EXECUTION COPY
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$1,020,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
among
PG&E CORPORATION
as Borrower,
the LENDERS party hereto,
▇▇▇▇▇▇ COMMERCIAL PAPER INC.
as Administrative Agent
and
▇▇▇▇▇▇ BROTHERS INC.
as Lead Arranger and Book Manager
_______________________________________
Dated as of June 25, 2002
_______________________________________
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TABLE OF CONTENTS
Page
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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 Borrowing .............................................................. 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. ................................................ 5
2.8 Compensation ..................................................................... 7
2.9 Extension of Maturity Date ....................................................... 7
2.10 Conversion of Put Option Purchase Price to Tranche A Loan ........................ 8
SECTION 3. PREPAYMENTS; PAYMENTS; TAXES ................................................... 9
3.1 Voluntary Prepayments ............................................................ 9
3.2 Mandatory Repayments ............................................................. 9
3.3 Method and Place of Payment ...................................................... 13
3.4 Net Payments ..................................................................... 13
3.5 Allocation ....................................................................... 15
3.6 [OMITTED] ........................................................................ 15
3.7 Application of Payments; Sharing ................................................. 15
3.8 Change of Control ................................................................ 16
SECTION 4. CONDITIONS PRECEDENT ........................................................... 16
4.1 Conditions to Closing ............................................................ 16
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 ............................................................................ 24
(i)
5.9 Insurance ........................................................................... 24
5.10 Capitalization and Ownership ........................................................ 24
5.11 Financial Statements; Absence of Certain Changes .................................... 25
5.12 Taxes ............................................................................... 26
5.13 Disclosure .......................................................................... 26
5.14 Environmental Matters ............................................................... 27
5.15 Brokers' or Finders' Fees ........................................................... 27
5.16 Certain Regulatory Matters ......................................................... 27
5.17 Transactions With Affiliates ........................................................ 29
5.18 Use of Proceeds ..................................................................... 29
5.19 Compliance with ERISA ............................................................... 29
5.20 Investment Company Act .............................................................. 30
5.21 Regulation .......................................................................... 30
5.22 Security Documents .................................................................. 30
5.23 Certain Scheduled Projects .......................................................... 31
5.24 Environmental Matters ............................................................... 31
5.25 Intellectual Property ............................................................... 32
5.26 No Default .......................................................................... 32
5.27 Single-Purpose Entity ............................................................... 32
5.28 Trust Indenture Act ................................................................. 32
5.29 Existing Indebtedness ............................................................... 32
5.30 Ratings Letter ...................................................................... 32
SECTION 6. AFFIRMATIVE COVENANTS ............................................................ 32
6.1 Information Covenants .............................................................. 33
6.2 Books, Records and Inspections ..................................................... 36
6.3 Maintenance of Property; Insurance ................................................. 36
6.4 Corporate Franchises ............................................................... 36
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 ............................................... 39
6.9 Payment of Taxes ................................................................... 39
6.10 [OMITTED]. ......................................................................... 39
6.11 Performance of Obligations ......................................................... 39
6.12 Use of Proceeds .................................................................... 39
6.13 Regulatory Compliance .............................................................. 39
6.14 Financial Covenant ................................................................. 39
6.15 Charter Documents .................................................................. 40
6.16 Further Assurances; etc. ........................................................... 40
6.17 Delisting .......................................................................... 40
SECTION 7. TRANCHE A NEGATIVE COVENANTS ..................................................... 40
7.1 Liens .............................................................................. 40
7.2 Consolidation, Merger, Purchase or Sale of Assets, etc. ............................ 42
(ii)
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 .................................................................................. 47
7.11 Regulatory Compliance ..................................................................... 48
7.12 [OMITTED] ................................................................................. 48
7.13 Limitation on Optional Payments and Modifications of Convertible Notes .................... 48
7.14 Cash Reserve; Interest Reserve Amounts .................................................... 48
7.15 Plan of Reorganization .................................................................... 49
7.16 FMV Ratio ................................................................................. 49
SECTION 7A. TRANCHE B NEGATIVE COVENANTS ............................................................ 49
7A.1. Liens ..................................................................................... 49
7A.2. Consolidation, Merger, Purchase or Sale of Assets, etc. ................................... 51
7A.3. Dividends ................................................................................. 52
7A.4. Indebtedness .............................................................................. 53
7A.5. Advances, Investments and Loans ........................................................... 54
7A.6. Transactions with Affiliates .............................................................. 55
7A.7. Capital Expenditures ...................................................................... 55
7A.8. Limitations on Liens on Collateral; Modifications of Certain
Indebtedness; Modifications of Certificate of Incorporation, By-Laws
and Certain Other Agreements, etc. ...................................................... 56
7A.9. Limitation on Issuance of Capital Stock ................................................... 56
▇▇.▇▇.▇▇▇▇▇▇▇▇ .................................................................................. 57
7A.11.Regulatory Compliance ..................................................................... 57
7A.12.[OMITTED] ................................................................................. 57
7A.13.Limitation on Optional Payments and Modifications of Convertible Notes .................... 57
7A.14.Interest Reserve Account .................................................................. 57
7A.15.Plan of Reorganization .................................................................... 58
7A.16.FMV Ratio ................................................................................. 58
SECTION 8. TRANCHE A EVENTS OF DEFAULT AND REMEDIES ................................................ 58
8.1 Events of Default ......................................................................... 58
8.2 Acceleration .............................................................................. 61
8.3 Other Remedies ............................................................................ 61
SECTION 8A. TRANCHE B EVENTS OF DEFAULT AND REMEDIES ................................................ 62
8A.1. Events of Default ......................................................................... 62
(iii)
8A.2. Acceleration ......................................................................... 65
8A.3. Other Remedies ....................................................................... 65
SECTION 9. MISCELLANEOUS ....................................................................... 65
9.1 Costs and Expenses ................................................................... 65
9.2 Indemnity ............................................................................ 66
9.3 Notices .............................................................................. 68
9.4 Benefit of Agreement ................................................................. 68
9.5 No Waiver; Remedies Cumulative ....................................................... 68
9.6 No Third Party Beneficiaries ......................................................... 69
9.7 Reinstatement ........................................................................ 69
9.8 No Immunity .......................................................................... 69
9.9 Counterparts ......................................................................... 69
9.10 Amendment or Waiver .................................................................. 69
9.11 Assignments, Participations, etc. .................................................... 71
9.12 Survival ............................................................................. 72
9.13 WAIVER OF JURY TRIAL ................................................................. 73
9.14 Right of Set-off ..................................................................... 73
9.15 Severability ......................................................................... 73
9.16 Governing Law; Submission to Jurisdiction ............................................ 73
9.17 Waiver by Borrower ................................................................... 74
9.18 Recourse ............................................................................. 74
9.19 Complete Agreement ................................................................... 75
9.20 Publicity ............................................................................ 75
9.21 Effectiveness ........................................................................ 75
9.22 Certain Representations and Warranties ............................................... 75
9.23 Confidentiality ...................................................................... 75
9.24 Release of Liens for NEG Equity Sale ................................................. 76
9.25 Delivery of Lender Addendum .......................................................... 76
9.26 Determination of Fair Market Value ................................................... 76
9.27 Intercreditor Agreement .............................................................. 76
9.28 Special Exculpation .................................................................. 76
SECTION 10. THE ADMINISTRATIVE AGENT; THE LEAD ARRANGER AND THE BOOK MANAGER ................... 77
10.1 Appointment .......................................................................... 77
10.2 Nature of Duties ..................................................................... 77
10.3 Lack of Reliance on the Administrative Agent ......................................... 77
10.4 Certain Rights of the Administrative Agent ........................................... 78
10.5 Reliance ............................................................................. 78
10.6 Indemnification ...................................................................... 78
10.7 The Administrative Agent in its Individual Capacity .................................. 78
10.8 Holders .............................................................................. 79
10.9 Resignation or Replacement of the Administrative Agent ............................... 79
10.10 The Lead Arranger and Book Manager .................................................. 79
(iv)
10.11 Direction to Administrative Agent and Collateral Agent ............................... 80
(v)
APPENDICES:
Appendix A Defined Terms and Rules of Interpretation
EXHIBITS:
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Note
Exhibit C Form of Section 3.4(b)(ii) Certificate
Exhibit D Form of Process Agent Letter
Exhibit E-1 Form of Change of Control Offer to Repay Notice
Exhibit E-2 Form of Response to Change of Control 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(e) Warrants, etc.
Schedule 5.10(f) Ownership
Schedule 5.14 Environmental Matters
Schedule 5.15 Brokers' or Finders' Fees
Schedule 5.16(e) Regulated Entities
Schedule 5.17 Transactions with Affiliates
Schedule 5.19 ERISA Plans
Schedule 5.23 Scheduled Projects
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
(vi)
AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"),
dated as of June 25, 2002, among PG&E Corporation, a California corporation, as
the Borrower, the Lenders party hereto, ▇▇▇▇▇▇ Commercial Paper Inc., a New York
corporation, as Administrative Agent, and ▇▇▇▇▇▇ Brothers Inc., a Delaware
corporation, as Lead Arranger and Book Manager.
W I T N E S S E T H:
WHEREAS, the Borrower is a party to the Credit Agreement,
dated as of March 1, 2001 (as amended, supplemented or otherwise modified from
time to time, the "Existing Credit Agreement"), with the lenders party thereto,
▇▇▇▇▇▇ 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 A Loan, to reflect the repayment of the
Existing Tranche B 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 Covered Parties under the Financing Documents (as such terms are 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).
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SECTION 2. AMOUNTS AND TERMS OF CREDIT FACILITY.
2.1 Existing Loans; the New Tranche B Commitment. (a) Subject
to and upon the terms and conditions set forth herein, on the Closing Date, (i)
the $600,000,000 portion of the Existing Tranche A Loan held by GECC shall be
continued hereunder as the Tranche A Loan, which shall mature on the earlier of
(x) the date of a Spin-Off of NEG, Inc. and (y) the Date Certain, (ii) the
remaining $92,000,000 portion of the Existing Tranche A Loan not held by GECC
shall be automatically converted into, and become a part of, the Tranche B Loan
with the identical terms of the Tranche B Loan made pursuant to clause (iii)
below, and (iii) each New Tranche B Lender shall make a term loan to the
Borrower, and/or continue to hold or acquire a portion of the $92,000,000 amount
of the Tranche A Loan converted to a Tranche B Loan pursuant to the foregoing
clause (ii), in an aggregate amount not to exceed the amount of the New Tranche
B Commitment of such Lender, which term loans made pursuant to this clause (iii)
(A) shall be incurred pursuant to a single drawing on the Closing Date, (B)
shall be denominated in Dollars, (C) shall be incurred and maintained as
Eurodollar Loans, except as otherwise specifically provided in Section 2.7(b),
(D) shall be made on the Closing Date in an aggregate principal amount which
equals the aggregate New Tranche B Commitments, and (E) shall mature on the
earlier of (x) the date of a Spin-Off of NEG, Inc. and (y) the Tranche B
Maturity Date. For the avoidance of doubt, after giving effect to the
continuation and the conversion described above and the making of the Tranche B
Loan on the Closing Date, the aggregate principal amount of the Tranche A Loan
and the Tranche B Loan outstanding on the Closing Date shall be $600,000,000 and
$420,000,000, respectively.
(b) If the Closing Date has not occurred on or prior to June
26, 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.
2.2 Notice of Borrowing. The Borrower shall give the
Administrative Agent prior notice of the Tranche B Loan to be incurred
hereunder, 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 Borrowing") 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: (i) the aggregate principal amount of the
Tranche B Loan to be incurred, and the date selected to be the Closing Date
(which shall be a Business Day), (ii) the Interest Period applicable thereto,
and (iii) the account information for disbursement of the Loans. The
Administrative Agent shall promptly advise the Tranche B Lenders of the contents
of such Notice of Borrowing.
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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 such
Lender's pro rata share of the amount of Borrowing requested to be made on such
date. All such amounts will be made available in Dollars and in immediately
available funds and disbursed to the Borrower as directed by the Borrower.
2.4 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, any Loan made by a Lender shall be evidenced by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B, with blanks appropriately completed in conformity herewith
(each, a "Note"). On the Closing Date, to the extent requested by any Lender,
the existing promissory note held by such Lender shall be exchanged for a new
Note.
(b) The Note issued to a Lender shall (i) be executed by the
Borrower, (ii) be payable to such Lender or its Assignee and be dated the
Closing Date (or, if issued after the Closing Date, 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,
in the case of the Tranche A Loan, on the earlier of (A) the date of a Spin-Off
of NEG, Inc. and (B) the Date Certain and, in the case of the Tranche B Loan, on
the earlier of (A) the date of a Spin-Off of NEG, Inc. and (B) 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 Note 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.
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(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) Upon each Interest Payment Date in respect of the
Tranche A 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 A Loan, the amount of such interest shall be
withdrawn from the Tranche A Interest Reserve Account and applied to
pay such interest. The Tranche A Lenders hereby authorize and direct
the Collateral Agent to request such withdrawal under the Tranche A
Interest Reserve Account Control Agreement and to pay such interest.
(ii) 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 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 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 (or from the Closing Date in
the case of the first such calculation) 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.
5
(h) For the avoidance of doubt, no interest payment may be
made in respect of the Tranche B Loan (other than the pay-in-kind interest
provided for in clause (g) above) unless and until any interest then due and
payable in respect of the Tranche A Loan shall have been paid in full, and in
any event any such payment of interest in respect of the Tranche B Loan shall be
subject to the terms of the Intercreditor Agreement.
