AMENDMENT NO. 3,
WAIVER AND CONSENT
Dated as of March 11, 1994
to
CONSTRUCTION AND TERM CREDIT
AGREEMENT
Dated as of July 18, 1988,
as amended
between
O'BRIEN (NEWARK) COGENERATION, INC.
and
NATIONAL WESTMINSTER BANK PLC
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AMENDMENT NO. 3, WAIVER AND CONSENT, dated as of March 11,
1994 (this "Amendment") to the Construction and Term Credit
Agreement, dated as of July 18, 1988, as amended by Amendment No.
1, dated as of April 1, 1989 and Amendment No. 2, dated as of
June 1, 1989 (as heretofore amended, the "Credit Agreement"),
between O'BRIEN (NEWARK) COGENERATION, INC., a Delaware
corporation (the "Company") and NATIONAL WESTMINSTER BANK PLC
(the "Bank").
W I T N E S S E T H
WHEREAS, the Bank has loaned, and the Company has borrowed,
certain amounts pursuant to the terms and conditions of the
Credit Agreement;
WHEREAS, the Company desires to borrow certain monies from
Stewart and Stevenson Services, Inc., a Texas corporation (the
"Subordinated Lender");
WHEREAS, the Subordinated Lender has agreed to lend amounts
not in excess of an aggregate principal amount of $7,000,000 to
the Company on a subordinated basis (the "Subordinated Loans")
pursuant to a certain Subordinated Loan Agreement, dated as of
March 11, 1994, between the Company and the Subordinated lender,
a copy of which is attached hereto as Exhibit A (as such
agreement is in effect on the date hereof, the "Subordinated Loan
Agreement");
WHEREAS, the Company has requested the Bank to, among other
things, consent to the incurrence of the Subordinated Loans of
the Company under, and to the Company's execution, delivery and
performance of, the Subordinated Loan Agreement under the terms
of the Credit Agreement;
WHEREAS, the Company has also requested the Bank to consent
to the Company's execution, delivery and performance of the
Operation & Maintenance Contract, dated as of January 12, 1994,
between the Company and Stewart & Stevenson Operations, Inc. (the
"Operator"), a wholly-owned subsidiary of the Subordinated
Lender, a copy of which is attached hereto as Exhibit B (as such
agreement is in effect on the date hereof, the "Operating
Agreement");
WHEREAS, the parties hereto desire to amend and waive
certain provisions of the Credit Agreement, all upon the terms
and conditions set forth herein.
NOW, THEREFORE, the Company and the bank hereby agree as
follows:
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SECTION I. Definitions.
Unless otherwise defined herein, all capitalized terms used
herein which are defined in the Credit Agreement shall have their
respective meanings as therein defined.
SECTION II. Amendments.
1. Clause (d) of the definition of "Expenses" in Article I
is amended in its entirety to read in its entirety as follows:
"(d) the amounts (i) owed to the Operator under Section 6.1
of the Operating Agreement or (ii) paid into the Shortfall
Account or Major Repair Reserve Account as required under the
Operating Agreement."
2. The definition of "Financing Documents" in Article I is
amended by adding the phrase ", the Subordination Agreement"
after the word "Notes" appearing therein.
3. The definition of "Operator" in Article I is amended in
its entirety to read as follows:
"'Operator' shall mean Stewart & Stevenson Operations, Inc.,
a Delaware corporation and its permitted successors and assigns,
and any substitute operator approved by the Bank."
4. The definition of "Operator Consent Agreement" in
Article I is amended in its entirety to read as follows:
"'Operator Consent Agreement' shall mean the Consent to
Assignment of Operation and Maintenance Agreement, dated as of
March 11, 1994, among the Company, the Bank and the Operator."
5. The definition of "Operating Agreement" in Article I is
amended in its entirety to read as follows:
"Operating Agreement" shall mean the Operation and
Maintenance Contract, dated as of January 12, 1994, between the
Company and the Operator, as the same may be supplemented,
modified or otherwise amended from time to time."
6. The definition of "Operating Guarantor" in Article I is
amended in its entirety to read as follows:
"'Operating Guarantor' shall mean Stewart & Stevenson
Services, Inc., a Texas corporation."
7. The definition of "Operating Guaranty" in Article I is
amended in its entirety to read as follows:
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"'Operating Guaranty' shall mean the guaranty by the
Operating Guarantor of the obligations of the Operator under the
Operating Agreement."
8. The definition of "Operating Guaranty Consent
Agreement" in Article I is amended in its entirety to read as
follows:
"'Operating Guaranty Consent Agreement' shall mean the
Consent to Assignment of Operation and Maintenance Agreement,
dated as of March 11, 1994, among the Company, the Bank and the
Operating Guarantor."
9. The definition of "Parent" in Article I is amended in
its entirety to read as follows:
"'Parent' shall mean O'Brien Environmental Energy, Inc.
(formerly known as O'Brien Energy Systems, Inc.), a Delaware
corporation, and its permitted successors and assigns."
10. The definition of "Revenues" in Article I is amended in
its entirety to read as follows:
"'Revenues' shall mean, for any period, all operating and
nonoperating receipts, revenues, renewals, fees, income and other
moneys of the Company, including, without limitation, liquidated,
performance and other damage payments or other amount payable
under the Project Agreements, in each case calculated under GAAP,
any investment earnings on the accounts of the Company, and the
proceeds of Permitted Debt (but excluding (i) Insurance Proceeds
other than the proceeds of business interruption insurance and
(ii) interest earned on amounts deposited in the Shortfall
Account)."
11. The following additional definitions are added to
Article 1 in their appropriate alphabetical order:
"'Amendment No. 3, Waiver and Consent' shall mean Amendment
No. 3, Waiver and Consent, dated as of March 11, 1994, to this
Agreement."
"'Bank Share' shall mean an amount equal to 50% of
Distributable Cash."
"'Company Share' shall mean an amount equal to 50% of
Distributable Cash."
"'Distributable Cash' shall mean, on any date of
determination, all amounts remaining in the Revenue Account on
such date after giving effect to the application of proceeds
thereto pursuant to Sections 7.01(b)(i) - (xiv), inclusive."
<Page 5>
"'Excess Insurance Proceeds' shall have the meaning provided
in Section 7.01(h).
"'Major Repair Reserve Account' shall mean the account of
that name established pursuant to Section 7.01 hereof."
"'Repayment Amount' shall mean an aggregate principal amount
of $3,500,000 which has been prepaid on the Term Loan after the
date of Amendment No. 3, Waiver and Consent (not including any
payments as a result of scheduled installments of principal or
any prepayments made pursuant to Section 2.08(b))."
"'Reserve Requirement Amount' shall mean an amount equal to
$2,000,000 remaining in the Reserve Requirement Sub-Account."
"'Restoration Program' shall mean all repairs, replacements,
reconstruction or acquisitions in connection with the Project
arising as a result of the fire at the Project which occurred on
December 25, 1992, and all work, repairs and reconstruction which
have been or are still to be performed and replacements, repairs,
reconstruction and acquisitions which have been or are still to
be made with respect thereto, including, without limitation, the
wastewater demineralization system or program being implemented
at the Project."
"'Shortfall Account' shall mean the account of that name
established pursuant to Section 7.01 hereof."
"'Stewart & Stevenson Security Agreement' shall mean the
Loan Agreement, dated as of March 11, 1994, between the Company
and Stewart & Stevenson Services, Inc., as in effect on the date
of Amendment No. 3, Waiver and Consent."
"'Subordinated Loan Agreement' shall mean the Subordinated
Loan Agreement, dated as of March 11, 1994, between Stewart &
Stevenson, Inc. and the Company, providing for loans, on a
subordinated basis, not in excess of an aggregate principal
amount of $7,000,000 outstanding at any time, as in effect on the
date of Amendment No. 3, Waiver and Consent."
"'Subordinated Loans' shall mean the loans and other Debt
and obligations of the Company under or in connection with the
Subordinated Loan Agreement."
"'Subordination Agreement' shall mean the Subordination
Agreement, dated as of March 11, 1994, among the Company, Stewart
& Stevenson, Inc. and the Bank, as amended, modified or
supplemented from time to time in accordance with its terms."
"'Subordinated Loan Repayment Date' shall mean the date on
which the Subordinated Loan Agreement has been terminated and all
<Page 6>
Subordinated Loans and other obligations thereunder or in respect
thereof have been repaid in full."
"'Tranche A Subordinated Loan' shall mean the Tranche A Loan
under the Subordinated Loan Agreement not to exceed an aggregate
principal amount of $3,500,000, provided that the aggregate
principal amount of the Tranche A Subordinated Loan and the
Tranche B Subordinated Loan shall not exceed $7,000,000."
"'Tranche B Subordinated Loan' shall mean the Tranche B Loan
under the Subordinated Loan Agreement not to exceed an aggregate
principal amount of $4,000,000, provided that the aggregate
principal amount of the Tranche A Subordinated Loan and the
Tranche B Subordinated Loan shall not exceed $7,000,000, and,
provided further that in the event the Tranche A Subordinated
Loan exceeds $3,000,000, the maximum aggregate principal amount
of the Tranche B Subordinated Loan shall be reduced by the amount
of such excess."
