19, 1997 by NRG Energy for the benefit of Cogen, LLC.
Exhibit 10.27.17
Limited Guaranty
This Limited Guaranty (this "Guaranty") is made on this 19th
day of September, 1997, by NRG Energy, Inc., a Delaware
corporation, with its principal offices located at 0000 Xxxxxxxx
Xxxx, Xxxxxxxxxxx, Xxxxxxxxx (the "Guarantor") for the benefit of
NRG (Xxxxxx) Xxxxx, LLC, a Delaware limited liability company
with its principal offices located at 0000 Xxxxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxxxx (the "Principal"). Guarantor and Principal
are sometimes collectively referred to as the "Parties" and
individually as a "Party."
R E C I T A L S
WHEREAS, Principal is in the process of developing a nominal
117 megawatt gas-fired cogeneration project (the "Project") at
the Morris, Illinois, chemical production facility owned by
Millennium Petrochemicals Inc.; and
WHEREAS, Principal intends to contract with NRG Xxxxxx
Operations Inc. (the "Operator"), an affiliate of Guarantor,
pursuant to that certain Operation and Maintenance Agreement
dated as of September 19, 1997 (the "O&M Agreement") for the
operation and maintenance of the Project; and
WHEREAS, in order to induce Principal to enter into the
Operation and Maintenance Agreement with Operator, Guarantor is
prepared to provide a limited guaranty of certain of Operator's
obligations thereunder; and
WHEREAS, Principal acknowledges that this is a limited
guaranty of Operator's obligations based on the terms set out
herein; and
WHEREAS, unless otherwise defined, capitalized terms used
herein shall have the meanings ascribed to such terms in the O&M
Agreement;
NOW, THEREFORE, in consideration of the O&M Agreement
between Principal and Operator and the covenants of the Parties
contained herein, Guarantor hereby covenants with Principal as
follows:
1. Scope and Effective Date of Guaranty. Guarantor hereby
guaranties to Principal the payment by Operator when
due of up to a maximum of one million two hundred
thousand dollars ($1,200,000) in liquidated damages
potentially owed by Operator to Principal under
Sections 8.1 and/or 8.2 of the O&M Agreement (the
"Guarantied Obligations"). No more than four hundred
thousand dollars ($400,000) of such damages shall be
guarantied by Guarantor in any Operating Year. No
other obligations of Operator under the O&M Agreement
are covered by this Guaranty. This Guaranty shall
become effective and enforceable upon the Effective
Date under the O&M Agreement.
2. Failure of Operator to pay Liquidated Damages. If
Operator (unless relieved from its obligation to pay
liquidated damages under Sections 8.1 and/or 8.2 of the
O&M Agreement by statute or by the decision of an
arbitration panel or tribunal of competent
jurisdiction) shall in any respect fail to pay
liquidated damages owed to Principal under Sections 8.1
and/or 8.2 of the O&M Agreement, then Guarantor will,
upon receipt of notice that such damages are due and of
Operator's failure to pay same, pay such amounts, up to
a maximum of four hundred thousand dollars ($400,000)
in any Operating Year, and up to a maximum of one
million two hundred thousand dollars ($1,200,000)
during the term of the O&M Agreement. Payment shall be
by wire transfer in immediately available funds to an
account designated by Principal, or Principal's Lender.
Payment will be made within ten (10) Business Days of
receipt of notice by Guarantor or in the event that
Operator disputes such damages, within ten (10)
Business Days of a final decision of the arbitration
panel established pursuant to Article XIII of the O&M
Agreement. In the event Operator disputes such
damages, and pursues dispute resolution proceedings
pursuant to such Article XIII with due diligence,
Guarantor shall have no obligation to Principal until
the final decision of the arbitration panel is issued.
3. Modifications to the O&M Agreement. The Guarantor
shall not be discharged or released from, and its
liability shall not be affected under this Guaranty, by
any arrangement which may be made between Operator and
the Principal or by any forbearance by the Principal
whether as to payment, time of performance or by
anything else which might otherwise have any such
effect at law or in equity. Operator is expressly
authorized to amend, supplement, or otherwise modify
the O&M Agreement, waive compliance by the Principal
with the terms thereof, and settle or compromise any of
the Guarantied Obligations without notice to the
Guarantor, and without in any manner affecting the
absolute liabilities of the Guarantor hereunder.
4. Nature of Guaranty. This Guaranty is an absolute,
unconditional, irrevocable and continuing guaranty of
payment of the Guarantied Obligations, and the
obligations of the Guarantor hereunder shall not be
released, in whole or in part, by any action or thing
which might, but for this provision of this Guaranty,
be deemed a legal or equitable discharge of a surety or
guarantor, other than irrevocable payment in full of
the Guarantied Obligations. No notice of the
Guarantied Obligations to which this Guaranty may
apply, or any renewal or extension thereof, need be
given to the Guarantor, and none of the foregoing acts
shall release the Guarantor from liability hereunder.
The Guarantor hereby expressly waives (a) demand of
payment, presentment, protest, or notice of dishonor
for non-payment of the Guarantied Obligations; (b)
notice of acceptance of this Guaranty and notice of any
liability to which it may apply; and (c) all other
notices and demands of any kind and description
relating to the Guarantied Obligations now or hereafter
provided for by any agreement, statute, law, rule, or
regulation. The Guarantor shall not be exonerated with
respect to the Guarantor's liabilities under this
Guaranty by any act or thing except irrevocable payment
of the Guarantied
Obligations, it being the purpose and intent of this
Guaranty that covenants, agreements, and all
obligations of the Guarantor hereunder be absolute,
unconditional, and irrevocable. No invalidity,
irregularity, or unenforceability of all or any part of
the Guarantied Obligations shall affect, impair, or be
a defense of this Guaranty. The liabilities of the
Guarantor herein shall not be affected or impaired by
any failure, delay, neglect or omission on the part of
Principal to realize upon any of the Guarantied
Obligations of Operator to the Principal nor by the
taking by Principal of (or the failure to take) any
other guaranty or guaranties to secure the Guarantied
Obligations, nor by the taking by the Principal (or the
failure to take or the failure to perfect any security
interest in or other lien on) of collateral or security
of any kind. No act or omission of the Principal,
whether or not such action or failure to act varies or
increases the risk, or affects the rights or remedies,
of the Guarantor, shall affect or impair the
obligations of the Guarantor hereunder. The Guarantor
acknowledges that this Guaranty is in effect and
binding as of the Effective Date without reference to
whether this Guaranty is signed by any other person,
that possession of this Guaranty by Principal shall be
conclusive evidence of due delivery hereof by the
Guarantor and that this Guaranty shall continue in full
force and effect notwithstanding the release of or
extension of time provided to any other guarantor of
the Guarantied Obligations or any part thereof.
5. Waiver of Subrogation and Contribution Rights. Prior
to the irrevocable payment in full of the Guarantied
Obligations hereunder, the Guarantor waives all rights
of subrogation to any of the rights of Principal
against Operator, and the Guarantor waives all rights
to seek any recourse against, or contribution or
reimbursement from, Operator in respect of payments
made by the Guarantor hereunder.
6. Set Aside of Payments made by Operator to Principal.
If any payment received by the Principal and applied to
the Guarantied Obligations is subsequently set aside,
recovered, rescinded, or required to be returned for
any reason (including without limitation, the
bankruptcy, insolvency or reorganization of Operator),
the Guarantied Obligations to which such payment was
applied shall for the purposes of this Guaranty be
deemed to have continued in existence, notwithstanding
such application, and this Guaranty shall be
enforceable as to such Guarantied Obligations as fully
as if such application had never been made. References
in this Guaranty to amounts "irrevocably paid" or to
"irrevocable payment" refer to payments that cannot be
set aside, recovered, rescinded, or required to be
returned for any reason.
7. Effect of Bankruptcy Proceedings involving Operator.
The Guarantor expressly agrees that the liabilities and
Guarantied Obligations of the Guarantor under this
Guaranty shall not in any way be impaired or otherwise
affected by the institution by or against Operator of
any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceedings, or any other
similar proceedings for relief under any bankruptcy law
or similar law for the relief of debtors and that any
discharge of any of the Guarantied Obligations pursuant
to any such bankruptcy or similar law or other law
shall not diminish, discharge, or otherwise affect in
any way the obligations of the Guarantor under this
Guaranty, and that upon the institution of any of the
above actions, such obligations shall be enforceable
against the Guarantor.
8. Reimbursement of Certain Expenses of Principal. The
Guarantor will pay or reimburse the Principal on demand
for all out-of-pocket expenses (including in each case
all reasonable fees and expenses of counsel) incurred
by the Principal arising out of or in connection with
the enforcement of this Guaranty against the Guarantor
or arising out of or in connection with any failure of
the Guarantor to fully and timely perform the
obligations of the Guarantor hereunder.
9. Representations and Warranties of Guarantor. Guarantor
represents and warrants to Principal as follows: (a)
Guarantor is a corporation duly formed, validly
existing, and in good standing under the laws of
Delaware; (b) Guarantor has the requisite power and
authority to execute, deliver and perform the terms and
provisions of this Guaranty, (c) the execution,
delivery, and performance of this Guaranty have been
duly authorized and approved by Guarantor, and no other
authorizations, approvals, or consents are required in
order for this Guaranty to constitute a binding and
enforceable legal obligation of the Guarantor; (d) the
execution of this Guaranty by Guarantor and the
performance of Guarantor's obligations under this
Guaranty will not conflict with, or result in a breach
of or default under any agreement, contract, or
covenant to which Guarantor is a party or by which
Guarantor is bound; and (e) this Guaranty, as executed,
constitutes the binding legal obligation of Guarantor
that is enforceable in accordance with its terms and
conditions, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of rights of creditors
generally and except to the extent that enforcement of
rights and remedies set forth therein may be limited by
equitable principles (regardless of whether enforcement
is considered in a court of law or a proceeding in
equity).
10. Assignment. This Guaranty may not be assigned by
Guarantor without the express prior written approval of
Principal. This Guaranty may not be assigned by
Principal without the express prior written consent of
Guarantor; provided, however, that Principal may assign
this Guaranty, without the consent of Guarantor, as
collateral for financing for the cogeneration Project
which is the subject of the O&M Agreement. Xxxxxxxxx
agrees to execute any consent to assignment which may
be reasonably requested by Principal's Lenders.
11. Successors and Permitted Assigns. This Guaranty shall
be binding upon, and inure to the benefit of, the
successors and permitted assigns of the Parties.
12. Waivers and Amendments. This Guaranty may be waived,
modified or amended only by a writing signed by the
Principal and Guarantor. A waiver so signed shall
be effective only in the specific instance and for the
specific purpose given.
13. Expiration of Guarantee. This Guaranty shall expire
upon the earliest of (a) the payment by the Guarantor
of the maximum amount of Guarantied Obligations set
forth in Section 1 above; (b) expiration of the term of
the O&M Agreement if no claim has been made by
Principal against Guarantor prior to such expiration;
or (c) delivery by Operator to Principal of a letter of
credit or substitute guaranty, in each case in form and
substance satisfactory to Principal, in an amount equal
to the remaining obligation of Guarantor hereunder. No
extension of this Guaranty shall be effective unless
evidenced by written amendment signed by Guarantor.
14. Governing Law. This Guaranty shall in all respects be
governed by the laws in force in the state of Minnesota
except with regard to such state's choice of law
provisions, and the Guarantor hereby submits to the
personal jurisdiction of the state and federal courts
of the state of Minnesota, and waives any defense based
on improper venue or forum non-conveniens. Xxxxxxxxx
agrees to accept service of process by certified mail
in any enforcement proceedings.
15. Notices. All notices and other communications required
or permitted by this Guaranty shall become effective
when delivered (including by messenger or courier) or
when received by facsimile or such other method of
telecommunication as is capable of creating a writing.
All notices and other communication shall be forwarded
to the Parties at the following addresses, or facsimile
numbers, or at such substitute addresses, or substitute
facsimile numbers as the Party may designate by written
notice to the other Party in the manner specified
herein:
If to Principal: NRG (Xxxxxx) Xxxxx, LLC
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx
Facsimile: 000-000-0000
Attention: President
If to Guarantor: NRG Energy, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx
Facsimile: 000-000-0000
Attention: General Counsel
16. Severability. In the event that any provision of this
Guaranty is held to be unenforceable or invalid by any
court of competent jurisdiction, the validity and
enforcibility of the remaining provisions shall not be
affected thereby.
IN WITNESS WHEREOF, the Guarantor has duly signed this
Limited Guaranty as of the date and year first above written.
NRG Energy, Inc.
By:/s/ Xxxxx Xxxxxxxxxxx
Name: Xxxxx Xxxxxxxxxxx
Title: Vice President