2.6 Interest Periods. At the time the Borrower gives the
Notice of Borrowing, 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; and (v) no
Interest Period in respect of any Borrowing of any Eurodollar Loan
shall be selected which extends beyond the Date Certain, in the case
of the Tranche A Loan, or the Tranche B Maturity Date, in the case of
the Tranche B Loan.
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.
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
6
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
7
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).
2.9 Extension of Maturity Date. (a) The Borrower may by
notice to the Administrative Agent and the Tranche A Lender not later than
thirty (30) days prior to ▇▇▇▇▇ ▇,
▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ (▇▇ the maturity date of the Tranche A Loan was
extended to September 2, 2003), and upon payment of the Extension Fees relating
to such extension, extend the maturity date of the Tranche A Loan to the earlier
of (i) the date of a Spin-Off of NEG, Inc. and (ii) September 2, 2003 or March
2, 2004, as set forth in the Borrower's notice, but in no event shall the Date
Certain with respect to the Tranche A Loan be beyond March 2, 2004, unless
further extended pursuant to Section 2.9(b) below; provided, that there shall be
no extension of the maturity date of the Tranche A Loan pursuant to this Section
2.9(a) if on the date of such extension, a Default or an Event of Default shall
be continuing.
(b) The Borrower may by notice to the Administrative Agent
and the Tranche A Lender not later than thirty (30) days prior to ▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇▇ (▇▇ the maturity date of the Tranche A Loan was extended to
March 2, 2005), and upon payment of the Extension Fees relating to such
extension, extend the maturity date of the Tranche A Loan to the earlier of (i)
the date of a Spin-Off of NEG, Inc. and (ii) March 2, 2005 or March 2, 2006,
respectively, but in no event shall the Date Certain with respect to the Tranche
A Loan be beyond March 2, 2006; provided, that there shall be no extension of
the maturity date of the Tranche A Loan pursuant to this paragraph (b) if (i) on
the date of such extension, a Default or an Event of Default shall be continuing
or (ii) on the date of such extension (x) the amount of cash or Cash Equivalents
owned by the Borrower in its own name, free and clear of all Liens, plus the
aggregate amount on deposit in the Interest Reserve Accounts, is less than 15%
of the total principal amount of Loans then outstanding, and (y) the Borrower
has not prepaid the Extension Interest Prepayment Amount.
(c) Any extension of the maturity date of the Tranche A Loan
made pursuant to this Section 2.9 shall become effective on the maturity date in
effect immediately prior to giving effect to such extension.
2.10 Conversion of Put Option Purchase Price to Tranche A
Loan. (a) In the event that, pursuant to Article VI of the Option Agreement, any
Holder exercises its right to put any Option of such Holder to a Purchasing
Party on any Put Repurchase Date (as defined in the Option Agreement) prior to
the Additional Extended Date Certain, the Put Option Purchase Price (as defined
in the Option Agreement) with respect to such put shall be determined in
accordance with the Option Agreement, and, as provided in Section 6.04 of the
Option Agreement, the amount of such Put Option Purchase Price shall be paid in
immediately available funds or, at the Borrower's option, shall be deemed to
constitute a Tranche A Loan made by such Holder, or its Affiliate Lender, on
such Put Repurchase Date in a principal amount equal to the amount of such Put
Option Purchase Price.
(b) In the event that, pursuant to Section 2.01(b) of the
Option Agreement, the Holders may be entitled to receive an Additional Option
(as defined in the Option Agreement) to purchase from LLC in excess of one
percent (1.0%) of the total common equity of NEG, Inc. computed on a Fully
Diluted Basis (as defined in the Option Agreement) (such excess only, the
"Excess Additional Option Percentage"), at Borrower's option, (i) LLC may grant
such Additional Option with respect to the Excess Additional Option Percentage
in accordance with the terms of Section 2.01(b) of the Option Agreement, or (ii)
the amount of the Put Option Purchase Price (as defined in the Option Agreement)
with respect to such Excess Additional Option Percentage shall be determined in
accordance with Section 2.01(b) of the Option
9
Agreement, and, as provided therein, the amount of such Put Option Purchase
Price with respect to such Excess Additional Option Percentage (x) shall be paid
in immediately available funds or, at Borrower's option, (y) shall be deemed to
constitute a Tranche A Loan made by such Lender on such Put Repurchase Date in a
principal amount equal to the amount of such Put Option Purchase Price with
respect to such Excess Additional Option Percentage.
(c) Any Tranche A Loan arising pursuant to Section 2.10(a) or
(b) shall be subject to the terms and conditions of this Agreement applicable to
the Tranche A Loan and shall be evidenced by a Note in a principal amount equal
to the applicable Put Option Purchase Price, which Note the Borrower shall duly
execute and deliver to such Lender on the applicable Put Repurchase Date.
SECTION 3. PREPAYMENTS; PAYMENTS; TAXES.
3.1 Voluntary Prepayments. The Borrower shall have the right
to prepay the Tranche A Loan and the Tranche B Loan, without premium or penalty,
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 payment in full of the
Tranche A Loan, all other amounts payable to the Tranche A Lender under the
Credit Agreement and 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 on or prior to the second anniversary of the
Closing Date shall be accompanied by payment of a prepayment fee equal to (i) if
such prepayment is made on or prior to the first anniversary of the Closing
Date, 2% of the principal amount prepaid and (ii) if such prepayment is made
after the first anniversary of the Closing Date and on or prior to the second
anniversary of the Closing Date, 1% of the principal amount prepaid.
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, LLC, NEG, Inc. or any NEG Subsidiary receives any cash proceeds from
any incurrence by the Borrower, LLC, NEG, Inc. or any NEG Subsidiary 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(h); provided that (A) up to $5,000,000 of such Net
Debt Proceeds from any incurrence by the Borrower of Indebtedness under Section
7.4(ix) or Section 7A.4(ix) need not be so applied; (B) such Net Debt Proceeds
from any incurrence by LLC, NEG, Inc. or any NEG Subsidiary of Indebtedness for
borrowed money incurred while no Default or Event of Default has occurred and is
continuing shall not be required to be so applied to the extent such
10
Net Debt Proceeds are (i) retained as cash or Cash Equivalents by LLC, NEG, Inc.
or any NEG Subsidiary or (ii) applied to repay Indebtedness for borrowed money
of NEG, Inc. or any NEG Subsidiary or (iii) reinvested in the business of NEG,
Inc. or any NEG Subsidiary within the scope of business as described by the
Business Plan; provided, further, that if a Default or Event of Default shall
have occurred and be continuing, such reinvestment may only be made to the
extent specified in Part II of the Business Plan; and (C) the Net Debt Proceeds
from the incurrence of the Convertible Notes 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, LLC, NEG, Inc. or any NEG Subsidiary 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 (other than cash
proceeds received as part of an IPO which shall be applied pursuant to clause
(d) below) 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(h); provided, that (A) 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 or the Reorganization
Subsidiaries to the extent permitted by clauses (v) and (vi) of Sections 7.5 and
7A.5 or as otherwise permitted by this Agreement, (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(h) or to make investments in PGE Utility to the extent permitted
by clauses (v) and (vi) of Sections 7.5 and 7A.5 or as otherwise permitted by
this Agreement, 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
and (B) any such Net Equity Proceeds received from the sale or issuance of
equity of LLC, NEG, Inc. or any NEG Subsidiary shall not be required to be
applied to repay the Loans to the extent that such Net Equity Proceeds (i) are
retained as cash or Cash Equivalents by LLC, NEG, Inc. or the NEG Subsidiaries,
(ii) applied to repay Indebtedness for borrowed money of NEG, Inc. or any NEG
Subsidiary, or (iii) reinvested in the business of NEG, Inc. or any NEG
Subsidiary within the scope of business as described by the Business Plan;
provided that if a Default or Event of Default shall have occurred and be
continuing, such reinvestment may only be made to the extent specified in Part
II of the Business Plan.
(d) In addition to any other mandatory repayments required
pursuant to this Section 3.2, on the date of an IPO upon which the Borrower, LLC
or NEG, Inc. receives any Net Equity Proceeds from such IPO, such Net Equity
Proceeds shall be applied on such date, in accordance with the requirements of
Section 3.2(h), to prepay the Loans to the extent required to cause the
aggregate outstanding principal amount of the Loans not to exceed the lesser of
(i) $400,000,000 and (ii) an amount equal to 50% of the Market Value of the
common stock of NEG, Inc. held by the Collateral Agent as Collateral, after
giving effect to such IPO and such repayment of the Loans. For purposes of this
paragraph, the "Market Value" of the common stock of NEG, Inc. held by the
Collateral Agent as Collateral shall be deemed to be equal to the product of (x)
the percentage of the common stock of NEG, Inc. held by the Collateral Agent as
11
Collateral after giving effect to the IPO, multiplied by (y) a fraction, the
numerator of which is the aggregate gross cash proceeds of such IPO, and the
denominator of which is the percentage (expressed as a decimal) of the shares of
common stock of NEG, Inc. sold to the public in such IPO.
(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, LLC, NEG, Inc. or any NEG Subsidiary receives any cash proceeds from
any Asset Sale by the Borrower, LLC, NEG, Inc. or any NEG Subsidiary, an amount
equal to 100% of the Net Sale Proceeds therefrom shall be applied in accordance
with the requirements of Section 3.2(h); provided that Net Sale Proceeds from
any Asset Sale consummated, at any time when no Default or Event of Default has
occurred and is continuing, by LLC, NEG, Inc. or any NEG Subsidiary shall not be
required to be so applied to the extent such Net Sale Proceeds are (i) retained
as cash or Cash Equivalents by LLC, NEG, Inc. or the NEG Subsidiaries or (ii)
applied to repay Indebtedness for borrowed money of NEG, Inc. or any NEG
Subsidiary or (iii) reinvested in the business of NEG, Inc. or any NEG
Subsidiary within the scope of business as described by the Business Plan;
provided, further, that if a Default or Event of Default shall have occurred and
be continuing, such reinvestment may only be made to the extent specified in
Part II of the Business Plan; and (B) on each date after the date of the Utility
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(h).
(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, LLC, NEG, Inc. or any NEG Subsidiary 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(h); provided that such Net Insurance Proceeds shall not be required
to be so applied to the extent such Net Insurance Proceeds are (i) applied to
repay Indebtedness for borrowed money of NEG, Inc. or any NEG Subsidiary; (ii)
reinvested in the business of NEG, Inc. or any NEG Subsidiary within the scope
of business as described by the Business Plan within eighteen (18) months of the
Recovery Event; provided, further, that if a Default or Event of Default shall
have occurred and be continuing, such reinvestment may only be made to the
extent specified in Part II of the Business Plan; (iii) 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 such Subsidiaries; or (iv)
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 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 (x) the
proceeds of an IPO which shall be applied pursuant to clause (d) above, (y)
issuance of the note from NEG, Inc. to LLC or the Borrower or from LLC to the
Borrower, solely in connection with the IPO (but not payments thereunder) and
(z) distribution
12
to the Borrower of shares of Reorganization Subsidiaries or the shares or
related preferred stock purchase rights of PGE Utility in connection with the
Utility Spin-Off), an amount equal to 100% of such proceeds (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), (ii) any expenses then due and payable under
the Expense Sharing Agreement or (iii) any amount then due and payable under the
note from NEG, Inc. and payable to LLC or the Borrower solely in connection with
the IPO) shall be applied in accordance with the requirements of Section 3.2(h).
(h) Each amount required to be applied pursuant to this
Section 3.2(h) shall be, first, paid to each Tranche A Lender ratably according
to the respective outstanding principal amounts of the Tranche A Loan held by
such Tranche A Lender and shall be applied by each such Tranche A Lender to
payment of any amount owing to such Tranche A Lender under Section 2.8, then to
payment of any interest then due and payable to such Tranche A Lender on account
of the Tranche A Loan, then to reduce the remaining principal balance of the
Tranche A Loan of such Tranche A Lender, then to repayment of all other amounts
payable to such Tranche A Lender under the Credit Agreement, and then to
repayment of 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, 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 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.
(i) Each prepayment of the Tranche B Loan made pursuant to
Sections 3.2(b) through (g) above on or prior to the second anniversary of the
Closing Date shall be accompanied by payment of a prepayment fee equal to (i) if
such prepayment is made on or prior to the first anniversary of the Closing
Date, 2% of the principal amount prepaid and (ii) if such prepayment is made
after the first anniversary of the Closing Date and on or prior to the second
anniversary of the Closing Date, 1% of the principal amount prepaid.
(j) In addition to any other mandatory repayments pursuant to
this Section 3.2, (i) all of the then outstanding Tranche A Loan shall be repaid
in full on the earlier of (x) the date of a Spin-Off of NEG, Inc. and (y) the
Date Certain, and (ii) all of the then outstanding Tranche B Loan shall be
repaid in full on the earlier of (x) the date of a Spin-Off of NEG, Inc. and (y)
the Tranche B Maturity Date.
(k) The application of any proceeds received by LLC to be
applied for mandatory repayment under Sections 3.2(b), (c), (e) and (f) shall be
subject to Compliance by LLC with the requirements for Distribution under
Section 13 of the LLC Agreement.
13
(l) Nothing in this Section 3.2 shall limit any other rights
or remedies a Lender may have under Sections 8 and 8A 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.