12. Section 2.08 of the Credit Agreement is amended to add
a new subclause (c) thereto to read as follows:
(c) In addition to the payment provisions set forth in
Section 2.08(b), the Term Loan shall be subject to mandatory
prepayment as follows:
(i) on the date of the funding of the Tranche A
Subordinated Loan in an of $1,000,000;
(ii) on the date of the funding of the Tranche B
Subordinated Loan in an amount of $2,500,000;
(iii) so long as the Subordinated Loan Repayment Date
has not occurred, in the event the Reserve Requirement Sub-
Account is fully funded in the amount of the Reserve Requirement
Amount, in an amount equal to 50% of Excess Insurance Proceeds
(after giving effect to amounts necessary to so fund the Reserve
Requirement Sub-Account pursuant to Section 7.01(h)(i)), on the
date such Excess Insurance Proceeds are received by or on behalf
of the Company or any of its affiliates;
(iv) so long as the Subordinated Loan Repayment Date
has not occurred, if (A) the Repayment Amount has been satisfied
and (B) the Reserve Requirement Amount is satisfied, in an amount
equal to the Bank Share of Distributable Cash on the date, and to
the extent, such Distributable Cash on the date, and to the
extent, such Distributable Cash exists after giving effect to the
application of the Bank Share of Distributable Cash to fund the
Reserve Requirement Sub-Account pursuant to Section 7.01(h) and,
if necessary, after giving effect to the application of
<Page 7>
Distributable Cash pursuant to Section 2.08(c)(v) which was
applied to the Repayment Amount;
(v) so long as the Subordinated Loan Repayment Date
has not occurred, if (A) the Repayment Amount has not been
satisfied and (B) the Reserve Requirement Amount is satisfied, in
an amount equal to (1) the Bank Share of Distributable Cash on
the date, and to the extent, such Distributable Cash exists after
giving effect to the application of Distributable Cash to fund
the Reserve Requirement Sub-Account pursuant to Section 7.01(h)
plus (2) the Company Share of Distributable Cash on the date, and
to the extent, such Distributable Cash exists after giving effect
to the application of Distributable Cash to fund the Reserve
Requirement Sub-Account pursuant to Section 7.01(h), provided,
however, that in the event the Subordinated Loans have been and
remain accelerated in accordance with the terms of the
Subordinated Loan Agreement, the Company Share of such
Distributable Cash shall not be made as a prepayment on the Term
Loan in accordance with subclause (2) hereof and shall instead be
applied in accordance with Section 7.01(b)(xv)(3).
Each such prepayment pursuant to this Section 2.08(c) shall
be applied to the outstanding installments of principal of the
Term Loan in the inverse order of scheduled maturities."
13. Section 6.03 of the Credit Agreement is hereby amended
by (i) deleting the word "and" following subclause (d) therein,
(ii) deleting the period after subclause (e) therein and
substituting the phrase"; and" therefor and (iii) adding a new
subclause (f) which shall read as follows:
"(f) so long as the Subordinated Loan Repayment Date has not
occurred, no Distributions may be made after the date of
Amendment No. 3, Waiver and Consent unless the Repayment Amount
shall have been applied to the prepayment of the Term Loan;
provided, however that nothing in this Section 6.03(f) shall
prohibit the application of an amount equal to the Company Share
of Distributable Cash to the payment in respect of the
Subordinated Loans in the event the Subordinated Loans are
accelerated in accordance with the terms of the Subordinated Loan
Agreement".
14. Section 6.06 of the Credit Agreement is hereby amended
by adding the following to the end thereof:
"or (d) any amendment, supplement, or modification of,
or waiver with respect to, any of the terms or
provisions of the Subordinated Loan Agreement, the
Stewart & Stevenson Security Agreement or any of the
documents, instruments or agreements relating thereto."
<Page 8>
15. A new Section 6.12 shall be added to the Credit
Agreement following Section 6.11 thereof to read as follows:
"SECTION 6.12. Hazardous Substance. Release emit or
discharge into the environment any Hazardous Substances (as
defined in the Subordinated Loan Agreement) in excess of
permitted levels or reportable quantities or in violation of
other permitted concentrations standards or limitations under any
Hazardous Substance Laws (as defined in the Subordinated Loan
Agreement), Legal Requirements or Government Approvals."
