AGREEMENT WITH RESPECT TO THE PREFERRED INTEREST PURCHASE AGREEMENT
Exhibit 10.35
AGREEMENT WITH RESPECT TO
THE PREFERRED INTEREST PURCHASE AGREEMENT
THE PREFERRED INTEREST PURCHASE AGREEMENT
This Agreement with respect to the Preferred Interest Purchase Agreement (this “Agreement”) is
made as of this 19th day of December, 2008 among NRG Common Stock Finance II LLC, a Delaware
limited liability company (“Issuer”), NRG Energy, Inc., a Delaware corporation (the “Company”),
Credit Suisse Capital LLC (together with its successor and assigns, “Purchaser”) and Credit Suisse
Securities (USA) LLC (“Agent”), solely in its capacity as agent for Purchaser and Issuer.
W I T N E S S E T H
WHEREAS, Issuer, Purchaser and Agent are party to the Preferred Interest Purchase Agreement
dated August 4, 2006 (the “Preferred Interest Purchase Agreement”), whereby Issuer issued to
Purchaser Issuer’s Series 1 Exchangeable Limited Liability Company Preferred Interests (the
"Preferred Interests”) on the terms and conditions set forth therein;
WHEREAS, Issuer, Purchaser and Agent have heretofore entered into a Preferred Interest
Amendment Agreement dated as of the date hereof relating to the Preferred Interest Purchase
Agreement (the “First Amendment Agreement”) (and, for the avoidance of doubt, references to the
Preferred Interest Purchase Agreement herein shall mean the Preferred Interest Purchase Agreement
as modified or amended by such First Amendment Agreement);
WHEREAS, the Preferred Interests have the terms and provisions contained in a Certificate of
Designations dated as of August 4, 2006 (the “Certificate of Designations”);
WHEREAS, the terms and provisions of the Preferred Interests have heretofore been modified or
amended in a First Certificate of Amendment relating to the Certificate of Designations executed on
the date hereof (the “First Certificate of Amendment”) (and, for the avoidance of doubt, references
to the Certificate of Designations herein shall mean the Certificate of Designations as modified or
amended by such First Certificate of Amendment);
WHEREAS, Issuer and Purchaser wish to effect certain transactions in connection with the
Preferred Interest Purchase Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of their mutual covenants herein contained, the parties
hereto, intending to be legally bound, hereby mutually covenant and agree as follows:
SECTION 1 . Definitions. As used herein, capitalized terms not defined herein shall have the
meaning ascribed to them in, or as provided in, the Preferred Interest Purchase Agreement and the
Certificate of Designations.
SECTION 2 . Notice of Increased Costs. (a) Purchaser shall provide notice (an “Increased
Costs Notice”) to Issuer following the end of each calendar month during which an Increased Cost of
Stock Borrow, Increased Cost or Other Increased Cost of Hedging in respect of the Preferred
Interests occurred or was continuing of the amount in U.S. dollars of each such Increased Cost of
Stock Borrow, Increased Cost and/or Other Increased Cost of Hedging for such month. Such Increased
Costs Notice shall specify the nature and amount of the Increased Cost of Stock Borrow, Increased
Cost and/or Other Increased Cost of Hedging and shall provide a reasonably detailed basis for the
determination thereof. In addition, in respect of any Increased Cost of Stock Borrow specified in
such Increased Costs Notice, Purchaser shall provide notice of (i) the reduction of the Threshold
Price for any Preferred Interest that the Calculation Agent would apply pursuant to Section 4.5 of
the Certificate of Designations to account for such Increased Cost of Stock Borrow (the “Threshold
Price Adjustment”) and (ii) an amount of cash in U.S. dollars (the “Increased Cost of Stock Borrow
Amount”) relating to such Increased Cost of Stock Borrow that Issuer may elect to pay in lieu of
such Threshold Price Adjustment. Purchaser shall respond in good faith to good faith inquiries or
disputes from Issuer regarding the Increased Cost of Stock Borrow, Threshold Price Adjustment,
Increased Cost and/or Other Increased Cost of Hedging set forth in an Increased Costs Notice.
Notwithstanding the foregoing, Issuer may, in its reasonable judgment, designate as an Increased
Cost of Stock Borrow or an Other Increased Cost of Hedging, as the case may be, any amount or
portion thereof specified by Purchaser as an Other Increased Cost of Hedging or an Increased Cost
of Stock Borrow in such Increased Costs Notice that Issuer reasonably believes should more properly
have been characterized as an Increased Cost of Stock Borrow or an Other Increased Cost of Hedging,
as the case may be, by providing notice to Purchaser of such designation by 5:00 PM, New York City
time, on the second Business Day immediately following the date of the relevant Increased Costs
Notice (such time on such Business Day, the “Notice Deadline”), in which case such Other Increased
Cost of Hedging or Increased Cost of Stock Borrow shall be considered an Increased Cost of Stock
Borrow or an Other Increased Cost of Hedging, as the case may be, for purposes of this Agreement.
(b) By 5:00 PM, New York City time, on the third Business Day immediately following the date
of each Increased Costs Notice, Issuer shall (i) if Issuer so elects pursuant to Section 2(a), pay
the Increased Cost of Stock Borrow Amount in immediately available funds by wire transfer to an
account designated by Purchaser and (ii) either (A) pay the aggregate amount of any Increased Cost
and/or Other Increased Cost of Hedging specified in such Increased Costs Notice (such amount, the
“Other Increased Cost Amount”) in immediately available funds by wire transfer to an account
designated by Purchaser or (B) subject to
2
satisfaction of the conditions set forth in Section 3, in lieu of paying the Other Increased
Cost Amount in cash, deliver shares of NRG Common Stock (“Delivered Shares”) to Purchaser pursuant
to Section 3. For the avoidance of doubt, if Issuer pays the Increased Cost of Stock Borrow Amount
as set forth in this Section 2(b), then the Threshold Price Adjustment described in such Increased
Costs Notice shall not take effect, and if Issuer does not make such payment by the time required,
then such Threshold Price Adjustment shall be effective on the terms set forth in such Increased
Costs Notice. The parties also acknowledge, for the avoidance of doubt, that the terms of the
Preferred Interests do not provide for any adjustment to the Threshold Price in respect of an
Increased Cost or an Other Increased Cost of Hedging.
SECTION 3 . Delivery of Shares. If Issuer elects in connection with any Increased Costs
Notice to deliver Delivered Shares in lieu of paying the Other Increased Cost Amount in cash, then
the following provisions apply.
(a) Issuer may elect to deliver Delivered Shares in lieu of paying the Other Increased Cost
Amount in cash only if Issuer notifies Purchaser of its irrevocable election to do so by the Notice
Deadline and all Delivered Shares are, at the time of such delivery, covered by an effective
registration statement of the Company for immediate resale by Purchaser (such registration
statement, including the related prospectus, the “Registration Statement”) in form and content
commercially reasonably satisfactory to Purchaser, and:
(i) Purchaser (or an affiliate of Purchaser designated by Purchaser) shall have been
afforded a reasonable opportunity to conduct a due diligence investigation with respect to
the Company that is customary in scope for underwritten offerings of equity securities and
that yields results that are commercially reasonably satisfactory to Purchaser or such
affiliate, as the case may be, in its discretion; and
(ii) Purchaser (or an affiliate of Purchaser designated by Purchaser) and the Company
shall have entered into an agreement (a “Registration Agreement”) on commercially
reasonable terms in connection with the public resale of such Delivered Shares by
Purchaser or such affiliate substantially similar to underwriting agreements customary for
underwritten offerings of equity securities, in form and substance commercially reasonably
satisfactory to Purchaser or such affiliate and the Company, which Registration Agreement
shall include, without limitation, provisions substantially similar to those contained in
such underwriting agreements relating to the indemnification of, and contribution in
connection with the liability of, Purchaser and its affiliates and the Company, shall
provide for the payment by the Company of all expenses in connection with such resale,
including all registration costs and all fees and expenses of counsel for Purchaser, and
shall provide for the delivery of customary “disclosure letters” of outside counsel to the
Company with respect to the Registration Statement and customary
3
accountants’ “comfort letters” to Purchaser or such affiliate with respect to the
financial statements and certain financial information contained in or incorporated by
reference into the Registration Statement. The parties agree that the substantive
provisions of the Registration Agreement shall be substantially similar to those of the
Underwriting Agreement dated as of August 4, 2006 among the Company, the Purchaser and
Credit Suisse Securities (USA) LLC.
(b) The number of Delivered Shares initially delivered to Purchaser in connection with any
Increased Costs Notice shall equal the applicable Other Increased Cost Amount divided by the net
resale value per share to Purchaser of such Delivered Shares as determined by the Calculation
Agent.
(c) If Issuer delivers the Delivered Shares in lieu of paying the Other Increased Cost Amount
in cash, then Purchaser or its affiliate may sell (which sale shall be made in a commercially
reasonable manner) such Delivered Shares during a period (the “Resale Period”) commencing on the
Business Day following the Notice Deadline and ending on the Business Day on which Purchaser
completes the sale of all such Delivered Shares or a sufficient number of Delivered Shares so that
the realized net proceeds of such sales exceed the Other Increased Cost Amount. If any of such
Delivered Shares remain after such realized net proceeds exceed the Other Increased Cost Amount,
Purchaser shall return such remaining Delivered Shares to Issuer. If the Other Increased Cost
Amount exceeds the realized net proceeds from such resale, Issuer shall transfer to Purchaser by
the open of the regular trading session on the Exchange on the Scheduled Trading Day immediately
following the last day of the Resale Period the amount of such excess (the “Additional Amount”) in
cash or in a number of additional Delivered Shares (“Make-whole Shares”) equal to the Additional
Amount divided by the net resale value per share to Purchaser of such Make-whole Shares as
determined by the Calculation Agent. The Resale Period shall continue to enable the sale of the
Make-whole Shares in the manner contemplated by this Section 3(c). This provision shall be applied
successively until the Additional Amount is equal to zero.
(d) Notwithstanding the foregoing, Issuer shall not have the right to elect to deliver
Delivered Shares in lieu of paying the Other Increased Cost Amount unless, at the time of such
election, the Company represents in writing to Purchaser that the Company’s Annual Report on Form
10-K most recently filed with the Securities and Exchange Commission (the “Commission”) and all
subsequent reports (collectively, the “Exchange Act Reports”) that have been filed by the Company
with the Commission or sent to stockholders pursuant to the Exchange Act, do not include any untrue
statement of a material fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, and that such
documents, when they were filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission thereunder.
4
(e) If at any time during the Resale Period, (i) the Registration Statement becomes the
subject of a stop order or ceases to be effective, (ii) the prospectus forming part of the
Registration Statement at such time includes an untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (iii) any part of the Registration
Statement, at the time such part became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, then (A) the Company shall immediately so notify Purchaser and
(B) Issuer shall immediately repurchase from Purchaser all Delivered Shares not yet sold by
Purchaser for an aggregate cash purchase price equal to the Other Increased Cost Amount minus the
realized net proceeds of sales by Purchaser of the Delivered Shares already sold, for settlement on
a T+3 basis. The Company shall be deemed to have represented and warranted to Purchaser
continuously during any Resale Period, prior to delivery of a notice of the type described in
clause (A) of the immediately preceding sentence, that none of the conditions set forth in clauses
(i), (ii) and (iii) of the immediately preceding sentence exist.
SECTION 4 . Representations, Warranties and Agreements of the Company and Issuer. Each of
the Company and Issuer represents, warrants and agrees as follows:
(a) it has the power to execute this Agreement, to deliver this Agreement and to perform its
obligations under this Agreement and has taken all necessary action to authorize such execution,
delivery and performance;
(b) such execution, delivery and performance do not violate or conflict with any law
applicable to it, any provision of its constitutional documents, any order or judgment of any court
or other agency of government applicable to it or any of its assets or any contractual restriction
binding on or affecting it or any of its assets;
(c) all governmental and other consents that are required to have been obtained by it with
respect to the execution and delivery of and the performance of its obligations under this
Agreement have been obtained and are in full force and effect and all conditions of any such
consents have been complied with;
(d) its obligations under this Agreement constitute its legal, valid and binding obligations,
enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors’ rights generally and to general equitable principles;
(e) no Early Redemption Event has occurred and is continuing and no such event or circumstance
would reasonably be expected to occur as a result of its entering into or performing its
obligations under this Agreement;
5
(f) there is not pending or, to its knowledge, threatened against it or any of its affiliates
any action, suit or proceeding at law or in equity or before any court, tribunal, governmental
body, agency or official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or its ability to perform its obligations under this
Agreement;
(g) it is acting for its own account, and has made its own independent decision to enter into
this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own
judgment and upon advice of such advisors as it deems necessary; it acknowledges and agrees that it
is not relying, and has not relied, upon any communication (written or oral) of Purchaser or any
Affiliate of Purchaser with respect to the legal, accounting, tax or other implications of this
Agreement and that it has conducted its own analyses of the legal, accounting, tax and other
implications hereof (it being understood that information and explanations related to the terms and
conditions of this Agreement shall not be considered investment advice or a recommendation to enter
into this Agreement); it further acknowledges and confirms that it has taken independent tax advice
with respect to this Agreement;
(h) it is entering into this Agreement with a full understanding of all of the terms and risks
hereof (economic and otherwise) and is capable of evaluating and understanding (on its own behalf
or through independent professional advice), and understands and accepts, the terms, conditions and
risks; it is also capable of assuming (financially and otherwise), and assumes, those risks;
(i) it acknowledges that neither Purchaser nor any Affiliate of Purchaser is acting as a
fiduciary for or an advisor to the Company in respect of this Agreement;
(j) it is not entering into this Agreement to create actual or apparent trading activity in
the NRG Common Stock (or any security convertible into or exchangeable for NRG Common Stock) or to
manipulate the price of the NRG Common Stock (or any security convertible into or exchangeable for
NRG Common Stock) or otherwise in violation of the Exchange Act;
(k) without limiting the generality of Section 4(b), this Agreement will not violate Rule
13e-1 or Rule 13e-4 under the Exchange Act;
(l) it is not, and after giving effect to the transactions contemplated hereby will not be,
required to register as an “investment company” as such term is defined in the Investment Company
Act of 1940, as amended; and
(m) each of the Company and Issuer is, and shall be as of the date of any payment or delivery
by Issuer hereunder, solvent and able to pay its debts as they come due, with assets having a fair
value greater than liabilities and with capital sufficient to carry on the businesses in which it
engages.
6
SECTION 5 . Preferred Interest Purchase Agreement and Certificate of Designations. Except as
otherwise specified in this Agreement, the Preferred Interest Purchase Agreement and the
Certificate of Designations shall remain in full force and effect.
SECTION 6 . Effectiveness. This Agreement shall become effective upon execution hereof by
the parties hereto and execution of the Preferred Interest Amendment Agreement among Issuer,
Purchaser and Agent of even date herewith by the parties thereto.
7
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
| ISSUER: | ||||||
| NRG COMMON STOCK FINANCE II LLC | ||||||
| By: Name: |
/s/ Xxxxxxxxxxx Xxxxx
|
|||||
| Title: | Vice President and Treasurer | |||||
| COMPANY: | ||||||
| NRG ENERGY, INC. | ||||||
| By: Name: |
/s/ Xxxxxxxxxxx Xxxxx
|
|||||
| Title: | Vice President and Treasurer | |||||
| PURCHASER: | ||||||
| CREDIT SUISSE CAPITAL LLC | ||||||
| By: Name: |
/s/ Xxxxx Xxxxx
|
|||||
| Title: | Authorized Signatory | |||||
| By: Name: |
/s/ Xxxx Xxxx
|
|||||
| Title: | Authorized Signatory | |||||
| AGENT: | ||||||
| CREDIT SUISSE SECURITIES (USA) LLC | ||||||
| By: Name: |
/s/ Xxxxx Xxxxx
|
|||||
| Title: | Authorized Signatory | |||||
