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EXHIBIT 4.10
EXECUTION COPY
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SECURITY AGREEMENT
among
NRG NORTHEAST GENERATING LLC,
THE GUARANTORS PARTY HERETO
and
THE CHASE MANHATTAN BANK
as Collateral Agent
Dated as of February 22, 2000
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TABLE OF CONTENTS
Page
Section 1. Definitions............................................................................1
Section 2. Representations and Warranties.........................................................3
Section 3. Collateral.............................................................................4
Section 4. Cash Proceeds of Collateral............................................................6
4.01 Collateral Account...................................................................6
4.02 Investment of Balance in Collateral Account..........................................6
Section 5. Further Assurances; Remedies...........................................................7
5.01 Delivery and Other Perfection........................................................7
5.02 Other Financing Statements and Liens.................................................8
5.03 Preservation of Rights...............................................................8
5.04 Special Provisions Relating to Certain Collateral....................................8
5.05 Events of Default, Etc...............................................................9
5.06 Deficiency..........................................................................11
5.07 Removals, Etc.......................................................................11
5.08 Private Sale........................................................................11
5.09 Application of Proceeds.............................................................11
5.10 Attorney-in-Fact....................................................................12
5.11 Perfection..........................................................................12
5.12 Termination.........................................................................12
5.13 Further Assurances..................................................................13
Section 6. Miscellaneous.........................................................................13
6.01 Notices.............................................................................13
6.02 No Waiver...........................................................................14
6.03 Amendments, Etc.....................................................................14
6.04 Expenses............................................................................14
6.05 Successors and Assigns..............................................................15
6.06 Counterparts........................................................................15
6.07 Governing Law.......................................................................15
6.08 Captions............................................................................15
6.09 Agents and Attorneys-in-Fact........................................................15
6.10 Severability........................................................................15
6.11 Additional Obligors.................................................................15
Annex 1 - Pledged Membership Interests
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SECURITY AGREEMENT
SECURITY AGREEMENT dated as of February 22, 2000, between NRG NORTHEAST
GENERATING LLC, a limited liability company duly organized and validly existing
under the laws of the State of Delaware (the "Company"); each of the
Subsidiaries of the Company identified under the caption "GUARANTORS" on the
signature pages hereto (individually, a "Guarantor" and, collectively, the
"Guarantors" and, together with the Company, the "Obligors"); THE CHASE
MANHATTAN BANK, a New York banking corporation, as collateral agent under the
Collateral Agency and Intercreditor Agreement referred to below (in such
capacity, together with its successors in such capacity, the "Collateral
Agent").
WITNESSETH
WHEREAS, the Obligors and The Chase Manhattan Bank as trustee for the
Holders (in such capacity, together with its successors in such capacity, the
"Trustee") are parties to an Indenture dated February 22, 2000 (as amended,
modified and supplemented and in effect from time to time, the "Indenture"),
providing, subject to the terms and conditions thereof, for the creation of an
issue of its bonds, debentures, notes or other evidence of indebtedness to be
issued in one or more series from time to time (the "Bonds"), and
WHEREAS, the Obligors and a syndicate of financial institutions (the
"Working Capital Banks", including The Chase Manhattan Bank and Citibank, N.A.
(the "Working Capital Agents"), are parties to a Working Capital Agreement dated
February 22, 2000 (as amended, modified and supplemented and in effect from time
to time, the "Working Capital Agreement"), providing, subject to the terms and
conditions thereof, for the making of loans to the Company for working capital
purposes; and
WHEREAS, to induce the Trustee to enter into the Indenture, to induce the
Initial Purchasers (as defined in the Indenture) to purchase the Initial Bonds
offered thereunder and to induce the Working Capital Banks to enter into the
Working Capital Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Obligors have
agreed to pledge and grant a security interest in the Collateral (as hereinafter
defined) as security for the Secured Obligations (as hereinafter defined).
Accordingly, the parties agree as follows.
SECTION 1. DEFINITIONS. Terms defined in the Indenture are used herein
as defined therein. In addition, as used herein:
"Assigned Agreements" has the meaning assigned to such term in Section 3.
"Collateral" has the meaning assigned to such term in Section 3.
"Collateral Account" has the meaning assigned to such term in Section
4.01
"Collateral Agency and Intercreditor Agreement" means the Collateral
Agency and Intercreditor Agreement dated as of February 22, 2000 among the
Company, the Guarantors,
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the Collateral Agent, The Chase Manhattan Bank, as Trustee under the Indenture
and the Working Capital Agents.
"Equity Collateral" means, collectively, the Collateral described
in clauses (a) through (c) of Section 3 and the proceeds of and to any such
property and, to the extent related to any such property or such proceeds, all
books, correspondence, credit files, records, invoices and other papers.
"Holder" means, a Person in whose name a Bond is registered in
the Security Register and any holder of Senior Secured Debt, inlcluding, without
limitation, any lender named in the Working Capital Agreement.