14
(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
15
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 under this Agreement and the Options and the Warrants, as
applicable, issued by the Borrower under the Option Agreement and the Warrant
Agreement, as applicable, 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 Lender for its Note
and Options and Warrants, as applicable, 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
16
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 amount
hereunder (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.
3.8 Change of Control. Upon a Change of Control, the Borrower
shall prepare and provide to each Lender a notice (each, a "Change of Control
Offer to Repay Notice"), which shall be in the form of Exhibit E-1, and 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 Change of Control Offer to Repay Notice, such
Lender's Loan, together with a prepayment fee (the "Change of Control Prepayment
Fee") for the Tranche B Lender equal to 1% of the aggregate principal amount of
such Tranche B Lender's Tranche B Loan, and each Lender wishing to accept the
Change of Control Offer to Repay shall reply, in the form of Exhibit E-2 and
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
considered to have been accepted in whole by such Lender and such repayment will
be made by the Borrower to such Lender in respect of such Change of Control. On
the Change of Control Offer Settlement Date, the Borrower shall pay to those
Lenders who have accepted the Change of Control Offer to Repay the aggregate
amount necessary to prepay that portion of the outstanding Loans, together with
(for the Tranche B Lenders) the Change of Control Prepayment Fee, in respect of
which such Lenders have accepted the Change of Control Offer to Repay in
accordance with this Section 3.8. Notwithstanding the foregoing, no payment
shall be made to the Tranche B Lenders on the Change of Control Offer Settlement
Date pursuant to this Section 3.8 unless and until the Tranche A Loan of, and
the other Senior Obligations that are then due and payable owing to, those
Tranche A Lenders that shall have accepted the Change of Control Offer to Repay
have been paid in full.
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
17
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 LLC Pledge Agreement, the Stock Pledge Agreement, the Option
Agreement, the Warrant Agreement, the Reserve Account Control Agreements and the
Intercreditor Agreement) 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 account 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, LLC,
NEG, Inc., the Significant Subsidiaries and the Specified
Subsidiaries, 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, LLC, NEG,
Inc., the Significant Subsidiaries and the Specified Subsidiaries
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 each of the
Borrower, LLC and NEG, Inc., 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 each of
the Borrower, LLC and NEG, Inc., 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
18
financing statements that name the Borrower, LLC or NEG, Inc., as debtor,
together with copies of such financing statements.
(i) 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.
(ii) The Collateral Agent shall have received the stock
certificates representing 100% of the capital stock of NEG, Inc.,
together with related appropriate stock powers, duly executed in
blank.
(iii) 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) Other Officer Certificates. (i) Such Lender shall have
received a certificate signed by an Authorized Officer of LLC, dated the Closing
Date, to the effect that (i) the representations and warranties of LLC set forth
in each of the Financing Documents to which it 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 such date as if made 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) and (ii) all covenants required to be performed
by LLC contained in any Financing Document to which it is a party prior to the
Closing Date have been performed in all material respects.
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(ii) Such Lender shall have received a certificate signed by
an Authorized Officer of NEG, Inc., dated the Closing Date, to the effect that
(i) the representations and warranties of NEG, Inc. set forth in each of the
Financing Documents to which it 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 such date as if made on and as of such date (or, if stated to have
been made solely as of an earlier date, were true and correct as of such earlier
date) and on and as of the Closing Date, and (ii) all covenants required to be
performed by NEG, Inc. contained in any Financing Document to which it is a
party prior to the Closing Date have been performed in all material respects.
(g) Financial Information, etc. (i) Such Lender shall have
received copies of the most recent audited and unaudited (x) consolidated
financial statements from each of the Borrower and NEG, Inc. and (y) financial
statements or information from each of the FI Subsidiaries, in each case, 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)
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.
(iii) Such Lender shall have received the Business Plan.
(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,
and, in addition, shall cover matters relating to the Warrant Agreement, the
Warrants issued thereunder and the Interest Reserve Account Control Agreements.
(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 or of LLC, NEG,
Inc. and the Significant Subsidiaries, taken as a whole.
(K) Fees; Expenses. ▇▇▇▇▇▇ Commercial Paper Inc. shall have
received the fees payable to it pursuant to the ▇▇▇▇▇▇ Fee Letter, GECC shall
have received the fees payable to it
20
pursuant to the GECC 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. GECC and 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. (i) The Borrower shall have deposited in the
Tranche A Interest Reserve Account an amount estimated to be sufficient to pay
interest on the Tranche A Loan for the one-year period after the Closing Date
and (ii) the Borrower shall have deposited in the Tranche B Interest Reserve
Account an amount estimated to be sufficient to pay interest on the Tranche B
Loan for the one-year period after the Closing Date. In each case, interest
payable on each Loan for the one-year period following the Closing Date shall be
estimated using the twelve-month Eurodollar Rate in effect on the date which is
two Business Days prior to the Closing Date, plus 4.00%.
(m) Warrants. The Borrower shall have issued the Warrants as
required by the ▇▇▇▇▇▇ Fee Letter.
(n) Notice of Borrowing. The Administrative Agent shall have
received a Notice of Borrowing 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.
(p) 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, NEG,
Inc. or the Significant Subsidiaries which, if adversely determined, could
reasonably be expected to result in a Material Adverse Change to the Borrower,
or a Material Adverse Change to LLC, NEG, Inc. and the Significant Subsidiaries,
taken as a whole. Notwithstanding the foregoing, there shall
21
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), the Borrower and its Subsidiaries
(on a consolidated basis) and LLC (on a stand-alone basis), in each case, 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, LLC,
NEG, Inc. or any Significant Subsidiary is a party which would result in a
Material Adverse Change to the Borrower, or a Material Adverse Change to LLC,
NEG, Inc. and the Significant Subsidiaries, taken as a whole.
(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.
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, LLC, NEG, Inc. and each
Significant Subsidiary (collectively, the "Covered Parties") is a corporation,
limited partnership or limited liability company duly formed, validly existing
and in good standing under the laws of its
22
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, other than with
respect to 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 which , in
23
each case, may require filing under the HSR Act or with FERC or 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.
(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 any Covered Party or any of its Subsidiaries 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 of the Borrower and each member of the
NEG Group and each Scheduled Project 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 and such Scheduled Project.
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, NEG,
Inc. or the Significant Subsidiaries which, if adversely determined, could
reasonably be expected to result in a Material Adverse Change to the Borrower,
or a Material Adverse Change to LLC, NEG, Inc. and the Significant Subsidiaries,
taken as a whole. 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 any Covered Party (collectively, the "Covered Contracts") (it
being understood that any contract, agreement or letter of intent or written
understanding (i) entered in the ordinary course of business of the Covered
Parties, or (ii) with respect to Indebtedness of any such Covered Party that is
non-recourse to such Covered Party, or (iii) requiring aggregate payments of
less than $10,000,000 or (iv) with a fixed term of less than three hundred and
sixty-four (364) days shall not be deemed to be a "material" contract, agreement
or letter of intent or written understanding).
(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
Covered Party which is a party thereto and enforceable by the Covered Parties
(as applicable) in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization or similar laws
24
or equitable principles relating to creditors' rights generally; (ii) none of
the Covered Parties party to any Covered Contract is in default or alleged to be
in default under any Covered Contract, and no other asserted or, to the best
knowledge of the Borrower, LLC and NEG, Inc., 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 Covered
Parties 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, LLC or NEG, Inc. 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 Covered Parties and their 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,
LLC, NEG, Inc. or a NEG Subsidiary (as indicated on Schedule 5.9). None of the
Covered Parties 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
Covered Parties 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.
(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) NEG, Inc. is (and at all times prior to the Closing Date from and
after January 1, 1999, was) the ultimate sole parent other than companies owning
NEG, Inc. directly or indirectly, of all Significant Subsidiaries and other NEG
Subsidiaries.
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(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. 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, 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 and the Warrant Agreement, no Person other than 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, LLC, NEG, Inc. or any Significant Subsidiary of
its Equity Interests (as defined below), or (ii) any outstanding stock
appreciation, phantom stock, profit participation or similar rights with respect
to LLC, NEG, Inc. or any Significant Subsidiary, 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, NEG, Inc. or any
Significant Subsidiary is party.
(f) Schedule 5.10(f) sets forth for each of the Borrower, LLC, NEG,
Inc. and the NEG Subsidiaries a complete and accurate listing of (i) its name
and jurisdiction of organization, (ii) its form of organization and (iii) the
percentage (and, where applicable, the amount) of capital stock, partnership
interests (general and limited), membership interests or other equity interests
("Equity Interests") held directly or indirectly by the Borrower.
5.11 Financial Statements; Absence of Certain Changes. (a) Prior to
the execution of this Agreement, the Borrower has delivered to the
Administrative Agent and each Lender the following financial statements, each of
which has been certified by the Chief Financial Officer, Chief Accounting
Officer or Treasurer of the relevant Person specified below:
(i) (x) the audited consolidated financial statements of the Borrower
as at December 31, 2001 and (y) the unaudited consolidated financial
statements of the Borrower as at March 31, 2002;
(ii) (x) the audited financial statements of each of the FI
Subsidiaries as at December 31, 2001 and (y) the unaudited financial
statements of each of the FI Subsidiaries as at March 31, 2002; and
(iii) (x) the unaudited consolidated balance sheet and income
statements of NEG, Inc. as at December 31, 2001 and (y) the unaudited
consolidated financial statements of NEG, Inc. as at March 31, 2002.
Any 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 relevant Person as at December 31,
2001, and were prepared in accordance with U.S. GAAP, consistently applied. Any
unaudited financial statements (the "Unaudited Financial
26
Statements") described in this Section 5.11(a) present fairly the financial
position of the relevant Person 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 relevant Person.
(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 and all members of the NEG Group have conducted their
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, none of the Covered Parties or any other NEG Subsidiary has any
outstanding claims, liabilities or indebtedness, contingent or otherwise.
5.12 Taxes. (a) Each of the Covered Parties 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 such Covered Party, its Subsidiaries, or any assets
thereof. The Returns accurately reflect (or will accurately reflect) all
liabilities for Taxes of each such Covered Party or Subsidiary for the periods
covered thereby in all material respects. All material Taxes due by or with
respect to each such Covered Party or 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 each of the Covered Parties, 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 any of the Covered Parties, their
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 each such Covered Party and its
Subsidiaries, as applicable, in accordance with U.S. GAAP. None of the Covered
Parties or any of their 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 each such Covered Party and its Subsidiaries, as
applicable, in accordance with U.S. GAAP.
(b) All material Taxes which a Covered Party 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 Covered Parties or its Affiliates that have been furnished to
the Lenders by or on behalf of the Covered Parties, 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
27
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 or a Material Adverse Change of NEG, Inc. and the NEG Subsidiaries, taken
as a whole.
5.14 Environmental Matters. Except as set forth in Schedule 5.14, (a)
each of the Borrower and the members of the NEG Group 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 any member of
the NEG Group or, to the best knowledge of the Borrower, threatened against the
Borrower or any member of the NEG Group, which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or to
result in a Material Adverse Change to NEG, Inc. and the NEG Subsidiaries, taken
as a whole, and (c) to the best knowledge of the Borrower, LLC and NEG, Inc.,
none of the Covered Parties or other NEG Subsidiary 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 or a Material Adverse Change to NEG, Inc. and the NEG
Subsidiaries, taken as a whole.
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 Covered Parties or any of their 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 Borrower nor any
Subsidiary of 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) Each member of the NEG Group that owns assets subject to the
jurisdiction of FERC pursuant to the FPA or sells power at wholesale in the
United States is and at all relevant times has been either: (i) a QF; (ii)
certified by FERC as an EWG, has been granted by FERC the waivers from
regulation under the FPA typically granted to EWGs with market rate authority,
and has been granted by FERC market rate authority without qualifications,
conditions or restrictions other than those typically imposed on utility
affiliates; or (iii) a power marketer which owns no physical assets used for the
generation, transmission or distribution of electric energy as such terms are
used in PUHCA, has been granted by FERC the waivers from regulation under the
FPA typically granted to power marketers, and has been granted by FERC market
rate authority without qualifications, conditions or restrictions other than
those typically imposed on utility affiliates. The applications and additional
information submitted in connection with the certifications for QF status,
applications for EWG certification, applications for power marketer status, and
applications for market rate authority were accurate and complete in all
material respects when made and, as amended or supplemented from time-to-time,
remained at all relevant times and currently remain accurate and complete in all
respects
28
affecting the eligibility for QF status, EWG status, power marketer status, or
market rate authority as applicable, and each such FERC authorization or
certification is in full force and effect.
(c) Each member of the NEG Group (other than a QF during the period
during which it was a QF) that owns assets subject to the jurisdiction of FERC
pursuant to the FPA or sells power at wholesale in the United States has charged
rates or provided services only pursuant to either: (i) one or more rate
schedules on file with FERC; or (ii) market rate contracts in compliance with
such entity's market rate authority from FERC, in each case, except such
noncompliances with ongoing ministerial FERC filing requirements previously
disclosed in writing to Lenders and other noncompliances which, in each case,
could not reasonably be expected to affect the status of any member(s) of the
NEG Group as an EWG or power marketer or have a Material Adverse Effect or
result in a Material Adverse Change to NEG, Inc. or any of the NEG Subsidiaries.
Each QF during the period it was a QF has sold power only in a manner consistent
with its status as a QF.
