Exhibit 10.27.10
Execution Version
PLEDGE AND SECURITY AGREEMENT
dated as of December 10, 1997
among
NRGG FUNDING INC.,
as a Pledgor
NRG MORRIS INC.,
as a Pledgor
and
THE CHASE MANHATTAN BANK,
as Collateral Agent
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINED TERMS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Defined Terms 2
Section 1.2 Principles of Construction 2
ARTICLE 2
PLEDGE
Section 2.1 Pledged Collateral 3
Section 2.2 Pledgors' Rights 4
Section 2.3 Secured Parties Not Liable 5
Section 2.4 Attorney-in-Fact 5
Section 2.5 Collateral Agent May Perform 6
Section 2.6 Reasonable Care 6
Section 2.7 Security Interest Absolute 6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PLEDGORS
Section 3.1 Ownership of Pledged Collateral; Other
Financing Statements 7
Section 3.2 Due Incorporation; Qualification 7
Section 3.3 Authority; Authorization, Execution
and Delivery; Enforceability 7
Section 3.4 Consents; Governmental Approvals 8
Section 3.5 No Conflicts 8
Section 3.6 Litigation 8
Section 3.7 Necessary Filings 8
Section 3.8 Compliance with Laws 9
Section 3.9 No Defaults 9
Section 3.10 Chief Executive Office 9
ARTICLE 4
COVENANTS OF THE PLEDGORS
Section 4.1 Transfer of Interests 9
Section 4.2 No Other Liens 10
Section 4.3 Maintenance of Existence 10
Section 4.4 Compliance with Laws; Governmental Approvals 10
Section 4.5 Payment of Taxes 10
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Section 4.6 Amendment of LLC Agreement 11
Section 4.7 Chief Executive Office 11
Section 4.8 Supplements; Further Assurances 11
Section 4.9 Certificated Interests 11
Section 4.10 Records; Statements and Schedules 12
Section 4.11 Improper Distributions 12
Section 4.12 Bankruptcy 12
ARTICLE 5
EXERCISE OF REMEDIES UPON AN EVENT OF DEFAULT
Section 5.1 Remedies Generally 12
Section 5.2 Sale of Pledged Collateral 12
Section 5.3 Purchase of Pledged Collateral 13
Section 5.4 Application of Proceeds 14
Section 5.5 Expenses 14
ARTICLE 6
MISCELLANEOUS PROVISIONS
Section 6.1 Notices 14
Section 6.2 Continuing Security Interest 15
Section 6.3 Release 15
Section 6.4 Reinstatement 15
Section 6.5 Independent Security 15
Section 6.6 Amendments 16
Section 6.7 Successors and Assigns 16
Section 6.8 Third Party Beneficiaries 16
Section 6.9 Survival 16
Section 6.10 No Waiver; Remedies Cumulative 16
Section 6.11 Counterparts 16
Section 6.12 Headings Descriptive 17
Section 6.13 Severability 17
Section 6.14 Governing Law; Submission to Jurisdiction
and Venue; Waiver of Jury Trial 17
Section 6.15 Entire Agreement 18
Section 6.16 Indemnity 18
Section 6.17 Independent Obligations 20
Section 6.18 Waiver of Defenses 20
Section 6.19 Subrogation, Etc.
21
Section 6.20 Joint and Several Liability 21
Section 6.21 Recourse Limited to Collateral 21
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PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this
"Agreement"), dated as of December 10, 1997, among NRGG FUNDING
INC., a Delaware corporation ("NRGG FUNDING"), NRG MORRIS INC.,
a Delaware corporation ("NRGMI"), and THE CHASE MANHATTAN BANK,
as Collateral Agent (as defined below) and grantee hereunder
for the benefit of the Secured Parties (as defined below).
NRGG Funding and NRGMI are sometimes referred to herein
collectively as the "Pledgors" and each individually as a
"Pledgor."
W I T N E S S E T H :
WHEREAS, NRG (Morris) Cogen, LLC, a Delaware limited
liability company (the "Borrower") entered into the
Construction and Term Loan Agreement, dated as of September 15,
1997 (as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), with the banks party thereto
(the "Banks"), The Chase Manhattan Bank, as agent for the Banks
(in such capacity, the "Agent Bank"), and The Chase Manhattan
Bank, as collateral agent for the Banks and the Agent Bank (in
such capacity, the "Collateral Agent" and, collectively with
the Banks and the Agent Bank, the "Secured Parties"), pursuant
to which the Banks make construction and term loans and other
extensions of credit to the Borrower;
WHEREAS, NRG Energy, Inc. ("NRG Energy"), NRGMI and
the Collateral Agent entered into the Pledge and Security
Agreement, dated as of September 15, 1997 (the "Original Pledge
Agreement"), pursuant to which NRG Energy and NRGMI granted a
security interest in the Pledged Collateral (as defined
therein) to the Collateral Agent to secure the Borrower's
obligations under the Credit Agreement;
WHEREAS, pursuant to the Membership Interest Purchase
Agreement, dated as of December 10, 1997 (the "Purchase
Agreement"), between NRGG Funding and NRG Energy, NRGG Funding
will purchase all of NRG Energy's membership interests in the
Borrower;
WHEREAS, upon execution and delivery of the Purchase
Agreement, the Pledgors together will own one hundred percent
(100%) of the membership interests in the Borrower and,
accordingly, will benefit from the extensions of credit made by
the Banks to the Borrower under the Credit Agreement;
WHEREAS, it is a condition precedent to (i) obtaining
the consent of the Collateral Agent and the Agent Bank to the
form and substance of the Purchase Agreement and (ii) to the
Banks continuing to extend credit to the Borrower under the
Credit Agreement that the Pledgors execute and deliver this
Agreement;
NOW, THEREFORE, in consideration of the foregoing
premises and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the
Pledgors hereby agree with the Collateral Agent as follows:
ARTICLE 1
DEFINED TERMS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Defined Terms. (a) Unless otherwise defined
herein, terms defined in the Credit Agreement shall have such
defined meanings when used herein.
(b) The following terms shall have the following
respective meanings:
"Expenses" shall have the meaning ascribed thereto in
Section 6.16(a).
"Financing Statement" shall mean all financing
statements, recordings, filings or other instruments of
registration necessary and appropriate to perfect a security
interest or Lien by filing in any appropriate filing or
recording office in accordance with the Uniform Commercial Code
as enacted in any and all relevant jurisdictions or any other
relevant applicable Law.
"Indemnitee" shall have the meaning ascribed thereto
in Section 6.16(a).
"LLC Agreement" shall mean the Amended and Restated
Limited Liability Company Agreement of NRG (Morris) Cogen, LLC,
dated December 10, 1997, between the Pledgors, and all
amendments, modifications and supplements thereto and
restatements thereof made in accordance with Section 4.6.
"LLC Interests" shall have the meaning ascribed
thereto in Section 2.1(a)(i).
"NRG Energy Lien" shall have the meaning ascribed
thereto in Section 3.1.
"Permitted Liens" shall mean: (a) Liens granted
pursuant to this Agree ment; (b) Liens granted pursuant to the
Subordinated Pledge Agreement; (c) Liens (other than any Lien
imposed by ERISA) in connection with workmen's compensation,
unemployment insurance or other social security or pension
obligations; (d) Liens for taxes not yet delinquent or, if
delinquent, which are subject to a Contest; and (e) attachment
or judgment Liens, provided that (i) the existence of such
Liens could not reasonably be expected to result in a Material
Adverse Effect (as defined in Section 3.2) and (ii) such Liens
are discharged within thirty (30) days of the creation thereof.
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"Pledged Collateral" shall have the meaning ascribed
thereto in Section 2.1(a).
"Secured Obligations" shall mean (i) the Obligations
and (ii) the Pledgors' obligations hereunder.
"Securities Act" shall have the meaning ascribed
thereto in Section 5.2(b).
"Subordinated Pledge Agreement" shall mean the
Subordinated Pledge and Security Agreement, dated as of the
date hereof, among the Pledgors and NRG Energy.
Section 1.2 Principles of Construction. Unless otherwise
expressly provided herein, the principles of construction set
forth in Section 1.4 of the Credit Agreement shall apply to
this Agreement.
ARTICLE 2
PLEDGE
Section 2.1 Pledged Collateral. (a) As collateral
security for the prompt and complete payment and performance
when due, whether at stated maturity, by acceleration or
otherwise (including the payment of amounts which would become
due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. 362(a)), of all of the
Secured Obligations, whether now existing or hereafter arising
and howsoever evidenced, each Pledgor hereby pledges, grants,
assigns, hypothecates, transfers and delivers to the Collateral
Agent, for its benefit and the benefit of the other Secured
Parties, a first priority security interest in the following,
whether now existing or hereafter from time to time acquired
(collectively, the "Pledged Collateral"):
(i) all of such Pledgor's membership interests
in the Borrower (such Pledgor's "LLC Interests") and all
of such Pledgor's rights to acquire membership interests
in the Borrower in addition to or in exchange or
substitution for such Pledgor's LLC Interests;
(ii) all of such Pledgor's rights, privileges,
authority and powers as a member of the Borrower under the
LLC Agreement;
(iii) all certificates or other documents (if
any) representing any and all of the foregoing in clauses
(i) and (ii);
(iv) all dividends, distributions, cash,
securities, instruments and other property of any kind to
which such Pledgor may be entitled in its capacity as a
member of the Borrower by way of distribution, return of
capital or otherwise;
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(v) any other claim which such Pledgor now has
or may in the future acquire in its capacity as a member
of the Borrower against the Borrower and its property; and
(vi) all proceeds, products and accessions of
and to any of the property described in the preceding
clauses (i) through (v).
(b) As used herein, the term "proceeds" shall be
construed in its broadest sense and shall include whatever is
received or receivable when any of the Pledged Collateral, or
any proceeds thereof, is sold, collected, exchanged or
otherwise disposed of, whether voluntarily or involuntarily,
and shall include, without limitation, all rights to payment,
including interest and premiums, with respect to any of the
Pledged Collateral or any proceeds thereof.
Section 2.2 Pledgors' Rights.
(a) Distributions. Unless an Event of Default shall
have occurred and be continuing, the Pledgors shall be entitled
to receive and retain any and all distributions paid in respect
of the Pledged Collateral in compliance with the terms of the
Credit Agreement; provided, however, that any and all
(i) distributions paid or payable in respect of
any Pledged Collateral (whether paid in cash, securities
or other property) in connection with (A) any partial or
total liquidation or dissolution of the Borrower, (B) any
distribution of capital of the Borrower, (C) any
recapitalization or reclassification of the capital of the
Borrower or (D) any reorganization of the Borrower, and
(ii) all property (whether cash, securities or
other property) paid, payable or otherwise distributed in
redemption of, or in exchange for, the property described
in clause (i) immediately above,
shall be, and shall be forthwith delivered to the Collateral
Agent to hold as, Pledged Collateral and shall, if received by
either of the Pledgors, be received in trust for the benefit of
the Collateral Agent, be segregated from the other property or
funds of such Pledgor, and be forthwith delivered to the
Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement). All cash and cash
equivalents received by the Collateral Agent pursuant to the
preceding sentence shall be deposited in the appropriate
Project Account in accordance with the Credit Agreement. Upon
the occurrence and during the continuance of an Event of
Default, all rights of the Pledgors to receive the
distributions which they would otherwise be authorized to
receive and retain pursuant to this clause (a) shall cease, and
all such rights shall thereupon become vested in the Collateral
Agent which shall thereupon have the sole right to receive and
hold as Pledged Collateral such distributions; provided that,
notwithstanding anything
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herein to the contrary, if such Event of Default is cured or
waived in accordance with the terms of the Credit Agreement,
any such distribution previously paid to the Collateral Agent
shall, upon request of the relevant Pledgor, be returned to
such Pledgor.
(b) Other Rights. Unless an Event of Default shall
have occurred and be continuing, each Pledgor shall be entitled
to exercise all voting and other rights with respect to such
Pledgor's LLC Interests; provided, however, that no vote shall
be cast, right exercised or other action taken which could
impair the Pledged Collateral or which would be inconsistent
with or result in any violation of any provision of this
Agreement or any other Transaction Document. Upon the
occurrence and during the continuance of an Event of Default,
all voting and other rights of each Pledgor with respect to
such Pledgor's LLC Interests which such Pledgor would otherwise
be entitled to exercise pursuant to the terms of this Agreement
shall cease, and all such rights shall be vested in the
Collateral Agent which shall thereupon have the sole right to
exercise such rights.
(c) Turnover. All distributions and other amounts
which are received by any Pledgor contrary to the provisions of
this Agreement shall be received in trust for the benefit of
the Collateral Agent, shall be segregated from other funds of
such Pledgor and shall be forthwith paid over to the Collateral
Agent as Pledged Collateral in the same form as so received
(with any necessary endorsement).
Section 2.3 Secured Parties Not Liable. Notwithstanding
any other provision contained in this Agreement, the Pledgors
shall remain liable under the LLC Agreement to observe and
perform all of the conditions and obligations to be observed
and performed by the Pledgors thereunder. None of the
Collateral Agent, any other Secured Party or any of their
respective directors, officers, employees or agents shall have
any obligations or liability under or with respect to any
Pledged Collateral by reason of or arising out of this
Agreement or the receipt by the Collateral Agent of any payment
relating to any Pledged Collateral, nor shall any of the
Collateral Agent, any other Secured Party or any of their
respective directors, officers, employees or agents be
obligated in any manner to (a) perform any of the obligations
of either Pledgor under or pursuant to the LLC Agreement or any
other agreement to which either Pledgor is a party, (b) make
any payment or to inquire as to the nature or sufficiency of
any payment or performance with respect to any Pledged
Collateral, (c) present or file any claim or collect the
payment of any amounts or take any action to enforce any
performance with respect to the Pledged Collateral or (d) take
any other action whatsoever with respect to the Pledged
Collateral.
Section 2.4 Attorney-in-Fact. (a) Each Pledgor hereby
appoints the Collateral Agent, on behalf of the Secured
Parties, or any Person, officer or agent whom the Collateral
Agent may designate, as its true and lawful attorney-in-fact,
with full irrevocable power and authority in the place and
stead of such Pledgor and in the name of such Pledgor or in its
own name, at such Pledgor's cost and expense, from time to time
in the Collateral Agent's reasonable discretion (as directed by
the Agent Bank, acting in
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accordance with the Credit Agreement) to take any action and to
execute any instrument which the Collateral Agent may
reasonably deem necessary or advisable to enforce its rights
under this Agreement, including, without limitation, authority
to receive, endorse and collect all instruments made payable to
such Pledgor representing any distribution, interest payment or
other payment in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same; provided,
however, that the Collateral Agent will not exercise its powers
under this Section 2.4 unless an Event of Default has occurred
and is continuing (except that the Collateral Agent may at any
time, in the name of either Pledgor or in its own name,
prepare, sign and file any Financing Statement for the purpose
of perfecting the security interest granted hereunder).
(b) Each Pledgor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue
hereof, in each case pursuant to the powers granted hereunder.
Each Pledgor hereby acknowledges and agrees that in acting
pursuant to the power-of-attorney granted in clause (a)
immediately above, the Collateral Agent shall be acting in its
own interest and on behalf of the Secured Parties, and each
Pledgor acknowledges and agrees that the Collateral Agent and
the other Secured Parties shall have no fiduciary duties to
such Pledgor and such Pledgor hereby waives any claims or
rights of a beneficiary of a fiduciary relationship hereunder.
Section 2.5 Collateral Agent May Perform. If either
Pledgor fails to perform any agreement contained herein after
receipt of a written request to do so from the Collateral
Agent, the Collateral Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of
the Collateral Agent, including the reasonable fees and
expenses of its counsel, incurred in connection therewith shall
be payable by such Pledgor under Section 6.16; provided that if
an Event of Bankruptcy shall have occurred with respect to such
Pledgor, the notice described in this Section 2.5 shall not be
required and shall be deemed to have been delivered upon the
failure of such Pledgor to perform such agreement.
Section 2.6 Reasonable Care. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially
equivalent to that which the Collateral Agent accords its own
property of the type of which the Pledged Collateral consists,
it being understood that the Collateral Agent shall have no
responsibility for () ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Pledged Collateral, whether or
not the Collateral Agent has or is deemed to have knowledge of
such matters, or () taking any necessary steps to preserve
rights against any parties with respect to any Pledged
Collateral.
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Section 2.7 Security Interest Absolute. All rights of
the Collateral Agent and security interests hereunder, and all
obligations of the Pledgors hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of any of
the Transaction Documents or any other agreement or
instrument relating thereto (other than against the
Collateral Agent);
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of
or any consent to any departure from the Transaction
Documents or any other agreement or instrument relating
thereto;
(c) any exchange, release or non-perfection of any
other collateral, or any release or amendment or waiver of
or consent to any departure from any guaranty, for all or
any of the Secured Obligations; or
(d) any other circumstance (other than the
indefeasible payment in full of the Secured Obligations in
cash or cash equivalents and/or application of the
purchase price of any or all of the Pledged Collateral
purchased by the Collateral Agent pursuant to Section 5.3)
which might otherwise constitute a defense avail able to,
or a discharge of, the Pledgors.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PLEDGORS
Each Pledgor represents and warrants as follows, which
representations and warranties shall survive the execution and
delivery of this Agreement and the making and repayment of the
Secured Obligations; provided that (i) prior to the effective
date of this Agreement, such representations and warranties
shall be made by the Pledgors on a several basis, and (ii) on
and after the effective date of this Agreement, such
representations and warranties shall be made by the Pledgors on
a joint and several basis:
Section 3.1 Ownership of Pledged Collateral; Other
Financing Statements. Such Pledgor is the sole legal and
beneficial owner of the Pledged Collateral pledged by it
hereunder free and clear of any Lien other than (a) the Lien
created pursuant to this Agreement and (b) the subordinated
Lien (the "NRG Energy Lien") created in favor of NRG Energy
pursuant to the Subordinated Pledge Agreement. No security
agreement, Financing Statement or other public notice with
respect to all or any part of the Pledged Collateral is on file
or of record in any public office, except such as may have been
filed (x) in favor of the Collateral Agent pursuant to this
Agreement or (y) in favor of NRG Energy pursuant to the
Subordinated Pledge Agreement.
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Section 3.2 Due Incorporation; Qualification. Such
Pledgor is a corporation duly organized and validly existing
under the Laws of the State of Delaware, and is qualified to
own property and transact business in every jurisdiction where
the ownership of its property and the nature of its business as
currently conducted and as contemplated to be conducted
requires it to be qualified, except where the failure to so
qualify could not reasonably be expected to result in a
Material Adverse Effect (as herein defined). For purposes of
this Section 3.2, "Material Adverse Effect" shall mean a
material adverse effect on any of (i) the operations, business,
financial condition or property of NRGG Funding and its
subsidiaries on a consolidated basis, (ii) the ability of
either Pledgor to perform in a timely manner its material
obligations under this Agreement or any other Transaction
Document to which it is a party, (iii) the rights and interests
of the Banks, the Agent Bank and the Collateral Agent under the
Transaction Documents or (iv) the value of the Pledged
Collateral or the validity or priority of the security
interests therein granted to the Collateral Agent.
Section 3.3 Authority; Authorization, Execution and
Delivery; Enforceability. Such Pledgor has full power,
authority and legal right to enter into this Agreement and to
perform its obligations hereunder and to pledge all of the
Pledged Collateral pledged by it pursuant to this Agreement.
The pledge of such Pledged Collateral pursuant to this
Agreement has been duly authorized by such Pledgor. This
Agreement has been duly authorized, executed and delivered by
such Pledgor and constitutes a legal, valid and binding
obligation of such Pledgor enforceable against such Pledgor in
accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or
other similar Laws affecting creditors' rights generally and
except as enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity).
Section 3.4 Consents; Governmental Approvals. No consent
of any other party (including, without limitation, stockholders
or creditors of such Pledgor) and no Governmental Approval is
required which has not been obtained either (a) for the
execution, delivery and performance by such Pledgor of this
Agreement, (b) for the pledge by such Pledgor of the Pledged
Collateral pledged by it pursuant to this Agreement, or (c) for
the exercise by the Collateral Agent of the rights provided for
in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement.
Section 3.5 No Conflicts. The execution, delivery and
performance of this Agreement and each other Transaction
Document to which such Pledgor is a party will not (i) require
any consent or approval of the Board of Directors of such
Pledgor which has not been obtained, (ii) violate the
provisions of such Pledgor's Certificate of Incorporation or By-
laws, (iii) violate the provisions of any Law (including,
without limitation, any usury Laws), regulation or order of any
Governmental Authority applicable to such Pledgor, (iv) result
in a breach of or constitute a default under any material
agreement relating to the management or affairs of such
Pledgor, or any indenture or loan or credit
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agreement or any other material agreement, lease or instrument
to which such Pledgor is a party or by which such Pledgor or
any of its material properties may be bound or (v) result in or
create any Lien (other than Permitted Liens) under, or require
any consent which has not been obtained under, any indenture or
loan or credit agreement or any other material agreement,
instrument or document, or the provisions of any order, writ,
judgment, injunction, decree, determination or award of any
Governmental Authority binding upon such Pledgor or the
Borrower or any of their respective properties.
Section 3.6 Litigation. No Event of Bankruptcy has
occurred with respect to such Pledgor and there is no action,
suit or proceeding at Law or in equity or by or before any
Governmental Authority, arbitral tribunal or other body now
pending against such Pledgor or, to the best knowledge of such
Pledgor, threatened against such Pledgor which questions the
validity or legality of or seeks damages in connection with
this Agreement or any other Transaction Document to which such
Pledgor is a party.
Section 3.7 Necessary Filings. Upon the filing with the
Minnesota Secretary of State of all necessary Financing
Statements executed by the Pledgors in favor of the Collateral
Agent with respect to the Pledged Collateral, all filings,
registrations and recordings necessary or appropriate to
create, preserve, protect and perfect the security interest
granted by such Pledgor to the Collateral Agent hereby in
respect of the Pledged Collateral shall have been accomplished
and the security interest granted by such Pledgor to the
Collateral Agent pursuant to this Agreement in the Pledged
Collateral constitutes a valid and enforceable perfected
security interest therein superior and prior to the rights of
all other Persons therein and, in each case, subject to no
other Liens, sales, assignments, conveyances, settings over or
transfers.
Section 3.8 Compliance with Laws. Such Pledgor has been
in the past and is in current compliance with all applicable
Laws () in respect of the conduct of its business and the
ownership of its property, () in connection with the
procurement of any Transaction Document to which it is a party
and () in connection with the execution, delivery and
performance of any Transaction Document to which it is a party,
except in each case where such Pledgor's failure to comply
could not reasonably be expected to result in a Material
Adverse Effect.
Section 3.9 No Defaults. Such Pledgor is not in default
in the performance, observance or fulfillment of any of the
material obligations, covenants or conditions applicable to
such Pledgor contained in any Transaction Document to which it
is a party.
Section 3.10 Chief Executive Office. (a) The chief
executive office of NRGG Funding and the office where NRGG
Funding keeps its records concerning the Borrower and the
Project and all contracts relating thereto is located at:
1221 Nicollet Mall, Suite 610
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Minneapolis, MN 55403.
(b) The chief executive office of NRGMI and the office
where NRGMI keeps its records concerning the Borrower and the
Project and all contracts relating thereto is located at:
1221 Nicollet Mall, Suite 610
Minneapolis, MN 55403.
ARTICLE 4
COVENANTS OF THE PLEDGORS
Each Pledgor hereby covenants and agrees from and after
the date of this Agreement until the termination of this
Agreement in accordance with the provisions of Section 6.3:
Section 4.1 Transfer of Interests. (a) Such Pledgor
shall not sell or otherwise dispose of the Pledged Collateral
or any interest therein without the prior written consent of
the Collateral Agent (as directed by the Agent Bank, acting
upon the instructions of the Required Banks); provided,
however, that such Pledgor may, without the prior written
consent of the Collateral Agent (as directed by the Agent Bank,
acting upon the instructions of the Required Banks), sell,
together with any sale of LLC Interests made by the other
Pledgor pursuant to this provisio, less than or equal to ten
percent (10%) of its LLC Interests to the Energy Purchaser
within one hundred twenty (120) days after the Closing Date
pursuant to Section 19.5 of the Energy Services Agreement if
(i) such sale does not cause a Default or an Event of Default
under the Credit Agreement and (ii) such sale is consummated
under documentation that is acceptable in form and substance
satisfactory to the Collateral Agent and the Agent Bank and
which causes the Energy Purchaser to pledge its membership
interests in the Borrower so purchased to the Collateral Agent
for the benefit of the Secured Parties as security for the
Secured Obligations; provided that no sale of LLC Interests
shall be permitted under this clause (a) unless NRGG Funding
remains obligated under the Equity Commitment Agreement, dated
as of September 15, 1997, among NRG Energy, the Borrower and
the Collateral Agent, as assumed by NRGG Funding pursuant to
the Assignment and Assumption Agreement, dated as of the date
hereof, between NRG Energy and NRGG Funding.
(b) If either Pledgor transfers all of its LLC
Interests pursuant to any transfer permitted under clause (a)
of this Section 4.1, then the Secured Parties, upon the request
and at the expense of such Pledgor, shall execute and deliver
all such documentation reasonably necessary to release such
Pledgor from the terms of this Agreement.
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Section 4.2 No Other Liens. Such Pledgor shall not
create, incur or permit to exist, shall defend the Pledged
Collateral against and shall take such other action as is
necessary to remove, any Lien or claim on or to the Pledged
Collateral (other than Permitted Liens), and shall defend the
right, title and interest of the Collateral Agent in and to any
of the Pledged Collateral against the claims and demands of all
Persons whomsoever.
Section 4.3 Maintenance of Existence. Such Pledgor shall
preserve and maintain its legal existence as a corporation in
good standing under the Laws of the State of Delaware; provided
that NRGMI shall be permitted to merge into NRGG Funding if, in
connection with such merger, NRGG Funding and NRGMI execute
such documentation as is reasonably necessary to continue the
Lien of the Collateral Agent on the Pledged Collateral.
Section 4.4 Compliance with Laws; Governmental Approvals.
Such Pledgor (i) shall comply with all Laws and (ii) shall
obtain, maintain and comply with all Governmental Approvals as
shall now or hereafter be necessary under applicable Law, rule
or regulation, in each case in connection with the making and
performance by such Pledgor of any material provision of the
Transaction Documents to which it is a party, except where the
failure to do so could not reasonably be expected to result in
a Material Adverse Effect (as defined in Section 3.2).
Section 4.5 Payment of Taxes. Such Pledgor shall pay and
discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of
its property prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, could
reasonably be expected to become a Lien (other than a Permitted
Lien) upon the Pledged Collateral, unless such matters are
subject to a Contest. Such Pledgor will promptly pay or cause
to be paid any valid, final judgment enforcing any such tax,
assessment, charge, levy or claim and cause the same to be
satisfied of record.
Section 4.6 Amendment of LLC Agreement. Such Pledgor
shall not, without the prior written consent of the Collateral
Agent (as directed by the Agent Bank, acting upon the
instructions of the Required Banks), agree to or permit (a) the
cancellation or termination of the LLC Agreement, except upon
the expiration of the stated term thereof or (b) any amendment,
supplement, or modification of, or waiver with respect to any
of the provisions of, the LLC Agreement (except with respect to
(x) any sale of LLC Interests in accordance with Section 4.1 or
(y) with the prior written consent of the Collateral Agent and
the Agent Bank (which consent shall not be unreasonably
withheld), any amendment that could not reasonably be expected
to have an adverse effect on any of the rights of any of the
Secured Parties under this Agreement).
11
Section 4.7 Chief Executive Office. Such Pledgor shall
not establish a new location for its chief executive office or
change its name until (i) it has given to the Collateral Agent
not less than thirty (30) days prior written notice of its
intention so to do, clearly describing such new location or
specifying such new name, as the case may be, and (ii) with
respect to such new location or such new name, as the case may
be, it shall have taken all action, satisfactory to the
Collateral Agent, to maintain the security interest of the
Collateral Agent in the Pledged Collateral intended to be
granted hereby at all times fully perfected and in full force
and effect.
Section 4.8 Supplements; Further Assurances. Such
Pledgor shall at any time and from time to time, at the expense
of such Pledgor, promptly execute and deliver all further
instruments and documents, and take all further action, that
may be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or
to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Pledged
Collateral.
Section 4.9 Certificated Interests. If such Pledgor
shall become entitled to receive or shall receive any
certificate, instrument, option or rights, whether as an
addition to, in substitution of or in exchange for the Pledged
Collateral or any part thereof, or otherwise, such Pledgor
shall accept any such certificate, instrument, option or rights
as the Collateral Agent's agent, shall hold them in trust for
the Collateral Agent and shall deliver them forthwith to the
Collateral Agent in the exact form received, with such
Pledgor's endorsement when necessary or accompanied by duly
executed instruments of transfer or assignment in blank or, if
requested by the Collateral Agent, an additional pledge
agreement or security agreement executed and delivered by such
Pledgor, all in form and substance satisfactory to the
Collateral Agent, to be held by the Collateral Agent, subject
to the terms hereof, as further collateral security for the
Secured Obligations.
Section 4.10 Records; Statements and Schedules. Such
Pledgor shall keep and maintain, at its own cost and expense,
records of the Pledged Collateral, including, but not limited
to, records of all payments received with respect thereto, and
such Pledgor shall make the same available to the Collateral
Agent and the other Secured Parties for inspection at such
Pledgor's chief executive office, at such Pledgor's own cost
and expense, at any and all times upon demand. Such Pledgor
shall furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the
Pledged Collateral and such other reports in connection with
the Pledged Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
Section 4.11 Improper Distributions. Notwithstanding any
other provision contained in this Agreement, such Pledgor shall
not accept any distributions, dividends or other payments (or
any collateral in lieu thereof) in respect of the Pledged
Collateral,
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except to the extent the same are expressly permitted by the
terms of this Agreement and the Credit Agreement.
Section 4.12 Bankruptcy. Such Pledgor shall not
authorize or permit the Borrower to make a general assignment
for the benefit of the Borrower's creditors. Such Pledgor
shall not commence or join with any other Person (other than
the Collateral Agent) in commencing any proceeding against the
Borrower under any bankruptcy, reorganization, liquidation or
insolvency law or statute now or hereafter in effect in any
jurisdiction.
ARTICLE 5
EXERCISE OF REMEDIES UPON AN EVENT OF DEFAULT
Section 5.1 Remedies Generally. If an Event of Default
shall have occurred and be continuing, the Collateral Agent (as
directed by the Agent Bank, acting in accordance with the
Credit Agreement) may exercise, in addition to all other rights
and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party
under the Uniform Commercial Code in effect from time to time
in any relevant jurisdiction and all other rights and remedies
available at Law or in equity.
Section 5.2 Sale of Pledged Collateral. (a) Without
limiting the generality of Section 5.1, the Collateral Agent
(as directed by the Agent Bank, acting in accordance with the
Credit Agreement) may, without notice except as specified
below, sell the Pledged Collateral or any part thereof in one
or more parcels at public or private sale or at any of the
Collateral Agent's Office or elsewhere, for cash, on credit or
for future delivery, and at such price or prices and upon such
other terms as the Collateral Agent may reasonably deem
commercially reasonable, irrespective of the impact of any such
sales on the market price of the Pledged Collateral at any such
sale. Each purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of
the Pledgors, and the Pledgors hereby waive (to the extent
permitted by Law) all rights of redemption, stay and/or
appraisal which they now have or may at any time in the future
have under any rule of Law or statute now existing or hereafter
enacted. The Pledgors agree that, to the extent notice of sale
shall be required by Law, at least ten (10) days' notice to the
Pledgors of the time and place of any public sale or the time
after which any private sale is to be made shall constitute
reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place
to which it was so adjourned. Assuming that such sales are
made in compliance with federal and state securities Laws, the
Collateral Agent shall incur no liability as a result of the
sale of the Pledged Collateral,
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or any part thereof, at any public or private sale. The
Pledgors hereby waive any claims against the Collateral Agent
arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at such a private sale,
if commercially reasonable, was less than the price which might
have been obtained at a public sale, even if the Collateral
Agent accepts the first offer received and does not offer such
Pledged Collateral to more than one offeree.
(b) The Pledgors recognize that the Collateral Agent
(as directed by the Agent Bank, acting in accordance with the
Credit Agreement) may elect to sell all or a part of the
Pledged Collateral to one or more purchasers in privately
negotiated transactions in which the purchasers will be
obligated to agree, among other things, to acquire the Pledged
Collateral for their own account, for investment and not with a
view to the distribution or resale thereof. The Pledgors
acknowledge that any such private sales may be at prices and on
terms less favorable than those obtainable through a public
sale (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act
of 1933, as amended (the "Securities Act")), and the Pledgors
and the Collateral Agent agree that such private sales shall be
made in a commercially reasonable manner and that the
Collateral Agent has no obligation to engage in public sales
and no obligation to delay sale of any Pledged Collateral to
permit the issuer thereof to register the Pledged Collateral
for a form of public sale requiring registration under the
Securities Act.
Section 5.3 Purchase of Pledged Collateral. The
Collateral Agent may be a purchaser of the Pledged Collateral
or any part thereof or any right or interest therein at any
sale thereof, whether pursuant to foreclosure, power of sale or
otherwise hereunder and the Collateral Agent may apply the
purchase price to the payment of the Secured Obligations. Any
purchaser of all or any part of the Pledged Collateral shall,
upon any such purchase, acquire good title to the Pledged
Collateral so purchased, free of the security interests created
by this Agreement.
Section 5.4 Application of Proceeds. The Collateral
Agent shall apply any proceeds from time to time held by it and
the net proceeds of any collection, recovery, receipt,
appropriation, realization or sale with respect to the Pledged
Collateral in accordance with the relevant provisions of the
Credit Agreement. For avoidance of doubt, it is understood
that the Borrower shall remain liable to the extent of any
deficiency between the amount of proceeds of the Pledged
Collateral and the aggregated amount of the Secured
Obligations.
Section 5.5 Expenses. The Pledgors shall upon demand pay
to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, and any transfer taxes,
in each case payable upon sale of the Pledged Collateral, which
the Collateral Agent may incur in connection with () the
custody or preservation of, or the sale of, collection from or
other
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realization upon, any of the Pledged Collateral pursuant to the
exercise or enforcement of any of the rights of the Collateral
Agent hereunder or (b) the failure by the Pledgors to perform
or observe any of the provisions hereof, together with interest
thereon from the date of demand at the rate per annum equal to
the Base Rate plus the Applicable Margin plus two percent (2%).
Any amount payable by the Pledgors pursuant to this Section 5.5
shall be payable on demand and shall constitute Secured
Obligations secured hereby.
ARTICLE 6
MISCELLANEOUS PROVISIONS
Section 6.1 Notices. Except as otherwise expressly
provided herein, all notices, requests and demands to or upon
the respective parties hereto to be effective shall be in
writing (including by telecopy, telex or cable communication),
and shall be deemed to have been duly given or made when
delivered by hand, or upon actual receipt if deposited in the
United States mail, postage prepaid, or, in the case of telex
notice, when answerback is received, or, in the case of
telecopy notice, when confirmation is received, or, in the case
of a nationally recognized overnight courier service, one
Business Day after delivery to such courier service, addressed,
in the case of each party hereto, at its address specified
below its signature hereto or to such other address as may be
designated by any party in a written notice to the other
parties hereto; provided that notices and communications to the
Collateral Agent shall not be effective until received by the
Collateral Agent.
Section 6.2 Continuing Security Interest. This Agreement
shall create a continuing security interest in the Pledged
Collateral until the release thereof pursuant to Section 6.3.
Section 6.3 Release. Upon the indefeasible payment in
full of the Secured Obligations in cash or cash equivalents
and/or application of the purchase price of any or all of the
Pledged Collateral purchased by the Collateral Agent pursuant
to Section 5.3, the Collateral Agent, upon the request, and at
the expense, of the Pledgors, shall execute and deliver all
such documentation necessary to release the security interest
created pursuant to this Agreement.
Section 6.4 Reinstatement. This Agreement shall continue
to be effective or be reinstated, as the case may be, if at any
time any amount received by the Collateral Agent or any other
Secured Party hereunder or pursuant hereto is rescinded or must
otherwise be restored or returned by the Collateral Agent or
such Secured Party, as the case may be, upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of
either of the Pledgors or the Borrower or upon the appointment
of any intervenor or conservator of, or trustee or similar
official for, either of the Pledgors or the Borrower or any
substantial part of either of the Pledgors' or the Borrower's
assets, or upon the entry of an order by any
15
court avoiding the payment of such amount, or otherwise, all as
though such payments had not been made.
Section 6.5 Independent Security. The security provided
for in this Agreement shall be in addition to and shall be
independent of every other security which the Secured Parties
may at any time hold for any of the Secured Obligations hereby
secured, whether or not under the Security Documents. The
execution of any other Security Document shall not modify or
supersede the security interest or any rights or obligations
contained in this Agreement and shall not in any way affect,
impair or invalidate the effectiveness and validity of this
Agreement or any term or condition hereof. The Pledgors hereby
waive their rights to plead or claim in any court that the
execution of any other Security Document is a cause for
extinguishing, invalidating, impairing or modifying the
effectiveness and validity of this Agreement or any term or
condition contained herein. The Collateral Agent shall be at
liberty to accept further security from the Pledgors or from
any third party and/or release such security without notifying
the Pledgors and without affecting in any way the obligations
of the Pledgors under the Security Documents or the other
Transaction Documents. The Collateral Agent (as directed by
the Agent Bank, acting in accordance with the Credit Agreement)
shall determine if any security conferred upon the Secured
Parties under the Security Documents shall be enforced by the
Collateral Agent, as well as the sequence of securities to be
so enforced.
Section 6.6 Amendments. No waiver, amendment,
modification or termination of any provision of this Agreement,
or consent to any departure by the Pledgors therefrom, shall in
any event be effective without the prior written consent of the
Collateral Agent and none of the Pledged Collateral shall be
released without the written consent of the Collateral Agent.
Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 6.7 Successors and Assigns. This Agreement shall
be binding upon the Pledgors and their respective successors
and assigns and shall inure to the benefit of the Collateral
Agent and the other Secured Parties and their respective
successors and assigns (subject to Section 11.4 of the Credit
Agreement). Subject to Section 4.1, the Pledgors may not
assign or otherwise transfer any of their respective rights or
obligations under this Agreement without the written consent of
the Collateral Agent.
Section 6.8 Third Party Beneficiaries. The agreements of
the parties hereto are intended to benefit the Banks and the
Agent Bank and their respective successors and assigns.
16
Section 6.9 Survival. All agreements, statements,
representations and warranties made by the Pledgors herein or
in any certificate or other instrument delivered by the
Pledgors or on their behalf under this Agreement shall be
considered to have been relied upon by the Collateral Agent and
the Secured Parties and shall survive the execution and
delivery of this Agreement and the other Transaction Documents
until termination thereof or the indefeasible payment in full
in cash or cash equivalents of all of the Secured Obligations
regardless of any investigation made by the Collateral Agent or
the Secured Parties, or made on their behalf.
Section 6.10 No Waiver; Remedies Cumulative. No failure
or delay on the part of the Collateral Agent in exercising any
right, power or privilege hereunder and no course of dealing
between the Pledgors and the Collateral Agent shall operate as
a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege hereunder or thereunder. The rights and
remedies herein expressly provided are cumulative and not
exclusive of any rights or remedies which the Collateral Agent
would otherwise have.
Section 6.11 Counterparts. This Agreement may be
executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
Section 6.12 Headings Descriptive. The headings of the
several Sections and sub sections 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 6.13 Severability. In case any provision
contained in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 6.14 Governing Law; Submission to Jurisdiction
and Venue; Waiver of Jury Trial. (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 (other than Section
5-1401 of the New York General Obligations Law).
(b) Any legal action or proceeding against the
Pledgors with respect to this Agreement 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 Pledgor hereby
irrevocably accepts for itself and in
17
respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Pledgors agree that
a judgment, after exhaustion of all available appeals, in any
such action or proceeding shall be conclusive and binding upon
the Pledgors and may be enforced in any other jurisdiction by a
suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. Each Pledgor hereby
irrevocably designates, appoints and empowers CT Corporation
System, with its offices as of the date hereof at 1633
Broadway, New York, New York 10019, as its designee, appointee
and agent to receive and accept for and on its behalf service
of any and all legal process, summons, notices and documents
which may be served in any such action or proceeding. If for
any reason such designee, appointee and agent shall cease to be
available to act as such, each Pledgor 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
Collateral Agent. The Pledgors further irrevocably consent 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
each Pledgor at its address referred to in Section 6.1, such
service to become effective thirty (30) days after such
mailing. Nothing herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted
by Law or to commence legal proceedings or otherwise proceed
against the Pledgors in any other jurisdiction.
(c) The Pledgors hereby irrevocably waive any
objection which they 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
Transaction Document brought in the courts referred to in
clause (b) above and hereby further irrevocably waive and agree
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.
(d) WITH REGARD TO THIS AGREEMENT, THE PLEDGORS AND THE
COLLATERAL AGENT HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
Section 6.15 Entire Agreement. This Agreement, together
with any other agree ment executed in connection herewith, is
intended by the parties as a final expression of their
agreement as to the matters covered hereby and is intended as a
complete and exclusive statement of the terms and conditions
thereof.
Section 6.16 Indemnity. (a) Each Pledgor agrees to
indemnify, reimburse and hold the Collateral Agent and the
other Secured Parties and their respective officers, directors,
employees, and agents (each individually, an "Indemnitee," and
collectively, "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims,
demands, actions, suits, judgments and any and all costs and
expenses (including reasonable attorneys' fees and
disbursements) (such expenses, for purposes of this Section
6.16, hereinafter "Expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to this Agree-
18
ment or the Pledged Collateral and arising out of (i) this
Agreement or the documents executed in connection herewith or
in any other way connected with the administration of the
transactions contemplated hereby, or the enforcement of any of
the terms hereof, or the preservation of any rights hereunder,
(ii) the ownership, purchase, delivery, control, acceptance,
financing, possession, condition, sale, return or other
disposition, or use of, the Pledged Collateral (including,
without limitation, latent or other defects, whether or not
discoverable), (iii) the violation of any Laws, (iv) any tort
(including, without limitation, claims arising or imposed under
the doctrine of strict liability, or for or on account of
injury to or the death of any Person including any Indemnitee)
or property damage, or (v) any contract claim, excluding in all
cases those Expenses, claims and liabilities finally judicially
determined to have arisen solely from the gross negligence or
willful misconduct of any Indemnitee. Each Indemnitee agrees
to use its best efforts to promptly notify such Pledgor of any
assertion of any such liability, damage, injury, penalty,
claim, demand, action, judgment or suit of which such
Indemnitee has knowledge. In case any action, suit or
proceeding shall be brought against any Indemnitee for which
the Indemnitee is indemnified under this clause (a), such
Indemnitee shall notify the relevant Pledgor of the
commencement thereof, and such Pledgor shall be entitled, at
its expense, acting through counsel reasonably acceptable to
such Indemnitee, to participate in, and, to the extent that
such Pledgor desires to, assume and control the defense
thereof; provided, however, that such Pledgor shall have
acknowledged in writing its obligation to fully indemnify such
Indemnitee in respect of such action, suit or proceeding; and
provided, further, that such Pledgor shall not be entitled to
assume and control the defense of any such action, suit or
proceeding if and to the extent that, (A) in the reasonable
opinion of such Indemnitee, (x) (i) such action, suit or
proceeding involves any risk of imposition of criminal
liability or (ii) such action, suit or proceeding involves any
material risk of material civil liability on such Indemnitee or
will involve a material risk of the sale, forfeiture or loss
of, or the creation of any Lien (other than a Permitted Lien)
on, the Pledged Collateral or any part thereof, unless, in the
case of this clause (x) (ii), such Pledgor shall have posted a
bond or other security satisfactory to the relevant Indemnitees
in respect to such risk or (y) the control of such action, suit
or proceeding would involve a bona fide conflict of interest,
(B) such proceeding involves Expenses not fully indemnified by
such Pledgor which such Pledgor and the Indemnitee have been
unable to sever from the indemnified Expense(s), (C) a Default
or an Event of Default has occurred and is continuing or (D)
such action, suit or proceeding involves matters which extend
beyond or are unrelated to the transactions contemplated by the
Transaction Documents and if determined adversely could be
materially detrimental to the interests of such Indemnitee
notwithstanding indemnification by such Pledgor. The
Indemnitee, on the one hand, and such Pledgor, on the other
hand, may participate in a reasonable manner at its own expense
and with its own counsel in any proceeding conducted by the
other in accordance with the foregoing. Each Indemnitee shall
at such Pledgor's expense supply such Pledgor with such
information and documents reasonably requested by such Pledgor
as are necessary or advisable for such Pledgor to participate
in any action, suit or proceeding to the extent permitted by
this clause (a). Unless an Event of Default shall have
occurred and be continuing, no Indemnitee shall
19
enter into any settlement or other compromise with respect to
any Expense which is entitled to be indemnified under this
clause (a) without the prior written consent of the relevant
Pledgor, which consent shall not be unreasonably withheld or
delayed, unless such Indemnitee waives its right to be
indemnified under this clause (a) with respect to such Expense.
In addition, if an Indemnitee, in violation of either Pledgor's
right to assume and control the defense of any Expense, refuses
to permit such Pledgor to control the defense after written
demand by such Pledgor for such control, such Indemnitee waives
its right to be indemnified under this clause (a) with respect
to such Expense. Upon payment in full of any Expense by either
Pledgor pursuant to this clause (a) to or on behalf of an
Indemnitee, such Pledgor without any further action shall be
subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance
policies maintained by such Indemnitee at its own expense), and
such Indemnitee shall execute such instruments of assignment
and conveyance, evidence of claims and payment and such other
documents, instruments and agreements as may be necessary to
preserve any such claims and otherwise cooperate with such
Pledgor and give such further assurances as are necessary or
advisable to enable such Pledgor vigorously to pursue such
claims. The obligations and rights of each Pledgor under this
Section 6.16 shall survive the repayment of all Secured
Obligations and the termination of this Agreement.
(b) Without limiting the application of clause (a)
immediately above, each Pledgor agrees to pay, or reimburse the
Collateral Agent for, any and all fees, costs and Expenses of
whatever kind or nature incurred in connection with the
creation, preservation, protection or validation of the
Collateral Agent's Liens on, and security interest in, the
Pledged Collateral, including, without limitation, all fees and
taxes in connection with the recording or filing of instruments
and documents in public offices, payment or discharge of any
taxes or Lien upon or in respect of the Pledged Collateral,
premiums for insurance with respect to the Pledged Collateral
and all other fees, costs and expenses in connection with
protecting, maintaining or preserving the Pledged Collateral
and the Collateral Agent's interest therein, whether through
judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or
relating to the Pledged Collateral.
(c) Without limiting the application of clause (a)
immediately above, each Pledgor agrees to pay, indemnify and
hold each Indemnitee harmless from and against any loss, costs,
damages and Expenses which such Indemnitee may suffer, expend
or incur in consequence of or growing out of any failure of
such Pledgor to comply with its obligations under this
Agreement, or any misrepresentation by such Pledgor in this
Agreement, or in any statement or writing contemplated by or
made or delivered pursuant to or in connection with this
Agreement.
(d) If and to the extent that the obligations of the
Pledgors under this Section 6.16 are unenforceable for any
reason, each Pledgor hereby agrees to make the
20
maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable Law.
(e) Any amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement, together with
interest on such amounts from the date paid until reimbursement
in full at a rate per annum equal at all times to the Base Rate
plus the Applicable Margin plus two percent (2%), shall
constitute Secured Obligations secured by the Pledged
Collateral.
Section 6.17 Independent Obligations. The Pledgors'
obligations under this Agreement are independent of those of
the Borrower. The Collateral Agent may bring a separate action
against the Pledgors without first proceeding against the
Borrower or any other Person or any other security held by the
Collateral Agent and without pursuing any other remedy.
Section 6.18 Waiver of Defenses. The Pledgors hereby
waive: (a) any defense of a statute of limitations; (b) any
defense based on the legal disability of the Borrower or any
discharge or limitation of the liability of the Borrower to the
Collateral Agent or the Secured Parties, whether consensual or
arising by operation of law; (c) presentment, demand, protest
and notice of any kind; and (d) any defense based upon or
arising out of any defense (other than the indefeasible payment
in full in cash or cash equivalents of the Secured Obligations)
which the Borrower may have to the payment or performance of
any part of the Secured Obligations.
Section 6.19 Subrogation, Etc. Notwithstanding any
payment or payments made by the Pledgors or the exercise by the
Collateral Agent of any of the remedies provided under this
Agreement or any other Financing Document, until the Secured
Obligations have been indefeasibly paid in full in cash or cash
equivalents, the Pledgors shall have no claim (as defined in 11
U.S.C. 101(5)) of subrogation to any of the rights of the
Collateral Agent against the Borrower, the Pledged Collateral
or any guaranty held by the Collateral Agent for the
satisfaction of any of the Secured Obligations, nor shall the
Pledgors have any claims (as defined in 11 U.S.C. 101(5)) for
reimbursement, indemnity, exoneration or contribution from the
Borrower in respect of payments made by the Pledgors hereunder.
Notwithstanding the foregoing, if any amount shall be paid to
the Pledgors on account of such subrogation, reimbursement,
indemnity, exoneration or contribution rights at any time, such
amount shall be held by the Pledgors in trust for the
Collateral Agent segregated from other funds of the Pledgors,
and shall be turned over to the Collateral Agent in the exact
form received by the Pledgors (duly endorsed by the Pledgors to
the Collateral Agent if required) to be applied against the
Secured Obligations in such amounts and in such order as the
Collateral Agent (as directed by the Agent Bank, acting in
accordance with the Credit Agreement) may elect.
21
Section 6.20 Joint and Several Liability. Prior to the
effective date of this Agreement, the obligations of the
Pledgors hereunder shall be several and not joint. On and
after the effective date of this Agreement, the obligations of
the Pledgors under this Agreement shall be joint and several.
Section 6.21 Recourse Limited to Collateral.
Notwithstanding anything herein to the contrary, including,
without limitation, Section 6.16, the Collateral Agent
acknowledges and agrees on behalf of itself and each Secured
Party, that neither of the Pledgors, nor any past or present
shareholder, officer, employee, servant, controlling Person,
executive, director, agent or authorized representative or
Affiliate (other than the Borrower) of either of the Pledgors,
shall be personally liable for any deficiency in the payment or
satisfaction of the Secured Obligations and that the sole
recourse of the Collateral Agent and each Secured Party for
payment and performance of the obligations of the Pledgors
hereunder shall be to the Pledged Collateral. This provision
shall not be deemed to waive any cause of action the Collateral
Agent or any Secured Party may have against the Pledgors for
their nonperformance or against any Person for fraud or willful
misconduct by such Person.
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IN WITNESS WHEREOF, the parties hereto have caused
this Pledge and Security Agreement to be duly executed and
delivered by their officers thereunto duly authorized as of the
date first above written.
NRGG FUNDING INC.
By: /s/
Timothy P. Hunstad
Name: Timothy P. Hunstad
Title: VP-CFO
Address for Notices:
1221 Nicollet Mall, Suite 610
Minneapolis, MN 55403
NRG MORRIS INC.
By: /s/ Craig Mataczynski
Name: Craig Mataczynski
Title: President
Address for Notices:
1221 Nicollet Mall, Suite 610
Minneapolis, MN 55403
THE CHASE MANHATTAN BANK,
as Collateral Agent
By: /s/ Annette M. Marsula
Name: Annette M. Marsula
Title: Assistant Vice President
Address for Notices:
450 West 33rd Street, 15th Floor
New York, NY 10001