EXHIBIT ___
COGEN LYONDELL
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NGC CORPORATION
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GUARANTY
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Dated as of June 27, 1997
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TABLE OF CONTENTS
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ARTICLE I
GUARANTY
Section 1.1 Definitions and Interpretations.................... 2
Section 1.2 Agreement.......................................... 10
Section 1.3 Agreement to be Absolute........................... 10
ARTICLE II
GENERAL PROVISIONS REGARDING GUARANTY
Section 2.1 Nature of Guaranty................................. 11
Section 2.2 Limitation on NGC's Rights; Waiver of Subrogation.. 11
Section 2.3 Events of Default.................................. 12
Section 2.4 Lease Terminated................................... 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Corporate Existence................................ 13
Section 3.2 Authorization and Validity......................... 13
Section 3.3 No Conflict; Government Consent.................... 13
Section 3.4 Financial Information.............................. 14
Section 3.5 Litigation......................................... 14
Section 3.6 Subsidiaries....................................... 14
Section 3.7 Ownership.......................................... 14
ARTICLE IV
COVENANTS OF THE GUARANTOR
Section 4.1 Net Worth.......................................... 15
Section 4.2 Leverage Ratio..................................... 15
Section 4.3 Coverage Ratio..................................... 15
Section 4.4 Information........................................ 15
ARTICLE V
MISCELLANEOUS
Section 5.1 NGC's Waivers...................................... 16
Section 5.2 Third Party Beneficiaries.......................... 17
Section 5.3 No Waiver; Consents; Cumulative Remedies........... 17
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Section 5.4 Successors and Assigns; Participations............. 18
Section 5.5 Notices............................................ 18
Section 5.6 Rights to Deal with the Lessee..................... 18
Section 5.7 Payments........................................... 18
Section 5.8 Survival of Representations, Warranties, etc....... 18
Section 5.9 Termination or Replacement of NGC Guaranty......... 19
Section 5.10 Governing Law...................................... 20
Section 5.11 Costs and Expenses................................. 20
Section 5.12 Miscellaneous...................................... 20
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GUARANTY
THIS GUARANTY ("Agreement") dated as of June 27, 1997, is by NGC
CORPORATION, a Delaware corporation ("NGC" or the "Guarantor") in favor of COGEN
FUNDING, LIMITED PARTNERSHIP, a Delaware limited partnership (the "Lessor" and a
"Beneficiary"), and in favor of CREDIT SUISSE FIRST BOSTON, as AGENT and as
COLLATERAL AGENT for the benefit of the Banks (the "Banks") now or hereafter
parties to the Credit Agreement (defined below) (in such capacity, the "Agent"
and a "Beneficiary", and collectively with the Lessor, the "Beneficiaries").
RECITALS
X. XxXxx Lyondell, Inc., a Texas corporation ("CoGen" or "Lessee") which
is a wholly owned subsidiary of Destec Holdings, Inc., which is a wholly owned
subsidiary of Destec Energy, Inc. ("Destec"), which is a majority-owned
subsidiary of The Dow Chemical Company ("Dow"), entered into that certain
Amended and Restated Lease Agreement dated as of August 11, 1995, (as amended,
modified or supplemented from time to time, the "Lease") with the Lessor.
B. In order to induce the Lessor to enter into the Lease, Dow entered
into that certain Guaranty dated as of August 11, 1995 (the "Original Guaranty")
for the benefit of the Lessor to guarantee the performance by CoGen of its
covenants and agreements under the Lease.
C. NGC and NGC Acquisition Corporation II, a wholly-owned subsidiary of
NGC ("NACII"), have entered into that certain Agreement and Plan of Merger dated
as of February 17, 1997 (the "Destec Contract") with Destec and Dow, whereby at
the closing of the transactions contemplated thereby NGC will acquire the stock
of Destec pursuant to the merger of NACII with and into Destec (the "Acquisition
Transactions").
D. Section 4.9(b) of the Original Guaranty provides that Dow may
terminate the Original Guaranty if Dow shall provide at least thirty days notice
to the Lessor, or any person or entity to whom the Lessor has assigned or
granted a security interest in the Original Guaranty, that Dow will be selling
its interest in Destec as of the date specified in such notice and the purchaser
of Dow's interest in Destec is acceptable to Credit Suisse First Boston
(formerly Credit Suisse), such acceptance not to be unreasonably withheld.
E. NGC and CoGen have requested that Credit Suisse First Boston, as
Agent, consent to the Acquisition Transactions and indicate its acceptance of
NGC as the purchaser of Dow's interest in Destec.
F. Credit Suisse First Boston, as Agent, has agreed to provide such
consent and indicate such acceptance pursuant to that certain Consent and
Agreement, dated as of June 27, 1997 (the "Consent and Agreement"), among the
Lessor, CoGen, NGC, Destec, Credit Suisse First Boston, as
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Agent, and the Banks, subject to the terms and conditions set forth in the
Consent and Agreement, including without limitation, the delivery by NGC of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, NGC agrees as follows:
ARTICLE I
GUARANTY
Section 1.1 Definitions and Interpretations.
(a) The table of contents and article and section headings of this
Agreement are included herein for convenience of reference purposes only and
shall not constitute a part of this Agreement or affect its interpretation in
any respect. Except where the context otherwise requires, (i) words imparting
the singular number shall include the plural number, and vice versa, and shall
be construed to be of such gender or number as the context requires; (ii) the
words "herein," "hereof," "hereunder" and other words of similar import when
used in this Agreement refer to this Agreement as a whole, and not to any
particular article, section or subsection; (iii) pronouns, wherever used in this
Agreement and of whatever gender, shall include natural persons, corporations
and associations of every kind and character; (iv) the gender of all words used
in this Agreement shall include the masculine, feminine and neuter; (v) the
words "includes" or "including" shall mean "including without limitation"; (vi)
the word "or" shall mean "and/or"; and (vii) in the computation of interest and
fees payable from a specified date to a later specified date, unless otherwise
indicated the word "from" means "from and including" and the words "to" and
"until" both mean "to but not including".
(b) Unless expressly stated otherwise, any reference in this Agreement to a
document or instrument shall mean such document or instrument, together with all
exhibits thereto, as amended, extended, supplemented, or otherwise modified from
time to time, as permitted by the Related Documents. Any reference in this
Agreement to any Person as a party to any document or instrument shall include
its successors and assigns to such person's status as a party, to the extent
permitted by the Related Documents.
