UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 25, 1997
RIDGEWOOD ELECTRIC POWER TRUST II
(Exact name of Registrant as Specified in Charter)
Delaware 0-21304 22-3105824
(State or other (Commission (IRS Employer
jurisdiction file number) Identification Number)
of incorporation)
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 447-9000
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On June 25, 1997 the Registrant, Ridgewood Electric Power Trust II (the
"Trust"), sold its entire interest in its San Diego Project to subsidiaries
of NRG Energy, Inc. of Minneapolis, Minnesota("NRG"). The San Diego
Project is a district cooling system located in downtown San Diego,
California, that generated and supplied chilled water through sub-street
piping to approximately 10 large office buildings. The sale took the form
of a sale of all of the Trust's limited partnership interest in the
limited partnership that owned the Project and its interest in the general
partner. The sale price was $6,200,000, of which $3,500,000 was paid in
cash at the closing. The remaining $2,700,000 was paid by delivery of a
secured, purchase money promissory note of the principal NRG subsidiary
purchasing the Project. The note bears interest at 8% per year and is
payable in equal monthly installments of principal and interest through its
maturity on July 1, 2003. The note is secured by the partnership interests
sold by the Trust to the NRG subsidiaries.
NRG and its subsidiaries participating in the transaction are not
affiliated with and have no material relationships with the Trust, its
Managing Shareholder or their affiliates, directors, officers or associates
of their directors and officers. The sales price and the terms of the
acquisition were determined in arm's length negotiations between the
Managing Shareholder of the Trust and NRG.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
Exhibit No. Item
2.A Partnership Interest Purchase Agreement, dated as of June 25, 1997,
by and among the Trust, RSD Power Corp., NRG San Diego, Inc., and NRG del
Coronado, Inc. Exhibits and schedules are omitted, and a list of the
omitted documents is found at page 20. The Registrant agrees to furnish
supplementally a copy of any omitted exhibit or schedule to the Partnership
Interest Purchase Agreement to the Commission upon request.
2.B Purchase Money Promissory Note.
2.C Security and Pledge Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
RIDGEWOOD ELECTRIC POWER TRUST II
By: /s/ Thomas R. Brown
Thomas R. Brown, Senior Vice
President and Chief Financial
Officer
PARTNERSHIP INTEREST PURCHASE AGREEMENT
This Partnership Interest Purchase Agreement (the "Agreement"), dated
as of June 25, 1997, is among NRG San Diego, Inc., a Delaware corporation,
("NRGSD"), NRG del Coronado, Inc., a Delaware corporation ("NRGdC") (NRGSD
and NRGdC collectively referred to herein as "Purchasers"), Ridgewood
Electric Power Trust II, a Delaware business trust (the "Trust"), RSD Power
Corp., a Delaware corporation ("RSD").
BACKGROUND
A. Trust is a limited partner of RSD Power Partners, L.P., a Delaware
limited partnership (the "Partnership") and owns an interest in the capital
and profits of the Partnership as described in the Agreement of Limited
Partnership, dated January 7, 1994, between RSD, Trust and Steven Jay
Mueller ("Mueller"), as amended (the "Partnership Agreement").
B. RSD is the general partner of the Partnership and owns an interest
in the capital and profits of the Partnership as described in the
Partnership Agreement.
C. NRGSD and NRGdC wish to purchase, and Trust and RSD (collectively,
the "Sellers") wish to sell, on the terms set forth in this Agreement, all
of RSD's and Trust's Partnership Interests.
TERMS
Now, therefore, in consideration of the foregoing and the mutual
agreements set forth in this Agreement, the parties agree as follows:
1. Purchase and Sale. Sellers hereby sell and deliver to Purchasers,
free and clear of all security interests, liens and other encumbrances and
claims, and Purchasers hereby purchase, all of Sellers' interests in the
Partnership (the "Partnership Interests"). NRGdC shall purchase the
Partnership Interest of RSD and NRGSD shall purchase the Partnership
Interest of Trust.
2. Purchase Price. The aggregate purchase price for the Partnership
Interests (the "Purchase Price") is $6.2 million. The Purchase Price is
being paid on the date of this Agreement (the "Closing Date") as follows:
2.1 $10,000 to RSD by wire transfer to an account designated in
writing by RSD;
2.2 $3,490,000 to Trust by wire transfer to an account designated in
writing by Trust;
2.3 $2,700,000 by delivery to Trust of NRGSD's purchase money
promissory note (the "Promissory Note") in the form of Exhibit 2.3.
3. Obligations at Closing; Further Assurances.
3.1 Sellers' Deliveries. Sellers have delivered to Purchasers, on
the date of this Agreement, the following:
(A) Assignments of partnership interests, substantially in the
form of Exhibits 3.1(A)-1 and 3.1(A)-2, executed by each of the Sellers;
(B) All books of account, records, contracts, tax returns,
processes, formulas and all other original documents and records of the
Partnership held by any of the Sellers;
(C) An opinion of Sellers' counsel in the form of Exhibit
3.1(C);
(D) Such Partnership officer and employee resignations as
Purchasers have requested;
(E) Good standing certificate for the Partnership issued by the
Delaware Secretary of State not earlier than three (3) days prior to the
Closing Date;
(F) All other documents required to be delivered by Sellers to
Purchasers pursuant to this Agreement.
3.2 Purchasers' Deliveries. Purchasers have delivered to Trust, on
the date of this Agreement, the following:
(A) the Promissory Note, executed by NRGSD;
(B) a Security and Pledge Agreement in the form of Exhibit 3.2,
executed by NRGSD and NRGdC.
3.3 Post-Closing Covenants. At any time, and from time to time, at
or after the Closing Date, at Purchasers' request and without further
consideration, Sellers will execute and deliver such other instruments and
take such actions as Purchasers may reasonably deem necessary or desirable
in order to more effectively transfer, convey and assign to Purchasers, and
to confirm Purchasers' title to, the Partnership Interests or to put
Purchasers in actual possession and operating control of all of the
business, properties, assets and goodwill of the business of the
Partnership and to assist Purchasers in exercising all rights with respect
thereto; provided that none of such additional instruments or actions shall
cause the Sellers to have
any
additional obligation or liability to any third party.
4. Representations and Warranties by Sellers. Sellers jointly and
severally represent and warrant to Purchasers as follows:
4.1 Organization, Standing and Qualification of Partnership. The
Partnership is duly organized, validly existing and in good standing under
the laws of the State of Delaware; it has all requisite partnership power
and authority to carry on its business as it is now being conducted and to
own, lease or operate its properties as and in the places where such
business is now conducted. The Partnership is qualified and in good
standing as a foreign limited partnership in the State of California.
Except as stated in the preceding sentence, the Partnership is not required
to be qualified, licensed or domesticated as a foreign partnership in any
other jurisdiction.
4.2 Execution, Delivery and Performance of Agreement; Authority.
Neither the execution, delivery nor performance of this Agreement by
Sellers, with or without the giving of notice or the passage of time, or
both, conflicts with, results in a default, right to accelerate or loss of
rights under, or results in the creation of any lien, charge or encumbrance
pursuant to, any provision of the Partnership Agreement or any franchise,
mortgage, deed of trust, lease, license, easement, agreement,
understanding, law, rule or regulation or any order, judgment or decree to
which either of the Sellers is a party or by which either of the Sellers or
their respective properties may be bound or affected. To Sellers'
knowledge, neither the execution, delivery nor performance of this
Agreement by Sellers, with or without the giving of notice or the passage
of time, or both, conflicts with, results in a default, right to accelerate
or loss of rights under, or results in the creation of any lien, charge or
encumbrance pursuant to, any franchise, mortgage, deed of trust, lease,
license, easement, agreement, understanding, law, rule or regulation or any
order, judgment or decree to which the Partnership is a party or by which
the Partnership or its properties may be bound or affected. Sellers each
have full power and authority to enter into this Agreement and to carry out
the transactions contemplated by this Agreement, and this Agreement
constitutes a valid and binding obligation of Sellers, enforceable in
accordance with its terms.
