Contract
$720,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
PG&E CORPORATION
as Borrower,
the LENDERS party hereto,
XXXXXX COMMERCIAL PAPER INC.
as Syndication Agent and Administrative Agent,
XXXXXX BROTHERS INC.
as Sole Lead Arranger and Sole Bookrunner,
and
XXXXXXX XXXXX CREDIT PARTNERS L.P.
as Co-Arranger
_______________________________________
Dated as of October 18, 2002
_______________________________________
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND RULES OF
INTERPRETATION....................1
1.1 Defined
Terms..........................................1
1.2 Rules of
Interpretation..................................1
1.3 Accounting
Principles....................................1
SECTION 2. AMOUNTS AND TERMS OF CREDIT
FACILITY.......................2
2.1 Existing Loans; the New
Tranche B Commitment.................2
2.2 Notice of
Funding.......................................2
2.3 Disbursement of
Funds....................................3
2.4
Notes.................................................3
2.5
Interest...............................................3
2.6 Interest
Periods........................................5
2.7 Increased Costs,
Illegality, etc...........................6
2.8
Compensation...........................................8
SECTION 3. PREPAYMENTS; PAYMENTS;
TAXES.............................8
3.1 Voluntary
Prepayments....................................8
3.2 Mandatory
Repayments.....................................8
3.3 Method and Place of
Payment..............................11
3.4 Net
Payments..........................................12
3.5
Allocation............................................14
3.6
[OMITTED].............................................14
3.7 Application of Payments;
Sharing..........................14
3.8 Offers to
Repay........................................15
SECTION 4. CONDITIONS
PRECEDENT...................................17
4.1 Conditions to
Closing...................................17
SECTION 5. REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.................21
5.1
Standing..............................................21
5.2 Requisite Authority;
Etc................................22
5.3 No
Conflict...........................................22
5.4
Consents..............................................22
5.5 Compliance with
Law....................................23
5.6 Litigation
Claims......................................23
5.7 Contracts and
Commitments...............................23
5.8
Liens................................................23
5.9
Insurance.............................................24
5.10 Capitalization and
Ownership............................24
5.11 Financial Statements;
Absence of Certain Changes; Cash Flow Forecasts
......................................................25
5.12
Taxes...............................................26
5.13
Disclosure...........................................26
5.14 Environmental
Matters..................................26
5.15 Brokers' or Finders'
Fees...............................27
5.16 Certain Regulatory
Matters..............................27
5.17 Transactions With
Affiliates............................27
5.18 Use of
Proceeds.......................................27
5.19 Compliance with
ERISA..................................28
5.20 Investment Company
Act.................................29
5.21
Regulation...........................................29
5.22 Security
Documents....................................30
5.23
[Reserved]...........................................30
5.24
[Reserved]...........................................30
5.25 Intellectual
Property..................................30
5.26 No
Default...........................................31
5.27 Single-Purpose
Entity..................................31
5.28 Trust Indenture
Act....................................31
5.29 Existing
Indebtedness..................................31
5.30 No Event of
Default....................................31
5.31 Certain
Obligations....................................31
5.32
Solvency.............................................32
SECTION 6. AFFIRMATIVE
COVENANTS..................................32
6.1 Information
Covenants...................................32
6.2 Books, Records and
Inspections...........................35
6.3 Maintenance of Property;
Insurance........................35
6.4 Corporate
Franchises....................................35
6.5 Compliance with Statutes,
etc............................36
6.6 Compliance with
Environmental Laws........................36
6.7
ERISA................................................37
6.8 End of Fiscal Years;
Fiscal Quarters......................38
6.9 Payment of
Taxes.......................................38
6.10
[OMITTED]............................................38
6.11 Performance of
Obligations..............................38
6.12 Use of
Proceeds.......................................38
6.13 Regulatory
Compliance..................................38
6.14 Form
8-K.............................................39
6.15 Charter
Documents.....................................39
6.16 Further Assurances;
etc................................39
6.17 Regarding
LLC.........................................39
6.18
Warrants.............................................39
SECTION 7. NEGATIVE
COVENANTS.....................................39
7.1
Liens................................................39
7.2 Consolidation, Merger,
Purchase or Sale of Assets, etc.......41
7.3
Dividends.............................................43
7.4
Indebtedness..........................................43
7.5 Advances, Investments and
Loans..........................44
7.6 Transactions with
Affiliates.............................46
7.7 Capital
Expenditures....................................46
7.8 Limitations on Liens on
Collateral; Modifications of Certain
Indebtedness; Modifications of Certificate of Incorporation,
By-Laws
and Certain
Other Agreements, etc.........................46
7.9 Limitation on Issuance of
Capital Stock....................47
7.10
Business.............................................48
7.11 Regulatory
Compliance..................................48
7.12
[OMITTED]............................................48
7.13 Limitation on Optional
Payments and Modifications of Convertible Notes
......................................................48
7.14 Interest Reserve
Amounts...............................48
7.15 Plan of
Reorganization.................................49
7.16 Certain
Transactions...................................49
SECTION 8. EVENTS OF DEFAULT AND
REMEDIES...........................50
8.1 Events of
Default......................................50
8.2
Acceleration..........................................52
8.3 Other
Remedies.........................................53
SECTION 9.
MISCELLANEOUS.........................................53
9.1 Costs and
Expenses.....................................53
9.2
Indemnity.............................................54
9.3
Notices..............................................56
9.4 Benefit of
Agreement....................................56
9.5 No Waiver; Remedies
Cumulative...........................56
9.6 No Third Party
Beneficiaries.............................57
9.7
Reinstatement.........................................57
9.8 No
Immunity...........................................57
9.9
Counterparts..........................................57
9.10 Amendment or
Waiver....................................57
9.11 Assignments,
Participations, etc.........................58
9.12
Survival.............................................60
9.13 WAIVER OF JURY
TRIAL...................................60
9.14 Right of
Set-off......................................60
9.15
Severability.........................................61
9.16 Governing Law; Submission
to Jurisdiction.................61
9.17 Waiver by
Borrower....................................62
9.18
Recourse.............................................62
9.19 Complete
Agreement....................................62
9.20
Publicity............................................62
9.21
Effectiveness.........................................62
9.22 Certain Representations
and Warranties....................62
9.23
Confidentiality.......................................62
9.24 Release of
Liens......................................63
9.25 Delivery of Lender
Addendum.............................63
9.26 Special
Exculpation....................................63
9.27 Intercreditor
Agreement................................64
9.28 Amended and Restated
Security Documents...................64
9.29 Consent to Convertible
Note Amendment.....................64
SECTION 10. THE ADMINISTRATIVE AGENT; THE SYNDICATION
AGENT, THE LEAD ARRANGER
AND
THE BOOKRUNNER.....................................64
10.1
Appointment..........................................64
10.2 Nature of
Duties......................................65
10.3 Lack of Reliance on the
Administrative Agent...............65
10.4 Certain Rights of the
Administrative Agent................65
10.5
Reliance.............................................66
10.6
Indemnification.......................................66
10.7 The Administrative Agent
in its Individual Capacity.........66
10.8
Holders..............................................66
10.9 Resignation or
Replacement of the Administrative Agent......67
10.10 The Syndication Agent,
Lead Arranger and Bookrunner........67
10.11 Direction to
Administrative Agent and Collateral Agent......67
SECTION 11. COLLATERAL
AGENT......................................68
11.1
Appointment..........................................68
11.2 Exculpatory
Provisions.................................68
11.3 Reliance by Collateral
Agent............................68
11.4 Notice of
Default.....................................69
11.5
Indemnification.......................................69
11.6 Successor Collateral
Agent..............................70
11.7
Miscellaneous.........................................70
APPENDICES:
Appendix
A Defined Terms and Rules of
Interpretation
EXHIBITS:
Exhibit
A Form of Notice of
Funding
Exhibit
B-1 Form of Continued Tranche B Loan
Note
Exhibit
B-2 Form of New Tranche B Loan Note
Exhibit
C Form of Section 3.4(b)(ii)
Certificate
Exhibit
D Form of Process Agent
Letter
Exhibit
E-1 Form of Offer to Repay Notice
Exhibit
E-2 Form of Response to Offer to Repay
Notice
SCHEDULES:
Schedule
A Form of Lender Addendum
Schedule
B SEC Filings
Schedule
3.5 Allocation - Investment Unit
Schedule
5.6 Litigation
Schedule
5.7 Covered Contracts
Schedule
5.8 Liens
Schedule
5.9 Insurance
Schedule
5.10(a) Stock of PGE Utility
Schedule
5.10(e) Warrants, etc.
Schedule
5.10(f) Ownership
Schedule
5.14 Environmental Matters
Schedule
5.15 Brokers' or Finders' Fees
Schedule
5.17 Transactions with Affiliates
Schedule
5.19 ERISA Plans
Schedule
5.31(a) Indebtedness of the Borrower to Subsidiaries
Schedule
5.31(b) Indebtedness of Subsidiaries to the Borrower
Schedule
7.1 Certain Liens
Schedule
9.3 Notices
ANNEXES
Annex
A Section 13 of the
LLC Agreement
Annex
B Description of
Utility Spin-Off
SECOND
AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"),
dated as of October 18, 2002, among PG&E Corporation, a
California
corporation, as the Borrower, the Lenders party hereto, Xxxxxx
Commercial
Paper Inc., a New York corporation, as Syndication Agent and
Administrative
Agent, and Xxxxxx Brothers Inc., a Delaware corporation, as Lead
Arranger and
Bookrunner.
W I T N E S S E T H:
WHEREAS, the
Borrower is a party to the Amended and Restated
Credit Agreement, dated as of June 25, 2002 (as amended,
supplemented or
otherwise modified from time to time, the "Existing Credit
Agreement"), with
the lenders party thereto, Xxxxxx Commercial Paper Inc., as
Administrative
Agent, and others, pursuant to which such lenders made the Tranche
A Loan (as
defined in the Existing Credit Agreement, the "Existing Tranche A
Loan") and
the Tranche B Loan (as defined in the Existing Credit Agreement,
the
"Existing Tranche B Loan");
WHEREAS, the
parties hereto wish to amend and restate the
Existing Credit Agreement in its entirety to modify certain of the
terms
applicable to the Existing Tranche B Loan, to reflect the repayment
of the
Existing Tranche A Loan and to provide for the making of an
additional
Tranche B Loan to the Borrower; and
WHEREAS, (i)
the Existing Credit Agreement is being amended and
restated pursuant to this Agreement, (ii) certain indebtedness
under the
Existing Credit Agreement, as amended and restated in connection
with this
Agreement, will be continued under this Agreement and (iii) all
obligations
of the Borrower, LLC and NEG, Inc. under the Financing Documents
(as such
term is defined herein) and all liens and security interests
created under
the Financing Documents will be continued, amended and restated as
provided
herein and therein and will not be cancelled or discharged;
NOW,
THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties hereto agree that,
upon the
Closing Date, the Existing Credit Agreement shall be amended and
restated in
its entirety as follows:
SECTION
1. DEFINITIONS AND RULES OF
INTERPRETATION.
1.1 Defined Terms. Except as otherwise expressly
provided
herein, capitalized terms used in this Agreement and its Schedules
and
Exhibits shall have the respective meanings assigned to such terms
in
Appendix A hereto.
1.2 Rules of Interpretation. Except as otherwise
expressly
provided herein, the rules of interpretation set forth in Appendix
A hereto
shall apply to this Agreement.
1.3 Accounting Principles. Except as otherwise
provided in
this Agreement, all computations and determinations as to financial
matters,
and all financial statements to be delivered under this Agreement
shall be
made or prepared in accordance with U.S. GAAP (including principles
of
consolidation where appropriate) applied on a consistent basis
(except to the
extent approved or required by the independent public accountants
certifying
such statements and disclosed therein).
SECTION
2. AMOUNTS AND TERMS OF CREDIT
FACILITY.
2.1 Existing Loans; the New Tranche B Commitment.
(a) Prior
to the date hereof, the Existing Tranche A Loan was repaid in
full. Subject
to and upon the terms and conditions set forth herein, on the
Closing Date,
(i) the Existing Tranche B Loan shall be continued as a loan
hereunder (the
"Continued Tranche B Loan"), which shall mature on the Tranche B
Maturity
Date, and (ii) (A) each New Tranche B Lender shall make available
to the
Administrative Agent, in immediately available funds, an amount
equal to the
New Tranche B Commitment of such Lender and (B) the Administrative
Agent
shall transfer such amount to the Tranche B Escrow Account (from
which such
amount shall be released (x) to the Borrower on the Escrow Release
Date, if
the Escrow Release Date occurs, and upon such release such amount
shall
constitute term loans (collectively, the "New Tranche B Loan") made
by each
New Tranche B Lender to the Borrower in an amount equal to the
amount of the
New Tranche B Commitment of such Lender or (y) to the
Administrative Agent,
to be returned to each New Tranche B Lender ratably in accordance
with the
amounts made available by the New Tranche B Lenders to the
Administrative
Agent on the Closing Date, if the Bankruptcy Termination Event
occurs, in
which case no New Tranche B Loans shall be made). The New
Tranche B Loans
(A) shall be denominated in Dollars, (B) shall be incurred and
maintained as
Eurodollar Loans, except as otherwise specifically provided in
Section 2.7(b)
and (C) shall mature on the Tranche B Maturity Date. For the
avoidance of
doubt, the aggregate principal amount of the Continued Tranche B
Loan and the
New Tranche B Loan outstanding on the Escrow Release Date (after
giving
effect to the release of funds from the Tranche B Escrow Account on
the
Escrow Release Date, but without giving effect to any pay-in-kind
interest
pursuant to Section 2.5(g)) shall be $420,000,000 and
$300,000,000,
respectively.
(b) If the Closing Date has not occurred on or prior
to
October 18, 2002, then, in such event, (i) except as set forth in
clause (ii)
below, the Lenders shall have no further obligations or liabilities
under any
of the Financing Documents and the Financing Documents shall have
no further
force or effect with respect to the Lenders, but the Borrower's
obligation to
pay the costs, fees and expenses as provided herein and to
indemnify the
other parties to the Financing Documents shall not be terminated,
modified or
diminished in any respect, and (ii) the Existing Credit Agreement
and the
other Existing Financing Documents shall remain in full force and
effect, and
no modification thereof shall have been made pursuant hereto.
(c) The Loans are available only on the terms and
conditions
specified hereunder, and once repaid, in whole or in part, at
maturity or by
prepayment, may not be reborrowed in whole or in part.
(d) The Continued Tranche B Loan and the New Tranche B
Loan
shall be separate and distinct loans that shall have identical
terms except
as expressly set forth in the Financing
Documents.
2.2 Notice of Funding.
The Borrower shall give the
Administrative Agent prior notice requesting the funding by each
New Tranche
B Lender to the Administrative Agent of an amount equal to the New
Tranche
Commitment of such New Tranche B Lender, provided that any such
notice shall
be deemed to have been given on a certain day only if given before
1:00 P.M.
(New York time) on such day. Such notice (the "Notice of
Funding") shall be
irrevocable and shall be in writing, or by telephone promptly
confirmed in
writing, in the form of Exhibit A, appropriately completed to
specify the
aggregate principal amount of the New Tranche B Commitments to be
funded, and
the date selected to be the Closing Date (which shall be a Business
Day).
The Administrative Agent shall promptly advise the New Tranche B
Lenders of
the contents of such Notice of Funding.
2.3 Disbursement of Funds. No later than 1:00
P.M. (New York
time) on the Closing Date, each New Tranche B Lender will make
available to
the Administrative Agent such Lender's pro rata share of the amount
of the
amount requested in the Notice of Funding. Such amounts will
be transferred
by the Administrative Agent to the Tranche B Escrow Account.
2.4 Notes. (a) The Borrower's
obligation to pay the principal
of, and interest on, the Continued Tranche B Loan and the New
Tranche Loan
made by a Lender shall be evidenced by promissory notes duly
executed and
delivered by the Borrower substantially in the form of Exhibits B-1
and B-2,
respectively, with blanks appropriately completed in conformity
herewith
(each, a "Note").
(b) The Notes issued to a Lender shall (i) be executed
by the
Borrower, (ii) be payable to such Lender or its Assignee and be
dated the
date of issuance thereof, (iii) be in a stated principal amount
equal to the
Loan made or continued by, or assigned to, such Lender, as the case
may be,
and be payable in the outstanding principal amount of the Loan
evidenced
thereby, (iv) mature on the Tranche B Maturity Date, (v) bear
interest as
provided in the appropriate clause of Section 2.5 in respect of a
Base Rate
Loan (if converted pursuant to Section 2.7(b)) or a Eurodollar
Loan, as the
case may be, evidenced thereby, (vi) be subject to voluntary
prepayment as
provided in Section 3.1, and mandatory repayment as provided in
Section 3.2,
and (vii) be entitled to the benefits of this Agreement and the
other
Financing Documents.
(c) Each Lender will note on its internal records the
amount of
the Loan made by it and each payment in respect thereof and will
prior to any
transfer of its Notes endorse on the reverse side thereof the
outstanding
principal amount of the Loan evidenced thereby. Failure to
make any such
notation or any error in such notation shall not affect the
Borrower's
obligations in respect of such Loan.
2.5 Interest. (a) The Borrower agrees
to pay interest in
respect of the unpaid principal amount of any Base Rate Loan from
the date of
conversion thereof pursuant to Section 2.7(b) until the maturity
thereof
(whether by acceleration or otherwise) at a rate per annum which
shall be
equal to the sum of the Applicable Margin plus the Base Rate each
as in
effect from time to time.
(b) The Borrower agrees to pay interest in respect of
the
unpaid principal amount of each Eurodollar Loan from the date of
Borrowing or
conversion thereof until the earlier of (i) the maturity thereof
(whether by
acceleration or otherwise) and (ii) the conversion of such
Eurodollar Loan to
a Base Rate Loan pursuant to Section 2.7(b) at a rate per annum
which shall,
during each Interest Period applicable thereto, be equal to the sum
of the
Applicable Margin as in effect from time to time during such
Interest Period
plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by
law,
overdue interest in respect of each Loan and any other overdue
amount payable
by the Borrower shall, in each case, bear interest at a rate per
annum equal
to the rate which is 2% in excess of the rate then borne by such
Loan.
Interest which accrues under this Section 2.5(c) shall be payable
on demand.
(d) Accrued (and theretofore unpaid) interest shall be
payable
(i) in respect of each Base Rate Loan, (x) quarterly in arrears on
each
Quarterly Date, (y) on the date of any repayment or prepayment of
the
outstanding principal amount of such Base Rate Loan, and (z) at
maturity
(whether by acceleration or otherwise) and, after such maturity, on
demand,
and (ii) in respect of each Eurodollar Loan, (x) on the last day of
each
Interest Period applicable thereto and, in the case of an Interest
Period in
excess of three months, on each date occurring at three month
intervals after
the first day of such Interest Period, and (y) on the date of any
repayment
or prepayment (on the amount repaid or prepaid), at maturity
(whether by
acceleration or otherwise) and, after such maturity, on demand
(each such
date upon which interest shall be payable, an "Interest Payment
Date").
(e) Upon each Interest Determination Date with respect
to any
Eurodollar Loan, the Administrative Agent shall determine the
Eurodollar Rate
for the relevant Interest Period applicable to such Eurodollar Loan
and shall
promptly notify the Borrower thereof. Each such determination
shall, absent
manifest error, be final and conclusive and binding on all parties
hereto.
(f) (i) Until the Consolidation Date, upon each
Interest
Payment Date in respect of the Continued Tranche B Loan, if the
Borrower does
not on such Interest Payment Date pay the amount of interest
payable on such
Interest Payment Date in respect of the Continued Tranche B Loan,
the amount
of such interest shall be withdrawn from the Tranche B Interest
Reserve
Account (Continued Tranche B Loan) and applied to pay such
interest. The
Continued Tranche B Lenders hereby authorize and direct the
Collateral Agent
to request such withdrawal under the Tranche B Interest Reserve
Account
Control Agreement (Continued Tranche B Loan) and to pay such
interest.
(ii)
Until the Consolidation Date, upon each Interest Payment
Date in respect of the New Tranche B Loan, if the Borrower does not
on such
Interest Payment Date pay the amount of interest payable on such
Interest
Payment Date in respect of the New Tranche B Loan, the amount of
such
interest shall be withdrawn from the Tranche B Interest Reserve
Account (New
Tranche B Loan) and applied to pay such interest. The New
Tranche B Lenders
hereby authorize and direct the Collateral Agent to request such
withdrawal
under the Tranche B Interest Reserve Account Control Agreement (New
Tranche B
Loan) and to pay such interest.
(iii)
On or after the Consolidation Date, upon each Interest
Payment Date in respect of the Tranche B Loan, if the Borrower does
not on
such Interest Payment Date pay the amount of interest payable on
such
Interest Payment Date in respect of the Tranche B Loan, the amount
of such
interest shall be withdrawn from the Tranche B Interest Reserve
Account
(Combined Tranche B Loan) and applied to pay such interest.
The Tranche B
Lenders hereby authorize and direct the Collateral Agent to request
such
withdrawal under the Tranche B Interest Reserve Account Control
Agreement
(Combined Tranche B Loan) and to pay such interest.
(g) Upon each Interest Payment Date in respect of any
portion
of the Tranche B Loan, in addition to the interest payable in cash
as
described above, the principal amount of such portion will be
increased by a
pay-in-kind interest amount calculated on the principal amount of
such
portion at the rate per annum of 4.00% for the period from the
immediately
preceding Interest Payment Date with respect to such portion to the
current
Interest Payment Date, and such increased principal amount of the
Tranche B
Loan shall thereafter bear interest (both cash-pay and pay-in-kind)
at the
same rates as the original principal amount of the Tranche B
Loan. For
purposes of this paragraph (g), the Escrow Release Date shall be
deemed to be
an Interest Payment Date in respect of the New Tranche B Loan, and
pay-in-
kind interest in respect of the New Tranche B Loan shall accrue
from the
Closing Date.
2.6 Interest Periods. At the time the Borrower
gives the
Notice of Funding, or prior to 1:00 P.M. (New York time) on the
third
Business Day prior to the expiration of an Interest Period
applicable to a
Eurodollar Loan (in the case of any subsequent Interest Period),
the Borrower
shall have the right to elect the interest period (each an
"Interest Period")
applicable to such Eurodollar Loan, which Interest Period shall, at
the
option of the Borrower, be a one, two, three or six-month period;
provided
that (in each case):
(i) the initial Interest Period for any Eurodollar Loan
shall
commence on the date of Borrowing or
conversion of such Eurodollar Loan
and each Interest Period occurring
thereafter in respect of such
Eurodollar Loan shall commence on the day
on which the next preceding
Interest Period applicable thereto
expires;
(ii) if any Interest Period for a Eurodollar Loan
begins on a
day for which there is no numerically
corresponding day in the calendar
month at the end of such Interest Period,
such Interest Period shall
end on the last Business Day of such
calendar month;
(iii) if any Interest Period for a Eurodollar Loan
would
otherwise expire on a day which is not a
Business Day, such Interest
Period shall expire on the next succeeding
Business Day; provided,
however, that if any Interest Period for
such Eurodollar Loan would
otherwise expire on a day which is not a
Business Day but is a day of
the month after which no further Business
Day occurs in such month,
such Interest Period shall expire on the
next preceding Business Day;
(iv) no Interest Period may be selected at any time
when a
Default or an Event of Default is then in
existence;
(v) no Interest Period in respect of any Borrowing of
any
Eurodollar Loan shall be selected which
extends beyond the Tranche B
Maturity Date; and
(vi) on the Closing Date, the Interest Period in
respect of the
Continued Tranche B Loan shall expire
(subject to payment by the
Borrower of any breakage costs pursuant to
Section 2.8, determined as
if the expiration of such existing
Interest Period on the Closing Date
were a prepayment made on the Closing
Date), and the next Interest
Period selected on or after the Closing
Date shall end on the first
Business Day which occurs on or after the
date which is 91 days after
the Closing Date.
If upon the expiration of any Interest Period applicable to any
Eurodollar
Loan, the Borrower has failed to elect, or is not permitted to
elect, a new
Interest Period to be applicable to such Eurodollar Loan as
provided above,
the Borrower shall be deemed to have elected a one-month Interest
Period
effective as of the expiration date of such current Interest
Period. For
purposes of calculating the funding fee payable pursuant to
Paragraph 4 of
the Escrow Agreement, such funding fee shall be calculated as if an
Interest
Period in respect of the New Tranche B Loan began on the Closing
Date and
ended on the first Business Day to occur on or after the date which
is 91
days after the Closing Date.
2.7 Increased Costs, Illegality, etc.
(a) In the event that a
Lender shall have determined (which determination shall, absent
manifest
error, be final and conclusive and binding upon all parties
hereto):
(i) on any Interest Determination Date that, by reason
of any
changes arising after the date of this
Agreement affecting the
interbank Eurodollar market, adequate and
fair means do not exist for
ascertaining the applicable interest rate
on the basis provided for in
the definition of Eurodollar Rate;
or
(ii) at any time, that such Lender shall incur
increased costs
or reductions in the amounts received or
receivable hereunder with
respect to any Eurodollar Loan of such
Lender because of (x) any change
since the Closing Date in any applicable
law or governmental rule,
regulation, order, guideline or request
(whether or not having the
force of law) or in the interpretation or
administration thereof and
including the introduction of any new law
or governmental rule,
regulation, order, guideline or request,
such as, for example, but not
limited to: (A) a change in the
basis of taxation of payment to such
Lender of the principal of or interest on
such Lender's Loan or Note or
any other amounts payable to such Lender
hereunder (except for changes
in the rate of tax on, or determined by
reference to, the net income or
net profits of such Lender pursuant to the
laws of the jurisdiction in
which it is doing business, organized or
in which its principal office
or applicable lending office is located or
any subdivision thereof or
therein) or (B) a change in official
reserve requirements, but, in all
events, excluding reserves required under
Regulation D to the extent
included in the computation of the
Eurodollar Rate and/or (y) other
circumstances (other than with respect to
taxes) arising since the
Closing Date affecting such Lender (or its
Source), the interbank
Eurodollar market or the position of such
Lender in such market; or
(iii) at any time, that the making or continuance of
any
Eurodollar Loan has been made (x) unlawful
by any law or governmental
rule, regulation or order, (y) impossible
by compliance by such Lender
in good faith with any governmental
request (whether or not having
force of law) or (z) impracticable as a
result of a contingency
occurring after the Closing Date which
materially and adversely affects
the interbank Eurodollar market;
then, and in any such event, such Lender shall promptly give notice
(by
telephone promptly confirmed in
writing) to the Borrower of
such
determination. Thereafter (x) in the case of clause (i)
above, Eurodollar
Loans shall no longer be available until such time as such Lender
notifies
the Borrower that the circumstances giving rise to such notice by
the Lender
no longer exist, (y) in the case of clause (ii) above, the Borrower
agrees to
pay to such Lender, upon such Lender's written request therefor,
such
additional amounts (in the form of an increased rate of, or a
different
method of calculating, interest or otherwise as such Lender in its
sole
discretion shall determine) as shall be required to compensate such
Lender
for such increased costs or reductions in amounts received or
receivable
hereunder (a written notice as to the additional amounts owed to
such Lender,
showing in reasonable detail the basis for the calculation thereof,
submitted
to the Borrower by such Lender shall, absent manifest error, be
final and
conclusive and binding on all the parties hereto) and (z) in the
case of
clause (iii) above, the Borrower shall take one of the actions
specified in
Section 2.7(b) as promptly as possible and, in any event, within
the time
period required by Law.
Each Lender,
at the sole cost and expense of the Borrower
(including, but not limited to, such Lender's internal costs for
use of its
personnel and resources), will use its reasonable efforts to
minimize taxes
indemnifiable by the Borrower under this Section 2.7(a), including
by
complying with reasonable requests by the Borrower to do or to
refrain from
doing any act (including the execution of any certificates or
similar
documents required to establish an exemption or relief from any
tax), if such
efforts or any such compliance is, in the good faith discretion of
such
Lender, of a purely ministerial nature and has no adverse impact on
such
Lender or any Affiliate or on the business or operations of the
foregoing
(unless such adverse impact is one of a nature and quality such
that it is
subject to indemnification and the Borrower has indemnified such
Lender
against such adverse impact in a manner satisfactory to such
Lender
determined in its sole discretion). The Borrower shall
indemnify such Lender
for any taxes that may be imposed on it as a consequence of such
compliance.
(b) At any time that any Eurodollar Loan is affected by
the
circumstances described in Section 2.7(a)(i) or (ii), the Borrower
may, and
in the case of a Eurodollar Loan affected by the circumstances
described in
Section 2.7(a)(iii), the Borrower shall, upon at least three
Business Days'
written notice to such Lender, require the affected Lender to
convert such
Eurodollar Loan into a Base Rate Loan.
(c) If a Lender determines that after the Closing Date
the
introduction of or any change in any applicable law or governmental
rule,
regulation, order, guideline, directive or request (whether or not
having the
force of law) concerning capital adequacy, or any change in
interpretation or
administration thereof by the NAIC or any governmental authority,
central
bank or comparable agency, will have the effect of increasing the
amount of
capital required or expected to be maintained by such Lender (or
its Source)
or any corporation controlling such Lender based on the existence
of such
Lender's obligations hereunder, then the Borrower agrees to pay to
such
Lender, upon its written demand therefor, such additional amounts
as shall be
required to compensate such Lender or such other corporation for
the
increased cost to such Lender or such other corporation or the
reduction in
the rate of return to such Lender or such other corporation as a
result of
such increase of capital. In determining such additional
amounts, each
Lender will act reasonably and in good faith and will use averaging
and
attribution methods which are reasonable, provided that such
Lender's
determination of compensation owing under this Section 2.7(c)
shall, absent
manifest error, be final and conclusive and binding on all the
parties
hereto. Such Lender, upon determining that any additional
amounts will be
payable pursuant to this Section 2.7(c), will give prompt written
notice
thereof to the Borrower, which notice shall show in reasonable
detail the
basis for calculation of such additional amounts.
2.8 Compensation. The Borrower agrees to
compensate each
Lender, upon its written request (which request shall set forth in
reasonable
detail the basis for requesting such compensation), for all losses,
expenses
and liabilities (including, without limitation, any loss, expense
or
liability incurred by reason of the liquidation or reemployment of
deposits
or other funds required by such Lender to fund its Eurodollar Loan
but
excluding loss of anticipated profits) which such Lender may
sustain: (i) if
any prepayment or repayment (including any prepayment or repayment
made
pursuant to Section 3.1, Section 3.2, Section 3.8 or as a result of
an
acceleration of the Loans pursuant to Section 8.2) or conversion of
any
Eurodollar Loan is made on a date other than the last day of the
Interest
Period applicable thereto; or (ii) as a consequence of (x) any
other default
by the Borrower to repay such Eurodollar Loan when required by the
terms of
this Agreement or any Note held by such Lender or (y) any election
made
pursuant to Section 2.7(b).
SECTION
3. PREPAYMENTS; PAYMENTS; TAXES.
3.1 Voluntary Prepayments. The Borrower shall
have the right
to prepay the Tranche B Loan, ratably, in whole or in part at any
time and
from time to time on the following terms and conditions: the
Borrower shall
give each affected Lender prior to 12:00 Noon (New York time) (x)
at least
one Business Day's prior written notice (or telephonic notice
promptly
confirmed in writing) of its intent to prepay a Base Rate Loan and
(y) at
least three Business Days' prior written notice (or telephonic
notice
promptly confirmed in writing) of its intent to prepay a Eurodollar
Loan,
which notice (in each case) shall specify the amount of such
prepayment which
shall be in an aggregate principal amount of at least $10,000,000,
and
minimum increments of $1,000,000 in excess thereof; provided that,
the
Tranche B Loan may not be prepaid until after all amounts payable
to each
Holder under the Option Agreement in respect of any Put Notice (as
defined in
the Option Agreement) theretofore delivered by such Holder.
Each prepayment
of the Tranche B Loan made pursuant to this Section 3.1 shall be
accompanied
by payment of a prepayment fee equal to (i) if such prepayment is
made on or
prior to October 1, 2003, the Voluntary Make-Whole Amount, (ii) if
such
prepayment is made after October 1, 2003 and on or prior to October
1, 2004,
2.5% of the principal amount prepaid and (iii) if such prepayment
is made
after October 1, 2004, 0.5% of the principal amount prepaid, which
fee shall
be distributed among each Tranche B Lender ratably according to
the
respective outstanding principal amounts of the Tranche B Loan held
by such
Tranche B Lender.
3.2 Mandatory Repayments. (a) The
principal amount of each
Loan, to the extent then outstanding, shall be repaid at its
maturity
(whether by acceleration or otherwise).
(b) In addition to any other mandatory repayments
pursuant to
this Section 3.2, on each date on or after the Closing Date upon
which the
Borrower receives any cash proceeds from any incurrence by the
Borrower of
Indebtedness for borrowed money, an amount equal to 100% of the Net
Debt
Proceeds of such incurrence shall be applied on such date in
accordance with
the requirements of Section 3.2(i); provided that up to $5,000,000
of such
Net Debt Proceeds from any incurrence by the Borrower of
Indebtedness under
Section 7.4(ix) need not be so applied.
(c) In addition to any other mandatory repayments
pursuant to
this Section 3.2, on each date on or after the Closing Date upon
which the
Borrower receives any cash proceeds from any sale or issuance of
its equity,
including any preferred stock and any instrument that has both
equity-like
and debt-like components, an amount equal to 100% of the Net Equity
Proceeds
of such sale or issuance of equity shall be applied on such date
in
accordance with the requirements of Section 3.2(i); provided, that
any such
Net Equity Proceeds received from the sale or issuance of equity of
the
Borrower shall not be required to be applied to repay the Loans (i)
to the
extent that such Net Equity Proceeds are invested by the Borrower
in PGE
Utility to the extent permitted by clauses (v) and (vi) of Section
7.5,
(ii) to the extent that such Net Equity Proceeds are held by the
Borrower as
cash or Cash Equivalents and thereafter used solely to prepay the
Loans in
accordance with the requirements of Section 3.2(i) or to make
investments in
PGE Utility to the extent permitted by clauses (v) and (vi) of
Section 7.5,
or (iii) to the extent that the Net Equity Proceeds arose in
conjunction with
the sale by the Borrower (directly or through any of its
Subsidiaries) of the
Borrower's common stock to the trustee for the PG&E Corporation
Retirement
Savings Plan, stock option and other equity based incentives under
the PG&E
Corporation Long Term Incentive Program and the Dividend
Reinvestment Plan or
the trustee of the PGE Utility Savings Fund Plan.
(d) In addition to any other mandatory repayments
pursuant to
this Section 3.2, (A) on each date on or after the Closing Date
upon which
(i) PGE Utility conveys, sells, leases, spins-off, transfers or
otherwise
disposes of assets having a fair market value exceeding (on a
cumulative
basis, including all prior conveyances, sales, leases, spin-offs,
transfers
and other dispositions consummated after the Closing Date)
$250,000,000 in
the aggregate (other than in connection with a Spin-Off, provided
that the
Borrower complies with the requirements of Section 3.8) or (ii) PGE
Utility
issues (other than as a pro rata dividend) common stock (or
options, warrants
or other rights to acquire, or securities convertible into, common
stock)
representing (on a cumulative basis, including all prior such
issuances after
the Closing Date) over 15% of its issued and outstanding common
stock as of
the Closing Date, the Borrower shall on such date repay in full the
Tranche B
Loan, all accrued and unpaid interest thereon and all other amounts
owing to
the Tranche B Lenders under the Financing Documents; and (B) on
each date on
or after the Closing Date upon which PGE Utility issues (i) any
preferred
Capital Stock or (ii) any common stock (or options, warrants or
other rights
to acquire, or securities convertible into, common stock)
representing (on a
cumulative basis, including all prior such issuances after the
Closing Date)
up to 15% of its issued and outstanding common stock as of the
Closing Date,
an amount equal to 100% of the Net Equity Proceeds thereof shall be
applied
on such date in accordance with the requirements of Section
3.2(i).