16. A new Section 6.13 shall be added to the Credit
Agreement following Section 6.12 thereof (as added pursuant to
paragraph 15 of this Amendment) to read as follows:
"SECTION 6.13 Bonding of Liens. In the event the Tranche A
Subordinated Loan has been funded and mechanic's liens,
contractors lien's or similar liens or claims have been filed by
any vendor or contractor or other Person in respect of the
Restoration Program, the Company shall, not later than March 31,
1994, bond such liens and claims in an amount, and with a surety
company, acceptable to the Bank, or otherwise satisfy such liens
and claims to the satisfaction of the Bank."
17. Section 7.01(b) of the Credit Agreement is amended by
deleting subsections (i) through (xi), inclusive, therein and the
last paragraph thereof and substituting the following therefor:
(i) to the payment of Expenses and
the payment of any bonus payments to the
Contractor due under the Construction
Contract;
(ii) to the payment of interest on
the Term Loan;
(iii) to the payment of principal of
the Term Loan;
(iv) to the payment of Bank Fees;
(v) to the payment of any other
amounts due and payable to the Bank;
(vi) to the deposit into the
Reserve Account of the amount, if any,
required to be deposited therein pursuant to
Section 7.01(c) and 7.01(h), provided,
however, that in the event the Reserve
Requirement Amount has been satisfied and
amounts therein have been applied in
<Page 9>
accordance with Section 7.01(h), amounts from
the Revenue Account shall be applied to
replenish the Reserve Requirement Sub-Account
to the Reserve Requirement Amount solely to
the extent proceeds are available pursuant to
Section 7.01(b)(xiv) or Section 7.01(h)(i);
(vii) to the payment of
extraordinary expenses except for those
required to be paid from the Collateral
Account;
(viii) to the payment of any amounts
owed to the Operator under the Operating
Agreement;
(ix) to the deposit into the
Shortfall Account of the amount, if any,
required to be deposited therein pursuant to
Section 7.01(f);
(x) to the deposit into the Major
Repair Reserve Account of the amount, if any,
required to be deposited therein pursuant to
Section 7.01(g);
(xi) to the payment of principal
and interest on outstanding Permitted Debt,
if any, other than any such Debt constituting
the Subordinated Loans;
(xii) if applicable, to the deposit
into the Surplus Cash Flow Sub-Account of an
amount necessary to maintain such Sub-Account
at $500,000;
(xiii) to the payment of scheduled
principal and interest on outstanding
Subordinated Loans but only to the extent
Distributions would be permitted to be made
pursuant to Section 6.03 (without giving
effect to Section 6.03(f)) and further
subject to the terms and provisions of the
Subordination Agreement;
(xiv) to the extent the Reserve
Requirement Amount was satisfied and funds in
the Reserve Requirement Sub-Account have been
used in accordance with Section 7.01(h), to
the deposit in the Reserve Requirement Sub-
Account of the amount required to be
<Page 10>
deposited therein pursuant to Section 7.01(c)
and Section 7.01(h) to cause the Reserve
Requirement Amount to remain satisfied; and
(xv) in an amount equal to the
Company Share of Distributable Cash, to the
extent permitted by Section 6.03 and in
accordance with Section 7.01(c), either
(1) to the making of Distributions, provided
all mandatory prepayments on the Term Loan
are made at such time in accordance with
Section 2.08(c), there has been no
acceleration of the Subordinated Loans in
accordance with the terms and provisions of
the Subordinated Loan Agreement and, unless
the Subordinated Loan Repayment Date has
occurred, the Repayment Amount has been
satisfied, (2) to the deposit into the
Reserve Requirement Sub-Account to the extent
required pursuant to Section 7.01(h) and to
the repayment of the Term Loan to the extent
required pursuant to Section 2.08(c)(v) or
(3) in the event the Subordinated Loans have
been accelerated in accordance with the terms
and provisions of the Subordinated Loan
Agreement, to the payment of the Subordinated
Loans in accordance with the terms and
provisions of the Subordination Agreement.
The Bank shall have the right to debit the Operating Account, to
the extent necessary to make the payments described in clauses
(ii), (iii), (iv), (v), (vi), (ix), (x), (xi) and (xv) of this
Section 7.01(b). Upon the occurrence of an Event of Default, the
Bank may liquidate all Permitted Investments held in the
Operating Account, and apply the proceeds thereof to the payment
of the Obligations in such order as the Bank shall elect."