"Transition Power Sales Agreements" means, collectively, the
agreement titled Transition Capacity Agreement between Arthur Kill LLC and
Consolidated Edison Company of New York, Inc. dated June 25, 1999, the agreement
titled Transition Capacity Agreement between Astoria Gas Turbine LLC and
Consolidated Edison Company of New York, Inc. dated June 25, 1999, the agreement
titled Transition Power Purchase Agreement Huntley 65 or 66 Secondary Call
between Huntley Power LLC and Niagara Mohawk Power Corporation dated June 11,
1999, the agreement titled Transition Power Purchase Agreement - Huntley Power
LLC - Call between Huntley Power LLC and Niagara Mohawk Power Corporation dated
June 11, 1999, the agreement titled Transition Power Purchase Agreement between
Oswego Harbor Power LLC and Niagara Mohawk Power Corporation dated April 1,
1999.
"Pledged Interests" has the meaning assigned to such term in
Section 3(a).
"Records" has the meaning assigned to such term in Section 2.
"Secured Obligations" means, collectively, (a) in the case of the
Company, (i) the principal and interest on the Bonds and all other amounts
(including, but not limited to, fees, penalties, indemnities and legal and other
expenses, whether due after acceleration or otherwise) from time to time owing
to the Holders or the Trustee by the Company under the Indenture or the Bonds,
(ii) the principal and interest on the loans made by the Working Capital Banks
to the Company and all other amounts (including, but not limited to, fees,
penalties, indemnities and legal and other expenses, whether due after
acceleration or otherwise) from time to time owing to the Working Capital Banks
by the Company under the Working Capital Agreement, and (iii) the principal and
interest on any other Senior Secured Debt and all other amounts (including, but
not limited to, fees, penalties, indemnities and legal and other expenses,
whether due after acceleration or otherwise) from time to time owing to other
Senior Secured Debt holders or to any Senior Secured Debt Agents by the Company
under any Senior Secured Debt Documents (b) in the case of the Guarantors, all
obligations of the Guarantors under the Indenture and the Working Capital
Agreement (including, without limitation, in respect of their Guarantees under
Article 4 of the Indenture and Article III of the Working Capital Agreement) and
all other guarantees of Senior Secured Debt, and (c) all obligations of the
Obligors to the Collateral Agent hereunder.
"Secured Parties" has the meaning set forth in the Collateral
Agency and Intercreditor Agreement.
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"Senior Secured Debt" means all Permitted Indebtedness of the
Issuer (including Bonds in addition to the Initial Bonds) ranking pari passu as
to payment with the Bonds and which is secured by the Intercreditor Collateral
(as defined in the Collateral Agency and Intercreditor Agreement).
"Senior Secured Debt Agents" any trustees or agents under any
other Senior Secured Debt Documents on behalf of the holders of the indebtedness
or obligations evidenced by such Senior Secured Debt Documents (together with
their respective successors and assigns) in such capacity.
"Senior Secured Debt Documents" shall mean all agreements,
documents and instruments evidencing and/or securing any Senior Secured Debt.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the State of New York.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each Obligor
represents and warrants to the Collateral Agent that:
(a) Such Obligor is the sole beneficial owner of the Collateral
(other than the Collateral Account) in which it purports to grant a
security interest pursuant to Section 3 and no Lien exists or will exist
upon such Collateral at any time, except for liens permitted under
Sections 6.9 and 7.5 of the Indenture and Sections 6.09 and 7.05 of the
Working Capital Agreement and except for the pledge and security interest
in favor of the Collateral Agent for the benefit of the Secured Parties
created or provided for herein, which pledge and security interest (i)
constitute valid and enforceable perfected security interests in all of
the Collateral in favor of the Collateral Agent as collateral security
for such Obligor's Secured Obligations to the extent that a security
interest may be perfected by filing and/or the other actions specified
herein, and (ii) are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Liens (as defined in
the Indenture and the Working Capital Agreement) which have priority by
operation of law.
(b) The Pledged Interests evidenced by the certificates
identified under the name of such Obligor in Annex 1 are, and all other
Pledged Interests in which such Obligor shall hereafter grant a security
interest pursuant to Section 3 will be, duly authorized, validly
existing, fully paid and non-assessable and none of such Pledged
Interests is or will be subject to any contractual restriction, or any
restriction under the charter or by-laws of the respective issuers of
such Pledged Interests, upon the transfer of such Pledged Interests
(except for any such restriction contained herein or in the Indenture).
(c) The Pledged Interests evidenced by the certificates identified
under the name of such Obligor in Annex 1 constitute all limited
liability company membership or other ownership interests of any class or
character of the Guarantors beneficially owned by such Obligor on the
date hereof (whether or not registered in the name of such Obligor) and
Annex 1 correctly identifies, as at the date hereof, the respective
issuers of such Pledged Interests, the membership interests constituting
such Pledged Interests and the
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respective amount of each membership interest (and registered owners
thereof) represented by each such certificate.
