Exhibit 10.7.1
NRG NEWARK COGEN LOAN AGREEMENT
dated as of April 30, 1996
$24,000,000
Between
NRG ENERGY, INC.
and
NRG GENERATING (U.S.) INC.
NRG NEWARK COGEN LOAN AGREEMENT, dated as of April 30, 1996,
between NRG GENERATING (U.S.) INC., a Delaware corporation (the "Company")
and NRG ENERGY, INC., a Delaware corporation (the "Lender").
WITNESSETH:
WHEREAS, immediately prior to the execution and delivery of this
Agreement, the Company was the debtor and the debtor in possession in
Chapter 11 case number 94-26723 (the "Case") pending before the United
States Bankruptcy Court for the District of New Jersey (the "Bankruptcy
Court");
WHEREAS, pursuant to the Fourth Amended and Restated Plan of
Reorganization for the Company proposed by the Lender, Wexford Management
Corp. and the official Committee of Equity Security Holders dated November
17, 1995 (as amended and confirmed by order of the Bankruptcy Court entered
on February 22, 1996, the "NRG Plan"; capitalized terms used herein without
definition shall have the respective meanings assigned to them in the NRG
Plan), and subject to the terms and conditions of the Amended and Restated
Stock Purchase and Reorganization dated as of January 31, 1996 between the
Lender and the Company, the Lender is acquiring on the date hereof 41.86%
of the outstanding shares of Common Stock of the Company and in that
connection has agreed to make certain loans to the Company;
WHEREAS, the NRG Plan contemplates that a Newark Project
Refinancing may occur on the Effective Date pursuant to which Newark
Refinancing Proceeds of up to $24 million may be generated for purposes of
funding distributions to creditors under the NRG Plan but, to the extent
Newark Refinancing Proceeds of $24 million for any reason are not available
on the Effective Date, the Lender is to make the NRG Newark Cogen Loan in
an amount equal to the amount (if any) by which $24 million exceeds the
Newark Refinancing Proceeds, which amount equals $24,000,000.
WHEREAS, the Lender agrees to make the NRG Newark Cogen Loan to
the Company contemplated by the NRG Plan on the terms and conditions set
forth below.
NOW, THEREFORE, the Company and the Lender agree as follows:
ARTICLE 1
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
terms defined in the caption hereto shall have the meanings set forth
therein, and the following terms have the following meanings:
"Acquisition" means the acquisition by the Company pursuant to
the Acquisition Agreement of 41.86% of the issued and outstanding capital
stock of the company as reorganized under the NRG Plan and all of the
capital stock of each of certain of the Company's subsidiaries.
"Acquisition Agreement" means the Amended and Restated Stock
Purchase and Reorganization Agreement, dated as of January 31, 1996,
between the Lender and O'Brien Environmental Energy, Inc., a Delaware
corporation, the predecessor in interest to the Company.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such
Capital Stock by the Company or another Restricted Subsidiary; or (iii)
Capital Stock constituting a minority interest in any Person that at such
time is a Restricted Subsidiary; provided, however, that, in the case of
clauses (ii) and (iii), such Restricted Subsidiary is primarily engaged in
a Related Business.
"Affiliate" of any specified Person means (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) any Person who
is a director or officer (a) of such Person, (b) of any Subsidiary of such
Person or (c) of any Person described in clause (i) above. For the
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. For purposes of Sections 6.04 and
6.05 only, "Affiliate" shall also mean any beneficial owner of shares
representing 5% or more of the total voting power of the Voting Stock (on a
fully diluted basis) of the Company or of rights or warrants to purchase
such Voting Stock (whether or not currently exercisable) and
2
any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"Affiliate Transaction" shall have the meaning assigned thereto
in Section 6.05(a).
"Agreement" means this Loan Agreement, as amended, supplemented
or modified from time to time.
"Asset Disposition" means any sale, lease, transfer or other
disposition of shares of Capital Stock of a Restricted Subsidiary (other
than directors' qualifying shares), property or other assets (each referred
to for the purposes of this definition as a "disposition") by the Company
or any of its Restricted Subsidiaries (including any disposition by means
of a merger, consolidation or similar transaction) other than (i) a
disposition by a Restricted Subsidiary to the Company or by the Company or
a Restricted Subsidiary to a Wholly owned Subsidiary, (ii) a disposition of
property or assets in the ordinary course of business, (iii) for purposes
of Section 6.04 only, a disposition subject to Section 6.02 and (iv) a
disposition of Liquidating Assets in accordance with and pursuant to the
terms of the Liquidating Asset Management Agreement.
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date
of determination to the dates of each successive scheduled principal
payment of such Indebtedness or redemption or similar payment with respect
to such Preferred Stock multiplied by the amount of such payment by (ii)
the sum of all such payments.
"Bankruptcy Law" shall have the meaning assigned thereto in
Section 8.01.
"Base Rate" means for any day, a rate per annum equal to 9.5%.
"Board of Directors" means the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required
by law to close.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in
3
(however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible into such equity.
"Capitalized Lease obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount
of such obligation determined in accordance with GAAP; and the Stated
Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease.
"Closing Date" means the date, which shall be on the Effective
Date, on which the Lender makes the Loan.
"Code" means the Internal Revenue Code of 1986, as amended.
"Co-Investment Agreement" shall mean that certain Co-Investment
Agreement dated the date hereof between the Lender and the Company and as
provided for by the NRG Plan.
"Co-Investment Indebtedness" means Indebtedness incurred by the
Company to finance the Company's investment in a project offered to the
Company pursuant to the terms of the Co-Investment Agreement.
"Commercial L/C11 means a commercial documentary letter of credit
under which the issuer agrees to make payments in Dollars for the account
of the Company, on behalf of the Company or a Subsidiary thereof, in
respect of obligations of the Company or such Subsidiary in connection with
the purchase of goods or services in the ordinary course of business.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 414(b) or (c) of the Code.
"Company" means the party named as such in this Agreement until a
successor replaces it and, thereafter, means the successor.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the
most recent four consecutive fiscal quarters ending prior to the date of
such determination to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (1) if the Company or any
Restricted Subsidiary has Incurred any Indebtedness since the
4
beginning of such period that remains outstanding on such date of
determination or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period, (2) if since the
beginning of such period the Company or any Restricted Subsidiary shall
have made any Asset Disposition, the EBITDA for such period shall be
reduced by an amount equal to the EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset Disposition
for such period or increased by an amount equal to the EBITDA (if negative)
directly attributable thereto for such period and Consolidated Interest
Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of
the Company or any Restricted Subsidiary repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (3) if since the beginning of such period
the Company or any Restricted Subsidiary (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary (or any Person which
becomes a Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially
all an operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period and (4)
if since the beginning of such period any Person (that subsequently became
a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) shall have made
any Asset Disposition or any Investment or acquisition of assets that would
have required an adjustment pursuant to clause (2) or (3) above if made by
the Company or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Asset Disposition, Investment or
acquisition assets occurred on the first day of such period. For purposes
of this
5
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in
good faith by a responsible financial or accounting officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given
pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been
the applicable rate for the entire period (taking into account any Interest
Rate Protection Agreement applicable to such Indebtedness if such Interest
Rate Protection Agreement has a remaining term as at the date of
determination in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the company and its consolidated Subsidiaries, plus, to
the extent incurred by the Company and its Subsidiaries in such period but
not included in such interest expense, (i) interest expense attributable to
Capitalized Lease obligations, (ii) amortization of debt discount and debt
issuance cost, (iii) capitalized interest, (iv) non-cash interest expense,
(v) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing, (vi) interest actually
paid by the Company or any such Subsidiary under any Guarantee of
Indebtedness or other obligation of any other Person, (vii) net costs
associated with Hedging obligations (including amortization of fees),
(viii) the product of (a) all Preferred Stock dividends in respect of all
Preferred Stock of Subsidiaries of the Company and Redeemable Stock of the
Company held by Persons other than the Company or a Wholly Owned Subsidiary
multiplied by (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of the Company, expressed as a decimal, in
each case, determined on a consolidated basis in accordance with GAAP and
(ix) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to
pay interest or fees to any Person (other than the Company) in connection
with Indebtedness Incurred by such plan or trust; provided, however, that
there shall be excluded therefrom any such interest expense of any
Unrestricted Subsidiary to the extent the related Indebtedness is not
Guaranteed or paid by the Company or any Restricted Subsidiary.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income:
6
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations contained
in clause (iv) below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such Person during
such period to the Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any such
Person (other than an Unrestricted Subsidiary) for such period shall be
included in determining such Consolidated Net Income,
(ii) any net income (loss) of any person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition,
(iii) any net income (loss) of any Restricted subsidiary if such
subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A) subject
to the limitations contained in (iv) below, the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary as a dividend
(subject, in the case of a dividend that could have been made to another
Restricted Subsidiary, to the limitation contained in this clause) and (B)
the Company's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net Income,
(iv) any gain (but not loss) realized upon the sale or other
disposition of any asset of the Company or its consolidated Subsidiaries
(including pursuant to any sale/leaseback transaction) which is not sold or
otherwise disposed of in the ordinary course of business and any gain (but
not loss) realized upon the sale or other disposition of any Capital Stock
of any Person,
(v) any extraordinary gain or loss, and
(vi) the cumulative effect of a change in accounting principles.
7
"Consolidated Net Worth" means the total of the amounts shown on
the balance sheet of the Company and the Restricted Subsidiaries,
determined on a consolidated basis, as of the end of the most recent fiscal
quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated
value of all outstanding Capital stock of the Company plus (ii) paid-in
capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit and
(B) any amounts attributable to Disqualified Stock.
"Contingent obligation" means as to any Person, any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
dividends or other obligations ("primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including any obligation of such Person, whether or not contingent (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or
hold harmless the owner of any such primary obligation against loss in
respect thereof; provided, however, that the term Contingent obligation
shall not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Contingent obligation
shall be deemed to be an amount equal to the stated or determinable amount
(based upon the maximum reasonably anticipated net liability in respect
thereof as determined by the Company in good faith) of the primary
obligation or portion thereof in respect of which such Contingent
obligation is made or, if not stated or determinable, the maximum
reasonably anticipated net liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by the Company in
good faith.