18. Section 7.01 of the Credit Agreement is amended by
adding the following new clauses (f), (g) and (h):
"(f) Shortfall Account. (i) On the date hereof, the
Company is establishing an account with the bank which
shall be known as the "Shortfall Account" and which
shall bear interest under such terms and at such rate
as may be set by the Bank from time to time on similar
savings accounts. Monthly, beginning at the end of the
first month occurring after the Effective Date, as such
term is defined in the Operating Agreement, the Company
shall, from funds available pursuant to Section
7.01(b)(ix), deposit into the Shortfall Account such
amounts, if any, as are required to be distributed to
<Page 11>
fund the first major overhaul of the gas turbine
pursuant to Section 5.4 of Appendix 5 of the Operating
Agreement until such time as the balance in the
Shortfall Account shall equal $600,000. Each month
during such period, the Company shall provide the bank
with a certificate signed by the Chief Financial
Officer of the Company stating the amount, if any,
required to be distributed as set forth in the previous
sentence. All interest or dividends earned on amounts
on deposit in the Shortfall Account shall be added to
the principal balance of the account; provided,
however, that any interest or dividends accruing at any
time that the amount on deposit in the Shortfall
Account is greater than or equal to $600,000 shall be
deemed to constitute Revenues and shall be applied in
accordance with Section 7.01(b). Upon the occurrence
and during the continuance of an Event of Default, the
Bank may apply all funds in the Shortfall Account to
the satisfaction of the Obligations in such order as it
shall elect.
(ii) Amounts in the Shortfall Account shall be
released (1) if provided for in the then current
Operating Budget or (2) upon the bank's receipt and,
after consultation with the Bank's Engineer, the bank's
approval of a certificate of an officer of the Company
setting forth the amount and purpose of the
expenditure(s), and certifying that such expenditure(s)
(x) constitute all or part of the first major overhaul
of the Project's gas or steam turbines and (y) have not
been included in any prior certificate or in any
payment under 7.01(b)(i). After the first major
overhaul of such turbines has been completed, any
amounts remaining in the account shall be transferred
to the Major Repair Reserve Account, and the Shortfall
Account shall be closed.
(g) Major Repair Reserve Account. On the date hereof,
the Company is establishing an account with the Bank
which shall be known as the "Major Repair Reserve
Account." Monthly, beginning at the end of the first
month occurring after the Effective Date, as such term
is defined in the Operating Agreement, the Company
shall, from funds available pursuant to Section
7.01(b)(ix), deposit into the Major Repair Reserve
Account such amounts, if any, as are required to be
distributed pursuant to Section 5.4 of Appendix 5 of
the Operating Agreement to fund (i) the second and any
subsequent major overhauls of the gas turbines, steam
turbines, the gas turbine generator and the steam
turbine generator, (ii) hot gas path inspections of the
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gas turbine, and (iii) combustion inspections of the
gas turbine ((i), (ii) and (iii) collectively, the
"Major Repairs"). Each month during such period, the
Company shall provide the Bank with a certificate
signed by the Chief Financial Officer of the Company
stating the amount, if any, required to be distributed
as set forth in the previous sentence. Upon the
occurrence and during the continuance of an Event of
Default, the Bank may apply all funds in the Major
Repair Reserve Account to the satisfaction of the
Obligations in such order as it shall elect.
(ii) Amounts in the Major Repair Reserve Account shall
be released (1) if provided for in the then current
Operating Budget or (2) upon the Bank's receipt and,
after consultation with the Bank's Engineer, the Bank's
approval of a certificate of an officer of the Company
setting forth the amount and purpose of the
expenditure(s), and certifying that such expenditure(s)
(x) constitute a Major Repair and (y) have not been
included in any prior certificate or in any payment
under 7.01(b)(i).
(h) Notwithstanding anything to the contrary set forth
in Section 7.01(c) or in any other Financing Document
or other agreement, instrument, document, or writing,
on the date of Amendment No. 3, Waiver and Consent the
Company hereby reestablishes the Reserve Requirement
Sub-Account with the Bank. Such Reserve Requirement
Sub-Account shall remain in effect until all
Obligations have been paid in full. The Reserve
Requirement Sub-Account shall be funded as follows:
(i) To the extent proceeds of insurance are
received by or on behalf of the Company or
any affiliate thereof in connection with
claims arising from events giving rise to the
Restoration Program in excess of all amounts
due to contractors and in respect of all work
remaining to be performed on the Restoration
Program (such excess, the "Excess Insurance
Proceeds"), an amount equal to (A) 50% of the
Excess Insurance Proceeds shall (x) be
deposited into the Reserve Requirement Sub-
Account up to an amount such that the amount
on deposit in the Reserve Requirement Sub-
Account equals the Reserve Requirement Amount
at all times and (y) any remaining proceeds
after the application pursuant to subclause
(x) shall be applied in accordance with
Section 2.08(c)(iii), and (B) the remaining
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50% of such Excess Insurance Proceeds may be
applied in accordance with Section 7.02(c).