(d) The chief place of business and chief executive office of such
Obligor and the office where such Obligor keeps its records concerning
the Collateral (herein collectively called the "Records") and the
original copies of the Assigned Agreements are located at the address
specified for such Obligor pursuant to Section 6.01 of this Agreement.
(e) A certified copy of each Assigned Agreement in effect on the
Effective Date has been furnished to the Collateral Agent, including all
schedules and exhibits thereto, and each such Assigned Agreement sets
forth the entire agreement of the parties thereto relating to the subject
matter thereof, and there are no other agreements or understandings,
written or oral, relating to the matters covered thereby or the rights of
such Obligor in respect thereof.
SECTION 3. COLLATERAL. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, each Obligor hereby assigns, transfers,
pledges and grants to the Collateral Agent, for the benefit of the Holders, a
continuing first priority perfected security interest in, and a lien upon, all
of such Obligor's right, title and interest in the following property, whether
now owned by such Obligor or hereafter acquired and whether now existing or
hereafter coming into existence (all being collectively referred to herein as
"Collateral"):
(a) the limited liability company membership interests in the
Guarantors identified in Annex 1 hereto and all other limited liability
company membership or other ownership interests of whatever class or
character of the Guarantors, now or hereafter owned by such Obligor, in
each case together with the certificates (if any) evidencing the same
(collectively, the "Pledged Interests");
(b) all membership interests, securities, moneys or property
representing a dividend on any of the Pledged Interests, or representing
a distribution or return of capital upon or in respect of the Pledged
Interests, or resulting from a split-up, revision, reclassification or
other like change of the Pledged Interests or otherwise received in
exchange therefor, and any subscription warrants, rights or options
issued to the holders of, or otherwise in respect of, the Pledged
Interests;
(c) without affecting the obligations of such Guarantor under any
provision prohibiting such action hereunder or under the Indenture, the
Working Capital Agreement and any Senior Secured Debt Document, in the
event of any consolidation or merger in which a Guarantor is not the
surviving entity, all ownership interests of any class or character of
the successor entity (unless such successor entity is such Guarantor
itself) formed by or resulting from such consolidation or merger received
by the Company in connection therewith;
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(d) the following agreements and documents:
(1) each Power Sales Agreement, each Power Marketing
Agreement with a term that exceeds 30 days, each
Operations and Maintenance Agreement and each
Corporate Services Agreement to which such Obligor
is a party;
(2) any future agreements similar to the Power Sales
Agreements, Power Marketing Agreements, Operation
and Maintenance Agreements, Corporate Services
Agreements or entered into by an Obligor which, in
the case of a Power Sales Agreement, has a term
which exceeds 30 days; and
(3) each and every bond, indemnity, warranty, guaranty
and any other agreement relating to the performance
by any party (except such Obligor) of any of the
foregoing;
as each such agreement, contract and document may be amended, supplemented,
modified or replaced and in effect from time to time (said agreements, contracts
and documents, as so amended, supplemented, modified or replaced and in effect
from time to time, being, individually, an "Assigned Agreement", and,
collectively, the "Assigned Agreements"), including, without limitation: (i) all
rights of such Obligor to receive moneys due and to become due under or pursuant
to the Assigned Agreements, (ii) all rights of such Obligor to receive proceeds
of any insurance, bond, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (iii) all claims of such Obligor for damages arising out of
or for breach of or default under the Assigned Agreements and (iv) all rights of
such Obligor to terminate, amend, supplement, modify or waive performance under
the Assigned Agreements, to perform thereunder and to compel performance and
otherwise to exercise all remedies thereunder; provided, that any agreement
which by its terms or by operation of applicable law is not assignable or would
become void, voidable or terminable if mortaged pledged or assigned thereunder
or if a security interest therin were granted hereunder, is expressly excepted
and excluded from the Collateral to the extent necessary as to avoid such
voidness, avoidability or terminability;
(e) all rights of an Obligor in respect to each and every
Intercompany Note;
(f) the Collateral Account and all property credited thereto,
including but not limited to, the balance from time to time in the Collateral
Account (including all Permitted Investments and "securities entitlements" (as
defined in Section 8-102(a)(17) of the Uniform Commercial Code) credited
thereto) and all security entitlements with respect to any of the foregoing; and
(g) all proceeds, rents, profits, income, benefits, substitutions
and replacements of, and to any of the property of such Obligor described in the
preceding clauses of this Section 3 (including, without limitation, all causes
of action, claims and warranties now
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or hereafter held by any Obligor in respect of any of the items listed
above) and, to the extent related to any property described in said
clauses or such proceeds, all books, correspondence, credit files,
records, invoices and other papers, including without limitation all
tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Obligor or any computer bureau or
service company from time to time acting for such Obligor.
SECTION 4. CASH PROCEEDS OF COLLATERAL.