(d) Each member of the NEG Group which owns natural gas assets, sells
natural gas or provides services subject to the jurisdiction of FERC pursuant to
the Natural Gas Act, as amended, or the Natural Gas Policy Act of 1978, as
amended, (i) has a rate schedule on file with FERC; (ii) has charged rates and
provided services only pursuant to such filed rates; and (iii) has complied and
complies in all material respects with the requirements of FERC orders
applicable to such member of the NEG Group.
(e) No member of the NEG Group is subject to Utility Regulation other
than as set forth in Schedule 5.16(e).
(f) Neither the Borrower nor LLC directly owns any assets subject to
the jurisdiction of FERC pursuant to the FPA.
(g) Except with respect to material licenses issued for the ▇▇▇▇▇▇▇
Point and Salem Harbor Stations for monitoring equipment used to measure coal
supply, no member of the NEG Group is subject to regulation under the Atomic
Energy Act of 1954.
(h) 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.
(i) The Borrower and each of its Subsidiaries subject to Utility
Regulations is in material compliance with the requirements of Utility
Regulation applicable to it.
(j) None of the Borrower or any member of the NEG Group 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.
29
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 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 proceeds of the Tranche B Loan to be made on the Closing
Date by the New Tranche B Lenders will be used to fund the Tranche A Interest
Reserve Account and the Tranche B Interest Reserve Account and for general
corporate purposes of the Borrower and its Subsidiaries. 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 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; 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
30
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.
(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, any of the LLC
Interests pledged under the LLC Pledge Agreement or any of the collateral
pledged under the Stock Pledge Agreement, or the exercise of any right under the
Option 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
the Public Utility Holding Company Act of 1935, (ii) under the Federal Power Act
of 1920, 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 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.
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
31
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 Certain Scheduled Projects. Schedule 5.23 sets forth a complete
list of all projects owned directly or indirectly by the Borrower, LLC, NEG,
Inc. and the NEG Subsidiaries ("Scheduled Projects") and a summary of material
information with respect thereto, including the name, location, capacity and
classification of each Scheduled Project as a QF, EWG or otherwise, and the
equity structure, with respect to each Scheduled Project and such other
information requested by the Lenders.
5.24 Environmental Matters. (a) The Borrower, LLC, NEG, Inc. and the
NEG Subsidiaries have complied and are now complying in all material respects
with (i) all Environmental Laws applicable to the Scheduled Projects and (ii)
the requirements of any Governmental Approvals issued under such Environmental
Laws with respect to the Scheduled Projects.
(b) Except as set forth in Schedule 5.14, there are no facts,
circumstances, conditions or occurrences regarding any of the Scheduled Projects
that (i) to the best knowledge of the Borrower, could reasonably be anticipated
to form the basis of an Environmental Claim against such Scheduled Project, the
Borrower, LLC, NEG, Inc. or any NEG Subsidiary or, to the best knowledge of the
Borrower, or any other Person occupying or conducting operations on or about
such Scheduled Project which if adversely determined could reasonably be
expected to have a Material Adverse Effect or a Material Adverse Change to NEG,
Inc. and the NEG Subsidiaries, taken as a whole, (ii) could reasonably be
anticipated to cause such Scheduled Project to be subject to any material
restrictions on its ownership, occupancy, use or transferability under any
Environmental Law or (iii) could be reasonably anticipated to require the filing
or recording of any material notice, registration, permit or disclosure document
under any Environmental Law.
(c) Except as set forth in Schedule 5.14, there are no past, pending,
or, to the best knowledge of the Borrower, threatened, Environmental Claims
against the Borrower, LLC, NEG, Inc., or any of the Scheduled Projects, which if
adversely determined could reasonably be expected to have a Material Adverse
Effect or a Material Adverse Change to NEG, Inc. and the NEG Subsidiaries, taken
as a whole.
(d) Hazardous Materials have not at any time been generated, used,
treated, recycled, stored on, or transported to or from, or Released, deposited
or disposed of on all or any portion of any Scheduled Project other than in
compliance at all times with all applicable Environmental Laws, except to the
extent such non-compliance, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect or a Material Adverse
Change to NEG, Inc., and the NEG Subsidiaries, taken as a whole.
(e) There are not now and, to the best knowledge of the Borrower,
never have been any underground storage tanks located on the Scheduled Projects
and there is no asbestos contained in, forming part of, or contaminating, any
part of the Scheduled Projects, and no polychlorinated biphenyls (PCBs) are
used, stored, located at or contaminate any part of the
32
Scheduled Projects, the existence of which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect or a Material
Adverse Change to NEG, Inc. and the NEG Subsidiaries, taken as a whole.
5.25 Intellectual Property. Each of the Covered Parties 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
any of the Covered Parties in connection with its business infringes or will
infringe any patent, trademark, permit, service ▇▇▇▇, 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 ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, 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 Ratings Letter. Since January 19, 2001, none of NEG, Inc. or any
Significant Subsidiary has knowledge of or received any notice of a downgrade of
the credit rating of its long-term senior unsecured indebtedness or its being
placed on "credit watch (with negative implications)" by ▇▇▇▇▇'▇ or Standard &
Poor's.
SECTION 6. AFFIRMATIVE COVENANTS.
The Borrower hereby covenants and agrees that in the case of the
covenants described below 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):
33
6.1 Information Covenants. The Borrower will, or will cause the Covered
Parties to, furnish to each Lender:
(a) Quarterly Financial Statements. Within 60 days after the close of
the first three quarterly accounting periods in each fiscal year of the relevant
Person specified below, (i) the consolidated balance sheets of each of (x) the
Borrower and its consolidated subsidiaries and (y) NEG, Inc. and its
consolidated subsidiaries, and (ii) the condensed consolidated balance sheets of
the Significant Subsidiaries and their 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 relevant
Person, subject to normal year-end audit adjustments.
(b) Annual Financial Statements. Within 120 days after the close of
each fiscal year of the relevant Person specified below, (i) the consolidated
balance sheets of each of (x) the Borrower and its consolidated subsidiaries and
(y) NEG, Inc. and its consolidated subsidiaries, and (ii) the balance sheets of
each of the FI Subsidiaries as at the end of such fiscal year and in each case,
the related statements of income and retained earnings and of cash flows for
such fiscal year, consolidated or otherwise, as applicable, 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
any of (A) the Borrower and its consolidated subsidiaries, or (B) NEG, Inc. or
any of its consolidated subsidiaries or (C) any of the FI Subsidiaries, as the
case may be, 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 or any of its Subsidiaries, a copy of any "management letter" received
by any such Person 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) [OMITTED].
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(f) Notice of Default or Litigation, etc. Promptly, and in any event
within three (3) Business Days after an officer of the Borrower or any other
Covered Party 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 or result in a Material Adverse Change to LLC, NEG, Inc.
and the Significant Subsidiaries, taken as a whole, (y) with respect to any
Indebtedness in excess of $10,000,000 of the Borrower or any of its Subsidiaries
or (z) with respect to any Financing Document, (iii) demand for satisfaction of
any guaranty or other Contingent Obligations of the Borrower or any other
Covered Party, and (iv) any downgrade of the credit rating of the long-term
senior unsecured indebtedness of the Borrower or any other Covered Party or
"credit watch (with negative implications)" by ▇▇▇▇▇'▇ or Standard & Poor's.
(g) Other Reports and Filings. Promptly, copies of all financial
information, proxy materials and other information and 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, which could reasonably be expected to have a
Material Adverse Effect or result in a Material Adverse Change to LLC, NEG, Inc.
and the Significant Subsidiaries, taken as a whole, 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 or any other Covered Party
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 or result in a
Material Adverse Change to LLC, NEG, Inc. and the Significant Subsidiaries,
taken as a whole:
(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
35
(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 periodic environmental
audit and associated final closeout reports audited by the environmental
management system of any member of the NEG Group and annual environmental
compliance report prepared by any member of the NEG Group, and 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) Certain Other Information. Concurrently therewith, any financial
information provided by NEG, Inc. to its lenders, noteholders or bondholders
pursuant to the terms of the credit agreement, loan agreement or other
equivalent instrument.
(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) Cash Reserve Certificate. At the time of delivery of the quarterly
financial statements pursuant to clause (a) above, a certificate of an officer
of the Borrower certifying that it is in compliance with Section 7.14(a) and
setting forth in reasonable detail the calculation and the amount of cash and
Cash Equivalents held by the Borrower with respect to such compliance at such
time.
(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.
36
6.2 Books, Records and Inspections. The Borrower will, and will cause
all members of the NEG Group 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 the other Covered Parties 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 the other Covered Parties in whomsoever's possession, and to
examine the books of account of the Borrower and the other Covered Parties and
discuss the affairs (including environmental matters), finances and accounts of
the Borrower and the other Covered Parties 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, and will
cause all members of the NEG Group to, (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 members
of the NEG Group, 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.
6.5 Compliance with Statutes, etc. The Borrower will, and will cause
all members of the NEG Group 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 or result in a Material Adverse
Change to LLC, NEG, Inc. and the Significant Subsidiaries, taken as a whole.
6.6 Compliance with Environmental Laws. (a) The Borrower will comply,
and will cause all members of the NEG Group 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 Covered 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
37
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 or a Material Adverse
Change of LLC, NEG, Inc. and the Significant Subsidiaries, taken as a whole. The
Borrower will not and will cause the other Covered 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
Covered 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 or result in a Material Adverse Change to LLC, NEG, Inc. and the
Significant Subsidiaries, taken as a whole) 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 result in a Material Adverse Change to LLC, NEG, Inc. and the
Significant Subsidiaries, taken as a whole, 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 each Lender 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
38
extent that the Borrower has previously delivered to each Lender 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 each Lender 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 each
Lender 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 each Lender 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 each Lender 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 upon the business,
39
operations, condition (financial or otherwise) or prospects of the Borrower or
any Subsidiary of the Borrower.
6.8 End of Fiscal Years; Fiscal Quarters. The Borrower shall cause (i)
each of its, and each of the other Covered Party's, 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, and will cause each
member of the NEG Group to, 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 or result in
a Material Adverse Change to LLC, NEG, Inc. and the NEG Subsidiaries taken as a
whole.
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. 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 Financial Covenant. The long-term unsecured debt obligations of
NEG, Inc. shall be rated at least BBB- by Standard & Poor's or Baa3 by ▇▇▇▇▇'▇.
40
6.15 Charter Documents. The Borrower will, and will cause LLC and the
other Specified Subsidiaries to, comply with their respective Charter Documents
in all material respects.
6.16 Further Assurances; etc. The Borrower will, and will cause the
other Covered Parties, 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 Delisting. The Borrower will maintain the listing of its common
stock on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market such that there will be at least 43 Trading Days during the
first 75 calendar days following the Closing Date.
SECTION 7. TRANCHE A 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):
7.1 Liens. The Borrower will not, and will not permit any of the
other Covered Parties 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 any of the other Covered Parties, 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 any of the other Covered Parties), 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 in respect of Property or assets of the Covered Parties
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,
41
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 or the other
Covered Parties and do not materially impair the use thereof in the
operation of the business of the Borrower or the other Covered Parties
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 the
Initial Closing Date 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 and the other Covered Parties,
taken as a whole;
(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 and the other Covered Parties, taken as a whole;
(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 $25,000,000 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) attachment or judgment Liens in an aggregate amount
outstanding at any one time not in excess of the amount of $1,000,000;
(xi) attachment or judgment Liens paid or fully covered by
insurance which are not outstanding for more than sixty (60) days;
42
(xii) Liens arising from precautionary Uniform Commercial Code
financing statement filings with respect to operating leases or
consignment arrangements entered into by the Borrower or any of the
other Covered Parties in the ordinary course of business;
(xiii) other than by LLC, any Lien attendant to transactions
described in Part I of the Business Plan; and
(xiv) 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.
The Borrower will not create, incur, assume or suffer to exist
any Lien upon the Capital Stock of PGE Utility or any Reorganization Subsidiary.
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 (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, or any
substantial part of the assets of, any Reorganization Subsidiary or any member
of the NEG Group), or enter into any sale-leaseback transactions, 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 to the extent attendant to transactions
described by the Business Plan and 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);
(y) 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
43
business which do not materially interfere with the business of the
Borrower, LLC, NEG, Inc. and the NEG Subsidiaries, taken as a whole;
(vi) each of the Borrower, LLC, NEG, Inc. or any NEG
Subsidiary may transfer assets or lease to or acquire or lease assets
from the Borrower, 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) any NEG Subsidiary may sell or otherwise dispose of
additional assets, provided that (x) each such sale or disposition
shall be for an amount at least equal to the fair market value thereof
(as determined in good faith by the senior management of such Person),
(y) each such sale (other than any like-kind exchange) results in
consideration at least 75% of which shall be in the form of cash (for
such purpose, taking into account the amount of cash, the principal
amount of any promissory notes and the fair market value, as determined
in good faith by the senior management of the Borrower, of any other
consideration), and (z) the Net Sale Proceeds therefrom shall be
applied pursuant to Section 3.2;
(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; and
(ix) the Borrower may sell or otherwise dispose of any
assets other than (A) 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.
For avoidance of doubt, nothing in this Section shall
prohibit the Borrower from consummating the Utility Spin-Off, the NEG Equity
Transactions or any plan of reorganization permitted by Section 7.15.