(ii) From the proceeds of Distributable Cash
as follows:
(A) If the Repayment Amount has
been satisfied, an amount equal to
the Bank Share of Distributable
Cash shall be deposited to the
extent necessary to satisfy the
Reserve Requirement Amount at all
times, with all remaining amounts
of such Bank Share to be applied to
the repayment of the Term Loan
pursuant to Section 2.08(c);
(B) Subject to Section
7.01(h)(ii)(C), if the Repayment
Amount has not been satisfied, an
amount equal to the Bank Share of
Distributable Cash plus the Company
Share of Distributable Cash shall
be deposited to the extent
necessary to satisfy the Reserve
Requirement Amount at all times,
with all remaining amounts of such
Bank Share and Company Share to be
applied to the repayment of the
Term Loan pursuant to Section
2.08(c).
(C) If the Repayment Amount has
not been satisfied, but the
Subordinated Loans have been and
remain accelerated in accordance
with the terms of the Subordinated
Loan Agreement and remain
outstanding, an amount equal to the
Bank Share of Distributable Cash
shall be deposited to the extent
necessary to satisfy the Reserve
Requirement Amount at all times,
with all remaining amounts of such
Bank Share to be applied to the
repayment of the Term Loan pursuant
to Section 2.08(c).
(D) If such proceeds are being
deposited into the Reserve
Requirement Sub-Account to
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replenish amounts therein to the
Reserve Requirement Amount as a
result of the application of
amounts in the Reserve Requirement
Sub-Account in accordance with the
terms of this Section 7.01(h), an
amount equal to the Bank Share of
Distributable Cash plus the Company
Share of Distributable Cash shall
be deposited to the extent
necessary to satisfy the Reserve
Requirement Amount at all times.
Amounts on deposit in the Reserve Requirement Sub-
Account shall be used solely to prepay or repay the
outstanding principal amount of, and interest on, the
Term Loan at such times as the Revenues shall be
insufficient therefor. Notwithstanding anything to the
contrary set forth in Section 7.01(c), including,
without limitation, the second paragraph thereof, or in
any other Financing Document or other agreement,
instrument, document or writing, in no event shall the
Company request the Bank to release, nor shall the Bank
release, any amounts in the Reserve Requirement Sub-
Account to the Company until all Obligations are paid
in full.
19. Section 7.02 of the Credit Agreement is amended by
adding the following new subsection (c) thereto immediately
following subsection (b), which new subsection (c) shall read as
follows:
"(c) Notwithstanding anything to the contrary
set forth herein, 50% of the amount of Excess
Insurance Proceeds may be retained by the
Company and distributed to the Parent upon
request."
20. Section 7.07 of the Credit Agreement is amended by
adding the following new text to the start of the first sentence:
"With the exception of funds held in the Shortfall Account,"
21. Section 8.01(h) of the Credit Agreement is hereby
amended by (i) deleting the reference to "Hawker Siddeley"
wherever such term appears therein and substituting the term
"Guarantor" therefor and (ii) restating the proviso appearing
therein following subclause (v) to read in its entirety as
follows:
<Page 15>
"provided, however, that no Event of Default shall have
occurred under this Section 8.01(h) as a result of any of the
event, actions or occurrences listed in clauses (i) through (v),
inclusive, of this Section 8.01(h) relating to the Contractor,
the Operator, the Guarantor, JCP&L, PSE&G, Paperboard, the Gas
Supplier or the Parent if (x) the Company shall have obtained and
delivered to the Bank written evidence satisfactory to the Bank
in its sole discretion that the Contractor, the Operator, the
Guarantor, JCP&L, PSE&G, Paperboard or the Gas Supplier, as the
case may be, or in the case of each of such events, actions, or
occurrences relating to the Parent, each of such Persons, shall
be able to continue to perform its obligations under any of the
Project Agreements to which such Person is a party, or (y) the
Company shall have obtained a replacement for the Contractor, the
Operator, the Guarantor, JCP&L, PSE&G, Paperboard or the Gas
Supplier, as the case may be, or in the case of each of such
events, actions, or occurrences relating to the Parent, each of
such persons, which replacements shall be acceptable to the Bank
to perform the obligations under the Project Agreements to which
such Person is a party; or"
22. Article IX of the Credit Agreement is amended by
(i) deleting the word "and" appearing at the end of clause (b)
thereof, (ii) deleting the semicolon at the end of clause (c)
thereof, and substituting the phrase ", and" therefor and
(iii) adding a new subclause (d) prior to the proviso therein
which shall read as follows:
"(d) as a result of any payment made by the
Bank in respect of the Subordinated Loans
pursuant to Section 7.01(h) and the
Subordination Agreement;"
SECTION III. Waiver and Consent.
