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EXHIBIT 10.3
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of this
23rd day of December, 1999, by NRG Energy, Inc. (the "Company"), in favor of The
Chase Manhattan Bank ("Chase") and Citibank, N.A. ("Citibank") as Lender
Representative (as defined below) for themselves and on behalf of the Financing
Parties referred to below.
RECITALS
A. NRG Northeast Generating LLC, a Delaware limited liability company
(the "Borrower"), the subsidiary guarantors party thereto, the Administrative
Agents, Chase as the Collateral Agent, Citibank as the Paying Agent and the
lenders referred to therein (the "Lenders") have entered into a Loan Agreement
dated as of June 4, 1999 (the "Loan Agreement"), pursuant to which the Lenders
have agreed, subject to the terms and conditions thereof, to lend to the
Borrower in an aggregate principal amount not exceeding $686,564,000 including a
loan in an amount not to exceed $68,440,000 (the "Tranche D Term Loan") the
proceeds of which the Borrower will lend to its affiliate, Oswego Harbor Power
LLC, a Delaware limited liability company ("Oswego Harbor Power") to enable
Oswego Harbor Power to purchase the Oswego Facility from Niagra Mohawk Power
Corporation pursuant to the Oswego Acquisition Documents, and revolving loans in
an aggregate amount not to exceed $4,234,000 (the "Tranche D Revolver Amount")
for working capital purposes of the Borrower and its subsidiaries.
B. The Borrower desires to request that the Tranche D Term Loans and
Revolving Loans be made to it.
C. Under Sections 5.02(j) and 5.03(a) of the Loan Agreement, it is a
condition precedent to the making of the Tranche D Term Loan and the making of
Revolving Loans, that the representations made by the Borrower in Article IV of
the Loan Agreement be true and correct as of the date of the loan or advance
request, including the representation in Section 4.06(a) of the Loan Agreement
that no actions, suits or proceedings by or before any Governmental Authority be
pending or threatened against or affecting the Borrower or any of its
subsidiaries that, inter alia, involve the Loan Agreement or other transactions
including the Oswego Acquisition.
D. On or about July 12, 1999 suit was filed by Fortistar Capital, Inc.
("Plaintiff") in District Court, Fourth Judicial District, in Hennepin County,
Minnesota against the Company (together with any other actions or claims
relating to or arising out of such suit, the "Litigation"), as a result of which
the Borrower will be unable to make the representations contained in said
Section 4.06(a).
E. The Borrower has requested that the Lenders waive the conditions
precedent under Sections 5.02(j) and 5.03(a) of the Loan Agreement as they
relate to the representations of the Borrower under Section 4.06(a) of the Loan
Agreement to the extent that the Borrower is
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unable to make such representations because of the existence of the Litigation.
F. As a condition to agreeing to such waiver, the Administrative Agents
and the Lenders have required that the Company indemnify each of them, the
Paying Agent, the Collateral Agent and each of their respective Related Parties,
the Borrower, the Subsidiary Guarantors and Oswego Harbor Power for any losses,
damages and expenses that might be incurred by any of them with respect to the
Litigation, all in accordance with this Agreement.
G The Lenders want to ensure that the Litigation will not adversely
affect the prospects of the contemplated bond refinancing of the indebtedness
under the Loan Agreement or any other refinancing or replacement financing. As
such, the Financing Parties and any Lender Representative acting on behalf of
such Persons are expressly intended to be beneficiaries of this Agreement.
H As a further condition to agreeing to such waiver, the Administrative
Agents and the Lenders have required the Company to indemnify the Financing
Parties under any refinancing, refunding or replacement of the indebtedness
under the Loan Agreement and any Lender Representative acting on behalf of such
Persons.
NOW, THEREFORE, in consideration of the Administrative Agents' and the
Lenders' agreements to waive the condition of certification of no pending
litigation with respect to the Litigation, and to make the Tranche D Term Loan
and the Revolving Loans, the Company hereby agrees as follows:
Section 1. Defined Terms.
(a) As used in this Agreement, the following terms have the meanings specified
below:
"Administrative Agents" means the Person(s) acting as
administrative agent(s) under the Loan Agreement.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Claim" has the meaning assigned to such term in Section 2.
