Exhibit 10.2.1
Exhibit B Acquisition
Agreement
CHAPTER 11
FINANCING AGREEMENT
CHAPTER 11 FINANCING AGREEMENT dated as of August 30, 1995 (the
"Agreement"), between O'BRIEN ENVIRONMENTAL ENERGY, INC. (the "Company"),
debtor and debtor-in-possession, and NRG ENERGY, INC. ("NRG"), having a
business address at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403.
WHEREAS, the Company filed a petition for relief under chapter 11 of
title 11 of the United States Code, 11 U.S.C. SS 101 et seq. (the
"Bankruptcy Code") on September 28, 1994 (the "Filing Date") in the United
States Bankruptcy Court for the District of New Jersey (the "Bankruptcy
Court"), which chapter 11 case is currently pending in the Bankruptcy Court
as Case No. 94-26723 (the "Chapter 11 Case");
WHEREAS, the Company continues in the operation of its business and
management of its property as a debtor-in-possession pursuant to sections
1107 and 1108 of the Bankruptcy Code;
WHEREAS, the Company and NRG are negotiating the terms of a stock purchase
and reorganization agreement (the "Purchase Agreement");
WHEREAS, the Company does not have sufficient working capital to maintain
its ordinary course of operations;
WHEREAS, the Company is otherwise unable to obtain unsecured credit
allowable as an administrative expense; and
WHEREAS, the parties hereto are entering into this Agreement to provide the
Company with working capital to be used solely for the purposes specified
herein to enhance the prospects for successful reorganization of the
Company in the Chapter 11 Case;
NOW, THEREFORE, the parties hereto agree as follows:
1. THE LOANS.
1.1 The Loans. Subject to the terms and conditions of this
Agreement, NRG agrees to make advances to the Company from time to time
during the period (the "Commitment Period") commencing on the Effective
Date (as defined below) to but not including the Final Maturity Date (as
defined below), so long as an Event of Default (as defined below)
hereunder, or any event which upon the lapse of time or notice or both
would become an Event of Default hereunder, shall have not occurred, in an
amount which will not exceed in the aggregate at any one time $3,000,000
(the "Commitment") (each such advance, a "Loan", and collectively, the
"Loans").
1.2 The Note. The Loans made by NRG shall be evidenced by
a single promissory note substantially in the form of Exhibit A hereto (the
"Note") dated the Effective Date and payable to NRG in the aggregate
principal amount of $3,000,000, together with interest as provided herein.
The amount and date of each Loan made by NRG, and all payments on account
of the
2
principal thereof, shall be recorded by NRG on its books and endorsed by
NRG on the schedule attached to the Note or any continuation thereof, and
any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded.
1.3 Prepayment. After taking into account the proviso in
section 1.9, the Company may prepay, without premium or penalty, all or
part of the Loans upon not less than three (3) business days' prior written
notice to NRG, which notice (i) shall specify the prepayment date (which
shall be a business day) and the amount of the prepayment and (ii) shall be
irrevocable and effective upon receipt by NRG, provided that interest on
the principal repaid, accrued to the prepayment date, shall be paid on the
prepayment date. Partial prepayment shall be in an aggregate principal
amount of $500,000, or a whole multiple thereof. Amounts prepaid may not
be reborrowed.
1.4 Repayment of the Loans. The Company will pay to NRG
the outstanding principal balance and unpaid interest on the Note on the
earliest to occur of (i) the effective date of a plan of reorganization for
the Company or the closing of a sale described in (ii) below, (ii) thirty
days after entry by the Bankruptcy Court of an order approving the sale of
all or any portion of the assets or capital stock of the Company or O'Brien
(Newark) Cogeneration, Inc., O'Brien (Parlin) Cogeneration, Inc. or O'Brien
Energy Services, Inc. (hereinafter collectively referred to as the
"Designated Subsidiaries"), or confirming a
3
plan which provides for the sale of all or any portion of the assets or
capital stock of the Company or the Designated Subsidiaries, to a party
other than NRG or its designated Affiliate, (iii) when and if the Purchase
Agreement is executed by the Company, ten (10) days after entry by the
Bankruptcy Court of an order or judgment determining that the Company
breached its obligations under the Purchase Agreement and that NRG was
entitled to terminate the Purchase Agreement pursuant to the terms thereof,
and (iv) when and if the Purchase Agreement is executed by the Company,
ninety (90) days after the termination by either party thereto of the
Purchase Agreement for any reason other than those specified in
clause (iii) hereof, (v) conversion or dismissal of the Chapter 11 Case or
(vi) March 15, 1996. The earliest to occur of the foregoing (i) - (vi) is
herein referred to as the "Final Maturity Date". All payments hereunder
shall be applied first to any unpaid accrued interest on the Loans, and
then to the outstanding principal balance of the Loans.