(c) Each capitalized term used herein and not otherwise defined herein
shall have the meanings given such term in the Lease, or if not defined therein,
in the Credit Agreement. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the following meanings:
"AES" means The AES Corporation, a Delaware corporation.
"AES Contract" means that certain Asset Purchase Agreement dated February
17, 1997 between NGC and AES.
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"AES Transaction" means the sale by NGC of the International Assets (as
defined in the AES Contract) of Destec pursuant to the AES Contract.
"Assets" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person, and includes, without limitation, stock, partnership
and limited liability company interests owned or held in any other Person by
such Person.
"Authorized Officer" means any of the President, the Chief Financial
Officer, the Senior Vice President-General Counsel, the Vice President-Finance,
the Controller or the Treasurer of NGC.
"Capitalized Lease" of a Person means any lease of Assets by such Person as
lessee which would be capitalized on a balance sheet of such Person prepared in
accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person as a lessee under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in accordance
with GAAP.
"CoGen Obligations" shall have the meaning ascribed to such term in Section
1.2.
"Commission" means the Securities and Exchange Commission of the United
States of America.
"Consolidated Debt" means, as of any date of determination thereof, the
aggregate principal amount of all then outstanding Debt of NGC and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP as of
such date.
"Consolidated EBITD" of NGC and its Subsidiaries means, for any period, the
sum of (a) Consolidated Net Income (excluding income taxes) determined for such
period; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of NGC) in which NGC or any Subsidiary of NGC
has an interest but in which any other Person (not NGC or any of its
Subsidiaries) has a joint interest with respect to which the equity method of
accounting is utilized, except to the extent of the amount of dividends or other
distributions actually paid to NGC, or any of its Subsidiaries, by such Person
during such period, (ii) the income (or loss) of any Person (other than a Person
that is consolidated as a result of the Merger) accrued prior to the date it
becomes a Subsidiary of NGC or is merged into or consolidated with NGC or any of
its Subsidiaries or that such Person's Assets are acquired by NGC or any of its
Subsidiaries, and (iii) the income of any Subsidiary of NGC to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement (other than the Existing Xxxxxx Indentures as in
effect on November 1, 1994), instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary, plus (b) the
Consolidated Interest Expense for such period, plus (c) to the extent taken into
account in calculating Consolidated Net Income (excluding income taxes) referred
to in clause
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(a) of this definition, the aggregate amount of all costs and expenses incurred
as a result of the Acquisition Transactions, and the Newco Combination,
respectively, plus (d) depreciation, depletion and amortization expense of NGC
and its Subsidiaries determined for such period on a consolidated basis plus (e)
without duplication, the amount of dividends or other distributions actually
paid to NGC or any of its Subsidiaries during such period to the extent
attributable to income from another period excluded pursuant to clause (i)
above; provided, however, for purposes of this definition, extraordinary gains
and losses shall excluded from the calculation of Consolidated Net Income.
"Consolidated Interest Expense" means, for any Rolling Period, the total
interest expense, whether paid or accrued (including, without limitation, that
attributable to Capitalized Leases), of NGC and its Subsidiaries determined for
such period on a consolidated basis in accordance with GAAP, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing plus or minus net
amounts paid or payable or received or receivable pursuant to interest rate
swap, exchange, cap or similar agreements.
"Consolidated Net Income" means, for any period, the consolidated net
income of a Person and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means at any date the stockholders' equity of NGC
and its Subsidiaries determined on a consolidated basis in accordance with GAAP
as of such date.
"Consolidated Tangible Net Worth" means at any date the stockholders'
equity of NGC and its Subsidiaries less their consolidated Intangible Assets,
all determined on a consolidated basis in accordance with GAAP as of such date.
For purposes of this definition, "Intangible Assets" means the amount (to the
extent reflected in determining such stockholders' equity) of (a) all net write-
ups (other than write-ups resulting from foreign currency translations and
write-ups of assets of a going concern business made within twelve months after
the acquisition of such business) subsequent to December 31, 1993, in the book
value of any Assets owned by NGC or any of its Consolidated Subsidiaries and (b)
all unamortized debt discount and expense, goodwill, patents, trademarks,
service marks, trade names, copyrights, and organization or developmental
expenses.
"Credit Agreement" means that certain Amended and Restated Credit Agreement
dated as of the date hereof, among the Lessor, the Agent, and the Banks parties
thereto.
"CUSA" means Chevron U.S.A. Inc., a Pennsylvania corporation.
"CUSA Assumed Debt" means the $155,373,000 aggregate principal amount of
CUSA's obligations under the CUSA Note, the payment of which was assumed by
Newco under the CUSA Assumption Agreement.
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"CUSA Assumption Agreement" means the agreement dated as of the closing of
the Newco Combination pursuant to which Newco assumed CUSA's payment obligation
for the CUSA Assumed Debt.
"CUSA Note" means the demand promissory note dated August 25, 1994 payable
by CUSA to Chevron Capital U.S.A. Inc.
"Debt" means, with respect to any Person, (a) all indebtedness and other
obligations of such Person for the repayment of money borrowed, whether or not
represented by acceptances, bonds, debentures, notes, or other instruments or
securities, (b) all indebtedness and other obligations of such Person for the
deferred payment of the purchase price of any property or assets (other than
accounts payable on terms customary in the trade), (c) all Capitalized Lease
Obligations of such Person, and (d) all indebtedness and other obligations,
whether or not assumed by such Person, secured by any Lien (other than (i)
utility easements, building restrictions and such other encumbrances or charges
against real property as are of a nature generally existing with respect to
properties of a similar character and which do not materially affect the
marketability of the same or interfere with the use thereof in the business of
the Guarantor or its Subsidiaries, (ii) Permitted Liens, (iii) Liens on cash and
short-term investments (a) deposited by the Guarantor or any of its Subsidiaries
in margin accounts with futures contract brokers authorized to trade on the New
York Mercantile Exchange to secure the Guarantor's obligations with respect to
futures contracts for the purchase or sale of natural gas, natural gas liquids,
domestic crude, Xxxxx crude, propane, heating oil, unleaded gasoline and/or jet
fuel or (b) pledged by the Guarantor or any of its Subsidiaries to secure the
Guarantor's obligations pursuant to one or more Fixed Price Contracts or other
such contracts with respect to other commodities or interest rate or currency
rate management contracts, and (iv) extensions, renewals or replacements of any
Lien referred to in (i) through (iii), provided that the principal amount of the
Debt or obligation secured thereby is not increased and that any such extension,
renewal or replacement Lien is limited to the Assets originally encumbered
thereby) on, or payable out of the proceeds of or production from, any Assets of
such Person; provided, however that in no event shall Debt described in any of
the foregoing categories (i) be duplicative of any Debt described in any other
such category, (ii) include Guaranties, or (iii) include any Project Financing
that would not be shown as a liability on the financial statements of NGC and
its Subsidiaries on a consolidated basis; provided further, that for purposes of
the foregoing clauses (a), (b), (c), and (d), Debt shall include, in the case of
NGC and its Subsidiaries, only such obligations as are shown as a liability on a
consolidated balance sheet of NGC and its Subsidiaries in accordance with GAAP;
and provided further that the Institutionally Targeted Capital Securities shall
not constitute Debt.
"Dollars" means the lawful currency of the United States of America.
"Existing Xxxxxx Indentures" means each of (i) the Indenture dated to be
effective as of September 9, 1993 between Xxxxxx XXX, Inc., as Issuer, and
Ameritrust Texas National Association, Trustee, for $65,000,000 14% Senior
Subordinated Notes due 2001 and (ii) the Indenture dated to be effective as of
April 15, 1993 between Xxxxxx XXX, Inc., as Issuer, and the First National Bank
of Boston, Trustee, for $105,000,000 10 1/4% Subordinated Notes due 2003.
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"Fixed Price Contract" means, as of any date of determination, a contract
(including, without limitation, physical delivery, option (whether cash or
financial), exchange, swap and futures contracts) entered into by the Guarantor
or any of its Subsidiaries for the purchase or sale of all gaseous hydrocarbons
including, but not limited to oil well gas, gas well gas, and casinghead gas,
but excluding any natural gas liquids ("Natural Gas"), other than (i) such a
contract which has a remaining term of thirty (30) days or less from such date
of determination, or (ii) such a contract under which the purchase or sale price
of any portion of Natural Gas delivered or to be delivered on or after such date
of determination is calculated by reference to (a) the spot price for Natural
Gas current on each date of delivery at the place of delivery specified in such
contract, (b) the spot price for Natural Gas current on each date of delivery at
a place of delivery other than the place of delivery specified in such contract
provided that such spot price is adjusted to reflect the cost of transporting
Natural Gas to the place of delivery specified in such contract, (c) a basket of
price indices similar to the spot price for Natural Gas current on each date of
delivery at the place of delivery, or (d) a basket of price indices similar to
the then current spot price for Natural Gas at a place of delivery other than
the place of delivery specified in such contract provided that each such price
index is adjusted to reflect the cost of transporting Natural Gas to the place
of delivery specified in such contract; provided, however, that for purposes of
this Agreement a Fixed Price Contract shall not include any contract (including,
without limitation, physical delivery, option (whether cash or financial),
exchange, swap and futures contracts) entered into by the Guarantor or any of
its Subsidiaries in the ordinary course of business for the purpose of managing
the impact of price fluctuations on Natural Gas supply costs related to any
Natural Gas processing activity conducted by the Guarantor or any of its
Subsidiaries.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time, applied on a basis consistent with the most recent financial
statements of NGC and its Subsidiaries delivered pursuant hereto.
"Guaranty" means, with respect to any Person, (a) all indebtedness and
other obligations, contingent or otherwise, of such Person under or in respect
of any letter of credit issued for its own account, and (b) all indebtedness and
other obligations of such Person under any agreement, undertaking or other
arrangement by which such Person (i) assumes, guarantees, endorses (other than
the endorsement of instruments for collection in the ordinary course of
business), commits or agrees (whether or not such commitment or agreement is
contingent or subject to the occurrence of a specified event or events) to
purchase or otherwise acquire or provide funds for the payment of any obligation
or liability of any other Person or (ii) agrees to maintain the net worth,
working capital or any other financial condition of any other Person; provided,
however, in no event shall Guaranties described in any of the foregoing
categories include any Guaranties by a Project Financing Subsidiary that would
not be shown as a liability on the financial statements of NGC and its
Subsidiaries on a consolidated basis.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
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composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case undertaken under the federal bankruptcy laws of the
United States from time to time in effect.
"Institutionally Targeted Capital Securities" means the capital securities
to be issued in an aggregate amount of up to $200,000,000 by a Delaware business
trust, the proceeds of which will be loaned to NGC or one or more of its
Subsidiaries all on the terms set forth in the Offering Memorandum dated May 22,
1997, a copy of which has been delivered to the Agent.
"Leverage Ratio" means the ratio, expressed as a percentage, of
Consolidated Debt to the sum of Consolidated Debt plus Consolidated Net Worth.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, security interest, encumbrance or preference,
priority or other security agreement or any interest in Assets to secure payment
of a debt or performance of an obligation (including the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Maintenance Capital Expenditure" means, for any Rolling Period, any
capital expenditure to maintain the Assets of NGC and its Subsidiaries in good
working condition in accordance with industry standards.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Assets, financial condition or results of operations of NGC and its
Subsidiaries taken as a whole, or (ii) the ability of NGC to perform its payment
obligations under this Agreement.
"Material Agreement" means any contract or agreement to which NGC or any of
its Subsidiaries is a party which is material to the consolidated financial
condition or operations of NGC and its Subsidiaries, and includes the Existing
Xxxxxx Indentures.
"Merger" means the merger, consolidation or combination of NGC's partners
into or with NGC, with NGC being the surviving corporation pursuant to the
Merger Agreement.
"Merger Agreement" means the Combination Agreement and Plan of Merger by
and among Natural Gas Clearinghouse and Trident NGL Holding, Inc. and others,
dated as of October 21, 1994.
"Newco" means Midstream Combination Corp., a Delaware corporation.
"Newco Combination" means the merger of a predecessor in interest to NGC
into Newco pursuant to that certain Combination Agreement and Plan of Merger
dated as of May 22, 1996 between CUSA and Newco, whereby at the closing of the
transaction contemplated thereby, CUSA contributed certain assets to Newco, and
upon consummation of such transactions, the separate existence of such
predecessor in interest to NGC ceased, Newco became the surviving Person and
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successor to such predecessor in interest to NGC and Newco was renamed NGC
Corporation. NGC is the surviving Person of, and successor to, Xxxxx.