"Contractual Obligation" means as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of the
property owned by it is bound.
"Credit Documents" means the collective reference to this
Agreement and the Note.
8
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Custodian" shall have the meaning assigned thereto in Section
8.01.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable or exercisable) or
upon the happening of any event (i) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (ii) is convertible or
exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable
at the option of the holder thereof, in whole or in part, in each case on
or prior to the first anniversary of the Stated Maturity of the Notes.
"Dollars" and "$11 means dollars in lawful currency of the United
States of America.
"EBITDA" means, for any period the Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, (ii) Consolidated
Interest Expense,
(iii) depreciation expense and (iv) amortization expense, in each case for
such period.
"Effective Date" shall have the meaning assigned thereto in the
NRG Plan, which definition is incorporated herein by this reference.
"Environmental Laws" means any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any Governmental Authority or requirements of
law (including court-ordered requirements of common law) regulating or
imposing liability or standards of conduct concerning environmental or
public health protection matters, including Hazardous Materials, as now or
may at any time hereafter be in effect.
"ERISAII means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" shall have the meaning assigned thereto in
Section 8.01.
9
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fee Property" shall have the meaning assigned thereto in Section
3.10.
"Final Maturity Date" shall have the meaning assigned thereto in
Section 2.04.
"Fiscal Date" means the Saturday closest to February 1, May 1,
August 1 or November 1, as the case may be, in any calendar year.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keepwell, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in
any other manner the obligee of such Indebtedness or other obligation of
the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, however, that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Materials" means any hazardous materials, hazardous
wastes, hazardous pesticides, hazardous or toxic substances, defined,
listed, classified or regulated as such in or under any Environmental Law,
including asbestos, petroleum, any other petroleum products (including
gasoline, crude oil or any fraction thereof) polychlorinated biphenyls and
urea-formaldehyde insulation.
10
"Hedging obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Highest Lawful Rate" shall have the meaning assigned thereto in
Section 9.10.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money,
(ii) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments,
(iii) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement obligations
with respect thereto),
(iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services (except Trade Payables),
which purchase price is due more that six months after the date of placing
such property in service or taking delivery and title thereto or the
completion of such services,
(v) all Capitalized Lease obligations of such Person,
(vi) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of the Company, any Preferred Stock (but
excluding, in each case, any accrued dividends),
(vii) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided, however, that the amount of Indebtedness of such
Person shall be the lesser of (A) the fair market value of such
11
asset at such date of determination and (B) the amount of such Indebtedness
of such other Persons,
(viii) all Indebtedness of other Persons to the extent
Guaranteed by such Person, and
(ix) to the extent not otherwise included in this definition,
Hedging obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date.
"indemnified liabilities" shall have the meaning assigned thereto
in Section 9.05(d).
"Initial Maturity Date" shall have the meaning assigned thereto
in Section 2.04.
"Insolvency" means, with respect to a Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as
used in Section 4245 of ERISA.
"Interest Payment Date" means the last day of each March, June,
September and December, commencing on the first such day to occur after the
Loan is made.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement, interest rate hedge
agreement or other similar agreement or arrangement as to which such Person
is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the balance sheet of such
Person) or other extension of credit (including by way of Guarantee or
similar arrangement) or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services
for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such
Person. For purposes of the definition of "Unrestricted Subsidiary" and
Section 6.02, (i) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market value
of the net assets of any Subsidiary of the Company at the time that such
Subsidiary is
12
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company
shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to (x) the
Company's "Investment" in such Subsidiary at the time of such redesignation
less (y) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its
fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
"Leased Properties" shall have the meaning assigned thereto in
Section 3.10.
"Lender" means the party named in this Agreement until one or
more successors replace it, and thereafter means the successor or
successors.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Liquidating Assets" shall have the meaning assigned thereto in
the Liquidating Asset Management Agreement which definition shall be
incorporated herein by this reference.
"Liquidating Asset Management Agreement" means that certain
Liquidating Asset Management Agreement dated the date hereof by and between
the Company and Wexford Management Corp., a Delaware corporation and as
provided for by the NRG Plan.
"Loan" shall have the meaning set forth in Section 2.01.
"Multiemployer Plan" means a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring person of
Indebtedness or other obligations relating to the properties or assets that
are the subject of such Asset Disposition or received in any other noncash
form) therefrom, in each case net of (i) all legal, title and recording tax
expenses, commissions and other
13
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset
Disposition in accordance with the terms of any Lien upon such assets, or
which must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be repaid out of the proceeds from
such Asset Disposition, (iii) all distributions and other payments required
to be made to minority interest holders in Subsidiaries or joint ventures
as a result of such Asset Disposition and (iv) appropriate amounts to be
provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset
Disposition and retained by the Company or any Restricted Subsidiary after
such Asset Disposition.
"Net Cash Proceeds" means, with respect to any Newark Loan
Refinancing, the cash proceeds thereof, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees and expenses actually
incurred in connection therewith and net of taxes paid or payable as a
result thereof.
"Newark Loan Refinancing" shall mean Indebtedness that is
incurred to enable the Company to repay, retire, or refinance the mortgage
indebtedness of Newark Cogen.
"Note" means the Note substantially in the form attached hereto
as Exhibit A.
"Notice Event" shall have the meaning assigned thereto in Section
5.08.
"NRG Plan" has the meaning set forth in the recitals.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary or Clerk of the Company.
"Officers" Certificate" means a certificate signed by two
officers.
"0pinion of counsel" means a written opinion from legal counsel
who is acceptable to the Lender. The counsel may be an employee of or
counsel to the Company or the Lender.
14
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) a Restricted Subsidiary, the Company or a
Person which will, upon the making of such Investment, become a Restricted
subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (ii) another Person if as a result of
such Investment such other Person is merged or consolidated with or into,
or transfers or conveys all or substantially all its assets to, the Company
or a Restricted Subsidiary; provided, however, that such Person's primary
business is a Related Business; (iii) Temporary Cash Investments; (iv)
receivables owing to the Company or any Restricted Subsidiary, if created
or acquired in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms; provided, however, that such
trade terms may include such concessionary trade terms as the Company or
any such Restricted Subsidiary deems reasonable under the circumstances;
(v) payroll, travel and similar advances to cover matters that are expected
at the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Restricted
Subsidiary; (vii) stock, obligations or securities received in settlement
of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; and
(viii) any Investment pursuant to and in accordance with the terms of the
Co-Investment Agreement.
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges not
yet delinquent or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or such Subsidiary, as the case may
be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics' landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
in respect of obligations which are not yet due or which are bonded or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Company or such Subsidiary, as the case may be, in accordance with GAAP;
15
(c) pledges or deposits in connection with workmen's compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, tenders, trade or
government contracts (other than for borrowed money), leases, licenses,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(e) easements (including reciprocal easement agreements), rights-of-
way, building, zoning and similar restrictions, utility agreements,
covenants, reservations, restrictions, encroachments, changes, and other
similar encumbrances or title defects incurred, or leases or subleases
granted to others, in the ordinary course of business, which do not in the
aggregate materially detract from the aggregate value of the properties of
the Company and its Subsidiaries, taken as a whole or in the aggregate
materially interfere with or adversely affect in any material respect the
ordinary conduct of the business of the Company and its Subsidiaries on the
properties subject thereto, taken as a whole;
(f) Bankers' liens arising by operation of law;
(g) Liens on documents of title and the property covered thereby
securing Indebtedness in respect of any Commercial L/Cs;
(h) (i) mortgages, liens, security interests, restrictions or
encumbrances that have been placed by any developer, landlord or other
third party on property over which the Company or any Subsidiary of the
Company has easement rights or on any Leased Property and subordination or
similar agreements relating thereto and (ii) any condemnation or eminent
domain proceedings affecting any real property;
(i) Liens on goods (and Proceeds thereof) held by the Company or any
of its Subsidiaries to be sold on a consignment basis in the ordinary
course of business;
(j) leases or subleases to third parties;
(k) Liens in connection with workmen's compensation obligations and
general liability exposure of the Company and its Subsidiaries; and
16
(l) Liens securing Indebtedness Incurred under Section 6.01(b)(ii) or
(iii).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or
any other entity.
"Plan" means at any particular time, any employee benefit plan as
defined in Section 3(3) of ERISA and not , excluded by Section 4(b) of
ERISA and in respect of which the Company or a Commonly Controlled Entity
is (or, if such plan were terminated at such time, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Preferred Stock" as applied to the Capital Stock of any
corporation means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.
"principal" of a Note means the principal of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to
become due at the relevant time.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to
any defeasance or discharge mechanism) (collectively, "refinances" and
"refinanced" shall have a correlative meaning) any Indebtedness existing on
the Closing Date or Incurred in compliance with this Agreement (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary (to the extent permitted in this Agreement) and Indebtedness of
any Restricted Subsidiary that refinances Indebtedness of another
Restricted Subsidiary) including Indebtedness that refinances Refinancing
Indebtedness; provided, however, that (i) the Refinancing Indebtedness has
a Stated Maturity no earlier than the Stated Maturity of the Indebtedness
being refinanced, (ii) the Refinancing Indebtedness has an Average Life at
the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced and
(iii) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or if
issued with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced; provided further,
however, that Refinancing Indebtedness shall not
17
include (x) Indebtedness of a Restricted Subsidiary that refinances
Indebtedness of the Company or (y) Indebtedness of the Company or a
Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary.
"Register" shall have the meaning assigned thereto in Section
2.10(b).
"Regulation U11 means Regulation U of the Board of Governors of
the Federal Reserve System, as from time to time in effect.
"Related Business" means those businesses in which the Company or
any of its Subsidiaries is engaged on the date of this Agreement, or which
are directly related thereto.
"Reorganization" means with respect to a Multiemployer Plan, the
condition that such Plan is in reorganization as such term is used in
Section 4241 of ERISA.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA other than those events as to which the thirty day notice
period is waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
S 2615.
"Requirement of Law" means, as to any Person, the Articles or
Certificate of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, order, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its property, or to which such Person or any of its
property is subject.