1.5 Limitation.
(a) Notwithstanding anything contained in Section 1.1, NRG will
not make Loans which in the aggregate exceed the Commitment.
(b) Notwithstanding anything contained in Section 1.1, the Loans
shall not exceed any maximum borrowing authority of the Company as may from
time to time be ordered or authorized by the Bankruptcy Court.
4
1.6 Procedure for Borrowing. National Westminster Bank plc
or another person designated by NRG to the Company in writing shall act as
agent (in such capacity, hereinafter referred to as "Agent") for NRG in
connection with the Commitment. The Company may borrow under the
Commitment during the Commitment Period on any business day. The Company
shall give Agent irrevocable notice (which notice must be received by Agent
in writing prior to 10:00 a.m., New York time, three business days prior to
the requested borrowing date), specifying (i) the amount of the Loan and
(ii) the requested borrowing date. Upon receipt of such notice from the
Company, Agent shall make such loan by wire transfer of immediately
available funds in accordance with the instructions set forth in
Schedule 1.6 hereto. Each Loan shall be in an amount equal to $500,000 or
a whole multiple thereof.
1.7 Purpose of Loans. The proceeds of the Loans shall be
used by the Company solely for the purposes set forth in Schedule 1.7
hereto.
1.8 Extension. If the Final Maturity Date shall have
occurred pursuant to clause (i) of Section 1.4, the Company shall have the
option, subject to the terms and conditions of this Agreement, to extend
the Final Maturity Date by an additional sixty (60) days upon payment by
the Company to NRG of an extension fee equal to 3% of the Commitment.
1.9 Repayment at Closing. Notwithstanding any provision
hereof to the contrary, the Loans and all other amounts
5
outstanding hereunder and under the Note as of the closing date of the
Purchase Agreement, if and when such Purchase Agreement is executed by the
Company, shall, at the election of NRG to the extent provided in the
Purchase Agreement, be repaid upon such closing; provided, that in the
event NRG and O'Brien consummate the transactions contemplated by the
Purchase Agreement, O'Brien shall not be obligated to pay to NRG any
portion of any Loan and the corresponding interest accrued thereon (i.e.,
any portion of outstanding principal balance and corresponding unpaid
interest on the Note) to the extent such portion of the Loan is used to
make capital contributions or incur any development costs in connection
with the projects commonly referred to as Edgeboro or Grays Ferry
("Specified Development Costs").
2. INTEREST.
2.1 Interest. The Loans shall bear interest at a rate per
annum equal to the Prime Rate as of the Effective Date, plus two percent
(2%). For purposes of this Financing Agreement, the term "Prime Rate"
shall mean as of any date of determination, the higher of (i) the interest
rate established by National Westminster Bank plc ("NatWest") as its prime
rate and (ii) the weighted average of the overnight federal funds rates
plus 0.5%. Subject to Section 1.4, interest shall be payable monthly in
arrears on the first day of the following month.
2.2 Computation of Interest. Interest hereunder and under
the Note shall be computed on the basis of a year of 360 days for the
actual number of days elapsed.
6
2.3 Payments and Endorsements. Except as provided in
Section 1.9 hereof, all payments of principal of and interest hereunder and
under the Note shall be made without setoff, deduction or counterclaim and
shall be made prior to 12:00 noon, New York time, on the due date thereof,
to NRG by wire transfer of immediately available funds in accordance with
the wire transfer instructions to be provided by NRG to the Company.
2.4 Payment on Non-Business Days. Whenever any payment to
be made hereunder or under the Note shall be stated to be due on a
Saturday, Sunday or a public holiday under the laws of the State of New
York, such payment shall be made on the next succeeding business day, and
such extension of time shall in such case be included in the computation of
payment of interest hereunder or under the Note, as the case may be.
2.5 Additional Interest. If all or a portion of (i) the
principal amount of any Loan, (ii) any interest payable thereon or
(iii) any other amounts payable hereunder shall not be paid when due
(whether at stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate which (a) in the case of overdue
principal, shall be the rate applicable thereto pursuant to Section 2.1
plus 2% or (b) in the case of overdue interest or other amounts, shall be
the rate described in Section 2.1 plus 2%, in each case from the date when
due (whether at stated maturity, by acceleration or otherwise) until such
amount is paid in full. Overdue interest shall be
7
compounded and bear interest on each date for payment of interest on
principal hereunder.
3. CONDITIONS PRECEDENT. NRG's obligation to make the initial Loan
requested hereunder is subject to the satisfaction or waiver of each of the
Company:
(a) NRG shall have received this Agreement and the Note in each
case executed by a duly authorized officer of the Company;
(b) An order (the "Financing Order") in the form attached as
Exhibit B shall have been entered by the Bankruptcy Court, or such other
court exercising jurisdiction over the Chapter 11 Case, approving and
authorizing (i) this Agreement, the Note and the borrowings contemplated
hereby and (ii) the superpriority of the Loans pursuant to Section
364(c)(1) of the Bankruptcy Code, which Financing Order (w) shall be in
full force and effect, (x) shall not have been revised, modified or
amended, (y) shall not be subject to any appeal which challenges whether
NRG extended the Loans hereunder in good faith or is otherwise entitled to
the benefits of section 364(e) of the Bankruptcy Code and (z) shall not be
subject to any stay or injunction;
(c) No preliminary or final injunction which restrains or
prohibits the consummation of the transactions contemplated hereby shall
have been issued and be in effect;
(d) NRG shall have received the Facility Fee (as defined below);
8
(e) The representations and warranties contained in Section 7
hereof shall be true and correct on and as of the Effective Date (as
defined in Paragraph 12 below) as though made on and as of the Effective
Date; and
(f) No event shall have occurred and be continuing on the
Effective Date which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both.
4. CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES. The obligation of NRG to
make each Loan (including the initial Loan) shall be subject to the
following conditions precedent:
(a) The representations and warranties contained in Section 7
shall be true and correct on and as of the date of such Loan as though made
on and as of such date; and
(b) No event shall have occurred and be continuing on the date
of such Loan which would constitute an Event of Default or would constitute
an Event of Default but for the requirement that notice be given or time
elapse or both; and
(c) The Financing Order shall be in full force and effect on the
date of such Loan without any revision, modification or amendment which, in
NRG's judgment, adversely affects its rights, benefits or remedies.
5. COVENANTS. The Company hereby covenants and agrees with NRG that so
long as the Commitment remains in effect, the Note remains outstanding and
any portion thereof unpaid, or any other amount is owed to NRG hereunder,
it shall:
9
(a) Maintain its books and records in accordance with generally
accepted accounting principles and, during reasonable business hours and
upon reasonable notice, make available to NRG the Company's books and
records. NRG shall be entitled to make such investigation of the business
of the Company as NRG reasonably requests; provided, however, that (i) the
Company shall not be required to provide its books and records to the
extent disclosure of them would compromise any attorney-client privilege
between the Company and its counsel and (ii) other than as may be provided
in any order entered by the Bankruptcy Court, NRG shall not be entitled to
receive any document or information concerning bids for the Company or its
assets submitted by entities other than NRG and its affiliates; and
provided, further, that NRG will continue to comply with the
confidentiality agreement previously entered into by NRG with the Company.
(b) Promptly give to NRG written notice of:
(i) Any Event of Default or any event which, upon
lapse of time or notice or both, would become an Event of Default;
(ii) The occurrence of any event or any matter
known to the Company which has resulted or will result in a material
adverse effect, which shall mean any condition, change or event that,
individually or in the aggregate, would materially and adversely
affect the business, operations, properties, financial condition or
10
prospects of the Company and its subsidiaries taken as a whole; and
(iii) Any change in location known to the Company
of any of the Company's books and records.
6. NEGATIVE COVENANTS. The Company covenants and agrees that, so long as
the Commitment remains in effect, the Note remains outstanding and unpaid
or any other amount is owed to NRG hereunder, it will not, without the
prior written consent of NRG:
(a) Unless otherwise agreed to by NRG in writing, use all or any
portion of the Loans for purposes other than those specified in
Schedule 1.7; and
(b) Create, assume, or suffer to exist, or seek to create,
assume, or suffer to exist, any unsecured debt incurred after the Petition
Date which would have the priority senior or equal to NRG's priority under
Section 8.3 hereof, other than any unsecured debt incurred for the purpose
of making or incurring Specified Development Costs; provided, that other
unsecured debt may be incurred by the Company to finance or to fund such
development costs ("Additional Development Financing"), so long as the
Company shall have first offered the opportunity to NRG in writing to
provide such financing on substantially the same terms and conditions and
NRG has declined to provided such financing. If NRG does not accept or
decline such offer within three business days after receipt thereof of
receiving such offer in writing such offer shall be deemed declined.
11
7. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to NRG on and as of the date hereof and the Effective Date that:
(a) Corporate Action. Conditioned upon entry of the Financing
Order, the Company has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the
Note; the execution, delivery, and performance by the Company of this
Agreement and the Note have been duly authorized by all necessary corporate
action on its part; and this Agreement has been duly and validly executed
by the Company and constitutes, and the Note when executed and delivered
will constitute, its legal, valid and binding obligations, enforceable in
accordance with their respective terms;
(b) Approval. Conditioned upon entry of the Financing Order, no
authorizations, approvals or consents of, and no filings or registrations
with, any governmental authority or any other person are necessary for the
execution, delivery or performance by the Company of this Agreement or the
Note or for the validity or enforceability thereof; and
(c) No Breach. Conditioned upon entry of the Financing Order,
none of the execution and delivery of this Agreement and the Note, and the
consummation of the transactions herein contemplated and compliance with
the terms and provisions hereof or of the Note will conflict with or result
in a breach of, or require any consent under, the charter or by-laws of the
12
Company, or any applicable Law, or any Order of any governmental authority
or any material agreement by which the Company or any of its property is
bound.
8. CLAIM PRIORITY. NRG shall be granted an allowed administrative expense
claim in the Chapter 11 Case for the Loans and all other fees and expenses
owing hereunder and under the Note, including, but not limited to, fees and
expenses pursuant to Section 13.4 of this Agreement, which claim shall be,
pursuant to section 364(c)(1) of the Bankruptcy Code, senior to any and all
other administrative expenses in the Chapter 11 Case of the kind specified
in sections 503(b) or 507(a)(1) of the Bankruptcy Code, other than any
administrative expense claim in respect of any Additional Development
Financing, which administrative expense claim shall be entitled to pari
passu treatment with the administrative expense claim of NRG provided
herein; provided, however, that nothing contained herein shall prevent the
Company from using the proceeds of the Loans for the purposes specified in
Section 1.7.
9. EVENTS OF DEFAULT. The following shall constitute "Events of Default"
hereunder:
(a) any amounts due hereunder or under the Note shall
not have been paid when due in accordance with the terms hereof or thereof;
(b) any covenant made under this Agreement or the Note
by the Company shall be breached in any material
13
respect and such breach shall continue for ten (10) business bays;
(c) any representation or warranty made under this Agreement or
the Note by the Company shall prove to have been incorrect when made (or
deemed made) or shall be breached in any material respect and such error or
breach shall continue for ten (10) business days;
(d) the appointment of a trustee under section 1104 of the
Bankruptcy Code by order of the Bankruptcy Court or such other court
exercising jurisdiction over the Chapter 11 Case unless, within sixty (60)
days following entry of an order appointing such trustee, NRG receives
written confirmation from such trustee that he, she or it will perform, as
and when due, without modification or variation, all of the obligations
(i) of the Company hereunder and under the Note and (ii) of the Company and
the Designated Subsidiaries under the Purchase Agreement, when and if it is
executed by the Company;
(e) the dismissal of the Chapter 11 Case or the conversion of
the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code;
(f) the Financing Order, as it may apply to any outstanding
Loans, shall have been vacated, revised, modified or amended without the
prior written consent of NRG; or
(g) the commencement against NRG of any action or proceeding
which asserts by or on behalf of the Company or any of the Company's
creditors or shareholders, or committees
14
of any of the foregoing, or affiliates, successors, or assigns, any action
which seeks to set off or counterclaim against, disallow, limit or reduce,
or avoid or subordinate the Company's obligations to NRG, or to recover any
legal or equitable remedy against NRG, which action or proceeding has not
been dismissed within sixty (60) days after its commencement.
10. TERMINATION. The obligation of NRG to make any of the Loans hereunder
shall automatically terminate upon (x) the occurrence of an Event of
Default, which Event of Default continues uncured for the duration of any
applicable grace period or (y) the Final Maturity Date. Upon the
occurrence of an Event of Default, which continues uncured for the duration
of any applicable grace period, the principal of, and accrued interest on,
the Note shall become immediately due and payable. The Company's
obligations hereunder shall terminate at such time as the Loans and the
interest, fees and costs owing under this Agreement and the Pledge
Agreement shall have been paid in full.
11. REMEDIES. Upon the occurrence of an Event of Default:
(a) NRG may cease making Loans under the Commitment, but the
Company's obligations to perform the terms of this Agreement shall continue
until the Loans and the interest, fees and costs owing under this Agreement
are paid in full; and
(b) The automatic stay of section 362 of the Bankruptcy Code
shall be immediately and automatically terminated and vacated without
further order of the Bankruptcy Court five
15
(5) business days after the date upon which NRG files in the Chapter 11
Case a notice of the Company's default under this Agreement, unless the
Company in good faith has promptly, and in no event later than three
(3) business days following the filing of such notice, applied to the
Bankruptcy Court for a continuation of the automatic stay and has requested
a hearing to be held as soon thereafter as the Bankruptcy Court's calendar
permits. Upon termination or vacation of the automatic stay, NRG may
thereafter pursue its rights and remedies as a creditor under applicable
law without seeking further relief from the Bankruptcy Court.