7.3 Dividends. The Borrower will not, and will not
permit any of the other Covered Parties to, authorize, declare or pay any
Dividends, except that (i) any Subsidiary of the Borrower may pay cash Dividends
to the Borrower or to LLC, NEG, Inc. or any NEG Subsidiary, (ii) NEG, Inc. may
distribute a note to LLC or the Borrower, and LLC may distribute any such note
to the Borrower, solely in connection with the IPO and (iii) NEG, Inc. may pay
cash Dividends to any New Investor to the extent that Dividends are paid pro
rata to the Borrower and such New Investor in accordance with their respective
equity interests in NEG, Inc. 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, or any substantial part of the assets of,
any Reorganization Subsidiary or any member of the NEG Group.
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 the Utility Spin-Off or the NEG
Equity Transactions.
7.4 Indebtedness. The Borrower will not, and will not
permit any member of the NEG Group to, contract, create, incur, assume or suffer
to exist any Indebtedness, except:
44
(i) Indebtedness incurred pursuant to this Agreement and the
other Financing Documents;
(ii) existing Indebtedness outstanding on the Initial Closing
Date and listed, with respect to the Borrower, on Part A of the
Disclosure Letter and, with respect to the Covered Parties (other than
the Borrower), Part B of the Disclosure Letter (as reduced by any
repayments of principal thereof), 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 among Borrower or any member of the NEG Group
(other than LLC) and any other NEG Subsidiary 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 a Covered Party (other than LLC) secured
by Liens permitted under Sections 7.1(i), (ii), (vii) and (viii);
(vi) in the case of the Borrower, Specified Rated Indebtedness;
provided that, after giving effect to the incurrence of such
Indebtedness, the Tranche A Loan, and the other Senior Obligations that
are then due and payable, shall have been paid in full;
(vii) in the case of any member of the NEG Group (other than
LLC), to the extent described by the Business Plan;
(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, 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.
7.5 Advances, Investments and Loans. The Borrower will not,
and will not permit any member of the NEG Group to, 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 to, 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:
45
(i) the Borrower and the other Covered Parties may acquire and
hold accounts receivables owing to any of them, if created or acquired
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms of the Borrower or such other
Covered Parties;
(ii) the Borrower and the other Covered Parties may acquire and
hold cash and Cash Equivalents;
(iii) the Borrower and the other Covered Parties 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) any Investment by a Covered Party (other than LLC) to the
extent described by the Business Plan;
(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 Covered Parties (other than LLC)
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) any NEG Subsidiary and NEG, Inc. may distribute a note to
LLC or the Borrower, and LLC may distribute any such note to the
Borrower, solely in connection with the IPO;
(ix) any Investment made by any of LLC, NEG, Inc. or any NEG
Subsidiary pursuant to Section 3.2(b)(iii), 3.2(c)(B)(iii),
3.2(e)(A)(iii) or 3.2(f)(ii);
(x) any Investment made by the Borrower or any member of the
NEG Group in a wholly-owned Subsidiary;
(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 not otherwise related to PGE
Utility or any of its Subsidiaries in an amount not to exceed
$10,000,000 in the aggregate for any fiscal year; 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 or in the Business Plan to the
contrary, (A) no investment may be made by the Borrower or any member of the NEG
Group in the nuclear
46
generation business and (B) the Borrower may consummate the Utility Spin-Off and
the NEG Equity Transactions.
7.6 Transactions with Affiliates. Except as disclosed on Schedule
5.17, the Borrower will not, and will not permit any member of the NEG Group and
any other NEG Subsidiaries to, 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 or such Subsidiary as would
reasonably be obtained by the Borrower or such Subsidiary at that time in a
comparable arm's-length transaction with a Person other than an Affiliate,
except for provision of cash, credit or other financial assistance or support by
the Borrower or any member of the NEG Group to PGE Utility or any of its
Subsidiaries (unless such assistance or support is made to the extent provided
in the Business Plan), (b) as reasonably determined by the Borrower that such
transaction is required by applicable Law or the Holding Company Conditions, (c)
among the Borrower and the other Covered Parties and any other NEG Subsidiaries
and among the NEG Group, (d) 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, (e) the payment of reasonable and customary fees
and reimbursements of expenses payable to directors of any member of the NEG
Group, (f) the employment arrangements with respect to the procurement of
services of directors, officers and employees of any member of the NEG Group in
the ordinary course of business and payment of reasonable and customary fees in
connection therewith, (g) the consummation of the Utility Spin-Off and the NEG
Equity Transactions, or (h) transactions expressly permitted under Section 7.3
or Section 7.5.
7.7 Capital Expenditures. The Borrower will not, and will not permit
any member of the NEG Group to, 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, (c) that such Capital
Expenditures are made by a Covered Party (other than LLC) attendant to
transactions described by the Business Plan, (d) related to Investment made by
any of LLC, NEG, Inc. or any NEG Subsidiary pursuant to Section 3.2(b)(iii),
3.2(c)(B)(iii), 3.2(e)(A)(iii) or 3.2(f)(ii) or (e) 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 any of the
Covered Parties and the Specified Subsidiaries 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 or result in a Material
Adverse Change to LLC, NEG, Inc. and the NEG Subsidiaries, taken as a
whole;
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(iii) except as provided in the Business Plan with respect to the IPO
or the Spin-Off of NEG, Inc., (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 or
(z) amend the Business Plan;
(iv) terminate, cancel or suspend any license, contract or material
franchise agreements which would result in a Material Adverse Effect or a
Material Adverse Change to LLC, NEG, Inc. and the NEG Subsidiaries, taken
as a whole; or
(v) except as a part of the NEG Equity Transactions, create any
Subsidiary of the Borrower which will be a direct or indirect parent of
LLC or create any Subsidiary of LLC which will be a direct or indirect
parent of NEG, Inc. or create any Subsidiary of NEG, Inc. which would own,
directly or indirectly, all or substantially all of the assets or shares
of the NEG Subsidiaries.
7.9 Limitation on Issuance of Capital Stock. (a) Except as otherwise
permitted by Sections 7.3 and 7.5, or to the extent attendant to transactions
described by the Business Plan, the Borrower will not permit any of the Covered
Parties (other than the Borrower) 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 common stock or other redeemable common equity interest
other than common stock or other redeemable common equity interest that is
redeemable at the sole option of the Borrower or such Covered Party, as the case
may be.
(b) Except as otherwise permitted by Sections 7.3 and 7.5, and except
as a part of the NEG Equity Transactions, the Borrower will not permit any of
the Covered Parties (other than the Borrower) 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, (iv) to
the extent the Borrower reasonably determines that such issuance is required by
applicable Law, or (v) to the extent attendant to transactions described by the
Business Plan.
7.10 Business. The Borrower will not, and will not permit any of the
other Covered Parties to, engage in any business other than the current
businesses engaged in by the Borrower and the other Covered Parties as of the
date hereof or to the extent within the scope of business described by the
Business Plan.
48
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. The Borrower will not take any
actions or allow any of its Subsidiaries to take any actions that would prevent
Borrower from reaffirming the representations of Sections 5.16(b), (c), (d), (e)
and (g) as of any date prior to repayment of the Loans in full.
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 (i) during any
Convertible Notes Blockage Period or (ii) at any time when, after giving effect
to such interest payment, the aggregate amount of cash and Cash Equivalents held
by the Borrower in its own name (including, without limitation, any cash and
Cash Equivalents held in any Interest Reserve Account) would be less than an
amount that is 5 percentage points greater than the amount required from time to
time under Section 7.14(a).
7.14 Cash Reserve; Interest Reserve Amounts. (a) The Borrower will not
(i) at any time commencing on March 2, 2002 and until and including the earlier
of (x) repayment in full of the Loans and (y) (A) March 2, 2003 or (B) if the
Date Certain to occur on March 2, 2003 is extended, March 2, 2004, permit the
aggregate amount of cash and Cash Equivalents held by it in its own name
(including, without limitation, any cash and Cash Equivalents held in any
Interest Reserve Account) to be an amount less than 15% of the then-outstanding
aggregate principal amount of the Loans and the Convertible Notes and (ii) at
any time after the extension of the Date Certain pursuant to Section 2.9(b) and
until the Loans are repaid in full, permit the aggregate amount of cash and Cash
Equivalents held by it in its own name (including, without limitation, any cash
and Cash Equivalents held in any Interest Reserve Account) to be an amount less
than 10% of the then-outstanding aggregate principal amount of the Loans and the
Convertible Notes.
(b) The Borrower will not permit the aggregate amount of cash and Cash
Equivalents held in (i) the Tranche A Interest Reserve Account on any Interest
Payment Date in respect of the Tranche A Loan, or any Interest Payment Date in
respect of the Tranche B Loan
49
that occurs more than 30 days after the immediately preceding Interest Payment
Date in respect of the Tranche A Loan, to be less than the amount of interest
payable on the Tranche A Loan during the one-year period following such Interest
Payment Date or (ii) the Tranche B Interest Reserve Account on any Interest
Payment Date to be less than the amount of interest payable on the Tranche B
Loan during the one-year period following such Interest Payment Date (such
interest amount, in each case, to be estimated using a rate per annum equal to
the twelve-month Eurodollar Rate in effect two Business Days prior to such
Interest Payment Date, plus 4.00%).
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 one
which is substantially consistent with Annex B; 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 any Person that receives fair value for the assets so disposed); 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. For avoidance of doubt, any
transaction or series of transactions involving the disposition of any
Reorganization Subsidiary or any assets that would constitute a Reorganization
Subsidiary and the subsequent spin-off of PGE Utility along with the proceeds of
such disposition would not be substantially consistent with Annex B and would be
prohibited by this Section.
7.16 FMV Ratio. The Borrower will not permit the ratio of the Fair
Market Value of NEG, Inc. to the aggregate amount of principal then outstanding
under the Loans (the "Required FMV Ratio") to be less than 2.00:1. The Required
FMV Ratio may be determined in accordance with the procedure set forth in
Section 9.26 at any time at the request of the Majority Tranche A Lenders (or,
at any time after the Tranche A Loan, and the other Senior Obligations that are
then due and payable, have been paid in full, the Majority Tranche B Lenders)
(at the expense of each such requesting Lender, ratably based upon the amount of
the Loans held by such Lender) by delivering a notice to the Borrower no more
frequently than once per fiscal quarter of the Borrower.
SECTION 7A. TRANCHE B NEGATIVE COVENANTS.
The Borrower covenants and agrees that on and after the Closing Date
and until the Tranche A Loan and the related Notes, together with interest, fees
and all other obligations incurred hereunder and thereunder owing to the Tranche
A Lender, are paid in full (other than any indemnity, not then due and payable,
which by its terms shall survive such termination and payment):
7A.1. Liens. The Borrower will not, and will not permit any of the
other Covered Parties 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 any of the other Covered Parties, 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 any of the other
50
Covered Parties), 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 7A.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 in respect of Property or assets of the Covered
Parties 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 or the other Covered Parties and do
not materially impair the use thereof in the operation of the business
of the Borrower or the other Covered Parties 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 7A.4(ii), Liens in existence on the
Initial Closing Date 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 and the other Covered Parties,
taken as a whole;
(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 and the other Covered Parties, taken as a whole;
(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,
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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 7A.4(ix)
shall not exceed $25,000,000 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) attachment or judgment Liens in an aggregate amount
outstanding at any one time not in excess of the amount of $1,000,000;
(xi) attachment or judgment Liens paid or fully covered by
insurance which are not outstanding for more than sixty (60) days;
(xii) Liens arising from precautionary Uniform Commercial
Code financing statement filings with respect to operating leases or
consignment arrangements entered into by the Borrower or any of the
other Covered Parties in the ordinary course of business;
(xiii) other than by LLC, any Lien attendant to transactions
described in Part I of the Business Plan; and
(xiv) 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.
The Borrower will not create, incur, assume or suffer to exist
any Lien upon the Capital Stock of PGE Utility or any Reorganization
Subsidiary.
7A.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 (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, or any
substantial part of the assets of, any Reorganization Subsidiary or any member
of the NEG Group), or enter into any sale-leaseback transactions, 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 to the extent attendant to transactions
described by the Business Plan and 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;
52
(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 7A.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, LLC, NEG, Inc. and the NEG
Subsidiaries, taken as a whole;
(vi) each of the Borrower, LLC, NEG, Inc. or any NEG
Subsidiary may transfer assets or lease to or acquire or lease assets
from the Borrower, 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) any NEG Subsidiary may sell or otherwise dispose of
additional assets, provided that (x) each such sale or disposition
shall be for an amount at least equal to the fair market value thereof
(as determined in good faith by the senior management of such Person),
(y) each such sale (other than any like-kind exchange) results in
consideration at least 75% of which shall be in the form of cash (for
such purpose, taking into account the amount of cash, the principal
amount of any promissory notes and the fair market value, as determined
in good faith by the senior management of the Borrower, of any other
consideration), and (z) the Net Sale Proceeds therefrom shall be
applied pursuant to Section 3.2;
(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; and
(ix) the Borrower may sell or otherwise dispose of any
assets other than (A) 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.
For avoidance of doubt, nothing in this Section shall prohibit
the Borrower from consummating the Utility Spin-Off, the NEG Equity Transactions
or any plan of reorganization permitted by Section 7A.15.
7A.3. Dividends. The Borrower will not, and will not permit
any of the other Covered Parties to, authorize, declare or pay any Dividends,
except that (i) any Subsidiary of the
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Borrower may pay cash Dividends to the Borrower or to LLC, NEG, Inc. or any NEG
Subsidiary, (ii) NEG, Inc. may distribute a note to LLC or the Borrower, and LLC
may distribute any such note to the Borrower, solely in connection with the IPO
and (iii) NEG, Inc. may pay cash Dividends to any New Investor to the extent
that Dividends are paid pro rata to the Borrower and such New Investor in
accordance with their respective equity interests in NEG, Inc. 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, or any
substantial part of the assets of, any Reorganization Subsidiary or any member
of the NEG Group.