4.3 Financial Statements. Sellers have delivered to Purchasers, and
they are attached as Schedule 4.3 of this Agreement, true and complete
copies of the Partnership's audited financial statements as of December 31,
1996 and for the year then ended and true and complete copies of the
Partnership's audited financial statements for the fiscal years ended
December 31, 1995 and 1994. All of the Financial Statements (as defined
below) are complete and correct, have been prepared from the books and
records of the Partnership in accordance with generally accepted accounting
principles consistently applied (subject to normal year-end adjustments
which are not in the aggregate material) and fairly present the financial
condition of the Partnership as of their respective dates and the results
of its operations for the periods covered thereby. Sellers have delivered
the interim financial statements as of March 31, 1997 (the "Balance Sheet
Date") and for the 3-month interim period then ended. The Partnership's
balance sheet as of the Balance Sheet Date and the related statements of
income have been prepared in accordance with generally accepted accounting
principles consistently applied, subject to normal year-end adjustments
which are not in the aggregate material and the omission of footnotes in
such interim financial statements. All of the financial statements
referred to in this Section 4.3 are collectively referred to in this
Agreement as the "Financial Statements."
4.4 Absence of Changes or Events. Since December 31, 1996, except as
set forth in Schedule 4.4, the Partnership has conducted its business only
in the ordinary course and, to the Sellers' knowledge, has not:
(A) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in the ordinary
course of business and consistent with the Partnership's prior practice,
none of which, in any case or in the aggregate, materially or adversely
affects the business, assets, liabilities, financial condition or prospects
of the Partnership;
(B) discharged or satisfied any lien or other encumbrance other
than those then required to be discharged or satisfied, or paid any
obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, other than current liabilities shown on the
Financial Statements and current liabilities incurred since the Balance
Sheet Date in the ordinary course of business and consistent with the
Partnership's prior practice;
(C) subjected to lien or any other encumbrance or restriction
any of the Partnership's property, business or assets, tangible or
intangible;
(D) sold, transferred, leased to others or otherwise disposed of
any of the Partnership's assets, except for inventory sold in the ordinary
course of business, or canceled or compromised any debt or claim, or waived
or released any right, having a value of more than $10,000 or an aggregate
value of $25,000;
(E) received any notice or threat of termination of any
contract, lease, easement or other agreement or suffered any damage,
destruction or loss (whether or not covered by insurance) which, in any
case or in the aggregate, has had or may have a material adverse effect on
the Partnership's assets, operations or prospects;
(F) encountered any labor union organizing activity, had any
actual or threatened employee strikes, work-stoppages, slow-downs or lock-
outs, or had any material change in the Partnership's relations with its
employees, agents, customers or suppliers;
(G) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any United States or
foreign license, patent, copyright, trademark, trade name, invention or
similar rights, or modified any existing rights with respect thereto;
(H) made any direct or indirect payments, dividends, sales,
transfers of assets or other distributions of the Partnership's assets,
other than normal compensation, or made any change in the rate of
compensation, commission, bonus or other direct or indirect remuneration
payable, or paid or agreed, orally or in writing, to pay, conditionally or
otherwise, any bonus, extra compensation, pension or severance or vacation
pay, to any partner, officer, employee, salesperson, distributor, agent,
independent contractor or affiliate of the Partnership;
(I) made any capital expenditures or capital additions or
betterments in excess of an aggregate of $25,000;
(J) failed to replenish its inventories and supplies in a normal
and customary manner consistent with its prior practice and prudent
business practices prevailing in the industry, or made any purchase
commitment in excess of the normal, ordinary and usual requirements of its
business, or made any change in its selling, pricing, advertising or
personnel practices inconsistent with its prior practice;
(K) suffered any change, event or condition which, in any case
or in the aggregate, has had or may have a material adverse affect on the
Partnership's condition (financial or otherwise), properties, assets,
liabilities, or operations including, without limitation, any change in its
revenues, costs, backlog or relations with its employees, agents, customers
or suppliers;
(L) entered into any transaction, contract or commitment other
than in the ordinary course of business; and
(M) entered into any agreement or made any commitment to take
any of the types of action described in Subsections 4.4(A) through 4.4(D)
and 4.4(G) through 4.4(L).
4.5 Litigation. Except as set forth in Schedule 4.5, there is
neither any claim, legal action, suit, arbitration, governmental
investigation or other legal or administrative proceeding, nor any order,
decree or judgment in progress, pending or in effect, or, to the Sellers'
knowledge, threatened, against or relating to the Partnership, the
Partnership's partners, officers, or employees, the Partnership's
properties, assets or business, any of the Sellers or related to any of the
transactions contemplated by this Agreement, and Sellers know of no reason
for, and have no reason to be aware of, any basis for the same.
4.6 Compliance with Laws and Other Instruments. Except as set forth
in Schedule 4.6, the Partnership has, to Sellers' knowledge, complied in
all material respects with all existing laws, rules, regulations,
ordinances, orders, judgments and decrees now or hereafter applicable to
the business, properties or operations of the Partnership. To the Sellers'
knowledge, neither the ownership nor use of the Partnership's properties
nor the conduct of the business of Partnership conflicts with the rights of
any other person, firm or corporation or violates, or with or without the
giving of notice or the passage of time, or both, will violate, conflict
with or result in a default, right to accelerate or loss of rights under,
any terms or provisions of the Partnership Agreement as presently in
effect, or any lien, encumbrance, mortgage, deed or trust, lease, easement,
license, agreement, understanding, or law, ordinance, rule, regulation, or
any order, judgment or decree to which the Partnership is a party or by
which it or its assets may be bound or affected.
4.7 Title to and Condition of Properties.
(A) Except as disclosed in Schedule 4.7,
(1) the Partnership has good title to all the personal
properties and assets it owns or uses in its business or purports to own,
including, without limitation, those reflected in its books and records and
in the Financial Statements; and
(2) none of those properties or assets are subject to any
lien or other encumbrance, restriction, lease, license, easement, liability
or adverse claim of any nature whatsoever, direct or indirect, whether
accrued, absolute, contingent or otherwise.
(B) The Partnership does not own any real estate. All of the
properties and assets owned, leased or used by the Partnership are, to the
Sellers' knowledge, in good operating condition (ordinary wear and tear
excepted), have been properly maintained in accordance with prudent
industry practice, are suitable for the purposes used, are adequate and
sufficient for all of the current operations and are directly related to
the business of the Partnership.
(C) The Sellers' have caused the Partnership to liquidate and
dissolve San Diego Central Cooling Company, a California corporation, 100%
of the stock of which was heretofore owned by the Partnership.