"NGC Revolver" means, at any time, the revolving credit agreement of NGC
with the largest commitment then in effect, as the same may be amended,
extended, supplemented, renewed, restated, replaced or otherwise modified from
time to time or if no such revolving credit agreement is then in effect, the
revolving credit agreement of NGC most recently in effect. As of the date
hereof, that certain Xxxxxxx and Restated Credit Agreement dated as of June 27,
1997, among NGC, The First National Bank of Chicago, as Agent, The Chase
Manhattan Bank and NationsBank of Texas, N.A., as Co-Agents, and each of the
lenders signatory thereto constitutes the NGC Revolver.
"Permitted Liens" means any one or more of the following: (a) Liens for
taxes, assessments or other governmental charges or levies either not yet
delinquent or which are being contested in good faith by appropriate proceedings
diligently prosecuted and as to which adequate reserves shall have been set
aside in conformity with GAAP, (b) deposits or pledges to secure the payment of
workers' compensation, unemployment insurance, social security benefits or
obligations arising under similar legislation, or to secure the performance of
public or statutory obligations, surety or appeal bonds, and other obligations
of a like nature incurred in the ordinary course of business, (c) materialmen's,
mechanics', workmen's, repairmen's, employee's, landlord's, xxxxxx's or other
like Liens arising in the ordinary course of business to secure obligations not
more than 30 days past due or being contested in good faith and as to which
adequate reserves shall have been set aside in conformity with GAAP or as to
which adequate bonds shall have been obtained, (d) Liens arising under Section
9.319 of the Texas Uniform Commercial Code or similar statutes of states other
than Texas, (e) zoning restrictions, easements, rights-of-way, restrictions,
servitudes, permits, reservations, encroachments, exceptions, conditions,
covenants, and any other restrictions on the use of real property none of which
materially impairs the use of such Assets by the owner of such Assets in the
operation of its business, (f) liens in favor of The First National Bank of
Chicago, as Agent under the NGC Revolver for the pro rata benefit of the lenders
thereunder, or to the lenders thereunder to secure the Obligations (as defined
in the NGC Revolver), (g) inchoate Liens arising under ERISA, (h) Liens reserved
in customary oil, gas and/or mineral leases for bonus or rental payments and for
compliance with the terms of such leases and Liens reserved in customary
operating agreements, farm-out and farm-in agreements, exploration agreements,
development agreements and other similar agreements for compliance with the
terms of such agreements, (i) any obligations or duties affecting any of the
Assets of any Person to any municipality or public authority with respect to any
franchise, grant, license or permit which do not materially impair the use of
such Assets for the purposes for which such Assets are held, (j) defects,
irregularities and deficiencies in title to any Assets of any Person which in
the aggregate do not materially impair the use of such Assets for the purposes
for which such Assets are held by such Person, and defects, irregularities and
deficiencies in title to any Assets of the Guarantor which defects,
irregularities or deficiencies have been cured by possession under applicable
statutes of limitation, (k) royalties, overriding royalties, revenue interests,
net revenue interests, production payments (other than royalties, overriding
royalties, revenue interests, net revenue interests or production payments
granted or created by such
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Person or any of its Subsidiaries in the ordinary course of business in
connection with, or having the effect of, the borrowing of money), advance
payment obligations (other than obligations in respect of advance payment
received by such Person or any of its Subsidiaries in connection with, or having
the effect of, the borrowing of money) and other similar burdens now existing on
Assets now owned or, as to Assets hereafter acquired, at the time of acquisition
by such Person, (l) Liens arising out of all presently existing and future
division and transfer orders, advance payment agreements, processing contracts,
gas processing plant agreements, operating agreements, gas balancing or deferred
production agreements, pooling, unitization or communitization agreements,
pipeline, gathering or transportation agreements, platform agreements, drilling
contracts, injection or repressuring agreements, cycling agreements,
construction agreements, salt water or other disposal agreements, leases or
rental agreements (but only as otherwise permitted by this Agreement), farm-out
and farm-in agreements, exploration and development agreements, and any and all
other contracts or agreements covering, arising out of, used or useful in
connection with or pertaining to the exploration, development, operation,
production, sale, use, purchase, exchange, storage, separation, dehydration,
treatment, compression, gathering, transportation, processing, improvement,
marketing, disposal or handling of any Assets of a Person, provided such
agreements are entered into the ordinary course of business and contain terms
customary for such agreements in the industry, and (m) in the case of the
Guarantor and its Subsidiaries, other minor liens or encumbrances none of which
interferes materially with the use of the Assets affected in the ordinary
conduct of the Guarantor's and/or its Subsidiaries business and which
individually or in the aggregate do not have a Material Adverse Effect.
"Project Financing" means any Debt or obligations under leases that do not
constitute Capitalized Lease Obligations at the time such leases are entered
into, in each case that are incurred to finance a project (including any
construction financing) and that do not permit recourse to NGC or any of its
Subsidiaries (other than a Project Financing Subsidiary) or any of their
respective Assets (other than the Assets of a Project Financing Subsidiary).
"Project Financing Subsidiary" means (i) any Subsidiary of NGC or (ii) any
other Person in which NGC owns a 50% or less interest, in each case described in
clause (i) or (ii), whose principal purpose is to incur Project Financing or to
become an owner of interests in a Person so created to conduct the business
activities for which such Project Financing was incurred, and substantially all
of the fixed assets of which Subsidiary or Person are those fixed assets being
financed (or to be financed) in whole or in part by one or more Project
Financings.
"Rolling Period" means for each calendar quarter, such quarter and the
three preceding calendar quarters.
"Scheduled Debt Service" means, for any Rolling Period, the sum of all
scheduled, required and mandatory principal payments of NGC and its Subsidiaries
on a consolidated basis in accordance with GAAP plus Consolidated Interest
Expense for such Rolling Period; provided, further that for purposes of this
definition, principal owing in respect of the CUSA Assumed Debt as a result of a
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demand for payment thereof being made by CUSA prior to the stated maturity
thereof shall not be a scheduled, required, or mandatory principal payment of
NGC and its Subsidiaries.