"Responsible Officer" means, with respect to any Person, the
president, chief executive officer, the chief operating officer, the chief
financial officer, treasurer, controller or any vice president of such
Person.
"Restricted Payment" shall have the meaning assigned thereto in
Section 6.02(a).
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Single Employer Plan" means any Plan which is covered by Title
IV of ERISA and which is not a Multiemployer Plan.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of
principal of such security is due
18
and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at
the option of the holder thereof upon the happening of any contingency
beyond the control of the issuer unless such contingency has occurred).
"Subordinated obligation" means any Indebtedness of the company
(whether outstanding on the Closing Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Note pursuant to a written
agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total
voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i)
such Person or (ii) one or more Subsidiaries of such Person.
"Successor Company" shall have the meaning assigned hereto in
Section 7.01(i).
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or
any agency thereof, (ii) investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 180 days of the date
of acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $300,000,000 (or the
foreign currency equivalent thereof), (iii) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (i) or (ii) above entered into with a bank meeting the
qualifications described in clause (ii) above, and (iv) investments in
commercial paper, maturing not more than six months after the date of
acquisition, issued by the Lender or the parent corporation of the Lender,
and commercial paper with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to ▇▇▇▇▇'▇ Investors
Service, Inc. or "A-11" (or higher) according to Standard and Poor's
Ratings Group.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed
19
by such Person arising in the ordinary course of business in connection
with the acquisition of goods or services.
"Transferee" shall have the meaning set forth in Section 9.06(b).
"Uniform Commercial Code" means the New York Uniform commercial
Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the company
that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii)
any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may
designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or owns or holds any Lien on any property of, the Company
or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total consolidated assets of $1,000 or
less or (B) if such Subsidiary has consolidated assets greater than $1,000,
then such designation would be permitted under Section 6.02. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, however, that immediately after giving effect to such
designation (x) the Company's Consolidated Coverage Ratio would exceed
1.6:1.00 and (y) no Default shall have occurred and be continuing. Any
such designation by the Board of Directors shall be evidenced to the Lender
by promptly filing with the Lender a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in
the election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the
Company all the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly owned Subsidiary.
SECTION 1.02. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) as used herein and in the Note and any certificate or other
document made or delivered pursuant
20
hereto, accounting terms relating to the Company and its Subsidiaries not
defined in Section 1.01 and accounting terms partly defined in Section 1.01
to the extent not defined shall have the respective meanings given to them
under GAAP. All computations determining compliance with financial
covenants or terms, including definitions used therein, shall be prepared
in accordance with generally accepted accounting principles in effect at
the time of the preparation of, and in conformity with those used to
prepare, the historical financial statements of the Company;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate
or junior to secured Indebtedness merely by virtue of its nature as
unsecured indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP and accretion of principal on such security shall be
deemed to be the Incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater;
(9) unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the Note or any
certificate or other document made or delivered pursuant hereto;
(10) the words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and section,
Section, schedule and exhibit references are to this Agreement unless
otherwise specified; and
(11) as used in this Agreement, references to a fiscal year of
the Company identified only by a year
21
refer to the fiscal year of the Company ended on the Fiscal Date at the end
of the fourth fiscal quarter of the company which falls in the immediately
succeeding calendar year. References to the last day of any fiscal year or
fiscal quarter of the Company, or to a fiscal year or quarter ended on a
certain date, shall be deemed to refer to the Fiscal Date at the end of
such fiscal year or quarter.
ARTICLE 2
Loan
SECTION 2.01. Loan. Subject to the terms and conditions hereof,
the Lender agrees to make a loan in Dollars (the "Loan") to the Company on
the Closing Date, in an aggregate principal amount of [twenty-four million
dollars ($24,000,000)].
SECTION 2.02. Use of Proceeds. The proceeds of the Loan shall be
used for the purposes set forth in the NRG Plan and shall be applied in
accordance with the NRG Plan.
SECTION 2.03. Borrowing. The Company shall borrow the entire
amount of the Loan on the Closing Date.
SECTION 2.04. Maturity: Refinancing.
(a) The Loan will mature on the date that is twelve (12) years
following the Closing Date (the "Maturity Date").
(b) The Company hereby covenants and agrees to use its
reasonable best efforts to obtain Newark Loan Refinancing the Net Cash
Proceeds of which will enable and permit the Company to repay the Loan in
its entirety, including principal and interest thereon.
SECTION 2.05. Optional and Mandatory Prepayments; Principal
Amortization.
(a) The Company may at any time and from time to time prepay the
Loan, in whole or in part, without premium or penalty, upon at least five
days irrevocable notice to the Lender. If such notice is given, the
Company shall make such prepayment, and the payment amount specified in
such notice shall be due and payable, on the date specified therein.
Partial prepayments of the Loan shall be in an aggregate principal amount
equal to the lesser of (A) $2,000,000, or a whole multiple of $1,000,000 in
excess thereof and (B) the aggregate unpaid principal amount of the Loan.
22
(b) (i) If, subsequent to the Closing Date, there shall be
obtained a Newark Loan Refinancing, 100% of the Net Cash Proceeds thereof,
after paying in full the mortgage debt of Newark Cogen being refinanced,
shall be promptly applied toward the payment of the Loan.
(ii) The Company shall give the Lender at least one Business
Day's notice of each prepayment or mandatory reduction pursuant to this
Section 2.05(b) setting forth the date and amount thereof.
(c) Accrued interest on the amount of any prepayments shall be
paid on the date of such prepayment.
(d) The principal amount of the loan shall be repaid in semi-
annual installments of [$800,000] on every other Interest Payment Date,
commencing with the second Interest Payment Date after the Closing Date.
SECTION 2.06. Interest Rate and Payment Dates.
(a) The Loan shall bear interest for the period from and
including the date the Loan is made to, but excluding, the maturity date
thereof an the unpaid principal thereof at a rate per annum equal to the
Base Rate.
(b) If all or a portion of (i) the principal amount of the Loan
or (ii) any interest payable thereon shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise) the Loan, and any such
overdue amount shall, without limiting the rights of the Lender under
Section 8, bear interest at a rate per annum which is 2.00% above the Base
Rate from the date of such non-payment until paid in full (as well after as
before judgment).
(c) Interest shall be payable in arrears on each Interest Payment
Date.
SECTION 2.07. Computation of Interest.
Interest in respect of the Loan, shall be calculated on the basis
of a 365 (or 366 as the case may be) day year for the actual days elapsed.
SECTION 2.08. Treatment of Payments.
(a) Whenever any payment received by the Lender under this
Agreement or the Note is insufficient to pay in full all amounts then due
and payable to the Lender under this Agreement or the Note such payment
shall be applied by the Lender in the following order: First, to the
payment of fees and expenses, if any, due and payable to the Lender under
and
23
in connection with this Agreement and the Note including the payment of all
expenses due and payable under Section 9.05; Second, to the payment of
interest then due and payable on the Loan; and Third, to the payment of the
principal amount of the Loan which is then due and payable; or
(b) All payments (including prepayments) to be made by the
Company on account of principal, interest and fees shall be made without
set-off or counterclaim and shall be made to the Lender, for the account of
the Lender at the office of the Lender located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ in lawful money of the United States of America
and in immediately available funds. If any payment hereunder would become
due and payable on a day other than a Business Day, such payment shall
become due and payable on the next succeeding Business Day and, with
respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
SECTION 2.9. Indemnity. The Company agrees to indemnify the
Lender and to hold the Lender harmless from any loss or expense (but
without duplication of any amounts payable as default interest) which the
Lender may sustain or incur as a consequence of default by the Company in
making any prepayment after the Company has given a notice in accordance
with Section 2.05. This covenant shall survive termination of this
Agreement and repayment of the Loan.
SECTION 2.10. Repayment of the Loan: Evidence of Debt.
(a) The Company hereby unconditionally promises to pay to the
Lender the then unpaid principal amount of the Loan in accordance with the
terms hereof and the Note. The Company hereby further agrees to pay
interest on the unpaid principal amount of the Loan from time to time
outstanding from the date hereof until payment in full thereof at the rates
per annum, and on the dates, set forth in Section 2.06.
(b) The Lender shall maintain a Register (the "Register") in
which shall be recorded (i) the amount of the Loan made hereunder, (ii) the
amount of any principal or interest due and payable or to become due and
payable from the Company to the Lender hereunder and (iii) the amount of
any sum received by the Lender hereunder from the Company.
(c) The entries made in the Register to the extent permitted by
applicable law, shall be prima facie evidence of the existence and amounts
of the obligations of the Company therein recorded; provided, however, that
the failure of the Lender to maintain the Register, or any error therein,
shall not in any manner affect the obligation of the Company to
24
repay (with applicable interest) the Loan made to the Company by the Lender
in accordance with the terms of this Agreement.
(d) The Company agrees that, upon the request of the Lender, the
Company will execute and deliver to the Lender the Note evidencing the
Loan, with appropriate insertions as to date and principal amount.
ARTICLE 3
Representations and Warranties
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company hereby represents and warrants to the Lender, as
follows (all representations and warranties are made with respect to the
Closing Date and with respect to the entire period following the Closing
Date during which any amounts are due and owing from the Company to the
Lender hereunder, as if made at any time during such period):
SECTION 3.01. No Change. There has been no change, and no
development or event involving a prospective change, which has had or could
reasonably be expected to have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of, the
Company and its Subsidiaries taken as a whole.
SECTION 3.02. Corporate Existence; Compliance with Law. Except
for those exceptions to the following which the Lender has actual knowledge
of on the Closing Date, each of the Company and its Subsidiaries (a) is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation, (b) has full corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to use its corporate
name and to own, lease or otherwise hold its properties and assets and to
carry on its business as presently conducted other than such franchises,
licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, would not have a material adverse effect
on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, (c) is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership, leasing or holding of
its properties makes such qualification necessary, except such
jurisdictions where the failure so to qualify would not have a material
adverse effect on the business, assets, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries,
25
taken as a whole, and (d) is in compliance with all applicable statutes,
laws, ordinances, rules, orders, permits and regulations of any
Governmental Authority (including those related to Hazardous Materials and
substances), except where noncompliance would not have a material adverse
effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a
whole. Neither the Company nor any of its Subsidiaries has received any
written communication from a Governmental Authority that alleges that the
Company or any of its Subsidiaries is not in compliance, in all material
respects, with all material federal, state, local or foreign laws,
ordinances, rules and regulations.