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 the Utility Spin-Off or the NEG Equity
Transactions.
7A.4. Indebtedness. The Borrower will not, and will not
permit any member of the NEG Group 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 the Initial
Closing Date and listed, with respect to the Borrower, on Part A of the
Disclosure Letter and, with respect to the Covered Parties (other than
the Borrower), Part B of the Disclosure Letter (as reduced by any
repayments of principal thereof), 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 among Borrower or any member of the NEG
Group (other than LLC) and any other NEG Subsidiary from intercompany
transfers of assets made in the ordinary course of business or to the
extent permitted under Sections 7A.2 and 7A.5;
(v) Indebtedness of a Covered Party (other than LLC)
secured by Liens permitted under Sections 7A.1(i), (ii), (vii) and
(viii);
(vi) in the case of the Borrower, Specified Rated
Indebtedness; provided that, after giving effect to the incurrence of
such Indebtedness, the Tranche A Loan, and the other Senior Obligations
that are then due and payable, shall have been paid in full;
(vii) in the case of any member of the NEG Group (other than
LLC), to the extent described by the Business Plan;
(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, provided that the aggregate amount
of such other Indebtedness together with deposits permitted under
sub-clauses (y) and (z) of Section 7A.1(viii) shall not exceed the
amount set forth in Section 7A.1(viii); and
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(x) Indebtedness of the Borrower in respect of the
Convertible Notes in an aggregate principal amount not to exceed
$280,000,000.
7A.5. Advances, Investments and Loans. The Borrower will not,
and will not permit any member of the NEG Group to, 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 to, 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) the Borrower and the other Covered Parties may acquire
and hold accounts receivables owing to any of them, if created or
acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms of the Borrower
or such other Covered Parties;
(ii) the Borrower and the other Covered Parties may acquire
and hold cash and Cash Equivalents;
(iii) Borrower and the other Covered Parties 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) any Investment by a Covered Party (other than LLC) to
the extent described by the Business Plan;
(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 Covered Parties (other than
LLC) 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) any NEG Subsidiary and NEG, Inc. may distribute a note
to LLC or the Borrower, and LLC may distribute any such note to the
Borrower, solely in connection with the IPO;
(ix) any Investment made by any of LLC, NEG, Inc. or any NEG
Subsidiary pursuant to Section 3.2(b)(iii), 3.2(c)(B)(iii),
3.2(e)(A)(iii) or 3.2(f)(ii);
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(x) any Investment made by the Borrower or any member of
the NEG Group in a wholly-owned Subsidiary;
(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 not otherwise related to PGE
Utility or any of its Subsidiaries in an amount not to exceed
$10,000,000 in the aggregate for any fiscal year; 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 or in the Business Plan to the
contrary, (A) no investment may be made by the Borrower or any member of the NEG
Group in the nuclear generation business and (B) the Borrower may consummate the
Utility Spin-Off and the NEG Equity Transactions.
7A.6. Transactions with Affiliates. Except as disclosed on
Schedule 5.17, the Borrower will not, and will not permit any member of the NEG
Group and any other NEG Subsidiaries to, 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 or such Subsidiary as
would reasonably be obtained by the Borrower or such Subsidiary at that time in
a comparable arm's-length transaction with a Person other than an Affiliate,
except for provision of cash, credit or other financial assistance or support by
the Borrower or any member of the NEG Group to PGE Utility or any of its
Subsidiaries (unless such assistance or support is made to the extent provided
in the Business Plan), (b) as reasonably determined by the Borrower that such
transaction is required by applicable Law or the Holding Company Conditions, (c)
among the Borrower and the other Covered Parties and any other NEG Subsidiaries
and among the NEG Group, (d) 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, (e) the payment of reasonable and customary fees
and reimbursements of expenses payable to directors of any member of the NEG
Group, (f) the employment arrangements with respect to the procurement of
services of directors, officers and employees of any member of the NEG Group in
the ordinary course of business and payment of reasonable and customary fees in
connection therewith, (g) the consummation of the Utility Spin-Off and the NEG
Equity Transactions, or (h) transactions expressly permitted under Section 7A.3
or Section 7A.5.
7A.7. Capital Expenditures. The Borrower will not, and will
not permit any member of the NEG Group to, 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, (c) that
such Capital Expenditures are made by a Covered Party (other than LLC) attendant
to transactions described by the Business Plan, (d) related to Investment made
by any of LLC, NEG, Inc. or any NEG Subsidiary pursuant to Section 3.2(b)(iii),
3.2(c)(B)(iii), 3.2(e)(A)(iii) or 3.2(f)(ii) or (e) provided in the cash-flow
forecast of the Borrower attached to the solvency certificate of the Borrower
delivered on the Closing Date.
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7A.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 any of
the Covered Parties and the Specified Subsidiaries 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 or result in a
Material Adverse Change to LLC, NEG, Inc. and the NEG Subsidiaries,
taken as a whole;
(iii) except as provided in the Business Plan with respect to
the IPO or the Spin-Off of NEG, Inc., (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 or (z) amend the Business Plan;
(iv) terminate, cancel or suspend any license, contract or
material franchise agreements which would result in a Material Adverse
Effect or a Material Adverse Change to LLC, NEG, Inc. and the NEG
Subsidiaries, taken as a whole; or
(v) except as a part of the NEG Equity Transactions, create
any Subsidiary of the Borrower which will be a direct or indirect
parent of LLC or create any Subsidiary of LLC which will be a direct or
indirect parent of NEG, Inc. or create any Subsidiary of NEG, Inc.
which would own, directly or indirectly, all or substantially all of
the assets or shares of the NEG Subsidiaries.
7A.9. Limitation on Issuance of Capital Stock. (a) Except as
otherwise permitted by Sections 7.3 and 7.5 or to the extent attendant to
transactions described by the Business Plan, the Borrower will not permit any of
the Covered Parties (other than the Borrower) 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 common stock or other redeemable common
equity interest other than common stock or other redeemable common equity
interest that is redeemable at the sole option of the Borrower or such Covered
Party, as the case may be.
(b) Except as otherwise permitted by Sections 7.3 and 7.5,
and except as a part of the NEG Equity Transactions, the Borrower will not
permit any of the Covered Parties (other than the Borrower) 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
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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, (iv) to the extent the Borrower
reasonably determines that such issuance is required by applicable Law, or (v)
to the extent attendant to transactions described by the Business Plan.
7A.10. Business. The Borrower will not, and will not permit
any of the other Covered Parties to, engage in any business other than the
current businesses engaged in by the Borrower and the other Covered Parties as
of the date hereof or to the extent within the scope of business described by
the Business Plan.
7A.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. The Borrower will not
take any actions or allow any of its Subsidiaries to take any actions that would
prevent Borrower from reaffirming the representations of Sections 5.16(b), (c),
(d), (e) and (g) as of any date prior to repayment of the Loans in full.
7A.12. [OMITTED].
7A.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 (i)
during any Convertible Notes Blockage Period or (ii) at any time when, after
giving effect to such interest payment, the aggregate amount of cash and Cash
Equivalents held by the Borrower in its own name (including, without limitation,
any cash and Cash Equivalents held in any Interest Reserve Account) would be
less than an amount that is 5 percentage points greater than the amount required
from time to time under Section 7.14(a).
7A.14. Interest Reserve Account. The Borrower will not permit
the aggregate amount of cash and Cash Equivalents held in the Tranche B Interest
Reserve Account on any Interest Payment Date to be less than the amount of
interest on the Tranche B Loan during the one-year period following such
Interest Payment Date (such interest amount to be estimated
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using a rate per annum equal to the twelve-month Eurodollar Rate in effect two
Business Days prior to such Interest Payment Date, plus 4.00%).
7A.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
one which is substantially consistent with Annex B; provided, that this Section
7A.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 any Person that receives fair value for the assets so disposed);
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. For avoidance of doubt, any
transaction or series of transactions involving the disposition of any
Reorganization Subsidiary or any assets that would constitute a Reorganization
Subsidiary and the subsequent spin-off of PGE Utility along with the proceeds of
such disposition would not be substantially consistent with Annex B and would be
prohibited by this Section.
7A.16 FMV Ratio. The Borrower will not permit the Required FMV
Ratio to be less than 1.75:1. The Required FMV Ratio may be determined in
accordance with the procedure set forth in Section 9.26 at any time at the
request of the Majority Tranche B Lenders (at the expense of each such
requesting Tranche B Lender, ratably based upon the amount of the Tranche B Loan
held by such Tranche B Lender) by delivering a notice to the Borrower no more
frequently than once per fiscal quarter of the Borrower.
SECTION 8. TRANCHE A EVENTS OF DEFAULT AND REMEDIES.
8.1 Events of Default. The occurrence of any of the following
events or circumstances shall constitute a "Tranche A Event of Default" (or, at
any time after the Tranche A Loan, and the other Senior Obligations that are
then due and payable, have been paid in full, a "Tranche B Event of Default")
hereunder:
(a) The Borrower shall (i) default in the payment when due of
any principal of any Tranche A Loan (or, at any time after the Tranche A Loan,
and the other Senior Obligations that are then due and payable, have been paid
in full, 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 or any other Covered Party 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 or any of the other Covered Parties shall (i)
default in the due performance or observance by it of any term, covenant or
agreement contained in Section 6
59
(other than Sections 6.1 and 6.2) or Section 7; provided, however that a Default
under Section 7.16 shall not constitute an Event of Default hereunder unless
such Default shall continue unremedied for sixty (60) days and the Appraiser, at
the Majority Tranche A Lenders' (or, at any time after the Tranche A Loan, and
the other Senior Obligations that are then due and payable, have been paid in
full, the Majority Tranche B Lenders') request, again reaffirms that the
Required FMV Ratio is below 2.00:1 after such sixty (60) day period 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) Any of the Covered Parties shall default in any
payment of any Indebtedness when due, or (ii) any of the Covered Parties 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 any of the Covered Parties 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 or any of the other Covered Parties 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 or any of the other Covered Parties, 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 any of the other Covered Parties; or the Borrower or any of the
other Covered Parties 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 any of the other Covered Parties; or there is
commenced against the Borrower or any of the other Covered Parties any such
proceeding which remains undismissed for a period of 60 days; or the Borrower or
any of the other Covered Parties is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Borrower or any of the other Covered Parties 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 or
any of the other Covered Parties makes a general assignment for the benefit of
creditors; or any corporate, limited liability company or similar action is
taken by the Borrower or any of the other Covered Parties 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
60
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), or 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
(h) One or more judgments or decrees shall be entered against
the Borrower or any other Covered Party involving in the aggregate for the
Borrower and the other Covered Parties a liability (not paid or fully covered by
a reputable and solvent insurance company) of $100,000,000 or more and such
judgments and decrees 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
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(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 result in a Material Adverse Change to the
Borrower, LLC, or NEG, Inc. and the Significant Subsidiaries, taken as a whole;
or
(j) The Required FMV Ratio is below 1.25:1 on any date; or
(k) 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
(l) 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 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; or
(m) The Tranche B Loan shall cease, for any reason, to be
validly subordinated to the Senior Obligations as provided in the Intercreditor
Agreement, or the Borrower, any of its Subsidiaries or any holder of
$105,000,000 or more of the Tranche B Loan shall so assert in writing and such
assertion shall not have been withdrawn, rescinded or otherwise retracted in
writing within 15 days thereof.
8.2 Acceleration. (a) If an Event of Default specified in
Section 8.1(e) with respect to the Borrower shall occur, automatically the
Tranche A Loan (or, at any time after the Tranche A Loan, and the other Senior
Obligations that are then due and payable, have been paid in full, 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) with respect to the Borrower) shall occur, then
the Administrative Agent (acting upon the instructions of the Majority Tranche A
Lenders (or, at any time after the Tranche A Loan, and the other Senior
Obligations that are then due and payable, have been paid in full, the Majority
Tranche B Lenders)) may by notice to the Borrower declare the Tranche A Loan
(or, at any time after the Tranche A Loan, and the other Senior Obligations that
are then due and payable, have been paid in full, the Tranche B Loan), all
accrued and unpaid interest thereon and all other amounts owing to the Tranche A
Lender (or, at any time after the Tranche A Loan, and the other Senior
Obligations that are then due and payable, have been paid in full, the Tranche B
Lender) 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 (acting upon the
instructions of the Majority Tranche A Lenders (or, at any time after the
Tranche A Loan, and the other Senior Obligations that are then due and payable,
have been paid in full, the Majority Tranche B Lenders)) may exercise any
62
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 Majority Tranche A
Lenders (or, at any time after the Tranche A Loan, and the other Senior
Obligations that are then due and payable, have been paid in full, the Majority
Tranche B Lenders)) may elect), including without limitation or prejudice to any
Tranche A Lender's (or, at any time after the Tranche A Loan, and the other
Senior Obligations that are then due and payable, have been paid in full, 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 A
Lender (or, at any time after the Tranche A Loan, and the other Senior
Obligations that are then due and payable, have been paid in full, 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 8A. TRANCHE B EVENTS OF DEFAULT AND REMEDIES.