4.01 Collateral Account. The Collateral Agent will cause to be
established at a banking institution to be selected by the Collateral Agent a
cash collateral account (the "Collateral Account"), which may be a "securities
account" (as defined in Section 8-501 of the Uniform Commercial Code), in the
name and under the sole dominion and control of the Collateral Agent (and, in
the case of a securities account, in respect of which the Collateral Agent is
the "entitlement holder" (as defined in Section 8-102(a)(7) of the Uniform
Commercial Code)), into which there shall be deposited from time to time upon
the occurrence and during the continuance of an Event of Default the cash
proceeds of any of the Collateral required to be delivered to the Collateral
Agent pursuant hereto and into which the Obligors may from time to time deposit
any additional amounts that any of them wishes to pledge to the Collateral Agent
for the benefit of the Secured Parties as additional collateral security
hereunder. The balance from time to time in the Collateral Account shall
constitute part of the Collateral hereunder and shall not constitute payment of
the Secured Obligations until applied as hereinafter provided. Except as
expressly provided in the next sentence, the Collateral Agent shall remit the
collected balance standing to the credit of the Collateral Account to or upon
the written order of the respective Obligor as such Obligor through the Company
shall from time to time instruct. However, at any time following the occurrence
and during the continuance of an Event of Default, the Collateral Agent shall at
the written direction of the Required Creditors (as defined in the Collateral
Agency and Intercreditor Agreement) apply or cause to be applied (subject to
collection) the balance from time to time standing to the credit of the
Collateral Account to the payment of the Secured Obligations in the manner
specified in Section 5.09. The balance from time to time in the Collateral
Account shall be subject to withdrawal only as provided herein. In addition to
the foregoing, each Obligor agrees that, at any time after the occurrence and
during the continuance of an Event of Default, if the proceeds of any Collateral
hereunder shall be received by it, such Obligor shall, upon the request of the
Collateral Agent, as promptly as possible deposit such proceeds into the
Collateral Account. Until so deposited, all such proceeds shall be held in trust
by such Obligor for and as the property of the Collateral Agent and shall not be
commingled with any other funds or property of such Obligor.
4.02 Investment of Balance in Collateral Account. The cash
balance standing to the credit of the Collateral Account shall be invested at
the written request of the Company from time to time in such Permitted
Investments as the respective Obligor through the Company (or, after the
occurrence and during the continuance of an Event of Default, the Required
Creditors) shall determine, which Permitted Investments shall be held in the
name and be under the control of the Collateral Agent (and, if the Collateral
Account is a securities account, credited to the Collateral Account); provided
that at any time after the occurrence and during the continuance of an Event of
Default, the Collateral Agent shall at the written direction of the Required
Creditors
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at any time and from time to time elect to liquidate any such Permitted
Investments and to apply or cause to be applied the proceeds thereof to the
payment of the Secured Obligations in the manner specified in Section 5.09.
The Collateral Agent shall have no obligation to invest and
reinvest any cash held in the absence of timely and specific written investment
direction from the Obligors or the Required Creditors. In no event shall the
Collateral Agent be liable for the selection of investments or for investment
losses incurred thereon. The Collateral Agent shall have no liability in
respect of losses incurred as a result of the liquidation of any investment
prior to its stated maturity or the failure of the Obligors to provide timely
written investment direction.
SECTION 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the
grant of the pledge and security interest pursuant to Section 3, the Obligors
hereby jointly and severally agree:
5.01 Delivery and Other Perfection. Each Obligor shall:
(a) if any of the membership interests, securities, moneys or
property required to be pledged by such Obligor under Section 3 are
received by such Obligor and are required by the terms of this Security
Agreement, the Indenture, the Working Capital Agreement or any other
Senior Secured Debt Document to be delivered to the Collateral Agent,
forthwith either (x) transfer and deliver to the Collateral Agent such
membership interests or securities so received by such Obligor (together
with the certificates for any such membership interests and securities
duly endorsed in blank or accompanied by undated stock powers duly
executed in blank), all of which thereafter shall be held by the
Collateral Agent, pursuant to the terms of this Agreement, as part of the
Collateral or (y) take such other reasonable action as the Collateral
Agent shall deem necessary or appropriate to duly record the Lien created
hereunder in such membership interests, securities, moneys or property in
Section 3 hereof;
(b) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary to create, preserve, perfect or validate the security
interest granted pursuant hereto or to enable the Collateral Agent to
exercise and enforce its rights hereunder with respect to such pledge and
security interest, including, without limitation, upon the occurrence and
during the continuation of an Event of Default, causing any or all of the
Equity Collateral to be transferred of record into the name of the
Collateral Agent or its nominee (and the Collateral Agent agrees that if
any Equity Collateral is transferred into its name or the name of its
nominee, the Collateral Agent will thereafter promptly give to the
respective Obligor copies of any notices and communications received by
it with respect to the Equity Collateral pledged by such Obligor
hereunder);
(c) use their best efforts to obtain consent to the assignment of
any future Assigned Agreement from all other Persons a party to such
future Assigned Agreement to the extent such Assigned Agreement has a
term of one year or more;
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(d) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner in order to reflect the security interests granted by this
Agreement; and
(e) permit representatives of the Collateral Agent, upon
reasonable notice, at any time during normal business hours to inspect
and make abstracts from its books and records pertaining to the
Collateral, and, upon the occurrence and during the continuation of an
Event of Default, permit representatives of the Collateral Agent to be
present at such Obligor's place of business to receive copies of all
communications and remittances relating to the Collateral, and forward
copies of any notices or communications received by such Obligor with
respect to the Collateral, all in such manner as the Collateral Agent may
require.
