Exhibit 10.16.2
AGREEMENT
This Agreement dated as of May 1, 1996 (the "Agreement") is entered
into by and among Xxxxxxx & Xxxxxxxxx Operations, Inc. ("SSOI"), NRG
Generating (Newark) Cogeneration Inc. ("NRGG (Newark)"), NRG Generating
(Xxxxxx) Cogeneration Inc. ("NRGG (Xxxxxx)"), NRG Generating (U.S.) Inc.
("NRGG"), and Xxxxxxx & Xxxxxxxxx Services, Inc. ("SSSI").
RECITALS
WHEREAS, SSOI and O'Brien (Newark) Cogeneration, Inc. ("O'Brien
(Newark)") entered into an Operation and Maintenance Contract dated January
12, 1994 ("O'Brien (Newark) O&M Contract");
WHEREAS, SSOI and O'Brien (Xxxxxx) Cogeneration, Inc. ("XXxxxx
(Xxxxxx)") entered into an Operation and Maintenance Contract dated April
1, 1994 ("O'Brien (Xxxxxx) O&M Contract" and, together with the O'Brien
(Newark) O&M Contract, the "O'Brien O&M Contracts")';
WHEREAS, on or about September 28, 1994, the parent company of O'Brien
(Newark) and O'Brien (Xxxxxx), X'Xxxxx Environmental Energy, Inc,
("O'Brien), filed for relief under Chapter 11 and Title 11 of the United
States Bankruptcy Code in United States Bankruptcy Court in the District of
New Jersey (the "Court") commencing in re O'Brien Environmental Energy,
Inc., Case No. 94-26723 (RG) (the "Chapter 11 Case");
WHEREAS, NRG Energy. Inc. ("NRGE") was approved by the Court to
acquire a substantial interest in O'Brien pursuant to the plan approved by
the Court on or about February 22, 1996;
WHEREAS, NRGE closed its acquisition of a substantial interest in
O'Brien on April 30, 1996 and caused O'Brien to be renamed as NRGG;
WHEREAS, O'Brien (Newark) and O'Brien (Xxxxxx), respectively, are now
known as NRGG (Newark) and NRGG (Xxxxxx), respectively;
WHEREAS, SSOI and NRGG (Newark) are currently negotiating an operating
and Maintenance Agreement (the "NRGG (Newark) O&M Agreement") which will
replace the O'Brien (Newark) O&M Contract;
WHEREAS, SSOI and NRGG (Xxxxxx) are currently negotiating an Operating
and Maintenance Agreement (the "NRGG (Xxxxxx) O&M Agreement" and, together
with the NRGG (Newark) O&M Agreement, the "NRGG O&M Agreements") which will
replace the O'Brien (Xxxxxx) O&M Contract;
WHEREAS, there are currently unresolved issues under the O'Brien O&M
Contracts, which SSOI, NRGG (Newark) and NRGG (Xxxxxx) desire to resolve
prior to entering into the NRGG O&M Agreements; and
WHEREAS, SSOI, NRGG (Newark), NRGG (Xxxxxx), NRGG and SSSI desire to
enter into this Agreement to memorialize their settlement as to the issues
addressed below and as an inducement to and condition of their entering
into the NRGG O&M Agreements,
NOW, THEREFORE, in consideration of mutual covenants contained herein,
the parties agree as follows:
1. Specialty Handtools.
a. NRGG (Newark) agrees to pay SSOI the lesser of the audited value
of the specialty handtools identified under SSOI Invoice Nos. 53001883,
dated July 31, 1994, 53001997, dated September 30,1994, 53001614 dated June
9, 1994, 53001709 dated March 1, 1994, 53001719 dated June 30, 1994,
53001779 dated 7/31/94, 53002154 dated 10/31/94, or $100,000 (the least of
such amounts being referred to as the "Audited Value").
b.: NRGG (Xxxxxx) agrees to pay SSOI the lesser of the audited value
of the specialty handtools identified under SSOI Invoice Nos. 53001991,
dated August 31, 1994 53001608 dated June 3 1994, 53001714 dated June 30,
1994, and 53001795 dated 7/31/94, or S100,000 (the least of such amounts
being referred to as the Audited value).
c. The Audited Values owed respectively by NRGG (Newark) and NRGG
(Xxxxxx) under this Section 1 shall be due and payable only add completion
of audits conducted respectively by or on behalf of NRGG (Newark) and NRGG
(Xxxxxx), establishing the type, quantity, and value of the Newark and
Xxxxxx specialty handtools. NRGG (Newark) and NRGG (Xxxxxx) shall cause
their respective audits to be completed by August 1. 1996.
d. The amounts owed by NRGG (Newark) and NRGG (Xxxxxx) under this
Section 1 shall be paid as follows:
(i) The annual Operating Fee (as defined in each NRGG O&M
Agreement) will be increased for NRGG (Xxxxxx) and NRGG
(Newark), respectively, by an amount equal to one-sixth
(16.67%) of each location's annual Operating Fee until
each location's Audited Value amount is paid in full;
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and
(ii) If NRGG (Newark) and/or NRCYG (Xxxxxx) elects to
terminate its agreements other than for cause of either
NRGG O&M Agreement, then on or before the effective
date of such termination NRGG (Newark) and/or NRGG
(Xxxxxx), as the case may be, shall pay in full the
unpaid balance of each location's Audited Value.
e. NRGG (Newark) and NRGG (Xxxxxx) shall have the right to pay the
unpaid balance of the Audited Value in full in advance without penalty or
premium. Except as provided in either NRGG O&M Agreements for interest on
late payments, them shall be no interest payable on any portion of the
payments owed to SSOI under this Section 1.
f. Upon payment in full of their respective Audited Values, NRGG
(Newark) or NRGG (Xxxxxx) shall automatically obtain and thereafter have
title to all of the specialty handtools identified on the invoices
referenced above. Also, the Operating Fee for each shall be readjusted
downward, to reflect such Payment.
2. Bonus.
a. Notwithstanding the fact that NRGG (Newark) and SSOI may enter
into the NRGG (Newark) O&M Agreement before the expiration of the Agreement
Year (as defined in the O'Brien (Newark) O&M Contract), NRGG (Newark)
agrees to pay SSOI a Bonus (as defined in the O'Brien (Newark) O&M
Contract). The amount of the Bonus shall be calculated under the terms of
the O'Brien (Newark) O&M Contract through April 30,1996, provided, however,
that the amount of the Bonus shall under no circumstances exceed $338,000.
b. SSOI will promptly invoice NRGG (Newark) for the Bonus after the
effective due of the NRGG (Newark) O&M Agreement.
c. There shall not be a bonus payable to SSOI from NRGG (Xxxxxx).
3. Accounts Receivable.
a. Each of NRGG (Newark) and NRGG (Xxxxxx) acknowledges obligations
to pay certain outstanding accounts receivable under the O'Brien (Newark)
O&M Contract and O'Brien (Xxxxxx) O&M Contract, respectively. As of April
30.1996, the outstanding
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accounts receivable (the "Accounts Receivable") are: for Newark $333,682.20
and for Xxxxxx $672,333.40.
b. SSOI acknowledges that it has suffered budget cap overages for
the Agreement Year (as defined in the O'Brien O&M Contracts) ending June
30, 1995. The amount of the budget cap overages are: for Newark,
$138,112.80 and for Xxxxxx $217,087.24. SSOI agrees to offset dollar for
dollar, against the Accounts Receivable for the applicable plant, the
budget cap overages for such plant. Therefore, the parties agree that the
amounts to be paid by NRGG (Newark) and NRGG (Xxxxxx) in full satisfaction
of its respective Accounts Receivable are as follows:
NRGG (Newark) $333,692.20 Outstanding accounts
receivable as of 4/30/96
($139,112.80) Credit for budget cap overage
for 1995
$195,570.40 Total amount payable as of
4/30/96
NRGG (Xxxxxx) $672,393.40 Outstanding accounts
receivable as of 4/30/96
($217,097.24) Credit for budget cap overage
for 1995
$455,296.16 Total amount payable as of
4/30/96
c. The total amount of the Accounts Receivable owed by NRGG (Newark)
and NRGG (Xxxxxx) shall be payable in three (3) equal, consecutive monthly
installments of: $65,190.13 for Newark and $151,765.39 for Xxxxxx,
beginning June 1, 1996. Should either NRGG (Newark) or NRGG (Xxxxxx) fail
to timely pay its Accounts Receivable, then SSOI may immediately and
retroactively charge such party interest as provided in the applicable
O'Brien O&M Contract, but otherwise no interest shall be owed.
d. This Section 3 shall. not be construed as a compromise by SSOI or
SSSI of rights, if any, that Calpine Corporation may enjoy by reason of any
accounts payable of O'Brien (Newark) Or O'Brien (Xxxxxx) that SSOI or SSSI
may have sold to Calpine Corporation..
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4. Environmental Matters.
Payment at any time of any fine or penalties payable to any state
or the United States as a result of SSOI's failure prior to the
date hereof to operate and maintain either or both of the
Projects (as defined in the O'Brien O&M Contracts) in accordance
with Requirements of Law (as defined in the O'Brien O&M
Contracts) or Approvals and Permits (as defined in the O'Brien
O&M Contracts) applicable to the operation and maintenance of
either or both of the Projects shall be the sole responsibility
of SSOI and such fines or penalties shall not result in any costs
to be borne by NRGG (Newark), NRGG (Xxxxxx) or NRGG.
5. Guarantee.
a. By signing in the space provided below, NRGG hereby
guarantees the prompt performance in payment when due, of
the indebtedness, liabilities and undertakings of NRGG
(Newark) and NRGG (Xxxxxx) according to the terms of this
Agreement. This guarantee is continuing, absolute and
unconditional. This guarantee is a guarantee of payment and
not collection and no action or demand need be made or
brought against the entity whose obligations arc guaranteed
as a precondition of enforcement.
b. By signing in the space provided below, SSSI hereby
acknowledges that the Guarantee which guarantees SSOI's
obligations under each of the NRGG O&M Agreements, dated as
of , by and among SSSI, NRGG (Newark) and NRGG
(Xxxxxx), shall also guarantee prompt performance of SSOI's
obligations under this Agreement.
6. Settlement of Payment Obligations.
Except as expressly set forth in this Agreement, none of NRGG
(Newark), NRGG (Xxxxxx), or SSOI shall have any obligation to
make any payment of any funds to any of the others of than under
either or both of the O'Brien O&M Contracts or any provision or
provisions thereof, provided, however, that this provision shall.
not be construed as a compromise by SSOI or SSSI of rights, if
any, that either or both of them may enjoy by reason of any
agreements heretofore made by O'Brien (Newark) or O'Brien
(Xxxxxx) with Calpine Corporation.
7. Financing Agreements.
NRGG, NRGG (Newark) and NRGG (Xxxxxx) represent that their
execution of this Agreement will not violate any Financing
Agreement (as
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defined in the NRGG O&M Agreements) executed on or subsequent to
the date hereof
8. No Conditions Precedent.
The effectiveness of this Agreement is not conditioned upon the
consent of the Agent (as defined under the NRGG O&M Agreements)
or any lender. This Agreement will be executed simultaneously
with the NRGG O&M Agreements.
9. Cooperation in Refinancing.
Should NRGG (Newark) and/or NRGG (Xxxxxx) decide to refinance,
SSOI and SSSI agrees to execute the documents reasonably
requested by their lender to effectuate such refinancing,
including without limitation, consents to assignment of the NRGG
O&M Agreements and any guarantees given by SSOI in connection
with either or both of the NRGG O&M Agreements. This provision
shall apply to the refinancing that NRGG (Newark) and NRGG
(Xxxxxx) are currently negotiating with Credit Suisse.
10. General.
This Agreement shall be governed by and construed under the laws
of New Jersey. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
No modification or amendment of this Agreement shall be valid
unless in writing and executed by all parties to this Agreement.
This Agreement shall be binding and inure to the benefit of the
parties hereto and their respective successors and assigns. The
waiver of any breach of any term or condition hereof shall not be
deemed a waiver of any other or substantive breach, whether of
like or different nature.
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XXXXXXX & XXXXXXXXX OPERATIONS, INC.
/s/ Xxxxxx Xxxxxxxx
(b) Xxxxxx Xxxxxxxx
Vice President - North American Operations
NRG GENERATING (NEWARK) COGENERATION INC.
By: /s/ Xxxxxxx Xxxxx
Name:
Title:
NRG GENERATING (XXXXXX) COGENERATION INC.
By: /s/ Xxxxxxx Xxxxx
Name:
Title:
NRG GENERATING (U.S.) INC.
By: /s/ Xxxxxxx Xxxxx
Name:
Title:
XXXXXXX & XXXXXXXXX SERVICES, INC.
By: /s/
Name:
Title:
