Exhibit 10.8.1
CREDIT AGREEMENT
by and among
NRG GENERATING (NEWARK) COGENERATION INC.
and
NRG GENERATING (PARLIN) COGENERATION INC.
CREDIT SUISSE, GREENWICH FUNDING CORPORATION AND ANY PURCHASING LENDER
as Lender,
and
CREDIT SUISSE
as Agent
Dated as of May 17, 1996
TABLE OF CONTENTS
Page
ARTICLE I
Definitions 1
ARTICLE II
Amounts and Terms of the Loans 1
Section 2.1 The Loans 1
Section 2.2 The Debt Service Line of Credit
Facility Commitment 2
Section 2.3 Conditions Relating to Borrowings 3
Section 2.4 Interest and Fees 5
Section 2.5 Funding and Yield Protection 7
Section 2.6 Repayment Dates. 11
Section 2.7 Optional Prepayments 13
Section 2.8 Mandatory Prepayments 13
Section 2.9 Optional Termination or Reduction
of Commitments 15
Section 2.10 General Terms of Payment 16
Section 2.11 Note(s) 18
Section 2.12 Replacement of Lender 20
Section 2.13 Limitation on Liability 21
ARTICLE III
Conditions of Commitments 22
Section 3.1 Conditions Precedent to the Making
of Initial Loans 22
Section 3.2 Conditions Precedent to the Making of
Debt Service Loans 30
Section 3.3 Conditions Precedent to the Making of
Additional Loans 31
ARTICLE IV
Representations and Warranties 43
Section 4.1 Organization; Capitalization 43
(i)
Section 4.2 Authorization of Loan Instruments 44
Section 4.3 Governmental Approvals 44
Section 4.4 No Conflicts 47
Section 4.5 Enforceability of Project Agreements 47
Section 4.6 Title to Property; Sufficiency of Assets48
Section 4.7 Compliance with Laws 48
Section 4.8 No Litigation 49
Section 4.9 Events of Default 49
Section 4.10 Financial Condition 49
Section 4.11 No Material Adverse Effect 50
Section 4.12 Security Interests 50
Section 4.13 No Burdensome Restrictions 51
Section 4.14 Taxes 52
Section 4.15 ERISA and IRC Compliance and Liability 52
Section 4.16 Funding 52
Section 4.17 Prohibited Transactions and Payments 53
Section 4.18 No Termination Event 53
Section 4.19 ERISA Litigation 53
Section 4.20 No Other Obligations 53
Section 4.21 Margin Regulations 54
Section 4.22 Investment Company Act 54
Section 4.23 Environmental Matters 54
Section 4.24 Disclosure 54
Section 4.25 Insurance 55
Section 4.26 Labor Matters 55
Section 4.27 Additional Representations and
Warranties and Conditions Precedent 55
Section 4.28 Transactions With Affiliates 55
Section 4.29 Projections 56
Section 4.30 Patents and Other Similar Property 56
Section 4.31 Bank Accounts 56
Section 4.32 Sources and Uses 56
Section 4.33 Operating Budget 57
Section 4.34 Operation of the Project 57
Section 4.35 Regulation of Parties 57
Section 4.36 EWG Status/Qualifying Cogeneration
Facility Status 58
Section 4.37 Nature of Business 58
Section 4.38 No Material Adverse Change 58
Section 4.39 Private Offering by Borrower 59
Section 4.40 Bankruptcy 59
Section 4.41 On-Site Alternate Fuel 59
Section 4.42 No Liabilities 59
Section 4.43 Levelized Capacity Payments 59
Section 4.44 Ownership 59
(ii)
ARTICLE V
Covenants of Borrower 60
Section 5.1 The Accounts 60
Section 5.2 Debt Service Coverage Ratio 66
Section 5.3 Maintenance of Existence, Privileges,
Etc. 66
Section 5.4 Performance of Project Documents 67
Section 5.5 Operation and Maintenance 67
Section 5.6 Operating Logs 68
Section 5.7 Compliance with Laws 69
Section 5.8 Information 73
Section 5.9 Bank Accounts 80
Section 5.10 Inspection; Maintenance of Records 80
Section 5.11 Maintenance of Properties, Etc 81
Section 5.12 Maintenance of Insurance 81
Section 5.13 Payment of Taxes, Etc 81
Section 5.14 Syndication Efforts 82
Section 5.15 Interest Rate Hedge Agreements 82
Section 5.16 Other Contracts 83
Section 5.17 Use of Proceeds 84
Section 5.18 Obligations Upon Casualty 84
Section 5.19 Additional Documents; Filings and
Recordings 88
Section 5.20 Assignment by Borrower 88
Section 5.21 Advertising; Press Releases 88
Section 5.22 Negative Pledge and Liens 89
Section 5.23 Limitation on Debt and Contingent
Obligations 89
Section 5.24 Fundamental Changes 89
Section 5.25 Restricted Junior Payments 90
Section 5.26 Investments 90
Section 5.27 Nature of Business 90
Section 5.28 Fiscal Year 90
Section 5.29 Bankruptcy 91
Section 5.30 Transactions with Affiliates 91
Section 5.31 Compliance with ERISA 91
Section 5.32 Other Transactions 92
Section 5.33 Abandonment 93
Section 5.34 Improper Use 93
Section 5.35 Alternative Fuel 94
Section 5.36 Pre-existing Liabilities 94
Section 5.37 Debt Service Coverage Ratio Covenant 94
Section 5.38 Environmental Covenant 95
Section 5.39 Flood Zone Insurance 96
Section 5.40 Additional Consents 96
Section 5.41 Backup Gas Supply 96
(iii)
ARTICLE VI
Events of Default 96
Section 6.1 Events of Default 96
Section 6.2 Limitation on Representations and
Warranties 104
ARTICLE VII
Relationship of Agent and Lenders 104
Section 7.1 Appointment 104
Section 7.2 Nature of Duties 104
Section 7.3 Lack of Reliance on the Agent 105
Section 7.4 Certain Rights of the Agent 105
Section 7.5 Reliance 106
Section 7.6 Indemnification 106
Section 7.7 The Agent in its Individual Capacity 106
Section 7.8 Resignation by the Agent 106
Section 7.9 No Amendment to Duties of Agent Without
Consent 107
ARTICLE VIII
General Terms And Conditions 107
Section 8.1 Notices 107
Section 8.2 Indemnities and Expenses 109
Section 8.3 Survival 112
Section 8.4 Governing Law; Submission to
Jurisdiction 112
Section 8.5 Successors and Assigns 113
Section 8.6 Assignments and Participations 113
Section 8.7 Counterparts 116
Section 8.8 Right of Setoff 116
Section 8.9 No Waiver; Remedies Cumulative 116
Section 8.10 Severability 117
Section 8.11 Calculation 117
Section 8.12 Payments Pro Rata; Sharing 117
Section 8.13 Headings Descriptive 118
Section 8.14 Amendment or Waiver 118
Section 8.15 Confidentiality 118
(iv)
SCHEDULES
Schedule 2.6(a) - Repayment of Funding Loans
Schedule 2.8(a) - Required Prepayment Amounts
Schedules 3.1(a)-(e) - List of Obligors
Schedule 3.1(y) - Environmental Reports (Newark)
Schedule 3.3(y) - Environmental Reports (Parlin)
Schedule 4.1(b) - Authorized Stock
Schedule 4.3A - Governmental Approvals (Newark)
Schedule 4.3B - Governmental Approvals (Newark and Parlin)
Schedule 4.8 - Litigation
Schedule 4.12 - Transactions Under Other Names
Schedule 4.20 - Welfare Benefits
Schedule 4.23 - Environmental Matters
Schedule 4.24 - List of Documents
Schedule 4.25 - Insurance
Schedule 4.28 - Transactions With Affiliates
Schedule 4.31 - Bank Accounts
Schedule 4.32 - Sources and Uses Table
Schedule 4.33A - Operating Budget (Newark)
Schedule 4.33B - Operating Budget (Parlin)
Schedule 4.42 - Liabilities
Schedule 5.1(f) - Maintenance Reserve Required Deposit
Schedule 5.1(g) - Capital Improvements Reserve Required
Deposit
Schedule 5.2 - Debt Service Coverage Ratio Calculation
Schedule 5.24 - Assets
Schedule 5.40 - List of Consents, Certificates of
Incorporation, Certificates of Good Standing,
Certificates of Qualification, By Laws,
Incumbency Certificates
Schedule 8.1 - Addresses
Schedule 8.6 - Commitment Schedule
(v)
EXHIBITS
Exhibit A1 - Form of Initial Loan Note
Exhibit A2 - Form of Funding Loan Note
Exhibit B - Form of Debt Service Loan Note
Exhibit C1 - Form of Opinion of Counsel to Borrower,
Guarantor and NRG
Exhibit C2 - Form of Opinion of Counsel to Third Parties
Exhibit D - Blocked Account Agreement
Exhibit E - Form of Commitment Transfer Supplement
Exhibit F - Form of Compliance Certificate
Exhibit G - Form of PSE&G Consent
Exhibit H - Form of Notice of Borrowing
Exhibit I - Form of Subordination Provisions
Exhibit J - Form of Guaranty
Exhibit K - Form of Tax Indemnification Agreement
Exhibit X - Definitions and Interpretation
(vi)
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of May 17, 1996, is made by and
among (i) NRG Generating (Newark) Cogeneration Inc., a Delaware corporation
("NRG Newark"), and NRG Generating (Parlin) Cogeneration Inc., a Delaware
corporation ("NRG Parlin"), (ii) CREDIT SUISSE, GREENWICH FUNDING
CORPORATION, a Delaware corporation ("GFC"), and each Purchasing Lender
(each, a "Lender" and collectively, the "Lenders"), and (iii) CREDIT
SUISSE, as agent for the Lenders ("Agent").
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Lenders to make credit
facilities available on the terms and subject to the conditions set forth
in this Agreement, for the payment of Qualifying Uses; and
WHEREAS, the Lenders are willing to provide the Loans and the
Commitments to the Borrower on the terms and subject to the conditions set
forth in this Agreement, for the purpose described above.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereby agree as follows:
ARTICLE I
Definitions
For purposes of this Agreement, the terms used in this Agreement
and not otherwise defined herein shall have the respective meanings
assigned to them in Exhibit X hereto (such definitions to be equally
applicable to both singular and plural forms of the terms defined).
ARTICLE II
Amounts and Terms of the Loans
Section 2.1 The Loans.
(a) The Commitment. Subject to and upon the terms and
conditions of this Agreement, on the Initial Funding Date the Lenders agree
to make available to NRG Newark, as the Borrower, the Initial Loan in the
aggregate amount of the Initial Commitment. Subject to and upon the terms
and conditions of this Agreement, the Lenders agree to make available to
NRG Newark and NRG Palin, jointly and severally, as the Borrower, during
the Additional Commitment Period, the Additional Loan in the aggregate
amount of the Additional Commitment. The proceeds of the Funding Loans
shall be used for the Qualifying Uses. The Initial Loans shall be funded
in one drawing on the Initial Funding Date and shall be made available to
Borrower in immediately available funds in the accounts specified by
Borrower to Agent on or before the Initial Funding Date. The Additional
Loans shall be funded in one drawing on the Additional Funding Date and
shall be made available to Borrower in immediately available funds in the
accounts specified by Borrower to Agent on or before the Additional Funding
Date. Any amount of the Funding Loans which is repaid may not be
reborrowed.
(b) Borrowing Mechanics. The Funding Loans made on the Initial
Funding Date or the Additional Funding Date, as the case may be, shall be
made on a Notice of Borrowing, given not later than 11:00 a.m. (New York
time) in the case of Funding Loans based on LIBOR, on the third Business
Day and, in the case of Funding Loans based on the Base Rate, on the
Business Day prior to the date of the proposed Funding Loans by Borrower to
Agent at the Agent's office indicated in Section 8.1 hereof, and Agent
shall give to each Lender prompt notice thereof by cable or telefacsimile,
but in any event, such notice shall be received by each Lender prior to
1:00 p.m. New York City time on the date Agent receives such Notice of
Borrowing in compliance with this Section 2.1(b). Such Notice of Borrowing
shall be by cable, telefacsimile, or telephone confirmed promptly in
writing, but in no event shall such written confirmation be received by
Agent later than 11:00 a.m. (New York time) on the Business Day prior to
the date the Funding Loans are to be made. Such Notice of Borrowing shall
specify the date of the requested Funding Loans.
2
Section 2.2 The Debt Service Line of Credit Facility Commitment.
(a) The Debt Service Line of Credit Facility Commitment.
Subject to and upon the terms and conditions of this Agreement, the Lenders
agree to make available to Borrower during the Availability Period, Debt
Service Loans in an aggregate maximum amount at any one time outstanding up
to the Debt Service Line of Credit Facility Commitment. The proceeds of
the Debt Service Loans shall only be used for the payment of Debt Service.
The initial Availability Period shall expire on the fifth anniversary of
the Initial Funding Date. Borrower may, at least one year prior to such
expiration date (as extended from time to time), request Lenders to extend
the Availability Period. Within 60 days of receipt of Borrower's request,
Agent shall notify Borrower of the Lenders' decision regarding Borrower's
request to extend the Availability Period. The Availability Period shall
be extended only with the prior written consent of all the Lenders. If the
Lenders do decide to extend the Availability Period, the Availability
Period shall be extended for such additional term as the Lenders may
decide, which additional term shall not be less than one year; provided,
however, that in no event shall the Availability Period extend beyond the
Maturity Date.
(b) Borrowing Mechanics. The Debt Service Loans shall be made
on a Notice of Borrowing, given not later than 11:00 a.m. (New York time)
in the case of Debt Service Loans based on LIBOR, on the third Business Day
and, in the case of Debt Service Loans based on the Base Rate, on the
Business Day prior to the date of the proposed Debt Service Loans by
Borrower to Agent at the Agent's office indicated in Section 8.1 hereof,
and Agent shall give to each Lender prompt notice thereof by cable or
telefacsimile, but in any event, such notice shall be received by each
Lender prior to 1:00 p.m. New York City time on the date Agent receives
such Notice of Borrowing in compliance with this Section 2.2(b). Such
notice of Borrowing shall be by cable, telefacsimile, or telephone
confirmed promptly in writing, but in no event shall such written
confirmation be received by Agent later than 11:00 a.m. (New York time) on
the Business Day prior to the date the Debt Service Loans are to be made.
Such Notice of Borrowing shall specify the date of the requested Debt
Service Loans.
Section 2.3 Conditions Relating to Borrowings.
(a) Notice of Borrowing Irrevocable. A Notice of Borrowing
shall be irrevocable and binding on Borrower.
3
Borrower shall indemnify each Lender against any loss, cost or expense
incurred by such Lender as a result of any failure to fulfill on or before
the date specified in the Notice of Borrowing the applicable conditions set
forth in Article III, including, without limitation, any loss, cost or
expense (excluding the loss of the Base Rate Margin or the LIBOR Margin, as
applicable) incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Loans to be
made by such Lender when the Loans, as a result of such failure, are not
made on such date.
(b) Agent's Reliance on Lender Loans. Unless Agent shall have
been notified by any Lender prior to the date of the Loans that such Lender
does not intend to make available to Agent its pro rata portion of such
Loan to be made on such date, Agent may assume that such Lender has made
such amount available to Agent on such date and Agent in its sole
discretion may, in reliance upon such assumption, make available to
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to Agent by such Lender and Agent has made such amount
available to Borrower, Agent shall be entitled to recover such
corresponding amount on demand from such Lender. If such Lender does not
pay such corresponding amount forthwith upon Agent's demand therefor, Agent
shall promptly notify Borrower and Borrower shall immediately repay such
corresponding amount to Agent. Agent shall also be entitled to recover
from such Lender or Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by Agent to Borrower to the date
such corresponding amount is recovered by Agent, at the Federal Funds Rate
until the third Business Day, and at the Base Rate plus the Base Rate
Margin thereafter. Nothing herein shall be deemed to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice
any rights which Borrower may have against any Lender as a result of any
default by such Lender hereunder. Notwithstanding anything contained
herein or in any other Loan Instrument to the contrary, the Agent may,
subject to the rights of the Borrower or the other Secured Parties under
the Security Documents, apply all funds and proceeds of collateral
available for the payment of any Obligations first to repay any amount
owing by any Lender to Agent as a result of such Lender's failure to fund
its pro rata share of any Loan hereunder.
(c) Failure to Make Loan. The failure of any Lender to make the
Loans to be made by it shall not relieve any other Lender of its
obligation, if any, hereunder to make
4
its Loan, on the date of the Loans, but no Lender shall be responsible for
the failure of any other Lender to make the Loans to be made by such other
Lender on the date of the Loans.
(d) Notice of Interest Rate. Agent shall give prompt notice to
Borrower and the Lenders of the applicable Interest Rate for such Loan
determined by Agent pursuant to Section 2.4 hereof as soon as reasonably
practicable after such rate is determined by Agent and in no event later
than two Business Days (one Business Day in the case of a Loan using the
Base Rate) prior to making such Loan.
Section 2.4 Interest and Fees.
(a) Interest on Loans. On each Interest Payment Date, Borrower shall pay
to Agent for the account of the Lenders interest in respect of each
Interest Period on the daily unpaid principal amounts of any Loans
outstanding during such Interest Period in arrears at the rates per annum
equal to the Interest Rates then in effect. Interest shall be computed on
the basis of the actual number of days elapsed and (A) a year of 360 days
for LIBOR and (B) a year of 365 or 366 days, as appropriate, for the Base
Rate. In the case of an Interest Period using LIBOR, Borrower shall select
each Interest Period and the Interest Rate therefor by giving oral notice
of such selection to Agent by 12:00 noon (New York time) on the date of any
such notice at least three Business Days before the first day of such
Interest Period, and such oral notice shall be confirmed in a written
notice delivered to Agent as soon as practicable, but in no event later
than three Business Days from the date of such oral notice; provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding
Business Day unless, in the case of an Interest Period using LIBOR,
such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period using LIBOR which begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month in which such
Interest Period ends) shall, subject to clause (iv) below, end on the
last Business Day of a calendar month;
5
(iii) no Loan upon first being made shall be divided into or
allocated among more than six (6) Interest Periods;
(iv) no Interest Period shall extend, with respect to the
Funding Loans, beyond the Maturity Date and with respect to the Debt
Service Loans, beyond the earlier of (a) the expiration of the
Availability Period and (b) the next Repayment Date.
(v) at no time shall the outstanding principal amounts of
the Funding Loans and the Debt Service Loans, in the aggregate, accrue
interest pursuant to more than six (6) Interest Periods (each
variation in time or in the basis upon which interest is calculated
constituting an Interest Period).
Such notice shall specify the Interest Rate and Interest Period selected by
Borrower and the amount or amounts of the Loans that shall bear interest at
such Interest Rate for such Interest Period. In the event Borrower fails
to provide such notice to Agent within such time, the Interest Rate shall
be the Base Rate plus the applicable Base Rate Margin.
(b) Default Interest. Upon written notice from Agent of the occurrence of
an Event of Default, Borrower shall pay interest on the principal amounts
of the Funding Loans and the Debt Service Loans then outstanding, in lieu
of the otherwise applicable Interest Rate, from and including (i) in the
event that Borrower notifies Agent of the Event of Default within ten (10)
Business Days of the occurrence thereof, the date of Agent's written notice
to Borrower and (ii) in the event that Borrower does not notify Agent of
the Event of Default within ten (10) Business Days of the occurrence
thereof, the date of occurrence of the Event of Default, at the Default
Interest Rate and continuing so long as the amount in respect of which such
interest or fees accrue remains unpaid or until such Event of Default is
remedied, whichever shall occur first, which interest and fees shall be due
and payable by Borrower on Agent's demand, provided that upon the
occurrence of an Event of Default specified in Sections 6.1(h), 6.1(i) or
6.1(t) with respect to Borrower, such interest and fees shall be
immediately due and payable without the making of a demand by Agent.
(c) Fees. Borrower shall pay the following fees:
(i) Agency Fee: to Agent for its own account, the non-
refundable "Agency Fee" payable in advance, which shall be $150,000
per annum payable first
6
on the Initial Funding Date and thereafter on each anniversary
thereof. Beginning with the second payment, the Agency Fee shall be
increased or decreased as of each date it is payable by the percentage
change in the GNP Implicit Price Deflator for the calendar year
immediately preceding the date on which the Agency Fee was paid. No
decrease of any such fees shall result in any refund of any such fees
previously owed or paid;
(ii) Commitment Fees. Borrower shall pay to Agent for the
account of the Lenders during the Additional Commitment Period a
commitment fee on the Additional Commitment at a rate per annum equal
to 0.375%. Borrower shall also pay to Agent for the account of the
Lenders during the Availability Period a commitment fee on the daily
average unadvanced portion of the Debt Service Line of Credit Facility
Commitment at a rate per annum equal to the applicable LIBOR Margin.
The commitment fees shall be computed on the basis of the actual
number of days elapsed and a year of three hundred and sixty (360)
days and shall be payable quarterly in arrears on each Quarterly Date.
(iii) Borrower hereby authorizes the Lenders to make a Debt
Service Loan if the conditions specified in Section 3.2 (other than
with respect to clauses (c) and (e) thereof) have been satisfied in
the amount of any of the aforesaid fees when due, whether or not a
Notice of Borrowing has been submitted by Borrower and all sums
disbursed hereunder shall be secured by the Loan Instruments. Agent
shall give Borrower written notice of all Debt Service Loans made
pursuant to this section.
Section 2.5 Funding and Yield Protection.
(a) Taxes. (i) Borrower shall make all payments of all amounts payable
or reimbursable to the Lenders under the Notes net, free and clear of and
without deduction for any and all Taxes, and shall reimburse each Lender
for the cost of any Taxes imposed on it or on any payment under or with
respect to any aspect of any Loan or the Notes, as applicable, or the
making, execution or enforcement thereof; provided that the foregoing
obligation to pay such additional amounts shall not apply to any payment to
a Lender hereunder unless such Lender is, on the date hereof (or on the
date it becomes a Lender as provided in Section 8.6(a) hereof) and on the
date of any change in the applicable lending office of such Lender,
entitled to submit either a Form 1001 (relating to such Lender and
entitling it to a complete exemption from
7
withholding on all interest to be received by it hereunder in respect of
the Loans) or Form 4224 (relating to all interest to be received by such
Lender hereunder in respect of the Loans).
For the purposes of this Section 2.5(a), (x) "Form 1001" shall mean
Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the
Department of the Treasury of the United States of America, and (y)
"Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States) of the Department of the Treasury of the United States of
America (or in relation to either such Form such successor and related
forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America to document a claim to which
such Form relates).
(ii) If Borrower is prohibited or prevented by Applicable Law or otherwise
from making any such payment net, free and clear of any Taxes or from
reimbursing any Lender for the cost of any such Taxes (as provided above),
then the amount of such payment to be made by Borrower shall be increased
by such additional amount or amounts as may be necessary to ensure that
each Lender shall receive a net amount which after payment of any Taxes
imposed shall be equal to the amount each such Lender would have received
had no such imposition been made.
(iii) Borrower shall, at Agent's request, provide evidence that
all Taxes imposed on all payments under or with respect to the Loans, the
Notes or any related instrument shall have been paid in full to the
appropriate authorities by delivery of official receipts or notarized
copies thereof to Agent within 30 days after payment thereof. Borrower
shall be entitled to make all filings, pursue all remedies and appeals and
take such other lawful action to prevent or challenge the imposition of any
Taxes, or to procure a refund of any Taxes paid, provided that Borrower
shall indemnify and hold the Lenders harmless, to the reasonable
satisfaction of Agent, for such Taxes (and any penalties, interest or other
charges attached thereto) and for any liabilities, costs or expenses
incurred by the Lenders (including reasonable fees and expenses of counsel)
in connection with any such action by Borrower.
(b) Increased Costs. (i) If, with respect to the Loans, the Commitments
or any of the Loan Instruments (including the making or the maintenance by
any Lender of its proportionate share of the Loans),
8
(x) the compliance by any Lender with any direction,
requirement or request made, instituted or initially enforced after
the date hereof from any Governmental Authority, whether or not having
the force of Law, with which such Lender must reasonably comply; or
(y) any change, made or initially enforced after the date
hereof, in the interpretation or application of any Law or the
enactment of any Law imposing or modifying any reserve, deposit,
capital adequacy or similar requirement with respect to any class of
assets or liabilities of, deposits with or for the account of, or
loans by any Lender (or with respect to any change therein or in the
amount thereof); or
(z) the occurrence of a change, made or initially enforced
after the date hereof, in any other condition or circumstance with
respect to this Agreement and/or the maintenance by any Lender of its
proportionate share of the Loans or the Commitments;
shall (A) result in any increase in cost to any Lender in connection with
or arising out of the Loans, the Commitments or any Loan Instrument,
(B) result in any reduction in the amount of any payment receivable by such
Lender hereunder or thereunder or (C) result in any reduction of the rate
of the return on any Lender's capital as a consequence of its obligations
hereunder below that which such Lender could have achieved but for such
circumstances (collectively, "Increased Costs"), then in each such case
Borrower shall fully reimburse such Lender the amount of such Increased
Costs promptly after written notification thereof to Borrower and Agent by
such Lender. At Borrower's request, such Lender shall provide Borrower
with evidence of the Increased Costs to such Lender.
(ii) Each Lender shall notify Borrower of any event that will entitle such
Lender to compensation under clause (i) of this Section 2.5(b) within 45
days after such Lender obtains actual knowledge thereof, provided that if
any Lender fails to give such notice within 45 days after it obtains actual
knowledge of such an event, such Lender shall, with respect to compensation
payable under clause (i) of this Section 2.5(b), only be entitled to
payment under this Section 2.5(b) for Increased Costs incurred from and
after the date that is 45 days prior to the date that such Lender does give
such notice. Except as provided in the immediately preceding sentence, the
failure to give any such notice shall
9
not release or diminish any of Borrower's obligations to pay any amounts
pursuant to this Section 2.5(b).
(c) Change of Law. After the date hereof if any change in Law or the
interpretation thereof by any Governmental Authority makes it unlawful for
any Lender to make or continue its proportionate interest in the Loans or
the Commitments, as applicable, then such Lender shall promptly give notice
along with evidence thereof to Borrower and Agent, and Borrower shall pay
forthwith in the manner set forth below all amounts outstanding, accrued or
payable under this Agreement and the Notes to such Lender.
(d) Non-Availability.
(i) If at any time the Agent in good faith determines that
deposits are not available in the London interbank market for the next
Interest Period, Agent shall so notify Borrower, and the LIBOR basis for
such Loans shall be suspended, and interest on such Loans for any
subsequent Interest Periods shall accrue at the Base Rate plus the Base
Rate Margin, until such time as such condition no longer exists.
(ii) If at any time the Majority Lenders in good faith determine
that the Interest Rate then in effect based on LIBOR does not serve as an
accurate reference to determine the cost of advancing or maintaining the
Loans on a LIBOR basis during any Interest Period, then the Majority
Lenders shall notify Agent, who shall so notify Borrower, and interest on
such Loans shall for any subsequent Interest Period accrue at the Base Rate
plus the Base Rate Margin.
(iii) Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender to honor its obligation
to make or maintain Loans on a LIBOR basis hereunder, then such Lender
shall promptly notify the Borrower thereof (with a copy to the Agent) and
such Lender's obligation to make or continue Loans on a LIBOR basis shall
be suspended, and such Lender shall make or continue Loans for any
subsequent Interest Periods on a Base Rate basis, until such time as such
Lender may again make and maintain Loans on a LIBOR basis.
(e) Funding Costs. Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any actual loss, cost or out-of-pocket expense
(excluding the loss of the Base Rate Margin or the LIBOR Margin, as
applicable) which such Lender determines is attributable to (i) default by
Borrower in making a borrowing of any Loan having an
10
Interest Rate determined using LIBOR after Borrower has selected an
Interest Rate with respect to such Borrowing pursuant to Section 2.4(a)
hereof, (ii) default by Borrower in making any prepayment of any Loan, as
applicable, having an Interest Rate determined using LIBOR after Borrower
has given any notice required hereunder regarding such prepayment or
(iii) the making of a prepayment (including, without limitation, on
acceleration) on a day which is not the last day of an Interest Period with
respect thereto, to the extent any such loss, cost or expense arises from
the reemployment of funds obtained by such Lender to maintain its Loans
having an Interest Rate based on LIBOR or from fees payable to terminate
the deposits from which such funds were obtained.
Section 2.6 Repayment Dates.
(a) Repayment of Funding Loans.
(i) Repayment of Funding Loans.
(A) If the Additional Funding Date does not occur on
or prior to the Initial Maturity Date, then Borrower shall pay to
Agent on the Initial Maturity Date for the pro rata account of the
Lenders the entire outstanding principal amount of the Initial Loans
plus any accrued and unpaid interest and fees thereon plus any other
fees remaining unpaid under this Agreement or any other Loan
Instrument.
(B) If the Additional Funding Date occurs on or prior
to the Initial Maturity Date, then Borrower shall pay on each
Repayment Date to Agent for the pro rata account of the Lenders the
amount (the "Funding Loans Repayment Amount") equal to the percentage,
indicated below for such Repayment Date (or in Schedule 2.6(a) if the
first Repayment Date occurs after September 30, 1996), of the
principal amount of the Funding Loans; provided, however,
notwithstanding the foregoing, to the extent that the Additional
Commitment is reduced in accordance with Section 2.9 (C), Agent shall,
on the Additional Funding Date, deliver to Borrower a revised
amortization schedule which shall preserve the same Debt Service
Coverage Ratios for the period from the Additional Funding Date to the
Maturity Date that existed prior to the reduction of the Additional
Commitment, and Borrower shall pay on each Repayment Date to Agent for
the pro rata account of the Lenders the Funding Loan Repayment Amount
equal to the percentage indicated for such Repayment Date on such
amortization schedule:
11
Repayment Funding Loans Repayment Funding Loans
Date Repayment Date Repayment
Amount Amount
1 1.2750% 31 1.4625%
2 1.2750% 32 1.4625%
3 1.2250% 33 1.4625%
4 1.2250% 34 1.4625%
5 1.2250% 35 1.5250%
6 1.2250% 36 1.5250%
7 1.3750% 37 1.5250%
8 1.3750% 38 1.5250%
9 1.3750% 39 1.4375%
10 1.3750% 40 1.4375%
11 1.5500% 41 1.4375%
12 1.5500% 42 1.4375%
13 1.5500% 43 1.7250%
14 1.5500% 44 1.7250%
15 1.3875% 45 1.7250%
16 1.3875% 46 1.7250%
17 1.3875% 47 1.8625%
18 1.3875% 48 1.8625%
19 1.6875% 49 1.8625%
20 1.6875% 50 1.8625%
21 1.6875% 51 1.8750%
22 1.6875% 52 1.8750%
23 1.7625% 53 1.8750%
24 1.7625% 54 1.8750%
25 1.7625% 55 1.8250%
26 1.7625% 56 1.8250%
27 1.5000% 57 3.0750%
28 1.5000% 58 3.0750%
29 1.5000% 59 3.0750%
30 1.5000% 60 3.0750%
(C) All Funding Loan Repayment Amounts shall be
rounded down to the nearest whole dollar, except that the final
Funding Loan Repayment Amount shall be in an amount equal to the
outstanding principal amount of the Funding Loans plus accrued and
unpaid interest and fees thereon, provided that any and all other
Obligations of Borrower in respect of the Funding Loans shall be
deemed immediately due and payable on the Maturity Date, without
demand, and shall be paid by Borrower no later than the close of
business on such date.