"Subsidiary" of any Person, means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall, at the time,
be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, joint venture, limited liability company or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall, at the time, be so owned. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a direct
or indirect Subsidiary of NGC.
"Substantial Portion" means, with respect to the Assets of the Guarantor
and its Subsidiaries, Assets which (i) represent more than 15% of the
consolidated Assets of the Guarantor and its Subsidiaries as shown in the
consolidated financial statements of the Guarantor and its Subsidiaries most
recently delivered to the Agent pursuant to Section 4.4 (or, if no such
statements have been delivered, the statements referred to in Section 3.4(a)) or
(ii) is responsible for more than 15% of the Consolidated EBITD for the Rolling
Period ending with the calendar quarter immediately prior to the quarter in
which such determination is made.
Section 1.2 Agreement. NGC hereby irrevocably and unconditionally
guarantees to the Beneficiaries the punctual payment when due, in Dollars,
whether at stated maturity, by acceleration or otherwise, of all obligations of
CoGen now or hereafter existing under the Lease, whether for rent, principal,
interest, fees, obligations, liabilities, indebtedness, and other amounts
required to be paid by CoGen under or in respect of the Lease, and all other
present and future payment obligations and payment liabilities (whether
absolute, fixed or contingent, matured or unmatured, joint, several or
independent and howsoever acquired) of CoGen arising out of or in any way
relating to the Lease or the transactions contemplated thereby (such obligations
being the "CoGen Obligations"), and agrees to pay any and all reasonable out-of-
pocket expenses incurred by the Beneficiaries in enforcing any rights under this
Agreement. Any payment required to be made by NGC under this Agreement must be
preceded by a written demand.
Section 1.3 Agreement to be Absolute. NGC guarantees that the CoGen
Obligations will be paid strictly in accordance with the terms of the Lease,
irrespective of any law, regulation, order, court decision, or other
Governmental Rule now or hereafter in effect in any jurisdiction purporting to
prohibit payment of the obligations by CoGen or any change in the time, manner,
or place of payment of, or in any other term of, all or any of the CoGen
Obligations, or any other amendment or waiver of or any consent to departure
from the Lease.
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ARTICLE II
GENERAL PROVISIONS REGARDING GUARANTY
Section 2.1 Nature of Guaranty. The liability of NGC under this
Agreement is and shall be a continuing, absolute, unconditional and irrevocable
guaranty of payment by CoGen (and not of collectibility from CoGen).
Section 2.2 Limitation on NGC's Rights; Waiver of Subrogation.
(a) NGC further agrees that nothing contained herein shall prevent the
Beneficiaries from suing on the CoGen Obligations or exercising any rights
available to them under the Lease and that the exercise of any of the aforesaid
rights shall not constitute a legal or equitable discharge of NGC in respect of
the CoGen Obligations or otherwise. NGC hereby waives any right, claim or
remedy of subrogation, reimbursement, contribution or any similar right which
NGC may now have or hereafter acquire against CoGen in respect of the CoGen
Obligations, including any right, claim or remedy of the Beneficiaries against
CoGen until such time as all CoGen Obligations have been paid in full. Without
limiting the generality of the foregoing, NGC hereby expressly agrees that it
shall remain fully liable to the Beneficiaries under the terms hereof
notwithstanding (i) the voluntary or involuntary liquidation, dissolution,
merger, consolidation, sale or other disposition of all or substantially all of
the assets, marshaling of the assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or readjustment of, or other similar
proceedings affecting CoGen; or (ii) the failure of the Beneficiaries to
mitigate damages resulting from any default by CoGen under the Lease.
(b) Regardless of whether NGC may have made any payments to either
Beneficiary, NGC hereby subordinates to all rights the Beneficiaries may have
against CoGen, including all rights to enforce any remedy that either
Beneficiary may have against CoGen, including: (i) all of NGC's rights of
subrogation, if any, of indemnity, and to collect reimbursement from CoGen for
any sums paid to either Beneficiary, whether such rights are contractual or
arise by operation of law (including the United States Bankruptcy Code or any
successor or similar statute) or otherwise, and (ii) all rights to enforce any
remedy that NGC may have against CoGen. NGC agrees that no payment made by it
or for its account pursuant to the provisions hereof to either Beneficiary shall
entitle it, by subrogation, indemnification, exoneration, contribution,
reimbursement or otherwise to the rights of such party in respect of which such
payment is made or otherwise, to any payment by CoGen or from or out of any
property of CoGen, and NGC hereby expressly waives, to the fullest extent
possible, and shall not exercise rights or remedies it has or may in the future
have with respect to any of the foregoing, unless (a) no Event of Default shall
have occurred and be continuing at the time of the exercise by NGC of such right
or remedy, (b) the CoGen Obligations have been paid and performed in full and
(c) at the time of such payment by NGC pursuant to the provisions hereof, NGC is
not an "insider" of CoGen with respect to which such payment by NGC is made,
within the meaning of said section 101(31) of the Bankruptcy Reform Act of 1978,
as now or hereafter in effect, or any successor provision. If, and to the
extent that, any such rights or remedies against CoGen or its property may not
be waived under applicable law, NGC (if at the time of such payment
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by NGC, CoGen is such an "insider" within the meaning of said section 101(31),
or any successor provisions) shall be deemed to have contributed any such rights
to CoGen effective immediately upon the arising of such rights or remedies. If
NGC receives any reimbursement from CoGen in contradiction of the foregoing, NGC
shall hold such payment in trust for, and shall promptly deliver such payment to
the Agent.
Section 2.3 Events of Default. The following are "Events of Default"
under this Agreement:
(a) any default by NGC in the payment of any amount due under this
Agreement shall occur;
(b) other than as set forth in Sections 2.3(a), any default by NGC in the
performance or observance of any other covenant or agreement contained herein
and such default shall continue unremedied for 30 days after the earlier to
occur of (i) the date on which an Authorized Officer of NGC becomes aware of
such default or (ii) written notice thereof has been given to NGC by the Lessor
or the Agent;
(c) any representation, warranty, certification or statement made or deemed
made by NGC in this Agreement, the Consent and Agreement, or any document to
which NGC is a party that is contemplated hereby or thereby or in any
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect when made
(or deemed made);
(d) the Guarantor or any of its Subsidiaries (other than any Project
Financing Subsidiary) shall (i) have an order for relief entered with respect to
it under the federal bankruptcy laws as now or hereafter in effect, (ii) make an
assignment for the benefit of creditors, (iii) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it, or any Substantial Portion of its Assets,
(iv) institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking an order for relief
under the Federal bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (v) take any
corporate action to authorize or effect any of the foregoing actions set forth
in this Section (d), (vi) not pay, or admit in writing its inability to pay, its
debts generally as they become due, or (vii) fail to contest in good faith any
appointment or proceeding described in Section 2.3(e);
(e) without the application, approval or consent of the Guarantor or any of
its Subsidiaries (other than any Project Financing Subsidiary), a receiver,
trustee, examiner, liquidator or similar official shall be appointed for the
Guarantor or such Subsidiary, or any Substantial Portion of the Assets of the
Guarantor or such Subsidiary, or a proceeding described in Section 2.3(d) shall
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be instituted against the Guarantor or any of its Subsidiaries (other than any
Project Financing Subsidiary) and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of 60 consecutive
days; or
(f) any "Default" as defined in the NGC Revolver shall have occurred and be
continuing.
Section 2.4 Lease Terminated. In case the Lease shall be terminated as
a result of the rejection thereof by any trustee, receiver or liquidating agent
of the Lessee or any of its properties in any bankruptcy, insolvency,
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar proceeding, NGC's obligations hereunder shall continue to the same
extent as if such agreement had not been so rejected. NGC agrees that this
Agreement shall continue to be effective or be reinstated, as the case may be,
if any payment to the Lessor or the Agent in respect of the CoGen Obligations
or any part thereof is rescinded or must otherwise be returned by the Lessor or
the Agent upon the insolvency, bankruptcy or reorganization of the Lessee, or
otherwise, as though such payment to the Lessor or the Agent had not been made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
NGC hereby represents and warrants to the Beneficiaries that the following
shall be true and correct as of the date of this Agreement:
Section 3.1 Corporate Existence. NGC (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and (ii) is in good standing and has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted,
except where the failure to have such authority would not have a Material
Adverse Effect.
Section 3.2 Authorization and Validity. NGC has the corporate power and
authority to execute this Agreement and to perform its obligations hereunder.
Except to the extent that the failure to so qualify would not have a Material
Adverse Effect, NGC has all requisite power, and is in all respects duly
qualified and licensed under all applicable laws to own its Assets as now owned
and to carry on its business as now conducted. The execution and delivery by
NGC of this Agreement and the performance of its obligations hereunder have been
duly authorized by proper corporate proceedings, and this Agreement constitutes
the legal, valid and binding obligation of NGC, enforceable against NGC in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
Section 3.3 No Conflict; Government Consent. Neither the execution and
delivery by NGC of this Agreement, nor consummation of the transactions herein
contemplated, nor compliance with the provisions hereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
NGC or NGC's articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which NGC is a party or is subject, or by
which it, or its Assets, is bound, or conflict with or constitute a default
thereunder, or result in the creation or
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imposition of any Lien in, of or on the Assets of NGC pursuant to the terms of
such indenture, instrument or agreement that is a Material Agreement. No order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, this Agreement, or to
the extent that any such consent or other action may be required, it has been
validly procured and all waiting periods with respect thereto have expired.
Section 3.4 Financial Information.
(a) The March 31, 1997 consolidated financial statements of NGC and its
Subsidiaries (set forth in NGC's quarterly report for the fiscal quarter ended
March 31, 1997 as filed with the Commission on Form 10-Q) heretofore delivered
to the Banks were prepared in accordance with generally accepted accounting
principles as in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of NGC and its
Subsidiaries as of such date and the consolidated results of their operations
for the period then ended.
(b) Since March 31, 1997, there has been no change in the business, Assets,
financial condition, or results of operations of NGC and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.
Section 3.5 Litigation. There is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge
of any of its officers, threatened against or affecting NGC or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
Section 3.6 Subsidiaries. Each of NGC's Subsidiaries is duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, except where the failure
to be so qualified could reasonably be expected to have a Material Adverse
Effect.
Section 3.7 Ownership. NGC owns and holds directly or indirectly
through one or more wholly-owned Subsidiaries, the entire legal title to and
beneficial interest in 100% of all outstanding shares of capital stock of the
Lessee, and is benefitted by the Lease and the transactions contemplated by the
Related Documents.
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ARTICLE IV
COVENANTS OF THE GUARANTOR
Section 4.1 Net Worth. NGC will maintain at all times, Consolidated
Tangible Net Worth of not less than the sum of (i) $400 million, plus (ii) 50%
of NGC's Consolidated Net Income, if positive, for each fiscal quarter ending
after March 14, 1995, plus (iii) 50% of the aggregate net proceeds of all
issuances of equity securities made by NGC after March 14, 1995; provided that
for purposes of this Section 4.1, the Institutionally Targeted Capital
Securities will not constitute equity of NGC and its Subsidiaries.
Section 4.2 Leverage Ratio. NGC will not permit its Leverage Ratio to
exceed 60%; provided that notwithstanding the foregoing, until the earlier of
(i) the end of the quarter which ends the quarter containing the date which is
18 months from the effective date of the Acquisition Transactions, and (ii) the
effective date of the AES Transaction, the foregoing 60% shall be 65%; provided
further that for purposes of determining the Leverage Ratio for purposes of this
Section 4.2, the Institutionally Targeted Capital Securities are deemed to be
included in stockholders' equity.
Section 4.3 Coverage Ratio. NGC will maintain for each Rolling Period
ending as of the last day of each calendar quarter a ratio of (i) Consolidated
EBITD minus Maintenance Capital Expenditures to (ii) Scheduled Debt Service of
not less than 2.0 to 1.0.
Section 4.4 Information. NGC will deliver to the Lessor and to the
Agent for distribution to the Banks:
(a) as soon as available and in any event within 120 days after the end of
each fiscal year of NGC, a consolidated balance sheet of NGC and its
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on in a manner acceptable to the Commission by independent public accountants of
nationally recognized standing (it being understood that delivery of NGC's
annual report on form 10-K in respect of such fiscal year as filed pursuant to
Section 13(a) of the Securities Exchange Act of 1934 shall constitute compliance
herewith, provided that such report otherwise meets the requirements of this
subsection (a)), together with a certificate of an Authorized Officer setting
forth in reasonable detail the calculations of the financial tests set forth in
Sections 4.1, 4.2 and 4.3.