(e) In addition to any other mandatory repayments
pursuant to
this Section 3.2, (A) on each date on or after the Closing Date
upon which
the Borrower receives any cash proceeds from any Asset Sale by the
Borrower,
LLC, NEG, Inc. or any NEG Subsidiary (including, without
limitation, any
Qualified Asset Sale and any sale of the common stock of PGE
Utility owned by
the Borrower to the extent permitted by Section 7.2(xi)), an amount
equal to
100% of the Net Sale Proceeds therefrom shall be applied in
accordance with
the requirements of Section 3.2(i); and (B) on each date after the
date of a
Spin-Off on which the Borrower or any Reorganization Subsidiary
receives any
cash proceeds from any Asset Sale by the Borrower or any
Reorganization
Subsidiary, an amount equal to 100% of the Net Sale Proceeds
therefrom shall
be applied in accordance with the requirements of Section
3.2(i).
(f) In addition to any other mandatory repayments
pursuant to
this Section 3.2, on each date on or after the Closing Date upon
which the
Borrower receives any cash proceeds from any Recovery Event, an
amount equal
to 100% of the Net Insurance Proceeds from such Recovery Event
shall be
applied in accordance with the requirements of Section 3.2(i);
provided that
such Net Insurance Proceeds shall not be required to be so applied
to the
extent such Net Insurance Proceeds are (i) in respect of Recovery
Events for
one or more Subsidiaries of the Borrower and arise from insurance
programs
maintained by the Borrower for such Subsidiaries to the extent that
such Net
Insurance Proceeds are made available to, and actually received by,
such
Subsidiaries; or (ii) utilized to repair the damages which resulted
in such
Net Insurance Proceeds or are reinvested in assets similar to the
assets with
respect to which such Net Insurance Proceeds were received.
(g) In addition to any other mandatory repayments
pursuant to
this Section 3.2, on each date on or after the Closing Date upon
which the
Borrower or LLC receives any cash proceeds from any Qualified NEG
Sale, an
amount equal to 100% of the Net Sale Proceeds therefrom, minus any
net tax
liability of the Borrower resulting from such Qualified NEG Sale,
shall be
applied in accordance with the requirements of Section
3.2(i).
(h) In addition to any other mandatory repayments
pursuant to
this Section 3.2, on each date on or after the Closing Date upon
which the
Borrower receives any principal repayment in respect of borrowed
money owing
to the Borrower by any member of the NEG Group or a distribution or
Dividend
of any sort from LLC, PGE Utility or any Reorganization Subsidiary
(other
than distribution to the Borrower of shares of Reorganization
Subsidiaries or
the shares or related preferred stock purchase rights of PGE
Utility in
connection with a Spin-Off or a Non-Spin Plan of Reorganization),
an amount
equal to 100% of such proceeds (and, other than in the case of a
distribution
or Dividend from PGE Utility, net of any amount thereof used to
reimburse the
Borrower for (i) any expense related to any income or franchise
Taxes of NEG,
Inc. or any NEG Subsidiary (computed as if NEG, Inc. and each of
its
Subsidiaries filed a consolidated federal income Tax return and
state
consolidated or combined income or franchise Tax returns, where
applicable,
separate from the Borrower, PGE Utility and Subsidiaries of PGE
Utility, for
all taxable periods) or (ii) any expenses then due and payable
under the
Expense Sharing Agreement) shall be applied in accordance with
the
requirements of Section 3.2(i). In addition to any other
mandatory
repayments pursuant to this Section 3.2, on each date on or after
the Closing
Date upon which LLC receives any principal repayment in respect of
borrowed
money owing to LLC by any member of the NEG Group or a distribution
or
Dividend of any sort from any member of the NEG Group, an amount
equal to
100% of such proceeds (net of any amount thereof used to reimburse
LLC and/or
the Borrower for (i) any expense related to any income or franchise
Taxes of
NEG, Inc. or any NEG Subsidiary (computed as if NEG, Inc. and each
of its
Subsidiaries filed a consolidated federal income Tax return and
state
consolidated or combined income or franchise Tax returns, where
applicable,
separate from LLC, the Borrower, PGE Utility and Subsidiaries of
PGE Utility,
for all taxable periods) or (ii) any expenses then due and payable
under the
Expense Sharing Agreement) shall be applied in accordance with
the
requirements of Section 3.2(i).
(i) Each amount required to be applied pursuant to this
Section
3.2(i) shall be, first, used to repay all amounts due and payable
to each
Holder under the Option Agreement in respect of any Put Notice (as
defined in
the Option Agreement) theretofore delivered by such Holder, and,
second, paid
to each Tranche B Lender ratably according to the respective
outstanding
principal amounts of the Tranche B Loan held by such Tranche B
Lender and
shall be applied by each such Tranche B Lender to payment of any
amount owing
to such Tranche B Lender under Section 2.8, then to payment of any
interest
and fees then due and payable to such Tranche B Lender on account
of the
Tranche B Loan, and then to reduce the remaining principal balance
of the
Tranche B Loan of such Tranche B Lender.
(j) (i) Each repayment or prepayment of the
Tranche B Loan
made pursuant to Sections 3.2(a) through (c) above shall be
accompanied by
payment of a payment fee equal to (A) if such repayment or
prepayment is made
on or prior to October 1, 2003, the Mandatory Make-Whole Amount,
(B) if such
repayment or prepayment is made after October 1, 2003 and on or
prior to
October 1, 2004, 2.5% of the principal amount repaid or prepaid and
(C) if
such repayment or prepayment is made after October 1, 2004, 0.5% of
the
principal amount repaid or prepaid, which fee shall be distributed
among each
Tranche B Lender ratably according to the respective outstanding
principal
amounts of the Tranche B Loan held by such Tranche B Lender.
(ii)
Each repayment of the Tranche B Loan made pursuant to
Sections 3.2(d) through (h) above shall be accompanied by payment
of a
repayment fee equal to (A) if such repayment is made on or prior to
October
1, 2003, 3.5% of the principal amount repaid, (B) if such repayment
is made
after October 1, 2003 and on or prior to October 1, 2004, 2.5% of
the
principal amount repaid and (C) if such repayment is made after
October 1,
2004, 0.5% of the principal amount repaid, which fee shall be
distributed
among each Tranche B Lender ratably according to the respective
outstanding
principal amounts of the Tranche B Loan held by such Tranche B
Lender.
(k) In addition to any other mandatory repayments
pursuant to
this Section 3.2, all of the then outstanding Tranche B Loan shall
be repaid
in full on the Tranche B Maturity Date.
(l)
The application of any proceeds received by LLC to
be
applied for mandatory repayment under Sections 3.2(b), (c), (e),
(f), (g) and
(h) shall be subject to Compliance by LLC with the requirements
for
Distribution under Section 13 of the LLC Agreement.
(m) Nothing in this Section 3.2 shall limit any other
rights or
remedies a Lender may have under Section 8 of this Agreement or
under
applicable law in connection with any Event of Default.
3.3 Method and Place of Payment. Except as
otherwise
specifically provided herein, all payments under this Agreement and
under any
Note shall be made to the Administrative Agent for the account of
the Lenders
entitled thereto not later than 12:00 Noon (New York time) on the
date when
due and shall be made in Dollars in immediately available funds at
the
Payment Office or pursuant to such other instruction as the
Administrative
Agent shall designate to the Borrower in writing. Except as
otherwise
provided herein, whenever any payment to be made hereunder or under
any Note
shall be stated to be due on a day which is not a Business Day, the
due date
thereof shall be extended to the next succeeding Business Day and,
with
respect to payments of principal, interest shall be payable at the
applicable
rate during such extension.
3.4 Net Payments. (a) All payments
made by the Borrower to
the Administrative Agent or any Lender hereunder and under any Note
will be
made without setoff, counterclaim or other defense. Except as
provided in
Section 3.4(b), all such payments will be made free and clear of,
and without
deduction or withholding for, any present or future taxes, levies,
imposts,
duties, fees, assessments or other charges of whatever nature now
or
hereafter imposed by any jurisdiction or by any political
subdivision or
taxing authority thereof or therein with respect to such payments
(but
excluding, except as provided in the second succeeding sentence,
any tax
imposed on or measured by the net income or net profits of a Lender
pursuant
to the laws of the jurisdiction in which it is doing business,
organized or
the jurisdiction in which the principal office or applicable
lending office
of such Lender is located or any subdivision thereof or therein)
and all
interest, penalties or similar liabilities with respect to such
non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges
(all such
non-excluded taxes, levies, imposts, duties, fees, assessments or
other
charges being referred to collectively as "Taxes"). If any
Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of
such Taxes,
and such additional amounts as may be necessary so that every
payment of all
amounts due under this Agreement or under any Note, after
withholding or
deduction for or on account of any Taxes, will not be less than the
amount
provided for herein or in such Note. If any amounts are
payable in respect
of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse
each Lender, upon the written request of such Lender, for taxes
imposed on or
measured by the net income or net profits of such Lender pursuant
to the laws
of the jurisdiction in which such Lender is doing business,
organized or in
which the principal office or applicable lending office of such
Lender is
located or under the laws of any political subdivision or taxing
authority of
any such jurisdiction in which such Lender is doing business,
organized or in
which the principal office or applicable lending office of such
Lender is
located and for any withholding of taxes as such Lender shall
reasonably
determine are payable by, or withheld from, such Lender, in respect
of such
amounts so paid to or on behalf of such Lender pursuant to the
preceding
sentence and in respect of any amounts paid to or on behalf of such
Lender
pursuant to this sentence. The Borrower will furnish to such
Lender within
45 days after the date the payment of any Taxes is due pursuant to
applicable
law certified copies of tax receipts evidencing such payment by
such
Borrower. The Borrower agrees to indemnify and hold harmless
each Lender,
and reimburse such Lender upon its written request, for the amount
of any
Taxes so levied or imposed and paid by such Lender.
(b) Any Lender that is not a United States person (as
such term
is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax
purposes agrees to deliver to the Administrative Agent and the
Borrower on or
prior to the Closing Date or, in the case of a Lender that is an
assignee or
transferee of an interest under this Agreement pursuant to Section
9.11(a)
(unless such Assignee was already a Lender hereunder immediately
prior to
such assignment in which case such assignee shall reaffirm its
ability to
deliver the forms set forth below in clause (i) or (ii), as
applicable), on
the date of the assignment to such Assignee, (i) two accurate and
complete
original signed copies of Internal Revenue Service Form W-8ECI or
Form W-8BEN
(with respect to a complete exemption under an income tax treaty)
(or
successor forms) certifying to such Lender's entitlement as of such
date to a
complete exemption from United States withholding tax with respect
to
payments to be made under this Agreement and under any Note, or
(ii) if any
such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form W-8ECI
or Form
W-8BEN (with respect to a complete exemption under an income tax
treaty) (or
any successor forms) pursuant to clause (i) above, (x) a
certificate
substantially in the form of Exhibit C (any such certificate, a
"Section
3.4(b)(ii) Certificate") and (y) two accurate and complete original
signed
copies of Internal Revenue Service Form W-8BEN (with respect to the
portfolio
interest exemption) (or successor form) certifying to such
Lender's
entitlement as of such date to a complete exemption from United
States
withholding tax with respect to payments of interest to be made
under this
Agreement and under any Note. In addition, each such Lender
agrees that from
time to time after the Closing Date, when a lapse in time or change
in
circumstances renders the previous certification obsolete or
inaccurate in
any material respect, such Lender will deliver to the
Administrative Agent
and the Borrower two new accurate and complete original signed
copies of
Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect to
the
benefits of any income tax treaty), or Form W-8BEN (with respect to
the
portfolio interest exemption) and a Section 3.4(b)(ii) Certificate,
as the
case may be, and such other forms as may be required in order to
confirm or
establish the entitlement of such Lender to a continued exemption
from or
reduction in United States withholding tax with respect to payments
under
this Agreement and any Note, or such Lender shall immediately
notify the
Administrative Agent and the Borrower of its inability to deliver
any such
Form or Certificate, in which case such Lender shall not be
required to
deliver any such Form or Certificate pursuant to this Section
3.4(b).
Notwithstanding anything to the contrary contained in Section
3.4(a) but
subject to the immediately succeeding sentence, (x) the Borrower
shall be
entitled, to the extent it is required to do so by law, to deduct
or withhold
income or similar taxes imposed by the United States (or any
political
subdivision or taxing authority thereof or therein) from interest,
fees or
other amounts payable hereunder for the account of any Lender which
is not a
United States person (as such term is defined in Section
7701(a)(30) of the
Code) for U.S. Federal income tax purposes to the extent that such
Lender has
not provided to the Administrative Agent and the Borrower U.S.
Internal
Revenue Service Forms that establish a complete exemption from such
deduction
or withholding and (y) the Borrower shall not be obligated pursuant
to
Section 3.4(a) to gross-up payments to be made to a Lender in
respect of
income or similar taxes imposed by the United States if (I) such
Lender has
not provided to the Administrative Agent and the Borrower the
Internal
Revenue Service Forms required to be provided to the Administrative
Agent and
the Borrower pursuant to this Section 3.4(b) or (II) in the case of
a
payment, other than interest, to a Lender described in clause (ii)
above, to
the extent that such Forms do not establish a complete exemption
from
withholding of such taxes. Notwithstanding anything to the
contrary
contained in the preceding sentence or elsewhere in this Section
3.4, the
Borrower agrees to pay any additional amounts and to indemnify each
Lender in
the manner set forth in Section 3.4(a) (without regard to the
identity of the
jurisdiction requiring the deduction or withholding) in respect of
any
amounts deducted or withheld by it as described in the immediately
preceding
sentence as a result of any changes that are effective after the
Closing Date
in any applicable law, treaty, governmental rule, regulation,
guideline or
order, or in the interpretation thereof, relating to the deducting
or
withholding of such Taxes. The sole consequence of any Lender
failing to
comply with the requirement to deliver the Internal Revenue Service
Forms or
the Section 3.4(b)(ii) Certificate shall be that the Borrower shall
not be
obligated pursuant to Section 3.4(a) to gross-up payments to be
made to such
Lender in respect of any resulting U.S. income or similar
taxes.
(c) Any Lender that is (i) an Assignee pursuant to
Section
9.11(a) and (ii) not a United States person (as such term is
defined in
Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes will
certify to the Borrower on or prior to the date of the assignment
to such
Lender that payments to such Lender hereunder and under any Note
are, as of
the date of such assignment, not subject to any withholding tax
imposed by
any taxing jurisdiction located outside of the United States.
(d) Each Lender, at the sole cost and expense of the
Borrower
(including, but not limited to, the Lender's internal costs for use
of its
personnel and resources), will use its reasonable efforts to
minimize taxes
indemnifiable by the Borrower under this Section 3.4, including by
complying
with reasonable requests by the Borrower to do or to refrain from
doing any
act (including the execution of any certificates or similar
documents
required to establish an exemption or relief from any tax), if such
efforts
or any such compliance is, in the good faith discretion of such
Lender, of a
purely ministerial nature and has no adverse impact on such Lender
or any
Affiliate or on the business or operations of the foregoing (unless
such
adverse impact is one of a nature and quality such that it is
subject to
indemnification and the Borrower has indemnified such Lender
against such
adverse impact in a manner satisfactory to such Lender determined
in its sole
discretion). The Borrower shall indemnify such Lender for any
taxes that may
be imposed on it as a consequence of such compliance. No
Lender shall be
required to disclose any tax return or filing or any related
information it
deems confidential and all positions taken by each Lender in any
tax return,
filing or proceeding shall be within the sole control of such
Lender.
3.5 Allocation. The parties agree that the Notes
issued by the
Borrower to the New Tranche B Lenders under this Agreement and the
New
Warrants issued by the Borrower to the New Tranche B Lenders under
the New
Warrant Agreement will, for federal tax purposes, be treated as
an
"investment unit" as such term is defined under Section 1273(c)(2)
of the
Code and the parties agree that the consideration paid by each New
Tranche B
Lender for its Note and New Warrants shall be allocated as set
forth on
Schedule 3.5.
3.6 [OMITTED].
3.7 Application of Payments; Sharing. (a)
Subject to the
provisions of the Intercreditor Agreement and this Section 3.7,
the
Administrative Agent agrees that promptly after its receipt of each
payment
from or on behalf of the Borrower in respect of any Obligations of
the
Borrower hereunder, it shall promptly distribute such payment to
the Lenders
pro rata based upon their respective shares, if any, of the
Obligations with
respect to which such payment was received.
(b) Each of
the Lenders agrees that, except to the extent that
this Agreement provides for payments to be allocated to particular
Lenders or
to Lenders holding a particular Loan, if it should receive any
payment
hereunder on account of the Obligations (whether by voluntary
payment, by
realization upon security, by the exercise of the right of setoff
or banker's
lien, by counterclaim or cross action, by the enforcement of any
right under
the Financing Documents, or otherwise), which, in any such case, is
in excess
of its ratable share of payments on account of the Obligations
obtained by
all Lenders, then such Lender receiving such excess payment shall
purchase
for cash without recourse or warranty from the other Lenders an
interest in
the Obligations of the Borrower to such Lenders in such amount as
shall
result in a proportional participation by all the Lenders in such
amount;
provided, however, that if all or any portion of such excess amount
is
thereafter recovered from such Lender, such purchase shall be
rescinded and
the purchase price restored to the extent of such recovery, but
without
interest. Notwithstanding the foregoing provisions of this
paragraph, in the
event that (i) during the period between the Closing Date and the
date which
is 91 days after the Closing Date, an Event of Default occurs under
Section
8.1(e) and (ii) during the proceeding constituting such Event of
Default any
payment made by the Borrower in respect of either the Continued
Tranche B
Loan or the New Tranche B Loan, as the case may be, prior to the
commencement
of any such proceeding is avoided or otherwise recovered pursuant
to Sections
547 and 550 of the Bankruptcy Code, or any lien granted by the
Borrower prior
to the commencement of any such proceeding to secure either the
Continued
Tranche B Loan or the New Tranche B Loan, as the case may be, is
avoided or
otherwise recovered pursuant to Section 547 of the Bankruptcy
Code, then, in
any such case, solely for purposes of this paragraph, such payment
or such
lien shall be deemed not to have been avoided or recovered, and
(for greater
certainty) any amount that would have been received in respect of
the
Continued Tranche B Loan or the New Tranche B Loan, as the case may
be, if
such lien had not been so avoided shall be deemed to have been
received and
not avoided. Anything to the contrary in this Agreement
notwithstanding, all
proceeds of the Tranche B Escrow Account (including all
substitutions and
replacements therefor) shall be applied solely to the New Tranche B
Loan
ratably among the New Tranche B Lenders according to the
respective
outstanding principal amounts of the New Tranche B Loan held by the
New
Tranche B Lenders, and shall not be shared with the Continued
Tranche B
Lenders on account of the Continued Tranche B Loan.
3.8 Offers to Repay. (a) Upon a Change
of Control, the
Borrower shall prepare and provide to each Lender an Offer to Repay
Notice,
which shall include an offer (the "Change of Control Offer to
Repay") to
prepay on the date (each, a "Change of Control Offer Settlement
Date") that
is ten (10) Business Days after the date of the Offer to Repay
Notice, such
Lender's Loan, together with a prepayment fee (the "Change of
Control
Prepayment Fee") equal to 1.5% of the aggregate principal amount of
such
Lender's Loan, and each Lender wishing to accept the Change of
Control Offer
to Repay (which shall be determined by such Lender in its sole
discretion)
shall reply, in the form of Exhibit E-2, indicating whether such
offer is
accepted or rejected in whole or in part (and if so, to what
extent) by the
close of business on the Business Day preceding the Change of
Control Offer
Settlement Date, failing which such offer will be deemed to have
been
accepted in whole by such Lender and such repayment will be made by
the
Borrower to such Lender. On the Change of Control Offer
Settlement Date, the
Borrower shall pay to those Lenders who have accepted (or are
deemed to have
accepted) the Change of Control Offer to Repay the aggregate amount
necessary
to prepay that portion of the outstanding Loans, together with the
Change of
Control Prepayment Fee, in respect of which such Lenders have
accepted (or
are deemed to have accepted) the Change of Control Offer to Repay
in
accordance with this Section 3.8(a).
(b) Not later than 45 days prior to the date (the
"Spin-Off
Date") of any Spin-Off, the Borrower shall prepare and provide to
each Lender
an Offer to Repay Notice, which shall include an offer (the "Spin
Offer to
Repay") to prepay on a date (each, a "Spin Offer Settlement Date")
that is on
or before the Spin-Off Date, such Lender's Loan, together with a
prepayment
fee (the "Spin Prepayment Fee") equal to the Put Prepayment Fee
Percentage of
the aggregate principal amount of such Lender's Loan, and each
Lender wishing
to accept the Spin Offer to Repay (which shall be determined by
such Lender
in its sole discretion) shall reply, in the form of Exhibit E-2,
indicating
whether such offer is accepted or rejected in whole or in part (and
if so, to
what extent) by the close of business on the date that is ten (10)
days after
the date of receipt of the Offer to Repay Notice by such Lender,
failing
which such offer will be deemed to have been accepted in whole by
such Lender
and such repayment will be made by the Borrower to such
Lender. On the Spin
Offer Settlement Date, the Borrower shall pay to those Lenders who
have
accepted (or are deemed to have accepted) the Spin Offer to Repay
the
aggregate amount necessary to prepay that portion of the
outstanding Loans,
together with the Spin Prepayment Fee, in respect of which such
Lenders have
accepted (or are deemed to have accepted) the Spin Offer to Repay
in
accordance with this Section 3.8(b); provided, that in the event
that both
(1) the PGE Plan is confirmed and (2) immediately upon the
consummation of
the Newco Spin, the Borrower has delivered to the Collateral Agent
the stock
certificates representing the common stock of Newco received by the
Borrower
in the Newco Spin such that the Lenders shall have a perfected
first priority
security interest in the common stock of Newco pursuant to the
Utility Pledge
Agreements, the Spin-Off Date shall be deemed to be the earlier of
(i) the
date of the PGE Spin and (ii) the date 30 days after the date of
the Newco
Spin. For avoidance of doubt, no Spin-Off shall be permitted
prior to the
prepayment of all amounts owing to Lenders that accept the
Borrower's Spin
Offer to Repay in accordance with this Section 3.8(b).
(c) Upon and after the confirmation of any Non-Spin
Plan of
Reorganization, if on any Test Date the Post-Confirmation Market
Value to
Loan Ratio is less than 85% of the Pre-Closing Market Value to Loan
Ratio,
then, not later than 5 Business Days after such Test Date, the
Borrower shall
prepare and provide to each Lender an Offer to Repay Notice, which
shall
include an offer (the "Non-Spin Offer to Repay") to prepay on a
date (each, a
"Non-Spin Offer Settlement Date") that is on or before the date
twenty-five
(25) Business Days after the date of the Offer to Repay Notice,
such Lender's
Loan, together with a prepayment fee (the "Non-Spin Prepayment
Fee") equal to
the Put Prepayment Fee Percentage of the aggregate principal amount
of such
Lender's Loan, and each Lender wishing to accept the Non-Spin Offer
to Repay
(which shall be determined by such Lender in its sole discretion)
shall
reply, in the form of Exhibit E-2, indicating whether such offer is
accepted
or rejected in whole or in part (and if so, to what extent) by the
close of
business on the date that is ten (10) days after the date of
receipt of the
Offer to Repay Notice by such Lender, failing which such offer will
be deemed
to have been accepted in whole by such Lender and such repayment
will be made
by the Borrower to such Lender. On the Non-Spin Offer
Settlement Date, the
Borrower shall pay to those Lenders who have accepted (or are
deemed to have
accepted) the Non-Spin Offer to Repay the aggregate amount
necessary to
prepay that portion of the outstanding Loans, together with the
Non-Spin
Prepayment Fee, in respect of which such Lenders have accepted (or
are deemed
to have accepted) the Non-Spin Offer to Repay in accordance with
this Section
3.8(c).
SECTION
4. CONDITIONS PRECEDENT.
4.1 Conditions to Closing. The obligation of any
Lender to
make or continue its Loan, and the occurrence of the Closing Date,
shall be
subject to the conditions precedent that such Lender shall have
received, or
shall have waived receipt of, the following (in the case of
documents
described below to be delivered to such Lender), each of which
shall be in
form and substance satisfactory to such Lender, and that the other
conditions
set forth below shall have been satisfied or waived in accordance
with this
Agreement:
(a)
Financing Documents. Each of the Financing
Documents
(including the acknowledgments under the LLC Pledge Agreement and
the Stock
Pledge Agreement, the Utility Pledge Agreements, the Security
Agreements, the
Option Agreement, the New Warrant Agreement and the Tranche B
Interest
Reserve Account Control Agreements (other than the Tranche B
Interest Reserve
Account Control Agreement (Combined Tranche B Loan))) shall have
been duly
authorized, executed and delivered by each party thereto.
Such Lender shall
have received an original of each Financing Document executed by
all parties
thereto.
(b) Notes. The Borrower shall have duly
authorized, executed
and delivered a Note for the Continued Tranche B Loan and the New
Tranche B
Loan (as applicable) of such Lender. Each Note shall be
appropriately
completed with the name of the payee, the maximum principal amount
thereof
and the date of issuance (which shall be the Closing Date) inserted
therein.
(c) Charter Documents. Such Lender shall have
received the
following documents, each certified as indicated below:
(i) a copy of the Charter Documents of the Borrower, as
in
effect on the Closing Date, certified by
the Secretary of State of the
State of such Person's organization, as
applicable, and a certificate,
where available, as to the good standing
of and payment of franchise
taxes by the Borrower from the Secretary
of State of the State of such
Person's organization, dated as of a date
no earlier than five (5) days
prior to the Closing Date;
(ii) a certificate of an Authorized Officer of the
Borrower,
dated the Closing Date, certifying (A)
that attached thereto is a true
and complete copy of the Charter
Documents of such Person, as in effect
at all times from the date on which the
resolutions referred to in
clause (B) below were adopted to and
including the date of such
certificate, (B) that attached thereto is
a true and complete copy of
resolutions duly adopted by the board of
directors (or other equivalent
body) or evidence of all corporate,
partnership or limited liability
company action, as the case may be, of
such Person, authorizing the
execution, delivery and performance of the
Financing Documents to which
such Person is or is intended to be a
party, and that such resolutions
have not been modified, rescinded or
amended and are in full force and
effect, and (C) as to the name,
incumbency and specimen signature of
each officer of such Person executing the
Financing Documents to which
such Person is intended to be a party and
each other document to be
delivered by such Person from time to time
in connection therewith; and
(iii) a certificate of another Authorized Officer of
the
Borrower as to the name, incumbency and
specimen signature of the
Authorized Officer of such Person that
signed the certificate referred
to in clause (ii) above.
(d) Filings, Registrations,
Recordings; Other Perfection
Actions. (i) On or prior to the Closing Date, such
Lender shall have
received certified copies of Requests for Information or Copies
(Form UCC-
11), or equivalent reports, each of a recent date listing all
effective
financing statements that name the Borrower, LLC or NEG, Inc., as
debtor,
together with copies of such financing
statements.
(ii) Any document required to be filed, registered,
notarized
or recorded in order to create and perfect
the security interest of the
Collateral Agent under the Security
Documents as a first priority Lien
shall have been properly filed,
registered, notarized or recorded in
each office in each jurisdiction in which
such filings, registrations,
notarizations and recordations are
required, and any other action
required in the judgment of any Lender to
perfect such security
interest as such first priority Lien shall
have been effected, and such
Lender shall have received acknowledgment
copies or other evidence
satisfactory to it that all necessary
filing, notarization, recording
and other fees and all taxes and expenses
related to such filings,
notarizations, registrations and
recordings have been paid in full.
(iii) The Collateral Agent shall have received the
stock
certificates representing 100% of the
Capital Stock of NEG, Inc. and
100% of the Capital Stock of PGE Utility
owned by the Borrower,
together with related appropriate stock
powers, duly executed in blank.
(iv) The Collateral Agent shall have received the
certificates
representing 100% of the Pledged Interest
of the Borrower being pledged
pursuant to the LLC Pledge Agreement,
together with related powers,
duly executed in blank.
(e) Borrower's Certificate. Such Lender shall
have received an
original counterpart of a certificate of an Authorized Officer of
the
Borrower, dated the Closing Date, to the effect that:
(i) the
representations and warranties of the Borrower contained in Section
5 hereof
and the representations and warranties of the Borrower contained in
each of
the other Financing Documents to which the Borrower is a party are
true and
correct in all material respects (or in the event any such
representation or
warranty shall be qualified by a "Material Adverse Effect" or a
materiality
threshold, in all respects) on and as of the Closing Date (or, if
stated to
have been made solely as of an earlier date, were true and correct
as of such
earlier date), (ii) all covenants required to be performed by the
Borrower
contained in any Financing Document to which it is a party prior to
the
Closing Date have been performed in all material respects, (iii)
all
Financing Documents are in full force and effect under the terms
and
conditions set forth in such Financing Documents, and (iv) no
Default or
Event of Default (after giving effect to the transactions
contemplated
hereby) has occurred and is continuing.
(f) [OMITTED].
(g) Financial Information, etc.
(i) Such Lender shall have
received copies of the most recent audited and unaudited (x)
consolidated
financial statements from the Borrower, in form and substance
satisfactory to
such Lender together with a certificate from the Chief Financial
Officer,
Chief Accounting Officer, Treasurer or other Authorized Officer of
such
Person, dated the Closing Date, to the effect that, to the best of
such
officer's knowledge, (A) such financial statements or information
are true,
complete and correct in all material respects and (B) except as
disclosed in
the SEC Filings by the Borrower or NEG, Inc. since December 31,
2001 but
prior to the Closing Date, there has been no material adverse
change in the
condition (financial or otherwise), results of operations,
business,
Properties, liabilities, management or prospects of such Person
since the
date of the most recent financial statements or information of such
Person.
(ii) Such Lender shall have received such other
financial,
business and other information regarding any other Subsidiary of
the Borrower
as such Lender shall have reasonably requested.
(h) Process Agent. Such Lender shall have
received a copy of a
letter from Corporation Service Company accepting its appointment
as process
agent in New York for the Borrower, LLC and NEG, Inc., in
substantially the
form of Exhibit D hereto.
(i) Legal Opinions. Such Lender shall have
received original
counterparts of the legal opinions of counsel to the Borrower, LLC
and NEG,
Inc., which legal opinions shall be dated the Closing Date,
addressed to such
Lender, and in form, scope and substance satisfactory to such
Lender; such
legal opinions shall cover substantially the same matters as were
covered by
the legal opinions delivered on behalf of the Borrower on the
Initial Closing
Date; provided, that the legal opinion with respect to
substantive
consolidation shall address the substantive consolidation of the
Borrower and
NEG, Inc., and PGE Utility and NEG, Inc., in each case in a
bankruptcy with
respect to NEG, Inc, as well as the substantive consolidation of
the Borrower
and PGE Utility.
(j) Material Adverse Change. Since December 31,
2001, and
except as disclosed in the SEC Filings by the Borrower or NEG, Inc.
since
December 31, 2001 but prior to the Closing Date, there shall not
have
occurred and be continuing any Material Adverse Change of the
Borrower.
(k) Fees; Expenses. Xxxxxx Commercial Paper Inc.
shall have
received the fees payable to it pursuant to the Xxxxxx Fee Letter,
and all
other fees, costs and charges due and owing to any Person under the
Financing
Documents on or prior to the Closing Date shall have been received
by such
Person. The Collateral Agent shall have received the CA Fee
for payment of
its services as Collateral Agent under the Financing
Documents. The
Administrative Agent shall have received payment of all
out-of-pocket
expenses payable by the Borrower to such Person (including, in its
capacity
as a Lender as well as an agent) pursuant to Section 9.1
(including
reasonable fees and expenses and disbursements of legal
counsel).
(l) Interest. On or prior to the Closing Date,
the Borrower
shall have deposited in the Tranche B Interest Reserve Account
(Continued
Tranche B Loan) at least $75,833,333.33, and the Collateral Agent
shall have
confirmed receipt of such amount and the amount of the account
balance of
such account. The Borrower shall have paid in cash all
interest (both cash-
pay and pay-in-kind) on the Continued Tranche B Loan that accrued
(and was
not previously paid in cash) to the Closing Date under the Existing
Credit
Agreement.
(m) [OMITTED].
(n) Notice of Funding. The Administrative Agent
shall have
received a Notice of Funding pursuant to and in compliance with
Section 2.2.
(o) Governmental Approvals,
etc. (i) All Governmental
Approvals and consents or approvals from any third party which
under
applicable Law or any agreement, contract or document are required
to be
obtained by the Borrower or its Subsidiaries with respect to the
transactions
contemplated by the Financing Documents prior to the Closing Date
shall have
been duly obtained and shall be final, non-appealable and in full
force and
effect; (ii) there shall have been no change in any applicable Law,
and no
issuance of any order, writ, injunction or decree of any
Governmental
Authority or arbitral tribunal, which, in either such case, could
reasonably
be expected to have a Material Adverse Effect; and (iii) there
shall have
been no proposed change in or modification of any applicable Law
which could
reasonably be expected to be enacted and which if enacted could
reasonably be
expected to have a Material Adverse Effect.
(p) Material Adverse
Effect. There shall exist
no
circumstance, event or condition which has had or could reasonably
be
expected to have a Material Adverse Effect.
(q) Litigation. Except as set forth on Schedule
5.6, no legal
or arbitral proceedings or investigations, or any proceedings by or
before
any Governmental Authority or any Person, shall be pending or
threatened
against the transactions contemplated by the Financing Documents or
any
document executed in connection therewith which, if adversely
determined,
could reasonably be expected to have a Material Adverse Effect, and
no other
legal or arbitral proceedings or investigations, or any proceedings
by or
before any Governmental Authority or any Person, shall be pending
in respect
of the Borrower, LLC or NEG, Inc. which, if adversely determined,
could
reasonably be expected to result in a Material Adverse Change to
the
Borrower. No legal or arbitral proceedings or
investigations, or any
proceedings by or before any Governmental Authority or any Person,
shall be
pending in respect of PGE Utility which could reasonably be
expected to
result in a Material Adverse Change to the Borrower.
Notwithstanding the
foregoing, there shall exist no
legal or arbitral proceedings or
investigations, or any proceedings by or before any Governmental
Authority or
any Person, pending or threatened, which, if adversely determined,
could
reasonably be expected to have a material adverse effect on (i) the
legality,
validity or enforceability of any material provision of any
Financing
Document, (ii) the rights and remedies of the Collateral Agent,
the
Administrative Agent, any Holder or any Lender under any of the
Financing
Documents or (iii) the security interests provided under the
Security
Documents.
(r) Solvency Certificate. On or before the
Closing Date, the
Borrower shall cause to be delivered to such Lender a solvency
certificate
from the Chief Financial Officer or Treasurer of the Borrower in
form, scope
and substance satisfactory to such Lender, dated the Closing Date,
setting
forth the conclusion that, after giving effect to the
transaction
contemplated by the Financing Documents and the incurrence of all
the
financings contemplated herein, the Borrower (on a stand-alone
basis) and the
Borrower and its Subsidiaries (on a consolidated basis) are not
insolvent and
will not be rendered insolvent by the indebtedness incurred in
connection
therewith, and will not be left with unreasonably small capital
with which to
engage in its or their businesses and will not have incurred debts
beyond its
or their ability to pay debts as they mature and become due.
(s) No Breach. Immediately prior to and after
giving effect to
the transactions contemplated by the Financing Documents, except as
disclosed
in Part E of the Disclosure Letter, there shall exist no default or
event of
default under any material agreement or contract to which the
Borrower is a
party which would result in a Material Adverse Change to the
Borrower.
(t) Disclosure Letter. Such Lender shall have
received the
Disclosure Letter.
(u) Proceedings. All corporate and other
proceedings, and all
Charter Documents, other documents, instruments and other legal
matters in
connection with the transactions contemplated hereby and the other
Financing
Documents shall be satisfactory in form and substance to such
Lender and such
Lender shall have received such other documents, certificates and
instruments
relating to the Financing Documents or the transactions
contemplated thereby
as it shall have reasonably requested, in each case, in form and
substance
satisfactory to it.
(v) Convertible Notes.
The Convertible Notes and the
Convertible Notes Indenture shall have been modified in a manner
reasonably
satisfactory to the Required Waiver Lenders such that no
non-payment or
acceleration of indebtedness of NEG, Inc. or any of its
Subsidiaries, and no
bankruptcy event with respect to NEG, Inc. or any of its
Subsidiaries, will
constitute a default or event of default under the Convertible
Notes and the
Convertible Notes Indenture.