(ii) Reborrowing Prohibited. No amount repaid pursuant to
this Section 2.6(a) may be reborrowed by Borrower.
12
(b) Repayment of Debt Service Loans.
(i) Repayment of Debt Service Loans. Each Debt Service Loan shall be
due and payable by Borrower, without demand, on the next Repayment Date
from 100% of the Cash Revenues available after making the payments
specified in Sections 5.1(c)(i), 5.1(c)(ii) and 5.1(c)(iii).
Notwithstanding the foregoing, upon the expiration of the Availability
Period, all Debt Service Loans, together with all accrued and unpaid
interest thereon, shall be immediately due and payable without demand.
(ii) Reborrowing. Prior to the last day of the Availability Period,
Debt Service Loans may be borrowed, repaid and reborrowed.
Section 2.7 Optional Prepayments. By giving irrevocable written notice,
which is received by Agent at least 10 but not more than 45 Business Days
in advance, Borrower may, at its option, make prepayments to Agent for the
pro rata account of the Lenders on any Interest Payment Date, of all the
outstanding principal amount of the Funding Loans, or from time to time any
part thereof equal to $5,000,000 or more in integral multiples of
$1,000,000, in each case together with all accrued and unpaid interest
thereon to the date of prepayment and any additional amounts owed by
Borrower pursuant to Section 2.5(e)(iii) or, if applicable, Section
5.15(b), provided that if a Default or Event of Default shall have occurred
and be continuing or shall result from such prepayment, Borrower may not
make prepayments pursuant to this Section 2.7 unless (a) such prepayments
are made from funds other than Cash Revenues, or (b) prepayments are made
of all the outstanding principal amount of the Loans together with all
interest, fees, costs, charges, expenses and other amounts payable by
Borrower to Lenders under any Loan Instrument, including, without
limitation, amounts owed by Borrower pursuant to Section 2.5(e)(iii) or, if
applicable, Section 5.15(b) hereof. All partial prepayments shall be
applied in payment of the Repayment Amounts in inverse order of maturities
and shall be deemed first applied to prepay amounts not subject to the
Interest Rate Hedge Agreements. Amounts prepaid pursuant to this
Section 2.7 may not be reborrowed.
Section 2.8 Mandatory Prepayments
(a) Certain Events. If an Event of Loss shall occur in respect
of a Project, Borrower shall, subject to the provisions of Section 5.18,
prepay the Loans on the earlier to occur of (i) the date occurring 90 days
after the date of
13
such Event of Loss and (ii) receipt of the Net Proceeds in respect of such
Event of Loss, in an amount equal to the Required Prepayment Amount for the
affected Project. In addition, if (x) the projections for the remaining
Project, in form and substance satisfactory to Agent, do not demonstrate
the ability of Borrower to maintain at all times during the term of this
Agreement, the Required Coverages (after the prepayment of the Required
Prepayment Amount for the affected Project), or (y) an Event of Default
shall have occurred and be continuing, or (z) the term of any of the
Project Documents for the remaining Project shall expire prior to the date
twelve months after the Maturity Date, then at the same time as the
prepayment pursuant to the preceding sentence, Borrower shall also apply
any Net Proceeds in excess of the Required Prepayment Amount for the
affected Project to prepay the Loans. If the Event of Loss shall occur in
respect of the Parlin Project, the prepayment pursuant to this section
shall be applied pro rata to the payment of the outstanding Funding Loan
Repayment Amounts. If the Event of Loss shall occur in respect of the
Newark Project prior to the Additional Funding Date, then the prepayment
pursuant to this section shall be applied to the payment of the Initial
Loan. If the Event of Loss shall occur in respect of the Newark Project on
or after the Additional Funding Date, then the prepayment pursuant to this
section shall be applied in the following manner: (A) the first
$16,500,000 shall be applied to the payment of the Repayment Amounts in the
inverse order of maturities and (B) the remaining amount shall be applied
pro rata to the payment of the outstanding Funding Loan Repayment Amounts.
(b) Rate Shortfall. (i) If at any time on and after the
Additional Funding Date (x) the Qualifying Cogeneration Facility status of
the Newark Project is not maintained and the rates approved by FERC under
the Newark Power Purchase Agreement are at a level lower than the rates set
forth therein, or (y) the rates approved by FERC under the Parlin Power
Purchase Agreement are at a level lower than the rates previously approved
by FERC under the Parlin Power Purchase Agreement, then in either such case
Borrower shall pay to Agent on the Rate Shortfall Prepayment Date an amount
(the "Rate Shortfall Prepayment Amount") calculated such that after giving
effect to such prepayment (A) the annual Projected Debt Service Coverage
Ratio for each calendar year (or part thereof) for the period from and
excluding the Rate Determination Date to and including the Maturity Date is
at least 1.35:1.00 and (B) the average calendar year Projected Debt Service
Coverage Ratio for the period from and excluding the Rate Determination
Date to and including the Maturity Date is at least 1.45:1.00. For
purposes of calculating such
14
Projected Debt Service Coverage Ratio, Projected Debt Service shall not
include the Rate Shortfall Prepayment Amount. The determination of the
Rate Shortfall Prepayment Amount shall be made by Agent in its reasonable
discretion and in good faith, after consultation with the Lenders and the
Independent Engineer. The Rate Shortfall Prepayment Amount shall be due
and payable to Agent on the date which is 30 days after the date Agent
delivers to Borrower the results of such determination ("Rate Shortfall
Prepayment Date").
(ii) Borrower shall also refund to JCP&L, if so ordered by FERC,
any amounts ("Refunded Amount") that are to be refunded due to the higher
rates paid by JCP&L during the period that the rates paid by JCP&L pursuant
to the Newark Power Purchase Agreement were higher than the rates approved
by FERC under the Newark Power Purchase Agreement.
(c) Restricted Payments Escrow Account. On any Repayment Date,
the Funding Loans shall be prepaid by Agent from funds which have remained
on deposit in the Restricted Payments Escrow Account for twelve (12) months
or more as provided in Section 5.1(c)(viii) hereof, together with all
accrued and unpaid interest thereon. All partial prepayments are to be
applied to Repayment Amounts in inverse order of maturities.
(d) BPU Order. If at any time prior to the Additional Funding
Date, the order of the New Jersey Board of Public Utilities ("BPU")
approving the Third Amendment to the Newark Power Purchase Agreement or the
Interim Gas Service Agreement is modified, rescinded or otherwise
invalidated in whole or in part by the BPU or by an appropriate court on
appeal of such BPU order, then Borrower shall immediately prepay the
Initial Loan, together with all accrued and unpaid interest thereon.
(e) Amounts Prepaid. Amounts prepaid pursuant to this
Section 2.8 may not be reborrowed. Any prepayments made pursuant to this
Section 2.8 shall include, in addition to the accrued interest and accrued
unpaid fees to the date of prepayment, any additional amounts owed by
Borrower pursuant to Section 2.5.
Section 2.9 Optional Termination or Reduction of Commitments.
(A) Provided that no Default or Event of Default shall have occurred and be
continuing or shall result therefrom, by giving irrevocable written notice,
which is received by Agent at least 10 but not more than 45 days in
advance, Borrower may, during the Availability Period, terminate or reduce
the Debt Service Line of Credit Facility
15
Commitment, provided that (a) any such reduction shall be in integral
multiples of $100,000, (b) prior to any such termination or reduction, the
Borrower shall have demonstrated to the satisfaction of Agent that the
balance in the Debt Service Reserve Account, without taking into account
the terminated or reduced portion of the Debt Service Line of Credit
Facility Commitment, shall be equal to or greater than the Debt Service
Required Balance, and (c) any such termination or reduction shall apply
proportionally to reduce the Debt Service Line of Credit Facility
Commitment of each Lender. Once terminated or reduced pursuant to this
Section 2.9, the Debt Service Line of Credit Facility Commitment may not
thereafter be reinstated or increased.
(B) NRG Newark and NRG Parlin may, by giving irrevocable written
notice, which is received by Agent at least three Business Days in advance
but not more than 45 days in advance, reduce or terminate the Additional
Commitment during the Additional Commitment Period. Once reduced or
terminated, the Additional Commitment may not thereafter be increased or
reinstated.
(C) If, prior to the Additional Funding Date, FERC approves the
rates in the Parlin Power Purchase Agreement on a cost of service basis and
such rates are approved at a level lower than the rates set forth in the
Parlin Power Purchase Agreement, then Borrower shall deliver revised base
case projections to Agent that reflect such approved rates and, based on
such base case projections, the Additional Commitment shall be reduced by
an amount (the "Additional Commitment Reduction Amount") calculated such
that after giving effect to such reduction (A) the annual Projected Debt
Service Coverage Ratio for each calendar year (or part thereof) for the
period from the Additional Funding Date to and including the Maturity Date
is at least 1.35:1.00 and (B) the average calendar year Projected Debt
Service Coverage Ratio for the period from the Additional Funding Date to
and including the Maturity Date is at least 1.45:1.00.
Section 2.10 General Terms of Payment.
(a) General. All sums payable to the Lenders hereunder and
under any other Loan Instrument to which they are a party shall be paid
without condition or deduction for any counterclaim, defense, recoupment or
set-off in New York City in immediately available funds not later than
12:00 noon (New York time) on the day in question to the Federal Reserve
Bank of New York, for credit to the Loan Clearing Account, Account No.
90499602, of Credit Suisse, as Agent,
16
ABA No. 026009179, Attention: Project Finance, Reference: NRG
Newark/Parlin.
(b) Distribution of Payments. If at any time Agent makes
available to any Lender amounts due from Borrower hereunder which Borrower
fails to make available to Agent, such Lender shall on request forthwith
refund such amounts to Agent together with interest thereon at the Federal
Funds Rate for such period. In the event that any Lender shall at any time
receive any payment in excess of its rights hereunder to receive payments,
from any source in respect of any of Borrower's Obligations hereunder, in
violation of the requirement of this Agreement that Borrower makes such
payment to Agent, such Lender shall be deemed to have received such payment
as agent for and on behalf of all the Lenders and shall immediately advise
Agent of the receipt of such funds and promptly transmit the full amount
thereof to Agent for prompt distribution among all the Lenders as provided
for in this Agreement, provided that such Lender shall be deemed not to
have received, and Borrower shall be deemed not to have made to such
Lender, any payment transmitted to Agent by such Lender pursuant to this
Section 2.10(b).
(c) Priority of Application. Any payments made to Agent for its
account or for the benefit of the Lenders shall be applied (pro rata within
each of clauses below, unless otherwise specifically required pursuant to
the terms hereof) as follows:
(A) first against costs, expenses and indemnities due under the Loan
Instruments;
(B) then against fees for Agent and the Lenders;
(C) then against payments of accrued and unpaid interest on the Loans
and payments with respect to any Interest Rate Hedge Agreement;
(D) then against principal of the Funding Loans; and
(E) then against principal of the Debt Service Loans.
(d) Non-Business Day. Whenever any payment hereunder shall be
due, or any calculation shall be made, on a day which is not a Business
Day, the date for payment shall be extended to the next succeeding Business
Day, and any interest on any payment shall be payable for such extended
time at the specified rate. In no event shall this Section
17
2.10(d) be deemed to modify the definition of Interest Period, Initial
Maturity Date, Maturity Date, Additional Commitment Period or Availability
Period set forth in this Agreement.
(e) Agent's Calculations. All calculations of interest,
commissions, increased costs, funding costs, gross-up costs or other
amounts due hereunder calculated by Agent with respect to the Loans shall
be conclusive and binding for all purposes absent manifest error. Agent
shall, upon request by Borrower, promptly provide Borrower with a
certificate as to the calculation of the amount of any funding, yield
protection or increased cost with respect to the Loans, setting forth the
method of such calculation.
Section 2.11 Note(s).
(a) Initial Loan Notes. The Initial Loans made by each Lender
shall be evidenced by a separate promissory note of Borrower in favor of
each such Lender, substantially in the form of Exhibit A1, with appropriate
insertions as to payee, date and principal amount (individually, an
"Initial Loan Note" and, collectively, the "Initial Loan Notes"), payable
to the order of such Lender and evidencing the obligation of Borrower to
pay a principal amount equal to the aggregate unpaid principal amount of
the Initial Loans made by such Lender under this Agreement, plus interest
due such Lender thereon, all as provided in this Agreement and the other
Loan Instruments.
(b) Funding Loan Notes. On the Additional Funding Date,
Borrower shall execute and deliver separate promissory notes of Borrower in
favor of each Lender, substantially in the form of Exhibit A2 hereto with
appropriate insertions as to payee, date and principal amount
(individually, a "Funding Loan Note" and, collectively, the "Funding Loan
Notes"), payable to the order of such Lender and evidencing the joint and
several obligations of Borrower to pay a principal amount equal to the
aggregate unpaid principal amount of the Funding Loans made by such Lender
under this Agreement plus interest due such Lender thereon, all as provided
in this Agreement and the other Loan Instruments. Simultaneously with the
delivery of a Funding Loan Note to a Lender, such Lender shall cancel and
deliver its Initial Loan Note to NRG Newark. Any Funding Loan Note
executed and delivered in accordance with the foregoing shall carry the
rights to unpaid interest that were carried by the Initial Loan Note(s),
such that no loss of interest shall result from any such exchange. Each
Funding Loan Note executed and delivered in accordance with
18
the foregoing shall have set forth thereon a legend substantially in the
following form:
"This Note is issued, in part, in replacement of [describe
canceled Note[s]] and, notwithstanding the date of this
Note, this Note carries all of the rights to unpaid interest
that were carried by such replaced Note[s], such that no
loss of interest shall result from any such replacement."
(c) Debt Service Loan Notes. The Debt Service Loans provided by
each Lender shall be evidenced by a separate promissory note of Borrower in
favor of each such Lender, substantially in the form of Exhibit B hereto,
with appropriate insertions as to payee, date and principal amount
(individually, a "Debt Service Loan Note" and, collectively, the "Debt
Service Loan Notes"), payable to the order of such Lender and evidencing
the obligation of Borrower to pay a principal amount equal to the aggregate
unpaid principal amount of all Debt Service Loans made by such Lender under
this Agreement, plus interest due such Lender thereon, all as provided in
this Agreement.
(d) Certain Terms of the Notes. Each Lender is hereby
authorized to record on its Note (or a schedule or grid attached thereto)
or on its regularly maintained books and records the date, type and amount
of each Loan made or continued by, or arising in favor of, such Lender, and
the date and amount of each payment or prepayment of principal thereof,
and, in the case of Loans subject to an Interest Period using LIBOR, the
Interest Period with respect thereto, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so
recorded. Interest on each Note shall be payable on the dates specified in
Section 2.4 hereof. The principal of each Initial Loan Note shall be
stated to be payable on the Initial Maturity Date and the principal of each
Funding Loan Note shall be stated to be payable on each Repayment Date and
the Maturity Date. The principal of each Debt Service Loan Note shall be
stated to be payable in accordance with the provisions of Section
2.6(b)(i). Each Lender is hereby authorized to record on its Note (or a
schedule or grid attached thereto) or on its regularly maintained books and
records the date, type and amount of each Loan made or continued by, or
arising in favor of, such Lender, and the date and amount of each payment
or prepayment of principal thereof, and, in the case of Loans subject to an
Interest Period using LIBOR, the Interest Period with respect thereto, and
any such
19
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. At any time, at the reasonable request of any
Lender, Borrower (at its expense) shall execute and deliver one or more of
the applicable Notes in substitution of the Note(s) held prior thereto,
which latter Note(s) shall be canceled and simultaneously delivered to
Borrower. Any Note executed and delivered in accordance with the foregoing
shall carry the rights to unpaid interest that were carried by the Note(s)
canceled and delivered to Borrower in exchange therefor, such that no loss
of interest shall result from any such exchange. Each Note executed and
delivered in accordance with the foregoing shall have set forth thereon a
legend substantially in the following form:
"This Note is issued, in part, in replacement of [describe
canceled Note[s]] and, notwithstanding the date of this
Note, this Note carries all of the rights to unpaid interest
that were carried by such replaced Note[s], such that no
loss of interest shall result from any such replacement."
Section 2.12 Replacement of Lender. (a) In the event that (i)
any Lender requests compensation pursuant to Section 2.5 hereof, (ii) the
obligation of any Lender to make or continue its proportionate interest in
the Loans or the Commitments is terminated pursuant to Section 2.5(c)
hereof, (iii) the obligation of any Lender to make or continue Loans on a
LIBOR basis shall be suspended pursuant to Section 2.5(d) hereof, or (iv)
any Lender becomes insolvent or fails to make any Loan in response to a
request for borrowing by the Borrower where the Majority Lenders have made
the respective Loans to be made by them in response to such request, then,
so long as such condition exists, Borrower may either (x) designate another
financial institution (such financial institution being herein called a
"Replacement Lender") acceptable to Agent (which acceptance shall not be
unreasonably withheld) and which is not an Affiliate of the Borrower or
Guarantor, to assume such Lender's Commitments hereunder and to purchase
the Loans of such Lender and such Lender's rights under this Agreement and
the Notes and any other Loan Instruments held by such Lender, all without
recourse to or representation or warranty by, or expense to, such Lender,
for a purchase price equal to the outstanding principal amount of the Loans
payable to such Lender plus any accrued but unpaid interest on such Loans
and accrued but unpaid fees owing to such Lender, and upon such assumption,
purchase and substitution, and subject to the execution and delivery to the
Agent by the Replacement Lender
20
of documentation satisfactory to the Agent (pursuant to which such
Replacement Lender shall assume the obligations of such original Lender
under this Agreement and any other Loan Instruments), the Replacement
Lender shall succeed to the rights and obligations of such Lender
hereunder, or (y) pay to such Lender the outstanding principal amount of
the Loans payable to such Lender under this Agreement and any other Loan
Instruments plus any accrued but unpaid interest on such Loans and accrued
but unpaid fees owing to such Lender under this Agreement and any other
Loan Instruments. In the event that Borrower exercises its rights under
the preceding sentence, the Lender against which such rights were exercised
shall no longer be a party hereto or have any rights or obligations
hereunder. If Borrower exercises its rights under clause (y) above against
any Lender, then the outstanding Loans and the Commitments shall be reduced
to the extent of such Lender's pro rata share of the Loans and the
Commitments.
(b) If the Borrower exercises its rights under clause (y)
of Section 2.12(a) hereof, the Borrower may, not later than the first
anniversary of such exercise, designate another financial institution (such
financial institution being herein called a "Substitute Lender") acceptable
to the Agent (which acceptance will not be unreasonably withheld) and which
is not an Affiliate of the Borrower or Guarantor, to assume the Commitments
of the Lender against which such rights were exercised and, subject to the
execution and delivery to the Agent by the Substitute Lender of
documentation satisfactory to the Agent, the Substitute Lender shall become
party to this Agreement as a Lender. Upon the Substitute Lender so
becoming a party hereto, the Borrower shall borrow Loans from the
Substitute Lender in such a manner and in such amounts as will result in
the outstanding principal amount of the Loans held by the Lenders being pro
rata according to the amounts of their respective Commitments.
Section 2.13. Limitation on Liability. Notwithstanding any
other term of this Agreement or any of the other Loan Instruments to the
contrary, (a) prior to the Additional Funding Date, (i) NRG Parlin shall
not be liable in any respect for the payment of principal, interest, fees,
expenses or other amounts in respect of the Initial Loan or for the payment
of any other amounts under this Agreement or any other Loan Instrument;
(ii) NRG Parlin shall not be obligated under any covenant contained in this
Agreement (other than in Section 5.7(a)) or any other Loan Instrument; and
(b) commencing on the Additional Funding Date, (i) NRG Parlin shall be
jointly and severally liable with NRG Newark
21
with respect to the Obligations; and (ii) all covenants contained in this
Agreement or in any other Loan Instruments shall be applicable to NRG
Parlin as well as NRG Newark.
ARTICLE III
Conditions of Commitments
Section 3.1 Conditions Precedent to the Making of Initial Loans.
The obligations of each Lender to make its pro rata share of the Initial
Loans on the Initial Funding Date is subject to the satisfaction of Agent
of all the conditions precedent set forth below:
(a) Certificate of Incorporation or Organizational Documents.
Borrower shall have delivered and shall have caused each of the Obligors
other than those listed on Schedule 3.1(a) to have delivered to Agent a
copy of the certificate of incorporation or other organizational documents
of such Obligors, and each amendment thereto, certified by the Secretary of
State of its state of incorporation or other appropriate Governmental
Authority as being a true and correct copy thereof, such certificate or
document to be dated a recent date prior to the Initial Funding Date.
(b) Certificate of Good Standing. Borrower shall have delivered
and shall have caused each of the Obligors other than those listed on
Schedule 3.1(b) to have delivered to Agent a certificate or other
appropriate document from the Secretary of State of its state of
incorporation or other governmental authority of such Obligor, listing the
certificate of incorporation or other organizational documents and each
amendment thereto on file in its office and, if available, certifying that
(i) such amendments are the only amendments to each such certificate of
incorporation or other organizational documents on file in its office,
(ii) such Obligor has paid all franchise taxes to the date of such
certificate and (iii) such Obligor as appropriate, is duly incorporated and
in good standing under the laws of such jurisdiction, such certificates to
be dated a recent date prior to the Initial Funding Date.
(c) Certificate of Qualification. Borrower shall have delivered
and shall have caused each of the Obligors other than those listed on
Schedule 3.1(c) to have delivered to Agent certificates or equivalent
documents from all states in which it is necessary for such Obligor to be
qualified and/or licensed to do business for the purposes of the
22
transactions contemplated hereunder or under any of the Project Agreements,
certifying that such Obligor has duly qualified to do business in such
jurisdiction as a foreign corporation and is in good standing under such
qualification, such certificates or equivalent documents to be dated a
recent date prior to the Initial Funding Date.
(d) By-Laws and Resolutions. Borrower shall have delivered and
shall have caused each of the Obligors other than those listed on
Schedule 3.1(d) to have delivered to Agent copies of the By-Laws or other
equivalent organizational documents of such Obligor, the resolutions of its
Board of Directors approving each Project Agreement to which it is a party
(other than the DuPont Power Purchase Agreement), and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to each such Project Agreement to which it is a party
(other than the DuPont Power Purchase Agreement), certified as of the
Initial Funding Date as true and correct in each case by an Authorized
Officer of such Obligor.
(e) Incumbency Certificate. Borrower shall have delivered and
shall have caused each of the Obligors other than those listed on
Schedule 3.1(e) to have delivered to Agent a certificate of an Authorized
Officer of such Obligor dated as of the Initial Funding Date certifying the
names and true signatures of the officers authorized to sign each Project
Agreement to which it is a party (other than the DuPont Power Purchase
Agreement) and the other documents to be delivered by it pursuant to the
Project Agreements (other than the DuPont Power Purchase Agreement).
(f) Opinions of Counsel. Borrower shall have delivered to Agent
a favorable opinion of (a) Troutman Sanders LLP, as counsel to Borrower and
Guarantor, substantially in the form of Exhibit C1 hereto, and as to such
other matters as Agent may reasonably request, (b) Michael Young, Esq.,
counsel to NRG, substantially in the form of Exhibit C1 hereto, and as to
such other matters as Agent may reasonably request, (c) Greenbaum, Rowe,
Smith, Ravin and Davis, New Jersey counsel to Borrower and Guarantor,
substantially in the form of Exhibit C1 hereto, and as to such other
matters as Agent may reasonably request, (d) Gibson, Dunn & Crutcher, New
York counsel to Borrower, Guarantor and NRG, substantially in the form of
Exhibit C1 hereto, and as to such other matters as Agent may reasonably
request, and (e) counsel to each of JCP&L, Newark Group, Stewart &
Stevenson, and Stewart & Stevenson Services, substantially in the form of
Exhibit C2 hereto, and as to such other matters as Agent may reasonably
request, in each case dated as of the Initial Funding Date and addressed to
23
the Agent, the Secured Parties and the Lenders, in form and substance
satisfactory to Agent.
(g) Fees. Payment in full by NRG and NRG Newark of all fees and
expenses which are to be paid on or before the Initial Funding Date,
including, without limitation, the fees provided for in the letter
agreement dated May 17, 1996 among NRG Newark, NRG Parlin and Agent and the
expenses provided for in the letter agreement dated February 13, 1996
between NRG and Agent.
(h) Loan Instruments. Borrower shall have delivered to Agent
fully executed counterparts of this Agreement, the NRG Guaranty, the
Initial Loan Notes, the Pledge Agreement, the Security Agreement, the
Blocked Account Agreements, the Mortgage, all financing statements, stock
certificates, guarantees, assignments, instruments and agreements required
by Agent to be executed on or prior to the Initial Funding Date by or on
behalf of Borrower to guaranty or provide collateral security with respect
to the Obligations, and such other certificates, opinions, documents and
instruments evidencing, securing or pertaining to the Loans and the
Commitments as shall be required by Agent to be delivered to the Secured
Parties by Borrower or any other Person prior to the Initial Funding Date,
in each case in form and substance satisfactory to Agent and signed by all
parties thereto (other than Agent) and in full force and effect. In
addition, Agent shall have received pay-off letters, UCC termination
statements and other documents, in each case, in form and substance
satisfactory to Agent, evidencing the release and termination of all prior
Liens on the Collateral. All representations and warranties contained in
Section 4.1 and each other Loan Instrument shall be true and correct as of
the Initial Funding Date.
(i) Borrower's Shares. Borrower shall have caused Guarantor to
deliver to Agent stock certificates representing 100% of the issued and
outstanding shares of capital stock of Borrower registered in the name of
Guarantor, together with irrevocable undated stock powers duly endorsed in
blank.
(j) [Intentionally Omitted].
(k) NRG Energy Investment. Borrower shall have delivered to
Agent evidence satisfactory to Agent that not less than $29 million has
been paid by NRG by way of cash equity or payment of the purchase price of
stock.
(l) Security Interest. Except to the extent Consents are
required to create a first priority perfected
24
security interest in the Project Documents other than the Power Purchase
Agreement, the Steam Sales Agreement and the Ground Lease (which Consents
shall be obtained in accordance with Section 5.40), Borrower shall have
provided Agent with evidence satisfactory to Agent that it has, for the
benefit of the Secured Parties, a valid and perfected first priority
security interest in the Collateral on the Initial Funding Date (subject
only to Permitted Liens).
(m) Financial Statements of Obligors. Agent shall have received
the most recent year-end audited financial statements and unaudited
quarterly financial statements which are available for each Obligor (or, in
the case of each of JCP&L and PSE&G, the most recent Form 10-K filed with
the SEC and, to the extent that the most recent Form 10-Q filed with the
SEC is dated a more recent date than the most recent Form 10-K for such
Obligor, the most recent Form 10-Q filed with and available from the SEC).
In the opinion of Agent, there shall have been no material adverse change
in the business operations, results of operations, condition (financial or
otherwise), prospects or property of any Obligor (except as previously
disclosed to Agent in a writing delivered by or on behalf of Borrower or
such Obligor) since (i) the date of such Obligor's most recent audited
financial statements (or Forms 10-Q or 10-K, as appropriate) previously
delivered to Agent, if such Obligor's financial statements have been
previously delivered to Agent and (ii) the date which is six months prior
to the Initial Funding Date, if such Obligor's financial statements have
not previously been delivered to Agent.
(n) Notice of Borrowing. Borrower shall have delivered to Agent
a Notice of Borrowing in accordance with Section 2.1(b).
(o) Officer's Certificate. Borrower shall have delivered to
Agent a certificate executed by an Authorized Officer, stating that:
(a) on such date, and after giving effect to the funding of the Initial
Loans, the provision of the Commitment and the other transactions
contemplated hereby or under any of the Project Agreements, no Default or
Event of Default has occurred and is continuing or would arise as a result
of the consummation of the transactions contemplated hereby or under any of
the Project Agreements; (b) no Material Adverse Effect has occurred since
June 30, 1995; (c) the representations and warranties set forth in
Article IV are true and correct in all material respects on and as of such
date with the same effect as though made on and as of such date; and (d) it
is not in default under any
25
material agreement, indenture, credit agreement or other document to which
it is a party.
(p) Confirmation of Agent for Service. Borrower shall have
delivered to Agent confirmation from CT Corporation System of its
acceptance of its appointment as agent for service of process for Borrower
required under Section 8.4 and similar provisions in the other Loan
Instruments.
(q) [Intentionally Omitted].
(r) Government Approvals, Litigation and Project Documents. (i)
Borrower shall have delivered to Agent evidence satisfactory to Agent
that all Governmental Approvals and filings and consents from third
parties, except such Consents as are set forth in Schedule 5.40 hereof,
required in connection with the transactions contemplated hereby in
connection with the Newark Project have been obtained, to the extent
reasonably obtainable (including, without limitation, all filings required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
New Jersey Industrial Site Recovery Act (N.J. Rev. Stat. 13:1K-6 et seq.)
and all New Jersey asset transfer approvals required under the
environmental regulations). Agent shall have received evidence or copies
of all Governmental Approvals for the Newark Project that are set forth in
Part I of Schedule 4.3A hereto (including, without limitation, those
necessary for the operation of the Project at levels satisfactory to Agent
after consultation with the Independent Engineer and the approvals),
certified by an Authorized Officer of Borrower as being (except in the case
of the BPU orders approving the Third Amendment to the Newark Power
Purchase Agreement and the Interim Gas Service Agreement) complete and in
full force and effect and not subject to appeal, and copies of all
correspondence referred to in such Governmental Approvals and all
applications for such Governmental Approvals, certified by an Authorized
Officer of Borrower as complete. Agent shall have received evidence
satisfactory to Agent that (x) neither the Borrower nor the Project is in
violation of any Governmental Approval, (y) no additional Governmental
Approvals are required for the operation of the Project as contemplated in
the Project Documents, and (z) there is no litigation arising from or
relating to the transactions contemplated hereby which could reasonably be
expected to result in a Material Adverse Effect.
(ii) Each of the Project Documents shall be in form and
substance reasonably satisfactory to Agent. Agent
26
shall have received evidence satisfactory to it that each of such Project
Documents is in full force and effect and that Borrower is not, and to the
best knowledge of Borrower, no other party to any such Project Document is,
in default in the performance, observance or fulfillment of any of its
obligations, covenants or conditions contained therein and that the
Effective Date (as defined in the Power Purchase Agreement) has occurred.
Agent shall have received executed Consents, in the form and substance
satisfactory to Agent (other than those Consents referred to in Schedule
5.40 hereof). Agent shall have received an executed copy of each Project
Document, certified in the case of each such document to which Agent is not
a party by an Authorized Officer of Borrower as being complete (including
all exhibits, schedules and disclosure or other material letters referred
to therein or delivered pursuant thereto, and all amendments thereto) and
in full force and effect and that no force majeure has occurred thereunder.