"Collateral Agent" means the Person acting as collateral agent
under the Loan Agreement.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Financing Documents" means (a) initially, the Loan Agreement and
(b) any
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credit agreement, bond indenture, note purchase agreement or similar document or
documents pursuant to which the Borrower obtains financing to refinance, refund
or otherwise replace its indebtedness under the Loan Agreement or any subsequent
refinancing, refunding or replacement of the current financing.
"Financing Party" means any bank, financial institution or other
institutional investor providing for financing under a Financing Document, any
Lender Representative, and any trustee, agent or other representative acting on
behalf of such person.
"Governmental Approval" shall mean any authorization, consent,
approval, license, ruling, permit, concession, certification, exemption, filing,
variance, order, judgment, decree, publication, notice to, declaration of or
with or registration by or with any Governmental Authority.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Indemnified Person" has the meaning assigned to such term in
Section 2.
"Lender Representative" means (a) initially, the Administrative
Agents acting jointly and (b) in accordance with Section 5(b) hereof, following
the refinancing, refunding or other replacement of the Loan Agreement or any
subsequent refinancing, refunding or replacement of the current financing, any
trustee, agent or other representative acting on behalf of the Financing Parties
under the Financing Documents.
"Oswego Acquisition" means the purchase by Oswego Harbor Power of
the Oswego Facility pursuant to the Oswego Acquisition Documents.
"Oswego Acquisition Documents" means the Asset Sales Agreement
dated as of April 1, 1999 between the Sponsor, Niagara Mohawk Power Corporation,
Rochester Gas and Electric Corporation and Oswego Harbor Power and each of the
other agreements attached as a form thereto.
"Oswego Facility" means the electrical generating plant and
related property, plant and equipment to be purchased by Oswego Harbor Power
pursuant to, and as more fully described in, the Oswego Acquisition Documents.
"Paying Agent" means the person acting as paying agent under the
Loan Agreement.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
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"Related Parties" means, with respect to any specified Person,
such Person's Affiliates (other than, in the case of Affiliates of the Company)
and the respective directors, officers, employees, agents and advisors of such
Person and such Person's Affiliates (other than, in the case of Affiliates of
the Company).
"Revolving Loans" means the revolving loans made pursuant to the
Loan Agreement and subject to the conditions precedents in Section 5.03 of the
Loan Agreement.
"Subsidiary Guarantors" means the subsidiary guarantors party to
the Loan Agreement along with any subsidiaries of the Borrower after the date
hereof that become subsidiary guarantors of any indebtedness under the Financing
Documents.
(b) The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof and (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement.
Section 2. Indemnification. The Company shall pay and assume liability
for, and does hereby agree, to indemnify, protect, defend, save and keep
harmless the Borrower, the Subsidiary Guarantors, Oswego Harbor Power, the
Lender Representative, the Collateral Agent, the Paying Agent and each Financing
Party, and each Related Party of any of the foregoing Persons (collectively, the
"Indemnified Persons" and each individually, an "Indemnified Person") from and
against any and all liabilities, losses, obligations, actions, suits, judgments,
penalties, fines, claims, demands, settlements, costs and expenses (including
reasonable legal fees and expenses) of any nature ("Claims") that may be imposed
on, incurred by or asserted against an Indemnified Person arising out of or
relating to the Litigation, the settlement or adjudication (final or otherwise)
thereof or the waiver of any condition precedent set forth in any Financing
Document relating to the Litigation, whether or not such Claim is covered by any
other indemnification contained in any Financing Document, whenever such Claim
arises or accrues. It is expressly agreed that the term "Claims" shall include
(without limitation) (i) all payments, penalties, fines, losses or other costs
of the Borrower, the Subsidiary Guarantors or Oswego Harbor Power that directly
or indirectly arise out of, relate to or result from the Litigation and (ii) if
the Litigation results in a nullification of the acquisition of the Oswego
Facility, (x) the prepayment of an aggregate outstanding amount of principal of,
interest on and fees in respect of the Tranche D
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Term Loans made by the Lenders to the Borrower together with the aggregate
outstanding principal amount of interest on and fees in respect of Revolving
Loans made by the Lenders to the Borrower after the date hereof or (y) in the
event that the indebtedness under the Loan Agreement has been refinanced, the
prepayment or redemption of the principal amount of the then current financing
or financings (ratably in the case of more than one financing) in the amount of
$68,400,000 plus any interest accrued on such principal amount, plus any
make-whole premiums, penalties, breakage costs or other applicable fees related
to such prepayment or redemption, in either case, as reduced by the application
of proceeds of such nullification theretofore applied to such prepayment or
redemption. All amounts due under this Section 2 shall be payable not later than
20 days after written demand therefor. Notwithstanding the indemnification
contained in Section 2 of this Agreement, the Company shall not be obligated to
indemnify an Indemnified Person for any Claim to the extent that such Claim is
determined by a court of competent jurisdiction by final and nonappealable
judgement to have resulted from the gross negligence or willful misconduct of
such Indemnified Person.
Section 3. Nature of Obligations. The obligations of the Company under
Section 2 hereof are absolute and unconditional irrespective of the value,
genuineness, validity, regularity or enforceability of any agreement or
instrument referred to herein or therein, or any security therefor or any
substitution, release or exchange of any other guarantee of or security for any
thereof, and, to the fullest extent permitted by applicable law, irrespective of
any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the intent of
this Section 3 that the obligations of the Company hereunder shall be absolute
and unconditional under any and all circumstances.
Section 4. Representation and Warranty. The Company represents and
warrants to the Borrower, the Subsidiary Guarantors, Oswego Harbor Power, the
Lender Representative and each of the Financing Parties as follows:
(a) this Agreement has been duly executed and delivered by it and
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights and (ii) the application
of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(b) it has received or has the benefit of all Governmental
Approvals which are necessary for the execution, delivery and
performance of its obligations under this Agreement. The execution,
delivery and performance of this Agreement by it (i) will not violate
any applicable law or regulation or its charter, by-laws or other
organizational documents of or any order of any Governmental Authority,
(ii) will not result in a default under any indenture, agreement or
other instrument binding upon the Company or its assets, or give rise to
a right thereunder to require any payment to be made by it, and (iii)
will not result in the creation or imposition of any Lien on any of its
assets the imposition of which would materially impair its ability to
perform its obligations
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hereunder.
Section 5. Lender Representative.
(a) Each of the Borrower, the Subsidiary Guarantors and Oswego
Harbor Power hereby appoints the Lender Representative as its
attorney-in-fact, with full power of substitution, for the purpose of
exercising and enforcing any and all rights of the Borrower, the
Subsidiary Guarantors and Oswego Harbor Power hereunder and taking any
action and executing any instrument which the Lender Representative may
reasonably deem necessary to accomplish such purpose. The appointment in
this Section 5 of the Lender Representative as attorney-in-fact is
coupled with an interest and shall be irrevocable. The Company agrees
that, from time to time upon the request of the Lender Representative,
it will take such action and execute an such instruments as the Lender
Representative may reasonably request in order fully to carry out the
provisions and intentions of this Agreement; and
(b) In connection with a refinancing, refunding or replacement of
the Loan Agreement or any subsequent refinancing, refunding or
replacement of the then current financing, a trustee, agent or other
representative acting on behalf of such Financing Parties for such
refinancing, refunding or replacement under the Financing Documents
shall succeed to and become vested with the rights powers, privileges
and duties of the current Lender Representative, thereafter becoming the
Lender Representative for the purposes of this Agreement; provided that,
the provisions of Section 2 hereof shall inure to the benefit of the
retiring Lender Representative and the related Financing Parties as to
events that arose prior to such refinancing, refunding or other
replacement; provided, further, that in the event of any partial
refinancing, refunding or replacement of the then current financing, the
current Lender Representative and the trustee, agent or other
representative acting on behalf of the Financing Parties under the
Financing Documents for such refinancing, refunding or replacement shall
each be a Lender Representative and shall act jointly with the current
Lender Representative The replacement of the Lender Representative under
this Section shall become effective upon written notification by each of
the retiring and successor Lender Representative to the Company and the
Borrower.
Section 6. Notice in Respect of Claims. If any action, suit or
proceeding shall be brought against any Indemnified Person for which it is
seeking indemnification hereunder, or if any Indemnified Person is named as a
party to the Litigation, or if any Indemnified Person is seeking indemnification
hereunder in respect of a Claim, such Indemnified Person shall notify the
Company thereof. Any such notices received by the Company from the Borrower, the
Subsidiary Guarantors or Oswego Harbor Power shall be promptly forwarded by the
Company to the Lender Representative.
Section 7. Miscellaneous.
(a) Notices. All notices, requests and other communications
provided for herein (including, without limitation, any modifications
of, or waivers under, this
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Agreement) shall be given or made in writing (including, without
limitation, by telecopy) delivered to the intended recipient at the
"Address for Notices" specified, as to the Company and each party
hereto, below its name on the signature page hereof or at such other
address as shall be designated by any party in a notice to each other
party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given (i) when received
by certified mail or by an international courier, such as Federal
Express, by such Person, at said address of such Person or (ii) when
transmitted by facsimile to the number specified below and the receipt
confirmed telephonically by recipient, provided that such facsimile is
promptly followed by a copy of such notice delivered to such Person by
postage-prepaid certified mail, or by an international courier, such as
Federal Express.
(b) Waivers, Etc. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by the
parties hereto.
(c) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of
each of the Company, the Borrower, the Subsidiary Guarantors, Oswego
Harbor Power, the Lender Representative, the Collateral Agent, the
Paying Agent, and the Financing Parties.
(d) Counterparts; Integration; Effectiveness. This Agreement may
be executed in any number of counterparts, all of which when taken
together shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such
counterpart. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, written or oral, relating to the subject
matter hereof.
(e) Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted
by applicable law (a) the other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be liberally construed
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.
(f) Headings. Headings appearing herein are used solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
(g) No Third Party Beneficiaries. This Agreement is solely for
the benefit of the Borrower, the Subsidiary Guarantors. Oswego Harbor
Power, the Lender Representative, the Paying Agent, the Collateral Agent
and the Financing Parties and no other person shall have any rights
hereunder.
(h) Governing Law: Submission to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the law of the
State of New York. The
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Company hereby submits to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and of the
Supreme Court of the State of New York sitting in New York County
(including its Appellate Division) and of any other appellate court in
the State of New York for the purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated
hereby. The Company hereby irrevocably waives, to the fullest extent
permitted by applicable law, any objection that it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
(i) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed by its duly authorized officer as of the date first written above.
NRG ENERGY, INC.
By: /s/ Brian B. Bird
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Title: VP & Treasurer
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Address for Notices:
1221 Nicollet Mall
Minneapolis, Minnesota 55403-2445
Telephone: (612) 373-5300
Facsimile: (612) 373-5392
Attention: General Counsel
Accepted:
THE CHASE MANHATTAN BANK,
as an initial Lender Representative
By:
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Title:
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Address for Notices:
CITIBANK, N.A.,
as an initial Lender Representative
By:
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Title:
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Address for Notices:
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NRG NORTHEAST GENERATING LLC,
as Borrower
By: /s/ Brian B. Bird
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Title: Treasurer
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Address for Notices:
ARTHUR KILL POWER LLC
By: /s/ Brian B. Bird
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Title: Treasurer
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Address for Notices:
ASTORIA GAS TURBINE POWER LLC
By: /s/ Brian B. Bird
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Title: Treasurer
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Address for Notices:
DUNKIRK POWER LLC
By: /s/ Brian B. Bird
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Title: Treasurer
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Address for Notices:
HUNTLEY POWER LLC
By: /s/ Brian B. Bird
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Title: Treasurer
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Address for Notices:
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NRG NORTHEAST POWER MARKETING LLC
By: /s/ Brian B. Bird
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Title: Treasurer
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Address for Notices:
OSWEGO HARBOR POWER LLC
By: /s/ Brian B. Bird
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Title: Treasurer
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Address for Notices:
SOMERSET POWER LLC
By: /s/ Brian B. Bird
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Title: Treasurer
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Address for Notices:
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