the specific purpose for which given.
No notice to or demand on Borrower in any case shall entitle
Borrower to any other or further notice or demand in the same,
similar or other circumstances. The prior written approval of
UNIVERSITY shall be required with respect to certain amendments,
modifications or supplements to this Loan Agreement as set forth
in [Section 5.5] of the Restructuring Agreement.
12.2 Notices. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other party, or
whenever any of the parties desires to give or serve upon any
other party any other communication with respect to this Loan
Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be deemed to have been
fully given when made in accordance with [Section 5.3] of the
Restructuring Agreement.
12.3 Severability. In the event that any one or more
provisions contained in this Loan Agreement should for any reason
be held to be unenforceable in any respect under the laws of the
United States or any state, such unenforceability shall not
affect any other provision hereof, and this Loan Agreement shall
be construed in the applicable jurisdiction as if such
unenforceable provision had not been contained herein.
12.4 Term. The term of this Loan Agreement shall be as long as
any of the obligations of Borrower hereunder shall be
outstanding.
12.5 Independence of Covenants. Each covenant made by Borrower
herein is independent of each other covenant, and the performance
or observance of any covenant shall not satisfy any other
covenant.
12.6 Survival. All warranties, representations, and covenants
made by Borrower herein or in any certificate or other instrument
delivered by it or any of its officers or employees under this
Loan Agreement shall be considered to have been relied upon by
GECC and shall survive the delivery to GECC of the Notes,
regardless of any investigation made by GECC or on its behalf.
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All statements in any such certificate or other instrument shall
constitute warranties and representations by Borrower hereunder.
12.7 Successors and Assigns. This Loan Agreement shall inure
to the benefit of and be binding upon the successors and assigns
of each of the parties. The provisions of this Loan Agreement
are intended to be for the benefit of all holders, from time to
time, of the Working Capital and Overhaul Notes, and shall be
enforceable by any such holder, whether or not an express
assignment to such holder of rights under this Loan Agreement has
been made by GECC or its successors or assigns. Notwithstanding
the foregoing, Borrower may assign its right, title and interest
hereunder, or any part thereof, only with the written consent of
GECC. GECC may assign its right, title and interest hereunder,
or any part thereof, only to a Person to whom GECC or any
successor to GECC's interest under the GECC Lease assigns its
right, title and interest under the GECC Lease. Notwithstanding
the foregoing, GECC may assign its interest in the GECC Lease to
an Affiliate without assigning its interest hereunder to such
Affiliate.
12.8 Entire Agreement, Waiver. This Loan Agreement and the
Exhibits attached hereto constitute and contain the entire
agreement of the parties with respect to the subject matter
hereof and thereof and collectively supersede any and all prior
negotiations, correspondence, understandings and agreements
between the parties respecting the subject matter hereof and
thereof. No party is relying on, nor shall be deemed to have
made, any representation or promise not expressly set forth or
referred to in this Loan Agreement. Borrower acknowledges that
this Section 12.8 is an important part of the consideration to
GECC for entering into this Loan Agreement. No party, by any
act, delay, omission or otherwise, shall be deemed to have waived
any of its rights, and/or remedies hereunder. A waiver of any
right and/or remedy or an acceptance of a payment under this Loan
Agreement on any one occasion shall not be construed as a waiver
of any right and/or remedy which such party would otherwise have
on any future occasion or a waiver of any preceding breach or
default (including, without limitation, an Event of Default)
under this Loan Agreement, regardless of any knowledge of such
breach or default at the time of any such waiver or acceptance of
any such payment. The making of any demand and the giving of any
notices or the waiver at any time of any of a party's rights in
any one or more instances shall not be deemed to establish a
course of conduct nor constitute a further waiver of any rights.
All rights and remedies shall be cumulative and may be exercised
concurrently or singly from time to time.
12.9 Governing Law. Each and all of the Loan Instruments shall
be governed by, and construed in accordance with, the laws of the
State of California.
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12.10 Consent to Jurisdiction. Borrower submits to the
jurisdiction of any California state or federal court sitting in
San Francisco, California in any action or proceeding arising out
of or relating to any of the Loan Instruments.