SECTION
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
In order to
induce the Administrative Agent and each Lender to
enter into this Agreement, and to induce each Lender to make or
continue its
Loan, the Borrower makes the following representations, warranties
and
agreements as of the date hereof, all of which shall survive the
execution
and delivery of this Agreement and the Notes and the making and
continuance
of the Loans:
5.1 Standing. (a) Each of the Borrower
and LLC (collectively,
the "Covered Parties") is a corporation or limited liability
company duly
formed, validly existing and in good standing under the laws of
its
jurisdiction of organization and has the requisite power and
authority to
own, lease and operate its Properties and to carry on its business
as now
being conducted.
(b) Each Covered Party is duly qualified or licensed to
do
business as a foreign entity and is in good standing in each
jurisdiction in
which the use and ownership of its Property or the conduct of its
business
requires such license or qualification, except where the failure to
be so
qualified or licensed would not have a Material Adverse
Effect.
5.2 Requisite Authority; Etc. Each Covered Party
has all
requisite power and authority to enter into the Financing Documents
to which
it is a party. All necessary action on the part of each
Covered Party has
been taken to authorize the execution and delivery of the Financing
Documents
to which it is a party, the performance of its obligations under
such
Financing Documents and the consummation of the transactions
contemplated
hereby and thereby. Each of the Financing Documents has been
duly and
validly executed and delivered by each Covered Party that is a
party thereto,
and constitutes valid and binding agreements of each such Covered
Party,
enforceable in accordance with their respective terms, except as
the
enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent
transfer, reorganization, moratorium and similar laws of general
application
relating to or affecting creditors' rights generally and to
general
principles of equity (regardless of whether such enforceability is
considered
in an proceeding in equity or at law).
5.3 No Conflict. Neither the execution and
delivery of the
Financing Documents nor the consummation of the transactions
contemplated by
such Financing Documents nor compliance by any Covered Party with
any of the
provisions of such Financing Documents to which it is a party
will
(i) violate or conflict with any provision of the charter,
certificate of
formation, by-laws or limited liability company agreement or other
governing
documents of such Covered Party, or any Law, judgment, order, writ,
decree or
injunction applicable to such Covered Party, or (ii) except as set
forth in
Part F of the Disclosure Letter, violate, or conflict with, or
result in a
breach of any provision of, or constitute a default (or any event
which, with
or without due notice or lapse of time, or both, would constitute a
default)
under, or result in the termination of, accelerate the performance
required
by, or, except for the Liens created by the Financing Documents,
result in
the creation of any Lien upon any of the Properties or assets of
such Covered
Party, under any contract, note, bond, mortgage, indenture, deed of
trust,
license, lease, agreement, permit or other instrument or obligation
of which
such Covered Party is a party or by which it or any of its assets
are bound.
5.4 Consents. (a) No permit,
application, notice, transfer,
consent, approval, order, qualification, waiver from or
authorization of, or
declaration, filing or registration with, any Governmental
Authority or any
third party is currently required to be made or obtained by any
Covered Party
or any of its Subsidiaries in connection with (i) the execution,
delivery and
performance of the Financing Documents or the consummation of
the
transactions contemplated by such Financing Documents, (ii) the
grant by the
Borrower or LLC, or the perfection and maintenance, of the Liens
contemplated
by the Financing Documents (including the first priority nature
thereof) or
(iii) the exercise by any party to the Financing Documents of any
of its
rights under any such Financing Document or any remedies pursuant
to the
Financing Documents, except that (A) the exercise by any Holder of
its right
to convert the Option to Option Shares under the Option Agreement
or the
exercise of Warrants by any holder thereof, in each case, may
require filing
under the HSR Act or with FERC, (B) the exercise of the foreclosure
rights
with respect to the stock of NEG, Inc. or the LLC Interests which
may require
filing with FERC and certain state regulatory agencies and (C) the
exercise
of foreclosure rights with respect to the common stock of PGE
Utility or
Newco may require filing with FERC.
(b) No right of first refusal, preemptive right, right
of first
offer or other similar rights to acquire (each a "Preferential
Right") are
required to be complied with by the Borrower, LLC or NEG, Inc. in
connection
with the execution, delivery or performance of the Financing
Documents or the
consummation of the transactions contemplated by the Financing
Documents.
5.5 Compliance with Law. Each Covered Party has
been and on
the Closing Date is in compliance in all material respects with all
Laws,
Governmental Approvals, orders, writs, injunctions or decrees or
its Charter
Documents applicable to or otherwise concerning such Person.
5.6 Litigation Claims. Except as set forth on
Schedule 5.6,
there are no legal or arbitral proceedings or investigations, or
any
proceedings by or before any Governmental Authority or any Person,
pending or
threatened against the transactions contemplated by the Financing
Documents
or any document executed in connection therewith which, if
adversely
determined, could reasonably be expected to have a Material Adverse
Effect,
and there are no other legal or arbitral proceedings or
investigations, or
any proceedings by or before any Governmental Authority or any
Person pending
against the Borrower, LLC or NEG, Inc. which, if adversely
determined, could
reasonably be expected to result in a Material Adverse Change to
the
Borrower. There are no legal or arbitral proceedings or
investigations, or
any proceedings by or before any Governmental Authority or any
Person pending
against PGE Utility or its Subsidiaries which could reasonably be
expected to
result in a Material Adverse Change to the Borrower.
Notwithstanding the
foregoing, there are no legal or arbitral proceedings or
investigations, or
any proceedings by or before any Governmental Authority or any
Person,
pending or threatened, which, if adversely determined, could
reasonably be
expected to have a material adverse effect on (i) the legality,
validity or
enforceability of any material provision of any Financing Document,
(ii) the
rights and remedies of the Collateral Agent, the Administrative
Agent, any
Holder or any Lender under any of the Financing Documents or (iii)
the
security interests provided under the Security Documents.
5.7 Contracts and Commitments.
(a) Schedule 5.7 reflects a
complete and accurate list of all material contracts, agreements or
letters
of intent or written understandings (including all amendments and
supplements
thereto) entered into by the
Borrower (collectively, the "Covered
Contracts").
(b) Except as otherwise set forth on Part E of the
Disclosure
Letter, (i) each of the Covered Contracts is a valid and binding
obligation
of the Borrower and enforceable by the Borrower in accordance with
its terms,
except as enforcement may be
limited by bankruptcy, insolvency,
reorganization or similar laws or equitable principles relating to
creditors'
rights generally; (ii) the Borrower is not in default or alleged to
be in
default under any Covered Contract, and no other asserted or, to
the best
knowledge of the Borrower, unasserted claim or dispute under any
Covered
Contract exists; and (iv) to the best knowledge of the Borrower,
there exists
no event, condition or occurrence that, after notice or lapse of
time, or
both, would constitute such a default, claim or dispute by the
Borrower or,
to the best knowledge of the Borrower, any other party to any such
Covered
Contract.
5.8 Liens. Except as set forth on Schedule 5.8,
none of the
Properties of the Borrower or LLC are subject to any Lien, other
than the
Liens created by this Agreement and the Security Documents.
5.9 Insurance. All insurance policies and
fidelity bonds
relating to the Borrower and its Properties, including summary
descriptions
and the termination dates thereof, in force as of the date of this
Agreement
are set forth on Schedule 5.9. The insurance coverage
provided by such
policies will not terminate or lapse as a result of the
transactions
contemplated by this Agreement or the other Financing
Documents. Except as
set forth on Schedule 5.9, all such insurance policies and fidelity
bonds are
in the name of the Borrower. None of the Borrower or, to the
best knowledge
of the Borrower, any other party to any such policy or bond is in
breach,
violation or default (including with respect to the payment of
premiums or
the giving of notices), and, to the best knowledge of the Borrower,
no event
has occurred that, with notice or the lapse of time or both, could
constitute
such a breach, violation or default by the Borrower or any other
party, or
permit termination, modification or acceleration, under such policy
or bond,
except where any such breach, violation, default, termination,
modification
or acceleration could not reasonably be expected to have a Material
Adverse
Effect.
5.10 Capitalization and Ownership.
(a) As of the Closing
Date, the Borrower and Energy NEG Corp. are the sole members of
LLC, with the
Borrower owning all of the Class A membership interests of the LLC,
which
entitle the Borrower to 100% of the economic interest in LLC, and
Energy NEG
Corp. owning all of the Class B membership interests of LLC, which
entitle
Energy NEG Corp. to vote solely on certain bankruptcy matters of
LLC as
provided for in the LLC Agreement. The Borrower is (and at
all times prior
to the Closing Date from and after January 12, 2001, was) the owner
of 100%
of the Class A membership interests in LLC and is (and at all times
prior to
the Closing Date from and after January 12, 2001, was) the indirect
owner
(through the Limited Liability Company Interests) of 100% of NEG,
Inc. and
the NEG Subsidiaries. Set forth on Schedule 5.10(a) is a
schedule setting
forth the outstanding Capital Stock of PGE Utility and the owners
thereof as
of the Closing Date. The Capital Stock of PGE Utility owned
by the Borrower
is free and clear of all Liens and adverse claims, other than the
Liens in
favor of the Collateral Agent created by the Security
Documents.
(b) LLC is (and at all times prior to the Closing Date
from and
after January 12, 2001, was) the sole direct owner of all of the
outstanding
Capital Stock of NEG, Inc., free and clear of all Liens and adverse
claims,
other than the Liens in favor of the Collateral Agent created by
the Security
Documents.
(c) [Reserved]
(d) (i) All of the Limited Liability Company
Interests have
been duly authorized and, at the Closing Date, are and will be
validly
issued, free and clear of all Liens and adverse claims, other than
the Liens
in favor of the Collateral Agent created by the Security
Documents.
(ii) All shares of the Capital Stock of NEG, Inc. and
PGE
Utility have been duly authorized and, at the Closing Date, are and
will be
validly issued and fully paid and nonassessable and are owned by
LLC or the
Borrower, respectively, free and clear of all Liens and adverse
claims, other
than the Liens in favor of the Collateral Agent created by the
Security
Documents.
(e) Except as set forth in Schedule 5.10(e) and as
provided
under the Option Agreement, no Person other than an employee or
former
employee of a member of the NEG Group owns (i) any outstanding
option,
warrant, purchase right, subscription right, conversion right,
exchange right
or other contract, commitment, arrangement or understanding
relating to the
issuance by or purchase from the Borrower of its LLC Interests or
LLC or NEG,
Inc. of its Equity Interests, or (ii) any outstanding stock
appreciation,
phantom stock, profit participation or similar rights with respect
to LLC or
NEG, Inc., and there are no voting trusts, proxies or other
agreements or
understandings with respect to the voting of LLC Interests or
Equity
Interests to which the Borrower, LLC or NEG, Inc. is party.
Except as set
forth in Schedule 5.10(e), no Person owns (i) any outstanding
option,
warrant, purchase right, subscription right, conversion right,
exchange right
or other contract, commitment, arrangement or understanding
relating to the
issuance by or purchase from the Borrower or PGE Utility of Capital
Stock of
PGE Utility, or (ii) any outstanding stock appreciation, phantom
stock,
profit participation or similar rights with respect to PGE Utility,
and there
are no voting trusts, proxies or other agreements or understandings
with
respect to the voting of the common stock of PGE Utility to which
the
Borrower or PGE Utility is party.
(f) Schedule 5.10(f) sets forth for each of the
Borrower, LLC,
NEG, Inc. and PGE Utility a complete and accurate listing of (i)
its name and
jurisdiction of organization, (ii) its form of organization and
(iii) in the
case of LLC, NEG, Inc. and PGE Utility, the percentage (and,
where
applicable, the amount) of capital stock, membership interests or
other
equity interests ("Equity Interests") held directly or indirectly
by the
Borrower.
5.11 Financial Statements; Absence of Certain Changes;
Cash
Flow Forecasts. (a) Prior to the execution of this
Agreement, the Borrower
has delivered to the Administrative Agent and each Lender (i) the
audited
consolidated financial statements of the Borrower as at December
31, 2001 and
(ii) the unaudited consolidated financial statements of the
Borrower as at
June 30, 2002, each of which has been certified by the Chief
Financial
Officer of the Borrower. The audited financial statements
(the "Audited
Financial Statements") described in this Section 5.11(a) (complete
with any
appropriate footnote disclosures) present fairly the financial
position of
the Borrower as at December 31, 2001, and were prepared in
accordance with
U.S. GAAP, consistently applied. The unaudited financial
statements (the
"Unaudited Financial Statements") described in this Section 5.11(a)
present
fairly the financial position of the Borrower as at such dates and
were
prepared on a management basis without accompanying notes.
Such Audited
Financial Statements and Unaudited Financial Statements have been
prepared
from the books of account and financial records of the
Borrower.
(b) Since December 31, 2001 and except as disclosed in
the SEC
Filings by the Borrower or NEG, Inc. since December 31, 2001 but
prior to the
Closing Date, the Borrower has conducted its business only in the
ordinary
course of business, and there has not been (i) any event or
development that
could, individually or in the aggregate, reasonably be expected to
have a
Material Adverse Effect or (ii) any damage, destruction or loss,
whether or
not covered by insurance, that could, individually or in the
aggregate,
reasonably be expected to have a Material Adverse Effect.
Except as set
forth in the Audited Financial Statements or otherwise disclosed in
writing
to each Lender in the Disclosure Letter or incurred in the ordinary
course of
business, the Borrower has no
outstanding claims, liabilities or
indebtedness, contingent or otherwise.
(c) The cash flow forecasts, dated October 17, 2002
and
denominated by the Borrower as "Case 1 and Case 2 Cash Forecasts"
have been
delivered to the Lenders. Such forecasts were prepared by the
Borrower in
good faith based upon assumptions (which are disclosed in such
forecasts)
believed by the Borrower to be reasonable, and on the date hereof
the
Borrower believes that such forecasts and the assumptions upon
which they
were based continue to be reasonable on the date hereof.
5.12 Taxes. (a) Each of the Borrower
and its Subsidiaries has
filed or caused to be filed with the appropriate taxing authorities
all
material federal, state and local tax returns ("Returns") which are
required
to be filed by or with respect to each of the Borrower, its
Subsidiaries, or
any assets thereof. The Returns accurately reflect (or will
accurately
reflect) all liabilities for Taxes of the Borrower and each such
Subsidiary
for the periods covered thereby in all material respects. All
material Taxes
due by or with respect to the Borrower and each such Subsidiary, or
any
assets thereof, whether or not shown on any Return, have been or
will be
timely paid in full on or prior to the Closing Date or accrued and
provided
for on the books and records of each such Person, as applicable,
in
accordance with U.S. GAAP. There is no dispute or claim
concerning any
liability for Taxes of the Borrower and each of its Subsidiaries,
or any
assets thereof that has been claimed or raised by any Governmental
Authority,
except for disputes or claims for Taxes that have been provided for
on the
books and records of each such Person, as applicable, in accordance
with U.S.
GAAP. No Return of the Borrower, its Subsidiaries, or the
affiliated group
of the Borrower is currently, or has been, the subject of an audit
by any
taxing authority and no notice of such an audit has been received,
except for
audits with respect to Taxes that have been provided for on the
books and
records of the Borrower and its Subsidiaries, as applicable, in
accordance
with U.S. GAAP. None of the Borrower or any of its
Subsidiaries have waived
any statute of limitations in respect of Taxes or agreed to any
extension of
time with respect to a Tax assessment or deficiency, except with
respect to
Taxes that have been provided for on the books and records of the
Borrower
and its Subsidiaries, as applicable, in accordance with U.S.
GAAP.
(b) All material Taxes which the Borrower or any of
its
Subsidiaries is (or was) required by Law to withhold or collect
with respect
to any payments made in connection with its Property have been duly
withheld
or collected, and have been timely paid over to the appropriate
authorities
to the extent due and payable.
5.13 Disclosure. All documents, reports or other
written
information pertaining to the Borrower or its Affiliates that have
been
furnished to the Lenders by or on behalf of the Borrower, taken as
a whole,
are true and correct in all material respects and do not contain
any untrue
statement of a material fact or omit to state any material fact
necessary to
make the statements contained therein not misleading. There
is no fact,
event or circumstance that has not been disclosed to the Lenders in
writing,
the existence of which could reasonably be expected to have a
Material
Adverse Effect.
5.14 Environmental Matters. Except as set forth
in Schedule
5.14 or as disclosed in the SEC Filings by the Borrower or NEG,
Inc. since
December 31, 2001 but prior to the Closing Date, (a) each of the
Borrower and
PGE Utility is in compliance in all material respects with all
applicable
Environmental Laws, (b) there is no Environmental Claim outstanding
or
pending against the Borrower or PGE Utility or, to the best
knowledge of the
Borrower, threatened against the Borrower or PGE Utility, which,
individually
or in the aggregate, could reasonably be expected to have a
Material Adverse
Effect, and (c) to the best knowledge of the Borrower, neither the
Borrower
nor PGE Utility has made any past or present releases, emissions,
discharges
or disposals of any Hazardous Material in violation of any
Environmental Laws
or that would give rise to any liability which, individually or in
the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.15 Brokers' or Finders' Fees. Except as set
forth in
Schedule 5.15 (as to which the Borrower is solely responsible for
the payment
of any such investment banker's, brokers' or finders' fee or other
commission
or similar fee), no agent, broker, investment banker, Person or
firm acting
on behalf of the Borrower or any of its Affiliates or under the
authority of
the Borrower or any of its Affiliates is or will be entitled to any
brokers'
or finders' fee or any other commission or similar fee directly or
indirectly
from any of the parties hereto in connection with any of the
transactions
contemplated hereby.
5.16 Certain Regulatory Matters.
(a) Neither the Borrower nor
any Subsidiary of the Borrower is a "registered holding company" or
a
"subsidiary company" or an "affiliate" of a "registered holding
company" or a
company which is required to be registered as a "holding company"
as such
terms are defined under PUHCA.
(b) Neither the Borrower nor LLC directly owns any
assets
subject to the jurisdiction of FERC pursuant to the FPA.
(c) The Borrower and each of its Subsidiaries is in
material
compliance with all orders of the CPUC applicable to it, including
without
limitation, the conditions set forth in the orders setting forth
the
conditions for the creation of the Borrower and any subsequent
CPUC
proceedings, Pacific Gas and Electric Company, 69 CPUC2nd 167 (Nov.
6, 1996),
Pacific Gas and Electric Company, 194 PUR4th 1 (April 22, 1999),
and all
other CPUC orders purporting to apply to the Borrower or its
Subsidiaries
regardless of whether the CPUC had jurisdiction.
(d)
Each of the Borrower and PGE Utility is in material
compliance with the requirements of Utility Regulation applicable
to it.
(e) Neither the Borrower nor PGE Utility is subject to
any
statute or regulation which would prohibit or require approval of
the
transactions contemplated under this Agreement and the other
Financing
Documents, including any Utility Regulation.
5.17 Transactions With Affiliates. Except as set
forth on
Schedule 5.17, neither the Borrower nor any of its Subsidiaries is
a party to
any material contract (i) with PGE Utility on the one hand and the
Borrower
or any member of the NEG Group on the other, or (ii) with the
Borrower on the
one hand and any member of the NEG Group on the other.
5.18 Use of Proceeds. The proceeds of the
Existing Tranche A
Loan and the Existing Tranche B Loan were used for the purposes set
forth in
the Existing Credit Agreement. The amount funded in respect
of the New
Tranche B Commitments on the Closing Date shall be transferred by
the
Administrative Agent to the Tranche B Escrow Account; and upon the
withdrawal
on the Escrow Release Date of amounts in the Tranche B Escrow
Account, a
Tranche B Loan shall be deemed to be made on the Escrow Release
Date by each
New Tranche B Lender in an amount equal to the amount funded by
such New
Tranche B Lender on the Closing Date, and the proceeds thereof will
be used
on the Escrow Release Date to fund the Tranche B Interest Reserve
Account
(New Tranche B Loan) in the amount specified in clause (b) of
Section 7.14(a)
and, thereafter, for general corporate purposes of the Borrower and
its
Subsidiaries, and in no event shall any of such proceeds be used to
make
Investments in LLC or NEG, Inc. or any of their Subsidiaries or,
except to
the extent permitted by clauses (v) and (vi) of Section 7.5, in PGE
Utility.
The Borrower is not engaged principally, or as one of its
important
activities, in the business of extending credit for the purpose,
whether
immediate, incidental or ultimate, of buying or carrying Margin
Stock and no
part of the proceeds of the Loans will be used to purchase or carry
any
Margin Stock. Neither the making of the Loans nor the use of
the proceeds
thereof will violate or be inconsistent with the provisions of
Regulation U
or Regulation X.
5.19 Compliance with ERISA.
(a) Schedule 5.19 sets forth each
Plan; each Plan (and each related trust, insurance contract or
fund) is in
substantial compliance with its terms and with all applicable laws,
including
without limitation ERISA and the Code; each Plan (and each related
trust, if
any) which is intended to be qualified under Section 401(a) of the
Code has
received (or, in the case of the Retirement Savings Plan for
Union-
Represented Employees, applied for) a determination letter from the
Internal
Revenue Service to the effect that it meets the requirements of
Sections
401(a) and 501(a) of the Code; no Reportable Event (other than
the
commencement of the bankruptcy proceeding in 2001 by PGE Utility)
has
occurred; no Plan which is a multiemployer plan (as defined in
Section
4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has
an
Unfunded Current Liability; no Plan which is subject to Section 412
of the
Code or Section 302 of ERISA has an accumulated funding deficiency,
within
the meaning of such sections of the Code or ERISA, or has applied
for or
received a waiver of an accumulated funding deficiency or an
extension of any
amortization period, within the meaning of Section 412 of the Code
or Section
303 or 304 of ERISA; all contributions required to be made with
respect to a
Plan have been timely made; neither the Borrower nor any Subsidiary
of the
Borrower nor any ERISA Affiliate has incurred any material
liability
(including any indirect, contingent or secondary liability) to or
on account
of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063,
4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or
4975 of the
Code or expects to incur any such liability under any of the
foregoing
sections with respect to any Plan; no condition exists which
presents a
material risk to the Borrower or any Subsidiary of the Borrower or
any ERISA
Affiliate of incurring a liability to or on account of a Plan
pursuant to the
foregoing provisions of ERISA and the Code; no proceedings have
been
instituted to terminate or appoint a trustee to administer any Plan
which is
subject to Title IV of ERISA; no action, suit, proceeding, hearing,
audit or
investigation with respect to the administration, operation or the
investment
of assets of any Plan (other than routine claims for benefits) is
pending,
expected or threatened (other than an ongoing Department of
Labor
investigation of the impact of insurance company demutualization on
benefit
plans of the Borrower and its Subsidiaries); using actuarial
assumptions and
computation methods consistent with Part 1 of subtitle E of Title
IV of
ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its
ERISA Affiliates to all Plans which are multiemployer plans (as
defined in
Section 4001(a)(3) of ERISA) in the event of a complete withdrawal
therefrom,
as of the close of the most recent fiscal year of each such Plan
ended prior
to the date of the most recent Credit Event, would not exceed
$100,000; each
group health plan (as defined in Section 607(1) of ERISA or
Section
4980B(g)(2) of the Code) which covers or has covered employees or
former
employees of the Borrower, any Subsidiary of the Borrower, or any
ERISA
Affiliate has at all times been operated in compliance with the
provisions of
Part 6 of subtitle B of Title I of ERISA and Section 4980B of the
Code; no
lien imposed under the Code or ERISA on the assets of the Borrower
or any
Subsidiary of the Borrower or any ERISA Affiliate exists or is
likely to
arise on account of any Plan; and the Borrower and its Subsidiaries
may cease
contributions to or terminate any employee benefit plan maintained
by any of
them without incurring any material liability, except as such
cessation or
termination may be limited by the terms of a collective bargaining
agreement.
(b) Each Foreign Pension Plan
has been maintained in
substantial compliance with its terms and with the requirements of
any and
all applicable laws, statutes, rules, regulations and orders and
has been
maintained, where required, in good standing with applicable
regulatory
authorities. All contributions required to be made with
respect to a Foreign
Pension Plan have been timely made. Neither the Borrower nor
any of its
Subsidiaries has incurred any obligation in connection with the
termination
of, or withdrawal from, any Foreign Pension Plan. The present
value of the
accrued benefit liabilities (whether or not vested) under each
Foreign
Pension Plan, determined as of the end of the Borrower's most
recently ended
fiscal year on the basis of actuarial assumptions, each of which
is
reasonable, did not exceed the current value of the assets of such
Foreign
Pension Plan allocable to such benefit liabilities.
5.20 Investment Company Act. The
Borrower is not an
"investment company," or an "affiliated person" of, or "promoter"
or
"principal underwriter" for, an "investment company," as such terms
are
defined in the Investment Company Act of 1940, as amended.
Neither the
making of any Loan, nor the application of the proceeds or
repayment thereof
by the Borrower, nor the consummation of the other transactions
contemplated
hereby will violate any provisions of such Act or any rule,
regulation or
order of the SEC thereunder.
5.21 Regulation. Solely by virtue of the
execution, delivery
and performance of, or the consummation of the transactions
contemplated by
the Financing Documents (including, without limitation, the
assignment of or
transfer into any trust, or any realization or foreclosure upon
(pursuant to
the provisions of the applicable Security Agreement), any of the
LLC
Interests pledged under the LLC Pledge Agreement or any of the
collateral
pledged under the Stock Pledge Agreement or the Utility Base
Pledge
Agreement, or the exercise of any right under the Option Agreement
or the
Warrant Agreement), neither any Holder nor any Lender shall be or
become
subject to regulation (i) as a "holding company," or an "affiliate"
of a
"holding company" or a "subsidiary company" of a "holding company,"
within
the meaning of PUHCA, provided that, if, pursuant to the exercise
of the
remedies contained in Section 7 of the Utility Base Pledge
Agreements the
voting securities of Newco or PGE Utility are transferred into the
Collateral
Agent's name or the name of its nominee or nominees, or if,
whether or not
so transferred, the Collateral Agent shall acquire the right to
vote or take
the other actions referenced in Section 7(iii) of the Utility Base
Pledge
Agreements with respect to such Collateral, then, (x) the
Collateral Agent
and any Lender, to the extent an exemption from registration as a
holding
company under PUHCA is not otherwise available, may be required to
register
as a holding company under PUHCA, and (y) prior to exercising any
such remedy
the Collateral Agent and any Lender may be required to obtain
approval
pursuant to Section 9(a)(2) of PUHCA to the extent that, in the
case of
exercise of such remedies with respect to securities of PGE
Utility, such
parties, individually or collectively, would directly or indirectly
own,
control or hold with power to vote 5% or more of the voting
securities of PGE
Utility and any other "public-utility company" or "holding
company", as
defined under PUHCA, or to the extent that, in the case of the
exercise of
such remedies with respect to the securities of Newco, such
parties,
individually or collectively, would directly or indirectly,
own, control or
hold with power to vote 5% or more of the voting securities of
Newco;
provided, further, that subject to compliance with its terms,
Rule 3
promulgated under PUHCA provides an exemption from the requirements
set forth
in subclauses (x) and (y) above, to companies primarily
engaged in business
as a commercial bank or trust company, or both, and subject to
regulation or
examination under the laws of the United States or any State, or
any
receiver, conservator, or liquidating agent thereof in his capacity
as such;
(ii) under the FPA, provided that any person acquiring the voting
securities
of NEG, Inc., PGE Utility or Newco or the LLC Interests may require
prior
approval from FERC, or (iii) as a "public utility" or "public
service
corporation" or the equivalent under the applicable Law of any
Governmental
Authority, except with respect to the exercise of foreclosure
rights with
respect to the stock of NEG, Inc. or PGE Utility or the LLC
Interests, which
may require filing with certain state regulatory agencies.
5.22 Security Documents. The provisions of the
Security
Documents are effective to create, in favor of the Collateral
Agent, for the
benefit of the Lenders, legal, valid and enforceable Liens on or in
all of
the collateral intended to be covered thereby, and all necessary
recordings
and filings have been made in all necessary public offices and all
other
necessary and appropriate action has been taken so that the Liens
created by
each Security Document constitute perfected Liens on or in the
collateral
intended to be covered thereby, prior and superior to all other
Liens, and
all necessary consents to the creation, effectiveness, priority
and
perfection of each such Lien have been obtained. No mortgage
or financing
statement or other instrument or recordation covering all or any
part of the
collateral is on file in any recording office, except such as may
have been
filed in favor of the Collateral Agent, for the benefit of the
Lenders.
5.23 [Reserved].
5.24 [Reserved].
5.25 Intellectual Property. The Borrower owns or
has the right
to use all patents, trademarks, permits, service marks, trade
names,
copyrights, franchises, formulas, licenses and other rights with
respect
thereto, and has obtained assignment of all licenses and other
rights of
whatsoever nature necessary for the operation of its business as
currently
contemplated without any conflict with the rights of others.
To the best
knowledge of the Borrower, no product, process, method, substance,
part or
other material sold or employed or presently contemplated to be
sold by or
employed by the Borrower in connection with its business infringes
or will
infringe any patent, trademark, permit, service xxxx, trade name,
copyright,
franchise, formula, license or other intellectual property
right.
5.26 No Default. No Default or Event of Default
has occurred
and is continuing.
5.27 Single-Purpose Entity. LLC has not engaged
in any
business other than the ownership of 100% of the capital stock of
NEG, Inc.
LLC has established offices at 0000 Xxx Xxxxxxxxxx Xxxx, Xxxxxxxx,
XX 00000-
6161, and does not have a place of business at any other
location. LLC has
no Indebtedness and no significant assets other than the common
stock of NEG,
Inc.
5.28 Trust Indenture Act. The offering, issuance,
sale and
delivery of the Notes under the circumstances contemplated by this
Agreement
and the other Financing Documents will not require this Agreement
to be
qualified under the Trust Indenture Act of 1939, as amended.
5.29 Existing Indebtedness. Part A of the
Disclosure Letter
sets forth a true and complete list of all agreements with respect
to the
Indebtedness of the Borrower and the amount thereof existing on the
Closing
Date which, subject to Section 7.4, is to remain outstanding after
the
Closing Date (the "Existing Indebtedness Agreements"). Except
as set forth
in Part A of the Disclosure Letter, none of the obligations of the
Borrower
under the Existing Indebtedness Agreements are due and payable as
of the
Closing Date, and there has been no demand on the Borrower, and the
Borrower
is not currently liable, for any payment under such Existing
Indebtedness
Agreements.
5.30 No Event of Default. No event or
circumstance has
occurred and is continuing that would constitute an Event of
Default under
this Agreement if this Agreement had been in effect since the
Initial Closing
Date.
5.31 Certain Obligations. (a) Schedule
5.31(a) lists each
item of Indebtedness or other obligation (whether direct or
contingent, or
matured or unmatured), in an amount of $5,000,000 or greater, owing
by the
Borrower to, or on account of, any of its Subsidiaries as of August
31, 2002.
The amount of such Indebtedness or other obligations not listed on
Schedule
5.31(a) as of August 31, 2002 does not exceed $10,000,000 in the
aggregate.
Although the Borrower has not yet officially finalized its
accounting
results, based on the Borrower's knowledge, as of the Effective
Date there
has been no material change in the amount of Indebtedness or
other
obligations owing by the Borrower to, or on account of, its
Subsidiaries.
(b) Except for Indebtedness or other obligations
described in
Section 5.31(c), Schedule 5.31(b) lists each item of Indebtedness
or other
obligation (whether direct or indirect, or matured or unmatured),
in an
amount of $5,000,000 or greater, owing to the Borrower by any
Subsidiary of
the Borrower as of August 31, 2002; each such item of Indebtedness
or other
obligation constitutes a legal, valid and binding claim of the
Borrower
against the obligor thereof, enforceable in accordance with its
terms, except
as the enforceability thereof may be limited by bankruptcy,
insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general
application relating to or affecting creditors' rights generally
and to
general principles of equity (regardless of whether such
enforceability is
considered in a proceeding in equity or at law). The amount
of such
Indebtedness or other obligations not listed on Schedule 5.31(b) as
of August
31, 2002 does not exceed $10,000,000 in the aggregate.
Although the Borrower
has not yet officially finalized its accounting results, based on
the
Borrower's knowledge, as of the Effective Date there has been no
material
change in the amount of Indebtedness or other obligations owing to
the
Borrower by its Subsidiaries.
(c) The Borrower has filed one or more proofs of claim
in an
aggregate amount of $175,605,965.02 in the PGE Utility Bankruptcy
Proceeding;
such claims are general, unsecured, unsubordinated claims, and
neither PGE
Utility nor any other Person having standing to object to such
claim has
filed any objection thereto in the PGE Utility Bankruptcy
Proceeding; and the
Borrower knows of no basis upon which such claims could be validly
objected
to.
5.32 Solvency. After giving effect to the
borrowing of the New
Tranche B Loan on the Closing Date, the Borrower will be
Solvent.
SECTION
6. AFFIRMATIVE COVENANTS.
The Borrower
hereby covenants and agrees that on and after the
Closing Date and until the Loans and the Notes together with
interest, fees
and all other Obligations incurred hereunder and thereunder are
paid in full
(other than any indemnity, not then due and payable, which by its
terms shall
survive such termination and payment) (it being agreed that, to the
extent
any of the covenants set forth in this Section 6 require the
Borrower to
cause LLC or any of its Subsidiaries to take or refrain from taking
any
action, such covenant shall cease to apply to any such Person when
such
Person is no longer a Subsidiary of the Borrower (it being further
understood
that this provision shall not in any way constitute a waiver of any
breach of
this Agreement)):
6.1 Information Covenants. The Borrower will
furnish to the
Administrative Agent:
(a) Quarterly Financial Statements. Within 60
days after the
close of the first three quarterly accounting periods in each
fiscal year of
the Borrower, the consolidated balance sheet of the Borrower and
its
consolidated subsidiaries, as at the end of such quarterly
accounting period
and the related consolidated statements of income and cash flows,
in each
case for such quarterly accounting period and for the elapsed
portion of the
fiscal year ended with the last day of such quarterly accounting
period, and
in each case, setting forth comparative figures for the related
periods in
the prior fiscal year, all of which shall be certified by the Chief
Financial
Officer, Chief Accounting Officer or Treasurer of the Borrower,
subject to
normal year-end audit adjustments.
(b) Annual Financial Statements. Within 120 days
after the
close of each fiscal year of the Borrower, the consolidated balance
sheets of
the Borrower and its consolidated subsidiaries and the related
statements of
income and retained earnings and of cash flows for such fiscal
year, setting
forth comparative figures for the preceding fiscal year and in the
case of
all such balance sheets certified by Deloitte & Touche LLP, or
such other
independent certified public accountants of recognized national
standing
reasonably acceptable to the Lenders, together with a report of
such
accounting firm stating that in the course of its regular audit of
the
financial statements of the Borrower and its consolidated
subsidiaries, which
audit was conducted in accordance with generally accepted auditing
standards,
such accounting firm obtained no knowledge of any Default or Event
of Default
which has occurred and is continuing or, if in the opinion of such
accounting
firm such a Default or Event of Default has occurred and is
continuing, a
statement as to the nature thereof, and (iii) management's
discussion and
analysis of the Borrower of the important operational and
financial
developments during such fiscal year.
(c) Management Letters. Promptly after the
receipt thereof by
the Borrower, a copy of any "management letter" received by the
Borrower from
its certified public accountants and the management's responses
thereto.
(d) Officer's Certificates. At the time of the
delivery of the
financial statements provided for in Sections 6.1(a) and (b), a
certificate
of the Chairman of the Board, the President or Chief Financial
Officer or
Treasurer of the Borrower to the effect that, to the best of such
officer's
knowledge, no Default or Event of Default has occurred and is
continuing or,
if any Default or Event of Default has occurred and is continuing,
specifying
the nature and extent thereof.
(e) Reports and Other Information from NEG, Inc.
Promptly
after delivery thereof to any of the lenders under any material
credit
facility to which NEG, Inc. is a party, copies of any financial
statements,
reports or other information delivered by NEG, Inc. to such
lender.
(f) Notice of Default or Litigation, etc.