8A.1. Events of Default. The occurrence of any of the
following events or circumstances at any time prior to the repayment in full of
the Tranche A Loan shall constitute a "Tranche B 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 or any other Covered Party 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 or any of the other Covered Parties 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 7A
(other than Section 7A.14); provided, however that a Default under Section 7A.16
shall not constitute an Event of Default hereunder unless such Default shall
continue unremedied for sixty (60) days and the Appraiser, at the request of the
Majority Tranche A Lenders or the Majority Tranche B Lenders, again reaffirms
that the Required FMV Ratio is below 1.75:1 after such sixty (60) day period or
(ii) except as set forth in clauses (iii) and (iv) and Section 8A.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 8A.1) and such
default shall continue unremedied for a period of 40 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 the Warrant Agreement or (iv) fail to make the required
deposits in the Tranche B Interest Reserve Account after the Closing Date in
accordance with Section 7A.14 and the amount on deposit in the Tranche B
Interest Reserve
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Account is equal to or less than the amount of interest estimated, in the manner
described in Section 7A.14, to be payable on the Tranche B Loan for the next
nine-month period; or
(d) (i) Any of the Covered Parties shall default in any
payment of any Indebtedness when due, or (ii) any of the Covered Parties 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 any of the Covered Parties 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 or any of the other Covered Parties 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 or any of the other Covered Parties, 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 any of the other Covered Parties; or the Borrower or any of the
other Covered Parties 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 any of the other Covered Parties; or there is
commenced against the Borrower or any of the other Covered Parties any such
proceeding which remains undismissed for a period of 60 days; or the Borrower or
any of the other Covered Parties is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Borrower or any of the other Covered Parties 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 or
any of the other Covered Parties makes a general assignment for the benefit of
creditors; or any corporate, limited liability company or similar action is
taken by the Borrower or any of the other Covered Parties 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
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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), or 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
(h) One or more judgments or decrees shall be entered against
the Borrower or any other Covered Party involving in the aggregate for the
Borrower and the other Covered Parties a liability (not paid or fully covered by
a reputable and solvent insurance company) of $100,000,000 or more and such
judgments and decrees 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 result in a Material Adverse Change to the
Borrower, LLC, or NEG, Inc. and the Significant Subsidiaries, taken as a whole;
or
(j) The Required FMV Ratio is below 1.25:1 on any date; or
(k) The Option Agreement or the Warrant Agreement shall cease
to be in full force and effect or shall cease to give the Holders or the holders
of Warrants, as the case may be, the rights, powers and privileges purported to
be created thereby; or
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(l) 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 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.
8A.2. Acceleration. (a) If an Event of Default specified in
Section 8A.1(e) with respect to the Borrower 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 8A.1(e) with respect to the Borrower) shall occur, then
the Administrative Agent (acting upon the instructions of the Majority Tranche B
Lenders) may 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 Lender
under the Financing Documents to be due and payable, whereupon the same shall
become immediately due and payable. Upon the delivery of any such notice to the
Borrower, the Administrative Agent shall contemporaneously notify the Tranche A
Lenders thereof, provided that the failure to give such notice shall not affect
the rights and remedies of the Administrative Agent or the Tranche B Lenders
against the Borrower or any of its Subsidiaries.
(c) Except as expressly provided above in this Section 8A.2,
presentment, demand, protest and all other notices and other formalities of any
kind are hereby expressly waived by the Borrower.
8A.3. Other Remedies. Upon the occurrence and during the
continuation of an Event of Default, the Administrative Agent (acting upon the
instructions of the Majority Tranche B Lenders) may 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 Majority Tranche B
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 8A.1(a) or 8A.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 the Administrative
Agent (in its capacity as such and in its capacity as a Lender), the Lead
Arranger, the Book Manager, each Lender (in the case of clause (b) below only),
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, including, without limitation, (a)
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any and all amounts which the Administrative Agent, each Lender (in the case of
clause (b) below only), 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, (b) 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 (c) 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 Lead Arranger, the Book Manager,
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 Lead Arranger, the Book Manager, 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, Lead Arranger, Book Manager, 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 Lead Arranger, the Book
Manager, 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.
(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,
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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 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.
(i) 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.
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(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, 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 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
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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. The agreement of any Lender to make
extensions of credit to the Borrower on the terms and conditions set forth in
this Agreement and the other Financing Documents is solely for the benefit of
the Borrower, and no other Person shall have any rights hereunder against such
Lender with respect to the Loans, the proceeds thereof or otherwise.
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) Except as provided in paragraph (b) of
this Section, 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 Majority Tranche A Lenders and the Majority Tranche B
Lenders and the Borrower and each Covered Party that is a party thereto, and, to
the extent that its rights or obligations may be affected thereby, the
Administrative Agent. Notwithstanding the foregoing provisions, no such
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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, without the prior written consent of such
Lender, (iv) release all or substantially all 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 this Section 9.10 or Section 9.1 or 9.2, without the prior written consent of
each Lender, (vi) reduce the percentage specified in or otherwise amend the
definition of Required Waiver Lenders or Majority Tranche A Lenders or Majority
Tranche B Lenders, without the prior written consent of each Lender, (vii)
change, amend or modify the principal amount of, or rate of interest on, or the
maturity of, any Tranche A Loan, without the prior written consent of the
Majority Tranche B Lenders, (viii) change, amend or modify the principal amount
of, or rate of interest on, or the maturity of, any Tranche B Loan, without the
prior written consent of the Majority Tranche A Lenders, or (ix) amend, modify
or waive any provision of Section 10, without the prior written consent of the
Administrative Agent.
(b) Notwithstanding anything to the contrary above, (i) at any time
prior to the repayment in full of the Tranche A Loan, Sections 7 (other than
Section 7.14) and 8 (but not Section 7A or 8A) may be amended, supplemented,
modified or waived with the consent of the Majority Tranche A Lenders, without
the consent of any Tranche B Lender (provided that (x) unless consented to by
the Majority Tranche B Lenders, no such amendment, supplement, modification or
waiver shall add additional covenants or events of default or make existing
covenants or events of default more restrictive on the Borrower and its
Subsidiaries and (y) at the time of repayment in full of the Tranche A Loan and
of the other Senior Obligations then due and payable, all such amendments,
supplements, modifications and waivers effected after the Closing Date shall
automatically cease to be in effect unless consented to by the Majority Tranche
B Lenders), and (ii) Sections 7A (other than Section 7A.14) and 8A (but not
Section 7 or 8) may be amended, supplemented, modified or waived with the
consent of the Majority Tranche B Lenders, without the consent of any Tranche A
Lender (provided that, unless consented to by the Majority Tranche A Lenders, no
such amendment, supplement, modification or waiver shall add additional
covenants or events of default or make existing covenants or events of default
more restrictive on the Borrower and its Subsidiaries).
(c) Any waiver and any amendment, supplement or modification made or
entered into in accordance with Section 9.10(a) or (b) shall be binding upon the
Borrower, the Administrative Agent, the Lenders and their successors and
assigns.
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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 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.
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(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.
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(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(a) and 3.4 of the Existing Credit Agreement and
other liabilities of the Borrower for breach of representations and warranties
or covenants under the Existing Credit Agreement and the other Financing
Documents (as defined in 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).
74
(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 the date hereof at 1177 Avenue of the Americas, ▇▇/▇▇/ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, 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. (S) 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 of the Tranche A
Lender and the 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
76
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 for NEG Equity Sale. Concurrently with the
consummation of the NEG Equity 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, in the shares of
common stock of NEG, Inc. being sold in the NEG Equity Sale.
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 Determination of Fair Market Value. For purposes hereof, the
"Fair Market Value" of NEG, Inc. shall mean the price at which a willing buyer
would buy and a willing seller would sell the Pledged Interests having full
knowledge of the facts, and assuming each party acts on an arm's-length basis
with the expectation of concluding the purchase or sale within a reasonable
time, which determination shall be made by an Approved Appraiser selected by (i)
the Majority Tranche A Lenders in consultation with the Administrative Agent (in
the case of a determination made at the request of the Majority Tranche A
Lenders pursuant to Section 7.16) or (ii) the Majority Tranche B Lenders in
consultation with the Tranche A Lenders (in the case of a determination made at
the request of the Majority Tranche B Lenders pursuant to Section 7A.16) (the
"Appraiser"). The Borrower will cooperate and deliver such document and provide
such information as may be reasonably requested by the Majority Tranche A
Lenders, the Majority Tranche B Lenders, the Administrative Agent or the
Appraiser with respect to the determination of the Required FMV Ratio.
9.27 Intercreditor Agreement. Notwithstanding anything provided
herein to the contrary, the terms and provisions of the Intercreditor Agreement
shall govern the relationship between the Tranche A Lender and the Tranche B
Lender with respect to the rights, remedies and obligations of the Lenders under
this Agreement and the other Financing Documents, including, without limitation,
the subordination in payment of the Tranche B Loan and the limitation on the
exercise of remedies by the Tranche B Lender under the Financing Documents.
9.28 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 ▇▇▇ UPON ANY CLAIM FOR ANY SUCH
77
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.
SECTION 10. THE ADMINISTRATIVE AGENT; THE LEAD ARRANGER AND THE BOOK
MANAGER.
10.1 Appointment. ▇▇▇▇▇▇ 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.
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, 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, the Administrative Agent 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. The Administrative Agent 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
78
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
or the Majority Tranche A Lenders or the Majority Tranche B Lenders, as the case
may be, 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 or the Majority Tranche A Lenders
or the Majority Tranche B Lenders, as the case may be, 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 or the Majority Tranche A Lenders or the Majority Tranche B
Lenders, as the case may be.
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", "Majority Tranche A Lenders",
"Majority Tranche B 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.
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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) and the Majority Tranche A Lenders and the Majority Tranche B
Lenders.
(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 Lead Arranger and Book Manager. Neither the Lead Arranger
nor the Book Manager, 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.
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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 Intercreditor Agreement and 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.
* * *
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
By:________________________________________
Name:
Title:
▇▇▇▇▇▇ COMMERCIAL PAPER INC., as
a Lender and Administrative Agent
By:________________________________________
Name:
Title:
▇▇▇▇▇▇ BROTHERS INC., as Lead Arranger
and Book Manager
By:________________________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By:_____________________________________
Name:
Title:
Appendix A
DEFINED TERMS AND RULES OF INTERPRETATION
1. Defined Terms.
"Additional Extended Date Certain" shall mean each of (i) March 2,
2005, and (ii) March 2, 2006.
"Administrative Agent" shall mean ▇▇▇▇▇▇ 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) with respect to the Tranche A
Loan, (i) as to the Base Rate Loan, (x) during the period commencing on the
Initial Closing Date to but excluding the date eighteen (18) months from the
Initial Closing Date, 2.50% per annum and (y) during the period commencing on
the date eighteen (18) months from the Initial Closing Date and thereafter,
4.00% per annum, and (ii) as to the Eurodollar Loan, (x) during the period
commencing on the Initial Closing Date to but excluding the date eighteen (18)
months from the Initial Closing Date, 2.50% per annum and (y) during the period
commencing the date eighteen (18) months from the Initial Closing Date and
thereafter, 4.00% per annum; and (b) with respect to the Tranche B Loan, (i) as
to the Base Rate Loan, 3.00% per annum, and (ii) as to the Eurodollar Loan,
4.00% per annum.
"Appraiser" shall have the meaning provided in Section 9.26 of the
Credit Agreement.
"Approved Appraiser" shall mean any independent nationally recognized
investment bank experienced in the valuation of equity interests of a company
similar to NEG, Inc. as may be reasonably proposed by the Borrower at the
request of the Majority Tranche A Lenders or the Majority Tranche B Lenders;
provided that the Borrower shall always propose at least two alternate
investment banks.
"Asset Sale" shall mean any sale, transfer or other disposition of
any Property of the Borrower (including, without limitation, after the
consummation of the Utility Spin-Off, the Capital Stock of, or any assets
(taking into account all prior asset sales) having an aggregate book value in
excess of $75,000,000 of, any Reorganization Subsidiary) and any member of the
NEG Group.
"Assignee" shall have the meaning provided in Section 9.11 of the
Credit Agreement.
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"Audited Financial Statements" shall have the meaning provided in
Section 5.11 of the Credit Agreement.
"Authorized Officer" shall mean (i) 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 (ii) 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)
and Section 8A.1(e) of the Credit Agreement.
"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.
"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.
"Book Manager" shall mean ▇▇▇▇▇▇ 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 (i) for all purposes other than as covered
by clause (ii) 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 (ii) 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 (i) above and which is also a day for trading
by and between banks in the London interbank eurodollar market.
"Business Plan" shall mean the certified copy of the business plan of
NEG, Inc., as amended and restated as of the Closing Date, as delivered to the
Lenders.
"CA Fee" shall mean the fees and expenses of the Collateral Agent set
forth in the Schedule of Fees with the Collateral Agent dated the Initial
Closing Date.
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"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, (i) 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, (ii) 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, (iii) repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications specified in clause
(ii) above, (iv) 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 Moody's and in each case maturing
not more than one year after the date of acquisition by such Person, and (v)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv)
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. (S) 9601 et seq.
"Change of Control" shall mean any of the following: (i) 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
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under the Exchange Act), directly or indirectly, of more than 25% of the
outstanding common stock of the Borrower; (ii) the board of directors of the
Borrower shall cease to consist of a majority of Continuing Directors; or (iii)
a Specified Change of Control shall occur.
"Change of Control Offer to Repay" shall have the meaning
provided in Section 3.8 of the Credit Agreement.
"Change of Control Offer to Repay Notice" shall have the
meaning provided in Section 3.8 of the Credit Agreement.
"Change of Control Offer Settlement Date" shall have the
meaning provided in Section 3.8 of the Credit Agreement.
"Change of Control Prepayment Fee" shall have the meaning
provided in Section 3.8 of the Credit Agreement.
"Charter Documents" shall mean, with respect to any Person,
(i) the articles of incorporation or other similar organizational document of
such Person, (ii) the by-laws or other similar document of such Person, (iii)
any certificate of designation or instrument relating to the rights of preferred
shareholders or other holders of Capital Stock of such Person and (iv) 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 each Lender.
"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.
"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
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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.
"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 issued on the Closing Date pursuant
to the Convertible Notes Indenture.
"Convertible Notes Blockage Period" shall mean the period
commencing the date the Administrative Agent or the Tranche A Lender 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 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.
"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 Amended and Restated Credit
Agreement, dated as of June 25, 2002, among the Borrower, the Lenders party
thereto, ▇▇▇▇▇▇ Commercial Paper Inc., as Administrative Agent and ▇▇▇▇▇▇
Brothers Inc., as Lead Arranger and Book Manager.
"Date Certain" shall mean the Initial Date Certain, as such
date may be extended pursuant to Section 2.9 of the Credit Agreement.
"Default" shall mean any event or circumstance which with
notice or lapse of time or both would become an Event of Default.
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"Disclosure Letter" shall mean the letter from the Borrower,
addressed to the Administrative Agent and the Lenders, dated as of June 25,
2002, with respect to certain disclosure of the Borrower.
"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 (i) all
payments made or required to be made by such Person 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 (ii) 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 June 25, 2002.
"Environmental Claim" shall mean, with respect to any Person,
(i) any notice, claim, administrative, regulatory or judicial or equitable
action, suit, Lien, judgment or demand by any other Person or (ii) 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 (x) the presence,
or Release into the environment, of any Hazardous Material at any location,
whether or not owned by such Person or (y) 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
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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.
"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 mean a Tranche A Event of Default or
a Tranche B Event of Default.
"EWG" shall mean an "exempt wholesale generator" as defined
under PUHCA.
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"Excess Additional Option Percentage" shall have the meaning
provided in Section 2.10(b).
"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.
"Expense Sharing Agreement" shall mean each of the agreements
entitled "Continuing Services Agreement" listed and marked with "*" on Schedule
5.17.
"Extension Fee" shall have the meaning set forth in the
Extension Fee Letter.
"Extension Fee Letter" shall mean the Extension Fee Letter
dated June 25, 2002 among the Borrower, ▇▇▇▇▇▇ Commercial Paper Inc., GECC and
Wilmington Trust Company.
"Extension Interest Prepayment Amount" shall mean with respect
to an extension of the maturity date granted pursuant to Section 2.9(b) of the
Credit Agreement the amount that is the total amount of interest payable on the
Loans during such extension period based on a one-year Eurodollar Rate as of the
first date of such extension discounted to present value as of such date using a
discount rate of 4.25%.
"Fair Market Value" shall have the meaning provided in Section
9.26 of the Credit Agreement.
"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.
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"FI Subsidiaries" shall mean any of PG&E Energy Trading
Holdings Corp., a California corporation, PG&E Gas Transmission, Northwest
Corporation, a California corporation and PG&E Generating Company LLC, a
Delaware limited liability company.
"Financing Documents" shall mean, collectively, the Credit
Agreement, the Notes, the Extension Fee Letter, the ▇▇▇▇▇▇ Fee Letter, the GECC
Fee Letter, the Security Documents, the Intercreditor Agreement, the Warrant
Agreement and the Option 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.
"GECC" shall mean General Electric Capital Corporation, a
Delaware corporation.
"GECC Fee Letter" shall mean the Tranche A Letter Agreement
dated June 25, 2002 between the Borrower and GECC.
"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" means 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
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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 ▇▇-▇▇-▇▇▇ or Decision ▇▇-▇▇-▇▇▇ 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976.
"Indebtedness" of any Person shall mean (i) all indebtedness
of such Person for borrowed money, (ii) 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, (iii) the face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (iv) 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, (v) all Capital Lease Obligations of such Person,
(vi) 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, (vii) all net obligations of such Person under Hedging Agreements
and (viii) all Contingent Obligations of such Person; provided that Indebtedness
shall not include (a) 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 (b) 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 March 1, 2001.
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"Initial Date Certain" shall mean the second anniversary of
the Initial Closing Date.
"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, the Lenders and the holders party to the Warrant
Agreement.
"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.
"Interest Reserve Accounts" shall mean the collective
reference to the Tranche A Interest Reserve Account and the Tranche B Interest
Reserve Account.
"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 Sections 7.5
and 7A.5 of the Credit Agreement.
"IPO" shall mean the sale, in an initial underwritten
offering, registered under the Securities Act, of shares of NEG, Inc.'s common
stock, where after such offering, the common stock sold in such offering is
traded on the Nasdaq National Market or a national securities exchange.
"Law" shall mean, with respect to any Person (i) 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 (ii) any directive, guideline, policy, requirement or any
similar form of decision of or determination by any Governmental Authority which
is binding on such
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Person, in each case, whether now or hereafter in effect (including, without
limitation, in each case, any Environmental Law).
"Lead Arranger" shall mean ▇▇▇▇▇▇ Brothers Inc., a Delaware
corporation.
"▇▇▇▇▇▇ Fee Letter" shall mean the Fee Letter dated June 13,
2002 among the Borrower, ▇▇▇▇▇▇ Brothers Inc. and ▇▇▇▇▇▇ Commercial Paper Inc.
"Lender" shall mean, individually or collectively, as the
context may require, a Tranche A Lender, 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 individually and collectively PG&E National
Energy Group, LLC, a Delaware limited liability company, and the New LLC.
"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.
13
"Loan" shall mean each of the Tranche A Loan and 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.
"Majority Tranche A Lenders" shall mean, at any time, the
holders of more than 50% in principal amount of the Tranche A Loan then
outstanding.
"Majority Tranche B Lenders" shall mean, at any time, the
holders of more than 50% in principal amount of the Tranche B Loan then
outstanding.
"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 (i) the condition (financial or otherwise), results of operations, business,
Properties, liabilities, management or prospects of the Borrower, (ii) the
ability of the Borrower, LLC or NEG, Inc. to timely perform any of its
obligations under any of the Financing Documents to which it is a party, (iii)
the legality, validity or enforceability of any material provision of any
Financing Document, (iv) the rights and remedies of the Collateral Agent, the
Administrative Agent, any Holder or any Lender under any of the Financing
Documents or (v) the security interests provided under the Security Documents or
the value thereof.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"NAIC" shall mean the National Association of Insurance
Commissioners.
"NEG Equity Sale" shall mean the sale of up to 20% of the
outstanding equity of NEG, Inc., substantially in the manner described in the
NEG Equity Sale Letter with such changes in the transactions described therein
as may hereafter occur; provided that no such changes will be made that will
adversely affect the Lenders' security interest in the Collateral or the rights
of the Holders under the Option Agreement (other than the effect of the release
of up to 20% of the outstanding equity of NEG, Inc. to be released by the
Lenders pursuant to the terms hereof in connection with any NEG Equity Sale).
"NEG Equity Sale Letter" shall mean the letter from the
Borrower addressed to the Administrative Agent and the Lenders dated November
19, 2001, describing the terms of a potential sale of no more than 20% of the
outstanding equity of NEG, Inc. and certain other actions related thereto.
"NEG Equity Transactions" shall mean, collectively, (a) the
creation of a wholly-owned Subsidiary of NEG, Inc. (the "New LLC"), (b) the
transfer to the New LLC of up to 200
14
shares of the common stock of NEG, Inc., provided, that, prior to such transfer,
the New LLC becomes a party to the Stock Pledge Agreement on the same terms as
those applicable to the pledgor thereunder on the Closing Date, and (c) the NEG
Equity Sale; provided, further, that the Borrower shall give five (5) Business
Days' prior written notice to the Lenders of the NEG Equity Transactions.
"NEG Group" means 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 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, 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 Investor" shall mean any purchaser of shares of the
outstanding equity of NEG, Inc. in connection with the NEG Equity Sale, and
their successors and assigns.
"New LLC" shall have the meaning provided in the definition of
"NEG Equity Transactions" in Appendix A to the Credit Agreement.
"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
$420,000,000.
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"New Tranche B Lender" shall mean any holder of a New Tranche
B Commitment.
"Note" shall have the meaning provided in Section 2.4 of the
Credit Agreement.
"Notice of Borrowing" shall have the meaning provided in
Section 2.2 of the Credit Agreement.
"Obligations" shall mean, collectively, (i) 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; (ii) any and all sums
advanced by the Collateral Agent, the Administrative Agent or any Lender in
order to preserve the Collateral; and (iii) 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.
"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 Closing Date.
"Option Shares" shall have the meaning provided in the Option
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 Sections
7.1 and 7A.1 of the Credit Agreement.
"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 Utility" shall mean Pacific Gas and Electric Company, a
California corporation.
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"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.
"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.
"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.
"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.
17
"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).
"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 FMV Ratio" shall have the meaning provided in
Section 7.16 of the Credit Agreement.
"Required Waiver Lenders" shall mean, at any time, the holders
of more than 50% in principal amount of the Loans then outstanding.
"Reserve Account Control Agreements" shall mean, collectively,
the Tranche A Interest Reserve Account Control Agreement and the Tranche B
Interest Reserve Account Control Agreement.
"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.
18
"Return" shall have the meaning provided in Section 5.12 of
the Credit Agreement.
"Scheduled Project" shall have the meaning provided in Section
5.23 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 Documents" shall mean, collectively, the LLC Pledge
Agreement, the Stock Pledge Agreement, the Reserve Account Control Agreements
and all Uniform Commercial Code financing statements and other filings,
recordings or regulations required by the Credit Agreement or the LLC Pledge
Agreement or the Stock Pledge Agreement to be filed or made in respect of any
such Security Document.
"Senior Obligations" shall have the meaning provided in the
Intercreditor Agreement.
"Significant Subsidiaries" shall mean any of PG&E Gas
Transmission, Northwest Corporation, a California corporation, PG&E Energy
Trading Holdings Corporation, a California corporation, PG&E Generating Company,
LLC, a Delaware limited liability company and USGen New England, Inc., a
Delaware corporation.
"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.
"Specified Rated Indebtedness" shall mean any long-term
unsecured Indebtedness for borrowed money which (a) has a credit rating of no
less than BBB- by Standard & Poor's or Baa3 by Moody's, (b) a maturity date no
earlier than 180 days after the Tranche B Maturity Date and (c) does not
constitute "Senior Obligations" for purposes of the Intercreditor Agreement.
"Specified Subsidiaries" shall mean any of GTN Holdings LLC, a
Delaware limited liability company and PG&E Energy Trading Holdings, LLC, a
Delaware limited liability company.
"Spin-Off" of NEG, Inc. shall mean a spin-off, divestiture,
reorganization or other form of restructuring that results in NEG, Inc. no
longer being a Subsidiary of LLC or the Borrower.
19
"Standard & Poor's" shall mean Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ 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.
"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.
"Tax" shall have the meaning provided in Section 3.4 of the
Credit Agreement.
"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 A Event of Default" shall have the meaning provided
in Section 8.1 of the Credit Agreement.
"Tranche A Interest Reserve Account" shall the mean the
collateral account, account no. 34214, maintained with the Collateral Agent for
the purposes of paying interest on the Tranche A Loan.
"Tranche A Interest Reserve Account Control Agreement" shall
mean the Tranche A Interest Reserve Account Security and Control Agreement,
dated as of June 25, 2002, among the Borrower, the Collateral Agent and the bank
party thereto, with respect to the Tranche A Interest Reserve Account.
"Tranche A Lender" shall be the collective reference to (i)
General Electric Capital Corporation, a New York corporation, and (ii) any other
holder of the Tranche A Loan (including, without limitation, any Lender which
becomes a holder of the Tranche A Loan pursuant to Section 2.10).
"Tranche A Loan" shall mean the Loan continued by the Tranche
A Lender on the Closing Date.
20
"Tranche B Event of Default" shall have the meaning provided
in Sections 8.1 and 8A.1 of the Credit Agreement.
"Tranche B Interest Reserve Account" shall the mean the
collateral account, account no. 34213, maintained with the Collateral Agent for
the purposes of paying interest on the Tranche B Loan.
"Tranche B Interest Reserve Account Control Agreement" shall
mean the Tranche B Interest Reserve Account Security and Control Agreement,
dated as of June 25, 2002, among the Borrower, the Collateral Agent and the bank
party thereto, with respect to the Tranche B Interest Reserve Account.
"Tranche B Lender" shall be the collective reference to (i)
▇▇▇▇▇▇ Commercial Paper Inc., a New York corporation, and (ii) any other holder
of the Tranche B Loan or the New Tranche B Commitment.
"Tranche B Loan" shall be the collective reference to (i) the
Loan converted into the Tranche B Loan pursuant to Section 2.1 of the Credit
Agreement on the Closing Date and (ii) the Loan provided by the New Tranche B
Lenders on the Closing Date.
"Tranche B Maturity Date" shall mean September 2, 2006.
"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 Regulation" means 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
21
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, 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.
"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 have the meaning provided in the Warrant
Agreement.
"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.
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;
22
(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 and "knowledge" of the
Borrower shall mean and include knowledge of the other Covered Parties.