1. The Bank hereby waives Section 6.10 of the Credit
Agreement solely to permit the incurrence of an aggregate
principal amount of Subordinate debt not in excess of $7,000,000
outstanding at any time pursuant to and in accordance with the
terms and provisions of the Subordinated Loan Agreement in effect
on the date hereof, provided that all the obligations and
indebtedness incurred thereunder (including, without limitation,
the Subordinated Loans) shall constitute Subordinate Debt and
shall be subject to the Subordination Agreement attached hereto
as Exhibit C, which Subordination Agreement shall have been duly
executed and delivered by the Company and the Subordinated Lender
and, provided further, that notwithstanding anything to the
contrary set forth in the Credit Agreement, the Tranche A
Subordinated Loan Conditions (as defined herein) must be
satisfied and no funds in the Operating Account shall be applied
at the times and to the extent set forth in Section 7.01(b)(xiii)
<Page 16>
(as such Section has been renumbered after giving effect to
paragraph 17 of this Amendment) if payments in respect of the
Subordinate Debt or otherwise in respect of the "Junior Debt" (as
defined in the Subordination Agreement) are prohibited pursuant
to the terms of the Subordination Agreement. The Company hereby
agrees and acknowledges that the Subordinated Loans outstanding
under the Subordinated Loan Agreement constitute Subordinate Debt
and shall be applied against $750,000 of the permitted amount of
Unsecured Debt and Subordinate Debt set forth in clause (c) of
Section 6.10 until the aggregate outstanding principal amount of
Subordinated Loans are less than $250,000, in which case such
Subordinated Loans will be applied against such permitted amount
on a dollar for dollar basis.
As used herein, "Tranche A Subordinated Loan Conditions"
shall mean that the consent and waiver of the Bank hereunder to
the Tranche A Subordinated Loan shall be subject to the Bank's
satisfaction that no mechanics' liens, contractors' liens or
similar liens or claims have been or are likely to be filed by
Century Contractors West Inc. ("Century") or any vendor or
contractor in respect of the Restoration Program, or, in the
event any such liens or claims have been or are likely to be
filed, either (A) all such liens or claims shall have been bonded
in amounts, and with a surety company, acceptable to the Bank in
its sole discretion, (B) Insurance Proceeds have been received by
the Bank in an amount sufficient to satisfy all such liens and
claims or (C) the bank shall have been provided evidence
satisfactory to it in its sole discretion that Century, and any
other vendor or contractor which is reasonably likely to file any
such lien or claim, has agreed to not take any enforcement action
on or in respect of any such liens or claims until a date no
earlier than March 31, 1994.
2. The Bank hereby consents to the execution and delivery
by the Company of the Operation and Maintenance Contract by and
among the Company, as owner, and Stewart and Stevenson
Operations, Inc., as operator, dated as of January 12, 1994, and
in the form attached hereto as Exhibit B, and the substitution of
Stewart and Stevenson Operations, Inc. as Operator.
3. The Bank hereby consents to the making of Distributions
of proceeds from the (A) Tranche A Loan (as defined in the
Subordinated Loan Agreement) in an amount not to exceed
(i) $2,000,000 in the aggregate in the event the Tranche A Loan
has been funded in an amount of $3,000,000 and (ii) $2,000,000
plus the amount of the Tranche A Loan over $3,000,000 (which
Tranche A Loan shall not in any event exceed $3,500,000) and
(B) Tranche B Loan (as defined in the Subordinated Loan
Agreement) in an amount not to exceed $1,500,000 less the amount
by which the Tranche A Loan exceeds $3,000,000 in the aggregate,
subject, in each case to the terms and conditions of the Credit
<Page 17>
Agreement as amended hereby. The Company acknowledges and agrees
that no Distribution may be made, nor any loans or advances made
to any Person from the proceeds, of the Tranche A Loan or the
Tranche B Loan in excess of the amounts set forth in the
immediately preceding sentence.
4. The bank hereby agrees that, for purposes of
determining compliance with Section 5.09 of the Credit Agreement
as at June 30, 1994 and December 31, 1994 only, the Reserve
Requirement Sub-Account shall be deemed to be funded at an amount
equal to $2,000,000 except in the event where the Tranche B Loan
has not been advanced, in which case the Reserve Requirement Sub-
Account shall be deemed to be funded in the amount of $1,000,000.
