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Exhibit 1
OPTION AGREEMENT
OPTION AGREEMENT, dated as of March 8, 1996 (this "Agreement"), made by
O'BRIEN ENVIRONMENTAL ENERGY, INC., A Delaware corporation, as a Debtor and a
Debtor-in-Possession under Chapter 11 of the Bankruptcy Code (the "Parent"), in
favor of NRG ENERGY, INC., a Delaware corporation (the "Lender").
WITNESSETH:
WHEREAS, pursuant to the Loan Agreement, dated as of the date hereof
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), between O'BRIEN (SCHUYKILL) COGENERATION, INC. (the "Borrower") and
the Lender, the Lender has agreed to make a Loan to the Borrower upon the terms
and subject to the conditions set forth therein, to be evidenced by the Note
issued by the Borrower under the Credit Agreement;
WHEREAS, pursuant to the Guarantee, dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the
"Guarantee"), made by the Parent in favor of the Lender, the Parent has
guaranteed the obligations of the Borrower to the Lender;
WHEREAS, it is a condition precedent to the obligation of the Lender to
make the Loan to the Borrower under the Credit Agreement that the Parent shall
have executed and delivered this Agreement to the Lender; and
WHEREAS, the Parent is the parent of the Borrower, and it is to the
advantage of Parent that the Lender make the Loan to the Borrower.
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to enter into the Credit Agreement and to induce the Lender to make the
loan to the Borrower under the Credit Agreement, the Parent hereby agrees with
the Lender as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them
in the Credit Agreement.
2. Option to Convert Portion of Loan to Common Stock. The Parent
hereby grants to the Lender, at any time after both (a) the NRG Plan Effective
Date and (b) the date on which the Lender shall have made the Loan, the right,
upon not less then fifteen Business Days' prior written notice to the Parent, to
exchange the Note for (1) a new promissory Note in a principal amount which is
$3 million less than the previously outstanding principal amount of the Note
for which it is exchanged and (2) that number of shares of common stock of the
Parent which would equal, on a fully diluted basis, 5.767% of the shares of
common stock of the Company (the "Conversion Shares") as of the NRG Plan
Effective Date. On the day specified in the notice delivered pursuant to the
preceding sentence, the Lender shall deliver the Note to the Company in
exchange for (1) the delivery by the Company to the Lender of a new Note in a
principal amount which is $3 million less than the previously outstanding
principal amount of the old Note ( and the Parent agrees to cause the Company
to deliver such new Note) and (2) the delivery by the Parent to the Lender of
the Conversion Shares.
3. Notices. All notices, requests and demands to or upon the Lender
or the Parent to be effective shall be in writing (or by telex, fax or similar
electronic transfer confirmed in writing) and
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shall be deemed to have been duly given or made (1) when delivered by hand or
(2) if given by mail, when deposited in the mails by certified mail, return
receipt requested, or (3) if by telex, fax or similar electronic transfer, when
sent and receipt has been confirmed, addressed as set forth in the
Agreement.
4. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
5. Amendments in Writing: No Waiver, Cumulative Remedies. None of the
terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Parent and
the Lender.
6. Section Headings. The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
7. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Parent and shall inure to the benefit of the
Lender and its successors and assigns.
8. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered by its duly authorized officer as of the day and
year first above written.
O'BRIEN ENVIRONMENTAL ENERGY, INC.
by: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Chief Administrative Officer