(b) as soon as available and in any event within sixty (60) days after the
end of each of the first three quarters of each fiscal year of NGC, a
consolidated balance sheet of NGC and its Subsidiaries as of the close of
business for such quarter and the related consolidated statement of income for
such quarter and the related consolidated statements of income and cash flows
for the period commencing with the beginning of NGC's fiscal year to the end of
such quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of NGC's previous fiscal
year, (it being understood that delivery of NGC's quarterly report on form 10-Q
in respect of such period as filed pursuant to Section 13(a) of the Securities
Exchange
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Act of 1934 shall constitute compliance herewith, provided that such report
otherwise meets the requirements of this subsection (b)), and a computation of
the ratios and amounts required to be maintained by Sections 4.1, 4.2 and 4.3,
all in reasonable detail, prepared in each case in accordance with generally
accepted accounting principles and certified by an Authorized Officer to the
effect that they present fairly the financial condition and results of the
operations of NGC at the date and for the period indicated therein, subject to
changes resulting from year end adjustments.
(c) other than for the fiscal year 1996, at the same time as it delivers or
is required to deliver the statements described in clause (a) above, certificate
of an Authorized Officer of NGC stating whether there exists on or as of the
date of such certificate any Potential Default or Event of Default hereunder or
under any Related Document to which NGC is a party, and, if a Potential Default
or Event of Default then exists, setting forth the details thereof and the
action, if any, NGC has taken, is taking or proposes to take with respect
thereto;
(d) promptly upon the mailing thereof to the shareholders of NGC generally,
copies of all financial statements, proxy statements and reports so mailed; and
(e) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which NGC shall have filed with the Commission.
ARTICLE V
MISCELLANEOUS
Section 5.1 NGC's Waivers. NGC waives:
(a) all statutes of limitation that would bar any action or proceeding
brought against NGC under this Agreement by either Beneficiary where such
Beneficiary was unable to commence or prosecute such action or proceeding prior
to the expiration of the applicable period(s) of limitation due to any stay,
such as the automatic stay in bankruptcy, or due to the necessity of completing
or exhausting remedies against another Person or other collateral before
proceeding against NGC or due to any other cause wholly or partially beyond the
control of such Beneficiary, to the fullest extent permitted by law;
(b) any right NGC may have, if any, to require the Beneficiaries to proceed
against CoGen, to proceed against or exhaust any security or collateral held
from CoGen, or to pursue any other remedy in either Beneficiary's power to
pursue;
(c) any defense based on any claim that NGC's obligations exceed or are
more burdensome than those of CoGen;
(d) any defense based on: (i) any legal disability of CoGen, and (ii) any
release, discharge, modification, impairment or limitation of the liability of
CoGen to either Beneficiary from
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any cause, whether consented to by either Beneficiary or arising by operation of
law or from any Insolvency Proceeding or otherwise;
(e) any defense based on any action taken or omitted by the Beneficiaries
in any Insolvency Proceeding involving CoGen, including any extension of credit
by either Beneficiary to CoGen in any Insolvency Proceeding, and the taking and
holding by either Beneficiary of any security or collateral for any such
extension of credit;
(f) all presentments, demands for performance or payment, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Agreement and of the existence, creation, or incurrence of
new or additional indebtedness, and demands and notices of every kind except for
any demand upon NGC expressly provided for in Section 1.2;
(g) any defense based on or arising out of any defense that CoGen may have
to the CoGen Obligations;
(h) all notices to NGC and, on behalf of NGC only, all notices to CoGen,
including notices of the acceptance of this Agreement or the creation, renewal,
extension or modification of the CoGen Obligations, or of default in the
performance of the CoGen Obligations (or any portion thereof) and of enforcement
of any right or remedy with respect thereto or notice of any other matters
relating to the CoGen Obligations or to this Agreement;
(i) diligence and demand or performance in respect of the CoGen
Obligations; and
(j) all principles or provisions of law which conflict with the terms of
this Agreement.
NGC further agrees that the Beneficiaries may enforce this Agreement upon
CoGen's failure to perform the CoGen Obligations, notwithstanding the existence
of any dispute between CoGen, NGC or either Beneficiary with respect to the
performance of the CoGen Obligations (or any portion thereof) or any
counterclaim, set-off or other claim which CoGen may allege against either
Beneficiary. NGC further agrees that its obligations in respect of the CoGen
Obligations shall not be affected by any circumstances which constitute a legal
or equitable discharge of a guarantor or surety.
Section 5.2 Third Party Beneficiaries. This Agreement is solely for the
benefit of the Beneficiaries and is not intended to nor shall it be deemed to be
for the benefit of any other third party.
Section 5.3 No Waiver; Consents; Cumulative Remedies. Each waiver by
the Beneficiaries must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from either Beneficiary's delay
in exercising or failure to exercise any right or remedy against CoGen or NGC.
Consent by the Beneficiaries to any act or omission by CoGen or NGC shall not be
construed as a consent to any other or subsequent act or omission, or as a
waiver
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of the requirement for any Beneficiary's consent to be obtained in any future or
other instance. All remedies of the Beneficiaries against CoGen and NGC are
cumulative.
Section 5.4 Successors and Assigns; Participations. The terms of this
Agreement shall bind and benefit the successors and assigns of the
Beneficiaries; provided, however, that, subject to the provisions of Section
5.9, NGC may not assign this Agreement, or assign or delegate any of its rights
or obligations under this Agreement without the written consent of the
Beneficiaries. Upon notice to NGC, the Beneficiaries and their successors,
assigns and transferees may assign their rights and benefits under this
Agreement to any financial institutions providing financing to the Lessor in
connection with the Lease or any agent for such financial institutions.
Section 5.5 Notices. All notices, requests and other communications
given under this Agreement must be given in the manner and shall be effective as
provided in Section 23 of the Lease. All notices to NGC shall be sent to the
address specified on the signature page hereof.
Section 5.6 Rights to Deal with the Lessee. At any time and from time
to time, without terminating, affecting or impairing the validity of this
Agreement or the obligations of NGC hereunder, the Beneficiaries may deal with
CoGen in the same manner and as fully and as if this Agreement did not exist and
shall be entitled, among other things, to xxxxx XxXxx, without notice or demand
and without affecting NGC's liability hereunder, such extension or extensions of
time to perform, renew, compromise, accelerate or otherwise change the time for
payment of or otherwise change the terms of payment or any part thereof
contained in or arising under the Lease, or to waive any CoGen Obligation of
CoGen to perform any act or acts as the Beneficiaries may deem advisable.
Section 5.7 Payments. Each payment by NGC to either Beneficiary under
this Agreement shall be made by transferring the amount thereof in immediately
available funds without setoff or counterclaim; provided that, no such payment
shall be deemed a waiver of any rights NGC may have. The Lessor hereby
irrevocably instructs NGC, at all times that the Credit Agreement is in effect
or any amounts are due and owing thereunder, to pay any and all amounts payable
to the Lessor under this Agreement to the Agent by depositing the same into the
Collateral Account. NGC agrees to pay all such amounts in accordance with the
foregoing instructions, free and clear of any set-off, counterclaim or defense
that NGC may have with respect thereto, other than counterclaims required by
law, if any; provided, however, that no payment by NGC to the Agent shall be
deemed a waiver of any rights NGC may have.
Section 5.8 Survival of Representations, Warranties, etc. All
representations, warranties made herein and in statements or certificates
delivered pursuant hereto shall survive any investigation or inspection made by
or on behalf of the Beneficiaries and shall continue in full force and effect
until all of the obligations of NGC under this Agreement shall be fully
performed in accordance with the terms hereof, and, subject to Section 5.9
hereof, until the payment and performance in full of all obligations.
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Section 5.9 Termination or Replacement of NGC Guaranty.
(a) This Agreement may be (i) terminated, subject to the provisions of
Subsections 5.9(b) and (c), on any anniversary of the date of this Agreement if
NGC shall, on any Business Day that is at least 91 days before such anniversary,
notify each of the Beneficiaries that this Agreement will be so terminated on
such anniversary date, or (ii) replaced to the extent provided herein, subject
to the provisions of Subsection 5.9(b), if either (A) another Person acceptable
to the Lessor, each of the Banks, and if the rights, obligations, or duties of
the Agent are affected thereby, the Agent, such acceptance not to be
unreasonably withheld, executes a guaranty in form and substance substantially
similar to this Agreement, including any changes approved by the Lessor, each of
the Banks, and if the rights, obligations, or duties of the Agent are affected
thereby, the Agent, (B) another Person obtains from a bank with assets of $60
billion or more and whose long-term, unsecured debt is rated A or better by S&P
or A2 or better by Xxxxx'x, or any successor rating agency, a letter of credit
naming the Beneficiaries as the beneficiaries thereunder, in form and substance,
and in an amount, satisfactory to the Lessor, each of the Banks and if the
rights, obligations, or duties of the Agent are affected thereby, the Agent, or
(C) NGC obtains from a Bank whose long-term, unsecured debt is rated A or better
by S&P or A2 or better by Xxxxx'x or any successor rating agency, a letter of
credit naming the Beneficiaries as the beneficiaries thereunder in form and
substance, and in an amount, satisfactory to the Lessor, the Majority Banks, and
if the rights, obligations, or duties of the Agent are affected thereby, the
Agent.
(b) Upon delivery of such other guaranty or such letter of credit, this
Agreement shall be replaced to the extent, but only to the extent, the
obligations hereunder are replaced by such other guaranty or such letter of
credit, and this Agreement shall continue in full force and effect with respect
to all other obligations hereunder. In addition, no termination or replacement
of any portion of this Agreement pursuant to the provisions of Subsection 5.9(a)
shall be effective to terminate or replace the obligations and liabilities of
NGC, or to affect the Beneficiaries' rights, powers, and remedies, under this
Agreement (i) with respect to any of the obligations hereunder that become due
and payable either (A) prior to or concurrently with such termination or prior
to such replacement or (B) as a result of such termination and CoGen's purchase
of the Facility pursuant to Subsection 5.9(c) hereof and Section 14(b) of the
Lease, or (ii) with respect to any payment made prior to such termination or
replacement which is rescinded or must otherwise be returned after such
termination or replacement.
(c) Following each Beneficiary's receipt of notice as required by
subsection 5.9(a)(i), CoGen shall be required to purchase the Facility as
provided in Section 14(b) of the Lease, and this Agreement and NGC's obligations
hereunder shall continue with respect to all of the CoGen Obligations (including
CoGen's obligation to purchase the Facility) that become due and payable prior
to or concurrently with the termination of this Agreement provided for in
Subsection 5.9(a)(i), until all such CoGen Obligations have been fully satisfied
and performed. Following satisfaction of either clause (A) or clause (B) of
Subsection 5.9(a)(ii), CoGen shall not be required to purchase the Facility
solely as a result of the replacement of this Guaranty pursuant to Subsection
5.9(a)(ii).
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Section 5.10 Governing Law. This Agreement shall be governed by, and
constructed in accordance with, the laws of the State of New York. NGC HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE
OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR
ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF
MAY NOT BE LITIGATED IN OR BY SUCH COURTS. NGC AGREES THAT SERVICE OF PROCESS
MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES
SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
Section 5.11 Costs and Expenses. If any lawsuit, including any
Insolvency Proceeding, is commenced which arises out of, or which relates to
this Agreement, the Beneficiaries shall be entitled to recover from NGC such
sums as the court may adjudge to be reasonable attorneys' fees and expenses in
the action or proceeding, in addition to reasonable out-of-pocket costs and
expenses otherwise allowed by law. NGC agrees to pay all of the Beneficiaries'
reasonable out-of-pocket costs and expenses, including reasonable attorneys'
fees and expenses which may be incurred, all such sums shall bear interest at
the rate per annum equal to the Base Rate plus 1% until paid in full.
Section 5.12 Miscellaneous. The illegality or unenforceability of one or
more provisions of this Agreement shall not affect any other provision. Time is
of the essence in the performance of this Agreement by NGC.
[SIGNATURES BEGIN NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GUARANTOR:
NGC CORPORATION
By:\s\ Xxxxxx X. Xxxx, Xx.
-----------------------
Xxxxxx X. Xxxx, Xx.
Vice President and Treasurer
Address Where Notices to NGC are to be Sent:
0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Telephone No. (000) 000-0000
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