4.8 Schedules and Contracts.
(A) Attached as Schedule 4.8 is a separate schedule containing
an accurate and complete list and description of:
(1) All real property owned by the Partnership or in which
the Partnership has a leasehold easement, license, or other interest or
which is used by the Partnership in connection with the operation of its
business, together with a description of each lease, sublease, easement,
license, or any other instrument under which Sellers claim or hold such
leasehold or other interest or right to sublet or granted any rights
therein, identifying the parties thereto, the rental or other payment
terms, expiration date, cancellation and renewal terms, and indemnification
terms thereof;
(2) All machinery, tools, equipment, motor vehicles,
rolling stock and other tangible personal property (other than inventory
and supplies), owned, leased or used by the Partnership, except for items
having a value of less than $500, setting forth with respect to all such
listed property a summary description of all leases, liens, claims,
encumbrances, charges, restrictions, covenants and conditions relating
thereto, identifying the parties thereto, the rental or other payment
terms, expiration date, cancellation and renewal terms, and indemnification
terms thereof;
(3) All patents, patent applications, patent licenses,
trademarks, trademark registrations, and applications therefor, service
marks, service names, trade names, copyrights and copyright registrations,
and applications therefor, wholly or partially owned, or held or used, by
the Partnership;
(4) All fire, theft, casualty, liability and other
insurance policies insuring the Partnership, specifying with respect to
each such policy the name of the insurer, the annual premium, the risk
insured against, the limits of coverage, the deductible amount (if any),
the identity of any loss payees or insureds other than the Partnership, a
record of any claims made thereunder during the past three (3) years and
the date through which coverage will continue by virtue of premiums already
paid;
(5) All sales agency or distributorship agreements or
franchises or agreements providing for the services of an independent
contractor to which the Partnership is a party or by which it is bound;
(6) All contracts, agreements, commitments or licenses
relating to patents, trademarks, trade names, copyrights or other
intellectual property, to which the Partnership is a party or by which it
is bound;
(7) All loan agreements, indentures, mortgages, pledges,
conditional sale or title retention agreements, security agreements,
equipment obligations, guaranties, leases or lease purchase agreements to
which the Partnership is a party or by which it is bound;
(8) All customer agreements, fuel agreements and franchise
agreements;
(9) All other contracts, agreements, commitments or other
understandings or arrangements (both written and oral) which are not listed
on Schedule 4.8 or Schedule 4.15 and to which the Partnership or any of its
real or personal property is bound or affected but excluding only
(a) purchase and sales orders and commitments made in
the ordinary course of business, and
(b) non-material contracts entered into in the
ordinary course of business which are terminable by the Partnership on less
than 30 days' notice without any penalty or payment of any consideration;
(10) The names and current annual salary rates of all
persons (including independent commission agents) whose annual compensation
(direct or indirect, current or deferred) from the Partnership is currently
at the rate of more than $30,000 annually and showing separately for each
such person the date of last rate increase and the amounts paid as bonus
payments and any indirect compensation for the year ended December 31,
1996; and
(11) A list of the Partnership's bank accounts, showing
account numbers and the address of the depository bank.
(B) All of the contracts, agreements, leases, licenses and
commitments required to be listed on Schedules 4.8 and 4.15 are, as to the
Partnership, and to Sellers' knowledge with respect to the other parties to
such contracts, agreements, leases, licenses and commitments, valid and
binding, enforceable in accordance with their respective terms, in full
force and effect and, except as otherwise specified in Schedule 4.8, to
Sellers' knowledge will be unaffected by the sale of the Partnership
Interests to Purchasers under this Agreement so that, after such sale, the
Partnership will continue to be entitled to the full benefits thereof.
Except as disclosed in Schedule 4.8, there is not under any such contracts,
agreements, leases, licenses or commitments any existing default by the
Partnership or, to Sellers' knowledge, by any other party thereto, or event
which, after notice or lapse of time, or both, would constitute a default
or result in a right to accelerate any obligations or rights.
4.9 Intellectual Property. Schedule 4.9 identifies all patents
applied for by or issued to the Partnership, all trademarks for which the
Partnership has applied or obtained registration, and all licenses or other
agreements concerning intellectual property rights to which the Partnership
is a party, whether as licensor, licensee or otherwise. The Partnership
owns, or possesses royalty-free licenses or other rights to use, all
copyrights, trademarks, trademark rights, service marks, service names,
trade names, patents and other intellectual property necessary or useful to
conduct its business as it is presently operated. To the Sellers'
knowledge, the Partnership is not infringing upon or otherwise acting
adversely to any copyrights, trademarks, trademark rights, service marks,
service names, trade names, patents, patent rights, licenses or trade
secrets owned by any other person or entity, and there is no claim or
action by any such other person or entity pending, or, to
the knowledge of Sellers, threatened, with respect thereto. To the
Sellers' knowledge, there has been no infringement or improper use of any
item of intellectual property in which the Partnership has any interest by
any third party. The Partnership has all necessary licenses for all
software utilized by the Partnership.
4.10 Records. The books of account of the Partnership are complete
and correct in all material respects, and there have been no material
transactions involving the business of the Partnership which properly
should have been set forth in those books and which are not accurately so
set forth.
4.11 Ownership and Authority. The Partnership Interests are owned by
the Sellers free and clear of all liens, security interests, claims,
charges or other encumbrances. The Partnership Agreement has not been
amended, whether in writing or orally, and remains in full force and effect
among the parties thereto. No consent of any person or entity is or will
be required for the Sellers to sell the Partnership Interests pursuant to
this Agreement pursuant to any agreement to which either of the Sellers is
a party or, to Sellers' knowledge, by which the Partnership is bound.
Except for the interest of Steven Mueller, there are no other partners in
the Partnership.
4.12 No Options. Neither the Sellers nor the Partnership have granted
any options, warrants, conversion rights or similar rights of any kind to
any person or entity to acquire any interest in the Partnership.
4.13 General Business. To the Sellers' knowledge, the Partnership has
not entered into any agreements, commitments or understandings restricting
or limiting the conduct of its business. Since its inception, the only
business the Partnership has conducted has involved the San Diego district
cooling system.
4.14 Taxes. Except as disclosed on Schedule 4.14, all federal, state,
foreign, county and local income, profits, franchise, sales, use,
occupation, property, excise or other taxes (including any interest or
penalties relating thereto) for all periods prior to the Closing Date have
been paid or are properly reserved for on the Partnership's records and are
reflected in the Financial Statements and all tax returns due have been
filed. There are no additional assessments of any tax by any governmental
authority pending or, to Sellers' knowledge, threatened and there are no
tax examinations or audits awaiting commencement, in progress or completed
within the last 12 months.
4.15 Employee Benefit Plans. All collective bargaining agreements,
employment and consulting agreements, executive compensation plans, bonus
plans, deferred compensation agreements, employee pension plans or
retirement plans, employee stock options or stock purchase plans and group
life, health and accident insurance and other employee benefit plans,
agreements, arrangements or commitments, whether or not legally binding
(including, without limitation, holiday, vacation, Christmas and other
bonus practices), to which the Partnership is a party or bound or which
relate to the operation of the business of the Partnership are listed on
Schedule 4.15. Except as disclosed on Schedule 4.15, the Partnership has
no unfunded obligations with respect to any Partnership sponsored or union
deferred compensation, pension, retirement, life, health or accident
insurance or other benefit plans. All required plan descriptions, reports,
tax or information returns and other documents have been properly filed or
delivered to the appropriate party. All such plans have been maintained in
compliance with the Employee Retirement Income Security Act of 1974, as
amended, the Internal Revenue Code and the associated regulations, and
applicable federal and state securities and other laws, regulations and
rulings. All plans have been amended so as to be currently in regulatory
compliance. Neither the Partnership nor any trustee or administrator of
any plan has engaged in any transaction which could subject the Partnership
with any civil penalty or tax assessment and no plan will lose tax exempt
status for any act or omission occurring prior to the Closing Date.
4.16 Employee Matters. None of the employees of the Partnership are
represented by any union or subject to any collective bargaining agreement
and, to the Sellers' knowledge, none of the Partnership's employees are
engaged in any organizational activities. To the Sellers' knowledge, none
of the employees of the Partnership has suffered or is suffering from any
illness or disease caused directly or indirectly by any employment related
condition or by contact with any hazardous materials within the scope of
such employees' employment by the Partnership. Schedule 4.16 identifies
all persons whose employment with the Partnership was involuntarily
terminated by the Partnership during the period beginning on December 31,
1995 through the date of this Agreement.
4.17 Environmental Protection.
(A) All of the permits, licenses and other authorizations (the
"Environmental Permits") issued in the name of the Partnership and which
are required under federal, state and local laws, regulations and rulings
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, hazardous or toxic materials, or wastes into
ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or hazardous or
toxic materials or wastes ("Environmental Laws") are listed on Schedule
4.17(A);
(B) To the Sellers' knowledge, no Environmental Permits other
than those set forth on Schedule 4.17(A) are required for the operation of
the Partnership's business;
(C) To the Seller's knowledge, all activities which have
occurred on the facilities owned or leased (or previously owned or leased)
by the Partnership and all actions taken by the Partnership during the
period of time that any one or both of the Sellers have been a partner or
officer of the Partnership, comply and have complied with all Environmental
Laws and with all terms and conditions of any required permits, licenses
and authorizations applicable to the Partnership with respect thereto; and
(D) To the Seller's knowledge, the Partnership is in compliance
with all limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any plan, order, decree, judgment or
notice. Sellers have no knowledge of, nor has the Partnership received any
notice of, any events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent continued
compliance with, or which may give rise to any liability under, any
Environmental Laws or the common law.
4.18 Absence of Undisclosed Liabilities. Except for those (i)
disclosed
in Schedule 4.18, (ii) accrued on the Partnership's December 31, 1996
Financial Statements, or (iii) arising in the ordinary course of business
since December 31, 1996, the Partnership has no liabilities or obligations,
whether known or unknown, fixed or contingent, matured or unmatured.
5. Representations and Warranties by Purchasers. Each Purchaser
represents and warrants to Sellers as follows:
5.1 Corporate Existence and Power. Such Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power and authority to assume the
obligations under this Agreement and such other documents delivered in
connection with this Agreement to which it is a part and to carry out the
transactions contemplated by this Agreement.
5.2 Authorization and Approval of Agreement. All corporate action
required to be taken by Purchaser relating to the execution and performance
of this Agreement and the consummation of the transactions contemplated by
this Agreement have been taken on or prior to the date hereof.
6. Indemnification.
6.1 Indemnification by Sellers. Sellers jointly and severally agree
to indemnify, defend, and hold the Purchasers, their respective officers,
directors, and employees and the Partnership harmless from, against and in
respect of, and shall, on demand, reimburse Purchasers (or if Purchasers so
direct, the Partnership) for any and all loss, offset, liability or damages
suffered or incurred by the Partnership which arises out of:
(A) any untrue representation, breach of warranty or
nonfulfillment of any covenant or agreement by Sellers contained in this
Agreement or in any certificate, document or instrument delivered to
Purchasers pursuant to this Agreement;
(B) any act, omission, transaction, circumstance or state of
facts which occurred or existed on or before the Closing Date, whether
known or unknown, and which gives rise to any liability, contingent
liability or obligation of the Partnership after the Closing Date, except
for any liability, contingent liability or obligation:
(1) which is expressly disclosed in this Agreement or any
Schedule hereto, or
(2) which arose in the ordinary course of business or with
the prior written approval of Purchasers since December 31, 1996;
(C) any claim for a finder's fee or brokerage or other
commission arising by reason of any services alleged to have been rendered
to or at the direction of any of the Sellers or the Partnership with
respect to this Agreement or any of the transactions contemplated by this
Agreement;
(D) any claim for personal injury or property damage incurred or
sustained by reason of the Partnership's business or operations by the
Partnership prior to the Closing Date, to the extent not covered by
insurance;
(E) any claim by Steven Jay Mueller, whether sounding in tort or
in contract, against the Partnership or Purchasers' in connection with the
transactions contemplated by this Agreement or under the Partnership
Agreement; and
(F) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable attorneys' fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to oppose
the imposition thereof, or relating to the enforcement of this indemnity.
6.2 Indemnification by Purchasers. Purchasers agree to indemnify and
hold Sellers harmless from, against and in respect of and shall, on demand,
reimburse Sellers for any loss, offsets, liability, or damages suffered or
incurred by Sellers and resulting from:
(A) any untrue representation, breach of warranty or non-
fulfillment of any covenant or agreement by Purchasers contained in this
Agreement or in any certificate, document or instrument delivered to
Sellers pursuant to this Agreement;
(B) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable attorneys' fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to oppose
the imposition thereof, or relating to the enforcement of this indemnity;
and
(C) except to the extent covered by Sellers' indemnification
obligation under Sections 6.1(B) or 6.1(F), any liability, contingent
liability or obligation of the Partnership arising after the Closing Date.
6.3 Third Party Actions.
(A) In order for a party (the "indemnified party"), to be
entitled to any indemnification provided for under this Agreement in
respect of, arising out of or involving a claim made by any person against
the indemnified party (a "Third-Party Claim"), such indemnified party must
notify the indemnifying party in writing of the Third-Party Claim within a
reasonable time after receipt by such indemnified party of written notice
of the Third-Party Claim. Thereafter, the indemnified party shall deliver
to the indemnifying party, within a reasonable time after the indemnified
party's receipt thereof, copies of all notices and documents (including
court papers) received by the indemnified party relating to the Third-Party
Claim.
(B) If a Third-Party claim is made against an indemnified party,
the indemnifying party will be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by the indemnifying party; provided such counsel is not reasonably
objected to by the indemnified party. Should the indemnifying party so
elect to assume the defense of a Third-Party Claim, the indemnifying party
will not be liable to the indemnified party for any legal expenses
subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party elects to assume the defense of
a Third-Party Claim, the indemnified party will (i) cooperate in all
reasonable respects with the indemnifying party in connection with such
defense, (ii) not admit any liability with respect to, or settle,
compromise or discharge, any Third-Party Claim without the indemnifying
party's prior written consent and (iii) agree to any settlement, compromise
or discharge of a Third-Party Claim which the indemnifying party may
recommend and which by its terms obligates the indemnifying party to pay
the full amount of the liability in connection with such Third-Party Claim
and which releases the indemnified party completely in connection with such
Third-Party Claim. In the event the indemnifying party shall assume the
defense of any Third-Party Claim, the indemnified party shall be entitled
to participate in (but not control) such defense with its own counsel at
its own expense. If the indemnifying party does not assume the defense of
any such Third-Party Claim, the indemnified party may defend the same in
such manner as it may deem appropriate, including but not limited to
settling such claim or litigation after giving notice to the indemnifying
party of such terms, and the indemnifying party will promptly reimburse the
indemnified party upon written request for all cost, expense (including
reasonable attorneys' fees), loss, liability or damage incurred and paid by
the indemnified party in connection with such claim.
(C) Notwithstanding the foregoing, Purchasers shall not be
entitled to indemnification pursuant to this Section 6 arising out of a
breach of any representation, warranty or agreement contained in Section 4
(other than Section 4.1, 4.2, 4.11 and 4.12, as to which this Section 6(C)
shall not apply) except to the extent that the aggregate amount for which
indemnification is sought, together with the amount of all prior claims for
indemnification hereunder, exceeds $50,000. In the event that the total of
all such claims exceeds $50,000, then the Sellers shall be liable for all
such claims, including the prior amounts which were singly or in the
aggregate less than $50,000.
(D) Upon notice to the Sellers specifying in reasonable detail
the basis for such set-off, NRGSD may set-off any amount to which it may be
entitled under this Section 6 against amounts otherwise payable under the
Promissory Note. The exercise of such right of set-off by NRGSD in good
faith, whether or not ultimately determined to be justified, shall not
constitute an event of default under the Promissory Note or the Security
and Pledge Agreement. In the absence of any tortious misrepresentation,
Purchasers agree that its remedies for money damages under this Agreement
shall be limited solely to the set-off rights provided hereunder.
7. Nature and Survival of Representations and Warranties. All
representations and warranties, and covenants made by Purchasers or any of
the Sellers in this Agreement or in any document, certificate or other
instrument delivered pursuant to this Agreement or in connection with this
Agreement will survive the Closing Date for a period of one (1) year from
the date hereof, or in the case of the representations in Sections 4.1,
4.2, 4.11, 4.12, 4.14, 4.17, 5.1 or 5.2, for a period equal to the statute
of limitations applicable to the claim, in each case plus any time required
to resolve disputes. No claims for indemnification are permitted unless
notice of such claim is given to the person or entity against whom it is
asserted within the period specified above.
8. Notices. All notices or other communications required or permitted to
be given under any of the provisions of this Agreement must be in writing
and are deemed to have been duly given when personally delivered, sent by
facsimile or mailed by first class registered mail, return receipt
requested, or by a nationally-recognized overnight delivery service,
addressed to the parties at the addresses set forth below (or such other
address as any party may specify by notice to all other parties given as
aforesaid). A copy of a notice sent to counsel does not constitute notice
under this Agreement.
If to Purchasers to:
c/o NRG Energy Center, Inc.
3707 IDS Center
Minneapolis, MN 55402
Attn: President
Facsimile No. (612) 349-6067
With a copy to:
NRG Energy, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, MN 55403-2445
Attn: Vice President and General Counsel
Facsimile No. (612) 373-5392
If to Sellers to:
RSD Power Corp.
c/o Ridgewood Power Corp.
947 Linwood Avenue
Ridgewood, NJ 07450-2939
Attn: President
9. Resolution of Disputes. Any and all disputes arising out of or
relating to this Agreement or any of the other documents or instruments
delivered pursuant to this Agreement, or any alleged breach of the
Agreement or of the other documents or instruments, shall be resolved by
binding arbitration commenced and conducted in accordance with the rules of
commercial arbitration of the American Arbitration Association in an
arbitration commenced and held before a single arbitrator. The location of
the arbitration shall be (whether an arbitration action is commenced by
Sellers or Purchasers), in Hennepin County, Minnesota. Sellers and
Purchasers hereby submit themselves to personal jurisdiction in the State
of Minnesota for such purpose. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, if a dispute relates to an indemnification
claim involving a pending lawsuit or governmental administrative proceeding
brought by a third party against Sellers or Purchasers and, as a result of
such lawsuit or proceeding, Sellers or Purchasers are entitled to
indemnification under this Agreement, then such party may, at
its option, bring the other in as a party to such lawsuit or administrative
proceeding and have the dispute determined as a part of such lawsuit or
administrative proceeding.
10. Miscellaneous.
10.1 Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter of this
Agreement and may not be amended or terminated except by a written
agreement specifically referring to this Agreement signed by all of the
parties to this Agreement.
10.2 Written Waivers. No waiver of any breach or default under this
Agreement is valid unless in writing and signed by the party giving such
waiver, and such a written waiver does not constitute a waiver of any
subsequent breach or default of any nature.
10.3 Binding Nature of Agreement. This Agreement is binding upon and
inures to the benefit of the parties to this Agreement and their respective
successors and assigns but does not confer any rights upon any third
persons except as expressly set forth in this Agreement. No party may
assign its rights or delegate its duties and obligations under this
Agreement without the prior written consent of the other parties, except
that Purchasers may, without any consent of Sellers, assign:
(A) Purchasers' rights and obligations under this Agreement to
any wholly-owned subsidiary of the Purchasers or affiliate of the
Purchasers, provided such affiliate is controlled, directly or indirectly,
by NRG Energy, Inc., and
(B) all or any portion of Purchasers' rights under this
Agreement to any commercial lender providing financing to the Purchasers.
10.4 Headings. The section headings contained in this Agreement are
intended for convenience only and do not define or limit the contents of
such sections.
10.5 Costs and Expenses. The Purchasers and Sellers must each bear
their respective costs and expenses in connection with the negotiation,
execution and performance of this Agreement, including all taxes of any
type and the fees and disbursements of all attorneys, accountants,
appraisers and advisors retained by or representing them in connection with
the preparation and performance of this Agreement. Sellers are solely
responsible for any brokers' or advisors' fees payable for services
rendered to the Sellers or the Partnership with respect to the transactions
contemplated by this Agreement. If any arbitration or legal proceedings
are instituted to enforce the terms of this Agreement or to declare rights
under this Agreement, the prevailing party is entitled to an award of
reasonable attorneys' fees and expenses. The Partnership must not pay any
costs, fees or expenses which the Sellers are obligated to pay.
10.6 Governing Law. This Agreement is governed by and must be
construed in accordance with the internal laws of the State of Minnesota,
without regard to the conflicts of laws statutes of any jurisdiction.
10.7 Press Releases. Neither Sellers nor the Partnership may issue
any press release or make any general public announcement or statement with
respect to the execution or closing of this Agreement or the transactions
contemplated by this Agreement unless the same, including the content
thereof, is first approved by Purchasers in writing.
10.8 Joint and Several. Unless expressly stated otherwise in this
Agreement, all representations and warranties and all covenants, agreements
and obligations of any Seller are deemed to be made jointly and severally
by the Sellers. Unless expressly stated otherwise in this Agreement, all
representations and warranties and all covenants, agreements and
obligations of any Purchaser are deemed to be made jointly and severally by
the Purchasers; provided, however, that only NRGSD shall be the obligor
under the Promissory Note.
10.9 Sellers' Knowledge. For purposes of this Agreement, the term
"Sellers' knowledge" means the actual knowledge, after inquiry, of
Sellers', their partners, directors, trustees, officers and managers and
shall also include the actual knowledge of Steven Jay Mueller, with whom
Sellers' have reviewed the representations and warranties set forth in
Section 4 hereof .
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the day and year first above written.
NRG SAN DIEGO, INC.
By
Its
NRG DEL CORONADO, INC.
By
Its
RIDGEWOOD ELECTRIC POWER TRUST II
By: Ridgewood Power Corporation
Its Managing Shareholder
By
Its
RSD POWER CORP.
By
Its
Exhibits and Schedules to Partnership Interests Purchase Agreement
Exhibits
2.3 Purchase Money Promissory Note
3.1(A-1) Form of Assignment (General Partner)
3.1(A-2) Form of Assignment (Limited Partner)
3.1(C) Form of Legal Opinion of Sellers' Counsel
3.2 Security and Pledge Agreement
Schedules
4.3 Financial Statements
4.4 Certain Changes
4.5 Pending or Threatened Legal Matters
4.6 Compliance Issues
4.7 Title
4.8 Properties and Certain Contracts
4.9 Certain Intellectual Property
4.14 Taxes
4.15 Employee Benefits
4.16 Certain Terminated Employees
4.18 Other Liabilities
PURCHASE MONEY
PROMISSORY NOTE
June 25, 1997
Minneapolis, Minnesota $2,700,000
FOR VALUE RECEIVED, NRG San Diego, Inc., a Delaware corporation (the
"Debtor"), hereby promises to pay to the order of Ridgewood Electric Power
Trust II, a Delaware business trust, or its assigns (the "Holder"), the
principal sum of Two Million Seven Hundred Thousand and no/100s Dollars
($2,700,000.00), together with interest, in the manner provided herein.
All principal and interest amounts due under this Note are referred to
herein as the "Obligations" and are subject to the provisions of this Note.
Payment of Principal and Interest
1. Debtor shall pay the principal, together with interest thereon at
an interest rate of eight percent (8%) in 72 consecutive equal monthly
installments of Forty-Seven Thousand Three Hundred Thirty Nine and 75/100
Dollars ($47,339.75) commencing on July 25, 1997 and on the 25th day of
each month thereafter through and including June 25, 2003.
Acceleration
2. Upon the occurrence of any Event of Default, Holder may, at its
election, by written notice to Debtor declare all Obligations that are past
due or are to become due to become immediately due and payable, whereupon
the same shall become due and payable without further notice or demand.
Event of Default
3. For purposes of this Note, an Event of Default shall mean:
(a) the failure by Debtor to make any payment of principal or
interest required hereunder and such default is not cured within thirty
(30) days after notice of such default has been delivered to Debtor in
accordance with the provisions hereof;
(b) Debtor's failure to generally pay its debts as such debts
become due, or its admission in writing of its insolvency or its inability
to pay its debts generally, or the making of a general assignment for the
benefit of creditors;
(c) the initiation of any proceeding by or against the Debtor
seeking to adjudicate the Debtor a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
custodianship, protection, relief, or composition of the Debtor or the
Debtor's debts under any now existing or future applicable law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking
the entry of an order for relief, or the appointment of a receiver,
custodian, trustee, sequestrator, assignee, or other similar official for
such party or for any substantial part of such party's property, except
that if such proceeding is instituted involuntarily against the Debtor, an
Event of Default will occur only if the proceeding has not been dismissed
within sixty (60) days of the commencement of such proceeding;
(d) the Debtor's action to authorize any of the actions set forth
in (b) or (c) above;
(e) the occurrence and continuance of a Default under the
Security and Pledge Agreement of even date herewith between Debtor, NRG del
Coronado, Inc., a Delaware corporation ("NRGdC") and Holder (the "Security
and Pledge Agreement"); or
(f) sale, transfer or other disposition of the majority of the
stock or assets of Debtor or assets of San Diego Power & Cooling Company to
any person or entity which is not, directly or indirectly through one or
more intermediaries, controlled by or under common control with NRG Energy,
Inc., a Delaware corporation.
Prepayment
4. This Note shall be subject to prepayment at any time, without
premium or penalty.
General
5. The indebtedness evidenced by this Note is secured by the Security
and Pledge Agreement.
6. Debtor hereby:
(a) waives diligence, presentment, demand for payment, notice of
dishonor, notice of non-payment, protest, notice of protest, and any and
all other demands in connection with the delivery, acceptance, performance,
default or enforcement of this Note;
(b) agrees that Holder shall have the right, without notice, to
grant any extension of time for payment of any indebtedness evidenced by
this Note or any other indulgence or forbearance whatsoever;
(c) agrees that no failure on the part of Holder to exercise any
power, right or privilege hereunder, or to insist upon prompt compliance
with the terms of this Note shall constitute a waiver of that power, right
or privilege; and
(d) agrees that the acceptance at any time by Holder of any past
due amounts shall not be deemed to be a waiver of the requirement to make
prompt payment when due of any other amounts then or hereafter due and
payable.
7. The payment obligations of Debtor hereunder are subject to the
set-off rights described in the Partnership Interest Purchase Agreement,
dated the date hereof, by and among Debtor, NRGdC, Holder and RSD Power
Corp., a Delaware corporation.
8. This Note shall be governed in all respects by the laws of the
State of Minnesota without giving effect to the principles of conflicts of
law.
9. In the event that Debtor defaults in the payment of any Obligation
due hereunder, Debtor shall pay Holder's out-of-pocket collection costs,
including without limitation reasonable attorneys' fees and legal costs,
whether or not any suit or enforcement proceeding is commenced.
NRG SAN DIEGO, INC.
By:_____________________________
Its:_____________________________
SECURITY AND PLEDGE AGREEMENT
SECURITY AND PLEDGE AGREEMENT dated as of June 25, 1997 (the "Security
and Pledge Agreement"), between NRG del Coronado, Inc., a Delaware
corporation ("NRGdC"); NRG San Diego, a Delaware corporation ("NRGSD")
(NRGdC and NRGSD collectively referred to herein as the "Debtors"), and
Ridgewood Electric Power Trust II, a Delaware business trust (the "Secured
Party").
RECITALS:
1. NRGdC has, on the date hereof, purchased the general partner
interest (the "GP Interest") of RSD Power Corp., a Delaware corporation, in
RSD Power Partners, L.P., a Delaware limited partnership (the
"Partnership").
2. NRGSD has, on the date hereof, purchased Secured Party's limited
partner interest (the "LP Interest" and together with the GP Interest, the
"Partnership Interests") in the Partnership for a purchase price of
$6,190,000, of which $3,490,000 has been paid in cash by NRGSD on the date
hereof and the balance of $2,700,000 to be paid pursuant to the terms of
that certain Purchase Money Promissory Note dated the date hereof, executed
by NRGSD and delivered to the Secured Party (the "Note").
3. To secure the Note described above, the Secured Party has
required the Debtors to convey a security interest in the Partnership
Interests.
4. NRGdC acknowledges that it will receive substantial benefits from
the transactions involving NRGSD and the Secured Party and has entered into
this Agreement in consideration of such benefits.
Accordingly, the Debtors hereby agree with the Secured Party as
follows:
1. Pledge. In order to secure the payment and performance of the
Note and of all renewals, replacements, substitutions and amendments
thereof (the Note and all renewals, replacements, substitutions, and
amendments thereof collectively referred to as the "Obligations"), and in
consideration of the premises and the mutual covenants of the parties
hereinafter set forth, the Debtors hereby grant, pledge and give to the
Secured Party, and its successors and assigns, a continuing lien and
security interest in all of its right, title and interest, now or hereafter
existing in, to and under (a) the Partnership Interests (the "Pledged
Interests"); and (b) any and all proceeds of the foregoing. The property
referred to above in subparagraphs (a) and (b) is sometimes collectively
referred to herein as the "Collateral."
2. Covenants. The Debtors hereby covenant and agree with the
Secured Party as follows:
2.1 The Collateral is now, and at all times will be, maintained
by the Debtors free and clear of all liens, security interests, charges,
claims, pledges, encumbrances of any nature whatsoever or equities of any
kind, other than the interest of the Secured Party hereunder and the
interest of any third party whose claim is acknowledged in writing to be
junior to the interest of the Secured Party hereunder.
2.2 The Debtors shall not, without the prior written consent of
the Secured Party, (i) sell, transfer, assign or otherwise dispose of the
Collateral, or (ii) permit the admission of any person or entity as a
partner in the Partnership where such new partner has in excess of a twenty
percent (20%) interest in the capital and profits of the Partnership,
provided however, that the Debtors shall be permitted to sell, transfer or
assign their interest in the Collateral to any entity controlled by,
controlling, or under common control with NRG Energy, Inc., a Delaware
corporation, where such assignee acknowledges in writing the interest of
the Secured Party in the Collateral and agrees in writing to assume the
obligations of the Debtors hereunder.
2.3 The Debtors agree that they shall not permit the Partnership
to incur any indebtedness for borrowed money, where such indebtedness is
secured by an interest in the assets of the Partnership, in excess of the
sum of (i) $5,400,000, plus (ii) $2 for every $1 by which the principal
amount of the Note is less than $2,700,000. The provisions of this Section
2.3 shall not prohibit the Partnership from entering into any capital lease
or other arrangement whereby the Partnership grants a purchase money
security interest in specific assets or from borrowing under a revolving
credit facility where only the Partnership's accounts receivable are
pledged as security for indebtedness thereunder. In the event any
indebtedness of the Partnership for borrowed money is provided by the
Debtors or any of their affiliates, the Debtors shall cause the Partnership
to secure from such affiliate a subordination agreement in form and
substance reasonably satisfactory to the Secured Party.
2.4 The Debtors will perform all acts and execute all documents
reasonably requested by the Secured Party from time to time to evidence,
perfect, maintain or enforce the Secured Party's perfected lien and
security interest in the Collateral granted hereby, or otherwise in
furtherance of the provisions of this Security and Pledge Agreement, and
the transactions contemplated hereby, including, without limitation, any
act which may be required to effect a sale or other disposition of the
Collateral in accordance with the terms of this Security and Pledge
Agreement.
2.5 The Debtors shall reimburse the Secured Party for any and
all reasonable sums, costs, and expenses which the Secured Party has paid,
or may pay or incur, pursuant to the provisions of this Security and Pledge
Agreement or in defending, protecting or enforcing this Security and Pledge
Agreement or otherwise in connection with the provisions hereof.
2.6 Simultaneously with the execution and delivery of this
Security and Pledge Agreement, the Debtors shall deliver such instruments
as the Secured Party or its legal counsel may reasonably request in order
to effect the pledge and security interest to the Secured Party as
contemplated hereunder. The Secured Party is authorized, after a
foreclosure of its interest in the Collateral in accordance with the terms
of this Agreement, to register the Pledged Interest in its own name.
3. Defaults. The occurrence of any of the following shall
constitute a default (a "Default") under this Security and Pledge
Agreement:
3.1 The breach, failure to perform or violation of any material
covenant under Section 2 and the failure to cure such breach, failure or
violation within sixty (60) days after written notice has been delivered to
Debtors; or
3.2 The occurrence of an "Event of Default" under the Note.
4. Voting Rights. Until the occurrence of a Default hereunder, the
Debtors shall be entitled to (a) vote the Pledged Interests; (b) give
consents, waivers and ratifications with respect thereto and; (c) otherwise
act with respect to the Pledged Interests as the owner thereof.
5. Remedies Upon Default. After a Default shall have occurred and
be continuing the Secured Party may, without notice to or demand upon the
Debtors, in addition to any other remedies available to a secured party
under applicable law, take the following actions:
5.1 Exercise all voting power with respect to the Pledged
Interests, and in so voting and exercising the powers of an owner with
respect to any of the Pledged Interests, neither the Secured Party nor any
representative or agent of the Secured Party, shall be required to attend
any meeting of security holders, and the Secured Party may vote or act by
power of attorney or proxy, and such power of attorney or proxy may be
granted to any person selected by the Secured Party, and the Secured Party
may so vote and exercise the powers of an owner with respect to the Pledged
Interests for any purpose or purposes which the Secured Party, in its sole
and absolute discretion, shall deem advisable and in its interests.
5.2 The Secured Party, at its option, may by its
representatives, agents or otherwise sell, assign and deliver all, or any
part, of the Collateral, including, without limitation, any payments and
other distributions on or with respect to the Pledged Interests, at any
broker's board, or on any securities exchange, at public or private sale,
as the Secured Party may elect, either for cash or on credit, and for
present or future delivery, and for such price or prices and on such terms
as the Secured Party, in its sole and absolute discretion, shall deem
appropriate, without demand, advertisement or notice of any kind, (other
than the notice specified in Section 5.3 hereof). The Secured Party shall
be authorized at any such sale, in its sole and absolute discretion, to
restrict the prospective bidders to persons who will represent and agree
that they are purchasing the Collateral for their own account in compliance
with the applicable Blue Sky laws and Federal securities laws, and upon
consummation of any such sale, the Secured Party shall have the right to
assign, transfer, enforce and deliver to the Secured Party or Secured
Parties thereof, the Collateral so sold. Each Secured Party at any such
sale shall hold the property sold to that Secured Party free and clear of
any claim or right on the part of the Debtors, and the Debtors hereby
unconditionally and irrevocably waive, to the extent permitted
by applicable law, all rights of redemption, stay or appraisal which the
Debtors now have or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted.
5.3 The Secured Party shall give the Debtors thirty (30) days'
written notice (which the Debtors agree is reasonable notification within
the meaning of Section 9-504(3) of the Uniform Commercial Code as in effect
in the State of Minnesota) of the Secured Party's intention to make any
such public or private sale or sale at any broker's board or on a
securities exchange. Such notice, in case of a public sale, shall state
the time and place for such sale, and, in the case of a sale at a broker's
board or securities exchange, the broker's board or securities exchange at
which such sale is to be made and the day on which the Collateral, or
portion thereof, will first be offered for sale. Such notice in the case
of a private sale shall contain reasonable notification of the time at
which sale is to be made, or such other language as may be required by
Article 9 of the Uniform Commercial Code as in effect in the State of
Minnesota. Any such sale shall be held at such time or times
within ordinary business hours and at such place or places as the Secured
Party shall fix in the notice or publication, if any, of such sale. At any
such sale, the Collateral, or portion thereof to be sold, may be sold in
one lot as an entirety or in separate parcels, as the Secured Party may, in
its sole and absolute discretion, determine. The Secured Party shall not
be obligated to make any sale of the Collateral if it shall determine not
to do so, regardless of the fact that notice of sale of the Collateral may
have been given. The Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for sale, and such
sale, without further notice, may be made at the time and place to which
the same was so adjourned.
As an alternative to exercising the power of sale herein conferred upon it,
the Secured Party may proceed by a suit or suits at law or in equity to
foreclose against any of the Collateral pledged pursuant to this Security
and Pledge Agreement and to sell the Collateral, or any portion thereof,
pursuant to a judgment or decree of a court or courts of competent
jurisdiction. In the event of any sale or alternative thereto hereunder,
the Secured Party shall, after deducting all costs and expenses of every
kind for care, safekeeping, collection, sale, delivery, legal proceedings
(including, without limitation, the fees and disbursements of legal
counsel) or otherwise apply the residue of the proceeds of the sale,
together with any other moneys at the time held by it hereunder, as set
forth in Section 10 hereof.
6. Secured Party Appointed Attorney-in-Fact. The Debtors hereby
irrevocably appoint the Secured Party as its attorney-in-fact, from and
after any Default hereunder, for the purpose of carrying out the provisions
of this Security and Pledge Agreement and taking any action and executing
any instrument which the Secured Party may, in its sole and absolute
discretion, deem necessary or advisable to accomplish the purposes hereof,
which appointment is irrevocable and coupled with an interest. Without
limiting the generality of the foregoing, the Secured Party shall have the
right and power, if a Default shall have occurred, (a) to ask for, demand,
collect, sue for, receive, endorse and collect all checks and other orders
for the payment of money made payable to the Debtors representing any
interest or dividend or other distribution payable in respect of the
Collateral or any part thereof and to give full discharge for the same; (b)
to give any necessary receipts for amounts collected or received by the
Secured Party pursuant to this Security and Pledge Agreement and make all
necessary transfers of all or any part of the Collateral in connection with
any sale or other disposition thereof made pursuant to this Security and
Pledge Agreement, and for that purpose to execute all necessary instruments
of assignment and transfer; (c) to commence and prosecute any and all
suits, actions or proceedings in law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any part of the
Collateral or to enforce any rights in respect thereof; and (d) to settle,
compromise, compound, adjust or defend any actions, suits or proceedings
relating to any or all of the Collateral. The Debtors hereby ratify and
confirm all actions that are consistent with this
Section 6 performed by the Secured Party as attorney-in-fact.
7. Delay by Secured Party Not a Waiver. To the extent permitted by
law, no delay on the Secured Party's part in exercising any power of sale,
lien, option or other right hereunder, and no notice or demand which may be
given to or made upon the Debtors with respect to any power of sale, lien,
option or other right hereunder, shall constitute a waiver thereof, or
limit or impair the right of the Secured Party to take any action or to
exercise any power of sale, lien, option or any other right under this
Security and Pledge Agreement, or otherwise, nor shall any single or
partial exercise of any such power of sale, lien, option or other right
preclude any other or further exercise thereof, or the exercise of any
power, lien, option or other right under this Security and Pledge Agreement
or otherwise, all without notice or demand (except such notice as is
otherwise required by this Security and Pledge Agreement), nor shall any of
the same prejudice the rights of the Secured Party as against the Debtors
in any respect.
8. Assignment. After the occurrence of a Default, the Secured Party
may hold the Pledged Interests, either in its own name or endorsed or
assigned in blank or in the name of any nominee or nominees of the Secured
Party, as the Secured Party in its sole and absolute discretion may
determine, and in connection therewith the Secured Party may deliver the
Pledged Interests to the Debtors, or any transfer agent of the Pledged
Interests, as the case may be.
9. Remedies. Nothing herein contained shall be deemed to impair in
any manner the absolute right, in accordance with the terms of this
Security and Pledge Agreement, of the Secured Party to realize upon all or
such portion of the Collateral after a Default at such time and in such
order as it may elect, in its sole and absolute discretion, or to enforce
any one or more remedies, individually or cumulatively, relative hereto
either successively or concurrently, and the Debtors hereby agree that the
liens, options and other rights hereby given to the Secured Party shall
remain unimpaired and unprejudiced and that the enforcement of any remedy
shall not operate to bar or estop the Secured Party from exercising any
other right or remedy. Each and every remedy of the Secured Party shall be
in addition to any other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
10. Application of Proceeds of Sale and Other Property. The proceeds
of any sale of Collateral sold pursuant to this Security and Pledge
Agreement shall be applied by the Secured Party as follows:
FIRST: to the payment of all reasonable costs and expenses
incurred by the Secured Party in connection with such sale,
including, but not limited to, the reasonable fees and expenses
of
legal counsel for the Secured Party incurred in connection
therewith, and to the payment of all advances made by the Secured
Party hereunder for the account of the Debtors and the payment of
all costs and expenses paid or incurred by the Secured Party upon
the exercise of any right or remedy hereunder; and
SECOND: to the payment in full of accrued interest on the
Obligations and thereafter to the outstanding principal amount of
the Obligations; and
THIRD: to the payment in full or reduction of the Obligations
(to
the extent not previously paid); and
FOURTH: amounts remaining after payment in full as set forth
above shall be remitted to the Debtors.
11. Termination. The lien and security interests created by this
Security and Pledge Agreement shall terminate on the date when all
Obligations secured hereby shall have been fully paid, at which time the
Secured Party shall reassign and redeliver (or cause to be so reassigned
and redelivered), without recourse upon or warranty by the Secured Party,
and at the sole expense of the Debtors, to the Debtors, against receipt
therefor, such of the Collateral (if any) as shall not have been sold or
otherwise applied by the Secured Party pursuant to the terms hereof and not
theretofore reassigned and redelivered to the Debtors, together with
appropriate instruments of reassignment and release.
12. Miscellaneous.
12.1 Any provision of this Security and Pledge Agreement
prohibited by the laws of any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition, or modified to conform
with such laws, without invalidating the remaining provisions of this
Security and Pledge Agreement, and any such prohibition in one jurisdiction
shall not invalidate such provision in any other jurisdiction. If such
prohibition or unenforceability has an economic effect adverse to the
Secured Party, then the parties shall negotiate in good faith an equivalent
economic benefit to the Secured Party.
12.2 All notices, consents, and other communications hereunder
shall be in writing and shall be deemed to have been received by a party
hereto and to be effective on (i) the business day when delivered
personally, (ii) the next succeeding business day after delivery to a
nationally recognized overnight courier or delivery service, or (iii) when
mailed by first-class certified or registered mail, return receipt
requested, four (4) business days after such mailing, to a party at the
address set forth below (or such other address as a party, may designate by
notice to the others pursuant hereto):
If to the Secured Party, to it at:
Ridgewood Electric Power Trust II
c/o Ridgewood Power Corporation
947 Linwood Avenue
Ridgewood, NJ
If the Debtors to them at:
NRG del Coronado, Inc.
NRG San Diego, Inc.
c/o NRG Energy Center, Inc.
3707 IDS Center
Minneapolis, MN 55402
Attn: President
With copies to:
NRG Energy, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, MN 55403
Attn: Vice President and General Counsel; and
12.3 This Security and Pledge Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota applicable
to agreements made and to be performed therein.
12.4 This Security and Pledge Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that, except as permitted in Section 2.2,
the Debtors shall not assign any of their rights, or delegate any of its
duties or obligations under this Security and Pledge Agreement without the
prior written consent of the Secured Party.
12.5 The failure of a party to insist upon strict adherence to
any term of this Security and Pledge Agreement on any occasion shall not be
considered a waiver thereof or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Security and Pledge Agreement. Any waiver must be in writing and be signed
by the party or parties against whom the waiver is sought.
12.6 This Security and Pledge Agreement supersedes all prior
agreements among the parties with respect to its subject matter, is
intended as a complete and exclusive statement of the terms and the
agreement among the parties with respect thereto, and cannot be amended,
modified, changed or terminated except by a written instrument executed by
the party or parties against whom enforcement thereof is sought.
12.7 This Security and Pledge Agreement shall be a continuing
agreement in every respect until all the Obligations have been satisfied in
their entirety.
12.8 This Security and Pledge Agreement may be executed by the
parties hereto in any number of counterparts, no one of which need to be
executed by all or more than one of the parties hereto; and when this
Security and Pledge Agreement has been executed by all of the parties
hereto, each of said counterparts shall be deemed an original, and all of
such counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Debtors and the Secured Party have executed
this Security and Pledge Agreement as of the day and year above written.
Debtors:
NRG DEL CORONADO, INC.
By:
Its:
NRG SAN DIEGO, INC.
By:
Its:
Secured Party:
RIDGEWOOD ELECTRIC POWER TRUST II
By: Ridgewood Power Corporation
Its Managing Shareholder
By:
Its:
