Exhibit 10.27.12
SUBORDINATED PLEDGE AND SECURITY AGREEMENT
dated as of December 10, 1997
among
NRGG FUNDING INC.,
as a Pledgor
NRG ▇▇▇▇▇▇ INC.,
as a Pledgor
and
NRG ENERGY, INC.
SUBORDINATED PLEDGE AND SECURITY AGREEMENT
This SUBORDINATED PLEDGE AND SECURITY AGREEMENT (this
"Agreement"), dated as of December 10, 1997, among NRGG
Funding Inc., a Delaware corporation ("NRGG Funding"), NRG
▇▇▇▇▇▇ INC., a Delaware corporation ("NRGMI", and NRG ENERGY,
INC., a Delaware corporation ("NRG Energy"). NRGG Funding
and NRGMI are sometimes referred to herein collectively as
the "Pledgors" and each individually as a "Pledgor."
W I T N E S S E T H :
WHEREAS, NRG Energy entered into an Equity Commitment Agreement
dated as of September 15, 1997 (the "Equity Commitment Agreement") for
the benefit of NRG (▇▇▇▇▇▇) ▇▇▇▇▇, LLC, a Delaware limited liability
company (the "Company") and The Chase Manhattan Bank, as collateral
agent (in such capacity, the "Collateral Agent") for the banks (the
"Banks") party to that certain Construction and Term Loan Agreement
dated as of September 15, 1997 (the "Credit Agreement"), by and between
the Company, the Banks, the Collateral Agent and The Chase Manhattan
Bank, as agent for the Banks (in such capacity, the "Agent");
WHEREAS, NRG Energy has agreed to sell, and NRGG Funding has
agreed to purchase, all of NRG Energy's beneficial interest in the
Company (the "Membership Interests"), pursuant to the terms of that
certain Membership Interest Purchase Agreement, dated as of December
10, 1997 (the "Purchase Agreement") by and between NRG Energy and NRGG
(such sale and purchase is hereinafter referred to as the
"Transaction");
WHEREAS, in connection with the Transaction, NRG Energy has
assigned, and NRGG Funding has assumed, all of the rights and
obligations of NRG Energy under the Equity Commitment Agreement,
pursuant to the terms of that certain Assignment and Assumption
Agreement dated as of December 10, 1997 (the "Assignment and Assumption
Agreement") by and between NRG Energy and NRGG Funding;
WHEREAS, NRG Energy has guaranteed, pursuant to that certain
Equity Commitment Guaranty (the "Equity Guaranty") in favor of The
Chase Manhattan Bank, in its capacity as Collateral Agent for the banks
party to the Credit Agreement, certain equity funding and related
obligations of NRGG Funding under the Equity Commitment Agreement
assumed by NRGG Funding pursuant to the Assignment and Assumption
Agreement;
1
WHEREAS, NRGG has guaranteed the obligations of NRGG Funding
under the Equity Commitment Agreement for the benefit of NRG Energy,
pursuant to an Equity Commitment Guaranty dated as of December 10, 1997
(the "NRGG Equity Guaranty");
WHEREAS, NRGG and NRGG Funding have entered into a
Supplemental Loan Agreement, (as amended, supplemented or otherwise
modified from time to time, the "NRG Loan Agreement") with NRG Energy
pursuant to which NRG Energy shall commit to make loans to NRGG and
NRGG Funding to enable NRGG and NRGG Funding to meet their respective
obligations under the Equity Commitment Agreement and the NRGG Equity
Guaranty;
WHEREAS, upon execution and delivery of the Purchase
Agreement, the Pledgors together will own one hundred percent (100%) of
the membership interests in the Company (the "Membership Interests"),
and the Pledgors will benefit from the (i) loan under the NRG Loan
Agreement, as the proceeds thereof may be used to meet the equity
commitments of NRGG Funding to the Company and the Collateral Agent,
and (ii) the Equity Guaranty and the NRGG Equity Guaranty, as the
Collateral Agent and the Banks would not consent to the transfer of the
Membership Interests without delivery by NRG Energy of the Equity
Guaranty;
WHEREAS, it is a condition precedent to (i) NRG Energy's
execution of the Equity Guaranty and (ii) the funding of the Loan
under the NRG Loan Agreement that the Pledgors execute this
Subordinated Pledge and Security Agreement.
NOW, THEREFORE, in consideration of the foregoing premises
and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Pledgors hereby agree with NRG
Energy as follows:
ARTICLE 1
DEFINED TERMS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Defined Terms. (a) Unless otherwise defined herein,
terms defined in the Credit Agreement shall have such defined meanings
when used herein.
(b) The following terms shall have the following respective
meanings:
"Agent" shall have the meaning ascribed thereto in the first
recital hereto.
"Agreement" shall have the meaning ascribed thereto in the
introduction paragraph hereto.
2
"Assignment and Assumption Agreement" shall have the meaning
ascribed thereto in the third recital hereto.
"Bank Closing Date" shall have the meaning ascribed to the
term "Closing Date" in the Credit Agreement.
"Bank Pledge Agreement" shall mean the Pledge and Security
Agreement dated as of December 10, 1997 by and between NRGG Funding,
NRGMI and the Collateral Agent.
"Banks" shall have the meaning ascribed thereto in the first
recital hereto.
"Collateral Agent" shall have the meaning ascribed thereto in
the first recital hereto.
"Company" shall have the meaning ascribed thereto in the
first recital hereto.
"Contest" shall mean, with respect to any tax, Lien or claim,
a contest pursued in good faith and by appropriate proceedings
diligently conducted, so long as (i) adequate reserves have been
established with respect thereto in accordance with GAAP, (ii) any Lien
filed in connection therewith shall have been removed from the record
by the bonding of such Lien by a reputable surety company satisfactory
to NRG Energy, or security satisfactory to NRG Energy is otherwise
provided to assure the discharge of the obligation thereunder and of
any additional charge, penalty or expense arising from or incurred as a
result of such contest, (iii) if it becomes necessary to prevent the
delivery of a tax deed or other similar instrument conveying the
Pledged Collateral or any portion thereof because of non-payment of any
such tax, Lien or claim being contested, then the Pledgors shall pay
the same in sufficient time to prevent the delivery of such tax deed or
other similar instrument, (iv) the failure to pay any such tax, Lien or
claim during the pendency of such contest would not otherwise result in
a material adverse effect on the Person subject to any such tax, Lien
or claim and (v) the Person subject to any such tax, Lien or claim has
no knowledge of any actual or proposed additional deficiency or
additional assessment in connection therewith that is not provided for
in any of clauses (i) through (iv) of this definition.
"Credit Agreement" shall have the meaning ascribed thereto in
the first recital hereto.
"Expenses" shall have the meaning ascribed thereto in Section
6.15(a).
"Equity Commitment Agreement" shall have the meaning ascribed
thereto in the first recital hereto.
3
"Financing Statement" shall mean all financing statements,
recordings, filings or other instruments of registration necessary and
appropriate to perfect a security interest or Lien by filing in any
appropriate filing or recording office in accordance with the Uniform
Commercial Code as enacted in any and all relevant jurisdictions or any
other relevant applicable Law.
"Indemnitee" shall have the meaning ascribed thereto in
Section 6.15(a).
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, mandatory deposit arrangement with any party owning
indebtedness of either Pledgor, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having
substantially the same effect as any of the foregoing and the filing of
any financing statement or similar instrument under the Uniform
Commercial Code or comparable law.
"LLC Agreement" shall mean the Amended and Restated Limited
Liability Company Agreement of NRG (▇▇▇▇▇▇) ▇▇▇▇▇, LLC, dated December
10, 1997, between the Pledgors, and all amendments, modifications and
supplements thereto and restatements thereof made in accordance with
Section 4.6.
"LLC Interests" shall have the meaning ascribed thereto in
Section 2.1(a)(i).
"Material Adverse Effect" shall mean a material adverse
effect on any of (i) the operations, business, financial condition or
property of NRGG Funding and its subsidiaries on a consolidated basis,
(ii) the ability of either Pledgor to perform in a timely manner its
material obligations under this Agreement or any other Transaction
Document to which it is a party, (iii) the rights and interests of NRG
Energy under the NRGG Equity Guaranty or the Credit Documents (as that
term is defined in the NRG Loan Agreement) or (iv) the value of the
Pledged Collateral or the validity or priority of the security
interests therein granted to NRG Energy.
"NRG Energy" shall have the meaning ascribed thereto in the
introductory paragraph hereto.
"NRG Loan Agreement" shall have the meaning ascribed thereto
in the fourth recital hereto.
"NRGG" shall mean NRG Generating (U.S.) Inc., a Delaware
corporation.
4
"NRGG Equity Guaranty" shall have the meaning ascribed
thereto in the fifth recital hereto.
"NRGMI" shall have the meaning ascribed thereto in the
introductory paragraph hereto.
"Permitted Liens" shall mean:
(a) Liens granted to NRG Energy pursuant to this Agreement;
(b) Liens granted to the Collateral Agent;
(c) Liens (other than any Lien imposed by ERISA) in
connection with workmen's compensation, unemployment insurance or other
social security or pension obligations;
(d) Liens for taxes not yet delinquent or, if delinquent,
which are subject to a Contest; and
(e) Attachment or judgment Liens; provided that (i) the
existence of such Liens could not reasonably be expected to result in a
Material Adverse Effect and (ii) such Liens are discharged within
thirty (30) days of the creation thereof.
"Pledged Collateral" shall have the meaning ascribed thereto
in Section 2.1(a).
"Pledgor" and "Pledgors" shall have the meaning ascribed
thereto in the introductory paragraph hereto.
"Purchase Agreement shall have the meaning ascribed thereto
in the second recital hereto.
"Secured Obligations" shall mean (i) the obligations of NRGG
Funding and NRGG under the NRG Loan Agreement and the other Credit
Documents (as that term is defined in the NRG Loan Agreement), (ii) the
obligations of NRGG Funding to pay subrogation and related claims of
NRG Energy relating to and arising under the Equity Commitment
Agreement, as assumed by NRGG Funding pursuant to the Assignment and
Assumption Agreement, (iii) the obligations of NRGG under the Equity
Commitment Guaranty by NRGG in favor of NRG Energy of even date
herewith and (iv) the Pledgors' obligations hereunder.
"Securities Act" shall have the meaning ascribed thereto in
Section 5.2(b).
5
"Transactions" shall have the meaning ascribed thereto in the
second recital hereto.
Section 1.2 Principles of Construction. Unless otherwise
expressly provided herein, the principles of construction set forth in
Section 1.4 of the Credit Agreement shall apply to this Agreement.
ARTICLE 2
PLEDGE
Section 2.1 Pledged Collateral. (a) As collateral security for
the prompt and complete payment and performance when due, whether at
stated maturity, by acceleration or otherwise (including the payment of
amounts which would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ? 362(a)),
of all of the Secured Obligations, whether now existing or hereafter
arising and howsoever evidenced, each Pledgor hereby pledges, grants,
assigns, hypothecates, transfers and delivers to NRG Energy a second
priority security interest in the following, whether now existing or
hereafter from time to time acquired (collectively, the "Pledged
Collateral"):
(i) all of such Pledgor's membership interests in the
Company (such Pledgor's "LLC Interests") and all of such Pledgor's
rights to acquire membership interests in the Company in addition
to or in exchange or substitution for such Pledgor's LLC
Interests;
(ii) all of such Pledgor's rights, privileges, authority
and powers as a member of the Company under the LLC Agreement;
(iii) all certificates or other documents (if any)
representing any and all of the foregoing in clauses (i) and (ii);
(iv) all dividends, distributions, cash, securities,
instruments and other property of any kind to which such Pledgor
may be entitled in its capacity as a member of the Company by way
of distribution, return of capital or otherwise;
(v) any other claim which such Pledgor now has or may in
the future acquire in its capacity as a member of the Company
against the Company and its property; and
6
(vi) all proceeds, products and accessions of and to any
of the property described in the preceding clauses (i) through
(v).
(b) As used herein, the term "proceeds" shall be construed in its
broadest sense and shall include whatever is received or receivable
when any of the Pledged Collateral, or any proceeds thereof, is sold,
collected, exchanged or otherwise disposed of, whether voluntarily or
involuntarily, and shall include, without limitation, all rights to
payment, including interest and premiums, with respect to any of the
Pledged Collateral or any proceeds thereof.
Section 2.2 Distributions. At any time when an Event of Default
has occurred and is continuing or distributions are otherwise
restricted pursuant to the Loan Agreement, any and all
(i) distributions paid or payable in respect of any
Pledged Collateral (whether paid in cash, securities or other
property), and
(ii) property (whether cash, securities or other
property) paid, payable or otherwise distributed in redemption of,
or in exchange for, the property described in clause (i)
immediately above,
shall be, and shall be forthwith delivered to NRG Energy to hold as,
Pledged Collateral and shall be applied to reduce the Loan in
accordance with the Loan Agreement and shall, if received by either of
the Pledgors, be received in trust for the benefit of NRG Energy, be
segregated from the other property or funds of such Pledgor, and be
forthwith delivered to NRG Energy (to the extent and in the manner set
forth in the NRG Loan Agreement) as Pledged Collateral in the same form
as so received (with any necessary endorsement); provided, however,
that at all other times the Pledgors shall be entitled to receive and
retain any and all distributions paid in respect of the Pledged
Collateral in compliance with the terms of the Credit Agreement. All
cash and cash equivalents received by NRG Energy pursuant to the
preceding sentence shall be applied to the Secured Obligations as
provided in Section 5.4. All other property received by NRG Energy
pursuant to this Section 2.2 may be sold by NRG Energy and the proceeds
applied to the Secured Obligations, all as provided in Article V.
Section 2.3 Voting Rights. Unless an Event of Default shall have
occurred and be continuing, each Pledgor shall be entitled to exercise
all voting with respect to such Pledgor's LLC Interests; provided,
however, that no vote shall be cast, right exercised or other action
taken which could impair the Pledged Collateral or which would be
inconsistent with or result in any violation of any provision of this
Agreement or any other Credit Document. Upon the occurrence and during
the continuance of an Event of Default, all voting and other rights of
each Pledgor with respect to such Pledgor's LLC Interests
7
which such Pledgor would otherwise be entitled to exercise pursuant to
the terms of this Agreement shall cease, and all such rights shall be
vested in NRG Energy which shall thereupon have the sole right to
exercise such rights.
Section 2.4 Secured Party Not Liable. Notwithstanding any other
provision contained in this Agreement, the Pledgors shall remain liable
under the LLC Agreement to observe and perform all of the conditions
and obligations to be observed and performed by the Pledgors
thereunder. Neither NRG Energy nor any of its directors, officers,
employees or agents shall have any obligations or liability under or
with respect to any Pledged Collateral by reason of or arising out of
this Agreement or the receipt by NRG Energy of any payment relating to
any Pledged Collateral, nor shall any of NRG Energy or any of its
directors, officers, employees or agents be obligated in any manner to
(a) perform any of the obligations of either Pledgor under or pursuant
to the LLC Agreement or any other agreement to which either Pledgor is
a party, (b) make any payment or to inquire as to the nature or
sufficiency of any payment or performance with respect to any Pledged
Collateral, (c) present or file any claim or collect the payment of any
amounts or take any action to enforce any performance with respect to
the Pledged Collateral or (d) take any other action whatsoever with
respect to the Pledged Collateral.
Section 2.5 Attorney-in-Fact. (a) Each Pledgor hereby appoints
NRG Energy, or any Person, officer or agent whom NRG Energy may
designate, as its true and lawful attorney-in-fact, with full
irrevocable power and authority in the place and stead of such Pledgor
and in the name of such Pledgor or in its own name, at such Pledgor's
cost and expense, from time to time in NRG Energy's reasonable
discretion to take any action and to execute any instrument which NRG
Energy may reasonably deem necessary or advisable to enforce its rights
under this Agreement, including, without limitation, authority to
receive, endorse and collect all instruments made payable to such
Pledgor representing any distribution, interest payment or other
payment in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same; provided, however, that NRG Energy
will not exercise its powers under this Section 2.5 unless an Event of
Default has occurred and is continuing (except that NRG Energy may at
any time, in the name of either Pledgor or in its own name, prepare,
sign and file any Financing Statement for the purpose of perfecting the
security interest granted hereunder).
(b) Each Pledgor hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof, in each case pursuant
to the powers granted hereunder. Each Pledgor hereby acknowledges and
agrees that in acting pursuant to the power-of-attorney granted in
clause (a) immediately above, NRG Energy shall be acting in its own
interest, and each Pledgor acknowledges and agrees that NRG Energy
shall have no fiduciary duties to such Pledgor and such Pledgor hereby
waives any claims or rights of a beneficiary of a fiduciary
relationship hereunder.
8
Section 2.6 NRG Energy May Perform. If either Pledgor fails to
perform any agreement contained herein after receipt of a written
request to do so from NRG Energy, NRG Energy may itself perform, or
cause performance of, such agreement, and the reasonable expenses of
NRG Energy, including the reasonable fees and expenses of its counsel,
incurred in connection therewith shall be payable by such Pledgor under
Section 6.15; provided that if an Event of Bankruptcy shall have
occurred with respect to such Pledgor, the notice described in this
Section 2.5 shall not be required and shall be deemed to have been
delivered upon the failure of such Pledgor to perform such agreement.
Section 2.7 Reasonable Care. NRG Energy shall be deemed to have
exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if the Pledged Collateral is
accorded treatment substantially equivalent to that which NRG Energy
accords its own property of the type of which the Pledged Collateral
consists, it being understood that NRG Energy shall have no
responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters
relative to any Pledged Collateral, whether or not NRG Energy has or is
deemed to have knowledge of such matters, or (b) taking any necessary
steps to preserve rights against any parties with respect to any
Pledged Collateral.
Section 2.8 Security Interest Absolute. All rights of NRG Energy
and security interests hereunder, and all obligations of the Pledgors
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the
Credit Documents or any other agreement or instrument relating
thereto (other than against NRG Energy);
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure
from the Credit Documents or any other agreement or instrument
relating thereto;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
any departure from any guaranty, for all or any of the Secured
Obligations; or
(d) any other circumstance (other than the indefeasible
payment in full of the Secured Obligations in cash or cash
equivalents and/or application of the purchase price of any or all
of the Pledged Collateral purchased by NRG Energy pursuant to
Section 5.3) which might otherwise constitute a defense available
to, or a discharge of, the Pledgors.
9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PLEDGORS
Each Pledgor represents and warrants as follows, which
representations and warranties shall survive the execution and delivery of
this Agreement and the making and repayment of the Secured Obligations;
provided that (i) prior to the effective date of this Agreement, such
representations and warranties shall be made by the Pledgors on a several
basis, and (ii) on and after the effective date of this Agreement, such
representations and warranties shall be made by the Pledgors on a joint
and several basis:
Section 3.1 Ownership of Pledged Collateral; Other Financing
Statements. Such Pledgor is the sole legal and beneficial owner of the
Pledged Collateral pledged by it hereunder free and clear of any Lien
other than the Lien created pursuant to this Agreement, other than the
Lien of the Collateral Agent under the Bank Pledge Agreement. No
security agreement, Financing Statement or other public notice with
respect to all or any part of the Pledged Collateral is on file or of
record in any public office, except such as may have been filed in
favor of NRG Energy pursuant to this Agreement or the Collateral Agent
pursuant to the Bank Pledge Agreement.
Section 3.2 Due Incorporation; Qualification. Such Pledgor is a
corporation duly organized and validly existing under the Laws of the
State of Delaware, and is qualified to own property and transact
business in every jurisdiction where the ownership of its property and
the nature of its business as currently conducted and as contemplated
to be conducted requires it to be qualified, except where the failure
to so qualify could not reasonably be expected to result in a Material
Adverse Effect.
Section 3.3 Authority; Authorization, Execution and Delivery;
Enforceability. Such Pledgor has full power, authority and legal right
to enter into this Agreement and to perform its obligations hereunder
and to pledge all of the Pledged Collateral pledged by it pursuant to
this Agreement. The pledge of such Pledged Collateral pursuant to this
Agreement has been duly authorized by such Pledgor. This Agreement has
been duly authorized, executed and delivered by such Pledgor and
constitutes a legal, valid and binding obligation of such Pledgor
enforceable against such Pledgor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar Laws affecting creditors' rights generally
and except as enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
Section 3.4 Consents; Governmental Approvals. No consent of any
other party (including, without limitation, stockholders or creditors
of such Pledgor) and no Governmental Approval is required which has not
been obtained either (a) for the execution, delivery and performance by
such Pledgor of this Agreement, (b) for the pledge by such
10
Pledgor of the Pledged Collateral pledged by it pursuant to this
Agreement, or (c) for the exercise by NRG Energy of the rights provided
for in this Agreement (except to the extent that a consent of another
party or a Governmental Approval may be required for NRG Energy to so
act) or the remedies in respect of the Pledged Collateral pursuant to
this Agreement.
Section 3.5 No Conflicts. The execution, delivery and
performance of this Agreement and each other Transaction Document to
which such Pledgor is a party will not (i) require any consent or
approval of the Board of Directors of such Pledgor which has not been
obtained, (ii) violate the provisions of such Pledgor's Certificate of
Incorporation or By-laws, (iii) violate the provisions of any Law
(including, without limitation, any usury Laws), regulation or order of
any Governmental Authority applicable to such Pledgor, (iv) result in a
breach of or constitute a default under any material agreement relating
to the management or affairs of such Pledgor, or any indenture or loan
or credit agreement or any other material agreement, lease or
instrument to which such Pledgor is a party or by which such Pledgor or
any of its material properties may be bound or (v) result in or create
any Lien (other than Permitted Liens) under, or require any consent
which has not been obtained under, any indenture or loan or credit
agreement or any other material agreement, instrument or document, or
the provisions of any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority binding upon such
Pledgor or the Company or any of their respective properties.
Section 3.6 Litigation. No Event of Bankruptcy has occurred with
respect to such Pledgor and there is no action, suit or proceeding at
Law or in equity or by or before any Governmental Authority, arbitral
tribunal or other body now pending against such Pledgor or, to the best
knowledge of such Pledgor, threatened against such Pledgor which
questions the validity or legality of or seeks damages in connection
with this Agreement or any other Transaction Document to which such
Pledgor is a party.
Section 3.7 Necessary Filings. Upon the filing with the
Minnesota Secretary of State of all necessary Financing Statements
executed by the Pledgors in favor of NRG Energy with respect to the
Pledged Collateral, all filings, registrations and recordings necessary
or appropriate to create, preserve, protect and perfect the security
interest granted by such Pledgor to NRG Energy hereby in respect of the
Pledged Collateral shall have been accomplished and the security
interest granted by such Pledgor to NRG Energy pursuant to this
Agreement in the Pledged Collateral constitutes a valid and enforceable
perfected security interest therein superior and prior to the rights of
all other Persons therein (other than the rights of the Collateral
Agent and the Banks pursuant to the Bank Pledge Agreement) and, in each
case, subject to no other Liens, sales, assignments, conveyances,
settings over or transfers, other than the Lien of the Collateral Agent
under the Bank Pledge Agreement.
11
Section 3.8 Compliance with Laws. Such Pledgor has been in the
past and is in current compliance with all applicable Laws in respect
of the conduct of its business and the ownership of its property.
Section 3.9 No Defaults. Such Pledgor is not in default in the
performance, observance or fulfillment of any of the material
obligations, covenants or conditions applicable to such Pledgor
contained in any Transaction Document to which it is a party.
Section 3.10 Chief Executive Office. (a) The chief executive
office of NRGG Funding and the office where NRGG Funding keeps its
records concerning the Company and the Project and all contracts
relating thereto is located at:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) The chief executive office of NRGMI and the office where NRGMI
keeps its records concerning the Company and the Project and all
contracts relating thereto is located at:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
ARTICLE 4
COVENANTS OF THE PLEDGORS
Each Pledgor hereby covenants and agrees from and after the date
of this Agreement until the termination of this Agreement in accordance
with the provisions of Section 6.3:
Section 4.1 Transfer of Interests. (a) Such Pledgor shall not
sell or otherwise dispose of the Pledged Collateral or any interest
therein without the prior written consent of NRG Energy; provided,
however, that such Pledgor may, without the prior written consent of
NRG Energy, sell, together with any sale of LLC Interests made by the
other Pledgor pursuant to this proviso, less than or equal to ten
percent (10%) of the total LLC Interests to the Energy Purchaser within
one hundred twenty (120) days after the Bank Closing Date pursuant to
Section 19.5 of the Energy Services Agreement if (i) such sale does not
cause a Default or an Event of Default under the NRG Loan Agreement or
the Credit Agreement and (ii) such sale is consummated under
documentation that is
12
acceptable in form and substance satisfactory to NRG Energy; provided
that no sale of LLC Interests shall be permitted under this clause (a)
unless NRGG Funding remains obligated under the Equity Commitment
Agreement, dated as of September 15, 1997, among NRG Energy, the
Borrower and the Collateral Agent, as assumed by NRGG Funding pursuant
to the Assignment and Assumption Agreement, and NRGG remains obligated
under the NRGG Equity Guaranty.
(b) If either Pledgor transfers all of its LLC Interests pursuant
to any transfer permitted under clause (a) of this Section 4.1, then
NRG Energy, upon the request and at the expense of such Pledgor, shall
execute and deliver all such documentation reasonably necessary to
release such Pledgor from the terms of this Agreement.
Section 4.2 No Other Liens. Such Pledgor shall not create, incur
or permit to exist, shall defend the Pledged Collateral against and
shall take such other action as is necessary to remove, any Lien or
claim on or to the Pledged Collateral (other than Permitted Liens), and
shall defend the right, title and interest of NRG Energy in and to any
of the Pledged Collateral against the claims and demands of all Persons
whomsoever (other that the Collateral Agent).
Section 4.3 Maintenance of Existence. Such Pledgor shall
preserve and maintain its legal existence as a corporation in good
standing under the laws of the State of Delaware; provided that NRGMI
shall be permitted to merge into NRGG Funding if, in connection with
such merger, NRGG Funding and NRGMI execute such documentation as is
reasonably necessary to continue the Lien of NRG Energy on the Pledged
Collateral.
Section 4.4 Compliance with Laws; Governmental Approvals. Such
Pledgor (i) shall comply with all Laws and (ii) shall obtain, maintain
and comply with all Governmental Approvals as shall now or hereafter be
necessary under applicable Law, rule or regulation, in each case in
connection with the making and performance by such Pledgor of any
material provision of the Transaction Documents to which it is a party,
except where the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
Section 4.5 Payment of Taxes. Such Pledgor shall pay and
discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its property
prior to the date on which penalties attach thereto, and all lawful
claims which, if unpaid, could reasonably be expected to become a Lien
upon the Pledged Collateral, unless such matters are subject to a
Contest. Such Pledgor will promptly pay or cause to be paid any valid,
final judgment enforcing any such tax, assessment, charge, levy or
claim and cause the same to be satisfied of record.
Section 4.6 Amendment of LLC Agreement. Such Pledgor shall not,
without the prior written consent of NRG Energy, agree to or permit (a)
the cancellation or termina-
13
tion of the LLC Agreement, except upon the expiration of the
stated term thereof or (b) any amendment, supplement, or modification
of, or waiver with respect to any of the provisions of, the LLC
Agreement (except with respect to (x) any sale of LLC Interests in
accordance with Section 4.1 or (y) with the prior written consent of
NRG Energy (which consent shall not be unreasonably withheld), any
amendment that could not reasonably be expected to have an adverse
effect on any of the rights of any of the Secured Parties under this
Agreement).
Section 4.7 Chief Executive Office. Such Pledgor shall not
establish a new location for its chief executive office or change its
name until (i) it has given to NRG Energy not less than thirty (30)
days prior written notice of its intention so to do, clearly describing
such new location or specifying such new name, as the case may be, and
(ii) with respect to such new location or such new name, as the case
may be, it shall have taken all action, satisfactory to NRG Energy, to
maintain the security interest of NRG Energy in the Pledged Collateral
intended to be granted hereby at all times fully perfected and in full
force and effect.
Section 4.8 Supplements; Further Assurances. Such Pledgor shall
at any time and from time to time, at the expense of such Pledgor,
promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that
NRG Energy may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to
enable NRG Energy to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
Section 4.9 Certificated Interests. If such Pledgor shall become
entitled to receive or shall receive any certificate, instrument,
option or rights, whether as an addition to, in substitution of or in
exchange for the Pledged Collateral or any part thereof, or otherwise,
such Pledgor shall accept any such certificate, instrument, option or
rights as NRG Energy's agent, shall hold them in trust for NRG Energy
and shall deliver them forthwith to NRG Energy in the exact form
received, with such Pledgor's endorsement when necessary or accompanied
by duly executed instruments of transfer or assignment in blank or, if
requested by NRG Energy, an additional pledge agreement or security
agreement executed and delivered by such Pledgor, all in form and
substance satisfactory to NRG Energy, to be held by NRG Energy, subject
to the terms hereof, as further collateral security for the Secured
Obligations.
Section 4.10 Records; Statements and Schedules. Such Pledgor
shall keep and maintain, at its own cost and expense, records of the
Pledged Collateral, including, but not limited to, records of all
payments received with respect thereto, and such Pledgor shall make the
same available to NRG Energy for inspection at such Pledgor's chief
executive office, at such Pledgor's own cost and expense, at any and
all times upon demand. Such Pledgor shall furnish to NRG Energy from
time to time statements and
14
schedules further identifying and describing the Pledged Collateral and
such other reports in connection with the Pledged Collateral as NRG
Energy may reasonably request, all in reasonable detail.
Section 4.11 Improper Distributions. Notwithstanding any other
provision contained in this Agreement, such Pledgor shall not accept
any distributions, dividends or other payments (or any collateral in
lieu thereof) in respect of the Pledged Collateral, except to the
extent the same are expressly permitted by the terms of this Agreement
and the NRG Loan Agreement.
Section 4.12 Bankruptcy. Such Pledgor shall not authorize or
permit the Company to make a general assignment for the benefit of the
Company's creditors. Such Pledgor shall not commence or join with any
other Person (other than the Collateral Agent) in commencing any
proceeding against the Company under any bankruptcy, reorganization,
liquidation or insolvency law or statute now or hereafter in effect in
any jurisdiction.
ARTICLE 5
EXERCISE OF REMEDIES UPON AN EVENT OF DEFAULT
Section 5.1 Remedies Generally. If an Event of Default shall
have occurred and be continuing, NRG Energy may exercise, in addition
to all other rights and remedies granted in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under
the Uniform Commercial Code in effect from time to time in any relevant
jurisdiction and all other rights and remedies available at Law or in
equity.
Section 5.2 Sale of Pledged Collateral. (a) Without limiting the
generality of Section 5.1, NRG Energy may, without notice except as
specified below, sell the Pledged Collateral or any part thereof in one
or more parcels at public or private sale or at any of NRG Energy's
offices or elsewhere, for cash, on credit or for future delivery, and
at such price or prices and upon such other terms as NRG Energy may
reasonably deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Pledged Collateral at any
such sale. Each purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of the
Pledgors, and the Pledgors hereby waive (to the extent permitted by
Law) all rights of redemption, stay and/or appraisal which they now
have or may at any time in the future have under any rule of Law or
statute now existing or hereafter enacted. The Pledgors agree that, to
the extent notice of sale shall be required by Law, ten (10) days' or
more notice to the Pledgors of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Collateral Agent shall not be
15
obligated to make any sale of Pledged Collateral regardless of notice
of sale having been given. The Collateral Agent may adjourn any public
or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Assuming that such
sales are made in compliance with federal and state securities Laws,
NRG Energy shall incur no liability as a result of the sale of the
Pledged Collateral, or any part thereof, at any public or private sale.
The Pledgors hereby waive any claims against NRG Energy arising by
reason of the fact that the price at which any Pledged Collateral may
have been sold at such a private sale, if commercially reasonable, was
less than the price which might have been obtained at a public sale,
even if NRG Energy accepts the first offer received and does not offer
such Pledged Collateral to more than one offeree.
(b) The Pledgors recognize that NRG Energy may elect to sell all
or a part of the Pledged Collateral to one or more purchasers in
privately negotiated transactions in which the purchasers will be
obligated to agree, among other things, to acquire the Pledged
Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. The Pledgors acknowledge that any
such private sales may be at prices and on terms less favorable than
those obtainable through a public sale (including, without limitation,
a public offering made pursuant to a registration statement under the
Securities Act of 1933, as amended (the "Securities Act")), and the
Pledgors and NRG Energy agree that such private sales shall be made in
a commercially reasonable manner and that NRG Energy has no obligation
to engage in public sales and no obligation to delay sale of any
Pledged Collateral to permit the issuer thereof to register the Pledged
Collateral for a form of public sale requiring registration under the
Securities Act.
Section 5.3 Purchase of Pledged Collateral. NRG Energy may be a
purchaser of the Pledged Collateral or any part thereof or any right or
interest therein at any sale thereof, whether pursuant to foreclosure,
power of sale or otherwise hereunder and NRG Energy may apply the
purchase price to the payment of the Secured Obligations. Any
purchaser of all or any part of the Pledged Collateral shall, upon any
such purchase, acquire good title to the Pledged Collateral so
purchased, free of the security interests created by this Agreement.
Section 5.4 Application of Proceeds. NRG Energy shall apply any
proceeds from time to time held by it and the net proceeds of any
collection, recovery, receipt, appropriation, realization or sale with
respect to the Pledged Collateral in accordance with the relevant
provisions of the Credit Agreement. For avoidance of doubt, it is
understood that the NRGG shall remain liable to the extent of any
deficiency between the amount of proceeds of the Pledged Collateral and
the aggregated amount of the Secured Obligations.
16
Section 5.5 Expenses. The Pledgors shall upon demand pay to NRG
Energy the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and
agents, and any transfer taxes, in each case payable upon sale of the
Pledged Collateral, which NRG Energy may incur in connection with (a)
the custody or preservation of, or the sale of, collection from or
other realization upon, any of the Pledged Collateral pursuant to the
exercise or enforcement of any of the rights of NRG Energy hereunder or
(b) the failure by the Pledgors to perform or observe any of the
provisions hereof, together with interest thereon from the date of
demand at the rate per annum equal to the Base Rate plus the Applicable
Margin plus two percent (2%). Any amount payable by the Pledgors
pursuant to this Section 5.5 shall be payable on demand and shall
constitute Secured Obligations secured hereby.
ARTICLE 6
MISCELLANEOUS PROVISIONS
Section 6.1 Notices. Except as otherwise expressly provided
herein, all notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by
telecopy), and shall be deemed to have been duly given or made when
delivered by hand, or upon actual receipt if deposited in the United
States mail, postage prepaid, or, in the case of telecopy notice, when
confirmation is received, or, in the case of a nationally recognized
overnight courier service, one Business Day after delivery to such
courier service, addressed, in the case of each party hereto, at its
address specified below its signature hereto or to such other address
as may be designated by any party in a written notice to the other
parties hereto; provided that notices and communications to NRG Energy
shall not be effective until received by NRG Energy.
Section 6.2 Continuing Security Interest. This Agreement shall
create a continuing security interest in the Pledged Collateral until
the release thereof pursuant to Section 6.3.
Section 6.3 Release. Upon (a) termination of the Equity
Commitment Guaranty and (b) the indefeasible payment in full of the
Secured Obligations in cash or cash equivalents and termination of NRG
Energy's commitments under the NRG Loan Agreement, NRG Energy's
security interest hereunder shall be deemed automatically to be and to
have been extinguished and NRG Energy, upon the request of the
Pledgors, shall execute and deliver all such documentation necessary to
release, and to evidence the release of, the security interest created
pursuant to this Agreement.
Section 6.4 Reinstatement. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any
amount received by NRG Energy hereunder or pursuant hereto is rescinded
or must otherwise be restored or returned by NRG
17
Energy, upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of either of the Pledgors or upon the appointment of any
intervenor or conservator of, or trustee or similar official for,
either of the Pledgors or any substantial part of either of the
Pledgors' assets, or upon the entry of an order by any court avoiding
the payment of such amount, or otherwise, all as though such payments
had not been made.
Section 6.5 Independent Security. The security provided for in
this Agreement shall be in addition to and shall be independent of
every other security which NRG Energy may at any time hold for any of
the Secured Obligations hereby secured. The execution of any other
security agreement or other document by a Pledgor or any other party
shall not modify or supersede the security interest or any rights or
obligations contained in this Agreement and shall not in any way
affect, impair or invalidate the effectiveness and validity of this
Agreement or any term or condition hereof. The Pledgors hereby waive
their rights to plead or claim in any court that the execution of any
other security agreement or other document is a cause for
extinguishing, invalidating, impairing or modifying the effectiveness
and validity of this Agreement or any term or condition contained
herein. NRG Energy shall be at liberty to accept further security from
the Pledgors or from any third party and/or release such security
without notifying the Pledgors and without affecting in any way the
obligations of the Pledgors hereunder, under the other Credit
Documents, under the Equity Commitment Agreement or under the NRGG
Equity Guaranty. NRG Energy shall determine, in its sole discretion,
if any security conferred upon NRG Energy hereunder or otherwise shall
be enforced by NRG Energy, as well as the sequence of security
interests to be so enforced.
Section 6.6 Amendments. No waiver, amendment, modification or
termination of any provision of this Agreement, or consent to any
departure by the Pledgors therefrom, shall in any event be effective
without the prior written consent of NRG Energy and none of the Pledged
Collateral shall be released without the written consent of NRG Energy,
except as provided in Section 6.3. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given.
Section 6.7 Successors and Assigns. This Agreement shall be
binding upon the Pledgors and their respective successors and assigns
and shall inure to the benefit of NRG Energy and its successors and
assigns. Subject to Section 4.1 hereof, the Pledgors may not assign or
otherwise transfer any of their respective rights or obligations under
this Agreement without the written consent of NRG Energy.
Section 6.8 Survival. All agreements, statements,
representations and warranties made by the Pledgors herein or in any
certificate or other instrument delivered by the Pledgors or on their
behalf under this Agreement shall be considered to have been relied
upon by NRG Energy and shall survive the execution and delivery of this
Agreement and the other Credit Documents until termination thereof or
the indefeasible payment in full
18
in cash or cash equivalents of all of the Secured Obligations
regardless of any investigation made by NRG Energy or made on its
behalf.
Section 6.9 No Waiver; Remedies Cumulative. No failure or delay
on the part of NRG Energy in exercising any right, power or privilege
hereunder and no course of dealing between the Pledgors and NRG Energy
shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or
remedies which NRG Energy would otherwise have.
Section 6.10 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 6.11 Headings Descriptive. The headings of the several
Sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
Section 6.12 Severability. In case any provision contained in or
obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
Section 6.13 Governing Law; Submission to Jurisdiction and Venue;
Waiver of Jury Trial.
(a) This Agreement is a contract made under the Laws of the State
of Minnesota of the United States and shall for all purposes be
governed by and construed in accordance with the laws of such State
without regard to the conflict of law rules thereof.
(b) Each party to this Agreement hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement,
any of the other Credit Documents, the Equity
Commitment Agreement and the NRGG Equity Guaranty,
or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of
19
Minnesota, the courts of the United States of
America for Minnesota and appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection
that it may now or hereafter have to the venue of
any such action or proceeding in any such court or
that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim
the same;
(iii)agrees that service of process in any such action
or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any
substantially similar form of mail), postage
prepaid, to such party at its address set forth
below its signature hereto;
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner
permitted by law or shall limit the right to ▇▇▇ in
any other jurisdiction.
(c) The Pledgors hereby irrevocably waive any objection which
they may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Agreement, any other Credit Document, the Equity Commitment
Agreement and the NRGG Equity Guaranty brought in the courts referred
to in clause (b) above and hereby further irrevocably waive and agree
not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, THE PLEDGORS AND NRG ENERGY
HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
Section 6.14 Entire Agreement. This Agreement, together with any
other agreement executed in connection herewith, is intended by the
parties as a final expression of their agreement as to the matters
covered hereby and is intended as a complete and exclusive statement of
the terms and conditions thereof.
Section 6.15 Indemnity. (a) Each Pledgor agrees to indemnify,
reimburse and hold NRG Energy and its officers, directors, employees,
and agents (each individually, an "Indemnitee," and collectively,
"Indemnitees") harmless from any and all liabilities, obligations,
damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all costs and expenses (including reasonable
attorneys' fees and disbursements) (such expenses, for purposes of this
Section 6.15, hereinafter "Expenses") of whatsoever
20
kind and nature imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to this Agreement or the Pledged
Collateral and arising out of (i) this Agreement or the documents
executed in connection herewith or in any other way connected with the
administration of the transactions contemplated hereby, or the
enforcement of any of the terms hereof, or the preservation of any
rights hereunder, (ii) the ownership, purchase, delivery, control,
acceptance, financing, possession, condition, sale, return or other
disposition, or use of, the Pledged Collateral (including, without
limitation, latent or other defects, whether or not discoverable),
(iii) the violation of any laws, (iv) any tort (including, without
limitation, claims arising or imposed under the doctrine of strict
liability, or for or on account of injury to or the death of any Person
including any Indemnitee) or property damage, or (v) any contract
claim, excluding in all cases those Expenses, claims and liabilities
finally judicially determined to have arisen solely from the gross
negligence or willful misconduct of any Indemnitee. Each Indemnitee
agrees to use its best efforts to promptly notify such Pledgor of any
assertion of any such liability, damage, injury, penalty, claim,
demand, action, judgment or suit of which such Indemnitee has
knowledge. In case any action, suit or proceeding shall be brought
against any Indemnitee for which the Indemnitee is indemnified under
this clause (a), such Indemnitee shall notify the relevant Pledgor of
the commencement thereof, and such Pledgor shall be entitled, at its
expense, acting through counsel reasonably acceptable to such
Indemnitee, to participate in, and, to the extent that such Pledgor
desires to, assume and control the defense thereof; provided, however,
that such Pledgor shall have acknowledged in writing its obligation to
fully indemnify such Indemnitee in respect of such action, suit or
proceeding; and provided, further, that such Pledgor shall not be
entitled to assume and control the defense of any such action, suit or
proceeding if and to the extent that, (A) in the reasonable opinion of
such Indemnitee, (x) (i) such action, suit or proceeding involves any
risk of imposition of criminal liability or (ii) such action, suit or
proceeding involves any material risk of material civil liability on
such Indemnitee or will involve a material risk of the sale, forfeiture
or loss of, or the creation of any Lien (other than a Permitted Lien)
on, the Pledged Collateral or any part thereof, unless, in the case of
this clause (x) (ii), such Pledgor shall have posted a bond or other
security agreement or satisfactory to the relevant Indemnitees in
respect to such risk or (y) the control of such action, suit or
proceeding would involve a bona fide conflict of interest, (B) such
proceeding involves Expenses not fully indemnified by such Pledgor
which such Pledgor and the Indemnitee have been unable to sever from
the indemnified Expense(s), (C) a Default or an Event of Default has
occurred and is continuing or (D) such action, suit or proceeding
involves matters which extend beyond or are unrelated to the
transactions contemplated hereunder and if determined adversely could
be materially detrimental to the interests of such Indemnitee
notwithstanding indemnification by such Pledgor. The Indemnitee, on
the one hand, and such Pledgor, on the other hand, may participate in a
reasonable manner at its own expense and with its own counsel in any
proceeding conducted by the other in accordance with the foregoing.
Each Indemnitee shall at such Pledgor's expense supply such Pledgor
with such information and documents reasonably requested by such
Pledgor as are necessary or advisable for such Pledgor to participate
in any action, suit or
21
proceeding to the extent permitted by this Section 6.15(a). Unless an
Event of Default shall have occurred and be continuing, no Indemnitee
shall enter into any settlement or other compromise with respect to any
Expense which is entitled to be indemnified under this Section 6.15(a)
without the prior written consent of the relevant Pledgor, which
consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified under this Section
6.15(a) with respect to such Expense. In addition, if an Indemnitee,
in violation of either Pledgor's right to assume and control the
defense of any Expense, refuses to permit such Pledgor to control the
defense after written demand by such Pledgor for such control, such
Indemnitee waives its right to be indemnified under this Section
6.15(a) with respect to such Expense. Upon payment in full of any
Expense by either Pledgor pursuant to this Section 6.15(a) to or on
behalf of an Indemnitee, such Pledgor without any further action shall
be subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance policies
maintained by such Indemnitee at its own expense), and such Indemnitee
shall execute such instruments of assignment and conveyance, evidence
of claims and payment and such other documents, instruments and
agreements as may be necessary to preserve any such claims and
otherwise cooperate with such Pledgor and give such further assurances
as are necessary or advisable to enable such Pledgor vigorously to
pursue such claims. The obligations and rights of each Pledgor under
this Section 6.15 shall survive the repayment of all Secured
Obligations and the termination of this Agreement.
(b) Without limiting the application of Section 6.15(a)
immediately above, each Pledgor agrees to pay, or reimburse NRG Energy,
any and all fees, costs and Expenses of whatever kind or nature
incurred in connection with the creation, preservation, protection or
validation of NRG Energy's Liens on, and security interest in, the
Pledged Collateral, including, without limitation, all fees and taxes
in connection with the recording or filing of instruments and documents
in public offices, payment or discharge of any taxes or Lien upon or in
respect of the Pledged Collateral, premiums for insurance with respect
to the Pledged Collateral and all other fees, costs and expenses in
connection with protecting, maintaining or preserving the Pledged
Collateral and NRG Energy's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Pledged
Collateral.
(c) Without limiting the application of Section 6.15(a),
each Pledgor agrees to pay, indemnify and hold each Indemnitee harmless
from and against any loss, costs, damages and Expenses which such
Indemnitee may suffer, expend or incur in consequence of or growing out
of any failure of such Pledgor to comply with its obligations under
this Agreement, or any misrepresentation by such Pledgor in this
Agreement, or in any statement or writing contemplated by or made or
delivered pursuant to or in connection with this Agreement.
22
(d) If and to the extent that the obligations of the
Pledgors under this Section 6.15 are unenforceable for any reason, each
Pledgor hereby agrees to make the maximum contribution to the payment
and satisfaction of such obligations which is permissible under
applicable Law.
(e) Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement, together with interest on
such amounts from the date paid until reimbursement in full at a rate
per annum equal at all times to the Base Rate plus two percent (2%),
shall constitute Secured Obligations secured by the Pledged Collateral.
Section 6.16 Independent Obligations. Each Pledgor's obligations
under this Agreement are independent of those of the other Pledgor.
NRG Energy may bring a separate action against either Pledgor without
first proceeding against the other Pledgor, the Company or any other
Person or any other security held by NRG Energy and without pursuing
any other remedy.
Section 6.17 Waiver of Defenses. The Pledgors hereby waive: (a)
any defense of a statute of limitations; (b) any defense based on the
legal disability of the other Pledgor or the Company or any discharge
or limitation of the liability of the other Pledgor or the Company to
NRG Energy, whether consensual or arising by operation of law; (c)
presentment, demand, protest and notice of any kind; and (d) any
defense based upon or arising out of any defense (other than the
indefeasible payment in full in cash or cash equivalents of the Secured
Obligations) which NRGG Funding or NRGG may have to the payment or
performance of any part of the Secured Obligations.
Section 6.18 Subrogation, Etc. Notwithstanding any payment or
payments made by the Pledgors or the exercise by NRG Energy of any of
the remedies provided under this Agreement or any other Financing
Document, until the Secured Obligations have been indefeasibly paid in
full in cash or cash equivalents, neither Pledgor shall have any claim
(as defined in 11 U.S.C. ? 101(5)) of subrogation to any of the rights
of NRG Energy against the Company or the other Pledgor, the Pledged
Collateral or any guaranty held by for the satisfaction of any of the
Secured Obligations, nor shall either Pledgor have any claims (as
defined in 11 U.S.C. ? 101(5)) for reimbursement, indemnity,
exoneration or contribution from the Company or the other Pledgor in
respect of payments made by the Pledgors hereunder. Notwithstanding
the foregoing, if any amount shall be paid to the Pledgors on account
of such subrogation, reimbursement, indemnity, exoneration or
contribution rights at any time, such amount shall be held by the
Pledgors in trust for NRG Energy segregated from other funds of the
Pledgors, and shall be turned over to NRG Energy in the exact form
received by the Pledgors (duly endorsed by the Pledgors to NRG Energy
if required) to be applied against the Secured Obligations in such
amounts and in such order as NRG Energy may elect.
23
Section 6.19 Joint and Several Liability. Prior to the effective
date of this Agreement, the obligations of the Pledgors hereunder shall
be several and not joint. On and after the effective date of this
Agreement, the obligations of the Pledgors under this Agreement shall
be joint and several.
Section 6.20 Subordination. Notwithstanding anything contained
herein to the contrary, all of the Pledgors' obligations hereunder, and
all of NRG Energy's rights hereunder, are subject to the terms of that
certain Subordination Agreement dated as of December 10, 1997 between
NRG Energy and the Collateral Agent.
24
IN WITNESS WHEREOF, the parties hereto have caused this
Subordinated Pledge and Security Agreement to be duly executed and
delivered by their officers thereunto duly authorized as of the date
first above written.
NRGG FUNDING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: VP-CFO
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NRG ▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: President
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NRG ENERGY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President & CEO
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
25