SECTION 3.03. Corporate Power; Authorization. Each of the
Company and its Subsidiaries has the corporate power and authority to make,
deliver and perform each of the Credit Documents to which it is a party,
and the Company has the corporate power and authority and legal right to
borrow hereunder. Each of the Company and its Subsidiaries has taken all
necessary corporate action to authorize the execution, delivery and
performance of each of the Credit Documents to which it is or will be a
party and the Company has taken all necessary corporate action to authorize
the borrowings hereunder. No consent or authorization of, or filing with,
any Person (including any Governmental Authority) is required in connection
with the execution, delivery or performance by the Company or any of the
Company's Subsidiaries, or for the validity or enforceability against the
Company or any of the Company's Subsidiaries, of any Credit Document except
for consents, authorizations and filings (a) which have been obtained or
made and are in full force and effect, and except such consents,
authorizations and filings, the failure to obtain or perform (i) which
would not have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole and (ii) which would not adversely affect the
validity or enforceability of any of the Credit Documents or the rights or
remedies of the Lender thereunder.
SECTION 3.04. Enforceable Obligations. This Agreement, and each
of the other Credit Documents has been, duly executed and delivered on
behalf of the Company. This Agreement and each of the other Credit
Documents constitutes the legal, valid and binding obligation of the
Company, and is enforceable against the Company in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
26
SECTION 3.05. No Legal Bar. The execution, delivery and
performance of each Credit Document and the incurrence or issuance of and
use of the proceeds of the Loan do not violate any Requirement of Law or
any Contractual obligation applicable to or binding upon the Company or any
Subsidiary of the Company or any of their respective properties or assets,
in any manner which, individually or in the aggregate, (i) would have a
material adverse effect on the ability of the Company or any such
Subsidiary to perform its obligations under the Credit Documents to which
it is a party, (ii) would give rise to any liability on the part of the
Lender, or (iii) would have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, and do not result in the
creation or imposition of any Lien on any of its properties or assets
pursuant to any Requirement of Law applicable to it, as the case may be, or
any of its Contractual Obligations, except for Permitted Liens.
SECTION 3.06. No Material Litigation. No litigation by,
investigation known to the company by, or proceeding of, any Governmental
Authority is pending against the Company or any of its Subsidiaries with
respect to the validity, binding effect or enforceability of any Credit
Document, the Loan made hereunder or the use of proceeds thereof. No
lawsuits, claims, proceedings or investigations pending or, to the best
knowledge of the Company, threatened against or affecting the Company or a
subsidiary of the Company or any of their respective properties, assets,
operations or businesses, in which there is a probability of an adverse
determination that is reasonably likely, if adversely decided, to have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries,
taken as a whole.
SECTION 3.07. Investment Company Act. Neither the company nor
any Subsidiary of the Company is an "investment company" or a company
"controlled" by an "investment company" (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended).
SECTION 3.08. Federal Regulation. No part of the proceeds of the
Loan are being or are to be used for any purpose which violates the
provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System. Neither the Company nor any of its Subsidiaries is
engaged or will engage, principally or as one of its important activities,
in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock"
27
within the respective meanings of each of the quoted terms under said
Regulation U.
SECTION 3.09. No Default. The Company and each of its
Subsidiaries have performed all material obligations required to be
performed by them under their respective Contractual obligations on and
after the Closing Date and they are not (with or without the lapse of time
or the giving of notice, or both) in breach or default in any respect
thereunder, except to the extent that such breach or default would not have
a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole. Neither the Company nor any of its Subsidiaries is in
default under any material judgment, order or decree of any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, applicable to it or any of its
respective properties, assets, operations or business, except to the extent
that any such defaults would not, in the aggregate, have a material adverse
effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a
whole.
SECTION 3.10. Ownership of Property: Liens. Each of the Company
and its Subsidiaries has good and valid title to all of its material
tangible and intangible personal property, in each case free and clear of
all mortgages, liens, security interests or encumbrances of any nature
whatsoever except Permitted Liens. With respect to real property or
interests in real property, as of the Closing Date, each of the Company and
its Subsidiaries has (i) fee title to all of the real property listed on
Schedule 3.10 (each, a "Fee Property"), and (ii) good and valid title to
the leasehold estates in all of the real property leased by it and listed
on Schedule 3.10 under the heading "Leased Properties" (each, a "Leased
Property"), in each case free and clear of all mortgages, liens, security
interests, easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except (A) Permitted Liens, (B) any
conditions that may be shown by a current, accurate survey or physical
inspection of any Fee Property or Leased Property, (C) as to Leased
Property, the terms and provisions of the respective lease therefor and any
matters affecting the fee title and any estate superior to the leasehold
estate related thereto, and (D) title defects, or leases or subleases
granted to others, which are not material to the Fee Properties or the
Leased Properties, as the case may be, taken as a whole. The Fee
Properties and the Leased Properties (collectively the "Real Properties")
constitute, as of the Closing Date, all of the real property owned in fee
or leased by the Company and its subsidiaries.
28
SECTION 3.11. ERISA. None of the Company, any Subsidiary of the
Company or any Commonly Controlled Entity would be liable for any amount
pursuant to Section 4062, 4063, 4064 or 4069 of ERISA, if any Single
Employer Plan were to terminate. Neither the Company nor any Commonly
Controlled Entity has been involved in any transaction that would cause the
Company to be subject to liability with respect to a Plan to which the
Company or any Commonly Controlled Entity contributed or was obligated to
contribute during the six-year period ending on the date this
representation is made or deemed made under Section 4062, 4069 or 4212(c)
of ERISA. Neither the Company nor any Commonly Controlled Entity has
incurred any material liability under Title IV of ERISA which could become
or remain a liability of the Company after the Closing Date. None of the
Company, any Subsidiary of the Company, or any director, officer or
employee thereof, or any of the Plans (to the best knowledge of the Company
with respect to any Multiemployer Plan), or any trust created thereunder,
or any fiduciary thereof, has engaged in a transaction or taken any other
action or omitted to take any action involving any Plan which could
constitute a prohibited transaction within the meaning of Section 406 of
ERISA which is not otherwise exempted, or would cause it to be subject to
either a material liability or civil penalty assessed pursuant to Section
409 or 502 of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code. Each of the Plans (to the best knowledge of the Company
with respect to any Multiemployer Plan) has been operated and administered
in all material respects in accordance with applicable laws, including but
not limited to ERISA and the Code. There are no material pending or, to
the best knowledge of the Company, threatened claims by or on behalf of any
of the Plans or any fiduciary, by any employee or beneficiary covered under
any such Plan, or otherwise involving any such Plan or fiduciary (other
than routine claims for benefits). No condition exists and no event has
occurred with respect to any Multiemployer Plan which presents a material
risk of a complete or partial withdrawal under Subtitle E of Title IV of
ERISA, nor has the Company or any Commonly Controlled Entity been notified
that any such Multiemployer Plan is insolvent or in reorganization within
the meaning of Section 4241 of ERISA. Neither the Company nor any Commonly
Controlled Entity nor any Subsidiary has been a party to any transaction or
agreement to which the provisions of Section 4204 of ERISA were applicable.
Neither the Company nor any Commonly Controlled Entity nor any subsidiary
is obligated to contribute to a Multiemployer Plan, on behalf of any
current or former employee of the Company, any Commonly Controlled Entity
or any Subsidiary. None of the Plans or any trust established thereunder
has incurred any "accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, as of the
last day of the most recent fiscal year of each of the
29
Plans. No contribution failure has occurred with respect to any Plan
sufficient to give rise to a lien under Section 302(f) of ERISA.
SECTION 3.12. Copyrights, Patents, Trademarks and Licenses. The
Company or a Subsidiary of the Company owns or has the right to use,
without payment to any other party, all material patents, patent
applications, trademarks (registered or unregistered), trade names, service
marks and copyrights owned, used or filed by or licensed to the Company and
its Subsidiaries. To the best knowledge of the Company, no claims are
pending by any Person with respect to the ownership, validity,
enforceability or the Company's or any Subsidiary's use of any such
patents, patent applications, trademarks (registered or unregistered),
trade names, service marks, copyrights challenging or questioning the
validity or effectiveness of any of the foregoing, in any jurisdiction,
domestic or foreign.
SECTION 3.13. Environmental Matters.
(a) To the best knowledge of the Company, the Real Properties do
not contain in, on or under including the soil and groundwater thereunder,
any Hazardous Materials in amounts or concentrations that constitute or
constituted a material violation of, or could reasonably give rise to
material liability under, Environmental Laws.
(b) To the best knowledge of the Company, the Real Properties
and all operations and facilities at the Real Properties are in material
compliance with all Environmental Laws, and there is no contamination or
violation of any Environmental Law which could materially interfere with
the continued operation of, or materially impair the fair salable value of,
the Real Properties.
(c) To the best knowledge of the Company, neither the Company
nor any of its Subsidiaries has received or is aware of any complaint,
notice of violation, alleged violation, or notice of investigation or of
potential liability under Environmental Laws with regard to the Real
Properties or the operations of the Company or its subsidiaries, nor does
the Company or any of its Subsidiaries have knowledge that any such action
is being contemplated, considered or threatened.
(d) To the best knowledge of the Company, Hazardous Materials
have not been generated, treated, stored, disposed of, at, on or under the
Real Properties, nor have any Hazardous Materials been transported from the
Real Properties, in material violation of or in a manner that could
reasonably give rise to liability under any Environmental Laws.
30
(e) There are no governmental administrative actions or judicial
proceedings pending or, to the knowledge of the Company and its
Subsidiaries, threatened, under any Environmental Law to which the Company
or any of its Subsidiaries is a party with respect to the Real Properties,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements, other than permits authorizing operations at facilities at
the Real Properties, outstanding under any Environmental Law with respect
to the Real Properties.
ARTICLE 4
Conditions Precedent
SECTION 4.01. Conditions to Loans. The obligation of the Lender
to make the Loan on the Closing Date is subject to the satisfaction, or
waiver by the Lender, immediately prior to or concurrently with the making
of the Loan, of the following conditions:
(a) Note. The Lender shall have received the Note conforming to
the requirements hereof and executed by a duly authorized officer of the
Company.
(b) Consummation of Acquisition and NRG Plan. The Acquisition
shall have been consummated at the Closing (as defined in the Acquisition
Agreement) and concurrently therewith the KRG Plan shall have been
consisted on the Effective Date (as defined in the NRG Plan).
ARTICLE 5
Affirmative Covenants
The Company hereby agrees that, so long as the Loan remains
outstanding and unpaid, or any other amount is owing to the Lender
hereunder or under any of the other Credit Documents, it shall, and, in the
case of the agreements contained in Sections 5.04 through 5.07 and 5.09,
the Company shall cause each of its Subsidiaries to:
SECTION 5.01. Financial Statements. Furnish to the Lender:
(a) as soon as available after the end of each fiscal year of
the Company, but in any event within 10 days of filing them with the
Securities and Exchange commission, a copy of the consolidated balance
sheet of the Company and its consolidated Subsidiaries as at the end of
such fiscal year and the related consolidated
31
statements of stockholders, equity and cash flows and the consolidated
statements of income of the Company and its Subsidiaries for such fiscal
year, setting forth in each case (other than for the financial statements
delivered with respect to the first fiscal year of the Company ended
following the Closing Date) in comparative form the figures for the
previous year, reported on by independent certified public accountants of
nationally recognized standing; and
(b) as soon as available after the end of each of the first
three quarterly periods of each fiscal year of the Company, but in any
event within 10 days of filing them with the Securities and Exchange
Commission, the unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of each such quarter and the related unaudited
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such quarterly period and the portion of the fiscal year
of the Company through such date, setting forth in each case (other than
for the financial statements delivered with respect to fiscal quarters
occurring during the first fiscal year of the Company ended following the
Closing Date) in comparative form the figures for the corresponding quarter
in, and year to date portion of, the previous year; together with a
comparison showing the figures for such periods in the budget prepared by
the Company and furnished to the Lender, certified by the chief financial
officer, controller or treasurer of the Company as being fairly stated in
all material respects.
SECTION 5.02. Certificates; Other Information. Furnish to the
Lender:
(a) concurrently with the delivery of the consolidated financial
statements referred to in Section 5.01(a), so long as not contrary to the
then current recommendations of the American Institute of Certified
Accountants, a letter from the independent certified public accountants
reporting on such financial statements stating that in making the
examination necessary to express their opinion on such financial
statements, nothing has come to their attention which would lead them to
believe that there exists any Default or Event of Default under Sections
6.01 and 6.02, except as specified in such letter;
(b) within 15 days of the delivery of the financial statements
referred to in Sections 5.01(a) and (b) (except that the certificate
referred to in clause (i) below shall be delivered concurrently with such
financial statements), a certificate of the chief
32
financial officer of the Company (i) stating that, to the best of such
officer's knowledge, each of the Company and its respective Subsidiaries
has observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Agreement and the
other Credit Documents to be observed, performed or satisfied by it, and
that such officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate, (ii) showing in detail as
of the end of the related fiscal period the figures and calculations
supporting such statement in respect of Sections 6.02 and 6.05 and (iii) if
not specified in the financial statements delivered pursuant to Section
5.01, specifying the aggregate amount of interest paid or accrued by the
Company and its Subsidiaries, and the aggregate amount of depreciation,
depletion and amortization charged on the books of the Company and its
Subsidiaries, during such accounting period; and
(c) promptly, such additional financial and other information as
the Lender may from time to time reasonably request.
SECTION 5.03. SEC Reports. The Company shall furnish to the
Lender, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available to
the public generally by the Company or any of its Subsidiaries, if any, and
all regular and periodic reports and all final registration statements and
final prospectuses, if any, filed by the Company or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission
or any Governmental Authority succeeding to any of its functions.
SECTION 5.04. Payment of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent,
as the case may be, all its obligations and liabilities of whatever nature,
except (a) when the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with
GAAP with respect thereto have been provided on the books of the Company or
any of its Subsidiaries, as the case may be, (b) for delinquent obligations
which do not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company
and its Subsidiaries taken as a whole and (c) for trade and other accounts
payable in the ordinary course of business which are not overdue for a
period of more than 90 days or, if overdue for more than 90 days, as to
which a dispute exists and adequate reserves in conformity with GAAP have
been established on the books of the Company or any of its Subsidiaries, as
the case may be.
33
SECTION 5.05. Conduct of Business and Maintenance of Existence.
Except as otherwise contemplated or permitted by the Co-Investment
Agreement or the Liquidating Asset Management Agreement, continue to engage
in business of the same general type as now conducted by it, and preserve,
renew and keep in full force and effect its corporate existence and take
all reasonable action to maintain all material rights, material privileges,
franchises, patents, patent applications, copyrights, trademarks and trade
names, necessary or desirable in the normal conduct of its business except
for rights, privileges, franchises, patents, patent applications,
copyrights, trademarks and tradenames the loss of which would not in the
aggregate have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole, and comply with all applicable Requirements
of Law except to the extent that the failure to comply therewith would not,
in the aggregate, have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company
and its Subsidiaries taken as a whole.
SECTION 5.06. Maintenance of Property; Insurance.
(a) Keep all property useful and necessary in its business in
good working order and condition (ordinary wear and tear excepted); and
(b) Maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and with
only such deductibles as are usually maintained by, and against at least
such risks (but including, in any event, public liability insurance) as are
usually insured against in the same general area, by companies engaged in
the same or a similar business and furnish to the Lender, upon written
request of the Lender, full information as to the insurance carried;
Provided that the Company may implement programs of self-insurance in the
ordinary course of business and in accordance with industry standards for a
company of similar size so long as reserves are maintained in accordance
with GAAP for the liabilities associated therewith.
SECTION 5.07. Inspection of Property: Books and Records;
Discussions. Keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation
to its business and activities which permit financial statements to be
prepared in conformity with GAAP and all Requirements of Law; and permit
representatives of the Lender upon reasonable notice (but no more
frequently than monthly), to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any
reasonable time and as often as may
34
reasonably be requested upon reasonable notice, and to discuss the
business, operations, assets and financial and other condition of the
Company and its Subsidiaries with officers and employees thereof and with
their independent certified public accountants.
SECTION 5.08. Notices. Subject to the last sentence of this
section promptly give notice to the Lender of any of the following (a
"Notice Event"):
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any instrument
or other agreement, guarantee or collateral document of the Company or any
of its Subsidiaries which default or event of default has not been waived
and would have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole, or (ii) litigation, investigation or
proceeding which may exist at any time between the Company or any of its
Subsidiaries and any Governmental Authority, or receipt of any notice of
any environmental claim or assessment against the company or any of its
Subsidiaries by any Governmental Authority which in any such case would
have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole;
(c) of any litigation or proceeding against the company or any
of its Subsidiaries (i) in which more than $500,000 of the amount claimed
is not covered by insurance or (ii) in which injunctive or similar relief
is sought which if obtained would have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole;
(d) of the following events, as soon as practicable after, and
in any event within 30 days after, the Company knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any
Plan which Reportable Event could reasonably result in material liability
to the Company and its Subsidiaries taken as a whole, or (ii) the
institution of proceedings or the taking of any other action by PBGC, the
Company or any Commonly Controlled Entity to terminate, withdraw or
partially withdraw from any Plan and, with respect to a Multiemployer Plan,
the Reorganization or Insolvency of the Plan, in each of the foregoing
cases which could
35
reasonably result in material liability to the Company and its Subsidiaries
taken as a whole, and in addition to such notice, deliver to the Lender
whichever of the following may be applicable: (A) a certificate of a
Responsible officer of the Company setting forth details as to such
Reportable Event and the action that the Company or such Commonly
Controlled Entity proposes to take with respect thereto, together with a
copy of any notice of such Reportable Event that may be required to be
filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent
to institute such proceedings or any notice to PBGC that such Plan is to be
terminated, as the case may be; and
(e) of a material adverse change known to the Company or its
Subsidiaries in the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries taken as a whole.
Each notice pursuant to this Section 5.08 shall be accompanied by a
statement of a Responsible officer setting forth details of the occurrence
referred to therein and (in the cases of clauses (a) through (d)) stating
what action the Company proposes to take with respect thereto. The company
shall not be deemed in breach or default of its obligations under this
Section 5.08 due to the failure to notify the Lender of any Notice Event of
which the Lender shall have had actual knowledge as of the date notice of
such Notice Event was to have been provided.
SECTION 5.09. Environmental Laws.
(a) Comply with, and use all reasonable efforts to insure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and maintain, and require
that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, registrations or permits required by
Environmental Laws, except to the extent that failure to do so would not
have any reasonable likelihood of having a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole or on the
validity or enforceability of any of the Credit Documents or the rights and
remedies of the Lender thereunder;
(b) conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions, required under
applicable Environmental Laws, and promptly comply with all lawful orders
and directives of all Governmental Authorities respecting Environmental
Laws,
36
except to the extent that the same are being contested in good faith by
appropriate proceedings; and
(c) In regard to this Agreement or in any way relating to the
Company or its Subsidiaries or their current or former operations, defend,
indemnify and hold harmless the Lender, and its respective employees,
agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to Hazardous Material or Environmental Laws,
including any orders, requirements or demands of Governmental Authorities
related thereto, including reasonable attorney's and consultant's fees,
investigation and laboratory fees, remediation costs, court costs and
litigation expenses, except to the extent that any of the foregoing arise
out of the gross negligence or willful misconduct of the party seeking
indemnification therefor. The agreements in this Section 5.09(c) shall
survive repayment of the Loan and all other amounts payable hereunder.
SECTION 5.10. Further Instruments and Acts. Upon request of the
Lender, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Agreement.
SECTION 5.11 Taxes. Each of the Company and its Subsidiaries will
file or cause to be filed all material tax returns which, to the knowledge
of the Company, are required to be filed and will pay all taxes shown to be
due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any
amount of which is currently being contested in good faith by appropriate
proceeds and with respect to which reserves (or other sufficient
provisions) in conformity with GAAP have been provided on the books of the
Company or its Subsidiaries, as the case may be).
ARTICLE 6
Negative Covenants
So long as the Loan remains outstanding and unpaid, or any other
amount is owing to the Lender hereunder or under any other Credit Document
(it being understood that each of the permitted exceptions to each of the
covenants in this Article 6 is in addition to, and not overlapping with,
any other of such permitted exceptions except to the extent expressly
provided):
37
SECTION 6.01. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur any Indebtedness; provided, however, that on or after
the first anniversary of the Closing Date the Company may Incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio would
be greater than 1.6:1.0.
(b) Notwithstanding Section 6.01(a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness (A) of the Company to any Subsidiary, and (B)
of any Subsidiary to the Company or any other Subsidiary;
(ii) Indebtedness represented by (w) the Loan, (x) any
Indebtedness outstanding or to be issued or incurring pursuant to the NRG
Plan, (y) any Co-Investment Indebtedness and (z) any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this
clause (ii) or Section 6.01(a);
(iii) Indebtedness of the Company or any of its
Subsidiariestn an aggregate principal amount at any one time outstanding
(excluding any Indebtedness permitted to be incurred under clause (ii) or
(iii) of this Section 6.01(b)) not in excess of $5,000,000;
(iv) Indebtedness in connection with workmen's compensation
obligations and related general liability exposure of the Company and its
Subsidiaries; and
(v) Capitalized Lease Obligations in respect of (A)
sale/leaseback transactions of property owned by the Company on the Closing
Date, and (B) fixtures and equipment and other personal property acquired
after the Closing Date.
(c) The Company shall not Incur any Indebtedness pursuant to
Section 6.01(b) if the proceeds thereof are used, directly or indirectly,
to repay, prepay, redeem, defease, retire, refund or refinance any
Subordinated Obligations unless such Indebtedness shall be subordinated to
the Loan to at least the same extent as such Subordinated obligations.
SECTION 6.02. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to (i) declare or pay any dividend or
make any distribution on or in respect of its Capital Stock (including any
payment in connection with
38
any merger or consolidation involving the Company) except dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and except dividends or distributions payable to the Company or
another Restricted Subsidiary (and, if such Restricted Subsidiary is not
wholly owned, to its other shareholders on a pro rata basis), (ii)
purchase, redeem, retire or otherwise acquire for value any Capital Stock
of the Company or any Restricted Subsidiary held by Persons other than the
Company or another Restricted Subsidiary, (iii) purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment,
any Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final
maturity, or (iv) make any Investment (other than a Permitted Investment)
in any Person (any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition, retirement or Investment being
herein referred to as a "Restricted Payment") if at the time the Company or
such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (Or would
result therefrom);
(2) the Consolidated Coverage Ratio of the Company would be less
than 1.6:1.0; or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in cash,
to be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of the
Board of Directors) declared or made subsequent to the Closing Date would
exceed the sum of:
(A) 25% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the beginning of the fourth
fiscal quarter in 1995, to the end of the most recent fiscal quarter ending
at least 45 days prior to the date of such Restricted Payment (or, in case
such Consolidated Net Income shall be a deficit, minus 100% of such
deficit); and
(B) the aggregate Net Cash Proceeds received by the Company
from the issue or sale of its Capital Stock (other than Disqualified Stock)
subsequent to the Closing Date (other than an issuance or sale to a
subsidiary of the Company or an employee stock
39
ownership plan or other trust established by the Company or any
of its Subsidiaries).
(b) The provisions of Section 6.02(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock of the Company
or Subordinated Obligations made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or other trust established
by the Company or any of its Subsidiaries); provided, however, that (A)
such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds from such sale
shall be excluded from clause (3)(B) of Section 6.02(a);
(ii) any purchase or redemption of Subordinated obligations made
by exchange for, or out of the proceeds of the substantially concurrent
sale of, Indebtedness of the Company which is permitted to be Incurred
pursuant to Section 6.01; provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments;
(iii) any purchase or redemption of Subordinated Obligations
from Net Available Cash to the extent permitted by Section 6.04; provided,
however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with Section 6.02(a); provided, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments; or
(v) so long as the entire principal and accrued interest on the
Loan shall not have been accelerated and become due and payable pursuant to
Section 8.02 or so long as such acceleration shall have been rescinded, the
payment of dividends upon or the redemption of the Company's Class A
Preferred Stock in accordance with the terms of such stock.
SECTION 6.03. Limitation on Restrictions on Distributions from
Subsidiaries. The company shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become
effective any
40
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its
Capital Stock or pay any Indebtedness or other obligations owed to the
Company, (ii) make any Loan or advances to the Company or (iii) transfer
any of its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the closing Date;
(2) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (1) of this Section or this clause (2) or contained
in any amendment to an agreement referred to in clause (1) of this Section
or this clause (2); provided, however, that the encumbrances and
restrictions contained in any such refinancing agreement or amendment are
no less favorable to the Lender than encumbrances and restrictions
contained in such agreements;
(3) in the case of clause (iii), any encumbrance or restriction
(A) that restricts in a customary manner the subletting, assignment or
transfer of any property or asset that is subject to a lease, license or
similar contract or (B) contained in security agreements securing
Indebtedness of a Restricted Subsidiary to the extent such encumbrance or
restrictions restrict the transfer of the property subject to such security
agreements; and
(4) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition
of all or substantially all the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition.
SECTION 6.04. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration (including by way of relief
from, or by any other Person assuming sole responsibility for, any
liabilities, contingent or otherwise) at the time of such Asset Disposition
at least equal to the fair market value of the shares and assets subject to
such Asset Disposition, (ii) at least 80% of the consideration thereof
received by the Company or such Restricted Subsidiary is in the form of
cash and (iii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such
41
Restricted Subsidiary, as the case may be) (A) first, to the extent the
Company elects (or is required by the terms of any Senior Indebtedness or
Indebtedness of a Wholly owned Subsidiary), to prepay, repay or purchase
such Indebtedness of a Wholly Owned Subsidiary (in each case other than
Indebtedness owed to the Company or an Affiliate of the Company) within 6
months after the later of the date of such Asset Disposition or the receipt
of such Net Available Cash; (B) second, to the extent of the balance of Net
Available Cash after application in accordance with clause (A), to the
extent the Company or such Restricted Subsidiary elects, to reinvest in
Additional Assets (including by means of an Investment in Additional Assets
by a Restricted Subsidiary with Net Available Cash received by the Company
or another Restricted Subsidiary) within 6 months from the later of such
Asset Disposition or the receipt of such Net Available Cash; and (C) third,
to the extent of the balance of such Net Available Cash after application
in accordance with clauses (A) and (B), to repay the Loan, provided,
however, that in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted Subsidiary shall retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section, the Company and
the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this Section exceed $500,000.
For the purposes of this Section, the following are deemed to be
cash: (x) the assumption of Indebtedness of the Company (other than
Disqualified Stock of the Company) or any Restricted Subsidiary and the
release of the Company or such Restricted Subsidiary from all liability on
such Indebtedness in connection with such Asset Disposition and (y)
securities received by the Company or any Restricted Subsidiary from the
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash.
SECTION 6.05. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any
transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Company
(an "Affiliate Transaction") on terms (i) that are less favorable to the
Company or such Restricted Subsidiary, as the case may be, than those that
could be obtained at the time of such
42
transaction in arm's-length dealings with a Person who is not such an
Affiliate and (ii) that, in the event such Affiliate Transaction involves
an aggregate amount in excess of $500,000, are not in writing and have not
been approved by a majority of the members of the Board of Directors having
no personal stake in such Affiliate Transaction.
(b) The provisions of Section 6.05(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 6.02, (ii) the
performance of the Company's or Subsidiary's obligations under any
employment contract, collective bargaining agreement, employee benefit
plan, related trust agreement or any other similar arrangement heretofore
or hereafter entered into in the ordinary course of business, (iii) payment
of compensation to employees, officers, directors or consultants in the
ordinary course of business, (iv) maintenance in the ordinary course of
business of benefit programs or arrangements for employees, officers or
directors, including vacation plans, health and life insurance plans,
deferred compensation plans, and retirement or savings plans and similar
plans or (v) any transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries (v) any transaction between
the Lender and the Company and (vi) any transaction pursuant to and in
accordance with the Liquidating Asset Management Agreement.
SECTION 6.06. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly,
create or permit to exist any Lien an any of its property or assets
(including Capital Stock), whether owned on the date of this Agreement or
thereafter acquired, securing any obligation other than Permitted Liens.
SECTION 6.07. Limitation on Lines of Business. The Company shall
not, and shall not permit any Restricted Subsidiary to, engage in any
business, other than (i) those businesses in which the Company or such
Restricted subsidiary is engaged on the date of this Agreement (or which
are directly related thereto or (ii) those businesses in which the Company
or any of its Subsidiaries may engage in connection with any Investment
made pursuant to and in accordance with the terms of the Co-Investment
Agreement.
SECTION 6.08. When the Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person,
unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized and existing under
the laws of the United States of America, any State thereof or the District
of
43
Columbia and the Successor Company (if not the Company) shall expressly
assume, by an agreement supplemental hereto, executed and delivered to the
Lender, in form satisfactory to the Lender, all the obligations of the
Company under the Note and this Agreement;
(ii) immediately after giving affect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted Subsidiary
at the time of such transaction), no Default shall have occurred and be
continuing;
(iii)immediately after giving effect to such transaction, the
Consolidated Coverage Ratio of the Successor Company would be greater than
1.6:1.0;
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which is
not less than the Consolidated Net Worth of the Company immediately prior
to such transaction; and
(v) the Company shall have delivered to the Lender an Officers'
Certificate and an opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Agreement.
The Successor Company shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this
Agreement, but the predecessor Company in the case of a lease of all or
substantially all its assets shall not be released from the obligation to
pay the principal of and interest on the Note.
Notwithstanding, the foregoing clauses (ii), (iii) and (iv), (1)
any Restricted Subsidiary may consolidate with, merge into or transfer all
or part of its properties and assets to the Company and (2) the Company may
merge with an Affiliate incorporated for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits.