12.11 Headings, Section References. Section headings and
indices have been inserted in this Loan Agreement as a matter of
convenience for reference only. Such section headings and
indices are not a part of this Loan Agreement and shall not be
used in the interpretation of any provision hereof.
12.12 Counterparts. This Loan Agreement may be executed in
one or more counterparts, all of which shall together constitute
but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the date above written.
O.L.S. ENERGY-BERKELEY
By _______________________________
Its ___________________________
By _______________________________
Its ___________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By _______________________________
Its ___________________________
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EXHIBIT A
FORM OF LETTER OF CREDIT
Irrevocable Letter of Credit No. ___ (Date)
APPLICANT: BENEFICIARY:
OLS Energy-Berkeley (insert name and address)
c/o Energy Initiatives Inc. ("Beneficiary")
Parsippany, New Jersey
("Applicant")
Dear Beneficiary:
At the request of and for the account of Applicant, we hereby
establish in your favor our Irrevocable Letter of Credit No. ___
(this "Letter of Credit") whereby, subject to the terms and
conditions contained herein, you hereby are authorized
irrevocably to draw on us, by your draft or drafts at sight, an
aggregate amount (such amount the "Stated Amount") not to exceed,
as of the date of any such draft drawn under this Letter of
Credit (such draft a "Sight Draft") US$____________________.
This Letter of Credit (i) shall be effective on the date
hereof, and (ii) shall expire on the Expiration Date (as
hereinafter defined). Partial drawings under this Letter of
Credit are permitted.
Funds under this Letter of Credit shall be available to you
upon presentation to us of
(i) a Sight Draft drawn on us in the form of Exhibit A
hereto in the amount of such demand (which amount, together
with the amounts of any previous Sight Drafts presented
hereunder, shall not exceed the Stated Amount), and
(ii) a Drawing Certificate in the form of Exhibit B
hereto duly executed and delivered by your authorized
representative.
Presentation of any such Sight Draft and Drawing Certificate
shall be made at our office located at 1600 Summer Street,
Stamford, Connecticut 06905, Attention: Manager, Operations. We
hereby agree that any Sight Draft drawn under and in compliance
with the terms of this Letter of Credit shall be duly honored by
us upon delivery of the above-specified Drawing Certificate, if
presented on or before the Expiration Date at our office
specified above. If a drawing is made by you hereunder at or
prior to 10:00 a.m., New York time, on a business day, and
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provided that such drawing and the document presented in
connection therewith conforms to the terms and conditions hereof,
payment shall be made to you of the amount specified, in
immediately available funds, at or before 3:00 p.m., New York
time, on the third business day thereafter. If a drawing in
respect of payment is made by you hereunder after 10:00 a.m., New
York time, on a business day, and provided that such drawing and
the document presented in connection therewith conform to the
terms and conditions hereof, payment shall be made to you of the
amount specified, in immediately available funds, at or before
3:00 p.m. New York time, on the fourth business day thereafter.
As used herein, "business day" shall mean any day other than a
Saturday, Sunday or day on which banking institutions in the
State of New York are authorized or required by law to close. If
any drawings or the documentation presented in connection
therewith does not in our opinion conform to the terms and
conditions hereof, we will further advise you of same by
telephone and give the reasons for such non-conformance.
This Letter of Credit shall expire and shall be delivered to us
for cancellation on the Expiration Date which shall be the
earliest to occur of:
(a) (insert date)
(b) such earlier date as may be agreed between
Beneficiary and Applicant;
(c) the date you or your account have been paid the
full Stated Amount pursuant to a Sight Draft or Sight Drafts
drawn hereunder;
(d) the date you notify us in writing that you have
accepted a letter of credit or an alternate form of security
acceptable to you as a substitute for this Letter of Credit.
This Letter of Credit is subject to the Uniform Customs
Practice for Documentary Credits, 1983 Revision, International
Chamber of Commerce, Paris, France Publication No. 400 (the
"Uniform Customs") and to the extent not inconsistent therewith
shall be governed by, and construed in accordance with, the laws
of the State of New York. Other than as provided herein,
communications with respect to this Letter of Credit shall be in
writing and shall be addressed to General Electric Capital
Corporation, Attention: Manager, Operations, specifically
referring therein to Irrevocable Letter of Credit No. ___.
This Letter of Credit may not be transferred or assigned in
whole or in part without the prior written consent of General
Electric Capital Corporation, which consent shall not be
unreasonably withheld.
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Only you may draw upon this Letter of Credit. Upon the payment
to you or your account for the full aggregate Stated Amount
specified herein, we shall be fully discharged of our obligations
under this Letter of Credit.
The Letter of Credit sets forth in full the terms of our
undertaking. Reference in this Letter of Credit to other
documents or instruments is for the identification purposes only
and such references shall not modify or affect the terms hereof
or cause such documents or instruments to be deemed incorporated
herein.
Yours very truly,
GENERAL ELECTRIC CAPITAL CORPORATION
By _______________________________
Title ____________________________
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EXHIBIT A TO LETTER OF CREDIT
SIGHT DRAFT
(To Follow)
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EXHIBIT B TO LETTER OF CREDIT
DRAWING CERTIFICATE IN CONNECTION
WITH LETTERS OF CREDIT
__________, 19__
General Electric Capital Corporation
1600 Summer Street, Sixth Floor
Stamford, CT 06905
Attention: Manager - Portfolio Development and Support
Re: Letter of Credit No. ___________________
Gentlemen:
The undersigned hereby certifies as follows with respect to
that certain Letter of Credit No. _________ (the "Letter of
Credit") dated _______________ issued by you:
1. Payment is hereby demanded with respect to the following
obligations (the "Obligations") of O.L.S. Energy-Berkeley (the
"Company"): (List unpaid obligations of the Company).
2. Each of these Obligations is an obligation of the Company
for payment to us for goods and services provided to the Company
at the rates specified in our tariffs approved by the Public
Utilities Commission of the State of California.
3. Each of the Obligations remains unpaid by the Company
nineteen (19) days after demand was made on the Company by us for
payment.
4. The aggregate amount required to be drawn under the Letter
of Credit to pay the Obligations is _________________ dollars.
5. We have not drawn under the Letter of Credit or any other
letter of credit issued by you previously for payment of the
Obligations.
6. The officer signing below is duly authorized to execute
and deliver this certificate on behalf of [Beneficiary].
IN WITNESS WHEREOF, the undersigned has executed this Demand
for Payment this ____ day of ___________, 19__.
(Beneficiary)
By _______________________________
Title ____________________________
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EXHIBIT B
WORKING CAPITAL NOTE
$1,500,000 ______________, 19__
San Francisco, California
FOR VALUE RECEIVED, the undersigned O.L.S. ENERGY-BERKELEY, a
California corporation ("Borrower") promises to pay to the order
of GENERAL ELECTRIC CAPITAL CORPORATION ("GECC"), in lawful money
of the United States of America and in immediately available
funds, the aggregate unpaid principal amount of all Working
Capital Advances made by GECC to Borrower pursuant to that
certain First Amended and Restated Revolving Credit Agreement
(the "Loan Agreement") dated as of __________, 1993, between
Borrower and GECC (all terms defined in the Loan Agreement shall
have the same meanings when used herein). Unless earlier paid,
the aggregate unpaid principal balance hereunder shall be due and
payable on August 7, 2007. All such payments shall be made in
accordance with the terms of the Loan Agreement. Borrower also
agrees to pay interest on the aggregate unpaid principal amount
of such Working Capital Advances at the Working Capital Reference
Interest Rate. All accrued and unpaid interest hereunder shall
be due and payable on the last Business Day of each calendar
month and on the Maturity Date. Interest on the aggregate unpaid
principal hereunder shall accrue daily, and shall be computed on
the number of actual days elapsed. All sums of principal and
interest not paid when due (whether scheduled or accelerated)
shall bear interest, until paid, at a per annum rate equal to the
Working Capital Reference Interest Rate plus two percent (2%).