(s) Acquisition Documents. Borrower shall have delivered to
Agent a certificate executed by an Authorized Officer stating that, prior
to or concurrently with the making of the Initial Loans and the provision
of the Commitments, the Acquisition has been or shall be consummated in
accordance with the Acquisition Documents and all Laws, and no term or
provision of any Acquisition Document has been amended or waived (except
any amendments or waivers approved by Agent in writing). Borrower shall
have delivered executed copies of each of the Acquisition Documents (and
all exhibits and schedules thereto) certified as being true and correct
copies by an Authorized Officer of Borrower, together with copies of all
certificates, opinions and other documents executed and delivered
thereunder or in connection therewith.
(t) Material Adverse Effect. Since June 30, 1995, there shall
not have occurred any Material Adverse Effect.
(u) Pro Forma, the Operating Budget and Projections. Agent
shall have received the Pro Forma Balance Sheets for the Project, the
Sources and Uses Table, the Operating Budget for the Project and, at least
five Business Days prior to the Initial Funding Date, the Projections for
the Newark Project and Parlin Project, in each case satisfactory to Agent;
provided that such Projections demonstrate the ability of NRG Newark and
NRG Parlin to maintain, at all times during the term of this Agreement, an
annual Debt Service Coverage Ratio of at least 1.35:1.00 and an average
annual Debt Service Coverage Ratio of at least 1.45:1.00.
27
(v) Title Insurance; Surveys. Agent shall have received an ALTA
lender's paid policy of title insurance issued by the Title Company, in
form and substance satisfactory to Agent, with such endorsements and
affirmative coverage as Agent may reasonably request, with such ALTA direct
facultative reinsurance agreements (with direct access provisions) as Agent
may reasonably request, (i) insuring the Secured Parties for their ratable
benefit in an amount not less than $60,000,000, that good and marketable
leasehold title to the Project is vested in the Borrower pursuant to the
Ground Lease and good and marketable easements in that portion of the
Property consisting of easements is vested in the Borrower and that the
Mortgage constitutes a valid and enforceable first mortgage lien on the
Project subject only to Permitted Liens and (ii) providing full coverage
against all mechanics' and materialmen's liens (including any relating to
environmental remediation) as well as coverage against survey exceptions
(except as specifically approved by Agent). Agent shall also have received
a currently dated ALTA/ASCM Class A certified survey of the Project and all
easements affecting the Project by a licensed surveyor in the State of New
Jersey satisfactory to Agent and the Title Company, certified to the
Secured Parties and the Title Company, showing outlines of the Project,
location of all improvements, set back lines, encroachments (if any),
rights of way, and showing no state of facts unsatisfactory to any of them
and showing such details as Agent may reasonably require. The legal
descriptions on the survey shall coincide exactly with that on the title
insurance policies to be furnished to Agent.
(w) Insurance. Agent shall have received (i) a certified copy
of, or binder for, each of the insurance policies for the Project that are
required by Section 4.25 hereof, such policies to be in form and substance,
and issued by companies, satisfactory to Agent, together with evidence
satisfactory to Agent that such insurance complies with the provisions of
Section 4.25 hereof and with the provisions of each of the Project
Documents, and that all premiums then due with respect to such insurance
have been paid and (ii) a written report of the Insurance Consultant
describing the insurance obtained by Borrower as of the Initial Funding
Date with respect to the Project and stating that the insurance required to
be obtained as of the Initial Funding Date pursuant to the Loan Instruments
and the Project Documents is in full force and effect and provides
reasonable and adequate coverage for the Project.
(x) EWG/QF Status. The Project shall be a Qualifying
Cogeneration Facility and Borrower shall have
28
maintained and established by filing the QF Certificate, which shall be in
full force and effect and shall reflect operation and ownership of the
Project consistent with the Project Documents and the Governmental
Approvals. NRG Newark and NRG Parlin shall each have filed good faith
applications for certification as an EWG with FERC, which applications
shall reflect NRG Newark and NRG Parlin as the owner of the Newark Project
and the Parlin Project, respectively, and which shall reflect the operation
and ownership of the Newark Project and the Parlin Project consistent with
the Newark Project Documents and the Parlin Project Documents and the
Governmental Approvals, and which shall have been served on all of the
entities required to have been served under FERC regulations.
(y) Environmental Status. Agent shall have received (i) the
environmental reports listed in Schedule 3.1(y) as well as a reliance
letter with respect to such reports and such reports and reliance letter
shall be in form and substance satisfactory to Agent and such reports shall
contain the results of the review of the environmental audit of the
Project, permitting issues and other matters of environmental concern with
respect to the Project and (ii) such other information as to the past
ownership and use and the present condition of the Project as Agent may
have requested; and such reports shall not disclose, in the opinion of
Agent, any unusual or significant risks associated with the Project
relating to any Environmental Requirements.
(z) Independent Engineer's Report; Gas Consultant Report. Agent
shall have received a report of the Independent Engineer and Gas Consultant
detailing to the satisfaction of Agent such matters as Agent may reasonably
request, including without limitation, the technical and economic
feasibility of the Project and the availability of Alternative Fuel and
Backup Gas for the Project.
(aa) Regulation as Utility. None of the making of any Loan or
any Commitment, the securing of any obligation by Liens pursuant to the
Security Documents, any other transaction contemplated by any of the Loan
Instruments, nor the ownership or operation of the Newark Project or the
Parlin Project by NRG Newark or NRG Parlin shall cause Borrower or, solely
on the basis of this transaction, any Secured Party to become subject to
regulation by any Governmental Authority as a "public utility", an
"electric utility", an "electric utility holding company", a "public
utility holding company", or a subsidiary or affiliate of any of the
foregoing under any Law or Governmental Requirements (including, without
limitation, PUHCA and FPA).
29
(bb) Filing, Registration and Recording Fees. Agent shall have
received evidence satisfactory to it that all filing, recordation,
subscription and inscription fees, and all taxes and other expenses related
thereto, necessary for the consummation of the transactions contemplated by
the Project Agreements have been paid or provided for in full by or on
behalf of Borrower.
(cc) Transfer and Stamp Taxes. Agent shall have received
evidence that all transfer, stamp, documentary, intangible personal
property or similar taxes, levies, imposts, assessments or charges imposed
by any Governmental Authority and any and all interest, penalties or other
liabilities arising under or relating thereto, in respect of this
Agreement, any other Loan Instrument, any Loans or Obligations or the
transactions contemplated herein or therein which are due and payable have
been paid or provided for in full.
(dd) [Intentionally Omitted].
(ee) Operations and Maintenance Agreement; Operating Guaranty.
Borrower shall have delivered to Agent certified copies of the executed
Operations and Maintenance Agreement and the Operating Guaranty, each in
form and substance satisfactory to Agent.
(ff) Assignment of Gas Contract With PSE&G. The Gas Service
Agreement, dated May 13, 1993, between O'Brien (Newark) Cogeneration, Inc.
and PSE&G shall have been assigned to JCP&L and the Borrower shall have no
obligation or liability under such agreement, and the Borrower shall have
delivered to Agent a certificate to this effect. Further, Borrower shall
have delivered to Agent a certified copy of the Assignment of Gas Service
Agreement dated as of April 30, 1996 by and among O'Brien (Newark)
Cogeneration, Inc., PSE&G and JCP&L.
(gg) Interim Gas Service Agreement. Borrower shall have
delivered to Agent certified copies of the executed Interim Gas Service
Agreement which shall be in full force and effect.
Section 3.2 Conditions Precedent to the Making of Debt Service
Loans;. The obligations of each Lender to make its pro rata share of each
Debt Service Loan is subject to the satisfaction of Agent of all the
conditions precedent set forth below:
30
(a) Funding Loans. All the conditions precedent to the making
of Funding Loans set forth in Section 3.1 and 3.3 shall have been satisfied
and the Initial Loans shall have been made on the Initial Funding Date and
the Additional Loans shall have been made on the Additional Funding Date to
Borrower.
(b) Insufficient Funds to Repay Debt Service. Debt Service
shall be due and payable by the Borrower to the Lenders and the Cash
Revenues available to the Borrower plus the balance existing at the time in
the Debt Service Reserve Account after making the payments specified in
Section 5.1(c)(i) shall be insufficient to pay such Debt Service.
(c) Debt Service Loans to be Used to Pay Debt Service. Borrower
shall have delivered to Agent a certificate certifying that the proceeds of
the proposed Debt Service Loan shall be used only to pay Debt Service due
and payable by the Borrower to the Lenders.
(d) Debt Service Loans not to exceed Debt Service Line of Credit
Facility Commitment. The amount of the proposed Debt Service Loan shall
not exceed an amount equal to the Debt Service Line of Credit Facility
Commitment.
(e) Notice of Borrowing. Borrower shall have delivered to Agent
a Notice of Borrowing in accordance with Section 2.2(b).
Section 3.3 Conditions Precedent to the Making of Additional
Loans. The obligations of each Lender to make its pro rata share of the
Additional Loans on the Additional Funding Date is subject to the
satisfaction of Agent of all the conditions precedent set forth below:
(a) Certificate of Incorporation or Organizational Documents.
NRG Parlin shall have delivered and shall have caused each of DuPont,
Guarantor and NPI to have delivered to Agent a copy of the certificate of
incorporation or other organizational documents of such Parlin Obligors,
and each amendment thereto, certified by the Secretary of State of its
state of incorporation or other appropriate Governmental Authority as being
a true and correct copy thereof, such certificate or document to be dated a
date during, or a recent date prior to, the Additional Commitment Period.
(b) Certificate of Good Standing. NRG Parlin shall have
delivered and shall have caused each of DuPont, Guarantor and NPI to have
delivered to Agent a certificate or
31
other appropriate document from the Secretary of State of its state of
incorporation or other governmental authority of such Parlin Obligor,
listing the certificate of incorporation or other organizational documents
and each amendment thereto on file in its office and, if available,
certifying that (i) such amendments are the only amendments to each such
certificate of incorporation or other organizational documents on file in
its office, (ii) such Parlin Obligor has paid all franchise taxes to the
date of such certificate and (iii) such Parlin Obligor as appropriate, is
duly incorporated and in good standing under the laws of such jurisdiction,
such certificates to be dated a date during, or a recent date prior to, the
Additional Commitment Period.
(c) Certificate of Qualification. NRG Parlin shall have
delivered and shall have caused each of DuPont, Guarantor and NPI to have
delivered to Agent certificates or equivalent documents from all states in
which it is necessary for such Parlin Obligor to be qualified and/or
licensed to do business for the purposes of the transactions contemplated
hereunder or under any of the Project Agreements, certifying that such
Parlin Obligor has duly qualified to do business in such jurisdiction as a
foreign corporation and is in good standing under such qualification, such
certificates or equivalent documents to be dated a date during, or a recent
date prior to, the Additional Commitment Period.
(d) By-Laws and Resolutions. NRG Parlin shall have delivered
and shall have caused each of DuPont, Guarantor and NPI to have delivered
to Agent copies of the by-laws or other equivalent organizational documents
of such Parlin Obligor, the resolutions of its Board of Directors approving
each Parlin Project Agreement to which it is a party, and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to each such Parlin Project Agreement to which it is a
party, certified as of a date during, or a recent date prior to, the
Additional Commitment Period as true and correct in each case by an
Authorized Officer of such Parlin Obligor.
(e) Incumbency Certificate. NRG Parlin shall have delivered and
shall have caused each of DuPont, Guarantor and NPI to have delivered to
Agent a certificate of an Authorized Officer of such Parlin Obligor dated
as of a date during, or a recent date prior to, the Additional Commitment
Period certifying the names and true signatures of the officers authorized
to sign each Parlin Project Agreement (other than the DuPont Power Purchase
Agreement) to which it is a party
32
and the other documents to be delivered by it pursuant to the Parlin
Project Agreements (other than the DuPont Power Purchase Agreement).
(f) Opinions of Counsel. NRG Parlin shall have delivered to
Agent a favorable opinion of (a) Troutman Sanders LLP, as counsel to NRG
Parlin and Guarantor, substantially in the form of Exhibit C1 hereto,
including all federal regulatory matters and such other matters as Agent
may reasonably request based on any facts, information, circumstances or
matters that arise, or that the Agent becomes aware of, with respect to the
Parlin Project after the Initial Funding Date, (b) in house counsel to NRG
and NPI, substantially in the form of Exhibit C1 hereto, including all
federal regulatory matters, and such other matters as Agent may reasonably
request based on any facts, information, circumstances or matters that
arise, or that the Agent becomes aware of, with respect to the Parlin
Project after the Initial Funding Date, (c) Greenbaum, Rowe, Smith, Ravin
and Davis, or other New Jersey counsel to NRG Parlin, NPI and Guarantor,
substantially in the form of Exhibit C1 hereto, including all state
regulatory matters and such other matters as Agent may reasonably request
based on any facts, information, circumstances or matters that arise, or
that the Agent becomes aware of, with respect to the Parlin Project after
the Initial Funding Date, (d) Gibson, Dunn & Crutcher, New York counsel to
NRG Parlin, Guarantor, NPI and NRG, substantially in the form of Exhibit C1
hereto, and as to matters set forth in Section 3.3(s)(i) and such other
matters as Agent may reasonably request based on any facts, information,
circumstances or matters that arise, or that Agent becomes aware of, with
respect to the Parlin Project after the Initial Funding Date, and (e)
counsel to each of JCP&L, DuPont, Stewart & Stevenson, Stewart & Stevenson
Services, and NPI, substantially in the form of Exhibit C2 hereto, in each
case dated a date during, or a recent date prior to, the Additional
Commitment Period and addressed to the Agent, the Secured Parties and the
Lenders, in form and substance satisfactory to Agent.
(g) Fees. Payment in full by NRG and NRG Parlin of all fees and
expenses which are to be paid on or before the Additional Funding Date,
including, without limitation, the fees provided for in the letter
agreement dated May 17, 1996 among NRG Newark, NRG Parlin and Agent and the
expenses provided for in this Agreement.
(h) Loan Instruments. NRG Parlin and NRG Newark shall have
delivered to Agent fully executed counterparts of the Guaranty, the Funding
Loan Notes, the Debt Service Loan
33
Notes, the Tax Indemnification Agreement, the Parlin Pledge Agreement, the
Parlin Security Agreement, the Blocked Account Agreements with respect to
the Parlin Project, the Parlin Mortgage, an amended and restated Newark
Mortgage substantially in the form of the Newark Mortgage and securing up
to $160,000,000 of the outstanding principal amount of the Funding Loan
Notes and the Debt Service Loan Notes, all financing statements, stock
certificates, guarantees, assignments, instruments and agreements required
by Agent to be executed on or prior to the Additional Funding Date by or on
behalf of NRG Parlin or NRG Newark to guaranty or provide collateral
security with respect to the Obligations (other than the DuPont Power
Purchase Agreement), and such other certificates, opinions, documents and
instruments evidencing, securing or pertaining to the Loans and the
Commitments as shall be required by Agent to be delivered to the Secured
Parties by Borrower or any other Person prior to the Additional Funding
Date, in each case in form and substance satisfactory to Agent and signed
by all parties thereto (other than Agent) and in full force and effect. In
addition, Agent shall have received pay-off letters, UCC termination
statements and other documents, in each case, in form and substance
satisfactory to Agent, evidencing the release and termination of all prior
Liens on the Collateral intended to be subject to the Parlin Security
Documents.
(i) NRG Parlin's and NPI's Shares. NRG Parlin shall have caused
Guarantor to deliver to Agent stock certificates representing 100% of the
issued and outstanding shares of capital stock of NRG Parlin registered in
the name of Guarantor together with irrevocable undated stock powers duly
endorsed in blank.
(j) [Intentionally Omitted].
(k) NRG Investment. NRG Parlin shall have delivered to Agent a
certificate of an Authorized Officer of Guarantor that, after taking into
account the Funding Loans and the application of proceeds thereof, NRG's
equity investment in Guarantor will not be less than $29 million.
(l) Security Interest. NRG Parlin shall have provided Agent
with evidence satisfactory to Agent that it has, for the benefit of the
Secured Parties, a valid and perfected first priority security interest in
the Collateral (intended to be subject to the Parlin Security Documents) on
or prior to the Additional Funding Date (subject only to Permitted Liens).
NRG Parlin and NRG Newark shall have delivered to Agent each of the items
required to be obtained in accordance with Section 5.40, including, without
34
limitation, an executed copy of the PSE&G Consent substantially in the form
of Exhibit G attached hereto.
(m) Financial Statements of Parlin Obligors. Agent shall have
received the most recent year-end audited financial statements and
unaudited quarterly financial statements which are available for NRG
Parlin, Guarantor and NPI and the most recent Form 10-K filed with the SEC
and, to the extent that the most recent Form 10-Q filed with the SEC is
dated a more recent date than such Form 10-K, the most recent Form 10-Q
filed with and available from the SEC, which are available for DuPont. In
the opinion of Agent, there shall have been no material adverse change in
the business operations, results of operations, condition (financial or
otherwise), prospects or property of any such Parlin Obligor (except as
previously disclosed to Agent in a writing delivered by or on behalf such
Parlin Obligor) since (i) the date of such Parlin Obligor's most recent
audited financial statements (or Forms 10-Q or 10-K, as appropriate)
previously delivered to Agent, if such Parlin Obligor's financial
statements have been previously delivered to Agent and (ii) the date which
is six months prior to the Additional Funding Date, if such Parlin
Obligor's financial statements have not previously been delivered to Agent.
(n) Notice of Borrowing. NRG Parlin shall have delivered to
Agent a Notice of Borrowing in accordance with Section 2.1(b).
(o) Officer's Certificate. NRG Parlin shall have delivered to
Agent a certificate executed by an Authorized Officer, stating that:
(a) on such date, and after giving effect to the making of the Funding
Loans, the provision of the Commitments and the consummation of the other
transactions contemplated hereby or under any of the Parlin Project
Agreements, no Default or Event of Default has occurred and is continuing
or would arise as a result of the consummation of the transactions
contemplated hereby or under any of the Parlin Project Agreement; (b) no
Material Adverse Effect has occurred since the Initial Funding Date;
(c) the representations and warranties set forth in Article IV are true and
correct in all material respects on and as of the date such representations
and warranties are made; and (d) it is not in default under any material
agreement, indenture, credit agreement or other document to which it is a
party.
(p) Confirmation of Agent for Service. NRG Parlin shall have
delivered to Agent confirmation from CT Corporation System of its
acceptance of its appointment as agent for service of process for NRG
Parlin required under
35
Section 8.4 and similar provisions in the other Loan Instruments.
(q) Flood Zone. NRG Parlin shall have delivered to Agent
evidence, in form and substance satisfactory to Agent, that the Parlin
Project does not and will not include any improved real property that is
located within an area that has been identified by the Director of the
Federal Emergency Management Agency as an area having special flood hazards
and for which flood insurance has been made available under the National
Flood Insurance Act of 1968, as amended.
(r) Government Approvals, Litigation and Project Documents. (i)
NRG Parlin shall have delivered to Agent evidence satisfactory to Agent
that all Governmental Approvals and filings and consents from third parties
required in connection with the transactions contemplated hereby have been
obtained, to the extent reasonably obtainable (including, without
limitation, all filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, New Jersey Industrial Site Recovery
Act (N.J. Rev. Stat. 13:1K-6 et seq.) and all New Jersey asset transfer
approvals required under the environmental regulations). Agent shall have
received evidence or copies of all Governmental Approvals set forth in Part
I of Schedule 4.3B hereto (including, without limitation, those necessary
for the operation of the Parlin Project at levels satisfactory to Agent
after consultation with the Independent Engineer), certified by an
Authorized Officer of NRG Parlin as being complete and in full force and
effect and not subject to appeal, and copies of all correspondence referred
to in such Governmental Approvals and all applications for such
Governmental Approvals, certified by an Authorized Officer of NRG Parlin as
complete. Agent shall have received evidence satisfactory to Agent that
(x) neither NRG Parlin nor the Parlin Project is in violation of any
Governmental Approval and that the Parlin Project has not been in material
violation of any Governmental Approval since the Initial Funding Date,
(y) no additional Governmental Approvals are required for the operation of
the Parlin Project as contemplated in the Parlin Project Documents, and (z)
there is no litigation arising from or relating to the transactions
contemplated hereby which could reasonably be expected to result in a
Material Adverse Effect.
(ii) Each of the Parlin Project Documents shall be in form and
substance reasonably satisfactory to Agent. Agent shall have received
evidence satisfactory to it that each of such Parlin Project Documents is
in full force and effect and that NRG Parlin is not, and to the best
knowledge
36
of NRG Parlin, no other party to any such Parlin Project Document is, in
default in the performance, observance or fulfillment of any of its
obligations, covenants or conditions contained therein and that the
Effective Date (as defined in each Power Purchase Agreement) has occurred.
Agent shall have received executed Parlin Consents, in the form and
substance satisfactory to Agent. Agent shall have received an executed
copy of each Parlin Project Document, certified in the case of each such
document to which Agent is not a party by an Authorized Officer of NRG
Parlin as being complete (including all exhibits, schedules and disclosure
or other material letters referred to therein or delivered pursuant
thereto, and all amendments thereto) and in full force and effect and that
no force majeure has occurred thereunder.
(s) Bankruptcy Court Orders. NRG Parlin shall have delivered to
Agent (i) an unqualified opinion of Gibson, Dunn & Crutcher, in form and
substance satisfactory to Agent, stating that no order of the Bankruptcy
Court and no notice, hearing or other pleading in the Bankruptcy Case are
required in connection with the Loans, the Commitments, the Loan
Instruments and the obligations of the Guarantor or either Borrower
thereunder, or (ii) a final and non-appealable order of the Bankruptcy
Court authorizing and approving the Commitments and the Loans and the Loan
Instruments or a final and non-appealable order of the Bankruptcy Court
stating that it has no jurisdiction over such transactions.
(t) Material Adverse Effect. Since the Initial Funding Date
there shall not have occurred any Material Adverse Effect; provided that
for purposes of this Section 3.3(t), in determining whether a Material
Adverse Effect has occurred, in all provisions of this Agreement "Borrower"
shall be deemed to have included NRG Parlin, "Project" shall be deemed to
have included the Parlin Project, "Obligor" shall be deemed to have
included Parlin Obligors, "Project Agreements" shall be deemed to have
included Parlin Project Agreements, and "Security Documents" shall be
deemed to have included Parlin Security Documents during the Additional
Commitment Period.
(u) Pro Forma; the Operating Budget. Agent shall have received
the Pro Forma Balance Sheets for the Parlin Project, the Sources and Uses
Table, and the Operating Budget for the Parlin Project.
(v) Title Insurance; Surveys. Agent shall have received an ALTA
lender's paid policy of title insurance issued by the Title Company, in
form and substance
37
satisfactory to Agent, with such endorsements and affirmative coverage as
Agent may reasonably request, with such ALTA direct facultative reinsurance
agreements (with direct access provisions) as Agent may reasonably request,
(i) insuring the Secured Parties for their ratable benefit in an amount not
less than $160,000,000 for each of the Newark Project and the Parlin
Project, that good and marketable leasehold title to the Parlin Project and
the Newark Project is vested in NRG Parlin and NRG Newark, respectively,
pursuant to the Parlin Ground Lease and the Newark Ground Lease,
respectively, and good and marketable easements in that portion of the
Parlin Property and the Newark Property consisting of easements is vested
in NRG Parlin and NRG Newark, respectively, and that the Parlin Mortgage
and the Newark Mortgage constitute a valid and enforceable first mortgage
lien on the Parlin Project and the Newark Project, respectively, subject
only to Permitted Liens and (ii) providing full coverage against all
mechanics' and materialmen's liens (including any relating to environmental
remediation) as well as coverage against survey exceptions (except as
specifically approved by Agent). Agent shall also have received currently
dated ALTA/ASCM Class A certified surveys of the Parlin Project and all
easements affecting the Parlin Project by a licensed surveyor in the State
of New Jersey satisfactory to Agent and the Title Company, certified to the
Secured Parties and the Title Company, showing outlines of the Parlin
Project, location of all improvements, set back lines, encroachments (if
any), rights of way, and showing no state of facts unsatisfactory to any of
them and showing such details as Agent may reasonably require. The legal
descriptions on the surveys shall coincide exactly with that on the title
insurance policies to be furnished to Agent.
(w) Insurance. Agent shall have received (i) a certified copy
of, or binder for, each of the insurance policies required for the Parlin
Project by Section 4.25 hereof, such policies to be in form and substance,
and issued by companies, satisfactory to Agent, together with evidence
satisfactory to Agent that such insurance complies with the provisions of
Section 4.25 hereof and with the provisions of each of the Parlin Project
Documents, and that all premiums then due with respect to such insurance
have been paid and (ii) a written report of the Insurance Consultant
describing the insurance obtained by NRG Parlin with respect to the Parlin
Project and stating that the insurance required to be obtained by NRG
Parlin as of the Additional Funding Date pursuant to the Loan Instruments
and the Parlin Project Documents is in full force and effect and provides
reasonable and adequate coverage for the Parlin Project.
38
(x) EWG/QF Status. The Newark Project shall be a Qualifying
Cogeneration Facility. NRG Parlin shall have received approval from the
FERC of its applications for certification as an EWG, which application
shall reflect NRG Parlin as the owner of the Parlin Project, and which
shall reflect the operation and ownership of the Parlin Project consistent
with the Parlin Project Documents and Governmental Approvals, and which
shall have been served on all of the entities required to have been served
under the FERC regulations. NRG Parlin shall have received approval from
FERC for the transactions contemplated by the Credit Agreement and the
other Loan Instruments to which it is a party. NRG Parlin shall have
received approval of its rates from FERC without reduction from the rates
set forth in the Parlin Power Purchase Agreement, or, if such rates are
reduced or there are additional costs in obtaining other approvals, the
Additional Commitment shall be reduced as provided in Section 2.9(C).
(y) Environmental Status. Agent shall have received (i) the
environmental reports listed in Schedule 3.3(y) as well as a reliance
letter with respect to such reports and such reports and reliance letter
shall be in form and substance satisfactory to Agent and such reports shall
contain the results of the review of the environmental audit of the Parlin
Project, permitting issues and other matters of environmental concern with
respect to the Parlin Project and (ii) such other information as to the
past ownership and use and the present condition of the Parlin Project as
Agent may have requested; and such reports shall not disclose, in the
opinion of Agent, any unusual or significant risks associated with the
Parlin Project relating to any Environmental Requirements.
(z) Independent Engineer's Report; Gas Consultant Report. Agent
shall have received a report of the Independent Engineer and Gas Consultant
detailing to the satisfaction of Agent such matters as Agent may reasonably
request, including without limitation, the technical and economic
feasibility of the Parlin Project and the availability of Alternative Fuel
and Backup Gas for the Parlin Project.
(aa) Regulation as Utility. None of the making of any Loan or
any Commitment, the securing of any obligation by Liens pursuant to the
Security Documents, any other transaction contemplated by any of the Loan
Instruments, nor the ownership or operation of the Newark Project or the
Parlin Project by NRG Newark or NRG Parlin shall cause NRG Newark or NRG
Parlin or, solely on the basis of this
39
transaction, any Secured Party to become subject to regulation by any
Governmental Authority as a "public utility", an "electric utility", an
"electric utility holding company", a "public utility holding company", or
a subsidiary or affiliate of any of the foregoing under any Law or
Governmental Requirements (including, without limitation, PUHCA and the
FPA); provided, however, that NRG Parlin alone shall be subject to
regulation as a public utility under the FPA.
(bb) Filing, Registration and Recording Fees. Agent shall have
received evidence satisfactory to it that all filing, recordation,
subscription and inscription fees, and all taxes and other expenses related
thereto, necessary for the consummation of the transactions contemplated by
the Parlin Project Agreements have been paid or provided for in full by or
on behalf of NRG Parlin.
(cc) Transfer and Stamp Taxes. Agent shall have received
evidence that all transfer, stamp, documentary, intangible personal
property or similar taxes, levies, imposts, assessments or charges imposed
by any Governmental Authority and any and all interest, penalties or other
liabilities arising under or relating thereto, in respect of this
Agreement, any other Loan Instrument, any Loans or Obligations or the
transactions contemplated herein or therein which are due and payable have
been paid or provided for in full.
(dd) Operations and Maintenance Agreement. NRG Parlin shall
have delivered to Agent the Parlin Operations and Maintenance Agreement and
the Parlin Operating Guaranty, each in form and substance satisfactory to
Agent.
(ee) Debt Service Reserve Account. The Debt Service Reserve
Account shall have been funded with Cash Revenues in an amount which when
added to the Debt Service Line of Credit Facility Commitment is equal to
the Debt Service Reserve Required Balance.
(ff) Maintenance Reserve Account; Capital Improvements Reserve
Account. The Maintenance Reserve Account shall have been funded in an
amount equal to the Maintenance Reserve Required Deposit, and the Capital
Improvements Reserve Account shall have been funded in an amount equal to
the Capital Improvements Reserve Required Deposit.
(gg) [Intentionally Omitted].
40
(hh) [Intentionally Omitted].
(ii) Assignment of DuPont Power Purchase Contract; Agreements
and Approvals Pursuant to Parlin Power Purchase Agreement. The Electricity
Purchase Contract, dated January 18, 1988 between DuPont and O'Brien
(Parlin) Cogeneration, Inc. (as the same may be assigned by NRG Parlin to
NPI, the "DuPont Power Purchase Agreement") shall have been assigned by NRG
Parlin in its entirety to NPI and NPI shall have entered into a wholesale
power purchase agreement with NRG Parlin (the "Wholesale Power Purchase
Agreement"), substantially on the same terms as the DuPont Power Purchase
Agreement, and NRG Parlin shall have delivered to Agent a certificate to
the effect of the foregoing. Further, the Parlin Power Purchase Agreement
shall have been amended to reflect, or JCP&L shall have consented in
writing to, the assignment by NRG Parlin of the DuPont Power Purchase
Agreement and the entering into of the Wholesale Power Purchase Agreement.
NRG Parlin shall also have obtained all required approvals contemplated
under Article 2 of the Parlin Power Purchase Agreement, including, without
limitation, approval from the BPU.
(jj) Inventories. NRG Parlin and NRG Newark shall have
delivered to Agent a list of inventories and spare parts existing for their
respective Projects, along with a certificate of Operator as to the
accuracy of such lists, which lists shall be satisfactory to the
Independent Engineer.
(kk) Assignment of Gas Contract With PSE&G. The Gas Service
Agreement, dated May 13, 1993, between O'Brien (Parlin) Cogeneration, Inc.
and PSE&G shall have been assigned to JCP&L and NRG Parlin shall have no
obligation or liability under such agreement, and NRG Parlin shall have
delivered to Agent a certificate to this effect. Further, NRG Parlin shall
have delivered to Agent a certified copy of the Assignment of Gas Service
Agreement dated as of April 30, 1996 by and among O'Brien (Parlin)
Cogeneration, Inc., PSE&G and JCP&L.
(ll) Environmental Permits. NRG Parlin shall have delivered to
Agent a plan for the discharge of stormwater from the Parlin Plant in the
event that the Parlin Plant is prevented from continuing to use the DuPont
stormwater management system. Such plan shall include the reasonable cost
and time necessary to effect the changes described in the plan and shall be
in form and substance satisfactory to Agent.
41
(mm) Default. No Default or Event of Default shall have
occurred and be continuing as of the Additional Funding Date nor shall the
making of the Initial Loan, the Additional Loan or the Commitments result
in a Default or Event of Default, and Borrower shall have delivered to
Agent a certificate to this effect; provided that notwithstanding any other
provision to the contrary, any event, occurrence, condition, act or
omission relating to the Parlin Project, NRG Parlin, Parlin Obligors or
Parlin Project Agreements that occurred during the Additional Commitment
Period and that would have constituted a Default or Event of Default
hereunder if it had occurred after the Additional Funding Date shall be
deemed to constitute a Default or Event of Default, as the case may be, for
purposes of this Section 3.3.
(nn) EWG. NRG Parlin shall have received certification from the
FERC of EWG status in a final order.
(oo) FERC Approvals. NRG Parlin shall have filed at FERC for
approval of the rates in the Parlin Power Purchase Agreement and the
Wholesale Power Purchase Agreement, on a market-rate or cost of service
basis and shall have received FERC approval for the effectiveness of the
rates in a final and non-appealable order (provided that such order may be
appealable by Borrower). NRG Parlin shall also have filed at FERC for
approval to incur obligations under this Agreement pursuant to Section 204
of the FPA and shall have obtained such approval from the FERC in a final
and non-appealable order, or shall have otherwise obtained a blanket
approval from FERC to issue securities or assume liabilities under
Section 204 of the FPA in a final and non-appealable order. NRG and
Guarantor shall jointly have filed at FERC for approval under Section 203
of the FPA for NRG to appoint a fourth director to the board of the
directors of Guarantor and shall have obtained such approval from the FERC.
(pp) No Action Letter. NPI shall have obtained a no-action
letter from the SEC staff in connection with the sale by NPI of electricity
to DuPont.
(qq) Initial Funding. The Initial Funding Date shall have
occurred.
(rr) Violations of Air Permit. If, as of the Additional Funding
Date, NRG Parlin has not entered into an administrative consent order with,
or shall have received a settlement letter or similar document from, the
New Jersey Department of Environmental Protection (the "NJDEP")
42
evidencing the NJDEP's final terms and conditions for resolving all matters
relating to the letter dated April 22, 1996 from Robert Evans to Iclal Atay
and Harold Christiff of the NJDEP (the "NOx Exceedances"), NRG Parlin shall
have delivered to Agent a full report on the status of such matters,
including all information concerning (i) potential future penalties, and
(ii) any other conditions or requirements which the NJDEP has revealed it
is considering. There shall have been no settlement or resolution of the
NOx Exceedances which could reasonably be expected to result in a Material
Adverse Effect on the Parlin Project, nor in the reasonable judgment of the
Agent shall there be a significant risk arising out of any facts,
circumstances or matters that occur, or that Agent becomes aware of, with
respect to the Parlin Project after the Inital Funding Date, that any such
settlement or resolution will occur in the future.
(ss) Five-year Operating Certificates. If NRG Parlin has not
yet obtained five-year operating certificates for the Parlin Plant, NRG
Parlin shall have delivered to Agent evidence satisfactory to Agent that it
has taken all steps necessary for obtaining such certificates, other than
with respect to resolution of issues in connection with the NOx
Exceedances, and that the temporary operating certificates for the Parlin
Plant remain in full force and effect. NRG Parlin shall also submit a plan
of action for obtaining five-year operating certificates for the Parlin
Plant, which plan shall be satisfactory to Agent.
(tt) Amended Emissions Reports. NRG Parlin shall have filed
with the NJDEP amended emission reports and, as required, new emissions
reports reflecting the information known about the NOx Exceedances.
(uu) NPI Account. (i) NPI shall have established with Agent an
account into which DuPont shall directly deposit all amounts payable to NPI
under the DuPont Power Purchase Agreement, and such amounts shall
thereafter be withdrawn and transferred by Agent into the Project Account
as an item of Cash Revenues or (ii) NPI shall have established an account
with any bank or financial institution into which DuPont shall directly
deposit all amounts payable to NPI under the DuPont Power Purchase
Agreement, and NPI, Agent and such bank or financial institution shall have
entered into a blocked account agreement, in form and substance
satisfactory to Agent, which shall provide for the transfer of all amounts
in such blocked account to the Project Account only.
43
ARTICLE IV
Representations and Warranties
In order to induce Agent and each Lender to enter into this
Agreement and to induce each Lender to make the Loans hereunder, each
Borrower represents and warrants to Agent and each Lender that the
following statements, after giving effect to the making of the Loans and
the Commitments and the consummation of the Acquisition, will be true,
correct and complete on and as of the Initial Funding Date, except with
respect to Sections 4.1(b)(ii), 4.2, 4.3(b), 4.4(b), 4.5(b), 4.6(b),
4.9(b), 4.12(b), 4.39 and 4.44, which representations and warranties will
be true, correct and complete with respect to NRG Parlin, the Parlin
Project, the Parlin Project Agreements and the Parlin Obligors on and as of
the Additional Funding Date:
Section 4.1 Organization; Capitalization. (a) Borrower is duly
organized and validly existing under the Laws of the jurisdiction of its
formation, and is properly qualified to do business and in good standing in
every jurisdiction where the failure to maintain such qualification or good
standing could reasonably be expected to result in a Material Adverse
Effect.
(b)(i) The authorized capital stock or other equity interests of
NRG Newark is as set forth on Schedule 4.1(b). All issued and outstanding
shares of capital stock of NRG Newark are duly authorized and validly
issued, fully paid, nonassessable, free and clear of all Liens other than
those granted under the Newark Security Documents, and such shares were
issued in compliance with all applicable state, federal and foreign Laws
concerning the issuance of securities or, if the issuance of such shares is
not is compliance with such Laws, such non-compliance could not reasonably
be expected to result in a Material Adverse Effect. No shares of the
capital stock of or other equity interests of NRG Newark, other than those
described above, are issued and outstanding. There are no preemptive or
other outstanding rights, options, warrants, conversion rights or similar
agreements or understandings for the purchase or acquisition from NRG
Newark of any shares of capital stock or other securities or other equity
interests of NRG Newark.
(ii) As of the Additional Funding Date, the authorized capital
stock or other equity interests of NRG Parlin is as set forth on
Schedule 4.1(b). As of the Additional Funding Date, all issued and
outstanding shares of capital stock of NRG Parlin are duly authorized and
validly
44
issued, fully paid, nonassessable, free and clear of all Liens other than
those granted under the Parlin Security Documents, and such shares were
issued in compliance with all applicable state, federal and foreign Laws
concerning the issuance of securities or, if the issuance of such shares is
not is compliance with such Laws, such non-compliance could not reasonably
be expected to result in a Material Adverse Effect. As of the Additional
Funding Date, no shares of the capital stock of or other equity interests
of NRG Parlin, other than those described above, are issued and
outstanding. As of the Additional Funding Date, there are no preemptive or
other outstanding rights, options, warrants, conversion rights or similar
agreements or understandings for the purchase or acquisition from NRG
Parlin of any shares of capital stock or other securities or other equity
interests of NRG Parlin.
Section 4.2 Authorization of Loan Instruments. The execution,
delivery and performance of each of the Project Agreements to which a
Borrower is a party are within its respective corporate powers and have
been duly authorized. Each of the Newark Project Agreements to which NRG
Newark is a party has been validly executed and delivered by NRG Newark.
As of the Additional Funding Date, each of the Parlin Project Agreements to
which NRG Parlin is a party shall have been validly executed and delivered
by NRG Parlin.
Section 4.3 Governmental Approvals. (a) The execution, delivery
and performance of each of the Newark Project Agreements to which NRG
Newark is a party, the granting of the Liens by NRG Newark and the making
of the Loans and the Commitments do not and will not require any
registration with, consent or approval of, or notice to, or other action
with or by, any Governmental Authority, regulatory body or any other Person
which has not been made or obtained and in full force and effect, except
for filings required by federal or state securities laws (which filings
have been made and true and complete copies of which have been delivered to
Agent, including, without limitation, all filings under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and all New Jersey
asset transfer approvals) and, until the earlier of the Additional Funding
Date and the Initial Maturity Date, set forth in Schedule 5.40 hereof. All
Governmental Approvals, other than ministerial Governmental Approvals,
required under Law in connection with the operation, maintenance and
ownership of the Newark Project (including, without limitation, (i) those
necessary for the operation of the Newark Project at levels satisfactory to
Agent after consultation with the Independent Engineer and (ii) those
necessary for the installation and
45
operation of an auxiliary boiler on the Newark Group plant site as required
in the Stipulation of Settlement, but excluding those required for the
initial construction or the restoration of the Newark Project after the
fire at the Newark Project) now, or to the knowledge of NRG Newark, in the
future, are set forth in Schedule 4.3A. Except for the Governmental
Approvals set forth in Part II of Schedule 4.3A with respect to the Newark
Project, each of such Governmental Approvals has been obtained, is validly
issued, is in full force and effect, is not subject to appeal by any Person
other than NRG Newark (other than the orders of the BPU approving the Third
Amendment to the Newark Power Purchase Agreement and the Interim Gas
Service Agreement on and as of the Initial Funding Date) and, to the best
of NRG Newark's knowledge, is free from conditions or requirements
compliance with which could reasonably be expected to result in a Material
Adverse Effect. There is no proceeding pending or, to the best knowledge
of NRG Newark, threatened which is reasonably likely to result in the
rescission, revocation, material modification, suspension or determination
of invalidity or limitation of effectiveness of any such Governmental
Approval. The information set forth in each application and other written
material submitted by or on behalf of NRG Newark or, to the best knowledge
of NRG Newark, submitted by or on behalf of each Newark Obligor (other than
NRG Newark) to the applicable Governmental Authority in connection with
each such Governmental Approval is accurate and complete in all material
respects. NRG Newark has no reason to believe that any Governmental
Approval that has not been obtained, but which will be required in the
future, for the Newark Project, will not be granted in due course, on or
prior to the date when required (unless the failure to obtain such
Governmental Approvals could not reasonably be expected to result in a
Material Adverse Effect), and such Governmental Approvals shall be free
from any condition or requirement, the compliance with which could
reasonably be expected to result in a Material Adverse Effect or which NRG
Newark does not reasonably expect to be able to satisfy. The Newark Project
complies in all respects with all covenants, conditions, restrictions and
reservations in the Governmental Approvals relating to the Newark Project
and the Newark Project Documents applicable thereto and all Laws applicable
thereto, all to the extent necessary to avoid a Material Adverse Effect.
(b) As of the Additional Funding Date, the execution, delivery
and performance of each of the Parlin Project Agreements to which either
NRG Parlin or Guarantor is a party, the granting of the Liens by either NRG
Parlin or Guarantor and the making of the Loans and the Commitments do
46
not and will not require any registration with, consent or approval of, or
notice to, or other action with or by, any Governmental Authority,
regulatory body or any other Person which has not been made or obtained and
in full force and effect, except for filings required by federal or state
securities laws (which filings have been made and true and complete copies
of which have been delivered to Agent, including, without limitation, all
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and all New jersey asset transfer approvals). As of the
Additional Funding Date, all Governmental Approvals, other than ministerial
Governmental Approvals, required under Law in connection with the
operation, maintenance and ownership of the Parlin Project (including,
without limitation, those necessary for the operation of the Parlin Project
at levels satisfactory to Agent after consultation with the Independent
Engineer) now, or to the knowledge of NRG Newark, in the future, are set
forth in Schedule 4.3B. As of the Additional Funding Date, except for the
Governmental Approvals set forth in Part II of Schedule 4.3B with respect
to the Parlin Project, each of such Governmental Approvals has been
obtained, is validly issued, is in full force and effect, is not subject to
appeal by any Person except Borrower and, to the best of NRG Parlin's
knowledge, is free from conditions or requirements compliance with which
could reasonably be expected to result in a Material Adverse Effect. As of
the Additional Funding Date, there is no proceeding pending or, to the best
knowledge of NRG Parlin, threatened which is reasonably likely to result in
the rescission, revocation, material modification, suspension or
determination of invalidity or limitation of effectiveness of any such
Governmental Approval. As of the Additional Funding Date the information
set forth in each application and other written material submitted by or on
behalf of NRG Parlin or, to the best knowledge of NRG Parlin, submitted by
or on behalf of each Parlin Obligor (other than the NRG Parlin) to the
applicable Governmental Authority in connection with each such Governmental
Approval is accurate and complete in all material respects. As of the
Additional Funding Date, NRG Parlin has no reason to believe that any
Governmental Approval that has not been obtained, but which will be
required in the future, for the Parlin Project, will not be granted in due
course, on or prior to the date when required (unless the failure to obtain
such Governmental Approvals could not reasonably be expected to result in a
Material Adverse Effect), and such Governmental Approvals shall be free
from any condition or requirement, the compliance with which could
reasonably be expected to result in a Material Adverse Effect or which NRG
Parlin does not reasonably expect to be able to satisfy. As of the
Additional Funding Date the
47
Parlin Project complies in all respects with all covenants, conditions,
restrictions and reservations in the Governmental Approvals relating to the
Parlin Project and the Parlin Project Documents applicable thereto and all
Laws applicable thereto, all to the extent necessary to avoid a Material
Adverse Effect.
Section 4.4 No Conflicts. (a) The execution, delivery and
performance of the Newark Project Agreements to which NRG Newark is a party
and the Governmental Approvals and the Insurance Policies and the
transactions contemplated hereunder and the making of the Loans and the
provision of the Commitments will not (i) violate (A) the certificate of
incorporation or by-laws (or comparable documents) of NRG Newark, (B) any
Law applicable to NRG Newark, violation of which could reasonably be
expected to result in a Material Adverse Effect or (C) any provision of any
contract, agreement, indenture or instrument to which NRG Newark is a party
or by which any of its respective properties is bound, the violation of
which could reasonably be expected to result in a Material Adverse Effect
or (ii) be in conflict with, or result in a breach of or constitute a
default under, any contract, agreement, indenture or instrument referred to
in Section 4.4(a)(i)(C) above or (iii) violate the provisions of the Newark
Project Agreements or (iv) result in the creation or imposition of any Lien
on the Newark Project, except Permitted Liens or (v) give to any Person
rights to cancel, terminate or suspend performance of its obligations to
NRG Newark under, or accelerate payments of amounts owed by NRG Newark to
others under, any contract, agreement, indenture or instrument referred to
in Section 4.4(a)(i)(C).
(b) As of the Additional Funding Date, the execution, delivery
and performance of the Project Agreements to which NRG Parlin is a party
and the Governmental Approvals and the Insurance Policies and the
transactions contemplated hereunder and the making of the Loans and the
provision of the Commitments will not (i) violate (A) the certificate of
incorporation or by-laws (or comparable documents) of NRG Parlin, (B) any
Law applicable to NRG Parlin, violation of which could reasonably be
expected to result in a Material Adverse Effect or (C) any provision of any
contract, agreement, indenture or instrument to which NRG Parlin is a party
or by which any of its respective properties is bound, the violation of
which could reasonably be expected to result in a Material Adverse Effect
or (ii) be in conflict with, or result in a breach of or constitute a
default under, any contract, agreement, indenture or instrument referred to
in Section 4.4(b)(i)(C) above or (iii) violate any provision of the Parlin
Project Agreements or (iv) result in the creation
48
or imposition of any Lien on the Parlin Project, except Permitted Liens or
(v) give to any Person rights to cancel, terminate or suspend performance
of its obligations to NRG Parlin under, or accelerate payments of amounts
owed by NRG Parlin to others under, any contract, agreement, indenture or
instrument referred to in Section 4.4(b)(i)(C).
Section 4.5 Enforceability of Project Agreements. (a) Each
Newark Project Agreement to which NRG Newark is a party is a legal, valid
and binding agreement of NRG Newark enforceable against NRG Newark in
accordance with its respective terms, except to the extent enforceability
may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of
creditors' rights (other than the Bankruptcy Case) and subject to general
equitable principles.
(b) As of the Additional Funding Date, each Parlin Project
Agreement to which NRG Parlin is a party is a legal, valid and binding
agreement of NRG Parlin enforceable against NRG Parlin in accordance with
its respective terms, except to the extent enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights (other than the
Bankruptcy Case) and subject to general equitable principles.
Section 4.6 Title to Property; Sufficiency of Assets. (a) NRG
Newark has good, valid and sufficient (i) leasehold estate in and to the
Leasehold Premises (as such term is defined in the Newark Mortgage), (ii)
right to use and enjoy the Easements (as such term is defined in the Newark
Mortgage), (iii) title to the Improvements and Equipment (such terms are as
defined in the Newark Mortgage), and (iv) title to all other portions of
the Mortgaged Property (as such term is defined in the Newark Mortgage), in
each case free and clear of all Liens, except for Permitted Liens. The
services to be performed, the materials to be supplied and the easements,
licenses and other rights granted or to be granted to NRG Newark pursuant
to the terms of the Newark Project Documents and Governmental Approvals for
the Newark Project provide or will provide NRG Newark with all rights and
property interests required to enable NRG Newark to obtain all services,
materials or rights (including access) required for the operation and
maintenance of the Newark Project, including NRG Newark's full and prompt
performance of its obligations, and full and timely satisfaction of all
conditions precedent to the performance by others of their obligations,
under the Newark Project Documents and Governmental Approvals for the
Newark Project,
49
other than those services, materials or rights that reasonably can be
expected to be obtainable in the ordinary course of business without
material additional expense or material delay.
(b) As of the Additional Funding Date, NRG Parlin has good,
valid and sufficient (i) leasehold estate in and to the Leasehold Premises
(as such term is defined in the Parlin Mortgage), (ii) right to use and
enjoy the Easements (as such term is defined in the Parlin Mortgage), (iii)
title to the Improvements and Equipment (such terms are as defined in the
Parlin Mortgage), and (iv) title to all other portions of the Mortgaged
Property (as such term is defined in the Parlin Mortgage), in each case
free and clear of all Liens, except for Permitted Liens. As of the
Additional Funding Date, the services to be performed, the materials to be
supplied and the easements, licenses and other rights granted or to be
granted to NRG Parlin pursuant to the terms of the Parlin Project Documents
and Governmental Approvals for the Parlin Project provide or will provide
NRG Parlin with all rights and property interests required to enable NRG
Parlin to obtain all services, materials or rights (including access)
required for the operation and maintenance of the Parlin Project, including
NRG Parlin's full and prompt performance of its obligations, and full and
timely satisfaction of all conditions precedent to the performance by
others of their obligations, under the Parlin Project Documents and
Governmental Approvals for the Parlin Project, other than those services,
materials or rights that reasonably can be expected to be obtainable in the
ordinary course of business without material additional expense or material
delay
Section 4.7 Compliance with Laws. Each Borrower is in
compliance with all Laws, other than those Laws the non compliance with
which could not reasonably be expected to result in a Material Adverse
Effect.
Section 4.8 No Litigation. Except as disclosed on Schedule 4.8,
there are no actions, suits, proceedings, claims or disputes pending or, to
the best of Borrower's knowledge, threatened against or affecting either
Borrower or any of their respective properties or assets before any
arbitrator or other Governmental Authority. There is no injunction, writ,
preliminary restraining order or any order of any nature issued by an
arbitrator or other Governmental Authority directing that any material
aspect of the transactions provided for in any of the Loan Instruments or
Acquisition Documents not be consummated as herein or therein provided.
50
Section 4.9 Events of Default. (a) No event has occurred or
would result from the incurring of obligations under any Newark Loan
Instrument which is, or upon the lapse of time or notice or both would
become, an Event of Default. NRG Newark is not in default under or with
respect to any contractual obligation in any respect, the default of which
could reasonably be expected to result in a Material Adverse Effect. NRG
Newark is not in default under any order, award or decree of any court,
arbitrator or Governmental Authority binding upon or affecting it or by
which any of its properties or assets is bound or affected, the default of
which could reasonably be expected to result in a Material Adverse Effect.
NRG Newark has not received notice of, and neither Borrower is aware of,
the occurrence of any event of force majeure with respect to the Newark
Project.
(b) As of the Additional Funding Date, no event has occurred or
would result from the incurring of obligations under any Parlin Loan
Instrument which is, or upon the lapse of time or notice or both would
become, an Event of Default. As of the Additional Funding Date, NRG Parlin
is not in default under or with respect to any contractual obligation in
any respect, the default of which could reasonably be expected to result in
a Material Adverse Effect. As of the Additional Funding Date, NRG Parlin
is not in default under any order, award or decree of any court, arbitrator
or Governmental Authority binding upon or affecting it or by which any of
its properties or assets is bound or affected, the default of which could
reasonably be expected to result in a Material Adverse Effect. As of the
Additional Funding Date, NRG Parlin has not received notice of, and neither
Borrower is aware of, the occurrence of any event of force majeure with
respect to the Parlin Project.
Section 4.10 Financial Condition.
(a) The consolidated draft unaudited balance sheet of Guarantor
as at June 30, 1994 and June 30, 1995 and the related consolidated
statements of operations and retained earnings and changes in financial
position for the fiscal years ended on such dates, prepared by the chief
financial officer of Guarantor as of the date of such financial statements,
copies of which have heretofore been furnished to Agent, with sufficient
copies for each Lender, are complete and correct and present fairly the
consolidated financial condition of Guarantor and each Borrower as at such
dates, and the consolidated results of its operations and changes in
financial position for the fiscal years then ended. The separate draft
unaudited balance sheets of each Borrower as at December 31, 1995 and June
30, 1995 and the related
51
statements of operations and retained earnings and changes in financial
position for the fiscal years ended on such dates, prepared by the chief
financial officer of such Borrower as of the date of such financial
statements, copies of which have heretofore been furnished to Agent, with
sufficient copies for each Lender, are complete and correct and fairly
present the financial condition of such Borrower as at such dates, and the
results of its operations and changes in financial position for the fiscal
years then ended. Such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by
such accountants and as disclosed therein). Each Borrower is (and after
giving effect to the transactions contemplated by the Loan Instruments and
the Acquisition Documents will be) Solvent.
(b) Except as fully reflected in the financial statements
referred to above and agreements entered into in the ordinary course of
business which are not required to be reflected in such financial
statements in accordance with GAAP, or as contemplated by this Agreement,
there are no liabilities or obligations with respect to either Borrower or
Guarantor of any nature whatsoever (whether absolute, accrued, contingent
or otherwise and whether or not due) for the period to which such financial
statements relate.
Section 4.11 No Material Adverse Effect. Since June 30, 1995,
there has been no Material Adverse Effect.
Section 4.12 Security Interests. (a) Except to the extent
Consents set forth in Schedule 5.40 are required to create a first priority
perfected security interest in the Newark Project Documents, the security
interests created in favor of Agent on behalf of the Secured Parties
hereunder and under the Newark Security Documents are valid and perfected,
first-priority security interests (subject only to Permitted Liens)
superior and prior to the rights of all Persons (except those rights of the
holders of Permitted Liens), whether the property subject to the security
interests is now owned by NRG Newark or Guarantor or is hereafter acquired.
The Newark Security Documents (including the UCC financing statements) have
been duly filed, recorded and/or registered in each office and in each
jurisdiction where required to create and perfect the lien and security
interest described above. The chief executive office of each of NRG Newark
and Guarantor, as such term is used in the uniform commercial code adopted
in the State of New Jersey, is located in the State of Minnesota, the
principal place of business of each of NRG Newark and Guarantor is located
in the States of New
52
Jersey, Delaware or Minnesota, and the offices where each of NRG Newark and
Guarantor keeps its records regarding the Collateral covered by the
Security Documents are located in the States of New Jersey, Delaware or
Minnesota, and such locations are the sole offices or places of business
maintained by each of them as of the date hereof. To the best of NRG
Newark's knowledge none of NRG Newark or Guarantor have transacted any
business under any name other than those set forth in Schedule 4.12.
(b) As of the Additional Funding Date, the security interests
created in favor of Agent on behalf of the Secured Parties hereunder and
under the Parlin Security Documents are valid and perfected, first-priority
security interests (subject only to Permitted Liens) superior and prior to
the rights of all Persons (except those rights of the holders of Permitted
Liens), whether the property subject to the security interests is now owned
by NRG Parlin or Guarantor or is hereafter acquired. As of the Additional
Funding Date, the Security Documents (including the UCC financing
statements) have been duly filed, recorded and/or registered in each office
and in each jurisdiction where required to create and perfect the lien and
security interest described above. As of the Additional Funding Date, the
chief executive office of each of NRG Parlin and Guarantor, as such term is
used in the uniform commercial code adopted in the State of New Jersey, is
located in the State of Minnesota, the principal place of business of each
of NRG Parlin and Guarantor is located in the States of New Jersey,
Delaware or Minnesota, and the offices where each of NRG Parlin and
Guarantor keeps its records regarding the Collateral covered by the
Security Documents are located in the States of New Jersey, Delaware or
Minnesota, and such locations are the sole offices or places of business
maintained by each of them as of the date hereof. As of the Additional
Funding Date, to the best of NRG Parlin's knowledge none of NRG Parlin or
Guarantor have transacted any business under any name other than those set
forth in Schedule 4.12.
Section 4.13 No Burdensome Restrictions;. No Contractual
Obligation of either Borrower and no Requirement of Law has, or is
reasonably expected to have, in light of all facts and circumstances of
which either Borrower has actual knowledge, a Material Adverse Effect, it
being understood that the mere existence of traditional project finance
contractual provisions which provide lenders with security interests and
restrictive covenants, including the ability to restrict cash
distributions, would not constitute a burdensome restriction hereunder.
53
Section 4.14 Taxes. All tax returns which are required to be
filed in respect of each Borrower, and all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than those the amount or
validity of which is currently being contested in a Good Faith Contest and
with respect to which reserves in conformity with GAAP have been provided
on the books of such Borrower) have been filed and paid on behalf of the
Borrower; and no tax Liens have been filed and, to the knowledge of
Borrower, no claims are being asserted with respect to any such taxes, fees
or other charges which are material either as to amount or potentially
adverse effect when considered with respect to the financial and business
condition of such Borrower. As of the Additional Funding Date, Guarantor,
Borrower and Agent have entered into an indemnification agreement ("Tax
Indemnification Agreement") substantially in the form of Exhibit K attached
hereto, whereby Guarantor has unconditionally and irrevocably agreed to
indemnify Borrower for all income and franchise taxes that may be imposed
on either Borrower by any Governmental Authority.
Section 4.15 ERISA and IRC Compliance and Liability. To the
best of its knowledge and belief, each Borrower and each ERISA Affiliate is
in compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder with respect to all Employee
Benefit Plans and, to the extent that such compliance is required of such
Borrower or such ERISA Affiliate, with respect to all Multiemployer Plans
except for any required amendments for which the remedial amendment period
as defined in Section 401(b) of the IRC has not yet expired. Each Employee
Benefit Plan and Multiemployer Plan that is intended to be qualified under
Section 401(a) of the IRC has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the IRC or an application
for determination letter confirming such qualification and exemption is
pending or will be filed prior to the expiration of the applicable remedial
amendment period as defined in Section 401(b) of the IRC. To the best of
its knowledge and belief, no material liability has been incurred by either
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan.
Section 4.16 Funding. No Pension Plan has been terminated, nor
has any accumulated funding deficiency (as defined in Section 412 of the
IRC) been incurred (without
54
regard to any waiver granted under Section 412 of the IRC), nor has any
funding waiver from the IRS been received or requested with respect to any
Pension Plan, nor, to the best of its knowledge and belief, has either
Borrower or any ERISA Affiliate failed to make any contributions or to pay
any amounts due and owing as required by Section 412 of the IRC,
Section 302 of ERISA or the terms of any Pension Plan prior to the due
dates of such contributions under Section 412 of the IRC or Section 302 of
ERISA, nor has there been any event requiring any disclosure under
Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan.
Section 4.17 Prohibited Transactions and Payments. None of
Borrower and Guarantor or, in the case of clauses (b) through (d) hereof,
any ERISA Affiliate has, to the best of its knowledge and belief:
(a) engaged in a nonexempt prohibited transaction described in Section 406
of ERISA or Section 4975 of the IRC; (b) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid; (c) failed to make a required
contribution or payment to a Multiemployer Plan; or (d) failed to make a
required installment or other required payment under Section 412 of the
IRC.
Section 4.18 No Termination Event. No Termination Event has
occurred or is reasonably expected to occur.
Section 4.19 ERISA Litigation. No proceeding, claim, lawsuit
and/or investigation is existing or, to the knowledge of either Borrower,
threatened concerning or involving any (a) employee welfare benefit plan
(as defined in Section 3(1) of ERISA) currently maintained or contributed
to by either Borrower or any ERISA Affiliate to which either Borrower or
Guarantor may have liability, (b) Pension Plan or (c) to the knowledge of
either Borrower, Multiemployer Plan which could reasonably be expected to
have a Material Adverse Effect.
Section 4.20 No Other Obligations. Except as set forth on
Schedule 4.20, none of Borrower and Guarantor has any obligation to provide
post-retirement welfare benefits under any Employee Benefit Plan or other
plan or agreement, except for benefits due (i) under employee pension
benefit plans (as defined in Section 3(2) of ERISA), (ii) to its disabled
employees, (iii) under Section 4980B of the IRC or Section 601 et seq. of
ERISA, or (iv) as otherwise required by law.
55
Section 4.21 Margin Regulations. Neither Borrower is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation G, T, U, or X of the Board
of Governors of the Federal Reserve System) and no proceeds of any Loan
will be used in a manner which would violate, or result in a violation of,
such Regulation G, T, U, or X.
Section 4.22 Investment Company Act. Neither Borrower is an
"investment company" nor a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Section 4.23 Environmental Matters. (i) Except as described in
Schedule 4.23 hereto, no Hazardous Material has been or is currently
located at, in, on, under or about the Property (or any other property with
respect to which either Borrower has or may have liability either
contractually or by operation of law) in a manner which violates any
applicable Environmental Requirement, or for which cleanup or corrective
action of any kind is required or authorized under any applicable
Environmental Requirement;
(ii) no substantial risk to human health or the environment
exists as a result of any condition on the Property; no Release of any
Hazardous Material from the Property onto or into any other property or
from any other property onto or into the Property has occurred or is
occurring in violation of any applicable Environmental Requirement except
as described in Schedule 4.23 hereto, or which could pose a substantial
risk to human health or the environment;
(iii) no notice of violation, Lien, complaint, suit, order or
other notice with respect to the environmental condition of the Property
(or any other property with respect to which either Borrower has or may
have liability either contractually or by operation of law) is outstanding
or anticipated, nor has any such notice been issued which has not been
fully satisfied and complied with in a timely fashion so as to bring the
Property (or any other property with respect to which either Borrower has
or may have retained or assumed liability either contractually or by
operation of law) into full compliance with every applicable Environmental
Requirement except as described in Schedule 4.23 hereto.
Section 4.24 Disclosure. No representation or warranty of
either Borrower contained in any Loan Instrument, or any other document,
certificate or written statement set
56
forth on Schedule 4.24 contained as of the date made any untrue statement
of a fact or omitted, omits or will omit to state a fact necessary in order
to make the statements contained herein or therein, when taken as a whole,
not misleading in any respect in light of the circumstances in which, and
on the date on which, the same were made. There is no fact known to either
Borrower which has not been disclosed in writing to Agent and which
materially adversely affects, or which could reasonably be expected in the
future to materially adversely affect, the properties, business, prospects
or financial condition of either Borrower or either Project.
Section 4.25 Insurance. Schedule 4.25 hereto sets forth a
complete and accurate description of all material policies of insurance
that will be in effect as of the Initial Funding Date for NRG Newark and as
of the Additional Funding Date for NRG Newark and NRG Parlin. To the best
of Borrower's knowledge, such policies are with companies rated "A-" or
better by Best's Insurance Guide and Key Rating or other insurance
companies of recognized responsibility satisfactory to Agent, and the
coverages provided by such policies are in amounts and cover such risks as
are usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which each Borrower
operates and, in any event the insurance coverages shall not be less than
the insurance coverages set forth in Schedule 4.25.
Section 4.26 Labor Matters. There are no strikes or other labor
disputes or grievances or charges or complaints with respect to any
employee or group of employees pending or, to the best of either Borrower's
knowledge, threatened against a Borrower.
Section 4.27 Additional Representations and Warranties and
Conditions Precedent. All representations and warranties set forth in each
Project Agreement and each writing delivered to any of the Secured Parties
pursuant hereto or thereto made by either Borrower, or to the best of
either Borrower's knowledge, any other Obligor are true and correct as
though made as of the date hereof or, if not true and correct, could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.28 Transactions With Affiliates. Set forth on
Schedule 4.28 is a true, accurate and complete description of all
transactions between a Borrower and any Affiliate of either Borrower or
Guarantor since June 30, 1995 which required or which will require in the
case of either
57
Borrower, the payment by such Borrower of an amount equal to or greater
than $100,000 during any twelve-month period.
Section 4.29 Projections. The Projections have been prepared by
Borrower and Guarantor on the basis of assumptions which are set forth
therein and which are acceptable to Agent, and (i) the assumptions related
thereto have been made in good faith with due care, (ii) the Projections,
taken as a whole, represent the best estimates of Borrower and Guarantor as
of the date such Projections are delivered to Agent pursuant to Article III
and based on the assumptions set forth therein, which assumptions are, to
the best of Borrower's and Guarantor's knowledge, realistic and achievable,
as to the matters covered thereby as of such date, it being understood and
acknowledged that the Projections do not represent a guarantee that the
Borrower will be able to achieve the results described in the Projections,
(iii) the Projections are based on reasonable assumptions as to all factual
and legal matters material to the estimates therein (including interest
rates and costs), (iv) the Projections are in all material respects
consistent with, and will be in all material respects consistent with, the
material provisions of Project Agreements and the Governmental Approvals,
and (v) the Projections reflect the transactions contemplated by the
Project Agreements. Each Borrower intends to conduct its business, to the
extent reasonably practicable, in order to achieve the Projections.
Section 4.30 Patents and Other Similar Property. Each Borrower
owns or has the right to use all patents, trademarks, service marks, trade
names, copyrights, licenses and other rights, which are necessary for the
ownership, operation and maintenance of its Project. No product, process,
method, substance, part or other material presently contemplated to be sold
by or used or employed by either Borrower in connection with its business
does or will infringe any patent, trademark, service mark, trade name,
copyright, license or other right owned by any other Person; there is no
claim or litigation pending or, to the best of each Borrower's knowledge,
threatened against or affecting either Borrower contesting its right to
sell, use or employ any such product, process, method, substance, part or
other material.
Section 4.31 Bank Accounts. Schedule 4.31 sets forth the
account numbers and location of all bank accounts of each Borrower.
Section 4.32 Sources and Uses. The Sources and Uses Table
delivered to Agent on or prior to the Initial
58
Funding Date accurately specifies, to the best of each Borrower's
knowledge, all Qualifying Costs and costs incurred in connection with each
Project during the period through and including the Initial Funding Date.
As of the Additional Funding Date, the Sources and Uses Table delivered to
Agent during the Additional Commitment Period accurately specifies, to the
best of each Borrower's knowledge, all Qualifying Costs and costs incurred
in connection with each Project during the period through and including the
Additional Funding Date.
Section 4.33 Operating Budget. The proposed Newark Operating
Budget prepared for each month of the period commencing on the Initial
Funding Date and ending on December 31, 1996 is attached hereto as Schedule
4.33A and is, to the best of Borrower's knowledge, a complete, fair and
accurate projection of projected Gross Revenues and projected Operating
Costs for the Newark Project for such period, it being understood and
acknowledged that the projected Gross Revenues and projected Operating
Costs set forth in the Newark Operating Budget do not represent a guarantee
that NRG Newark will be able to achieve the results described in the Newark
Operating Budget. The proposed Parlin Operating Budget, prepared for each
month of the period commencing on the Initial Funding Date and ending on
December 31, 1996 is attached hereto as Schedule 4.33B and is, to the best
of Borrower's knowledge, a complete, fair and accurate projection of
projected Gross Revenues and projected Operating Costs for the Parlin
Project for such period, it being understood and acknowledged that the
projected Gross Revenues and projected Operating Costs set forth in the
Parlin Operating Budget do not represent a guarantee that Borrower will be
able to achieve the results described in the Parlin Operating Budget.
Section 4.34 Operation of the Project. Each Project will be
able to be operated on a safe and commercially sound basis in compliance
with all Governmental Requirements and applicable Project Agreements,
except in cases where the non-compliance with such Governmental
Requirements and Project Agreements could not reasonably be expected to
result in a Material Adverse Effect, so that the performance and facility
guarantees and specifications provided for in the applicable Project
Agreements and Governmental Approvals can be substantially met during the
term of this Agreement and each Borrower can duly and punctually meet its
obligations under the applicable Project Agreements and Governmental
Approvals in accordance with the terms thereof. Each Borrower has adequate
inventories and spare parts to operate its respective Project in accordance
59
with the Project Agreements and the Governmental Requirements.
Section 4.35 Regulation of Parties. None of NRG Newark, NRG
Parlin, Guarantor or the Secured Parties is or will be, solely as a result
of the participation by such parties separately or as a group in the
transactions contemplated hereby or by any other Project Agreement, or by
the ownership, use or operation of either Project, subject to regulation by
any Governmental Authority as a "public utility", "electric utility", an
"electric utility holding company", a "public utility holding company", a
"holding company", or a subsidiary or affiliate of any of the foregoing
under any Governmental Requirements (including, without limitation, PUHCA
and the FPA); provided, however, that NRG Parlin alone shall be subject to
regulation as a public utility under the FPA. So long as the Newark
Project remains a Qualifying Cogeneration Facility, none of the Secured
Parties will by reason of its or their ownership or operation of the Newark
Project upon the exercise of remedies under the Newark Security Documents
be subject to financial, organizational or rate regulation by any
Governmental Authority as a "public utility", an "electric utility", and
"electric utility holding company", "holding company", or a subsidiary or
affiliate of any of the foregoing under any Governmental Requirements
(including, without limitation, PUHCA and the FPA).
Section 4.36 EWG Status/Qualifying Cogeneration Facility Status.
Each of NRG Newark and NRG Parlin is an Exempt Wholesale Generator and the
Newark Project is a Qualifying Cogeneration Facility. As of the Initial
Funding Date, each of NRG Newark and NRG Parlin has made a good faith
application for a certification of EWG status, and NRG Newark has
maintained and established by filing the QF Certificate for the Newark
Project, with such filings reflecting the intended ownership and operation
of the Newark Project or the Parlin Project, as the case may be. As of the
Initial Funding Date, the Newark Project is owned and operated in the
manner contemplated in the QF Certificate.
Section 4.37 Nature of Business. Neither Borrower (a) has
engaged in any business other than the operation of its respective Project
and (b) is a party to any contract, operating lease, agreement or
commitment which, either individually, or in the aggregate is material to
the operation of its respective Project, other than the applicable Project
Agreements.
60
Section 4.38 No Material Adverse Change. To the best knowledge
of Borrower, no material adverse change in the business, operations,
results of operations, condition (financial or otherwise), prospects or
property of any Obligor has occurred (except as previously disclosed to
Agent in a writing delivered by or on behalf of Borrower or such Obligor)
since (A) the date of such Obligor's most recent audited financial
statements previously delivered to Agent, if such Obligor's financial
statements have been delivered to Agent and (B) the date which is six
months prior to the Initial Funding Date, if such Obligor's financial
statements have not been delivered to Agent.
Section 4.39 Private Offering by Borrower. It is not necessary
in connection with the initial offering, sale or delivery of any of the
Initial Loan Notes to register such Initial Loan Notes under the Securities
Act. As of the Additional Funding Date, it is not necessary in connection
with the initial offering, sale or delivery of any of the Funding Loan
Notes and the Debt Service Loan Notes to register such Funding Loan Notes
and Debt Service Loan Notes under the Securities Act.
Section 4.40 Bankruptcy. The sale price for the Acquisition was
not arrived at by collusion among the buyer and potential bidder, and the
orders of the Bankruptcy Court authorizing the Acquisition and the
transactions contemplated by the Project Agreements were not obtained
through means such as mistake, inadvertence or fraud.
Section 4.41 On-Site Alternate Fuel. Each Project includes
facilities for the storage of Alternative Fuel (including kerosene)
sufficient to meet its obligations under the applicable Project Documents
and Governmental Requirements.
Section 4.42 No Liabilities. Except as disclosed on Schedule
4.23 or Schedule 4.42, to the best of Borrower's knowledge, there are no
Liabilities above $100,000, in the aggregate, existing or threatened
against either Borrower or such Borrower's respective properties or assets
that could reasonably be expected to result in a Material Adverse Effect.
Section 4.43 Levelized Capacity Payments. NRG Parlin has
elected levelized capacity payments under the Parlin Power Purchase
Agreement.
Section 4.44 Ownership. (i) NRG Newark is the sole owner of the
Newark Project free and clear of all Liens
61
(other than Permitted Liens), (ii) as of the Additional Funding Date, NRG
Parlin is the sole owner of the Parlin Project free and clear of all Liens
(other than Permitted Liens) (ii) Guarantor owns 100% of the outstanding
common stock of each Borrower free and clear of all Liens (other than
Permitted Liens), and (iii) NRG owns at least 41.86% of the outstanding
common stock of Guarantor free and clear of all Liens (other than Permitted
Liens).
ARTICLE V
Covenants of Borrower
Each Borrower hereby covenants and agrees that until payment in
full in cash of all of the Obligations or so long as any of the Commitments
shall remain available hereunder, Borrower will observe and fulfill, and
will cause to be observed and fulfilled (other than with respect to
Guarantor prior to the Additional Funding Date), each and all of the
following covenants unless Majority Lenders shall otherwise consent in
writing.
Section 5.1 The Accounts.
(a) Contingency Account. Borrower shall maintain a special
depository account (the "Contingency Account") (Account No. 376620-01) (and
such account shall be titled appropriately so as to identify the nature of
such account). Borrower agrees and shall cause the Contingency Account to
be funded with all insurance and condemnation proceeds payable to Agent in
accordance with Section 5.18.
(b) Project Account. Borrower shall maintain a special
depository account (the "Project Account") (Account No. 376620-02) (and
such account shall be titled appropriately so as to identify the nature of
such account). All Cash Revenues shall be deposited in the Project
Account. Borrower has irrevocably instructed all parties making payments
to either Borrower under the Project Documents, and shall instruct all
other parties at any time making cash payments to either Borrower, to make
such payments directly to the Project Account. Neither Borrower shall make
any withdrawal or transfer from the Project Account except in strict
adherence to the provisions of this Agreement and the Security Documents.
(c) Withdrawals from Project Account. Borrower shall make
withdrawals from the Project Account pursuant to
62
the terms of this Agreement and for the purposes of satisfying the
provisions of this Section 5.1, in the following order of priority:
(i) Payment of Operating Costs: on any day after the
Initial Funding Date, withdraw and transfer directly to such payees as
Borrower specifies or to the Local Bank Account, but not more
frequently than once per month, all amounts that Borrower reasonably
determines are necessary in order to pay Operating Costs (including
Cash Expenses and the management fees payable to Operator pursuant to
the Operations and Maintenance Agreement); provided that prior written
consent of the Agent shall be required (which consent shall not be
unreasonably withheld) to transfer amounts exceeding 110% of the
amounts allocated therefor in the approved Operating Budget for such
month and, provided, further, that Borrower shall have provided a
written notice to Agent for any such transfer (whether or not Agent's
consent is required for such transfer hereunder) at least five
Business Days prior to the date of withdrawal and transfer. At the
end of each fiscal year, Agent shall withdraw all amounts in the Local
Bank Account in excess of $200,000 that are not required to pay
current Operating Costs and deposit such amounts in the Project
Account;
(ii) Payments of Fees; Interest on the Loans and Other Debt
Service: after making the withdrawals specified in clause (i) above,
on each Interest Payment Date or any other date as required, withdraw
and transfer amounts to pay (A) accrued interest on the Loans, (B)
accrued commitment fees on the Commitments, (C) any amounts payable
pursuant to the Interest Rate Hedging Agreement, (D) the Agency Fee,
and (E) any other Debt Service (other than principal on the Loans) in
each instance then due;
(iii) Principal of the Credit Facility: after making the
withdrawals specified in clauses (i) and (ii) above, (A) if the
Additional Funding Date does not occur on or prior to the Initial
Maturity Date, then on the Initial Maturity Date withdraw and transfer
amounts necessary to repay the outstanding principal amount of the
Initial Loans, plus accrued and unpaid interest and fees thereon and
(B) if the Additional Funding Date occurs on or prior to the Initial
Maturity Date, then on each Repayment Date withdraw and transfer
amounts necessary to repay Funding Loan Repayment Amounts.
63
(iv) Principal of the Debt Service Line of Credit Facility:
after making the withdrawals specified in clauses (i), (ii) and (iii)
above, on each Repayment Date withdraw and transfer amounts necessary
to repay all outstanding principal amounts of the Debt Service Loans.
(v) Funding of Maintenance Reserve Account: after making
the withdrawals specified in clauses (i) through (iv) above, on each
Repayment Date withdraw and transfer for deposit in the Maintenance
Reserve Account an amount equal to the Maintenance Reserve Required
Deposit;
(vi) Funding of Debt Service Reserve Account: after making
the withdrawals specified in clauses (i) through (v) above, (A) on the
Additional Funding Date and on each Repayment Date withdraw and
transfer for deposit in the Debt Service Reserve Account (x) at all
times prior to the initial withdrawal of funds from the Debt Service
Reserve Account, fifty percent (50%) of the Available Cash Flow and
(y) at all times after the initial withdrawal of funds from the Debt
Service Reserve Account, one hundred percent (100%) of the Available
Cash Flow, in each case until such time that the amount on deposit in
the Debt Service Reserve Account, when taken together with the undrawn
portion of the Debt Service Line of Credit Facility Commitment, equals
the Debt Service Required Balance and, (B) if on any Repayment Date
the Debt Service Coverage Ratio, delivered on the immediately
preceding Calculation Delivery Date pursuant to Section 5.2 is less
than 1.25:1.00, withdraw and transfer for deposit in the Debt Service
Reserve Account, in addition to the amounts deposited pursuant to
clause (A) above, fifty percent (50%) of the Available Cash Flow
remaining after making the withdrawals specified in clause (A) above,
up to such amounts as shall cause the Additional Debt Service Required
Balance to be deposited in the Debt Service Reserve Account (not
including amounts that are counted towards the Debt Service Required
Balance); provided, however, that amounts on deposit in the Debt
Service Reserve Account representing the Additional Debt Service
Required Balance shall be withdrawn from the Debt Service Reserve
Account for deposit in the Project Account if the Debt Service
Coverage Ratio is at least 1.25:1.00 for two consecutive Calculation
Delivery Dates occurring after such amounts have been deposited into
the Debt Service Reserve Account; otherwise, the amount
64
of the Additional Debt Service Required Balance shall be recalculated
(and if necessary funded pursuant to this Section 5.1(c)(vi)) on each
succeeding Repayment Date. For purposes of this Agreement, the term
"Available Cash Flow" means, as of any Repayment Date, Cash Revenues
for the period ending on such Repayment Date and commencing on the
date which is three (3) months prior to such ending date plus any
other amounts on deposit in the Project Account on such Repayment
Date, less the sum of all payments made for such period pursuant to
clauses (i) through and including (v) of this Section 5.1(c);
(vii) Funding of Capital Improvements Reserve Account: after
making the withdrawals specified in clauses (i) through (vi) above, on
each Repayment Date, withdraw and transfer for deposit in the Capital
Improvements Reserve Account an amount equal to the Capital
Improvements Reserve Required Deposit;
(viii) Restricted Payments Escrow Account: after making the
withdrawals specified in clauses (i) through (vii) above, on each
Repayment Date, if the Debt Service Coverage Ratio delivered on the
immediately preceding Calculation Delivery Date pursuant to
Section 5.2 is less than 1.15:1.00, withdraw and transfer amounts
otherwise distributable to the Borrower pursuant to clause (x) below
for deposit in the Restricted Payments Escrow Account, provided,
however, that amounts on deposit in the Restricted Payments Escrow
Account shall be withdrawn from the Restricted Payments Escrow Account
for deposit in the Project Account if the Debt Service Coverage Ratio
is at least 1.20:1.00 for two consecutive Calculation Delivery Dates
occurring after such amounts have been deposited into the Restricted
Payments Escrow Account, provided, further, however, that in the event
amounts in the Restricted Payments Escrow Account are not transferred
to the Project Account within 12 months of being deposited into the
Restricted Payments Escrow Account, then such amounts shall be
withdrawn and made available for prepayment of the Loans in accordance
with Section 2.8(c) hereof;
(ix) Pre-Existing Liabilities: after making the withdrawals
specified in clauses (i) through (viii) above, on any Repayment Date,
withdraw and transfer directly to such payees as Borrower specifies
amounts that are necessary to pay Pre-Existing Liabilities; and
65
(x) Distribution to Borrower: (A) if the Debt Service
Coverage Ratio delivered on the immediately preceding Calculation
Delivery Date pursuant to Section 5.2 is at least 1.20:1.00 and (B) if
the Additional Funding Date has occurred on or prior to the Initial
Maturity Date and (C) so long as no Default or Event of Default has
occurred and is continuing, and (D) so long as none of the events
specified in clause (d) of the "Change of Control" definition have
occurred and (E) after making the withdrawals and retentions specified
in clauses (i) through (ix) above, then on each Repayment Date,
withdraw and transfer the monies remaining in the Project Account to
such account as Borrower shall direct, or for such other use as
Borrower shall direct.
(d) Debt Service Reserve Account; Restricted Payments Escrow
Account. Commencing on the Initial Funding Date, Borrower shall maintain a
special depository account (the "Debt Service Reserve Account") (Account
No. 376620-03) (and such account shall be titled appropriately so as to
identify the nature of such account). On the Additional Funding Date the
balance in the Debt Service Reserve Account shall be $5 million
(represented by the undrawn portion of the Debt Service Reserve Line of
Credit Facility Commitment). After the Additional Funding Date, to the
extent the balance in the Debt Service Reserve Account is less than the
Debt Service Required Balance, and, if applicable, the Additional Debt
Service Required Balance, the Debt Service Reserve Account shall be funded
as set forth in Section 5.1(c)(vi) on each Repayment Date in an amount up
to the Debt Service Required Balance and, if applicable, the Additional
Debt Service Required Balance. During the Availability Period the Debt
Service Reserve Account will be deemed to be funded to the extent of the
undrawn portion of the Debt Service Reserve Line of Credit Facility
Commitment plus the actual amounts on deposit in the Debt Service Reserve
Account. Lenders shall be entitled to use the balance in the Debt Service
Reserve Account to satisfy payment obligations of Borrower under this
Agreement and the other Loan Instruments. So long as no Event of Default
has occurred and is continuing, on each Repayment Date, Agent shall
withdraw any amount in the Debt Service Reserve Account in excess of the
sum of (A) the Debt Service Required Balance and (B) the Additional Debt
Service Required Balance (if required to be funded) for deposit in the
Project Account.
Commencing on the Initial Funding Date, Borrower shall maintain a
special depository account (the "Restricted
66
Payments Escrow Account") (Account No. 376620-05) (and such account shall
be titled appropriately so as to identify the nature of such account). The
Restricted Payments Escrow Account shall be funded as set forth in
Section 5.1(e)(vii).
(e) Pre-Existing Liabilities Account. Commencing on the Initial
Funding Date, Borrower shall maintain a special depository account (the
"Pre-Existing Liabilities Account") (Account No. 376620-06) (and such
account shall be titled appropriately so as to identify the nature of such
account). Amounts in the Pre-Existing Liabilities Account shall be used to
satisfy Pre-Existing Liabilities.
(f) Maintenance Reserve Account. Commencing on the Initial
Funding Date, Borrower shall maintain a special depository account (the
"Maintenance Reserve Account") (Account No. 376620-07) (and such account
shall be titled appropriately so as to identify the nature of such
account). Borrower shall fund the Maintenance Reserve Account on the
Additional Funding Date in an amount equal to the Maintenance Reserve
Required Deposit. After the Additional Funding Date, the Maintenance
Reserve Account shall be funded as set forth in Section 5.1(c)(v) on each
Repayment Date in an amount equal to the Maintenance Reserve Required
Deposit or as otherwise instructed by Agent based on consultation with the
Independent Engineer and Borrower, if Agent reasonably believes that any
such amount needs to be adjusted due to the necessity to overhaul the
Newark Project's or the Parlin Project's material equipment earlier or
later than expected. Agent shall provide Borrower with ninety (90) days'
prior written notice of any adjustment in such amount. Borrower may, with
the consent of Agent based upon consultation with the Independent Engineer,
not to be unreasonably withheld, from time to time withdraw funds from the
Maintenance Reserve Account to pay expenses associated with major equipment
inspection and major overhaul, with respect to either Project.
(g) Capital Improvements Reserve Account. Commencing on the
Initial Funding Date, Borrower shall maintain a special depository account
(the "Capital Improvements Reserve Account") (Account No. 076620-04) (and
such account shall be titled appropriately so as to identify the nature of
such account). Borrower shall fund the Capital Improvements Reserve
Account on the Additional Funding Date in an amount equal to the Capital
Improvements Reserve Required Deposit. After the Additional Funding Date,
the Capital Improvements Reserve Account shall be funded as set forth in
Section 5.1(c)(vii) on each Repayment Date in an
67
amount equal to the Capital Improvements Reserve Required Deposit or as
otherwise instructed by Agent based on consultation with the Independent
Engineer and Borrower, if Agent reasonably believes that any such amount
needs to be adjusted due to the necessity to repair any of the Newark
Project's or Parlin Project's material equipment earlier or later than
expected. Agent shall provide Borrower with ninety (90) days' prior
written notice of any adjustment in such amount. Borrower may, with the
consent of Agent based upon consultation with the Independent Engineer, not
to be unreasonably withheld, from time to time withdraw funds from the
Capital Improvements Reserve Account to pay expenses associated with
capital improvements, major repair and major component part replacement
with respect to either Project.
(h) Permitted Investments. Pending the application of funds in
the Project Account, Debt Service Reserve Account, Restricted Payments
Escrow Account, Pre-Existing Liabilities Account, Maintenance Reserve
Account or Capital Improvements Reserve Account in accordance with
Sections 5.1(c), (d), (e), (f) or (g) hereof, respectively, such funds
shall be invested, reinvested and liquidated (at the risk and expense of
Borrower) in accordance with instructions given by Borrower (except upon
the occurrence and during the continuance of an Event of Default when such
investments, reinvestments and liquidations shall, at Agent's option, be
determined by Agent); provided, however, that no such investment shall be
made other than in Permitted Investments. Agent shall not be required to
take any action with respect to investing the funds in any Account in the
absence of written instructions by Borrower. Agent shall not be liable for
any loss resulting from any Permitted Investment or the sale or redemption
thereof (other than such loss resulting from Agent's gross negligence or
willful misconduct). If and when cash is required for disbursement in
accordance with Section 5.1(c), (d), (e), (f) or (g) hereof, Agent is
authorized, without instructions from Borrower, to the extent necessary, to
cause Permitted Investments to be sold or otherwise liquidated into cash
(without regard to maturity) in such manner as Agent shall deem reasonable
and prudent under the circumstances. Any funds held by Agent, and all such
Permitted Investments made in respect thereof, shall be held by Agent, and
the interest of Borrower therein, until withdrawn, shall constitute part of
the security subject to the security interests created by the Security
Documents.
Section 5.2 Debt Service Coverage Ratio. On each Calculation
Delivery Date, Borrower shall deliver to Agent
68
the Debt Service Coverage Ratio calculated for the four consecutive
quarterly periods ending on the Repayment Date immediately preceding such
Calculation Delivery Date. A sample calculation of the ratio to be
provided hereunder is contained in Schedule 5.2. Such calculation shall be
made by Borrower reasonably and in good faith.
Section 5.3 Maintenance of Existence, Privileges, Etc. Each
Borrower shall, and shall cause NPI to, at all times (i) preserve and
maintain in full force and effect (A) its existence as a corporation in
good standing under the laws of the State of Delaware, (B) its
qualification to do business in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its
business as conducted or proposed to be conducted makes such qualification
necessary and where the failure to maintain such qualification could
reasonably be expected to result in a Material Adverse Effect and (C) all
of its powers, rights, privileges and franchises necessary for the
ownership, maintenance and operation of each Project and the maintenance of
its existence, except, in the case of clause (C) only, where the failure to
do so could not reasonably be expected to result in a Material Adverse
Effect and (ii) obtain and maintain in full force and effect all
Governmental Approvals and other consents and approvals required at any
time in connection with the maintenance, ownership or operation of each
Project and where the failure to obtain and maintain in full force and
effect such Governmental Approvals, consents and approvals could reasonably
be expected to result in a Material Adverse Effect.
Section 5.4 Performance of Project Documents. Each Borrower
will, and will cause NPI to, (i) perform and observe all of its covenants
and agreements contained in the Governmental Approvals, Insurance Policies
and any of the Project Agreements to which it is a party, unless the
failure to perform or observe such covenants and agreements could not
reasonably be expected to result in a Material Adverse Effect,
(ii) preserve, protect and defend the rights of each of Borrower and NPI
contained in the Governmental Approvals, Insurance Policies and any of the
Project Agreements to which it is a party, unless the failure to preserve,
protect or defend such rights could not reasonably be expected to result in
a Material Adverse Effect and (iii) maintain in full force and effect each
of the Project Agreements and all contracts, permits and approvals relating
thereto which are necessary for the maintenance and operation of each
Project.
69
Section 5.5 Operation and Maintenance.
(a) Operations. Each Borrower will use, maintain and operate
its respective Project in compliance with Prudent Electrical Practices (as
defined in the relevant Power Purchase Agreement), all Project Documents,
this Agreement, the Operating Budget and all applicable Governmental
Approvals and Laws, the non-compliance with which could reasonably be
expected to result in a Material Adverse Effect. Each Borrower will
inspect, maintain, service and repair its respective Project so as to keep
such Project (i) in good order, operating condition (normal wear and tear
excepted) and repair in conformity with prudent industry standards and
commercial practice, (ii) in compliance with all requirements under the
Project Documents, the non-compliance with which could reasonably be
expected to result in a Material Adverse Effect and (iii) in such condition
that such Project will have the capacity and functional ability to perform,
in normal commercial operation, the functions and at the ratings set forth
in the Project Documents and all applicable Governmental Approvals for the
remaining useful life of such Project, except where such failure could not
reasonably be expected to result in a Material Adverse Effect. Each
Borrower shall cause its respective Project to be operated so as to
preserve and enforce all warranties and guaranties regarding such Project
and to which such Borrower is a beneficiary, unless the failure to preserve
and enforce such warranties and guaranties could not reasonably be expected
to result in a Material Adverse Effect.
(b) Repair and Replacement. Each Borrower will keep its
respective Project and all other property necessary for its business in
good repair, working order and condition, normal wear and tear excepted.
In the event of any damage to or destruction of either Project, or any part
thereof, by fire or other casualty not resulting in a prepayment under
Section 2.8(a), each respective Borrower shall, at its own expense and
whether or not such damage or destruction is covered by an insurance
policy, but subject to the release by Agent of and having the benefit of
any insurance proceeds released pursuant to Section 5.18, with reasonable
promptness, repair, restore, replace or rebuild the same so that upon the
completion of such repair, restoration, replacement or rebuilding, such
Project shall be in the condition required by the foregoing provisions of
this Section 5.5 and so that the productive capacity, value, utility and
remaining useful life of such Project shall be at least equal to the
greater of (i) the actual productive capacity, value, utility and remaining
useful life of such Project immediately prior to the happening of such
casualty
70
or (ii) the productive capacity, value, utility and remaining useful life
that such Project would have had if such Project were used, maintained and
operated in accordance with the requirements of this Section 5.5.
Section 5.6 Operating Logs. Each Borrower will, at its sole
cost and expense, (a) maintain at its respective Project daily operating
logs showing, among other things, the electrical output of such Project,
(b) keep maintenance and repair reports in sufficient detail to indicate
the nature and date of all work done, (c) maintain a current operating
manual and a complete set of plans, accounting records and specifications
reflecting all alterations and (d) maintain all other records, logs and
other materials required by the relevant Project Documents or any
Governmental Requirements.
Section 5.7 Compliance with Laws.
(a) Generally. Each Borrower shall make such alterations to its
respective Project as may be required for compliance with all applicable
Governmental Requirements, except where non-compliance could not reasonably
be expected to result in a Material Adverse Effect. NRG Newark and NRG
Parlin shall take no action which would have an adverse impact upon the
status of NRG Newark or NRG Parlin as an EWG or, until the Rate Approval
Date, of the Newark Project as a Qualifying Cogeneration Facility, and
shall ensure that each EWG certification and, until the Rate Approval Date
for NRG Newark, the QF Certificate for the Newark Project is maintained.
Upon the request of Agent, each Borrower shall deliver to Agent evidence of
such Borrower's compliance with all applicable Governmental Requirements
and, if such evidence is not reasonably available to such Borrower, certify
to Agent that such Borrower is in full compliance, except where the non-
compliance with such Governmental Requirements could not reasonably be
expected to result in a Material Adverse Effect.
(b) Resistance of Regulatory Change. If any litigation,
investigation or proceeding specifically directed to either Borrower or
either Project is commenced which causes, or may cause, any Governmental
Authority to issue (or propose to issue) any order, judgment, regulation,
decision or interpretation specifically directed to such Borrower or such
Project the effect of which is, or may cause (i) a Material Adverse Effect
or (ii) a rescission, termination, repeal, invalidation, suspension,
injunction, or a material amendment or modification of any license, permit,
authorization or Project Agreement, or any part thereof, with respect to
such Borrower, and, if in the opinion of such
71
Borrower, there is a reasonable likelihood that such litigation,
investigation or proceeding or action by any Governmental Authority could
reasonably be expected to result in a Material Adverse Effect, such
Borrower will use commercially reasonable efforts, in light of all
circumstances at the time, to (A) contest and resist any such litigation,
investigation or proceeding or such action by any Governmental Authority,
(B) pursue all remedies and appeals as necessary in connection therewith
and (C) take such other lawful action, in each case as such Borrower shall
determine to be necessary or, in the opinion of Agent, is desirable in
light of all relevant circumstances to prevent such litigation,
investigation or proceeding or such action by any Governmental Authority
from becoming final and nonappealable or otherwise irrevocable, to attempt
to postpone the effectiveness of such litigation, investigation or
proceeding or such action by any Governmental Authority, and to cause such
litigation, investigation or proceeding or such action by any Governmental
Authority to be terminated, revoked, amended or modified so as to eliminate
the reasonable likelihood of such effect.
(c) Compliance with Margin Stock Rules. No part of the proceeds
of the Commitments will be used to purchase "margin stock" (as defined in
the regulations referred to below) or for any other purpose which would
result in a violation (whether by a Borrower, Agent or the Lenders) of
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System or to extend credit to others for any such purpose. Neither
Borrower nor any of its Affiliates is engaged in, nor will any of them
engage in, the business of extending credit for the purpose of purchasing
or carrying any "margin stock."
(d) Environmental Matters. Each Borrower will comply, and shall
cause all tenants, licensees, invitees, any subcontractor, operator, and
occupants of its respective Project to comply in all material respects with
all applicable Environmental Requirements. Each Borrower will use its best
efforts to cause all other Obligors to comply in all material respects with
all Environmental Requirements applicable to its respective Project. Each
Borrower will not, and will not permit any such other party to, generate,
store, handle, process, transport, ship, dispose, or otherwise use
Hazardous Materials at, in, on, under or from its respective Project, or
onto any other property, in a manner that could lead to the imposition on
such Borrower, any of the Secured Parties or such Project of any cleanup
obligation, corrective action, liability, judgment, order or Lien under any
Environmental Requirement. Each Borrower
72
shall promptly notify Agent when it learns of any information that would
have resulted in a breach hereunder if such information had been known but
not disclosed at the time such representation was made, or when it becomes
aware of any Release of any Hazardous Material (whether or not such Release
occurred prior to, on or after the Initial Funding Date) at, in, on, under
or from its respective Project which is required to be reported to a
Governmental Authority, or which could result in any cleanup obligation,
corrective action, liability, judgment, order or Lien under any
Environmental Requirement. Each Borrower shall immediately forward to
Agent copies of any notices, complaints or summonses received by such
Borrower relating to alleged violations of any Environmental Requirement or
potential adverse actions in any way involving environmental or health
matters. Each Borrower will promptly pay when due any fine, penalty,
judgment, or assessment arising under any Environmental Requirement against
such Borrower, its respective Project or against any of the Secured Parties
to the extent the same arises in connection with such Project, except to
the extent (x) any such fine, penalty, judgment or assessment is being
contested in good faith by appropriate proceedings under applicable Laws,
(y) the pendency of such proceedings is not likely to interfere with the
operation of such Project by such Borrower and does not involve a material
risk that such Project or any part thereof may be sold, lost or forfeited,
and (z) adequate reserves in the judgment of Agent have been set aside with
respect thereto to satisfy any adverse determination. If at any time the
condition, operation or use of either Project violates or could result in
liability under any applicable Environmental Requirement, or there are
Hazardous Materials located at, in, on, under or from either Project for
which cleanup or corrective action of any kind is required under any
applicable Environmental Requirement or, because of any Release of any
Hazardous Material, cleanup of or corrective action with respect to such
Hazardous Material is authorized under CERCLA or any similar state or local
Law, each respective Borrower shall, within 10 days after discovering such
condition, operation or use, notify Agent and immediately initiate and
thereafter diligently pursue, at its sole cost and expense, such actions as
shall expeditiously result in full compliance in all material respects with
and, to the maximum extent possible, elimination of any liability under all
Environmental Requirements. If an Event of Default exists, Agent may cause
an environmental audit of either Project or any portion thereof to be
conducted at Borrower's expense, and each Borrower shall cooperate in all
reasonable ways with any such audit. If either Mortgage is foreclosed or
either Borrower tenders a deed or assignment in lieu of foreclosure, such
73
Borrower shall deliver the applicable Project to the purchaser at
foreclosure or to Agent or the nominee of either, as the case may be, in a
condition that complies in all respects with all applicable Environmental
Requirements, and that does not contain Hazardous Materials for which
cleanup or corrective action is required under any applicable Environmental
Requirements or, because of any Release of Hazardous Material, cleanup of
or corrective action with respect to such Hazardous Material is authorized
under CERCLA or any similar state or local Law or may be necessary to
prevent or eliminate a material risk to human health or the environment.
(e) Changes in Laws; Compliance with Environmental Requirements.
If (A) there shall occur any change effective after the Initial Funding
Date in any Governmental Requirement that, in the reasonable judgment of
the Majority Lenders, could reasonably be expected to result in a Material
Adverse Effect on the ability of either Borrower to meet its obligations
under the Loan Instruments or (B) in order to comply with any Environmental
Requirements, including, without limitation, any regulations promulgated by
the U.S. Environmental Protection Agency and any state implementing
authority pursuant to the Clean Air Act Amendments of 1990, either Borrower
is required to acquire pollution allowances, offsets or similar emission
approvals, or is required to make other expenditures that could reasonably
be expected to result in a Material Adverse Effect (including the
installation or modification of equipment or technologies) to comply with
such Environmental Requirements, then, in the case of any event described
in the foregoing clause (A) or (B) such Borrower shall develop a plan of
action ("Plan") for the purpose of (x) in the case of any event described
in clause (A), (i) causing its respective Project to comply with such
change, no later than the effective date thereof or (ii) otherwise curing
the Material Adverse Effect, which Plan shall include (A) the proposed
method for effecting changes required to such Project or for effecting such
cure, (B) the schedule for implementation of any such changes or any such
cure and (C) the method for financing the required changes to such Project
or such cure and (y) in the case of any event described in clause (B),
acquiring such allowances, offsets or approvals or otherwise complying with
such Environmental Requirements. Any such Plan shall be reasonably
acceptable in form and substance to Agent, in consultation with the
Independent Engineer, and shall be submitted to Agent and the Independent
Engineer for their review and approval within 90 days of such event or of
recognition by such Borrower or Agent of the actual or potential
applicability of such Environmental Requirements or such shorter period as,
in the
74
reasonable judgment of Agent, in consultation with such Borrower and the
Independent Engineer, may be necessary in order to effectively mitigate any
Material Adverse Effect or otherwise comply with the change in the
Governmental Requirement or Environmental Requirement. No funds shall be
distributed pursuant to Section 5.1(c)(x) hereof until Agent and Borrower
mutually agree as to the amounts, if any, needed to be reserved to
implement any such Plan and upon such agreement Borrower shall, if
required, establish a reserve account in such amounts and in accordance
with a schedule to be determined by the Secured Parties, for the purpose of
funding the anticipated cost of implementing such Plan. Such reserve
account shall be funded from monies in the Project Account after making the
withdrawals and retentions specified in Section 5.1(c)(i) through (vi)
hereof.
(f) Operating Reports. Each Borrower will provide to Agent and
the Independent Engineer, on or before the 20th day of each month and at
any other time when so requested by Agent, a report setting forth the
principal operating data for its respective Project for the previous month,
including, without limitation, (x) until the Rate Approval Date, evidence
that NRG Newark is maintaining the Newark Project's status as a Qualifying
Cogeneration Facility, (y) any reports as to significant operating,
maintenance and management events, pursuant to the Operations and
Maintenance Agreement, or otherwise, and (z) such other information as
Agent may request. Each Borrower shall monitor the activities of its
respective Project pertinent to the maintenance of its status as an EWG (or
a Qualifying Cogeneration Facility, if applicable) in the manner deemed
necessary or advisable from time to time by any Governmental Authority or
Agent.
(g) Intellectual Property Infringement. In the event that any
product, process, method, substance, part or other material sold, used or
employed, or contemplated to be sold, used or employed, by either Borrower
in connection with its business or its respective Project does or will
infringe any patent, trademark, service mark, trade name, copyright,
license or other right owned by any other Person or any claim or litigation
is pending or threatened against or affecting such Borrower contesting its
right to sell, use or employ any such product, process, method, substance,
part or other material, such Borrower shall give Agent notice promptly, but
in no event more than five days after obtaining knowledge thereof and such
Borrower shall effectively eliminate such infringement within 30 days of
giving such notice to Agent (unless subject to a Good Faith Contest) or
such longer period as in the reasonable judgment of Agent could not
reasonably be expected to have a Material Adverse Effect.
75
(h) Tracking of Permits. Each Borrower shall maintain a
tracking system to monitor the status of, the conditions contained in, and
compliance with, Governmental Approvals required to be obtained by such
Borrower, the non-compliance with which could reasonably be expected to
result in a Material Adverse Effect, in form and substance reasonably
satisfactory to the Independent Engineer.
Section 5.8 Information. Borrower will furnish to Agent with
sufficient copies for each Lender (as designated by Agent) the following
information:
(a) Quarterly Financial Statements of Borrower. As soon as
available and in any event within 60 days after the end of each of the
first three fiscal quarters of each fiscal year of Borrower and Guarantor,
consolidated balance sheets of Borrower and Guarantor as of the end of such
quarter and consolidated (and consolidating) statements of operations,
stockholders' equity and cash flows of Borrower and Guarantor for the
period commencing at the beginning of such fiscal year and ending with the
end of such quarter, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by an Authorized Officer of Borrower and
Guarantor as having been prepared in accordance with GAAP, consistently
applied, together with a Compliance Certificate as of the end of such
fiscal quarter. Prior to the termination of the NRG Guaranty, Borrower
shall also deliver, as soon as available and in any event within 60 days
after the end of each of the first three fiscal quarters of each fiscal
year of NRG, the balance sheets of NRG as of the end of such quarter and
statements of operations, stockholders' equity and cash flows of NRG for
the period commencing at the beginning of such fiscal year and ending with
the end of such quarter, all in reasonable detail and duly certified
(subject to year-end audit adjustments) by an Authorized Officer of NRG as
having been prepared in accordance with GAAP consistently applied, together
with a Compliance Certificate as of the end of such fiscal quarter. Agent
and Lenders agree to keep such financial statements of NRG confidential in
accordance with the provisions of Section 8.15. At the same time as such
quarterly financial statements are delivered, Borrower shall also deliver
an operating statement in the same form as the Operating Budget which shall
list in comparative form the approved Operating Costs and Operating
Revenues as set forth in the approved Operating Budget for the year in
which such quarterly financial statements are delivered and the actual
Operating Costs and Operating Revenues for such quarter as set forth in
such quarter's consolidated statements of operations;
76
(b) Annual Financial Statements of Borrower. As soon as
available and in any event within 105 days after the end of each fiscal
year of Borrower and Guarantor, the consolidated balance sheets of Borrower
and Guarantor as of the end of such fiscal year and the consolidated (and
consolidating) statements of operations, stockholders' equity and cash
flows of Borrower and Guarantor for such fiscal year, in the case of such
consolidated financial statements, certified, without material
qualifications or limitations as to scope of the audit by independent
public accountants of recognized standing, as having been prepared in
accordance with GAAP, consistently applied, together with a Compliance
Certificate as of the end of such fiscal year for Borrower and Guarantor.
Prior to the termination of the NRG Guaranty, Borrower shall also deliver,
as soon as possible and in any event within 105 days after the end of each
fiscal year of NRG, the balance sheets of NRG as of the end of such fiscal
year and the statements of operations, stockholders' equity and cash flows
of NRG for such fiscal year, certified, without material qualifications or
limitations as to the scope of the audit by independent public accountants
of recognized standing, as having been prepared in accordance with GAAP,
consistently applied, together with a Compliance Certificate as of the end
of such fiscal year for NRG. Agent and Lenders agree to keep such
financial statements of NRG confidential in accordance with the provisions
of Section 8.15.
(c) Accountants' Reports. Promptly upon receipt thereof,
Borrower will deliver copies of all significant reports submitted to
Borrower by independent public accountants in connection with each annual,
interim or special audit of the financial statements of Borrower made by
such accountants;
(d) Notice of Defaults. As soon as possible and in any event
within five days after obtaining actual knowledge of the occurrence of each
Event of Default and each event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default, a statement of an
Authorized Officer of Borrower setting forth details of such Event of
Default or event and the action which Borrower has taken and proposes to
take with respect thereto;
(e) PBGC Notices. Promptly and in any event within ten Business
Days after receipt thereof by either Borrower or any ERISA Affiliate from
the PBGC, copies of each notice received by such Borrower or any such ERISA
Affiliate of the intention of the PBGC to terminate any Pension Plan or to
have a trustee appointed to administer any Pension Plan;
77
(f) Litigation. Subject to the terms of Section 5.7(d) hereof,
notice (i) promptly after the commencement thereof, in the case of either
Borrower, of all actions, suits and proceedings before any Governmental
Authority affecting a Borrower or any of its respective assets or
properties; (ii) promptly upon receipt by either Borrower of written notice
thereof from an Obligor, of all actions, suits and proceedings before any
Governmental Authority affecting such Obligor or any of its assets or
properties; (iii) promptly after the commencement thereof, in the case of
Guarantor, of all actions, suits and proceedings before any Governmental
Authority affecting Guarantor or any of its respective assets or properties
involving an amount greater than $100,000; and (iv) in any such case,
promptly after the occurrence thereof, or (in the case of an Obligor) upon
receipt of notice thereof, notice of any material development in any such
actions, suits or proceedings;
(g) Quarterly Officer's Certificate. Together with the
financial statements referred to in Sections 5.8(a) and 5.8(b), a
certificate signed by an Authorized Officer of Borrower or Guarantor as the
case may be, in form and substance reasonably satisfactory to Agent,
(x) certifying (i) as to the absence of any Default or Event of Default
(or, if any exists, describing the nature thereof) and (ii) the absence of
a Material Adverse Effect (or, if any exists, describing the nature
thereof) and (y) setting forth a list, if applicable, of any and all
unaccrued and unwaived payment defaults by either Borrower aggregating more
than $100,000, or by Guarantor aggregating more than $250,000, on any Debt
as of the last day of the prior fiscal quarter;
(h) Employee Benefit Plans. With reasonable promptness, and in
any event within thirty (30) days of the time that either Borrower
reasonably becomes aware of such event or circumstance, such Borrower will
give notice of and/or deliver to Agent and each Lender copies of:
(1)(a) the establishment of any new Pension Plan or Multiemployer Plan,
(b) the commencement of contributions to any Pension Plan or Multiemployer
Plan to which such Borrower or any of its ERISA Affiliates were not
previously contributing or becomes obligated to contribute or (c) any
material increase in the benefits of any existing Pension Plan or
Multiemployer Plan or (d) the establishment or amendment of any Employee
Benefit Plan or other plan or agreement which creates or increases
liability of such Borrower or any of its ERISA Affiliates with respect to
health or welfare benefits to retirees and which could reasonably be
expected to result in a Material Adverse Effect; (2) each funding waiver
request filed with respect to
78
any Employee Benefit Plan and all communications received or sent by such
Borrower or any ERISA Affiliate with respect to such request; and (3) the
failure of such Borrower or any ERISA Affiliate to make a required
installment or payment under Section 302 of ERISA or Section 412 of the IRC
by the due date.
(i) Termination Events. Promptly and in any event within ten
(10) days of becoming aware of the occurrence of or forthcoming occurrence
of any (1) Termination Event or (2) nonexempt material "prohibited
transaction," as such term is defined in Section 406 of ERISA or
Section 4975 of the IRC, in connection with any Pension Plan or any trust
created thereunder, Borrower will deliver to Agent and each Lender a notice
specifying the nature thereof, what action Borrower or any ERISA Affiliate
have taken, are taking or propose to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(j) ERISA Notices. With reasonable promptness but in any event
within ten (10) days for purposes of clauses (1), (2) and (3), Borrower
will deliver to Agent and each Lender copies of: (1) any favorable or
unfavorable determination letter from the Internal Revenue Service
regarding the qualification of an Employee Benefit Plan or Multiemployer
Plan under Section 401(a) of the IRC; (2) all notices received by either
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer any Pension Plan;
(3) each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by either Borrower or any ERISA Affiliate with the Internal
Revenue Service with respect to each Pension Plan; and (4) all notices
received by either Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA; provided that such notice shall be
required for the event described in clause (1) above with respect to
Multiemployer Plans only after either Borrower has obtained knowledge or
has reason to know of such event. Borrower will notify Agent and each
Lender in writing within two (2) Business Days of either Borrower obtaining
knowledge or reason to know that such Borrower or any ERISA Affiliate have
filed or intends to file a notice of intent to terminate any Pension Plan
under a distress termination within the meaning of Section 4041(c) of
ERISA;
(k) Transactions With Affiliates. Within 10 days after the end
of each fiscal quarter of Borrower, Borrower will deliver to Agent a
description of any transaction
79
(except for transactions undertaken pursuant to the Management Agreement as
in effect on the date hereof and transactions undertaken pursuant to an
operations and maintenance agreement entered into with any Affiliate of a
Borrower in accordance with Sections 5.32 or 6.1(o)), that occurred during
such fiscal quarter between either Borrower and any Affiliate of such
Borrower requiring payments by such Borrower in excess of $100,000 for any
12-month period;
(l) Annual Projections; Operating Budget. Within 30 days prior
to the commencement of each fiscal year of Borrower, Borrower will deliver
to Agent (with sufficient copies for each Lender and after consultation
with Agent) (A) consolidated and consolidating projections of the
operations of each Borrower for the immediately succeeding fiscal year,
such projections to contain the types of information set forth on the
Projections and (B) an annual Operating Budget for each Project which shall
establish that each Borrower will be in compliance, on a pro forma
projected basis, with the term of this Agreement, such projections and
budgets to be accompanied by the certificate set forth in paragraph (m)
below. If such budgets are not within 10% of the base case projections,
then such budgets must be approved by Agent;
(m) Projections and Budget Certificate. Together with the
projections and budgets to be delivered pursuant to paragraph (l) above, a
certificate executed by the chief financial officer of Borrower certifying
that (i) the assumptions related thereto have been made in good faith with
due care, (ii) the projections or budgets as applicable, taken as a whole,
represent the best estimates of the Borrower as of the date thereof and
based on the assumptions set forth therein, which assumptions are, to the
best of Borrower's knowledge, realistic and achievable, of matters covered
thereby for the periods covered thereby, it being understood and
acknowledged that such projections and budgets do not represent a guarantee
that the Borrower will be able to achieve the results described therein,
(iii) the projections or budgets, as applicable, are based on reasonable
assumptions as to all factual and legal matters material to the estimates
therein (including interest rates and costs) and (iv) the projections or
budgets as applicable, are in all respects consistent with, and will be in
all respects consistent with, the provisions of the Project Agreements;
(n) Debt Service Coverage Ratio Compliance Certificate. No
later than 90 days after each fiscal year of Borrower, Borrower shall
deliver to Agent (with sufficient
80
copies for the Lenders) a certificate, executed by an Authorized Officer of
Borrower, stating that no event has occurred and neither Borrower has any
reason to believe that any event will occur which would cause Borrower not
to be in compliance with Section 5.37 for the then current fiscal year,
such certificate to be in form and substance satisfactory to Agent;
(o) Other Financial Statements. A copy of the annual and
quarterly financial statements (consisting of a balance sheet and the
related statements of income, equity and cash flows or, in the case of
DuPont, JCP&L and PSE&G, Forms 10-K and 10-Q, respectively, filed with the
SEC) of each of the Obligors, consolidated where any such party has
subsidiaries, within 30 days of publication of such statements; provided
that in the case of all Obligors other than Borrower, Guarantor and Newark
Group, such quarterly financial statements shall be furnished to the extent
publicly available or otherwise available to either Borrower or Guarantor;
(p) Additional Project Information. Without duplication of any
of the foregoing:
(i) as soon as available and in any event within five Business
Days after either Borrower (or in the case of clause (a) below an
Authorized Officer of either Borrower or the plant manager of either
Project) have knowledge thereof, written notice of:
(a) any information, development or knowledge of any adverse
change in the business, properties, condition (financial or
otherwise) or operations of any party to any of the Project
Documents which has had or could reasonably be expected to result
in a Material Adverse Effect;
(b) any fire or other casualty affecting either Project in
any material respect; and
(c) any actual or proposed termination, rescission,
discharge (otherwise than by performance), amendment or waiver
under, any material provision of any Project Agreement;
(q) Additional Information. Such other information respecting
the condition or operations, financial or otherwise, of either Borrower or,
to the extent reasonably available, any other Obligor or any other party,
as any
81
Lender through Agent may from time to time reasonably request; and
(r) Significant Events. Promptly upon either Borrower's
knowledge thereof, a written statement from an Authorized Officer of
Borrower describing the details of:
(A) any substantial dispute which may exist between either
Borrower and any governmental regulatory body or law enforcement
authority that could reasonably be expected to result in a
Material Adverse Effect;
(B) any labor controversy resulting in or reasonably likely
to result in a strike or work stoppage or slowdown against either
Borrower that could reasonably be expected to result in a
Material Adverse Effect;
(C) any proposal by any public authority to condemn or
acquire any material assets or business of either Borrower;
(D) any event or occurrence with respect to either Borrower
or any of its respective businesses, assets or properties which
gives rise to a claim in excess of $250,000 under any insurance
policy insuring such Borrower or any of its respective
businesses, assets or properties; and
(E) any change of any Law, which change is reasonably likely
to result in a Material Adverse Effect.
Section 5.9 Bank Accounts. Each Borrower will maintain all of
its bank accounts with Credit Suisse, except that (a) one or more bank
accounts may be maintained at one or more commercial banks in Minnesota
reasonably acceptable to Agent (the "Local Bank Accounts") for the sole
purpose of paying Cash Expenses and management fees under the Operations
and Maintenance Agreement, provided, that prior to depositing any funds in
any Local Bank Account, such Borrower, Agent and such bank shall have
entered into a blocked account agreement, each substantially in the form of
Exhibit D ("Blocked Account Agreement") with respect to each such account
and (b) one or more bank accounts may be maintained by Borrower for the
deposit of funds transferable by Borrower pursuant to Section 5.1(c).
82
Section 5.10 Inspection; Maintenance of Records.
(a) Inspection Rights. At any reasonable time and from time to
time upon reasonable notice, each Borrower will permit Agent or any agents
or representatives thereof, to examine (at the location where normally
kept) and make abstracts from the records and books of account of, and
visit the properties of such Borrower and to, upon reasonable notice to
such Borrower, discuss the affairs, finances and accounts of such Borrower
with any of its officers and discuss the affairs, finances and accounts of
such Borrower with its independent certified public accountants (at which
discussion, if such Borrower so requests, a representative of such Borrower
shall be permitted to be present) and permit such accountants to disclose
to Agent any and all financial statements and other reasonably requested
information of any kind that they may have with respect to such Borrower.
(b) Keeping of Books. Each Borrower will keep proper books of
record and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of such Borrower in a
form such that such Borrower may readily produce no less frequently than at
the end of each of its fiscal quarters, financial statements in accordance
with GAAP consistently applied.
Section 5.11 Maintenance of Properties, Etc. Each Borrower will
preserve and maintain good and marketable title to all of its properties
and assets which are necessary in the conduct of its business in good
working order and condition, ordinary wear and tear excepted, subject to no
Liens other than Permitted Liens.
Section 5.12 Maintenance of Insurance. Each Borrower will
maintain or cause to be maintained with insurance companies rated "A-" or
better by Best's Insurance Guide and Key Ratings or other insurance
companies of recognized responsibility satisfactory to Agent, insurance in
such amounts and covering such risks as are usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which such Borrower operates (the "Industry Standard"),
and in any event the insurance coverages shall not be less than the
insurance coverages set forth on Schedule 4.25. Each Borrower shall, upon
the request of Agent, promptly provide a schedule indicating the policies
maintained by such Borrower, coverage limits of liability, effective dates
of coverage, insurance carrier names and policy numbers. Each Borrower
shall cause Agent to be named as loss payee or as an additional named
insured, for the account of the Lenders and Agent itself.
83
Evidence of payment of premiums for Insurance Policies shall be delivered
to Agent at least 30 days prior to the expiration thereof and each Borrower
shall deliver the Insurance Policies to Agent promptly upon its request.
Section 5.13 Payment of Taxes, Etc. Each Borrower will cause to
be paid and discharged all taxes, assessments and governmental charges upon
it, its income and properties prior to the date on which penalties are
attached thereto, and all lawful claims which, if unpaid, might become a
Lien upon the property of such Borrower (or any part thereof), except where
failure to pay could not reasonably be expected to result in a Material
Adverse Effect and such Borrower shall have the right, however, to commence
a Good Faith Contest with respect to the validity or amount of any such
tax, assessment or governmental charge, and may permit the taxes,
assessments or governmental charges so contested to remain unpaid during
the period of such Good Faith Contest if (a) such Borrower diligently
prosecutes such contest, (b) adequate reserves, in the reasonable
determination of Agent, are maintained with respect thereto and (c) during
the period of such contest, the enforcement of any contested item is
effectively stayed. Each Borrower will promptly pay or cause to be paid
any valid, final judgment enforcing any such tax, assessment and
governmental charge and cause the same to be satisfied of record.
Guarantor shall, and each Borrower shall cause Guarantor to, indemnify such
Borrower pursuant to the Tax Indemnification Agreement in an amount equal
to any income and franchise taxes paid by such Borrower.
Section 5.14 Syndication Efforts. Each Borrower will make
itself reasonably available to assist Agent in syndicating the Commitments
and the Loans. Without limiting the generality of the foregoing, each
Borrower will, at the request of Agent, assist Agent and otherwise
cooperate with Agent in the preparation of an information memorandum (which
assistance may include reviewing and commenting on drafts of such
information memorandum and drafting portions thereof) to facilitate the
preparation and printing of such information memorandum and shall make its
chief financial officer and the appropriate personnel having knowledge of
either Project and the financing thereof available to attend a bank group
meeting among prospective banks.
Section 5.15 Interest Rate Hedge Agreements. (a) On or prior
to the date which is 30 days after the Additional Funding Date, Borrower
shall have entered into Interest Rate Hedge Agreements for a term ending on
the Maturity Date with respect to at least 50% of the aggregate outstanding
principal amount of the Notes. All obligations of Borrower
84
to make payments to the Hedge Parties pursuant to any Interest Rate Hedge
Agreement shall be secured by the Security Documents pari passu with
Borrower's obligations under this Agreement and the other Loan Instruments.
Concurrently with the execution and delivery of any Interest Rate Hedge
Agreement, Agent shall receive a legal opinion, in form and substance
reasonably satisfactory to Agent, with respect to such Interest Rate Hedge
Agreement.
(b) If, upon making any prepayment pursuant to Section 2.7
(optional) and Section 2.8 (mandatory), the aggregate notional amount
listed in all Interest Rate Hedge Agreements then in effect exceeds the
aggregate outstanding principal amount of Funding Loans ("Excess Amount"),
Borrower shall make corresponding adjustments to the notional amounts
listed in all such Interest Rate Hedge Agreements and shall pay all
settlement amounts due in accordance therewith; provided, however, that
instead of making such adjustments to the notional amounts listed in the
Interest Rate Hedge Agreements, Borrower may, with the prior written
consent of each counterparty to each of the affected Interest Rate Hedge
Agreements and at no cost to the Lenders, assign the Excess Amount listed
in one or more Interest Rate Hedge Agreements to any other Person. In
addition, upon making any prepayment pursuant to Section 2.7 or Section
2.8, Borrower shall pay all breakage expenses and other amounts, if any,
due under any Interest Rate Hedge Agreement, provided that all such
prepayments shall be deemed first applied against amounts not covered by
any Interest Rate Hedge Agreement.
Section 5.16 Other Contracts.
(a) Additional Contracts. Except as provided for in
Sections 5.32 and 6.1(o), neither Borrower shall become a party to any
contract, operating lease, agreement or commitment, except upon such terms
and with such parties as shall be approved in writing by the Independent
Engineer and the Majority Lenders, other than (i) the agreements identified
in the definition of the term Project Documents, but not replacements
thereof and (ii) any Permitted Contract.
(b) Project Document Amendment, Termination, Waiver, Etc.
Except as provided for in Sections 5.32 and 6.1(o), without the prior
written consent of the Agent, neither Borrower shall, or shall permit NPI
to, directly or indirectly, terminate, cancel or suspend, or permit or
consent to any termination, cancellation or suspension of, or enter into or
consent to or permit the assignment of the rights or obligations of any
party to, any of the Project Documents, Governmental Approvals or Insurance
Policies
85
(unless and until, in the case of Insurance Policies, Borrower has entered
into replacement Insurance Policies prior to such termination, cancellation
or suspension, and such replacement Insurance Policies are in accordance
with the provisions of Section 5.12). Neither Borrower shall, or shall
permit NPI to, directly or indirectly, amend, modify, supplement or waive,
or permit or consent to the amendment, modification, supplement or waiver
of, any of the provisions of, or give any consent under, any of the Project
Documents, Governmental Approvals or Insurance Policies without (i) first
submitting to Agent a copy of such proposed amendment, modification,
supplement, waiver or consent and (ii) if in the reasonable judgment of
Agent, such proposed amendment, supplement, waiver, or consent could
reasonably be expected to result in a Material Adverse Effect, the express
prior written consent of the Majority Lenders thereto. Neither Borrower
shall, or shall permit NPI to, directly or indirectly, amend, modify,
supplement or waive, or permit or consent to the amendment, modification,
supplement or waiver of, any of the provisions of, or give any consent
under, any of the Project Documents, Governmental Approvals or Insurance
Policies which does not require consent of the Majority Lenders, without
the prior written consent of Agent which consent shall not be unreasonably
withheld. Neither Borrower shall, or shall permit NPI to, directly or
indirectly, exercise or refuse to exercise or waive any option or right to
purchase any property or assets, nor exercise, or refuse to exercise or
waive any right of first refusal pursuant to any of the Project Documents
which does not require the consent of the Majority Lenders, without the
prior written consent of Agent, which consent shall not be unreasonably
withheld or delayed.
(c) Acquisition of Property. If either Borrower shall at any
time acquire any real property or leasehold or other interests therein not
covered by the relevant Mortgage, such Borrower shall, in addition to
fulfilling the requirements set forth in Section 5.16(a), promptly upon
such acquisition notify Agent and promptly upon the request of Agent
execute, deliver and record a supplement to such Mortgage satisfactory in
form and substance to Agent, subjecting such real property or leasehold or
other interests to the loan and security interest created by such Mortgage,
as appropriate.
Section 5.17 Use of Proceeds. Borrower will use the proceeds of
all Funding Loans only for Qualifying Uses.
Section 5.18 Obligations Upon Casualty. If an Event of Loss
occurs in respect of a Project to an extent
86
that such Project would, in the reasonable determination of the Borrower as
approved by Agent, be unable to operate on a commercially feasible basis
(i.e., the Project would not be able to satisfy the Debt Service Coverage
Ratios contained herein and in the Projections), and Restoration of such
Project would, in the reasonable judgment of the Borrower as approved by
Agent, be commercially feasible (i.e., after the Restoration, such Project
would be able to achieve the Debt Service Coverage Ratios that existed
immediately prior to the Event of Loss, such Debt Service Coverage Ratios
not to be less than 1.30:1.00), then after deducting from any insurance
proceeds (other than business interruption insurance proceeds) or
condemnation proceeds (collectively, the "Proceeds") the reasonable
expenses incurred by Agent and Borrower in collecting and disbursing such
Proceeds or otherwise in connection therewith, the Proceeds shall be
released to Borrower from time to time in installments sufficient to pay
for restoration as it progresses upon the conditions set forth below
(except that the following provisions shall not apply to the extent such
proceeds aggregate less than $1,000,000 in which case such proceeds shall
be released to Borrower directly for the prompt payment of the costs of
repair or restoration of the damage giving rise to such proceeds):
(a) Agent shall have received satisfactory assurances that all
payments required to be made hereunder in connection with the Loan
Instruments continue to be made by Borrower in a timely manner and that no
Event of Default shall occur during or as a result of such restoration.
(b) Agent, prior to the initial release of Proceeds, receives
evidence satisfactory to it and the Independent Engineer that:
(i) the Proceeds are sufficient to complete within a
reasonable period of time the restoration of such Project to the
equivalent condition that existed immediately prior to the casualty,
or Borrower provide assurances reasonably acceptable to Agent and the
Independent Engineer that the amount of any deficiency will be
available to Borrower when needed for such completion;
(ii) the capability of such Project to operate in a manner so
as to allow Borrower to fulfill its obligations under the Project
Documents, and the productive capacity, utility and remaining useful
life of such Project after restoration (after taking into account
relevant factors including without limitation
87
any cancellations, terminations or other consequences of such casualty
loss with respect to any Project Document) will not be materially less
than such capability immediately prior to the casualty; and
(iii) a restoration budget and work plan reasonably
satisfactory to Agent and the Independent Engineer has been prepared
for the complete restoration of such Project.
(c) For each subsequent release of Proceeds, in addition to
evidence and certification required by paragraphs (a) and (d) hereof, Agent
receives:
(i) a certificate in form and substance satisfactory to
Agent and the Independent Engineer (the "Certificate") of Borrower
dated not more than 10 days prior to the application for such release
stating the progress of the work up to the date of the Certificate and
certifying that:
(AA) the sum then requested to be released either has been
paid by Borrower and/or is due to contractors, subcontractors,
materialmen, engineers, architects or other named persons who
have rendered services or furnished materials in connection with
the approved restoration budget and work plan;
(BB) the sum then requested to be released, plus all sums
previously withdrawn, does not exceed the cost of the work
actually finished up to the date of the Certificate, and that the
remainder of the funds then held by Agent will be sufficient to
pay in full for the completion of the work (or Borrower provides
assurances reasonably acceptable to Agent that the amount of any
deficiency will be available to Borrower when needed for such
completion);
(CC) no part of the cost of the services and materials
described in the Certificate has been the basis for the release
of any funds in any previous application;
(DD) all materials and all property described in the
Certificate are free and clear of all Liens (other than Permitted
Liens), except for Liens securing indebtedness due to Persons
specified in such Certificate and which will be
88
discharged upon payment of such indebtedness and Liens for
retainage; and
(EE) there is no outstanding indebtedness known, after due
inquiry, which is then due and payable for work, labor, services
or materials in connection with the work which, if unpaid, might
become the basis of a vendor's, mechanic's, laborer's or
materialman's statutory or other similar Lien upon such Project,
except for amounts due and payable as retainage or to
contractors, subcontractors, materialmen, engineers, architects
or other persons for services rendered or materials furnished in
connection with the approved restoration budget and work plan for
which such Proceeds are to be released;
(ii) evidence reasonably satisfactory to Agent and the
Independent Engineer that Borrower has fulfilled such additional
conditions as Independent Engineer may reasonably impose to provide
assurance that the Proceeds will be used to restore such Project to
the equivalent (but not necessarily identical) condition as existed
prior to the damage, and Agent's and the Independent Engineer's prior
approval of plans, specifications and construction contracts for such
restoration and Agent's and the Independent Engineer's periodic
inspections of such restoration work as it progresses.
(d) Prior to the final release (in addition to evidence and
certification required by Section 5.18(c) hereof) Agent receives:
(i) evidence reasonably satisfactory to Agent and the
Independent Engineer that the restoration has been completed and such
Project conforms to all applicable Governmental Requirements, unless
the failure to conform to such Governmental Requirements could not
reasonably be expected to result in a Material Adverse Effect; and
(ii) a certification by the Independent Engineer that the
restoration has been completed in accordance with the budget and the
work plan delivered pursuant to Section 5.18(b)(iii) hereof (as such
budget and work plan may have been modified from time to time with the
approval of Agent) and that the quality of such restoration work is
good.
89
(e) The release of Proceeds received by Agent shall be made
within three Business Days after Agent receives a proper application
therefor.
(f) If the amount of Proceeds exceeds the amount necessary to
effect restoration and reimburse Agent for its expenses, then such excess
Proceeds shall be deposited in the Project Account; provided, however, if
(x) after the completion of the Restoration, the projections, in form and
substance satisfactory to Agent, do not demonstrate the ability of Borrower
to maintain at all times during the remaining term of this Agreement, the
Required Coverages, or (y) an Event of Default shall have occurred and be
continuing, then such excess Proceeds shall be paid over to Agent and shall
be applied in the following order of priority:
(A) first, to prepay all Debt Service Loans;
(B) then, to fund the Debt Service Reserve Account, without
taking into account the Debt Service Line of Credit Facility
Commitment, up to the amounts specified in Section 5.1(c)(vi);
and
(C) then, to prepay Funding Loans in the same manner as a
voluntary prepayment under Section 2.7.
To the extent that the Debt Service Reserve Account is funded pursuant to
clause (B) above, the Debt Service Line of Credit Facility Commitment shall
be reduced by an amount equal to the amount so funded pursuant to clause
(B) above.
Section 5.19 Additional Documents; Filings and Recordings. Each
Borrower shall execute and deliver from time to time as reasonably
requested by Agent, at Borrower's expense, such other documents in
connection with the rights and remedies of the Secured Parties granted or
provided for by the Project Agreements, as applicable, which are necessary
to consummate the transactions contemplated therein. Each Borrower shall,
at its own expense, take all reasonable actions that have been or shall be
requested by Agent to establish, maintain, protect, perfect and continue
the perfection of the first priority security interests of the Secured
Parties created by the Security Documents including the execution of such
instruments, and providing such other information as may be required to
enable Agent and any other appropriate Secured Party to effect any such
action. Without limiting the generality of the foregoing, each Borrower
shall execute or cause to be executed and shall file or cause to be filed
such financing statements, continuation statements,
90
fixture filings and mortgages or deeds of trust in all places necessary or
advisable (in the opinion of counsel for Agent) to establish, maintain and
perfect such security interests and in all other places that Agent shall
reasonably request.
Section 5.20 Assignment by Borrower. Except for assignments to
Agent for the benefit of the Secured Parties and except as provided in
Section 5.24, neither Borrower shall assign any of its rights or
obligations under any Project Agreement without the prior written consent
of the Majority Lenders.
Section 5.21 Advertising; Press Releases. Except as may be
required by Law, none of Borrower, any Secured Party nor any Affiliate of
Borrower shall issue or consent to the issuance of any press release or
other announcement or advertisement that refers to the provision of
financing by the Secured Parties without the prior written consent of
Borrower and Agent, which consent shall not be unreasonably withheld or
delayed.
Section 5.22 Negative Pledge and Liens. Neither Borrower will
create, incur, assume or suffer to exist any material Lien, except
Permitted Liens, upon or with respect to any assets or property of such
Borrower.
Section 5.23 Limitation on Debt and Contingent Obligations.
Neither Borrower will create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Debt, except (a) Debt
incurred pursuant to this Agreement or under any Interest Rate Hedge
Agreement; or (b) unsecured Debt that is fully subordinated to all of
Borrower's obligations under this Agreement and the other Loan Instruments
pursuant to documents in form and substance satisfactory to Agent and
containing the subordination provisions set forth in Exhibit I hereto; or
(c) Debt incurred in connection with speciality handtools pursuant to the
Agreement dated May 13, 1996 by and among Operator, NRG Newark, NRG Parlin,
Guarantor and Stewart and Stevenson Services.
Section 5.24 Fundamental Changes. (a) Neither Borrower will
(i) enter into any transaction of consolidation or acquisition into any
other Person; (ii) wind up, liquidate or dissolve its affairs; (iii) sell,
lease, transfer or otherwise dispose of directly or indirectly (or agree to
any of the foregoing at any future time), assets with a fair market value
in excess of $50,000, except for (1) obsolete, worn or replaced property
not used or useful in such Borrower's business unless Agent shall have
consented to such
91
sale, lease, transfer or other disposition and (2) assets set forth in
Schedule 5.24 hereto (unless such assets are sold, leased, transferred or
disposed of pursuant to the Stipulation of Settlement or after the
transactions contemplated by Stipulation of Settlement have been
consummated); (iv) form any Subsidiary; or (v) purchase or otherwise
acquire (in one or a series of related transactions) any material portion
of the property or assets of any Person out of the ordinary course of
business; and
In the event that Agent consents to any sale, assignment or
transfer of any ownership interest in either Borrower, such sale,
assignment or transfer shall be only to a Qualified Transferee. For
purposes of this Section, a "Qualified Transferee" means any person (i) who
(a) has, or who is majority-owned by a person who has, a long term credit
rating of at least BBB by S&P or Baa2 by Moody's or (b) is a substantially
well-capitalized organization acceptable to Agent in its reasonable
discretion; (ii) who has, in Agent's judgment, a reasonable amount of
experience in the ownership or operation of energy facilities and (iii)
who, in the reasonable discretion of the Agent, does not have a reputation
either within the banking industry or in prior dealings with Agent for
having failed to honor its obligations in a reasonable manner.
Section 5.25 Restricted Junior Payments. Neither Borrower will
make any Restricted Junior Payments except (i) from the proceeds of the
Initial Loan for the purpose of (A) redeeming preferred stock of Guarantor
issued in connection with the Acquisition or (B) repaying Debt or other
obligations incurred by Guarantor in connection with the Acquisition;
(ii) prior to the Additional Funding Date, in amounts necessary to permit
Guarantor to make payments of state income taxes required to be made by
Guarantor in respect of NRG Newark; (iii) prior to the Additional Funding
Date, an amount, not to exceed $200,000 per month, sufficient to permit
Guarantor to pay reasonable and normal operating expenses of Guarantor,
provided that such amounts shall not be used to pay Pre-Existing
Liabilities and, provided, further, that Borrower shall have delivered to
Agent a certificate of an Authorized Officer of Guarantor certifying that
such expenses are legitimate operating expenses of Guarantor; (iv) from the
proceeds of the Additional Loan for the purpose of (A) redeeming preferred
stock of Guarantor issued in connection with the Acquisition or
(B) repaying Debt or other obligations incurred by Guarantor in connection
with the Acquisition; and (v) following the Additional Funding Date, from
monies withdrawn and transferred pursuant to Section 5.1(c)(x).
92
Section 5.26 Investments. Neither Borrower shall make any
Investments except Permitted Investments or Cash Equivalents.
Section 5.27 Nature of Business. Neither Borrower will
(i) engage in any business activity, except (A) the ownership of its
respective Project and (B) other related activities incident to any of the
foregoing or (ii) have any employees.
Section 5.28 Fiscal Year. Neither Borrower will not change its
fiscal year except that a Borrower may change its fiscal year to a fiscal
year ending on December 31.
Section 5.29 Bankruptcy. Except with the prior written consent
of Agent, neither Borrower will, or will permit NPI to, commence, or join
with or solicit any other Person in commencing, any case or other
proceeding seeking liquidation, reorganization or other relief with respect
to either Borrower, Guarantor, NPI or NRG or their debts, under any
bankruptcy, insolvency or other similar Law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of either Borrower, Guarantor, NPI or NRG.
Section 5.30 Transactions with Affiliates. Neither Borrower
will enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service,
with any Affiliate of either Borrower or with any director, officer or
employee of either Borrower, except for (i) transactions contemplated by
any Operations and Maintenance Agreement entered into with an Affiliate of
Borrower in accordance with Sections 5.32 or 6.1(o), (ii) transactions
contemplated by the Management Agreement as in effect as of the date
hereof, (iii) transactions contemplated by the DuPont Power Purchase
Agreement and (iv) other transactions in the ordinary course of and
pursuant to the reasonable requirements of such Borrower's business and
upon fair and reasonable terms no less favorable to such Borrower than
would be obtained in an comparable arm's length transaction with a Person
not an Affiliate of either Borrower.
Section 5.31 Compliance with ERISA. Borrower will not and will
cause Guarantor not to:
(i) Permit the occurrence of any Termination Event; or
93
(ii) Permit the present value of all benefit liabilities
(based on the then most recent actuarial assumptions) under all
Pension Plans to exceed the current value of the assets of such
Pension Plans; or
(iii) Permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the IRC) with respect to any
Pension Plan, whether or not waived; or
(iv) Fail to make any contribution or payment to any
Multiemployer Plan which such Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(v) Engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction under Section 406 of ERISA or Section 4975 of
the IRC for which a civil penalty pursuant to Section 502(i) of ERISA
or a tax pursuant to Section 4975 of the IRC is imposed; or
(vi) Permit the establishment of any Employee Benefit Plan or
other plan or agreement providing post-retirement welfare benefits,
except as may be required pursuant to Section 4980B of the IRC or
Section 601 et seq. of ERISA or as otherwise required by law or
establish or amend any Employee Benefit Plan which establishment or
amendment could result in liability to such Borrower or Guarantor or
increase the obligation of such Borrower or Guarantor, whether
directly or indirectly through an ERISA Affiliate, to a Multiemployer
Plan which liability or increase, is material to such Borrower or
Guarantor; or
(vii) Fail to establish, maintain and operate each Employee
Benefit Plan or permit any ERISA Affiliate to fail to establish,
maintain and operate each Pension Plan in compliance in all material
respects with the provisions of ERISA, the IRC and all other
applicable laws and the regulations and interpretations thereof;
which in any such case in (i) through (vii) results in or could reasonably
be expected to result in a Material Adverse Effect; provided, however, that
any covenant made pursuant to this Section 5.31 with respect to any plan of
any ERISA Affiliate shall be limited to events over which such Borrower or
Guarantor have actual control or in which such Borrower or Guarantor have
authority to engage or refrain from engaging.
94
Section 5.32 Other Transactions. Neither Borrower will enter
into any partnership, profit-sharing, or royalty agreement or other similar
arrangement whereby such Borrower's income or profits are, or might be,
shared with any other Person, or enter into any management contract or
similar arrangement (other than the Operation and Maintenance Agreement)
whereby its business or operations are managed by any other Person, except
that such Borrower may enter into an operating and maintenance agreement
with any Affiliate of NSP or, with the prior written consent of Agent (such
consent not to be unreasonably withheld), other experienced and reputable
operator; provided that (i) any such replacement operator provides to Agent
and the Lenders substantially the same instruments, documents or agreements
as are required from Operator pursuant to Article III hereof, (ii) except
with the prior written consent of Agent, the fees payable to any such
replacement operator shall not exceed the amount specified therefor in the
base case projections, (iii) at no time shall more than one operations and
maintenance agreement exist for a Project, and (iv) (a) prior to
terminating either Operations and Maintenance Agreement pursuant to
Article XII(1)(d) of such Operations and Maintenance Agreement, NRG, the
relevant Borrower and Agent shall enter into an indemnification agreement
in form and substance satisfactory to Agent, whereby NRG shall agree to
indemnify such Borrower for all costs and expenses incurred in connection
with the termination of the Operations and Maintenance Agreement, or
(b) prior to terminating either Operations and Maintenance Agreement
pursuant to the second sentence of Article XII(1)(e) of such Operations and
Maintenance Agreement, NRG shall unconditionally and irrevocably indemnify
such Borrower in full for all costs and expenses incurred in connection
with the termination of the Operations and Maintenance Agreement.
Section 5.33 Abandonment. Neither Borrower will abandon or
agree to abandon its respective Project or place it or agree to place it on
a "care and maintenance basis" for more than 14 days in any calendar year,
provided, however, that (i) nothing in this Section 5.33 shall prevent such
Project from shut-downs necessary for repairs and maintenance or from
putting such Project on a "care and maintenance basis" during any force
majeure not within the control of such Borrower, which force majeure
prevents such Borrower from operating such Project, (ii) nothing in this
Section 5.33 shall prevent such Project from being shut down to the extent
necessary during any restoration undertaken pursuant to Section 5.18 or
required by Section 5.5(b), and (iii) nothing in this Section 5.33 shall be
deemed to waive or limit in any way the right of any of the Lenders or
Agent
95
to declare an Event of Default under any other provision of this Agreement.
Section 5.34 Improper Use. Neither Borrower will use, maintain,
operate or occupy, or allow the use, maintenance, operation or occupancy
of, any portion of its respective Project for any purpose (to the extent
that the same could reasonably be expected to result in a Material Adverse
Effect):
(i) which may be dangerous, unless safeguarded as required
by Law (provided, however, that this clause (a) shall not be deemed to
prohibit such Borrower from operating such Project in accordance with
the terms of any Project Document in a reasonable and prudent manner);
(ii) which violates any Law;
(iii) which constitutes a public or private nuisance;
(iv) which may make void, voidable, or cancelable or increase
the premium of, any insurance then in force with respect to such
Project or any part thereof unless, in the case of an increase in
premium, such Borrower give proof of payment of such increase; or
(v) otherwise than for the intended purpose thereof in the
operation and maintenance of such Project.
Section 5.35 Alternative Fuel. Each Borrower covenants and
agrees that, with respect to the supply of Alternative Fuel for its
respective Project (i) each year on September 30, the tanks for storage of
Alternative Fuel for such Project shall be filled to its capacity with
Alternative Fuel and such Borrower shall use its best efforts to keep such
storage tanks filled to capacity from September 30 of such year through
March 30 of the succeeding year; (ii) such Project shall maintain a supply
of Alternative Fuel in its on-site fuel storage facilities adequate to meet
any obligations under the Project Documents or under any Governmental
Requirements; and (iii) such Borrower shall enter into Additional
Contracts, approved by Agent in consultation with the Gas Consultant and/or
the Independent Engineer, that will ensure a continuous supply of
Alternative Fuel is available to enable such Borrower to meet its
obligations under its Power Purchase Agreement when supplies of gas are not
made available to such Borrower by JCP&L.
96
Section 5.36 Pre-Existing Liabilities. Borrower will pay,
discharge or otherwise satisfy to the extent not adequately covered by
insurance or amounts deposited in the Pre-Existing Liabilities Account, any
Pre-Existing Liabilities in an amount greater than $100,000 in the
aggregate before they become delinquent, except when the amount or validity
thereof is the subject of a Good Faith Contest by Borrower, Guarantor or
NRG.
Section 5.37 Debt Service Coverage Ratio Covenant. Until
payment in full in cash of all of the Obligations and the expiration or
termination of the Commitments, Borrower agrees that the Debt Service
Coverage Ratio delivered pursuant to Section 5.2 for any four consecutive
quarterly periods shall not be less than 1.0 to 1.0 provided, however, that
with respect to Section 5.37, if (A) within thirty days after the
occurrence of a breach of Section 5.37, Borrower provide Agent with a
business plan (satisfactory to Agent), including, without limitation, the
projections for the immediately succeeding twelve month period, which
incorporate the assumptions set forth in the business plan, describing the
steps Borrower will take to cause the Debt Service Coverage Ratio to be 1.0
to 1.0 or better (together with such information as Agent may reasonably
request) and (B) Borrower is proceeding with diligence and good faith to
implement such business plan, then Borrower shall have up to ninety days
after the occurrence of such breach to bring the Debt Service Coverage
Ratio to a level of at least 1.0 to 1.0.
Section 5.38 Environmental Covenant. NRG Parlin shall work
diligently to obtain five-year operating certificates with respect to all
regulated air emissions units at the Parlin Plant. NRG Parlin shall work
diligently to resolve any and all issues upon which the NJDEP may condition
the issuance of the five-year operating certificates for Stack No. 1, Stack
No. 2, and the auxiliary boiler at the Parlin Plant. If the five-year
operating certificates are not obtained within three months after the
Additional Funding Date, NRG Parlin shall submit a status report to Agent
describing what further steps, if any, must be taken by NRG Parlin to
obtain such certificates and explaining the reasons for the delay in
issuance of the certificates. NRG Parlin will continue to provide such
status reports to Agent every two months thereafter until the five-year
operating certificates have been issued for the Parlin Plant. Borrower
shall also take all steps necessary under applicable Environmental
Requirements to obtain a Clean Air Act Title V Operating Permit for the
Plant and shall maintain the applicable permit shield throughout the
application process and shall comply with all intermediate
97
deadlines, requirements and requests of Governmental Authorities under
applicable Environmental Requirements in connection with the application
for said operating permits. In addition, NRG Newark shall take all steps
necessary to comply with New Jersey Reasonably Available Control Technology
("RACT") requirements at New Jersey Administrative Code Subchapter 7:27-19
with respect to the auxiliary boiler at the Newark Plant, including all
necessary physical changes and modifications to said boiler and additional
stack testing or other requirements to establish that said boiler is in
compliance with RACT prior to the regulatory deadline of May 31, 1996.
However, if NRG Newark fails to establish RACT compliance for the auxiliary
boiler prior to May 31, 1996, there shall be no Event of Default hereunder,
provided that NRG Newark shall, by June 10, 1996, submit to Agent a plan
satisfactory to Agent describing all steps necessary to achieve compliance
with and resolve all issues under such RACT requirements as soon as
possible.
Section 5.39 Flood Zone Insurance. In the event it is
determined that either Project does or will include any improved real
property that is located within an area that has been identified by the
Director of the Federal Emergency Management Agency as an area having
special flood hazards, then the relevant Borrower shall immediately
thereafter obtain flood hazard insurance under the National Flood Insurance
Act of 1968, as amended.
Section 5.40 Additional Consents. Prior to the earlier to occur
of (a) the Additional Funding Date and (b) the Initial Maturity Date,
Borrower shall have obtained each item set forth on Schedule 5.40 hereto,
including, without limitation, the PSE&G consent, substantially in the form
of Exhibit G attached hereto.
Section 5.41 Backup Gas Supply. If in any calendar year, either
Project experiences 120 hours of forced outage resulting from a failure of
such Project's gas supply and an inability to operate such Project using
Alternative Fuel as a result of the terms of any Governmental Requirement,
within 30 days of the 120th hour of forced outage, the Borrower
experiencing such forced outages shall provide Agent with a plan for
preventing such forced outages in the future (the "Backup Gas Plan").
After reviewing the Backup Gas Plan, and in consultation with the Gas
Consultant, the Lenders may require such Project to enter into an
Additional Contract(s) with gas suppliers and transporters as is necessary
to ensure that a reliable supply of Backup Gas will be available to such
Borrower to meet its obligations under its Power Purchase Agreement.
98
ARTICLE VI
Events of Default
Section 6.1 Events of Default. If any of the following events
("Events of Default") shall occur and be continuing (other than any event
with respect to Guarantor occurring prior to the Additional Funding Date):
(a) Payments. Borrower shall fail to pay any principal of, or
interest on, any of the Loans within three Business Days of the date
when the same becomes due and payable, or Borrower shall fail to pay
any other sum due under this Agreement or any other Loan Instruments,
including, without limitation, prepayments required pursuant to
Section 2.8 hereof, within five Business Days of the date when the
same becomes due and payable; or
(b) Representations and Warranties. Any statement,
representation or warranty made, deemed made or confirmed by either
Borrower or Guarantor or NRG in any Project Agreement, financial
statement or any other statement furnished at any time to any of the
Secured Parties in connection with any of the Project Agreements and
the transactions contemplated thereby shall prove to have been false,
incorrect, incomplete or misleading on or as of the date made, deemed
made or confirmed and could reasonably be expected to result in a
Material Adverse Effect and such default is not cured within 30 days
after written notice thereof; or
(c) Particular Credit Agreement and Guaranty Covenant Defaults.
Either Borrower shall fail to perform or observe any covenant
contained in Section 5.1 (Accounts), Section 5.3 (Maintenance of
Existence), Section 5.16 (Other Contracts), Section 5.17 (Use of
Proceeds), Section 5.22 (Negative Pledge and Liens), Section 5.23
(Limitation on Debt and Contingent Obligations), Section 5.24
(Fundamental Changes), Section 5.26 (Investments), Section 5.27
(Nature of Business), Section 5.31 (Compliance with ERISA) or Section
5.38 (Environmental/Permitting Matters), or Guarantor shall fail to
perform or observe any covenant contained in Section 7(a) of the
Guaranty; or
(d) Compliance with Laws; Insurance and Taxes Covenants. Either
Borrower shall fail to perform or observe any covenant contained in
Sections 5.7, 5.12 and 5.13 and such failure shall remain unremedied
for ten
99
Business Days after the earlier of (i) such failure shall first become
known to either Borrower or (ii) a written notice thereof shall have
been given to either Borrower by Agent or any Lender; or
(e) Other Covenants. Either Borrower or Guarantor or NRG shall
fail to perform or observe any term, covenant or agreement contained
herein, in any Project Agreement or in any other Loan Instrument
(other than those referred to in paragraphs (a)-(d) above) on its part
to be performed or observed and any such failure shall remain
unremedied for 30 days or, if (i) such failure is incapable of being
remedied in 30 days, and (ii) Borrower or Guarantor or NRG is
proceeding with diligence and good faith to remedy such failure and
such failure could not reasonably be expected to result in a Material
Adverse Effect, and (iii) no distributions are made to Borrower
pursuant to Section 5.1(c)(x) during the cure period provided in this
paragraph (e), 90 days after the earlier of (i) such failure shall
first become known to either Borrower or Guarantor or NRG, or (ii) a
written notice thereof shall have been given to such Borrower or
Guarantor or NRG by Agent or any Lender; or
(f) Other Debts. Either Borrower or Guarantor shall fail to
make any payment of $100,000 or more on any Debt (individually or in
the aggregate) (other than the Loans or any refinancing, renewals,
extensions or restructurings thereof) or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue
after the applicable notice and grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other default
under any agreement or instrument relating to any Debt of a principal
amount of, in the case of Borrower and Guarantor, $250,000 or more, or
any other event, shall occur, if the effect of such default or event
is to accelerate the maturity of such Debt of a principal amount of,
in the case of Borrower and Guarantor, $250,000 or more; or any such
Debt shall be declared to be due and payable prior to the stated
maturity thereof; or
(g) Judgments and Orders. Any judgment or order for the payment
of money in excess of $250,000 shall be rendered against, and not be
paid by, either Borrower or Guarantor and either (i) enforcement
proceedings shall have been commenced by any creditor upon such
judgment or order and are not promptly stayed or enjoined or
100
(ii) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(h) Insolvency or Voluntary Proceedings. Either Borrower or
Guarantor is generally not paying or admits in writing its inability
to pay its debts as such debts become due, or files any petition or
action for relief under any bankruptcy, reorganization, insolvency, or
moratorium Law or any other Law for the relief of, or relating to,
debtors, now or hereafter in effect, or makes any assignment for the
benefit of creditors, liquidates or dissolves, or takes any action in
furtherance of any of the foregoing; or
(i) Involuntary Proceedings. An involuntary petition is filed
against either Borrower or Guarantor under any bankruptcy,
reorganization, insolvency, or moratorium Law now or hereafter in
effect, or a custodian, receiver, trustee, assignee for the benefit of
creditors (or other similar official) is appointed to take possession,
custody or control of any property of such Borrower or Guarantor, and
(i) such petition or appointment is not dismissed, set aside or
withdrawn or otherwise ceases to be in effect within 60 days from the
date of said filing or appointment, or (ii) an order for relief is
entered against such Borrower or Guarantor with respect thereto, or
(iii) such Borrower or Guarantor shall take any action indicating its
consent to, approval of, or acquiescence in, any such petition or
appointment; or
(j) ERISA - Pension Plans. (1) Either Borrower or any ERISA
Affiliate fails to make full payment when due of all amounts which,
under the provisions of any Pension Plan or Section 412 of the IRC,
such Borrower or any ERISA Affiliate is required to pay as
contributions thereto and such failure results in or could reasonably
be expected to result in a Material Adverse Effect; or (2) an
accumulated funding deficiency occurs or exists, whether or not
waived, with respect to any Pension Plan which results in, or could
reasonably be expected to result in, a Material Adverse Effect; or
(3) a Termination Event occurs which results in or could reasonably be
expected to result in a Material Adverse Effect; or
(k) ERISA - Multiemployer Plans. Either Borrower or any ERISA
Affiliate as employers under one or more
101
Multiemployer Plans makes a complete or partial withdrawal from such
Multiemployer Plans and the plan sponsor of such Multiemployer Plans
notifies such withdrawing employer that such employer has incurred a
withdrawal liability requiring payments in an amount which results in
or could reasonably be expected to result in a Material Adverse
Effect; or
(l) ERISA - General Liability. Either Borrower or Guarantor
incurs liability under or relating to any Employee Benefit Plan or
Multiemployer Plan resulting from a violation of ERISA, the IRC and/or
any other applicable federal, state or local law which results in, or
could reasonably be expected to result in, a Material Adverse Effect;
or
(m) Loan Instruments. Any provision of any Loan Instrument
shall for any reason cease to be valid and binding on either Borrower
or Guarantor, or either Borrower or Guarantor or any Governmental
Authority shall so state in writing, and such is reasonably expected
to result in a Material Adverse Effect; or
(n) Change of Control. A Change of Control (other than a Change
of Control resulting from any of the events specified in clause (d) of
the "Change of Control" definition) shall occur; or
(o) Failures Under Project Documents, Etc. Any Project
Document, any applicable Law, any Governmental Approval or any of the
requirements of the Insurance Policies are not fully and timely
complied with or are the subject of a breach or an event of default,
in each case by any party thereto and such failure to comply, breach
or default could reasonably be expected to result in a Material
Adverse Effect and such failure to comply, breach or default shall not
be remediable or, if remediable, shall continue unremedied for a
period terminating on the last day of the applicable cure period, if
any, specified in the relevant Project Document, Law, Governmental
Approval or Insurance Policy, or shall not be waived by the
appropriate party, provided that either Borrower, prior to waiving any
failure to comply, breach or default, shall have obtained the written
consent of Agent, provided, further, that each Borrower hereby
irrevocably constitutes and appoints Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact (which appointment as attorney-in-fact shall be
coupled with an interest),
102
with full authority in the place and stead of Borrower and in the name
of Borrower or otherwise, from time to time upon the delivery of a
notice of default to NRG Newark by the Newark Group pursuant to
Section 16.2(i) of the Newark Steam Sales Agreement or to NRG Parlin
by DuPont pursuant to Article 14(A) of the Parlin Steam Sales
Agreement, as the case may be, to take any action and to execute any
documents which Agent may deem necessary or advisable to cure the
default, and Borrower shall defend, indemnify and hold harmless Agent
and its officers, directors employees and agents ("Indemnified
Parties") from any and all costs, expenses, liabilities, losses,
damages, claims, penalties, fines, suits, judgments or demands (except
to the extent caused by the gross negligence or willful misconduct of
the Indemnified Parties) which are occasioned by or result from any
actions of the Indemnified Parties to cure the default under the Steam
Sales Agreement; or any material provision in any Project Document
shall for any reason cease to be valid and binding on any party
thereto (or any such party shall so state in writing) or shall be
declared null and void, or the validity or enforceability thereof
shall be contested by any party thereto (other than any of the Secured
Parties) or any Governmental Authority, or any party thereto shall
deny that it has any liability or obligation thereunder, except upon
fulfillment of its obligations thereunder; provided that to the extent
caused by the failure to comply, breach or default by a Person other
than Borrower or Guarantor with respect to a Project Document other
than the Power Purchase Agreement or the Ground Lease, such failure to
comply, breach or default shall not be an Event of Default under this
Section 6.1(o) if (A) such failure to comply, breach or default is
cured within 60 days of the date of occurrence of such failure to
comply, breach or default, or (B)(1) such Project Document is replaced
within 60 days of the date of such failure to comply, breach or
default with a substitute Project Document in form and substance
reasonably satisfactory to Agent, (2) the party or parties (other than
the Borrower) to such substitute Project Document are acceptable to
Agent, and, in the opinion of Agent, are capable of performing their
obligations under such substitute Project Document, (3) Agent shall
have been granted a security interest in such substitute Project
Document (other than in the case of the DuPont Power Purchase
Agreement) for the benefit of the Secured Parties to the same extent
as the Project Document being replaced, (4) in the case of
substitution of either Operations and Maintenance Agreement, prior to
103
substituting such Operations and Maintenance Agreement, NRG, the
relevant Borrower and Agent shall have entered into an indemnification
agreement, in form and substance satisfactory to Agent, whereby NRG
shall have agreed to indemnify such Borrower for all costs and
expenses incurred in connection with the termination of such
Operations and Maintenance Agreement and (5) in the case of
replacement of either Steam Sales Agreement, the Ground Lease for the
applicable Project shall not be terminable as a result of the
termination of such Steam Sales Agreement; or
(p) [Intentionally Omitted].
(q) Non-Maintenance of Governmental Approvals. Failure of
either Borrower to obtain during the required period and to maintain
thereafter all Governmental Approvals which are then required under
Law for the operation of its respective Project or to ensure the
continued rights of such Borrower under the Project Documents and
failure to obtain or maintain such Governmental Approvals could
reasonably be expected to result in a Material Adverse Effect; or
(r) Modifications of Governmental Approvals. Any modification
not previously approved by Agent (including, but without limitation,
establishment of new requirements or revocation of any exemption or
waiver) of any Governmental Approval or the inclusion of terms in any
Governmental Approval issued after the date hereof, which has had or
could reasonably expected to result in a Material Adverse Effect; or
(s) Qualifying Cogeneration Facility and EWG Status. Failure of
NRG Newark either to maintain the Newark Project's status as a
Qualifying Cogeneration Facility until the Rate Approval Date or the
failure of either Borrower to maintain its status as an EWG or any
action by either Borrower, or any Affiliate thereof, which would have
an adverse impact upon the Qualifying Cogeneration Facility status of
the Newark Project until the Rate Approval Date or the status of
either Borrower as an EWG; or
(t) Dissolution of Borrower; Others. The liquidation,
dissolution, termination, acquisition or consolidation of either
Borrower, Guarantor any other Obligor or any other party to any of the
Project Documents, or the transfer of all or substantially all of the
assets of either Borrower, or Guarantor to any
104
other Person, except, in the case of any such other Obligor or other
party to any Project Document, if the acquisition or consolidation is
by a Person with (i) an investment grade rating or equivalent or
better credit as such other Obligor or other party to a Project
Document and (ii) equivalent or better ability to perform and
reputation in the relevant area as such other Obligor or other party
to a Project Document; or
(u) Transfer of Collateral. Title to or any right in all or any
part of either Project, any collateral purported to be covered by the
Security Documents (other than obsolete or worn personal property
promptly replaced by adequate substitutes of equal or greater value
than the replaced items when new) shall become vested in any party
other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of Law or
otherwise; or
(v) Diminution of Property Rights. Without the prior written
consent of Agent, either Borrower hereafter grants any easement or
dedication, files any plat, declaration or restriction or enters into
any lease or sub-lease concerning either Project and the effect
thereof could reasonably be expected to result in a Material Adverse
Effect; or
(w) Impairment of Security Interests. Except to the extent
caused by the termination of any Project Document in accordance with
the terms of this Agreement, any provision in any Security Document
shall for any reason cease to be valid and binding on the Obligors
party thereto and the effect thereof is to materially impair the
security purported to be created thereby, or any such Obligors shall
so state in writing, or any Security Document shall cease to be in
full force and effect, or shall for any reason cease to create a valid
security interest having the priority and perfected in the manner
contemplated hereunder in any of the collateral purported to be
covered thereby, or either Borrower, or Guarantor shall default in the
due performance or observance of any term, covenant or agreement on
its part to be performed or observed pursuant to any of the Security
Documents and the effect thereof is to materially impair the security
purported to be created thereby.
then, (i) automatically upon the occurrence of any event specified in
Section 6.1(h) or Section 6.1(i) or, with respect to Borrower only,
Section 6.1(t) and at the option of
105
Majority Lenders, by notice from Agent to Borrower, in any other event,
(A) the obligation of each Lender hereunder or under any other Loan
Instruments to make any Loans, shall be immediately terminated, and (B) the
total outstanding principal amount of all Loans, all interest thereon and
all other amounts payable under this Agreement or under any other Loan
Instrument shall be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and (ii) Agent shall upon the request, or may with the
consent, of Majority Lenders take such actions under and exercise such
rights and remedies pursuant to the Loan Instruments, or any of them, as
Agent may deem appropriate.
Section 6.2. Limitation on Representations and Warranties.
Notwithstanding any other term or provision of this Agreement or the Loan
Instruments to the contrary, if any statement, certificate or
representation or warranty made herein or in connection herewith is later
determined to have been incorrect as of the date made or given as a result
of a Pre-Existing Liability, which neither Borrower nor Guarantor was aware
of as of such date, then such statement, certificate, representation or
warranty shall be deemed to have been correct, and no Default or Event of
Default shall exist hereunder as a result of such statement, certificate,
representation or warranty having been incorrect so long as (a) such
incorrectness can be cured by the payment of such Pre-Existing Liability
and (b) NRG or Guarantor either pays such Pre-Existing Liability or funds
the Pre-Existing Liability Account to the extent necessary to pay such Pre-
Existing Liability within sixty (60) days of either Borrower, Guarantor or
NRG becoming aware of such Pre-Existing Liability.
ARTICLE VII
Relationship of Agent and Lenders
Section 7.1 Appointment. Each Lender hereby designates Credit
Suisse, as Agent to act as specified herein and in any other Loan
Instrument and hereby irrevocably authorizes the Agent to take such action
on its behalf under the provisions of this Agreement, the other Loan
Instruments and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the Agent by
the terms hereof and thereof and such other powers as are reasonably
incidental thereto.
106
The Agent may perform any of its duties hereunder by or through its
officers, directors, agents or employees.
Section 7.2 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Loan Instruments. Neither the Agent nor any of its officers,
directors, agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Loan Instrument, or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason
of this Agreement or any other Loan Instrument a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any other Loan
Instrument, expressed or implied, is intended to or shall be so construed
as to impose upon the Agent any obligations in respect of this Agreement or
any other Loan Instrument except as expressly set forth herein or therein.
Section 7.3 Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Lender, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Borrower and
Guarantor in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of each Borrower and
Guarantor and, except as expressly provided in this Agreement, the Agent
shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any document, certificate or
other writing delivered in connection herewith or any other Loan Instrument
or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this Agreement or
any other Loan Instrument or the financial condition of any Borrower or
Guarantor or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of
this Agreement or any other Loan Instrument or the financial condition of
any Borrower or Guarantor or the existence or possible existence of any
Default or Event of Default.
107
Section 7.4 Certain Rights of the Agent. If the Agent shall
request instructions from the Majority Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any
other Loan Instrument, the Agent shall be entitled to refrain from such act
or taking such action unless and until the Agent shall have received
instructions from the Majority Lenders; and the Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the
Agent as a result of the Agent acting or refraining from acting hereunder,
under any other Loan Instrument in accordance with the instructions of the
Majority Lenders.
Section 7.5 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or
made by any Person that the Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement or any other
Loan Instrument and its duties hereunder and thereunder, upon advice of
counsel selected by it.
Section 7.6 Indemnification. To the extent the Agent is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Agent in proportion to their respective Commitment
Percentages for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Agent in performing its duties
hereunder or under any other Loan Instrument or in any way relating to or
arising out of this Agreement or any other Loan Instrument; provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful
misconduct.
Section 7.7 The Agent in its Individual Capacity. With respect
to any obligation the Agent may have to make Loans under this Agreement,
the Agent shall have the rights and powers specified herein for a "Lender",
and a Secured Party and may exercise the same rights and powers as though
it were not performing the duties of the Agent specified herein; and the
term "Lenders", "Majority Lenders", "Secured Parties" or any similar terms
shall, unless the context clearly otherwise indicates, include the Agent in
its
108
individual capacity. The Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with
the Borrower or any Affiliate of the Borrower as if it were not performing
the duties specified herein, and may accept fees and other consideration
from the Borrower or Guarantor for services in connection with this
Agreement and otherwise without having to account for the same to the
Lenders.
Section 7.8 Resignation by the Agent. (a) The Agent may resign
from the performance of all their respective functions and duties hereunder
and/or under the other Loan Instruments at any time by giving thirty (30)
days' prior written notice to the Borrower and the Secured Parties. Such
resignation shall take effect upon the appointment of a successor Agent
pursuant to clause (b) or (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within
such thirty (30) day period, the Agent, with the consent of the Borrower,
may then appoint a successor Agent who shall serve as Agent hereunder or
thereunder until such time, if any, as the Majority Lenders appoint a
successor Agent, as provided above.
(d) If no successor Agent has been appointed pursuant to
clause (b) or (c) above by the forty-fifth (45th) day after the date such
notice of resignation was given by the Agent, the Agent or any Lender may
petition any court of competent jurisdiction for the appointment of a
successor Agent. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor Agent who shall serve
as Agent hereunder until such time, if any, as the Majority Lenders appoint
a successor Agent.
Section 7.9 No Amendment to Duties of Agent Without Consent.
The Agent shall not be bound by any waiver, amendment, supplement or
modification of this Agreement which affects its rights or duties under
this Agreement unless it shall have given its prior written consent, as
Agent thereto.
109
ARTICLE VIII
General Terms And Conditions
Section 8.1 Notices. Except as otherwise expressly provided
herein, (a) all notices and other communications provided for hereunder
shall be provided in writing (including telegraphic, facsimile or cable
communication) and shall be sent by telecopy, telegraph or cable with the
original of such communication dispatched by (if inland) overnight or (if
overseas) international courier and, if such courier service is not
available, by registered airmail (or, if inland, registered first-class
mail) with postage prepaid to the Borrower and the Agent at their
respective addresses specified below and to the Lenders, at their
respective addresses specified in Schedule 8.1, or at such other address as
shall be designated by such party in a written notice to the other parties
hereto and (b) all such notices and communications shall, when mailed,
telegraphed, telecopied, or cabled or sent by overnight courier, be
effective seven (7) days after being deposited in the mails in the manner
as aforesaid, when delivered to the telegraph company or cable company (if
inland), one (1) day or (if overseas) three (3) days after delivery to a
courier in the manner as aforesaid, as the case may be, or when sent by
telecopier:
Addresses:
If to NRG Newark:
NRG Generating (Newark) Cogeneration Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attn.: Leonard A. Bluhm
Tel. : (612) 373-5305
Fax : (612) 373-5312
with a copy to:
NRG Energy, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attn.: James T. Hemphill
Tel. : (612) 373-5451
Fax : (612) 373-5312
110
If to NRG Parlin:
NRG Generating (Parlin) Cogeneration Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attn.: Leonard A. Bluhm
Tel. : (612) 373-5305
Fax : (612) 373-5312
with a copy to:
NRG Energy, Inc.
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403
Attn.: James T. Hemphill
Tel. : (612) 373-5451
Fax : (612) 373-5312
If to the Agent:
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
Attn.: Project Finance
Tel. : (212) 238-5462
Fax : (212) 238-5390
Section 8.2 Indemnities and Expenses. (a) Borrower agrees to
pay on demand, subject to the proviso set forth below, (i) all costs and
expenses of Agent in connection with the syndication by Agent of the credit
facility provided hereunder and in connection with the preparation,
execution, delivery, administration, modification and amendment of the Loan
Instruments and the other documents to be delivered under the Loan
Instruments, including, without limitation, the reasonable fees and
expenses of counsel (excluding allocated costs for in-house legal services)
for Agent with respect thereto and with respect to advising Agent as to its
rights and responsibilities under the Loan Instruments, (ii) all costs and
expenses of Agent and each of the Lenders, if any (including, without
limitation, reasonable counsel fees and expenses, but limited to costs and
expenses of the same counsel and local counsel for Agent and the Lenders
(excluding allocated costs for in-house legal services)), in
111
connection with the enforcement (whether through negotiations, legal
proceedings or otherwise), restructuring (whether or not in the nature of a
"work-out"), and the administration of the Loan Instruments and the other
documents to be delivered under the Loan Instruments, (iii) all costs and
expenses of Agent in connection with the disbursements of the Loans, and
(iv) the fees of the Independent Engineer and the Insurance Consultant;
provided that Borrower shall only be liable for costs or expenses incurred
in connection with the initial syndication of the credit facility provided
hereunder to any Lender that is or becomes party to this Agreement on or
prior to the Initial Funding Date or within 90 days from the date of
commencement of the initial syndication process.
(b) Borrower shall, whether or not the transactions herein
contemplated are consummated, (i) pay and hold each of the Lenders and the
Agent harmless from and against any and all present and future stamp and
other similar taxes with respect to the foregoing matters and save each of
the Lenders and the Agent harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to the Lenders) to pay such taxes; and (ii) indemnify
each of the Lenders and the Agent and each of their respective officers,
directors, employees, representatives, attorneys and agents from and hold
each of them harmless against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses and
disbursements incurred by any of them as a result of, or arising out of, or
in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not any Lender or the Agent is a party
thereto) related to the entering into and/or performance of this Agreement,
each other Loan Instrument or any Project Document or the use of the
proceeds of any Loans or the consummation of any transactions contemplated
herein, each other Loan Instrument, in any Project Document or in the base
case projections, including, without limitation, the reasonable fees and
disbursements of counsel selected by such indemnified party incurred in
connection with any such investigation, litigation or other proceeding or
in connection with enforcing the provisions of this Section 8.2(b) (but
excluding any such liabilities, obligations, losses, to the extent incurred
by reason of the gross negligence or willful misconduct of the Person to be
indemnified or its officers, directors, employees, representatives,
attorneys or agents, as the case may be as determined by a court of
competent jurisdiction). The Agent or such Lender, as the case may be,
shall (1) use its best efforts to, upon its becoming aware of
112
any event which may result in the Borrower being required to perform any of
its indemnity obligations under this paragraph (b), promptly notify the
Borrower (provided that failure to so notify shall not mitigate the
obligations of the Borrower hereunder), (2) upon request from the Borrower
consult the Borrower regarding any step (including any step which may
mitigate the effect of such event) it proposes to take in respect of such
event and (3) obtain the prior written consent of the Borrower before
entering into any settlement or compromise in relation to any such claims,
actions or suits.
(c) Without limitation to the provisions of paragraph (b) above,
each Borrower agrees to defend, protect, indemnify and hold harmless each
of the Lenders and the Agent and each of their respective officers,
directors, employees, representatives, attorneys and agents from and hold
each of them harmless against any and all liabilities (including removal
and remedial actions), obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) imposed on
or asserted against any such Persons directly or indirectly based on, or
arising or resulting from, (i) the actual or alleged presence of Hazardous
Materials on, under or at either Project or either Property, (ii) any
Environmental Claim relating to either Borrower or either Project or
arising out of the use of either Project or either Property, or (iii) the
exercise of the Agent's or the Lenders' rights under any of the provisions
of this Section 8.2 regardless of when any such matters arise, but
excluding (A) the Release by Agent or a Lender of any Hazardous Material on
the Property and (B) any matter based solely on the gross negligence or
willful misconduct of the Agent or any Lender or its officers, directors,
employees, representatives, attorneys or agents, as the case may be. Such
Lender or the Agent shall (1) use its best efforts to, upon its becoming
aware of any event which may result in either Borrower being required to
perform any of its obligations under this paragraph (c), promptly notify
such Borrower (provided that failure to so notify shall not mitigate the
obligations of such Borrower hereunder), (2) upon request from either
Borrower consult such Borrower regarding any step (including any step which
may mitigate the effect of such event) it proposes to take in respect of
such event and (3) obtain the prior written consent of the Borrower before
entering into any settlement or compromise in relation to any such claims,
actions or suits.
113
(d) To the extent that the undertaking in the preceding
paragraphs of this Section may be unenforceable because it is violative of
any law or public policy, each Borrower will contribute the maximum portion
that they are permitted to pay and satisfy under applicable law to the
payment and satisfaction of such undertakings.
(e) All sums paid and costs incurred by the Agent or the Lenders
in respect to any matter indemnified hereunder shall bear interest at the
Default Interest Rate from the date 35 days after the date of the invoice
therefor provided by the Agent or such Lenders to the Borrower until
reimbursed by the Borrower, and all such sums and costs not paid within
such 35 day period shall be added to the debt and be secured by the
Security Documents and shall be immediately due and payable on demand.
(f) If any amount owing to the Agent or the Lenders under this
Agreement shall be collected through any process of law or shall be placed
in the hands of attorneys for collection, the Borrower shall pay (in
addition to all monies then due in respect of the Loans otherwise payable
under this Agreement) reasonable attorneys' and other fees and expenses
incurred in respect of such collection.
Section 8.3 Survival. All indemnities set forth herein, shall
survive the execution and delivery of this Agreement and the Notes and the
making and repayment of the Loans.
Section 8.4 Governing Law; Submission to Jurisdiction. (a)
This Agreement is a contract made under the laws of the State of New York
of the United States and shall for all purposes be governed by and
construed in accordance with the laws of such State without regard to the
conflict of law rules thereof.
(b) Any legal action or proceeding against the
Borrower with respect to this Agreement or any Loan Instrument may be
brought in the courts of the State of New York in the County of New York or
of the United States for the Southern District of New York and, by
execution and delivery of this Agreement, each Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Borrower
agrees that a judgment, after exhaustion of all available appeals, in any
such action or proceeding shall be conclusive and binding upon the
Borrower, and may be enforced in any other jurisdiction by a suit upon such
judgment, a certified copy of which shall be conclusive
113
evidence of the judgment. Each Borrower hereby irrevocably designates,
appoints and empowers CT Corporation System, 1633 Broadway, New York, New
York, 10019, as its designee, appointee and agent to receive and accept
service of any and all legal process, summons, notices and documents
arising out of this Agreement. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Borrower agrees
to designate a new designee, appointee and agent in New York City on the
terms and for the purposes of this provision satisfactory to the Agent.
Each Borrower further irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
to such Borrower, at its respective addresses set forth in Section 8.1
hereof, such service to become effective 30 days after such mailing.
Nothing herein shall affect the right of any Secured Party to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against either Borrower in any other jurisdiction.
(c) Each Borrower hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
or any other Loan Instrument brought in the courts referred to in
clause (b) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum.
Section 8.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto, except that neither Borrower may assign or
otherwise transfer all or any part of their rights or obligations under
this Agreement without the prior written consent of the Lenders.
Section 8.6 Assignments and Participations.
(a) Additional Lenders. Any Lender may at any time sell to one
or more financial institutions, with the consent of Agent and with the
consent of Borrower, such consent not to be unreasonably withheld (a
"Purchasing Lender"), all or any part of its rights and obligations under
this Agreement and the Notes pursuant to a Commitment Transfer Supplement,
executed by such Purchasing Lender, such transferor Lender and Agent.
Borrower's consent shall not be deemed to have been unreasonably withheld
if there is a
115
material risk that any such assignment would result in Borrower being
liable to pay increased costs or other amounts pursuant to Section 2.5
hereof which the Borrower would not otherwise be obligated to pay. Upon
(x) such execution of such Commitment Transfer Supplement, and (y) delivery
of an executed copy thereof to Borrower and payment of the amount of its
participation to Agent, such Purchasing Lender shall for all purposes be a
Lender, party to this Agreement and shall have all the rights and
obligations of a Lender, under this Agreement, to the same extent as if it
were an original party hereto with the percentage of the Loans, Additional
Commitment and the Facility Debt Service Line of Credit Facility Commitment
as set forth in such Commitment Transfer Supplement, which shall be deemed
to amend this Agreement (including, without limitation, Schedule 8.6
hereto) to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of
percentage shares of the Loans, Additional Commitment and Debt Service Line
of Credit Facility Commitment arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Notes. Upon the consummation of any
transfer pursuant to this Section 8.6(a), the transferor Lender, Agent and
Borrower shall make appropriate arrangements so that, if required,
replacement Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchasing Lender, in
each case in principal amounts reflecting their percentage shares of the
Loans, the Additional Commitment and the Debt Service Line of Credit
Facility Commitment. Except as otherwise agreed to, or consented by, Agent
and Borrower, no Lender shall assign at any one time less than a
$10,000,000 interest in this Agreement and the Notes, unless and until such
Lender assigns all of its interest in this Agreement and the Notes.
(b) Participations. Any Lender may, from time to time, sell or
offer to sell any Loans owing to such Lender, any Notes held by such
Lender, any commitment of such Lender or any other interests and
obligations of such Lender hereunder, to one or more participants (each, a
"Participant"), on such terms and conditions as may be determined by the
selling party, without the consent of or notice to Borrower or any other
Secured Party, and the grant of such participation shall not relieve any
Lender of its obligations, or impair the rights of any Lender hereunder. A
Participant shall not have any right to approve any amendment,
modification, supplement or waiver of any provision of this Agreement;
provided that the Lender selling its interest to the Participant may agree
not to consent to
116
any amendment, modification, supplement or waiver of this Agreement of the
type specified in clauses (i), (ii), (iii) and (iv) of Section 8.14 without
the prior written consent of the Participant. Except as specified in the
immediately preceding sentence, no Participant shall have any rights under
this Agreement other than to receive payment of principal of and interest
through such Lender.
(c) Assignments to Federal Reserve Bank. Any Lender may at any
time (without obtaining the consent of Agent or any other Person) assign
and pledge all or any portion of its rights and obligations under this
Agreement and the Notes to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors and any Operating Circular issued by such Federal Reserve Bank.
No such assignment shall release the assigning Lender from its obligations
hereunder.
(d) Qualified Loan Assignment by Credit Suisse. Notwithstanding
anything to the contrary contained in this Agreement, but subject to the
terms and conditions set forth in this Section, Credit Suisse may from time
to time elect to grant to GFC, an option to (A) provide all or any part of
the Debt Service Loans from Credit Suisse to the Borrower (a "Qualified
Loan Assignment"), and (B) assign to GFC all or any undivided interest in
the right of Credit Suisse to receive and collect payments from the
Borrower respecting the Loans and the other applicable provisions of the
Loan Instruments. No additional Note shall be issued with regard to a
Qualified Loan Assignment; provided, however, to the extent GFC shall fund
any Debt Service Loans, Credit Suisse shall be deemed to hold the Note in
its possession as an agent for GFC to the extent of the Debt Service Loans
funded by GFC. Notwithstanding any such Qualified Loan Assignment, (x) to
the extent of any Loans funded or maintained by Credit Suisse, Credit
Suisse individually, and to the extent of any Loans funded or maintained by
GFC, Credit Suisse, as administrative agent for GFC, shall remain obligated
for all obligations under this Agreement to the Agent, including, without
limitation, any indemnity and expense reimbursement obligations under
Section 7.6 hereof (which shall be solely for the account of Credit
Suisse), the obligations of Credit Suisse under this Agreement to the Agent
shall remain unchanged, except Credit Suisse shall be excused pro tanto
from its payment obligations under Section 7.6 hereof to the extent any
payments on such Loans are made to the Agent by GFC, (y) Credit Suisse
shall remain primarily responsible for the performance of its obligations
hereunder, and (z) the Agent may continue to deal solely and directly with
Credit Suisse, as administrative agent for GFC, in connection with
117
all of GFC's rights and obligations under this Agreement, unless and until
the Agent is notified that Credit Suisse has been replaced as
administrative agent for GFC.
(e) No Proceedings. Each of Credit Suisse, the Purchasing
Lenders, the Borrower and the Agent hereby agrees that, at any time a
Qualified Loan Assignment is in effect, it shall not institute against, or
join any other person in instituting against, GFC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law, for one
year and a day after the latest maturing commercial paper note issued by
GFC is paid. This Section 8.6(e) shall survive the termination of this
Agreement.
Section 8.7 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
Section 8.8 Right of Setoff. In addition to any rights now or
hereafter granted under Applicable Law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
the Agent is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to any Borrower or
to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and apply any and all deposits (general or special)
and any other Debt at any time held or owing by any Lender (including
without limitation by branches and agencies of any Lender, wherever
located), to or for the credit or the account of the Borrower against and
on account of the Obligations of the Borrower under this Agreement and
liabilities of the Borrower to such Lender under this Agreement or any of
the other Loan Instruments, including, without limitation, all interests in
Obligations of the Borrower under this Agreement purchased by any Lender
pursuant to Section 8.6, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Loan
Instrument, irrespective of whether or not the Agent shall have made any
demand hereunder and although said Obligations, liabilities or claims, or
any of them, shall be contingent or unmatured.
Section 8.9 No Waiver; Remedies Cumulative. No failure or delay
on the part of the Agent or any Lender in exercising any right, power or
privilege hereunder or under any Loan Instrument and no course of dealing
between the Borrower and the Agent or any Lender shall impair any such
right, power or privilege or operate as a waiver thereof; nor
118
shall any single or partial exercise of any right, power or privilege
hereunder or under any Loan Instrument preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein, in any
Loan Instrument expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Agent, or any Lender would otherwise
have. No notice to or demand on any Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or any
Lender to any other or further action in any circumstances without notice
or demand.
Section 8.10 Severability. Any provision of this Agreement, any
Note and any other Loan Instrument which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability but that shall not
invalidate the remaining provisions of this Agreement, any Note or any
other Loan Instrument or affect such provision in any other jurisdiction.
Section 8.11 Calculation. All financial calculations to be made
under, or for the purposes of, this Agreement shall be determined in
accordance with generally accepted accounting principles, applied on a
consistent basis and, except as otherwise required to conform to the
definitions contained in Exhibit X of this Agreement or any other
provisions of this Agreement, shall be calculated from the then most
recently issued quarterly financial statements which the Borrower is
obligated to furnish to the Agent from time to time, as provided hereunder;
provided, however, that (a) if the relevant quarterly financial statements
should be in respect of the last quarter of a Fiscal Year then, at the
option of the Majority Lenders, such calculations may instead be made from
the audited financial statements for the relevant Fiscal Year, and (b) if
there should occur any material adverse change in the financial condition
or results of operations of the Borrower after the end of the period
covered by the relevant financial statements, then such material adverse
change shall also be taken into account in calculating the relevant
figures.
Section 8.12 Payments Pro Rata; Sharing. (a) Subject to
Sections 2.10(c) (Priority of Application) and 2.12 (Replacement of a
Lender), the Agent agrees that promptly after its receipt of each payment
from or on behalf of the Borrower in respect of any Obligations of the
Borrower to the Lenders hereunder, it shall distribute such payment to
119
the Lenders pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Loan Instruments or any Note or otherwise), which is applicable to the
payment of the principal of, or interest on, the Loans of a sum which with
respect to the related sum or sums received by the other Lenders is in a
greater proportion than the total amount of such Obligation then owed and
due to such Lender bears to the total amount of such Obligation then owed
and due to all the Lenders immediately prior to such receipt, then such
Lender receiving such excess payment shall purchase for cash without
recourse or warranty from the other Lenders an interest in the Obligations
of the Borrower to such Lenders in such amount as shall result in a
proportional participation by all the Lenders in such amount; provided,
however, that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without
interest.
Section 8.13 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
Section 8.14 Amendment or Waiver. Neither this Agreement nor
any terms hereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing signed by the
Majority Lenders and the Agent; provided, however, that no such change,
waiver, discharge or termination shall, without the consent of each of the
Lenders (i) extend the final maturity of any Loan or reduce the rate or
extend the time of payment of interest or fees thereon, or reduce the
principal amount thereof, or increase the commitments of any of the Lenders
over the amount thereof then in effect (it being understood that a waiver
of any Default or Event of Default shall not constitute a change in the
terms of the commitments of any Lender), (ii) amend, modify or waive any
provision of this Section 8.14 or Sections 8.2(b) and 8.2(c), (iii) reduce
the percentage specified in the definition of Majority Lenders set forth in
Exhibit X hereto or (iv) consent to the
120
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement.
Section 8.15 Confidentiality. Each Lender and the Agent agrees
(on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) to keep confidential, in accordance with
their customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices, any and all
projected financial information relating to the Borrower, Guarantor or NRG,
and any other non-public information supplied to it by the Borrower,
Guarantor or NRG pursuant to this Agreement; provided that nothing herein
shall limit the disclosure of any such information (i) to the extent
required by Law, statute, rule, regulation or judicial process, (ii) to
counsel for any of the Lenders or Agent, (iii) to bank examiners, auditors
or accountants, (iv) to Agent or any other Lender, (v) in connection with
any litigation to which any one or more of the Lenders is a party
(provided, that each such Lender will promptly notify the Company of such
litigation and of such proposed disclosure prior to the disclosure of such
information (unless prohibited from doing so by the relevant court)), (vi)
to any assignee or participant (or prospective assignee or participant) so
long as such assignee or participant (or prospective assignee or
participant) first executes and delivers to the respective Lender an
agreement to be bound by this Section 8.15, (vii) to any consultant of
Agent or any
121
other Lender so long as such consultant first executes and delivers to
Agent or such Lender an agreement to be bound by this Section 8.15, or
(viii) to any Affiliates, directors, officers or employees of Agent or any
other Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
CREDIT SUISSE, as Agent and Lender
By: /s/ Guy R. Cirincione
Name: Guy R. Cirincione
Title: Member of Senior Management
By: /s/ Louis D. Iaconetti
Name: Louis D. Iaconetti
Title: Associate
NRG GENERATING (NEWARK) COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
NRG GENERATING (PARLIN) COGENERATION INC.
By: /s/ Leonard Bluhm
Name: Leonard A. Bluhm
Title: President
GREENWICH FUNDING CORPORATION, as Lender
By: Credit Suisse, New York Branch, as
Attorney-In-Fact
By: /s/ Carin L. Okita
Name: Carin L. Okita
Title: Associate
By: /s/ Thomas Meier
Name: Thomas Meier
Title: Associate