The Collateral Agent has no duty or responsibility to ensure or
monitor the Obligors' compliance with the provisions of this Section 5.01 and
it shall have no liability if the Company fails to comply with such provisions.
5.02 Other Financing Statements and Liens. Except as otherwise
permitted under Articles 6.9 and 7.5 of the Indenture and Sections 6.09 or and
7.05 of the Working Capital Agreement, no Obligor shall file or suffer to be on
file, or authorize or permit to be filed or to be on file, in any jurisdiction,
any financing statement or like instrument with respect to the Collateral in
which the Collateral Agent is not named as the sole secured party for the
benefit of the Secured Parties.
5.03 Preservation of Rights. The Collateral Agent shall not be
required to take steps necessary to preserve any rights against prior parties to
any of the Collateral.
5.04 Special Provisions Relating to Certain Collateral
(a) Equity Collateral.
(1) Except for sales or other transfers of ownership
interests that are permitted under the Indenture and the Working Capital
Agreement, the Obligors will cause the Equity Collateral to constitute at
all times all ownership interests of any class or character of each
Guarantor then outstanding.
(2) So long as no Event of Default shall have occurred and
be continuing, the Obligors shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Equity
Collateral for all purposes not inconsistent with the terms of this
Agreement, the Indenture or any Transaction Document; provided that the
Obligors jointly and severally agree that they will not vote the Equity
Collateral in any manner that is inconsistent with the terms of this
Agreement, the Indenture or any such other instrument or agreement unless
so required by law; and the Collateral Agent shall execute and deliver to
the Obligors or cause to be executed and delivered to the Obligors all
such proxies, powers of attorney, dividend and other orders, and all such
instruments, without recourse, as the Obligors may reasonably request in
writing for the purpose of enabling the Obligors to exercise the rights
and powers that they are entitled to exercise pursuant to this Section
5.04(a)(2).
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(3) Unless and until an Event of Default has occurred and is
continuing, the Obligors shall be entitled to receive and retain any
dividends on the Equity Collateral paid in cash or other property out of
earned surplus.
(4) If an Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not the
Collateral Agent or any Secured Party exercises any available right to
declare any Secured Obligation due and payable or seeks or pursues any
other relief or remedy available to it under applicable law or under this
Agreement, the Indenture, the Working Capital Agreement or any other
agreement relating to such Secured Obligation, all dividends and other
distributions on the Equity Collateral shall be paid directly to the
Collateral Agent and retained by it in, or credited to, the Collateral
Account as part of the Equity Collateral, subject to the terms of this
Agreement, and, if the Collateral Agent shall so request in writing, the
Obligors jointly and severally agree to execute and deliver to the
Collateral Agent appropriate additional dividend, distribution and other
orders and documents required to effect this clause (4); provided that if
such Event of Default is cured, any such dividend or distribution
theretofore paid to the Collateral Agent shall, upon request of any of
the Obligors (except to the extent theretofore applied to the Secured
Obligations), be immediately returned by the Collateral Agent to such
Obligors.
(b) Assigned Agreements.
(1) Each Obligor shall remain liable to perform its
respective duties and obligations under the contracts and agreements
included in the Collateral in accordance with their respective terms to
the same extent as if this Agreement had not been executed and delivered.
The exercise by the Collateral Agent or any Secured Party of any right,
remedy, power or privilege in respect of this Agreement shall not release
such Obligor from any of its duties and obligations under such contracts
and agreements. Neither the Collateral Agent nor any Secured Party shall
have any duty, obligation or liability under such contracts and
agreements included in the Collateral by reason of this Agreement or any
other agreement, nor shall the Collateral Agent or any Secured Party be
obligated to perform any of the duties or obligations of such Obligor
under any such contract or agreement or to take any action to collect or
enforce any claim (for payment) under any such contract or agreement.
(2) No Lien granted by this Agreement in such Obligor's
right, title and interest in any contract or agreement shall be deemed to
be a consent by the Collateral Agent or any Secured Party to any such
contract or agreement.
(3) Unless and until an Event of Default has occurred and is
continuing, the Obligors shall be entitled to receive and retain any
income or payments on the Assigned Agreements or Intercompany Notes.
5.05 Events of Default, Etc. During any period in which an Event
of Default shall have occurred and be continuing:
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(a) each Obligor shall, at the request of the Collateral Agent,
assemble the Collateral owned by it at such place or places, reasonably
convenient to both the Collateral Agent and such Obligor, designated in its
request;
(b) the Collateral Agent may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral and may extend
the time of payment, arrange for payment in installments, or otherwise modify
the terms of, any of the Collateral;
(c) the Collateral Agent shall have all of the rights and remedies
with respect to the Collateral of a secured party under the Uniform Commercial
Code (whether or not said Code is in effect in the jurisdiction where the rights
and remedies are asserted) and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any jurisdiction where any
rights and remedies hereunder may be asserted, including, without limitation,
the right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral as if the
Collateral Agent were the sole and absolute owner thereof (and each Obligor
agrees to take all such action as may be appropriate to give effect to such
right);
(d) the Collateral Agent in its discretion may, in its name or in
the name of the Obligors or otherwise, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so; and
(e) the Collateral Agent may, upon 10 Business Days prior written
notice to the Obligors of the time and place, with respect to the Collateral or
any part thereof that shall then be or shall thereafter come into the
possession, custody or control of the Collateral Agent, the Secured Parties or
any of their respective agents, sell, lease, assign or otherwise dispose of all
or any part of such Collateral, at such place or places as the Collateral Agent
deems best, and for cash or for credit or for future delivery (without thereby
assuming any credit risk), at public or private sale, without demand of
performance or notice of intention to effect any such disposition or of the time
or place thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Collateral Agent or any Secured Party or
anyone else may be the purchaser, lessee, assignee or recipient of any or all of
the Collateral so disposed of at any public sale (or, to the extent permitted by
law, at any private sale) and thereafter hold the same absolutely, free from any
claim or right of whatsoever kind, including any right or equity of redemption
(statutory or otherwise), of the Obligors, any such demand, notice and right or
equity being hereby expressly waived and released. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned;
provided that the Collateral Agent shall not exercise any power of sale or other
right thereunder to foreclose upon the Pledged Interest unless an Event of
Default continues unremedied for 90 or more days.
NRG Northeast Security Agreement
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The Collateral Agent shall incur no liability as a result of the
sale of the Collateral, or any part thereof, at any private or public sale or as
a result or exercise of any other rights or remedies available to it.
The proceeds of each collection, sale or other disposition under
this Section 5.05 shall be applied in accordance with Section 5.09.
The Obligors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Collateral Agent may be compelled, with respect to any sale
of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Obligors acknowledge that any such private sales may be at prices and on terms
less favorable to the Collateral Agent than those obtainable through a public
sale without such restrictions, and, notwithstanding such circumstances, agree
that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any Collateral for
the period of time necessary to permit the respective Obligors thereof to
register it for public sale.
5.06 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.05 are insufficient
to cover the costs and expenses of such realization and the payment in full of
the Secured Obligations, the Obligors shall remain liable for any deficiency to
the extent the Obligors are obligated under this Agreement.
5.07 Removals, Etc. Without at least 30 days' prior written notice
to the Collateral Agent, no Obligor shall (i) maintain any of its books and
records with respect to the Collateral at any office, or maintain its principal
place of business at any place other than at the address indicated in or
pursuant to Section 1.4 of the Indenture or (ii) change its name, or the name
under which it does business, from the name shown on the signature pages hereto.
5.08 Private Sale. The Collateral Agent and the Secured Parties
shall incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 conducted in a
commercially reasonable manner. Each Obligor hereby waives any claims against
the Collateral Agent or any Secured Party arising by reason of the fact that the
price at which the Collateral may have been sold at such a private sale was less
than the price that might have been obtained at a public sale or was less than
the aggregate amount of the Secured Obligations, even if the Collateral Agent
accepts the first offer received and does not offer the Collateral to more than
one offeree.
5.09 Application of Proceeds. Except as otherwise herein expressly
provided, the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash at the time held
by the Collateral Agent under Section 4 or this Section 5, shall be applied by
the Collateral Agent:
First, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable out-of-pocket
costs and expenses of the Collateral Agent
NRG Northeast Security Agreement
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and the fees and expenses of its agents and counsel, and all expenses
incurred and advances made by the Collateral Agent in connection
therewith;
Next, to the payment in full of the Secured Obligations, in each
case equally and ratably in accordance with the respective amounts
thereof then due and owing or as the Secured Parties holding the same may
otherwise agree; and
Finally, to the payment to the respective Obligor, or their
respective successors or assigns, or as a court of competent jurisdiction
may direct, of any surplus then remaining.
As used in this Section 5, "proceeds" of Collateral means cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Obligors or any Guarantors of or
obligor on any of the Collateral.
5.10 Attorney-in-Fact. Without limiting any rights or powers
granted by this Agreement to the Collateral Agent while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default the Collateral Agent is hereby appointed the
attorney-in-fact of each Obligor for the purpose of carrying out the provisions
of this Section 5 and taking any action and executing any instruments that the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Collateral Agent shall be entitled under this Section 5 to make collections in
respect of the Collateral, the Collateral Agent shall have the right and power
to receive, endorse and collect all checks made payable to the order of any
Obligor representing any dividend, payment or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same and
will inform the Obligor thereof. The Collateral Agent shall have no obligation
or responsibility for the filing, refiling, rerecording or monitoring the status
of any financing or continuation statements or any other similar documentation
relating to the perfection of the Security Interest granted in the Collateral.
5.11 Perfection. Prior to or concurrently with the execution and
delivery of this Agreement, each Obligor shall (i) file such financing
statements and other documents in such offices as the Collateral Agent may
reasonably request to perfect the security interests granted by Section 3 of
this Agreement, (ii) deliver to the Collateral Agent all certificates identified
in Annex 1, accompanied by undated stock powers duly executed in blank, (iii)
deliver to the Collateral Agent all Intercompany Notes held by it, accompanied
by undated bond power duly executed in blank and (iv) deliver to the Collateral
Agent a copy of all UCC-1 financing statements filed pursuant to clause (i),
naming such Obligor as debtor and duly signed by such Obligor.
5.12 Termination.
(a) When all Secured Obligations shall have been paid in full and
the Commitments of the Working Capital Banks under the Working Capital Agreement
shall have expired or been terminated, this Agreement shall terminate, and the
Collateral Agent shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received
NRG Northeast Security Agreement
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in respect thereof, to or on the order of the respective Obligor. The Collateral
Agent shall also execute and deliver to the respective Obligor upon such
termination such Uniform Commercial Code termination statements and such other
documentation as shall be reasonably requested by the respective Obligor to
effect the termination and release of the Liens on the Collateral.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Obligor in a transaction permitted by the Indenture
and the Working Capital Agreement, then the Collateral Agent, at the request and
reasonable and sole expense of such Obligor, shall execute and deliver to such
Obligor all releases or other documents reasonably necessary or desirable for
the release of the Liens created hereby on such Collateral. At the request and
reasonable and sole expense of the Company, a Guarantor shall be released from
its obligations hereunder in the event that all the Capital Stock of such
Guarantor shall be sold, transferred or otherwise disposed of in a transaction
permitted by the Indenture and the Working Capital Agreement; provided, that the
Company shall have delivered to the Collateral Agent, at least ten Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Guarantor and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any expenses
in connection therewith, together with a certification by an executive officer
of the Company stating that such transaction is in compliance with the Indenture
and the Working Facility.
5.13 Further Assurances. Each Obligor agrees that, from time to
time upon the written request of the Collateral Agent, such Obligor will execute
and deliver such further documents and do such other acts and things as the
Collateral Agent may reasonably request in order to fully effect the purposes of
this Agreement.
SECTION 6. MISCELLANEOUS
6.01 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at:
Collateral Agent: The Chase Manhattan Bank
Capital Markets Fiduciary Services
As Collateral Agent
450 W. 33rd Street, 15th Floor
New York, New York 10001
ATTENTION: Annette M. Marsula,
International and Project Finance
Group
Telecopier No.: (212) 946-8177
Telephone No.: (212) 946-7557
NRG Northeast Security Agreement
16
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Issuer: NRG Northeast Generating LLC
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attention: Investor Relations
Telecopier No.: (612) 373-5430
With Copies to: NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403-2445
Attention: General Counsel
Telecopier No.: (612) 373-5392
6.02 No Waiver. No failure on the part of the Collateral Agent or
any Secured Party to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any Secured Party of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
6.03 Amendments, Etc. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by each
Obligor and the Collateral Agent and with the consent of the Working Capital
Banks as specified in the last paragraph of Article IX in the Working Capital
Agreement. Any such amendment or waiver shall be binding upon the Collateral
Agent and each Secured Party, each holder of any of the Secured Obligations and
each Obligor.
6.04 Expenses. The Obligors jointly and severally agree to
reimburse each of the Secured Parties and the Collateral Agent for all
reasonable costs and expenses of the Secured Parties and the Collateral Agent
(including, without limitation, the reasonable fees and expenses of legal
counsel) in connection with (i) any Event of Default and any enforcement or
collection proceeding resulting therefrom, including, without limitation, all
manner of participation in or other involvement with (w) performance by the
Collateral Agent of any obligations of the Obligors in respect of the Collateral
that the Obligors have failed or refused to perform, (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Collateral Agent
in respect thereof, by litigation or otherwise, including expenses of insurance,
(y) judicial or regulatory proceedings and (z) workout, restructuring or other
negotiations or proceedings (whether or not the workout, restructuring or
transaction contemplated thereby is consummated) and (ii) the enforcement of
this Section 6.04, and all such costs and expenses shall be Secured Obligations
entitled to the benefits of the
NRG Northeast Security Agreement
17
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collateral security provided pursuant to Section 3. The Obligors' obligations
under this Section 6.04 shall survive the termination or the earlier resignation
or removal of the Collateral Agent.
6.05 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of each
Obligor, the Collateral Agent, the Secured Parties and each holder of any of the
Secured Obligations (provided, however, that no Obligor shall assign or transfer
its rights hereunder without the prior written consent of the Collateral Agent).
6.06 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York (without regard
to choice of law principles thereof to the extent the application of such
principles would cause the application of the laws of any other jurisdiction).
6.08 Captions. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
6.09 Agents and Attorneys-in-Fact. The Collateral Agent may employ
agents and attorneys-in-fact in connection herewith but such employment will not
relieve the Collateral Agent from its duties and obligations hereunder.
6.10 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Collateral Agent
and the Secured Parties in order to carry out the intentions of the parties
hereto as nearly as may be possible and (b) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
6.11 Additional Obligors. As contemplated in Section 6.10 of the
Indenture and Section 6.10 of the Working Capital Agreement, any new
Subsidiaries of the Obligors formed or acquired by the Obligors after the date
hereof may become a "Guarantor" under the Indenture and the Working Capital
Agreement and an "Obligor" under this Agreement, by executing and delivering to
the Collateral Agent a Designation Letter in the form of Exhibit A to the
Collateral Agency and Intercreditor Agreement. Accordingly, upon the execution
and delivery of any such Designation Letter by any such Subsidiary, such new
Subsidiary shall automatically and immediately, and without any further action
on the part of any Person, become an "Obligor" for all purposes of this
Agreement, and the Annex hereto shall be supplemented in the manner specified in
such Designation Letter.
6.12 Merger. Any corporation into which the Collateral Agent may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation
NRG Northeast Security Agreement
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succeeding to the business of the Collateral Agent shall be the successor of the
Collateral Agent hereunder without the execution or filing of any paper with any
party hereto or any further act on the part of any of the parties hereto except
where an instrument of transfer or assignment is required by law to effect such
succession, anything herein to the contrary notwithstanding.
6.13 Cumulative Rights, No Waiver. The rights, powers and remedies
of the Collateral Agent under this Security Agreement are cumulative and in
addition to all rights, powers and remedies provided under any and all
agreements between the Company and the Collateral Agent relating hereto, at law,
in equity or otherwise. Neither any delay nor any omission by the Collateral
Agent to exercise any right, power or remedy shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise thereof or any exercise of any other right, power or remedy.
6.14 Collateral Agency and Intercreditor Agreement Protections. In
acting hereunder, the Collateral Agent shall be entitled to receive the rights,
protections, indemnities and immunities which it is afforded pursuant to the
Collateral Agency and Intercreditor Agreement.
NRG Northeast Security Agreement
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IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
NRG NORTHEAST GENERATING LLC,
By: /s/ Craig Mataczynski
----------------------------------
Name: Craig Matacynski
Title: President
GUARANTORS
ARTHUR KILL POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
ASTORIA GAS TURBINE POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
CONNECTICUT JET POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
DEVON POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
NRG Northeast Security Agreement
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DUNKIRK POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
HUNTLEY POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
MIDDLETOWN POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
MONTVILLE POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
NORWALK POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
OSWEGO HARBOR POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
NRG Northeast Security Agreement
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SOMERSET POWER LLC
By: /s/ Brian B. Bird
----------------------------------
Name: Brian B. Bird
Title: Treasurer
THE CHASE MANHATTAN BANK,
as Collateral Agent
By: /s/ Annette M. Marsula
----------------------------------
Name: Annette M. Marsula
Title: Vice President
NRG Northeast Security Agreement
22
Annex 1 to Security Agreement
ANNEX 1
PLEDGED MEMBERSHIP INTERESTS
GUARANTORS CERTIFICATE NOS. REGISTERED OWNER NUMBER OF UNITS
- --------------------- ------------------ ---------------------------- ---------------------------------
Arthur Kill Power LLC 001 NRG Northeast Generating LLC 990 units of membership interests
004 NRG Northeast Generating LLC 10 units of membership interests
Astoria Gas Turbine Power LLC 001 NRG Northeast Generating LLC 990 units of membership interests
004 NRG Northeast Generating LLC 10 units of membership interests
Connecticut Jet Power LLC 001 NRG Northeast Generating LLC 1000 unit of membership interest
Devon Power LLC 001 NRG Northeast Generating LLC 1000 unit of membership interest
Dunkirk Power LLC 001 NRG Northeast Generating LLC 990 units of membership interests
004 NRG Northeast Generating LLC 10 units of membership interests
Huntley Power LLC 001 NRG Northeast Generating LLC 990 units of membership interests
004 NRG Northeast Generating LLC 10 units of membership interests
Middletown Power LLC 001 NRG Northeast Generating LLC 1000 units of membership interest
Montville Power LLC 001 NRG Northeast Generating LLC 1000 units of membership interest
Norwalk Power LLC 001 NRG Northeast Generating LLC 1000 units of membership interest
23
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GUARANTORS CERTIFICATE NOS. REGISTERED OWNER NUMBER OF UNITS
- --------------------- ------------------ ---------------------------- ---------------------------------
Oswego Harbor Power LLC 001 NRG Northeast Generating LLC 990 units of membership interests
004 NRG Northeast Generating LLC 10 units of membership interests
Somerset Power LLC 001 NRG Northeast Generating LLC 990 units of membership interests
004 NRG Northeast Generating LLC 10 units of membership interests
NRG Northeast Security Agreement