All principal and all accrued and unpaid interest hereunder
shall be completely due and payable on the Maturity Date. So
long as no Loan Event of Default has occurred and is continuing,
all payments made on this Note shall be credited first, to
interest accrued on past due interest and principal, if any,
second, to interest due on the outstanding principal balance of
this Note, and third, to the reduction of principal under this
Note.
GECC is hereby authorized by Borrower to endorse on the
schedule attached to this Note the amount and type of each
Working Capital Advance made by GECC under the Loan Agreement and
the amount of each payment or prepayment of principal of each
such Working Capital Advance received by GECC, it being
understood, however, that the failure to make any such
endorsement (or any errors in notation) shall not affect the
obligations of Borrower hereunder or under the Loan Agreement in
respect of such Working Capital Advances, and payments or
prepayments of principal hereon by Borrower shall be credited to
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Borrower notwithstanding the failure to make a notation (or any
errors in notation) thereof on said schedule. Except in the case
of demonstrable error, the notations made by GECC pursuant to the
preceding sentence shall be conclusive evidence of the date and
amount of each Working Capital Advance, payment or prepayment, as
the case may be.
This Note is the Working Capital Note defined in and made
pursuant to the Loan Agreement, as amended from time to time.
This Note is subject to the terms and conditions of the Loan
Agreement, to which Loan Agreement reference is hereby made for a
statement of said terms and conditions, including those under
which this Note may be paid prior to its due date or its due date
accelerated. This Note is secured by the Collateral referred to
in the Escrow Agreement.
In addition to and not in limitation of the foregoing and the
provisions of the Loan Agreement, Borrower promises to pay the
holder hereof all costs and expenses of collection of this
Working Capital Note and to pay all reasonable attorneys' fees
incurred in such collection or in any suit or action to collect
this Note or any appeal thereof. Borrower waives presentment,
demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, any and all other notices and demands in connection
with the delivery, acceptance, performance, default or
enforcement of this Working Capital Note. No delay by the holder
hereof in exercising any power or right hereunder shall operate
as a waiver of any power or right.
This Working Capital Note shall be deemed to be made under and
shall be construed in accordance with and governed by the laws of
the State of California.
O.L.S. ENERGY-BERKELEY
By _______________________________
Title ____________________________
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SCHEDULE TO WORKING CAPITAL NOTE OF
O.L.S. ENERGY-BERKELEY
This Working Capital Note evidences Working Capital Advances
made under the within described Loan Agreement, in the principal
amounts on the dates set forth below, subject to the payments of
principal set forth below:
Amount of Amount of Unpaid
Working Capital Principal Principal Notation
Date Advance Made Repaid Balance Made By
________ $_______________ $_________ $________ $_______
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
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________ ________________ __________ _________ ________
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________ ________________ __________ _________ ________
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________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
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EXHIBIT C
OVERHAUL NOTE
$1,000,000 _______________, 19__
San Francisco, California
FOR VALUE RECEIVED, the undersigned O.L.S. ENERGY-BERKELEY, a
California corporation ("Borrower") promises to pay to the order
of GENERAL ELECTRIC CAPITAL CORPORATION ("GECC"), in lawful money
of the United States of America and in immediately available
funds, the aggregate unpaid principal amount of all Overhaul
Advances made by GECC to Borrower pursuant to that certain First
Amended and Restated Revolving Credit Agreement (the "Loan
Agreement") dated as of __________, 1993, between Borrower and
GECC (all terms defined in the Loan Agreement shall have the same
meanings when used herein). Unless earlier paid, the unpaid
principal balance on each Overhaul Advance shall be due and
payable on the earlier to occur of (i) the date which is five
years from the date of the Advance, or (ii) the Maturity Date.
All such payments shall be made in accordance with the terms of
the Loan Agreement. Borrower agrees to pay interest on the
aggregate unpaid principal amount of each Overhaul Advance at the
Overhaul Reference Interest Rate applicable to such Advance.
Payments of accrued principal and interest shall bear interest
after the date that such payments are due and payable (whether
scheduled or accelerated), at a rate per annum equal to the sum
of the Overhaul Reference Interest Rate applicable to such
Advance plus two percent (2%).