SECTION IV. Continuous Effect.
Except as expressly amended hereby, all of the terms and
provisions of the Credit Agreement shall remain in full force and
effect and are hereby restated as of the date hereof, ratified
and confirmed. On and after the effective date of this
Amendment, whenever the Credit Agreement is referred to in the
Credit Agreement, in any of the other Financing Documents or in
any of the other documents, agreements or instruments executed an
delivered in connection therewith it shall be deemed to mean the
Credit Agreement as amended hereby.
SECTION V. Governing Law.
This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION VI. No Novation.
This Amendment does not extinguish the outstanding
indebtedness or discharge or release the lien or priority of any
mortgage, security agreement or any other security for the
obligations of the Company. Nothing herein shall be construed as
a substitution or novation of the original indebtedness or
instruments securing the same, which shall remain in full force
and effect, except as expressly modified hereby or by instruments
executed concurrently herewith and in accordance herewith. The
Company agrees that at any time, and from time to time, at the
expense of the Company, the Company will promptly execute and
deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that the
Bank may reasonably request, in order to perfect and protect
rights granted or purported to be granted hereby or to enable the
Bank to exercise and enforce its rights and remedies hereunder.
<Page 18>
SECTION VII. Representations and Warranties.
The Company represents and warrants that (a) all of the
representations and warranties set forth in Article III of the
Credit Agreement are true and correct in all material respects on
and as of the effective date hereof with the same effect as if
made on such date, (b) as of the date hereof, the Company is in
compliance with all of the terms and provisions set forth in the
Credit Agreement on its part to be performed and no Event of
Default or event which, upon the giving of notice or lapse of
time or both, would constitute an Event of Default has occurred
and is continuing and (c) the amount of liens and claims of
Century and any other vendor or contractor which is reasonably
likely to file any such lien or claim in respect of the
Restoration Program are not in excess of $3,800,000 in the
aggregate.
SECTION VIII. Effectiveness.
This Amendment shall become effective upon satisfaction of
the following conditions:
(i) execution and delivery of this Amendment by
the Company, the Parent and the Bank;
(ii) execution and delivery of the Subordination
Agreement by the Company, the Subordinated
Lender and the Bank;
(iii) delivery of opinions of counsel to the
Company and Parent and counsel to the
Operator and Subordinated Lender in the form
attached as Exhibit D hereto; and
(iv) there are no Proceedings by or against the
Company or the Parent on the date of
effectiveness of this Amendment.
SECTION IX. Security Agreement, etc.
The Company hereby confirms that all of the Obligations are
secured by the Collateral under the Security Documents and
confirm and acknowledge that the Obligations include the
obligations under the Credit Agreement (as amended by this
amendment) and all amendments, extensions, renewals or
substitutions, if any, subsequent hereto. The Company
acknowledges and agrees, and by its signature hereto Parent
acknowledges and agrees, that nothing contained herein shall be a
waiver by the Bank in any of its rights in any of the Collateral.
<Page 19>
SECTION X. Responsibility.
(i) Neither the Bank nor any of its participants makes
any representation or warranty with respect to the Subordinated
Loan Agreement or any other document, instrument or agreement in
connection therewith or related thereto.
(ii) Neither the Bank nor any of its participants makes
any express or implied representation for warranty to any person
with respect to the legality, validity, genuineness, subsistence,
priority or value of the Subordinated Loan Agreement or
Subordinated Loans or of the repayment obligations of the Company
or any security therefor.
(iii) The Company agrees and acknowledges that it has
made its own analysis of its financial condition and ability to
perform its obligations under the Subordinated Loan Agreement and
Subordinated Loans, and it is not relying on the Bank nor any of
its participants in any way in connection therewith.
(iv) The Company agrees and acknowledges that it will
not have, and will not assert or seek to exercise, any right of
legal redress against the Bank or any participant in respect of
the Subordinated Loan Agreement, any related document, or the
Subordinated Loans.
SECTION XI. Counterparts.
This Amendment may be executed in two or more counterparts,
each of which shall constitute an original, but all of which when
taken together shall constitute but one instrument.
<Page 20>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered in New York, as of
the day and year first above written.
O'BRIEN (NEWARK) COGENERATION, INC.
By:/s/
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Name:
Title:
NATIONAL WESTMINSTER BANK PLC
By:/s/
---------------------------------
Name:
Title:
Agreed to and Acknowledged:
O'BRIEN ENVIRONMENTAL ENERGY, INC.
By:/s/
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Name:
Title: