Exhibit 10.3
LIQUIDATING ASSET MANAGEMENT AGREEMENT
This Liquidating Asset Management Agreement, dated as of
April 30, 1996 (the "Agreement"), is entered into by and between
NRG Generating ~.S.) Inc., a Delaware corporation (the "Company")
and Wexford Management LLC., a Connecticut limited liability
company ("Wexford").
WITNESSETH:
WHEREAS, the Company is a Delaware corporation formerly
known as O'Brien Environmental Energy, Inc. formed pursuant to
the Plan of Reorganization for O'Brien Environmental Energy, Inc.
dated January 31, 1996, as amended and confirmed by order of the
United States Bankruptcy Court for the District of New Jersey
(the "Composite Fourth Amended and Restated Plan of
Reorganization for O'Brien Environmental Energy, Inc.").
WHEREAS, Wexford and the Company desire to enter into an
arrangement under which Wexford will manage the liquidation of
the Liquidating Assets (as defined below) and provide related
management services to the Company, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, as well as other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
1.1 Definitions. Capitalized terms used herein that are
not defined below and are defined in the Plan shall have the
meanings assigned to such terms in the Plan. When used herein the
following terms shall have the meanings indicated below:
"Affiliate" shall mean, as to any Person, any other Person
having control of, controlled by, or under common control with,
such first Person. For purposes of this definition, "control"
shall mean power to direct, or cause the direction of, the
management or policies of any Person, whether through ownership
of securities, by contract or otherwise.
"Asset Liquidation Fee" shall mean a fee equal to a market
rate liquidation services fee calculated as a percentage (not to
exceed 10%) of the Net Sales Price of any Liquidating Asset sold
by Wexford during the term of this Agreement, as defined in the
good faith judgment of the Board of Directors.
"Bankruptcy Court" shall mean the United States Bankruptcy
Court for the District of New Jersey.
"Board of Directors" shall mean the Board of Directors of
the Company.
"Business Day" shall mean any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State
of New York or is a day on which banning institutions located in
such state are authorized or required by law or other government
action to close.
"Cause" shall mean (i) fraud, theft of Company property, or
malfeasance committed by Wexford in connection with the
performance of Wexford's duties hereunder, (ii) the willful
misconduct or negligence of Wexford in performing its duties
hereunder this Agreement, or (iii) a Section 2.9 Default.
"GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect from time to time.
"Joint Determination" shall mean a determination made upon
the mutual agreement of the Board of Directors and Wexford, as
provided in Article 6.8 hereof.
"Liquidating Assets" shall mean all of the Company's right,
title and interest in and to (i) all of the outstanding common
stock of Philadelphia Cogen and any management contracts relating
to the Philadelphia Water Department Project to which the Company
or any Affiliate thereto (other than Philadelphia Cogen) is a
party; (ii) all of the equity interest in Philadelphia Biogas
Supply, Inc., O'Brien Energy Services, Puma Power Plant, Ltd. and
American Hydrotherm Corp.; and (iii) the Equipment Held for Sale.
"Management Duties" shall have the meaning set forth in
Article 2.2.
"Net Sales Price" shall mean the gross sales price of any
Liquidating Asset minus commissions, sales and other taxes, legal
and accounting fees and other costs relating directly to the
sales transaction, provided, however, that such costs shall not
include any indebtedness directly associated with such
Liquidating Asset, which indebtedness is assumed or, to the
extent necessary, paid in full by the Company upon the sale of
such Liquidating Asset.
"Person" shall mean an individual, corporation, business
trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever
nature.
"Petition Date" shall have the meaning assigned to such term
in the Plan.
"Plan" shall have the meaning assigned to such term in the
Plan.
"Section 2.9 Default" shall have the meaning set forth in
Section 2.9.
"Termination Date" shall mean the effective date of
termination of this Agreement for any reason permitted under
Article Iv hereof
"Termination for Cause" shall have the meaning assigned to
such term in Section 4.2 hereof.
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ARTICLE II
Management Matter
2.1 Retention of Wexford. The Company hereby retains
Wexford and Wexford hereby agrees to serve as the exclusive
manager, operator and liquidator of the Liquidating Assets of the
Company, on the terms and conditions hereinafter set forth.
2.2 Services to be Provided. Wexford shall have the
responsibility, subject to the direction and control of the Board
of Directors and any officer of the Company to whom the Board may
delegate authority from time to time, to (i) manage the
liquidation of the Liquidating Assets, (ii) to the extent
requested by the Company from time to time, manage the operation
of the Liquidating Assets on behalf of the Company as set forth
below, and (iii) do anything necessary or incidental to the
foregoing (all of such actions collectively, the "Management
Duties"), subject to the limitations set forth below. Consistent
with the foregoing, Wexford shall provide management services to
the Company and shall use its best efforts consistent with sound
commercial practice and shall render services and perform duties
as follows:
(a) market and sell, on terms designed to maximize the sale
proceeds that will be realized by the Company, all of the
Liquidating Assets and in that connection prepare appropriate
sales memoranda and other marketing material and assist in the
negotiation and preparation of appropriate sales agreements and
related documentation;
(b) supervise, hire, fire and set compensation for the
personnel necessary to perform the Management Duties (all of
which personnel shall be employed by Wexford as set forth in
Section 2.5 hereof);
(c) supervise the collection of all judgments, settlements,
fees, charges or other sums due to the Company relating to the
Liquidating Assets, the rendering of bills for the same, and,
from the proceeds of such collections or from other capital
available to the Company, cause the Company to pay all costs,
expenses and fees incurred or payable by the Company relating to
the Liquidating Assets;
(d) prepare and deliver, or cause to be prepared and
delivered, to the Board of Directors (i) no later than fifteen
(15) days after the end of each month, a monthly report of all
fees and expenses incurred by Wexford on behalf of the Company;
and (ii) all such other information as the Board of Directors may
reasonably request from time to time;
(e) prepare or cause to be prepared all financial
statements and data required pursuant to any document, agreement
or other instrument to which the Company is a party or by which
it is bound relating to the Liquidating Assets;
(f) deposit Company funds relating to the disposition of
the Liquidating Assets in such Company accounts as may be
specified by the Company;
(g) assist in the preparation and timely filing of all
returns relating to the Liquidating Assets as requested by the
Board of Directors, as necessary for federal, state and local
income tax purposes;
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(h) maintain appropriate books and records on behalf of the
Company with respect to the Liquidating Assets; and
(i) subject to Section 2.3 hereof and to the preface to
this Section 2.2, perform or cause to be performed such other
services as Wexford reasonably believes are appropriate and
reasonable with respect to the Liquidating Assets.
2.3 Prohibitions. Notwithstanding anything to the contrary
contained herein, Wexford shall not be authorized on behalf of
the Company to:
(a) determine the accounting methods, conventions and
positions as to such items as income recognition and
deductibility to be used in the preparation of the income tax
returns of the Company or make any elections under the tax laws
of the United States, any states or other relevant jurisdictions;
(b) borrow money for any purpose on behalf of the Company;
(c) enter into any agreements or commitments which violate
the terms of this Agreement;
(d) enter into any agreement on behalf of the Company
outside the ordinary course of business without obtaining the
approval of the Board of Directors.
(e) disburse Company funds in any manner other than as
provided in Section 2.2 (c) or (f).
2.4. Office Location.
(a) Wexford shall initially maintain its office in
Greenwich, Connecticut, out of which office Wexford shall perform
the Management Duties.
(b) Wexford shall give the Company at least thirty (30)
days' prior written notice of any change in the location of
Wexford's office.
(c) Wexford shall maintain insurance covering its business
premises, equipment and records of the Company located in its
office in such amounts and against such risks as shall be
reasonably acceptable to the Company. A reasonable rata portion
of the cost of such insurance, as may be agreed between Wexford
and the Company, shall be borne by the Company.
2.5 Personnel Costs and Expenses. Subject to the approval
of the Board of Directors, Wexford shall hire or retain such
qualified personnel as are necessary to fulfill its obligations
under this Agreement. All reasonable costs and expenses
associated with such personnel (i.e., salaries, taxes, benefits,
insurance, and other reasonable, agreed overhead, etc.) and the
reasonable costs and expenses of independent contractors retained
by Wexford on behalf of the Company (as approved by the Board of
Directors) shall be borne by the Company. The Company shall
reimburse Wexford for all reasonable expenses incurred by Wexford
that directly relate to the performance of its Management Duties
on behalf of the Company.
2.6 Inspection. Upon reasonable notice, Wexford shall permit the
Company and any authorized representatives to inspect and audit
all data, documents and records
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of Wexford during normal business hours relating to its
performance under this Agreement.
2.7 Budget Considerations. Subject to any restrictions set
forth in any agreements to which any of the Subsidiaries are
party, all money required to operate the Liquidating Assets shall
be obtained from the net proceeds realized from the sale of
Liquidating Assets and distributions to the Company in respect of
the capital stock of any Subsidiary.
2.8 Non-Cash Recoveries. In the event the Company receives
any non-cash recoveries from the disposition of the Liquidating
Assets, and subject to the direction of the Board of Directors,
Wexford may (i) hold such recoveries in the name of the Company
for such period as the Board of Directors deems is practical to
maximize the value of such recoveries, (ii) sell such recoveries
for cash as the Board of Directors deems is in the best interest
of the Company, and (iii) hold and dispose of any securities
received in accordance with applicable securities laws. All
proceeds received from the sale of any non-cash recoveries shall
be Company funds and shall be retained pending disposition by the
Company.
2.9 Failure to Perform. If Wexford falls to perform any
actions which the Company determines are necessary for the proper
performance by Wexford of its Management Duties hereunder, the
Company shall provide written notice to Wexford of such failure
to perform. Within ten (10) days after receipt of such notice,
Wexford shall provide written notice to the Company that either
(i) Wexford has commenced to perform such action and will
diligently pursue such action to completion or (ii) Wexford
reasonably believes that the action should not be performed, in
which event the decision as to whether or not to take the action
shall become a Joint Determination. If Wexford falls to deliver
any written notice within the ten (10) day period, or if Wexford
delivers the notice set forth in subparagraph (i), but thereafter
unreasonably falls to complete the required actions within 25
days after receipt of the written notice from the Company (either
of such events being referred to herein as an "Section 2.9
Default"), the Company may terminate this Agreement for Cause.
ARTICLE III
Management Fee
3.1 Management Fee. As full compensation for the services
contemplated to be performed by Wexford during the term of this
Agreement, the Company shall pay Wexford the Asset Liquidation
Fee. The Asset Liquidation Fee payable by the Company with
respect to a Liquidating Asset shall be paid on the closing of
the sale of such Liquidating Asset. if; during the Term of this
Agreement, the Board of Directors elects for any reason to
withdraw from sale a Liquidating Asset or otherwise takes an
action which materially affects the ability to sell any
Liquidating Asset at or above the Net Sales Price set forth on
Exhibit 3.1 hereto, the Company shall promptly pay to Wexford an
Asset Liquidation Fee as if such Liquidating Asset had been sold
at the Net Sales Price set forth on Exhibit 3.1 hereto [To come,
but not to be disclosed to the public to ensure that the parties'
assumed values of the Liquidating Assets are not made public and
therefore do not inhibit the parties' abilities to sell such
assets to third parties for the highest possible purchase
prices]. Notwithstanding anything to the contrary in this
Agreement, the aggregate Asset Liquidation Fees payable to
Wexford hereunder shall in no event exceed $1,500,000, provided
that, the payment by the Company to Wexford of such maximum Asset
Liquidation Fees of $1,500,000 shall not excuse Wexford from its
obligation to perform the Management Duties for the duration of
the term of this Agreement, which may include the further sale of
Liquidating Assets with respect to which no Asset Liquidation Fee
will thereafter be payable. If Wexford falls to continue to
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perform such duties, it shall be liable to the Company for
liquidated damages calculated as Asset Liquidation Fee of the Net
Sales Price set forth on Exhibit 3.1 hereto with respect to those
Liquidating Assets with respect to which Wexford shall have filed
to perform such Management Duties.
3.2 Effect of Termination for Cause. In the event of a
Termination for Cause, Wexford shall be liable to the Company for
breach of contract damages arising out of the occurrence of the
event that gave rise to the Termination for Cause. In no event
shall Wexford be liable for consequential damages.
ARTICLE W
Termination
4.1 Term. This Agreement shall remain in full force and
effect from the date hereof until the fifth anniversary of the
date hereof, provided, however, that this Agreement may be
earlier terminated as set forth in this Article W.
4.2 Termination for Cause. This Agreement may be terminated
by the Company at any time immediately upon notice to Wexford
upon the occurrence of any event set forth in the definition of
Cause (a "Termination for Cause").
ARTICLE V
Indemnification
The Company shall indemnification and hold harmless Wexford
(and its agents, employees and representatives acting on its
behalf and independent contractors retained by Wexford in
accordance with the terms of this Agreement) and its directors,
officers, affiliates, successors and permitted assigns
(collectively, the "Indemnitees") from and against any reasonable
costs, expenses, or disbursements of any kind or nature
whatsoever including, without limitation, reasonable legal fees
which the Indemnitees may incur in connection with their status
as such, other than costs, expenses, or disbursements of any kind
or nature whatsoever arising from the willful misconduct or the
gross negligence of such Indemnitee, if the Indemnitee acted in
good faith and in a manner it reasonably believed to be in, or
not opposed to, the best interests of the Company and, with
respect to any criminal proceeding, had no reasonable cause to
believe its conduct was unlawful.
ARTICLE VI
Miscellaneous
6.1 No Waiver. No term or provision of this Agreement
shall be deemed waived and no breach or default shall be deemed
consented to unless such waiver or consent shall be in writing
and signed by the party claimed to have waived or consented. No
consent by any party to, or waiver of, a breach or default by the
other, whether express or implied, shall constitute a consent to
or a waiver of any different or subsequent breach or default.
6.2 Assignment. The rights and obligations of either party under
this Agreement may not be assigned, transferred or delegated
without the prior written consent of the other party, which such
consent may be withheld for any reason whatsoever.
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6.3 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES OF SUCH
JURISDICTION.
6.4 Severability. If any term or provision of this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms and
provisions shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
6.5 Notices. All notices and other communications
hereunder shall be given in writing and shall be deemed to have
been duly given if delivered personally, upon such delivery, if
transmitted by telecopier to the number(s) designated below, upon
receipt, or if mailed by registered or certified mail, postage
prepaid, return receipt requested, five days after being placed
in the mail, to the address(es) designated below, or to such
other address(es) as either party may specify in writing from
time to time.
(a) If to Wexford:
Wexford Management Corporation
411 West Putnam Avenue
Greenwich, CT 06830
Attention: Spyro S. Skouras
(b) If to the Company:
c/o NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Vice President, Business Development
6.6 Joint Determination. With respect to any action or decision
requiring a Joint Determination under this Agreement, either the
Company or Wexford (the "Initiating Party") may initiate the
Joint Determination process set forth below by delivery of
written notice to the other party (the "Other Party") of the
action or decision requiring Joint Determination, and specifying
therein the Initiating Party's recommendation as to the action or
decision to be taken. The Other Party shall have a period of
fifteen (15) days after receipt of such written notice to respond
in writing to the Initiating Party by setting forth its
recommendation as to the action or decision requiring a Joint
Determination. If the Other Party fails to do so respond in
writing within such fifteen (15) day period, the Initiating Party
may take the action recommended in its notice without the further
consent or approval of the Other Party, provided that the Other
Party shall not be responsible for (and shall be exculpated by
the Initiating Party from any liability for) the action
recommended by the Initiating Party and/or the implementation
thereof If the Other Party responds to the Initiating Party
within the fifteen (15) day period, the Other Party and the
Initiating Party shall use their reasonable good faith efforts to
reach agreement on the action or decision requiring Joint
Determination within twenty (20) days after receipt of the Other
Party's response. In the event the Company and Wexford cannot
agree on an action which requires a Joint Determination within
such twenty (20) day period, no such action shall be taken. If a
decision is necessary for the operation of the Company or if the
Company and/or Wexford so elect, the Company and/or Wexford may
petition the Bankruptcy Court for resolution of the dispute.
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6.7 Entire Agreement. This Agreement represents the entire
understanding of the parties hereto with respect to the subject
matter hereto and supersede any and all prior negotiations,
understandings and agreements with respect thereto.
6.8 Amendments. This Agreement may be amended only by a
written document signed by both parties.
6.9 No Joint Venture. Wexford and the Company are
independent contractors, and nothing in this Agreement shall be
construed to make Wexford and the Company joint venturers or
partners or to impose upon either of them any liability as such.
6.10 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding on and enforceable against, the
permitted successors and assigns of the respective signatories
hereto.
6.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered an
original and all of which taken together shall constitute one
agreement binding on both of the parties hereto, notwithstanding
that both parties shall not have signed the same counterpart.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
WEXFORD
NOW WEXFORD MANAGEMENT LLC
WEXFORD MANAGEMENT CORP.
By: /s/ Spyros S. Skouras
Name: Spyros S. Skouras
Title: Senior Vice President
COMPANY:
NRG GENERATING (U.S.) INC.
By: /s/ Leonard Bluhm
Name: Leonard Bluhm
Title: President and Chief
Executive Officer
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Exhibit 3.1
Commission Rate: 10%
Asset Net Sales Price
Philadelphia Cogen and any management $13,000,000
contracts relating to the Philadelphia
Water Dept. Project
Each item of Equipment Held for Sale Midpoint in the range
assigned to asset
appraisals performed by
Belyea Company, Inc. dated
July 14, 1995 or Arthur
Andersen & Co., SC dated
June 13, 1995
Equity Interests in:
Philadelphia Biogas Supply $1,000,000
O'Brien Energy Services $1,700,000
Puma Power Plant, Ltd. $3,000,000
American Hydrotherm Corp. $ 500,000