On the last Business Day of each month for which any Overhaul
Advance is outstanding, commencing with the last Business Day of
the month next succeeding the month in which such Overhaul
Advance is made, Borrower shall repay a portion of the
outstanding principal balance of such Overhaul Advance (the
"Scheduled Overhaul Loan Principal Payment") in an amount such
that equal monthly payments of accrued and unpaid interest on an
Overhaul Advance plus Scheduled Overhaul Loan Principal Payments
fully amortize the Overhaul Advance over a period equal to the
lesser of (a) three years from the date of the Advance, or
(b) the length of time between the date of the Advance and the
Maturity Date.
All principal and all accrued and unpaid interest hereunder
shall be completely due and payable on the Maturity Date. So
long as no Loan Event of Default has occurred and is continuing,
all payments made on this Note shall be credited first, to
interest accrued on past due interest and principal, if any,
second, to interest due on the outstanding principal balance of
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this Note, and third, to the reduction of principal under this
Note.
GECC is hereby authorized by Borrower to endorse on the
schedule attached to this Note the date, amount and type of each
Overhaul Advance made by GECC under the Loan Agreement, and the
amount of each payment or prepayment of principal and interest of
each such Advance received by GECC, it being understood, however,
that the failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower hereunder
or under the Loan Agreement in respect of such Overhaul Advances,
and payments of principal hereon by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any
errors in notation) thereof on said schedule. Except in the case
of demonstrable error, the notations made by GECC pursuant to the
preceding sentence shall be conclusive evidence of the date and
amount of each Advance, payment or prepayment, as the case may
be.
This Note is the Overhaul Note defined in and made pursuant to
the Loan Agreement, as amended from time to time. This Note is
subject to the terms and conditions of the Loan Agreement, to
which Loan Agreement reference is hereby made for a statement of
said terms and conditions, including those under which this Note
may be paid prior to its due date or its due date accelerated.
This Overhaul Note is secured by the Collateral referred to in
the Escrow Agreement.
In addition to and not in limitation of the foregoing and the
provisions of the Loan Agreement, Borrower promises to pay the
holder hereof all costs and expenses of collection of this
Overhaul Note and to pay all reasonable attorneys' fees incurred
in such collection or in any suit or action to collect this Note
or any appeal thereof. Borrower waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of
nonpayment, any and all other notices and demands in connection
with the delivery, acceptance, performance, default or
enforcement of this Overhaul Note. No delay by the holder hereof
in exercising any power or right hereunder shall operate as a
waiver of any power or right.
This Overhaul Note shall be deemed to be made under and shall
be construed in accordance with and governed by the laws of the
State of California.
O.L.S. ENERGY-BERKELEY
By _______________________________
Its ___________________________
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SCHEDULE TO OVERHAUL NOTE OF
O.L.S. ENERGY-BERKELEY
This Overhaul Note evidences Overhaul Advances made under the
within described Loan Agreement, in the principal amounts on the
dates set forth below, subject to the payments of principal set
forth below:
Amount of Unpaid
Amount of Principal Principal Notation
Date Advance Made Repaid Balance Made By
________ $_______________ $_________ $________ $_______
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
________ ________________ __________ _________ ________
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EXHIBIT D
NOTICE OF BORROWING
____________, 19__
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attention: Manager-Project Operations
Ladies and Gentlemen:
Pursuant to Section 2.2 of that certain First Amended and
Restated Revolving Credit Agreement (the "Loan Agreement") dated
as of ____________, 1993, between O.L.S. Energy-Berkeley
("Borrower") and General Electric Capital Corporation (all terms
defined in the Loan Agreement shall have the same meaning when
used herein), Borrower hereby irrevocably requests a Working
Capital/Overhaul [strike inapplicable] Advance on ____________,
199_, which is a Business Day, as follows:
1. Available Working Capital/Overhaul
Commitment [strike inapplicable] $____________
2. Total Amount of Advance Requested
Pursuant to this Notice $____________
Borrower certifies that:
(i) Representations and Warranties. The
representations and warranties made in the Financing
Agreement are true and correct in all material respects as if
made on the date hereof;
(ii) No Default. No Loan Event of Default exists;
and
_______________________
* NOTE: EACH AMOUNT ON LINE 2 MUST BE IN MINIMUM AMOUNT OF
($10,000).
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(iii) No Material Adverse Change. No event has
occurred or condition exists which materially adversely
affects (A) the ability of Borrower to perform its
obligations under the Loan Agreement, or (B) the business or
financial condition of Borrower.
O.L.S. ENERGY-BERKELEY
By _______________________________
Its ___________________________
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EXHIBIT E
NOTICE OF REQUEST TO ISSUE L/C
__________, 19__
General Electric Capital Corporation
1600 Summer Street
Stamford, CT 06905
Attention: Manager - Portfolio Development and Support
Ladies and Gentlemen:
Pursuant to Article 11 of that certain First Amended and
Restated Revolving Credit Agreement dated as of __________ __,
1993, between O.L.S. Energy-Berkeley ("Borrower") and General
Electric Capital Corporation ("GECC") between Borrower and GECC
(the Amended and Restated Revolving Credit Agreement is referred
to herein as the "Loan Agreement," and all terms defined in the
Loan Agreement shall have the same meaning when used herein),
Borrower hereby irrevocably requests that GECC issue an L/C on
________________, which is a Business Day, and deliver that L/C
to [approved gas supplier] at the following address:
The amount of the L/C shall be $________.
The expiration date of the L/C shall be ____________, 19__.
Borrower certifies that:
(i) Representations and Warranties. The represen-
tations and warranties made in the Financing Agreement and
the Loan Agreement are true and correct in all material
respects as if made on the date hereof;
(ii) No Default. No Loan Event of Default exists;
and
(iii) No Material Adverse Change. No event has
occurred or condition exists which materially adversely
affects (A) the ability of Borrower to perform its obliga-
tions under the Loan Agreement, or (B) the business or
financial condition of Borrower.
O.L.S. ENERGY-BERKELEY
By _______________________________
Its ___________________________
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EXHIBIT F
PRO FORMA PROJECTIONS
(To Follow.)
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Exhibit F-1
(Letterhead of Berlack, Israels & Liberman)
April 4, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: OLS Acquisition Corp.
OLS Energy-Berkeley
Application on Form U-1
SEC File No. 70-8311
Gentlemen:
We have examined the Application on Form U-1, dated
November 24, 1993, under the Public Utility Holding Company Act
of 1935 (the "Act"), filed by OLS Acquisition Corp. ("Acquisition
Corp.") and OLS Energy-Berkeley ("Berkeley") with the Securities
and Exchange Commission (the "Commission"), and docketed by the
Commission in SEC File No. 70-8311, as amended by Amendment No. 1
thereto, dated February 3, 1994, Amendment No. 2 thereto, dated
February 16, 1994, and Amendment No. 3 thereto, dated this date,
of which this opinion is to be a part. Such Application, as so
amended and as thus to be amended, is hereinafter referred to as
the "Application".
The Application contemplates, among other things, the
restructure by Berkeley of its lease with General Electric
Capital Corporation ("GECC") of its cogeneration facility, its
long-term Energy Service Agreement with the Regents of the
University of California and other related agreements. The
Application further contemplates the amendment and restatement of
Berkeley's Credit Agreement with GECC and the pledge by
Acquisition Corp. of all of the outstanding common stock of
Berkeley to secure Berkeley's obligations under the amended and
restated Credit Agreement ("Credit Agreement").
We have examined copies, signed, certified or otherwise
proven to our satisfaction, of the articles of incorporation and
by-laws of Acquisition Corp. and Berkeley. We have also examined
such other instruments, agreements and documents and made such
further investigation as we have deemed necessary as a basis for
this opinion.
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Securities and Exchange Commission Page 2
We have been counsel to General Public Utilities
Corporation ("GPU") and to its various subsidiaries for many
years. In that connection, we have participated in various
proceedings relating to the issuance of securities by GPU and its
subsidiaries, and we are familiar with the terms of the
outstanding securities of the corporations comprising the GPU
holding company system.
With respect to all matters of California law, we have
relied upon the opinion of Morrison & Foerster, filed as Exhibit
F-2.
Based upon the foregoing, and assuming that the
transactions therein proposed are carried out in accordance with
the Application, we are of the opinion, subject to the qualifica-
tions set forth herein and in the opinion of Morrison & Foerster,
that when the Commission shall have entered an order forthwith
granting the Application,
a. all state laws applicable to the proposed transactions
will have been complied with;
b. Acquisition Corp. and Berkeley are validly organized
and duly existing;
c. assuming due authorization, execution and delivery
thereof, the promissory notes issued by Berkeley under its
Credit Agreement will be the valid and binding obligations of
Berkeley in accordance with their terms subject to the effect
of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally; and
d. the consummation of the transactions proposed in the
Application will not violate the legal rights of the holders of
any securities issued by Acquisition Corp., Berkeley or any
"associate company" thereof, as defined in the Act.
We hereby consent to the filing of this opinion as an
exhibit to the Application and in any proceedings before the
Commission that may be held in connection therewith.
Very truly yours,
BERLACK, ISRAELS & LIBERMAN
/mem
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Exhibit F-2
(Letterhead of Morrison & Foerster)
April 4, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Berlack, Israels & Liberman
120 West 45th Street
New York, New York 10036
Re: OLS Acquisition Corporation
O.L.S. Energy-Berkeley
Application on Form U-1
SEC File No. 70-8311
Mesdames and Gentlemen:
We have acted as special California counsel to O.L.S.
Energy-Berkeley ("Berkeley") in connection with the
transactions described in the Application on Form U-1 dated
November 24, 1993 under the Public Utility Holding Company Act of
1935, filed by OLS Acquisition Corporation ("Acquisition Corp.")
and Berkeley with the Securities and Exchange Commission (the
"Commission") and docketed by the Commission in SEC File No.
70-8311, as amended by Amendment No. 1 thereto, dated February 3,
1994, Amendment No. 2 thereto, dated February 16, 1994, and
Amendment No. 3 thereto, dated this date, of which this opinion
is to be a part (the Application, as previously amended and as
thus to be amended, the "Application").
The Application contemplates, among other things, the
restructure by Berkeley of its lease with General Electric
Capital Corporation of its cogeneration facility, its long-term
Energy Service Agreement with the Regents of the University of
California, and other related agreements. The Application
further contemplates the amendment and restatement of the Credit
Agreement between Berkeley and GECC and the pledge by Acquisition
Corp. of all of the outstanding common stock of Berkeley to
secure Berkeley's obligations under the amended and restated
Credit Agreement.
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Securities and Exchange Commission Page 2
We have examined drafts of the following documents
(collectively, the "Documents"):
(i) the First Amended and Restated Credit Agreement
between Berkeley and GECC (the "Credit Agreement");
(ii) the Working Capital Note, as defined in, and be
issued under, the Credit Agreement (the "Working Capital Note");
and
(iii) the Overhaul Note, as defined in, and to be issued
under, the Credit Agreement (the "Overhaul Note"); and
(iv) the Pledge Agreement between Acquisition Corp. and
United States Trust Company of New York and Gerard F. Ganey, as
co-trustees (the "Pledge Agreement").
In addition, we have examined copies of the articles of
incorporation of Berkeley certified by the California Secretary
of State, the bylaws of Berkeley as provided to us by Berkeley,
and certificates of public officials with respect to Berkeley and
have considered such questions of law as we have deemed necessary
for the purpose of rendering the opinions set forth herein.
We have assumed the genuineness of all signatures and the
authenticity of all items submitted to us as originals and the
conformity with originals of all items submitted to us as copies.
In making our examination of the Documents, we have assumed that
each party to one or more of the Documents other than Berkeley
has the power to enter into and perform its obligations
thereunder, and that, assuming due authorization, execution, and
delivery thereof, such Documents constitute the legal, valid, and
binding obligations of such party. Our opinion set forth below
is subject to GECC having obtained an exemption from California
usury restrictions.
Our opinion in paragraph (a) below as to the due
incorporation and good standing of Berkeley is based solely upon
certificates issued by the California Secretary of State.
With respect to the opinion expressed in paragraph (d)
below, we have assumed that GECC will be acquiring the Working
Capital Note and the Overhaul Note with no present intention of
distributing the same other than in compliance with the
requirements, if any, of applicable state and federal securities
laws, and we have relied upon our understanding that as of the
date of this opinion Berkeley engages in no activity in
California other than the operation of the cogeneration facility
leased from GECC.
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Securities & Exchange Commission Page 3
The opinions hereinafter expressed are subject to the
following further qualifications:
(1) The effect of bankruptcy, insolvency, reorganiza-
tion, arrangement, moratorium or other similar laws relating to
or affecting the rights of creditors generally, including,
without limitation, laws relating to fraudulent transfers or
conveyances, preferences and equitable subordination.
(2) Limitations imposed by general principles of
equity upon the availability of equitable remedies or the
enforcement of provisions of the Documents, and the effect of
judicial decisions that have held that certain provisions are
unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing or would be commercially
unreasonable, or where a default under the Documents is not
material.
(3) The effect of judicial decisions that may permit
the introduction of extrinsic evidence to modify the terms or the
interpretation of the Documents.
(4) The unenforceability of certain provisions of the
Documents expressly or by implication waiving broadly or vaguely
stated rights, or waiving rights granted by law where such
waivers are against public policy.
(5) The unenforceability of provisions of the
Documents providing that rights or remedies are not exclusive,
that every right or remedy is cumulative, or that the election of
a particular remedy or remedies does not preclude recourse to one
or more other remedies.
(6) The effect of California law which provides that
where a contract permits one party to the contract to recover
attorney's fees, the prevailing party in any action to enforce
any provision of the contract shall be entitled to recover its
reasonable attorney's fees notwithstanding the absence of a
written agreement to such effect.
(7) The unenforceability of a requirement that
provisions of the Documents may only be waived in writing to the
extent that an oral agreement has been performed modifying
provisions of the Documents.
(8) The unenforceability of provisions providing for a
party to be indemnified with respect to its own negligence, a
past act constituting a felony, or a future act known by the
indemnitee at the time of doing it to be unlawful.
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Securities and Exchange Commission Page 4
(9) The unenforceability of provisions of the
Documents imposing or that are construed as effectively imposing
penalties, forfeitures or late charges.
Based upon and subject to the foregoing, and assuming that
the transactions therein proposed are carried out in accordance
with the Application, we are of the opinion that:
(a) Berkeley is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California.
(b) Berkeley has the corporate power and, assuming due
authorization by Berkeley, authority to execute and deliver, and
to perform and observe the provisions of, the Documents.
(c) Assuming that the Documents are duly authorized,
executed, and delivered by Berkeley, the Working Capital Note and
the Overhaul Note will constitute valid and binding obligations
of Berkeley, enforceable against Berkeley in accordance with
their respective terms.
(d) No registration with, consent or approval of,
notice to, or other action by, any governmental entity is
required on the part of Berkeley or Acquisition Corp. for the
execution, delivery, or performance by Berkeley or Acquisition
Corp., as appropriate, of the Documents to which it is a party,
or if required, such registration has been made, such consent or
approval has been obtained, such notice has been given or such
other appropriate action has been taken.
We express no opinion as to matters governed by any laws
other than the substantive laws of the State of California that
are in effect on the date hereof.
This opinion is solely for your benefit and may not be
relied upon by, nor may copies be delivered to, any other person
without our prior written consent.
Very truly yours,
MORRISON & FOERSTER
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Exhibit G
O.L.S. Energy-Berkeley
Estimated Source and Application of Funds
($ Million)
1993 1994
4th 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Quarter
Net Cash Flow (0.1) (0.3) (0.2) 0.2 (1.4)
Cumulative
Short-Term
Financing
Requirements (0.1) (0.4) (0.6) (0.4) (1.8)
1995
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
Net Cash Flow (0.1) (0.1) 0.4 (0.4)
Cumulative
Short-Term
Financing
Requirements (1.9) (2.0) (1.6) (1.2)
1996
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
Net Cash Flow (0.1) (0.1) 0.4 0.4
Cumulative
Short-Term
Financing
Requirements (1.3) (1.4) (1.0) (0.6)
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