12. EFFECTIVE DATE.
12.1 Effective Date. The date that is ten (10) days from
and after the date that the Bankruptcy Court enters the Financing Order is
hereinafter referred to as the "Effective Date".
12.2 Fees. On the Effective Date, the Company shall pay to
NRG a facility fee equal to $25,000 (the "Facility Fee").
13. MISCELLANEOUS.
13.1 Integration. The Financing Order, this Agreement and
the Note integrate all the terms and conditions mentioned herein or
incidental hereto, and supersede all prior negotiations, whether written or
oral, and prior writings with respect to the subject matter hereof.
16
13.2 No Waiver. No delay or omission to exercise any
right, power, or remedy accruing to NRG upon breach or default by the
Company under this Agreement or the Note shall impair any such right,
power, or remedy of NRG nor shall it be construed to be a waiver of any
such breach or default, nor an acquiescence therein, or of or in any breach
or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any breach or default under this Agreement or the
Note must be in writing, and shall be effective only to the extent of such
writing. All remedies under this Agreement and the Note or otherwise
afforded to NRG shall be cumulative and not alternative.
13.3 Successors and Assigns. This Agreement, together with
all extensions, amendments, and renewals thereof, shall bind and inure to
the benefit of the respective successors and assigns of each of the
parties, including any interim trustee, trustee, or examiner appointed
under the Bankruptcy Code. NRG may heretofore or hereafter sell, assign,
transfer, negotiate, or grant participations or subrogation rights in any
of its rights under this Agreement.
13.4 Attorneys' and Accountants' Fees and Costs. In the
event of any action at law or suit in equity in relation to this Agreement
or in the event that NRG incurs any attorneys' fees, accountants' fees, or
legal expenses or costs to protect or enforce its rights hereunder, the
Company, in addition to all other sums which the Company may be called upon
to pay, will pay
17
to NRG the sum of NRG's reasonable attorneys' fees, accountants' fees and
legal expenses and costs, including the fees and expenses of Agent.
13.5 Notices. Any notice required to be sent hereunder
shall be deemed given and received upon the earlier of (1) telecopy or
personal delivery to the addresses listed below, or (2) three (3) calendar
days after deposit in the United States mails, postage prepaid, addressed
as follows:
(1) If to NRG at:
NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Craig A. Mataczynski
Telephone: (612) 373-5460
Telecopier: (612) 373-5430
with a copy to counsel at:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attention: Steven P. Buffone, Esq.
Telephone: (212) 351-3936
Telecopier: (212) 351-4035
(2) If to the Company at:
O'Brien Environmental Energy, Inc.
225 South Eighth Street
Philadelphia, PA 19106
Attention: Chief Administrative Officer
Telephone: (215) 627-5500
Telecopier: (215) 922-5227
18
with a copy to counsel at:
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, NJ 07102
Attention: Brian S. Coven, Esq.
Telephone: (201) 643-7000
Telecopier: (201) 643-6500
13.6 Governing Law. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State of New
York, without reference to the conflicts of laws thereof, and, to the
extent applicable, the Bankruptcy Code. All disputes arising out of or
related to this Agreement, including, without limitation, any dispute
relating to the interpretation, meaning or effect of any provision hereof,
will be resolved in the Bankruptcy Court and the parties hereto each submit
to the exclusive jurisdiction of the Bankruptcy Court for the purpose of
adjudicating any such dispute.
13.7 Indemnification. The Company agrees (1) to indemnify
and hold harmless NRG, Agent and each director, officer, representative,
agent, attorney, advisor, consultant, employee and affiliate thereof (each
an "Indemnified Person") from and against any and all losses, claims,
damages, liabilities, and expenses that arise out of, result from, or in
any way relate to this Agreement or in connection with the transactions
contemplated hereby, and (ii) to reimburse each Indemnified Person, from
time to time, upon its demand for any legal or other expenses incurred in
connection with any investigation, defense, or participation in any actions
or other
19
proceedings that in any way relate thereto, other than any of the foregoing
claimed by any Indemnified Person to the extent incurred by reason of the
gross negligence or willful misconduct of such person.
13.8 WAIVER OF JURY TRIAL. THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR THE NOTE OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF NRG OR THE
COMPANY RELATING THERETO.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
O'BRIEN ENVIRONMENTAL ENERGY, INC.
debtor and debtor-in-possession
By: /s/ John B. Kelly
Title: Chief Administrative Officer
NRG ENERGY, INC.
By: /s/ Craig A. Mataczynski
Title: Vice President, Domestic
Business Development
Signature Page
Schedule 1.7
USES OF LOANS
1. Working capital of the Company and the O'Brien Subsidiaries,
including, but not limited to, the following:
a. salary, including state and federal employee withholding
taxes;
b. insurance;
c. maintenance expenses; and
d. general and administrative expenses.
2. Claims and expenses of administration of the bankruptcy
proceedings of the Company and the O'Brien Subsidiaries, including, but not
limited to, professional fees.
3. Fees and expenses of the Company and the O'Brien Subsidiaries
relating to ongoing operations.
4. Development costs, including but not limited to those related to
Edgeboro and Grays Ferry.
Exhibit A
[Form of Note]
$3,000,000 August __, 1995
Newark, New Jersey
FOR VALUE RECEIVED, O'BRIEN ENVIRONMENTAL ENERGY, INC., a Delaware
corporation, as debtor and debtor-in-possession (the "Company"), hereby
promises to pay to the order of NRG Energy, Inc. ("NRG"), at 1221 Nicollet
Mall, Suite 700, Minneapolis, MN 55403 or at such other address as may be
designated by NRG in writing, the principal sum of Three Million
($3,000,000) Dollars in lawful money of the United States of America and in
immediately available funds, on the date provided in the Chapter 11
Financing Agreement dated as of August __, 1995, between the Company and
NRG (the "Agreement"), and to pay interest on the unpaid principal amount
of the Loans, at said office, in like money and funds, for the period
commencing on the date of each Loan until such Loan shall be paid in full,
at the rate per annum and on the dates provided in the Agreement provided,
that the payment obligations of the Company under this Note with respect to
principal and interest shall be subject to the proviso set out in section
1.9 of the Agreement.
The amount and date of each Loan made by NRG to the Company, and each
payment made on account of the principal thereof, shall be recorded by NRG
on its books and endorsed by NRG on the schedule attached hereto or any
continuation thereof.
This Note is the Note referred to in the Agreement, and evidences the
Loans made by NRG thereunder. This Note is entitled to superpriority,
administrative expense status, pursuant to section 364(c)(1) of the
Bankruptcy Code, as provided in the Agreement and in that certain order
dated August __, 1995 of the United States Bankruptcy Court for the
District of New Jersey. Capitalized terms used in this Note have the
respective meanings assigned to them in the Agreement.
The Company may at its option prepay all or any part of the principal
of this Note before maturity upon the terms provided in the Agreement.
This Note has been executed and delivered in Newark, New Jersey and
shall be construed in accordance with and governed by the law of the State
of New York.
O'BRIEN ENVIRONMENTAL ENERGY, INC.
debtor and debtor-in-possession
By:
Name:
Title:
2
LOANS
This Note evidences Loans made under the within described Agreement to
the Company on the dates and in the principal amounts set forth below,
subject to the payments and prepayments of principal set forth below:
Principal Amount Unpaid
Date Amount Paid or Principal Notation
of Loan of Loan Prepaid Amount Made by
SILLS CUMMIS ZUCKERMAN RADIN
TISCHMAN EPSTEIN & GROSS, P.A.
JACK M. ZACKIN (JZ 2540)
One Riverfront Plaza
Newark, NJ 07102-5400
(201) 643-7000
Attorneys for O'Brien
Environmental Energy, Inc.
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY
x Chapter 11
In re : Case No. 94-26722
O'BRIEN ENVIRONMENTAL ENERGY, INC., : (RG)
Debtor. :
:
:
:
:
x
ORDER AUTHORIZING DEBTOR TO OBTAIN
POSTPETITION FINANCING PURSUANT TO
SECTION 364(c)(1) OF THE BANKRUPTCY CODE
Upon the Motion (the "Motion") duly noticed by O'Brien Environmental
Energy, Inc., debtor and debtor-in-possession (the "Debtor"), seeking,
among other things, an order of this Court pursuant to section 364(c)(1) of
title 11 of the United States Code, 11 U.S.C. 101, et seq. (the
"Bankruptcy Code"), and Rule 4001 of the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules"), authorizing the Debtor to obtain debtor
in possession financing from Calpine Corporation ("Calpine") pursuant to a
chapter 11 financing agreement attached thereto and the Court having been
advised at the duly noticed hearing on the
Motion that NRG Energy, Inc. ("NRG") is willing to provide pursuant to the
terms of the Chapter 11 Financing Agreement between the Debtor and NRG,
dated August 30, 1995 (the "Financing Agreement"; capitalized terms used
herein and not otherwise defined herein shall have the meanings given to
such terms in the Financing Agreement) such chapter 11 financing on terms
more favorable than those offered by Calpine and described in the Motion;
and NRG having agreed, pursuant to the Financing Agreement, to provide
postpetition financing (the "Financing") up to the principal amount of
$3,000,000, with priority over any and all administrative expenses of the
kind specified in sections 503(b) and 507(b) of the Bankruptcy Code
pursuant to section 364(c)(1) of the Bankruptcy Code; and pursuant to
Bankruptcy Rule 4001(c)(1), due notice of the Motion and hearing on the
Motion having been given to NatWest, each of the official committees
appointed in the chapter 11 case of the Debtor, NRG, those entities who
have filed a notice of appearance pursuant to Bankruptcy Rule 2002(i), and
the United States Trustee for the District of New Jersey; and upon the
record of the hearings held on ________________, 1995 and upon all of the
pleadings filed with the Court and all of the proceedings had before the
Court, and after due deliberation and consideration and sufficient cause
appearing therefor;
It is FOUND, DETERMINED, ORDERED AND ADJUDGED that:
2
1. This Court has core jurisdiction over these proceedings and the
parties and property affected hereby pursuant to 28 U.S.C. 157(b) and
1334.
2. The Debtor has an immediate need to obtain financing (i) to permit the
orderly continuation of its businesses so that they may be disposed of in a
manner which will maximize their value for the benefit of creditors and
shareholders and (ii) to satisfy other working capital needs.
3. The Debtor is otherwise unable to obtain adequate unsecured credit
allowable under section 503(b)(1) of the Bankruptcy Code as an
administrative expense. A facility in the amount provided by the Financing
Agreement is unavailable to the Debtor without the Debtor granting to NRG
pursuant to section 364(c)(1) of the Bankruptcy Code, allowed claims, with
respect to all indebtedness and obligations of the Debtor under the
Financing Agreement and the Note related thereto, having priority over any
and all administrative expenses of the kind specified in sections 503(b)
and 507(b) of the Bankruptcy Code. The ability of the Debtor to obtain
sufficient working capital and liquidity through the incurrence of
indebtedness for borrowed money and other financial accommodations is vital
to the Debtor. The preservation and maintenance of the going concern value
of the Debtor is integral to a successful reorganization of the Debtor
pursuant to the provisions of chapter 11 of the Bankruptcy Code.
4. The Financing Agreement has been negotiated in good faith and at
arm's-length between the Debtor and NRG, and
3
any credit extended and Loans made to the Debtor by NRG pursuant to the
Financing Agreement shall be deemed to have been extended by NRG in good
faith, as that term is used in section 364(e) of the Bankruptcy Code.
5. The Debtor is immediately authorized to borrow pursuant to the
Financing Agreement up to an aggregate of $3 million for the purposes, and
upon the terms and conditions, provided for by the Financing Agreement.
6. Pursuant to Section 364(c)(1) of the Bankruptcy Code the Debtor is
expressly authorized, empowered, and directed to enter into the Financing
Agreement and execute and deliver, among other documents, the Financing
Agreement and the Note in substantially the form of the exhibit attached to
the Financing Agreement (collectively, the "Loan Documents") without any
resolution or further action of its Board of Directors, shareholders or any
other person. The terms and conditions of the Loan Documents are approved
and the Debtor is authorized to execute, deliver and perform and do all
acts that may be required in connection with the Loan Documents. Upon
execution and delivery of the Loan Documents, the Loan Documents shall
constitute valid and binding obligations of the Debtor, enforceable against
the Debtor in accordance with their terms. For these purposes the Chief
Administrative Officer of the Debtor so appointed by the Bankruptcy Court
shall be authorized and is directed to so execute and deliver the Loan
Documents and to
4
perform any and all such further action as he may deem necessary to
effectuate the transaction contemplated by the Loan Documents.
7. The obligations of NRG to extend Loans under the Financing Agreement
are expressly subject to the conditions provided for in the Financing
Agreement.
8. For all of the Debtor's obligations and indebtedness arising under the
Financing Agreement and the other Loan Documents, NRG hereby is granted
pursuant to section 364(c)(1) of the Bankruptcy Code an allowed claim
having priority over any and all administrative expenses of the kind
specified in sections 503(b) and 507(b) of the Bankruptcy Code. Except as
otherwise provided in the Financing Agreement, no other claim having a
priority superior or pari passu to that granted by this Order to NRG shall
be granted while any amount under the Financing Agreement is unpaid or the
Commitment thereunder remains outstanding.
9. The Debtor shall use the amounts borrowed under the Financing
Agreement only for the purposes permitted thereunder.
10. At the election of NRG, National Westminster plc (in such capacity,
hereinafter referred to as "Agent"), or such other person as may be
designated by NRG in writing, is hereby authorized to act as agent for NRG
in connection with the Financing Agreement.
11. NRG's administrative expense claim pursuant to the Financing Agreement
shall be deemed filed and allowed without
5
further action on NRG's part, and NRG shall not be required to take any
action to preserve the priority of its administrative expense claims
allowed in full pursuant to this Order.
12. In making decisions to make Loans to the Debtor under the Financing
Agreement or to collect the indebtedness and obligations of the Debtor
arising thereunder, NRG shall not be deemed to be in control of the
operations of the Debtor or to be acting as a "responsible person" or
"owner or operator" with respect to the operation or management of the
Debtor (as such terms, or any similar terms, are used in the United States
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, or in any similar federal or state statute).
13. The Debtor is authorized and directed to do and perform all acts, to
make, execute and deliver all instruments and documents and to pay all fees
which may be reasonably required or necessary for the Debtor's performance
under the Financing Agreement, including, without limitation: (i)
execution of the Loan Documents, and (ii) the non-refundable payment to NRG
of the Facility Fee referred to in the Financing Agreement and such other
costs and expenses as may be due from time to time including, without
limitation, reasonable attorneys' fees and disbursements as provided in the
Loan Documents.
14. Subject only to the provisions of Section 11(b) of the Financing
Agreement, the automatic stay provisions of section 362 of the Bankruptcy
Code hereby are vacated and modified to the extent necessary so as to
permit NRG to exercise, upon the
6
occurrence of an Event of Default (as defined in the Financing Agreement),
all rights and remedies provided for in the Loan Documents.
Notwithstanding any other provision of the Financing Agreement or this
Order, NRG shall have no obligation to make any Loans upon the occurrence
of an Event of Default.
15. The Loan Documents and the provisions of this Order shall be binding
upon NRG, Agent and the Debtor and their respective successors and assigns
(including any trustee hereinafter appointed or elected for the estate of
the Debtor) and shall inure to the benefit of NRG and the Debtor and
(except with respect to any trustee hereinafter appointed or elected for
the estate of the Debtor) their respective successors and assigns.
16. If any or all of the provisions of this Order are hereafter reversed,
modified, vacated or stayed, such reversal, stay, modification or vacation
shall not affect (x) the validity of any obligation, indebtedness or
liability incurred by the Debtor to NRG prior to written notice to NRG of
the effective date of such reversal, stay, modification or vacation, or (y)
the validity and enforceability of any priority authorized or created
hereby or pursuant to the Loan Documents. Notwithstanding any such
reversal, stay, modification or vacation, any indebtedness, obligation or
liability incurred by the Debtor to NRG prior to written notice to NRG of
the effective date of such reversal, stay, modification or vacation shall
be governed in all respects by the Loan Documents and the original
provisions of this Order,
7
and NRG shall be entitled to all the rights, remedies, privileges and
benefits, granted herein and pursuant to the Loan Documents with respect to
all such indebtedness, obligation or liability.
17. The provisions of this Order shall be effective upon entry of this
Order by the Clerk of the Court. All actions taken pursuant to this Order
and the terms of this Order shall survive the entry of, and shall govern
with respect to any conflict with, any order that may be entered confirming
a plan of reorganization of the Debtor or that may be entered converting
the chapter 11 case of the Debtor to a chapter 7 case. No order confirming
a plan will alter or impair the rights of NRG under this Order without the
prior written consent of NRG. The terms and provisions of this Order as
well as all rights of NRG and all obligations of the Debtor created or
arising pursuant to this Order shall continue in this chapter 11 case and
any superseding proceedings under the Bankruptcy Code, and such rights and
obligations shall maintain their priority as provided by this Order until
all Loans are satisfied by payment in full and are thereby discharged. So
long as amounts are outstanding under the Financing Agreement, the
obligations of the Debtor under the Financing Agreement shall not be
discharged by the entry of an order confirming a plan of reorganization in
this chapter 11 case and, pursuant to section 1141(d)(4) of the Bankruptcy
Code, the Debtor has waived such discharge.
8
18. To the extent any of the terms and conditions of the Financing
Agreement are in conflict with the terms of this Order, the provisions of
this Order shall control.
19. The notice given by the Debtor of the Motion constitutes due and
sufficient notice of the relief granted pursuant to this Order.
Dated: Newark, New Jersey
August ____, 1995
___________________________________
HONORABLE ROSEMARY GAMBARDELLA
9