Promptly, and in any
event within three (3) Business Days after an officer of the
Borrower obtains
knowledge thereof, notice of (i) the occurrence of any event
which
constitutes a Default or Event of Default or a "Default" or "Event
of
Default" under the Convertible Notes Indenture, (ii) any litigation
or
governmental investigation or proceeding pending or threatened (x)
against
the Borrower or any of its Subsidiaries which would reasonably be
expected to
have a Material Adverse Effect, (y) with respect to any
Indebtedness in
excess of $10,000,000 of the Borrower or in excess of $50,000,000
of any of
its Subsidiaries or (z) with respect to any Financing Document and
(iii)
demand for satisfaction of any guaranty or other Contingent
Obligations of
the Borrower.
(g) Other Reports and Filings. Promptly, copies
of all
financial information, proxy materials and other material
information and
material reports, if any, which the Borrower or any of its
Subsidiaries shall
receive from FERC, CPUC or SEC or file with FERC, CPUC or SEC, or
deliver to
holders of its material Indebtedness pursuant to the terms of
the
documentation governing such Indebtedness (or any trustee, agent or
other
representative therefor) and holders of their Capital Stock in
their capacity
as such.
(h) Environmental Matters. Promptly upon, and in
any event
within thirty (30) days after, an officer of the Borrower obtains
knowledge
thereof, notice of one or more of the following environmental
matters which
occurs after the Closing Date, unless such environmental matters
would not,
individually or when aggregated with all other such environmental
matters, be
reasonably expected to have a Material Adverse Effect:
(i) any Environmental Claim pending or threatened in
writing
against the Borrower or any of its
Subsidiaries or any Real Estate
owned or operated or occupied by the
Borrower or any of its
Subsidiaries;
(ii) any condition or occurrence on or arising from any
Real
Estate owned or operated or occupied by
the Borrower or any of its
Subsidiaries that (a) results in
noncompliance by the Borrower or any
of its Subsidiaries with any applicable
Environmental Law or (b) would
reasonably be expected to form the basis
of an Environmental Claim
against the Borrower or any of its
Subsidiaries or any such Real
Estate;
(iii) any condition or occurrence on any Real Estate
owned or
operated or occupied by the Borrower or
any of its Subsidiaries that
would reasonably be expected to cause such
Real Estate to be subject to
any restrictions on the ownership,
occupancy, use or transferability by
the Borrower or any of its Subsidiaries of
such Real Estate under any
Environmental Law; and
(iv) the taking of any removal or remedial action in
response
to the actual or alleged presence of any
Hazardous Material on any Real
Estate owned or operated or occupied by
the Borrower or any of its
Subsidiaries as required by any
Environmental Law or any governmental
or other administrative agency; provided
that in any event the Borrower
shall deliver to each Lender all material
notices received by it or any
of its Subsidiaries from any government or
governmental agency under,
or pursuant to, CERCLA.
All such notices shall describe in reasonable detail the nature of
the claim,
investigation, condition, occurrence or removal or remedial action
and the
Borrower's or such Subsidiary's response thereto. In
addition, the Borrower
will provide each Lender, from time to time, with copies of all
material
communications with any government or governmental agency and all
material
communications with any Person relating to any Environmental Claim
as to
which notice is required to be given pursuant to this Section
6.1(h), and
such detailed reports of any such Environmental Claim as to which
notice is
required, as may reasonably be requested by any Lender.
(i) [OMITTED].
(j) Intercompany Transaction. From time to time,
such
information or document with respect to any commitment, memorandum
of
understanding or agreement, whether in writing or not, with respect
to
material transactions between (i) any of the Borrower and any
member of the
NEG Group or (ii) between or among any of the Borrower and any
member of the
NEG Group, on one hand and PGE Utility and any of its Subsidiaries,
on the
other hand.
(k) [OMITTED].
(l) Quarterly Meetings with Lender. At the
request of the
Administrative Agent, within 50 days after the close of each fiscal
quarter
the Borrower shall hold a meeting at a reasonable time and place
selected by
the Borrower and acceptable to each Lender at which meeting shall
be reviewed
the financial results of the previous fiscal quarter and the
financial
condition of the Borrower and its Subsidiaries and the budgets
presented for
the current fiscal quarter of the Borrower and its
Subsidiaries.
(m) Remaining Obligations. At the time of the
delivery of the
financial statements provided for in Sections 6.1(a) and (b), a
certificate
of the Chief Financial Officer or Treasurer of the Borrower
describing in
reasonable detail the nature and amount of any Remaining
Obligations incurred
by the Borrower during the previous fiscal quarter and setting
forth the
amount of any payments made with respect thereto.
(n) Other Information. From time to time, such
other
information or documents (financial or otherwise) with respect to
the
Borrower or its Subsidiaries as the Administrative Agent or any
Lender may
reasonably request in writing.
6.2 Books, Records and Inspections. The Borrower
will, and
will cause LLC and PGE Utility (together with the Borrower, the
"Covenant
Parties") to, keep proper books of record and account in which are
made full,
true and correct entries in conformity with generally accepted
accounting
principles and all requirements of law. The Borrower will,
and will cause
LLC to, permit officers and designated representatives of any
Lender to visit
and inspect, during regular business hours and under guidance of
officers of
the Borrower, any of the properties of the Borrower and LLC in
whomsoever's
possession, and to examine the books of account of the Borrower and
LLC and
discuss the affairs (including environmental matters), finances and
accounts
of the Borrower and LLC with, and be advised as to the same by, its
and their
officers and independent accountants, all upon reasonable advance
notice and
at such reasonable times and intervals and to such reasonable
extent as such
Lender may request, provided, that so long as no Default or Event
of Default
has occurred and is continuing, the Borrower shall have the right
to
participate in any discussions of the Lender with any independent
accountants
of the Borrower.
6.3 Maintenance of Property; Insurance. The
Borrower will (a)
keep all material properties and equipment used in its business in
good
working order and condition (ordinary wear and tear and loss or
damage by
casualty or condemnation excepted), (b) maintain in full force and
effect
insurance with reputable and solvent insurance carriers on all its
property
in at least such amounts, against at least such risks and with
such
deductibles or self-insured retentions as is consistent and in
accordance
with industry practice and (c) furnish to each Lender, upon written
request,
full information as to the insurance carried. In addition to
the
requirements to the immediately preceding sentence, the Borrower
will at all
time cause insurance of the types described in Schedule 5.9 to be
maintained
with no less scope of coverage or greater deductibles as are
described in
Schedule 5.9 unless Borrower can show that such insurance is no
longer
available to the Borrower at a commercially reasonable cost.
Such insurance
shall include physical damage insurance on all real and personal
property
(whether now or hereafter acquired) on an all risk basis and
business
interruption insurance.
6.4 Corporate Franchises. The Borrower will, and
will cause
all Covenant Parties to, do or cause to be done, all things
necessary to
preserve and keep in full force and effect its existence and its
material
rights, franchises, licenses and patents used in its business
(which business
shall be the business of PGE Utility as modified by any plan
of
reorganization that is consummated in accordance with this
Agreement).
6.5 Compliance with Statutes, etc. The Borrower
will, and will
cause all Covenant Parties to, comply, with all applicable Law, in
respect of
the conduct of its business and the ownership of its Property,
except such
noncompliances as could not, individually or in the aggregate,
reasonably be
expected to have a Material Adverse Effect.
6.6 Compliance with Environmental Laws.
(a) The Borrower will
comply, and will cause all Covenant Parties to comply, in all
material
respects with all Environmental Laws applicable to the operation of
its
business or to the ownership or use of Real Estate now or hereafter
owned or
operated by the Borrower and the other Covenant Parties, will
within a
reasonable time period pay or cause to be paid all costs and
expenses
incurred in connection with such compliance (except to the extent
being
contested in good faith), and will undertake all reasonable efforts
to keep
or cause to be kept all such Real Estate free and clear of any
Liens imposed
pursuant to such Environmental Laws, except such noncompliances as
could not,
individually or in the aggregate, reasonably be expected to have a
Material
Adverse Effect. The Borrower will not, and will cause the
other Covenant
Parties not to, generate, use, treat, store, release or dispose of,
or permit
the generation, use, treatment, storage, release or disposal of
Hazardous
Materials on any Real Estate now or hereafter owned or operated or
occupied
by the Borrower or any of the other Covenant Parties, or transport
or permit
the transportation of Hazardous Materials to or from any such Real
Estate
except in compliance with all applicable Environmental Laws (except
such
noncompliances as could not, individually or in the aggregate,
reasonably be
expected to have a Material Adverse Effect) and reasonably required
in
connection with the operation, use and maintenance of any such Real
Estate or
otherwise in connection with their businesses.
(b) At the written request of any Lender upon a
reasonable
belief by such Lender that the Borrower or any of its Subsidiaries
has
breached any representation or covenant contained herein relating
to
environmental matters, which request shall specify in reasonable
detail the
basis therefor, the Borrower will provide, at the Borrower's sole
cost and
expense, an environmental audit, reasonable in scope, concerning
the subject
matter of such representation or covenant and any Real Estate now
or
hereafter owned, operated or occupied by the Borrower or any of
its
Subsidiaries, prepared by an environmental consulting firm
reasonably
acceptable to such Lender, indicating (if relevant to such breach)
the
presence or absence of Hazardous Materials and the potential cost
of any
removal or remedial action in connection with any Hazardous
Materials on such
Real Estate; provided, that such request may be made only if (i)
there has
occurred and is continuing a Default, (ii) such Lender reasonably
believes
that the Borrower or any such Real Estate is not in compliance
with
Environmental Law and such circumstances would reasonably be
expected to have
a Material Adverse Effect or (iii) circumstances exist that
reasonably could
be expected to form the basis of a material Environmental Claim
against the
Borrower or any of its Subsidiaries or any such Real Estate.
If the Borrower
fails to provide the same within a reasonable period, not to exceed
90 days,
after such request was made, a Lender may order the same, and the
Borrower
shall grant and hereby grants to such Lender and its agents access
to such
Real Estate and specifically grants such Lender an irrevocable
non-exclusive
license, subject to the rights of tenants, to undertake such an
assessment,
all at the Borrower's expense.
6.7 ERISA. As soon as possible and, in any event,
within ten
(10) days after the Borrower, any Subsidiary of the Borrower or any
ERISA
Affiliate knows or has reason to know of the occurrence of any of
the
following, the Borrower will deliver to the Administrative Agent
a
certificate of the Chief Financial Officer or Treasurer of the
Borrower
setting forth the full details as to such occurrence and the
action, if any,
that the Borrower, such Subsidiary or such ERISA Affiliate is
required or
proposes to take, together with any notices required or proposed to
be given
or filed by such Borrower, such Subsidiary, the Plan administrator
or such
ERISA Affiliate to or with the PBGC or any other government agency,
or a Plan
participant and any notices received by such Borrower, such
Subsidiary or
ERISA Affiliate from the PBGC or any other government agency, or a
Plan
participant with respect thereto: that a Reportable Event has
occurred
(except to the extent that the Borrower has previously delivered to
the
Administrative Agent a certificate and notices (if any) concerning
such event
pursuant to the next clause hereof); that a contributing sponsor
(as defined
in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of
ERISA is
subject to the advance reporting requirement of PBGC Regulation
Section
4043.61 (without regard to subparagraph (b)(1) thereof), and an
event
described in subsection .62, .63, .64, .65, .66, .67 or .68 of
PBGC
Regulation Section 4043 is reasonably expected to occur with
respect to such
Plan within the following 30 days; that an accumulated funding
deficiency,
within the meaning of Section 412 of the Code or Section 302 of
ERISA, has
been incurred or an application may be or has been made for a
waiver or
modification of the minimum funding standard (including any
required
installment payments) or an extension of any amortization period
under
Section 412 of the Code or Section 303 or 304 of ERISA with respect
to a
Plan; that any contribution required to be made with respect to a
Plan or
Foreign Pension Plan has not been timely made; that a Plan has been
or may be
terminated, reorganized, partitioned or declared insolvent under
Title IV of
ERISA; that a Plan has an Unfunded Current Liability; that
proceedings may be
or have been instituted to terminate or appoint a trustee to
administer a
Plan which is subject to Title IV of ERISA; that a proceeding has
been
instituted pursuant to Section 515 of ERISA to collect a
delinquent
contribution to a Plan; that the Borrower, any Subsidiary of the
Borrower or
any ERISA Affiliate will or may incur any liability (including any
indirect,
contingent, or secondary liability) to or on account of the
termination of or
withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201,
4204 or
4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975
or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA or
with respect
to a group health plan (as defined in Section 607(1) of ERISA or
Section
4980B(g)(2) of the Code) under Section 4980B of the Code; or that
the
Borrower or any Subsidiary of the Borrower may incur any material
liability
pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of
ERISA) that provides benefits to retired employees or other former
employees
(other than as required by Section 601 of ERISA) or any Plan or any
Foreign
Pension Plan. The Borrower will deliver to the Administrative
Agent copies
of any records, documents or other information that must be
furnished to the
PBGC with respect to any Plan pursuant to Section 4010 of
ERISA. Upon the
reasonable request of the Required Waiver Lenders, the Borrower
will also
deliver to the Administrative Agent a complete copy of the annual
report (on
Internal Revenue Service Form 5500-series) of each Plan (including,
to the
extent required, the related financial and actuarial statements and
opinions
and other supporting statements, certifications, schedules and
information)
required to be filed with the Internal Revenue Service. In
addition to any
certificates or notices delivered to the Administrative Agent
pursuant to the
first sentence hereof, copies of annual reports and any records,
documents or
other information required to be furnished to the PBGC or any
other
government agency, and any material notices received by the
Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate with respect to
any Plan or
Foreign Pension Plan shall be delivered to the Administrative Agent
no later
than ten (10) days after the date such annual report has been filed
with the
Internal Revenue Service or such records, documents and/or
information has
been furnished to the PBGC or any other government agency or such
notice has
been received by the Borrower, the Subsidiary or the ERISA
Affiliate, as
applicable. The Borrower and each of its applicable
Subsidiaries shall
ensure that all Foreign Pension Plans administered by it or into
which it
makes payments obtains or retains (as applicable) registered status
under and
as required by applicable law and is administered in a timely
manner in all
respects in compliance with all applicable laws except where the
failure to
do any of the foregoing would not be reasonably likely to result in
a
Material Adverse Effect.
6.8 End of Fiscal Years; Fiscal Quarters. The
Borrower shall
cause (i) each of its, and each of the other Covenant Parties',
fiscal years
to end on December 31 and (ii) its fiscal quarters to end on March
31, June
30, September 30 and December 31.
6.9 Payment of Taxes. The Borrower (a) will pay
and discharge,
and will cause each of its Subsidiaries to pay and discharge, all
material
federal and state income and franchise taxes imposed upon it or
upon its
income or profits, or upon any properties belonging to it, prior to
the date
on which penalties attach thereto, and all lawful claims for sums
related
thereto that have become due and payable which, if unpaid, might
become a
Lien not otherwise permitted hereunder, and (b) will pay and
discharge, and
will cause each Subsidiary to pay and discharge, all other material
taxes,
assessments and governmental charges or levies imposed upon it or
upon its
income or profits, or upon any properties belonging to it, prior to
the date
on which penalties attach thereto, and all lawful claims for sums
that have
become due and payable which, if unpaid, might become a Lien not
otherwise
permitted hereunder, provided that neither the Borrower nor any of
its
Subsidiaries shall be required to pay any such tax, assessment,
charge, levy
or claim which is being contested in good faith and by proper
proceedings if
it has maintained adequate reserves with respect thereto in
accordance with
U.S. GAAP, and provided, further, that this Section 6.9 shall not
apply with
respect to any taxes of PGE Utility or any Subsidiary of PGE
Utility for
which Borrower has no liability under applicable law.
6.10 [OMITTED].
6.11 Performance of Obligations. The Borrower
will perform all
of its obligations under the terms of each mortgage, indenture,
security
agreement, loan agreement or credit agreement and each other
material
agreement, contract or instrument by which it is bound, except such
non-
performances as could not, either individually or in the
aggregate,
reasonably be expected to have a Material Adverse Effect.
6.12 Use of Proceeds. The Borrower will use the
proceeds of
the Loans only as provided in Section 5.18.
6.13 Regulatory Compliance. The Borrower will
take all actions
and cause its Subsidiaries to take all actions reasonably required
to comply
in all material respects with applicable Utility Regulations and
each order
issued pursuant thereto; provided that, the foregoing shall not
prevent
Borrower or a Subsidiary from challenging the validity or effect of
any
Utility Regulation or order in any proceeding provided the manner
of such
challenge could not reasonably be expected to cause a Material
Adverse
Effect.
6.14 Form 8-K. The Borrower will, as promptly as
practicable
after the Closing Date, file a Form 8-K with the SEC disclosing the
material
terms and conditions of the material Financing Documents and
attaching
thereto a copy of this Agreement and the Utility Pledge
Agreements.
6.15 Charter Documents. The Borrower will, and
will cause LLC
and NEG, Inc. to, comply with their respective Charter Documents in
all
material respects.
6.16 Further Assurances; etc. The Borrower will
at the expense
of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to
each Lender from time to time such confirmatory assignments,
conveyances,
financing statements, transfer
endorsements, powers of attorney,
certificates, reports, and other assurances or instruments and take
such
further steps as are necessary or desirable in order to carry out
the intent,
purpose, provisions of this Agreement and the other Financing
Document,
including any assignment or syndication by any Lender of its
Loan.
Furthermore, the Borrower will deliver to each Lender such
opinions of
counsel and other related documents as may be reasonably requested
by any
Lender to assure itself that this Section 6.16 has been complied
with.
6.17 Regarding LLC. Subject to Compliance by LLC
with the
applicable provisions of requirements for Distribution under
Section 13 of
the LLC Agreement, the Borrower will cause LLC to deliver to the
Borrower,
immediately after receipt thereof, (a) any Net Sale Proceeds of any
Asset
Sale or any Qualified NEG Sale and (b) any cash or Property
received by LLC,
by dividend or otherwise, from NEG, Inc. or any of its
Subsidiaries.
6.18 Warrants. No later than the tenth Trading
Day following
the Closing Date, the Borrower will issue the New Warrants pursuant
to the
New Warrant Agreement.
SECTION
7. NEGATIVE COVENANTS.
The Borrower
covenants and agrees that on and after the Closing
Date and until the Loans and the Notes, together with interest,
fees and all
other obligations incurred hereunder and thereunder, are paid in
full (other
than any indemnity, not then due and payable, which by its terms
shall
survive such termination and payment) (it being agreed that, to the
extent
any of the covenants set forth in this Section 7 require the
Borrower to
cause LLC or any of its Subsidiaries to take or refrain from
taking any
action, such covenant shall cease to apply to any such Person when
such
Person is no longer a Subsidiary of the Borrower (it being further
understood
that this provision shall not in any way constitute a waiver of any
breach of
this Agreement)):
7.1 Liens. (a) The Borrower will not,
and will not permit LLC
to, create, incur, assume or suffer to exist any Lien upon or with
respect to
any Property or assets (real or personal, tangible or intangible)
of the
Borrower or LLC, whether now owned or hereafter acquired, or sell
any such
Property or assets subject to an understanding or agreement,
contingent or
otherwise, to repurchase such Property or assets (including sales
of accounts
receivable with recourse to the Borrower), or assign any right to
receive
income or permit the filing of any financing statement under the
UCC or any
other similar notice of Lien under any similar recording or notice
statute;
provided that the provisions of this Section 7.1 shall not prevent
the
creation, incurrence, assumption or existence of the following
(Liens
described below are herein referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or
governmental
charges or levies not yet due and payable
or Liens for taxes,
assessments or governmental charges or
levies being contested in good
faith and by appropriate proceedings for
which adequate reserves have
been established in accordance with
generally accepted accounting
principles in the United States;
(ii) Liens imposed by law, which arise or were incurred
in the
ordinary course of business and do not
secure Indebtedness for borrowed
money, such as carriers', workmen's,
repairmen's, warehousemen's,
materialmen's and mechanics' liens,
collecting bank's liens, charge
back rights of depository banks for
uncollected items and other similar
Liens arising or incurred in the ordinary
course of business, and
(x) which do not in the aggregate
materially detract from the value of
the property or assets of the Borrower and
do not materially impair the
use thereof in the operation of the
business of the Borrower or
(y) which are being contested in good
faith by appropriate proceedings,
which proceedings (or orders entered
in connection with such
proceedings) have the effect of preventing
the forfeiture or sale of
the property or assets subject to any such
Lien;
(iii) subject to Section 7.4(ii), Liens in existence on
March
1, 2001 which are listed, and the Property
subject thereto described,
in Schedule 7.1;
(iv) Liens created pursuant to this Agreement and the
Security
Documents;
(v) licenses, leases or subleases granted to other
Persons in
the ordinary course of business not
materially interfering with the
conduct of the business of the
Borrower;
(vi) easements, rights-of-way, restrictions (including
zoning
restrictions), covenants, encroachments,
protrusions and other similar
charges or encumbrances, and minor title
deficiencies, in each case
whether now or hereafter in existence, not
securing Indebtedness and
not materially interfering with the
conduct of the business of the
Borrower;
(vii) statutory, contractual and common law landlords'
liens
under leases or subleases permitted by
this Agreement;
(viii) Liens (other than any Lien imposed by ERISA)
(x)
incurred or deposits made in the ordinary
course of business in
connection with workers' compensation,
unemployment insurance and other
types of social security, (y) to secure
the performance of tenders,
statutory obligations (other than excise
taxes), surety, stay, customs
and appeal bonds, statutory bonds, bids,
leases, government contracts,
trade contracts, performance and return of
money bonds and other
similar obligations (exclusive of
obligations for the payment of
borrowed money) or (z) arising by virtue
of deposits made in the
ordinary course of business to secure
liability for premiums to
insurance carriers, provided that the
aggregate amount of deposits at
any time pursuant to sub-clauses (y) and
(z) and other Indebtedness
permitted under Section 7.4(ix) shall not
exceed $15,000,000 in the
aggregate;
(ix) any interest or title of a lessor, sublessor,
licensee or
licensor under any lease or license
agreement permitted by this
Agreement;
(x) any attachment or judgment Liens which do not
result in an
Event of Default under Section 8.1(h),
provided that such Liens are
junior in priority to the Liens created
pursuant to this Agreement and
the Security Documents;
(xi) Liens securing Indebtedness of the Borrower
incurred
pursuant to Section 7.4(vii) to finance
the acquisition of fixed or
capital assets by the Borrower in the
ordinary course of its business,
provided that (i)
such Liens shall be created
substantially
simultaneously with the acquisition of
such fixed or capital assets,
(ii) such Liens do not at any time
encumber any property other than the
property financed by such Indebtedness and
(iii) the amount of
Indebtedness secured thereby is not
increased;
(xii) Liens arising from precautionary Uniform
Commercial Code
financing statement filings with respect
to operating leases or
consignment arrangements entered into by
the Borrower in the ordinary
course of business; and
(xiii) Liens on assets of the Borrower to secure
Hedging
Agreements entered into in the ordinary
course of business by the
Borrower hedging the interest rate
fluctuations in respect of interest
payable on the Loan.
(b) Without limiting the generality of the foregoing
paragraph
(a), the Borrower will not and will not permit any Subsidiary to,
create,
incur, assume or suffer to exist any lien upon the Capital Stock of
PGE
Utility owned by the Borrower or of any Reorganization Subsidiary
(other than
the Liens created by the Security Documents).
7.2 Consolidation, Merger, Purchase or Sale of Assets,
etc.
The Borrower will not, and will not permit any member of the NEG
Group to,
wind up, liquidate or dissolve its affairs or enter into any
transaction of
merger or consolidation, or convey, sell, lease, spin-off or
otherwise
dispose of (including, without limitation, cancellation of
indebtedness owing
to the Borrower by any Affiliate) (or agree to do any of the
foregoing at any
future time) all or any part of its Property or assets (including,
without
limitation, the Capital Stock of PGE Utility or any member of the
NEG Group),
or enter into any sale-leaseback transactions (any of the
foregoing, a
"Disposition"), or purchase or otherwise acquire (in one or a
series of
related transactions) any part of the Property or assets (other
than
purchases or other acquisitions of inventory in the ordinary course
of
business) of any Person (or agree to do any of the foregoing at any
future
time), except that:
(i) any NEG Subsidiary may in the ordinary course of
business,
sell, lease or otherwise dispose of any
assets which, in the reasonable
judgment of such Person, are obsolete,
worn out or otherwise no longer
useful in the conduct of such Person's
business;
(ii) each of the Borrower and any member of the NEG
Group may
lease (as lessee) real or personal
property in the ordinary course of
business (so long as any such lease does
not create a Capital Lease
Obligation (other than Capital Lease
Obligations permitted under
Section 7.4));
(iii) any NEG Subsidiary may make sales or transfers
of
inventory, energy and related products in
the ordinary course of
business and consistent with past
practices;
(iv) any NEG Subsidiary may sell or discount, in each
case
without recourse and in the ordinary
course of business, overdue
accounts receivable arising in the
ordinary course of business, but
only in connection with the compromise or
collection thereof consistent
with customary industry practice (and not
as part of any bulk sale);
(v) each of the Borrower and any member of the NEG
Group may
license or sublicense software, trademarks
and other intellectual
property in the ordinary course of
business which do not materially
interfere with the business of the
Borrower and its Subsidiaries, taken
as a whole;
(vi) each of LLC, NEG, Inc. or any NEG Subsidiary may
transfer
assets or lease to or acquire or lease
assets from LLC, NEG, Inc. or
any other NEG Subsidiary and LLC, NEG,
Inc. or any NEG Subsidiary may
be merged into LLC, NEG, Inc. or any other
NEG Subsidiary;
(vii) [OMITTED];
(viii) subject to Section 3.2(f), each of the Borrower
and any
member of the NEG Group may make transfers
of any proceeds of insurance
resulting from any casualty or
condemnation of property or assets;
(ix) the Borrower may sell or otherwise dispose of any
assets
other than (A) except as permitted by
Section 7.2(x), assets owned by,
or the Capital Stock of, any member of the
NEG Group and (B) the
Capital Stock of PGE Utility or the
Capital Stock of, or any
substantial part of the assets of, any
Reorganization Subsidiary;
provided that the proceeds of such sale or
disposition are applied
toward the prepayment of the Tranche B
Loan, to the extent required by
Section 3.2(e);
(x) subject to Section 7.16, the Borrower or any member
of the
NEG Group may consummate a Disposition of
any NEG Property; provided,
that (A) such Disposition is a Qualified
NEG Sale, a Qualified
Abandonment, a Qualified Asset Sale or a
Qualified Bankruptcy Sale and
(B) the proceeds of such Disposition are
applied toward the prepayment
of the Tranche B Loan, to the extent
required by Section 3.2(e) or
3.2(g), as applicable; and
(xi) the Borrower may sell up to 15% of the common
stock of PGE
Utility in a public offering; provided
that the Net Sale Proceeds of
such sale are applied toward the
prepayment of the Tranche B Loan, to
the extent required by Section
3.2(e).
For
avoidance of doubt, nothing in this Section shall prohibit
the Borrower from consummating a Spin-Off or any plan of
reorganization
permitted by Section 7.15 (so long as the Borrower complies with
the
requirements of Section 3.8).
7.3 Dividends. The Borrower will not, and will
not permit any
of its Subsidiaries to, authorize, declare or pay any Dividends,
except that
any Subsidiary of the Borrower may pay Dividends (in cash or
Capital Stock)
to the Borrower or to the immediate owner or owners of such
Subsidiary
(subject to compliance with provisions of the Security
Documents). The
Borrower will not, directly or indirectly, spin-off or transfer to
its
shareholders, or to the shareholders of any parent of the Borrower,
the
Capital Stock of any Reorganization Subsidiary, the Capital Stock
of any
member of the NEG Group, or any Material Reorganization
Asset.
Nothing in
this Section shall prohibit (i) the Borrower or LLC
from performing in full its obligations under Article VI of the
Option
Agreement or (ii) the Borrower from consummating a Spin-Off or any
plan of
reorganization permitted by Section 7.15 (so long as the Borrower
complies
with the requirements of Section 3.8).
7.4 Indebtedness. The Borrower will not, and will
not permit
LLC to, contract, create, incur, assume or suffer to exist any
Indebtedness,
except:
(i) Indebtedness incurred pursuant to this Agreement
and the
other Financing Documents;
(ii) existing Indebtedness outstanding on March 1, 2001
and
listed on Part A of the Disclosure Letter,
without giving effect to any
subsequent extension, renewal or
refinancing thereof;
(iii) Indebtedness resulting from the endorsement of
negotiable
instruments in the ordinary course of
business;
(iv) Indebtedness of the Borrower to any Subsidiary
(other than
NEG, Inc. or any of its Subsidiaries) from
intercompany transfers of
assets made in the ordinary course of
business or to the extent
permitted under Sections 7.2 and
7.5;
(v) Indebtedness of the Borrower constituting a
Permitted NEG
Reinvestment permitted by Section
7.5(viii);
(vi) Remaining Obligations permitted
to be incurred in
connection with any Qualified NEG Sale or
Qualified Asset Sale;
(vii) Indebtedness (including, without limitation,
Capital
Lease Obligations) secured by Liens
permitted by Section 7.1(a)(xi) in
an aggregate principal amount not to
exceed $10,000,000 at any one time
outstanding;
(viii) Hedging Agreements entered into in the ordinary
course
of business by the Borrower hedging the
interest rate fluctuations in
respect of interest payable on the
Loan;
(ix) other Indebtedness of the Borrower, provided that
the
aggregate amount of such other
Indebtedness together with deposits
permitted under sub-clauses (y) and (z) of
Section 7.1(viii) shall not
exceed the amount set forth in Section
7.1(viii); and
(x) Indebtedness of the Borrower in respect of the
Convertible
Notes in an aggregate principal amount not
to exceed $280,000,000 (plus
the amount of any capitalized interest
accrued in accordance with the
terms thereof).
7.5 Advances, Investments and Loans. The Borrower
will not,
directly or indirectly, lend money or credit or make advances to
any other
Person, or purchase or acquire any stock, obligations or securities
of, or
any other interest in, or make any capital contribution (including,
without
limitation, a capital contribution in the form of a note or other
evidence of
Indebtedness of the Borrower) to, any other Person, or make or
agree to make
any payments in respect of any Indebtedness or other obligations of
any Other
Person, or purchase or own a futures contract or otherwise become
liable for
the purchase or sale of currency or other commodities at a future
date in the
nature of a futures contract, or hold any cash or Cash Equivalents
(each of
the foregoing an "Investment" and, collectively, "Investments"),
except that
the following shall be permitted; provided that, other than in the
case of
clauses (v) and (vi) below, no Default or Event of Default shall
have
occurred and be continuing or would result therefrom:
(i) [OMITTED];
(ii) the Borrower may acquire and hold cash and
Cash
Equivalents;
(iii) the Borrower may acquire and own investments
(including
debt obligations) received in connection
with the bankruptcy or
reorganization of suppliers and customers
and in good faith settlement
of delinquent obligations of, and other
disputes with, customers and
suppliers arising in the ordinary course
of business;
(iv) the Borrower may (i) contribute Indebtedness,
claims and
other obligations owned by any member of
the NEG Group or (ii) become
liable with respect to Remaining
Obligations, in each case to the
extent permitted in connection with a
Qualified NEG Sale or a Qualified
Asset Sale;
(v) any Investment by the Borrower in PGE Utility if
the
Borrower reasonably determines that such
Investment is required by
applicable Law;
(vi) any Investment by the Borrower in PGE Utility if
the
Borrower reasonably determines that such
Investment is required by the
Holding Company Conditions;
(vii) loans and advances by the Borrower or PGE Utility
to
their respective directors, officers and
employees in a principal
amount not exceeding the amount of
$100,000, on an individual basis,
and $1,000,000, on an aggregate basis, at
any one time outstanding;
(viii) the Borrower may make Permitted NEG
Reinvestments in an
aggregate amount not greater than the
difference of (a) 75% of
Attributable Tax Benefits received on or
prior to the date of such
Investment, minus (b) the sum of (i) the
aggregate amount of other
Permitted NEG Reinvestments (including,
without limitation, the
aggregate amount of Permitted NEG
Reinvestments made from Operating
Loss Contributions) made on or prior to
the date of such Investment,
(ii) the aggregate amount of outstanding
Remaining Obligations (whether
or not then due and payable) incurred by
the Borrower on or prior to
the date of such Investment (except to the
extent that any such
outstanding Remaining Obligations were
incurred based upon the
provisions of the definition of "Remaining
Obligations" in Appendix A
hereto permitting such obligations in an
amount equal to the cash
purchase price actually received by the
Borrower in connection with any
Qualified NEG Sale or any Qualified Asset
Sale), (iii) the aggregate
amount of Transaction Costs incurred by
the Borrower on or prior to the
date of such Investment, and (iv) the
aggregate amount of payments made
by the Borrower in respect of obligations
of NEG, Inc. and/or any of
its Subsidiaries (including, without
limitation, any payments in
respect of any guaranty by the Borrower
of, or surety obligation of the
Borrower in respect of, the obligations of
any such entity and any
payments in respect of any Remaining
Obligations) on or prior to the
date of such Investment (such sum of the
amounts in clauses (i), (ii),
(iii) and (iv) the "Invested Tax Benefit
Amount"); provided, that the
Borrower may not make any Permitted NEG
Reinvestment pursuant to this
paragraph, whether or not previously
committed to, (1) prior to
delivering to the Administrative Agent
(for the benefit of the Lenders)
a certificate (with supporting detail) of
the Chief Financial Officer
or Treasurer of the Borrower setting forth
(and confirming the accuracy
of) calculations demonstrating that such
Investment is permitted by
this paragraph (viii), (2) if LLC and/or
NEG, Inc. is in bankruptcy, or
(3) if a Default or Event of Default has
occurred and is continuing;
(ix)
the Borrower may make Investments constituting
Permitted
NEG Reinvestments in an aggregate amount
not to exceed 75% of the cash
tax savings actually received by the
Borrower after the Closing Date as
a result of net operating losses of NEG,
Inc. and its Subsidiaries
("Operating Loss Contributions"),
provided, that the Borrower may not
make any such Investments from Operating
Loss Contributions in an
amount in excess of the difference of (a)
75% of the amount of cash tax
savings that the Borrower in good faith
projects that it will receive
as a result of any Qualified Asset Sale,
any Qualified NEG Sale or any
Qualified Restructuring that has been
consummated, minus (b) the
aggregate Invested Tax Benefit Amount;
provided, that the Borrower may
not make any Permitted NEG Reinvestment
pursuant to this paragraph,
whether or not previously committed to,
(i) prior to delivering to the
Administrative Agent (for the benefit of
the Lenders) a certificate
(with supporting detail) of the Chief
Financial Officer or Treasurer of
the Borrower setting
forth (and confirming the accuracy
of)
calculations demonstrating that such
Investment is permitted by this
paragraph (ix), (ii) if LLC and/or NEG,
Inc. is in bankruptcy, or (iii)
if a Default or Event of Default has
occurred and is continuing;
(x) the Borrower may invest in NEG, Inc. or its
Subsidiaries
(including, without limitation, incurring
obligations as guarantor or
surety in respect of obligations of NEG,
Inc. and its Subsidiaries) in
an aggregate amount not exceeding
$15,000,000 from and after June 25,
2002, provided, that the Borrower shall
not make any such Investment if
(i) LLC and or NEG, Inc is in bankruptcy
or (ii) a Default or Event of
Default has occurred and is
continuing;
(xi) in addition to the Investments permitted by
clauses (i)-
(x) above, the Borrower may make other
Investments for operations of
the Borrower or its Subsidiaries (other
than NEG, Inc., PGE Utility or
any of their Subsidiaries) in an amount
not to exceed (i) $12,000,000
in the aggregate for fiscal year 2002 and
fiscal year 2003 and (ii)
$10,000,000 in the aggregate for any
fiscal year thereafter provided
that no more than $5,000,000 of such
amount in any fiscal year may be
used to make Investments (other than
advances for operating expenses
payable by Subsidiaries); and
(xii) any Investment in a Hedging Agreement entered
into by the
Borrower hedging the interest rate
fluctuations in respect of interest
payable on the Loan.
Notwithstanding anything provided herein to the contrary, (A) no
investment
may be made by the Borrower in the nuclear generation business and
(B) the
Borrower may consummate a Spin-Off (so long as the Borrower
complies with the
requirements of Section 3.8).
7.6 Transactions with Affiliates. Except as
disclosed on
Schedule 5.17, the Borrower will not enter into any transaction or
series of
related transactions with any Affiliate of the Borrower or any of
its
Subsidiaries, other than (a) in the ordinary course of business and
on terms
and conditions substantially as favorable to the Borrower as would
reasonably
be obtained by the Borrower at that time in a comparable
arm's-length
transaction with a Person other than an Affiliate, (b) as
reasonably
determined by the Borrower that such transaction is required by
applicable
Law or the Holding Company Conditions, (c) any other transactions
with
Affiliates provided at cost where the difference between the
arms-length
price and cost is less than $5,000,000 in the aggregate, (d) the
payment of
reasonable and customary fees and reimbursements of expenses
payable to
directors of the Borrower, (e) the employment arrangements with
respect to
the procurement of services of directors, officers and employees of
the
Borrower in the ordinary course of business and payment of
reasonable and
customary fees in connection therewith, (f) the consummation of a
Spin-Off,
or (g) transactions expressly permitted under Section 7.3 or
Section 7.5.
7.7
Capital Expenditures. The Borrower will not make
any
Capital Expenditures, except to the extent (a) the Borrower
reasonably
determines that such Capital Expenditures by the Borrower in PGE
Utility is
required by applicable Law, (b) the Borrower reasonably determines
that such
Capital Expenditures by the Borrower in PGE Utility is required by
the
Holding Company Conditions or (c) provided in the cash-flow
forecast of the
Borrower attached to the solvency certificate of the Borrower
delivered on
the Closing Date.
7.8 Limitations on Liens on Collateral; Modifications
of
Certain Indebtedness; Modifications of Certificate of
Incorporation, By-Laws
and Certain Other Agreements, etc. The Borrower will not, and
will not
permit LLC to:
(i) create or suffer to exist any Lien on any of
the
Collateral;
(ii) amend or modify, or permit the amendment or
modification
of, any provision of any Existing
Indebtedness Agreements which could
reasonably be expected to have a Material
Adverse Effect;
(iii) (w) except to the extent it would not cause an
adverse
effect on any Lender, amend, modify or
change any material provision of
its certificate or articles of
incorporation (including, without
limitation, by the filing or modification
of any certificate or
articles of designation), certificate of
formation, limited liability
company agreement or by-laws (or the
equivalent organizational
documents), as applicable, or (x) amend,
modify or change any agreement
entered into by it with respect to its
capital stock or other equity
interests (including any shareholders'
agreement), or (y) enter into
any new agreement with respect to its
capital stock or other equity
interests;
(iv) terminate, cancel or suspend any license, contract
or
material franchise agreements which would
result in a Material Adverse
Effect; or
(v) create any Subsidiary of the Borrower which will be
a
direct or indirect parent of LLC or PGE
Utility or create any
Subsidiary of LLC which will be a direct
or indirect parent of NEG,
Inc.
Nothing in
clause (ii), (iii) or (v) of this Section shall
prohibit the consummation of a Spin-Off or any plan of
reorganization
permitted by Section 7.15 (so long as the Borrower complies with
the
requirements of Section 3.8) or any Qualified Restructuring.
7.9 Limitation on Issuance of Capital Stock.
(a) Except as
otherwise permitted by Sections 7.3 and 7.5, the Borrower will not,
and will
not permit LLC or NEG, Inc. to, issue (i) any participating
preferred stock
or other participating preferred equity interests or preferred
stock or other
preferred equity interests convertible to common stock or common
equity
interest or (ii) any redeemable stock or other redeemable equity
interest
other than common stock or other redeemable common equity interest
that is
redeemable at the sole option of the Borrower, LLC or NEG, Inc., as
the case
may be.
(b) Except as otherwise permitted by Sections 7.3 and
7.5, the
Borrower will not permit LLC or NEG, Inc. to issue any capital
stock or other
equity interests (including by way of sales of treasury stock) or
any options
(other than the Option) or warrants to purchase, or securities
convertible
into, capital stock or other equity interests, except (other than
LLC) (i)
for transfers and replacements of then outstanding shares of
capital stock or
other equity interests, (ii) for stock splits, stock dividends and
issuances
which do not decrease the percentage ownership of any of the
Covered Parties
in any class of the capital stock or other equity interests of such
other
Covered Parties, (iii) pursuant to employee stock option plans, or
(iv) to
the extent the Borrower reasonably determines that such issuance is
required
by applicable Law. Notwithstanding the foregoing, the
Borrower will not
permit any Subsidiary whose Capital Stock is pledged pursuant
hereto to issue
any additional Capital Stock of any type (other than (1) Capital
Stock issued
by PGE Utility and (2) the portion of the Capital Stock issued by
a
Subsidiary to an entity other than the Borrower or LLC as a pro
rata
distribution to all of the shareholders of such Subsidiary)
unless,
simultaneously therewith, the Collateral Agent receives a
perfected, first
priority security interest therein.
7.10
Business. The Borrower will not engage in any
business
other than the current businesses engaged in by the Borrower as of
the date
hereof.
7.11 Regulatory Compliance. The Borrower will not
take any
actions or allow any of its Subsidiaries to take any action which
would
materially violate any applicable Utility Regulations or order
issued
pursuant thereto; provided that, the foregoing shall not prevent
the Borrower
or a Subsidiary from challenging the validity or effect of any
Utility
Regulation or order in any proceeding provided the manner of such
challenge
could not reasonably be expected to cause a Material Adverse
Effect.
7.12 [OMITTED].
7.13 Limitation on Optional Payments and Modifications
of
Convertible Notes. The Borrower will not (a) make or offer to
make any
optional or voluntary payment, prepayment, repurchase or redemption
of, or
otherwise voluntarily or optionally defease, the Convertible Notes,
or
segregate funds for any such payment, prepayment, repurchase,
redemption or
defeasance, (b) amend, modify or otherwise change, or consent or
agree to any
amendment, modification, waiver or other change to, any of the
terms of the
Convertible Notes or the Convertible Notes Indenture (other than
any such
amendment, modification, waiver or other change which (i) would
extend the
maturity or reduce the amount of any payment of principal thereof,
reduce the
rate or extend the date for payment of interest thereon or relax
any covenant
or other restriction applicable to the Borrower or any of its
Subsidiaries
and (ii) does not involve the payment of a consent fee), (c)
designate any
Indebtedness (other than the Obligations) as "Designated Senior
Debt" for the
purposes of the Convertible Notes Indenture or (d) make any cash
payment in
respect of interest on the Convertible Notes during any Convertible
Notes
Blockage Period.
7.14 Interest Reserve Amounts.
(a) Until the Consolidation
Date, the Borrower will not permit (a) the aggregate amount of cash
and Cash
Equivalents held in the Tranche B Interest Reserve Account
(Continued Tranche
B Loan) to be less than (i) on any date prior to September 2,
2005,
$75,833,333.33 and (ii) on any Interest Payment Date thereafter
(after giving
effect to the payment of interest made on such Interest Payment
Date), the
lesser of (x) $75,833,333.33 and (y) the aggregate amount of
interest that
will accrue on the Continued Tranche B Loan from such Interest
Payment Date
through the Tranche B Maturity Date (such interest amount to be
calculated on
any Interest Payment Date at the Eurodollar Rate for an Interest
Period
approximately equal to remaining time to the Tranche B Maturity
Date (or, if
shorter, one year) plus the Applicable Margin) or (b) the aggregate
amount of
cash and Cash Equivalents held in the Tranche B Interest Reserve
Account (New
Tranche B Loan) to be less than (i) on any date on or after the
Escrow
Release Date and prior to September 2, 2005, $54,166,666.67 and
(ii) on any
Interest Payment Date thereafter (after giving effect to the
payment of
interest made on such Interest Payment Date), the
lesser of (x)
$54,166,666.67 and (y) the aggregate amount of interest that will
accrue on
the New Tranche B Loan from such Interest Payment Date through the
Tranche B
Maturity Date (such interest amount to be calculated on any
Interest Payment
Date at the Eurodollar Rate for an Interest Period approximately
equal to
remaining time to the Tranche B Maturity Date (or, if shorter, one
year) plus
the Applicable Margin).
(b) On or after the Consolidation Date, the Borrower
will not
permit (a) the aggregate amount of cash and Cash Equivalents held
in the
Tranche B Interest Reserve Account (Combined Tranche B Loan) to be
less than
(i) on any date prior to September 2, 2005, $130,000,000 and (ii)
on any
Interest Payment Date thereafter (after giving effect to the
payment of
interest made on such Interest Payment Date), the lesser of (x)
$130,000,000
and (y) the aggregate amount of interest that will accrue on the
Tranche B
Loan from such Interest Payment Date through the Tranche B Maturity
Date
(such interest amount to be calculated on any Interest Payment Date
at the
Eurodollar Rate for an Interest Period approximately equal to
remaining time
to the Tranche B Maturity Date (or, if shorter, one year) plus the
Applicable
Margin).
7.15 Plan of Reorganization. The Borrower will
not propose or
consent to a plan of reorganization in respect of PGE Utility that
provides
for a spin-off or any distribution, transfer or disposal of assets
other than
a Spin-Off (in connection with which the requirements of Section
3.8(b) are
complied with); provided, that this Section 7.15 shall not prohibit
the
Borrower from proposing or consenting to any plan of reorganization
in
respect of PGE Utility that does not involve a spin-off by, or
any
distribution, transfer or disposal of assets of, the Borrower or
any of its
Subsidiaries (other than any spin-off or distribution, transfer or
disposal
of assets by PGE Utility or any of its Subsidiaries that receives
fair value
for the assets so disposed), so long as the requirements of Section
3.8(c) in
connection therewith are satisfied; and provided, further, that,
immediately
prior to, and upon consummation of, any transaction pursuant to any
such plan
of reorganization, no Default or Event of Default shall have
occurred or be
continuing.
7.16 Certain Transactions. (a) The
Borrower will not Dispose
of the Capital Stock of LLC; provided that the Borrower may Dispose
of the
Capital Stock of LLC in a Qualified NEG Sale if (i) no Default or
Event of
Default shall be continuing and (ii) no bankruptcy proceeding shall
be
continuing in respect of LLC or NEG, Inc.
(b) The Borrower will not permit LLC to Dispose of the
Capital
Stock of NEG, Inc.; provided, that LLC may Dispose of the Capital
Stock of
NEG, Inc. in a Qualified NEG Sale if (i) no Default or Event of
Default shall
be continuing and (ii) no bankruptcy proceeding shall be continuing
in
respect of LLC or NEG, Inc.
(c) The Borrower will not permit NEG, Inc. or any of
its
Subsidiaries to Dispose of any Property; provided, that (i) NEG,
Inc. or any
of its Subsidiaries may consummate a Qualified Asset Sale if (x) no
Default
or Event of Default shall be continuing and (y) no bankruptcy
proceeding
shall be continuing in respect of LLC or NEG, Inc., (ii) NEG, Inc.
or any of
its Subsidiaries may consummate a Qualified Bankruptcy Sale if no
Event of
Default shall be continuing, and (iii) NEG, Inc. or any of its
Subsidiaries
may consummate any Disposition permitted by Section 7.2.
(d) The Borrower will not permit NEG, Inc. or any of
its
Subsidiaries to abandon any Property; provided, that NEG, Inc. or
any of its
Subsidiaries may consummate a Qualified Abandonment if no Default
or Event of
Default shall be continuing.
(e) The Borrower will not permit NEG, Inc. or any of
its
Subsidiaries to consummate any restructuring of Indebtedness or
other
obligations of NEG, Inc. or any of its Subsidiaries; provided, that
NEG, Inc.
or any of its Subsidiaries may consummate a Qualified Restructuring
if no
Default or Event of Default shall be continuing.
SECTION
8. EVENTS OF DEFAULT AND REMEDIES.
8.1 Events of Default. The occurrence of any of
the following
events or circumstances shall constitute an "Event of Default"
hereunder:
(a) The Borrower shall (i) default in the payment when
due of
any principal of any Tranche B Loan or any related Note or (ii)
default, and
such default shall continue unremedied for three or more Business
Days, in
the payment when due of any interest on any Loan or Note or any
fees or any
other amounts owing hereunder or under any other Financing
Document; or
(b) Any representation, warranty or statement made or
deemed
made by the Borrower herein or in any other Financing Document or
in the
Disclosure Letter or in any certificate delivered to the
Administrative Agent
or any Lender pursuant hereto or thereto shall prove to be untrue
in any
material respect on the date as of which made or deemed made;
or
(c) The Borrower shall (i) default in the due
performance or
observance by it of any term, covenant or agreement contained in
Section 6
(other than Sections 6.1 and 6.2) or Section 7 or (ii) except as
set forth in
clause (iii) and Section 8.1(g), default in the due performance or
observance
by it of any other term, covenant or agreement contained in this
Agreement or
in any other Financing Document (other than those set forth in
clauses (a)
and (b) of this Section 8.1) and such default shall continue
unremedied for a
period of 30 days after written notice thereof to the defaulting
party by any
Lender or (iii) default in the due performance or observance by it
of any
term, covenant or agreement contained in the Option Agreement;
or
(d) (i) The Borrower shall default in any payment
of any
Indebtedness when due, or (ii) the Borrower shall default in the
observance
or performance of any agreement or condition relating to any
Indebtedness or
any other event or condition shall occur or exist, the effect of
which event
or condition is to cause, or permit the holder or holders of
such
Indebtedness to cause any such Indebtedness to become due prior to
its stated
maturity, or (iii) any Indebtedness of the Borrower shall be
declared to be
(or shall become) due and payable, or required to be prepaid other
than by
regularly scheduled prepayment, prior to the stated maturity
thereof,
provided it shall not be a Default or an Event of Default under
this clause
(d) unless the aggregate principal amount of all Indebtedness as
described in
preceding subclauses (i), (ii) and (iii) is at least $100,000,000;
or
(e) The Borrower shall commence a voluntary case
concerning
itself under Title 11 of the United States Code entitled
"Bankruptcy," as now
or hereafter in effect, or any successor thereto (the "Bankruptcy
Code"); or
an involuntary case is commenced against the Borrower, and the
petition is
not controverted within 10 days, or is not dismissed within 45
days, after
commencement of the case; or a custodian (as defined in the
Bankruptcy Code)
is appointed for, or takes charge of, all or substantially all of
the
property of the Borrower; or the Borrower commences any other
proceeding
under any reorganization, arrangement, adjustment of debt, relief
of debtors,
dissolution, insolvency or liquidation or similar law of any
jurisdiction
whether now or hereafter in effect relating to the Borrower; or
there is
commenced against the Borrower any such proceeding which remains
undismissed
for a period of 60 days; or the Borrower is adjudicated insolvent
or
bankrupt; or any order of relief or other order approving any such
case or
proceeding is entered; or the Borrower suffers any appointment of
any
custodian or the like for it or any substantial part of its
property to
continue undischarged or unstayed for a period of 45 days; or the
Borrower
makes a general assignment for the benefit of creditors; or any
corporate,
limited liability company or similar action is taken by the
Borrower for the
purpose of effecting any of the foregoing; or
(f) (i) Any Plan shall fail to satisfy the minimum
funding
standard required for any plan year or part thereof under Section
412 of the
Code or Section 302 of ERISA or a waiver of such standard or
extension of any
amortization period is sought or granted under Section 412 of the
Code or
Section 303 or 304 of ERISA, a Reportable Event shall have
occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA)
of a Plan
subject to Title IV of ERISA shall be subject to the advance
reporting
requirement of PBGC Regulation
Section 4043.61 (without regard to
subparagraph (b)(1) thereof) and an event described in subsection
..62, .63,
..64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be
reasonably
expected to occur with respect to such Plan within the following 30
days, any
Plan which is subject to Title IV of ERISA shall have had or is
likely to
have a trustee appointed to administer such Plan, any Plan which is
subject
to Title IV of ERISA is, shall have been or is likely to be
terminated or to
be the subject of termination proceedings under ERISA, any Plan
shall have an
Unfunded Current Liability, a contribution required to be made with
respect
to a Plan or a Foreign Pension Plan has not been timely made, the
Borrower or
any Subsidiary of the Borrower or any ERISA Affiliate has incurred
or is
likely to incur any liability to or on account of a Plan under
Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or
Section 401(a)(29), 4971 or 4975 of the Code or on account of a
group health
plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2)
of the
Code) under Section 4980B of the Code, or the Borrower or any
Subsidiary of
the Borrower has incurred or is likely to incur liabilities
pursuant to one
or more employee welfare benefit plans (as defined in Section 3(1)
of ERISA)
that provide benefits to retired employees or other former
employees (other
than as required by Section 601 of ERISA) or Plans or Foreign
Pension Plans,
a "default" within the meaning of Section 4219(c)(5) of ERISA shall
occur
with respect to any Plan, any applicable law, rule or regulation is
adopted,
changed or interpreted, or the interpretation or administration
thereof is
changed, in each case after the date hereof, by any governmental
authority or
agency or by any court (a "Change in Law"), or, as a result of a
Change in
Law, an event occurs following a Change in Law, with respect to or
otherwise
affecting any Plan; (ii) there shall result from any such event or
events the
imposition of a lien, the granting of a security interest, or a
liability or
a material risk of incurring a liability; and (iii) such lien,
security
interest or liability, either individually and/or in the aggregate,
has had,
or could reasonably be expected to have, a Material Adverse Effect;
or
(g) Any of the Security Documents shall cease to be in
full
force and effect, or shall cease to give the Collateral Agent and
each Lender
the Liens, rights, powers and privileges purported to be created
thereby
(including, without limitation, a perfected security interest in,
and Lien
on, all of the Collateral, in favor of the Collateral Agent and
each Lender,
superior to and prior to the rights of all third Persons and
subject to no
other Liens); any Covered Party shall default in the due
performance or
observance of any term, covenant or agreement on its part to be
performed or
observed pursuant to any Security Document and such default shall
continue
beyond the period of grace, if any, specifically applicable thereto
pursuant
to the terms of such Security Document; or the Borrower or any
grantor party
to any Security Document shall assert in writing that (i) any
Security
Document is not in full force and effect or does not create the
security
interest purported to be created thereby, (ii) any security
interest
purported to be created by any Security Document is not a perfected
first
priority security interest or (iii) a Governmental Approval or a
consent or
approval of any Person was required in connection with any Security
Document
but was not obtained or is not effective; or
(h) One or more judgments, decrees or attachments shall
be
entered against the Borrower involving in the aggregate for the
Borrower a
liability (not paid or fully covered by a reputable and solvent
insurance
company) of $100,000,000 or more and such judgments, decrees and
attachments
either shall be final and non-appealable or shall not be vacated,
discharged
or stayed or bonded pending appeal for any period of 60 consecutive
days; or
(i) Any final and non-appealable order shall be issued
by FERC,
CPUC or other Governmental Authority that could reasonably be
expected to
have a Material Adverse Effect; or
(j) The Option Agreement shall cease to be in full
force and
effect or shall cease to give the Holders the rights, powers and
privileges
purported to be created thereby; or
(k) The Convertible Notes shall cease, for any reason,
to be
validly subordinated to the Obligations as provided in the
Convertible Notes
Indenture, or the Borrower, any of its Subsidiaries, the trustee
under the
Convertible Notes Indenture or any holder or holders of $70,000,000
or more
of the Convertible Notes shall so assert in writing and such
assertion shall
not have been withdrawn, rescinded or otherwise retracted in
writing within
15 days thereof;
(l) PGE Utility or any of its Subsidiaries shall
convey, sell,
lease, spin-off, transfer or otherwise dispose of any Material
Reorganization
Asset (other than in connection with a Spin-Off, provided that the
Borrower
complies with the requirements of Section 3.8); or
(m) A case under Chapter 7 of the Bankruptcy Code shall
be
commenced by or against PGE Utility.
8.2 Acceleration. (a) If an Event of
Default specified in
Section 8.1(e) shall occur, automatically the Tranche B Loan (with
accrued
interest thereon) and all other amounts owing under the Financing
Documents
shall immediately become due and payable.
(b) If any Event of Default (other than an Event of
Default
referred to in Section 8.1(e)) shall occur, then the Administrative
Agent
may, and shall upon the instructions of the Required Waiver
Lenders, by
notice to the Borrower declare the Tranche B Loan, all accrued and
unpaid
interest thereon and all other amounts owing to the Tranche B
Lenders under
the Financing Documents to be due and payable, whereupon the same
shall
become immediately due and payable.
(c) Except as expressly provided above in this Section
8.2,
presentment, demand, protest and all other notices and other
formalities of
any kind are hereby expressly waived by the Borrower.
8.3 Other Remedies. Upon the occurrence and
during the
continuation of an Event of Default, the Administrative Agent may,
and shall
upon the instructions of the Required Waiver Lenders, exercise any
or all
rights and remedies at law or in equity (in any combination or
order that the
Administrative Agent (acting upon the instructions of the Required
Waiver
Lenders) may elect), including without limitation or prejudice to
any Tranche
B Lender's other rights and remedies, any and all rights and
remedies
available under any of the Financing Documents; provided that any
Tranche B
Lender may exercise any or all rights and remedies at law or in
equity as
provided hereunder upon the occurrence and during the continuation
of an
Event of Default described in Section 8.1(a) or 8.1(e) above.
SECTION
9. MISCELLANEOUS.
9.1 Costs and Expenses. The Borrower shall,
whether or not the
transactions contemplated hereby are consummated and whether or not
any of
the following are incurred before or after the Closing Date, pay,
within five
(5) Business Days after demand, all reasonable costs and expenses
(including
reasonable fees and expenses of counsel and consultants) of (a)
the
Administrative Agent (in its capacity as such and in its capacity
as a
Lender), the Syndication Agent, the Lead Arranger, the Bookrunner,
each
Continuing Tranche B Lender, the Collateral Agent and each Holder
in
connection with the preparation, issuance, delivery, filing,
recording and
administration of this Agreement, the other Financing Documents,
and any
other documents which may be delivered in connection herewith or
therewith
and (b) the Administrative Agent (in its capacity as such and in
its capacity
as a Lender), the Syndication Agent, the Lead Arranger, the
Bookrunner, each
Lender, the Collateral Agent and each Holder in connection with (i)
any and
all amounts which the Administrative Agent, each Lender, the
Collateral Agent
and each Holder has paid relative to curing any Event of Default
resulting
from the acts or omissions of the Borrower under this Agreement or
any other
Financing Document, (ii) the exercise, enforcement or attempted
exercise,
enforcement of, or the investigation or preservation of any rights
or
remedies under, this Agreement or any other Financing Document, or
(iii) any
amendment, waiver or consent with respect to any provision
contained in this
Agreement or any other Financing Document. In addition, the
Borrower shall
pay any and all stamp and other taxes and fees payable or
determined to be
payable in connection with the execution, delivery, filing and
recording of
this Agreement or any other Financing Document, or any other
document which
may be delivered in connection with this Agreement, and agrees to
save the
Administrative Agent, the Syndication Agent, the Lead Arranger,
the
Bookrunner, each Lender, the Collateral Agent and each Holder
harmless from
and against any and all liabilities with respect to or resulting
from any
delay in paying or omission to pay such taxes and fees.
9.2 Indemnity. Whether or not the transactions
contemplated
hereby are consummated:
(a) The Borrower shall pay, indemnify, and hold each of
the
Administrative Agent, the Syndication Agent, the Lead Arranger,
the
Bookrunner, each Lender, the Collateral Agent and each Holder and
each of
their respective officers, directors, employees, counsel, agents
and
attorneys-in-fact and Affiliates (each, an "Indemnified Person")
harmless
from and against any and all liabilities, obligations, losses,
damages,
penalties, claims, actions, judgments, suits, costs, charges,
expenses or
disbursements (including reasonable legal fees and expenses and
reasonable
fees and expenses of consultants) of any kind or nature whatsoever
which may
at any time (including at any time following repayment of the Loan
or the
termination, resignation or replacement of any Administrative
Agent, the
Syndication Agent, Lead Arranger, Bookrunner, Lender, Collateral
Agent or
Holder) be imposed on, incurred by or asserted against any such
Person in any
way relating to or arising out of this Agreement or any other
Financing
Document, including the Security Documents and any other document
or
instrument contemplated by or referred to herein or therein, or
the
transactions contemplated hereby and thereby (including, without
limitation,
any losses incurred by any Lender as a result of any
misrepresentation by the
Borrower or any of its Subsidiaries hereunder or under any other
Financing
Document or any failure by any Covered Party to perform any of
its
obligations hereunder or under any other Financing Document), or
any action
taken or omitted by any such Person under or in connection with any
of the
foregoing, including with respect to the exercise by the
Administrative
Agent, the Syndication Agent, the Lead Arranger, the Bookrunner,
any Lender,
the Collateral Agent and any Holder of any of its respective rights
or
remedies under any of the Financing Documents, and any
investigation,
litigation or proceeding (including
any bankruptcy, insolvency,
reorganization or other similar proceeding or appellate proceeding)
related
to this Agreement or any other Financing Document or the Loan, or
the use of
the proceeds thereof, whether or not any Indemnified Person is a
party
thereto (all the foregoing, collectively, the "Indemnified
Liabilities");
provided, that the Borrower shall have no obligation hereunder to
any
Indemnified Person with respect to Indemnified Liabilities arising
from the
gross negligence or willful misconduct of such Indemnified Person
as
determined by a final judgment of a court of competent
jurisdiction.
(b) Environmental Indemnity.
(i) Without in any way limiting
the generality of the other provisions contained in this Section
9.2, the
Borrower agrees to defend, protect, indemnify, save and hold
harmless each
Indemnified Person, whether as beneficiary of any of the Security
Documents,
as a mortgagee in possession, or as successor-in-interest to the
Borrower by
foreclosure deed or deed in lieu of foreclosure, or otherwise, from
and
against any and all liabilities, obligations, losses, damages
(including
foreseeable and unforeseeable consequential damages and punitive
claims),
penalties, fees, claims, actions, judgments, suits, costs,
disbursements
(including, without limitation, reasonable legal fees and expenses
and
consultants' fees and disbursements) and expenses (collectively,
"Losses") of
any kind or nature whatsoever that may at any time be incurred by,
imposed
on, asserted or awarded against any such Indemnified Person
directly or
indirectly based on, or arising out of or resulting from, (A) the
actual or
alleged presence of Hazardous Materials on, in, under or affecting
all or any
portion of any Property of the Borrower, PGE Utility or any member
of the NEG
Group whether or not the same originates or emanates from any such
Property
or any property adjoining or adjacent to any such Property or from
properties
at which any Hazardous Materials generated, stored or handled by
the Borrower
were Released or disposed of, (B) any Environmental Claim relating
to any
such Property or (C) the exercise of any Secured Party's rights
under any of
the provisions of the Security Documents (the "Indemnified
Matters"), whether
any of the Indemnified Matters arise before or after foreclosure of
any of
the security interests or other taking of title to all or any
portion of the
Collateral by the Collateral Agent or any Lender, including,
without
limitation, (x) the costs of removal of any and all Hazardous
Materials from
all or any portion of any such Property or any property adjoining
or adjacent
to any such Property, (y) additional costs required to take
reasonable
precautions to protect against the Release of Hazardous Materials
on, in,
under or affecting any such Property into the air, any body of
water, any
other public domain or any surrounding areas, and (z) costs
incurred to
comply, in connection with all or any portion of any such Property
or any
surrounding areas, with all applicable Environmental Laws with
respect to
Hazardous Materials, except to the extent that any such Indemnified
Matter
arises from the gross negligence or willful misconduct of such
Indemnified
Person.
(ii) In no event shall any site visit, observation, or
testing
by any Indemnified Person (or any
representative of any such Person) be
deemed to be a representation or warranty
that Hazardous Materials are
or are not present in, on, or under, any
Property of the Borrower or
any member of the NEG Group, or that there
has been or shall be
compliance with any Environmental
Law. Neither the Borrower nor any
other Person is entitled to rely on any
site visit, observation, or
testing by any Indemnified Person.
No Indemnified Person owes any duty
of care to protect the Borrower or any
other Person against, or to
inform the Borrower or any other Person
of, any Hazardous Materials or
any other adverse condition affecting any
such Property. No
Indemnified Person shall be obligated to
disclose to the Borrower or
any other Person any report or findings
made as a result of, or in
connection with, any site visit,
observation, or testing by any
Indemnified Person.
(c) Survival; Defense. The obligations in this
Section 9.2
shall survive payment of the Loans and all other obligations
hereunder. At
the election of any Indemnified Person, the Borrower's
indemnification
obligations under this Section 9.2 shall include the obligation to
defend
such Indemnified Person using legal counsel satisfactory to such
Indemnified
Person, at the sole cost and expense of the Borrower. All
amounts owing
under this Section 9.2 shall be paid within 30 days after
demand.
(d) Contribution. To the extent that any
undertaking in the
preceding paragraphs of this Section 9.2 may be unenforceable
because it is
violative of any law or public policy, the Borrower will contribute
the
maximum portion that it is permitted to pay and satisfy under
applicable Law
to the payment and satisfaction of such undertaking.
(e) Settlement. So long as the Borrower is in
compliance with
its obligations under this Section 9.2, the Borrower shall not be
liable to
any Indemnified Person under this Section 9.2 for any settlement
made by such
Indemnified Person without the Borrower's consent.
(f) No Indemnity for
Intercreditor Agreement Disputes.
Notwithstanding anything to the contrary in this Agreement, the
Borrower
shall not be required under any circumstances to indemnify any
Lender or
agent, or otherwise be required to reimburse any Lender or agent,
for any
Losses resulting solely from disputes between or among Lenders with
respect
to the Intercreditor Agreement.
9.3 Notices. (a) All
notices, requests and other
communications provided for hereunder shall be in writing
(including, unless
the context expressly otherwise provides, by facsimile
transmission, provided
that any matter transmitted by the Borrower by facsimile (i) shall
be
immediately confirmed by a telephone call to the recipient at the
number
specified on Schedule 9.3 (or, with respect to any Lender, on the
Lender
Addendum for such Lender or as on file with the Administrative
Agent), and
(ii) shall be followed promptly by a hard copy original thereof by
express
courier) and faxed or delivered, to the address or facsimile number
specified
for notices on Schedule 9.3 (or, with respect to any Lender, on the
Lender
Addendum for such Lender or as on file with the Administrative
Agent) or to
such other address as shall be designated by such party in a
written notice
to the other parties hereto.
(b) All such notices, requests and communications (i)
sent by
express courier will be effective upon delivery to or refusal to
accept
delivery by the addressee, and (ii) transmitted by facsimile will
be
effective when sent and facsimile confirmation received; except
that all
notices and other communications to the Administrative Agent or any
Lender
shall not be effective until actually received.
(c) The Borrower acknowledges and agrees that any
agreement of
the Administrative Agent or any Lender to receive certain notices
by
telephone and facsimile is solely for the convenience and at the
request of
the Borrower. The Administrative Agent and each Lender shall
be entitled to
rely on the authority of any Person purporting to be a Person
authorized by
the Borrower to give such notice and the Administrative Agent and
each Lender
shall not have any liability to the Borrower or other Person on
account of
any action taken or not taken by any of the Administrative Agent or
such
Lender in reliance upon such telephonic or facsimile notice.
9.4 Benefit of Agreement. This Agreement shall be
binding upon
and inure to the benefit of and be enforceable by the respective
successors
and permitted assigns of the parties hereto. The Borrower may
not assign or
otherwise transfer any of its rights under this Agreement or any of
the other
Financing Documents.
9.5 No Waiver; Remedies Cumulative. No failure or
delay on the
part of the Administrative Agent or any Lender or the holder of any
Note in
exercising any right, power or privilege hereunder or under any
other
Financing Document and no course of dealing between the Borrower
and the
Administrative Agent or any Lender or the holder of any Note shall
operate as
a waiver thereof, nor shall any single or partial exercise of any
right,
power or privilege hereunder or under any other Financing Document
preclude
any other or further exercise thereof or the exercise of any other
right,
power or privilege hereunder or thereunder. No notice to or
demand on the
Borrower in any case shall entitle the Borrower to any other or
further
notice or demand in similar or other circumstances or constitute a
waiver of
the rights of the Administrative Agent or any Lender or the holder
of any
Note to take any other or further action in any circumstances
without notice
or demand. All remedies, either under this Agreement or any
other Financing
Document or pursuant to any applicable Law or otherwise afforded to
the
Administrative Agent or any Lender shall be cumulative and not
alternative.
9.6 No Third Party Beneficiaries. This Agreement
and the other
Financing Documents are solely for the benefit of the Lenders, the
Borrower
and the other parties hereto and thereto, and no other Person shall
have any
rights hereunder or thereunder.
9.7 Reinstatement. To the extent that the
Administrative Agent
or any Lender receives any payment by or on behalf of the Borrower,
which
payment or any part thereof is subsequently invalidated, declared
to be
fraudulent or preferential, set aside or required to be repaid to
the
Borrower or to its estate, trustee, receiver, custodian or any
other party
under any Bankruptcy Law or otherwise, then to the extent of the
amount so
required to be repaid, the obligation or part thereof which has
been paid,
reduced or satisfied by the amount so repaid shall be reinstated by
the
amount so repaid and shall be included within the Obligations as of
the date
such initial payment, reduction or satisfaction occurred.
9.8 No Immunity. To the extent that the Borrower
may be
entitled, in any jurisdiction in which judicial proceedings may at
any time
be commenced with respect to this Agreement or any other Financing
Document,
to claim for itself or its revenues, assets or Properties any
immunity from
suit, the jurisdiction of any court, attachment prior to judgment,
attachment
in aid of execution of judgment, set-off, execution of a judgment
or any
other legal process, and to the extent that in any such
jurisdiction there
may be attributed to such Person such an immunity (whether or not
claimed),
the Borrower hereby irrevocably agrees not to claim and hereby
irrevocably
waives such immunity to the fullest extent permitted by the Law of
the
applicable jurisdiction.
9.9 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 by facsimile or
otherwise shall
be an original, but all of which shall together constitute one and
the same
instrument.
9.10 Amendment or Waiver. (a) No
provision of this Agreement
or any other Financing Document may be amended, supplemented,
modified or
waived, except by a written instrument signed by each of the
Required Waiver
Lenders and the Borrower and each of LLC and NEG, Inc., to the
extent that it
is a party thereto, and, to the extent that its rights or
obligations may be
affected thereby, the Administrative Agent or the Collateral
Agent.
Notwithstanding the foregoing provisions, no such waiver and no
such
amendment, supplement or modification shall (i) increase or extend
the New
Tranche B Commitment of any Lender (it being understood that
waivers or
modifications after the Closing Date of covenants, Defaults or
Events of
Default shall not constitute an increase or extension of any New
Tranche B
Commitment of any Lender), without the prior written consent of
such Lender,
(ii) postpone or delay any date fixed by this Agreement or any
other
Financing Document for any payment of principal, interest, fees or
other
amounts due to any Lender hereunder or under any other Financing
Document (it
being understood that waivers or modifications after the Closing
Date of
covenants, Defaults or Events of Default shall not constitute a
postponement
or delay in any date fixed by this Agreement or any other Financing
Document
for any payment of principal, interest, fees or other amounts due
to any
Lender hereunder or under any other Financing Document), without
the prior
written consent of such Lender, (iii) reduce the principal of, or
the rate of
interest specified in any Financing Document on, any Loan of any
Lender or
reduce the amount of fees payable to any Lender, without the prior
written
consent of such Lender, (iv) release all or any substantial part of
the
Collateral except as shall be otherwise provided in any Security
Document or
other Financing Document or consent to the assignment or transfer
by the
Borrower of any of its respective obligations under this Agreement
or any
other Financing Document, without the prior written consent of each
Lender,
(v) amend, modify or waive any provision of Section 3.7, without
the prior
written consent of each Lender affected thereby, (vi) amend, modify
or waive
any provision of Section 7.1, 7.3, 7.4 or 7.5, without the prior
written
consent of the Supermajority Lenders, (vii) amend, modify or waive
any
provision of this Section 9.10 or Section 9.1 or 9.2, without the
prior
written consent of each Lender, (viii) reduce the percentage
specified in or
otherwise amend the definition of Required Waiver Lenders or
Supermajority
Lenders, without the prior written consent of each Lender, (ix)
amend, modify
or waive any provision of Section 10, without the prior written
consent of
the Administrative Agent, or (x) amend, modify or waive any
provision of
Section 11, without the prior written consent of the Collateral
Agent.
(b) Any waiver and any amendment, supplement or
modification
made or entered into in accordance with Section 9.10(a) shall be
binding upon
the Borrower, the Administrative Agent, the Lenders and their
successors and
assigns.
9.11 Assignments, Participations, etc.
(a) Each Lender may,
without the consent of the Borrower, but with prior notice to
the
Administrative Agent, sell or assign any part of the Loan of such
Lender and
the other rights and obligations of such Lender to any Person or
any assignee
thereof (an "Assignee") unless the sale or assignment of the Loan
and such
other rights and obligations of such Lender would reasonably put
the business
of the Borrower at a competitive disadvantage, then such sale or
assignment
shall require the consent of the Borrower. The assigning
Lender and the
Assignee shall enter into an assignment agreement, in form and
substance
satisfactory to the Administrative Agent (an "Assignment and
Acceptance"),
with respect to the sale or assignment of the Loan to be assigned
and,
subject to paragraphs (e) and (f) of this Section 9.11, upon
execution and
delivery of such Assignment and Acceptance, (i) the Assignee
thereunder shall
be a party hereto and, to the extent that rights and obligations
hereunder
have been assigned to it pursuant to such Assignment and
Acceptance, shall
have the rights and obligations of a Lender hereunder and under the
other
Financing Documents, and this Agreement shall be deemed to be
amended to the
extent, but only to the extent, necessary to effect the addition of
the
Assignee, and any reference to the assigning Lender hereunder or
under the
other Financing Documents shall thereafter refer to such Lender and
to the
Assignee to the extent of their respective interests, and (ii) the
assigning
Lender shall, to the extent that rights and obligations hereunder
and under
the other Financing Documents have been assigned by it pursuant to
such
assignment agreement, relinquish its rights and be released from
its
obligations under the Financing Documents.
(b) Each Lender may sell participations to one or more
banks or
other entities (other than the Borrower or any of its Affiliates)
in or to
all or a portion of its rights and obligations under this Agreement
and such
Lender's Note; provided, however, that (i) such Lender's
obligations under
this Agreement shall remain unchanged, (ii) such Lender shall
remain solely
responsible to the other parties hereto for the performance of
such
obligations, (iii) such Lender shall remain the holder of any such
Note for
all purposes of this Agreement, (iv) the Borrower and the other
Lenders shall
continue to deal solely and directly with such Lender in connection
with such
Lender's rights and obligations under this Agreement and (v) no
participant
under any such participation in an amount less than $50,000,000
shall have
any right to approve any amendment or waiver of any provision of
this
Agreement or any Note, or any consent to any departure by the
Borrower
therefrom, except to the extent that such amendment, waiver or
consent would
reduce the principal of, or interest on, the Note or any fees or
other
amounts payable hereunder, or release of all or substantially all
of the
Collateral, in each case to the extent subject to such
participation, or
postpone any date fixed for any payment of principal of, or
interest on, the
Notes or any fees or other amounts payable hereunder, in each case
to the
extent subject to such participation.
(c) A Lender may, in connection with any assignment
or
participation or proposed assignment or participation pursuant to
this
Section 9.11, disclose to the assignee or participant or proposed
assignee or
participant, any information relating to the Borrower furnished to
such
Lender by or on behalf of the Borrower; provided, that prior to any
such
disclosure, the assignee or participant or proposed assignee or
participant
shall agree to preserve the confidentiality of any confidential
information
relating to the Borrower received by it from such Lender.
(d) Notwithstanding any other provision contained in
this
Agreement or any other Financing Document to the contrary, any
Lender may
assign all or any portion of the Loan held by it as collateral
security,
provided that any payment in respect of such assigned Loan or Note
made by
the Borrower to or for the account of the assigning or pledging
Lender in
accordance with the terms of this Agreement shall satisfy the
Borrower's
obligations hereunder in respect to such assigned Loan or Note to
the extent
of such payment. No such assignment shall release the
assigning Lender from
its obligations hereunder.
(e) The Borrower hereby designates the Administrative
Agent to
serve as the Borrower's agent, solely for purposes of this Section
9.11, to
maintain a register (the "Register") on which it will record the
Loans made
by each of the Lenders and each repayment in respect of the
principal amount
of the Loans of each Lender. Failure to make any such
recordation, or any
error in such recordation shall not affect the Borrower's
obligations in
respect of such Loans. With respect to any Lender, the
transfer of the
rights to the principal of, and interest on, any Loan shall not be
effective
until such transfer is recorded on the Register maintained by
the
Administrative Agent with respect to ownership of such Loans and
prior to
such recordation all amounts owing to the transferor with respect
to such
Loans shall remain owing to the transferor. The registration
of assignment
or transfer of all or part of any Loans shall be recorded by
the
Administrative Agent on the Register only upon the acceptance by
the
Administrative Agent of a properly executed and delivered
Assignment and
Acceptance pursuant to Section 9.11(a). The Borrower agrees
to indemnify the
Administrative Agent from and against any and all losses, claims,
damages and
liabilities of whatsoever nature which may be imposed on, asserted
against or
incurred by the Administrative Agent in performing its duties under
this
Section 9.11(e).
(f) Upon its receipt of an Assignment and Acceptance
executed
by an assigning Lender and an Assignee (and, in any case where the
consent of
the Borrower is required by this Section, by the Borrower) together
with
payment to the Administrative Agent of a registration and
processing fee of
$3,500, the Administrative Agent shall (i) promptly accept such
Assignment
and Acceptance and (ii) on the effective date determined pursuant
thereto
record the information contained therein in the Register and give
notice of
such acceptance and recordation to the Borrower. On or prior
to such
effective date, the Borrower, at its own expense, upon request,
shall execute
and deliver to the Administrative Agent (in exchange for the Note
of the
assigning Lender) a new Note to the order of such Assignee in an
amount equal
to the Loan acquired by it pursuant to such Assignment and
Acceptance and, if
such assigning Lender has retained a Loan, a new Note to the order
of such
assigning Lender in an amount equal to the Loan retained by it
hereunder.
9.12 Survival.
(a) All indemnities set forth
herein,
including, without limitation, Section 9.2, shall survive the
execution and
delivery of this Agreement and the Notes and the making and
repayment of the
Loans. In addition, each representation and warranty made or
deemed to be
made pursuant hereto shall survive the making of such
representation and
warranty, and no Lender shall be deemed to have waived, by reason
of making
any extension of credit, any Default or Event of Default which may
arise by
reason of such representation or warranty proving to have been
false or
misleading, notwithstanding that such Lender may have had notice or
knowledge
or reason to believe that such representation or warranty was false
or
misleading at the time such extension of credit was made.
(b) Notwithstanding the execution
and delivery of this
Agreement, all representations and warranties of the Borrower under
the
Existing Credit Agreement and the other Financing Documents (as
defined in
the Existing Credit Agreement) and all obligations of the Borrower
under
Sections 9.1 and 9.2 of the Existing Credit Agreement and other
payment
obligations of the Borrower under Sections 2.5, 2.7, 2.8, 3.2 and
3.4 of the
Existing Credit Agreement accrued as of the Closing Date shall not
terminate
and shall survive the execution and delivery of this Agreement and
the other
Financing Documents (as defined herein).
9.13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF
THEM MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR
ARISING OUT
OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY
OTHER
FINANCING DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING HERETO
OR
THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
LENDERS TO ENTER
INTO THIS AGREEMENT.
9.14 Right of Set-off. In addition to any rights
now or
hereafter granted under applicable Law or otherwise, and not by way
of
limitation of any such rights, upon the occurrence of an Event of
Default,
each Lender is hereby authorized at any time or from time to time,
without
presentment, demand, protest or other notice of any kind to the
Borrower or
to any other Person, any such notice being hereby expressly waived,
to set
off and to appropriate and apply any and all deposits (general or
special)
and any other Indebtedness at any time held or owing by such
Lender
(including without limitation by branches and agencies of such
Lender
wherever located), to or for the credit or the account of the
Borrower
against and on account of the Obligations or liabilities of the
Borrower to
such Lender under this Agreement or any of the other Financing
Documents,
including all claims of any nature or description arising out of or
connected
with this Agreement or any other Financing Document, irrespective
of whether
such Lender shall have made any demand hereunder and although
said
Obligations, liabilities or claims, or any of them, shall be
contingent or
unmatured.
9.15 Severability. Any provision hereof 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 without affecting
the
validity or enforceability of any provision in any other
jurisdiction.
9.16 Governing Law; Submission to Jurisdiction.
(a) THIS
AGREEMENT AND EACH OF THE OTHER FINANCING DOCUMENTS (UNLESS SUCH
DOCUMENT
EXPRESSLY STATES OTHERWISE THEREIN) SHALL BE GOVERNED BY, AND
CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE
CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW
YORK
GENERAL OBLIGATIONS LAW).
(b) The Borrower hereby submits
to the nonexclusive
jurisdiction of the United States District Court for the Southern
District of
New York and of any New York State court sitting in New York City
for the
purposes of all legal proceedings arising out of or relating to
this
Agreement, any other Financing Document or the transactions
contemplated
hereby or thereby. The Borrower hereby irrevocably waives, to
the fullest
extent permitted by applicable Law, any objection which it may now
or
hereafter have to the laying of the venue of any such proceeding
brought in
such a court and any claim that any such proceeding brought in such
a court
has been brought in an inconvenient forum. The Borrower
hereby irrevocably
appoints Corporation Service Company (the "Process Agent"), with an
office on
th
the date hereof at 1177 Avenue of the Americas, 00 Xxxxx, Xxx
Xxxx, Xxx Xxxx
00000-0000, as its agent to receive on its behalf and on behalf of
its
Property, service of copies of the summons and complaint and any
other
process that may be served in any such action or proceeding.
Service upon
the Process Agent shall be deemed to be personal service on the
Borrower and
shall be legal and binding upon the Borrower for all purposes
notwithstanding
any failure to mail copies of such legal process to the Borrower,
or any
failure on the part of the Borrower to receive the same.
Nothing herein
shall affect the right to serve process in any other manner
permitted by
applicable Law or any right to bring legal action or proceedings in
any other
competent jurisdiction, including judicial or non-judicial
foreclosure of
real property interests which are part of the Collateral. The
Borrower
further agrees that the aforesaid courts of the State of New York
and of the
United States of America for the Southern District of New York
shall have
exclusive jurisdiction with respect to any claim or counterclaim of
the
Borrower based upon the assertion that the rate of interest charged
by or
under this Agreement or under the other Financing Documents is
usurious. To
the extent permitted by applicable Law, the Borrower further
irrevocably
agrees to the service of process of any of the aforementioned
courts in any
suit, action or proceeding by the mailing of copies thereof by
certified
mail, postage prepaid, return receipt requested, to the Borrower at
the
address referenced in Section 9.3, such service to be effective
upon the date
indicated on the postal receipt returned from the Borrower.
(c) The Borrower agrees that it will at all times
continuously
maintain an agent to receive service of process in the State of New
York on
behalf of itself and its Properties, and, in the event that for any
reason
the agent mentioned above shall not serve as agent for the Borrower
to
receive service of process in the State of New York on its behalf,
the
Borrower shall promptly appoint a
successor satisfactory to the
Administrative Agent so to serve, advise the Administrative Agent
thereof, and
deliver to the Administrative Agent evidence in writing of the
successor
agent's acceptance of such appointment. The foregoing
provisions constitute,
among other things, a special arrangement for service among the
parties to
this Agreement for the purposes of 28 U.S.C. § 1608.
9.17 Waiver by Borrower. The Borrower waives any
claim it may
now or hereafter have against the Administrative Agent, the
Collateral Agent,
any Lender and any Holder for any consequential, exemplary or
punitive damage
under or in connection with or relating to this Agreement or any of
the
Financing Documents.
9.18 Recourse. This Agreement is made with full
recourse to
the Borrower and pursuant to and upon all the representations,
warranties,
covenants and agreements on the part of the Borrower contained
herein and in
the other Financing Documents to which the Borrower is a party and
otherwise
in writing in connection herewith and therewith.
9.19 Complete Agreement. THIS AGREEMENT AND
THE OTHER
FINANCING DOCUMENTS REPRESENT THE FINAL AND COMPLETE AGREEMENT OF
THE PARTIES
HERETO AND THERETO WITH RESPECT TO THE LOANS, AND ALL PRIOR
NEGOTIATIONS,
REPRESENTATIONS, UNDERSTANDINGS, WRITINGS AND STATEMENTS OF ANY
NATURE WITH
RESPECT TO THE LOANS ARE HEREBY SUPERSEDED IN THEIR ENTIRETY BY THE
TERMS OF
THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS.
9.20 Publicity. Except as otherwise required by
law, none of
the parties hereto shall issue any press release relating to,
connected with
or arising out of this Agreement and the other Financing Documents
or the
matters contained herein or therein, without obtaining the prior
approval of
each other party hereto to the contents and the manner of
presentation and
publication thereof. No references to any party hereto shall
be made by any
party hereto in any public statement without its consent except as
otherwise
required by Law.
9.21 Effectiveness. This Agreement and the other
Financing
Documents shall be effective as of the Effective Date.
9.22 Certain Representations and Warranties. Each
Tranche B
Lender by reason of its business or financial experience, has the
capacity to
protect its own interests (within the meaning of Section
25102(f)(2) of the
California Corporations Code) in
connection with the transactions
contemplated by the Financing Documents.
9.23 Confidentiality. Each Lender agrees to keep
confidential
in accordance with such Lender's customary practices (and in any
event in
compliance with applicable law respecting material non-public
information)
all information obtained by it pursuant hereto and the other
Financing
Documents identified as confidential in writing at the time of
delivery and
agrees that it will only use such information in connection with
the
transactions contemplated by this Agreement and the other Financing
Documents
and not disclose any of such information other than (a) to such
Lender's
employees, representatives, directors,
attorneys, auditors, agents,
professional advisors, trustees or indirect contractual
counterparty in swap
agreements or such contractual counterparty's professional advisor
(so long
as such contractual counterparty or professional advisor to such
contractual
counterparty agrees to be bound by the provision of this Section
9.23 or is
bound by a confidentiality agreement containing substantially
equivalent
provisions), (b) to the extent such information presently is or
hereafter
becomes available to such Lender on a non-confidential basis from
any source
or such information that is in the public domain at the time of
disclosure,
(c) to the extent disclosure is required by law (including
applicable
securities laws), regulations, subpoena or judicial order or
process
(provided that notice of such requirement or order shall be
promptly
furnished to the Borrower unless such notice is legally
prohibited) or
requested or required by bank, securities, insurance or investment
company
regulations or auditors or any administrative body or commission
(including
the Securities Valuation Office of the National Association of
Insurance
Commissioners) to whose jurisdiction such Lender may be subject,
(d) to any
rating agency to the extent required in connection with any rating
to be
assigned to such Lender, (e) to Assignees or prospective Assignees
or
participants or prospective participants who agree to be bound by
the
provisions of this Section 9.23 or who are subject to
confidentiality
agreements containing substantially equivalent provisions, (f) to
the extent
required in connection with any litigation between any party hereto
or
thereto and any Lender with respect to the Loans or this Agreement
and the
other Financing Documents or (g) with the Borrower's prior written
consent.
The agreements in this Section 9.23 shall survive repayment of the
Loans and
all other amounts payable hereunder.
9.24 Release of Liens.
(a) Concurrently with the consummation
of a Qualified NEG Sale, the Lenders agree to cause the Collateral
Agent (at
the expense of the Borrower) to release the security interest held
by the
Collateral Agent, pursuant to the Stock Pledge Agreement or the LLC
Pledge
Agreement, as the case may be, in the Capital Stock being sold in
such
Qualified NEG Sale (so long as the Borrower complies with the
requirements of
Section 3.2(g)).
(b) Concurrently with the consummation of a Spin-Off or
a
public offering of the common stock of PGE Utility in accordance
with Section
7.2(xi), the Lenders agree to cause the Collateral Agent (at the
expense of
the Borrower) to release the security interest held by the
Collateral Agent,
pursuant to the Utility Pledge Agreements, in the Capital Stock of
PGE
Utility being disposed of in such Spin-Off or public offering (so
long as the
Borrower complies with the requirements of Section 3.8 or 3.2(d),
as
applicable).
9.25 Delivery of Lender Addendum. Each Tranche B
Lender
becoming a party hereto on the Closing Date shall become a party
hereto by
delivery to the Administrative Agent a Lender Addendum duly
executed by such
Tranche B Lender, the Borrower and the Administrative Agent.
9.26 Special Exculpation. NO CLAIM MAY BE MADE BY
THE BORROWER
OR ANY OTHER PERSON AGAINST THE COLLATERAL AGENT OR ANY LENDER OR
THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF
ANY OF
THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
IN RESPECT
OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF
LIABILITY ARISING
OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE
TRANSACTIONS
CONTEMPLATED THEREBY, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION
THEREWITH AND THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT
TO XXX UPON
ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER
OR NOT
KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
9.27 Intercreditor Agreement. The parties hereto
acknowledge
that this Agreement and the other Financing Documents are not
intended to
amend the Intercreditor Agreement or to affect any or the rights or
remedies
pursuant to the Intercreditor Agreement of the parties
thereto. To the
extent that provisions of the Intercreditor Agreement affects the
rights and
remedies of the holders of the Existing Tranche B Loan, nothing
herein or in
any other Financing Document shall be deemed to modify such
provisions, nor
shall anything herein or in any other Financing Document subject
the New
Tranche B Loan, or the holders thereof, or any security interest
created
pursuant to the Security Agreements, the Utility Pledge Agreements
or the
Tranche B Interest Reserve Account Control Agreement (New Tranche B
Loan), to
the provisions of the Intercreditor Agreement.
9.28 Amended and Restated Security Documents. If
no Default or
Event of Default under Section 8.1(e) shall have occurred and be
continuing
on the date which is 91 days after the Closing Date, the parties
hereto
hereby authorize and direct the Borrower, the Collateral Agent and
the
Administrative Agent as promptly as practicable thereafter to enter
into
amendments and restatements of the Security Agreements, the Utility
Pledge
Agreements and the Tranche B Reserve Account Control Agreements, in
such form
as the Borrower, the Collateral Agent and the Administrative Agent
shall
agree upon (but in all cases to be substantially similar to the
existing
documents), in each case to cause the New Tranche B Loan and the
Continued
Tranche B Loan to be equally and ratably secured by the Collateral
covered by
such Security Documents, without any distinction between the New
Tranche B
Loan and the Continued Tranche B Loan (the date upon which such
amended and
restated Security Documents shall become effective, the
"Consolidation
Date"). In connection with such amendment and restatement,
the Borrower
shall cause to be delivered to the Administrative Agent, for the
benefit of
the Lenders, such legal opinions as the Administrative Agent shall
reasonably
request in respect of such amended and restated Security
Documents. No
further consent of the Lenders to any such amendments and
restatements shall
be required.
9.29 Consent to Convertible Note Amendment. Each
Lender
consents to the amendment to the Convertible Notes and the
Convertible Notes
Indenture described in Section 4.1(v), a copy of which has been
provided to
the Lenders.
SECTION
10. THE ADMINISTRATIVE AGENT; THE SYNDICATION
AGENT,
THE LEAD ARRANGER AND THE BOOKRUNNER.
10.1 Appointment. Xxxxxx Commercial Paper Inc.
shall be the
Administrative Agent and shall act as specified herein and in the
other
Financing Documents. Each Lender hereby irrevocably
authorizes, and the
holder of any Note by the acceptance of such Note shall be deemed
irrevocably
to authorize, the Administrative Agent to take such action on its
behalf
under the provisions of this Agreement, the other Financing
Documents and any
other instruments and agreements referred to herein or therein and
to
exercise such powers and to perform such duties hereunder and
thereunder as
are specifically delegated to or required of the Administrative
Agent by the
terms hereof and thereof and such other powers as are reasonably
incidental
thereto. The Administrative Agent may perform any of its
duties hereunder by
or through its officers, directors, agents or employees. Each
Lender hereby
authorizes the Administrative Agent to execute, deliver and perform
each
Security Document and such Lender agrees to be bound by all of the
agreements
of the Administrative Agent contained in the Security
Documents.
10.2 Nature of Duties. The Administrative Agent
shall have no
duties or responsibilities except those expressly set forth in this
Agreement
and the Security Documents. Neither the Administrative Agent
nor any of its
officers, directors, agents or employees shall be liable for any
action taken
or omitted by it or them hereunder or under any other Financing
Document or
in connection herewith or therewith, unless caused by its or their
gross
negligence or willful misconduct. The duties of the
Administrative Agent
shall be mechanical and administrative in nature; the
Administrative Agent
shall not have by reason of this Agreement or any other Financing
Document,
or by reason of the use of the term "agent" with reference to
the
Administrative Agent, a fiduciary relationship in respect of any
Lender or
the holder of any Note; and nothing in this Agreement or any other
Financing
Document, expressed or implied, is intended to or shall be so
construed as to
impose upon the Administrative Agent any obligations in respect of
this
Agreement or any other Financing Document except as expressly set
forth
herein.
10.3 Lack of Reliance on
the Administrative Agent.
Independently and without reliance upon the Administrative Agent
or any
Lender, each Lender and each holder of any Note, to the extent it
deems
appropriate, has made and shall continue to make (i) its own
independent
investigation of the financial condition and affairs of the
Borrower in
connection with the making and the continuance of the Loans and the
taking or
not taking of any action in connection herewith and (ii) its own
appraisal of
the creditworthiness of the Borrower, except as expressly provided
in this
Agreement, neither the Administrative Agent nor any Lender shall
have no duty
or responsibility, either initially or on a continuing basis, to
provide any
Lender or the holder of any Note with any credit or other
information with
respect thereto, whether coming into its possession before the
making of the
Loans or at any time or times thereafter. Neither the
Administrative Agent
nor any Lender shall not be responsible to any Lender or the holder
of any
Note for any recitals, statements, information, representations or
warranties
herein or in any document, certificate or other writing delivered
in
connection herewith or for the execution, effectiveness,
genuineness,
validity, enforceability, perfection, collectibility, priority or
sufficiency
of this Agreement or any other Financing Document or the financial
condition
of the Borrower or be required to make any inquiry concerning
either the
performance or observance of any of the terms, provisions or
conditions of
this Agreement or any other Financing Document, or the financial
condition of
the Borrower or the existence or possible existence of any Default
or Event
of Default.
10.4 Certain Rights of the Administrative Agent.
If the
Administrative Agent shall request instructions from the Required
Waiver
Lenders with respect to any act or action (including failure to
act) in
connection with this Agreement or any other Financing Document,
the
Administrative Agent shall be entitled to refrain from such act or
taking
such action unless and until the Administrative Agent shall have
received
instructions from the Required Waiver Lenders, and the
Administrative Agent
shall not incur liability to any Person by reason of so refraining.
Without
limiting the foregoing, no Lender or the holder of any Note shall
have any
right of action whatsoever against the Administrative Agent as a
result of
the Administrative Agent acting or refraining from acting hereunder
or under
any other Financing Document in accordance with the instructions of
the
Required Waiver Lenders.
10.5 Reliance. The Administrative Agent shall be
entitled to
rely, and shall be fully protected in relying, upon any note,
writing,
resolution, notice, statement, certificate, telex, teletype or
telecopier
message, cablegram, radiogram, order or other document or telephone
message
signed, sent or made by any Person that the Administrative Agent
believed to
be the proper Person, and, with respect to all legal matters
pertaining to
this Agreement and any other Financing Document its duties
hereunder and
thereunder, upon advice of counsel selected by it.
10.6 Indemnification. To the extent the
Administrative Agent
is not reimbursed and indemnified by the Borrower, each Lender will
reimburse
and indemnify the Administrative Agent, in proportion to its
respective Loan,
for and against any and all liabilities, obligations, losses,
damages,
penalties, claims, actions, judgments,
suits, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on,
asserted
against or incurred by the Administrative Agent in performing its
duties
hereunder or under any other Financing Document, or in any way
relating to or
arising out of this Agreement or any other Financing Document;
provided,
however, that no Lender shall be liable for any portion of such
liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs,
expenses or disbursements resulting from the Administrative Agent's
gross
negligence or willful misconduct.
10.7 The Administrative Agent in its Individual
Capacity. With
respect to its obligation to make Loans under this Agreement, and
with
respect to any Loan held by it or made by it, the Administrative
Agent shall
have the rights and powers specified herein for a "Lender" and may
exercise
the same rights and powers as though it were not performing the
duties
specified herein; and the term "Lender," "Required Waiver Lenders",
"holder
of Note" or any similar terms shall, unless the context clearly
otherwise
indicates, include the Administrative Agent in its individual
capacity. The
Administrative Agent may accept deposits from, lend money to, and
generally
engage in any kind of banking, trust or other business with the
Borrower or
any Affiliate of the Borrower as if it were not performing the
duties
specified herein, and may accept fees and other consideration from
the
Borrower for services in connection with this Agreement and
otherwise without
having to account for the same to the Lenders.
10.8 Holders. The Administrative Agent may deem
and treat the
payee of any Note as the owner thereof for all purposes hereof
unless and
until a written notice of the assignment, transfer or endorsement
thereof, as
the case may be, shall have been filed with the Administrative
Agent. Any
request, authority or consent of any Person who, at the time of
making such
request or giving such authority or consent, is the holder of any
Note shall
be conclusive and binding on any subsequent holder, transferee,
assignee or
indorsee, as the case may be, of such Note or of any Note or Notes
issued in
exchange therefor.
10.9 Resignation or Replacement of the Administrative
Agent.
(a) The Administrative Agent may resign from the
performance of all its
functions and duties hereunder and/or under the other Financing
Documents at
any time by giving 15 Business Days' prior written notice to the
Borrower and
each Lender. Such resignation shall take effect upon the
appointment of a
successor Administrative Agent pursuant to clauses (c) and (d)
below or as
otherwise provided below.
(b) The Administrative Agent may be replaced at the
written
request of the Required Waiver Lenders at any time by such Lenders
giving 15
Business Days' prior written notice to the Administrative
Agent. Such
replacement shall take effect upon the appointment of a
successor
Administrative Agent pursuant to clauses (c) and (d) below or as
otherwise
provided below.
(c) Upon any such notice of resignation or replacement,
as the
case may be, the Required Waiver Lenders shall appoint a
successor
Administrative Agent hereunder or thereunder who shall be a
commercial bank,
trust company or other financial institution which is a Lender and
which
shall be subject to the reasonable approval of the Borrower (unless
an Event
of Default shall be continuing).
(d) If a successor Administrative Agent shall not have
been so
appointed within such 15 Business Day period, the Administrative
Agent, with
the consent of the Borrower, may then appoint a successor
Administrative
Agent who shall serve as Administrative Agent hereunder or
thereunder until
such time, if any, as the Required Waiver Lenders appoint a
successor
Administrative Agent as provided above.
(e) If no successor Administrative Agent has been
appointed
pursuant to clause (c) or (d) above by the 20th Business Day after
the date
such notice of resignation or replacement was given by the
Administrative
Agent or the Required Waiver Lenders, as the case may be, the
Administrative
Agent's resignation or replacement shall become effective and the
Required
Waiver Lenders shall thereafter perform all the duties of the
Administrative
Agent hereunder and/or under any other Financing Document until
such time, if
any, as the Required Waiver Lenders appoint a successor
Administrative Agent
as provided above.
10.10 The Syndication Agent, Lead Arranger and
Bookrunner.
None of the Syndication Agent, the Lead Arranger or the
Bookrunner, in such
respective capacity, shall have any duties or responsibilities
under this
Agreement or any other Financing Document, nor shall any of such
Persons, in
such respective capacities, have any obligations or liabilities
hereunder or
under any other Financing Document.
10.11 Direction to Administrative Agent and Collateral
Agent.
Each of the Lenders authorizes and directs the Administrative
Agent and the
Collateral Agent to execute and deliver the Security Documents and
to perform
their respective obligations thereunder. Each Lender agrees
that it is bound
by the provisions in the Security Documents and the Intercreditor
Agreement
relating to the Lenders to the same extent as if such Lender were a
party
thereto, including, without limitation, any provisions of the
Security
Documents requiring the Lenders to indemnify the Collateral
Agent. The
Administrative Agent and the Collateral Agent are express
third-party
beneficiaries of this Section.
SECTION
11. COLLATERAL AGENT.
11.1 Appointment. Each Lender hereby appoints,
designates and
authorizes the Collateral Agent to take such action on its behalf
under the
provisions of the Security Documents and to exercise such powers
and perform
such duties as are expressly delegated to it by the terms of any
Security
Document, together with such powers as are reasonably incidental
thereto.
Each Lender authorizes the Collateral Agent to execute, deliver
and perform
each of the Security Documents and such Lender agrees to be bound
by all of
the agreements of the Collateral Agent contained in the Security
Documents.
Notwithstanding any provision to the contrary contained in the
Security
Documents, the Collateral Agent shall not have any duties or
responsibilities
except those expressly set forth in the Security Documents, and
the
Collateral Agent does not have or shall not be deemed to have any
fiduciary
relationship with any Lender, and no implied covenants,
functions,
responsibilities, duties, obligations or liabilities shall be read
into the
Security Documents or otherwise exist against the Collateral
Agent. Without
limiting the generality of the foregoing sentence, the use of the
term
"Collateral Agent," in this Agreement with reference to the
Collateral Agent
is not intended to connote any fiduciary or other implied (or
express)
obligations arising under agency doctrine of any applicable
Law. Instead,
such term is used merely as a matter of market custom, and is
intended to
create or reflect only a relationship between independent
contracting
parties.
11.2 Exculpatory Provisions. Neither the
Collateral Agent nor
any of its officers, directors, employees or agents shall (i) be
liable for
any action taken or omitted to be taken by it under or in
connection with any
Security Document or the transactions contemplated thereby (except
for its
own gross negligence or willful misconduct), or (ii) be responsible
in any
manner to any of the Lenders or any other Person for any recital,
statement,
representation or warranty made by the Borrower or any Affiliate of
the
Borrower, or any officer thereof, contained in any Security
Document, or in
any certificate, report, statement or other document referred to or
provided
for in, or received by the Collateral Agent under or in connection
with, any
Security Document, or for the value of or title to any Collateral,
or the
validity, effectiveness, genuineness, enforceability or sufficiency
of any
Security Document, or for any failure of any Covered Party or any
other party
to any Security Document to perform its obligations
thereunder. The
Collateral Agent shall not be under any obligation to any Lender to
ascertain
or to inquire as to the observance or performance of any of the
agreements
contained in, or conditions of, any Security Document, or to
inspect the
books or records of the Borrower or any Affiliate of the
Borrower. Anything
in this Agreement or any Security Document to the contrary
notwithstanding,
in no event shall the Collateral Agent be liable for special,
indirect or
consequential loss or damage of any kind whatsoever (including but
not
limited to loss of profits).
11.3 Reliance by Collateral Agent. The Collateral
Agent shall
be entitled to rely conclusively, and shall be fully protected in
so relying,
upon any writing, resolution, notice, consent, certificate,
affidavit,
letter, telegram, facsimile, telex or telephone message, statement
or other
document or conversation believed by it to be genuine and correct
and to have
been signed, sent or made by the proper Person or Persons, and upon
advice
and statements of legal counsel, independent accountants and other
experts
selected by the Collateral Agent. The Collateral Agent shall
be fully
justified in failing or refusing to take any action under any
Security
Document (i) if such action would, in the opinion of the Collateral
Agent
(upon consultation with counsel), be contrary to applicable Law or
the terms
of any Security Document, (ii) if such action is not specifically
provided
for in the Security Documents and it shall not have received such
written
advice or concurrence of the Required Waiver Lenders, in each case
as the
Collateral Agent deems appropriate, (iii) unless, if it so
requests, such
Collateral Agent shall first be indemnified to its satisfaction by
the
Lenders against any and all liability and expense which may be
incurred by it
by reason of taking or continuing to take any such action.
The Collateral
Agent shall in all cases be fully protected in acting, or in
refraining from
acting, under the Security Documents in accordance with a written
request or
written consent of the Required Waiver Lenders, and such request
and any
action taken or failure to act pursuant thereto shall be binding
upon all of
the Lenders.
11.4 Notice of Default. The Collateral Agent
shall not be
deemed to have knowledge or notice of the occurrence of any Default
or Event
of Default unless the Collateral Agent shall have received written
notice
from a Lender or the Borrower referring to the Credit Agreement,
describing
such Default or Event of Default and stating that such notice is a
"Notice of
Default". If the Collateral Agent receives any such notice of
the occurrence
of a Default or an Event of Default, it shall give notice thereof
to the
Administrative Agent and the Lenders. The Collateral Agent
shall take such
action with respect to such Default or Event of Default as may be
requested
in writing by the Required Waiver Lenders; provided, however, that
unless and
until the Collateral Agent has received any such request, the
Collateral
Agent may (but shall not be obligated to) take such action, or
refrain from
taking such action, with respect to such Default or Event of
Default under
the Security Documents as it shall deem advisable or in the best
interest of
the Lenders.
11.5 Indemnification. Whether
or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify
upon demand
the Collateral Agent, its officers, directors, employees, counsel,
agents and
attorneys in fact ("Agent Related Person") (to the extent not
reimbursed by
or on behalf of the Borrower within 90 days of the Collateral
Agent's request
to the Borrower for payment and without limiting the obligation of
the
Borrower to do so), pro rata in accordance with the aggregate
principal
amount of the Loans held by such Lenders (as determined by the
Administrative
Agent), from and against any and all Indemnified Liabilities;
provided,
however, that no Lender shall be liable for the payment to the
Collateral
Agent or the Agent Related Persons of any portion of such
Indemnified
Liabilities resulting solely from such Person's gross negligence or
willful
misconduct. Without limitation of the foregoing, each Lender
shall reimburse
the Collateral Agent upon demand as provided above of any costs or
out-of-
pocket expenses incurred by such Collateral Agent or Agent Related
Person (to
the extent not reimbursed by or on behalf of the Borrower within 90
days of
the Collateral Agent's request to the Borrower for payment and
without
limiting the obligation of the Borrower to do so) in connection
with the
preparation, execution, delivery, administration, modification,
amendment or
enforcement (whether through negotiations, legal proceedings or
otherwise)
of, or legal advice in respect of rights or responsibilities under,
the
Security Documents or any document contemplated by or referred to
therein,
pro rata in accordance with the aggregate principal amount of the
Loans held
by such Lenders (as determined by the Administrative Agent).
The provisions
of this section shall survive termination of the Security Documents
or
earlier resignation or removal of the Collateral Agent.
Notwithstanding anything herein to the contrary, the
Collateral
Agent shall be entitled to set off from any Collateral or proceeds
thereof
any amounts due and owing to it pursuant to this Section 11.5
solely to the
extent such amounts are not paid by the Borrower or the Lenders as
provided
in the Security Documents and such amounts remain unpaid by the
Lenders for a
period of thirty days after demand therefor.
11.6 Successor Collateral Agent. Subject to the
appointment
and acceptance of a successor as provided below, the Collateral
Agent may
resign at any time by giving notice thereof to the Lenders and the
Borrower,
and the Collateral Agent may be removed at any time with or without
cause by
the Required Waiver Lenders upon thirty (30) days prior written
notice. Upon
any such resignation or removal, the Required Waiver Lenders shall
have the
right to appoint a successor to the Collateral Agent. If no
successor
Collateral Agent shall have been appointed by the Required Waiver
Lenders,
and shall have accepted such appointment within 30 days after the
resigning
Collateral Agent's giving of notice of resignation or the giving of
any
notice of removal of such Collateral Agent, then the resigning
Collateral
Agent or Collateral Agent being removed, as the case may be, may at
the
Borrower's expense, appoint a successor to such Collateral Agent or
petition
a court of competent jurisdiction for a successor. If the
Collateral Agent
shall resign or be removed pursuant to the foregoing provisions,
upon the
acceptance of appointment by a successor Collateral Agent
hereunder, the
former Collateral Agent shall deliver all Collateral then in its
possession
to the successor Collateral Agent. Upon the acceptance of its
appointment as
a successor Collateral Agent hereunder, such successor Collateral
Agent shall
thereupon succeed to and become vested with all the rights,
powers,
privileges and duties of such resigning or removed Collateral
Agent, and such
resigning Collateral Agent or removed Collateral Agent shall be
discharged
from its duties and obligations under the Security
Documents.
11.7 Miscellaneous. (a) None of
the provisions of the
Security Documents shall require the Collateral Agent to expend or
risk its
own funds or otherwise to incur any liability, financial or
otherwise, in the
performance of any of its duties thereunder, or in the exercise of
any of its
rights or powers if it shall have reasonable grounds for believing
that
repayment of such funds or indemnity satisfactory to it against
such risk or
liability is not assured to it.
(b) The Collateral Agent may execute any of the trusts
or
powers or perform any duties under any Security Document either
directly or
by or through agents, attorneys, custodians or nominees appointed
with due
care, and shall not be responsible for any willful misconduct or
negligence
on the part of any agent, attorney, custodian or nominee so
appointed.
(c)
Any corporation into which the Collateral Agent may be
merged or converted or with which it may be consolidated, or any
corporation
resulting from any merger, conversion or consolidation to which
the
Collateral Agent shall be a party, or any corporation succeeding to
the
business of the Collateral Agent shall be the successor of the
Collateral
Agent under the Security Documents without the execution or filing
of any
paper with any party to the Security Documents or any further act
on the part
of any of the parties to the Security Documents except where an
instrument of
transfer or assignment is required by law to effect such
succession, anything
herein to the contrary notwithstanding.
(d) The Collateral Agent shall not take any
instructions with
respect to the Security Documents from any entity that is not a
Lender
hereunder.
IN WITNESS
WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the
date
first above written.
PG&E CORPORATION
XXXXX X. XXXXXX
By:
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
Chief
Financial Officer
XXXXXX COMMERCIAL PAPER INC., as
a Lender and as Syndication Agent and
Administrative Agent
XXXXX X. XXXXX, XX.
By:
Name: Xxxxx X. Xxxxx, Xx.
Title: Authorized Signatory
XXXXXX BROTHERS INC., as Lead Arranger
and Bookrunner
XXXXX X. XXXXX, XX.
By:
Name: Xxxxx X. Xxxxx, Xx.
Title: SVP
Appendix A
DEFINED TERMS AND RULES OF INTERPRETATION
1. Defined Terms.
"Administrative Agent" shall mean Xxxxxx Commercial Paper
Inc.,
acting in its capacity as agent for the Lenders pursuant to the
Credit
Agreement, and any successor in such capacity.
"Affiliate"
shall mean, with respect to any Person, (a) any other
Person that is directly or indirectly Controlled by, under common
Control
with or Controls such Person; (b) any other Person owning
beneficially or
Controlling five percent or more of the Voting Stock of such
Person; or (c)
any officer, director or partner of such Person, except with
respect to any
officer or director of the Borrower.
"Applicable
Margin" shall mean (a) as to the Base Rate Loan,
9.00% per annum and (b) as to the Eurodollar Loan, 10.00% per
annum.
"Asset Sale"
shall mean any sale, transfer or other disposition
of any Property (other than any Qualified NEG Sale) of the Borrower
or any
member of the NEG Group (including, without limitation, after
the
consummation of a Spin-Off or a Non-Spin Plan of Reorganization,
the Capital
Stock of, or any assets of, PGE Utility or any Reorganization
Subsidiary).
"Assignee"
shall have the meaning provided in Section 9.11 of the
Credit Agreement.
"Attributable Tax Benefits" shall mean the aggregate amount
of
net cash tax savings actually received by the Borrower after
October 1, 2002
as a result of any Qualified Asset Sale, any Qualified NEG Sale,
any
Qualified Restructuring or any Qualified Abandonment.
"Audited
Financial Statements" shall have the meaning provided in
Section 5.11 of the Credit Agreement.
"Authorized
Officer" shall mean (a) with respect to any Person
that is a corporation or a limited liability company, the
Chairman,
President, any Vice President, Treasurer or Secretary of such
Person and (b)
with respect to any Person that is a partnership, the President,
any Vice
President, Treasurer or Secretary (or Assistant Secretary) of a
general
partner or managing partner of such Person and in each case whose
name
appears on a certificate of incumbency of such Person delivered in
accordance
with the Credit Agreement, as such certificate may be amended from
time to
time.
"Bankruptcy Code" shall have the
meaning provided in
Section 8.1(e) of the Credit Agreement.
"Bankruptcy
Court" shall mean the Bankruptcy Court in which the
PGE Utility Bankruptcy Proceeding is pending on the date
hereof.
"Bankruptcy
Law" shall mean the Bankruptcy Code and any other Law
of any jurisdiction relating to bankruptcy, insolvency,
liquidation,
reorganization, moratorium, winding-up or composition or
readjustment of
debts or any similar Law.
"Bankruptcy
Termination Event" shall mean the occurrence and
continuance of a Default or Event of Default under Section 8.1(e)
of the
Credit Agreement at any time prior to the Escrow Release
Date.
"Base Rate",
for any day, shall mean the rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus one-half
of one
percent (.5%) and (b) the Prime Rate for such day. Any
changes in the Base
Rate due to a change in the Prime Rate or the Federal Funds Rate
shall be
effective on the effective date of such change in the Prime Rate or
Federal
Funds Rate.
"Base Rate
Loans" shall mean the Loans or any portion thereof
which bears interest based upon the Base Rate.
"Bookrunner"
shall mean Xxxxxx Brothers Inc., a Delaware
corporation.
"Borrower"
shall mean PG&E Corporation, a California corporation.
"Borrowing"
shall mean the borrowing of Loans of one Type from a
Lender on a given date, provided that Base Rate Loans incurred
pursuant to
Section 2.7(b) shall be considered part of the related Borrowing
of
Eurodollar Loans.
"Business
Day" shall mean (a) for all purposes other than as
covered by clause (b) below, any day except Saturday, Sunday and
any day
which shall be in New York City, a legal holiday or a day on which
banking
institutions are authorized or required by law or other government
action to
close in such city, and (b) with respect to all notices and
determinations in
connection with, and payments of principal and interest on, any
Eurodollar
Loan, any day which is a Business Day described in clause (a) above
and which
is also a day for trading by and between banks in the London
interbank
eurodollar market.
"CA Fee"
shall mean the fees and expenses of the Collateral Agent
set forth in the Schedule of Fees with the Collateral Agent dated
March 1,
2001.
"Capital
Expenditure" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in
accordance with
generally accepted accounting principles, including all such
expenditures
with respect to fixed or capital assets (including, without
limitation,
expenditures for maintenance and repairs which should be
capitalized in
accordance with generally accepted accounting principles) and the
amount of
Capital Lease Obligations incurred by such Person.
"Capital
Lease Obligations" shall mean, for any Person, the
obligations of such Person to pay rent or other amounts under a
lease of (or
other agreement conveying the right to use) real or personal
Property which
obligations are required to be classified and accounted for as a
capital
lease on a balance sheet of such Person under U.S. GAAP (including
Statement
of Financial Accounting Standards No. 13 of the Financial
Accounting
Standards Board ("Statement No. 13")) and, for purposes of the
Credit
Agreement, the amount of such obligations shall be the capitalized
amount
thereof, determined in accordance with U.S. GAAP (including such
Statement
No. 13).
"Capital
Stock" shall mean, with respect to any Person, any and
all shares, interests, participations and/or rights in or other
equivalents
(however designated, whether voting or nonvoting, ordinary or
preferred) in
the equity or capital of such Person, now or hereafter outstanding,
and any
and all rights, warrants or options exchangeable for or convertible
into any
thereof.
"Cash
Equivalents" shall mean, as to any Person, (a) securities
issued or directly and fully guaranteed or insured by the United
States or
any agency or instrumentality thereof (provided that the full faith
and
credit of the United States is pledged in support thereof) having
maturities
of not more than one year from the date of acquisition, (b) time
deposits,
demand deposits, certificates of deposit and other deposits of any
commercial
bank having, or which is the principal banking subsidiary of a bank
holding
company organized under the laws of the United States, any State
thereof or
the District of Columbia having capital, surplus and undivided
profits
aggregating in excess of $200,000,000, with maturities of not more
than one
year from the date of acquisition by such Person, (c) repurchase
obligations
with a term of not more than 90 days for underlying securities of
the types
described in clause (a) above entered into with any bank meeting
the
qualifications specified in clause (b) above, (d) commercial paper
issued by
any Person incorporated in the United States rated at least A-1 or
the
equivalent thereof by Standard & Poor's or at least P-1 or the
equivalent
thereof by Xxxxx'x and in each case maturing not more than one year
after the
date of acquisition by such Person, and (e) investments in money
market funds
substantially all of whose assets are comprised of securities of
the types
described in clauses (a) through (d) above.
"CERCLA"
shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended
from time
to time, 42 U.S.C. § 9601 et seq.
"Change of
Control" shall mean any of the following: (a) any
"person" or "group" (as such terms are used in Sections 13(d) and
14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall
become, or obtain rights (whether by means or warrants, options or
otherwise)
to become, the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5
under the Exchange Act), directly or indirectly, of more than 25%
of the
outstanding common stock of the Borrower; (b) the board of
directors of the
Borrower shall cease to consist of a majority of Continuing
Directors; or (c)
a Specified Change of Control shall occur.
"Change of
Control Offer to Repay" shall have the meaning
provided in Section 3.8(a) of the Credit Agreement.
"Change of
Control Offer Settlement Date" shall have the meaning
provided in Section 3.8(a) of the Credit Agreement.
"Change of
Control Prepayment Fee" shall have the meaning
provided in Section 3.8(a) of the Credit Agreement.
"Charter
Documents" shall mean, with respect to any Person, (a)
the articles of incorporation or other similar organizational
document of
such Person, (b) the by-laws or other similar document of such
Person, (c)
any certificate of designation or instrument relating to the rights
of
preferred shareholders or other holders of Capital Stock of such
Person and
(d) any shareholder rights agreement or other similar
agreement.
"Closing
Date" shall mean the date upon which the conditions
precedent set forth in Section 4.1 of the Credit Agreement have
been
satisfied (or waived by all the Lenders).
"Code" shall
mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings
issued
thereunder. Section references to the Code are to the Code as
in effect at
the date of the Credit Agreement and any subsequent provisions of
the Code,
amendatory thereof, supplemental thereto or substituted
therefor.
"Collateral"
shall mean all Property that, in accordance with the
terms of the Security Documents, is intended to be subject to any
Lien in
favor of the Collateral Agent, for the benefit of the
Lenders.
"Collateral
Agent" shall mean Deutsche Bank Trust Company
Americas, acting as collateral agent for the benefit of the
Lenders.
"Compliance"
shall have the meaning provided in Section 13 of the
LLC Agreement, attached hereto as Annex A.
"Consolidation Date" shall have the meaning provided in
Section
9.28 of the Credit Agreement.
"Contingent
Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intending to guarantee
any
Indebtedness, leases, dividends or other obligations ("primary
obligations")
of any other Person (the "primary obligor") in any manner, whether
directly
or indirectly, including, without limitation, any obligation of
such Person,
whether or not contingent, (a) to purchase any such primary
obligation or any
property constituting direct or indirect security therefor, (b) to
advance or
supply funds (i) for the purchase or payment of any such primary
obligation
or (ii) to maintain working capital or equity capital of the
primary obligor
or otherwise to maintain the net worth or solvency of the primary
obligor,
(c) to purchase property, securities or services primarily for the
purpose of
assuring the owner of any such primary obligation of the ability of
the
primary obligor to make payment of such primary obligation or (d)
otherwise
to assure or hold harmless the owner of such primary obligation
against loss
in respect thereof. The amount of any Contingent Obligation
shall be deemed
to be an amount equal to the aggregate current exposure pursuant to
each
applicable agreement net of the fair market value of any posted
collateral
thereunder.
"Continued
Tranche B Lender" shall mean any holder of a Continued
Tranche B Loan.
"Continued
Tranche B Loan" shall have the meaning provided in
Section 2.1(a) of the Credit Agreement.
"Continuing
Directors" shall mean the directors of the Borrower
on the Closing Date and each other director, if, in each case, such
other
director's nomination for election to the board of directors of the
Borrower
is recommended by at least 66-2/3% of the then Continuing
Directors.
"Control"
shall mean possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a
Person, whether through the ownership of partnership interests or
voting
securities, by contract or otherwise.
"Convertible
Notes" shall mean the 7.50% Convertible Subordinated
Notes due 2007 of the Borrower in the aggregate principal amount
of
$280,000,000 issued on June 25, 2002 pursuant to the Convertible
Notes
Indenture.
"Convertible
Notes Blockage Period" shall mean the period
commencing the date the Administrative Agent has delivered a notice
to the
trustee under the Convertible Notes Indenture stating that an Event
of
Default exists hereunder, and terminating on the earlier of (A) the
date on
which such Event of Default is cured or waived in accordance with
the Credit
Agreement and (B) the date which is 240 days after the date of the
receipt by
the trustee of the default notice with respect thereto.
"Convertible
Notes Indenture" shall mean the Indenture, dated as
of June 25, 2002, as amended on or prior to the Closing Date,
entered into by
the Borrower in connection with the issuance of the Convertible
Notes,
together with all instruments and other agreements entered into by
the
Borrower in connection therewith.
"Covenant
Parties" shall have the meaning provided in Section 6.2
of the Credit Agreement.
"Covered Contracts" shall have the
meaning provided in
Section 5.7 of the Credit Agreement.
"Covered
Parties" shall have the meaning provided in Section 5.1
of the Credit Agreement.
"CPUC" shall
mean the California Public Utilities Commission or
its successor.
"Credit
Agreement" shall mean the Second Amended and Restated
Credit Agreement, dated as of October 18, 2002, among the Borrower,
the
Lenders party thereto, Xxxxxx Commercial Paper Inc., as Syndication
Agent and
Administrative Agent and Xxxxxx Brothers Inc., as Lead Arranger
and
Bookrunner.
"Default"
shall mean any event or circumstance which with notice
or lapse of time or both would become an Event of Default.
"Disclosure
Letter" shall mean the letter from the Borrower,
addressed to the Administrative Agent and the Lenders, dated as of
October
18, 2002, with respect to certain disclosure of the Borrower.
"Disposition" shall have the meaning provided in Section 7.2
of
the Credit Agreement.
"Distribution" shall have the meaning provided in Section 13
of
the LLC Agreement, attached hereto as Annex A.
"Dividend"
shall mean, with respect to any Person, that such
Person has declared or paid a dividend, distribution or returned
any equity
capital to its stockholders, partners or members or authorized or
made any
other distribution, payment or delivery of property (other than
common equity
of such Person) or cash to its stockholders, partners or members as
such
(including, without limitation, any "spin-off" of assets or Capital
Stock
held by such Person to the shareholder or partners or members of
such Person
or any parent of such Person), or redeemed, retired, purchased or
otherwise
acquired, directly or indirectly, for a consideration any shares of
any class
of its capital stock or any partnership or membership interests
outstanding
on or after the Closing Date (or any options or warrants issued by
such
Person with respect to its capital stock or other equity
interests), or set
aside any funds for any of the foregoing purposes, or shall have
permitted
any of its Subsidiaries to purchase or otherwise acquire for a
consideration
any shares of any class of the capital stock or any partnership or
membership
interests of such Person outstanding on or after the Closing Date
(or any
options or warrants issued by such Person with respect to its
capital stock
or other equity interests). Without limiting the foregoing,
"Dividends" with
respect to any Person shall also include (a) all payments made or
required to
be made by such Person (other than to employees of the Borrower or
any of its
Subsidiaries) with respect to any stock appreciation rights, plans,
equity
incentive or achievement plans or any similar plans or setting
aside of any
funds for the foregoing purposes and (b) all "Pass-Through
Dividends" made
pursuant to, and as defined in, the Convertibles Notes
Indenture.
"Dollars"
and the sign "$" shall each mean freely transferable,
lawful money of the United States.
"Effective
Date" shall mean October 18, 2002.
"Environmental Claim" shall mean, with respect to any Person,
(a)
any notice, claim, administrative, regulatory or judicial or
equitable
action, suit, Lien, judgment or demand by any other Person or (b)
any other
written communication by any Governmental Authority, in either case
alleging
or asserting such Person's liability for investigatory costs,
cleanup costs,
consultants' fees, governmental response costs, damages to natural
resources
(including, without limitation, wetlands, wildlife, aquatic and
terrestrial
species and vegetation) or other Property, property damages,
personal
injuries, fines or penalties arising out of, based on or resulting
from (i)
the presence, or Release into the environment, of any Hazardous
Material at
any location, whether or not owned by such Person or (ii)
circumstances
forming the basis of any violation, or alleged violation, of
any
Environmental Law or Governmental Approval issued under any
Environmental
Law.
"Environmental Laws" shall mean any and all Laws, now or
hereafter in effect, and any judicial or administrative
interpretation
thereof, including any judicial or administrative order, consent
decree or
judgment, relating to the environment, human health or safety, or
to
emissions, discharges, releases or threatened releases of
pollutants,
contaminants, chemicals, or toxic or hazardous substances or wastes
into the
environment including, without limitation, ambient air, surface
water,
groundwater, or land, or otherwise relating to the manufacture,
processing,
distribution, use, treatment, storage, disposal, transport, or
handling of
pollutants, contaminants, chemicals, or toxic or hazardous
substances or
wastes.
"Equity
Interest" shall have the meaning provided in Section
5.10(f) of the Credit Agreement.
"ERISA"
shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and
rulings issued thereunder. Section references to ERISA are to
ERISA, as in
effect at the date of the Credit Agreement and any subsequent
provisions of
ERISA, amendatory thereof, supplemental thereto or substituted
therefor.
"ERISA
Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with the Borrower or a Subsidiary of
the
Borrower would be deemed to be a "single employer" (i) within the
meaning of
Section 414(b), (c), (m) or (o) of the Code or (ii) as a result of
the
Borrower or a Subsidiary of the Borrower being or having been a
general
partner of such person.
"Escrow
Release Date" shall mean the first Business Day to occur
on or after the date which is 91 days after the Closing Date,
provided, that
no Default or Event of Default under Section 8.1(e) shall have
occurred and
be continuing.
"Eurodollar
Loan" shall mean any Loan or any portion thereof
which bears interest based on the Eurodollar Rate.
"Eurodollar
Rate" shall mean, with respect to each Interest
Period in respect of a Eurodollar Loan, the rate per annum (rounded
upwards,
if necessary, to the nearest 1/1000 of 1%) determined by the
Administrative
Agent to be equal to the quotient obtained by dividing (a) the
Eurorate for
such Eurodollar Loan for such Interest Period by (b) 1 minus the
Reserve
Requirement for such Eurodollar Loan for such Interest
Period.
As used
herein, "Eurorate" shall mean, with respect to each
Interest Period in respect of a Eurodollar Loan, as determined by
the
Administrative Agent, the rate per annum (rounded upwards, if
necessary, to
the nearest 1/1000 of 1%) appearing on Telerate Page 3750 (or any
successor
page) as the London interbank offered rate for deposits in Dollars
at
approximately 11:00 a.m. (London time) two Business Days prior to
the first
day of such Interest Period for a term comparable to such Interest
Period.
If for any reason such rate is not available, the term "Eurorate"
shall mean,
for any Eurodollar Loan for any Interest Period therefor, the rate
per annum
(rounded upwards, if necessary, to the nearest 1/1000 of 1%)
appearing on
Reuters Screen LIBO Page as the London interbank offered rate for
deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to
the first day of such Interest Period for a term comparable to such
Interest
Period; provided, however, if more than one rate is specified on
Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean
of all
such rates (rounded upwards, if necessary, to the nearest 1/1000 of
1%).
"Event of
Default" shall have the meaning provided in Section 8.1
of the Credit Agreement.
"Existing
Credit Agreement" shall have the meaning provided in
the recitals hereto.
"Existing
Financing Documents" shall mean the Financing Documents
(as defined in the Existing Credit Agreement).
"Existing
Indebtedness Agreements" shall have the meaning
provided in Section 5.29 of the Credit Agreement.
"Existing
Tranche A Loan" shall have the meaning provided in the
recitals hereto.
"Existing
Tranche B Loan" shall have the meaning provided in the
recitals hereto.
"Existing
Warrant" shall have the meaning provided in the
Existing Warrant Agreement.
"Existing
Warrant Agreement" shall mean the Warrant Agreement,
dated as of June 25, 2002, among the Borrower and the holders party
thereto,
together with all instruments and other agreements (including,
without
limitation, the related Equity Registration Rights Agreement)
entered into by
the Borrower in connection therewith.
"Expense
Sharing Agreement" shall mean each of the agreements
entitled "Continuing Services Agreement" listed and marked with "*"
on
Schedule 5.17.
"Federal
Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/1000 of 1%) equal
to the
weighted average of the rates on overnight Federal funds
transactions with
members of the Federal Reserve System arranged by Federal funds
brokers on
such day, as published by the Federal Reserve Bank of New York on
the
Business Day next succeeding such day; provided, that (i) if the
day for
which such rate is to be determined is not a Business Day, the
Federal Funds
Rate for such day shall be such rate on such transactions on the
next
preceding Business Day as so published on the next succeeding
Business Day
and (ii) if such rate is not so published for any day, the Federal
Funds Rate
for such day shall be the average rate charged to the
Administrative Agent
(in its individual capacity) on such day on such transactions as
determined
by the Administrative Agent.
"FERC" shall
mean the Federal Energy Regulatory Commission or its
successor.
"Financing
Documents" shall mean, collectively, the Credit
Agreement, the Notes, the Xxxxxx Fee Letter, the Security
Documents, the
Intercreditor Agreement, the Warrant Agreement, the Option
Agreement and the
Tranche B Escrow Account Agreement.
"Foreign
Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar
program
established or maintained outside the United States of America by
the
Borrower or any one or more of its Subsidiaries primarily for the
benefit of
employees of the Borrower or such Subsidiaries residing outside the
United
States of America, which plan, fund or other similar program
provides, or
results in, retirement income, a deferral of income in
contemplation of
retirement or payments to be made upon termination of employment,
and which
plan is not subject to ERISA or the Code.
"FPA" shall
mean the Federal Power Act, as amended, and the rules
and regulations promulgated thereunder.
"Governmental Approval" shall mean any authorization,
consent,
approval, license, ruling, permit, tariff, rate, certification,
exemption,
filing, variance, claim, order, judgment, decree, publication,
notice to,
declaration of or with, or registration by or with, any
Governmental
Authority.
"Governmental Authority" shall mean any government,
governmental
department, commission, board, bureau,
agency, regulatory authority,
instrumentality, judicial or administrative body, domestic or
foreign,
federal, state or local having jurisdiction over the matter or
matters in
question.
"Hazardous
Material" shall mean any substance that is regulated
or could lead to liability under any Environmental Law, including,
but not
limited to, any petroleum or petroleum product, asbestos in any
form that is
or could become friable, transformers or other equipment that
contain
dielectric fluid containing levels of polychlorinated biphenyls
(PCB's),
hazardous waste, hazardous material, hazardous substance, toxic
substance,
contaminant or pollutant, as defined or regulated as such under,
any
applicable Environmental Law.
"Hedging
Agreement" shall mean any agreement in respect of any
interest rate swap transaction, basis swap, forward rate
transaction,
commodity swap, commodity option, equity or equity index swap,
equity or
equity index option, bond option, interest rate option, foreign
exchange
transaction, cap transaction, floor transaction, collar
transaction, currency
swap transaction, cross-currency rate swap transaction, currency
option or
any other similar transaction (including any option with respect to
any of
the foregoing transactions) or any combination of the foregoing
transactions
entered into by the Borrower.
"Holder"
shall have the meaning provided in the Option Agreement.
"Holding
Company Conditions" shall mean the conditions set forth
by the CPUC in Decision 00-00-000 or Decision 00-00-000 and any
decision of
the CPUC which imposes a requirement or condition on the Borrower
affecting
the Borrower's relationship with PGE Utility.
"HSR Act"
shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
"Indebtedness" of any Person shall mean (a) all indebtedness
of
such Person for borrowed money, (b) the deferred purchase price of
assets or
services which in accordance with U.S. GAAP would be shown on the
liability
side of the balance sheet of such Person, (c) the face amount of
all letters
of credit issued for the account of such Person and, without
duplication, all
drafts drawn thereunder, (d) all Indebtedness of a second Person
secured by
any Lien on any Property owned by such first Person, whether or not
such
Indebtedness has been assumed, (e) all Capital Lease Obligations of
such
Person, (f) all obligations of such Person to pay a specified
purchase price
for goods or services whether or not delivered or accepted, i.e.,
take-or-pay
and similar obligations, (g) all net obligations of such Person
under Hedging
Agreements and (h) all Contingent Obligations of such Person;
provided that
Indebtedness shall not include (i) trade payables arising in the
ordinary
course of business so long as such trade payables are payable
within 90 days
of the date the respective goods are delivered or the respective
services are
rendered and are not overdue and (ii) obligations with respect to
the PG&E
Corporation Supplemental Retirement Savings Plan, the PG&E
Corporation
Management Retention Program, the PG&E Corporation Senior
Management
Incentive Program, the PG&E Corporation Long-Term Incentive
Program, the PG&E
Corporation Short-Term Incentive Program,
the Supplemental Executive
Retirement Plan, the Postretirement Medical Plan, the Post
Retirement Life
Insurance Plan and the PG&E Corporation Deferred Compensation
Plan for Non-
Employee Directors, which obligations as of the Closing Date do not
exceed
$90,000,000 in the aggregate, as such obligations may accrue in the
ordinary
course of business pursuant to the terms of such Plans (as amended
in the
ordinary course of business and consistent with past practice), as
may be
adjusted in accordance with U.S. GAAP.
"Indemnified
Liabilities" shall have the meaning provided in
Section 9.2(a) of the Credit Agreement.
"Indemnified
Matters" shall have the meaning provided in
Section 9.2(b) of the Credit Agreement.
"Indemnified Person" shall have the
meaning provided in
Section 9.2(a) of the Credit Agreement.
"Initial
Closing Date" shall mean June 25, 2002.
"Insurance
Proceeds" shall mean all amounts payable to the
Borrower or the Collateral Agent in respect of any insurance
required to be
maintained (or caused to be maintained) by the Borrower pursuant to
Section
5.9 of the Credit Agreement (other than general liability
insurance, delayed
completion insurance and business interruption insurance),
regardless of
whether such payments are received from any insurer or from either
EPC
Contractor pursuant to the EPC Contracts or otherwise.
"Intercreditor Agreement" shall mean the Intercreditor and
Subordination Agreement, dated as of June 25, 2002, among the
Administrative
Agent, the Collateral Agent, certain of the Lenders and the holders
of the
Existing Warrants.
"Interest
Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement
of any
Interest Period relating to such Eurodollar Loan.
"Interest
Payment Date" shall have the meaning provided in
Section 2.5(d) of the Credit Agreement.
"Interest
Period" shall have the meaning provided in Section 2.6
of the Credit Agreement.
"Investment"
in any Person shall mean, without duplication: (a)
the acquisition (whether for cash, securities, other Property,
services or
otherwise) or holding of capital stock, bonds, notes, debentures,
partnership
or other ownership interests or other securities of such Person, or
any
agreement to make any such acquisition or to make any capital
contribution to
such Person; or (b) the making of any deposit with, or advance,
loan or other
extension of credit to, such Person.
"Investments" shall have the meaning provided in Section 7.5
of
the Credit Agreement.
"Law" shall
mean, with respect to any Person (a) any statute,
law, regulation, ordinance, rule,
judgment, order, decree, permit,
concession, grant, franchise, license, agreement or other
governmental
restriction or any interpretation or administration of any of the
foregoing
by any Governmental Authority (including, without limitation,
Governmental
Approvals) applicable to such Person and (b) any directive,
guideline,
policy, requirement or any similar form of decision of or
determination by
any Governmental Authority which is binding on such Person, in each
case,
whether now or hereafter in effect (including, without limitation,
in each
case, any Environmental Law).
"Lead
Arranger" shall mean Xxxxxx Brothers Inc., a Delaware
corporation.
"Xxxxxx Fee
Letter" shall mean the Fee Letter dated October 11,
2002 among the Borrower, Xxxxxx Brothers Inc. and Xxxxxx Commercial
Paper
Inc.
"Lender"
shall mean, individually or collectively, as the context
may require, a Tranche B Lender and any Assignee thereof pursuant
to
Section 9.11 of the Credit Agreement.
"Lender
Addendum" shall mean, with respect to each Tranche B
Lender becoming, or continuing as, a Tranche B Lender on the
Closing Date, a
Lender Addendum, substantially in the form of Schedule A, to be
executed and
delivered by such Lender pursuant to Section 9.25 of the Credit
Agreement.
"Lien" shall
mean, with respect to any Property of any Person,
any mortgage, lien, deed of trust, hypothecation, fiduciary
transfer of
title, assignment by way of security, lien, pledge, charge, lease,
sale and
lease-back arrangement, easement, servitude, trust arrangement, or
security
interest or encumbrance of any kind in respect of such Property, or
any
preferential arrangement having the practical effect of
constituting a
security interest with respect to the payment of any obligation
with, or from
the proceeds of, any Property of any kind (and a Person shall be
deemed to
own subject to a Lien any Property that it has acquired or holds
subject to
the interest of a vendor or lessor under any conditional sale
agreement,
capital lease or other title retention agreement relating to such
Property).
"Limited
Liability Company Interest" shall have the meaning
provided in the LLC Pledge Agreement.
"LLC" shall
mean PG&E National Energy Group, LLC, a Delaware
limited liability company.
"LLC
Agreement" shall mean the Amended and Restated Limited
Liability Company Agreement dated as of March 1, 2001 of PG&E
National Energy
Group LLC.
"LLC
Interests" shall mean, as to LLC, any and all shares of the
profits and losses of such Person, any and all rights to
receive
distributions of such Person's assets, and any and all rights,
benefits or
privileges pertaining to any of the foregoing, including, without
limitation,
voting rights and the right to participate in management.
"LLC Pledge
Agreement" shall mean the Amended and Restated LLC
Pledge Agreement, dated as of June 25, 2002, among the Borrower, as
pledgor,
LLC, as issuer, the Administrative Agent and Deutsche Bank Trust
Company
Americas, as pledgee, as Collateral Agent for the benefit of the
Lenders, and
the acknowledgment, dated as of the Closing Date, of LLC in respect
of the
amendment and restatement of the Existing Credit Agreement in the
form of the
Credit Agreement.
"Loan" shall
mean the Tranche B Loan, and shall also mean, where
the context requires, any portion of any such loan held by a Lender
or
subject to a particular Interest Period or interest rate
option.
"Losses"
shall have the meaning provided in Section 9.2(b) of the
Credit Agreement.
"Mandatory
Make-Whole Amount" shall mean, in respect of any
repayment or prepayment on any Payment Date, pursuant to Section
3.2(a),
3.2(b) or 3.2(c) of the Credit Agreement, of the Tranche B Loan on
or before
October 1, 2003, an amount equal to the discounted present value on
such
Payment Date of sum of (a) 3.50% of the principal amount of such
repayment or
prepayment plus (b) the aggregate amount of interest that would
accrue on the
principal amount of such repayment or prepayment from such Payment
Date to
October 1, 2003 pursuant to Section 2.5 of the Credit Agreement
(including,
without limitation, pay-in-kind interest accruing pursuant to
Section 2.5(g)
of the Credit Agreement, calculated as if October 1, 2003 were an
Interest
Payment Date in respect of the principal amount being repaid or
prepaid on
such Payment Date), such discounted present value to be calculated
by the
Administrative Agent at the rate per annum equal to the yield to
maturity (as
reasonably determined by the Administrative Agent), on the Business
Day
immediately preceding such Payment Date, of United States Treasury
securities
having a maturity of approximately six months (or, if less, the
time
remaining to the Tranche B Maturity Date), and assuming that the
sum
described in the foregoing clauses (a) and (b) were paid on October
1, 2003.
"Margin
Stock" shall mean margin stock within the meaning of
Regulation U and Regulation X.
"Material
Adverse Change" shall mean, with respect to any Person,
a material adverse change in the condition (financial or
otherwise), results
of operations, business, Properties, liabilities, management or
prospects of
such Person.
"Material
Adverse Effect" shall mean a material adverse effect on
(a) the condition (financial or otherwise), results of operations,
business,
Properties, liabilities, management or prospects of the Borrower,
(b) the
ability of the Borrower or LLC to timely perform any of its
obligations under
any of the Financing Documents to which it is a party, (c) the
legality,
validity or enforceability of any material provision of any
Financing
Document, (d) the rights and remedies of the Collateral Agent,
the
Administrative Agent, any Holder or any Lender under any of the
Financing
Documents or (e) the security interests provided under the Security
Documents
or the value thereof.
"Material
Reorganization Assets" shall mean the material assets
that are contemplated by the PGE Plan to be transferred to Newco or
any
Reorganization Subsidiary or retained by PGE Utility.
"Moody's"
shall mean Xxxxx'x Investors Service, Inc.
"NAIC"
shall mean the National Association
of Insurance
Commissioners.
"NEG Group"
shall mean LLC and each of its Subsidiaries and each
corporation, company or partnership in which any of the foregoing
own a
Controlling equity interest.
"NEG, Inc."
shall mean PG&E National Energy Group, Inc., a
Delaware corporation.
"NEG
Property" shall mean any Capital Stock of, or any Property
owned by, any member of the NEG Group.
"NEG
Subsidiary" shall mean, as the context may require, any or
all Subsidiaries of NEG, Inc.
"Net Debt
Proceeds" shall mean, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds received by any
Person
(net of any tax, underwriting discounts and commissions and
reasonable costs
paid by such Person associated therewith) from the respective
incurrence of
such Indebtedness for borrowed money.
"Net Equity
Proceeds" shall mean, with respect to each issuance
or sale of any equity by any Person or any capital contribution to
such
Person, the cash proceeds received by any Person (net of any
tax,
underwriting discounts and commissions and reasonable costs paid by
such
Person associated therewith) from the respective sale or issuance
of its
equity or from the respective capital contribution.
"Net
Insurance Proceeds" shall mean, with respect to any Recovery
Event, the cash proceeds received by any Person (net of reasonable
costs and
taxes paid by such Person associated therewith) in connection with
such
Recovery Event.
"Net Sale
Proceeds" shall mean, for any Asset Sale or any
Qualified NEG Sale, the gross cash proceeds (including any cash
received by
way of deferred payment pursuant to a promissory note, receivable
or
otherwise, but only as and when received) received by any Person
from such
sale of assets (net of the fees and commissions and other
reasonable costs
paid by such Person associated therewith) relating to the assets
sold.
"New Tranche
B Commitment" shall mean as to any New Tranche B
Lender, the obligation of such Lender, if any, to make a Tranche B
Loan to
the Borrower in a principal amount not to exceed the amount set
forth in the
Lender Addendum executed and delivered by such New Tranche B Lender
pursuant
to Section 9.25. The original aggregate amount of the New
Tranche B
Commitments is $300,000,000.
"New Tranche
B Lender" shall mean any holder of a New Tranche B
Commitment or a New Tranche B Loan (or, at any time prior to the
Escrow
Release Date, any entity that has funded into the Tranche B Escrow
Account).
"New Tranche
B Loan" shall have the meaning provided in Section
2.1(a) of the Credit Agreement.
"New
Warrant" shall have the meaning provided in the New Warrant
Agreement.
"New Warrant
Agreement" shall mean the Warrant Agreement, dated
as of October 18, 2002, among the Borrower and the holders party
thereto,
together with all instruments and other agreements (including,
without
limitation, the related Equity Registration Rights Agreement)
entered into by
the Borrower in connection therewith.
"Newco"
shall have the meaning provided in the definition of
"Utility Spin-Off" in this Appendix A.
"Newco Spin"
shall have the meaning provided in the definition of
"Utility Spin-Off" in this Appendix A.
"Non-Spin
Offer to Repay" shall have the meaning provided in
Section 3.8(c) of the Credit Agreement.
"Non-Spin
Offer Settlement Date" shall have the meaning provided
in Section 3.8(c) of the Credit Agreement.
"Non-Spin
Prepayment Fee" shall have the meaning provided in
Section 3.8(c) of the Credit Agreement.
"Non-Spin
Plan of Reorganization" shall mean any plan of
reorganization of PGE Utility in the PGE Utility Bankruptcy
Proceeding that
does not involve a Spin-Off.
"Note" shall
have the meaning provided in Section 2.4 of the
Credit Agreement.
"Notice of
Funding" shall have the meaning provided in Section
2.2 of the Credit Agreement.
"Obligations" shall mean, collectively, (a) all loans,
advances,
debts, liabilities, and obligations, howsoever arising, owed by the
Borrower
under a Financing Document to the Administrative Agent or any
Lender or its
Affiliates of every kind and description (whether or not evidenced
by any
note or instrument and whether or not for the payment of money),
direct or
indirect, absolute or contingent, due or to become due, now
existing or
hereafter arising, including all
interest, fees, charges, expenses,
attorneys' fees and consultants' fees chargeable to the Borrower;
(b) any and
all sums advanced by the Collateral Agent, the Administrative Agent
or any
Lender in order to preserve the Collateral; and (c) the reasonable
expenses
of retaking, holding, preparing for sale or lease, selling or
otherwise
disposing of or realizing on the Collateral, or of any exercise by
the
Collateral Agent, the Administrative Agent or any Lender of its
rights under
the Security Documents, together with reasonable attorneys' fees
and court
costs.
"Offer to
Repay" shall have the meaning provided in Section 3.8
of the Credit Agreement.
"Offer to
Repay Notice" shall mean a notice in the form of
Exhibit E-1 to the Credit Agreement.
"Officer's
Certificate" shall mean an officer's certificate
signed by an Authorized Officer of the Borrower.
"Option"
shall have the meaning provided in the Option Agreement.
"Option
Agreement" shall mean the Amended and Restated Option
Agreement, dated as of June 25, 2002, among the Borrower, LLC, NEG,
Inc.,
GPSF-F Inc., a Delaware corporation, LB I Group Inc., a Delaware
corporation,
and each other entity holding Options on the Initial Closing
Date.
"Option
Shares" shall have the meaning provided in the Option
Agreement.
"Payment
Date" shall mean the date of any repayment or prepayment
of the Tranche B Loan pursuant to Section 3.1 or 3.2 of the Credit
Agreement.
"Payment
Office" shall mean the office specified from time to
time by the Administrative Agent as its payment office by notices
to the
Borrower and the Lenders.
"PBGC" shall
mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor
thereto.
"Permitted
Lien" shall have the meaning provided in Section 7.1
of the Credit Agreement.
"Permitted
NEG Reinvestments" shall mean any Investment by the
Borrower (a) in NEG, Inc. or any of its Subsidiaries or in any
other entity
that, directly or indirectly, acquires assets of, or equity
interests in, LLC
or NEG, Inc. or any of its Subsidiaries in a Qualified NEG Sale or
a
Qualified Asset Sale, or (b) in NEG, Inc. or any of its
Subsidiaries in
connection with a Qualified Restructuring, provided, that, in the
case of any
Investment described in the foregoing clauses (a) or (b), such
Investment is
made in connection with, and is a condition of, a Qualified
Asset Sale,
Qualified NEG Sale or Qualified Restructuring.
"Person" shall mean any individual,
corporation, limited
liability company, company, voluntary association,
partnership, joint
venture, trust, or other enterprises or unincorporated organization
or
government (or any agency, instrumentality or political subdivision
thereof).
"PGE Plan"
shall have the meaning provided in the definition of
"Utility Spin-Off" in this Appendix A.
"PGE Spin"
shall have the meaning provided in the definition of
"Utility Spin-Off" in this Appendix A.
"PGE
Utility" shall mean Pacific Gas and Electric Company, a
California corporation.
"PGE Utility
Bankruptcy Proceeding" shall mean the reorganization
case in the United States Bankruptcy Court for the Northern
District of
California commenced by the filing on April 6, 2001 by PGE Utility
of a
voluntary petition for relief under Chapter 11 of the U.S.
Bankruptcy Code.
"Plan" shall
mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there
is an
obligation to contribute of) the Borrower or a Subsidiary of the
Borrower or
an ERISA Affiliate, and each such plan for the five-year period
immediately
following the latest date on which the Borrower, or a Subsidiary of
the
Borrower or an Affiliate maintained, contributed to or had an
obligation to
contribute to such plan.
"Pledged
Interest" shall mean the Limited Liability Company
Interests pledged under the LLC Pledge Agreement.
"Post-Confirmation Market Value to Loan Ratio" shall mean,
with
respect to any Test Date, the quotient of (i) the aggregate market
value of
the common stock of the Borrower (based upon the volume weighted
average
price for the common stock of the Borrower for the 30 Trading
Days
immediately prior to such Test Date) divided by (ii) the
aggregate
outstanding amount of the Tranche B Loan (including, without
limitation,
accrued interest and fees) on such Test Date.
"Pre-Closing
Market Value to Loan Ratio" shall mean 5.0:1.0.
"Preferential Rights" shall have the meaning provided in
Section
5.4(b) of the Credit Agreement.
"Prime Rate"
shall mean the per annum rate of interest
established from time to time by Deutsche Bank Trust Company
Americas as its
prime rate, which rate may not be the lowest rate of interest
charged by
Deutsche Bank Trust Company Americas to its customers.
"Process
Agent" shall have the meaning provided in Section
9.16(b) of the Credit Agreement.
"Property"
shall mean any property or asset of any kind
whatsoever, whether real, personal or mixed and whether tangible
or
intangible, and any right or interest therein.
"PUHCA"
shall mean the Public Utility Holding Company Act of
1935, as amended, and rules and regulations promulgated
thereunder.
"Put
Prepayment Fee Percentage" shall mean, for any prepayment,
(i) if such prepayment is made on or prior to October 1, 2003,
3.5%, (ii) if
such prepayment is made after October 1, 2003 and on or prior to
October 1,
2004, 2.5% and (iii) thereafter, 0.5%.
"QF" shall
mean a "qualifying cogeneration facility" or a
"qualifying small power production facility" as defined under the
Public
Utility Regulatory Policies Act of 1978, as amended.
"Qualified
Abandonment" shall mean any abandonment of any
property of NEG, Inc. or any of its Subsidiaries in a transaction
which is an
abandonment, which qualifies for such under the Code and which
satisfies the
following: either (a) (i) NEG, Inc. and each of its Subsidiaries
releases the
Borrower from any and all claims and obligations related to the
property that
is being abandoned, and (ii) the Borrower shall have no obligation
or
liability (whether fixed, contingent or otherwise) resulting from
such
transaction that is not satisfied in full at the time of such
abandonment by
NEG, Inc., including without limitation, any tax liabilities (it
being
understood that any tax liabilities of NEG, Inc. arising from
such
abandonment shall be paid to the Borrower at the time of such
abandonment,
and the Borrower may pay such tax liabilities to the relevant
taxing
authority in accordance with the usual payment schedule); or (b)
such
abandonment is an abandonment of property that is immaterial to
NEG, Inc. or
any of its Subsidiaries (which does not create any material
obligation or
liability for the Borrower) and in connection with which the
Borrower shall
not have affirmatively undertaken or consented to pay or incur any
obligation
or liability (whether fixed, contingent or otherwise) resulting
from such
abandonment that is not satisfied in full at the time of such
abandonment by
NEG, Inc., including without limitation, any tax liabilities.
"Qualified
Asset Sale" shall mean the sale by NEG, Inc. or any of
its Subsidiaries of assets in a transaction which satisfies the
following:
(a) it is a transaction with an unaffiliated third party and on
arms-length
terms; (b) any Subsidiary so disposed of (or which disposes of
substantially
all of its assets in such transaction) releases the Borrower from
any and all
claims and obligations; (c) any Subsidiary so disposed of (or which
disposes
of substantially all of its assets in such transaction) which has
an
obligation to the Borrower pays such obligation in full to the
Borrower at
the closing of the sale (provided, that in connection with a
Qualified Asset
Sale that results in the receipt by the Borrower of net cash
benefits (either
in the form of cash purchase price or net tax savings that would
not
otherwise accrue to the benefit of the Borrower), the Borrower may
contribute
such obligation to the equity of the obligor, transfer such
obligation to the
purchaser in such Qualified Asset Sale or otherwise forgive such
obligation
as a part of such Qualified Asset Sale); (d) the Borrower shall
have no
obligation or liability (whether fixed, contingent or otherwise)
resulting
from such transaction that is not satisfied in full at such closing
by NEG,
Inc., including without limitation, any tax liabilities (it being
understood
that any tax liabilities of NEG, Inc. arising from such disposition
shall be
paid to the Borrower at the closing of such transaction, and the
Borrower may
pay such tax liabilities to the relevant taxing authority in
accordance with
the usual payment schedule); provided that the Borrower may have
Remaining
Obligations in connection with any Qualified Asset Sale, so long as
the
amount of Remaining Obligations in connection with any Qualified
Asset Sale
is contractually limited to an amount not exceeding the difference
of (i) the
sum of (A) 75% of Attributable Tax Benefits received on or prior to
the date
of such Qualified Asset Sale plus (B) the aggregate cash purchase
price
actually received by the Borrower in connection with such Qualified
Asset
Sale and any Qualified NEG Sale and Qualified Asset Sale previously
or
concurrently consummated, minus (ii) the sum of (A) the aggregate
amount of
Permitted NEG Reinvestments previously or concurrently made by the
Borrower
plus (B) the outstanding aggregate amount of Remaining Obligations
previously
or concurrently incurred by the Borrower (except to the extent that
any such
outstanding Remaining Obligations were incurred based upon the
provisions of
the definition of "Remaining Obligations" in this Appendix A
permitting such
obligations in an amount equal to the cash purchase price actually
received
by the Borrower in connection with any previous Qualified NEG Sale
or any
previous Qualified Asset Sale) plus (C) the aggregate amount of
payments
previously or concurrently made the Borrower in respect of any
Remaining
Obligations; and (e) the Borrower receives all Net Sale Proceeds,
to the
extent such Net Sale Proceeds are not applied by NEG, Inc. or
its
Subsidiaries (i) to repay existing indebtedness or other
obligations to
creditors of NEG, Inc. and its Subsidiaries, (ii) to pay or
cash-
collateralize tax obligations arising from such sale (it being
understood
that any tax liabilities of NEG, Inc. arising from such disposition
shall be
paid to the Borrower at the closing of such transaction, and the
Borrower may
pay such tax liabilities to the relevant taxing authority in
accordance with
the usual payment schedule) or (iii) as NEG, Inc. reasonably deems
necessary
to accomplish a restructuring of NEG, Inc. and its Subsidiaries,
including
maintaining (but not expanding) operations of NEG, Inc. and its
Subsidiaries.
"Qualified
Bankruptcy Sale" shall mean the sale by LLC or any of
its Subsidiaries of assets in a transaction that (a) occurs in a
bankruptcy
proceeding with respect to the entity making the sale, so long as
(i) the
Borrower shall not have affirmatively undertaken or consented to
pay or incur
any obligation or liability (whether fixed, contingent or
otherwise)
resulting from such transaction that is not satisfied at closing by
NEG, Inc.
and (ii) the Borrower has not incurred as a matter of law or
otherwise any
obligation or liability (whether fixed, contingent or otherwise)
resulting
from such transaction if as a result of such incurrence the sum of
(A) the
aggregate outstanding amount of all obligations and liabilities of
the
Borrower resulting from such transaction and all previous
Qualified
Bankruptcy Sales and (B) the aggregate amount the Borrower has paid
with
respect to all obligations and liabilities resulting from such
transaction
and all previous Qualified Bankruptcy Sales is in excess of (1)
$100,000,000,
plus (2) 75% of Attributable Tax Benefits received on or prior to
the date of
such Qualified Bankruptcy Sale minus (3) the sum of (x) the
aggregate amount
of Permitted NEG Reinvestments previously or concurrently made by
the
Borrower with Attributable Tax Benefits plus (y) the aggregate
outstanding
amount of Remaining Obligations previously or concurrently incurred
by the
Borrower (except to the extent that any such outstanding
Remaining
Obligations were incurred based upon the provisions of the
definition of
"Remaining Obligations" in this Appendix A permitting such
obligations in an
amount equal to the cash purchase price actually received by the
Borrower in
connection with any previous Qualified NEG Sale or any previous
Qualified
Asset Sale) plus (z) the aggregate amount of payments previously
or
concurrently made the Borrower in respect of any Remaining
Obligations; or
(b) is consented to by Required Waiver Lenders (it being agreed
that no
Lender shall receive any fee in connection with such
consent).
"Qualified
NEG Sale" shall mean the Disposition for cash of all
or any portion of the equity interests in LLC or in NEG, Inc. in
a
transaction which satisfies the following: (a) it is a
transaction with an
unaffiliated third party and on arms-length terms; (b) LLC, NEG,
Inc. and
each of their Subsidiaries releases the Borrower from any and all
claims and
obligations; (c) LLC, NEG, Inc. and each of their Subsidiaries
which has an
obligation to the Borrower pays such obligation in full to the
Borrower at
the closing of the sale (provided, that in connection with a
Qualified NEG
Sale that results in the receipt by the Borrower of net cash
benefits (either
in the form of cash purchase price or net tax savings that would
not
otherwise accrue to the benefit of the Borrower), the Borrower may
contribute
such obligation to the equity of the obligor, transfer such
obligation to the
purchaser in such Qualified NEG Sale or otherwise forgive such
obligation as
a part of such Qualified NEG Sale); (d) the Borrower shall have no
obligation
or liability (whether fixed, contingent or otherwise) resulting
from such
transaction that is not satisfied in full at closing by NEG, Inc.
or out of
the proceeds of such disposition, including without limitation, any
tax
liabilities (it being understood that any tax liabilities of NEG,
Inc.
arising from such disposition shall be paid to the Borrower at the
closing of
such transaction, and the Borrower may pay such tax liabilities to
the
relevant taxing authority in accordance with the usual payment
schedule);
provided (i) the Borrower may pay reasonable Transaction Costs in
connection
with such Qualified NEG Sale and (ii) that the Borrower may have
Remaining
Obligations in connection with such Qualified NEG Sale, so long as
the amount
of Remaining Obligations in connection with any Qualified NEG Sale
is
contractually limited to an amount not exceeding the difference of
(A) the
sum of (1) 75% of Attributable Tax Benefits received on or prior to
the date
of such Qualified NEG Sale plus (2) the aggregate cash purchase
price
actually received by the Borrower in connection with such Qualified
NEG Sale
and any Qualified NEG Sale and Qualified Asset Sale previously
or
concurrently consummated, minus (B) the sum of (1) the aggregate
amount of
Permitted NEG Reinvestments previously or concurrently made by the
Borrower
plus (2) the aggregate outstanding amount of Remaining Obligations
previously
or concurrently incurred by the Borrower (except to the extent that
any such
outstanding Remaining Obligations were incurred based upon the
provisions of
the definition of "Remaining Obligations" in this Appendix A
permitting such
obligations in an amount equal to the cash purchase price actually
received
by the Borrower in connection with any previous Qualified NEG Sale
or any
previous Qualified Asset Sale) plus (3) the aggregate amount of
payments
previously or concurrently made the Borrower in respect of any
Remaining
Obligations plus (4) the aggregate amount of Transaction Costs
previously or
concurrently incurred by the Borrower; and (e) all Net Sale
Proceeds received
by the Borrower and/or LLC, minus any net tax liability of the
Borrower
resulting from such Qualified NEG Sale shall have been applied to
prepay the
Loans as required by Section 3.2(g). Notwithstanding the
foregoing, no
Disposition shall be a Qualified NEG Sale unless the Borrower shall
have
delivered to the Administrative Agent a certificate demonstrating,
in
reasonable detail, that such Disposition constitutes a Qualified
NEG Sale,
and the Administrative Agent shall not have objected to such
certificate.
"Qualified Restructuring" shall
mean any substantial
restructuring of the Indebtedness or other obligations of NEG, Inc.
and its
Subsidiaries in one or more contractual transactions not involving
bankruptcy
proceedings in respect of the relevant obligor, which satisfies
the
following: (a) NEG, Inc. releases the Borrower from any and all
claims and
obligations related to the Indebtedness or other obligation that is
being
restructured; (b) each direct and indirect Subsidiary of NEG, Inc.
which
receives proceeds of a Permitted NEG Reinvestment in connection
with a
Qualified Restructuring releases the Borrower from any and all
claims and
obligations; and (c) the Borrower shall have no obligation or
liability
(whether fixed, contingent or otherwise) resulting from such
restructuring
that is not satisfied in full at closing by NEG, Inc., including
without
limitation, any tax liabilities (it being understood that any tax
liabilities
of NEG, Inc. arising from such restructuring shall be paid to the
Borrower at
the closing of such restructuring, and the Borrower may pay such
tax
liabilities to the relevant taxing authority in accordance with the
usual
payment schedule). In addition, a restructuring of immaterial
debt or other
immaterial obligations of NEG, Inc. or its Subsidiaries shall
constitute a
"Qualified Restructuring" so long as
the Borrower shall not have
affirmatively undertaken or consented to pay or incur any
obligation or
liability (whether fixed, contingent or otherwise) resulting from
such
restructuring that is not satisfied in full at the closing of
such
restructuring by NEG, Inc., including
without limitation, any tax
liabilities.
"Quarterly
Dates" shall mean the last Business Day of each of
March, June, September and December.
"Real
Estate" shall mean, with respect to any Person, all real
estate assets, real property interests, including all easements,
rights of
way, feehold interests, leasehold interests and any options with
respect to
any of the foregoing, owned by such Person.
"Recovery
Event" shall mean the receipt by any Person of any cash
insurance proceeds or condemnation awards payable (i) by reason of
theft,
loss, physical destruction, damage, taking or any other similar
event with
respect to any Property or assets of such Person or (ii) under any
policy of
insurance, except in the case of the Borrower, excluding such
proceeds or
awards attributable to PGE Utility or any Subsidiary of PGE Utility
or any
Reorganization Subsidiary.
"Register"
shall have the meaning provided in Section 9.11(e) of
the Credit Agreement.
"Regulation
D" shall mean Regulation D of the Board of Governors
of the Federal Reserve system (or any successor).
"Regulation
U" shall mean Regulation U of the Board of Governors
of the Federal Reserve system (or any successor).
"Regulation
X" shall mean Regulation X of the Board of Governors
of the Federal Reserve system (or any successor).
"Release"
shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or
disposing into the environment (including the abandonment or
discarding of
barrels, containers, and other closed receptacles containing any
Hazardous
Material, but excluding (i) emissions from the engine exhaust of a
motor
vehicle and (ii) the normal application of fertilizer).
"Remaining
Obligations" shall mean obligations or liabilities,
whether fixed, contingent or otherwise, with respect to
indemnification, tax
true-up or purchase price adjustment provisions contained in the
applicable
purchase agreement, sale agreement and/or merger agreement in
connection with
any Qualified Asset Sale or Qualified NEG Sale.
"Reorganization Subsidiary" shall mean any of Gen, ETrans,
GTrans
and Newco (as such capitalized terms are defined in Annex B), and
any
successor or replacement of any such entity and any entity holding
any
substantial part of the assets contemplated by Annex B to be held
by any such
entity, in each case, after giving effect to the transactions
described in
Annex B.
"Reportable
Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan that is subject to Title IV
of ERISA
other than those events as to which the 30-day notice period is
waived under
subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section
4043.
"Required
Waiver Lenders" shall mean, at any time, the holders of
more than 50% in principal amount of the Loans then outstanding (it
being
understood that for the purposes of this definition only, all
amounts in the
Tranche B Escrow Account shall be deemed to be Loans).
"Reserve
Requirement" shall mean, at any time, the maximum rate
at which reserves (including, without limitation, any marginal,
special,
supplemental, or emergency reserves) are required to be maintained
under
regulations issued from time to time by the Board of Governors of
the Federal
Reserve System (or any successor) by member banks of the Federal
Reserve
System against "Eurocurrency liabilities" (as such term is used in
Regulation
D). Without limiting the effect of the foregoing, the Reserve
Requirement
shall reflect any other reserves required to be maintained by such
member
banks with respect to (i) any category of liabilities which
includes deposits
by reference to which the Eurodollar Rate is to be determined, or
(ii) any
category of extensions of credit or other assets which include
Eurodollar
Loans. The Eurodollar Rate shall be adjusted automatically on
and as of the
effective date of any change in the Reserve Requirement.
"Return"
shall have the meaning provided in Section 5.12 of the
Credit Agreement.
"SEC" shall
mean the Securities and Exchange Commission.
"SEC
Filings" shall mean the filings of the Borrower and NEG,
Inc. listed on Schedule B.
"Securities
Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"Security
Agreements" shall mean, collectively, the two Security
Agreements, each dated as of October 18, 2002, among the Borrower,
the
Administrative Agent and Deutsche Bank Trust Company Americas, as
Collateral
Agent for the benefit of the Lenders holding the New Tranche B Loan
and the
Lenders holding the Continued Tranche B Loan, respectively.
"Security
Documents" shall mean, collectively, the LLC Pledge
Agreement, the Stock Pledge Agreement, the Utility Pledge
Agreements, the
Security Agreements, the Tranche B Interest Reserve Account
Control
Agreements, the Tranche B Escrow Account Agreement and all Uniform
Commercial
Code financing statements and other filings, recordings or
regulations
required by the Credit Agreement or the LLC Pledge Agreement, the
Stock
Pledge Agreement, the Utility Pledge Agreements or the Security
Agreements to
be filed or made in respect of any such Security Document.
"Solvent"
shall mean, with respect to any Person, as of any date
of determination, (a) the amount of the "present fair saleable
value" of the
assets of such Person will, as of such date, exceed the amount of
all
"liabilities of such Person, contingent or otherwise", as of such
date, as
such quoted terms are determined in accordance with applicable
federal and
state laws governing determinations of the insolvency of debtors,
(b) the
present fair saleable value of the assets of such Person will, as
of such
date, be greater than the amount that will be required to pay the
liability
of such Person on its debts as such debts become absolute and
matured, (c)
such Person will not have, as of such date, an unreasonably small
amount of
capital with which to conduct its business, and (d) such Person
will be able
to pay its debts as they mature. For purposes of this
definition, (i) "debt"
means liability on a "claim", and (ii) "claim" means any (x) right
to
payment, whether or not such a right is reduced to judgment,
liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed,
legal, equitable, secured or unsecured or (y) right to an equitable
remedy
for breach of performance if such breach gives rise to a right to
payment,
whether or not such right to an equitable remedy is reduced to
judgment,
fixed, contingent, matured or unmatured, disputed, undisputed,
secured or
unsecured.
"Source" of
a Lender shall mean the source from which such Lender
is obtaining funds in connection with the funding or maintenance of
its
Eurodollar Loan.
"Specified
Change of Control" shall mean a "Change of Control"
(or any other defined term having a similar purpose) as defined in
the
Convertible Notes Indenture.
"Spin-Off"
shall mean (A) any spin-off (including, without
limitation, the Utility Spin-Off) under any plan of reorganization
of PGE
Utility under Chapter 11 of the Bankruptcy Code (a) to the
shareholders of
the Borrower of (i) all or any portion (either directly or
indirectly) of PGE
Utility, Newco or any of the Reorganization Subsidiaries or (ii)
any of the
Material Reorganization Assets or (b) to the Borrower of (i) all or
any
portion of Newco or any of the Reorganization Subsidiary or (ii)
any of the
Material Reorganization Assets; or (B) any sale or issuance of more
than 15%
of the Capital Stock of PGE Utility pursuant to a plan of
reorganization of
PGE Utility under Chapter 11 of the Bankruptcy Code.
"Spin-Off
Date" shall have the meaning provided in Section 3.8(b)
of the Credit Agreement.
"Spin Offer
to Repay" shall have the meaning provided in Section
3.8(b) of the Credit Agreement.
"Spin Offer
Settlement Date" shall have the meaning provided in
Section 3.8(b) of the Credit Agreement.
"Spin
Prepayment Fee" shall have the meaning provided in Section
3.8(b) of the Credit Agreement.
"Standard
& Poor's" shall mean Standard & Poor's Ratings
Services, a division of The XxXxxx-Xxxx Companies, Inc.
"Stock
Pledge Agreement" shall mean the Amended and Restated
Stock Pledge Agreement, dated as of June 25, 2002, among LLC, as
pledgor,
NEG, Inc., as issuer, the Administrative Agent and Deutsche Bank
Trust
Company Americas, as pledgee, as Collateral Agent for the benefit
of the
Lenders, and the acknowledgment, dated as of the Closing Date, of
LLC and
NEG, Inc. in respect of the amendment and restatement of the
Existing Credit
Agreement in the form of the Credit Agreement.
"Subsidiary"
shall mean, for any Person, any corporation,
partnership or other entity of which at least a majority of the
securities or
other ownership interests having by the terms thereof ordinary
voting power
to elect a majority of the board of directors or other persons
performing
similar functions of such corporation, partnership or
other entity
(irrespective of whether or not at the time securities or other
ownership
interests of any other class or classes of such corporation,
partnership or
other entity shall have or might have voting power by reason of the
happening
of any contingency) is at the time directly or indirectly owned or
controlled
by such Person or one or more Subsidiaries of such Person or by
such Person
and one or more Subsidiaries of such Person.
"Supermajority Lenders" shall mean, at any time, the holders
of
more than 66 2/3% in principal amount of the Loans then
outstanding.
"Syndication
Agent" shall mean Xxxxxx Commercial Paper Inc.
"Tax" shall
have the meaning provided in Section 3.4 of the
Credit Agreement.
"Test
Date" shall mean the thirty-first
day following
confirmation (but in any event prior to consummation) of a Non-Spin
Plan of
Reorganization and the first Business Day of each calendar
quarter
thereafter.
"Trading
Day" shall mean a day during which trading in securities
generally occurs on the New York Stock Exchange or, if the
Borrower's common
stock is not listed on the New York Stock Exchange, on the
principal other
national or regional securities exchange on which the Borrower's
common stock
then is listed or, if the Borrower's common stock is not listed on
a national
or regional securities exchange, on the National Association of
Securities
Dealers Automated Quotation System or, if the Borrower's common
stock is not
quoted on the National Association of Securities Dealers Automated
Quotation
System, on the principal other market on which the Borrower's
common stock is
then traded.
"Tranche B
Escrow Account" shall mean the Escrow Fund (as defined
in the Tranche B Escrow Account Agreement.
"Tranche B
Escrow Account Agreement" shall mean the Escrow
Agreement, dated as of October 18, 2002, among the Borrower,
the
Administrative Agent, the Collateral Agent and Deutsche Bank Trust
Company
Americas, as Escrow Agent, as amended, supplemented or otherwise
modified
from time to time.
"Tranche B
Interest Reserve Account (Combined Tranche B Loan)"
shall mean the collateral account designated in the Tranche B
Interest
Reserve Account Control Agreement (Combined Tranche B Loan)
maintained with
the Collateral Agent for the purposes of paying interest on the
Tranche B
Loan on or after the Consolidation Date.
"Tranche B
Interest Reserve Account (Continued Tranche B Loan)"
shall mean the collateral account, account no. 34213, maintained
with the
Collateral Agent for the purposes of paying interest on the
Continued Tranche
B Loan prior to the Consolidation Date.
"Tranche B
Interest Reserve Account (New Tranche B Loan)" shall
mean the collateral account, account no. 35140, maintained with
the
Collateral Agent for the purposes of paying interest on the New
Tranche B
Loan prior to the Consolidation Date.
"Tranche B
Interest Reserve Accounts" shall mean, collectively,
(a) the Tranche B Interest Reserve Account (Continued Tranche B
Loan), (b)
the Tranche B Interest Reserve Account (New Tranche B Loan) and (c)
the
Tranche B Interest Reserve Account (Combined Tranche B Loan).
"Tranche B
Interest Reserve Account Control Agreement (Combined
Tranche B Loan)" shall mean the amended and restated Tranche B
Interest
Reserve Account Control Agreements entered into in accordance with
Section
9.28 of the Credit Agreement.
"Tranche B
Interest Reserve Account Control Agreements" shall
mean, collectively, (a) the Amended and Restated Tranche B Interest
Reserve
Account Security and Control Agreement (Continued Tranche B Loan),
dated as
of October 18, 2002, among the Borrower, the Collateral Agent and
the bank
party thereto, (b) the Tranche B Interest Reserve Account Security
and
Control Agreement (New Tranche B Loan), dated as of October 18,
2002, among
the Borrower, the Collateral Agent and the bank party thereto and
(c) the
Tranche B Interest Reserve Account Control Agreement (Combined
Tranche B
Loan).
"Tranche B
Lender" shall be the collective reference to (i) the
Continued Tranche B Lenders and (ii) the New Tranche B
Lenders.
"Tranche B
Loan" shall be the collective reference to (i) the
Continued Tranche B Loan and (ii) the New Tranche B Loan.
"Tranche B
Maturity Date" shall mean September 2, 2006.
"Transaction
Costs" shall mean transaction costs and expenses
incurred by the Borrower in connection with any Qualified NEG
Sale.
"Type"
shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan
or a
Eurodollar Loan.
"Unaudited
Financial Statements" shall have the meaning provided
in Section 5.11 of the Credit Agreement.
"Unfunded
Current Liability" of any Plan shall mean the amount,
if any, by which the value of the accumulated plan benefits under
the Plan
determined on a plan termination basis in accordance with
actuarial
assumptions at such time consistent with those prescribed by the
PBGC for
purposes of Section 4044 of ERISA, exceeds the fair market value of
all plan
assets allocable to such liabilities under Title IV of ERISA
(excluding any
accrued but unpaid contributions).
"United
States" and "U.S." shall each mean the United States of
America.
"U.S. GAAP"
shall mean generally accepted accounting principles
and practices as in effect from time to time in the United
States.
"Utility
Base Pledge Agreement" shall mean, collectively, the two
Utility Pledge Agreements (35%), dated as of October 18, 2002,
among the
Borrower, as pledgor, the Administrative Agent and Deutsche Bank
Trust
Company Americas, as pledgee, as Collateral Agent for the benefit
of the
Lenders holding the New Tranche B Loan and the Lenders holding the
Continued
Tranche B Loan, respectively.
"Utility
Pledge Agreements" shall mean, collectively, the Utility
Base Pledge Agreement and the Utility Protective Pledge
Agreement.
"Utility
Protective Pledge Agreement" shall mean, collectively,
the two Utility Pledge Agreements (65%), dated as of October 18,
2002, among
the Borrower, as pledgor, the Administrative Agent and Deutsche
Bank Trust
Company Americas, as pledgee, as Collateral Agent for the benefit
of the
Lenders holding the New Tranche B Loan and the Lenders holding the
Continued
Tranche B Loan, respectively.
"Utility
Regulation" shall mean any law, regulation or rule of
the Federal government, any state, or any agency or political
subdivision of
the foregoing which is applicable to an entity by virtue of (i)
such entity's
ownership or operation of assets used for the generation,
transmission,
distribution or sale of electric energy, (ii) such entity's
transportation of
natural or manufactured gas, gasoline, oil, or similar fuels,
steam, chilled
water or other products resulting in regulation similar to that
imposed on
the foregoing, (iii) such entity's engaging in the sale or
provision of
electric energy, natural gas or similar fuels, steam, water,
chilled water,
or telephone or other public utility services; provided that, such
term shall
not include laws, regulations or rules of general applicability
with respect
to protection of the environment, hazardous waste, or public health
or
safety.
"Utility
Spin-Off" shall mean individually and collectively, any
transfers, Investments, Indebtedness, Dividends, and other
transactions to
the extent substantially consistent with the transactions described
in the
attached Annex B (which summarizes the material provisions of the
filed Plan
of Reorganization, dated April 19, 2002 (without giving effect to
any
subsequent amendment or modification, the "PGE Plan"), proposed by
PGE
Utility in connection with its bankruptcy proceeding) and
undertaken pursuant
to a confirmed plan of reorganization of PGE Utility under Chapter
11 of the
Bankruptcy Code. In connection with the consummation of the
Utility Spin-
Off, (a) PGE Utility has formed a new corporation ("Newco"), to
which shall
be transferred the common stock of the Reorganization Subsidiaries,
(b) PGE
Utility will dividend the common stock of Newco to the Borrower
(the "Newco
Spin") and (c) the Borrower will dividend the common stock of PGE
Utility to
the stockholders of the Borrower (collectively, the "PGE
Spin").
"Voluntary
Make-Whole Amount" shall mean, in respect of any
optional prepayment on any Payment Date, pursuant to Section 3.1 of
the
Credit Agreement, of the Tranche B Loan on or before October 1,
2003, an
amount equal to the discounted present value on such Payment Date
of sum of
(a) 2.50% of the principal amount of such prepayment plus (b) the
aggregate
amount of interest that would accrue on the principal amount of
such
prepayment from such Payment Date to October 1, 2003 pursuant to
Section 2.5
of the Credit Agreement (including, without limitation, pay-in-kind
interest
accruing pursuant to Section 2.5(g) of the Credit Agreement,
calculated as if
October 1, 2003 were an Interest Payment Date in respect of the
principal
amount being prepaid on such Payment Date), such discounted present
value to
be calculated by the Administrative Agent at the rate per annum
equal to the
yield to maturity (as reasonably determined by the Administrative
Agent), on
the Business Day immediately preceding such Payment Date, of United
States
Treasury securities having a maturity of approximately six months
(or, if
less, the time remaining to the Tranche B Maturity Date), and
assuming that
the sum described in the foregoing clauses (a) and (b) were paid on
October
1, 2003.
"Voting
Stock", with respect to any Person, shall mean Capital
Stock the holders of which are ordinarily, in the absence of
contingencies,
entitled to vote for the election of directors (or persons
performing similar
functions) of such Person, even if the right so to vote has been
suspended by
the happening of a contingency.
"Warrant"
shall be the collective reference to (i) the Existing
Warrant and (ii) the New Warrant.
"Warrant
Agreement" shall be the collective reference to (i) the
Existing Warrant Agreement and (ii) the New Warrant
Agreement.
2. Rules of Interpretation. In each Financing
Document,
unless otherwise indicated:
(a)
each reference to, and the definition of, any document
(including any Financing Document) shall
be deemed to refer to such
document as it may be amended,
supplemented, revised or modified from
time to time in accordance with its terms
and, to the extent
applicable, the terms of the Credit
Agreement;
(b)
each reference to a Law or Governmental Approval shall be
deemed to refer to such Law or
Governmental Approval as the same may be
amended, supplemented or otherwise
modified from time to time;
(c)
any reference to a Person in any capacity includes a
reference to its permitted successors and
assigns in such capacity and,
in the case of any Governmental Authority,
any Person succeeding to any
of its functions and capacities;
(d)
references to days shall refer to calendar days unless
Business Days are specified; references to
weeks, months or years shall
be to calendar weeks, months or years,
respectively; if any calendar
day is not a Business Day, then
performances required on such calendar
day shall be deferred to the next Business
Day;
(e)
all references to a "Section," "Appendix," "Annex,"
"Schedule" or "Exhibit" are to a Section
of such Financing Document or
to an Appendix, Annex, Schedule or Exhibit
attached thereto;
(f)
the table of contents and Section headings and other
captions therein are for the purpose of
reference only and do not
affect the interpretation of such
Financing Document;
(g)
defined terms in the singular shall include the plural and
vice versa, and the masculine, feminine or
neuter gender shall include
all genders;
(h)
the words "hereof", "herein" and "hereunder", and words of
similar import, when used in any Financing
Document, shall refer to
such Financing Document as a whole and not
to any particular provision
of such Financing Document;
(i)
the words "include," "includes" and "including" are deemed
to be followed by the phrase "without
limitation";
(j)
where the terms of any Financing Document require that the
approval, opinion, consent or other input
of any Secured Party be
obtained, such requirement shall be deemed
satisfied only where the
requisite approval, opinion, consent or
other input is given by or on
behalf of the relevant party in
writing;
(k)
where the terms of any Financing Document require or permit
any action to be taken by the Collateral
Agent, such action shall be
taken strictly in accordance with the
applicable provisions of the
relevant Financing Documents;
(l)
whenever the phrase "material compliance" is used, it shall
be interpreted to mean that either the
entity is in full compliance
with the requirement or that any failure
of the entity to be in
compliance in all respects with the
requirement could not reasonably be
expected alone or together will all other
such failures and all of the
facts and circumstances to have a Material
Adverse Effect; and
(m)
all reference to "knowledge" of a Person shall mean the
knowledge or actual awareness of such
Person of the subject matter in
question after due inquiry and
investigation.