ARTICLE 7
Security Interest
SECTION 7.01. Assignment and Grant of Security. To secure the
prompt and unconditional payment, performance and discharge, when due, of
all of the Company's obligations under
44
this Agreement and the Note (collectively, the "Secured Obligations"), the
Company hereby assigns, pledges, conveys, sets over, delivers and transfers
to the Lender and grants a security interest to the Lender in and to all of
the Company's right, title and interest in and to each and all of the
following:
(a) any and all payments received or receivable by the company
from Newark Cogen, including without limitation any and all such payments
made pursuant to any management agreement between O'Brien and Newark Cogen
and all dividends or other distributions, but excluding any dividends or
distributions that are subject to any prior security interest granted to
any holder of Indebtedness secured by a mortgage on the Newark Project (the
"Designated Payments"); and
(b) all Proceeds of any Designated Payments (the Designated
Payments, together with the Proceeds thereof, are referred to as the
"Collateral"). As used herein, the terms "Proceeds" shall refer to and
include (i) whatever is now or hereafter received by the Company upon the
sale, exchange, collection or other disposition of any of the Collateral,
whether such Proceeds constitute accounts, accounts receivable, general
intangibles, instruments, securities, credits, documents', deposit
accounts, money, or contract rights; (ii) personal property of any type or
nature whatsoever which is now or hereafter acquired by the Company with
any Proceeds of the Collateral; and (iii) any insurance now or hereafter
payable by reason of any loss, damage or destruction to or of any or all of
the Collateral.
SECTION 7.02 Covenants In Respect Of Collateral.
(a) The Company shall not voluntarily, involuntarily or by
operation of law, sell, assign, hypothecate, pledge, encumber, grant any
other security interest or lien in, dispose of or otherwise transfer the
Collateral, or any portion thereof or any interest therein, or permit any
of the foregoing to occur and shall not otherwise do, suffer or permit
anything to be done or occur that may impair the Collateral as security
hereunder or the liens and security interests therein created hereunder in
favor of the Lender.
(b) The Company shall do all such other acts and things as may be
necessary or appropriate or which the Lender may from time to
time reasonably request as necessary in the opinion of the Lender
to establish and maintain a first priority perfected security
interest in the Collateral, including, without limitation, the
Proceeds, subject to no other liens, security interests or
encumbrances; and the Company shall pay the cost of all filings
or recordings of
45
this Agreement or any other document or instrument in all public offices
whenever it is reasonably deemed by the Lender to be necessary or
desirable. The Company hereby irrevocably constitutes and appoints the
Lender the attorney-in-fact of the Company to execute, deliver and, if
appropriate, to file with the appropriate filing officer or office such
security agreements, financing statements, continuation statements, notices
to the institutions or other entities with which the Collateral or any
portion thereof is maintained or such other documents or instruments as the
Lender may request or require in order to confirm, impose, perfect or
continue the perfection of the liens and security interests created hereby.
The foregoing power-of-attorney is coupled with an interest and shall
survive any dissolution, bankruptcy, or insolvency of the Company as an
entity.
(c) The Company shall provide to the Lender any information
which the Lender may at any time and from time to time hereafter require,
in its sole and absolute discretion, pertaining to the Collateral. The
Company shall promptly notify the Lender of any change of the Company's
place of business, chief executive office or mailing address.
(d) The Company shall not make any assignment, conveyance,
transfer or agreement in conflict herewith or constituting an assignment,
conveyance, transfer or encumbrance on any Designated Payment.
ARTICLE 8
1. Defaults and Remedies
SECTION 8.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest or any other
amount (other than those specified in (2) below) with respect to the Loan
when the same becomes due and payable and such default continues for a
period of 10 (or, from and after the Initial Maturity Date, 30) days;
(2) the Company (i) defaults in the payment of the principal of
the Loan when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration or otherwise or (ii) fails to redeem or
purchase the Note when required pursuant to this Agreement or the Note;
(3) at any time during which the Lender shall own less than 26%
of the outstanding common stock of the Company, or, persons designated by
the Lender or which
46
the Lender shall have the right to appoint shall constitute less than a one-
half of the Board of Directors: (i) any representation or warranty made or
deemed made by the company in any Credit Document shall prove to have been
incorrect in any material respect on or as of the date, or at any time
during the period, that such representation or warranty is made or deemed
made; (ii) the facts or circumstances giving rise to such incorrect
representation or warranty would have a material adverse effect on the
Company's ability to pay the amounts outstanding under the Loan (including
principal and interest) as they become due and payable; and (iii) both of
the conditions in preceding subclauses (i) and (ii) continue for 30 days
after the notice specified below;
(4) the Company fails to comply with Section 6.08 at any time
during which the Lender shall own less than 26% of the outstanding common
stock of the Company, or persons designated by the Lender or, which the
Lender shall have the right to appoint, shall constitute less than a one-
half of the Board of Directors;
(5) the Company shall default in the observance or performance
of any agreement contained in Section 5.08(a) or Article 6 of this
Agreement;
(6) the Company fails to comply with any of its agreements in
the Credit Documents (other than those referred to in (1) through (5)
above) and such failure continues for 30 days after the notice specified
below; provided that, in the case of Sections 5.04, 5.05 and 5.11, the
Lender shall then own less than 26% of the outstanding common stock of the
Company, or persons designated by the Lender or which the Lender shall have
the right to appoint shall constitute less than a one-half of the Board of
Directors;
(7) Indebtedness of the Company or any subsidiary is not paid
within any applicable grace period after final maturity or is accelerated
by the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $2,000,000 or its foreign
currency equivalent at the time;
(8) the company or any Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
47
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(9) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Subsidiary in an
involuntary case;
(B) appoints a Custodian of the Company or any subsidiary or for
any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(10) any judgment or decree for the payment of money in excess of
$2,000,000 or its foreign currency equivalent at the time is entered
against the Company or any Subsidiary and is not discharged and either (A)
an enforcement proceeding has been commenced by any creditor upon such
judgment or decree or (B) there is a period of 60 days following the entry
of such judgment or decree during which such judgment or decree is not
discharged, waived or the execution thereof stayed;
(11) (i) any Person shall engage in any "prohibited transaction"
(as defined in Section 4.06 of ERISA or Section 4975 of the Code) involving
any Plan which is not otherwise exempted, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any Plan, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lender, likely to result in
the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v)
the
48
Company or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Lender is likely to, incur any liability in connection with
a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan; and in each case in clauses (i) through (v) above, such event or
condition, together with all other such events or conditions relating to a
Plan, if any, would be reasonably likely to subject the Company or any of
its Subsidiaries to any tax, penalty or other liabilities in the aggregate
material in relation to the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole; or
(12) any Credit Document shall cease, for any reason, to be in
full force and effect or the Company or any of its subsidiaries shall so
assert in writing.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
The term "Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or
any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (3) and (6) is not an Event of Default
until the Lender notifies the Company of the Default and the Company does
not cure such Default within the time specified after receipt of such
notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
SECTION 8.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 8.01(8) or (9) with respect to the
Company) occurs and is continuing, the Lender by notice to the Company may
declare the principal of and accrued interest on the Loan to be due and
payable. upon such a declaration, such principal and interest shall be due
and payable immediately. If an Event of Default specified in Section
8.01(8) or (9) with respect to the Company (but not any Subsidiary) occurs,
the principal of and interest on the Loan Note shall ipso facto become and
be immediately due and payable without any declaration or other act on the
part of the Lender. The Lender by notice to the Company may rescind an
acceleration and its consequences. No such rescission
49
shall affect any subsequent Default or impair any right consequent thereto.
SECTION 8.03. Default and Remedies.
(a) If an Event of Default occurs and is continuing, the Lender
shall have all of the remedies of a secured party under the Uniform
Commercial Code, including, without limitation, the right, to notify the
account debtors from which the Designated Payments are owing to pay
directly to the Lender the amount owing from such account debtors to the
Company in respect of the respective Designated Receivable. In addition to
and not in derogation of any or all of the rights and remedies granted
hereunder to the Lender or otherwise available to the Lender under
applicable law, following such an Event of Default, the Lender shall have
the further right and power, at its sole option, to sell, or otherwise
dispose of, the Collateral (other than Collateral consisting of cash), or
any part thereof, at any one or more public or private sales as permitted
by applicable law, and for that purpose the Lender may take immediate and
exclusive possession of such Collateral, or any part thereof, to the extent
capable of possession.
(b) To the fullest extent permitted by law, the Company
irrevocably and expressly waives any right to receive any notice of sale or
notice of any other disposition of all or any part of the Collateral that
does not consist of cash, except that to the extent the Company may be
entitled by applicable law to any notice of sale or other disposition of
such Collateral, the Company agrees that if such notice is mailed, postage
prepaid, to the Company at the Company's address hereinafter specified not
less than five (5) days before the time of the sale or other disposition
contemplated therein, such notice shall conclusively be deemed commercially
reasonable and shall fully satisfy any requirement for giving of said
notice. The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(c) The proceeds realized upon any such disposition, after
deduction for the expenses of retaking, holding, preparing for sale,
selling or the like and reasonable attorneys' fees, legal expenses and
costs incurred by the Lender, shall be applied in accordance with Section
5.06.
(d) The remedies of the Lender hereunder are cumulative and the
exercise of any one or more of the remedies
50
provided for herein, or under the Uniform Commercial Code, shall not be
construed as a waiver of any other rights or remedies of the Lender so long
as any part of the Secured obligations remains unsatisfied or unperformed.
The making of this Agreement shall not waive or impair any other security
the Lender may have or hereafter acquire for the payment or performance of
the Secured Obligations, nor shall the making of any such additional
security waive or impair this Agreement; but the Lender may resort to any
security it may have in the order it may deem proper.
SECTION 8.04. Other Remedies. If an Event of Default occurs and
is continuing, the Lender may pursue any available remedy to collect the
payment of principal of or interest on the Note or to enforce the
performance of any provision of the Note or this Agreement.
The Lender may maintain a proceeding even if it does not possess
the Note or does not produce it in the proceeding. A delay or omission by
the Lender in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 8.05. Waiver of Past Defaults. The Lender by notice to
the Company may waive an existing Default and its consequences. When a
Default is waived, it is deemed cured, but no such waiver shall extend to
any subsequent or other Default or impair any consequent right.
SECTION 8.06. Priorities. If the Lender collects any money or
property pursuant to this Article 8, it shall pay out the money or property
in the following order:
FIRST: to itself in accordance with the priority set forth in
Section 2.08; and
SECOND: to the extent of any excess, to the Company.
SECTION 8.07. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Agreement a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys' fees, against
any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant.
51
SECTION 8.08. Waiver of Stay or Extension Laws. The company (to
the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of
this Agreement; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and shall
not hinder, delay or impede the execution of any power herein granted to
the Lender, but shall suffer and permit the execution of every such power
as though no such law had been enacted.
ARTICLE 9
Miscellaneous
SECTION 9.01. Amendments and Waivers. Except as otherwise
expressly set forth in this Agreement, no Credit Document nor any terms
thereof may be amended, supplemented, waived or modified except in
accordance with the provisions of this Section 9.01.
SECTION 9.02. Notices. All notices, requests and demands to or
upon-the respective parties hereto to be effective shall be in writing
(including by telecopy or telex, if one is listed), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three Business Days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when sent,
confirmation of receipt received, or, in the case of telex notice, when
sent, answerback received, addressed as follows, or to such other address
as may be hereafter notified by the respective parties hereto and any
future holders of the Note:
The Company: NRG GENERATING (U.S.) INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President and Chief
Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
NationsBank Plaza, Suite 5200
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
52
if to Lender NRG Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice
President, Business Development
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:NRG Energy Inc.
Legal Department
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President and General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Lender pursuant
to Section 2.05 shall not be effective until received.
SECTION 9.03. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
SECTION 9.04. Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
Note.
SECTION 9.05. Payment of Expenses and Taxes. The Company agrees
(a) to pay or reimburse the Lender for all its costs and expenses incurred
in connection with, and to pay, indemnify, and hold the Lender harmless
from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever arising out of or in
connection with, the enforcement or preservation of any rights under any
Credit Document and any such other documents, including reasonable fees and
disbursements of counsel to the Lender incurred in connection with the
foregoing (b) to pay,
53
indemnify, and to hold the Lender harmless from any and all recording and
filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other similar taxes (other than
withholding taxes), if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, any
Credit Document and any such other documents, and (c) to pay, indemnify,
and hold the Lender and its respective Affiliates, officers and directors
harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including reasonable fees
and disbursements of counsel) which may be incurred by or asserted against
the Lender or such Affiliates, officers or directors arising out of or in
connection with any investigation, litigation or proceeding related to this
Agreement, the other Credit Documents, the proceeds of the Loan and the
transactions contemplated by or in respect of such use of proceeds, or any
of the other transactions contemplated hereby, whether or not the Lender or
such Affiliates, officers or directors is a party thereto, including any of
the foregoing relating to the violation of, noncompliance with-or liability
under, any Environmental Law applicable to the operations of the Company,
any of its Subsidiaries or any of the facilities and properties owned,
leased or operated by the Company or any of its Subsidiaries (all the
foregoing, collectively, the "indemnified liabilities"); provided that the
Company shall have no obligation hereunder with respect to indemnified
liabilities of the Lender or any of its respective Affiliates, officers and
directors arising from (i) the gross negligence or willful misconduct of
the Lender or its respective directors or officers; (ii) legal proceedings
commenced against the Lender by any security holder or creditor thereof
arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such; (iii) legal proceedings commenced
against the Lender by any Transferee; or (iv) actions taken by the Company
either at the direction of the Board of Directors of the Company or
pursuant to the Management Agreement at such time as persons designated by
the Lender or which the Lender shall have the right to appoint, shall
constitute at least one-half of the Board. The agreements in this Section
9.05 shall survive repayment of the Note and all other amounts payable
hereunder.
SECTION 9.06. Successors and Assigns; Participations and
Assignments.
(a) This Agreement shall be binding upon and inure to the benefit
of the Company, the Lender all future holders
54
of the Note and the Loan, and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the
Lender.
(b) The company hereby agrees that the Lender may, in accordance
with applicable law, at any time and from time to time assign all or any
part of its rights and obligations under this Agreement and the Note to any
Person (a "Transferee"); provided, however, that any rights the Lender may
have pursuant to Article 3 and Section 8.01(3) shall not survive or be
effective as to any Transferee.
(c) The Company authorizes the Lender to disclose to any
prospective Transferee any and all financial information in the Lender's
possession concerning the Company and its Subsidiaries and Affiliates which
has been delivered to the Lender by or on behalf of the Company, subject to
receipt of a confidentiality agreement from such prospective Transferee in
form and substance reasonably satisfactory to the Company.
SECTION 9.07. Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
SECTION 9.08. Governing Law; No Third Party Rights. This
Agreement and the Note and the rights and obligations of the parties under
this Agreement and the Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York and
applicable laws of the United States of America. This Agreement is solely
for the benefit of the parties hereto and their respective successors and
assigns, and, except as set forth in Section 9.06, no other Persons shall
have any right, benefit, priority or interest under, or because of the
existence of, this Agreement.
SECTION 9.09. Submission to Jurisdiction; Waivers.
(a) Each party to this Agreement hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any of the other Credit Documents,
or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of
55
America for the Southern District of New York, and appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in Section 9.02; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction.
(b) Each party hereto unconditionally waives trial by jury in
any legal action or proceeding referred to in paragraph (a) above and any
counterclaim therein.
SECTION 9.10. Interest. Each provision in this Agreement and
each other Credit Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, by the
Company for the use, forbearance or detention of the money to be loaned
under this Agreement or any other Credit Document or otherwise (including
any sums paid as required by any covenant or obligation contained herein or
in any other Credit Document which is for the use, forbearance or detention
of such money) , exceed that amount of money which would cause the
effective rate of interest to exceed the highest lawful rate permitted by
applicable law (the "Highest Lawful Rate"), and all amounts owed under this
Agreement and each other Credit Document shall be held to be subject to
reduction to the effect that such amounts so paid or agreed to be paid
which are for the use, forbearance or detention of money under this
Agreement or such Credit Document shall in no event exceed that amount of
money which would cause the effective rate of interest to exceed the
Highest Lawful Rate. Notwithstanding any provision in this Agreement or
any other Credit Document to the contrary, if the maturity of the Loan or
the obligations in respect of the other Credit Documents are accelerated
for any reason, or in the event of any prepayment of all or any portion of
the Loan or the obligations in respect of the other Credit Documents by the
Company or in any other event, earned interest on the Loan and such other
obligations of the Company may never exceed the Highest Lawful Rate, and
any unearned interest otherwise
56
payable on the Loan or the obligations in respect of the other Credit
Documents that is in excess of the Highest Lawful Rate shall be canceled
automatically as of the date of such acceleration or prepayment or other
such event and (if theretofore paid) shall, at the option of the holder of
the Loan or such other obligations, be either refunded to the Company or
credited on the principal of the Loan. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the
Highest Lawful Rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, amortize, prorate, allocate and spread,
in equal parts during the period of the actual term of this Agreement, all
interest at any time contracted for, charged, received or reserved in
connection with this Agreement.
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered in New York, New York by their proper and
duly authorized officers as of the day and year first above written.
NRG GENERATING (U.S.) INC.
by
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
NRG ENERGY, INC.
by
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President, Domestic
Business Development
58
EXHIBIT A
New York, New York
April 30, 1996
NOTE
FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a Delaware
corporation (the "Company"), hereby promises to pay to the order of NRG
ENERGY, INC., a Delaware corporation, or registered assigns (the "Lender"),
at the office of the Lender at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, in lawful money of the United States of America and in
immediately available funds, the principal amount of TWENTY FOUR MILLION
DOLLARS ($24,000,000), or, if less, the aggregate unpaid principal amount
of the loan made by the lender pursuant to Section 2.01 of the Loan
Agreement referred to below (in either case, to be paid together with any
accrued interest not required to be paid currently in cash), which sum
shall be due and payable in such amounts and on such dates as are set forth
in the NRG Newark Cogen Loan Agreement, dated as of April 30, 1996 between
the Company and the Lender (the "Loan Agreement"; terms defined therein
being used herein as so defined). The undersigned further agrees to pay
interest at said office, in like money, from the date hereof on the unpaid
principally amount hereof from time to time outstanding at the rates and on
the dates specified in Section 2.06 of the Loan Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever.
The nonexercise by the holder of this Note of any of its rights hereunder
in any particular instance shall not constitute a waiver thereof in that or
any subsequent instance.
This Note is the Note referred to in the Loan Agreement, which Loan
Agreement, among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.
This Note shall be construed in accordance with and governed by the laws of
the State of New York and any applicable laws of the United States of
America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH TERMS OF THE
LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT.
NRG GENERATING (U.S.) INC.,
by
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
2
EXHIBIT B
A. NOTICE OF BORROWING
TO: NRG Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Pursuant to Section 2.07 of that certain Supplemental Loan
Agreement dated as of , 1996 (the "Loan Agreement") between NRG
Energy, Inc. (the "Lender and NRG Generating (U.S.) Inc. (the "Company'),
this notice represents the Company's request as follows:
The Lender advance to the Company the sum of $ as a
Deferred Administrative Shortfall Loan under Section 2.01 of the Loan
Agreement.
The effective date of the Borrowing requested hereunder shall be
19 ,
The undersigned officer of the Company certifies that:
(i) The Unresolved Administrative and Priority Claim of .. (the
"Claimant") has become Allowed in the amount of $ by
Final Order entered by the Bankruptcy Court on 199
[or, if applicable, has become due and payable in accordance
with its terms]; and
(ii) The amount of funds held in the Administrative and Priority
Claim Reserve that is available to satisfy the Unresolved
Administrative and Priority Claim of the Claimant to the
extent that it has become Allowed, is $ .
Each capitalized term used but not definedin this notice has the
meaning ascribed thereto in the Loan Agreement.
DATED: 199
NRG GENERATING (U.S.) INC.,
a Delaware corporation
By:
Title:
