-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KJravXTVvSuRW9UhMRQB6W15L5szJxlyKWkyr8QXfvKyPW7+0brVnsr7/tPc7oaH 334+ggR2LO+7VNYUwq6Bmg== 0000795185-97-000009.txt : 19971118 0000795185-97-000009.hdr.sgml : 19971118 ACCESSION NUMBER: 0000795185-97-000009 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 53 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19971117 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NRG GENERATING U S INC CENTRAL INDEX KEY: 0000795185 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 592076187 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-09208 FILM NUMBER: 97722933 BUSINESS ADDRESS: STREET 1: 1221 NICOLLET MALL CITY: MINNEAPOLIS STATE: MN ZIP: 55403 BUSINESS PHONE: 6123735300 MAIL ADDRESS: STREET 1: 1221 NICOLLET MALL CITY: MINNEAPOLIS STATE: MN ZIP: 55403 FORMER COMPANY: FORMER CONFORMED NAME: O BRIEN ENVIRONMENTAL ENERGY INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: OBRIEN ENERGY SYSTEMS INC DATE OF NAME CHANGE: 19910804 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________ FORM 10-K/A (Amendment No. 1) FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 1996 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________________. Commission File Number: 1-9208 NRG GENERATING (U.S.) INC. (Exact name of registrant as specified in its charter) Delaware 59-2076187 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1221 Nicollet Mall, Suite 610, Minneapolis, Minnesota 55403 (Address of principal executive offices) (Zip Code) (612) 373-8834 (Telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. X Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X As of October 24, 1997, there were outstanding 6,440,514 shares of Common Stock. Based on the last sales price at which such stock was sold on that date, the approximate aggregate market value of such shares held by non-affiliates was $68,621,000. Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. X Yes No The undersigned Registrant hereby amends the items, financial statements, exhibits or other portions of its Annual Report on Form 10-K for the fiscal year ended June 30, 1996 as set forth below. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. 3. Exhibits The "Index to Exhibits" following the Consolidated Financial Statements of the Company and its subsidiaries in the Company's Annual Report on Form 10-K, as filed, is amended to substitute therefor the "Exhibit Index" which follows the signature page hereof, which is incorporated herein by reference, and to file certain exhibits which are included herewith. Certain documents related to the projects and other matters, some of which are listed in the Index to Exhibits, will be filed by amendment as soon as practicable. 1 Signature In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NRG GENERATING (U.S.) INC. /s/ Timothy P. Hunstad By: Timothy P. Hunstad Title: Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date /s/ Robert T. Sherman President and October 28, 1997 By: Robert T. Sherman, Jr. Chief Executive Officer /s/ Timothy P. Hunstad Vice President and October 28, 1997 By: Timothy P. Hunstad Chief Financial Officer /s/ Leonard Bluhm Chairman of the Board October 28, 1997 By: Leonard A. Bluhm of Directors /s/ Lawrence Littman Director October 28, 1997 By: Lawrence I. Littman /s/ Craig A. Mataczynski Director October 28, 1997 By: Craig A. Mataczynski /s/ David H. Peterson Director October 28, 1997 By: David H. Peterson /s/ Spyros Skouras, Jr. Director October 28, 1997 By: Spyros S. Skouras, Jr. /s/ Charles Thayer Director October 28, 1997 By: Charles J. Thayer /s/ Ronald J. Will Director October 28, 1997 By: Ronald J. Will 2 Index to Exhibits Exhibit No. Description 2.1 Composite Fourth Amended and Restated Plan of Reorganization for the Company dated January 31, 1996 and proposed by the Company, the Official Committee of Equity Security Holders, Wexford Management Corp. ("Wexford") and NRG Energy, Inc. ("NRG Energy"). 2.2** Order confirming Composite Fourth Amended and Restated Plan of Reorganization for the Company proposed by the Company, the Official Committee of Equity Security Holders, Wexford and NRG Energy dated February 13, 1996 and entered on February 22, 1996 and filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated February 13, 1996 and incorporated herein by this reference. 2.3** Amended and Restated Stock Purchase and Reorganization Agreement dated January 31, 1996 between the Company and NRG Energy filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated February 13, 1996 and incorporated herein by this reference. 2.4 Letter Agreement dated April 26, 1996 between the Company and NRG Energy amending the Stock Purchase and Reorganization Agreement. 3.1 Amended and Restated Certificate of Incorporation of the Company. 3.2** Preferred Stock Certificate of Designation of the Company filed as Exhibit 3.3 to the Company's Current Report on Form 8-K dated April 30, 1996 and incorporated herein by this reference. 3.3** Bylaws of the Company filed as Exhibit 3.2 to the Company's Current Report on Form 8-K dated April 30, 1996 and incorporated herein by this reference. 10.1 Co-Investment Agreement dated April 30, 1996 between the Company and NRG Energy. 10.2.1 Chapter 11 Financing Agreement dated August 30, 1995 between the Company and NRG Energy. 10.2.2 Letter Agreement dated February 20, 1996 between the Company and NRG Energy amending the Chapter 11 Financing Agreement. 10.2.3 Letter Agreement dated April 30, 1996 between the Company and NRG Energy further amending the Chapter 11 Financing Agreement. 10.3 Liquidating Asset Management Agreement dated April 30, 1996 between the Company and Wexford. 10.4 Management Services Agreement dated as of January 31, 1996 between the Company and NRG Energy. 10.5.1 Loan Agreement dated April 30, 1996 between the Company and NRG Energy. 3 10.5.2 Note dated April 30, 1996 from the Company to NRG Energy in the principal amount of $45,000,000. 10.6.1 Supplemental Loan Agreement dated April 30, 1996 between NRG Energy and the Company. 10.6.2 Note dated April 30, 1996 from the Company to NRG Energy in the principal amount of $15,855,545.25. 10.7.1* NRG Newark Cogen Loan Agreement dated April 30, 1996 between NRG Energy and the Company. 10.7.2 Note dated April 30, 1996 from the Company to NRG Energy in the principal amount of $24,000,000. 10.8.1 Credit Agreement dated May 17, 1996 between NRG Generating (Newark) Cogeneration Inc. ("NRGG Newark"), NRG Generating (Parlin) Cogeneration Inc. ("NRGG Parlin"), Credit Suisse, Greenwich Funding Corporation and any Purchasing lender, as Lenders under the Credit Agreement. 10.8.2 Amendment No. 1 to the Credit Agreement dated June 28, 1996 between NRG Generating (Newark) Inc., NRG Generating (Newark) Inc. and Credit Suisse, Greenwich Funding Corporation and any Purchase Lender (as defined therein). 10.8.3 Stock Pledge Agreement dated June 28, 1996 between the Company as Pledgor and Credit Suisse. 10.8.4 Guaranty dated as of May 17, 1996 by NRG Energy, as Guarantor, to Credit Suisse, as Agent for the benefit of Credit Suisse, Greenwich Funding Corporation and any Purchasing lender, as Lenders under the Credit Agreement. 10.8.5 Guaranty dated as of June 28, 1996 by the Company as Guarantor to Credit Suisse as Agent for the benefit of Credit Suisse, Greenwich Funding Corporation and any Purchasing lender, as Lenders under the Credit Agreement. 10.8.6 Tax Indemnification Agreement dated June 28, 1996 between the Company, NRGG Newark, NRGG Parlin and Credit Suisse. 10.8.7 Assignment and Security Agreement dated June 28, 1996 between NRGG Parlin and Credit Suisse 10.8.8* Amended and Restated Leasehold Mortgage, Assignment of Leases and Rents and Security Agreement dated June 28, 1996 between NRGG Newark and Credit Suisse 10.8.9* Leasehold Mortgage, Assignment of Leases and Rents and Security Agreement dated June 28, 1996 between NRGG Parlin and Credit Suisse. 10.8.10 Interest Rate Swap Agreement dated August 2, 1996 between NRGG Newark, NRGG Parlin and Credit Suisse. 10.9.1* Loan Agreement dated March 8, 1996 between O'Brien (Schuylkill) Cogeneration Inc. and NRG Energy in connection with the Grays Ferry Partnership. 4 10.9.2* Option Agreement dated May 1, 1996 between O'Brien (Schuylkill) Cogeneration Inc. and NRG Energy. 10.10.1** Gas Supply Agreement dated June 30, 1992 between the Company and The Philadelphia Municipal Authority (the "PMA") regarding the NE Plant (Philadelphia Project) and filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992 and incorporated herein by this reference. 10.10.2** Gas Supply Agreement dated June 30, 1992 between the Company and the PMA regarding the SW Plant (Philadelphia Project) and filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992 and incorporated herein by this reference. 10.10.3** Energy Service Agreement dated June 30, 1992 between the Company and the PMA regarding the NE Plant (Philadelphia Project) and filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992 and incorporated herein by this reference. 10.10.4** Energy Service Agreement dated June 30, 1992 between the Company and the PMA regarding the SW Plant (Philadelphia Project) and filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992 and incorporated herein by this reference. 10.10.5** Stock Purchase Agreement dated November 12, 1993 between the Company, OPC Acquisition, Inc. and BioGas Acquisition, Inc. and filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993 and incorporated herein by this reference. 10.10.6* Loan Agreement between the Company and PECO. 10.11.1** Long Term Power Purchase Contract for Cogeneration and Small Power Production dated March 10, 1986 between the Company and Jersey Central Power and Light ("JCP&L") and filed as an exhibit to the Company's Registration Statement (File No. 33-11789) and incorporated herein by this reference. 10.11.2 Letter Agreement dated June 2, 1986 between the Company and JCP&L amending the Long Term Power Purchase Contract. 10.11.3 Second Amendment to Power Purchase Agreement dated March 1, 1988 between the Company and JCP&L. 10.11.4 Letter Agreement dated April 30, 1996 between O'Brien (Newark) Cogeneration, O'Brien (Parlin) Cogeneration and JCP&L. 10.11.5 Third Amendment to Power Purchase Agreement dated April 30, 1996 between O'Brien (Newark) Cogeneration and JCP&L. 10.12* Gas Service Agreement dated May 13, 1993 between O'Brien (Newark) Cogeneration, Inc. and Public Service Electric and Gas Company. 10.13.1* Interim Gas Service Agreement dated March 27, 1996 between JCP&L and Public Service Electric and Gas Company. 5 10.13.2* New Jersey Board of Public Utilities approval of Interim Gas Service Agreement. 10.14* Transmission Service and Interconnection Agreement dated November 17, 1987 between O'Brien Energy Systems, Inc. and Public Service Electric and Gas Company. 10.15.1* Steam Purchase Agreement dated October 3, 1986 between O'Brien Cogeneration IV, Inc. and Newark Boxboard Co. 10.15.2 Amendment to Steam Purchase Agreement dated March 15, 1988 between O'Brien Cogeneration IV, Inc. and Newark Boxboard Co. 10.15.3 Amendment to Steam Purchase Agreement dated July 18, 1988 between O'Brien (Newark) Cogeneration, Inc. and Newark Group Industries, Inc. 10.16.1* Operating and Maintenance Agreement dated May 1, 1996 between NRGG Newark and Stewart & Stevenson Operations, Inc. 10.16.2* Letter Agreement dated May 10, 1996 between the Company and Stewart & Stevenson Operations, Inc. 10.16.3* Letter Agreement dated May 20, 1996 between NRG Generating (Newark) Cogeneration and Stewart & Stevenson Operations, Inc. 10.17.1** Agreement for Purchase and Sale of Electric Power dated October 20. 1986 between the Company and JCP&L and filed as an exhibit to the Company's Registration Statement (File No. 33-11789) and incorporated herein by this reference. 10.17.2* First Amendment to Agreement for Purchase and Sale Electric Power dated June 11, 1991 between the Company and JCP&L. 10.17.3 Amended and Restated Agreement for Purchase and Sale of Electric Power dated April 30, 1996 between O'Brien (Parlin) Cogeneration, Inc. and JCP&L. 10.17.4 Letter Agreement dated April 30, 1996 between O'Brien (Parlin) Cogeneration, Inc. and JCP&L. 10.18* Gas Service Agreement dated May 13, 1993 between O'Brien (Parlin) Cogeneration, Inc. and Public Service Electric and Gas Company. 10.19.1* Interim Gas Service Agreement dated March 27, 1996 between JCP&L and Public Service Electric and Gas Company. 10.19.2* New Jersey Board of Public Utilities approval of Interim Gas Service Agreement. 10.20.1 Steam Purchase Contract dated December 8, 1986 between the Company and E.I. du Pont de Nemours("E.I. du Pont") and Company. 10.20.2 Amendment No. 1 to Steam Purchase Contract dated January 12, 1988 between the Company and E.I. du Pont. 10.20.3 Letter Agreement dated July 25, 1988 between the Company and E.I. du Pont. 10.20.4 Amendment No. 3 to Steam Purchase Agreement dated December 12, 1988 between the Company and E.I. du Pont. 6 10.20.5 Amendment No. 4 to Steam Purchase Contract dated July 14, 1989 between the Company and E.I. du Pont. 10.20.6 Amendment No. 5 to Steam Purchase Contract dated February 16, 1993 between the Company and E.I. du Pont. 10.21.1 Electricity Purchase Contract dated January 18, 1988 between the Company and E.I. du Pont. 10.21.2 Electricity Purchase Contract dated April 30, 1996 between O'Brien (Parlin) Cogeneration Inc. and NRG Parlin Inc. 10.21.3 Assignment of Electricity Purchase Contract dated April 30, 1996 between O'Brien (Parlin) Cogeneration, Inc., NRG Parlin, Inc. and E.I. du Pont. 10.22.1* Operating & Maintenance Agreement dated May 1, 1996 between NRG Generating (Parlin) Cogeneration, Inc. and Stewart Stevenson Operations, Inc. 10.22.2* Agreement dated May 1, 1996 between the Company, NRGG Newark, NRGG Parlin and Stewart & Stevenson Operations, Inc. 10.22.3* Letter Agreement dated May 20, 1996 between NRG Generating (Parlin) Cogeneration, Inc. and Stewart & Stevenson Operations, Inc. 10.23 Amended and Restated Partnership Agreement of Grays Ferry Cogeneration Partnership ("Grays Ferry") dated March 1, 1996, between Adwin (Schuylkill) Cogeneration, Inc. ("Adwin Schuylkill"), O'Brien (Schuylkill) Cogeneration, Inc. ("O'Brien Schuylkill") and Trigen-Schuylkill Cogeneration, Inc. ("Trigen- Schuylkill"). 10.24.1 Acquisition Agreement dated March 1, 1996 between Adwin Schuylkill, O'Brien Schuylkill and Trigen-Schuylkill. 10.24.2 Side Agreement dated March 1, 1996 between Adwin Schuylkill, O'Brien Schuylkill and Trigen-Schuylkill. 10.25.1 Contingent Capacity Purchase Addendum to the Agreement for Purchase of Electric Output (Phase I) dated September 17, 1993 between PECO and Grays Ferry. 10.25.2 Contingent Capacity Purchase Addendum to the Agreement for Purchase of Electric Output (Phase II) dated September 17, 1993 between PECO and Grays Ferry. 7 10.25.3* Amendment Agreement dated January 31, 1994 between PECO and Grays Ferry. 10.25.4* Agreement for Purchase of Electric Output (Phase I) dated July 28, 1992 between PECO Energy Company ("PECO") and Grays Ferry. 10.25.5* Agreement for Purchase of Electric Output (Phase II) dated July 28, 1992 between PECO and Grays Ferry. 10.26.1 Amended and Restated Steam Purchase Agreement dated September 17, 1993 among Philadelphia Thermal Energy Corporation ("PTEC"), Adwin Equipment Company ("Adwin"), O'Brien Environmental Energy, Inc. ("O'Brien") and Grays Ferry. 10.26.2 Amended and Restated Steam Venture Agreement dated September 17, 1993 among PTEC, Philadelphia United Power Corporation ("PUPCO"), Adwin and O'Brien. 10.27.1* Amended and Restated Project Services and Development Agreement dated September 17, 1993 by and between PUPCO and Grays Ferry 10.27.2 Consent to Assignment of Agreement dated March 1, 1996 between PUPCO, Grays Ferry Cogeneration Partnership and The Chase Manhattan Bank, N.A. 10.28 Amended and Restated Site lease, dated September 17, 1993 between PTEC and Grays Ferry. 10.29* Newark Lease. 10.30* Parlin Lease. 10.31.1** NRG Generating (U.S.) Inc. 1996 Stock Option Plan dated September 20, 1996 and filed as Appendix A to the Company's Proxy Statement dated October 28, 1996 and incorporated herein by reference. 10.31.2 Form of an Incentive Stock Option Agreement. 10.31.3 Form of a Nonqualified Stock Option Agreement. 10.31.4 Form of a Nonemployee Director Nonqualified Stock Option Agreement. 10.32 Employment Agreement dated April 30, 1996 between the Company and Leonard A. Bluhm. 11** Computation of Earnings 21** List of Subsidiaries of the Registrant. 23.1** Consent of Price Waterhouse LLP. 23.2** Consent of Coopers & Lybrand LLP. 27** Financial Data Schedule. _____ * To be filed by amendment. ** Previously filed. 8 EX-2.1 2 EXHIBIT 2.1 COMPOSITE FOURTH AMENDED AND RESTATED PLAN OF REORGANIZATION. Exhibit 2.1 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY - - - - - - - - - - - - - - - - - - x - - - - - - - - - - - - - - - - - - : - - - : Chapter 11 : In re: : Case No.: 94-26723 (RG) : O'BRIEN ENVIRONMENTAL ENERGY, INC. : x Debtor. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - COMPOSITE FOURTH AMENDED AND RESTATED PLAN OF REORGANIZATION FOR O'BRIEN ENVIRONMENTAL ENERGY, INC. PROPOSED BY O'BRIEN ENVIRONMENTAL ENERGY, INC., THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS, WEXFORD MANAGEMENT CORP. AND NRG ENERGY, INC. TABLE OF CONTENTS Page I: Definitions 1 II: Unclassified Claims 17 III:Classification of Claims and Interests 18 3.1 Class 1--BLT Leasing Corp. 18 3.2 Class 2--CoreStates New Jersey National Bank 18 3.3 Class 3--CoreStates Bank 18 3.4 Class 4--Financing for Science International, Inc. 18 3.5 Class 5--First Fidelity Bank, N.A. 18 3.6 Class 6--General Electric Capital Corporation 18 3.7 Class 7--Heller Financial, Inc. 18 3.8 Class 8--MDFC Equipment Leasing Corp. 19 3.9 Class 9--Meridian Bank 19 3.10 Class 10--PECO Energy Company 19 3.11 Class 11--The Bank of New York (Equipment) 19 3.12 Class 12--The Bank of New York (Documents) 19 3.13 Class 13--Natwest 19 3.14 Class 14--Other Secured Claims 19 3.15 Class 15A--Senior Debt 19 3.16 Class 15B--Non-Subordinated Unsecured Claims 19 3.17 Class 15C--Old Subordinated Noteholder Claims 20 3.18 Class 16--Old Common Stock 20 3.19 Class 17--Old Subordinated Noteholder Securities Claims 20 3.20 Class 18--Old Stockholder Securities Claims 20 i 3.21 Class 19--Old Options 20 IV: Treatment of Classes Not Impaired by the Plan 20 4.1 Class 1 (BLT Leasing Corp.) 20 4.2 Class 6 (General Electric Capital) 20 4.3 Class 9 (Subclass of Meridian Bank--Collateral Used in Biogas Projects Formerly Owned by O'Brien 20 4.4 Class 10 (PECO Energy Company) 20 4.5 Class 13 (Natwest) 20 V: Treatment of Classed Impaired by the Plan 20 5.1 Class 2 (CoreStates New Jersey National Bank) 20 5.2 Class 3 (CoreStates Bank) 21 5.3 Class 4 (Financing for Science International, Inc.) 21 5.4 Class 5 (First Fidelity Bank) 21 5.5 Class 7 (Heller Financial, Inc.) 21 5.6 Class 8 (MDFC Equipment Leasing Corp.) 21 5.7 Class 9 (Meridian Bank) 21 5.8 Class 11 (Bank of New York--Equipment) 22 5.9 Class 12 (The Bank of New York) 22 5.10 Class 14 (Other Secured Claims) 22 5.11 Class 15A (Senior Debt) 22 5.12 Class 15B (Non-Subordinated Unsecured Claims) 22 5.13 Class 15C (Old Subordinated Noteholder Claims) 23 5.14 Class 16 (Old Common Stock) 23 5.15 Class 17 (Old Subordinated Noteholder Securities Claims) 23 5.16 Class 18 (Old Stockholder Securities Claims) 23 5.17 Class 19 (Old Options) 24 ii VI:Means for Execution of Plan 24 6.1 Consummation of Acquisition and Plan 24 6.2 General Corporate Matters: Charter Amendment 25 6.3 Reconstituted Board of Directors of O'Brien 25 6.4 Corporate Action 25 6.5 Other Transaction Documents 25 6.6 Distributions 25 6.7 Distribution Dates 28 6.8 Vesting of Property 28 6.9 Consummation 28 6.10 NRG Supplemental Loan 28 6.11 Post-Petition Interest Fund 29 6.12 Deferral of DIP Loan and Wexford Administrative Claim 29 VII: Cramdown 30 VIII:Executory Contracts 31 8.1 Rejection of Executory Contracts 31 8.2 Assumption of Executory Contracts 31 IX: Rights and Obligations of Reorganized O'Brien as Plan Administrator 31 9.1 Appointment of Plan Administrator 31 9.2 Exculpation 31 9.3 Powers of Reorganized O'Brien 31 9.4 Duties of Reorganized O'Brien 31 X: Procedures for Resolving and Treating Disputed Claims 32 10.1 Objection Deadline 32 10.2 Responsibility For Objection to Disputed Claims 32 iii 10.3 No Distributions Pending Allowance 33 10.4 Distributions After Allowance 33 10.5 Treatment of Contingent Claims 33 10.6 Estimation of Claims 33 10.7 Disputed Claims Reserve 34 10.8 Administrative and Priority Claims Reserve 35 10.9 Payment of Taxes in Respect of the Distribution Reserves 36 XI: Conditions to Confirmation and Effective Date 37 11.1 Conditions to Confirmation 37 11.2 Conditions to Effective Date 37 11.3 Waiver of Conditions 37 XII: Effects of Confirmation and Effectiveness of Plan 37 12.1 Discharge of Debtor 37 12.2 Discharge of Liens 38 12.3 Injunction 38 12.4 Exculpations and Limitations of Liability 38 XIII:Retention of Jurisdiction 39 13.1 Retention of Jurisdiction 39 13.2 Failure of Court to Exercise Jurisdiction 40 XIV:Miscellaneous Provisions 40 14.1 Compliance With Tax Requirements 40 14.2 Post-Confirmation Date Fees and Expenses of Professional Persons 40 14.3 Retention of Avoidance Actions 40 14.4 Binding Effect 40 14.5 Governing Law 41 iv 14.6 Amendments and Modifications 41 14.7 Revocation 41 14.8 No Modification or Subordination Rights 41 14.9 Severability 41 14.10 De Minimis Distributions 42 14.11 Interpretation and Rules of Construction 42 14.12 Other Terms 42 14.13 Headings 42 14.14 Incorporation of Exhibits 42 v UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY - - - - - - - - - - - - - - - - - - x - - - - - - - - - - - - - - - - - - : - - - : Chapter 11 : In re: : Case No.: 94-26723 (RG) : O'BRIEN ENVIRONMENTAL ENERGY, INC. : x Debtor. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - COMPOSITE FOURTH AMENDED AND RESTATED PLAN OF REORGANIZATION FOR O'BRIEN ENVIRONMENTAL ENERGY, INC. PROPOSED BY O'BRIEN ENVIRONMENTAL ENERGY, INC., THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS, WEXFORD MANAGEMENT CORP. AND NRG ENERGY, INC. O'Brien Environmental Energy, Inc. ("O'Brien"), the Official Committee of Equity Security Holders of O'Brien Environmental Energy, Inc. (the "Equity Committee"), Wexford Management Corp., a Delaware corporation ("Wexford"), and NRG Energy, Inc., a Delaware corporation ("NRG"), hereby propose the following plan of reorganization for O'Brien pursuant to Chapter 11 of the Bankruptcy Code (the "Plan"): ARTICLE I: Definitions Unless the context otherwise requires, the following capitalized terms shall have the following meanings when used herein. Any capitalized term used herein that is not defined below and is defined in the Acquisition Agreement shall have the meaning assigned to such term in the Acquisition Agreement. Any term used herein that is not defined below in this Article I and is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to such term in the Bankruptcy Code or Bankruptcy Rules, unless the context clearly requires otherwise. 1.1. "Acquired Subsidiaries" means (i) O'Brien Biogas Inc. I (SKB); (ii) O'Brien Biogas Inc. VI; (iii) O'Brien Biogas (Mazzaro) Inc.; (iv) O'Brien Biogas (Corona) Inc.; (v) O'Brien Biogas Inc. IV; (vi) O'Brien Biogas (Hackensack) Inc.; (vii) O'Brien Cogen Inc. II (Artesia); (viii) O'Brien Standby Power Energy, Inc.; (ix) O'Brien Biogas Inc. III (Atochem); and (x) O'Brien Biogas Inc. VII. 1.2. "Acquisition Agreement" means the Amended and Restated Stock Purchase and Reorganization Agreement to be executed by NRG and O'Brien, substantially in the form filed with the Bankruptcy Court on February 2, 1996. 1.3. "Additional Cash Amount" means the sum of (A) the aggregate amount of any payments that would have been made to any Non-Accepting Secured Creditors had such Creditors received the Cash Payoff Treatment rather than the Collateral Putback Treatment, and (B) the amount that the increase to the Cash Equity Contribution provided for in Section 2.5 of the Acquisition Agreement is determined to be greater than $945,000. 1.4. "Administrative and Cure Claims Cash Payment" means the aggregate amount determined by the Bankruptcy Court prior to the Effective Date as being necessary to fund (a) Administrative Claims and Priority Claims that are Allowed and are due and payable on the Effective Date (excluding the DIP Loan Outstanding Amount and the Wexford Administrative Claim), (b) the Cure Payments and (c) the Administrative and Priority Claims Reserve. The Administrative and Cure Claims Cash Payment shall be funded from the Reserved Administrative and Cure Claims Cash Amount, the Additional Cash Amount, Excess Cash (to the extent available as provided in Section 6.12(c)) and, to the extent required by Section 6.10 below and subject to Section 10.8(b), the NRG Mandatory Supplemental Loan. 1.5. "Administrative and Priority Claims Reserve" means a segregated Cash fund in an amount that is determined by the Court prior to the Effective Date to be an appropriate reserve for the payment of the estimated allowable amount of all Unresolved Administrative and Priority Claims and which shall serve as the sole source of payment of any such claims that are Allowed by Final Order after the Effective Date or that are Allowed but by their respective terms not yet due and payable on the Effective Date. 1.6. "Administrative Claim" means (i) a Claim entitled to priority under Bankruptcy Code section 507(a)(1) (including any Claim of NRG in respect of the DIP Loan), (ii) a Claim in respect of any amounts required to be paid upon assumption of an executory contract or unexpired lease under Bankruptcy Code section 365(b)(1)(A) and (B), and (iii) any fees or charges assessed against the Debtor under chapter 123 of title 28, United States Code (28 U.S.C. Section 1911, et seq.). 1.7. "Administrative Claims Shortfall" has the meaning set forth in Section 10.8 (b). 1.8. "Administrative Shortfall Loan" has the meaning set forth in Section 10.8(b). 1.9. "Affiliate" means, with respect to any Entity, any other Person controlling, controlled by, or under common control with such Entity. For purposes of this definition, 'control' shall mean the power to direct, or cause the direction of, the management or policies of any Entity, whether through ownership of securities, by contract or otherwise. 1.10."Aggregate Non-Reinstated Secured Claim Supplemental Payment" means the aggregate amount of the Non- Reinstated Secured Claim Supplemental Payments that are to be made to the holders of Allowed Non-Reinstated Secured Claims on the Effective Date. 1.11."Allowed", "Allowed Claim" or "Allowed Interest" means, with reference to any Claim or Interest, (a) a Claim against or Interest in the Debtor, proof of which was filed within the applicable period of limitation fixed by the Bankruptcy Court, and which is not a Disputed Claim or Disputed Interest, (b) any Claim against or Interest in the Debtor, proof of which was not filed within the applicable period of limitation fixed by the Court and which has been listed by the Debtor in its Schedules as liquidated in amount and not disputed or contingent, (c) any Interest listed on the records of the Debtors transfer agent as of the Distribution Record Date, or (d) any Claim allowed by Final Order. An Allowed 2 Claim or Allowed Interest does not include any Claim or Interest or portion thereof which is a Disallowed Claim or Disallowed Interest or which has been subsequently withdrawn, disallowed, released or waived by the holder thereof or pursuant to a Final Order. 1.12."Allowed General Unsecured Claim" means a General Unsecured Claim that is an Allowed Claim. 1.13."Assumed Contracts" has the meaning set forth in Section 8.2. 1.14."Bankruptcy Code" means title 11 of the United States Code, as amended and in effect on the Petition Date. 1.15."Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as amended. 1.16."Bidding Procedures Order" means the Order (1) Establishing and Approving Bidding Procedures, (2) Setting Sale/Confirmation Hearing (A) to Consider Higher and Better Offers, If Any, (B) to Approve (i) Sale of Assets, (ii) Assumption and Assignment, as well as Rejection, of Certain Executory Contracts, and (iii) Establishment of Cure Amounts, If Any, and Adequate Assurance Terms and (C) for Plan Confirmation and (3) Setting Dates for, inter alia, Filing of Competing Bids and Plans and Objections entered by the Court on August 30, 1995. 1.17."Biogas Asset" means equipment owned by O'Brien that is used in connection with a biogas project operated by O'Brien or one of the Acquired Subsidiaries. 1.18."Biogas Claim Reinstatement Treatment" means, as to a Secured Claim that is secured by a Lien on Biogas Assets, the following treatment: (A) such Secured Claim shall not be bifurcated into an Allowed Secured Claim and an Allowed Unsecured Claim based on a determination of a Deficiency Amount in respect of such Claim; (B) the Collateral securing such Claim shall be transferred to the Acquired Subsidiary that operates or, following the Effective Date, will operate the biogas project in which such Collateral is used and such Acquired Subsidiary shall assume all of O'Brien's obligations and liabilities in respect of such Claim; (C) if applicable, the maturity of such Claim shall be reinstated; (D) any defaults with respect to such Claim other than the kind specified in Bankruptcy Code section 365(b)(2) shall be cured by O'Brien; (E) the holder of such Claim shall be compensated by O'Brien for any damages incurred by such holder as a result of any reasonable reliance by such holder on any contractual provision or applicable law that entitles such holder to demand or receive accelerated payment of such Claim after any default with respect to such Claim; and (F) the legal, equitable and contractual rights to which such Claim entitles such holder shall otherwise be left unaltered. 1.19."BONY Deferred Cash Payoff Treatment" means the following treatment accorded to The Bank of New York on the Effective Date with respect to its Class 12 Secured Claim: (a) the Class 12 Cure Payment and (b) The Bank of New York shall retain the Lien securing its Class 12 Secured Claim and shall receive on account of such Claim deferred cash payments from Reorganized O'Brien having a value, as of the Effective Date, equal to the Allowed Class 12 Secured Claim (excluding the Class 12 Cure Payment), which deferred cash payments shall be paid pursuant to a payment schedule and interest rate to be on terms acceptable to the BONY and set forth in a notice by NRG filed with the Court and served on The Bank of New York prior to commencement of the Confirmation Hearing. 3 1.20."BPU Approval" has the meaning given to it in Article I of the Acquisition Agreement. 1.21."Business Day" means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by Law or other government action to close. 1.22."Cash" means legal tender of the United States of America. 1.23."Cash Payment Fund" means a Cash fund available to holders of Allowed General Unsecured Claims other than Wexford- Related Unsecured Claims that will be created on the Effective Date and into which there shall be deposited the General Unsecured Claims Cash Payment; provided that any amount deposited or held in the Cash Payment Fund in excess of the Required Unsecured Claims Payment shall be withdrawn from the Cash Payment Fund and deposited in the Post-Petition Interest Fund. 1.24."Cash Payoff Treatment" means, as to any Allowed Secured Claim treated under the Plan, the following treatment: a cash payment on the Effective Date in the amount specified in the applicable section of Article V which, together with the applicable Non-Reinstated Secured Claim Supplemental Payment, shall be in full compromise and satisfaction of such Claim, provided that such treatment shall not be applicable to any such Claim, the holder of which (i) objects to any provision of the Plan or votes such Allowed Secured Claim or the General Unsecured Claim in respect of the Deficiency Amount of such Claim against the Plan and (ii) receives a Treatment Election Notice providing for Collateral Putback Treatment. 1.25."Cash Purchase Price" has the meaning given to it in Section 2.2(a) of the Acquisition Agreement. 1.26."Chapter 11 Case" means the case under Chapter 11 of the Bankruptcy Code with respect to the Debtor pending in the Court. 1.27."Claim" means a claim, as defined in Bankruptcy Code section 101(5), against the Debtor that arises before the Effective Date. 1.28."Class 12 Cure Payment" means a cash payment in the amount of $192,000 on account of the arrearage owing by O'Brien on the Effective Date to The Bank of New York in respect of the Allowed Class 12 Claim of The Bank of New York. 1.29."Class 15 Claim" means any Class 15A Claim, Class 15B Claim or Class 15C Claim. 1.30."Class 15A Cash Payment Fund" shall mean that portion of the Cash Payment Fund equal to a fraction, the numerator of which is the aggregate amount of Allowed General Unsecured Claims in respect of Senior Debt and the denominator of which is the aggregate amount of all Allowed General Unsecured Claims other than the Wexford-Related Unsecured Claims. 1.31."Class 15B Cash Payment Fund" shall mean that portion of the Cash Payment Fund equal to a fraction, the numerator of which is the aggregate amount of Allowed General Unsecured Claims other than those in respect of the Wexford- Related Class 15B 4 Claims, Senior Debt or Old Subordinated Noteholder Claims and the denominator of which is the aggregate amount of all Allowed General Unsecured Claims other than the Wexford-Related Unsecured Claims. 1.32."Class 15B Distribution Amount" shall have the meaning given to it in Section 5.12 of the Plan. 1.33."Class 15C Cash Payment Fund" shall mean that portion of the Cash Payment Fund equal to a fraction, the numerator of which is the aggregate amount of Allowed Old Subordinated Noteholder Claims other than the Wexford-Related Class 15C Claims and the denominator of which is the aggregate amount of all Allowed General Unsecured Claims other than the Wexford-Related Unsecured Claims. 1.34."Class 15C Distribution Amount" shall have the meaning given to it in Section 5.13 of the Plan. 1.35."Class 15 Supplemental Payment" means a cash payment equal to the amount of interest that accrues, at 5% per annum, for the period from February 1, 1996 until the Effective Date, on $69,467,000. 1.36."Class 15A Supplemental Payment" shall mean that portion of the Class 15 Supplemental Payment equal to a fraction, the numerator of which is the aggregate amount of Allowed General Unsecured Claims in respect of Senior Debt and the denominator of which is the aggregate amount of all Allowed General Unsecured Claims other than the Wexford-Related Unsecured Claims. 1.37."Class 15B Supplemental Payment" shall mean that portion of the Class 15 Supplemental Payment equal to a fraction, the numerator of which is the aggregate amount of Allowed General Unsecured Claims other than those in respect of the Wexford- Related Class 15B Claims, Senior Debt or Old Subordinated Noteholder Claims and the denominator of which is the aggregate amount of all Allowed General Unsecured Claims other than the Wexford-Related Unsecured Claims. 1.38."Class 15C Supplemental Payment" shall mean that portion of the Class 15 Supplemental Payment equal to a fraction, the numerator of which is the aggregate amount of Allowed Old Subordinated Noteholder Claims other than the Wexford-Related Class 15C Claims and the denominator of which is the aggregate amount of all Allowed General Unsecured Claims other than the Wexford-Related Unsecured Claims. 1.39."Co-Investment Agreement" means the Co-Investment Agreement between Reorganized O'Brien and NRG pursuant to which NRG shall grant Reorganized O'Brien a right of first refusal with respect to the Energy Development Projects (as defined in the Acquisition Agreement), substantially in the form attached as an Exhibit to the Acquisition Agreement. 1.40."Collateral" means any property of the Debtor subject to a valid and enforceable Lien to secure the payment of a Claim. 1.41."Collateral Putback Treatment" means, as to any Allowed Secured Claim treated under the Plan, the following treatment: the holder of such Allowed Claim will receive the Collateral securing such Claim on the Effective Date. If the Collateral Putback 5 Treatment is applicable to a particular Secured Claim, the Allowed amount of such Claim shall be determined by the Court prior to the Effective Date. 1.42."Committees" means the Creditors' Committee and the Equity Committee. 1.43."Confirmation Date" means the date on which the Confirmation Order is entered. 1.44."Confirmation Hearing" means the hearing conducted by the Court on confirmation of the Plan. 1.45."Confirmation Order" means an order of the Court, approving NRG as the prevailing Competing Bidder (as defined in the Bidding Procedures Order), confirming the Plan pursuant to Bankruptcy Code section 1129, and approving and authorizing the Acquisition Agreement and the Transaction Documents to which O'Brien is to be a party, in the form filed by the Proponents together herewith with such changes thereto as the Court may require that are reasonably satisfactory to the Proponents. 1.46."Contingent Claim" means a Claim that is contingent or unliquidated and that has not been Allowed by Final Order. 1.47."Court" means the United States Bankruptcy Court for the District of New Jersey, Judge Rosemary Gambardella presiding, or such other court as may have jurisdiction over the Chapter 11 Case. 1.48."Creditor Reinstatement Treatment" means either the Biogas Claims Reinstatement Treatment or the Reinstatement/Nonimpairment Treatment. 1.49."Creditors' Committee" means the Official Committee of Unsecured Creditors of O'Brien appointed in the Chapter 11 Case of O'Brien. 1.50."Cure Payments" means the aggregate amount required to be paid to any holders of Secured Claims on the Effective Date that are receiving the Biogas Claim Reinstatement Treatment or the Reinstatement/Nonimpairment Treatment under the Plan. 1.51."Debtor" means O'Brien. 1.52."Deferred Administrative Shortfall Amount" has the meaning given to it in Section 10.8.(b) 1.53."Deferred DIP Loan Amount" shall have the meaning given to it in Section 6.12(a) of the Plan. 1.54."Deferred Wexford Claim Amount" shall have the meaning given to it in Section 6.12(b) of the Plan. 1.55."Deficiency Amount" means, with respect to a Claim that is secured by a Lien on Collateral, the amount by which the Claim exceeds the sum of (i) the amount realized or realizable upon the exercise of any set-off rights of the holder of such Claim against the Debtor under sections 506 and 553 of the Bankruptcy Code, plus (ii) if the Collateral securing such Claim is disposed of prior to the Effective Date, the amount of net 6 proceeds realized therefrom or, if the Collateral is not so disposed of, the value of the interest of the holder of the Claim in the Debtor's interest in such Collateral, as determined by the Court under section 506 of the Bankruptcy Code; provided, however, that if the holder of such Claim makes the election provided in section 1111(b) of the Bankruptcy Code, there shall be no Deficiency Amount in respect of such Claim. 1.56."Designated Receivable" means the Insurance Receivable or the Pakistani Receivable. 1.57."DIP Loan" shall have the meaning given to it in the Acquisition Agreement. 1.58."DIP Loan Outstanding Amount" means the amount of the DIP Loan that is outstanding and due and owing to NRG immediately prior to consummation of the Plan on the Effective Date. 1.59."Disallowed Claim" or "Disallowed Interest" shall mean a Claim against, or Interest in, the Debtor, or any portion thereof, that has been disallowed by Final Order. 1.60."Disclosure Statement" means the Master Disclosure Statement filed by the Debtor, together with the supplemental disclosure statement relating to the Plan filed by the Proponents and any supplemental disclosure statement filed by the Proponents of any other plan of reorganization for the Debtor with respect to such plan of reorganization, as filed with the Court pursuant to section 1125 of the Bankruptcy Code and the Bidding Procedures Order. 1.61."Disclosure Statement Order" means the order of the Court entered on November 17, 1995, approving the Disclosure Statement pursuant to section 1125 of the Bankruptcy Code and establishing the procedures and method of providing notice of the Confirmation Hearing. 1.62."Disputed Claim" or "Disputed Interest" means a Claim against, or Interest in, the Debtor, to the extent that a proof of claim or interest has been filed or deemed filed under applicable law, (i) as to which an objection has been filed, (ii) which is a Contingent Claim that has not been withdrawn or disallowed by Final Order, (iii) that is designated as disputed in the Debtor's Schedules, (iv) in an amount in excess of that amount which has been listed by the Debtor in its Schedules as other than disputed, contingent or unliquidated, or (v) that has not been listed in the Debtor's Schedules. 1.63."Disputed Claims Reserve" shall have the meaning given to it in Section 10.7(c) of the Plan. 1.64."Distribution Date" means (i) for any Claim or Interest that is an Allowed Claim or Allowed Interest on the Effective Date, the Effective Date or as soon thereafter as practicable, but in no event more than ten days thereafter and (ii) for any Claim or Interest that is a Disputed Claim or Disputed Interest on the Effective Date, the date as soon as practicable, but in no event more than 30 days, after the date on which such Claim or Interest becomes an Allowed Claim or Allowed Interest. 7 1.65."Distribution Record Date" means the close of business in the City of New York, State of New York, on the Effective Date or such other date as may be fixed by order of the Court. 1.66."Distribution Reserves" means the Administrative and Priority Claims Reserve and the Disputed Claims Reserve. 1.67."Effective Date" means a Business Day designated by the Proponents in accordance with the Acquisition Agreement, on which (i) the Confirmation Order is not stayed and (ii) all conditions to the consummation of the Plan have been satisfied or waived as provided in Article XI. 1.68."Effective Date Administrative and Cure Payments" means the sum of the aggregate amount of Administrative Claims and Priority Claims that are Allowed and are due and payable on the Effective Date (excluding the DIP Loan Outstanding Amount and the Wexford Administrative Claim) and the Cure Payments. 1.69."Effective Date Administrative Shortfall Loan" shall have the meaning set forth in Section 10.8(b). 1.70."11% Subordinated Debentures (2010)" means the 11% Convertible Senior Subordinated Debentures issued by O'Brien, due March 15, 2010, pursuant to the 11% Subordinated Debentures (2010) Indenture. 1.71."11% Subordinated Debentures (2011)" means the 11% Convertible Senior Subordinated Debentures issued by O'Brien, due March 15, 2011, pursuant to the 11% Subordinated Debenture (2011) Indenture. 1.72."11% Subordinated Debentures (2010) Indenture" means the indenture, dated as of March 15, 1990, between O'Brien and Fidelity Bank, National Association, as Indenture Trustee. 1.73."11% Subordinated Debentures (2011) Indenture" means the Indenture, dated as of March 14, 1991, between O'Brien and United Jersey Bank, as Indenture Trustee. 1.74."Entity" means an individual, a corporation, a partnership, an association, a joint stock company, a joint venture, an estate, a trust, an unincorporated organization, a government or any subdivision thereof or any other person or entity. 1.75."Equipment Held for Sale" shall mean any item of energy equipment, consisting mainly of gas and steam turbines, owned by Reorganized O'Brien following the Effective Date and not utilized in a project operated by a Subsidiary, including, to the extent applicable, the energy equipment described in the appraisal dated July 14, 1995 delivered to O'Brien by Belyea Company Incorporated and the appraisal dated June 13, 1995 delivered to O'Brien by Arthur Andersen & Co., SC. 1.76."Equity Committee" has the meaning given to it in the first paragraph of the Plan. 1.77."Equityholders Cash Payment" means the $7.5 million Cash payment to be made pursuant to Section 5.14 of the Plan to the holders of Old Common Stock by 8 NRG, an affiliate of NRG, or Reorganized O'Brien in such manner as agreed between counsel to NRG and counsel to the Equity Committee prior to the Effective Date. 1.78."Estate" means the estate of the Debtor under section 541 of the Bankruptcy Code. 1.79."Excess Cash" shall have the meaning given to it in Section 6.12(c) of the Plan. 1.80."Fee Request Notice" shall have the meaning given to it in Section 10.2(b) of the Plan. 1.81."Final Order" means (1) an order of the Court as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument or rehearing shall then be pending or, (2) in the event that an appeal, writ or certiorari, reargument, or rehearing thereof has been sought, such order of the Court shall have been affirmed by the highest court to which such order was appealed, or certiorari has been denied, or from which reargument or rehearing was sought, and the time to take any further appeal, petition for certiorari or move for reargument or rehearing shall have expired; provided, however, that no order shall fail to be a Final Order solely because of the possibility that a motion pursuant to Rule 60 of the Federal Rules of Civil Procedure may be filed with respect to the order. 1.82."Final Resolution Date" means the date on which all Disputed Claims have been Allowed or disallowed by Final Order or withdrawn or otherwise finally resolved. 1.83."5 Percent Shareholder" means a shareholder described in Section 382(k)(7) of the Tax Code. 1.84."General Unsecured Claim" means any Claim other than an Administrative Claim, Priority Claim, Allowed Secured Claim, Old Subordinated Noteholder Securities Claim or Old Stockholder Securities Claim, including, but not limited to, (i) any Claim in respect of the Deficiency Amount of any Secured Claim classified in any of Classes 1 through 14 hereunder, as determined in accordance with Bankruptcy Code section 506, (ii) Old Subordinated Noteholder Claims held by holders of Old Subordinated Notes on the Distribution Record Date, and (iii) any Claim arising from the rejection by the Debtor of executory contracts and unexpired leases in accordance with Section 8.1 of the Plan. 1.85."General Unsecured Claims Cash Payment" means $77,967,000. Notwithstanding anything herein to the contrary and without limiting the generality of any provision hereof, neither Reorganized O'Brien nor NRG shall be entitled to the return of the General Unsecured Claims Cash Payment, the entire amount of which shall be distributable to the holders of Allowed Claims. 1.86."Insurance Receivable" means the $1 million insurance receivable described on the Pro Forma Balance Sheet of Parlin Cogen as of June 30, 1995. 1.87."Interest" means the interest represented by any equity security, as defined in Bankruptcy Code section 101(16). 1.88."ISRA Approval" has the meaning given to it in Section 3.10(b) of the Acquisition Agreement. 9 1.89."Lien" means any charge against or interest in property to secure payment of a debt or performance of an obligation. 1.90."Liquidating Asset Management Agreement" shall mean the Asset Management Agreement into which O'Brien and Wexford or its Affiliate will enter, effective on the Effective Date, providing for the management of the Liquidating Assets by Wexford or such Affiliate, in substantially the form attached as an Exhibit to the Acquisition Agreement; provided that the fees payable under the Liquidating Asset Management Agreement shall be subject to Court approval prior to the payment thereof and modified if and to the extent necessary for such fees to be determined by the Court to be reasonable pursuant to Bankruptcy Code section 1129(a)(4). 1.91."Liquidating Assets" means all of O'Brien's right, title and interest in and to (i) all of the outstanding common stock of Philadelphia Cogen and any management contracts relating to the Philadelphia Water Department Project to which O'Brien or any Affiliate thereof (other than Philadelphia Cogen) is a party; (ii) all of the equity interest in Philadelphia Biogas Supply, Inc., O'Brien Energy Services, Inc., Puma Power Plant, Ltd. and American Hydrotherm Corp.; and (iii) the Equipment Held for Sale. 1.92."Management Agreement" means the management agreement into which Reorganized O'Brien and NRG (or one or more of its Affiliates) will enter, effective on the Effective Date, providing for the provision of certain services relating to the management of Reorganized O'Brien and its subsidiaries following the Effective Date, substantially in the form attached as an Exhibit to the Acquisition Agreement. 1.93."Natwest" means National Westminster Bank, plc. 1.94."New By-laws" means the new by-laws of Reorganized O'Brien to take effect on the Effective Date, substantially in the form attached as an Exhibit to the Acquisition Agreement. 1.95."New Certificate of Designation" means a certificate of designation setting forth the terms of the New O'Brien Preferred Stock, which certificate of designation shall be filed with the Court not less than ten days prior to commencement of the Confirmation Hearing. 1.96."New Certificate of Incorporation" means the amended and restated certificate of incorporation of Reorganized O'Brien to take effect on the Effective Date, substantially in the form attached as an Exhibit to the Acquisition Agreement. 1.97."New O'Brien Common Stock" means shares of new common stock of Reorganized O'Brien, $.01 par value, to be issued on the Effective Date pursuant to the Plan. 1.98."New O'Brien Preferred Stock" means shares of Class A Preferred Stock of Reorganized O'Brien, $.01 par value, having the rights, preferences and privileges provided in the New Certificate of Designation, to be issued to holders of Wexford- Related Unsecured Claims (as provided in Section 5.12 and 5.13). 1.99."Newark Cogen" means O'Brien (Newark) Cogeneration, Inc. 1.100."Newark Loan Proceeds" means $24 million, representing the sum of the Newark Refinancing Proceeds and the proceeds of the NRG Newark Cogen Loan. 10 1.101."Newark Project" means the gas-fired Newark Cogeneration Facility owned by Newark Cogen. 1.102."Newark Project Refinancing" means a refinancing of the debt that is secured by a mortgage on the Newark Project. 1.103."Newark Refinancing Documentation" means the loan agreement, mortgage and other loan documentation relating to the Newark Project Refinancing. 1.104."Newark Refinancing Proceeds" means the proceeds, net of closing costs and expenses and the existing mortgage debt being refinanced, realized from the Newark Project Refinancing of up to $24 million, which proceeds shall be distributed by Newark Cogen to O'Brien on the Effective Date. 1.105."Non-Accepting Secured Creditor" means any holder of an Allowed Secured Claim that objects to or votes against the Plan and as a result receives the Collateral Putback Treatment instead of the Cash Payoff Treatment. 1.106."Non-Reinstated Secured Claim Supplemental Payment" means a cash payment to be made on the Effective Date to each holder of an Allowed Non-Reinstated Secured Claim equal to the amount of interest that accrues, at 5% per annum, for the period from February 1, 1996 until the Effective Date, on the Cash Payoff Treatment amount specified in the section of Article V that is applicable to such Allowed Non-Reinstated Secured Claim. 1.107."Non-Reinstated Secured Claims" means those Secured Claims treated under the Plan that are not receiving Creditor Reinstatement Treatment. 1.108."NRG" has the meaning set forth in the first paragraph of the Plan. 1.109."NRG Discretionary Supplemental Loan" has the meaning set forth in Section 6.10. 1.110."NRG Mandatory Supplemental Loan" has the meaning set forth in Section 6.10. 1.111."NRG New Loan" means a loan that will be made by NRG to Reorganized O'Brien on the Effective Date in the amount of $45 million pursuant to the NRG New Loan Agreement. 1.112."NRG New Loan Agreement" means a loan agreement into which Reorganized O'Brien and NRG will enter, effective on the Effective Date, substantially in the form filed with the Court on January 2, 1996. 1.113."NRG New Loan Expenses" means the reasonable out- of-pocket costs and expenses of NRG up to $100,000 referred to in Section 9.5 of the NRG New Loan Agreement. 1.114."NRG New Loan Proceeds" means the proceeds realized by Reorganized O'Brien from the NRG New Loan, net of the NRG New Loan Expenses of up to $100,000. 11 1.115."NRG Newark Cogen Loan" means a loan that will be made by NRG to O'Brien, on the Effective Date, pursuant to the NRG Newark Loan Documentation in an amount equal to the amount (if any) by which $24 million exceeds the Newark Refinancing Proceeds, which loan will be secured, by a Lien on all payments received or receivable by O'Brien from Newark Cogen, whether by dividend, pursuant to any management agreement between O'Brien and Newark Cogen or otherwise. 1.116."NRG Newark Cogen Loan Documentation" means the loan agreement, mortgage and other loan documentation relating to the NRG Newark Cogen Loan, substantially in the form filed with the Court on January 2, 1996. 1.117."NRG Supplemental Loan" means the NRG Discretionary Supplemental Loan and the NRG Mandatory Supplemental Loan. 1.118."NRG Supplemental Loan Documentation" means the loan agreement and other loan documentation relating to the NRG Supplemental Loan, substantially in the form filed with the Court on January 2, 1996, subject to such changes as are appropriate to give effect to Section 10.8(b) of the Plan. 1.119."Objection Resolution Expenses" has the meaning set forth in Section 10.2(b) of the Plan. 1.120."O'Brien" has the meaning set forth in the first paragraph of the Plan. 1.121."O'Brien Parlin Paydown Contribution" means a contribution by O'Brien to Parlin Cogen on the Effective Date of $1 million that will be applied to pay down the outstanding amount owing to Natwest under the Parlin Credit Agreement. 1.122."O'Brien Parlin Reserve Contribution" means the amount of Cash that Reorganized O'Brien is required to contribute to Parlin Cogen to fund fully the Parlin Reserve, which shall be net of any Cash held by Parlin Cogen that is available to fund the Parlin Reserve. 1.123."OES" means O'Brien Energy Services Company. 1.124."Old Common Stock" means the authorized shares of Class A Common Stock and Class B Common Stock of O'Brien, par value $.01 per share, issued and outstanding on the Petition Date. 1.125."Old Indenture Trustees" means, collectively, United Jersey Bank, BankAmerica National Trust Company and Bankers Trust Company, in each case as an indenture trustee or successor indenture trustee or successor indenture trustees. 1.126."Old Indentures" means the indentures pursuant to which the Old Subordinated Notes were issued by O'Brien. 1.127."Old Options" means the options to purchase shares of Old Common Stock granted pursuant to the Old Stock Option Plans and any other outstanding options, warrants or other rights to acquire any such shares. 1.128."Old Public Claims and Interests" means the Allowed Old Subordinated Noteholder Claims and Allowed Interests representing Old Common Stock. 12 This term specifically excludes any Old Subordinated Noteholder Securities Claims and Old Stockholder Securities Claims. 1.129."Old Stock Option Plans" means the 1987 Stock Option Plan, the 1989 Stock Option Plan, and the 1991 Stock Option Plan and any other stock option plan adopted by O'Brien. 1.130."Old Stockholder Securities Claim" means a Claim for damages or rescission arising out of the purchase or sale of Old Common Stock, or for reimbursement, contribution or indemnification on account of such a Claim. 1.131."Old Subordinated Noteholder Claims" means those Claims against O'Brien arising under any of the Old Subordinated Notes. The term specifically excludes any Old Subordinated Noteholder Securities Claims or any Claims held by the Old Indenture Trustees for fees and expenses that are not subordinated under the terms of the Old Debentures to the holders of Senior Debt. 1.132."Old Subordinated Noteholder Securities Claim" means any Claim for damages or rescission arising from or out of the purchase or sale of an Old Subordinated Note, or for reimbursement, contribution or indemnification on account of such a Claim. 1.133."Old Subordinated Notes" means (i) the 7 3/4% Subordinated Debentures, (ii) the 11% Subordinated Debentures (2010) and (iii) the 11% Subordinated Debentures (2011). 1.134."Pakistani Receivable" means the $1.24 million receivable held by O'Brien in respect of the Kribawa Project. 1.135."Parlin Cogen" means O'Brien (Parlin) Cogeneration, Inc. 1.136."Parlin Credit Agreement" means the Construction and Term Credit Agreement, dated March 1, 1989, between Parlin Cogen and Natwest, as amended. 1.137."Parlin Reserve" means the $3.5 million reserve required to be set aside pursuant to Section 7.1(c) of the Parlin Credit Agreement or such lower amount as Natwest may agree. 1.138."Petition Date" means the date on which the Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. 1.139."Philadelphia Cogen" means O'Brien (Philadelphia) Cogeneration, Inc., a Delaware corporation. 1.140."Philadelphia Water Development Project" shall mean the cogeneration and standby electric generating facility currently owned by Philadelphia Cogen. 1.141."Plan" means this Composite Fourth Amended and Restated Plan of Reorganization for O'Brien proposed by the Proponents, as it may be amended or supplemented as provided herein. 1.142."Plan Cash Insufficiency" has the meaning set forth in Section 6.10. 13 1.143."Plan Documents" means the documents referred to in the Plan that aid in effectuating the Plan and that, unless otherwise expressly provided herein, will be filed with the Court no later than ten days prior to commencement of the Confirmation Hearing. 1.144."Post-Petition Interest Fund" means a cash fund consisting of any amount initially deposited in the Cash Payment Fund that at any time is determined to be in excess of the Required Unsecured Claims Payment Amount, which cash fund shall be distributed to the holders of Allowed Non-Reinstated Secured Claims and Allowed General Unsecured Claims as and to the extent provided in Section 6.11. 1.145."Present Value" means the value, as of the Effective Date, of cash payments to be made to holders of Allowed Non-Reinstated Secured Claims and Allowed General Unsecured Claims under the Plan, determined by discounting such payments to present value at the legal rate of interest or, for purposes of discounting to present value amounts deposited in the Cash Payment Fund, such other rate that the Bankruptcy Court may determine is required. 1.146."Priority Claim" means a Claim entitled to priority under Bankruptcy Code sections 507(a)(3), 507(a)(4), or 507(a)(7) that is outstanding on the Effective Date. 1.147."Pro Rata Share" means, with reference to any distribution on account of any Allowed Claim or Interest in any particular class, subclass or specified group of classes of Claims or Interests, a distribution equal in amount to the ratio (expressed as a percentage) that the amount of such Allowed Claim or Interest bears at the time of such distribution to the aggregate amount of all Claims (including Disputed Claims, but not including Disallowed Claims) or Interests in such class, subclass or specified group of classes and, with respect to any distribution on account of an Allowed Interest in respect of Old Common Stock, Pro Rata Share means a distribution equal to the ratio (expressed as a percentage) that the number of shares of such Old Common Stock bears at the time of such distribution to the aggregate amount of all shares of Old Common Stock (including shares of Class A Common Stock and Class B Common Stock of O'Brien); provided that in the case of any provision of the Plan that provides for a holder of an Allowed Class 15B Claim or Allowed Class 15C Claim to receive a Pro Rata Share of the Class 15B Cash Payment Fund or the Class 15C Cash Payment Fund, the Pro Rata Share of each holder of an Allowed Class 15B Claim or an Allowed Class 15C Claim shall be determined as though the Wexford- Related Class 15B Claims and Wexford-Related Class 15C Claims are not Class 15B Claims and Class 15C Claims, respectively. 14 1.148."Professional Fees" means fees and expenses of professionals retained pursuant to an order of the Court pursuant to Bankruptcy Code section 327 or 1103 that are awarded by the Court under Bankruptcy Code section 330(a) in respect of services rendered by such professionals on or prior to the Effective Date. 1.149."Purchased Company Shares" means the shares of New O'Brien Common Stock to be acquired by NRG under the Acquisition Agreement and the Plan representing 41.86% of the shares of New O'Brien Common Stock to be issued and outstanding on and after the Effective Date. 1.150."Purchased Subsidiary Shares" means all of the issued and outstanding shares of capital stock of each of the Acquired Subsidiaries. 1.151."Reinstatement/Nonimpairment Treatment" means, as to any Secured Claim treated under the Plan, the following treatment: (A) such Claim shall not be bifurcated into an Allowed Secured Claim and an Allowed Unsecured Claim based on a determination of a Deficiency Amount in respect of such Claim; (B) if applicable, the maturity of such Claim shall be reinstated; (C) any defaults with respect to such Claim other than the kind specified in Bankruptcy Code section 365(b)(2) shall be cured; (D) the holder of such Claim shall be compensated for any damages incurred by such holder as a result of any reasonable reliance by such holder on any contractual provision or applicable law that entitles such holder to demand or receive accelerated payment of such Claim after any default with respect to such Claim; and (E) the legal, equitable and contractual rights to which such Claim entitles the holder thereof shall otherwise be left unaltered. 1.152."Rejected Contracts" has the meaning set forth in Section 8.1. 1.153."Reorganized O'Brien" means O'Brien following consummation of the Plan on the Effective Date. 1.154."Required Unsecured Claims Payment Amount" means cash payments that have a Present Value equal to the aggregate amount of all Allowed General Unsecured Claims other than the Wexford-Related Unsecured Claims. 1.155."Reserved Administrative and Cure Claims Cash Amount" means cash equal to the sum of $14,468,000. 1.156."Retained Working Capital Amount" means Cash held by O'Brien on the Effective Date in an amount equal to $1 million to be retained by Reorganized O'Brien on the Effective Date for working capital purposes. 1.157."Schedules" means the schedules filed by the Debtor in its Chapter 11 Case pursuant to Bankruptcy Rule 1007, as such schedules may be amended from time to time in accordance with Bankruptcy Rule 1009. 1.158."Secured Claim" means a Claim, to the extent of the value of any Lien on or security interest in property of the Debtor that secures payment of such Claim. 1.159."Senior Debt" means the holders of 'Senior Debt' or 'Senior Indebtedness,' as those terms are defined in the Old Indentures and to which the holders of Old Subordinated Notes are subordinated pursuant to the Old Indentures. For purposes of this Plan, if the holder of each of Allowed Claims in respect to Senior Debt of CoreStates New Jersey National Bank, CoreStates Bank, First Fidelity Bank, N.A., and Heller Financial, Inc. accepts the Plan (both as the holder of Secured Claims treated as Classes 2, 3, 5 and 7 and as the holder of an Allowed General Unsecured Claim in respect of Senior Debt), the aggregate amount of Allowed Claims held by such holder that are treated in Class 15A shall be deemed to be $11,002,070 (less $455,000 in respect of the Secured Class 2 Claim of CoreStates New Jersey National Bank, $495,000 in respect of the Secured Class 3 Claim of CoreStates Bank, $155,588 in respect of the Secured Class 5 Claim of First Fidelity Bank, N.A. and $1,360,000 in respect of the Secured Class 7 Claim of Heller Financial, Inc.). For purposes of this Plan, if The Bank of New York accepts the Plan (both as the holder of a Secured Claim treated in Class 11 and as the holder of an Allowed General Unsecured Claim in respect of Senior Debt), the Allowed Claims in respect to Senior Debt of The Bank of New York treated in Class 15A shall be deemed to be $5,004,355 (less the sum of $1,106,000 in respect of its Class 11 Secured Claim). To the extent that such Claims if deemed allowed 15 pursuant to Section 1.151, include amounts for attorneys' fees, such amounts shall be subject to approval of the Bankruptcy Court in the event an objection is filed, other than by any of the Proponents, prior to the Confirmation Hearing. 1.160."7 3/4% Subordinated Debentures" means the 7 3/4% Convertible Senior Subordinated Debentures issued by O'Brien, due March 15, 2002, pursuant to the 7 3/4% Subordinated Debentures Indenture. 1.161."7 3/4% Subordinated Debentures Indenture" means the Indenture, dated as of March 15, 1987, between O'Brien and United Jersey Bank as Indenture Trustee. 1.162."Stock Transfer Agent" has the meaning set forth in Section 6.6(a). 1.163."Subsidiary" has the meaning set forth in the Acquisition Agreement. 1.164."Supplemental Interest Amount" means the sum of (i) the Class 15 Supplemental Payment Amount and (ii) the Wexford- Related Class 15 Supplemental Payment. 1.165."Tax Claim" means a Claim of the kind specified in section 507(a)(7) of the Bankruptcy Code. 1.166."Tax Code" means the Internal Revenue Code of 1986, as amended from time to time. 1.167."Transaction Documents" means the contracts, agreements, documents and instruments contemplated to be entered into by the terms of the Acquisition Agreement. 1.168."Treatment Election Notice" has the meaning given to it in Section 5.1. 1.169."Unresolved Administrative and Priority Claim" means an Administrative Claim or Priority Claim against the Debtor (i) in the case of a Claim as to which a proof of Claim has been filed prior to the Effective Date, that is a Disputed Claim on the Effective Date, or (ii) in the case of a Claim as to which a proof of claim has not been filed prior to the Effective Date, any other such Claim of any kind or nature that is not an Allowed Claim on the Effective Date other than an Administrative Claim that represents an undisputed liability incurred by the Debtor in the ordinary course of business during the Chapter 11 Case that in accordance with its terms is due and payable on the Effective Date; provided that "Unresolved Administrative and Priority Claim" shall not include (x) the Administrative Claim of NRG in respect of the DIP Loan Outstanding Amount; (y) the Wexford Administrative Claim or (z) any Professional Fees awarded prior to the Effective Date that are to be paid on or as soon as practicable but no more than five Business Days after the Effective Date pursuant to clause (v) of Article II hereof; in each case subject to any applicable bar date established by the Court upon motion filed by the Debtor. 1.170."Wexford" has the meaning given to it in the first paragraph of the Plan. 1.171."Wexford Administrative Claim" means an Administrative Claim of Wexford that, upon the Effective Date, will be deemed Allowed in the amount of $200,000 and that will be in full settlement and satisfaction of any indemnification Claims of Wexford or its affiliates against the Debtor with respect to legal fees and expenses and any Claims under Bankruptcy Code section 503(b)(3)(D) based on Wexford having made a substantial 16 contribution to the Chapter 11 Case; provided that such Administrative Claim shall be subject to approval of the Court under Bankruptcy Code section 1129(a)(4) as reasonable. 1.172."Wexford-Related Class 15 Supplemental Payment" means the Wexford-Related Class 15B Supplemental Payment and the Wexford-Related Class 15C Supplemental Payment. 1.173."Wexford-Related Class 15B Claims" has the meaning given to it in Section 5.12 of the Plan. 1.174."Wexford-Related Class 15B Supplemental Payment" means a cash payment to be made on the applicable Distribution Date to each of the holders of Wexford-Related Class 15B Claims equal to the amount of interest that accrues, at 5% per annum, for the period from February 1, 1996 until the Effective Date, on the amount of such holder's Wexford-Related Class 15B Claims. 1.175."Wexford-Related Class 15C Supplemental Payment" means a cash payment to be made on the applicable Distribution Date to each of the holders of Wexford-Related Class 15C Claims equal to the amount of interest that accrues, at 5% per annum, for the period from February 1, 1996 until the Effective Date, on the amount of such holder's Wexford-Related Class 15C Claims. 1.176."Wexford-Related Class 15C Claims" has the meaning given to it in Section 5.13 of the Plan. 1.177."Wexford-Related Unsecured Claims" means, collectively, the Wexford-Related Class 15B Claims and the Wexford-Related Class 15C Claims. Article II: Unclassified Claims Unless otherwise agreed to by the holder of the Claim and the Debtor, each holder of an Allowed Administrative Claim or an Allowed Priority Claim against the Debtor shall receive on the Distribution Date Cash equal to the amount of such Allowed Claim; provided, however, that (i) Administrative Claims that represent undisputed liabilities incurred by the Debtor in the ordinary course of business during the Chapter 11 Case of the Debtor shall be paid in the ordinary course of business and in accordance with any terms and conditions that may be applicable under any agreements relating thereto; (ii) the Debtor shall provide for the full payment of any Administrative Claim or Priority Claim against the Debtor that constitutes an Unresolved Administrative and Priority Claim by establishing the Administrative and Priority Claims Reserve on the Effective Date, which, as provided in Section 10.8 of the Plan, shall be the sole source of payment in respect of such Claims after the Effective Date; (iii) the Administrative Claim of NRG in respect of the DIP Loan Outstanding Amount shall not be due and payable on the Effective Date and shall be repaid with deferred cash payments as and to the extent provided in Section 6.12(a); (iv) the Wexford Administrative Claim shall not be due and payable on the Effective Date and shall be repaid with deferred cash payments as and to the extent provided in Section 6.12(b) and (v) the amount of any Professional Fees awarded by the Court prior to the Effective Date (excluding any amount required to be held back pending allowance by the Court after the filing of final fee applications) shall be paid on the Effective Date to the professionals entitled thereto as soon as practicable but no later than five Business Days thereafter (subject to the effect of any order entered by the Court following the filing of final fee applications that 17 finally determines the aggregate Allowed amount of Professional Fees to be awarded to such professionals). Article III: Classification of Claims and Interests Claims and Interests that are required to be classified under Bankruptcy Code section 1123(a)(1) are hereby divided into the following classes: 3.1 Class 1--BLT Leasing Corp. Class 1 consists of the Allowed Secured Claim of BLT Leasing Corp. in respect of its first priority Lien on a Caterpillar G399 generator set and related Collateral, as and to the extent specified in the applicable security documentation between BLT Leasing Corp. and O'Brien. 3.2 Class 2--CoreStates New Jersey National Bank. Class 2 consists of the Allowed Secured Claims of CoreStates New Jersey National Bank in respect of its first priority Liens on certain generator sets, turbine sets, boilers and related Collateral, as and to the extent specified in the applicable security documentation between CoreStates New Jersey National Bank and O'Brien. Each such Allowed Secured Claim that arises out of a particular equipment financing transaction shall be classified in a separate subclass. 3.3 Class 3--CoreStates Bank. Class 3 consists of the Allowed Secured Claims of CoreStates Bank in respect of its first priority Liens on certain turbine sets, and related Collateral, as and to the extent specified in the applicable security documentation between CoreStates Bank and O'Brien. Each such Allowed Secured Claim that arises out of a particular equipment financing transaction shall be classified in a separate subclass. 3.4 Class 4--Financing for Science International, Inc. Class 4 consists of the Allowed Secured Claims of Financing for Science International, Inc., in respect of its first priority Liens on certain generator sets and related Collateral, as and to the extent specified in the applicable security documentation between O'Brien and Financing for Science International, Inc. Each such Allowed Secured Claim that arises out of a particular equipment financing transaction shall be classified in a separate subclass. 3.5 Class 5--First Fidelity Bank, N.A. Class 5 consists of the Allowed Secured Claims of First Fidelity Bank, N.A., in respect of its first priority Liens on certain generator sets and related Collateral, as and to the extent specified in the applicable security documentation between First Fidelity Bank, N.A. and O'Brien. Each such Allowed Secured Claim that arises out of a particular equipment financing transaction shall be classified in a separate subclass. 3.6 Class 6--General Electric Capital Corporation. Class 6 consists of the Allowed Secured Claims of General Electric Capital Corporation in respect of its first priority Liens on certain generator sets and related Collateral, as and to the extent specified in the applicable security documentation between O'Brien and General Electric Capital Corporation. Each such Allowed Secured Claim that arises out of a particular equipment financing transaction shall be classified in a separate subclass. 3.7 Class 7--Heller Financial, Inc. Class 7 consists of the Allowed Secured Claim of Heller Financial, Inc. in respect of its first priority Lien on certain steam turbine sets, generator sets and related Collateral, as and to the extent specified in the applicable security documentation between O'Brien and Heller Financial, Inc. 18 3.8 Class 8--MDFC Equipment Leasing Corp. Class 8 consists of the Allowed Secured Claims of MDFC Equipment Leasing Corp. in respect of its first priority Liens on certain generator sets and related Collateral, as and to the extent specified in the applicable security documentation between O'Brien and MDFC Equipment Leasing Corp. and the Stipulation and Order entered into by the Court on August 7, 1995 (for the purposes of the Plan, any claims of MDFC Equipment Leasing Corp. under any equipment lease will be deemed to be Secured Claims, whether or not such lease is a 'true lease' or a lease that is intended to create a security interest). Each such Allowed Secured Claim that arises out of a particular equipment financing transaction shall be classified in a separate subclass. 3.9 Class 9--Meridian Bank. Class 9 consists of the Allowed Secured Claims of Meridian Bank in respect of its first priority Liens on certain generator sets and related Collateral, as and to the extent specified in the applicable security documentation between O'Brien and Meridian Bank. Each such Allowed Secured Claim that arises out of a particular equipment financing transaction shall be classified in a separate subclass. 3.10 Class 10--PECO Energy Company. Class 10 consists of the Allowed Secured Claim of PECO Energy Company in respect of its first priority Lien on shares of capital stock of Philadelphia Cogen and certain other Collateral, as and to the extent specified in the applicable security documentation between O'Brien and PECO Energy Company. 3.11 Class 11--The Bank of New York (Equipment). Class 11 consists of the Allowed Secured Claims of The Bank of New York in respect of its first priority Liens on certain gas turbine sets, generator sets, steam turbine sets and related Collateral, as and to the extent specified in the applicable security documentation between O'Brien and The Bank of New York. Each such Allowed Secured Claim that arises out of a particular equipment financing transaction shall be classified in a separate subclass. 3.12 Class 12--The Bank of New York (Documents). Class 12 consists of all Allowed Secured Claims of The Bank of New York in respect of its first priority Lien on certain agreements and a standby letter of credit, as and to the extent provided in the applicable security documentation between O'Brien and The Bank of New York. 3.13 Class 13--Natwest. Class 13 consists of two subclasses, Class 13A and Class 13B. Class 13A consists of the Allowed Secured Claims of Natwest in respect of its first priority Lien on the shares of common stock of Newark Cogen. Class 13B consists of the Allowed Secured Claims of Natwest in respect of its first priority Lien on the shares of common stock of Parlin Cogen. 3.14 Class 14--Other Secured Claims. Class 14 consists of Allowed Secured Claims against O'Brien other than those that are specifically classified in any of Classes 1 through 13. Each Allowed Secured Claim that is classified in Class 14 shall be classified in a separate subclass. 3.15 Class 15A--Senior Debt. Class 15A consists of Allowed General Unsecured Claims in respect of Senior Debt. 3.16 Class 15B--Non-Subordinated Unsecured Claims. Class 15B consists of Allowed General Unsecured Claims other than those in respect of Senior Debt or Old Subordinated Noteholder Claims. 19 3.17 Class 15C--Old Subordinated Noteholder Claims. Class 15C consists of Allowed Old Subordinated Noteholder Claims. 3.18 Class 16--Old Common Stock. Class 16 consists of Allowed Interests in O'Brien represented by the Old Common Stock. 3.19 Class 17--Old Subordinated Noteholder Securities Claims. Class 17 consists of Allowed Old Subordinated Noteholder Securities Claims. 3.20 Class 18--Old Stockholder Securities Claims. Class 18 consists of Allowed Old Stockholder Securities Claims. 3.21 Class 19--Old Options. Class 19 consists of the Allowed Interests in O'Brien represented by the Old O'Brien Options. Article IV: Treatment of Classes Not Impaired by the Plan Classes not impaired by the Plan shall be treated as follows: 4.1 Class 1 (BLT Leasing Corp.). BLT Leasing Corp., as the holder of the Allowed Claim in Class 1, will receive the Reinstatement/Nonimpairment Treatment. 4.2 Class 6 (General Electric Capital). General Electric Capital Corporation, as the holder of the Allowed Class 6 Claim, will receive the Reinstatement/Nonimpairment Treatment. 4.3 Class 9 (Subclass of Meridian Bank--Collateral Used in Biogas Projects Formerly Owned by O'Brien). Meridian Bank, as the holder of Allowed Class 9 Claim that is secured by a Lien on equipment that is leased to the owners of Biogas projects formerly owned by O'Brien, will receive the Reinstatement/Nonimpairment Treatment. 4.4 Class 10 (PECO Energy Company). PECO Energy Company, as the holder of the Allowed Class 10 Claim, will receive the Reinstatement/Nonimpairment Treatment. 4.5 Class 13 (Natwest). Natwest, as the holder of Allowed Claims in Class 13A and 13B, will receive the Reinstatement/Nonimpairment Treatment. Article V: Treatment of Classes Impaired by the Plan Classes that are or may be impaired by the Plan shall be treated as follows: 5.1 Class 2 (CoreStates New Jersey National Bank). The Allowed Secured Claims in Class 2 will receive, on the Effective Date, the Cash Payoff Treatment in the amount of $455,000, plus the applicable Non-Reinstated Secured Claim Supplemental Payment, and, when and as provided in Section 6.11, its Pro Rata Share of the Post-Petition Interest Fund; provided that, in the event the holder of such Claims objects to any provision of the Plan or votes such Claims or the General Unsecured Claim in respect of the Deficiency Amount of such Claims against the Plan, at the election of the Proponents made in a written notice served and filed with the Court no later than twenty days prior to commencement of the Confirmation Hearing (the "Treatment Election Notice"), such holder will receive the 20 Collateral Putback Treatment in respect of such holder's Allowed Secured Claims, as and to the extent specified in the Treatment Election Notice. 5.2 Class 3 (CoreStates Bank). The Allowed Secured Claims in Class 3 will receive, on the Effective Date, the Cash Payoff Treatment in the amount of $495,000, plus the applicable Non-Reinstated Secured Claim Supplemental Payment, and, when and as provided in Section 6.11, its Pro Rata Share of the Post- Petition Interest Fund; provided that, in the event the holder of such Claims objects to any provision of the Plan or votes the General Unsecured Claim in respect of the Deficiency Amount of its Secured Claims against the Plan, at the election of the Proponents made in a Treatment Election Notice no later than twenty days prior to commencement of the Confirmation Hearing, such holder will receive the Collateral Putback Treatment in respect of such holder's Allowed Secured Claims, as and to the extent specified in the Treatment Election Notice. 5.3 Class 4 (Financing for Science International, Inc.). The Allowed Secured Claims in Class 4 will receive, on the Effective Date, the Biogas Claim Reinstatement Treatment, and the obligations of the Debtor to Financing for Science International, Inc. that are treated in Class 4 and are to be assumed by the Acquired Subsidiary to which the Biogas Assets that secure such obligations are transferred shall be unconditionally guaranteed by NRG. 5.4 Class 5 (First Fidelity Bank). The Allowed Secured Claims in Class 5 will receive, on the Effective Date, the Cash Payoff Treatment in the amount of $155,588, plus the applicable Non-Reinstated Secured Claim Supplemental Payment, and, when and as provided in Section 6.11, its Pro Rata Share of the Post-Petition Interest Fund; provided that, in the event the holder of such Claims objects to any provision of the Plan or votes the General Unsecured Claim in respect of the Deficiency Amount of its Secured Claims against the Plan, at the election of the Proponents made in a Treatment Election Notice no later than twenty days prior to commencement of the Confirmation Hearing, such holder will receive the Collateral Putback Treatment in respect of such holder's Allowed Secured Claims, as and to the extent specified in the Treatment Election Notice. 5.5 Class 7 (Heller Financial, Inc.). The Allowed Secured Claims in Class 7 will receive, on the Effective Date, the Cash Payoff Treatment in the amount of $1,360,000, plus the applicable Non-Reinstated Secured Claim Supplemental Payment, and, when and as provided in Section 6.11, its Pro Rata Share of the Post-Petition Interest Fund; provided that, in the event the holder of such Claims objects to any provision of the Plan or votes the General Unsecured Claim in respect of the Deficiency Amount of its Secured Claims against the Plan, at the election of the Proponents made in a Treatment Election Notice no later than twenty days prior to commencement of the Confirmation Hearing, such holder will receive the Collateral Putback Treatment in respect of such holder's Allowed Secured Claims, as and to the extent specified in the Treatment Election Notice. 5.6 Class 8 (MDFC Equipment Leasing Corp.). The holder of the Allowed Secured Claims in Class 8 will receive, on the Effective Date, in the case of the Retained Generator Equipment, as defined in the Stipulation and Order entered into on August 7, 1995, the treatment provided in such Stipulation and Order and, in the case of each such Secured Claim that is secured by any Biogas Assets, such Claim shall receive the Biogas Claim Reinstatement Treatment. 5.7 Class 9 (Meridian Bank). The Allowed Secured Claims in Class 9 (other than the subclass treated in Section 4.3) will receive, on the Effective Date, the Cash 21 Payoff Treatment in the amount of $140,000, plus the applicable Non-Reinstated Secured Claim Supplemental Payment, and, when and as provided in Section 6.11, its Pro Rata Share of the Post- Petition Interest Fund; provided that, in the event the holder of such Claims objects to any provision of the Plan or votes the General Unsecured Claim in respect of the Deficiency Amount of its Secured Claims against the Plan, at the election of the Proponents made in a Treatment Election Notice no later than twenty days prior to commencement of the Confirmation Hearing, such holder will receive the Collateral Putback Treatment in respect of such holder's Allowed Secured Claims, as and to the extent specified in the Treatment Election Notice. 5.8 Class 11 (Bank of New York--Equipment). The Allowed Secured Claims in Class 11 will receive, on the Effective Date, the Cash Payoff Treatment in the amount of $1,106,000, plus the applicable Non-Reinstated Secured Claim Supplemental Payment, and, when and as provided in Section 6.11, its Pro Rata Share of the Post-Petition Interest Fund; provided that, in the event the holder of such Claims objects to any provision of the Plan or votes the General Unsecured Claim in respect of the Deficiency Amount of its Secured Claims against the Plan, at the election of the Proponents made in a Treatment Election Notice no later than twenty days prior to commencement of the Confirmation Hearing, such holder will receive the Collateral Putback Treatment in respect of such holder's Allowed Secured Claims, as and to the extent specified in the Treatment Election Notice. 5.9 Class 12 (The Bank of New York) Documents. The holder of the Allowed Secured Claim in Class 12 will receive the BONY Deferred Cash Payment Treatment. 5.10 Class 14 (Other Secured Claims). Each holder of an Allowed Secured Claim in Class 14 will receive, on the Effective Date, the Collateral Putback Treatment or such other treatment as may satisfy the requirements of Bankruptcy Code section 1129(b)(2)(A). 5.11 Class 15A (Senior Debt). Subject to Article VII, each holder of an Allowed Class 15A Claim will receive its Pro Rata Share of (i) on the applicable Distribution Date, the Class 15A Cash Payment Fund and the Class 15A Supplemental Payment, and (ii) when and as provided in Section 6.11, the Post-Petition Interest Fund. 5.12 Class 15B (Non-Subordinated Unsecured Claims). Subject to Article VII, each holder of an Allowed Class 15B Claim will receive its Pro Rata Share of (i) on the applicable Distribution Date, the Class 15B Cash Payment Fund and the Class 15B Supplemental Payment, and (ii) when and as provided in Section 6.11, the Post-Petition Interest Fund; provided that, in lieu of receiving any distributions from the Class 15B Cash Payment Fund or any portion of the Class 15B Supplemental Payment in accordance with the foregoing (but not in lieu of any distributions from the Post-Petition Interest Fund, which shall not be affected by this proviso), Wexford and any Affiliate of Wexford shall receive in respect of any Allowed Class 15B Claims held by Wexford and each such Affiliate ("Wexford-Related Class 15B Claims") the following less favorable treatment to which Wexford and each such Affiliate have agreed pursuant to Bankruptcy Code section 1123(a)(4): Wexford and each such Affiliate shall receive, (x) on the applicable Distribution Date, the applicable Wexford-Related Class 15B Supplemental Payment and (y) promptly after a final determination is made of the Present Value of the distributions from the Class 15B Cash Payment Fund that Wexford or such Affiliate would have received pursuant to the foregoing provisions of this Section 5.12 had the amount in the Class 15B Cash Payment Fund been increased by the Allowed amount of the Wexford-Related Class 15B Claims and but for this proviso (the 22 "Class 15B Distribution Amount"), shares of New O'Brien Preferred Stock with a liquidation and redemption preference equal to the Class 15B Distribution Amount. Notwithstanding anything to the contrary in this Section 5.12, the holder of any General Unsecured Claim in respect of a guarantee by the Debtor of an obligation of any Affiliate that is an Allowed Claim on the Effective Date shall not be treated as a Class 15 Claim and shall instead receive the Reinstatement/Nonimpairment Treatment. Notwithstanding anything in this Section 5.12 to the contrary, any Allowed Claim that is held by any Subsidiary of the Debtor shall not be treated as a Class 15 Claim and shall instead be deemed to be released and discharged as of the Effective Date. 5.13 Class 15C (Old Subordinated Noteholder Claims). Subject to Article VII, each holder of an Allowed Class 15C Claim will receive its Pro Rata Share of (i) on the applicable Distribution Date, the Class 15C Cash Payment Fund and the Class 15C Supplemental Payment, and (ii) when and as provided in Section 6.11, the Post-Petition Interest Fund; provided that, in lieu of receiving any distributions from the Class 15C Cash Payment Fund in accordance with the foregoing (but not in lieu of any distribution from the Post-Petition Interest Fund, which shall not be affected by this proviso), Wexford and any Affiliate of Wexford shall receive in respect of any Allowed Class 15C Claims held by Wexford and each such Affiliate ("Wexford-Related Class 15C Claims") the following less favorable treatment to which Wexford and each such Affiliate have agreed pursuant to Bankruptcy Code section 1123(a)(4): Wexford and each such Affiliate shall receive (x) on the applicable Distribution Date, the applicable Wexford-Related Class 15C Supplemental Payment and (y) promptly after a final determination is made of the Present Value of the distributions from the Class 15C Cash Payment Fund that Wexford or such Affiliate would have received pursuant to the foregoing provisions of this Section 5.13 had the amount in the Class 15C Cash Payment Fund been increased by the Allowed amount of the Wexford-Related Class 15C Claims and but for this proviso (the "Class 15C Distribution Amount"), shares of New O'Brien Preferred Stock with a liquidation and redemption preference equal to the Class 15C Distribution Amount. 5.14 Class 16 (Old Common Stock). On the Effective Date, the Old Common Stock shall be canceled and extinguished, and on the Distribution Date each holder of an Allowed Class 16 Interest on the Distribution Record Date will receive its Pro Rata Share of the Equityholders Cash Payment and all of the New O'Brien Common Stock to be issued and outstanding on and after the Effective Date other than the Purchased Company Shares. 5.15 Class 17 (Old Subordinated Noteholder Securities Claims). If the holders of Class 17 Claims accept the Plan by the requisite majorities under Bankruptcy Code section 1126(c), such holders shall retain, and shall be entitled to assert following the Effective Date, their Class 17 Claims against O'Brien to the extent of any recoveries available to O'Brien in respect of any insurance policies providing any insurance coverage in respect of such Claims; provided that the holders of Class 17 Claims shall be entitled to no other distribution under the Plan in respect of such Claims and such Claims shall otherwise be discharged on the Effective Date. If the holders of Class 17 Claims do not accept the Plan by the requisite majorities under Bankruptcy Code section 1126(c), (i) the Proponents, prior to or at the Confirmation Hearing, shall seek the estimation of such Claims under Bankruptcy Code section 502(c) for allowance purposes at zero, and (ii) the holders of such Claims shall receive no distributions whatsoever on account of such Claims. 5.16 Class 18 (Old Stockholder Securities Claims). If the holders of Class 18 Claims accept the Plan by the requisite majorities under Bankruptcy Code section 1126(c), 23 such holders shall retain, and shall be entitled to assert, following the Effective Date, their Class 18 Claims against O'Brien to the extent of any recoveries available to O'Brien in respect of any insurance policies providing any insurance coverage in respect of such Claims; provided that the holders of Class 18 Claims shall be entitled to no other distribution under the Plan in respect of such Claims and such Claims shall otherwise be discharged on the Effective Date. If the holders of Class 18 Claims do not accept the Plan by the requisite majorities under Bankruptcy Code section 1126(c), (i) the Proponents, prior to or at the Confirmation Hearing, shall seek the estimation of such Claims under Bankruptcy Code section 502(c) for allowance purposes at zero, and (ii) the holders of such Claims shall receive no distributions whatsoever on account of such Claims. 5.17 Class 19 (Old Options). On the Effective Date, all Old Options shall be canceled and extinguished, and each holder of an Allowed Class 19 Interest shall receive no distributions on account of its Interest. Article VI: Means for Execution of Plan 6.1 Consummation of Acquisition and Plan. Promptly following the Confirmation Date, O'Brien shall execute and deliver the Acquisition Agreement and O'Brien shall execute and deliver each of the other Transaction Documents to which O'Brien is to be a party pursuant to the Acquisition Agreement. Pursuant to the Acquisition Agreement and the Plan, on the Effective Date, the Plan shall be implemented and the following shall take place: (a) Acquisition Agreement Closing. The Closing shall occur under the Acquisition Agreement and in connection therewith NRG shall pay or cause to be paid to Reorganized O'Brien the Cash Purchase Price, and NRG or an Affiliate thereof designated by NRG shall acquire the Purchased Company Shares and the Purchased Subsidiary Shares free and clear of all Liens, Claims and Interests and Reorganized O'Brien shall issue to the Stock Transfer Agent for the benefit of holders of Allowed Class 16 Interests, a certificate representing the aggregate amount of shares of New O'Brien Common Stock to which such holders are entitled pursuant to Section 5.14; (b) Cancellation of Old Common Stock. All Interests in O'Brien shall be canceled and extinguished and all certificates therefor shall be null and void, by operation of the Plan and without the need for any action to be taken by the certificate holder or by any other person; (c) Distributions. The distributions, including the Equityholders Cash Payment, to be made pursuant to Articles II, IV and V on the Effective Date, shall be made or provided for and the Distribution Reserves shall be created, and held and administered by, Reorganized O'Brien in accordance with Section 10.7; (d) NRG New Loan; Creation of Cash Payment Fund. (1) Reorganized O'Brien and NRG shall enter into the NRG New Loan Agreement, (2) NRG New Loan Expenses of up to $100,000 will be paid from the proceeds of the NRG New Loan, (3) the General Unsecured Claims Payment Amount shall be deposited in the Cash Payment Fund, and (4) to the extent applicable, any amount held in the Cash Payment Fund in excess of the Required Unsecured Claims Payment Amount shall be withdrawn therefrom and deposited in the Post-Petition Interest Fund; 24 (e) Additional Loan. If and to the extent required to be made pursuant to the Acquisition Agreement or the Plan, NRG shall make the NRG Mandatory Supplemental Loan; and (f) Parlin Contributions. Reorganized O'Brien shall make any O'Brien Parlin Reserve Contribution and the O'Brien Parlin Paydown Contribution. 6.2 General Corporate Matters: Charter Amendment. Reorganized O'Brien shall take such action as is necessary under the laws of the state of Delaware, federal law and other applicable law to effect the terms and provisions of the Plan. On the Effective Date, Reorganized O'Brien shall file the New Certificate of Incorporation and the New Certificate of Designation with the Secretary of State of the State of Delaware in accordance with sections 102 and 103 of Delaware General Corporation Law and the New By-laws shall be adopted. 6.3 Reconstituted Board of Directors of O'Brien. Effective on the Effective Date, the Board of Directors of Reorganized O'Brien shall consist of seven directors, of whom (i) four shall have been designated by NRG, (ii) one shall have been designated by Wexford, (iii) one shall have been designated by the Equity Committee and (iv) one shall have been jointly designated by Wexford and each of the holders of Old Common Stock who are members of the Equity Committee. 6.4 Corporate Action. Except as specifically provided in the Plan, the adoption of the New Certificate of Incorporation and New By-laws, the designation of directors for Reorganized O'Brien, the distribution of Cash and the adoption, execution and delivery of all contracts, instruments, indentures and other agreements related to any of the foregoing, including without limitation the Plan Documents, and the other matters provided for under the Plan involving corporate action to be taken by or required of the Debtor shall be deemed to have occurred and be effective as provided herein, and shall be authorized and approved in all respects, which authorization and approval shall be effective upon entry of the Confirmation Order, without any requirement of further action by stockholders or directors of the Debtor or Reorganized O'Brien. 6.5 Other Transaction Documents. On the Effective Date and as contemplated by the Acquisition Agreement, (i) NRG and Reorganized O'Brien shall enter into the Co-Investment Agreement; (ii) NRG (or one or more of its Affiliates) and Reorganized O'Brien shall enter into the Management Agreement; (iii) Reorganized O'Brien and Wexford (or an Affiliate thereof) shall enter into the Liquidating Asset Management Agreement; (iv) if the Newark Project Refinancing will occur on the Effective Date, Newark Cogen and the lender that is providing the Newark Project Refinancing shall enter into the loan documentation relating thereto; and (v) if the NRG Newark Cogen Loan is required to be made pursuant to the terms hereof and the Acquisition Agreement, NRG and Reorganized O'Brien shall enter into the NRG Newark Cogen Loan Documentation. 6.6 Distributions. (a) Generally. All distributions required to be made by Reorganized O'Brien hereunder to holders of Allowed Claims and Allowed Interests shall be made by Reorganized O'Brien (except for the Equityholders Cash Payment, which shall be made by NRG, an affiliate of NRG or Reorganized O'Brien in such manner as agreed by counsel to the Equity Committee and NRG prior to the Effective Date), provided that (i) in the case of the holders of Old Subordinated Noteholder Claims, Reorganized O'Brien shall make the 25 distributions to which such holders are entitled to the relevant Old Indenture Trustee, which, in turn, shall make such distributions to the holders of Old Subordinated Noteholder Claims entitled thereto in accordance with the applicable Old Indenture (for which service the Old Indenture Trustees shall receive their customary compensation), subject to any rights, claims or liens of each Old Indenture Trustee under its Old Indenture, to satisfy, without need for any further application to or approval of the Court, its Claims, to the extent not satisfied from any other source such as distributions under the Plan, for reasonable compensation and reimbursement of reasonable expenses and advances incurred or made by it, including reasonable compensation, disbursements and expenses of the agents of and legal counsel to such Old Indenture Trustee; and (ii) in the case of the holders of Old Common Stock, the distributions of New Common Stock and the Equityholders Cash Payment to which such holders are entitled shall be made by the transfer agent for the Old Common Stock or such other transfer or exchange agent as the Proponents may designate prior to the Effective Date (the "Stock Transfer Agent"), for which service the Stock Transfer Agent shall receive its customary compensation from Reorganized O'Brien. (b) Distributions Made as of Distribution Record Date. Only holders of record as of the Distribution Record Date shall be entitled to receive the distributions provided under the Plan in respect of Old Public Claims and Interests. As of the Distribution Record Date, the respective transfer ledgers in respect of the Old Subordinated Notes and Old Common Stock shall be closed. Reorganized O'Brien and its agents shall have no obligation to recognize any transfer of Old Subordinated Notes and Old Common Stock occurring after the Distribution Record Date. Reorganized O'Brien and its agents shall be entitled instead to recognize and, for purposes of making distributions under the Plan, deal only with those holders of record stated on the transfer ledgers maintained by the respective Registrar (as defined in the applicable Old Indenture) for the Old Subordinated Notes or by the Stock Transfer Agent as of the Distribution Record Date. (c) Procedures for Distributions. (i)On the Distribution Date, certificates representing the New O'Brien Common Stock shall be issued in accordance with the applicable terms of the Plan. As soon as practicable, Reorganized O'Brien shall deliver a jumbo certificate to the Stock Transfer Agent, which shall deliver certificates to the holders of Old Common Stock that have validly surrendered the certificates representing such Old Common Stock (or other appropriate evidence of ownership if the Old Common Stock held by such holders is in book entry form). (ii)As a condition to receiving distributions provided for by the Plan in respect of the Old Public Claims and Interests, any holder of an Allowed Claim or Interest that is included in the Old Public Claims and Interests shall be required to surrender the instrument or certificate evidencing such Allowed Claim or Interest, accompanied by duly executed and completed letters of transmittal in appropriate form (or other appropriate evidence of ownership if the Old Public Claims and Interests held by such holder are in book entry form), to Reorganized O'Brien. Distributions shall be made only to holders of Old Subordinated Notes and Old Common Stock that have surrendered such instruments or certificates (or, in the case of book entry securities, other appropriate evidence of ownership) as herein provided. Except as provided in Section 6.6(c)(iii), no distribution shall be made to any holder of an Old Subordinated Note or Old Common Stock that has not so surrendered such instruments or certificates held by it (or, in the case of book entry securities, provided other appropriate evidence of ownership). 26 (iii)Unless waived by Reorganized O'Brien, any holder of an Allowed Claim or Interest that is included in the Old Public Claims and Interests and that is based upon an instrument or certificate which has been lost, stolen, mutilated or destroyed shall, in lieu of surrendering such instrument or certificate as provided in this section, deliver to Reorganized O'Brien (i) evidence satisfactory to Reorganized O'Brien of the loss, theft, mutilation or destruction of such instrument and (ii) such security or indemnity as may be reasonably required by Reorganized O'Brien to hold Reorganized O'Brien harmless from any damages, liabilities, or costs incurred in treating such Entity as a holder of such instrument or certificate. Thereafter, such Entity shall be treated as the holder of the instrument or certificate for all purposes of the Plan and shall, for all purposes under the Plan, be deemed to have surrendered the instrument or certificate representing such Old Public Claims or Interests. (iv)Any holder of an Allowed Claim or Interest that is included in the Old Public Claims or Interests who shall not have surrendered or be deemed to have surrendered the instruments or certificates representing such Allowed Claim or Interest (or, in the case of book entry securities, other appropriate evidence of ownership) within twenty-four (24) months after the Effective Date shall have such Claim or Interest disallowed, shall receive no distributions on such Claim or Interest under the Plan and shall be forever barred from asserting any Claim or Interest. All such certificates representing shares of New O'Brien Common Stock distributable to holders of Old Common Stock shall be redistributed as soon as practicable after the end of the twenty-fourth month after the Effective Date to the other holders of Old Common Stock as of the Distribution Record Date who previously surrendered their certificates. (d) Calculation of Distribution Amounts of Securities. No fractional shares of New O'Brien Common Stock shall be issued or distributed. Fractional shares of New O'Brien Common Stock shall be rounded to the next greater or lesser whole number as follows: (a) fractions of greater than 0.5 shall be rounded up to the next greater whole number and (b) fractions of 0.5 or less shall be rounded down to the next lesser whole number; provided that in no event shall there be issued to holders of Allowed Class 16 Interests under the Plan an aggregate number of shares that is less than a total of 58.14% of the issued and outstanding shares of New O'Brien Common Stock to be issued on and after the Effective Date. (e) Delivery of Distributions. Subject to Bankruptcy Rule 9010, distributions to holders of Allowed Claims and Interests shall be mailed or otherwise delivered to the address of each such holder as set forth on the Schedules filed with the Court unless superseded by the address as set forth on the proofs of Claim or proofs of Interest filed by such holders (or at the last known addresses of such a holder if no proof of Claim or proof of Interest is filed or if O'Brien has been notified in writing of a change of address). If any holder's distribution is returned as undeliverable, no further distributions to such holder shall be made unless and until Reorganized O'Brien is notified of such holder's then current address, at which time all missed distributions shall be made to such holder without interest. Amounts in respect of undeliverable distributions shall be held by Reorganized O'Brien until such distributions are claimed. All Claims for undeliverable distributions shall be made on or before the later of the second anniversary of the Effective Date and, in the case of holders of Disputed Claims that have not been Allowed, disallowed or withdrawn at such time, the date ninety (90) days after such Claim is Allowed, disallowed or withdrawn. After such date, all unclaimed property shall be the property of and released to Reorganized O'Brien and the claim of any holder with respect to such property shall be discharged and forever barred. 27 (f) Time Bar to Cash Payments. Checks issued by Reorganized O'Brien in respect of Allowed Claims shall be null and void if not negotiated within six (6) months after the date of issuance thereof. Requests for reissuance of any check shall be made directly to Reorganized O'Brien by the holder of the Allowed Claim with respect to which such check originally was issued. Any claim in respect of such a voided check shall be made on or before the later of the second anniversary of the Effective Date and ninety (90) days after the six-month period following the date of issuance of such check. After such date, all claims in respect of void checks shall be discharged and forever barred. (g) Cancellation of Old Indentures. Subject to Sections 6.6(a) and 14.8, the Old Indentures and the respective obligations of the Old Indenture Trustees thereunder shall be canceled and discharged on the Effective Date and deemed null and void and of no further force or effect thereafter, provided that such cancellation shall not impair the rights of the Old Indenture Trustees to compensation or reimbursement or their duty to make distributions pursuant to the Plan. 6.7 Distribution Dates. Any distribution required to be made under the Plan on a particular date shall be made on such date or as soon as practicable thereafter. 6.8 Vesting of Property. Except as otherwise provided in the Plan or the Confirmation Order, upon the Effective Date all property of O'Brien's Estate, wherever situated, shall vest in Reorganized O'Brien and shall be retained by Reorganized O'Brien or transferred or distributed as provided in the Plan. Upon the Effective Date, all property of the Estate, whether retained by Reorganized O'Brien or transferred or distributed, shall be free and clear of all Claims, Liens, and Interests, except the Claims, Liens, and Interests of Creditors expressly provided for in the Plan. 6.9 Consummation. Substantial consummation of the Plan, within the meaning of Bankruptcy Code section 1101(2), shall occur on the Effective Date. 6.10 NRG Supplemental Loan. If and to the extent that the Cash Payment Fund is not or may not be sufficient to provide for the payment, in full, of the Allowed amount of all Class 15 Claims or that funds required to make payments contemplated to be made to the holders of Allowed Claims under the Plan, as it may be amended from time to time, otherwise would not or may not be available (a "Plan Cash Insufficiency"), NRG, in its sole discretion, may make a loan (the "NRG Discretionary Supplemental Loan") to Reorganized O'Brien on the Effective Date in an amount to be determined by NRG in its sole discretion up to the amount of the Plan Cash Insufficiency. Subject to Section 10.8(b), to the extent that (i) the Administrative and Cure Claims Cash Payment exceeds the sum of the Additional Cash Amount (if any), any Excess Cash available to be applied pursuant to Section 6.12(c) and the Reserved Administrative and Cure Claims Cash Amount, or (ii) the aggregate amount of proceeds of Designated Receivables received by O'Brien or any of its Subsidiaries after November 17, 1995 but before the Effective Date that is available for distribution by Reorganized O'Brien on the Effective Date is less than $2.24 million, NRG shall make a loan (the "NRG Mandatory Supplemental Loan") to Reorganized O'Brien on the Effective Date equal to the sum of (x) the amount by which the Administrative and Cure Claims Cash Payment exceeds the sum of the Additional Cash Amount (if any), any Excess Cash available to be applied pursuant to Section 6.12(c) and Reserved Administrative and Cure Claims Cash Amount, and (y) the amount by which $2.24 million exceeds the aggregate amount received by O'Brien or any of its Subsidiaries after November 17, 1995 but before the Effective Date in respect of the Designated Receivables that is available for distribution by Reorganized O'Brien on the Effective Date. The NRG Supplemental Loan shall be subordinate to the NRG New 28 Loan and shall be made pursuant to the NRG Supplemental Loan Documentation. NRG shall be granted a security interest in any Designated Receivables existing on the Effective Date to secure repayment of the NRG Mandatory Supplemental Loan, and any payments received by Reorganized O'Brien after the Effective Date in respect of such Designated Receivables shall be applied, first, to pay down the NRG Mandatory Supplemental Loan then outstanding. 6.11 Post-Petition Interest Fund. Each holder of an Allowed Non-Reinstated Secured Claim and each holder of an Allowed General Unsecured Claim in Class 15A, 15B or 15C will receive its Pro Rata Share of the Post-Petition Interest Fund on the Final Resolution Date (such Pro Rata Share to be determined as if each holder of an Allowed Non-Reinstated Secured Claim and the holders of General Unsecured Claims are entitled to receive such distribution, whether or not any such class forfeits its entitlement to such distribution provisions as provided below in this Section 6.11); provided that, if (i) any holder of an Allowed Non-Reinstated Claim fails to accept the Plan or objects to any provision of the Plan at the time of the Confirmation Hearing, (ii) the Class 15A Claims held by the holders of the Secured Claims in Classes 2, 3, 5, 7, 9 and 11 in respect of the Deficiency Amount of such Secured Claims fail to accept the Plan or (iii) any of Class 15B or 15C fails to accept the Plan by the requisite majorities in accordance with Bankruptcy Code section 1126(c), the amount of the distribution from the Post-Petition Interest Fund to which any such holder or the holders in any such non-accepting 15B or 15C Class (or, in the case of Class 15A, such Class containing holders that so fail to accept the Plan) shall be entitled to receive under the Plan, at the Proponents' option, shall be reduced or eliminated to the extent that distributions from the Post-Petition Interest Fund are not required to be made in order for the Plan to be confirmable. 6.12 Deferral of DIP Loan and Wexford Administrative Claim. (a) The DIP Loan Outstanding Amount shall be deferred and shall not be repaid on the Effective Date (the "Deferred DIP Loan Amount") except to the extent that Excess Cash remains available to repay the DIP Loan Outstanding Amount and the Wexford Administrative Claim after repaying the NRG Mandatory Supplemental Loan, to the extent of any such Loan made to cover the amounts specified in clause (y) of Section 6.10. To the extent such Excess Cash is available to repay less than the full amount of the DIP Loan Outstanding Amount and the Wexford Administrative Claim, the amount so available shall be applied to repay the DIP Loan Outstanding Amount and the Wexford Administrative Claim on a proportional basis. Subject to the provisions of Section 6.12(c) with regard to the application of Excess Cash, the Deferred DIP Loan Amount shall be repaid on a proportional basis (together with the Deferred Wexford Claim Amount) when and as the New O'Brien Preferred Stock is required or permitted to be redeemed pursuant to the New Certificate of Designation or Section 6.12(c). (b) The Wexford Administrative Claim shall be deferred and shall not be paid on the Effective Date (the "Deferred Wexford Claim Amount") except to the extent that Excess Cash remains available to repay the Wexford Administrative Claim and the DIP Loan Outstanding Amount after repaying the NRG Mandatory Supplemental Loan, to the extent of any such Loan made to cover the amounts specified in clause (y) of Section 6.10. To the extent such Excess Cash is available to repay less than the full amount of the Wexford Administrative Claim and the DIP Loan Outstanding Amount, the amount so available shall be applied to repay the DIP Loan Outstanding Amount and the Wexford Administrative Claim on a proportional basis. Subject to the provisions of Section 6.12(c) with regard to the application of Excess Cash, the Wexford Administrative Claim shall be paid on a proportional basis (together with the Deferred DIP Loan Amount) when and as the New O'Brien Preferred Stock issued to Wexford or any of its Affiliates in respect of the Wexford-Related Unsecured 29 Claims is required or permitted to be redeemed pursuant to the New Certificate of Designation or Section 6.12(c). (c) If, after setting aside the Administrative and Cure Claims Cash Payment, the aggregate amount of cash payments to be made to the holders of Allowed Secured Claims receiving the Cash Payoff Treatment under the Plan, the amount of the O'Brien Parlin Reserve Contribution, the O'Brien Parlin Paydown Contribution, the NRG New Loan Expenses, the Retained Working Capital Amount, the General Unsecured Claims Cash Payment, the Supplemental Interest Amount, and the Equityholders Cash Payment and there remains available and unapplied any portion of the Cash Purchase Price or Reorganized O'Brien otherwise then holds any other available cash, or funds are released from the Administrative and Priority Claims Reserve pursuant to Section 10.8, any such portion of the Cash Purchase Price, other available cash and funds so released from the Administrative and Priority Claims Reserve (collectively, "Excess Cash") shall be applied as provided in this Section 6.12(c). All Excess Cash shall be used, first, to fund the difference, if any, between the Administrative and Cure Claims Cash Payment and the sum of the Additional Cash Amount (if any) and the Reserved Administrative and Cure Claims Cash Amount, second, to repay the NRG Mandatory Supplemental Loan, and third, to repay NRG the then outstanding amount owing in respect of the DIP Loan and pay Wexford the remaining unpaid portion of the Wexford Administrative Claim, which shall be on a proportional basis in the event the remaining Excess Cash is not sufficient to pay the full amount outstanding in respect of the DIP Loan and the portion of the Wexford Administrative Claim remaining unpaid. If the remaining Excess Cash is sufficient to pay in full the then outstanding amount of the DIP Loan and any unpaid portion of the Wexford Administrative Claim, any amounts of Excess Cash available after paying in full such amounts will be applied in redemption of the New O'Brien Preferred Stock distributed under the Plan. Article VII: Cramdown If any impaired class of Claims or Interests shall fail to accept the Plan with the requisite majorities in accordance with Bankruptcy Code section 1126(c), the Proponents reserve the right to request that the Court determine that the Plan is fair and equitable as to, and does not discriminate against, each such Class and confirm the Plan in accordance with Bankruptcy Code section 1129(b). The Proponents hereby request the Court to determine that the Plan is fair and equitable as to, and does not unfairly discriminate against, Class 19 in accordance with Bankruptcy Code section 1129(b). If any holder of a Secured Claim in Class 2, 3, 5, 7, 9 (other than the subclass treated in Class 4.3) or 11 fails to accept the Plan or any of 15B or 15C fails to accept the Plan by the requisite majorities in accordance with Bankruptcy Code section 1126(c), (i) any such holder of a Secured Claim shall receive the Collateral Putback Treatment if and to the extent provided in any Treatment Election Notice which may be given to such holder and (ii) at the Proponents' option, the distributions from the Post-Petition Interest Fund which the holders in any such non-accepting Class are entitled to receive under Sections 5.1, 5.2, 5.4, 5.5, 5.7, 5.8, 5.12 or 5.13, as applicable, shall be reduced or eliminated to the extent provided, in the case of distributions from the Post-Petition Interest Fund, in Section 6.11. If the Class 15A Claims held by the holders of the Secured Claims in Classes 2, 3, 5, 7 and 11 in respect of the Deficiency Amount of such Secured Claims fail to accept the Plan, the distributions from the Post- Petition Interest Fund which the holders in Class 15A are entitled to receive under Section 5.1, at the Proponents' option, shall be reduced or eliminated to the extent provided in Section 6.11. 30 Article VIII: Executory Contracts 8.1 Rejection of Executory Contracts. Pursuant to the Plan and Bankruptcy Code sections 365 and 1123(b)(2), each executory contract or unexpired lease to which O'Brien is a party that is listed on Schedule 8.1 hereto, and any Old Options, to the extent that such Old Options constitute executory contracts under Bankruptcy Code section 365 (the "Rejected Contracts") shall be rejected, effective on the Effective Date. Any Claim for damages arising from rejection of any Rejected Contract pursuant to the Plan shall be forever barred unless a proof of claim therefor in proper form is filed with the Court no later than twenty days after notice of the Confirmation Date is given to the non-debtor party to such Rejected Contract or such earlier date as may be set forth in an order of the Bankruptcy Court. 8.2 Assumption of Executory Contracts. Pursuant to sections 365 and 1123(b)(2) of the Bankruptcy Code, all executory contracts and unexpired leases to which the Debtor is a party that are not Rejected Contracts (the "Assumed Contracts") shall be assumed, effective on the Effective Date. All payments required by Bankruptcy Code section 365(b)(1)(A) or (B) shall be made by Reorganized O'Brien on the Effective Date or as soon thereafter as is practicable in such amount as may be determined, in each instance, by agreement between NRG and the non-debtor party to the contract or, in the case of any dispute, by Final Order of the Court. Article IX: Rights and Obligations of Reorganized O'Brien as Plan Administrator 9.1 Appointment of Plan Administrator. Because the Proponents have jointly determined by written notice filed with the Court prior to entry of the Confirmation Order that the duties and responsibilities of plan administrator shall be performed by Reorganized O'Brien rather than an appointed plan administrator, all responsibilities of plan administration provided for herein shall be performed by Reorganized O'Brien. 9.2 Exculpation. No holder of a Claim or an Interest, or representative thereof, shall have or pursue any claim or cause of action (1) against Reorganized O'Brien for making distributions in accordance with the Plan, holding or administering the Distribution Reserves in accordance with the Plan or for implementing the provisions of the Plan, or (2) against any holder of a Claim or Interest for receiving or retaining payments or other distributions as provided for by the Plan. 9.3 Powers of Reorganized O'Brien. Pursuant to the terms and provisions of the Plan and the Confirmation Order, Reorganized O'Brien shall be empowered to (a) make distributions contemplated by the Plan, including without limitation by holding and administering the Distribution Reserves; (b) file and prosecute objections to Disputed Claims (other than Disputed Class 15 Claims); (c) employ, retain, or replace professionals to represent it with respect to the fulfillment of its responsibilities under the Plan and the Confirmation Order; and (d) exercise such other powers as may be vested in Reorganized O'Brien pursuant to an order of the Court or pursuant to the Plan. 9.4 Duties of Reorganized O'Brien. Pursuant to and subject to the terms and provisions of (and except as may otherwise be provided in) the Plan, Reorganized O'Brien shall have the duties of: (a) carrying out the distribution provisions of the Plan; 31 (b) managing property to be distributed in a manner designed to effectuate the Plan; and (c) complying with all tax withholding and reporting requirements imposed on it by any governmental unit. Article X: Procedures for Resolving and Treating Disputed Claims 10.1 Objection Deadline. Unless otherwise provided by order of the Court, no objections to Claims that are Allowed Claims on the Effective Date shall be filed after the Effective Date. No later than 60 days after the Effective Date, objections to Claims that are Disputed Claims on the Effective Date shall be filed with the Court and served upon the holders of each of the Disputed Claims. 10.2 Responsibility For Objection to Disputed Claims. (a) Reorganized O'Brien. Reorganized O'Brien shall be responsible for objecting to the allowance of, settling and litigating any Disputed Claims (other than Disputed Class 15 Claims) following the Effective Date on behalf of Reorganized O'Brien, the entire cost of which, including any fees and expenses of its counsel and other professionals, shall be borne by Reorganized O'Brien. Nothing herein shall affect the right of any other party in interest to file an objection to any Disputed Claim. NRG shall have the right to object to the allowance of any Administrative Claim. None of the Proponents shall object to the allowance of the Wexford Administrative Claim. (b) Creditors' Committee. Notwithstanding anything herein to the contrary, following the Effective Date, the Creditors' Committee shall be responsible for objecting to the allowance of, settling and litigating any Disputed Class 15 Claims on behalf of Reorganized O'Brien, the entire cost of which, including the fees and expenses of its counsel and other professionals (collectively, the "Objection Resolution Expenses"), shall be funded through and paid from the Cash Payment Fund. In connection with the prosecution of objections to Class 15 Claims, the Creditors' Committee shall have the exclusive right to assert all defenses, offsets, recoupments and counterclaims, including without limitation defenses under Section 502(d) of the Bankruptcy Code that are based upon claims or causes of action retained by the Reorganized Debtor under Section 14.3 or otherwise as a defense to the allowance of any Class 15 Claim; provided that any settlement of counterclaims asserted by the Creditors' Committee on behalf of Reorganized O'Brien in accordance with the foregoing shall require the consent of Reorganized O'Brien, and any disputes between the Creditors' Committee and Reorganized O'Brien with respect to the assertion and settlement of such counterclaims shall be resolved by the Bankruptcy Court. It is understood that the Creditors' Committee is intended to have the benefit of any such counterclaim up to the amount of the respective Disputed Class 15 Claim and that Reorganized O'Brien is intended to have the benefit of any such counterclaim in excess of the amount of the respective Disputed Class 15 Claim. The Creditors' Committee shall not object to any Claim acquired by Wexford or any Affiliate of Wexford prior to the commencement of the Confirmation Hearing except on the basis that all or any portion of any such Claim should be disallowed because the Debtor's records do not reflect the claimed amount as due and owing. Reorganized O'Brien shall reasonably cooperate with the Creditors' Committee in the Creditors' Committee's prosecution of objections to the allowance of Disputed Class 15 Claims, including by providing access to relevant documentation that the Creditors' Committee reasonably determines is necessary to prosecute objections to Disputed Class 15 Claims. The Objection Resolution Expenses shall be paid by Reorganized O'Brien solely from the Cash Payment 32 Fund without the necessity of any approval by the Court or review or other action by Reorganized O'Brien; provided that, at least fifteen days prior to any payment being made by Reorganized O'Brien in respect of any Objection Resolution Fees, the Creditors' Committee shall file with the Court and serve a notice (a "Fee Request Notice") setting forth the amount of Objection Resolution Expenses requested to be paid and the period covered thereby, and shall promptly provide to any of such parties who so request a copy of a statement of services rendered setting forth in appropriate detail a description of the services performed during the period in question on the following parties: (i) each holder of an Allowed Class 15A Claim, (ii) each holder of one of the five largest Class 15B Claims, (iii) each Old Indenture Trustee, (iv) Wexford and (v) Reorganized O'Brien; provided further that, if any holder of a Class 15 Claim that has not then been disallowed in full or withdrawn files with the Court and serves on the Creditors' Committee and Reorganized O'Brien, within ten days after the Creditors' Committee shall have filed and served any Fee Request Notice in accordance with the foregoing, an objection to the payment of any fees or expenses that are the subject of such Fee Request Notice, Reorganized O'Brien shall not make payment from the Cash Payment Fund the amount as to which any such holder has so objected until such objection is withdrawn or the Court shall have resolved the objection. Reorganized O'Brien shall set aside in the Disputed Claims Reserve such amount as the Creditors' Committee may request to serve as a reserve for the payment of all Objection Resolution Expenses projected to be incurred following the Effective Date; provided that, promptly after the Final Resolution Date, any remaining amount so reserved shall be released and distributed to the holders of Allowed Class 15 Claims. 10.3 No Distributions Pending Allowance. Notwithstanding any other provision of the Plan, no payments or distributions shall be made with respect to a Disputed Claim unless and until such Claim shall be Allowed by Final Order or the time by which Reorganized O'Brien or the Creditors' Committee, as applicable, is required to file an objection to such Claim shall have passed without the timely filing of an objection. 10.4 Distributions After Allowance. Payments and distributions from Reorganized O'Brien to each holder of a Disputed Claim, to the extent that it ultimately becomes an Allowed Claim, shall be made in accordance with the provisions of the Plan governing the Class of Claims to which the Disputed Claim belongs. On the Distribution Date in respect of a Disputed Claim that becomes an Allowed Claim after the Effective Date, any Cash that would have been distributed in respect of the Disputed Claim had it been an Allowed Claim at the Effective Date shall be distributed, with interest thereon to the extent earned after the Effective Date and before the Distribution Date, net of any taxes paid pursuant to Section 10.9. 10.5 Treatment of Contingent Claims. Until such time as a Contingent Claim becomes an Allowed Claim, such Claim shall be treated as a Disputed Claim. In the case of the holder of a Claim against the Debtor that has recourse against an Affiliate of the Debtor or any collateral security provided by any Affiliate of the Debtor, the Allowable amount of such claim shall be estimated by the Court prior to or at the Confirmation Hearing and shall be reduced by the present value, as determined by the Court as of the Effective Date, of the amount or value that such holder is expected to realize as a result of recourse to such Affiliate or collateral security thereof. 10.6 Estimation of Claims. The Proponents may, prior to the Confirmation Date, and Reorganized O'Brien may, at any time thereafter, request that the Court estimate any Contingent Claim pursuant to section 502(c) of the Bankruptcy Code. In the event that the Court estimates any Contingent Claim, that estimated amount will constitute either the 33 Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Court. If the estimated amount constitutes a maximum limitation on such Claim, Reorganized O'Brien or the Creditors' Committee, as applicable, may elect to pursue any supplemental proceedings to object to or estimate for allowance purposes any ultimate payment on such Claim. 10.7 Disputed Claims Reserve. (a) From and after the Effective Date, distributions in respect of the Class 15 Supplemental Payment and from the Cash Payment Fund and the Post-Petition Interest Fund shall be reserved by Reorganized O'Brien for the holders of Disputed Class 15 Claims and deposited in segregated accounts to be held and administered by Reorganized O'Brien (the "Disputed Claims Reserve"). The distributions so deposited in the Disputed Claims Reserve shall be held in trust by Reorganized O'Brien for the benefit of the holders of Class 15 Claims. Except to the extent the Court shall determine that a good and sufficient reserve for Disputed Class 15 Claims is less than the full amount thereof, in determining the amount of the distributions due to the holders of Allowed Class 15 Claims and the amount to be reserved for Disputed Class 15 Claims, the appropriate calculations shall be made as if all Disputed Claims were allowed as of the Effective Date in the full amount claimed by the holders thereof (which, in the case of Contingent Claims, shall be such maximum amount as may be estimated by the Court prior to or at the Confirmation Hearing). In the case of Disputed Class 15 Claims covered by any insurance policy under which the Debtor is the insured, the Debtor shall not be required to reserve an amount in excess of the respective Debtor's self-insured retention liability in respect of such Claim. (b) In the case of a Claim that is asserted as an Administrative Claim or Priority Claim but which Reorganized O'Brien believes constitutes, in whole or in part, a General Unsecured Claim, Reorganized O'Brien shall not be required to reserve within the Disputed Claims Reserve for Disputed Class 15 Claims the amount of Cash that would have been distributable on the Effective Date if such Claim then constituted an Allowed Class 15 Claim, provided such Claim is treated as an Unresolved Administrative and Priority Claim and a reserve therefor is accordingly included in the Administrative and Priority Claims Reserve. (c) All cash held in the Disputed Claims Reserve shall be invested in such investments as permitted under section 345 of the Bankruptcy Code. All interest earned on such investments shall be held in trust in the Disputed Claims Reserve and shall be distributed only in the manner set forth below in this Section 10.7. (d) To the extent that a Disputed Class 15 Claim is Allowed after the Effective Date, the amount of Cash which the holder of such Claim theretofore would have been entitled to receive if such Claim had been an Allowed Class 15 Claim on the Effective Date, together with interest earned on such Cash (net of any taxes paid pursuant to Section 10.9), shall be released from the Disputed Claims Reserve and distributed to such holder. (e) If and to the extent the holders of Allowed Class 15 Claims shall not, and upon receipt of such distributions will not, have received distributions under the Plan from the Cash Payment Fund equal to the Required Unsecured Claims Payment Amount, at the end of each calendar quarter following the Effective Date and on the Final Resolution Date, Reorganized O'Brien will distribute any amounts reserved from the Cash Payment Fund (and any interest earned thereon, net of any taxes paid pursuant to Section 10.9) and held in the Disputed Claims Reserve in respect of Disputed Class 15 Claims that have been disallowed by Final Order or withdrawn after the Effective Date or, if applicable, the end of the calendar 34 quarter following the Effective Date that immediately precedes such calendar quarter to the then holders of Allowed Class 15 Claims based on their Pro Rata Share. At the end of each calendar quarter following the Effective Date and on the Final Resolution Date, Reorganized O'Brien will distribute any amounts reserved in respect of the Class 15 Supplemental Payment (and any interest earned thereon, net of any taxes paid pursuant to Section 10.9) and held in the Disputed Claims Reserve in respect of Disputed Class 15 Claims that have been disallowed by Final Order or withdrawn after the Effective Date or, if applicable, the end of the calendar quarter following the Effective Date that immediately precedes such calendar quarter to the then holders of Allowed Class 15 Claims (other than the Wexford-Related Unsecured Claims) based on their Pro Rata Share. Following the disallowance by Final Order or the withdrawal of any Disputed Class 15 Claim after such time as the holders of Allowed Class 15 Claims shall have received distributions under the Plan from the Cash Payment Fund equal to the Required Unsecured Claims Payment Amount, Reorganized O'Brien will release the Cash held in the Disputed Claims Reserve in respect of such Disputed Class 15 Claim (and any interest earned thereon, net of taxes paid pursuant to Section 10.9) and deposit such amounts into the Post- Petition Interest Fund. Promptly after all Disputed Class 15 Claims shall have been Allowed or disallowed by Final Order or withdrawn after the Effective Date, Reorganized O'Brien shall make a final recalculation of amounts reserved from the Cash Payment Fund then held in the Disputed Claims Reserve and shall distribute all such amounts (together with any interest earned thereon net of taxes paid pursuant to Section 10.9) to the holders of Allowed Class 15 Claims, to the extent such holders shall not, and upon such distribution will not, have received distributions under the Plan from the Cash Payment Fund equal to the Required Unsecured Claims Payment Amount, and shall deposit any remaining amounts into the Post-Petition Interest Fund. Notwithstanding any provision to the contrary herein, interim distributions from the Post-Petition Interest Fund may be made by Reorganized O'Brien, if and to the extent requested by the Creditors' Committee or ordered by the Court on motion of any holder of an Allowed Class 15 Claim. (f) Prior to the Effective Date, the Court shall determine the maximum amount of Disputed Claims (including Contingent Claims) to the extent necessary for Reorganized O'Brien to calculate the amount of distributions to be held in the Disputed Claims Reserve. 10.8 Administrative and Priority Claims Reserve. (a) Subject to Section 10.8(b), the Administrative and Priority Claims Reserve shall be established on the Effective Date in an amount determined by the Court prior to the Effective Date. The Administrative and Priority Claims Reserve shall serve as the sole source of payment of all Unresolved Administrative and Priority Claims that are determined by Final Order after the Effective Date to be Allowed Claims, irrespective of the aggregate amount at which the Unresolved Administrative and Priority Claims ultimately are allowed by the Court. As Unresolved Administrative and Priority Claims are determined by Final Order to be Allowed Claims following the Effective Date, the Allowed amount thereof or, in the case of Unresolved Administrative and Priority Claims that ultimately are determined to be Allowed Class 15 Claims, the amount distributable in respect thereof in accordance with Section 10.7, to the extent there are funds then remaining in the Administrative and Priority Claims Reserve, shall be released from the Administrative and Priority Claims Reserve and paid to the holder thereof. After (i) the time shall have expired by which any holder of an Administrative Claim or Priority Claim must file a proof of claim or be forever barred, (ii) the Court shall have determined by Final Order the Allowed amount of all Unresolved Administrative and Priority Claims and (iii) the Allowed amount of all Unresolved Administrative and Priority Claims shall have been paid in full from the Administrative and Priority Claims Reserve, any funds then remaining in the Administrative 35 and Priority Claims Reserve shall be released therefrom and applied as Excess Cash as provided in Section 6.12(c)). (b) Notwithstanding anything herein to the contrary, if the Administrative and Cure Claims Cash Payment exceeds the sum of the Additional Cash Amount (if any), any Excess Cash available to be applied pursuant to Section 6.12(c) on the Effective Date and the Reserved Administrative and Cure Claims Cash Amount (the amount of such excess being referred to as an "Administrative Claims Shortfall") and, therefore, NRG is required to make an NRG Mandatory Supplemental Loan pursuant to Section 6.10 in an amount equal to the Administrative Claims Shortfall (an "Administrative Shortfall Loan"), the time at which all or a portion of the Administrative Shortfall Loan shall be required to be made shall be deferred until after the Effective Date, as follows: (i) the amount of the Administrative Shortfall Loan required to be made on the Effective Date shall equal the amount by which the Effective Date Administrative and Cure Payments exceeds the sum of the Additional Cash Amount (if any), any Excess Cash available to be applied pursuant to Section 6.12(c) on the Effective Date and the Reserved Administrative and Cure Claims Cash Amount (the amount of such excess being referred to as the "Effective Date Administrative Shortfall Loan," with the amount of the Administrative Shortfall Loan in excess of the Effective Date Administrative Shortfall Loan (the amount of such excess being referred to as the "Deferred Administrative Shortfall Amount") being deferred and potentially reduced as provided below in clause (ii) of this Section 10.8(b), and (ii) at such time or times as Unresolved Administrative and Priority Claims become Allowed by Final Order after the Effective Date (or in the case of such Claims that are Allowed, but not yet due and payable on the Effective Date, at such times as such Claims become due and payable after the Effective Date), and provided that NRG shall not theretofore have made deferred Administrative Shortfall Loans pursuant hereto in excess of the Deferred Administrative Shortfall Amount, NRG shall be required within 3 business days thereafter to make an advance to Reorganized O'Brien in respect of the Administrative Shortfall Loan pursuant to the NRG Supplemental Loan Documentation equal to the amount at which such Unresolved Administrative and Priority Claims have been so Allowed or become due and payable (less any amount then available in the Administrative and Priority Claims Reserve to pay such Claims), subject to the maximum amount thereof established by the Court prior to the Effective Date in connection with the fixing of the amount of the Administrative and Priority Claims Reserve. Any such advance, when received by Reorganized O'Brien, shall be promptly deposited in the Administrative and Priority Claims Reserve. Notwithstanding anything herein to the contrary, NRG in any event shall be required to make the Administrative Shortfall Loan on the Effective Date to the extent necessary to fund the payment of all Cure Payments and Administrative Claims and Priority Claims that are Allowed and due and payable on the Effective Date. 10.9 Payment of Taxes in Respect of the Distribution Reserves. Reorganized O'Brien shall pay, or cause to be paid, out of the interest earned on funds of each Distribution Reserve, any tax imposed by any governmental unit on the income generated by the funds held in that Distribution Reserve. Notwithstanding anything in Section 10.7 or Section 10.8 to the contrary, prior to the distribution of any amount in respect of interest earned on funds held in a Distribution Reserve to holders of an Allowed Claim, the amount of such interest shall be reduced by the amount of such taxes so paid by Reorganized O'Brien. Reorganized O'Brien shall also file or cause to be filed any tax or information returns related to the Distribution Reserves that are required by any governmental unit. 36 Article XI: Conditions to Confirmation and Effective Date 11.1 Conditions to Confirmation. Confirmation of the Plan is subject to the prior or concurrent satisfaction or fulfillment of the conditions precedent that the Confirmation Order, shall have been entered by the Court no later than February 28, 1996. 11.2 Conditions to Effective Date. The consummation of the Plan on the Effective Date is subject to the prior or concurrent satisfaction or fulfillment of each of the following conditions precedent: (a) all conditions to the obligations of the parties in Article 6 of the Acquisition Agreement to consummate the transactions to be consummated on the Closing Date thereunder (other than satisfaction or waiver of all conditions to the occurrence of the Effective Date hereunder) shall have been satisfied or waived as provided therein; (b) all indentures, mortgages, security agreements and other agreements and instruments to be delivered under or necessary to effectuate the Plan and consummate the transactions to be consummated at the Closing (as defined in the Acquisition Agreement), including without limitation the NRG New Loan Agreement, the Co-Investment Agreement, the Management Agreement, and the Liquidating Asset Management Agreement shall have been executed and delivered by the Entities that are the parties thereto; and (c) the Effective Date shall occur on or before March 15, 1996; provided that, if the Effective Date shall not have occurred on or before March 15, 1996 solely because ISRA Approval and/or BPU Approval shall not have been received, the Effective Date shall occur on the earlier of (i) five (5) Business Days after the first date on which both ISRA Approval and BPU Approval shall have been received or (ii) May 15, 1996. 11.3 Waiver of Conditions. The Proponents may waive any condition or any portion of any condition set forth in this Article XI at any time without notice and without leave of or order of the Court. Article XII: Effects of Confirmation and Effectiveness of Plan 12.1 Discharge of Debtor. Any consideration distributed under the Plan shall be in exchange for and in complete satisfaction, discharge, and release of all Claims or Interests of any nature whatsoever against the Debtor or any of its assets or properties; and, except as otherwise provided herein, upon the Effective Date, the Debtor shall be deemed discharged and released to the fullest extent permitted by section 1141 of the Bankruptcy Code from any and all 'debts' (as that term is defined in Bankruptcy Code section 101(11) and Claims that arise prior to the Effective Date, including but not limited to debts of the kind specified in Bankruptcy Code section 502(g), 502(h), or 502(i), whether or not (a) a proof of Claim based upon such debt is filed or deemed filed under section 501 of the Bankruptcy Code; (b) a Claim based upon such debt is Allowed under section 502 of the Bankruptcy Code; or (c) the holder of a Claim based upon such debt has accepted the Plan. Effective as of the Effective Date, all holders of Claims and Interests shall be precluded from asserting against the Debtor, any of its assets or properties, or any property dealt with under the Plan any other or further Claim based upon any act or omission, transaction, or other activity of 37 any kind or nature that occurred prior to the Effective Date, whether or not a proof of claim has been filed, such Claim is Allowed, or the holder of such Claim accepted the Plan. 12.2 Discharge of Liens. Except as otherwise provided in the Plan or in any contract, instrument, release, indenture or other agreement or document created in connection with the Plan, on the Effective Date, all mortgages, deeds of trust, liens or other security interests against the property of the Estate shall be fully released and discharged automatically and without the need for further action, and all of the rights, title and interest of any holder of such mortgages, deeds of trust, liens or other security interests will revert to Reorganized O'Brien and its successors and assigns. Notwithstanding the foregoing, each holder of a Claim in any of Classes 1 through 14 that is to receive full payment of its Claim in Cash on the Effective Date, in exchange for and as a condition to such holder's receiving such payment, shall execute and deliver to Reorganized O'Brien a Uniform Commercial Code termination statement, discharge of tax Lien, or other documents and instruments, all in such form and substance as the Proponents may reasonably require, reasonably necessary to evidence of record the discharge of the Lien or Liens securing such holder's Claim. If any such holder fails to execute and deliver to Reorganized O'Brien any such documents or instruments within 90 days after the tender thereof to such holder, then the effect shall be the same as though such holder's distribution had been tendered and remained unclaimed. 12.3 Injunction. Except as provided in the Plan or Confirmation Order, as of the Effective Date, all Entities that have held, currently hold or may hold a Claim or other debt or liability that is discharged or an Interest or other right of an equity security holder that is terminated pursuant to the terms of the Plan are permanently restrained and enjoined from taking any of the following actions on account of any such discharged Claims, debts or liabilities or terminated Interests or rights: (a) commencing or continuing in any manner any action or other proceeding against the Debtor or its property; (b) enforcing, attaching, collecting or recovering in any manner, any judgment, award, decree or order against the Debtor or its property; (c) creating, perfecting or enforcing any lien or encumbrance against the Debtor or its property; (d) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtor or its property; and (e) commencing or continuing any action, in any manner, in any place that does not comply with or is inconsistent with the provisions of the Plan. As of the Effective Date, all Entities that have held, currently hold or may hold a Claim, demand, debt, right, cause of action or liability that is released pursuant to this Plan are permanently enjoined from taking any of the following actions on account of such released claims, demands, debts, rights, causes of action or liabilities: (i) commencing or continuing in any manner any action or other proceeding; (ii) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order; (iii) creating, perfecting or enforcing any lien or encumbrance; (iv) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to any released entity; and (v) commencing or continuing any action, in any manner, in any place that does not comply with or is inconsistent with the provisions of the Plan. By accepting distributions pursuant to the Plan, each holder of an Allowed Claim or an Allowed Interest receiving distributions pursuant to the Plan will be deemed to have specifically consented to the injunctions set forth in this Section. 12.4 Exculpations and Limitations of Liability. To the fullest extent permitted under applicable law, the Debtor, NRG, the Equity Committee, the Creditors' Committee, Wexford and their respective directors, officers and employees (provided that, in the case of the Debtor, only the current directors, officers and employees), agents, advisors, attorneys and members and professionals, acting in such capacity, will neither have nor incur any liability to any Entity for any act taken or omitted to be taken in connection with or 38 related to the Chapter 11 Case or the formulation, preparation, dissemination, implementation, confirmation or consummation of the Plan, the Disclosure Statement or any contract, instrument, or other agreement or document created or entered into, or any other act taken or omitted to be taken in connection with the Plan or the Chapter 11 Case; provided, however, that the foregoing provisions of this Section 12.4 will have no effect on: (1) the liability of any Entity that would otherwise result from the failure to perform or pay any obligation or liability under the Plan or any contract, instrument, or other agreement or document to be delivered in connection with the Plan; and (2) the liability of any Entity that would otherwise result from any such act or omission to the extent that such act or omission is determined in a Final Order to have constituted gross negligence or willful misconduct. Article XIII: Retention of Jurisdiction 13.1 Retention of Jurisdiction. Pursuant to sections 1334 and 157 of title 28 of the United States Code, from and after the Confirmation Date, the Court shall retain and have jurisdiction of all matters arising in, arising under, and related to the Chapter 11 Case and the Plan pursuant to, and for the purposes of, sections 105(a) and 1142 of the Bankruptcy Code and for, among other things, the following purposes: (a) to hear and determine objections to allowance of Claims and Interests and any actions pursuant to Bankruptcy Code sections 510 and 542 through 553; (b) to hear and determine any and all adversary proceedings, applications or litigated matters pending on the Effective Date or brought after the Effective Date; (c) to hear and determine any and all applications for substantial contribution and for Professional Fees; (d) to hear and determine, pursuant to the provisions of section 505 of the Bankruptcy Code, all issues related to the liability of the Debtor for any tax incurred prior to the Effective Date; (e) to enable Reorganized O'Brien to commence and prosecute any and all proceedings relating to Claims or causes of action which arose prior to the Effective Date or to recover any transfers, assets, properties or damages to which it may be entitled; (f) to allow or disallow any Disputed Claim; (g) to enter and implement such orders as may be appropriate in the event confirmation of the Plan is for any reason stayed, reversed, revoked, modified or vacated; (h) to modify any provision of the Plan to the extent permitted by the Bankruptcy Code and to correct any defect, cure any omission or reconcile any inconsistency in the Plan or the Confirmation Order as may be necessary to carry out the purposes and intent of the Plan; (i) to hear and determine any dispute arising under the Plan or the Transaction Documents, or concerning the conduct of any parties in interest with respect to the Plan and the Transaction Documents or the conduct of the Chapter 11 Case, its implementation and execution of any necessary documents thereunder; and to 39 hear and determine any requests to amend, modify or correct the Plan, provided that such matters are brought to the Court before substantial consummation as defined by Bankruptcy Code section 1101(2), and subject further to the restrictions provided by Bankruptcy Code section 1127(b); (j) to enforce and implement the terms of the Plan, including the consummation thereof and the making of all payments required thereunder; (k) to hear and determine any motion to assume, reject, or assign an executory contract or unexpired lease pursuant to Bankruptcy Code section 365; (l) to enforce all discharge provisions of the Plan and Bankruptcy Code sections 1141 and 524 through appropriate means, including without limitation the granting of injunctive relief; and (m) to enter such orders as may be necessary or appropriate in furtherance of consummation and implementation of the Plan. 13.2 Failure of Court to Exercise Jurisdiction. If the Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising in, arising under, or related to the Chapter 11 Case including the matters set forth in Section 13.1 of the Plan, this Article XIII shall have no effect upon and shall not control, prohibit, or limit the exercise of jurisdiction by any other court having jurisdiction with respect to such matter. Article XIV: Miscellaneous Provisions 14.1 Compliance With Tax Requirements. In connection with the Plan, Reorganized O'Brien shall comply with all withholding and reporting requirements imposed by federal, state, local and foreign taxing authorities, and all distributions hereunder shall be subject to such withholding and reporting requirements. Creditors may be required to provide certain tax information as a condition to receipt of distributions pursuant to the Plan. 14.2 Post-Confirmation Date Fees and Expenses of Professional Persons. After the Effective Date, Reorganized O'Brien shall, in the ordinary course of business and without the necessity for any approval by the Court, pay the reasonable fees and expenses of persons employed by Reorganized O'Brien related to implementation and consummation of the Plan; provided, however, that no such fees and expenses shall be paid except upon receipt by Reorganized O'Brien of a detailed written invoice. 14.3 Retention of Avoidance Actions. Pursuant to Bankruptcy Code section 1123(b)(3), following the Effective Date the Debtor shall retain all claims or causes of action included in its Estate, including without limitation any avoidance actions under sections 544, 549 and 550 of the Bankruptcy Code. 14.4 Binding Effect. The Plan shall be binding upon and inure to the benefit of the Debtor, the holders of Claims or Interests (whether or not such holders have filed a proof of Claim or Interest or have accepted the Plan), NRG, the Committees and Wexford and their respective successors and assigns; provided, however, that if the Plan is not confirmed, the Plan shall be deemed null and void and nothing contained herein shall be deemed (i) to constitute a waiver or release of any Claims by the Debtor or any other Entity, 40 (ii) to prejudice in any manner the rights of the Debtor or any other Entity, or (iii) to constitute any admission by the Debtor or any other Entity. 14.5 Governing Law. Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and the Bankruptcy Rules) or the Delaware General Corporation Law or the law of the jurisdiction of organization of any entity formed or to be formed pursuant to the Plan, the internal laws of the State of New Jersey shall govern the construction and implementation of the Plan and any agreements, documents, and instruments executed in connection with the Plan or the Chapter 11 Case, except as may otherwise be provided in such agreements, documents, and instruments. 14.6 Amendments and Modifications. The Proponents may, in accordance with section 1127(a) of the Bankruptcy Code, amend or modify the Plan prior to the entry of the Confirmation Order. Any such amendment or modification proposed prior to entry of the Disclosure Statement Order shall not require the consent of the Equity Committee or Wexford; provided, however, that, if any such amendment or modification is made without the consent of the Equity Committee or Wexford, such entity shall be eliminated as a proponent of the Plan. After the entry of the Confirmation Order, the Proponents may, in accordance with section 1127(b) of the Bankruptcy Code, amend or modify the Plan, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. 14.7 Revocation. Without limiting the application of Section 14.6 and subject to the obligations of O'Brien and NRG under the Acquisition Agreement and NRG's agreement set forth in a letter dated September 29, 1995 addressed to the Honorable Rosemary Gambardella and counsel to the Debtor (the "Bid Letter"), the Proponents reserve the right to revoke and withdraw the Plan prior to entry of the Confirmation Order. Notwithstanding the foregoing, unless the Proponents, by prior written notice to the Court, shall have waived the effectiveness of this provision, the Proponents shall be deemed to have revoked the Plan if the Effective Date shall not have occurred on or before the date specified in Section 11.2(c). If the Proponents revoke or withdraw the Plan pursuant to this Section 14.7, then the Plan shall be deemed null and void and, in such event, nothing contained herein shall be deemed to constitute a waiver or release of any Claims by or against the Debtor or any Entity in any further proceedings involving the Debtor. Notwithstanding anything to the contrary set forth herein, nothing contained herein shall be construed to modify any provision of the Acquisition Agreement or the Bid Letter or any of NRG's rights and obligations that may be expressly set forth in the Acquisition Agreement or Bid Letter. 14.8 No Modification of Subordination Rights. Notwithstanding any provision contained herein to the contrary, nothing in the Plan shall modify or be deemed to modify any subordination rights in favor of the holders of Senior Debt under the Old Indentures, and any distributions from the Class 15C Cash Payment Fund that, if made to the holders of Old Subordinated Noteholder Claims in accordance with Section 5.13, would violate the subordination provisions of the Old Indentures shall be deemed automatically assigned, and shall be paid by Reorganized O'Brien directly, to the holders of Senior Debt entitled thereto in accordance with the applicable terms of the Old Indentures. 14.9 Severability. Should any provision in the Plan be determined to be unenforceable, such determination shall in no way limit or affect the enforceability and operative effect of any other provisions of the Plan. 41 14.10 De Minimis Distributions. No distribution of less than ten dollars ($10.00) in Cash shall be made to any holder of an Allowed Claim. Such undistributed amount will be the property of and released to Reorganized O'Brien. 14.11 Interpretation and Rules of Construction. Unless otherwise specified, all section, article, schedule and exhibit references in the Plan are to the respective section in, article of, or schedule or exhibit to, the Plan, as the same may be amended, waived, or modified from time to time. The rules of construction contained in section 102 of the Bankruptcy Code shall apply to the construction of the Plan. 14.12 Other Terms. The words 'herein,' 'hereof,' 'hereto,' 'hereunder,' and others of similar import refer to the Plan as a whole and not to any particular section, subsection, or clause contained in the Plan. 14.13 Headings. Headings are used in the Plan for convenience of reference only, and shall not constitute a part of the Plan for any other purpose. Headings shall not limit or otherwise affect the provisions of the Plan. 14.14 Incorporation of Exhibits. Each Schedule and Exhibit to the Plan annexed hereto and each of the Plan Documents are incorporated into and are a part of the Plan as if set forth in full herein. 14.15 Termination of Existence of Committees. The existence of the Equity Committee shall terminate on the Effective Date. The Creditors' Committee shall continue in existence following the Effective Date for the sole and limited purpose of performing its obligations under Section 10.2(b) of the Plan; provided that no expenses or other amounts shall be payable hereunder for services rendered or expenses incurred after the Effective Date, to or for the benefit of the Creditors' Committee or any member thereof other than the Objection Resolution Expenses that are payable pursuant to Section 10.2(b). Upon the Final Resolution Date, the existence of the Creditors' Committee shall terminate. 42 Dated at New York, New York, this 31st day of January, 1996. O'BRIEN ENVIRONMENTAL ENERGY, INC. By /s/ John B. Kelly Name: John B. Kelly NRG ENERGY, INC. By /s/ Craig Mataczynski Name: Craig A. Mataczynski OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS OF O'BRIEN ENVIRONMENTAL ENERGY, INC. By /s/ Larry Littman Name: Larry Littman WEXFORD MANAGEMENT CORP. By /s/ Spyros S. Skouras, Jr. Name: Spyros S. Skouras, Jr. SILLS, CUMMIS, ZUCKERMAN, RADIN, TISCHMAN, EPSTEIN & GROSS, P.C. One Riverfront Plaza, 13th Floor Newark, NJ 07102-5400 By /s/ Jack Zackin Name: Jack Zackin Attorneys for O'Brien Environmental Energy, Inc. GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, NY 10166 By /s/ Michael A. Rosenthal P.C. Name: Michael A. Rosenthal P.C. Attorneys for NRG Energy, Inc. 43 MARCUS MONTGOMERY P.C. 53 Wall Street, 8th Floor New York, NY 10005-2815 By /s/ Claude D. Montgomery Name: Claude D. Montgomery Attorneys for the Official Committee of Equity Security Holders ROSENMAN & COLIN LLP 575 Madison Avenue New York, NY 10022-2585 By /s/ Jeff J. Friedman Name: Jeff J. Friedman Attorneys for Wexford Management Corp. 44 EX-2.4 3 EXHIBIT 2.4 LETTER AGREEMENT DATED APRIL 26, 1996 BETWEEN THE COMPANY AND NRG ENERGY AMENDING THE STOCK PURCHASE AND REORGANIZATION AGREEMENT. Exhibit 2.4 NRG ENERGY, INC. 1221 NICOLLET MALL, SUITE 700 MINNEAPOLIS, MN 55403 As of April 26, 1996 O'Brien Environmental Energy, Inc. 225 South 8th Street Philadelphia, PA 19106 Dear Sirs: This will confirm the understanding and agreement between O'Brien Environmental Energy, Inc. ("O'Brien") and NRG Energy, Inc. ("NRG"), with respect to the amendment of certain provisions of the Amended and Restated Stock Purchase and Reorganization Agreement between O'Brien and NRG dated as of January 31, 1996 (the "Agreement") regarding the payment of the Equityholders Cash Payment (as such term is defined in the Plan) pursuant to and in furtherance of the objectives of section 6.6(a) of the Plan: 1. Capitalized terms used herein without definition shall have the respective meanings assigned to them in the Agreement. 2. The second "Whereas" clause of the Agreement is hereby amended by deleting such clause in its entirety and inserting the following language: "WHEREAS, subject to the terms and conditions set forth herein, and pursuant to the Composite Fourth Amended and Restated Plan of Reorganization for the Company proposed by the Company, the Purchaser, Wexford and the Equity Committee (as each such term is defined below) dated January 31, 1996 (as confirmed by the Bankruptcy Court, the "Plan"), the Purchaser desires that it or its designee acquire (i) the Purchased Old Common Stock (as defined below), (ii) 30.913% of the issued and outstanding capital stock of the Company as reorganized under the Plan on the Effective Date thereof (the Company as so reorganized, the "Reorganized Company") in exchange for the O'Brien Cash Equity Contribution, (iii) 10.947% of the issued and outstanding capital stock of the Reorganized Company in exchange for the Purchased Old Common Stock acquired by the Purchaser pursuant to the terms hereof, and (iv) all of the capital stock of each of the Acquired Subsidiaries (as defined below) (the acquisition of the Purchased Old Common Stock, the stock of the Reorganized Company and the stock of the Acquired Subsidiaries is hereinafter referred to as the "Acquisition");" 3. The definition of the term "Cash Equity Contribution" is hereby amended by deleting such definition in its entirety and inserting the following language: ""Cash Equity Contribution" shall mean that portion of the Cash Purchase Price funded by a cash payment by the Purchaser in respect of certain of the Purchased Shares, as defined below, in the amount of $28,678,062.92 (such amount including $417,062.92 as provided for in Section 2.5) subject to adjustment as provided in Sections 2.4 and 2.5 and increased by the amount, if any, of the Additional NRG Equity Contribution. The Cash Equity Contribution will be comprised of the O'Brien Cash Equity Contribution and the Purchased Subsidiary Cash Equity Contribution, each term as defined below." 4. A new definition is hereby added to Section 1.1 of the Agreement following the definition of "NRG Newark Cogen Loan Documentation" as follows: ""O'Brien Cash Equity Contribution" shall equal $21,178,062.92 (such amount including $417,062.92 as provided for in Section 2.5), subject to adjustment as provided in Sections 2.4 and 2.5 and increased by the amount, if any, of the Additional NRG Equity Contribution." 5. A new definition is hereby added to Section 1.1 of the Agreement following the definition of "Purchased Company Shares" as follows: 2 ""Purchased Old Common Stock" shall mean 15.845% of the Old Common Stock (as such term is defined in the Plan) issued and outstanding immediately prior to the Effective Date of the Plan, being held pro-rata by each of the holders of the Old Common Stock." 6. A new definition is hereby added to Section 1.1 of the Agreement following the definition of "Purchased Shares" as follows: ""Purchased Subsidiary Cash Equity Contribution" shall equal $7,500,000." 7. Section 2.1 of the Agreement is hereby amended by deleting the portion of such Section following "on the Closing Date," in the third line thereof, and inserting the following language: "each of the holders of the Old Common Stock, as such term is defined in the Plan, will sell to the Purchaser or its designee, as relevant, and the Purchaser or its designee shall purchase from each such holder, 100% of such holder's Purchased Old Common Stock in exchange for a pro-rata portion of the Equityholders Cash Payment, and the Reorganized Company shall issue or sell to the Purchaser or its designee, as relevant, and the Purchaser or its designee shall acquire from the Reorganized Company, (i) 30.913% of the Purchased Company Shares in exchange for the O'Brien Cash Equity Contribution, (ii) 10.947% of the Purchased Company Shares in exchange for the Purchased Old Common Stock and (iii) the Purchased Subsidiary Shares in exchange for the Purchased Subsidiary Cash Equity Contribution (collectively, the "Purchased Shares"). At the Closing, (a) the Purchased Company Shares shall constitute 41.86% of the issued and outstanding shares of New Common Stock and (b) the Purchased Subsidiary Shares shall constitute 100% of the issued and outstanding shares of capital stock of the Acquired Subsidiaries. The Stock Transfer Agent will act as the agent of the Purchaser or its designee to receive the Purchased Old Common Stock from the holders thereof and to transfer such Purchased Old Common Stock to the Company on the Purchaser's or its 3 designee's behalf in exchange for 10.947% of the Purchased Company Shares received by the Purchaser or its designee on the Closing Date." 8. Section 2.2 of the Agreement is hereby amended by deleting such Section in its entirety and inserting the following language: "SECTION 2.2 Consideration. (a) On the Closing Date, the Purchaser shall pay or cause to paid (1) to the Stock Transfer Agent on behalf of the holders of Old Common Stock, the Equityholders Cash Payment as consideration and in exchange for the Purchased Old Common Stock and (2) to the Company, $97,678,062.92 (such amount including $417,062.92 as provided for in Section 2.5) for distribution to the Claimants in accordance herewith and with the Plan and the Confirmation Order. The amount described in (2) above may be (i) reduced by the NRG New Loan Expenses of up to $100,000, (ii) increased or reduced, as applicable, by the adjustments to the Cash Equity Contribution provided for in Sections 2.4, 2.5 and 2.8, (iii) increased by the amount of any Additional NRG Equity Contribution, and (iv) increased by the aggregate amount of any NRG Mandatory Supplemental Loan; provided that the NRG Mandatory Supplemental Loan shall be deferred until after the Effective Date as and to the extent provided in Section 10.8(b) of the Plan (the amounts described in (1) and (2) above, as they may be increased or decreased pursuant hereto, the "Cash Purchase Price"). (b) The Equityholders Cash Payment shall be paid by the wire transfer of immediately available funds to a bank account designated in writing by the Stock Transfer Agent and the remainder of the Cash Purchase Price shall be paid by the wire transfer of immediately available funds to a bank account designated in writing by the Company, reduced by the Holdback Escrow Amount, if any, and by the amount of any then outstanding DIP Loan that the Purchaser elects, pursuant to Section 3.8, to offset against the Cash Purchase Price, subject to the terms of the DIP Loan Agreement and the Plan." 4 9. Except as expressly set forth above, the Agreement is not affected hereby and remains in full force and effect. The holders of Old Common Stock are hereby recognized to be the third- party beneficiaries of this Amendment. If the foregoing correctly sets forth the understanding and agreement between NRG and O'Brien, please so indicate in the space provided for that purposes below, whereupon this letter shall constitute a binding agreement as of the date first above written. O'BRIEN ENVIRONMENTAL ENERGY, INC. By: /s/ John B. Kelly Name: John B. Kelly Title: Chief Administrative Officer NRG ENERGY, INC. By: /s/ Craig Mataczynski Name: Craig Mataczynski Title: Vice President 5 EX-3.1 4 EXHIBIT 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY. Exhibit 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF NRG GENERATING (U.S.) INC. NRG Generating (U.S.) Inc. (the "Corporation"), formerly known as O'Brien Environmental Energy, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby files this Amended and Restated Certificate of Incorporation to amend Article Four from the Amended and Restated Certificate of Incorporation filed on April 30, 1996 and to restate in its entirety its Certificate of Incorporation. The date of filing of its original Certificate of Incorporation with the Secretary of State, under its original name of O'Brien Energy Systems, Inc., was December 5, 1983. The Corporation hereby certifies as follows: 1. This Amended and Restated Certificate of Incorporation restates the Certificate of Incorporation of the Corporation to read as set forth herein. 2. The text of the Certificate of Incorporation as heretofore amended or supplemented is hereby corrected to properly restate in Article Four the total number of authorized shares of stock of the Corporation and is hereby further restated to read in full as follows: FIRST: The name of the Corporation is: NRG GENERATING (U.S.) INC. SECOND: The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, and the name of its registered agent at that address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: (a) The total number of shares of stock which the Corporation is authorized to issue is seventy million (70,000,000), consisting of fifty million (50,000,000) shares of common stock, having a par value of one cent ($0.01) per share and twenty million (20,000,000) shares of Preferred Stock, having a par value of one cent ($0.01) per share. (b) The Corporation shall not issue any nonvoting equity securities provided that this provision, which is included in this Certificate of Incorporation in compliance with Section 1123(a)(6) of the United States Bankruptcy Code of 1978, as amended, shall have no force or effect beyond that required by such Section 1123(a)(6) and shall be effective only for so long as such Section 1123(a)(6) is in effect and applicable to the Corporation. (c) Shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized to fix the voting rights, designations, powers, preferences and the relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of Preferred Stock; and to fix the number of shares constituting such series (but not below the number of shares thereof then outstanding). FIFTH: (a) Except as provided below, the bylaws of the Corporation may only be made, repealed, altered, amended or rescinded by (i) the stockholders of the Corporation by the vote of the holders of not less than sixty percent (60%) of the total voting power of all outstanding shares of voting stock of the Corporation or (ii) the directors of the Corporation by 2 the vote of a majority of the entire board of directors present at a meeting at which a quorum is present. (b) Section 1.7(b) (regarding action by written consent of stockholders); Section 1.11 (regarding notice of stockholder nominations and other stockholder business); Section 2.1(b) (regarding the number of directors); Section 2.10 (regarding Independent Directors); and Section 3.2 (regarding the Independent Directors committee), of the bylaws of the Corporation may only be repealed, altered, amended or rescinded by (i) the stockholders of the Corporation by a vote of the holders of not less than seventy-five percent (75%) of the total voting power of all outstanding shares of voting stock of the Corporation or (ii) the directors of the Corporation by the affirmative vote of no fewer than the lesser of all of the directors then in office or six (6) of the Corporation's directors; provided however, that Section 2.10 (regarding Independent Directors) and Section 3.2 (regarding the Independent Directors Committee) may be altered or amended pursuant to the provisions of subparagraph (a) of Article Fifth to the extent necessary to comply with the provisions of the applicable listing requirements of any exchange or market system over which the securities of the Corporation are to be traded. SIXTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation 3 shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of this provision shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. SEVENTH: (a) Until April 30, 2002, (i) any attempted sale, transfer, assignment, conveyance, grant, pledge, gift or other disposition of any share or shares of stock of the Corporation (within the meaning of Section 382 of the Internal Revenue Code of 1986 (the "Code")), or any option or right to purchase such stock, as defined in the Treasury Regulations under Section 382 of the Code, to any person or entity (or group of persons or entities acting in concert) who either directly or indirectly owns or would be treated as owning, or whose shares are or would be attributed to any person or entity who directly or indirectly owns or would be treated as owning, in either case prior to the purported transfer and after giving effect to the applicable attribution rules of the Code and applicable Treasury Regulations, 5 percent or more of the value of the outstanding stock of the Corporation or otherwise treated as a 5 percent stockholder (within the meaning of Section 382 of the Code), regardless of the percent or the value of the stock owned, shall be void ab initio insofar as it purports to transfer ownership or rights in respect of such stock to the purported transferee and (ii) any attempted sale, transfer, assignment, conveyance, grant, gift, pledge or other disposition of any share of stock of the Corporation (within the meaning of Section 382 of the Code) or any option or right to purchase such stock, as defined in the Treasury Regulations under Section 382 of the Code, to any person or entity (or group of persons or entities acting in concert) not described in clause (i) who directly or indirectly would own, or whose shares would be attributed to any person or entity who directly or indirectly would own in each case as a result of the purported transfer and after giving 4 effect to the applicable attribution rules of the Code and applicable Treasury Regulations, 5 percent or more of the value of any of the stock of the Corporation (or otherwise treated as a 5-percent (5%) stockholder within the meaning of Section 382 of the Code), shall, as to that number of shares causing such person or entity to be a 5-percent stockholder, be void ab initio insofar as it purports to transfer ownership or rights in respect of such stock to the purported transferee; provided, however, that neither of the foregoing clauses (i) and (ii) shall prevent a valid transfer if (A) the transferor obtains the written approval of the board of directors of the Corporation which approval shall not be unreasonably withheld and provides the Corporation with an opinion of counsel reasonably satisfactory to the Corporation .that (assuming, as of the date of such opinion, the full exercise of (i) all warrants issued under, and (ii) any options granted pursuant to any stock option plan of the Corporation) the transfer shall not result in an ownership change within the meaning of Section 382 of the Code and any successor thereto or (B) a tender offer, within the meaning of the Securities Exchange Act of 1934, as amended, and pursuant to the rules and regulations thereof, is made by a bona fide third-party purchaser to purchase at least sixty-six and two-thirds percent (66-2/3%) of the issued and outstanding common stock of the Corporation and the offeror (i) agrees to effect, within ninety (90) days of the consummation of the tender offer, a back end merger in which all non-tendering stockholders would receive the same consideration as paid in the tender offer, and (ii) has received the tender of sufficient shares to effect such merger. Without limiting or restricting in any manner the effectiveness of the foregoing provisions, the Corporation and any transferor may rely and shall be protected in relying on the Corporation's stockholder lists and stock transfer records for all purposes relating to any opinion required hereunder. 5 (b) In the absence of specific board approval, a purported transfer of shares in excess of the shares that can be transferred pursuant to this Article SEVENTH (the "Prohibited Shares") to the purported acquiror (the "Purported Acquiror") is not effective to transfer ownership of such Prohibited Shares. On demand by the Corporation, which demand must be made within thirty (30) days of the time the Corporation learns of the transfer of the Prohibited Shares, a Purported Acquiror must transfer any certificate or other evidence of ownership of the Prohibited Shares within the Purported Acquiror's possession or control, together with any dividends or other distributions ("Distributions") that were received by the Purported Acquiror from the Corporation with respect to the Prohibited Shares, to an agent designated by the Corporation (the "Agent"). The Agent will sell the Prohibited Shares in an arm's length transaction (over a stock exchange, if possible), and the Purported Acquiror will receive an amount of sales proceeds not in excess of the price paid or consideration surrendered by the Purported Acquiror for the Prohibited Shares (or the fair market value of the Prohibited Shares at the time of an attempted transfer to the Purported Acquiror by gift, inheritance, or a similar transfer). If the Purported Acquiror has resold the Prohibited Shares prior to receiving the Corporation's demand to surrender the Prohibited Shares to the Agent, the Purported Acquiror shall be deemed to have sold the Prohibited Shares as an agent for the initial transferor, and shall be required to transfer to the Agent any proceeds of such sale and any Distributions. (c) If the initial transferor can be identified, the Agent will pay to it any sales proceeds in excess of those due to the Purported Acquiror, together with any Distributions received by the Agent. If the initial transferor cannot be identified within ninety (90) days, the Agent may pay any such amounts to a charity of its choosing. In no event shall amounts paid to the Agent inure to the benefit of the Corporation or the Agent, but such amounts may be used to 6 cover expenses of the Agent in attempting to identify the initial transferor. If the Purported Acquiror fails to surrender the Prohibited Shares within the next thirty (30) business days from the demand by the Corporation, then the Corporation will institute legal proceedings to compel the surrender. The Corporation shall be entitled to damages, including reasonable attorneys' fees and costs, from the Purported Acquiror, on account of such purported transfer. EIGHTH: The affirmative vote of the holders of greater than sixty-six and two thirds percent (66-2/3%) of the total voting power of all outstanding shares of voting stock of the Corporation shall be required for the approval of any proposal (1) that the Corporation merge or consolidate with any corporation, person, partnership, trust or other entity ("Entity"), or (2) that the Corporation sell or exchange all or substantially all of its assets or business, or (3) that the Corporation issue or deliver any stock or other securities of its issue in exchange or payment for any properties or assets of any Entity or securities issued by any Entity, and to effect such transaction the approval of stockholders of the Corporation is required by law or by any agreement between the Corporation and any national securities exchange. NINTH: (a) Any attempted sale, transfer, assignment, conveyance, pledge or other disposition of any share of the Corporation's common stock to any Electric Utility Interest (as defined below) shall be null and void ab initio. No employee or agent, including any independent transfer agent or registrar of this Corporation, shall be permitted to record any attempted or purported transfer made in violation of this provision, and no intended transferee of shares of this Corporation's common stock attempted to be transferred in violation of this Article NINTH shall be recognized as a holder of such shares for any purpose whatsoever, including, but not limited to, the right to vote such shares of common stock or to receive dividends or other distributions in respect thereof, if any. The transferor and any such intended transferee shall be 7 deemed to have appointed the corporation as attorney-in-fact, with full power of substitution and full power and authority, in the name and on behalf of the intended transferor and transferee, to sell, assign and transfer the shares of Common Stock of the corporation attempted to be transferred in violation of this Article NINTH, and to do all lawful acts and execute all documents deemed necessary or advisable to effect such sale, assignment and transfer, in an arm's-length transaction, to another entity or person; provided that the sale, assignment and transfer to such other entity of person does not violate the provisions of this Article NINTH. The Corporation shall apply the proceeds of any such sale first, to pay the expenses of the sale; second, to pay the intended transferee on whose behalf the shares were sold, an amount equal to (i) the sum of the intended transferee's cost of such shares (inclusive of brokerage fees and expenses), plus interest on such cost at the then minimum rate of interest which would prevent interest on a non-interest bearing obligation from being imputed by the Internal Revenue Service, less the amount of any dividends or other distributions inadvertently paid to said intended transferee in respect of such shares, or (ii) the balance of such proceeds, whichever is less; and third, the balance of such proceeds, if any, shall be paid to the corporation. Notwithstanding the foregoing, the Corporation shall not provide any proceeds to the intended transferee, if such intended transferee has received consideration from any subsequent attempted transfer. (b) This Corporation shall take all appropriate legal action to enforce the provisions of this Article NINTH in every case where there has been an attempted or purported transfer made in violation thereof. In taking any action hereunder, this Corporation, and its directors, officers and agents, will be fully protected in relying upon any notice, paper or other document reasonably believed by this Corporation or any such person to be genuine and sufficient, and, to the extent permitted by law, in no event shall this Corporation, or any of its directors, officers or 8 agents, be liable for any act performed or omitted to be performed hereunder in the absence of gross negligence or willful misconduct. This Corporation and each of its directors, officers and agents may consult with counsel in connection with its respective duties hereunder and, to the extent permitted by law, each shall be fully protected by any act taken, suffered or permitted in good faith in accordance with the advice of such counsel. (c) For purposes of this Article NINTH, the term "Electric Utility Interest" refers to an electric utility or utilities or an electric utility holding company or companies, or any affiliate of either, in each case as those terms are utilized by the Federal Energy Regulatory commission ("FERC") in regulations or orders implementing the Public Utility Regulatory Policies Act of 1978, as amended, and its successors ("PURPA"), if such entity's interest in this Corporation would be a utility interest for the purposes of 10 C.F.R. 292.206. (d) Whenever it is deemed by the board of directors to be prudent in protecting, preserving or obtaining for any of its projects (including projects in which this Corporation or a subsidiary has an interest, whether by ownership, lease or contract) the status of a "Qualifying Facility" (as defined under PURPA), the board of directors of this Corporation may require to be filed with this Corporation as a condition to permitting any proposed transfer, and/or the registration of any transfer, of any shares of this Corporation's common stock a statement of affidavit from any proposed transferee to the effect that such transferee is not an "Electric Utility Interest," as defined herein. (e) The Corporation may, at any time that the Board of Directors of the Corporation deems necessary or advisable to protect, preserve or obtain for any of its projects the status of a "Qualifying Facility", redeem any shares of its capital stock beneficially owned by any 9 Electric Utility Interest at a redemption price equal to the "Fair Market Value" (as defined in subsection (h) below) of such shares of capital stock. (f) In the event the Corporation shall redeem any shares of its capital stock pursuant to subsection (e) above, notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than thirty (30) days nor more than sixty (60) days prior to the redemption date, to each holder of record of the shares to be redeemed at such holder's address as the same appears on the books of the Corporation; provided, however, that no failure to mail such notice nor any defect therein shall affect the validity of the proceeding for the redemption of any shares of capital stock to be redeemed except as to the holder to whom the Corporation has failed to mail said notice or except as to the holder whose notice was defective. Each such notice shall state: (i) the redemption date; (ii) the number of shares of capital stock to be redeemed and, if less than all the shares held by such holder are to be redeemed from such holder, the number of shares to be redeemed from such holder; and (iii) the place or places where certificates for such shares are to be surrendered for payment of the redemption price. (g) Notice having been mailed as aforesaid, from and after the redemption date (unless the Corporation shall fail to provide money for the payment of the redemption price of the shares called for redemption) the shares of capital stock so called for redemption shall no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the board of directors shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price. 10 In case fewer than all of the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. (h) For purposes of this Article NINTH, "Fair Market Value" shall mean the average of the closing sale prices during the 30-day period immediately preceding the redemption date of a share of capital stock of the Corporation as reported on the American Stock Exchange, Inc. (the "Amex"), or, if such stock is not then listed on the Amex, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which such stock is listed, or, if such stock is not then listed on any such exchange, the average of the closing sale prices or closing bid quotations (whichever is higher, if both are reported) with respect to a share of such stock during the 30-day period immediately preceding the redemption date of a share of such stock on the National Association of Securities Dealers, Inc. National Market System or any system then in use, or if no such quotations are available, the fair market value on the redemption date of a share of such stock as determined by the board of directors in good faith. (i) The board of directors of this Corporation shall have the right to determine whether any transferee or purported transferee of shares of common stock of this corporation is an "Electric Utility Interest" and to determine whether this Corporation's projects (including projects in which this Corporation or a subsidiary has an interest, whether by ownership, lease or contract) meet the requirements for "Qualifying Facility" status under PURPA. (j) Nothing contained in this Article NINTH shall limit the authority of the board of directors of this Corporation to take such other action as it deems necessary or advisable to protect this Corporation and interests of its stockholders by protecting, preserving or obtaining for any of this Corporation's projects (including projects in which this Corporation or a 11 subsidiary has an interest, whether by ownership, lease or contract) the status of a "Qualifying Facility" under PURPA. (k) All certificates representing shares of this Corporation's common stock shall bear the following legend: The sale, transfer, assignment, conveyance, pledge or other disposition of any of the shares represented by this certificate to any "Electric Utility Interest" (as hereinafter defined) is restricted in accordance with the provisions of the Certificate of Incorporation of the Corporation. For these purposes, the term "Electric Utility Interest" refers to an electric utility or utilities or an electric utility holding company or companies, or any affiliate of either, in each case as those terms are utilized by the Federal Energy Regulatory Commission ("FERC") in regulations or orders implementing the Public Utility Regulatory Policies Act of 1978, as attended, and its successors ("PURPA"), if such entity's interest in the Corporation would be utility interest for purposes of 10 C.F.R. 292.206. TENTH: The provisions set forth in this Article TENTH and subparagraph (a) of Article FIFTH (regarding the alteration of bylaws) may not be repealed or amended in any respect unless such repeal or amendment is approved by the affirmative vote of the holders of not less than sixty percent (60%) of the total voting power of all outstanding shares of voting stock of the Corporation. ELEVENTH: The provisions set forth in this Article Eleventh, in subparagraph (b) of Article FIFTH (regarding the alteration of certain bylaws) and in Article EIGHTH (regarding the greater than sixty-six and two thirds percent (66-2/3%) vote of stockholders 12 required for certain mergers or other corporate combinations), may not be repealed or amended in any respect unless such repeal or amendment is approved by the affirmative vote of holders of not less than seventy-five percent (75%) of the total voting power of all outstanding shares of voting stock of the Corporation. TWELFTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute and in accordance with Articles TENTH and ELEVENTH hereof. IN WITNESS WHEREOF, this Certificate of Correction and Restated Certificate of Incorporation which restates in its entirety the provisions of the Corporation's Certificate of Incorporation, having been duly adopted by the Board of Directors of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware, has been executed on the 8th day of January, 1997. /s/ Timothy P. Hunstad Timothy P. Hunstad Treasurer and Chief Financial Officer ATTEST: /s/ Karen A. Brennan By: Karen Brennan Its: Secretary EX-10.1 5 EXHIBIT 10.1 CO-INVESTMENT AGREEMENT DATED APRIL 30, 1996 BETWEEN THE COMPANY AND NRG ENERGY. Exhibit 10.1 CO-INVESTMENT AGREEMENT between NRG ENERGY, INC. and NRG GENERATING (U.S.) INC. Dated as of April 30, 1996 TABLE OF CONTENTS ARTICLE I Definitions Section 1.1 Certain Defined Terms 1 Section 1.2 Terminology 5 ARTICLE II Purchase Right Section 2.1 Pre-Offer Procedures 5 Section 2.2 Offer Procedures 6 Section 2.3 Offer Price 8 Section 2.4 Standards for Offers 8 Section 2.5 NRG Financing 8 Section 2.6 Due Diligence; Delivery of Information 9 Section 2.7 NRG Covenants 9 Section 2.8 Permissive Offers 10 Section 2.9 Independent Committee 10 ARTICLE III Exempt Transactions and Interests Section 3.1 Exempt Transactions 11 Section 3.2 Exempt Interests 11 ARTICLE IV Events of Default; Remedies Section 4.1 Events of Default 12 Section 4.2 Remedies; Exclusivity 12 ARTICLE V Arbitration Section 5.1 Submission of Disputes to Arbitration 13 Section 5.2 Conduct of Arbitration 14 ARTICLE VI Miscellaneous Section 6.1 Notices 15 Section 6.2 Costs and Expenses 15 Section 6.3 Amendments 15 Section 6.4 Assignment 16 Section 6.5 Successors and Assigns 16 Section 6.6 Invalidity 16 Section 6.7 Counterparts 16 Section 6.8 No Oral Agreements 16 Section 6.9 Governing Law and Submission to Jurisdiction 16 Section 6.10 Interpretation and Conflicts 16 Section 6.11 Term 16 CO-INVESTMENT AGREEMENT THIS CO-INVESTMENT AGREEMENT is entered into on, and effective as of the Effective Date (as hereinafter defined), between NRG Energy, Inc., a Delaware corporation ("NRG Energy"), and NRG Generating (U.S.) Inc., a Delaware corporation ("Generating"). RECITALS 1. Pursuant to the Plan of Reorganization (as hereinafter defined), NRG Energy acquired 41.86% of the issued and outstanding shares of capital stock of reorganized O'Brien Environmental Energy, Inc., which has been renamed "NRG Generating (U.S.) Inc." 2. In connection with the Plan of Reorganization, NRG Energy has agreed to offer to Generating ownership interests in certain power projects within the Territory (as hereinafter defined) which were initially developed by NRG (as hereinafter defined) or with respect to which NRG has entered into a binding acquisition agreement with a third party. AGREEMENT In consideration of the premises and the covenants, conditions and agreements contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, NRG Energy and Generating hereby agree as follows: ARTICLE I Definitions Section 1.1 Certain Defined Terms. As used herein, each of the following terms shall have the meanings ascribed thereto below: "Acceptance Period" -- As defined in Section 2.2(b) of this Agreement. "Agreement" -- This Co-Investment Agreement between NRG and Generating. "Assumptions" -- The assumptions of facts upon which the financial projections relating to Eligible Projects and delivered pursuant to this Agreement are predicated. All assumptions applicable to an Eligible Project, unless otherwise indicated, will be deemed to include assumptions (which assumptions, for all purposes of the Agreement, will be deemed reasonable) that (a) the applicable laws, legal structure and taxes will remain the same; (b) all parties will perform their obligations under the Project Documents for such Eligible Project, in 1 all material respects; and (c) the Project Documents for such Eligible Project will continue in effect, and will be enforceable, in accordance with their terms. "Bankruptcy Code" -- Title 11 of the United States Code, 101, et seq, as now or hereafter in effect, or any successor statute thereto. "Bankruptcy Event" -- If, with respect to any Person, (a) such Person generally is unable to pay such Person's debts as such debts become due, or admits in writing such Person's inability to pay such Person's debts generally, or makes a general assignment for the benefit of such Person's creditors; or (b) any proceeding is instituted by or against such Person under any Bankruptcy Law seeking to adjudicate such Person as bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, rearrangement, adjustment, protection, relief or recomposition of such Person or such Person's debts, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for such Person or for all or substantially all of such Person's property and, in the case of any such proceeding instituted against such Person (but not instituted by or with the consent of such Person), is not controverted within 20 days and is not dismissed or stayed for a period of 60 days after such proceeding is filed. "Bankruptcy Law" -- The Bankruptcy Code and any other applicable federal, state, local or foreign insolvency, reorganization, moratorium, fraudulent conveyance or similar Law now or hereafter in effect for the relief of debtors. "Book Value" -- With respect to an Ownership Interest in an Eligible Project, the net asset value of such Ownership Interest as determined by NRG in accordance with GAAP (as evidenced by a certificate executed by NRG's Chief Accounting Officer setting forth such net asset value). "Business Day" -- Any day other than Saturday, Sunday and a day on which commercial banks are authorized or required to close in the states of New York or Minnesota. "Certificate of Incorporation and Bylaws" -- The Certificate of Incorporation and Bylaws of Generating, as amended from time to time. "Designated Closing Conditions" -- With respect to any Purchase Agreement for an Ownership Interest, the following conditions to the closing of the sale of such Ownership Interest: (a) all consents, approvals and permits required for such closing pursuant to an applicable Law or contract affecting such Ownership Interest or the underlying Eligible Project have been obtained, (b) the parties are not enjoined (or otherwise prohibited) from consummating such sale under applicable Law, and (c) the representations of the seller in the Purchase Agreement are true in all material respects. "Dispute" -- As defined in Section 5.1 of this Agreement. "Effective Date" -- The effective date of the Plan of Reorganization. 2 "Eligible Project" -- Any proposed or existing Power Plant within the Territory which NRG initially developed or in which NRG proposes to acquire an Ownership Interest. "Equity Interests" -- Collectively, stock in corporations, shares in limited liability companies and other partnership or equity interests that participate in the profits of the underlying entity (after the holders of indebtedness and other securities issued by such entity have been paid the fixed payments owed to such holders). "Event of Default" -- As defined in Section 4.1 of this Agreement. "Exempt Interest" -- As defined in Section 3.2 of this Agreement. "Exempt Transaction" -- As defined in Section 3.1 of this Agreement. "Financial Projections" -- As defined in Section 2.1 of this Agreement. "GAAP" -- Generally accepted accounting principles in the United States in effect from time to time. "Generating" -- NRG Generating (U.S.) Inc., a Delaware corporation. "Independent Committee" -- The Independent Committee of the Board of Directors of Generating, as described in the Certificate of Incorporation and Bylaws. "Law" -- Collectively, a law, rule, regulation or governmental requirement. "Limited Recourse Financing" -- With respect to any Eligible Project, the financing for such Eligible Project that is non-recourse to, and does not create any liability upon, NRG or any other Person that owns any direct or indirect Ownership Interest in such Eligible Project, except for (a) Shareholder Commitments that are fully discharged on or before a sale of the applicable Ownership Interest in the Eligible Project or (b) liability for misapplication of proceeds, fraud or other similar intentional wrongful acts committed by the owner of such Ownership Interest. "Note" -- As defined in Section 2.5 of this Agreement. "NRG" -- Collectively, NRG Energy and any corporation, partnership, joint venture or other entity in which NRG Energy (directly or indirectly) owns greater than 50% of the issued and outstanding Equity Interests. "NRG Energy" -- NRG Energy, Inc., a Delaware corporation. "Offer" -- As defined in Section 2.2(a) of this Agreement. "Offer Price" -- With respect to any Ownership Interest, the price initially offered by NRG for the sale of such Ownership Interest in the Offer to Generating; provided, that, in the 3 case of an assignment by NRG to Generating of a right to acquire an Ownership Interest, the Offer Price shall also include the amount payable to the Third Party seller to acquire such ownership Interest. "Offer Terms" -- As defined in Section 2.1 of this Agreement. "Ownership Interest" -- With respect to any Eligible Project, (a) a direct or indirect Equity Interest in such Eligible Project, and (b) a direct or indirect interest in the long-term indebtedness or other securities issued for such Eligible Project, which indebtedness or other securities are subordinate to the payment of debt service for such Eligible Project's Limited Recourse Financing. "Permissive Projects" -- As defined in Section 2.8 of this Agreement. "Person" -- Any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization, governmental authority or any other form of entity. "Plan of Reorganization" -- The Chapter 11 plan of reorganization for O'Brien Environmental Energy, Inc., proposed by NRG and certain other persons. "Potential Ownership Interest" -- As of any time, an Ownership Interest owned or proposed to be acquired by NRG which NRG believes is reasonably likely to become the subject of an Offer under this Agreement. "Power Plant" -- A facility the primary purpose of which is the generation of electricity for sale through the combustion of natural gas, oil or any other fossil fuel (other than biogas). "Project Description" -- As defined in Section 2.1 of this Agreement. "Project Document Violation" -- Any breach, violation or default (or event that with notice or the lapse of time, or both, would constitute a breach, violation or default) under a Project Document that could reasonably be expected to have a material adverse effect on the related Ownership Interest. Any such breach, violation or default that has given rise to a right to terminate (or accelerate obligations under) a Project Document will be deemed to have a material adverse effect on the related Ownership Interest. "Project Documents" -- With respect to an Ownership Interest in an Eligible Project, the contracts, licenses, and permits that burden or benefit (in any material respect) the Ownership Interest or the Eligible Project. The Project Documents may include one or more Shareholder Commitments. "Purchase Agreement" -- As defined in Section 2.2(c) of this Agreement. "Shareholder Commitment" -- Any guarantee, indemnity, other liability, undertaking or commitment of NRG entered into in connection with the development, acquisition, 4 financing or ownership of an Eligible Project or an Ownership Interest therein, in favor of the Eligible Project entity or any lender, supplier, customer or governmental entity for the primary purpose of providing financial or other credit support with respect to the Eligible Project or the Ownership Interest therein. "Significant Contracts Milestone" -- With respect to an Eligible Project, the execution and delivery of a binding power purchase agreement and fuel supply agreement and the completion of an engineering and feasibility study. "Subsidiary" -- With respect to any Person, means any corporation, partnership, joint venture or other entity that is consolidated with such Person in accordance with GAAP. "Territory" -- All geographic areas of the United States. "Third Party" -- Any Person, other than NRG, Generating or a Subsidiary of Generating. "United States" -- All states, commonwealths, territories and possessions of the United States of America, as of the date hereof. Section 1.2 Terminology. Unless the context of this Agreement clearly requires otherwise, (a) pronouns, wherever used herein, and of whatever gender, will include natural persons and corporations and associations of every kind and character, (b) the word "included" or "including" will mean "including without limitation", (c) the word "or" will have the inclusive meaning represented by the phrase "and/or", (d) the words hereof, herein, hereunder, and similar terms in this Agreement will refer to this Agreement as a whole and not any particular section or article in which such words appear, (e) all terms defined in this Agreement in the singular will have the same meaning when used in the plural and vice versa, and (f) each reference to NRG in the singular with respect to an Ownership Interest in an Eligible Project will refer collectively to all Persons within the definition of "NRG" which hold an Ownership Interest in such Eligible Project. The section, article and other headings in this Agreement and the Table of Contents to this Agreement are for reference purposes and will not control or affect the construction of this Agreement or the interpretation hereof in any respect. Article, section and subsection references are to this Agreement unless otherwise specified. ARTICLE II Purchase Right Section 2.1 Pre-Offer Procedures. As soon as practicable, but in no event less than 15 days prior to the date on which NRG expects to make an Offer pursuant to Section 2.2, NRG will give Generating notice of its estimate of the date on which such Offer is expected to be made. Such notice will include the following information relating to the Offer: 5 (a) The draft Purchase Agreement for the Offer, which will describe the proposed terms and conditions of the Offer other than price, including the Designated Closing Conditions and the representations, warranties, covenants or indemnities, if any, that NRG is required under Section 2.2(c) to offer or otherwise elects, in its sole discretion, to offer (together with any revisions thereto made in accordance with Section 2.2, the "Offer Terms"); (b) A description of the location and physical components of the Eligible Project together with the Project Documents for the Eligible Project (collectively, the "Project Description"); and (c) One or more sets of the financial projections (including a computer diskette thereof) for the Ownership Interest (the "Financial Projections"). Section 2.2 Offer Procedures. If any Eligible Project reaches the Significant Contracts Milestone prior to the expiration of the term of this Agreement (or if, prior to the expiration of the term of this Agreement, NRG enters a binding definitive agreement to acquire an Ownership Interest in an Eligible Project which has previously reached its Significant Contracts Milestone), then within 30 days NRG will offer to sell to Generating all of NRG's Ownership Interest in such Eligible Project in accordance with the following procedures: (a) Offer. NRG will make a written offer to Generating to sell all of NRG's Ownership Interest in such Eligible Project to Generating (an "Offer"), which Offer will contain the Offer Price, the Offer Terms presented by NRG, the terms of NRG's proposed financing in accordance with Section 2.5 and the Project Description for such Eligible Project. (b) Delivery and Acceptance of Offer. Each Offer will be delivered to the Chairman of the Independent Committee of Generating (with a copy to the Chief Executive Officer of Generating). Generating will have a period of 60 days after receipt of an Offer (the "Acceptance Period") to accept the Offer by executing the Purchase Agreement included with the Offer; provided that, in the case of an Eligible Project with respect to which NRG proposes to acquire an Ownership Interest, such Acceptance Period may be shortened (but not to less than 30 days) if required by the selling party as a condition to the agreement to sell such Ownership Interest to NRG. NRG will deal exclusively with Generating with respect to an Ownership Interest covered by an Offer during the Acceptance Period and may, but shall not be required to, revise the Offer Terms based on negotiations with the Independent Committee. (c) Purchase Agreement. The "Purchase Agreement" for an Ownership Interest means a binding purchase agreement, included in the Offer Terms for such Ownership Interest (or thereafter agreed upon by the parties), which evidences the rights and obligations of the parties with respect to the sale of the applicable Ownership Interest. In the Purchase Agreement for an Ownership Interest owned by 6 NRG, NRG will represent to Generating that (as of the proposed closing date): (i) the Ownership Interest will be conveyed free of material liens or other material rights or material encumbrances (other than those disclosed), (ii) it has provided copies to the Independent Committee of all Project Documents for the Eligible Project and disclosed in writing to the Independent Committee any Project Document Violation by NRG (or, to its knowledge, any other party) under such Project Documents, (iii) it has disclosed in writing to the Independent Committee all pending (or, to its knowledge, threatened) claims by Third Parties or for violations of Law that could reasonably be expected to have a material adverse effect on the Ownership Interest, (iv) it has all necessary corporate power and authority to convey the Ownership Interest to Generating, and (v) the conveyance of such Ownership Interest will not conflict with or result in a breach of, or require any consent which has not been obtained (or disclosed to Generating as having not yet been obtained) under, any Project Document for the Eligible Project or applicable Law (to the extent the failure to obtain same could be reasonably expected to have a material adverse effect on the Ownership Interest); provided that any of the foregoing representations may be omitted or modified upon the agreement of the parties. In the event that NRG proposes to acquire an Eligible Project with respect to which this Section 2.2 is applicable, NRG may assign its rights under the acquisition agreement between NRG and the Third Party seller to Generating and such acquisition agreement together with the applicable assignment documents will become the "Purchase Agreement." Unless the parties otherwise agree, the Purchase Agreement will provide that upon the closing of the purchase of an Ownership Interest, Generating will assume (or indemnify NRG and its affiliates against) all Shareholder Commitments. Unless the parties otherwise agree, the closing of the purchase of an Ownership Interest owned by NRG will occur within 15 days after execution of the Purchase Agreement, and such closing will be conditioned only upon satisfaction of the Designated Closing Conditions agreed upon by the parties in the Purchase Agreement. If such Designated Closing Conditions are not satisfied prior to the scheduled closing, then Generating may (by notice to NRG) extend such pre-closing period by up to an additional 30 days. (d) Failure to Close. If, after Generating accepts an Offer and the parties enter into the related Purchase Agreement, the Designated Closing Conditions in the Purchase Agreement are not satisfied (or waived), then, in the case of an Ownership Interest owned by NRG, NRG will not be required to sell, and Generating will not be required to purchase, the related Ownership Interest included in the Offer. In such case, the rights of NRG to sell or dispose of such Ownership Interest will thereafter be governed by Section 2.2(f). If Generating fails to purchase an Ownership Interest in violation of a Purchase Agreement, then this Agreement will no longer apply to such Ownership Interest. (e) Sale to Third Party. If Generating and NRG do not agree upon the terms and conditions of the sale of an Ownership Interest during the Acceptance Period, then NRG will have the right to sell such Ownership Interest to a Third Party 7 for a period of one year after the expiration of the Acceptance Period, provided that (i) the purchase price for such Ownership Interest equals or exceeds the Offer Price included in the Offer for such Ownership Interest (with all consideration paid by the Third Party measured at fair market value) and (ii) the terms and conditions of the proposed sale are not materially more favorable to such Third Party than those offered to Generating in the final Offer Terms. (f) Continuity of Right. If an Ownership Interest is not sold to a Third Party within one year after the expiration of the Acceptance Period as described in Section 2.2(e), or if the Designated Closing Conditions for the sale of an Ownership Interest are not satisfied or waived as described in Section 2.2(d), then before selling to any Third Party, NRG will offer to sell to Generating such Ownership Interest by making a new Offer to Generating in accordance with the provisions of this Article II. Section 2.3 Offer PriceError! Bookmark not defined.. Any Offer Price will be determined by NRG in compliance with the standards for Offers described in Section 2.4. Notwithstanding the provisions of this Article II to the contrary, NRG will not be required to make any Offer for an Ownership Interest at an Offer Price payable to NRG that is below NRG's Book Value for such Ownership Interest. Section 2.4 Standards for Offers. NRG will be considered to have complied (in all respects) with this Agreement with respect to an Offer if (a) the Offer is made in accordance with the procedures described in Sections 2.1, 2.2 and 2.3, and (b) in NRG's sole judgment determined in good faith at the time the Offer is made (and taking into consideration the Offer Terms, the Project Description, the Offer Price and the work previously performed by and on behalf of NRG in developing or acquiring the Eligible Project), the Offer is commercially reasonable and within a range which a reasonable offeree knowledgeable in the industry would reasonably be expected to accept. Any Offer Terms required to be included in the Purchase Agreement by Section 2.2(c) will be deemed to be commercially reasonable. Except as otherwise specifically provided in this Agreement, NRG will be free to establish the terms, conditions and price of any Offer it makes under this Agreement. Section 2.5 NRG Financing. To facilitate Generating's ability to acquire an Ownership Interest offered by NRG pursuant to this Agreement, NRG shall finance (on commercially competitive terms) the Offer Price to the extent funds are unavailable to Generating on comparable terms from other sources. Such financing shall be (i) secured by a first priority lien on the Ownership Interest acquired or, to the extent a first priority lien is unavailable because the relevant Eligible Project is the subject of Third Party financing and the Third Party lender has a first priority lien, a second priority lien, if available, (ii) recourse to Generating, (iii) subordinated to principal and interest on the $45 million note or notes (the "Note") issued by Generating in connection with the Plan of Reorganization, and (iv) required to be repaid from the net proceeds received by Generating from offerings of equity or debt securities of Generating (when market conditions permit such offerings to be made on favorable terms) after taking into account working capital and other cash requirements of Generating as determined by its Board of Directors. Notwithstanding the foregoing, NRG 8 shall have no obligation to provide any Limited Recourse Financing with respect to any Eligible Project. Section 2.6 Due Diligence; Delivery of Information. (a) The Independent Committee, on behalf of Generating, will have the right to perform all due diligence reasonably necessary to determine the value of any Ownership Interest offered under this Agreement and NRG will make available, at NRG's corporate headquarters at all reasonable times and upon reasonable notice, all reports, calculations, books, records and other information available to NRG which is reasonably necessary for the Independent Committee to perform such due diligence. NRG will provide a periodic report (on a quarterly basis) to the Independent Committee regarding the status of its development or acquisition of each Potential Ownership Interest and the negotiation of the material contracts for each Eligible Project . (b) NRG may condition and restrict delivery to the Independent Committee of the information described in this Section 2.6 and Section 2.1 upon execution of reasonable confidentiality and non-disclosure agreements by Generating. NRG will not be required to disclose or deliver information under this Agreement, if such disclosure or delivery would cause it to violate a confidentiality or non-disclosure covenant to which it is bound; provided that NRG will use reasonable efforts to obtain waivers or modifications of any confidentiality or non-disclosure covenants that prohibit it from providing the information described in this Section 2.6. Section 2.7 NRG Covenants. NRG covenants and agrees with Generating as follows: (a) NRG will not sell all or any portion of any Ownership Interest owned by it in any Eligible Project (other than an Exempt Interest), except pursuant to Article II or pursuant to an Exempt Transaction; (b) NRG will use reasonable efforts to obtain all consents and take other actions necessary to permit it to sell (and to satisfy the Designated Closing Conditions for the sale of) Ownership Interests to Generating in compliance with this Agreement; (c) NRG will use reasonable efforts to avoid the occurrence of any of the circumstances described in clauses (i) through (iii) below to the extent such circumstances would excuse it from making an Offer otherwise required under this Agreement; (d) During the three year period following the Effective Date, NRG will offer to Generating Ownership Interests in one or more Eligible Projects or Permissive Projects described in Section 2.8 representing an aggregate equity value of at least $60,000,000 or a minimum of 150 net megawatts; 9 (e) NRG will not, directly or indirectly, take any action, and will cause any affiliate not to take any action whether through the exercise of its stockholder vote, through its nominees on the Generating Board of Directors or otherwise, to remove, replace or vote down the election of any director who constitutes a member of, or a nominee named in accordance with Section 3.2 of the By-laws of Generating for whom proxies are solicited for election to the Board of Directors of Generating who will constitute a member of, the Independent Directors' Committee of Generating; (f) Notwithstanding any of the provisions of this Agreement to the contrary, Generating and its common stockholders not affiliated with NRG would not have an adequate remedy at law if NRG breaches its obligations under Section 2.7(e), (f) and (g) and expressly agrees that the Independent Directors' Committee, on behalf of Generating and such stockholders shall, in addition to any other remedies at law or in equity which it may have, be entitled to seek specific performance of NRG's obligations thereunder, including by way of injunction, restraining order, mandamus or otherwise, in any court of law or equity of competent jurisdiction; (g) The provisions of Section 2.7(e) shall survive through the stated term of this Agreement, notwithstanding any breach of any other provision hereof by any party hereto or any earlier termination permitted under Section 4.2 of this Agreement. Notwithstanding the provisions of this Article II to the contrary, NRG will not have an obligation to Offer to Generating any Ownership Interest, if the sale of such Ownership Interest (i) would cause Generating, NRG or any of their respective Subsidiaries to be classified as an "investment company," within the meaning of the Investment Company Act of 1940, as amended; (ii) would cause Generating, NRG or any of their respective Subsidiaries to be classified as a "holding company", a "subsidiary company" of a "holding company", an "affiliate" of a "holding company", or an "affiliate" of a "subsidiary" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended; or (iii) is prohibited by any Project Document. Section 2.8 Permissive Offers. NRG may, in its sole discretion, offer to Generating Ownership Interests in projects ("Permissive Projects") other than Eligible Projects or Ownership Interests which otherwise NRG would not be required to offer at such time to Generating under this Agreement, but NRG will have no obligation to do so. Any such permissive offers made by NRG will not otherwise be subject to the provisions of this Agreement, and shall not constitute, replace or affect in any way the obligations of NRG to make an Offer in compliance with this Agreement. Section 2.9 Independent Committee. The Independent Committee will have the sole authority and responsibility to make all decisions and take all actions on behalf of Generating under this Agreement. Accordingly, all notices, reports, books, records or other information required or permitted to be given to Generating under this Agreement will be delivered to the Chairman of the Independent Committee, with a copy to the Chief Executive Officer of Generating. The Independent Committee will be free to take such action as it determines in 10 its sole discretion to be reasonably necessary to evaluate fully and fairly the terms of any Offer, including engaging independent financial, technical and other advisors for the purpose of evaluating Offers, determining whether the projections on which such Offers may be based are reasonable and other matters under this Agreement. ARTICLE III Exempt Transactions and Interests Section 3.1 Exempt Transactions. Notwithstanding the provisions of Article II to the contrary, NRG will have the right to sell its Ownership Interest in an Eligible Project without offering such Ownership Interest to Generating in connection with any one or more of the following transactions (each, an "Exempt Transaction"): (a) Any sale or disposition of all or a portion of an Ownership Interest that is consummated as a result of a foreclosure or conveyance in lieu of foreclosure of liens or security interests (other than by NRG) encumbering the Eligible Project or such Ownership Interest; (b) Any sale or disposition of an Ownership Interest to a Third Party that is or will become a participant in the Eligible Project (such as a local or industry investor, a financial institution or a fuel or equipment supplier), provided that the obligation to sell is created prior to the Significant Contracts Milestone for the Eligible Project and is incidental to the provision of services or the contribution of assets to the Eligible Project; and (c) Any sale or disposition of an Ownership Interest to another Person as a part of a larger transaction involving the sale of all or substantially all of the assets of NRG Energy or the sale of an Equity Interest in NRG Energy, provided that the Person acquiring such Ownership Interest agrees to be bound by this Agreement with respect to such Ownership Interest (if such Ownership Interest has not previously been offered for sale to Generating pursuant to this Agreement). Section 3.2 Exempt Interests. Notwithstanding the provisions of Article II to the contrary, NRG will have the right to retain its Ownership Interest in an Eligible Project or sell such Ownership Interest to Third Parties without offering such Ownership Interest to Generating, if such Ownership Interest is an Exempt Interest. As referenced in this Agreement, an "Exempt Interest" means any of the following: (a) An Ownership Interest in an Eligible Project which is below a level that would cause the Eligible Project (or its owners) to be in violation of the relevant power purchase agreement or applicable state or federal law upon the generation of electricity for sale by such Eligible Project; 11 (b) An indirect Ownership Interest held by NRG in an Eligible Project arising from NRG's direct or indirect ownership of Equity Interests in Generating; (c) An Ownership Interest that is retained in order to later be sold in an Exempt Transaction contemplated by Section 3.1(b); and (d) An Ownership Interest in a Power Plant below 25 megawatts in capacity. ARTICLE IV Events of Default; Remedies Section 4.1 Events of Default. If one or more of the following events occurs with respect to a party hereto, it will constitute an "Event of Default" with respect to such party: (a) Failure to Perform Obligations. Such party fails to perform or observe any material obligation under this Agreement and such failure continues for more than 30 days after the non-defaulting party has given notice thereof to such party (or if the nature of such default is such that it is not capable of being cured within 30 days, then the failure of such party to commence to cure such default within 30 days and to diligently and continuously pursue the cure of such default thereafter, but in no event may such extended cure period exceed 180 days); (b) Bankruptcy Event. Such party becomes subject to a Bankruptcy Event. Section 4.2 Remedies; Exclusivity. Subject to the provisions of Article V, at any time during the continuance of an Event of Default, the non-defaulting party will have the right to (a) elect, by giving notice to the defaulting party, not to be bound in any respect by the provisions of this Agreement during such continuance, in which case such party will have no obligations or liabilities hereunder during such period, (b) terminate the Agreement upon giving notice of termination to the defaulting party, if the Event of Default is a Bankruptcy Event or otherwise has continued without cure for 180 days following notice pursuant to Section 4.1(a), and (c) seek the enforcement of an arbitrators award (including an award for damages or specific performance) pursuant to Article V. No failure on the part of either NRG or Generating to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 12 ARTICLE V Arbitration Section 5.1 Submission of Disputes to ArbitrationError! Bookmark not defined.. This Article V applies to any dispute (each a "Dispute") arising under this Agreement or under any Purchase Agreement between NRG and Generating, including any dispute regarding: (i) whether NRG is obligated to make an Offer, (ii) whether the terms of an Offer comply with the requirements of this Agreement, (iii) whether any party has failed to perform its obligations under a Purchase Agreement, and (iv) any other matter under this Agreement or a Purchase Agreement. If the parties are unable to resolve a Dispute, then either party may submit such Dispute to binding arbitration under this Article V as follows: (a) The party may give the other party a notice stating that such party desires to have the Dispute arbitrated pursuant to this Article V. Within 15 days after receipt of the arbitration notice, NRG and Generating will use their reasonable efforts to designate a single Person to act as arbitrator. (b) If the parties are unable to agree upon the joint selection of a single arbitrator within such 15-day period, each of NRG and Generating will select a single arbitrator within 10 days after the end of the 15-day period (and will notify the other party of its selection). If either party fails to designate an arbitrator within such 10-day period, then the arbitrator designated by the other will act as the sole arbitrator and will be deemed to be the unanimously approved arbitrator to resolve the Dispute. (c) If the two arbitrators selected by the parties are unable to reach a unanimous decision, the arbitrators will unanimously select a third qualified arbitrator. If the two arbitrators are unable to select a third arbitrator, either party may apply to the branch of the American Arbitration Association nearest to Minneapolis, Minnesota to designate and appoint the third arbitrator. (d) If the two arbitrators appointed pursuant to Section 5.1(b) reach a unanimous decision and award, such decision and award will be binding upon the parties. If a third arbitrator is appointed pursuant to Section 5.1(c), then the decision and award of two of the three arbitrators will be binding upon the parties. If two of the three arbitrators are unable to reach a unanimous decision, then the decision and award of the third arbitrator appointed pursuant to Section 5.1(c) will be binding upon the parties. (e) Each arbitrator appointed pursuant to this Section 5.1 will be a natural person with expertise in the issues involved in the subject Dispute. Additionally, each arbitrator will be competent and knowledgeable in the area of legal and contractual disputes. Each proposed arbitrator will disclose to the parties any business or other relationship or affiliation that may exist with either party; and any party may disqualify 13 an arbitrator on the basis that any existing relationship or affiliation could reasonably be expected to materially affect the decisions and objectivity of such arbitrator. Section 5.2 Conduct of Arbitration. Within 20 days after the commencement of an arbitration under this Article V, each party will submit to the other and to the arbitrators their written position concerning the Dispute. Within 20 days after the receipt by a party of the position of the other party in the Dispute, such receiving party will submit its written response to the other party and the arbitrators. The arbitrators will expeditiously (and, if possible, within 60 days after receipt of the initial positions and responses of the parties) hear and decide all matters concerning the Dispute. Any arbitration hearing will be held in Minneapolis, Minnesota. The arbitration will be conducted in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association (excluding rules governing the payment of arbitration, administrative or other fees or expenses to the arbitrator or such Association). The arbitrators will have the power to (a) gather such materials, information, testimony and evidence as they consider relevant to the Dispute (and each party will provide such materials, information, testimony and evidence required by the arbitrators, except to the extent any information so requested is proprietary, subject to a Third Party confidentiality restrictions or to an attorney-client or other privilege); and (b) grant such relief (including injunctive relief and the enforcement of specific performance) as may be consistent with the provisions of this Agreement and considered appropriate by the arbitrators. The arbitrators may propose that one or more experts be retained to assist in resolving the Dispute. The parties will have the right to approve such experts, which approval will not be unreasonably withheld; provided that a business or other relationship or affiliation between such expert and the arbitrators or either party will be deemed a reasonable basis for a party to withhold its approval of such expert. The responsibility for paying the costs and expenses of the arbitration (including compensation to the arbitrators and any experts retained by the arbitrators) will be allocated between the parties in a manner determined by the arbitrators to be fair and reasonable under the circumstances. Each party will be responsible for the fees and expenses of its respective counsel, consultants and witnesses, unless the arbitrators determine that compelling reasons exist for allocating all or a portion of such costs and expenses to the other party. The decision of the arbitrators (which will be rendered in writing) will be final, non- appealable and binding upon the parties and may be enforced in any court of competent jurisdiction. Any judicial proceedings relating to an arbitration under this Article V (including proceedings to compel arbitration or to confirm or enforce an arbitration award) will be maintained in the state or federal courts situated in Hennepin County, Minnesota (or any court having appellate jurisdiction therefrom) and will not be held or maintained in any other court or jurisdiction. Each Purchase Agreement will contain a provision stating that Disputes thereunder will be subject to arbitration, as set forth in this Article V. UNDER NO CIRCUMSTANCES WHATSOEVER, NOTWITHSTANDING ANY STATUTORY OR OTHER AUTHORITY TO THE CONTRARY, WILL THE ARBITRATOR OR ARBITRATORS ACTING UNDER THIS AGREEMENT OR A PURCHASE AGREEMENT HAVE AUTHORITY, JURISDICTION OR POWER TO MAKE ANY AWARD FOR CONSEQUENTIAL, PUNITIVE, EXEMPLARY, 14 PENAL, TREBLE, OR OTHER MULTIPLE DAMAGES, AND NO AWARD CONTAINING ANY SUCH DAMAGES WILL BE CONFIRMED OR ENFORCED. ARTICLE VI Miscellaneous Section 6.1 Notices. All notices, offers, extensions of time or descriptions, and all other communications provided for herein (including any modifications of, or waivers or consents under, this Agreement) will be given or made in writing and delivered by hand, telecopy, courier or U.S. mail to the intended recipient at the "Address for Notices" specified below (or, as to any party, at such other address as will be designated for notice by such party in a notice to the other party). Any notice given pursuant to this Agreement will be deemed effective when such notice is received (or upon refusal of receipt) by the addressee; provided that notices received by any party after its normal business hours (or on a day other than a Business Day) will be effective on the next Business Day. Addresses For Notices: To NRG Energy: NRG Energy, Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attn: Vice President of U.S. Business Development To Generating: Chairman -- Independent Committee c/o NRG Generating (U.S.) Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 with a copy to: Leonard A. Bluhm, Chief Executive Officer 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Section 6.2 Costs and Expenses. Each party will bear its own review costs, attorneys, accountants and other professional fees and other expenses incurred by it in connection with negotiating and entering into this Agreement and in negotiating and entering into any of the subsequent transactions contemplated by this Agreement. Section 6.3 Amendments. No amendment, modification, waiver, consent, approval, direction or other action under this Agreement will be effective unless in writing and signed by the party to be bound (and in the case of Generating, approved by the Independent Committee). Section 6.4 Assignment. Except as otherwise provided in this Section 6.4, neither party will have the right to assign any of its rights or delegate any of its duties or obligations 15 under this Agreement to any other Person without the prior written consent of the other party to this Agreement, which consent may be withheld in the consenting party's sole discretion. Any such assignment or delegation without such consent will be void ab initio. Notwithstanding the foregoing provisions of this Section 6.4 to the contrary, either party hereto will be entitled to assign all of its rights and delegate all of its duties and obligations under this Agreement to any successor of such party by merger or to any purchaser of all or substantially all of the assets of such party. Section 6.5 Successors and Assigns. Subject to Section 6.4, this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Section 6.6 Invalidity. In the event that any one or more of the provisions contained in this Agreement will, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement. Section 6.7 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together will constitute one and the same instrument and the parties hereto may execute this Agreement by signing any such counterpart. Section 6.8 No Oral Agreements. This Agreement embodies the entire agreement and understanding between the parties and supersedes all other agreements and understandings between such parties relating to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements among the parties. Section 6.9 Governing Law and Submission to Jurisdiction. This Agreement will be governed by, and construed in accordance with, the laws of the State of Minnesota, without regard to conflicts of laws principles provided that Sections 2.7(e), (f) and (g) shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to conflicts of law principles. Section 6.10 Interpretation and Conflicts. No presumption will apply in favor of any party hereto in the interpretation of this Agreement or in the resolution of any ambiguity of any provision hereof. Section 6.11 Term. Subject to the rights of the parties to terminate this Agreement pursuant to Section 4.2, this Agreement will terminate on the seventh anniversary of the Effective Date. The parties hereto will have no further rights or obligations hereunder following such termination (other than with respect to any defaults by either party hereunder prior to such termination and any matter subject to an arbitration being conducted as of such termination). 16 EXECUTED as of the date first above written. NRG ENERGY, INC. By: /s/ Craig Mataczynski Name: Craig Mataczynski Title: Vice President Domestic Business Development NRG GENERATING (U.S.) INC. By: /s/ Leonard Bluhm Name: Leonard Bluhm Title: President and Chief Executive Officer 17 EX-10.2.1 6 EXHIBIT 10.2.1 CHAPTER 11 FINANCING AGREEMENT DATED AUGUST 30, 1995 BETWEEN THE COMPANY AND NRG ENERGY. Exhibit 10.2.1 Exhibit B Acquisition Agreement CHAPTER 11 FINANCING AGREEMENT CHAPTER 11 FINANCING AGREEMENT dated as of August 30, 1995 (the "Agreement"), between O'BRIEN ENVIRONMENTAL ENERGY, INC. (the "Company"), debtor and debtor-in-possession, and NRG ENERGY, INC. ("NRG"), having a business address at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403. WHEREAS, the Company filed a petition for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. SS 101 et seq. (the "Bankruptcy Code") on September 28, 1994 (the "Filing Date") in the United States Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court"), which chapter 11 case is currently pending in the Bankruptcy Court as Case No. 94-26723 (the "Chapter 11 Case"); WHEREAS, the Company continues in the operation of its business and management of its property as a debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, the Company and NRG are negotiating the terms of a stock purchase and reorganization agreement (the "Purchase Agreement"); WHEREAS, the Company does not have sufficient working capital to maintain its ordinary course of operations; WHEREAS, the Company is otherwise unable to obtain unsecured credit allowable as an administrative expense; and WHEREAS, the parties hereto are entering into this Agreement to provide the Company with working capital to be used solely for the purposes specified herein to enhance the prospects for successful reorganization of the Company in the Chapter 11 Case; NOW, THEREFORE, the parties hereto agree as follows: 1. THE LOANS. 1.1 The Loans. Subject to the terms and conditions of this Agreement, NRG agrees to make advances to the Company from time to time during the period (the "Commitment Period") commencing on the Effective Date (as defined below) to but not including the Final Maturity Date (as defined below), so long as an Event of Default (as defined below) hereunder, or any event which upon the lapse of time or notice or both would become an Event of Default hereunder, shall have not occurred, in an amount which will not exceed in the aggregate at any one time $3,000,000 (the "Commitment") (each such advance, a "Loan", and collectively, the "Loans"). 1.2 The Note. The Loans made by NRG shall be evidenced by a single promissory note substantially in the form of Exhibit A hereto (the "Note") dated the Effective Date and payable to NRG in the aggregate principal amount of $3,000,000, together with interest as provided herein. The amount and date of each Loan made by NRG, and all payments on account of the 2 principal thereof, shall be recorded by NRG on its books and endorsed by NRG on the schedule attached to the Note or any continuation thereof, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded. 1.3 Prepayment. After taking into account the proviso in section 1.9, the Company may prepay, without premium or penalty, all or part of the Loans upon not less than three (3) business days' prior written notice to NRG, which notice (i) shall specify the prepayment date (which shall be a business day) and the amount of the prepayment and (ii) shall be irrevocable and effective upon receipt by NRG, provided that interest on the principal repaid, accrued to the prepayment date, shall be paid on the prepayment date. Partial prepayment shall be in an aggregate principal amount of $500,000, or a whole multiple thereof. Amounts prepaid may not be reborrowed. 1.4 Repayment of the Loans. The Company will pay to NRG the outstanding principal balance and unpaid interest on the Note on the earliest to occur of (i) the effective date of a plan of reorganization for the Company or the closing of a sale described in (ii) below, (ii) thirty days after entry by the Bankruptcy Court of an order approving the sale of all or any portion of the assets or capital stock of the Company or O'Brien (Newark) Cogeneration, Inc., O'Brien (Parlin) Cogeneration, Inc. or O'Brien Energy Services, Inc. (hereinafter collectively referred to as the "Designated Subsidiaries"), or confirming a 3 plan which provides for the sale of all or any portion of the assets or capital stock of the Company or the Designated Subsidiaries, to a party other than NRG or its designated Affiliate, (iii) when and if the Purchase Agreement is executed by the Company, ten (10) days after entry by the Bankruptcy Court of an order or judgment determining that the Company breached its obligations under the Purchase Agreement and that NRG was entitled to terminate the Purchase Agreement pursuant to the terms thereof, and (iv) when and if the Purchase Agreement is executed by the Company, ninety (90) days after the termination by either party thereto of the Purchase Agreement for any reason other than those specified in clause (iii) hereof, (v) conversion or dismissal of the Chapter 11 Case or (vi) March 15, 1996. The earliest to occur of the foregoing (i) - (vi) is herein referred to as the "Final Maturity Date". All payments hereunder shall be applied first to any unpaid accrued interest on the Loans, and then to the outstanding principal balance of the Loans. 1.5 Limitation. (a) Notwithstanding anything contained in Section 1.1, NRG will not make Loans which in the aggregate exceed the Commitment. (b) Notwithstanding anything contained in Section 1.1, the Loans shall not exceed any maximum borrowing authority of the Company as may from time to time be ordered or authorized by the Bankruptcy Court. 4 1.6 Procedure for Borrowing. National Westminster Bank plc or another person designated by NRG to the Company in writing shall act as agent (in such capacity, hereinafter referred to as "Agent") for NRG in connection with the Commitment. The Company may borrow under the Commitment during the Commitment Period on any business day. The Company shall give Agent irrevocable notice (which notice must be received by Agent in writing prior to 10:00 a.m., New York time, three business days prior to the requested borrowing date), specifying (i) the amount of the Loan and (ii) the requested borrowing date. Upon receipt of such notice from the Company, Agent shall make such loan by wire transfer of immediately available funds in accordance with the instructions set forth in Schedule 1.6 hereto. Each Loan shall be in an amount equal to $500,000 or a whole multiple thereof. 1.7 Purpose of Loans. The proceeds of the Loans shall be used by the Company solely for the purposes set forth in Schedule 1.7 hereto. 1.8 Extension. If the Final Maturity Date shall have occurred pursuant to clause (i) of Section 1.4, the Company shall have the option, subject to the terms and conditions of this Agreement, to extend the Final Maturity Date by an additional sixty (60) days upon payment by the Company to NRG of an extension fee equal to 3% of the Commitment. 1.9 Repayment at Closing. Notwithstanding any provision hereof to the contrary, the Loans and all other amounts 5 outstanding hereunder and under the Note as of the closing date of the Purchase Agreement, if and when such Purchase Agreement is executed by the Company, shall, at the election of NRG to the extent provided in the Purchase Agreement, be repaid upon such closing; provided, that in the event NRG and O'Brien consummate the transactions contemplated by the Purchase Agreement, O'Brien shall not be obligated to pay to NRG any portion of any Loan and the corresponding interest accrued thereon (i.e., any portion of outstanding principal balance and corresponding unpaid interest on the Note) to the extent such portion of the Loan is used to make capital contributions or incur any development costs in connection with the projects commonly referred to as Edgeboro or Grays Ferry ("Specified Development Costs"). 2. INTEREST. 2.1 Interest. The Loans shall bear interest at a rate per annum equal to the Prime Rate as of the Effective Date, plus two percent (2%). For purposes of this Financing Agreement, the term "Prime Rate" shall mean as of any date of determination, the higher of (i) the interest rate established by National Westminster Bank plc ("NatWest") as its prime rate and (ii) the weighted average of the overnight federal funds rates plus 0.5%. Subject to Section 1.4, interest shall be payable monthly in arrears on the first day of the following month. 2.2 Computation of Interest. Interest hereunder and under the Note shall be computed on the basis of a year of 360 days for the actual number of days elapsed. 6 2.3 Payments and Endorsements. Except as provided in Section 1.9 hereof, all payments of principal of and interest hereunder and under the Note shall be made without setoff, deduction or counterclaim and shall be made prior to 12:00 noon, New York time, on the due date thereof, to NRG by wire transfer of immediately available funds in accordance with the wire transfer instructions to be provided by NRG to the Company. 2.4 Payment on Non-Business Days. Whenever any payment to be made hereunder or under the Note shall be stated to be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment shall be made on the next succeeding business day, and such extension of time shall in such case be included in the computation of payment of interest hereunder or under the Note, as the case may be. 2.5 Additional Interest. If all or a portion of (i) the principal amount of any Loan, (ii) any interest payable thereon or (iii) any other amounts payable hereunder shall not be paid when due (whether at stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate which (a) in the case of overdue principal, shall be the rate applicable thereto pursuant to Section 2.1 plus 2% or (b) in the case of overdue interest or other amounts, shall be the rate described in Section 2.1 plus 2%, in each case from the date when due (whether at stated maturity, by acceleration or otherwise) until such amount is paid in full. Overdue interest shall be 7 compounded and bear interest on each date for payment of interest on principal hereunder. 3. CONDITIONS PRECEDENT. NRG's obligation to make the initial Loan requested hereunder is subject to the satisfaction or waiver of each of the Company: (a) NRG shall have received this Agreement and the Note in each case executed by a duly authorized officer of the Company; (b) An order (the "Financing Order") in the form attached as Exhibit B shall have been entered by the Bankruptcy Court, or such other court exercising jurisdiction over the Chapter 11 Case, approving and authorizing (i) this Agreement, the Note and the borrowings contemplated hereby and (ii) the superpriority of the Loans pursuant to Section 364(c)(1) of the Bankruptcy Code, which Financing Order (w) shall be in full force and effect, (x) shall not have been revised, modified or amended, (y) shall not be subject to any appeal which challenges whether NRG extended the Loans hereunder in good faith or is otherwise entitled to the benefits of section 364(e) of the Bankruptcy Code and (z) shall not be subject to any stay or injunction; (c) No preliminary or final injunction which restrains or prohibits the consummation of the transactions contemplated hereby shall have been issued and be in effect; (d) NRG shall have received the Facility Fee (as defined below); 8 (e) The representations and warranties contained in Section 7 hereof shall be true and correct on and as of the Effective Date (as defined in Paragraph 12 below) as though made on and as of the Effective Date; and (f) No event shall have occurred and be continuing on the Effective Date which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. 4. CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES. The obligation of NRG to make each Loan (including the initial Loan) shall be subject to the following conditions precedent: (a) The representations and warranties contained in Section 7 shall be true and correct on and as of the date of such Loan as though made on and as of such date; and (b) No event shall have occurred and be continuing on the date of such Loan which would constitute an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (c) The Financing Order shall be in full force and effect on the date of such Loan without any revision, modification or amendment which, in NRG's judgment, adversely affects its rights, benefits or remedies. 5. COVENANTS. The Company hereby covenants and agrees with NRG that so long as the Commitment remains in effect, the Note remains outstanding and any portion thereof unpaid, or any other amount is owed to NRG hereunder, it shall: 9 (a) Maintain its books and records in accordance with generally accepted accounting principles and, during reasonable business hours and upon reasonable notice, make available to NRG the Company's books and records. NRG shall be entitled to make such investigation of the business of the Company as NRG reasonably requests; provided, however, that (i) the Company shall not be required to provide its books and records to the extent disclosure of them would compromise any attorney-client privilege between the Company and its counsel and (ii) other than as may be provided in any order entered by the Bankruptcy Court, NRG shall not be entitled to receive any document or information concerning bids for the Company or its assets submitted by entities other than NRG and its affiliates; and provided, further, that NRG will continue to comply with the confidentiality agreement previously entered into by NRG with the Company. (b) Promptly give to NRG written notice of: (i) Any Event of Default or any event which, upon lapse of time or notice or both, would become an Event of Default; (ii) The occurrence of any event or any matter known to the Company which has resulted or will result in a material adverse effect, which shall mean any condition, change or event that, individually or in the aggregate, would materially and adversely affect the business, operations, properties, financial condition or 10 prospects of the Company and its subsidiaries taken as a whole; and (iii) Any change in location known to the Company of any of the Company's books and records. 6. NEGATIVE COVENANTS. The Company covenants and agrees that, so long as the Commitment remains in effect, the Note remains outstanding and unpaid or any other amount is owed to NRG hereunder, it will not, without the prior written consent of NRG: (a) Unless otherwise agreed to by NRG in writing, use all or any portion of the Loans for purposes other than those specified in Schedule 1.7; and (b) Create, assume, or suffer to exist, or seek to create, assume, or suffer to exist, any unsecured debt incurred after the Petition Date which would have the priority senior or equal to NRG's priority under Section 8.3 hereof, other than any unsecured debt incurred for the purpose of making or incurring Specified Development Costs; provided, that other unsecured debt may be incurred by the Company to finance or to fund such development costs ("Additional Development Financing"), so long as the Company shall have first offered the opportunity to NRG in writing to provide such financing on substantially the same terms and conditions and NRG has declined to provided such financing. If NRG does not accept or decline such offer within three business days after receipt thereof of receiving such offer in writing such offer shall be deemed declined. 11 7. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to NRG on and as of the date hereof and the Effective Date that: (a) Corporate Action. Conditioned upon entry of the Financing Order, the Company has all necessary corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Note; the execution, delivery, and performance by the Company of this Agreement and the Note have been duly authorized by all necessary corporate action on its part; and this Agreement has been duly and validly executed by the Company and constitutes, and the Note when executed and delivered will constitute, its legal, valid and binding obligations, enforceable in accordance with their respective terms; (b) Approval. Conditioned upon entry of the Financing Order, no authorizations, approvals or consents of, and no filings or registrations with, any governmental authority or any other person are necessary for the execution, delivery or performance by the Company of this Agreement or the Note or for the validity or enforceability thereof; and (c) No Breach. Conditioned upon entry of the Financing Order, none of the execution and delivery of this Agreement and the Note, and the consummation of the transactions herein contemplated and compliance with the terms and provisions hereof or of the Note will conflict with or result in a breach of, or require any consent under, the charter or by-laws of the 12 Company, or any applicable Law, or any Order of any governmental authority or any material agreement by which the Company or any of its property is bound. 8. CLAIM PRIORITY. NRG shall be granted an allowed administrative expense claim in the Chapter 11 Case for the Loans and all other fees and expenses owing hereunder and under the Note, including, but not limited to, fees and expenses pursuant to Section 13.4 of this Agreement, which claim shall be, pursuant to section 364(c)(1) of the Bankruptcy Code, senior to any and all other administrative expenses in the Chapter 11 Case of the kind specified in sections 503(b) or 507(a)(1) of the Bankruptcy Code, other than any administrative expense claim in respect of any Additional Development Financing, which administrative expense claim shall be entitled to pari passu treatment with the administrative expense claim of NRG provided herein; provided, however, that nothing contained herein shall prevent the Company from using the proceeds of the Loans for the purposes specified in Section 1.7. 9. EVENTS OF DEFAULT. The following shall constitute "Events of Default" hereunder: (a) any amounts due hereunder or under the Note shall not have been paid when due in accordance with the terms hereof or thereof; (b) any covenant made under this Agreement or the Note by the Company shall be breached in any material 13 respect and such breach shall continue for ten (10) business bays; (c) any representation or warranty made under this Agreement or the Note by the Company shall prove to have been incorrect when made (or deemed made) or shall be breached in any material respect and such error or breach shall continue for ten (10) business days; (d) the appointment of a trustee under section 1104 of the Bankruptcy Code by order of the Bankruptcy Court or such other court exercising jurisdiction over the Chapter 11 Case unless, within sixty (60) days following entry of an order appointing such trustee, NRG receives written confirmation from such trustee that he, she or it will perform, as and when due, without modification or variation, all of the obligations (i) of the Company hereunder and under the Note and (ii) of the Company and the Designated Subsidiaries under the Purchase Agreement, when and if it is executed by the Company; (e) the dismissal of the Chapter 11 Case or the conversion of the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code; (f) the Financing Order, as it may apply to any outstanding Loans, shall have been vacated, revised, modified or amended without the prior written consent of NRG; or (g) the commencement against NRG of any action or proceeding which asserts by or on behalf of the Company or any of the Company's creditors or shareholders, or committees 14 of any of the foregoing, or affiliates, successors, or assigns, any action which seeks to set off or counterclaim against, disallow, limit or reduce, or avoid or subordinate the Company's obligations to NRG, or to recover any legal or equitable remedy against NRG, which action or proceeding has not been dismissed within sixty (60) days after its commencement. 10. TERMINATION. The obligation of NRG to make any of the Loans hereunder shall automatically terminate upon (x) the occurrence of an Event of Default, which Event of Default continues uncured for the duration of any applicable grace period or (y) the Final Maturity Date. Upon the occurrence of an Event of Default, which continues uncured for the duration of any applicable grace period, the principal of, and accrued interest on, the Note shall become immediately due and payable. The Company's obligations hereunder shall terminate at such time as the Loans and the interest, fees and costs owing under this Agreement and the Pledge Agreement shall have been paid in full. 11. REMEDIES. Upon the occurrence of an Event of Default: (a) NRG may cease making Loans under the Commitment, but the Company's obligations to perform the terms of this Agreement shall continue until the Loans and the interest, fees and costs owing under this Agreement are paid in full; and (b) The automatic stay of section 362 of the Bankruptcy Code shall be immediately and automatically terminated and vacated without further order of the Bankruptcy Court five 15 (5) business days after the date upon which NRG files in the Chapter 11 Case a notice of the Company's default under this Agreement, unless the Company in good faith has promptly, and in no event later than three (3) business days following the filing of such notice, applied to the Bankruptcy Court for a continuation of the automatic stay and has requested a hearing to be held as soon thereafter as the Bankruptcy Court's calendar permits. Upon termination or vacation of the automatic stay, NRG may thereafter pursue its rights and remedies as a creditor under applicable law without seeking further relief from the Bankruptcy Court. 12. EFFECTIVE DATE. 12.1 Effective Date. The date that is ten (10) days from and after the date that the Bankruptcy Court enters the Financing Order is hereinafter referred to as the "Effective Date". 12.2 Fees. On the Effective Date, the Company shall pay to NRG a facility fee equal to $25,000 (the "Facility Fee"). 13. MISCELLANEOUS. 13.1 Integration. The Financing Order, this Agreement and the Note integrate all the terms and conditions mentioned herein or incidental hereto, and supersede all prior negotiations, whether written or oral, and prior writings with respect to the subject matter hereof. 16 13.2 No Waiver. No delay or omission to exercise any right, power, or remedy accruing to NRG upon breach or default by the Company under this Agreement or the Note shall impair any such right, power, or remedy of NRG nor shall it be construed to be a waiver of any such breach or default, nor an acquiescence therein, or of or in any breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any breach or default under this Agreement or the Note must be in writing, and shall be effective only to the extent of such writing. All remedies under this Agreement and the Note or otherwise afforded to NRG shall be cumulative and not alternative. 13.3 Successors and Assigns. This Agreement, together with all extensions, amendments, and renewals thereof, shall bind and inure to the benefit of the respective successors and assigns of each of the parties, including any interim trustee, trustee, or examiner appointed under the Bankruptcy Code. NRG may heretofore or hereafter sell, assign, transfer, negotiate, or grant participations or subrogation rights in any of its rights under this Agreement. 13.4 Attorneys' and Accountants' Fees and Costs. In the event of any action at law or suit in equity in relation to this Agreement or in the event that NRG incurs any attorneys' fees, accountants' fees, or legal expenses or costs to protect or enforce its rights hereunder, the Company, in addition to all other sums which the Company may be called upon to pay, will pay 17 to NRG the sum of NRG's reasonable attorneys' fees, accountants' fees and legal expenses and costs, including the fees and expenses of Agent. 13.5 Notices. Any notice required to be sent hereunder shall be deemed given and received upon the earlier of (1) telecopy or personal delivery to the addresses listed below, or (2) three (3) calendar days after deposit in the United States mails, postage prepaid, addressed as follows: (1) If to NRG at: NRG Energy, Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: Craig A. Mataczynski Telephone: (612) 373-5460 Telecopier: (612) 373-5430 with a copy to counsel at: Gibson, Dunn & Crutcher 200 Park Avenue New York, NY 10166 Attention: Steven P. Buffone, Esq. Telephone: (212) 351-3936 Telecopier: (212) 351-4035 (2) If to the Company at: O'Brien Environmental Energy, Inc. 225 South Eighth Street Philadelphia, PA 19106 Attention: Chief Administrative Officer Telephone: (215) 627-5500 Telecopier: (215) 922-5227 18 with a copy to counsel at: Sills Cummis Zuckerman Radin Tischman Epstein & Gross, P.A. One Riverfront Plaza Newark, NJ 07102 Attention: Brian S. Coven, Esq. Telephone: (201) 643-7000 Telecopier: (201) 643-6500 13.6 Governing Law. This Agreement and the Note shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to the conflicts of laws thereof, and, to the extent applicable, the Bankruptcy Code. All disputes arising out of or related to this Agreement, including, without limitation, any dispute relating to the interpretation, meaning or effect of any provision hereof, will be resolved in the Bankruptcy Court and the parties hereto each submit to the exclusive jurisdiction of the Bankruptcy Court for the purpose of adjudicating any such dispute. 13.7 Indemnification. The Company agrees (1) to indemnify and hold harmless NRG, Agent and each director, officer, representative, agent, attorney, advisor, consultant, employee and affiliate thereof (each an "Indemnified Person") from and against any and all losses, claims, damages, liabilities, and expenses that arise out of, result from, or in any way relate to this Agreement or in connection with the transactions contemplated hereby, and (ii) to reimburse each Indemnified Person, from time to time, upon its demand for any legal or other expenses incurred in connection with any investigation, defense, or participation in any actions or other 19 proceedings that in any way relate thereto, other than any of the foregoing claimed by any Indemnified Person to the extent incurred by reason of the gross negligence or willful misconduct of such person. 13.8 WAIVER OF JURY TRIAL. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR THE NOTE OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF NRG OR THE COMPANY RELATING THERETO. 20 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. O'BRIEN ENVIRONMENTAL ENERGY, INC. debtor and debtor-in-possession By: /s/ John B. Kelly Title: Chief Administrative Officer NRG ENERGY, INC. By: /s/ Craig A. Mataczynski Title: Vice President, Domestic Business Development Signature Page Schedule 1.7 USES OF LOANS 1. Working capital of the Company and the O'Brien Subsidiaries, including, but not limited to, the following: a. salary, including state and federal employee withholding taxes; b. insurance; c. maintenance expenses; and d. general and administrative expenses. 2. Claims and expenses of administration of the bankruptcy proceedings of the Company and the O'Brien Subsidiaries, including, but not limited to, professional fees. 3. Fees and expenses of the Company and the O'Brien Subsidiaries relating to ongoing operations. 4. Development costs, including but not limited to those related to Edgeboro and Grays Ferry. Exhibit A [Form of Note] $3,000,000 August __, 1995 Newark, New Jersey FOR VALUE RECEIVED, O'BRIEN ENVIRONMENTAL ENERGY, INC., a Delaware corporation, as debtor and debtor-in-possession (the "Company"), hereby promises to pay to the order of NRG Energy, Inc. ("NRG"), at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403 or at such other address as may be designated by NRG in writing, the principal sum of Three Million ($3,000,000) Dollars in lawful money of the United States of America and in immediately available funds, on the date provided in the Chapter 11 Financing Agreement dated as of August __, 1995, between the Company and NRG (the "Agreement"), and to pay interest on the unpaid principal amount of the Loans, at said office, in like money and funds, for the period commencing on the date of each Loan until such Loan shall be paid in full, at the rate per annum and on the dates provided in the Agreement provided, that the payment obligations of the Company under this Note with respect to principal and interest shall be subject to the proviso set out in section 1.9 of the Agreement. The amount and date of each Loan made by NRG to the Company, and each payment made on account of the principal thereof, shall be recorded by NRG on its books and endorsed by NRG on the schedule attached hereto or any continuation thereof. This Note is the Note referred to in the Agreement, and evidences the Loans made by NRG thereunder. This Note is entitled to superpriority, administrative expense status, pursuant to section 364(c)(1) of the Bankruptcy Code, as provided in the Agreement and in that certain order dated August __, 1995 of the United States Bankruptcy Court for the District of New Jersey. Capitalized terms used in this Note have the respective meanings assigned to them in the Agreement. The Company may at its option prepay all or any part of the principal of this Note before maturity upon the terms provided in the Agreement. This Note has been executed and delivered in Newark, New Jersey and shall be construed in accordance with and governed by the law of the State of New York. O'BRIEN ENVIRONMENTAL ENERGY, INC. debtor and debtor-in-possession By: Name: Title: 2 LOANS This Note evidences Loans made under the within described Agreement to the Company on the dates and in the principal amounts set forth below, subject to the payments and prepayments of principal set forth below: Principal Amount Unpaid Date Amount Paid or Principal Notation of Loan of Loan Prepaid Amount Made by SILLS CUMMIS ZUCKERMAN RADIN TISCHMAN EPSTEIN & GROSS, P.A. JACK M. ZACKIN (JZ 2540) One Riverfront Plaza Newark, NJ 07102-5400 (201) 643-7000 Attorneys for O'Brien Environmental Energy, Inc. UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY x Chapter 11 In re : Case No. 94-26722 O'BRIEN ENVIRONMENTAL ENERGY, INC., : (RG) Debtor. : : : : : x ORDER AUTHORIZING DEBTOR TO OBTAIN POSTPETITION FINANCING PURSUANT TO SECTION 364(c)(1) OF THE BANKRUPTCY CODE Upon the Motion (the "Motion") duly noticed by O'Brien Environmental Energy, Inc., debtor and debtor-in-possession (the "Debtor"), seeking, among other things, an order of this Court pursuant to section 364(c)(1) of title 11 of the United States Code, 11 U.S.C. 101, et seq. (the "Bankruptcy Code"), and Rule 4001 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), authorizing the Debtor to obtain debtor in possession financing from Calpine Corporation ("Calpine") pursuant to a chapter 11 financing agreement attached thereto and the Court having been advised at the duly noticed hearing on the Motion that NRG Energy, Inc. ("NRG") is willing to provide pursuant to the terms of the Chapter 11 Financing Agreement between the Debtor and NRG, dated August 30, 1995 (the "Financing Agreement"; capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Financing Agreement) such chapter 11 financing on terms more favorable than those offered by Calpine and described in the Motion; and NRG having agreed, pursuant to the Financing Agreement, to provide postpetition financing (the "Financing") up to the principal amount of $3,000,000, with priority over any and all administrative expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code pursuant to section 364(c)(1) of the Bankruptcy Code; and pursuant to Bankruptcy Rule 4001(c)(1), due notice of the Motion and hearing on the Motion having been given to NatWest, each of the official committees appointed in the chapter 11 case of the Debtor, NRG, those entities who have filed a notice of appearance pursuant to Bankruptcy Rule 2002(i), and the United States Trustee for the District of New Jersey; and upon the record of the hearings held on ________________, 1995 and upon all of the pleadings filed with the Court and all of the proceedings had before the Court, and after due deliberation and consideration and sufficient cause appearing therefor; It is FOUND, DETERMINED, ORDERED AND ADJUDGED that: 2 1. This Court has core jurisdiction over these proceedings and the parties and property affected hereby pursuant to 28 U.S.C. 157(b) and 1334. 2. The Debtor has an immediate need to obtain financing (i) to permit the orderly continuation of its businesses so that they may be disposed of in a manner which will maximize their value for the benefit of creditors and shareholders and (ii) to satisfy other working capital needs. 3. The Debtor is otherwise unable to obtain adequate unsecured credit allowable under section 503(b)(1) of the Bankruptcy Code as an administrative expense. A facility in the amount provided by the Financing Agreement is unavailable to the Debtor without the Debtor granting to NRG pursuant to section 364(c)(1) of the Bankruptcy Code, allowed claims, with respect to all indebtedness and obligations of the Debtor under the Financing Agreement and the Note related thereto, having priority over any and all administrative expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code. The ability of the Debtor to obtain sufficient working capital and liquidity through the incurrence of indebtedness for borrowed money and other financial accommodations is vital to the Debtor. The preservation and maintenance of the going concern value of the Debtor is integral to a successful reorganization of the Debtor pursuant to the provisions of chapter 11 of the Bankruptcy Code. 4. The Financing Agreement has been negotiated in good faith and at arm's-length between the Debtor and NRG, and 3 any credit extended and Loans made to the Debtor by NRG pursuant to the Financing Agreement shall be deemed to have been extended by NRG in good faith, as that term is used in section 364(e) of the Bankruptcy Code. 5. The Debtor is immediately authorized to borrow pursuant to the Financing Agreement up to an aggregate of $3 million for the purposes, and upon the terms and conditions, provided for by the Financing Agreement. 6. Pursuant to Section 364(c)(1) of the Bankruptcy Code the Debtor is expressly authorized, empowered, and directed to enter into the Financing Agreement and execute and deliver, among other documents, the Financing Agreement and the Note in substantially the form of the exhibit attached to the Financing Agreement (collectively, the "Loan Documents") without any resolution or further action of its Board of Directors, shareholders or any other person. The terms and conditions of the Loan Documents are approved and the Debtor is authorized to execute, deliver and perform and do all acts that may be required in connection with the Loan Documents. Upon execution and delivery of the Loan Documents, the Loan Documents shall constitute valid and binding obligations of the Debtor, enforceable against the Debtor in accordance with their terms. For these purposes the Chief Administrative Officer of the Debtor so appointed by the Bankruptcy Court shall be authorized and is directed to so execute and deliver the Loan Documents and to 4 perform any and all such further action as he may deem necessary to effectuate the transaction contemplated by the Loan Documents. 7. The obligations of NRG to extend Loans under the Financing Agreement are expressly subject to the conditions provided for in the Financing Agreement. 8. For all of the Debtor's obligations and indebtedness arising under the Financing Agreement and the other Loan Documents, NRG hereby is granted pursuant to section 364(c)(1) of the Bankruptcy Code an allowed claim having priority over any and all administrative expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code. Except as otherwise provided in the Financing Agreement, no other claim having a priority superior or pari passu to that granted by this Order to NRG shall be granted while any amount under the Financing Agreement is unpaid or the Commitment thereunder remains outstanding. 9. The Debtor shall use the amounts borrowed under the Financing Agreement only for the purposes permitted thereunder. 10. At the election of NRG, National Westminster plc (in such capacity, hereinafter referred to as "Agent"), or such other person as may be designated by NRG in writing, is hereby authorized to act as agent for NRG in connection with the Financing Agreement. 11. NRG's administrative expense claim pursuant to the Financing Agreement shall be deemed filed and allowed without 5 further action on NRG's part, and NRG shall not be required to take any action to preserve the priority of its administrative expense claims allowed in full pursuant to this Order. 12. In making decisions to make Loans to the Debtor under the Financing Agreement or to collect the indebtedness and obligations of the Debtor arising thereunder, NRG shall not be deemed to be in control of the operations of the Debtor or to be acting as a "responsible person" or "owner or operator" with respect to the operation or management of the Debtor (as such terms, or any similar terms, are used in the United States Comprehensive Environmental Response, Compensation, and Liability Act, as amended, or in any similar federal or state statute). 13. The Debtor is authorized and directed to do and perform all acts, to make, execute and deliver all instruments and documents and to pay all fees which may be reasonably required or necessary for the Debtor's performance under the Financing Agreement, including, without limitation: (i) execution of the Loan Documents, and (ii) the non-refundable payment to NRG of the Facility Fee referred to in the Financing Agreement and such other costs and expenses as may be due from time to time including, without limitation, reasonable attorneys' fees and disbursements as provided in the Loan Documents. 14. Subject only to the provisions of Section 11(b) of the Financing Agreement, the automatic stay provisions of section 362 of the Bankruptcy Code hereby are vacated and modified to the extent necessary so as to permit NRG to exercise, upon the 6 occurrence of an Event of Default (as defined in the Financing Agreement), all rights and remedies provided for in the Loan Documents. Notwithstanding any other provision of the Financing Agreement or this Order, NRG shall have no obligation to make any Loans upon the occurrence of an Event of Default. 15. The Loan Documents and the provisions of this Order shall be binding upon NRG, Agent and the Debtor and their respective successors and assigns (including any trustee hereinafter appointed or elected for the estate of the Debtor) and shall inure to the benefit of NRG and the Debtor and (except with respect to any trustee hereinafter appointed or elected for the estate of the Debtor) their respective successors and assigns. 16. If any or all of the provisions of this Order are hereafter reversed, modified, vacated or stayed, such reversal, stay, modification or vacation shall not affect (x) the validity of any obligation, indebtedness or liability incurred by the Debtor to NRG prior to written notice to NRG of the effective date of such reversal, stay, modification or vacation, or (y) the validity and enforceability of any priority authorized or created hereby or pursuant to the Loan Documents. Notwithstanding any such reversal, stay, modification or vacation, any indebtedness, obligation or liability incurred by the Debtor to NRG prior to written notice to NRG of the effective date of such reversal, stay, modification or vacation shall be governed in all respects by the Loan Documents and the original provisions of this Order, 7 and NRG shall be entitled to all the rights, remedies, privileges and benefits, granted herein and pursuant to the Loan Documents with respect to all such indebtedness, obligation or liability. 17. The provisions of this Order shall be effective upon entry of this Order by the Clerk of the Court. All actions taken pursuant to this Order and the terms of this Order shall survive the entry of, and shall govern with respect to any conflict with, any order that may be entered confirming a plan of reorganization of the Debtor or that may be entered converting the chapter 11 case of the Debtor to a chapter 7 case. No order confirming a plan will alter or impair the rights of NRG under this Order without the prior written consent of NRG. The terms and provisions of this Order as well as all rights of NRG and all obligations of the Debtor created or arising pursuant to this Order shall continue in this chapter 11 case and any superseding proceedings under the Bankruptcy Code, and such rights and obligations shall maintain their priority as provided by this Order until all Loans are satisfied by payment in full and are thereby discharged. So long as amounts are outstanding under the Financing Agreement, the obligations of the Debtor under the Financing Agreement shall not be discharged by the entry of an order confirming a plan of reorganization in this chapter 11 case and, pursuant to section 1141(d)(4) of the Bankruptcy Code, the Debtor has waived such discharge. 8 18. To the extent any of the terms and conditions of the Financing Agreement are in conflict with the terms of this Order, the provisions of this Order shall control. 19. The notice given by the Debtor of the Motion constitutes due and sufficient notice of the relief granted pursuant to this Order. Dated: Newark, New Jersey August ____, 1995 ___________________________________ HONORABLE ROSEMARY GAMBARDELLA 9 EX-10.2.2 7 EXHIBIT 10.2.2 LETTER AGREEMENT DATED FEBRUARY 20, 1996 BETWEEN THE COMPANY AND NRG ENERGY AMENDING THE CHAPTER 11 FINANCING AGREEMENT. Exhibit 10.2.2 NRG Energy, Inc. 1221 Nicollet Mall Suite 700 Minneapolis, MN April 30, 1996 O'Brien Environmental Energy, Inc. 225 South Eighth Street Philadelphia, PA 19106 Gentlemen/Ladies: Reference is made to that certain Chapter 11 Financing Agreement dated as of August 30, 1995, as amended by letter Agreement dated February 20, 1996, (the "DIP Loan Agreement") between O'Brien Environmental Energy, Inc. (the "Company") and NRG Energy, Inc. ("NRG") and the Amended and Restated Stock Purchase and Reorganization Agreement dated as of January 31, 1995 (the "Acquisition Agreement") by and between the Company and NRG. This will confirm our agreement to amend the DIP Loan Agreement by (i) striking the proviso that appears beginning in the seventh line of Section 1.9 of the DIP Loan Agreement and (ii) deleting the words "making or incurring Specified Development Costs" beginning in the fifth line of Section 6(b) of the DIP Loan Agreement and replacing them with the following: "making capital contributions or incurring development costs in connection with the projects commonly referred to as Edgeboro or Grays Ferry" (it being agreed and understood that, in view of the possible increase to the Cash Purchase Price (as defined in the Acquisition Agreement) provided for in Section 2.5 of the Acquisition Agreement in the event the Company makes capital contributions or incurs development costs in connection with Edgeboro or Grays Ferry using funds provided to the Company under the DIP Loan Agreement, any provision in the DIP Loan Agreement providing for a reduction in the amount to be repaid in respect of any DIP Loan would be duplicative of or otherwise inconsistent with Section 2.5 of the Acquisition Agreement. Except as expressly set forth above herein, this letter amendment does not amend or otherwise affect the DIP Loan Agreement, which shall continue in full force and effect. If the foregoing accurately sets forth our agreement with respect to the subject matter hereof, please sign in the place indicated below and return an original of this letter agreement, as signed, to the undersigned. O'Brien Environmental Energy, Inc. [Dated as of the Closing Date] Page 2 NRG Energy, Inc. By: /s/ Craig A. Mataczynski Title: Vice President ACCEPTED AND AGREED TO: O'BRIEN ENVIRONMENTAL ENERGY, INC. By: /s/ John B. Kelly As of the date set forth above. EX-10.2.3 8 EXHIBIT 10.2.3 LETTER AGREEMENT DATED APRIL 30, 1996 BETWEEN THE COMPANY AND NRG ENERGY FURTHER AMENDING THE CHAPTER 11 FINANCING AGREEMENT. Exhibit 10.2.3 NRG Energy, Inc. 1221 Nicollet Mall Suite 700 Minneapolis, MN April 30, 1996 O'Brien Environmental Energy, Inc. 225 South Eighth Street Philadelphia, PA 19106 Gentlemen/Ladies: Reference is made to that certain Chapter 11 Financing Agreement dated August 30, 1995, as amended by letter agreement dated February 20, 1996, (the "DIP Loan Agreement") between O'Brien Environmental Energy, Inc. (the "Company") and NRG Energy, Inc. ("NRG") and the Amended and Restated Stock Purchase and Reorganization Agreement dated as of January 31, 1995 (the "Acquisition Agreement") by and between the Company and NRG. This will confirm our agreement to amend the DIP Loan Agreement by (i) striking the proviso that appears beginning in the seventh line of Section 1.9 of the DIP Loan Agreement and (ii) deleting the words "making or incurring specified Development Costs" beginning in the fifth line of Section 6(b) of the DIP Loan Agreement and replacing them with the following: "making capital contributions or incurring development costs in connection with the projects commonly referred to as Edgeboro or Grays Ferry" (it being agreed and understood that, in view of the possible increase to the Cash Purchase Price (as defined in the Acquisition Agreement) provided for in Section 2.5 of the Acquisition Agreement in the event the Company makes capital contributions or incurs development costs in connection with Edgeboro or Grays Ferry using funds provided to the Company under the DIP Loan Agreement, any provision in the DIP Loan Agreement providing for a reduction in the amount to be repaid in respect of any DIP Loan would be duplicative of or otherwise inconsistent with Section 2.5 of the Acquisition Agreement. Except as expressly set forth above herein, this letter amendment does not amend or otherwise affect the DIP Loan Agreement, which shall continue in full force and effect. If the foregoing accurately sets forth our agreement with respect to the subject matter hereof, please sign in the place indicated below an return an original of this letter agreement, as signed, to the undersigned. NRG ENERGY, INC. By: /s/ Craig Mataczynski Vice President ACCEPTED AND AGREED TO: O'BRIEN ENVIRONMENTAL ENERGY, INC. By: /s/ John B. Kelly As of the date set forth above. EX-10.3 9 EXHIBIT 10.3 LIQUIDATING ASSET MANAGEMENT AGREEMENT DATED APRIL 30, 1996 BETWEEN THE COMPANY AND WEXFORD. Exhibit 10.3 LIQUIDATING ASSET MANAGEMENT AGREEMENT This Liquidating Asset Management Agreement, dated as of April 30, 1996 (the "Agreement"), is entered into by and between NRG Generating ~.S.) Inc., a Delaware corporation (the "Company") and Wexford Management LLC., a Connecticut limited liability company ("Wexford"). WITNESSETH: WHEREAS, the Company is a Delaware corporation formerly known as O'Brien Environmental Energy, Inc. formed pursuant to the Plan of Reorganization for O'Brien Environmental Energy, Inc. dated January 31, 1996, as amended and confirmed by order of the United States Bankruptcy Court for the District of New Jersey (the "Composite Fourth Amended and Restated Plan of Reorganization for O'Brien Environmental Energy, Inc."). WHEREAS, Wexford and the Company desire to enter into an arrangement under which Wexford will manage the liquidation of the Liquidating Assets (as defined below) and provide related management services to the Company, upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter contained, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I Definitions 1.1 Definitions. Capitalized terms used herein that are not defined below and are defined in the Plan shall have the meanings assigned to such terms in the Plan. When used herein the following terms shall have the meanings indicated below: "Affiliate" shall mean, as to any Person, any other Person having control of, controlled by, or under common control with, such first Person. For purposes of this definition, "control" shall mean power to direct, or cause the direction of, the management or policies of any Person, whether through ownership of securities, by contract or otherwise. "Asset Liquidation Fee" shall mean a fee equal to a market rate liquidation services fee calculated as a percentage (not to exceed 10%) of the Net Sales Price of any Liquidating Asset sold by Wexford during the term of this Agreement, as defined in the good faith judgment of the Board of Directors. "Bankruptcy Court" shall mean the United States Bankruptcy Court for the District of New Jersey. "Board of Directors" shall mean the Board of Directors of the Company. "Business Day" shall mean any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banning institutions located in such state are authorized or required by law or other government action to close. "Cause" shall mean (i) fraud, theft of Company property, or malfeasance committed by Wexford in connection with the performance of Wexford's duties hereunder, (ii) the willful misconduct or negligence of Wexford in performing its duties hereunder this Agreement, or (iii) a Section 2.9 Default. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time. "Joint Determination" shall mean a determination made upon the mutual agreement of the Board of Directors and Wexford, as provided in Article 6.8 hereof. "Liquidating Assets" shall mean all of the Company's right, title and interest in and to (i) all of the outstanding common stock of Philadelphia Cogen and any management contracts relating to the Philadelphia Water Department Project to which the Company or any Affiliate thereto (other than Philadelphia Cogen) is a party; (ii) all of the equity interest in Philadelphia Biogas Supply, Inc., O'Brien Energy Services, Puma Power Plant, Ltd. and American Hydrotherm Corp.; and (iii) the Equipment Held for Sale. "Management Duties" shall have the meaning set forth in Article 2.2. "Net Sales Price" shall mean the gross sales price of any Liquidating Asset minus commissions, sales and other taxes, legal and accounting fees and other costs relating directly to the sales transaction, provided, however, that such costs shall not include any indebtedness directly associated with such Liquidating Asset, which indebtedness is assumed or, to the extent necessary, paid in full by the Company upon the sale of such Liquidating Asset. "Person" shall mean an individual, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. "Petition Date" shall have the meaning assigned to such term in the Plan. "Plan" shall have the meaning assigned to such term in the Plan. "Section 2.9 Default" shall have the meaning set forth in Section 2.9. "Termination Date" shall mean the effective date of termination of this Agreement for any reason permitted under Article Iv hereof "Termination for Cause" shall have the meaning assigned to such term in Section 4.2 hereof. 2 ARTICLE II Management Matter 2.1 Retention of Wexford. The Company hereby retains Wexford and Wexford hereby agrees to serve as the exclusive manager, operator and liquidator of the Liquidating Assets of the Company, on the terms and conditions hereinafter set forth. 2.2 Services to be Provided. Wexford shall have the responsibility, subject to the direction and control of the Board of Directors and any officer of the Company to whom the Board may delegate authority from time to time, to (i) manage the liquidation of the Liquidating Assets, (ii) to the extent requested by the Company from time to time, manage the operation of the Liquidating Assets on behalf of the Company as set forth below, and (iii) do anything necessary or incidental to the foregoing (all of such actions collectively, the "Management Duties"), subject to the limitations set forth below. Consistent with the foregoing, Wexford shall provide management services to the Company and shall use its best efforts consistent with sound commercial practice and shall render services and perform duties as follows: (a) market and sell, on terms designed to maximize the sale proceeds that will be realized by the Company, all of the Liquidating Assets and in that connection prepare appropriate sales memoranda and other marketing material and assist in the negotiation and preparation of appropriate sales agreements and related documentation; (b) supervise, hire, fire and set compensation for the personnel necessary to perform the Management Duties (all of which personnel shall be employed by Wexford as set forth in Section 2.5 hereof); (c) supervise the collection of all judgments, settlements, fees, charges or other sums due to the Company relating to the Liquidating Assets, the rendering of bills for the same, and, from the proceeds of such collections or from other capital available to the Company, cause the Company to pay all costs, expenses and fees incurred or payable by the Company relating to the Liquidating Assets; (d) prepare and deliver, or cause to be prepared and delivered, to the Board of Directors (i) no later than fifteen (15) days after the end of each month, a monthly report of all fees and expenses incurred by Wexford on behalf of the Company; and (ii) all such other information as the Board of Directors may reasonably request from time to time; (e) prepare or cause to be prepared all financial statements and data required pursuant to any document, agreement or other instrument to which the Company is a party or by which it is bound relating to the Liquidating Assets; (f) deposit Company funds relating to the disposition of the Liquidating Assets in such Company accounts as may be specified by the Company; (g) assist in the preparation and timely filing of all returns relating to the Liquidating Assets as requested by the Board of Directors, as necessary for federal, state and local income tax purposes; 3 (h) maintain appropriate books and records on behalf of the Company with respect to the Liquidating Assets; and (i) subject to Section 2.3 hereof and to the preface to this Section 2.2, perform or cause to be performed such other services as Wexford reasonably believes are appropriate and reasonable with respect to the Liquidating Assets. 2.3 Prohibitions. Notwithstanding anything to the contrary contained herein, Wexford shall not be authorized on behalf of the Company to: (a) determine the accounting methods, conventions and positions as to such items as income recognition and deductibility to be used in the preparation of the income tax returns of the Company or make any elections under the tax laws of the United States, any states or other relevant jurisdictions; (b) borrow money for any purpose on behalf of the Company; (c) enter into any agreements or commitments which violate the terms of this Agreement; (d) enter into any agreement on behalf of the Company outside the ordinary course of business without obtaining the approval of the Board of Directors. (e) disburse Company funds in any manner other than as provided in Section 2.2 (c) or (f). 2.4. Office Location. (a) Wexford shall initially maintain its office in Greenwich, Connecticut, out of which office Wexford shall perform the Management Duties. (b) Wexford shall give the Company at least thirty (30) days' prior written notice of any change in the location of Wexford's office. (c) Wexford shall maintain insurance covering its business premises, equipment and records of the Company located in its office in such amounts and against such risks as shall be reasonably acceptable to the Company. A reasonable rata portion of the cost of such insurance, as may be agreed between Wexford and the Company, shall be borne by the Company. 2.5 Personnel Costs and Expenses. Subject to the approval of the Board of Directors, Wexford shall hire or retain such qualified personnel as are necessary to fulfill its obligations under this Agreement. All reasonable costs and expenses associated with such personnel (i.e., salaries, taxes, benefits, insurance, and other reasonable, agreed overhead, etc.) and the reasonable costs and expenses of independent contractors retained by Wexford on behalf of the Company (as approved by the Board of Directors) shall be borne by the Company. The Company shall reimburse Wexford for all reasonable expenses incurred by Wexford that directly relate to the performance of its Management Duties on behalf of the Company. 2.6 Inspection. Upon reasonable notice, Wexford shall permit the Company and any authorized representatives to inspect and audit all data, documents and records 4 of Wexford during normal business hours relating to its performance under this Agreement. 2.7 Budget Considerations. Subject to any restrictions set forth in any agreements to which any of the Subsidiaries are party, all money required to operate the Liquidating Assets shall be obtained from the net proceeds realized from the sale of Liquidating Assets and distributions to the Company in respect of the capital stock of any Subsidiary. 2.8 Non-Cash Recoveries. In the event the Company receives any non-cash recoveries from the disposition of the Liquidating Assets, and subject to the direction of the Board of Directors, Wexford may (i) hold such recoveries in the name of the Company for such period as the Board of Directors deems is practical to maximize the value of such recoveries, (ii) sell such recoveries for cash as the Board of Directors deems is in the best interest of the Company, and (iii) hold and dispose of any securities received in accordance with applicable securities laws. All proceeds received from the sale of any non-cash recoveries shall be Company funds and shall be retained pending disposition by the Company. 2.9 Failure to Perform. If Wexford falls to perform any actions which the Company determines are necessary for the proper performance by Wexford of its Management Duties hereunder, the Company shall provide written notice to Wexford of such failure to perform. Within ten (10) days after receipt of such notice, Wexford shall provide written notice to the Company that either (i) Wexford has commenced to perform such action and will diligently pursue such action to completion or (ii) Wexford reasonably believes that the action should not be performed, in which event the decision as to whether or not to take the action shall become a Joint Determination. If Wexford falls to deliver any written notice within the ten (10) day period, or if Wexford delivers the notice set forth in subparagraph (i), but thereafter unreasonably falls to complete the required actions within 25 days after receipt of the written notice from the Company (either of such events being referred to herein as an "Section 2.9 Default"), the Company may terminate this Agreement for Cause. ARTICLE III Management Fee 3.1 Management Fee. As full compensation for the services contemplated to be performed by Wexford during the term of this Agreement, the Company shall pay Wexford the Asset Liquidation Fee. The Asset Liquidation Fee payable by the Company with respect to a Liquidating Asset shall be paid on the closing of the sale of such Liquidating Asset. if; during the Term of this Agreement, the Board of Directors elects for any reason to withdraw from sale a Liquidating Asset or otherwise takes an action which materially affects the ability to sell any Liquidating Asset at or above the Net Sales Price set forth on Exhibit 3.1 hereto, the Company shall promptly pay to Wexford an Asset Liquidation Fee as if such Liquidating Asset had been sold at the Net Sales Price set forth on Exhibit 3.1 hereto [To come, but not to be disclosed to the public to ensure that the parties' assumed values of the Liquidating Assets are not made public and therefore do not inhibit the parties' abilities to sell such assets to third parties for the highest possible purchase prices]. Notwithstanding anything to the contrary in this Agreement, the aggregate Asset Liquidation Fees payable to Wexford hereunder shall in no event exceed $1,500,000, provided that, the payment by the Company to Wexford of such maximum Asset Liquidation Fees of $1,500,000 shall not excuse Wexford from its obligation to perform the Management Duties for the duration of the term of this Agreement, which may include the further sale of Liquidating Assets with respect to which no Asset Liquidation Fee will thereafter be payable. If Wexford falls to continue to 5 perform such duties, it shall be liable to the Company for liquidated damages calculated as Asset Liquidation Fee of the Net Sales Price set forth on Exhibit 3.1 hereto with respect to those Liquidating Assets with respect to which Wexford shall have filed to perform such Management Duties. 3.2 Effect of Termination for Cause. In the event of a Termination for Cause, Wexford shall be liable to the Company for breach of contract damages arising out of the occurrence of the event that gave rise to the Termination for Cause. In no event shall Wexford be liable for consequential damages. ARTICLE W Termination 4.1 Term. This Agreement shall remain in full force and effect from the date hereof until the fifth anniversary of the date hereof, provided, however, that this Agreement may be earlier terminated as set forth in this Article W. 4.2 Termination for Cause. This Agreement may be terminated by the Company at any time immediately upon notice to Wexford upon the occurrence of any event set forth in the definition of Cause (a "Termination for Cause"). ARTICLE V Indemnification The Company shall indemnification and hold harmless Wexford (and its agents, employees and representatives acting on its behalf and independent contractors retained by Wexford in accordance with the terms of this Agreement) and its directors, officers, affiliates, successors and permitted assigns (collectively, the "Indemnitees") from and against any reasonable costs, expenses, or disbursements of any kind or nature whatsoever including, without limitation, reasonable legal fees which the Indemnitees may incur in connection with their status as such, other than costs, expenses, or disbursements of any kind or nature whatsoever arising from the willful misconduct or the gross negligence of such Indemnitee, if the Indemnitee acted in good faith and in a manner it reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal proceeding, had no reasonable cause to believe its conduct was unlawful. ARTICLE VI Miscellaneous 6.1 No Waiver. No term or provision of this Agreement shall be deemed waived and no breach or default shall be deemed consented to unless such waiver or consent shall be in writing and signed by the party claimed to have waived or consented. No consent by any party to, or waiver of, a breach or default by the other, whether express or implied, shall constitute a consent to or a waiver of any different or subsequent breach or default. 6.2 Assignment. The rights and obligations of either party under this Agreement may not be assigned, transferred or delegated without the prior written consent of the other party, which such consent may be withheld for any reason whatsoever. 6 6.3 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES OF SUCH JURISDICTION. 6.4 Severability. If any term or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and provisions shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 6.5 Notices. All notices and other communications hereunder shall be given in writing and shall be deemed to have been duly given if delivered personally, upon such delivery, if transmitted by telecopier to the number(s) designated below, upon receipt, or if mailed by registered or certified mail, postage prepaid, return receipt requested, five days after being placed in the mail, to the address(es) designated below, or to such other address(es) as either party may specify in writing from time to time. (a) If to Wexford: Wexford Management Corporation 411 West Putnam Avenue Greenwich, CT 06830 Attention: Spyro S. Skouras (b) If to the Company: c/o NRG Energy, Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: Vice President, Business Development 6.6 Joint Determination. With respect to any action or decision requiring a Joint Determination under this Agreement, either the Company or Wexford (the "Initiating Party") may initiate the Joint Determination process set forth below by delivery of written notice to the other party (the "Other Party") of the action or decision requiring Joint Determination, and specifying therein the Initiating Party's recommendation as to the action or decision to be taken. The Other Party shall have a period of fifteen (15) days after receipt of such written notice to respond in writing to the Initiating Party by setting forth its recommendation as to the action or decision requiring a Joint Determination. If the Other Party fails to do so respond in writing within such fifteen (15) day period, the Initiating Party may take the action recommended in its notice without the further consent or approval of the Other Party, provided that the Other Party shall not be responsible for (and shall be exculpated by the Initiating Party from any liability for) the action recommended by the Initiating Party and/or the implementation thereof If the Other Party responds to the Initiating Party within the fifteen (15) day period, the Other Party and the Initiating Party shall use their reasonable good faith efforts to reach agreement on the action or decision requiring Joint Determination within twenty (20) days after receipt of the Other Party's response. In the event the Company and Wexford cannot agree on an action which requires a Joint Determination within such twenty (20) day period, no such action shall be taken. If a decision is necessary for the operation of the Company or if the Company and/or Wexford so elect, the Company and/or Wexford may petition the Bankruptcy Court for resolution of the dispute. 7 6.7 Entire Agreement. This Agreement represents the entire understanding of the parties hereto with respect to the subject matter hereto and supersede any and all prior negotiations, understandings and agreements with respect thereto. 6.8 Amendments. This Agreement may be amended only by a written document signed by both parties. 6.9 No Joint Venture. Wexford and the Company are independent contractors, and nothing in this Agreement shall be construed to make Wexford and the Company joint venturers or partners or to impose upon either of them any liability as such. 6.10 Successors and Assigns. This Agreement shall inure to the benefit of and be binding on and enforceable against, the permitted successors and assigns of the respective signatories hereto. 6.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered an original and all of which taken together shall constitute one agreement binding on both of the parties hereto, notwithstanding that both parties shall not have signed the same counterpart. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. WEXFORD NOW WEXFORD MANAGEMENT LLC WEXFORD MANAGEMENT CORP. By: /s/ Spyros S. Skouras Name: Spyros S. Skouras Title: Senior Vice President COMPANY: NRG GENERATING (U.S.) INC. By: /s/ Leonard Bluhm Name: Leonard Bluhm Title: President and Chief Executive Officer 9 Exhibit 3.1 Commission Rate: 10% Asset Net Sales Price Philadelphia Cogen and any management $13,000,000 contracts relating to the Philadelphia Water Dept. Project Each item of Equipment Held for Sale Midpoint in the range assigned to asset appraisals performed by Belyea Company, Inc. dated July 14, 1995 or Arthur Andersen & Co., SC dated June 13, 1995 Equity Interests in: Philadelphia Biogas Supply $1,000,000 O'Brien Energy Services $1,700,000 Puma Power Plant, Ltd. $3,000,000 American Hydrotherm Corp. $ 500,000 EX-10.4 10 EXHIBIT 10.4 MANAGEMENT SERVICES AGREEMENT DATED AS OF JANUARY 31, 1996 BETWEEN THE COMPANY AND NRG ENERGY. Exhibit 10.4 MANAGEMENT SERVICES AGREEMENT THIS MANAGEMENT SERVICES AGREEMENT is entered into on, and effective as of, the Effective Date (as hereinafter defined) by and between NRG ENERGY, INC., a Delaware corporation (the "Manager") and NRG GENERATING (U.S.) INC., a Delaware corporation (the "Company"). R E C I T A L S 1. Pursuant to the Plan of Reorganization (as hereinafter defined), the Manager acquired 41.86% of the issued and outstanding shares of capital stock of reorganized O'Brien Environmental Energy, Inc., which has been renamed "NRG Generating (U.S.) Inc." 2. In connection with the Plan of Reorganization, the Manager has agreed to provide management, administrative and certain other services to the Company in connection with the day to day business of the Company. A G R E E M E N T In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I Definitions 1.1. Definitions. The following terms shall have the indicated meanings for the purposes of this Agreement: "Affiliates" shall have the meaning given to such term in Rule 12b-2 issued under the Securities and Exchange Act of 1934, as amended. "Administrative and General Expenditures" shall mean all administrative and general expenditures, including (i) salaries and related benefits and expenses of personnel who render Services, (ii) charges related to the computer and telecommunications services (both voice and data) that support the provision of such Services and (iii) the administrative fee charged by the Manager or its Affiliates to manage, administer and bill for third-party contracts related to the provision of Services hereunder, but the term "Administrative and General Expenditures" shall not include charges related to the Manager's or its Affiliate's senior executive management. Administrative and General Expenditures shall be allocated to the Company in a fair and reasonable manner. 1 "Agreement" shall mean this Management Services Agreement. "Bankruptcy Code" -- Title 11 of the United States Code, 101, et seq, as now or hereafter in effect, or any successor statute thereto. "Bankruptcy Event" -- If, with respect to any Person, (a) such Person generally is unable to pay such Person's debts as such debts become due, or admits in writing such Person's inability to pay such Person's debts generally, or makes a general assignment for the benefit of such Person's creditors; or (b) any proceeding is instituted by or against such Person under any Bankruptcy Law seeking to adjudicate such Person as bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, rearrangement, adjustment, protection, relief or recomposition of such Person or such Person's debts, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for such Person or for all or substantially all of such Person's property and, in the case of any such proceeding instituted against such Person (but not instituted by or with the consent of such Person), is not controverted within 20 days and is not dismissed or stayed for a period of 60 days after such proceeding is filed. "Bankruptcy Law" -- The Bankruptcy Code and any other applicable federal, state, local or foreign insolvency, reorganization, moratorium, fraudulent conveyance or similar Law now or hereafter in effect for the relief of debtors. "Company Securities" shall mean the shares of Common Stock of the Company and any additional securities issued by the Company from time to time, if any such additional securities are issued. "Effective Date" shall mean the Effective Date of the Plan of Reorganization. "Independent Committee" shall mean the Independent Committee of the Board of Directors of the Company as defined in the Bylaws of the Company. "Outsource" shall mean to cause a Service to be provided by a third-party provider which is not an Affiliate of the Manager. "Outsourced Services" shall mean those services which the Manager Outsources to third-party providers which are not affiliates of the Manager. "Plan of Reorganization" shall mean the Chapter 11 plan of reorganization for O'Brien Environmental Energy, Inc. proposed by the Manager and certain other parties. "Person" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization, governmental authority or any other form of entity. 2 "Services" shall have the meaning set forth in Section 2.1. 1.2 Terminology. Unless the context of this Agreement clearly requires otherwise, (a) pronouns, wherever used herein, and of whatever gender, will include natural persons and corporations and associations of every kind and character, (b) the word "included" or "including" will mean "including without limitation", (c) the word "or" will have the inclusive meaning represented by the phrase "and/or", (d) the words hereof, herein, hereunder, and similar terms in this Agreement will refer to this Agreement as a whole and not any particular section or article in which such words appear and (e) all terms defined in this Agreement in the singular will have the same meaning when used in the plural and vice versa. The section, article and other headings in this Agreement and the Table of Contents to this Agreement are for reference purposes and will not control or affect the construction of this Agreement or the interpretation hereof in any respect. Article, section and subsection references are to this Agreement unless otherwise specified. ARTICLE II Services 2.1 General. The Company hereby appoints and retains the Manager, and the Manager accepts the appointment, to provide to the Company and its subsidiaries certain Services in accordance with the terms of this Agreement. At the Manager's election, it may cause one or more of its Affiliates or third-party contractors to provide the Services; provided, however, that the Manager shall remain responsible for the provision of the Services in accordance with this Agreement. Whenever services are to be rendered by a third party contractor, the Manager shall cause such third- party contractor to be engaged directly by the Company. The Independent Committee will have the sole authority and responsibility to make all decisions and take all actions on behalf of Generating under this Agreement. 2.2 Services. The Manager shall provide all services (the "Services") necessary to manage and administer the day to day business of the Company, including the following: 2.2.1 General Management and Administration. The Manager shall be responsible for the management, administration and support of all of the businesses of the Company or any subsidiary. 2.2.2 Administration of Agreements. The Manager shall administer all of the obligations and responsibilities of the Company and its subsidiaries under all agreements to which the Company or any of its subsidiaries is a party, subject to the availability of funds therefor in the Company's accounts established pursuant to Section 2.2.4. 2.2.3 Billing and Collection of Revenues. The Manager shall implement and maintain billing and collection procedures in respect of all accounts payable and other amounts due the Company or any of its subsidiaries. 3 2.2.4 Bank Accounts. The Manager shall establish and maintain on behalf of and in the name of the Company and its subsidiaries one or more bank accounts as required or convenient in connection with the business of the Company and its subsidiaries. 2.2.5 Accounting and Documentation. The Manager shall provide full bookkeeping and accounting services to the Company and its subsidiaries as required from time to time and, to the extent pertaining to matters within the knowledge and control of the Manager, shall prepare and submit on behalf of the Company and its subsidiaries all necessary documentation, certification and notices required to be submitted by the Company or its subsidiaries pursuant to any agreements or otherwise. 2.2.6 Licenses and Permits. The Manager shall maintain compliance with all required permits, licenses and governmental approvals obtained by or for the Company or its subsidiaries in connection with the operation of their respective businesses. Where permits must be obtained, modified or renewed by the Company and such responsibility has not been delegated to a third party, the Manager shall prepare any application, filing or notice related thereto, shall cause such materials to be submitted to, and shall represent the Company or the relevant subsidiary in contacts with, the appropriate governmental agency, and shall perform all ministerial or administrative acts necessary for timely issuance and the continued effectiveness thereof. Copies of all permits, licenses and governmental approvals obtained by or for the Company or its subsidiaries shall be maintained by the Manager at its offices. 2.2.7 Public Relations. The Manager shall be responsible for all public and community relations matters of the Company and its subsidiaries. 2.2.8 Tax Matters. The Manager shall provide the services necessary to provide required tax information for holders of the Company Securities and prepare tax returns, if any are required with respect to the Company and its subsidiaries. 2.2.9 Registration and Transfer of The Company Securities. The Manager shall cause the registration and transfer of the Company Securities issued by the Company and replacement of mutilated, destroyed, lost or stolen certificates representing the Company Securities including handling of any necessary interaction with American Stock Transfer and Trust Company, or its successor, as transfer agent. 2.2.10 SEC Filings. The Manager shall assist in connection with the Company's obligation to prepare any and all filings required to be made with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or other filing and reporting obligations of other regulatory agencies, or the American Stock Exchange or 4 other applicable securities exchange pursuant to the laws, rules and regulations governing the same, and in the preparation and distribution of all materials required to be delivered to the holders of the Company Securities pursuant to such laws or regulations. 2.2.11 Investor Relations. The Manager shall handle all investor relations matters of the Company and its subsidiaries, including the preparation of documents, responses to all inquiries from holders of the Company Securities, analysts or potential investors and the preparation and issuance of press releases. 2.2.12 Insurance. To the extent permitted by the Manager's insurers, the business, properties and assets of the Company and its subsidiaries shall be insured under the Manager's policies in effect from time to time or separate policies arranged by the Manager. The Manager shall provide the Company and its subsidiaries with risk management services. 2.2.13 Audit. The Manager shall assist the Company and its subsidiaries with negotiating services for both internal and contract audit functions. 2.3 Personnel. The Manager shall provide and make available as necessary all professional, supervisorial, managerial, administrative and other personnel as are necessary to perform the Services. Such personnel shall be qualified and experienced in the duties to which they are assigned. The working hours, rates of compensation and all other matters relating to the employment of individuals employed by the Manager or its Affiliates in the performance of the Services shall be determined solely by the Manager or its respective Affiliates. In the performance of the Services, the Manager also shall be authorized to obtain on behalf of the Company outside accounting, tax, legal, engineering, and other services as it reasonably deems necessary. 2.4 Standards for Performance of Services. The Manager shall, and shall cause its Affiliates to, perform the Services with reasonable diligence and dispatch in a prudent, cost effective and efficient manner, in accordance with all applicable laws, regulations, codes, permits, licenses, and standards, and in accordance with the applicable terms and conditions of the Company's contracts. The Manager shall not carry out any transaction or enter into any contract or agreement on behalf of the Company or any subsidiary hereunder with any Affiliate of the Manager except on terms no less favorable to the Company or such subsidiary than would be available in a bona fide arm's length transaction with a non-affiliated person. The Manager alone may determine whether or not to Outsource a Service. 2.5 Right to Request Instruction. At any time, the Manager may, if it reasonably deems it to be necessary or appropriate, request written instructions from the Independent Committee, within a reasonable period prior to the necessity for taking action, with respect to any matter contemplated by this Agreement and may defer action thereon pending the receipt of such written instructions. Actions taken by the Manager, its Affiliates or its or their officers, employees and representatives in accordance with the 5 written instructions of the Independent Committee, or, except in cases of the Manager's or such Affiliate's gross negligence or willful misconduct, failures to act by such persons pending the receipt of such written instructions, shall be deemed to be proper conduct within the scope of the Manager's authority under this Agreement. ARTICLE III Payment 3.1 Payment. The Company, in consideration for the performance of the Services by or on behalf of the Manager, agrees to reimburse the Manager for (i) all expenses actually incurred by the Manager relating to the Services provided by the Manager hereunder to the Company or its subsidiaries, including all Administrative and General Expenditures ("Direct Charges"), (ii) the actual cost of any item purchased for the Company or such subsidiary by the Manager or its Affiliates ("Operating Charges"), and (iii) all expenses actually incurred by the Manager or its Affiliates for Outsourced Services or other contract services or utilities provided by any third-party providers for the Company or its subsidiaries under an agreement between the Manager or is Affiliates and such third party ("Outsourced Charges"). If the compensation for the Services does not include sales, use, excise, value added or similar taxes, and if any such taxes are imposed on the Services, the Company shall pay or reimburse the Manager for any such taxes. 3.2 Invoicing. A. The Manager shall invoice, or cause its Affiliates to invoice, the Company by the 15th day of each month for all Direct Charges and Operating Charges with respect to the preceding month and any adjustments that may be necessary to correct prior invoices. The Manager shall invoice, or cause its Affiliates to invoice, the Company by the 15th day of the month following receipt of an invoice from a third-party contractor for Outsourced Charges for Services provided hereunder and any adjustments that may be necessary to correct prior invoices. All invoices shall reflect in reasonable detail a description of the Services performed during the preceding month and documentation available to the Manager backing up invoiced charges and shall be due and payable on the last day of the month of the relevant invoice in cash by wire transfer or check to an account or accounts designated by the Manager. In the event of a default in payment by the Company, upon thirty (30) days' written notice to the Company, sent by certified mail to the address specified below, the Manager may terminate this Agreement as to those Services which relate to the unpaid portion of the invoice if it has not received payment within such thirty (30) days; provided, however, in the event of a dispute as to the propriety of invoiced amounts, the Company shall pay all undisputed amounts on each invoice, but shall be entitled to withhold payment of any amount in dispute and shall notify the Manager within ten (10) business days from receipt of the invoice of the disputed amount and the reasons each such charge is disputed by the Company. The Manager shall promptly provide the Company with records relating to the disputed amount so as to 6 enable the parties to resolve the dispute. So long as the parties are attempting in good faith to resolve the dispute, the Manager shall not be entitled to terminate the Services related to and by reason of the disputed charge. B. Any statement or payment not disputed in writing by either party within two years of the date of such statement or payment shall be considered final and no longer subject to adjustment. The Company shall not be obligated to pay for any Direct Charges, Operating Charges or Outsourced Charges for which statements for payment are submitted more than two years after the termination of this Agreement. ARTICLE IV Limited Warranty; Limitation of Liability ALL PRODUCTS OBTAINED FOR THE COMPANY ARE AS IS, WHERE IS, WITH ALL FAULTS. SUBJECT TO THE MANAGER'S AND ITS AFFILIATES RESPONSIBILITIES SET FORTH IN SECTION 2.4 HEREOF, THE MANAGER AND ITS AFFILIATES MAKE NO (AND HEREBY DISCLAIM AND NEGATE ANY AND ALL) REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES RENDERED TO OR PRODUCTS OBTAINED FOR THE COMPANY. FURTHERMORE, THE COMPANY MAY NOT RELY UPON ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE MADE TO THE MANAGER OR ITS AFFILIATES BY ANY PARTY (INCLUDING AN AFFILIATE OF THE MANAGER) PERFORMING SERVICES ON BEHALF OF THE MANAGER OR ITS AFFILIATES HEREUNDER, UNLESS SUCH PARTY MAKES AN EXPRESS WRITTEN WARRANTY TO THE COMPANY. IT IS EXPRESSLY UNDERSTOOD BY THE COMPANY AND THE COMPANY AGREES THAT THE MANAGER AND ITS AFFILIATES SHALL HAVE NO LIABILITY FOR THE FAILURE OF THIRD- PARTY PROVIDERS TO PERFORM ANY SERVICES HEREUNDER AND FURTHER THAT THE MANAGER AND ITS AFFILIATES SHALL HAVE NO LIABILITY WHATSOEVER FOR THE SERVICES PROVIDED BY SUCH THIRD-PARTY PROVIDERS UNLESS SUCH SERVICES ARE PROVIDED IN A MANNER WHICH WOULD EVIDENCE GROSS NEGLIGENCE ON THE PART OF THE MANAGER OR ITS AFFILIATES OR INTENTIONAL MISCONDUCT. THE COMPANY AGREES THAT THE REMUNERATION TO BE PAID TO THE MANAGER OR AN AFFILIATE HEREUNDER FOR THE SERVICES TO BE PERFORMED REFLECTS THIS LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES. IN NO EVENT SHALL THE MANAGER OR ITS AFFILIATES BE LIABLE TO THE COMPANY OR ANY OTHER PERSON OR ENTITY FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY ERROR 7 IN THE PERFORMANCE OF SERVICES OR FROM THE BREACH OF THIS AGREEMENT, REGARDLESS OF THE FAULT OF THE MANAGER, ANY MANAGER AFFILIATE OR ANY THIRD- PARTY PROVIDER OR WHETHER THE MANAGER, ANY MANAGER AFFILIATE OR THIRD-PARTY PROVIDER IS WHOLLY, CONCURRENTLY, PARTIALLY, OR SOLELY NEGLIGENT. TO THE EXTENT ANY THIRD-PARTY PROVIDER HAS LIMITED ITS LIABILITY TO THE MANAGER OR ITS AFFILIATE FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT, THE COMPANY AGREES TO BE BOUND BY SUCH LIMITATION OF LIABILITY FOR ANY PRODUCT OR SERVICE PROVIDED TO THE COMPANY BY SUCH THIRD-PARTY PROVIDER UNDER THE MANAGER'S OR SUCH AFFILIATE'S AGREEMENT. ARTICLE V Force Majeure A. THE MANAGER AND ITS AFFILIATES SHALL HAVE NO OBLIGATION TO PERFORM OR CAUSE THE SERVICES TO BE PERFORMED IF ITS FAILURE TO DO SO IS CAUSED BY OR RESULTS FROM ANY ACT OF GOD, GOVERNMENTAL ACTION, NATURAL DISASTER, STRIKE, FAILURE OF ESSENTIAL EQUIPMENT OR ANY OTHER CAUSE OR CIRCUMSTANCE BEYOND THE CONTROL OF THE MANAGER, OR, IF APPLICABLE, ITS AFFILIATES OR THIRD-PARTY PROVIDERS OF SERVICES TO THE MANAGER ("NRG Event of Force Majeure"). The Manager will promptly notify the Company of any NRG Event of Force Majeure. The Manager agrees that upon restoring the Service following any NRG Event of Force Majeure, the Manager will allow the Company to have equal priority with the Manager and its Affiliates, in accordance with prior practice, with respect to access to the restored Service. B. THE COMPANY SHALL HAVE NO OBLIGATION TO USE ANY OF THE SERVICES IF ITS FAILURE TO DO SO IS CAUSED BY OR RESULTS FROM ANY ACT OF GOD, GOVERNMENTAL ACTION, NATURAL DISASTER, STRIKE, FAILURE OF ESSENTIAL EQUIPMENT OR ANY OTHER CAUSE OR CIRCUMSTANCE BEYOND THE CONTROL OF THE COMPANY (a "Company Event of Force Majeure"). IN SUCH CASE, THE COMPANY WILL NOT BE OBLIGATED TO PAY THE MANAGER FOR ANY SUCH SERVICES WHICH THE COMPANY DOES NOT USE, BUT THE COMPANY WILL BE OBLIGATED TO PAY THE MANAGER FOR ANY SUCH SERVICES WHICH THE COMPANY DOES USE. The Company will promptly notify the Manager of any Company Event of Force Majeure. 8 ARTICLE VI Term and Termination; Events of Default 6.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue until the expiration or other termination of the Co- Investment Agreement, subject to earlier termination pursuant to Section 6.2 or 6.3. 6.2 Events of Default. If one or more of the following events occurs with respect to a party hereto, it will constitute an "Event of Default" with respect to such party: (a) Failure to Perform Obligations. Such party fails to perform or observe any material obligation under this Agreement and such failure continues for more than 30 days after the non-defaulting party has given notice thereof to such party (or if the nature of such default is such that it is not capable of being cured within 30 days, then the failure of such party to commence to cure such default within 30 days and to diligently and continuously pursue the cure of such default thereafter, but in no event may such extended cure period exceed 180 days); (b) Bankruptcy Event. Such party becomes subject to a Bankruptcy Event. 6.3 Remedies; Exclusivity. At any time during the continuance of an Event of Default, the non-defaulting party will have the right to (a) elect, by giving notice to the defaulting party, not to be bound in any respect by the provisions of this Agreement during such continuance, in which case such party will have no obligations or liabilities hereunder during such period, (b) terminate the Agreement upon giving notice of termination to the defaulting party, if the Event of Default is a Bankruptcy Event or otherwise has continued without cure for 180 days following notice pursuant to Section 6.2(a), and (c) pursue its rights in accordance with Section 7.11. No failure on the part of either NRG or the Company to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege. ARTICLE VII Miscellaneous 7.1 Severability. In the event any portion of this Agreement shall be found by a court of competent jurisdiction to be unenforceable, that portion of the Agreement will be null and void and the remainder of the Agreement will be binding on the parties as if the unenforceable provisions had never been contained herein. 9 7.2 Assignment. Except for the ability of the Manager to cause one or more of the Services to be performed by one of its Affiliates or a third- party provider, no party shall have the right to assign its rights or obligations under this Agreement without the consent of the other party. 7.3 Entire Agreement. This Agreement constitutes the entire agreement of the parties relating to the performance of the Services. All prior or contemporaneous written or oral agreements are merged herein. 7.4 Law. This Agreement shall be subject to and governed by the laws of the State of Minnesota, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. 7.5 Amendment or Modification. This Agreement may be amended or modified from time to time only by a written amendment signed by the parties hereto. 7.6 Notices. Any notice, request, instruction, correspondence or other document to be given hereunder by either party to the other (herein collectively called "Notice") shall be in writing and delivered personally or mailed, postage prepaid, or by telegram or telecopier, as follows: (a) if to the Company, to: NRG Generating (U.S.) Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: President and Chief Executive Officer Telephone: 612-373-5300 Telecopier: 612-373-5346 With a copy to: Chairman, Independent Committee of NRG Generating (U.S.) Inc. c/o NRG Generating (U.S.) Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Telephone: 612-373-5300 Telecopier: 612-373-5346 10 (b) if to NRG, to: NRG Energy, Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: Vice President of Operations and Engineering Telephone: 612-373-5300 Telecopier: 612-373-5346 With a copy to: NRG Energy, Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: Vice President and General Counsel Telephone: 612-373-5300 Telecopier: 612-373-5392 Notice given by personal delivery or mail shall be effective upon actual receipt by the person to whom addressed. Notice given by telegram or telecopier shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. Any party may change any address to which Notice is to be given to it by giving Notice as provided above of such change of address. 7.7 Further Assurances. In connection with this Agreement and all transactions contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such additional documents and instruments as may be required for the Manager to provide the Services hereunder and to perform such other additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions, and conditions of this Agreement. 7.8 Designated Contact Person. Without limiting the obligations of the parties hereto with respect to the delivery of Notices pursuant to Paragraph 16 hereof, the Manager hereby designates Craig A. Mataczynski (phone no. (612) 373-5460) as a person with whom representatives of the Company may communicate regarding any Services to be performed hereunder. The Company hereby designates Leonard A. Bluhm (phone no. (612) 373-5300) as its designated person with whom the Manager may communicate regarding any problems or other matters that the Manager may have in providing any Service hereunder by itself or any third-party provider. Either party hereto may redesignate its representative at any time during the term hereof by written notice to the other party. 7.9 Acknowledgment Regarding Certain Provisions. EACH OF THE PARTIES HERETO SPECIFICALLY ACKNOWLEDGES AND AGREES (a) THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THAT IT IS CHARGED WITH 11 NOTICE AND KNOWLEDGE OF THE TERMS HEREOF, (b) THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT, AND (c) THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT PROVIDE FOR THE ASSUMPTION BY ONE PARTY OF, AND/OR RELEASE OF THE OTHER PARTY FROM, CERTAIN LIABILITIES ATTRIBUTABLE TO THE MATTERS COVERED BY THIS AGREEMENT THAT SUCH PARTY WOULD OTHERWISE BE RESPONSIBLE FOR UNDER THE LAW. EACH PARTY HERETO FURTHER AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY SUCH PROVISIONS OF THIS AGREEMENT ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT SUCH PROVISIONS ARE NOT "CONSPICUOUS." 7.10 No Third-Party Beneficiary. The provisions of this Agreement are enforceable solely by the parties to this Agreement, and no other person shall have the right, separate and apart from the Company or the Manager, to enforce any provision of this Agreement or to compel any party to this Agreement to comply with the terms of this Agreement. 7.11 Mediation. The Manager and the Company agree to negotiate in good faith in an effort to resolve any dispute related to this Agreement that may arise between the parties. If the dispute cannot be resolved promptly by negotiation, then either party may give the other party written notice that the dispute should be submitted to mediation. Promptly thereafter, a mutually acceptable mediator shall be chosen by the parties, who shall share the cost of mediation services equally. If the dispute has not been resolved by mediation within ninety (90) days after the date of written notice requesting mediation, then either party may initiate litigation and pursue any and all remedies at law or at equity that such party is entitled to. 7.12 Indemnification. The Company agrees that it will indemnify and hold harmless the Manager, its Affiliates and their respective directors, officers, employees, agents and controlling persons (each being a "Manager Indemnified Party") from and against any and all losses, claims, damages and liabilities, joint or several, to which such Manager Indemnified Party may become subject under any applicable federal or state law, or otherwise, relating to or arising out of the engagement of the Manager pursuant to, and the performance by the Manager or its Affiliates of the services contemplated by, this Agreement. The Company will reimburse any Manager Indemnified Party for all costs and expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation of, preparation of or defense of any pending or threatened claim or any action or proceeding covered by such indemnity. The Company will not be liable under the foregoing indemnification provisions to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court to have resulted primarily from the bad faith or gross negligence of the Manager or the relevant Affiliate. The Manager agrees that it will indemnify and hold harmless the Company and its directors, officers, employees, agents and controlling persons (each being a "Company 12 Indemnified Party") from and against any and all losses, claims, damages and liabilities, joint or several, to which the Company Indemnified Party becomes subject under any applicable federal or state law, or otherwise, relating to or arising out of the willful misconduct or gross negligence of the Manager or its Affiliates. The Manager will reimburse the Company Indemnified Party for all costs and expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation of, preparation of or defense of any pending or threatened claim or any actions or proceedings covered by such indemnity. The Manager will not be liable under the foregoing indemnification provisions to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court to have resulted primarily from the bad faith or gross negligence of the Company. 7.13 The Company Is Sole Beneficiary. The Company acknowledges that the Services shall be provided only with respect to the businesses of the Company and its subsidiaries. The Company shall not request performance of any Services for the benefit of any entity other than the Company or its subsidiaries. The Company represents and agrees that it will use the Services only in accordance with all applicable, federal, state and local laws and regulations and communications and common carrier tariffs, and in accordance with the reasonable conditions, rules, regulations and specifications which may be set forth in any manuals, materials, documents or instructions furnished from time to time by the Manager to the Company. The Manager reserves the right to take all actions, including termination of any particular Services, that the Manager reasonably believes to be necessary to assure compliance with applicable laws, regulations and tariffs. The Manager will notify the Company of the reasons for any such termination of Services. 13 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed on their behalf by there duly authorized officers. NRG ENERGY, INC. By: /s/ Craig A. Mataczynski Name: Craig A. Mataczynski Title: Vice President, Domestic Business Development NRG GENERATING (U.S.) INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President and Chief Executive Officer 14 EX-10.5.1 11 EXHIBIT 10.5.1 LOAN AGREEMENT DATED APRIL 30, 1996 BETWEEN THE COMPANY AND NRG ENERGY. Exhibit 10.5.1 LOAN AGREEMENT dated as of April 30, 1996 $45,000,000 _______________________ Between NRG ENERGY, INC. and NRG GENERATING (U.S.) INC. LOAN AGREEMENT, dated as of April 30, 1996, between NRG GENERATING (U.S.) INC., a Delaware corporation (the "Company") and NRG ENERGY, INC., a Delaware corporation (the "Lender"). W I T N E S S E T H: WHEREAS, immediately prior to the execution and delivery of this Agreement, the Company was the debtor and the debtor in possession in Chapter 11 case number 94-26723 (the "Case") pending before the United States Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court"); WHEREAS, pursuant to the Composite Fourth Amended and Restated Plan of Reorganization for the Company proposed by the Lender, Wexford Management Corp. and the Official Committee of Equity Security Holders dated January 31, 1995 (as amended and confirmed by order of the Bankruptcy Court entered on February 22, 1996, the "NRG Plan"; capitalized terms used herein without definition shall have the respective meanings assigned to them in the NRG Plan), and subject to the terms and conditions of the Amended and Restated Stock Purchase and Reorganization Agreement dated as of January 31, 1996 between the Lender and the Company, the Lender is acquiring on the date hereof 41.86% of the outstanding shares of Common Stock of the Company and in that connection has agreed to make certain loans to the Company; WHEREAS, the NRG Plan contemplates that the Company would issue New Notes in the initial principal amount of $45,000,000 in the aggregate to third party purchasers but that the Lender would be required to purchase any of such New Notes not so purchased by such purchasers; and WHEREAS, in lieu of arranging for the issuance of the New Notes pursuant to the NRG Plan and possibly purchasing some or all of such New Notes, the Lender has committed to lend the Company $45,000,000 pending the refinancing by the Company of the Loan (as defined below). NOW, THEREFORE, the Company and the Lender agree as follows: ARTICLE 1 Definitions SECTION 1.01. Defined Terms. As used in this Agreement, the terms defined in the caption hereto shall have the meanings set forth therein, and the following terms have the following meanings: "Acquisition" means the acquisition by the Company pursuant to the Acquisition Agreement of 41.86% of the issued and outstanding capital stock of the Company as reorganized under the NRG Plan and all of the capital stock of each of certain of the Company's subsidiaries. "Acquisition Agreement" means the Amended and Restated Stock Purchase and Reorganization Agreement, dated as of January 31, 1996, between the Lender and O'Brien Environmental Energy, Inc., a Delaware corporation, the predecessor in interest to the Company. "Additional Assets" means (i) any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in a Related Business; (ii) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (iii) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary; provided, however, that, in the case of clauses (ii) and (iii), such Restricted Subsidiary is primarily engaged in a Related Business. "Affiliate" of any specified Person means (i) any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person or (ii) any Person who is a director or officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any Person described in clause (i) above. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of Sections 6.04 and 6.05 only, "Affiliate" shall also mean any beneficial owner of shares representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "Affiliate Transaction" shall have the meaning assigned thereto in Section 6.05(a). "Agreement" means this Loan Agreement, as amended, supplemented or modified from time to time. 2 "Asset Disposition" means any sale, lease, transfer or other disposition of shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares), property or other assets (each referred to for the purposes of this definition as a "disposition") by the Company or any of its Restricted Subsidiaries (including any disposition by means of a merger, consolidation or similar transaction) other than (i) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of property or assets in the ordinary course of business, (iii) for purposes of Section 6.04 only, a disposition subject to Section 6.02 and (iv) a disposition of Liquidating Assets in accordance with and pursuant to the terms of the Liquidating Asset Management Agreement. "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments. "Bankruptcy Court" shall have the meaning assigned thereto in the Recitals. "Bankruptcy Law" shall have the meaning assigned thereto in Section 8.01. "Base Rate" means for any day, a rate per annum equal to 9.5%. "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a 3 capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease. "Case" shall have the meaning assigned thereto in the Recitals. "Closing Date" means the date, which shall be on the Effective Date, on which the Lender makes the Loan. "Code" means the Internal Revenue Code of 1986, as amended. "Co-Investment Agreement" shall mean that certain Co-Investment Agreement dated the date hereof between the Lender and the Company and as provided for by the NRG Plan. "Co-Investment Indebtedness" means Indebtedness incurred by the Company to finance the Company's investment in a project offered to the Company pursuant to the terms of the Co-Investment Agreement. "Commercial L/C" means a commercial documentary letter of credit under which the issuer agrees to make payments in Dollars for the account of the Company, on behalf of the Company or a Subsidiary thereof, in respect of obligations of the Company or such Subsidiary in connection with the purchase of goods or services in the ordinary course of business. "Commonly Controlled Entity" means an entity, whether or not incorporated, which is under common control with the Company within the meaning of Section 414(b) or (c) of the Code. "Company" means the party named as such in this Agreement until a successor replaces it and, thereafter, means the successor. "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (1) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence 4 of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period, (2) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale), (3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period and (4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition assets occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest 5 Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Protection Agreement applicable to such Indebtedness if such Interest Rate Protection Agreement has a remaining term as at the date of determination in excess of 12 months). "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Subsidiaries, plus, to the extent incurred by the Company and its Subsidiaries in such period but not included in such interest expense, (i) interest expense attributable to Capitalized Lease Obligations, (ii) amortization of debt discount and debt issuance cost, (iii) capitalized interest, (iv) non-cash interest expense, (v) commissions, discounts and other fees and charges attributable to letters of credit and bankers' acceptance financing, (vi) interest actually paid by the Company or any such Subsidiary under any Guarantee of Indebtedness or other obligation of any other Person, (vii) net costs associated with Hedging Obligations (including amortization of fees), (viii) the product of (a) all Preferred Stock dividends in respect of all Preferred Stock of Subsidiaries of the Company and Redeemable Stock of the Company held by Persons other than the Company or a Wholly Owned Subsidiary multiplied by (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of the Company, expressed as a decimal, in each case, determined on a consolidated basis in accordance with GAAP and (ix) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust; provided, however, that there shall be excluded therefrom any such interest expense of any Unrestricted Subsidiary to the extent the related Indebtedness is not Guaranteed or paid by the Company or any Restricted Subsidiary. "Consolidated Net Income" means, for any period, the net income (loss) of the Company and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income: (i) any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that 6 (A) subject to the limitations contained in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (iii) below) and (B) the Company's equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period shall be included in determining such Consolidated Net Income, (ii) any net income (loss) of any person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition, (iii) any net income (loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that (A) subject to the limitations contained in (iv) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of a dividend that could have been made to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income, (iv) any gain (but not loss) realized upon the sale or other disposition of any asset of the Company or its consolidated Subsidiaries (including pursuant to any sale/leaseback transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (but not loss) realized upon the sale or other disposition of any Capital Stock of any Person, (v) any extraordinary gain or loss, and (vi) the cumulative effect of a change in accounting principles. 7 "Consolidated Net Worth" means the total of the amounts shown on the balance sheet of the Company and the Restricted Subsidiaries, determined on a Consolidated basis, as of the end of the most recent fiscal quarter of the Company ending prior to the taking of any action for the purpose of which the determination is being made, as (i) the par or stated value of all outstanding Capital Stock of the Company plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified Stock. "Contingent Obligation" means as to any Person, any obligation of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount (based upon the maximum reasonably anticipated net liability in respect thereof as determined by the Company in good faith) of the primary obligation or portion thereof in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated net liability in respect thereof (assuming such Person is required to perform thereunder) as determined by the Company in good faith. "Contractual Obligation" means as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of the property owned by it is bound. "Credit Documents" means the collective reference to this Agreement and the Note. 8 "Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary. "Custodian" shall have the meaning assigned thereto in Section 8.01. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to the first anniversary of the Stated Maturity of the Notes. "Dollars" and "$" means dollars in lawful currency of the United States of America. "EBITDA" means, for any period the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest Expense, (iii) depreciation expense and (iv) amortization expense, in each case for such period. "Effective Date" shall have the meaning assigned thereto in the NRG Plan which definition is incorporated herein by this reference. "Environmental Laws" means any and all Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any Governmental Authority or requirements of law (including court-ordered requirements of common law) regulating or imposing liability or standards of conduct concerning environmental or public health protection matters, including Hazardous Materials, as now or may at any time hereafter be in effect. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Event of Default" shall have the meaning assigned thereto in Section 8.01. 9 "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fee Property" shall have the meaning assigned thereto in Section 3.10. "Fiscal Date" means the Saturday closest to February 1, May 1, August 1 or November 1, as the case may be, in any calendar year. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "Governmental Authority" means any nation or government, any state or other political subdivision thereof or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Hazardous Materials" means any hazardous materials, hazardous wastes, hazardous pesticides, hazardous or toxic substances, defined, listed, classified or regulated as such in or under any Environmental Law, including asbestos, petroleum, any other petroleum products (including gasoline, crude oil or any fraction thereof) polychlorinated biphenyls and urea-formaldehyde insulation. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. 10 "Highest Lawful Rate" shall have the meaning assigned thereto in Section 9.10. "Incur" means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. "Indebtedness" means, with respect to any Person on any date of determination (without duplication): (i) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money, (ii) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services (except Trade Payables), which purchase price is due more that six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, (v) all Capitalized Lease Obligations of such Person, (vi) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of the Company, any Preferred Stock (but excluding, in each case, any accrued dividends), (vii) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of Indebtedness of such Person shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Indebtedness of such other Persons, (viii) all Indebtedness of other Persons to the extent Guaranteed by such Person, and 11 (ix) to the extent not otherwise included in this definition, Hedging Obligations of such Person. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. "indemnified liabilities" shall have the meaning assigned thereto in Section 9.05(d). "Insolvency" means, with respect to a Multiemployer Plan, the condition that such Plan is insolvent within the meaning of such term as used in Section 4245 of ERISA. "Interest Payment Date" means the last day of each March, June, September and December, commencing on the first such day to occur after the Loan is made. "Interest Rate Agreement" means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary. "Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person) or other extension of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. For purposes of the definition of "Unrestricted Subsidiary" and Section 6.02, (i) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such 12 redesignation; and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors. "Leased Properties" shall have the meaning assigned thereto in Section 3.10. "Lender" means the party named in this Agreement until one or more successors replace it, and thereafter means the successor or successors. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Liquidating Assets" shall have the meaning assigned thereto in the Liquidating Asset Management Agreement which definition shall be incorporated herein by this reference. "Liquidating Asset Management Agreement" means that certain Liquidating Asset Management Agreement dated the date hereof by and between the Company and Wexford Management Corp., a Delaware corporation and as provided for by the NRG Plan. "Loan" shall have the meaning set forth in Section 2.01. "Loan Refinancing" shall mean Indebtedness that is incurred to enable the Company to prepay the Loan in whole or in part. "Maturity Date" shall have the meaning assigned thereto in Section 2.04. "Multiemployer Plan" means a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Available Cash" from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other noncash form) therefrom, in each case net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or 13 accrued as a liability under GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition, (iii) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition and (iv) appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition. "Net Cash Proceeds" means, with respect to any issuance or sale of New Notes by the Company or any Subsidiary, the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Note" means the Note substantially in the form attached hereto as Exhibit A. "Notice Event" shall have the meaning assigned thereto in Section 5.08. "NRG Plan" shall have the meaning assigned thereto in the Recitals. "Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary or Clerk of the Company. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Lender. The counsel may be an employee of or counsel to the Company or the Lender. "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor. "Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in (i) a Restricted Subsidiary, the Company or a Person which will, upon the 14 making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business; (ii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person's primary business is a Related Business; (iii) Temporary Cash Investments; (iv) receivables owing to the Company or any Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; (v) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (vi) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; (vii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments; and (viii) any Investment pursuant to and in accordance with the terms of the Co-Investment Agreement. "Permitted Liens" means: (a) Liens for taxes, assessments or other governmental charges not yet delinquent or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or such Subsidiary, as the case may be, in accordance with GAAP; (b) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other like Liens arising in the ordinary course of business in respect of obligations which are not yet due or which are bonded or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or such Subsidiary, as the case may be, in accordance with GAAP; (c) pledges or deposits in connection with workmen's compensation, unemployment insurance and other social security legislation; (d) deposits to secure the performance of bids, tenders, trade or government contracts (other than for 15 borrowed money), leases, licenses, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (e) easements (including reciprocal easement agreements), rights-of-way, building, zoning and similar restrictions, utility agreements, covenants, reservations, restrictions, encroachments, changes, and other similar encumbrances or title defects incurred, or leases or subleases granted to others, in the ordinary course of business, which do not in the aggregate materially detract from the aggregate value of the properties of the Company and its Subsidiaries, taken as a whole or in the aggregate materially interfere with or adversely affect in any material respect the ordinary conduct of the business of the Company and its Subsidiaries on the properties subject thereto, taken as a whole; (f) Bankers' liens arising by operation of law; (g) Liens on documents of title and the property covered thereby securing Indebtedness in respect of any Commercial L/Cs; (h) (i) mortgages, liens, security interests, restrictions or encumbrances that have been placed by any developer, landlord or other third party on property over which the Company or any Subsidiary of the Company has easement rights or on any Leased Property and subordination or similar agreements relating thereto and (ii) any condemnation or eminent domain proceedings affecting any real property; (i) Liens on goods (and Proceeds thereof) held by the Company or any of its Subsidiaries to be sold on a consignment basis in the ordinary course of business; (j) leases or subleases to third parties; (k) Liens in connection with workmen's compensation obligations and general liability exposure of the Company and its Subsidiaries; and (l) Liens securing Indebtedness Incurred under Section 6.01(b)(ii) or (iii). "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. 16 "Plan" means at any particular time, any employee benefit plan as defined in Section 3(3) of ERISA and not excluded by Section 4(b) of ERISA and in respect of which the Company or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Preferred Stock" as applied to the Capital Stock of any corporation means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, "refinances" and "refinanced" shall have a correlative meaning) any Indebtedness existing on the Closing Date or Incurred in compliance with this Agreement (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary (to the extent permitted in this Agreement) and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness; provided, however, that (i) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced and (iii) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced; provided further, however, that Refinancing Indebtedness shall not include (x) Indebtedness of a Restricted Subsidiary that refinances Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary. "Register" shall have the meaning assigned thereto in Section 2.10(b). 17 "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as from time to time in effect. "Related Business" means those businesses in which the Company or any of its Subsidiaries is engaged on the date of this Agreement, or which are directly related thereto. "Reorganization" means with respect to a Multiemployer Plan, the condition that such Plan is in reorganization as such term is used in Section 4241 of ERISA. "Reportable Event" means any of the events set forth in Section 4043(b) of ERISA other than those events as to which the thirty day notice period is waived under Sections .l3, .14, .16, .18, .19 or .20 of PBGC Reg. 2615. "Requirement of Law" means, as to any Person, the Articles or Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, order, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property, or to which such Person or any of its property is subject. "Responsible Officer" means, with respect to any Person, the president, chief executive officer, the chief operating officer, the chief financial officer, treasurer, controller or any vice president of such Person. "Restricted Payment" shall have the meaning assigned thereto in Section 6.02(a). "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "Single Employer Plan" means any Plan which is covered by Title IV of ERISA and which is not a Multiemployer Plan. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred). "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Closing Date or 18 thereafter Incurred) which is subordinate or junior in right of payment to the Note pursuant to a written agreement. "Subsidiary" of any Person means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person or (ii) one or more Subsidiaries of such Person. "Successor Company" shall have the meaning assigned hereto in Section 7.01(i). "Temporary Cash Investments" means any of the following: (i) any investment in direct obligations of the United States of America or any agency thereof or obligations Guaranteed by the United States of America or any agency thereof, (ii) investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits aggregating in excess of $300,000,000 (or the foreign currency equivalent thereof), (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) or (ii) above entered into with a bank meeting the qualifications described in clause (ii) above, and (iv) investments in commercial paper, maturing not more than six months after the date of acquisition, issued by the Lender or the parent corporation of the Lender, and commercial paper with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. or A-1" (or higher) according to Standard and Poor's Ratings Group. "Trade Payables" means, with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services. "Transferee" shall have the meaning set forth in Section 9.06(b). "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time. 19 "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either (A) the Subsidiary to be so designated has total consolidated assets of $1,000 or less or (B) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 6.02. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation (x) the Company's Consolidated Coverage Ratio would exceed 1.6:1.00 and (y) no Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Lender by promptly filing with the Lender a copy of the resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "Voting Stock" of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors. "Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or another Wholly Owned Subsidiary. SECTION 1.02. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) as used herein and in the Note and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Company and its Subsidiaries not defined in Section 1.01 and accounting terms partly defined in Section 1.01 to the extent not defined shall have the respective meanings given to them under GAAP. All computations determining compliance with financial covenants or terms, including definitions used therein, shall be prepared in accordance with generally accepted accounting principles in effect at the time of the preparation of, and in conformity with those used to 20 prepare, the historical financial statements of the Company; (3) "or" is not exclusive; (4) "including" means including without limitation; (5) words in the singular include the plural and words in the plural include the singular; (6) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured indebtedness; (7) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP and accretion of principal on such security shall be deemed to be the Incurrence of Indebtedness; (8) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; (9) unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Note or any certificate or other document made or delivered pursuant hereto; (10) the words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, Section, schedule and exhibit references are to this Agreement unless otherwise specified; and (11) as used in this Agreement, references to a fiscal year of the Company identified only by a year refer to the fiscal year of the Company ended on the Fiscal Date at the end of the fourth fiscal quarter of the Company which falls in the immediately succeeding calendar year. References to the last day of any fiscal year or fiscal quarter of the Company, or to a fiscal year or quarter ended on a certain date, shall be deemed to refer to the Fiscal Date at the end of such fiscal year or quarter. 21 ARTICLE 2 Loan SECTION 2.01. Loan. Subject to the terms and conditions hereof, the Lender agrees to make a loan in Dollars (the "Loan") to the Company on the Closing Date, in an aggregate principal amount of forty-five million dollars ($45,000,000). SECTION 2.02. Use of Proceeds. The proceeds of the Loan shall be used for the purposes set forth in the NRG Plan and shall be applied in accordance with the NRG Plan. SECTION 2.03. Borrowing. The Company shall borrow the entire amount of the Loan on the Closing Date. SECTION 2.04. Maturity; Refinancing. (a) The Loan will mature on the date that is sixty months following the Closing Date (the "Maturity Date"). (b) The Company hereby covenants and agrees to use its reasonable best efforts to obtain Loan Refinancing the Net Cash Proceeds of which will enable and permit the Company to prepay the Loan in its entirety, including principal and interest thereon. SECTION 2.05. Optional and Mandatory Prepayments; Repayments of Loans. (a) The Company may at any time and from time to time prepay the Loan, in whole or in part, without premium or penalty, upon at least five days irrevocable notice to the Lender. If such notice is given, the Company shall make such prepayment, and the payment amount specified in such notice shall be due and payable, on the date specified therein. Partial prepayments of the Loan shall be in an aggregate principal amount equal to the lesser of (A) $2,000,000, or a whole multiple of $1,000,000 in excess thereof and (B) the aggregate unpaid principal amount of the Loan. (b) (i) If, subsequent to the Closing Date, the Company or any of its Subsidiaries shall obtain any Loan Refinancing, 100% of the Net Cash Proceeds thereof shall be promptly applied toward the prepayment of the Loan. (ii) The Company shall give the Lender at least one Business Day's notice of each prepayment or mandatory reduction pursuant to this Section 2.05(b) setting forth the date and amount thereof. 22 (c) Accrued interest on the amount of any prepayments shall be paid on the date of such prepayment. SECTION 2.06. Interest Rate and Payment Dates. (a) The Loan shall bear interest for the period from and including the date the Loan is made to, but excluding, the maturity date thereof on the unpaid principal thereof at a rate per annum equal to the Base Rate. (b) If all or a portion of (i) the principal amount of the Loan or (ii) any interest payable thereon shall not be paid when due (whether at the stated maturity, by acceleration or otherwise) the Loan, and any such overdue amount shall, without limiting the rights of the Lender under Section 8, bear interest at a rate per annum which is 2.00% above the Base Rate from the date of such non-payment until paid in full (as well after as before judgment). (c) Interest shall be payable in arrears on each Interest Payment Date. SECTION 2.07. Computation of Interest and Fees. Interest in respect of the Loan, shall be calculated on the basis of a 365 (or 366 as the case may be) day year for the actual days elapsed. SECTION 2.08. Treatment of Payments. (a) Whenever any payment received by the Lender under this Agreement or the Note is insufficient to pay in full all amounts then due and payable to the Lender under this Agreement or the Note such payment shall be applied by the Lender in the following order: First, to the payment of fees and expenses due and payable to the Lender under and in connection with this Agreement and the Note including the payment of all expenses due and payable under Section 9.05; Second, to the payment of interest then due and payable on the Loan; and Third, to the payment of the principal amount of the Loan which is then due and payable; or (b) All payments (including prepayments) to be made by the Company on account of principal, interest and fees shall be made without set-off or counterclaim and shall be made to the Lender, for the account of the Lender at the office of the Lender located at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403 in lawful money of the United States of America and in immediately available funds. If any payment hereunder would become due and payable on a day other than a Business Day, such payment shall become due and payable on the next succeeding Business Day and, with respect to payments of 23 principal, interest thereon shall be payable at the then applicable rate during such extension. SECTION 2.9. Indemnity. The Company agrees to indemnify the Lender and to hold the Lender harmless from any loss or expense (but without duplication of any amounts payable as default interest) which the Lender may sustain or incur as a consequence of default by the Company in making any prepayment after the Company has given a notice in accordance with Section 2.05. This covenant shall survive termination of this Agreement and repayment of the Loan. SECTION 2.10. Repayment of the Loan; Evidence of Debt. (a) The Company hereby unconditionally promises to pay to the Lender the then unpaid principal amount of the Loan in accordance with the terms hereof and the Note. The Company hereby further agrees to pay interest on the unpaid principal amount of the Loan from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.06. (b) The Lender shall maintain a Register (the "Register") in which shall be recorded (i) the amount of the Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to the Lender hereunder and (iii) the amount of any sum received by the Lender hereunder from the Company. (c) The entries made in the Register to the extent permitted by applicable law, shall be prima facie evidence of the existence and amounts of the obligations of the Company therein recorded; provided, however, that the failure of the Lender to maintain the Register, or any error therein, shall not in any manner affect the obligation of the Company to repay (with applicable interest) the Loan made to the Company by the Lender in accordance with the terms of this Agreement. (d) The Company agrees that, upon the request of the Lender, the Company will execute and deliver to the Lender the Note evidencing the Loan, with appropriate insertions as to date and principal amount. ARTICLE 3 Representations and Warranties In order to induce the Lender to enter into this Agreement and to make the Loan, the Company hereby represents and warrants to the Lender, as follows (all representations 24 and warranties are made as of the Closing Date and with respect to the entire period following the Closing Date during which any amounts are due and owing from the Company to the Lender hereunder, as if made at any time during such period): SECTION 3.01. No Change. There has been no change, and no development or event involving a prospective change, which has had or could reasonably be expected to have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of, the Company and its Subsidiaries taken as a whole. SECTION 3.02. Corporate Existence; Compliance with Law. Except for those exceptions to the following which the Lender has actual knowledge of on the Closing Date, each of the Company and its Subsidiaries (a) is a corporation duly organized and validly existing under the laws of the jurisdiction of its incorporation, (b) has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to use its corporate name and to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, (c) is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership, leasing or holding of its properties makes such qualification necessary, except such jurisdictions where the failure so to qualify would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, and (d) is in compliance with all applicable statutes, laws, ordinances, rules, orders, permits and regulations of any Governmental Authority (including those related to Hazardous Materials and substances), except where noncompliance would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole. Neither the Company nor any of its Subsidiaries has received any written communication from a Governmental Authority that alleges that the Company or any of its Subsidiaries is not in compliance, in all material respects, with all material federal, state, local or foreign laws, ordinances, rules and regulations. SECTION 3.03. Corporate Power; Authorization. Each of the Company and its Subsidiaries has the corporate power and authority to make, deliver and perform each of the Credit 25 Documents to which it is a party, and the Company has the corporate power and authority and legal right to borrow hereunder. Each of the Company and its Subsidiaries has taken all necessary corporate action to authorize the execution, delivery and performance of each of the Credit Documents to which it is or will be a party and the Company has taken all necessary corporate action to authorize the borrowings hereunder. No consent or authorization of, or filing with, any Person (including any Governmental Authority) is required in connection with the execution, delivery or performance by the Company or any of the Company's Subsidiaries, or for the validity or enforceability against the Company or any of the Company's Subsidiaries, of any Credit Document except for consents, authorizations and filings (a) which have been obtained or made and are in full force and effect, and except such consents, authorizations and filings, the failure to obtain or perform (i) which would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole and (ii) which would not adversely affect the validity or enforceability of any of the Credit Documents or the rights or remedies of the Lender thereunder. SECTION 3.04. Enforceable Obligations. This Agreement, and each of the other Credit Documents has been, duly executed and delivered on behalf of the Company. This Agreement and each of the other Credit Documents constitutes the legal, valid and binding obligation of the Company, and is enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). SECTION 3.05. No Legal Bar. The execution, delivery and performance of each Credit Document and the incurrence or issuance of and use of the proceeds of the Loan do not violate any Requirement of Law or any Contractual Obligation applicable to or binding upon the Company or any Subsidiary of the Company or any of their respective properties or assets, in any manner which, individually or in the aggregate, (i) would have a material adverse effect on the ability of the Company or any such Subsidiary to perform its obligations under the Credit Documents to which it is a party, (ii) would give rise to any liability on the part of the Lender, or (iii) would have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole, and do not result in the creation or imposition of any Lien on any of its properties or assets 26 pursuant to any Requirement of Law applicable to it, as the case may be, or any of its Contractual Obligations, except for Permitted Liens. SECTION 3.06. No Material Litigation. No litigation by, investigation known to the Company by, or proceeding of, any Governmental Authority is pending against the Company or any of its Subsidiaries with respect to the validity, binding effect or enforceability of any Credit Document, the Loan made hereunder or the use of proceeds thereof. No lawsuits, claims, proceedings or investigations pending or, to the best knowledge of the Company, threatened against or affecting the Company or a Subsidiary of the Company or any of their respective properties, assets, operations or businesses, in which there is a probability of an adverse determination that is reasonably likely, if adversely decided, to have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole. SECTION 3.07. Investment Company Act. Neither the Company nor any Subsidiary of the Company is an "investment company" or a company "controlled" by an "investment company" (as each of the quoted terms is defined or used in the Investment Company Act of 1940, as amended). SECTION 3.08. Federal Regulation. No part of the proceeds of the Loan are being or are to be used for any purpose which violates the provisions of Regulation G, T, U or X of the Board of Governors of the Federal Reserve System. Neither the Company nor any of its Subsidiaries is engaged or will engage, principally or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under said Regulation U. SECTION 3.09. No Default. The Company and each of its Subsidiaries have performed all material obligations required to be performed by them under their respective Contractual Obligations on and after the Closing Date and they are not (with or without the lapse of time or the giving of notice, or both) in breach or default in any respect thereunder, except to the extent that such breach or default would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole. Neither the Company nor any of its Subsidiaries is in default under any material judgment, order or decree of any court, administrative agency or commission or other governmental authority or instrumentality, domestic or 27 foreign, applicable to it or any of its respective properties, assets, operations or business, except to the extent that any such defaults would not, in the aggregate, have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole. SECTION 3.10. Ownership of Property; Liens. Each of the Company and its Subsidiaries has good and valid title to all of its material tangible and intangible personal property, in each case free and clear of all mortgages, liens, security interests or encumbrances of any nature whatsoever except Permitted Liens. With respect to real property or interests in real property, as of the Closing Date, each of the Company and its Subsidiaries has (i) fee title to all of the real property listed on Schedule 3.10 (each, a "Fee Property"), and (ii) good and valid title to the leasehold estates in all of the real property leased by it and listed on Schedule 3.10 under the heading "Leased Properties" (each, a "Leased Property"), in each case free and clear of all mortgages, liens, security interests, easements, covenants, rights-of-way and other similar restrictions of any nature whatsoever, except (A) Permitted Liens, (B) any conditions that may be shown by a current, accurate survey or physical inspection of any Fee Property or Leased Property, (C) as to Leased Property, the terms and provisions of the respective lease therefor and any matters affecting the fee title and any estate superior to the leasehold estate related thereto, and (D) title defects, or leases or subleases granted to others, which are not material to the Fee Properties or the Leased Properties, as the case may be, taken as a whole. The Fee Properties and the Leased Properties (collectively the "Real Properties") constitute, as of the Closing Date, all of the real property owned in fee or leased by the Company and its Subsidiaries. SECTION 3.11. ERISA. None of the Company, any Subsidiary of the Company or any Commonly Controlled Entity would be liable for any amount pursuant to Section 4062, 4063, 4064 or 4069 of ERISA, if any Single Employer Plan were to terminate. Neither the Company nor any Commonly Controlled Entity has been involved in any transaction that would cause the Company to be subject to liability with respect to a Plan to which the Company or any Commonly Controlled Entity contributed or was obligated to contribute during the six-year period ending on the date this representation is made or deemed made under Section 4062, 4069 or 4212(c) of ERISA. Neither the Company nor any Commonly Controlled Entity has incurred any material liability under Title IV of ERISA which could become or remain a liability of the Company after the Closing Date. None of the Company, any Subsidiary of the Company, or any director, officer or employee thereof, or any 28 of the Plans (to the best knowledge of the Company with respect to any Multiemployer Plan), or any trust created thereunder, or any fiduciary thereof, has engaged in a transaction or taken any other action or omitted to take any action involving any Plan which could constitute a prohibited transaction within the meaning of Section 406 of ERISA which is not otherwise exempted, or would cause it to be subject to either a material liability or civil penalty assessed pursuant to Section 409 or 502 of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code. Each of the Plans (to the best knowledge of the Company with respect to any Multiemployer Plan) has been operated and administered in all material respects in accordance with applicable laws, including but not limited to ERISA and the Code. There are no material pending or, to the best knowledge of the Company, threatened claims by or on behalf of any of the Plans or any fiduciary, by any employee or beneficiary covered under any such Plan, or otherwise involving any such Plan or fiduciary (other than routine claims for benefits). No condition exists and no event has occurred with respect to any Multiemployer Plan which presents a material risk of a complete or partial withdrawal under Subtitle E of Title IV of ERISA, nor has the Company or any Commonly Controlled Entity been notified that any such Multiemployer Plan is insolvent or in reorganization within the meaning of Section 4241 of ERISA. Neither the Company nor any Commonly Controlled Entity nor any Subsidiary has been a party to any transaction or agreement to which the provisions of Section 4204 of ERISA were applicable. Neither the Company nor any Commonly Controlled Entity nor any Subsidiary is obligated to contribute to a Multiemployer Plan, on behalf of any current or former employee of the Company, any Commonly Controlled Entity or any Subsidiary. None of the Plans or any trust established thereunder has incurred any "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each of the Plans. No contribution failure has occurred with respect to any Plan sufficient to give rise to a lien under Section 302(f) of ERISA. SECTION 3.12. Copyrights, Patents, Trademarks and Licenses. The Company or a Subsidiary of the Company owns or has the right to use, without payment to any other party, all material patents, patent applications, trademarks (registered or unregistered), trade names, service marks and copyrights owned, used or filed by or licensed to the Company and its Subsidiaries. To the best knowledge of the Company, no claims are pending by any Person with respect to the ownership, validity, enforceability or the Company's or any Subsidiary's use of any such patents, patent applications, trademarks (registered or unregistered), trade names, service marks, copyrights challenging or questioning the validity or 29 effectiveness of any of the foregoing, in any jurisdiction, domestic or foreign. SECTION 3.13. Environmental Matters. (a) To the best knowledge of the Company, the Real Properties do not contain in, on or under including the soil and groundwater thereunder, any Hazardous Materials in amounts or concentrations that constitute or constituted a material violation of, or could reasonably give rise to material liability under, Environmental Laws. (b) To the best knowledge of the Company, the Real Properties and all operations and facilities at the Real Properties are in material compliance with all Environmental Laws, and there is no contamination or violation of any Environmental Law which could materially interfere with the continued operation of, or materially impair the fair salable value of, the Real Properties. (c) To the best knowledge of the Company, neither the Company nor any of its Subsidiaries has received or is aware of any complaint, notice of violation, alleged violation, or notice of investigation or of potential liability under Environmental Laws with regard to the Real Properties or the operations of the Company or its Subsidiaries, nor does the Company or any of its Subsidiaries have knowledge that any such action is being contemplated, considered or threatened. (d) To the best knowledge of the Company, Hazardous Materials have not been generated, treated, stored, disposed of, at, on or under the Real Properties, nor have any Hazardous Materials been transported from the Real Properties, in material violation of or in a manner that could reasonably give rise to liability under any Environmental Laws. (e) There are no governmental administrative actions or judicial proceedings pending or, to the knowledge of the Company and its Subsidiaries, threatened, under any Environmental Law to which the Company or any of its Subsidiaries is a party with respect to the Real Properties, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements, other than permits authorizing operations at facilities at the Real Properties, outstanding under any Environmental Law with respect to the Real Properties. 30 ARTICLE 4 Conditions Precedent SECTION 4.01. Conditions to Loans. The obligation of the Lender to make the Loan on the Closing Date is subject to the satisfaction, or waiver by the Lender, immediately prior to or concurrently with the making of the Loan, of the following conditions: (a) Note. The Lender shall have received the Note conforming to the requirements hereof and executed by a duly authorized officer of the Company. (b) Consummation of Acquisition and NRG Plan. The Acquisition shall have been consummated at the Closing (as defined in the Acquisition Agreement) and concurrently therewith the NRG Plan shall have been consummated on the Effective Date (as defined in the NRG Plan). (c) Fees. The Lender shall have received all fees, expenses and other consideration as required to be paid or delivered pursuant to Section 9.05 on or before the Closing Date. ARTICLE 5 Affirmative Covenants The Company hereby agrees that, so long as the Loan remains outstanding and unpaid, or any other amount is owing to the Lender hereunder or under any of the other Credit Documents, it shall, and, in the case of the agreements contained in Sections 5.04 through 5.07 and 5.09, the Company shall cause each of its Subsidiaries to: SECTION 5.01. Financial Statements. Furnish to the Lender: (a) as soon as available after the end of each fiscal year of the Company, but in any event within 10 days of filing them with the Securities and Exchange Commission, a copy of the consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of stockholders' equity and cash flows and the consolidated statements of income of the Company and its Subsidiaries for such fiscal year, setting forth in each case (other than for the financial statements delivered with respect to the first fiscal year of the Company ended following the Closing Date) in comparative form the figures for the previous year, reported on by independent 31 certified public accountants of nationally recognized standing; and (b) as soon as available after the end of each of the first three quarterly periods of each fiscal year of the Company, but in any event within 10 days of filing them with the Securities and Exchange Commission, the unaudited consolidated balance sheet of the Company and its Subsidiaries as at the end of each such quarter and the related unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries for such quarterly period and the portion of the fiscal year of the Company through such date, setting forth in each case (other than for the financial statements delivered with respect to fiscal quarters occurring during the first fiscal year of the Company ended following the Closing Date) in comparative form the figures for the corresponding quarter in, and year to date portion of, the previous year; together with a comparison showing the figures for such periods in the budget prepared by the Company and furnished to the Lender, certified by the chief financial officer, controller or treasurer of the Company as being fairly stated in all material respects. SECTION 5.02. Certificates; Other Information. Furnish to the Lender: (a) concurrently with the delivery of the consolidated financial statements referred to in Section 5.01(a), so long as not contrary to the then current recommendations of the American Institute of Certified Accountants, a letter from the independent certified public accountants reporting on such financial statements stating that in making the examination necessary to express their opinion on such financial statements, nothing has come to their attention which would lead them to believe that there exists any Default or Event of Default under Sections 6.01 and 6.02, except as specified in such letter; (b) within 15 days of the delivery of the financial statements referred to in Sections 5.01(a) and (b) (except that the certificate referred to in clause (i) below shall be delivered concurrently with such financial statements), a certificate of the chief financial officer of the Company (i) stating that, to the best of such officer's knowledge, each of the Company and its respective Subsidiaries has observed or performed all of its covenants and other agreements, and satisfied every material condition, contained in this Agreement and the other Credit Documents to be observed, performed or satisfied by it, and that such officer has obtained no 32 knowledge of any Default or Event of Default except as specified in such certificate, (ii) showing in detail as of the end of the related fiscal period the figures and calculations supporting such statement in respect of Sections 6.02 and 6.05 and (iii) if not specified in the financial statements delivered pursuant to Section 5.01, specifying the aggregate amount of interest paid or accrued by the Company and its Subsidiaries, and the aggregate amount of depreciation, depletion and amortization charged on the books of the Company and its Subsidiaries, during such accounting period; and (c) promptly, such additional financial and other information as the Lender may from time to time reasonably request. SECTION 5.03. SEC Reports. The Company shall furnish to the Lender, promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available to the public generally by the Company or any of its Subsidiaries, if any, and all regular and periodic reports and all final registration statements and final prospectuses, if any, filed by the Company or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any Governmental Authority succeeding to any of its functions. SECTION 5.04. Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations and liabilities of whatever nature, except (a) when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Company or any of its Subsidiaries, as the case may be, (b) for delinquent obligations which do not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole and (c) for trade and other accounts payable in the ordinary course of business which are not overdue for a period of more than 90 days or, if overdue for more than 90 days, as to which a dispute exists and adequate reserves in conformity with GAAP have been established on the books of the Company or any of its Subsidiaries, as the case may be. SECTION 5.05. Conduct of Business and Maintenance of Existence. Except as otherwise contemplated or permitted by the Co-Investment Agreement or the Liquidating Asset Management Agreement, continue to engage in business of the same general type as now conducted by it, and preserve, renew and keep in full force and effect its corporate existence and 33 take all reasonable action to maintain all material rights, material privileges, franchises, patents, patent applications, copyrights, trademarks and trade names, necessary or desirable in the normal conduct of its business except for rights, privileges, franchises, patents, patent applications, copyrights, trademarks and tradenames the loss of which would not in the aggregate have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole, and comply with all applicable Requirements of Law except to the extent that the failure to comply therewith would not, in the aggregate, have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole. SECTION 5.06. Maintenance of Property; Insurance. (a) Keep all property useful and necessary in its business in good working order and condition (ordinary wear and tear excepted); and (b) Maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and with only such deductibles as are usually maintained by, and against at least such risks (but including, in any event, public liability insurance) as are usually insured against in the same general area, by companies engaged in the same or a similar business and furnish to the Lender, upon written request of the Lender, full information as to the insurance carried; provided that the Company may implement programs of self-insurance in the ordinary course of business and in accordance with industry standards for a company of similar size so long as reserves are maintained in accordance with GAAP for the liabilities associated therewith. SECTION 5.07. Inspection of Property; Books and Records; Discussions. Keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities which permit financial statements to be prepared in conformity with GAAP and all Requirements of Law; and permit representatives of the Lender upon reasonable notice (but no more frequently than monthly), to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be requested upon reasonable notice, and to discuss the business, operations, assets and financial and other condition of the Company and its Subsidiaries with officers and employees thereof and with their independent certified public accountants. 34 SECTION 5.08. Notices. Subject to the last sentence of this section promptly give notice to the Lender of any of the following (a "Notice Event"): (a) of the occurrence of any Default or Event of Default; (b) of any (i) default or event of default under any instrument or other agreement, guarantee or collateral document of the Company or any of its Subsidiaries which default or event of default has not been waived and would have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole, or (ii) litigation, investigation or proceeding which may exist at any time between the Company or any of its Subsidiaries and any Governmental Authority, or receipt of any notice of any environmental claim or assessment against the Company or any of its Subsidiaries by any Governmental Authority which in any such case would have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole; (c) of any litigation or proceeding against the Company or any of its Subsidiaries (i) in which more than $500,000 of the amount claimed is not covered by insurance or (ii) in which injunctive or similar relief is sought which if obtained would have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole; (d) of the following events, as soon as practicable after, and in any event within 30 days after, the Company knows or has reason to know thereof: (i) the occurrence of any Reportable Event with respect to any Plan which Reportable Event could reasonably result in material liability to the Company and its Subsidiaries taken as a whole, or (ii) the institution of proceedings or the taking of any other action by PBGC, the Company or any Commonly Controlled Entity to terminate, withdraw or partially withdraw from any Plan and, with respect to a Multiemployer Plan, the Reorganization or Insolvency of the Plan, in each of the foregoing cases which could reasonably result in material liability to the Company and its Subsidiaries taken as a whole, and in addition to such notice, deliver to the Lender whichever of the following may be applicable: (A) a certificate of a Responsible Officer of the Company setting forth details as to such Reportable Event and the action that the 35 Company or such Commonly Controlled Entity proposes to take with respect thereto, together with a copy of any notice of such Reportable Event that may be required to be filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent to institute such proceedings or any notice to PBGC that such Plan is to be terminated, as the case may be; and (e) of a material adverse change known to the Company or its Subsidiaries in the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole. Each notice pursuant to this Section 5.08 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and (in the cases of clauses (a) through (d)) stating what action the Company proposes to take with respect thereto. The Company shall not be deemed in breach or default of its obligations under this Section 5.08 due to the failure to notify the Lender of any Notice Event of which the Lender shall have had actual knowledge as of the date notice of such Notice Event was to have been provided. SECTION 5.09. Environmental Laws. (a) Comply with, and use all reasonable efforts to insure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws and obtain and comply with and maintain, and require that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, registrations or permits required by Environmental Laws, except to the extent that failure to do so would not have any reasonable likelihood of having a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole or on the validity or enforceability of any of the Credit Documents or the rights and remedies of the Lender thereunder; (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions, required under applicable Environmental Laws, and promptly comply with all lawful orders and directives of all Governmental Authorities respecting Environmental Laws, except to the extent that the same are being contested in good faith by appropriate proceedings; and (c) In regard to this Agreement or in any way relating to the Company or its Subsidiaries or their current or former operations, defend, indemnify and hold harmless the 36 Lender, and its respective employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to Hazardous Material or Environmental Laws, including any orders, requirements or demands of Governmental Authorities related thereto, including reasonable attorney's and consultant's fees, investigation and laboratory fees, remediation costs, court costs and litigation expenses, except to the extent that any of the foregoing arise out of the gross negligence or willful misconduct of the party seeking indemnification therefor. The agreements in this Section 5.09(c) shall survive repayment of the Loan and all other amounts payable hereunder. SECTION 5.10. Further Instruments and Acts. Upon request of the Lender, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Agreement. SECTION 5.11 Taxes. Each of the Company and its Subsidiaries will file or cause to be filed all material tax returns which, to the knowledge of the Company, are required to be filed and will pay all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any amount of which is currently being contested in good faith by appropriate proceeds and with respect to which reserves (or other sufficient provisions) in conformity with GAAP have been provided on the books of the Company or its Subsidiaries, as the case may be). ARTICLE 6 Negative Covenants So long as the Loan remains outstanding and unpaid, or any other amount is owing to the Lender hereunder or under any other Credit Document (it being understood that each of the permitted exceptions to each of the covenants in this Article 6 is in addition to, and not overlapping with, any other of such permitted exceptions except to the extent expressly provided): 37 SECTION 6.01. Limitation on Indebtedness. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, Incur any Indebtedness; provided, however, that on or after the first anniversary of the Closing Date the Company may Incur Indebtedness if on the date thereof the Consolidated Coverage Ratio would be greater than 1.6:1.0. (b) Notwithstanding Section 6.01(a), the Company and its Restricted Subsidiaries may Incur the following Indebtedness: (i) Indebtedness (A) of the Company to any Subsidiary, and (B) of any Subsidiary to the Company or any other Subsidiary; (ii) Indebtedness represented by (w) the Loan, (x) any Indebtedness outstanding or to be issued or made pursuant to the NRG Plan, (y) any Co-Investment Indebtedness and (z) any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (ii) or Section 6.01(a); (iii) Indebtedness of the Company or any of its Subsidiaries in an aggregate principal amount at any one time outstanding (excluding Indebtedness that is permitted to be incurred pursuant to clause (ii) of this Section 6.01(b)) not in excess of $5,000,000; (iv) Indebtedness in connection with workmen's compensation obligations and related general liability exposure of the Company and its Subsidiaries; and (v) Capitalized Lease Obligations in respect of (A) sale/leaseback transactions of property owned by the Company on the Closing Date, and (B) fixtures and equipment and other personal property acquired after the Closing Date. (c) The Company shall not Incur any Indebtedness pursuant to Section 6.01(b) if the proceeds thereof are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any Subordinated Obligations unless such Indebtedness shall be subordinated to the Loan to at least the same extent as such Subordinated Obligations. SECTION 6.02. Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company) except 38 dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and except dividends or distributions payable to the Company or another Restricted Subsidiary (and, if such Restricted Subsidiary is not wholly owned, to its other shareholders on a pro rata basis), (ii) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any Restricted Subsidiary held by Persons other than the Company or another Restricted Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, or (iv) make any Investment (other than a Permitted Investment) in any Person (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Investment being herein referred to as a "Restricted Payment") if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and be continuing (or would result therefrom); (2) the Consolidated Coverage Ratio of the Company would be less than 1.6:1.0; or (3) the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a resolution of the Board of Directors) declared or made subsequent to the Closing Date would exceed the sum of: (A) 25% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fourth fiscal quarter in 1995, to the end of the most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); and (B) the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Closing Date (other than an issuance or sale to a Subsidiary of the Company or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries). 39 (b) The provisions of Section 6.02(a) shall not prohibit: (i) any purchase or redemption of Capital Stock of the Company or Subordinated Obligations made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries); provided, however, that (A) such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale shall be excluded from clause (3)(B) of Section 6.02(a); (ii) any purchase or redemption of Subordinated Obligations made by exchange for, or out of the proceeds of the substantially concurrent sale of, Indebtedness of the Company which is permitted to be Incurred pursuant to Section 6.01; provided, however, that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments; (iii) any purchase or redemption of Subordinated Obligations from Net Available Cash to the extent permitted by Section 6.04; provided, however, that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments; (iv) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with Section 6.02(a); provided, however, that such dividend shall be included in the calculation of the amount of Restricted Payments; or (v) so long as the entire amount of the outstanding principal and accrued interest on the Loan shall not have been accelerated and become due and payable pursuant to Section 8.02 or so long as such acceleration shall have been rescinded, the payment of dividends upon or the redemption of the Company's Class A Preferred Stock in accordance with the terms of such stock. SECTION 6.03. Limitation on Restrictions on Distributions from Subsidiaries. The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (i) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or 40 other obligations owed to the Company, (ii) make any Loan or advances to the Company or (iii) transfer any of its property or assets to the Company, except: (1) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Closing Date; (2) any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (1) of this Section or this clause (2) or contained in any amendment to an agreement referred to in clause (1) of this Section or this clause (2); provided, however, that the encumbrances and restrictions contained in any such refinancing agreement or amendment are no less favorable to the Lender than encumbrances and restrictions contained in such agreements; (3) in the case of clause (iii), any encumbrance or restriction (A) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract or (B) contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restrictions restrict the transfer of the property subject to such security agreements; and (4) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition. SECTION 6.04. Limitation on Sales of Assets and Subsidiary Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, make any Asset Disposition unless (i) the Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by any other Person assuming sole responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the fair market value of the shares and assets subject to such Asset Disposition, (ii) at least 80% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash and (iii) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) (A) first, to the extent the Company elects (or is required by the terms of any Senior Indebtedness or Indebtedness of a Wholly Owned 41 Subsidiary), to prepay, repay or purchase such Indebtedness of a Wholly Owned Subsidiary (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within 6 months after the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (B) second, to the extent of the balance of Net Available Cash after application in accordance with clause (A), to the extent the Company or such Restricted Subsidiary elects, to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) within 6 months from the later of such Asset Disposition or the receipt of such Net Available Cash; and (C) third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to repay the Loan, provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A) or (C) above, the Company or such Restricted Subsidiary shall retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing provisions of this Section, the Company and the Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section except to the extent that the aggregate Net Available Cash from all Asset Dispositions which are not applied in accordance with this Section exceed $500,000. For the purposes of this Section, the following are deemed to be cash: (x) the assumption of Indebtedness of the Company (other than Disqualified Stock of the Company) or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition and (y) securities received by the Company or any Restricted Subsidiary from the transferee that are promptly converted by the Company or such Restricted Subsidiary into cash. SECTION 6.05. Limitation on Transactions with Affiliates. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") on terms (i) that are less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate and (ii) that, in the event such Affiliate Transaction involves an aggregate amount in excess of 42 $500,000, are not in writing and have not been approved by a majority of the members of the Board of Directors having no personal stake in such Affiliate Transaction. (b) The provisions of Section 6.05(a) shall not prohibit (i) any Restricted Payment permitted to be paid pursuant to Section 6.02, (ii) the performance of the Company's or Subsidiary's obligations under any employment contract, collective bargaining agreement, employee benefit plan, related trust agreement or any other similar arrangement heretofore or hereafter entered into in the ordinary course of business, (iii) payment of compensation to employees, officers, directors or consultants in the ordinary course of business, (iv) maintenance in the ordinary course of business of benefit programs or arrangements for employees, officers or directors, including vacation plans, health and life insurance plans, deferred compensation plans, and retirement or savings plans and similar plans or (v) any transaction between the Company and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries (v) any transaction between the Lender and the Company and (vi) any transaction pursuant to and in accordance with the Liquidating Asset Management Agreement. SECTION 6.06. Limitation on Liens. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or permit to exist any Lien on any of its property or assets (including Capital Stock), whether owned on the date of this Agreement or thereafter acquired, securing any obligation other than Permitted Liens. SECTION 6.07. Limitation on Lines of Business. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business, other than (i) those businesses in which the Company or such Restricted Subsidiary is engaged on the date of this Agreement (or which are directly related thereto) or (ii) those businesses in which the Company or any of its Subsidiaries may engage in connection with any Investment made pursuant to and in accordance with the terms of the Co-Investment Agreement. ARTICLE 7 Successor Company SECTION 7.01. When the Company May Merge or Transfer Assets. The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (i) the resulting, surviving or transferee Person (the "Successor Company") shall be a corporation organized and existing under the laws of the United 43 States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by an agreement supplemental hereto, executed and delivered to the Lender, in form satisfactory to the Lender, all the obligations of the Company under the Note and this Agreement; (ii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction, the Consolidated Coverage Ratio of the Successor Company would be greater than 1.6:1.0; (iv) immediately after giving effect to such transaction, the Successor Company shall have Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of the Company immediately prior to such transaction; and (v) the Company shall have delivered to the Lender an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Agreement. The Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement, but the predecessor Company in the case of a lease of all or substantially all its assets shall not be released from the obligation to pay the principal of and interest on the Note. Notwithstanding, the foregoing clauses (ii), (iii) and (iv), (1) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (2) the Company may merge with an Affiliate incorporated for the purpose of reincorporating the Company in another jurisdiction to realize tax or other benefits. 44 ARTICLE 8 Defaults and Remedies SECTION 8.01. Events of Default. An "Event of Default" occurs if: (1) the Company defaults in any payment of interest or any other amount (other than those specified in (2) below) with respect to the Loan when the same becomes due and payable and such default continues for a period of 10 days; (2) the Company (i) defaults in the payment of the principal of the Loan when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration or otherwise or (ii) fails to redeem or purchase the Note when required pursuant to this Agreement or the Note; (3) at any time during which the Lender shall own less than 26% of the outstanding common stock of the Company, or, persons designated by the Lender or which the Lender shall have the right to appoint shall constitute less than one-half of the Board of Directors: (i) any representation or warranty made or deemed made by the Company in any Credit Document shall prove to have been incorrect in any material respect on or as of the date, or at any time during the period, that such representation or warrranty is made or deemed made; (ii) the facts or circumstances giving rise to such incorrect representation or warranty would have a material adverse effect on the Company's ability to pay the amounts outstanding under the Loan (including principal and interest) as they become due and payable; and (iii) both of the conditions in preceding subclauses (i) and (ii) continue for 30 days after the notice specified below; (4) the Company fails to comply with Section 7.01 at any time during which the Lender shall own less than 26% of the outstanding common stock of the Company, or persons designated by the Lender or, which the Lender shall have the right to appoint shall constitute less than one-half of the Board of Directors; (5) the Company shall default in the observance or performance of any agreement contained in Section 5.08(a) or Article 6 of this Agreement; (6) the Company fails to comply with any of its agreements in the Credit Documents (other than those referred to in (1) through (5) above) and such failure 45 continues for 30 days after the notice specified below; provided that, in the case of Sections 5.04, 5.05 and 5.11, the Lender shall then own less than 26% of the outstanding common stock of the Company, or, persons designated by the Lender or which the Lender shall have the right to appoint shall constitute less than one-half of the Board of Directors; (7) Indebtedness of the Company or any Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $2,000,000 or its foreign currency equivalent at the time; (8) the Company or any Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for any substantial part of its property; or (D) makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; (9) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company or any Subsidiary in an involuntary case; (B) appoints a Custodian of the Company or any Subsidiary or for any substantial part of its property; or (C) orders the winding up or liquidation of the Company or any Subsidiary; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days; (10) any judgment or decree for the payment of money in excess of $2,000,000 or its foreign currency 46 equivalent at the time is entered against the Company or any Subsidiary and is not discharged and either (A) an enforcement proceeding has been commenced by any creditor upon such judgment or decree or (B) there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged, waived or the execution thereof stayed; (11) (i) any Person shall engage in any "prohibited transaction" (as defined in Section 4.06 of ERISA or Section 4975 of the Code) involving any Plan which is not otherwise exempted, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Lender, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the reasonable opinion of the Lender is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan; and in each case in clauses (i) through (v) above, such event or condition, together with all other such events or conditions relating to a Plan, if any, would be reasonably likely to subject the Company or any of its Subsidiaries to any tax, penalty or other liabilities in the aggregate material in relation to the business, assets, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole; or (12) any Credit Document shall cease, for any reason, to be in full force and effect or the Company or any of its Subsidiaries shall so assert in writing. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, 47 trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Default under clauses (3) and (6) is not an Event of Default until the Lender notifies the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". SECTION 8.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 8.01(8) or (9) with respect to the Company) occurs and is continuing, the Lender by notice to the Company may declare the principal of and accrued interest on the Loan to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 8.01(8) or (9) with respect to the Company (but not any Subsidiary) occurs, the principal of and interest on the Loan Note shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Lender. The Lender by notice to the Company may rescind an acceleration and its consequences. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 8.03. Other Remedies. If an Event of Default occurs and is continuing, the Lender may pursue any available remedy to collect the payment of principal of or interest on the Note or to enforce the performance of any provision of the Note or this Agreement. The Lender may maintain a proceeding even if it does not possess the Note or does not produce it in the proceeding. A delay or omission by the Lender in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 8.04. Waiver of Past Defaults. The Lender by notice to the Company may waive an existing Default and its consequences. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 8.05. Priorities. If the Lender collects any money or property pursuant to this Article 8, it shall pay out the money or property in the following order: FIRST: to itself in accordance with the priority set forth in Section 2.08; and 48 SECOND: to the extent of any excess, to the Company. SECTION 8.06. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. SECTION 8.07. Waiver of Stay or Extension Laws. The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Agreement; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Lender, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 9 Miscellaneous SECTION 9.01. Amendments and Waivers. Except as otherwise expressly set forth in this Agreement, no Credit Document nor any terms thereof may be amended, supplemented, waived or modified except in accordance with the provisions of this Section 9.01. SECTION 9.02. Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy or telex, if one is listed), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when sent, confirmation of receipt received, or, in the case of telex notice, when sent, answerback received, addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Note: 49 The Company: NRG Generating (U.S.) Inc. 1221 Nicollet Mall Minneapolis, MN 55403 Attention: President or Chief Executive Officer Telephone: (612) 373-5300 Telecopier:(612) 373-5430 With a copy to: Troutman Sanders NationsBank Plaza, Suite 5200 600 Peachtree Street N.E. Atlanta, Georgia 30308 Attention: Hazen Dempster Telephone: (404) 885-3000 Telecopier:(404) 885-3900 if to Lender NRG Energy, Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: Vice President, Business Development Telephone: (612) 373-5300 Telecopier:(612) 373-5430 With copies to: NRG Energy Inc. Legal Department 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: Vice President and General Counsel Telephone: (612) 373-5300 Telecopier (612) 373-5392 provided that any notice, request or demand to or upon the Lender pursuant to Section 2.05 shall not be effective until received. SECTION 9.03. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 9.04. Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered 50 pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Note. SECTION 9.05. Payment of Expenses and Taxes. The Company agrees (a) to pay or reimburse the Lender for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, the Credit Documents and any other documents prepared in connection herewith, and the consummation of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to the Lender not to exceed $100,000, (b) to pay or reimburse the Lender for all its costs and expenses incurred in connection with, and to pay, indemnify, and hold the Lender harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever arising out of or in connection with, the enforcement or preservation of any rights under any Credit Document and any such other documents, including reasonable fees and disbursements of counsel to the Lender incurred in connection with the foregoing, (c) to pay, indemnify, and to hold the Lender harmless from any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes (other than withholding taxes), if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, any Credit Document and any such other documents, and (d) to pay, indemnify, and hold the Lender and its respective Affiliates, officers and directors harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable fees and disbursements of counsel) which may be incurred by or asserted against the Lender or such Affiliates, officers or directors arising out of or in connection with any investigation, litigation or proceeding related to this Agreement, the other Credit Documents, the proceeds of the Loan and the transactions contemplated by or in respect of such use of proceeds, or any of the other transactions contemplated hereby, whether or not the Lender or such Affiliates, officers or directors is a party thereto, including any of the foregoing relating to the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Company, any of its Subsidiaries or any of the facilities and properties owned, leased or operated by the Company or any of its Subsidiaries (all the foregoing, collectively, the "indemnified liabilities"); provided that the Company shall have no 51 obligation hereunder with respect to indemnified liabilities of the Lender or any of its respective Affiliates, officers and directors arising from (i) the gross negligence or willful misconduct of the Lender or its respective directors or officers; (ii) legal proceedings commenced against the Lender by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such; (iii) legal proceedings commenced against the Lender by any Transferee; or (iv) actions taken by the Company either at the direction of the Board of Directors of the Company or pursuant to the Management Agreement at such time as persons designated by the Lender or which the Lender shall have the right to appoint shall constitute at least one-half of the Board. The agreements in his Section 9.05 shall survive repayment of the Note and all other amounts payable hereunder. SECTION 9.06. Successors and Assigns; Participations and Assignments. (a) This Agreement shall be binding upon and inure to the benefit of the Company, the Lender all future holders of the Note and the Loan, and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender. (b) The Company hereby agrees that the Lender may, in accordance with applicable law, at any time and from time to time assign all or any part of its rights and obligations under this Agreement and the Note to any Person (a "Transferee"); provided, however, that any rights the Lender may have pursuant to Article 3 and Section 8.01(3) shall not survive or be effective as to any Transferee. (c) The Company authorizes the Lender to disclose to any prospective Transferee any and all financial information in the Lender's possession concerning the Company and its Subsidiaries and Affiliates which has been delivered to the Lender by or on behalf of the Company, subject to receipt of a confidentiality agreement from such Prospective Transferee in form and substance reasonably satisfactory to the Company. SECTION 9.07. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. SECTION 9.08. Governing Law; No Third Party Rights. This Agreement and the Note and the rights and obligations of 52 the parties under this Agreement and the Note shall be governed by, and construed and interpreted in accordance with, the law of the State of New York and applicable laws of the United States of America. This Agreement is solely for the benefit of the parties hereto and their respective successors and assigns, and, except as set forth in Section 9.06, no other Persons shall have any right, benefit, priority or interest under, or because of the existence of, this Agreement. SECTION 9.09. Submission to Jurisdiction; Waivers. (a) Each party to this Agreement hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement or any of the other Credit Documents, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth in Section 9.02; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. (b) Each party hereto unconditionally waives trial by jury in any legal action or proceeding referred to in paragraph (a) above and any counterclaim therein. SECTION 9.10. Interest. Each provision in this Agreement and each other Credit Document is expressly limited so that in no event whatsoever shall the amount paid, or otherwise agreed to be paid, by the Company for the use, forbearance or detention of the money to be loaned under this Agreement or any other Credit Document or otherwise (including 53 any sums paid as required by any covenant or obligation contained herein or in any other Credit Document which is for the use, forbearance or detention of such money), exceed that amount of money which would cause the effective rate of interest to exceed the highest lawful rate permitted by applicable law (the "Highest Lawful Rate"), and all amounts owed under this Agreement and each other Credit Document shall be held to be subject to reduction to the effect that such amounts so paid or agreed to be paid which are for the use, forbearance or detention of money under this Agreement or such Credit Document shall in no event exceed that amount of money which would cause the effective rate of interest to exceed the Highest Lawful Rate. Notwithstanding any provision in this Agreement or any other Credit Document to the contrary, if the maturity of the Loan or the obligations in respect of the other Credit Documents are accelerated for any reason, or in the event of any prepayment of all or any portion of the Loan or the obligations in respect of the other Credit Documents by the Company or in any other event, earned interest on the Loan and such other obligations of the Company may never exceed the Highest Lawful Rate, and any unearned interest otherwise payable on the Loan or the obligations in respect of the other Credit Documents that is in excess of the Highest Lawful Rate shall be cancelled automatically as of the date of such acceleration or prepayment or other such event and (if theretofore paid) shall, at the option of the holder of the Loan or such other obligations, be either refunded to the Company or credited on the principal of the Loan. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the Highest Lawful Rate, the Company and the Lender shall, to the maximum extent permitted by applicable law, amortize, prorate, allocate and spread, in equal parts during the period of the actual term of this Agreement, all interest at any time contracted for, charged, received or reserved in connection with this Agreement. 54 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in New York, New York by their proper and duly authorized officers as of the day and year first above written. NRG GENERATING (U.S.) INC. by /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President and Chief Executive Officer NRG ENERGY, INC. by /s/ Craig A. Mataczynski Name: Craig A. Mataczynski Title: Vice President, Domestic Business Development 55 EXHIBIT A New York, New York April 30, 1996 NOTE FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a Delaware corporation (the "Company"), hereby promises to pay to the order of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the "Lender"), at the office of the Lender located at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403 in lawful money of the United States of America and in immediately available funds, the principal amount of FORTY FIVE MILLION DOLLARS ($45,000,000), or, if less, the aggregate unpaid principal amount of the loan made by the lender pursuant to Section 2.01 of the Loan Agreement referred to below (in either case, to be paid together with any accrued interest not required to be paid currently in cash), which sum shall be due and payable in such amounts and on such dates as are set forth in the Loan Agreement, dated as of April 30, 1996 between the Company and the Lender (the "Loan Agreement"; terms defined therein being used herein as so defined). The undersigned further agrees to pay interest at said office, in like money, from the date hereof on the unpaid principally amount hereof from time to time outstanding at the rates and on the dates specified in Section 2.06 of the Loan Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder of this Note of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. This Note is the Note referred to in the Loan Agreement, which Loan Agreement, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Loan Agreement, all upon the terms and conditions therein specified. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT. NRG GENERATING (U.S.) INC., by _________________________ Name: Leonard A. Bluhm Title: President and Chief Executive Officer 2 EX-10.5.2 12 EXHIBIT 10.5.2 NOTE DATED APRIL 30, 1996 FROM THE COMPANY TO NRG ENERGY IN THE PRINCIPLE AMOUNT OF $45,000,000. Exhibit 10.5.2 New York, New York April 30, 1996 NOTE FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a Delaware corporation (the "Company"), hereby promises to pay to the order of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the "Lender"), at the office of the Lender located at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403 in lawful money of the United States of America and in immediately available funds, the principal amount of FORTY FIVE MILLION DOLLARS ($45,000,000), or, if less, the aggregate unpaid principal amount of the loan made by the lender pursuant to Section 2.01 of the Loan Agreement referred to below (in either case, to be paid together with any accrued interest not required to be paid currently in cash), which sum shall be due and payable in such amounts and on such dates as are set forth in the Loan Agreement, dated as of April 30, 1996 between the Company and the Lender (the "Loan Agreement"; terms defined therein being used herein as so defined). The undersigned further agrees to pay interest at said office, in like money, from the date hereof on the unpaid principally amount hereof from time to time outstanding at the rates and on the dates specified in Section 2.06 of the Loan Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder of this Note of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. This Note is the Note referred to in the Loan Agreement, which Loan Agreement, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Loan Agreement, all upon the terms and conditions therein specified. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT. NRG GENERATING (U.S.) INC., by /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President and Chief Executive Officer 2 EX-10.6.1 13 EXHIBIT 10.6.1 SUPPLEMENTAL LOAN AGREEMENT DATED APRIL 30, 1996 BETWEEN NRG ENERGY AND THE COMPANY. Exhibit 10.6.1 SUPPLEMENTAL LOAN AGREEMENT dated as of April 30, 1996 Between NRG ENERGY, INC. and NRG GENERATING (U.S.) INC. SUPPLEMENTAL LOAN AGREEMENT, dated as of April 30, 1996, between NRG GENERATING (U.S.) INC., a Delaware corporation formerly known as O'Brien Environmental Energy, Inc. (the "Company"), and NRG Energy, Inc., a Delaware corporation (the "Lender"). W I T N E S S E T H: WHEREAS, immediately prior to the execution and delivery of this Agreement, the Company was the debtor and the debtor in possession in Chapter 11 case number 94-26723 (the "Case") pending before the United States Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court"); WHEREAS, pursuant to the Composite Fourth Amended and Restated Plan of Reorganization for the Company proposed by the Company, the Lender, Wexford Management Corp. and the Official Committee of Equity Security Holders dated January 31, 1996 (as confirmed by order of the Bankruptcy Court entered on February 22, 1996, the "NRG Plan"; capitalized terms used herein without definition shall have the respective meanings assigned to them in the NRG Plan), and subject to the terms and conditions of the Amended and Restated Stock Purchase and Reorganization Agreement dated as of January 31, 1996 between the Lender and the Company, the Lender is acquiring on the date hereof 41.86% of the outstanding shares of Common Stock of the Company and in that connection has agreed to make certain loans to the Company; WHEREAS, to the extent that (i) the Administrative and Cure Claims Cash Payment exceeds the sum of the Additional Cash Amount (if any), any Excess Cash available to be applied pursuant to Section 6.12(c) of the NRG Plan and the Reserved Administrative and Cure Claims Cash Amount (the amount by which the Administrative and Cure Claims Cash Payment exceeds such sum being referred to as the "Administrative Claims Shortfall"), and (ii) the aggregate amount of proceeds of Designated Receivables received by the Company or any of its Subsidiaries after November 17, 1995 but before the date hereof that is available for distribution by the Company on the date hereof is less than $2.240,000 (the difference between $2,240,000 and the amount of such proceeds so received by the Company or any of its Subsidiaries and so available for distribution by the Company being referred to as the "Designated Receivable Shortfall"), Section 6.10 of the NRG Plan provides that the Lender shall make a loan (the "NRG Mandatory Supplemental Loan") to the Company on the Effective Date equal to the sum of (x) the Administrative Claims Shortfall and (y) the Designated Receivables Shortfall; WHEREAS, Section 10.8(b) of the NRG Plan provides that, notwithstanding anything in Section 6.10 of the NRG Plan to the contrary, if an Administrative Claims Shortfall exists and, therefore, the Lender is required to make an NRG Mandatory Supplemental Loan pursuant to Section 6.10 of the NRG Plan in an amount equal to the Administrative Claims Shortfall (the "Administrative Shortfall Loan"), the time at which all or a portion of the Administrative Shortfall Loan shall be required to be made shall be deferred until after the Effective Date, as follows: (i) the portion of the Administrative Shortfall Loan required to be advanced on the Effective Date shall equal the amount by which the Effective Date Administrative and Cure Payments exceeds the sum of the Additional Cash Amount (if any), any Excess Cash available to be applied pursuant to Section 6.12(c) of the NRG Plan on the Effective Date and the Reserved Administrative and Cure Claims Cash Amount (the amount of such excess being referred to as the "Effective Date Administrative Shortfall Loan)," with the amount of the Administrative Shortfall Loan in excess of the Effective Date Administrative Shortfall Loan (the amount of such excess being referred to as the "Deferred Administrative Shortfall Amount") being deferred and potentially reduced as provided below, and (ii) at such time or times as Unresolved Administrative and Priority Claims become Allowed by Final Order after the Effective Date (or in the case of such Claims that are Allowed, but not yet due and payable on the Effective Date, at such times as such Claims become due and payable after the Effective Date), the Lender is required, within three business days thereafter, to make an advance to the Company in respect of the Administrative Shortfall Loan equal to the aggregate amount at which such Unresolved Administrative and Priority Claims have been so Allowed or becom7e due and payable, reduced by any amount then available in the Administrative and Priority Claims Reserve to pay such Claims, in each case subject to the maximum amount thereof established by the Court prior to the Effective Date in connection with the fixing of the amount of the Administrative and Priority Claims Reserve (each such advance being referred to as a "Deferred Administrative Shortfall Loan"); WHEREAS, the Administrative Claims Shortfall is $15,255,065.50, the amount of the Effective Date Administrative Shortfall Loan is zero, the amount of the Administrative and Priority Claims Reserve on the Effective Date is $1,639,520.25, the Deferred Administrative Shortfall Amount is $13,615,545.25 and the Designated Receivable Shortfall is $2,240,000; WHEREAS, pursuant to Sections 6.10 and 10.8(b) of the NRG Plan, the aggregate amount of the NRG Mandatory Supplemental Loan to be made on the Effective Date is $2,240,000 and the aggregate amount of the NRG Mandatory Supplemental Loan to be made following the Effective Date is up to the Deferred Administrative Shortfall Amount of $13,615,545.25; WHEREAS, the Lender agrees to make the NRG Mandatory Supplemental Loan to the Company on the terms and conditions set forth below. NOW, THEREFORE, the Company and the Lender agree as follows: 2 ARTICLE 1 Definitions SECTION 1.01. Defined Terms. As used in this Agreement, the terms defined in the caption hereto shall have the meanings set forth therein, and the following terms have the following meanings: "Acquisition" means the acquisition by the Company pursuant to the Acquisition Agreement of 41.86% of the issued and outstanding capital stock of the Company as reorganized under the NRG Plan and all of the capital stock of each of certain of the Company's subsidiaries. "Acquisition Agreement" means the Amended and Restated Stock Purchase and Reorganization Agreement, dated as of January 31, 1996 between the Lender and the Company. "Administrative Claims Shortfall" shall have the meaning assigned thereto in the recitals. "Administrative Shortfall Loan" shall have the meaning assigned thereto in the recitals. "Affiliate" of any specified Person means (i) any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person or (ii) any Person who is a director or officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any Person described in clause (i) above. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agreement" means this Loan Agreement, as amended, supplemented or modified from time to time. "Base Rate" means for any day, a rate per annum equal to 9%. "Bankruptcy Court" shall have the meaning assigned thereto in the recitals. "Bankruptcy Law" means Title 11 of the United States Code. "Borrowing" means a borrowing under this Agreement consisting of a Deferred Administrative Shortfall Loan made by the Lender to the Company. 3 "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. Closing Date" means the date on which the Lender is to make the Initial Loan, which shall be the date hereof. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means the party named as such in this Agreement until a successor replaces it and, thereafter, means the successor. "Credit Documents" means the collective reference to this Agreement and the Note. "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Deferred Administrative Shortfall Amount" shall have the meaning assigned thereto in the recitals. "Deferred Administrative Shortfall Loan" shall have the meaning assigned thereto in the recitals. "Designated Receivable Shortfall" shall have the meaning assigned thereto in the recitals. "Dollars" and "$" means dollars in lawful currency of the United States of America. "Effective Date" shall have the meaning assigned thereto in the NRG Plan, which definition is incorporated herein by this reference. "Effective Date Administrative Shortfall Loan" shall have the meaning assigned thereto in the recitals. "Event of Default" shall have the meaning assigned thereto in Section 8.01. "Final Maturity Date" shall have the meaning assigned thereto in Section 2.04. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "Highest Lawful Rate" shall have the meaning assigned thereto in Section 7.09. 4 "Indemnified liabilities" shall have the meaning assigned thereto in Section 7.04. "Initial Loan" means the Loan to be made on the date hereof equal to the Designated Receivable Shortfall. "Initial Maturity Date" shall have the meaning assigned thereto in Section 2.04. "Interest Payment Date" means the last day of each March, June, September and December, commencing on the first such day to occur after the Loan is made. "Lender" means the party named in this Agreement until one or more successors replace it, and thereafter means the successor or successors. "Loan" means the Initial Loan or any Deferred Administrative Shortfall Loan and "Loans" means, collectively, the Initial Loan and the Deferred Administrative Shortfall Loans. "Net Cash Flow" means for any fiscal quarter of the Company, the following calculation: Net Income for such quarter; plus 1. non-cash charges which were deducted in computing Net Income for such quarter, including, without limitation, depreciation and deferred taxes; plus 2. net cash proceeds received from a sale made by the Company or its Subsidiaries of assets (other than (a) accounts, (b) inventory or (c) obsolete or worn out property the proceeds from the sale of which do not exceed $10,000 in the aggregate) occurring during such quarter less any gain or plus any loss from such sales included in the computation of Net Income; less 3. any amounts included as an income item in the computation of Net Income for such quarter with respect to which the Company and its Subsidiaries have not received any cash payment or other form of cash consideration, provided that any cash consideration received by the Company and its Subsidiaries with respect thereto in any subsequent quarter shall be included in Net Cash Flow for such subsequent quarter; less 4. debt amortization and other payments of principal indebtedness of the Company and its Subsidiaries existing on the date hereof or incurred for the period beginning on and including the first day of such quarter and ending on and including the first Business Day of the next succeeding quarter; less 5. capital expenditures for such quarter; less 6. any cash dividends or redemption payments paid during such quarter to the holders of the New O'Brien Preferred Stock issued by the Company pursuant to the NRG Plan; and less 5 7. any income of any Subsidiary included in the computation of New Income that the Company has not actually received in the form of dividends or similar distributions because of any limitations set forth in any debt documents to which such Subsidiary is a party on the date hereof or any debt documents into which such Subsidiary enters at any time during which Lender holds in excess of 26% of the outstanding shares of Common Stock of the Company; and less 8. any other amounts as may be agreed to in writing by the Lender for such quarter, but the Lender shall have no obligation to so agree. It is the expressed intent of the Company and the Lender that in making the foregoing computation there shall be no duplication of any item of income, expense or otherwise. If the foregoing computation for any quarter results in a negative number, Net Cash Flow shall be deemed to be zero for such quarter. "Net Income" means the consolidated net income of the Company and its Subsidiaries for the applicable reporting period after all applicable taxes on income and profits (and any refunds in respect thereof) and as determined in accordance with GAAP. "Note" means the Note substantially in the form attached hereto as Exhibit A. "Notice of Borrowing" means an irrevocable notice from the Company to the Lender, executed by an officer of the Company, requesting the Lender to make a Deferred Administrative Shortfall Loan, substantially in the form of Exhibit B hereto, delivered by the Company to the Lender pursuant to Section 2.07(b) hereof. "NRG Mandatory Supplemental Loan" shall have the meaning assigned thereto in the recitals. "NRG Plan" shall have the meaning specified in the recitals. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. "Register" shall have the meaning assigned thereto in Section 2.10(b). "Senior Indebtedness" means the indebtedness incurred by the Company to Lender under the Loan Agreement dated the date hereof under which Lender will loan the Company $45 million on the date hereof and any indebtedness, the proceeds of which are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any such indebtedness so incurred by the Company to Lender. 6 "Subsidiary" of any Person means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person or (ii) one or more Subsidiaries of such Person. Transferee" shall have the meaning assigned thereto in Section 7.05(b). "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time. SECTION 1.02. Rules of Construction. Unless the context otherwise requires: 1. a term has the meaning assigned to it; 2. "or" is not exclusive; 3. "including" means including without limitation; 4. words in the singular include the plural and words in the plural include the singular; 5. unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Note or any certificate or other document made or delivered pursuant hereto; and 6. the words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, Section, schedule and exhibit references are to this Agreement unless otherwise specified. ARTICLE 2 Loan SECTION 2.01. Loan. Subject to the terms and conditions hereof, the Lender agrees to make the NRG Mandatory Supplemental Loan in Dollars to the Company on or after the Closing Date, in an aggregate principal amount of up to Fifteen Million Eight Hundred Fifty Five Thousand Five Hundred and Forty Five Dollars and Twenty-Five Cents ($15,855,545.25), consisting of the Initial Loan in an aggregate principal amount of Two Million Two Hundred and Forty Thousand Dollars ($2,240,000) to be made on the Closing Date and Deferred Administrative Shortfall Loans from time to time after the Closing Date in 7 an aggregate amount of up to Thirteen Million Six Hundred Fifteen Thousand Five Hundred and Forty Five Dollars and Twenty-Five Cents ($13,615,545.25). SECTION 2.02. Use of Proceeds. The proceeds of the NRG Mandatory Supplemental Loan shall be used for the purposes set forth in the NRG Plan and shall be applied in accordance with the NRG Plan. SECTION 2.03. Borrowing. The Company shall borrow the entire amount of the Initial Loan on the Closing Date and, thereafter, shall borrow Deferred Administrative Shortfall Loans when and as provided herein. SECTION 2.04. Maturity. Each Loan will mature on the date that is five years following the Closing Date (the "Maturity Date"). SECTION 2.05. Optional and Mandatory Prepayments; Repayments of Loan. (a) The Company may at any time and from time to time prepay any Loan, in whole or in part, without premium or penalty, upon at least five days irrevocable notice to the Lender. If such notice is given, the Company shall make such prepayment, and the payment amount specified in such notice shall be due and payable, on the date specified therein. (b) The Company shall pay in reduction of the principal amount of the Loans then outstanding, promptly after receipt, the amount of any payments hereafter received by the Company or any of its Subsidiaries in respect of any Designated Receivables; provided that the Company's mandatory prepayment obligations under this Section 2.05(b) shall cease at such time as the Company shall have paid over in reduction of the principal amount of the Loan under this Section 2.05(b) an aggregate amount equal to the Designated Receivable Shortfall. The Company shall give the Lender at least one Business Day's notice of each mandatory prepayment pursuant to this Section 2.05(b) setting forth the date and amount thereof. (c) On or before the 45th day after the end of each quarterly period of each fiscal year of the Company, commencing with the fiscal quarter ending September 30, 1996, the Company shall prepay the Loans in an amount equal to 80% of the Net Cash Flow for such quarter. If any annual audit of the Company prepared in conjunction with the delivery of the financial statements required to be delivered pursuant to subsection 5.1(a) shows that Net Cash Flow for any quarterly period of the fiscal year of the Company covered by such audit exceeds the calculation of Net Cash Flow previously made at the conclusion of such quarter by more than $100,000, then the Company shall prepay the Loans in an amount equal to 80% of such excess for each such quarter. If such audit shows that Net Cash Flow for such quarterly period was less by more than $100,000 than the calculation of Net Cash Flow for such quarter on which any prepayment of the Loans pursuant to subsection 2.6(e)(i) was based, then an amount equal to 80% of such difference shall be applied to reduce any prepayment due pursuant to subsection 2.6(e)(i) for any subsequent fiscal quarters. 8 (d) Accrued interest on the amount of any prepayments shall be paid on the date of such prepayment. SECTION 2.06. Interest Rate and Payment Dates. (a) Each Loan shall bear interest for the period from and including the date the Loan is made to, but excluding, the maturity date thereof on the unpaid principal thereof at a rate per annum equal to the Base Rate. (b) If all or a portion of (i) the principal amount of any Loan or (ii) any interest payable thereon shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), each Loan, and any such overdue amount shall, without limiting the rights of the Lender under Article 5, bear interest at a rate per annum which is 2.00% above the Base Rate from the date of such non-payment until paid in full (as well after as before judgment). (c) Interest shall be payable in arrears on each Interest Payment Date. SECTION 2.07 Notice of Borrowing Requirements. (a) Each Borrowing shall be made on a Business Day. (b) Each Borrowing shall be made upon written notice, by way of a Notice of Borrowing, in the form of Exhibit B, attached hereto, given by telecopy, mail, or personal service, delivered to the Lender at its office at 1221 Nicollet Mall, Minneapolis, Minnesota at least three Business Days prior to the day on which such Borrowing is to be made and such notice shall specify that a Borrowing is requested and state the amount thereof (subject to the provisions of this Article 2). SECTION 2.08. Computation of Interest and Fees. (a) Interest in respect of the Loan, shall be calculated on the basis of a 365 (or 366 as the case may be) day year for the actual days elapsed. SECTION 2.09. Treatment of Payments. (a) Whenever any payment received by the Lender under this Agreement or the Note is insufficient to pay in full all amounts then due and payable to the Lender under this Agreement or the Note, such payment shall be applied by the Lender in the following order: First, to the payment of fees and expenses due and payable to the Lender under and in connection with this Agreement and the Note, including the payment of all expenses due and payable under Section 7.04; Second, to the payment of interest then due and payable on the Loans; and Third, to the payment of the principal amount of the Loans which is then due and payable; or (b) All payments (including prepayments) to be made by the Company on account of principal, interest and fees shall be made without set-off or counterclaim and shall 9 be made to the Lender, for the account of the Lender at its office located at 1221 Nicollet Mall, Minneapolis, Minnesota, in lawful money of the United States of America and in immediately available funds. If any payment hereunder would become due and payable on a day other than a Business Day, such payment shall become due and payable on the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. SECTION 2.10. Indemnity. The Company agrees to indemnify the Lender and to hold the Lender harmless from any loss or expense (but without duplication of any amounts payable as default interest) which the Lender may sustain or incur as a consequence of default by the Company in making any prepayment after the Company has given a notice in accordance with Section 2.05. This covenant shall survive termination of this Agreement and repayment of the Loan. SECTION 2.11. Repayment of the Loan; Evidence of Debt. (a) The Company hereby unconditionally promises to pay to the Lender the then unpaid principal amount of the Loans in accordance with the terms hereof and the Note. The Company hereby further agrees to pay interest on the unpaid principal amount of the Loan from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.06. (b) The Lender shall maintain a Register (the "Register") in which shall be recorded (i) the amount of each Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to the Lender hereunder and (iii) the amount of any sum received by the Lender hereunder from the Company. (c) The entries made in the Register to the extent permitted by applicable law, shall be prima facie evidence of the existence and amounts of the obligations of the Company therein recorded; provided, however, that the failure of the Lender to maintain the Register, or any error therein, shall not in any manner affect the obligation of the Company to repay (with applicable interest) the Loan made to the Company by the Lender in accordance with the terms of this Agreement. (d) The Company agrees that, on the Closing Date, the Company will execute and deliver to the Lender the Note evidencing the Loan, with appropriate insertions as to date and principal amount. ARTICLE 3 Conditions Precedent SECTION 3.01. Conditions to Initial Loan. The obligation of the Lender to make the Initial Loan on the Closing Date is subject to the satisfaction, or waiver by the 10 Lender, immediately prior to or concurrently with the making of the Initial Loan, of the following conditions: (a) Note. The Lender shall have received the Note conforming to the requirements hereof and executed by a duly authorized officer of the Company. (b) Acquisition and NRG Plan Consummation. The Acquisition shall have been consummated at the Closing (as defined in the Acquisition Agreement) and concurrently therewith the NRG Plan shall have been consummated on the Effective Date. SECTION 3.02. Condition to Deferred Administrative Shortfall Loans. The obligation of the Lender to make a Deferred Administrative Shortfall Loan is subject to the satisfaction, or waiver by the Lender, immediately prior to or concurrently with the making of such Deferred Administrative Shortfall Loan, of the condition that Lender shall have received a Notice of Borrowing, notifying the Lender than an Unresolved Administrative and Priority Claim has become an Allowed Claim by Final Order (or in the case of any such Claim that is Allowed, but not yet due and payable on the Effective Date, has become due and payable in accordance with its terms) and that insufficient funds are available in the Administrative and Priority Claims Reserve to pay such Claim and requesting the Lender to make a Deferred Administrative Shortfall Loan to the Company in the amount necessary to fund the payment in full of such Claim through the Administrative and Priority Claims Reserve (in each case subject to any cap on the Allowed amount of such Claim previously established by order of the Bankruptcy Court). ARTICLE 4 Security Interest SECTION 4.01. Assignment and Grant of Security. To secure the prompt and unconditional payment, performance and discharge, when due, of all of the Company's obligations under this Agreement and the Note (collectively, the "Secured Obligations"), the Company hereby assigns, pledges, conveys, sets over, delivers and transfers to the Lender and grants a security interest to the Lender in and to all of the Company's right, title and interest in and to each and all of the following: (a) the Designated Receivables; and (b) all Proceeds of any Designated Receivable; provided that, at such time as the Lender shall have received either under Section 2.05(b) as a mandatory reduction of the principal amount of the Loan or as a result of collecting or otherwise realizing against the Designated Receivables or the Proceeds hereof, an aggregate amount of payments equal to the Designated Receivable Shortfall, the Security Interest granted under this Section 4.01 shall terminate and be of no further force and effect (the Designated Receivables, together with the Proceeds thereof, are referred to as the "Collateral"). As used herein, the terms 11 "Proceeds" shall refer to and include (i) whatever is now or hereafter received by the Company upon the sale, exchange, collection or other disposition of any of the Collateral, whether such Proceeds constitute accounts, accounts receivable, general intangibles, instruments, securities, credits, documents, deposit accounts, money, or contract rights; (ii) personal property of any type or nature whatsoever which is now or hereafter acquired by the Company with any Proceeds of the Collateral; and (iii) any insurance now or hereafter payable by reason of any loss, damage or destruction to or of any or all of the Collateral. SECTION 4.02 Covenants In Respect Of Collateral. (a) The Company shall not voluntarily, involuntarily or by operation of law, sell, assign, hypothecate, pledge, encumber, grant any other security interest or lien in, dispose of or otherwise transfer the Collateral, or any portion thereof or any interest therein, or permit any of the foregoing to occur, and shall not otherwise do, suffer or permit anything to be done or occur that may impair the Collateral as security hereunder or the liens and security interests therein created hereunder in favor of the Lender. (b) The Company shall do all such other acts and things as may be necessary or appropriate or which the Lender may from time to time reasonably request as necessary in the opinion of the Lender to establish and maintain a first priority perfected security interest in the Collateral, including, without limitation, the Proceeds, subject to no other liens, security interests or encumbrances; and the Company shall pay the cost of all filings or recordings of this Agreement or any other document or instrument in all public offices whenever it is reasonably deemed by the Lender to be necessary or desirable. The Company hereby irrevocably constitutes and appoints the Lender the attorney-in-fact of the Company to execute, deliver and, if appropriate, to file with the appropriate filing officer or office such security agreements, financing statements, continuation statements, notices to the institutions or other entities with which the Collateral or any portion thereof is maintained or such other documents or instruments as the Lender may request or require in order to confirm, impose, perfect or continue the perfection of the liens and security interests created hereby. The foregoing power-of-attorney is coupled with an interest and shall survive any dissolution, bankruptcy, or insolvency of the Company as an entity. (c) The Company shall provide to the Lender any information which the Lender may at any time and from time to time hereafter require, in its sole and absolute discretion, pertaining to the Collateral. The Company shall promptly notify the Lender of any change of the Company's place of business, chief executive office or mailing address. (d) The Company has made any previous assignment, conveyance, transfer or agreement in conflict herewith or constituting an assignment, conveyance, transfer or encumbrance on any Designated Receivable. 12 ARTICLE 5 Defaults and Remedies SECTION 5.01. Events of Default. An "Event of Default" occurs if: 1. the Company defaults in any payment of interest or any other amount (other than those specified in (2) below) with respect to any Loan when the same becomes due and payable and such default continues for a period of 30 days; 2. the Company defaults in the payment of the principal of any Loan when the same become due and payable on the Maturity Date, upon mandatory prepayment, or otherwise; 3. the Company fails to comply with any of its agreements herein (other than those referred to in (1) or (2) above) and such failure continues for 30 days after the notice specified below; 4. indebtedness of the Company or any Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such indebtedness unpaid or accelerated exceeds $2,000,000 or its foreign currency equivalent at the time; 5. the Company or any Subsidiary pursuant to or within the meaning of any Bankruptcy Law: A. commences a voluntary case; B. consents to the entry of an order for relief against it in an involuntary case; C. consents to the appointment of a Custodian of it or for any substantial part of its property; or D. makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; 6. a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: A. is for relief against the Company or any Subsidiary in an involuntary case; B. appoints a Custodian of the Company or any Subsidiary or for any substantial part of its property; or 13 C. orders the winding up or liquidation of the Company or any Subsidiary; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days; 7. any judgment or decree for the payment of money in excess of $2,000,000 or its foreign currency equivalent at the time is entered against the Company or any Subsidiary and is not discharged and either (A) an enforcement proceeding has been commenced by any creditor upon such judgment or decree or (B) there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged, waived or the execution thereof stayed; or 8. this Agreement shall cease, for any reason, to be in full force and effect or the Company or any of its Subsidiaries shall so assert in writing. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. A Default under clause (6) is not an Event of Default until the Lender notifies the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". SECTION 5.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 5.01(5) or (6) with respect to the Company) occurs and is continuing, the Lender by notice to the Company may declare the principal of and accrued interest on the Loans to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 5.01(5) or (6) with respect to the Company (but not any Subsidiary) occurs, the principal of and interest on the Loans shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Lender. the Lender by notice to the Company may rescind an acceleration and its consequences. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 5.03. Default and Remedies. (a) If an Event of Default occurs and is continuing, the Lender shall have all of the remedies of a secured party under the Uniform Commercial Code, including, without limitation, the right, to notify the account debtors from which the Designated Receivables are owing to pay directly to the Lender the amount owing from such account debtors to the Company in respect of the respective Designated Receivable. In addition to and not in derogation of any or all of the rights and remedies granted hereunder to the Lender or 14 otherwise available to the Lender under applicable law, following such an Event of Default, the Lender shall have the further right and power, at its sole option, to sell, or otherwise dispose of, the Collateral (other than Collateral consisting of cash), or any part thereof, at any one or more public or private sales as permitted by applicable law, and for that purpose the Lender may take immediate and exclusive possession of such Collateral, or any part thereof, to the extent capable of possession. (b) To the fullest extent permitted by law, the Company irrevocably and expressly waives any right to receive any notice of sale or notice of any other disposition of all or any part of the Collateral that does not consist of cash, except that to the extent the Company may be entitled by applicable law to any notice of sale or other disposition of such Collateral, the Company agrees that if such notice is mailed, postage prepaid, to the Company at the Company's address hereinafter specified not less than five (5) days before the time of the sale or other disposition contemplated therein, such notice shall conclusively be deemed commercially reasonable and shall fully satisfy any requirement for giving of said notice. The Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (c) The proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale, selling or the like and reasonable attorneys' fees, legal expenses and costs incurred by the Lender, shall be applied in accordance with Section 5.06. (d) The remedies of the Lender hereunder are cumulative and the exercise of any one or more of the remedies provided for herein, or under the Uniform Commercial Code, shall not be construed as a waiver of any other rights or remedies of the Lender so long as any part of the Secured Obligations remains unsatisfied or unperformed. The making of this Agreement shall not waive or impair any other security the Lender may have or hereafter acquire for the payment or performance of the Secured Obligations, nor shall the making of any such additional security waive or impair this Agreement; but the Lender may resort to any security it may have in the order it may deem proper. SECTION 5.04. Other Remedies. If an Event of Default occurs and is continuing, the Lender may pursue any available remedy to collect the payment of principal of or interest on the Note or to enforce the performance of any provision of the Note or this Agreement. The Lender may maintain a proceeding even if it does not possess the Note or does not produce it in the proceeding. A delay or omission by the Lender in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 5.05. Waiver of Past Defaults. The Lender by notice to the Company may waive an existing Default and its consequences. When a Default is waived, it is 15 deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 5.06. Priorities. If the Lender collects any money or property pursuant to this Article 5, it shall pay out the money or property in the following order: FIRST: to itself in accordance with the priority set forth in Section 2.08; and SECOND: to the extent of any excess, to the Company. SECTION 5.07. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Agreement a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. SECTION 5.08. Waiver of Stay or Extension Laws. The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Agreement; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Lender, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 6 Subordination SECTION 6.01. Agreement To Subordinate. The Company and Lender agree that, subject to Lender's prior rights as the holder of a security interest in the Collateral, the indebtedness evidenced by the Note is subordinated in right of payment, to the extent and in the manner provided in this Article 6, to the prior payment in full of all Senior Indebtedness and that the subordination is for the benefit of and enforceable by the holders of Senior Indebtedness. The Note shall in all respects rank pari passu with all other indebtedness of the Company and only indebtedness of the Company which is Senior Indebtedness shall rank senior to the Note in accordance with the provisions set forth herein. SECTION 6.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or distribution of the assets of the Company to creditors upon a total or partial liquidation or a total or partial dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, subject to the prior rights of the Lender with respect to its security interest in the Collateral: 16 1. holders of Senior Indebtedness shall be entitled to receive payment in full of the Senior Indebtedness before Lender shall be entitled to receive any payment of principal of, or premium, if any, or interest of the Note; and 2. until the Senior Indebtedness is paid in full, any payment or distribution to which Lender would be entitled but for this Article 6 shall be made to holders of Senior Indebtedness as their interests may appear. SECTION 6.03. Default on Senior Indebtedness. The Company may not pay the principal of, premium, if any, or interest on, the Note or make any deposit pursuant to any defeasance provision or otherwise purchase or retire the Note (collectively, "pay the Note") if (i) any Senior Indebtedness is not paid when due or (ii) any other default on Senior Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated in accordance with its terms unless, in either case, (x) the default has been cured or waived and any such acceleration has been rescinded or (y) such Senior Indebtedness has been paid in full; provided, however, that the Company may pay the Note without regard to the foregoing if Lender is then the sole holder of Senior Indebtedness or if the Company and the Lender receive written notice approving such payment from each of the holders of Senior Indebtedness (or, if applicable, their indenture trustee or other representative) with respect to which either of the events set forth in (i) or (ii) above has occurred and is continuing. During the continuance of any default (other than a default described in clause (i) or (ii) of the preceding sentence) with respect to any Senior Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company may not pay the Note for a period (a "Payment Blockage Period") commencing upon the receipt by the Company and the Lender of written notice (a "Blockage Notice") of such default from the holders of such Senior Indebtedness (or, if applicable, their indenture trustee or other representative) specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated (i) by written notice to the Lender and the Company from the Person or Persons who gave such Blockage Notice, (ii) by repayment in full of such Senior Indebtedness or (iii) because the default giving rise to such Blockage Notice is no longer continuing). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this Section), unless the holders of such Senior Indebtedness (or the indenture trustee or other representative of such holders) shall have accelerated the maturity of such Senior Indebtedness, the Company may resume payments on the Note after such Payment Blockage Period. Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Senior Indebtedness during such period; provided further, however, that in no event may the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 360 consecutive day period. SECTION 6.04. Acceleration of Payment of Note. If payment of the Note is accelerated because of an Event of Default, the Company or the Lender shall promptly notify 17 the holders of the Senior Indebtedness of the acceleration. If any Senior Indebtedness is outstanding, the Company may not pay the Note until 5 business days after the holders (or their indenture trustee or other representative) of the Senior Indebtedness receives notice of such acceleration and, thereafter, may pay the Note only if this Article 6 otherwise permits the payment at that time. SECTION 6.05. When Distribution Must Be Paid Over. If a distribution is made to the Lender that because of this Article 6 should not have been made, the Lender shall hold such distribution in trust for holders of Senior Indebtedness and pay it over to them as their interests may appear. SECTION 6.06. Subrogation. After all Senior Indebtedness is paid in full and until the Note are paid in full, the Lender shall be subrogated to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness. A distribution made under this Article 6 to holders of Senior Indebtedness which otherwise would have been made to holder of the Note is not, as between the Company and the holder of the Note, a payment by the Company on Senior Indebtedness. SECTION 6.07. Relative Rights. This Article 6 defines the relative rights of the Lender (or a successor holder of the Note) and holders of Senior Indebtedness. Nothing in this Agreement shall: 1. impair, as between the Company and the Lender, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium, if any, and interest on the Note in accordance with their terms; or 2. prevent the Lender from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness to receive distributions otherwise payable to the Lender. SECTION 6.08. Subordination May Not Be Impaired by Company. No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Note shall be impaired by any act or failure to act by the Company or by its failure to comply with this Agreement. SECTION 6.09. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to any indenture trustee or other representative (if any) of such holders. SECTION 6.10. Article 6 Not To Prevent Events of Default or Limit Right To Accelerate. The failure to make a payment pursuant to the Note by reason of any provision in this Article 6 shall not be construed as preventing the occurrence of a Default. Nothing in this Article 6 shall have any effect on the right of the Lender to accelerate the maturity of the Note. 18 SECTION 6.11. Lender Entitled To Rely. Upon any payment or distribution pursuant to this Article 6, the Lender shall be entitled to rely (i) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 6.02 are pending, (ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Lender or (iii) upon the representatives for the holders of Senior Indebtedness for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 6. In the event that the Lender determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 6, the Lender may request such Person to furnish evidence to the reasonable satisfaction of the Lender as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 6, and, if such evidence is not furnished, the Lender may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 6.12. Reliance by Holders of Senior Indebtedness on Subordination Provisions. The Lender acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or acquired before or after the issuance of the Note, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. ARTICLE 7 Miscellaneous SECTION 7.01. Amendments and Waivers. Except as otherwise expressly set forth in this Agreement, no Credit Document nor any terms thereof may be amended, supplemented, waived or modified except in accordance with the provisions of this Section 7.01. SECTION 7.02. Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy or telex, if one is listed), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when sent, confirmation of receipt received, or, in the case of telex notice, when sent, answerback received, addressed as 19 follows, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Note: If to the Company: NRG Generating (U.S.) Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: President and Chief Executive Officer Telephone: (612) 373-5300 Telecopier:(612) 373-5430 With a copy to: Troutman Sanders NationsBank Plaza, Suite 5200 600 Peachtree Street N.E. Atlanta, Georgia 30308 Attention: Hazen Dempster Telephone: (404) 885-3000 Telecopier:(404) 885-3900 If to Lender NRG Energy, Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: Vice President, Business Development Telephone: (612) 373-5300 Telecopier:(612) 373-5430 With copies to: NRG Energy Inc. Legal Department 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 Attention: Vice President and General Counsel Telephone: (612) 373-5300 Telecopier (612) 373-5392 provided that any notice, request or demand to or upon the Lender pursuant to Section 2.05 shall not be effective until received. SECTION 7.03. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or 20 the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 7.04. Payment of Expenses and Taxes. The Company agrees (a) to pay or reimburse the Lender for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of any amendment, supplement or modification to the Credit Documents, including the reasonable fees and disbursements of counsel to the Lender, (b) to pay or reimburse the Lender for all its costs and expenses incurred in connection with, and to pay, indemnify, and hold the Lender harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever arising out of or in connection with, the enforcement or preservation of any rights under any Credit Document, including reasonable fees and disbursements of counsel to the Lender incurred in connection with the foregoing, (c) to pay, indemnify, and to hold the Lender harmless from any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes (other than withholding taxes), if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, any Credit Document and any such other documents, and (d) to pay, indemnify, and hold the Lender and its respective Affiliates, officers and directors harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable fees and disbursements of counsel) which may be incurred by or asserted against the Lender or such Affiliates, officers or directors arising out of or in connection with any investigation, litigation or proceeding related to this Agreement, the other Credit Documents, the proceeds of the Loan and the transactions contemplated by or in respect of such use of proceeds, or any of the other transactions contemplated hereby, whether or not the Lender or such Affiliates, officers or directors is a party thereto, including any of the foregoing relating to the violation of, noncompliance with or liability under, any environmental law or regulation applicable to the operations of the Company, any of its Subsidiaries or any of the facilities and properties owned, leased or operated by the Company or any of its Subsidiaries (all the foregoing, collectively, the "indemnified liabilities"); provided that the Company shall have no obligation hereunder with respect to indemnified liabilities of the Lender or any of its respective Affiliates, officers and directors arising from (i) the gross negligence or willful misconduct of the Lender or its directors or officers or (ii) legal proceedings commenced against the Lender by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such or (iii) legal proceedings commenced against the Lender by any Transferee. The agreements in this Section 7.04 shall survive repayment of the Note and all other amounts payable hereunder. SECTION 7.05. Successors and Assigns; Participations and Assignments. (a) This Agreement shall be binding upon and inure to the benefit of the Company, the 21 Lender, all future holders of the Note and the Loans, and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender. (b) The Company hereby agrees that the Lender may, in accordance with applicable law, at any time and from time to time assign all or any part of its rights and interest under this Agreement and the Note to any Person (a "Transferee"). (c) The Company authorizes the Lender to disclose to any prospective or Transferee any and all financial information in the Lender's possession concerning the Company and its Subsidiaries and Affiliates which has been delivered to the Lender by or on behalf of the Company. SECTION 7.06. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. SECTION 7.07. Governing Law; No Third Party Rights. This Agreement and the Note and the rights and obligations of the parties under this Agreement and the Note shall be governed by, and construed and interpreted in accordance with, the law of the State of New York and applicable laws of the United States of America. This Agreement is solely for the benefit of the parties hereto and their respective successors and assigns, and, except as set forth in Article 7, no other Persons shall have any right, benefit, priority or interest under, or because of the existence of, this Agreement. SECTION 7.08. Submission to Jurisdiction; Waivers. (a) Each party to this Agreement hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement or any of the other Credit Documents, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth in Section 7.02; and 22 (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction. (b) Each party hereto unconditionally waives trial by jury in any legal action or proceeding referred to in paragraph (a) above and any counterclaim therein. SECTION 7.09. Interest. Each provision in this Agreement and each other Credit Document is expressly limited so that in no event whatsoever shall the amount paid, or otherwise agreed to be paid, by the Company for the use, forbearance or detention of the money to be loaned under this Agreement or any other Credit Document or otherwise (including any sums paid as required by any covenant or obligation contained herein or in any other Credit Document which is for the use, forbearance or detention of such money), exceed that amount of money which would cause the effective rate of interest to exceed the highest lawful rate permitted by applicable law (the "Highest Lawful Rate"), and all amounts owed under this Agreement and each other Credit Document shall be held to be subject to reduction to the effect that such amounts so paid or agreed to be paid which are for the use, forbearance or detention of money under this Agreement or such Credit Document shall in no event exceed that amount of money which would cause the effective rate of interest to exceed the Highest Lawful Rate. Notwithstanding any provision in this Agreement or any other Credit Document to the contrary, if the maturity of the Loans or the obligations in respect of the other Credit Documents are accelerated for any reason, or in the event of any prepayment of all or any portion of the Loan or the obligations in respect of the other Credit Documents by the Company or in any other event, earned interest on the Loan and such other obligations of the Company may never exceed the Highest Lawful Rate, and any unearned interest otherwise payable on the Loans or the obligations in respect of the other Credit Documents that is in excess of the Highest Lawful Rate shall be cancelled automatically as of the date of such acceleration or prepayment or other such event and (if theretofore paid) shall, at the option of the holder of the Loan or such other obligations, be either refunded to the Company or credited on the principal of the Loans. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the Highest Lawful Rate, the Company and the Lender shall, to the maximum extent permitted by applicable law, amortize, prorate, allocate and spread, in equal parts during the period of the actual term of this Agreement, all interest at any time contracted for, charged, received or reserved in connection with this Agreement. 23 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. NRG GENERATING (U.S.) INC. by: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President and Chief Executive Officer NRG ENERGY, INC. by: /s/ Craig A. Mataczynski Name: Craig A. Mataczynski Title: Vice President, Domestic Business Deveopment 24 EXHIBIT A New York, New York April 30, 1996 NOTE FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a Delaware corporation (the "Company"), hereby promises to pay to the order of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the "Lender"), at the office of the Lender at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403, in lawful money of the United States of America and in immediately available funds, the principal amount of up to Fifteen Million Eight Hundred Fifty Five Thousand Five Hundred and Forty Five Dollars and Twenty-Five Cents ($15,855,545.25), or, if less, the aggregate unpaid principal amount of the Loans made by the Lender pursuant to Section 2.01 of the Loan Agreement referred to below (in either case, to be paid together with any accrued interest not required to be paid currently in cash), which sum shall be due and payable in such amounts and on such dates as are set forth in the Supplemental Loan Agreement, dated as of April 30, 1996 between the Company and the Lender (the "Loan Agreement"; terms defined therein being used herein as so defined). The undersigned further agrees to pay interest at said office, in like money, from the date hereof on the unpaid principally amount hereof from time to time outstanding at the rates and on the dates specified in Section 2.06 of the Loan Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder of this Note of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. This Note is the Note referred to in the Loan Agreement, which Loan Agreement, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Loan Agreement, all upon the terms and conditions therein specified. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT. NRG GENERATING (U.S.) INC., by: Name: Leonard A. Bluhm Title: President and Chief Executive Officer 2 EX-10.6.2 14 EXHIBIT 10.6.2 NOTE DATED APRIL 30, 1996 FROM THE COMPANY TO NRG ENERGY IN THE PRINCIPLE AMOUNT OF $15,855,545.25. Exhibit 10.6.2 New York, New York April 30, 1996 NOTE FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a Delaware corporation (the "Company"), hereby promises to pay to the order of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the "Lender"), at the office of the Lender at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403, in lawful money of the United States of America and in immediately available funds, the principal amount of up to Fifteen Million Eight Hundred Fifty Five Thousand Five Hundred and Forty Five Dollars and Twenty-Five Cents ($15,855,545.25), or, if less, the aggregate unpaid principal amount of the Loans made by the Lender pursuant to Section 2.01 of the Loan Agreement referred to below (in either case, to be paid together with any accrued interest not required to be paid currently in cash), which sum shall be due and payable in such amounts and on such dates as are set forth in the Supplemental Loan Agreement, dated as of April 30, 1996 between the Company and the Lender (the "Loan Agreement"; terms defined therein being used herein as so defined). The undersigned further agrees to pay interest at said office, in like money, from the date hereof on the unpaid principally amount hereof from time to time outstanding at the rates and on the dates specified in Section 2.06 of the Loan Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder of this Note of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. This Note is the Note referred to in the Loan Agreement, which Loan Agreement, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Loan Agreement, all upon the terms and conditions therein specified. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT. NRG GENERATING (U.S.) INC., by: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President and Chief Executive Officer 2 EX-10.7.2 15 EXHIBIT 10.7.2 NOTE DATED APRIL 30, 1996 FROM THE COMPANY TO NRG ENERGY IN THE PRINCIPLE AMOUNT OF $24,000,000. Exhibit 10.7.2 New York, New York April 30, 1996 NOTE FOR VALUE RECEIVED, the undersigned, NRG GENERATING (U.S.) INC., a Delaware corporation (the "Company"), hereby promises to pay to the order of NRG ENERGY, INC., a Delaware corporation, or registered assigns (the "Lender"), at the office of the Lender located at 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403 in lawful money of the United States of America and in immediately available funds, the principal amount of TWENTY FOUR MILLION DOLLARS ($24,000,000), or, if less, the aggregate unpaid principal amount of the loan made by the lender pursuant to Section 2.01 of the Loan Agreement referred to below (in either case, to be paid together with any accrued interest not required to be paid currently in cash), which sum shall be due and payable in such amounts and on such dates as are set forth in the Loan Agreement, dated as of April 30, 1996 between the Company and the Lender (the "Loan Agreement"; terms defined therein being used herein as so defined). The undersigned further agrees to pay interest at said office, in like money, from the date hereof on the unpaid principally amount hereof from time to time outstanding at the rates and on the dates specified in Section 2.06 of the Loan Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder of this Note of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. This Note is the Note referred to in the Loan Agreement, which Loan Agreement, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Loan Agreement, all upon the terms and conditions therein specified. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE LENDER PURSUANT TO THE TERMS OF THE LOAN AGREEMENT. NRG GENERATING (U.S.) INC., by /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President and Chief Executive Officer 2 EX-10.8.1 16 EXHIBIT 10.8.1 CREDIT AGREEMENT DATED MAY 17, 1996. Exhibit 10.8.1 CREDIT AGREEMENT by and among NRG GENERATING (NEWARK) COGENERATION INC. and NRG GENERATING (PARLIN) COGENERATION INC. CREDIT SUISSE, GREENWICH FUNDING CORPORATION AND ANY PURCHASING LENDER as Lender, and CREDIT SUISSE as Agent Dated as of May 17, 1996 TABLE OF CONTENTS Page ARTICLE I Definitions 1 ARTICLE II Amounts and Terms of the Loans 1 Section 2.1 The Loans 1 Section 2.2 The Debt Service Line of Credit Facility Commitment 2 Section 2.3 Conditions Relating to Borrowings 3 Section 2.4 Interest and Fees 5 Section 2.5 Funding and Yield Protection 7 Section 2.6 Repayment Dates. 11 Section 2.7 Optional Prepayments 13 Section 2.8 Mandatory Prepayments 13 Section 2.9 Optional Termination or Reduction of Commitments 15 Section 2.10 General Terms of Payment 16 Section 2.11 Note(s) 18 Section 2.12 Replacement of Lender 20 Section 2.13 Limitation on Liability 21 ARTICLE III Conditions of Commitments 22 Section 3.1 Conditions Precedent to the Making of Initial Loans 22 Section 3.2 Conditions Precedent to the Making of Debt Service Loans 30 Section 3.3 Conditions Precedent to the Making of Additional Loans 31 ARTICLE IV Representations and Warranties 43 Section 4.1 Organization; Capitalization 43 (i) Section 4.2 Authorization of Loan Instruments 44 Section 4.3 Governmental Approvals 44 Section 4.4 No Conflicts 47 Section 4.5 Enforceability of Project Agreements 47 Section 4.6 Title to Property; Sufficiency of Assets48 Section 4.7 Compliance with Laws 48 Section 4.8 No Litigation 49 Section 4.9 Events of Default 49 Section 4.10 Financial Condition 49 Section 4.11 No Material Adverse Effect 50 Section 4.12 Security Interests 50 Section 4.13 No Burdensome Restrictions 51 Section 4.14 Taxes 52 Section 4.15 ERISA and IRC Compliance and Liability 52 Section 4.16 Funding 52 Section 4.17 Prohibited Transactions and Payments 53 Section 4.18 No Termination Event 53 Section 4.19 ERISA Litigation 53 Section 4.20 No Other Obligations 53 Section 4.21 Margin Regulations 54 Section 4.22 Investment Company Act 54 Section 4.23 Environmental Matters 54 Section 4.24 Disclosure 54 Section 4.25 Insurance 55 Section 4.26 Labor Matters 55 Section 4.27 Additional Representations and Warranties and Conditions Precedent 55 Section 4.28 Transactions With Affiliates 55 Section 4.29 Projections 56 Section 4.30 Patents and Other Similar Property 56 Section 4.31 Bank Accounts 56 Section 4.32 Sources and Uses 56 Section 4.33 Operating Budget 57 Section 4.34 Operation of the Project 57 Section 4.35 Regulation of Parties 57 Section 4.36 EWG Status/Qualifying Cogeneration Facility Status 58 Section 4.37 Nature of Business 58 Section 4.38 No Material Adverse Change 58 Section 4.39 Private Offering by Borrower 59 Section 4.40 Bankruptcy 59 Section 4.41 On-Site Alternate Fuel 59 Section 4.42 No Liabilities 59 Section 4.43 Levelized Capacity Payments 59 Section 4.44 Ownership 59 (ii) ARTICLE V Covenants of Borrower 60 Section 5.1 The Accounts 60 Section 5.2 Debt Service Coverage Ratio 66 Section 5.3 Maintenance of Existence, Privileges, Etc. 66 Section 5.4 Performance of Project Documents 67 Section 5.5 Operation and Maintenance 67 Section 5.6 Operating Logs 68 Section 5.7 Compliance with Laws 69 Section 5.8 Information 73 Section 5.9 Bank Accounts 80 Section 5.10 Inspection; Maintenance of Records 80 Section 5.11 Maintenance of Properties, Etc 81 Section 5.12 Maintenance of Insurance 81 Section 5.13 Payment of Taxes, Etc 81 Section 5.14 Syndication Efforts 82 Section 5.15 Interest Rate Hedge Agreements 82 Section 5.16 Other Contracts 83 Section 5.17 Use of Proceeds 84 Section 5.18 Obligations Upon Casualty 84 Section 5.19 Additional Documents; Filings and Recordings 88 Section 5.20 Assignment by Borrower 88 Section 5.21 Advertising; Press Releases 88 Section 5.22 Negative Pledge and Liens 89 Section 5.23 Limitation on Debt and Contingent Obligations 89 Section 5.24 Fundamental Changes 89 Section 5.25 Restricted Junior Payments 90 Section 5.26 Investments 90 Section 5.27 Nature of Business 90 Section 5.28 Fiscal Year 90 Section 5.29 Bankruptcy 91 Section 5.30 Transactions with Affiliates 91 Section 5.31 Compliance with ERISA 91 Section 5.32 Other Transactions 92 Section 5.33 Abandonment 93 Section 5.34 Improper Use 93 Section 5.35 Alternative Fuel 94 Section 5.36 Pre-existing Liabilities 94 Section 5.37 Debt Service Coverage Ratio Covenant 94 Section 5.38 Environmental Covenant 95 Section 5.39 Flood Zone Insurance 96 Section 5.40 Additional Consents 96 Section 5.41 Backup Gas Supply 96 (iii) ARTICLE VI Events of Default 96 Section 6.1 Events of Default 96 Section 6.2 Limitation on Representations and Warranties 104 ARTICLE VII Relationship of Agent and Lenders 104 Section 7.1 Appointment 104 Section 7.2 Nature of Duties 104 Section 7.3 Lack of Reliance on the Agent 105 Section 7.4 Certain Rights of the Agent 105 Section 7.5 Reliance 106 Section 7.6 Indemnification 106 Section 7.7 The Agent in its Individual Capacity 106 Section 7.8 Resignation by the Agent 106 Section 7.9 No Amendment to Duties of Agent Without Consent 107 ARTICLE VIII General Terms And Conditions 107 Section 8.1 Notices 107 Section 8.2 Indemnities and Expenses 109 Section 8.3 Survival 112 Section 8.4 Governing Law; Submission to Jurisdiction 112 Section 8.5 Successors and Assigns 113 Section 8.6 Assignments and Participations 113 Section 8.7 Counterparts 116 Section 8.8 Right of Setoff 116 Section 8.9 No Waiver; Remedies Cumulative 116 Section 8.10 Severability 117 Section 8.11 Calculation 117 Section 8.12 Payments Pro Rata; Sharing 117 Section 8.13 Headings Descriptive 118 Section 8.14 Amendment or Waiver 118 Section 8.15 Confidentiality 118 (iv) SCHEDULES Schedule 2.6(a) - Repayment of Funding Loans Schedule 2.8(a) - Required Prepayment Amounts Schedules 3.1(a)-(e) - List of Obligors Schedule 3.1(y) - Environmental Reports (Newark) Schedule 3.3(y) - Environmental Reports (Parlin) Schedule 4.1(b) - Authorized Stock Schedule 4.3A - Governmental Approvals (Newark) Schedule 4.3B - Governmental Approvals (Newark and Parlin) Schedule 4.8 - Litigation Schedule 4.12 - Transactions Under Other Names Schedule 4.20 - Welfare Benefits Schedule 4.23 - Environmental Matters Schedule 4.24 - List of Documents Schedule 4.25 - Insurance Schedule 4.28 - Transactions With Affiliates Schedule 4.31 - Bank Accounts Schedule 4.32 - Sources and Uses Table Schedule 4.33A - Operating Budget (Newark) Schedule 4.33B - Operating Budget (Parlin) Schedule 4.42 - Liabilities Schedule 5.1(f) - Maintenance Reserve Required Deposit Schedule 5.1(g) - Capital Improvements Reserve Required Deposit Schedule 5.2 - Debt Service Coverage Ratio Calculation Schedule 5.24 - Assets Schedule 5.40 - List of Consents, Certificates of Incorporation, Certificates of Good Standing, Certificates of Qualification, By Laws, Incumbency Certificates Schedule 8.1 - Addresses Schedule 8.6 - Commitment Schedule (v) EXHIBITS Exhibit A1 - Form of Initial Loan Note Exhibit A2 - Form of Funding Loan Note Exhibit B - Form of Debt Service Loan Note Exhibit C1 - Form of Opinion of Counsel to Borrower, Guarantor and NRG Exhibit C2 - Form of Opinion of Counsel to Third Parties Exhibit D - Blocked Account Agreement Exhibit E - Form of Commitment Transfer Supplement Exhibit F - Form of Compliance Certificate Exhibit G - Form of PSE&G Consent Exhibit H - Form of Notice of Borrowing Exhibit I - Form of Subordination Provisions Exhibit J - Form of Guaranty Exhibit K - Form of Tax Indemnification Agreement Exhibit X - Definitions and Interpretation (vi) CREDIT AGREEMENT This CREDIT AGREEMENT, dated as of May 17, 1996, is made by and among (i) NRG Generating (Newark) Cogeneration Inc., a Delaware corporation ("NRG Newark"), and NRG Generating (Parlin) Cogeneration Inc., a Delaware corporation ("NRG Parlin"), (ii) CREDIT SUISSE, GREENWICH FUNDING CORPORATION, a Delaware corporation ("GFC"), and each Purchasing Lender (each, a "Lender" and collectively, the "Lenders"), and (iii) CREDIT SUISSE, as agent for the Lenders ("Agent"). W I T N E S S E T H : WHEREAS, the Borrower has requested the Lenders to make credit facilities available on the terms and subject to the conditions set forth in this Agreement, for the payment of Qualifying Uses; and WHEREAS, the Lenders are willing to provide the Loans and the Commitments to the Borrower on the terms and subject to the conditions set forth in this Agreement, for the purpose described above. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereby agree as follows: ARTICLE I Definitions For purposes of this Agreement, the terms used in this Agreement and not otherwise defined herein shall have the respective meanings assigned to them in Exhibit X hereto (such definitions to be equally applicable to both singular and plural forms of the terms defined). ARTICLE II Amounts and Terms of the Loans Section 2.1 The Loans. (a) The Commitment. Subject to and upon the terms and conditions of this Agreement, on the Initial Funding Date the Lenders agree to make available to NRG Newark, as the Borrower, the Initial Loan in the aggregate amount of the Initial Commitment. Subject to and upon the terms and conditions of this Agreement, the Lenders agree to make available to NRG Newark and NRG Palin, jointly and severally, as the Borrower, during the Additional Commitment Period, the Additional Loan in the aggregate amount of the Additional Commitment. The proceeds of the Funding Loans shall be used for the Qualifying Uses. The Initial Loans shall be funded in one drawing on the Initial Funding Date and shall be made available to Borrower in immediately available funds in the accounts specified by Borrower to Agent on or before the Initial Funding Date. The Additional Loans shall be funded in one drawing on the Additional Funding Date and shall be made available to Borrower in immediately available funds in the accounts specified by Borrower to Agent on or before the Additional Funding Date. Any amount of the Funding Loans which is repaid may not be reborrowed. (b) Borrowing Mechanics. The Funding Loans made on the Initial Funding Date or the Additional Funding Date, as the case may be, shall be made on a Notice of Borrowing, given not later than 11:00 a.m. (New York time) in the case of Funding Loans based on LIBOR, on the third Business Day and, in the case of Funding Loans based on the Base Rate, on the Business Day prior to the date of the proposed Funding Loans by Borrower to Agent at the Agent's office indicated in Section 8.1 hereof, and Agent shall give to each Lender prompt notice thereof by cable or telefacsimile, but in any event, such notice shall be received by each Lender prior to 1:00 p.m. New York City time on the date Agent receives such Notice of Borrowing in compliance with this Section 2.1(b). Such Notice of Borrowing shall be by cable, telefacsimile, or telephone confirmed promptly in writing, but in no event shall such written confirmation be received by Agent later than 11:00 a.m. (New York time) on the Business Day prior to the date the Funding Loans are to be made. Such Notice of Borrowing shall specify the date of the requested Funding Loans. 2 Section 2.2 The Debt Service Line of Credit Facility Commitment. (a) The Debt Service Line of Credit Facility Commitment. Subject to and upon the terms and conditions of this Agreement, the Lenders agree to make available to Borrower during the Availability Period, Debt Service Loans in an aggregate maximum amount at any one time outstanding up to the Debt Service Line of Credit Facility Commitment. The proceeds of the Debt Service Loans shall only be used for the payment of Debt Service. The initial Availability Period shall expire on the fifth anniversary of the Initial Funding Date. Borrower may, at least one year prior to such expiration date (as extended from time to time), request Lenders to extend the Availability Period. Within 60 days of receipt of Borrower's request, Agent shall notify Borrower of the Lenders' decision regarding Borrower's request to extend the Availability Period. The Availability Period shall be extended only with the prior written consent of all the Lenders. If the Lenders do decide to extend the Availability Period, the Availability Period shall be extended for such additional term as the Lenders may decide, which additional term shall not be less than one year; provided, however, that in no event shall the Availability Period extend beyond the Maturity Date. (b) Borrowing Mechanics. The Debt Service Loans shall be made on a Notice of Borrowing, given not later than 11:00 a.m. (New York time) in the case of Debt Service Loans based on LIBOR, on the third Business Day and, in the case of Debt Service Loans based on the Base Rate, on the Business Day prior to the date of the proposed Debt Service Loans by Borrower to Agent at the Agent's office indicated in Section 8.1 hereof, and Agent shall give to each Lender prompt notice thereof by cable or telefacsimile, but in any event, such notice shall be received by each Lender prior to 1:00 p.m. New York City time on the date Agent receives such Notice of Borrowing in compliance with this Section 2.2(b). Such notice of Borrowing shall be by cable, telefacsimile, or telephone confirmed promptly in writing, but in no event shall such written confirmation be received by Agent later than 11:00 a.m. (New York time) on the Business Day prior to the date the Debt Service Loans are to be made. Such Notice of Borrowing shall specify the date of the requested Debt Service Loans. Section 2.3 Conditions Relating to Borrowings. (a) Notice of Borrowing Irrevocable. A Notice of Borrowing shall be irrevocable and binding on Borrower. 3 Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in the Notice of Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss, cost or expense (excluding the loss of the Base Rate Margin or the LIBOR Margin, as applicable) incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Loans to be made by such Lender when the Loans, as a result of such failure, are not made on such date. (b) Agent's Reliance on Lender Loans. Unless Agent shall have been notified by any Lender prior to the date of the Loans that such Lender does not intend to make available to Agent its pro rata portion of such Loan to be made on such date, Agent may assume that such Lender has made such amount available to Agent on such date and Agent in its sole discretion may, in reliance upon such assumption, make available to Borrower a corresponding amount. If such corresponding amount is not in fact made available to Agent by such Lender and Agent has made such amount available to Borrower, Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon Agent's demand therefor, Agent shall promptly notify Borrower and Borrower shall immediately repay such corresponding amount to Agent. Agent shall also be entitled to recover from such Lender or Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by Agent to Borrower to the date such corresponding amount is recovered by Agent, at the Federal Funds Rate until the third Business Day, and at the Base Rate plus the Base Rate Margin thereafter. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights which Borrower may have against any Lender as a result of any default by such Lender hereunder. Notwithstanding anything contained herein or in any other Loan Instrument to the contrary, the Agent may, subject to the rights of the Borrower or the other Secured Parties under the Security Documents, apply all funds and proceeds of collateral available for the payment of any Obligations first to repay any amount owing by any Lender to Agent as a result of such Lender's failure to fund its pro rata share of any Loan hereunder. (c) Failure to Make Loan. The failure of any Lender to make the Loans to be made by it shall not relieve any other Lender of its obligation, if any, hereunder to make 4 its Loan, on the date of the Loans, but no Lender shall be responsible for the failure of any other Lender to make the Loans to be made by such other Lender on the date of the Loans. (d) Notice of Interest Rate. Agent shall give prompt notice to Borrower and the Lenders of the applicable Interest Rate for such Loan determined by Agent pursuant to Section 2.4 hereof as soon as reasonably practicable after such rate is determined by Agent and in no event later than two Business Days (one Business Day in the case of a Loan using the Base Rate) prior to making such Loan. Section 2.4 Interest and Fees. (a) Interest on Loans. On each Interest Payment Date, Borrower shall pay to Agent for the account of the Lenders interest in respect of each Interest Period on the daily unpaid principal amounts of any Loans outstanding during such Interest Period in arrears at the rates per annum equal to the Interest Rates then in effect. Interest shall be computed on the basis of the actual number of days elapsed and (A) a year of 360 days for LIBOR and (B) a year of 365 or 366 days, as appropriate, for the Base Rate. In the case of an Interest Period using LIBOR, Borrower shall select each Interest Period and the Interest Rate therefor by giving oral notice of such selection to Agent by 12:00 noon (New York time) on the date of any such notice at least three Business Days before the first day of such Interest Period, and such oral notice shall be confirmed in a written notice delivered to Agent as soon as practicable, but in no event later than three Business Days from the date of such oral notice; provided that: (i) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of an Interest Period using LIBOR, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (ii) any Interest Period using LIBOR which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month in which such Interest Period ends) shall, subject to clause (iv) below, end on the last Business Day of a calendar month; 5 (iii) no Loan upon first being made shall be divided into or allocated among more than six (6) Interest Periods; (iv) no Interest Period shall extend, with respect to the Funding Loans, beyond the Maturity Date and with respect to the Debt Service Loans, beyond the earlier of (a) the expiration of the Availability Period and (b) the next Repayment Date. (v) at no time shall the outstanding principal amounts of the Funding Loans and the Debt Service Loans, in the aggregate, accrue interest pursuant to more than six (6) Interest Periods (each variation in time or in the basis upon which interest is calculated constituting an Interest Period). Such notice shall specify the Interest Rate and Interest Period selected by Borrower and the amount or amounts of the Loans that shall bear interest at such Interest Rate for such Interest Period. In the event Borrower fails to provide such notice to Agent within such time, the Interest Rate shall be the Base Rate plus the applicable Base Rate Margin. (b) Default Interest. Upon written notice from Agent of the occurrence of an Event of Default, Borrower shall pay interest on the principal amounts of the Funding Loans and the Debt Service Loans then outstanding, in lieu of the otherwise applicable Interest Rate, from and including (i) in the event that Borrower notifies Agent of the Event of Default within ten (10) Business Days of the occurrence thereof, the date of Agent's written notice to Borrower and (ii) in the event that Borrower does not notify Agent of the Event of Default within ten (10) Business Days of the occurrence thereof, the date of occurrence of the Event of Default, at the Default Interest Rate and continuing so long as the amount in respect of which such interest or fees accrue remains unpaid or until such Event of Default is remedied, whichever shall occur first, which interest and fees shall be due and payable by Borrower on Agent's demand, provided that upon the occurrence of an Event of Default specified in Sections 6.1(h), 6.1(i) or 6.1(t) with respect to Borrower, such interest and fees shall be immediately due and payable without the making of a demand by Agent. (c) Fees. Borrower shall pay the following fees: (i) Agency Fee: to Agent for its own account, the non- refundable "Agency Fee" payable in advance, which shall be $150,000 per annum payable first 6 on the Initial Funding Date and thereafter on each anniversary thereof. Beginning with the second payment, the Agency Fee shall be increased or decreased as of each date it is payable by the percentage change in the GNP Implicit Price Deflator for the calendar year immediately preceding the date on which the Agency Fee was paid. No decrease of any such fees shall result in any refund of any such fees previously owed or paid; (ii) Commitment Fees. Borrower shall pay to Agent for the account of the Lenders during the Additional Commitment Period a commitment fee on the Additional Commitment at a rate per annum equal to 0.375%. Borrower shall also pay to Agent for the account of the Lenders during the Availability Period a commitment fee on the daily average unadvanced portion of the Debt Service Line of Credit Facility Commitment at a rate per annum equal to the applicable LIBOR Margin. The commitment fees shall be computed on the basis of the actual number of days elapsed and a year of three hundred and sixty (360) days and shall be payable quarterly in arrears on each Quarterly Date. (iii) Borrower hereby authorizes the Lenders to make a Debt Service Loan if the conditions specified in Section 3.2 (other than with respect to clauses (c) and (e) thereof) have been satisfied in the amount of any of the aforesaid fees when due, whether or not a Notice of Borrowing has been submitted by Borrower and all sums disbursed hereunder shall be secured by the Loan Instruments. Agent shall give Borrower written notice of all Debt Service Loans made pursuant to this section. Section 2.5 Funding and Yield Protection. (a) Taxes. (i) Borrower shall make all payments of all amounts payable or reimbursable to the Lenders under the Notes net, free and clear of and without deduction for any and all Taxes, and shall reimburse each Lender for the cost of any Taxes imposed on it or on any payment under or with respect to any aspect of any Loan or the Notes, as applicable, or the making, execution or enforcement thereof; provided that the foregoing obligation to pay such additional amounts shall not apply to any payment to a Lender hereunder unless such Lender is, on the date hereof (or on the date it becomes a Lender as provided in Section 8.6(a) hereof) and on the date of any change in the applicable lending office of such Lender, entitled to submit either a Form 1001 (relating to such Lender and entitling it to a complete exemption from 7 withholding on all interest to be received by it hereunder in respect of the Loans) or Form 4224 (relating to all interest to be received by such Lender hereunder in respect of the Loans). For the purposes of this Section 2.5(a), (x) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United States of America, and (y) "Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates). (ii) If Borrower is prohibited or prevented by Applicable Law or otherwise from making any such payment net, free and clear of any Taxes or from reimbursing any Lender for the cost of any such Taxes (as provided above), then the amount of such payment to be made by Borrower shall be increased by such additional amount or amounts as may be necessary to ensure that each Lender shall receive a net amount which after payment of any Taxes imposed shall be equal to the amount each such Lender would have received had no such imposition been made. (iii) Borrower shall, at Agent's request, provide evidence that all Taxes imposed on all payments under or with respect to the Loans, the Notes or any related instrument shall have been paid in full to the appropriate authorities by delivery of official receipts or notarized copies thereof to Agent within 30 days after payment thereof. Borrower shall be entitled to make all filings, pursue all remedies and appeals and take such other lawful action to prevent or challenge the imposition of any Taxes, or to procure a refund of any Taxes paid, provided that Borrower shall indemnify and hold the Lenders harmless, to the reasonable satisfaction of Agent, for such Taxes (and any penalties, interest or other charges attached thereto) and for any liabilities, costs or expenses incurred by the Lenders (including reasonable fees and expenses of counsel) in connection with any such action by Borrower. (b) Increased Costs. (i) If, with respect to the Loans, the Commitments or any of the Loan Instruments (including the making or the maintenance by any Lender of its proportionate share of the Loans), 8 (x) the compliance by any Lender with any direction, requirement or request made, instituted or initially enforced after the date hereof from any Governmental Authority, whether or not having the force of Law, with which such Lender must reasonably comply; or (y) any change, made or initially enforced after the date hereof, in the interpretation or application of any Law or the enactment of any Law imposing or modifying any reserve, deposit, capital adequacy or similar requirement with respect to any class of assets or liabilities of, deposits with or for the account of, or loans by any Lender (or with respect to any change therein or in the amount thereof); or (z) the occurrence of a change, made or initially enforced after the date hereof, in any other condition or circumstance with respect to this Agreement and/or the maintenance by any Lender of its proportionate share of the Loans or the Commitments; shall (A) result in any increase in cost to any Lender in connection with or arising out of the Loans, the Commitments or any Loan Instrument, (B) result in any reduction in the amount of any payment receivable by such Lender hereunder or thereunder or (C) result in any reduction of the rate of the return on any Lender's capital as a consequence of its obligations hereunder below that which such Lender could have achieved but for such circumstances (collectively, "Increased Costs"), then in each such case Borrower shall fully reimburse such Lender the amount of such Increased Costs promptly after written notification thereof to Borrower and Agent by such Lender. At Borrower's request, such Lender shall provide Borrower with evidence of the Increased Costs to such Lender. (ii) Each Lender shall notify Borrower of any event that will entitle such Lender to compensation under clause (i) of this Section 2.5(b) within 45 days after such Lender obtains actual knowledge thereof, provided that if any Lender fails to give such notice within 45 days after it obtains actual knowledge of such an event, such Lender shall, with respect to compensation payable under clause (i) of this Section 2.5(b), only be entitled to payment under this Section 2.5(b) for Increased Costs incurred from and after the date that is 45 days prior to the date that such Lender does give such notice. Except as provided in the immediately preceding sentence, the failure to give any such notice shall 9 not release or diminish any of Borrower's obligations to pay any amounts pursuant to this Section 2.5(b). (c) Change of Law. After the date hereof if any change in Law or the interpretation thereof by any Governmental Authority makes it unlawful for any Lender to make or continue its proportionate interest in the Loans or the Commitments, as applicable, then such Lender shall promptly give notice along with evidence thereof to Borrower and Agent, and Borrower shall pay forthwith in the manner set forth below all amounts outstanding, accrued or payable under this Agreement and the Notes to such Lender. (d) Non-Availability. (i) If at any time the Agent in good faith determines that deposits are not available in the London interbank market for the next Interest Period, Agent shall so notify Borrower, and the LIBOR basis for such Loans shall be suspended, and interest on such Loans for any subsequent Interest Periods shall accrue at the Base Rate plus the Base Rate Margin, until such time as such condition no longer exists. (ii) If at any time the Majority Lenders in good faith determine that the Interest Rate then in effect based on LIBOR does not serve as an accurate reference to determine the cost of advancing or maintaining the Loans on a LIBOR basis during any Interest Period, then the Majority Lenders shall notify Agent, who shall so notify Borrower, and interest on such Loans shall for any subsequent Interest Period accrue at the Base Rate plus the Base Rate Margin. (iii) Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender to honor its obligation to make or maintain Loans on a LIBOR basis hereunder, then such Lender shall promptly notify the Borrower thereof (with a copy to the Agent) and such Lender's obligation to make or continue Loans on a LIBOR basis shall be suspended, and such Lender shall make or continue Loans for any subsequent Interest Periods on a Base Rate basis, until such time as such Lender may again make and maintain Loans on a LIBOR basis. (e) Funding Costs. Borrower agrees to indemnify each Lender and to hold each Lender harmless from any actual loss, cost or out-of-pocket expense (excluding the loss of the Base Rate Margin or the LIBOR Margin, as applicable) which such Lender determines is attributable to (i) default by Borrower in making a borrowing of any Loan having an 10 Interest Rate determined using LIBOR after Borrower has selected an Interest Rate with respect to such Borrowing pursuant to Section 2.4(a) hereof, (ii) default by Borrower in making any prepayment of any Loan, as applicable, having an Interest Rate determined using LIBOR after Borrower has given any notice required hereunder regarding such prepayment or (iii) the making of a prepayment (including, without limitation, on acceleration) on a day which is not the last day of an Interest Period with respect thereto, to the extent any such loss, cost or expense arises from the reemployment of funds obtained by such Lender to maintain its Loans having an Interest Rate based on LIBOR or from fees payable to terminate the deposits from which such funds were obtained. Section 2.6 Repayment Dates. (a) Repayment of Funding Loans. (i) Repayment of Funding Loans. (A) If the Additional Funding Date does not occur on or prior to the Initial Maturity Date, then Borrower shall pay to Agent on the Initial Maturity Date for the pro rata account of the Lenders the entire outstanding principal amount of the Initial Loans plus any accrued and unpaid interest and fees thereon plus any other fees remaining unpaid under this Agreement or any other Loan Instrument. (B) If the Additional Funding Date occurs on or prior to the Initial Maturity Date, then Borrower shall pay on each Repayment Date to Agent for the pro rata account of the Lenders the amount (the "Funding Loans Repayment Amount") equal to the percentage, indicated below for such Repayment Date (or in Schedule 2.6(a) if the first Repayment Date occurs after September 30, 1996), of the principal amount of the Funding Loans; provided, however, notwithstanding the foregoing, to the extent that the Additional Commitment is reduced in accordance with Section 2.9 (C), Agent shall, on the Additional Funding Date, deliver to Borrower a revised amortization schedule which shall preserve the same Debt Service Coverage Ratios for the period from the Additional Funding Date to the Maturity Date that existed prior to the reduction of the Additional Commitment, and Borrower shall pay on each Repayment Date to Agent for the pro rata account of the Lenders the Funding Loan Repayment Amount equal to the percentage indicated for such Repayment Date on such amortization schedule: 11 Repayment Funding Loans Repayment Funding Loans Date Repayment Date Repayment Amount Amount 1 1.2750% 31 1.4625% 2 1.2750% 32 1.4625% 3 1.2250% 33 1.4625% 4 1.2250% 34 1.4625% 5 1.2250% 35 1.5250% 6 1.2250% 36 1.5250% 7 1.3750% 37 1.5250% 8 1.3750% 38 1.5250% 9 1.3750% 39 1.4375% 10 1.3750% 40 1.4375% 11 1.5500% 41 1.4375% 12 1.5500% 42 1.4375% 13 1.5500% 43 1.7250% 14 1.5500% 44 1.7250% 15 1.3875% 45 1.7250% 16 1.3875% 46 1.7250% 17 1.3875% 47 1.8625% 18 1.3875% 48 1.8625% 19 1.6875% 49 1.8625% 20 1.6875% 50 1.8625% 21 1.6875% 51 1.8750% 22 1.6875% 52 1.8750% 23 1.7625% 53 1.8750% 24 1.7625% 54 1.8750% 25 1.7625% 55 1.8250% 26 1.7625% 56 1.8250% 27 1.5000% 57 3.0750% 28 1.5000% 58 3.0750% 29 1.5000% 59 3.0750% 30 1.5000% 60 3.0750% (C) All Funding Loan Repayment Amounts shall be rounded down to the nearest whole dollar, except that the final Funding Loan Repayment Amount shall be in an amount equal to the outstanding principal amount of the Funding Loans plus accrued and unpaid interest and fees thereon, provided that any and all other Obligations of Borrower in respect of the Funding Loans shall be deemed immediately due and payable on the Maturity Date, without demand, and shall be paid by Borrower no later than the close of business on such date. (ii) Reborrowing Prohibited. No amount repaid pursuant to this Section 2.6(a) may be reborrowed by Borrower. 12 (b) Repayment of Debt Service Loans. (i) Repayment of Debt Service Loans. Each Debt Service Loan shall be due and payable by Borrower, without demand, on the next Repayment Date from 100% of the Cash Revenues available after making the payments specified in Sections 5.1(c)(i), 5.1(c)(ii) and 5.1(c)(iii). Notwithstanding the foregoing, upon the expiration of the Availability Period, all Debt Service Loans, together with all accrued and unpaid interest thereon, shall be immediately due and payable without demand. (ii) Reborrowing. Prior to the last day of the Availability Period, Debt Service Loans may be borrowed, repaid and reborrowed. Section 2.7 Optional Prepayments. By giving irrevocable written notice, which is received by Agent at least 10 but not more than 45 Business Days in advance, Borrower may, at its option, make prepayments to Agent for the pro rata account of the Lenders on any Interest Payment Date, of all the outstanding principal amount of the Funding Loans, or from time to time any part thereof equal to $5,000,000 or more in integral multiples of $1,000,000, in each case together with all accrued and unpaid interest thereon to the date of prepayment and any additional amounts owed by Borrower pursuant to Section 2.5(e)(iii) or, if applicable, Section 5.15(b), provided that if a Default or Event of Default shall have occurred and be continuing or shall result from such prepayment, Borrower may not make prepayments pursuant to this Section 2.7 unless (a) such prepayments are made from funds other than Cash Revenues, or (b) prepayments are made of all the outstanding principal amount of the Loans together with all interest, fees, costs, charges, expenses and other amounts payable by Borrower to Lenders under any Loan Instrument, including, without limitation, amounts owed by Borrower pursuant to Section 2.5(e)(iii) or, if applicable, Section 5.15(b) hereof. All partial prepayments shall be applied in payment of the Repayment Amounts in inverse order of maturities and shall be deemed first applied to prepay amounts not subject to the Interest Rate Hedge Agreements. Amounts prepaid pursuant to this Section 2.7 may not be reborrowed. Section 2.8 Mandatory Prepayments (a) Certain Events. If an Event of Loss shall occur in respect of a Project, Borrower shall, subject to the provisions of Section 5.18, prepay the Loans on the earlier to occur of (i) the date occurring 90 days after the date of 13 such Event of Loss and (ii) receipt of the Net Proceeds in respect of such Event of Loss, in an amount equal to the Required Prepayment Amount for the affected Project. In addition, if (x) the projections for the remaining Project, in form and substance satisfactory to Agent, do not demonstrate the ability of Borrower to maintain at all times during the term of this Agreement, the Required Coverages (after the prepayment of the Required Prepayment Amount for the affected Project), or (y) an Event of Default shall have occurred and be continuing, or (z) the term of any of the Project Documents for the remaining Project shall expire prior to the date twelve months after the Maturity Date, then at the same time as the prepayment pursuant to the preceding sentence, Borrower shall also apply any Net Proceeds in excess of the Required Prepayment Amount for the affected Project to prepay the Loans. If the Event of Loss shall occur in respect of the Parlin Project, the prepayment pursuant to this section shall be applied pro rata to the payment of the outstanding Funding Loan Repayment Amounts. If the Event of Loss shall occur in respect of the Newark Project prior to the Additional Funding Date, then the prepayment pursuant to this section shall be applied to the payment of the Initial Loan. If the Event of Loss shall occur in respect of the Newark Project on or after the Additional Funding Date, then the prepayment pursuant to this section shall be applied in the following manner: (A) the first $16,500,000 shall be applied to the payment of the Repayment Amounts in the inverse order of maturities and (B) the remaining amount shall be applied pro rata to the payment of the outstanding Funding Loan Repayment Amounts. (b) Rate Shortfall. (i) If at any time on and after the Additional Funding Date (x) the Qualifying Cogeneration Facility status of the Newark Project is not maintained and the rates approved by FERC under the Newark Power Purchase Agreement are at a level lower than the rates set forth therein, or (y) the rates approved by FERC under the Parlin Power Purchase Agreement are at a level lower than the rates previously approved by FERC under the Parlin Power Purchase Agreement, then in either such case Borrower shall pay to Agent on the Rate Shortfall Prepayment Date an amount (the "Rate Shortfall Prepayment Amount") calculated such that after giving effect to such prepayment (A) the annual Projected Debt Service Coverage Ratio for each calendar year (or part thereof) for the period from and excluding the Rate Determination Date to and including the Maturity Date is at least 1.35:1.00 and (B) the average calendar year Projected Debt Service Coverage Ratio for the period from and excluding the Rate Determination Date to and including the Maturity Date is at least 1.45:1.00. For purposes of calculating such 14 Projected Debt Service Coverage Ratio, Projected Debt Service shall not include the Rate Shortfall Prepayment Amount. The determination of the Rate Shortfall Prepayment Amount shall be made by Agent in its reasonable discretion and in good faith, after consultation with the Lenders and the Independent Engineer. The Rate Shortfall Prepayment Amount shall be due and payable to Agent on the date which is 30 days after the date Agent delivers to Borrower the results of such determination ("Rate Shortfall Prepayment Date"). (ii) Borrower shall also refund to JCP&L, if so ordered by FERC, any amounts ("Refunded Amount") that are to be refunded due to the higher rates paid by JCP&L during the period that the rates paid by JCP&L pursuant to the Newark Power Purchase Agreement were higher than the rates approved by FERC under the Newark Power Purchase Agreement. (c) Restricted Payments Escrow Account. On any Repayment Date, the Funding Loans shall be prepaid by Agent from funds which have remained on deposit in the Restricted Payments Escrow Account for twelve (12) months or more as provided in Section 5.1(c)(viii) hereof, together with all accrued and unpaid interest thereon. All partial prepayments are to be applied to Repayment Amounts in inverse order of maturities. (d) BPU Order. If at any time prior to the Additional Funding Date, the order of the New Jersey Board of Public Utilities ("BPU") approving the Third Amendment to the Newark Power Purchase Agreement or the Interim Gas Service Agreement is modified, rescinded or otherwise invalidated in whole or in part by the BPU or by an appropriate court on appeal of such BPU order, then Borrower shall immediately prepay the Initial Loan, together with all accrued and unpaid interest thereon. (e) Amounts Prepaid. Amounts prepaid pursuant to this Section 2.8 may not be reborrowed. Any prepayments made pursuant to this Section 2.8 shall include, in addition to the accrued interest and accrued unpaid fees to the date of prepayment, any additional amounts owed by Borrower pursuant to Section 2.5. Section 2.9 Optional Termination or Reduction of Commitments. (A) Provided that no Default or Event of Default shall have occurred and be continuing or shall result therefrom, by giving irrevocable written notice, which is received by Agent at least 10 but not more than 45 days in advance, Borrower may, during the Availability Period, terminate or reduce the Debt Service Line of Credit Facility 15 Commitment, provided that (a) any such reduction shall be in integral multiples of $100,000, (b) prior to any such termination or reduction, the Borrower shall have demonstrated to the satisfaction of Agent that the balance in the Debt Service Reserve Account, without taking into account the terminated or reduced portion of the Debt Service Line of Credit Facility Commitment, shall be equal to or greater than the Debt Service Required Balance, and (c) any such termination or reduction shall apply proportionally to reduce the Debt Service Line of Credit Facility Commitment of each Lender. Once terminated or reduced pursuant to this Section 2.9, the Debt Service Line of Credit Facility Commitment may not thereafter be reinstated or increased. (B) NRG Newark and NRG Parlin may, by giving irrevocable written notice, which is received by Agent at least three Business Days in advance but not more than 45 days in advance, reduce or terminate the Additional Commitment during the Additional Commitment Period. Once reduced or terminated, the Additional Commitment may not thereafter be increased or reinstated. (C) If, prior to the Additional Funding Date, FERC approves the rates in the Parlin Power Purchase Agreement on a cost of service basis and such rates are approved at a level lower than the rates set forth in the Parlin Power Purchase Agreement, then Borrower shall deliver revised base case projections to Agent that reflect such approved rates and, based on such base case projections, the Additional Commitment shall be reduced by an amount (the "Additional Commitment Reduction Amount") calculated such that after giving effect to such reduction (A) the annual Projected Debt Service Coverage Ratio for each calendar year (or part thereof) for the period from the Additional Funding Date to and including the Maturity Date is at least 1.35:1.00 and (B) the average calendar year Projected Debt Service Coverage Ratio for the period from the Additional Funding Date to and including the Maturity Date is at least 1.45:1.00. Section 2.10 General Terms of Payment. (a) General. All sums payable to the Lenders hereunder and under any other Loan Instrument to which they are a party shall be paid without condition or deduction for any counterclaim, defense, recoupment or set-off in New York City in immediately available funds not later than 12:00 noon (New York time) on the day in question to the Federal Reserve Bank of New York, for credit to the Loan Clearing Account, Account No. 90499602, of Credit Suisse, as Agent, 16 ABA No. 026009179, Attention: Project Finance, Reference: NRG Newark/Parlin. (b) Distribution of Payments. If at any time Agent makes available to any Lender amounts due from Borrower hereunder which Borrower fails to make available to Agent, such Lender shall on request forthwith refund such amounts to Agent together with interest thereon at the Federal Funds Rate for such period. In the event that any Lender shall at any time receive any payment in excess of its rights hereunder to receive payments, from any source in respect of any of Borrower's Obligations hereunder, in violation of the requirement of this Agreement that Borrower makes such payment to Agent, such Lender shall be deemed to have received such payment as agent for and on behalf of all the Lenders and shall immediately advise Agent of the receipt of such funds and promptly transmit the full amount thereof to Agent for prompt distribution among all the Lenders as provided for in this Agreement, provided that such Lender shall be deemed not to have received, and Borrower shall be deemed not to have made to such Lender, any payment transmitted to Agent by such Lender pursuant to this Section 2.10(b). (c) Priority of Application. Any payments made to Agent for its account or for the benefit of the Lenders shall be applied (pro rata within each of clauses below, unless otherwise specifically required pursuant to the terms hereof) as follows: (A) first against costs, expenses and indemnities due under the Loan Instruments; (B) then against fees for Agent and the Lenders; (C) then against payments of accrued and unpaid interest on the Loans and payments with respect to any Interest Rate Hedge Agreement; (D) then against principal of the Funding Loans; and (E) then against principal of the Debt Service Loans. (d) Non-Business Day. Whenever any payment hereunder shall be due, or any calculation shall be made, on a day which is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and any interest on any payment shall be payable for such extended time at the specified rate. In no event shall this Section 17 2.10(d) be deemed to modify the definition of Interest Period, Initial Maturity Date, Maturity Date, Additional Commitment Period or Availability Period set forth in this Agreement. (e) Agent's Calculations. All calculations of interest, commissions, increased costs, funding costs, gross-up costs or other amounts due hereunder calculated by Agent with respect to the Loans shall be conclusive and binding for all purposes absent manifest error. Agent shall, upon request by Borrower, promptly provide Borrower with a certificate as to the calculation of the amount of any funding, yield protection or increased cost with respect to the Loans, setting forth the method of such calculation. Section 2.11 Note(s). (a) Initial Loan Notes. The Initial Loans made by each Lender shall be evidenced by a separate promissory note of Borrower in favor of each such Lender, substantially in the form of Exhibit A1, with appropriate insertions as to payee, date and principal amount (individually, an "Initial Loan Note" and, collectively, the "Initial Loan Notes"), payable to the order of such Lender and evidencing the obligation of Borrower to pay a principal amount equal to the aggregate unpaid principal amount of the Initial Loans made by such Lender under this Agreement, plus interest due such Lender thereon, all as provided in this Agreement and the other Loan Instruments. (b) Funding Loan Notes. On the Additional Funding Date, Borrower shall execute and deliver separate promissory notes of Borrower in favor of each Lender, substantially in the form of Exhibit A2 hereto with appropriate insertions as to payee, date and principal amount (individually, a "Funding Loan Note" and, collectively, the "Funding Loan Notes"), payable to the order of such Lender and evidencing the joint and several obligations of Borrower to pay a principal amount equal to the aggregate unpaid principal amount of the Funding Loans made by such Lender under this Agreement plus interest due such Lender thereon, all as provided in this Agreement and the other Loan Instruments. Simultaneously with the delivery of a Funding Loan Note to a Lender, such Lender shall cancel and deliver its Initial Loan Note to NRG Newark. Any Funding Loan Note executed and delivered in accordance with the foregoing shall carry the rights to unpaid interest that were carried by the Initial Loan Note(s), such that no loss of interest shall result from any such exchange. Each Funding Loan Note executed and delivered in accordance with 18 the foregoing shall have set forth thereon a legend substantially in the following form: "This Note is issued, in part, in replacement of [describe canceled Note[s]] and, notwithstanding the date of this Note, this Note carries all of the rights to unpaid interest that were carried by such replaced Note[s], such that no loss of interest shall result from any such replacement." (c) Debt Service Loan Notes. The Debt Service Loans provided by each Lender shall be evidenced by a separate promissory note of Borrower in favor of each such Lender, substantially in the form of Exhibit B hereto, with appropriate insertions as to payee, date and principal amount (individually, a "Debt Service Loan Note" and, collectively, the "Debt Service Loan Notes"), payable to the order of such Lender and evidencing the obligation of Borrower to pay a principal amount equal to the aggregate unpaid principal amount of all Debt Service Loans made by such Lender under this Agreement, plus interest due such Lender thereon, all as provided in this Agreement. (d) Certain Terms of the Notes. Each Lender is hereby authorized to record on its Note (or a schedule or grid attached thereto) or on its regularly maintained books and records the date, type and amount of each Loan made or continued by, or arising in favor of, such Lender, and the date and amount of each payment or prepayment of principal thereof, and, in the case of Loans subject to an Interest Period using LIBOR, the Interest Period with respect thereto, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded. Interest on each Note shall be payable on the dates specified in Section 2.4 hereof. The principal of each Initial Loan Note shall be stated to be payable on the Initial Maturity Date and the principal of each Funding Loan Note shall be stated to be payable on each Repayment Date and the Maturity Date. The principal of each Debt Service Loan Note shall be stated to be payable in accordance with the provisions of Section 2.6(b)(i). Each Lender is hereby authorized to record on its Note (or a schedule or grid attached thereto) or on its regularly maintained books and records the date, type and amount of each Loan made or continued by, or arising in favor of, such Lender, and the date and amount of each payment or prepayment of principal thereof, and, in the case of Loans subject to an Interest Period using LIBOR, the Interest Period with respect thereto, and any such 19 recordation shall constitute prima facie evidence of the accuracy of the information so recorded. At any time, at the reasonable request of any Lender, Borrower (at its expense) shall execute and deliver one or more of the applicable Notes in substitution of the Note(s) held prior thereto, which latter Note(s) shall be canceled and simultaneously delivered to Borrower. Any Note executed and delivered in accordance with the foregoing shall carry the rights to unpaid interest that were carried by the Note(s) canceled and delivered to Borrower in exchange therefor, such that no loss of interest shall result from any such exchange. Each Note executed and delivered in accordance with the foregoing shall have set forth thereon a legend substantially in the following form: "This Note is issued, in part, in replacement of [describe canceled Note[s]] and, notwithstanding the date of this Note, this Note carries all of the rights to unpaid interest that were carried by such replaced Note[s], such that no loss of interest shall result from any such replacement." Section 2.12 Replacement of Lender. (a) In the event that (i) any Lender requests compensation pursuant to Section 2.5 hereof, (ii) the obligation of any Lender to make or continue its proportionate interest in the Loans or the Commitments is terminated pursuant to Section 2.5(c) hereof, (iii) the obligation of any Lender to make or continue Loans on a LIBOR basis shall be suspended pursuant to Section 2.5(d) hereof, or (iv) any Lender becomes insolvent or fails to make any Loan in response to a request for borrowing by the Borrower where the Majority Lenders have made the respective Loans to be made by them in response to such request, then, so long as such condition exists, Borrower may either (x) designate another financial institution (such financial institution being herein called a "Replacement Lender") acceptable to Agent (which acceptance shall not be unreasonably withheld) and which is not an Affiliate of the Borrower or Guarantor, to assume such Lender's Commitments hereunder and to purchase the Loans of such Lender and such Lender's rights under this Agreement and the Notes and any other Loan Instruments held by such Lender, all without recourse to or representation or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and accrued but unpaid fees owing to such Lender, and upon such assumption, purchase and substitution, and subject to the execution and delivery to the Agent by the Replacement Lender 20 of documentation satisfactory to the Agent (pursuant to which such Replacement Lender shall assume the obligations of such original Lender under this Agreement and any other Loan Instruments), the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder, or (y) pay to such Lender the outstanding principal amount of the Loans payable to such Lender under this Agreement and any other Loan Instruments plus any accrued but unpaid interest on such Loans and accrued but unpaid fees owing to such Lender under this Agreement and any other Loan Instruments. In the event that Borrower exercises its rights under the preceding sentence, the Lender against which such rights were exercised shall no longer be a party hereto or have any rights or obligations hereunder. If Borrower exercises its rights under clause (y) above against any Lender, then the outstanding Loans and the Commitments shall be reduced to the extent of such Lender's pro rata share of the Loans and the Commitments. (b) If the Borrower exercises its rights under clause (y) of Section 2.12(a) hereof, the Borrower may, not later than the first anniversary of such exercise, designate another financial institution (such financial institution being herein called a "Substitute Lender") acceptable to the Agent (which acceptance will not be unreasonably withheld) and which is not an Affiliate of the Borrower or Guarantor, to assume the Commitments of the Lender against which such rights were exercised and, subject to the execution and delivery to the Agent by the Substitute Lender of documentation satisfactory to the Agent, the Substitute Lender shall become party to this Agreement as a Lender. Upon the Substitute Lender so becoming a party hereto, the Borrower shall borrow Loans from the Substitute Lender in such a manner and in such amounts as will result in the outstanding principal amount of the Loans held by the Lenders being pro rata according to the amounts of their respective Commitments. Section 2.13. Limitation on Liability. Notwithstanding any other term of this Agreement or any of the other Loan Instruments to the contrary, (a) prior to the Additional Funding Date, (i) NRG Parlin shall not be liable in any respect for the payment of principal, interest, fees, expenses or other amounts in respect of the Initial Loan or for the payment of any other amounts under this Agreement or any other Loan Instrument; (ii) NRG Parlin shall not be obligated under any covenant contained in this Agreement (other than in Section 5.7(a)) or any other Loan Instrument; and (b) commencing on the Additional Funding Date, (i) NRG Parlin shall be jointly and severally liable with NRG Newark 21 with respect to the Obligations; and (ii) all covenants contained in this Agreement or in any other Loan Instruments shall be applicable to NRG Parlin as well as NRG Newark. ARTICLE III Conditions of Commitments Section 3.1 Conditions Precedent to the Making of Initial Loans. The obligations of each Lender to make its pro rata share of the Initial Loans on the Initial Funding Date is subject to the satisfaction of Agent of all the conditions precedent set forth below: (a) Certificate of Incorporation or Organizational Documents. Borrower shall have delivered and shall have caused each of the Obligors other than those listed on Schedule 3.1(a) to have delivered to Agent a copy of the certificate of incorporation or other organizational documents of such Obligors, and each amendment thereto, certified by the Secretary of State of its state of incorporation or other appropriate Governmental Authority as being a true and correct copy thereof, such certificate or document to be dated a recent date prior to the Initial Funding Date. (b) Certificate of Good Standing. Borrower shall have delivered and shall have caused each of the Obligors other than those listed on Schedule 3.1(b) to have delivered to Agent a certificate or other appropriate document from the Secretary of State of its state of incorporation or other governmental authority of such Obligor, listing the certificate of incorporation or other organizational documents and each amendment thereto on file in its office and, if available, certifying that (i) such amendments are the only amendments to each such certificate of incorporation or other organizational documents on file in its office, (ii) such Obligor has paid all franchise taxes to the date of such certificate and (iii) such Obligor as appropriate, is duly incorporated and in good standing under the laws of such jurisdiction, such certificates to be dated a recent date prior to the Initial Funding Date. (c) Certificate of Qualification. Borrower shall have delivered and shall have caused each of the Obligors other than those listed on Schedule 3.1(c) to have delivered to Agent certificates or equivalent documents from all states in which it is necessary for such Obligor to be qualified and/or licensed to do business for the purposes of the 22 transactions contemplated hereunder or under any of the Project Agreements, certifying that such Obligor has duly qualified to do business in such jurisdiction as a foreign corporation and is in good standing under such qualification, such certificates or equivalent documents to be dated a recent date prior to the Initial Funding Date. (d) By-Laws and Resolutions. Borrower shall have delivered and shall have caused each of the Obligors other than those listed on Schedule 3.1(d) to have delivered to Agent copies of the By-Laws or other equivalent organizational documents of such Obligor, the resolutions of its Board of Directors approving each Project Agreement to which it is a party (other than the DuPont Power Purchase Agreement), and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to each such Project Agreement to which it is a party (other than the DuPont Power Purchase Agreement), certified as of the Initial Funding Date as true and correct in each case by an Authorized Officer of such Obligor. (e) Incumbency Certificate. Borrower shall have delivered and shall have caused each of the Obligors other than those listed on Schedule 3.1(e) to have delivered to Agent a certificate of an Authorized Officer of such Obligor dated as of the Initial Funding Date certifying the names and true signatures of the officers authorized to sign each Project Agreement to which it is a party (other than the DuPont Power Purchase Agreement) and the other documents to be delivered by it pursuant to the Project Agreements (other than the DuPont Power Purchase Agreement). (f) Opinions of Counsel. Borrower shall have delivered to Agent a favorable opinion of (a) Troutman Sanders LLP, as counsel to Borrower and Guarantor, substantially in the form of Exhibit C1 hereto, and as to such other matters as Agent may reasonably request, (b) Michael Young, Esq., counsel to NRG, substantially in the form of Exhibit C1 hereto, and as to such other matters as Agent may reasonably request, (c) Greenbaum, Rowe, Smith, Ravin and Davis, New Jersey counsel to Borrower and Guarantor, substantially in the form of Exhibit C1 hereto, and as to such other matters as Agent may reasonably request, (d) Gibson, Dunn & Crutcher, New York counsel to Borrower, Guarantor and NRG, substantially in the form of Exhibit C1 hereto, and as to such other matters as Agent may reasonably request, and (e) counsel to each of JCP&L, Newark Group, Stewart & Stevenson, and Stewart & Stevenson Services, substantially in the form of Exhibit C2 hereto, and as to such other matters as Agent may reasonably request, in each case dated as of the Initial Funding Date and addressed to 23 the Agent, the Secured Parties and the Lenders, in form and substance satisfactory to Agent. (g) Fees. Payment in full by NRG and NRG Newark of all fees and expenses which are to be paid on or before the Initial Funding Date, including, without limitation, the fees provided for in the letter agreement dated May 17, 1996 among NRG Newark, NRG Parlin and Agent and the expenses provided for in the letter agreement dated February 13, 1996 between NRG and Agent. (h) Loan Instruments. Borrower shall have delivered to Agent fully executed counterparts of this Agreement, the NRG Guaranty, the Initial Loan Notes, the Pledge Agreement, the Security Agreement, the Blocked Account Agreements, the Mortgage, all financing statements, stock certificates, guarantees, assignments, instruments and agreements required by Agent to be executed on or prior to the Initial Funding Date by or on behalf of Borrower to guaranty or provide collateral security with respect to the Obligations, and such other certificates, opinions, documents and instruments evidencing, securing or pertaining to the Loans and the Commitments as shall be required by Agent to be delivered to the Secured Parties by Borrower or any other Person prior to the Initial Funding Date, in each case in form and substance satisfactory to Agent and signed by all parties thereto (other than Agent) and in full force and effect. In addition, Agent shall have received pay-off letters, UCC termination statements and other documents, in each case, in form and substance satisfactory to Agent, evidencing the release and termination of all prior Liens on the Collateral. All representations and warranties contained in Section 4.1 and each other Loan Instrument shall be true and correct as of the Initial Funding Date. (i) Borrower's Shares. Borrower shall have caused Guarantor to deliver to Agent stock certificates representing 100% of the issued and outstanding shares of capital stock of Borrower registered in the name of Guarantor, together with irrevocable undated stock powers duly endorsed in blank. (j) [Intentionally Omitted]. (k) NRG Energy Investment. Borrower shall have delivered to Agent evidence satisfactory to Agent that not less than $29 million has been paid by NRG by way of cash equity or payment of the purchase price of stock. (l) Security Interest. Except to the extent Consents are required to create a first priority perfected 24 security interest in the Project Documents other than the Power Purchase Agreement, the Steam Sales Agreement and the Ground Lease (which Consents shall be obtained in accordance with Section 5.40), Borrower shall have provided Agent with evidence satisfactory to Agent that it has, for the benefit of the Secured Parties, a valid and perfected first priority security interest in the Collateral on the Initial Funding Date (subject only to Permitted Liens). (m) Financial Statements of Obligors. Agent shall have received the most recent year-end audited financial statements and unaudited quarterly financial statements which are available for each Obligor (or, in the case of each of JCP&L and PSE&G, the most recent Form 10-K filed with the SEC and, to the extent that the most recent Form 10-Q filed with the SEC is dated a more recent date than the most recent Form 10-K for such Obligor, the most recent Form 10-Q filed with and available from the SEC). In the opinion of Agent, there shall have been no material adverse change in the business operations, results of operations, condition (financial or otherwise), prospects or property of any Obligor (except as previously disclosed to Agent in a writing delivered by or on behalf of Borrower or such Obligor) since (i) the date of such Obligor's most recent audited financial statements (or Forms 10-Q or 10-K, as appropriate) previously delivered to Agent, if such Obligor's financial statements have been previously delivered to Agent and (ii) the date which is six months prior to the Initial Funding Date, if such Obligor's financial statements have not previously been delivered to Agent. (n) Notice of Borrowing. Borrower shall have delivered to Agent a Notice of Borrowing in accordance with Section 2.1(b). (o) Officer's Certificate. Borrower shall have delivered to Agent a certificate executed by an Authorized Officer, stating that: (a) on such date, and after giving effect to the funding of the Initial Loans, the provision of the Commitment and the other transactions contemplated hereby or under any of the Project Agreements, no Default or Event of Default has occurred and is continuing or would arise as a result of the consummation of the transactions contemplated hereby or under any of the Project Agreements; (b) no Material Adverse Effect has occurred since June 30, 1995; (c) the representations and warranties set forth in Article IV are true and correct in all material respects on and as of such date with the same effect as though made on and as of such date; and (d) it is not in default under any 25 material agreement, indenture, credit agreement or other document to which it is a party. (p) Confirmation of Agent for Service. Borrower shall have delivered to Agent confirmation from CT Corporation System of its acceptance of its appointment as agent for service of process for Borrower required under Section 8.4 and similar provisions in the other Loan Instruments. (q) [Intentionally Omitted]. (r) Government Approvals, Litigation and Project Documents. (i) Borrower shall have delivered to Agent evidence satisfactory to Agent that all Governmental Approvals and filings and consents from third parties, except such Consents as are set forth in Schedule 5.40 hereof, required in connection with the transactions contemplated hereby in connection with the Newark Project have been obtained, to the extent reasonably obtainable (including, without limitation, all filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, New Jersey Industrial Site Recovery Act (N.J. Rev. Stat. 13:1K-6 et seq.) and all New Jersey asset transfer approvals required under the environmental regulations). Agent shall have received evidence or copies of all Governmental Approvals for the Newark Project that are set forth in Part I of Schedule 4.3A hereto (including, without limitation, those necessary for the operation of the Project at levels satisfactory to Agent after consultation with the Independent Engineer and the approvals), certified by an Authorized Officer of Borrower as being (except in the case of the BPU orders approving the Third Amendment to the Newark Power Purchase Agreement and the Interim Gas Service Agreement) complete and in full force and effect and not subject to appeal, and copies of all correspondence referred to in such Governmental Approvals and all applications for such Governmental Approvals, certified by an Authorized Officer of Borrower as complete. Agent shall have received evidence satisfactory to Agent that (x) neither the Borrower nor the Project is in violation of any Governmental Approval, (y) no additional Governmental Approvals are required for the operation of the Project as contemplated in the Project Documents, and (z) there is no litigation arising from or relating to the transactions contemplated hereby which could reasonably be expected to result in a Material Adverse Effect. (ii) Each of the Project Documents shall be in form and substance reasonably satisfactory to Agent. Agent 26 shall have received evidence satisfactory to it that each of such Project Documents is in full force and effect and that Borrower is not, and to the best knowledge of Borrower, no other party to any such Project Document is, in default in the performance, observance or fulfillment of any of its obligations, covenants or conditions contained therein and that the Effective Date (as defined in the Power Purchase Agreement) has occurred. Agent shall have received executed Consents, in the form and substance satisfactory to Agent (other than those Consents referred to in Schedule 5.40 hereof). Agent shall have received an executed copy of each Project Document, certified in the case of each such document to which Agent is not a party by an Authorized Officer of Borrower as being complete (including all exhibits, schedules and disclosure or other material letters referred to therein or delivered pursuant thereto, and all amendments thereto) and in full force and effect and that no force majeure has occurred thereunder. (s) Acquisition Documents. Borrower shall have delivered to Agent a certificate executed by an Authorized Officer stating that, prior to or concurrently with the making of the Initial Loans and the provision of the Commitments, the Acquisition has been or shall be consummated in accordance with the Acquisition Documents and all Laws, and no term or provision of any Acquisition Document has been amended or waived (except any amendments or waivers approved by Agent in writing). Borrower shall have delivered executed copies of each of the Acquisition Documents (and all exhibits and schedules thereto) certified as being true and correct copies by an Authorized Officer of Borrower, together with copies of all certificates, opinions and other documents executed and delivered thereunder or in connection therewith. (t) Material Adverse Effect. Since June 30, 1995, there shall not have occurred any Material Adverse Effect. (u) Pro Forma, the Operating Budget and Projections. Agent shall have received the Pro Forma Balance Sheets for the Project, the Sources and Uses Table, the Operating Budget for the Project and, at least five Business Days prior to the Initial Funding Date, the Projections for the Newark Project and Parlin Project, in each case satisfactory to Agent; provided that such Projections demonstrate the ability of NRG Newark and NRG Parlin to maintain, at all times during the term of this Agreement, an annual Debt Service Coverage Ratio of at least 1.35:1.00 and an average annual Debt Service Coverage Ratio of at least 1.45:1.00. 27 (v) Title Insurance; Surveys. Agent shall have received an ALTA lender's paid policy of title insurance issued by the Title Company, in form and substance satisfactory to Agent, with such endorsements and affirmative coverage as Agent may reasonably request, with such ALTA direct facultative reinsurance agreements (with direct access provisions) as Agent may reasonably request, (i) insuring the Secured Parties for their ratable benefit in an amount not less than $60,000,000, that good and marketable leasehold title to the Project is vested in the Borrower pursuant to the Ground Lease and good and marketable easements in that portion of the Property consisting of easements is vested in the Borrower and that the Mortgage constitutes a valid and enforceable first mortgage lien on the Project subject only to Permitted Liens and (ii) providing full coverage against all mechanics' and materialmen's liens (including any relating to environmental remediation) as well as coverage against survey exceptions (except as specifically approved by Agent). Agent shall also have received a currently dated ALTA/ASCM Class A certified survey of the Project and all easements affecting the Project by a licensed surveyor in the State of New Jersey satisfactory to Agent and the Title Company, certified to the Secured Parties and the Title Company, showing outlines of the Project, location of all improvements, set back lines, encroachments (if any), rights of way, and showing no state of facts unsatisfactory to any of them and showing such details as Agent may reasonably require. The legal descriptions on the survey shall coincide exactly with that on the title insurance policies to be furnished to Agent. (w) Insurance. Agent shall have received (i) a certified copy of, or binder for, each of the insurance policies for the Project that are required by Section 4.25 hereof, such policies to be in form and substance, and issued by companies, satisfactory to Agent, together with evidence satisfactory to Agent that such insurance complies with the provisions of Section 4.25 hereof and with the provisions of each of the Project Documents, and that all premiums then due with respect to such insurance have been paid and (ii) a written report of the Insurance Consultant describing the insurance obtained by Borrower as of the Initial Funding Date with respect to the Project and stating that the insurance required to be obtained as of the Initial Funding Date pursuant to the Loan Instruments and the Project Documents is in full force and effect and provides reasonable and adequate coverage for the Project. (x) EWG/QF Status. The Project shall be a Qualifying Cogeneration Facility and Borrower shall have 28 maintained and established by filing the QF Certificate, which shall be in full force and effect and shall reflect operation and ownership of the Project consistent with the Project Documents and the Governmental Approvals. NRG Newark and NRG Parlin shall each have filed good faith applications for certification as an EWG with FERC, which applications shall reflect NRG Newark and NRG Parlin as the owner of the Newark Project and the Parlin Project, respectively, and which shall reflect the operation and ownership of the Newark Project and the Parlin Project consistent with the Newark Project Documents and the Parlin Project Documents and the Governmental Approvals, and which shall have been served on all of the entities required to have been served under FERC regulations. (y) Environmental Status. Agent shall have received (i) the environmental reports listed in Schedule 3.1(y) as well as a reliance letter with respect to such reports and such reports and reliance letter shall be in form and substance satisfactory to Agent and such reports shall contain the results of the review of the environmental audit of the Project, permitting issues and other matters of environmental concern with respect to the Project and (ii) such other information as to the past ownership and use and the present condition of the Project as Agent may have requested; and such reports shall not disclose, in the opinion of Agent, any unusual or significant risks associated with the Project relating to any Environmental Requirements. (z) Independent Engineer's Report; Gas Consultant Report. Agent shall have received a report of the Independent Engineer and Gas Consultant detailing to the satisfaction of Agent such matters as Agent may reasonably request, including without limitation, the technical and economic feasibility of the Project and the availability of Alternative Fuel and Backup Gas for the Project. (aa) Regulation as Utility. None of the making of any Loan or any Commitment, the securing of any obligation by Liens pursuant to the Security Documents, any other transaction contemplated by any of the Loan Instruments, nor the ownership or operation of the Newark Project or the Parlin Project by NRG Newark or NRG Parlin shall cause Borrower or, solely on the basis of this transaction, any Secured Party to become subject to regulation by any Governmental Authority as a "public utility", an "electric utility", an "electric utility holding company", a "public utility holding company", or a subsidiary or affiliate of any of the foregoing under any Law or Governmental Requirements (including, without limitation, PUHCA and FPA). 29 (bb) Filing, Registration and Recording Fees. Agent shall have received evidence satisfactory to it that all filing, recordation, subscription and inscription fees, and all taxes and other expenses related thereto, necessary for the consummation of the transactions contemplated by the Project Agreements have been paid or provided for in full by or on behalf of Borrower. (cc) Transfer and Stamp Taxes. Agent shall have received evidence that all transfer, stamp, documentary, intangible personal property or similar taxes, levies, imposts, assessments or charges imposed by any Governmental Authority and any and all interest, penalties or other liabilities arising under or relating thereto, in respect of this Agreement, any other Loan Instrument, any Loans or Obligations or the transactions contemplated herein or therein which are due and payable have been paid or provided for in full. (dd) [Intentionally Omitted]. (ee) Operations and Maintenance Agreement; Operating Guaranty. Borrower shall have delivered to Agent certified copies of the executed Operations and Maintenance Agreement and the Operating Guaranty, each in form and substance satisfactory to Agent. (ff) Assignment of Gas Contract With PSE&G. The Gas Service Agreement, dated May 13, 1993, between O'Brien (Newark) Cogeneration, Inc. and PSE&G shall have been assigned to JCP&L and the Borrower shall have no obligation or liability under such agreement, and the Borrower shall have delivered to Agent a certificate to this effect. Further, Borrower shall have delivered to Agent a certified copy of the Assignment of Gas Service Agreement dated as of April 30, 1996 by and among O'Brien (Newark) Cogeneration, Inc., PSE&G and JCP&L. (gg) Interim Gas Service Agreement. Borrower shall have delivered to Agent certified copies of the executed Interim Gas Service Agreement which shall be in full force and effect. Section 3.2 Conditions Precedent to the Making of Debt Service Loans;. The obligations of each Lender to make its pro rata share of each Debt Service Loan is subject to the satisfaction of Agent of all the conditions precedent set forth below: 30 (a) Funding Loans. All the conditions precedent to the making of Funding Loans set forth in Section 3.1 and 3.3 shall have been satisfied and the Initial Loans shall have been made on the Initial Funding Date and the Additional Loans shall have been made on the Additional Funding Date to Borrower. (b) Insufficient Funds to Repay Debt Service. Debt Service shall be due and payable by the Borrower to the Lenders and the Cash Revenues available to the Borrower plus the balance existing at the time in the Debt Service Reserve Account after making the payments specified in Section 5.1(c)(i) shall be insufficient to pay such Debt Service. (c) Debt Service Loans to be Used to Pay Debt Service. Borrower shall have delivered to Agent a certificate certifying that the proceeds of the proposed Debt Service Loan shall be used only to pay Debt Service due and payable by the Borrower to the Lenders. (d) Debt Service Loans not to exceed Debt Service Line of Credit Facility Commitment. The amount of the proposed Debt Service Loan shall not exceed an amount equal to the Debt Service Line of Credit Facility Commitment. (e) Notice of Borrowing. Borrower shall have delivered to Agent a Notice of Borrowing in accordance with Section 2.2(b). Section 3.3 Conditions Precedent to the Making of Additional Loans. The obligations of each Lender to make its pro rata share of the Additional Loans on the Additional Funding Date is subject to the satisfaction of Agent of all the conditions precedent set forth below: (a) Certificate of Incorporation or Organizational Documents. NRG Parlin shall have delivered and shall have caused each of DuPont, Guarantor and NPI to have delivered to Agent a copy of the certificate of incorporation or other organizational documents of such Parlin Obligors, and each amendment thereto, certified by the Secretary of State of its state of incorporation or other appropriate Governmental Authority as being a true and correct copy thereof, such certificate or document to be dated a date during, or a recent date prior to, the Additional Commitment Period. (b) Certificate of Good Standing. NRG Parlin shall have delivered and shall have caused each of DuPont, Guarantor and NPI to have delivered to Agent a certificate or 31 other appropriate document from the Secretary of State of its state of incorporation or other governmental authority of such Parlin Obligor, listing the certificate of incorporation or other organizational documents and each amendment thereto on file in its office and, if available, certifying that (i) such amendments are the only amendments to each such certificate of incorporation or other organizational documents on file in its office, (ii) such Parlin Obligor has paid all franchise taxes to the date of such certificate and (iii) such Parlin Obligor as appropriate, is duly incorporated and in good standing under the laws of such jurisdiction, such certificates to be dated a date during, or a recent date prior to, the Additional Commitment Period. (c) Certificate of Qualification. NRG Parlin shall have delivered and shall have caused each of DuPont, Guarantor and NPI to have delivered to Agent certificates or equivalent documents from all states in which it is necessary for such Parlin Obligor to be qualified and/or licensed to do business for the purposes of the transactions contemplated hereunder or under any of the Project Agreements, certifying that such Parlin Obligor has duly qualified to do business in such jurisdiction as a foreign corporation and is in good standing under such qualification, such certificates or equivalent documents to be dated a date during, or a recent date prior to, the Additional Commitment Period. (d) By-Laws and Resolutions. NRG Parlin shall have delivered and shall have caused each of DuPont, Guarantor and NPI to have delivered to Agent copies of the by-laws or other equivalent organizational documents of such Parlin Obligor, the resolutions of its Board of Directors approving each Parlin Project Agreement to which it is a party, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to each such Parlin Project Agreement to which it is a party, certified as of a date during, or a recent date prior to, the Additional Commitment Period as true and correct in each case by an Authorized Officer of such Parlin Obligor. (e) Incumbency Certificate. NRG Parlin shall have delivered and shall have caused each of DuPont, Guarantor and NPI to have delivered to Agent a certificate of an Authorized Officer of such Parlin Obligor dated as of a date during, or a recent date prior to, the Additional Commitment Period certifying the names and true signatures of the officers authorized to sign each Parlin Project Agreement (other than the DuPont Power Purchase Agreement) to which it is a party 32 and the other documents to be delivered by it pursuant to the Parlin Project Agreements (other than the DuPont Power Purchase Agreement). (f) Opinions of Counsel. NRG Parlin shall have delivered to Agent a favorable opinion of (a) Troutman Sanders LLP, as counsel to NRG Parlin and Guarantor, substantially in the form of Exhibit C1 hereto, including all federal regulatory matters and such other matters as Agent may reasonably request based on any facts, information, circumstances or matters that arise, or that the Agent becomes aware of, with respect to the Parlin Project after the Initial Funding Date, (b) in house counsel to NRG and NPI, substantially in the form of Exhibit C1 hereto, including all federal regulatory matters, and such other matters as Agent may reasonably request based on any facts, information, circumstances or matters that arise, or that the Agent becomes aware of, with respect to the Parlin Project after the Initial Funding Date, (c) Greenbaum, Rowe, Smith, Ravin and Davis, or other New Jersey counsel to NRG Parlin, NPI and Guarantor, substantially in the form of Exhibit C1 hereto, including all state regulatory matters and such other matters as Agent may reasonably request based on any facts, information, circumstances or matters that arise, or that the Agent becomes aware of, with respect to the Parlin Project after the Initial Funding Date, (d) Gibson, Dunn & Crutcher, New York counsel to NRG Parlin, Guarantor, NPI and NRG, substantially in the form of Exhibit C1 hereto, and as to matters set forth in Section 3.3(s)(i) and such other matters as Agent may reasonably request based on any facts, information, circumstances or matters that arise, or that Agent becomes aware of, with respect to the Parlin Project after the Initial Funding Date, and (e) counsel to each of JCP&L, DuPont, Stewart & Stevenson, Stewart & Stevenson Services, and NPI, substantially in the form of Exhibit C2 hereto, in each case dated a date during, or a recent date prior to, the Additional Commitment Period and addressed to the Agent, the Secured Parties and the Lenders, in form and substance satisfactory to Agent. (g) Fees. Payment in full by NRG and NRG Parlin of all fees and expenses which are to be paid on or before the Additional Funding Date, including, without limitation, the fees provided for in the letter agreement dated May 17, 1996 among NRG Newark, NRG Parlin and Agent and the expenses provided for in this Agreement. (h) Loan Instruments. NRG Parlin and NRG Newark shall have delivered to Agent fully executed counterparts of the Guaranty, the Funding Loan Notes, the Debt Service Loan 33 Notes, the Tax Indemnification Agreement, the Parlin Pledge Agreement, the Parlin Security Agreement, the Blocked Account Agreements with respect to the Parlin Project, the Parlin Mortgage, an amended and restated Newark Mortgage substantially in the form of the Newark Mortgage and securing up to $160,000,000 of the outstanding principal amount of the Funding Loan Notes and the Debt Service Loan Notes, all financing statements, stock certificates, guarantees, assignments, instruments and agreements required by Agent to be executed on or prior to the Additional Funding Date by or on behalf of NRG Parlin or NRG Newark to guaranty or provide collateral security with respect to the Obligations (other than the DuPont Power Purchase Agreement), and such other certificates, opinions, documents and instruments evidencing, securing or pertaining to the Loans and the Commitments as shall be required by Agent to be delivered to the Secured Parties by Borrower or any other Person prior to the Additional Funding Date, in each case in form and substance satisfactory to Agent and signed by all parties thereto (other than Agent) and in full force and effect. In addition, Agent shall have received pay-off letters, UCC termination statements and other documents, in each case, in form and substance satisfactory to Agent, evidencing the release and termination of all prior Liens on the Collateral intended to be subject to the Parlin Security Documents. (i) NRG Parlin's and NPI's Shares. NRG Parlin shall have caused Guarantor to deliver to Agent stock certificates representing 100% of the issued and outstanding shares of capital stock of NRG Parlin registered in the name of Guarantor together with irrevocable undated stock powers duly endorsed in blank. (j) [Intentionally Omitted]. (k) NRG Investment. NRG Parlin shall have delivered to Agent a certificate of an Authorized Officer of Guarantor that, after taking into account the Funding Loans and the application of proceeds thereof, NRG's equity investment in Guarantor will not be less than $29 million. (l) Security Interest. NRG Parlin shall have provided Agent with evidence satisfactory to Agent that it has, for the benefit of the Secured Parties, a valid and perfected first priority security interest in the Collateral (intended to be subject to the Parlin Security Documents) on or prior to the Additional Funding Date (subject only to Permitted Liens). NRG Parlin and NRG Newark shall have delivered to Agent each of the items required to be obtained in accordance with Section 5.40, including, without 34 limitation, an executed copy of the PSE&G Consent substantially in the form of Exhibit G attached hereto. (m) Financial Statements of Parlin Obligors. Agent shall have received the most recent year-end audited financial statements and unaudited quarterly financial statements which are available for NRG Parlin, Guarantor and NPI and the most recent Form 10-K filed with the SEC and, to the extent that the most recent Form 10-Q filed with the SEC is dated a more recent date than such Form 10-K, the most recent Form 10-Q filed with and available from the SEC, which are available for DuPont. In the opinion of Agent, there shall have been no material adverse change in the business operations, results of operations, condition (financial or otherwise), prospects or property of any such Parlin Obligor (except as previously disclosed to Agent in a writing delivered by or on behalf such Parlin Obligor) since (i) the date of such Parlin Obligor's most recent audited financial statements (or Forms 10-Q or 10-K, as appropriate) previously delivered to Agent, if such Parlin Obligor's financial statements have been previously delivered to Agent and (ii) the date which is six months prior to the Additional Funding Date, if such Parlin Obligor's financial statements have not previously been delivered to Agent. (n) Notice of Borrowing. NRG Parlin shall have delivered to Agent a Notice of Borrowing in accordance with Section 2.1(b). (o) Officer's Certificate. NRG Parlin shall have delivered to Agent a certificate executed by an Authorized Officer, stating that: (a) on such date, and after giving effect to the making of the Funding Loans, the provision of the Commitments and the consummation of the other transactions contemplated hereby or under any of the Parlin Project Agreements, no Default or Event of Default has occurred and is continuing or would arise as a result of the consummation of the transactions contemplated hereby or under any of the Parlin Project Agreement; (b) no Material Adverse Effect has occurred since the Initial Funding Date; (c) the representations and warranties set forth in Article IV are true and correct in all material respects on and as of the date such representations and warranties are made; and (d) it is not in default under any material agreement, indenture, credit agreement or other document to which it is a party. (p) Confirmation of Agent for Service. NRG Parlin shall have delivered to Agent confirmation from CT Corporation System of its acceptance of its appointment as agent for service of process for NRG Parlin required under 35 Section 8.4 and similar provisions in the other Loan Instruments. (q) Flood Zone. NRG Parlin shall have delivered to Agent evidence, in form and substance satisfactory to Agent, that the Parlin Project does not and will not include any improved real property that is located within an area that has been identified by the Director of the Federal Emergency Management Agency as an area having special flood hazards and for which flood insurance has been made available under the National Flood Insurance Act of 1968, as amended. (r) Government Approvals, Litigation and Project Documents. (i) NRG Parlin shall have delivered to Agent evidence satisfactory to Agent that all Governmental Approvals and filings and consents from third parties required in connection with the transactions contemplated hereby have been obtained, to the extent reasonably obtainable (including, without limitation, all filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, New Jersey Industrial Site Recovery Act (N.J. Rev. Stat. 13:1K-6 et seq.) and all New Jersey asset transfer approvals required under the environmental regulations). Agent shall have received evidence or copies of all Governmental Approvals set forth in Part I of Schedule 4.3B hereto (including, without limitation, those necessary for the operation of the Parlin Project at levels satisfactory to Agent after consultation with the Independent Engineer), certified by an Authorized Officer of NRG Parlin as being complete and in full force and effect and not subject to appeal, and copies of all correspondence referred to in such Governmental Approvals and all applications for such Governmental Approvals, certified by an Authorized Officer of NRG Parlin as complete. Agent shall have received evidence satisfactory to Agent that (x) neither NRG Parlin nor the Parlin Project is in violation of any Governmental Approval and that the Parlin Project has not been in material violation of any Governmental Approval since the Initial Funding Date, (y) no additional Governmental Approvals are required for the operation of the Parlin Project as contemplated in the Parlin Project Documents, and (z) there is no litigation arising from or relating to the transactions contemplated hereby which could reasonably be expected to result in a Material Adverse Effect. (ii) Each of the Parlin Project Documents shall be in form and substance reasonably satisfactory to Agent. Agent shall have received evidence satisfactory to it that each of such Parlin Project Documents is in full force and effect and that NRG Parlin is not, and to the best knowledge 36 of NRG Parlin, no other party to any such Parlin Project Document is, in default in the performance, observance or fulfillment of any of its obligations, covenants or conditions contained therein and that the Effective Date (as defined in each Power Purchase Agreement) has occurred. Agent shall have received executed Parlin Consents, in the form and substance satisfactory to Agent. Agent shall have received an executed copy of each Parlin Project Document, certified in the case of each such document to which Agent is not a party by an Authorized Officer of NRG Parlin as being complete (including all exhibits, schedules and disclosure or other material letters referred to therein or delivered pursuant thereto, and all amendments thereto) and in full force and effect and that no force majeure has occurred thereunder. (s) Bankruptcy Court Orders. NRG Parlin shall have delivered to Agent (i) an unqualified opinion of Gibson, Dunn & Crutcher, in form and substance satisfactory to Agent, stating that no order of the Bankruptcy Court and no notice, hearing or other pleading in the Bankruptcy Case are required in connection with the Loans, the Commitments, the Loan Instruments and the obligations of the Guarantor or either Borrower thereunder, or (ii) a final and non-appealable order of the Bankruptcy Court authorizing and approving the Commitments and the Loans and the Loan Instruments or a final and non-appealable order of the Bankruptcy Court stating that it has no jurisdiction over such transactions. (t) Material Adverse Effect. Since the Initial Funding Date there shall not have occurred any Material Adverse Effect; provided that for purposes of this Section 3.3(t), in determining whether a Material Adverse Effect has occurred, in all provisions of this Agreement "Borrower" shall be deemed to have included NRG Parlin, "Project" shall be deemed to have included the Parlin Project, "Obligor" shall be deemed to have included Parlin Obligors, "Project Agreements" shall be deemed to have included Parlin Project Agreements, and "Security Documents" shall be deemed to have included Parlin Security Documents during the Additional Commitment Period. (u) Pro Forma; the Operating Budget. Agent shall have received the Pro Forma Balance Sheets for the Parlin Project, the Sources and Uses Table, and the Operating Budget for the Parlin Project. (v) Title Insurance; Surveys. Agent shall have received an ALTA lender's paid policy of title insurance issued by the Title Company, in form and substance 37 satisfactory to Agent, with such endorsements and affirmative coverage as Agent may reasonably request, with such ALTA direct facultative reinsurance agreements (with direct access provisions) as Agent may reasonably request, (i) insuring the Secured Parties for their ratable benefit in an amount not less than $160,000,000 for each of the Newark Project and the Parlin Project, that good and marketable leasehold title to the Parlin Project and the Newark Project is vested in NRG Parlin and NRG Newark, respectively, pursuant to the Parlin Ground Lease and the Newark Ground Lease, respectively, and good and marketable easements in that portion of the Parlin Property and the Newark Property consisting of easements is vested in NRG Parlin and NRG Newark, respectively, and that the Parlin Mortgage and the Newark Mortgage constitute a valid and enforceable first mortgage lien on the Parlin Project and the Newark Project, respectively, subject only to Permitted Liens and (ii) providing full coverage against all mechanics' and materialmen's liens (including any relating to environmental remediation) as well as coverage against survey exceptions (except as specifically approved by Agent). Agent shall also have received currently dated ALTA/ASCM Class A certified surveys of the Parlin Project and all easements affecting the Parlin Project by a licensed surveyor in the State of New Jersey satisfactory to Agent and the Title Company, certified to the Secured Parties and the Title Company, showing outlines of the Parlin Project, location of all improvements, set back lines, encroachments (if any), rights of way, and showing no state of facts unsatisfactory to any of them and showing such details as Agent may reasonably require. The legal descriptions on the surveys shall coincide exactly with that on the title insurance policies to be furnished to Agent. (w) Insurance. Agent shall have received (i) a certified copy of, or binder for, each of the insurance policies required for the Parlin Project by Section 4.25 hereof, such policies to be in form and substance, and issued by companies, satisfactory to Agent, together with evidence satisfactory to Agent that such insurance complies with the provisions of Section 4.25 hereof and with the provisions of each of the Parlin Project Documents, and that all premiums then due with respect to such insurance have been paid and (ii) a written report of the Insurance Consultant describing the insurance obtained by NRG Parlin with respect to the Parlin Project and stating that the insurance required to be obtained by NRG Parlin as of the Additional Funding Date pursuant to the Loan Instruments and the Parlin Project Documents is in full force and effect and provides reasonable and adequate coverage for the Parlin Project. 38 (x) EWG/QF Status. The Newark Project shall be a Qualifying Cogeneration Facility. NRG Parlin shall have received approval from the FERC of its applications for certification as an EWG, which application shall reflect NRG Parlin as the owner of the Parlin Project, and which shall reflect the operation and ownership of the Parlin Project consistent with the Parlin Project Documents and Governmental Approvals, and which shall have been served on all of the entities required to have been served under the FERC regulations. NRG Parlin shall have received approval from FERC for the transactions contemplated by the Credit Agreement and the other Loan Instruments to which it is a party. NRG Parlin shall have received approval of its rates from FERC without reduction from the rates set forth in the Parlin Power Purchase Agreement, or, if such rates are reduced or there are additional costs in obtaining other approvals, the Additional Commitment shall be reduced as provided in Section 2.9(C). (y) Environmental Status. Agent shall have received (i) the environmental reports listed in Schedule 3.3(y) as well as a reliance letter with respect to such reports and such reports and reliance letter shall be in form and substance satisfactory to Agent and such reports shall contain the results of the review of the environmental audit of the Parlin Project, permitting issues and other matters of environmental concern with respect to the Parlin Project and (ii) such other information as to the past ownership and use and the present condition of the Parlin Project as Agent may have requested; and such reports shall not disclose, in the opinion of Agent, any unusual or significant risks associated with the Parlin Project relating to any Environmental Requirements. (z) Independent Engineer's Report; Gas Consultant Report. Agent shall have received a report of the Independent Engineer and Gas Consultant detailing to the satisfaction of Agent such matters as Agent may reasonably request, including without limitation, the technical and economic feasibility of the Parlin Project and the availability of Alternative Fuel and Backup Gas for the Parlin Project. (aa) Regulation as Utility. None of the making of any Loan or any Commitment, the securing of any obligation by Liens pursuant to the Security Documents, any other transaction contemplated by any of the Loan Instruments, nor the ownership or operation of the Newark Project or the Parlin Project by NRG Newark or NRG Parlin shall cause NRG Newark or NRG Parlin or, solely on the basis of this 39 transaction, any Secured Party to become subject to regulation by any Governmental Authority as a "public utility", an "electric utility", an "electric utility holding company", a "public utility holding company", or a subsidiary or affiliate of any of the foregoing under any Law or Governmental Requirements (including, without limitation, PUHCA and the FPA); provided, however, that NRG Parlin alone shall be subject to regulation as a public utility under the FPA. (bb) Filing, Registration and Recording Fees. Agent shall have received evidence satisfactory to it that all filing, recordation, subscription and inscription fees, and all taxes and other expenses related thereto, necessary for the consummation of the transactions contemplated by the Parlin Project Agreements have been paid or provided for in full by or on behalf of NRG Parlin. (cc) Transfer and Stamp Taxes. Agent shall have received evidence that all transfer, stamp, documentary, intangible personal property or similar taxes, levies, imposts, assessments or charges imposed by any Governmental Authority and any and all interest, penalties or other liabilities arising under or relating thereto, in respect of this Agreement, any other Loan Instrument, any Loans or Obligations or the transactions contemplated herein or therein which are due and payable have been paid or provided for in full. (dd) Operations and Maintenance Agreement. NRG Parlin shall have delivered to Agent the Parlin Operations and Maintenance Agreement and the Parlin Operating Guaranty, each in form and substance satisfactory to Agent. (ee) Debt Service Reserve Account. The Debt Service Reserve Account shall have been funded with Cash Revenues in an amount which when added to the Debt Service Line of Credit Facility Commitment is equal to the Debt Service Reserve Required Balance. (ff) Maintenance Reserve Account; Capital Improvements Reserve Account. The Maintenance Reserve Account shall have been funded in an amount equal to the Maintenance Reserve Required Deposit, and the Capital Improvements Reserve Account shall have been funded in an amount equal to the Capital Improvements Reserve Required Deposit. (gg) [Intentionally Omitted]. 40 (hh) [Intentionally Omitted]. (ii) Assignment of DuPont Power Purchase Contract; Agreements and Approvals Pursuant to Parlin Power Purchase Agreement. The Electricity Purchase Contract, dated January 18, 1988 between DuPont and O'Brien (Parlin) Cogeneration, Inc. (as the same may be assigned by NRG Parlin to NPI, the "DuPont Power Purchase Agreement") shall have been assigned by NRG Parlin in its entirety to NPI and NPI shall have entered into a wholesale power purchase agreement with NRG Parlin (the "Wholesale Power Purchase Agreement"), substantially on the same terms as the DuPont Power Purchase Agreement, and NRG Parlin shall have delivered to Agent a certificate to the effect of the foregoing. Further, the Parlin Power Purchase Agreement shall have been amended to reflect, or JCP&L shall have consented in writing to, the assignment by NRG Parlin of the DuPont Power Purchase Agreement and the entering into of the Wholesale Power Purchase Agreement. NRG Parlin shall also have obtained all required approvals contemplated under Article 2 of the Parlin Power Purchase Agreement, including, without limitation, approval from the BPU. (jj) Inventories. NRG Parlin and NRG Newark shall have delivered to Agent a list of inventories and spare parts existing for their respective Projects, along with a certificate of Operator as to the accuracy of such lists, which lists shall be satisfactory to the Independent Engineer. (kk) Assignment of Gas Contract With PSE&G. The Gas Service Agreement, dated May 13, 1993, between O'Brien (Parlin) Cogeneration, Inc. and PSE&G shall have been assigned to JCP&L and NRG Parlin shall have no obligation or liability under such agreement, and NRG Parlin shall have delivered to Agent a certificate to this effect. Further, NRG Parlin shall have delivered to Agent a certified copy of the Assignment of Gas Service Agreement dated as of April 30, 1996 by and among O'Brien (Parlin) Cogeneration, Inc., PSE&G and JCP&L. (ll) Environmental Permits. NRG Parlin shall have delivered to Agent a plan for the discharge of stormwater from the Parlin Plant in the event that the Parlin Plant is prevented from continuing to use the DuPont stormwater management system. Such plan shall include the reasonable cost and time necessary to effect the changes described in the plan and shall be in form and substance satisfactory to Agent. 41 (mm) Default. No Default or Event of Default shall have occurred and be continuing as of the Additional Funding Date nor shall the making of the Initial Loan, the Additional Loan or the Commitments result in a Default or Event of Default, and Borrower shall have delivered to Agent a certificate to this effect; provided that notwithstanding any other provision to the contrary, any event, occurrence, condition, act or omission relating to the Parlin Project, NRG Parlin, Parlin Obligors or Parlin Project Agreements that occurred during the Additional Commitment Period and that would have constituted a Default or Event of Default hereunder if it had occurred after the Additional Funding Date shall be deemed to constitute a Default or Event of Default, as the case may be, for purposes of this Section 3.3. (nn) EWG. NRG Parlin shall have received certification from the FERC of EWG status in a final order. (oo) FERC Approvals. NRG Parlin shall have filed at FERC for approval of the rates in the Parlin Power Purchase Agreement and the Wholesale Power Purchase Agreement, on a market-rate or cost of service basis and shall have received FERC approval for the effectiveness of the rates in a final and non-appealable order (provided that such order may be appealable by Borrower). NRG Parlin shall also have filed at FERC for approval to incur obligations under this Agreement pursuant to Section 204 of the FPA and shall have obtained such approval from the FERC in a final and non-appealable order, or shall have otherwise obtained a blanket approval from FERC to issue securities or assume liabilities under Section 204 of the FPA in a final and non-appealable order. NRG and Guarantor shall jointly have filed at FERC for approval under Section 203 of the FPA for NRG to appoint a fourth director to the board of the directors of Guarantor and shall have obtained such approval from the FERC. (pp) No Action Letter. NPI shall have obtained a no-action letter from the SEC staff in connection with the sale by NPI of electricity to DuPont. (qq) Initial Funding. The Initial Funding Date shall have occurred. (rr) Violations of Air Permit. If, as of the Additional Funding Date, NRG Parlin has not entered into an administrative consent order with, or shall have received a settlement letter or similar document from, the New Jersey Department of Environmental Protection (the "NJDEP") 42 evidencing the NJDEP's final terms and conditions for resolving all matters relating to the letter dated April 22, 1996 from Robert Evans to Iclal Atay and Harold Christiff of the NJDEP (the "NOx Exceedances"), NRG Parlin shall have delivered to Agent a full report on the status of such matters, including all information concerning (i) potential future penalties, and (ii) any other conditions or requirements which the NJDEP has revealed it is considering. There shall have been no settlement or resolution of the NOx Exceedances which could reasonably be expected to result in a Material Adverse Effect on the Parlin Project, nor in the reasonable judgment of the Agent shall there be a significant risk arising out of any facts, circumstances or matters that occur, or that Agent becomes aware of, with respect to the Parlin Project after the Inital Funding Date, that any such settlement or resolution will occur in the future. (ss) Five-year Operating Certificates. If NRG Parlin has not yet obtained five-year operating certificates for the Parlin Plant, NRG Parlin shall have delivered to Agent evidence satisfactory to Agent that it has taken all steps necessary for obtaining such certificates, other than with respect to resolution of issues in connection with the NOx Exceedances, and that the temporary operating certificates for the Parlin Plant remain in full force and effect. NRG Parlin shall also submit a plan of action for obtaining five-year operating certificates for the Parlin Plant, which plan shall be satisfactory to Agent. (tt) Amended Emissions Reports. NRG Parlin shall have filed with the NJDEP amended emission reports and, as required, new emissions reports reflecting the information known about the NOx Exceedances. (uu) NPI Account. (i) NPI shall have established with Agent an account into which DuPont shall directly deposit all amounts payable to NPI under the DuPont Power Purchase Agreement, and such amounts shall thereafter be withdrawn and transferred by Agent into the Project Account as an item of Cash Revenues or (ii) NPI shall have established an account with any bank or financial institution into which DuPont shall directly deposit all amounts payable to NPI under the DuPont Power Purchase Agreement, and NPI, Agent and such bank or financial institution shall have entered into a blocked account agreement, in form and substance satisfactory to Agent, which shall provide for the transfer of all amounts in such blocked account to the Project Account only. 43 ARTICLE IV Representations and Warranties In order to induce Agent and each Lender to enter into this Agreement and to induce each Lender to make the Loans hereunder, each Borrower represents and warrants to Agent and each Lender that the following statements, after giving effect to the making of the Loans and the Commitments and the consummation of the Acquisition, will be true, correct and complete on and as of the Initial Funding Date, except with respect to Sections 4.1(b)(ii), 4.2, 4.3(b), 4.4(b), 4.5(b), 4.6(b), 4.9(b), 4.12(b), 4.39 and 4.44, which representations and warranties will be true, correct and complete with respect to NRG Parlin, the Parlin Project, the Parlin Project Agreements and the Parlin Obligors on and as of the Additional Funding Date: Section 4.1 Organization; Capitalization. (a) Borrower is duly organized and validly existing under the Laws of the jurisdiction of its formation, and is properly qualified to do business and in good standing in every jurisdiction where the failure to maintain such qualification or good standing could reasonably be expected to result in a Material Adverse Effect. (b)(i) The authorized capital stock or other equity interests of NRG Newark is as set forth on Schedule 4.1(b). All issued and outstanding shares of capital stock of NRG Newark are duly authorized and validly issued, fully paid, nonassessable, free and clear of all Liens other than those granted under the Newark Security Documents, and such shares were issued in compliance with all applicable state, federal and foreign Laws concerning the issuance of securities or, if the issuance of such shares is not is compliance with such Laws, such non-compliance could not reasonably be expected to result in a Material Adverse Effect. No shares of the capital stock of or other equity interests of NRG Newark, other than those described above, are issued and outstanding. There are no preemptive or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition from NRG Newark of any shares of capital stock or other securities or other equity interests of NRG Newark. (ii) As of the Additional Funding Date, the authorized capital stock or other equity interests of NRG Parlin is as set forth on Schedule 4.1(b). As of the Additional Funding Date, all issued and outstanding shares of capital stock of NRG Parlin are duly authorized and validly 44 issued, fully paid, nonassessable, free and clear of all Liens other than those granted under the Parlin Security Documents, and such shares were issued in compliance with all applicable state, federal and foreign Laws concerning the issuance of securities or, if the issuance of such shares is not is compliance with such Laws, such non-compliance could not reasonably be expected to result in a Material Adverse Effect. As of the Additional Funding Date, no shares of the capital stock of or other equity interests of NRG Parlin, other than those described above, are issued and outstanding. As of the Additional Funding Date, there are no preemptive or other outstanding rights, options, warrants, conversion rights or similar agreements or understandings for the purchase or acquisition from NRG Parlin of any shares of capital stock or other securities or other equity interests of NRG Parlin. Section 4.2 Authorization of Loan Instruments. The execution, delivery and performance of each of the Project Agreements to which a Borrower is a party are within its respective corporate powers and have been duly authorized. Each of the Newark Project Agreements to which NRG Newark is a party has been validly executed and delivered by NRG Newark. As of the Additional Funding Date, each of the Parlin Project Agreements to which NRG Parlin is a party shall have been validly executed and delivered by NRG Parlin. Section 4.3 Governmental Approvals. (a) The execution, delivery and performance of each of the Newark Project Agreements to which NRG Newark is a party, the granting of the Liens by NRG Newark and the making of the Loans and the Commitments do not and will not require any registration with, consent or approval of, or notice to, or other action with or by, any Governmental Authority, regulatory body or any other Person which has not been made or obtained and in full force and effect, except for filings required by federal or state securities laws (which filings have been made and true and complete copies of which have been delivered to Agent, including, without limitation, all filings under the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended, and all New Jersey asset transfer approvals) and, until the earlier of the Additional Funding Date and the Initial Maturity Date, set forth in Schedule 5.40 hereof. All Governmental Approvals, other than ministerial Governmental Approvals, required under Law in connection with the operation, maintenance and ownership of the Newark Project (including, without limitation, (i) those necessary for the operation of the Newark Project at levels satisfactory to Agent after consultation with the Independent Engineer and (ii) those necessary for the installation and 45 operation of an auxiliary boiler on the Newark Group plant site as required in the Stipulation of Settlement, but excluding those required for the initial construction or the restoration of the Newark Project after the fire at the Newark Project) now, or to the knowledge of NRG Newark, in the future, are set forth in Schedule 4.3A. Except for the Governmental Approvals set forth in Part II of Schedule 4.3A with respect to the Newark Project, each of such Governmental Approvals has been obtained, is validly issued, is in full force and effect, is not subject to appeal by any Person other than NRG Newark (other than the orders of the BPU approving the Third Amendment to the Newark Power Purchase Agreement and the Interim Gas Service Agreement on and as of the Initial Funding Date) and, to the best of NRG Newark's knowledge, is free from conditions or requirements compliance with which could reasonably be expected to result in a Material Adverse Effect. There is no proceeding pending or, to the best knowledge of NRG Newark, threatened which is reasonably likely to result in the rescission, revocation, material modification, suspension or determination of invalidity or limitation of effectiveness of any such Governmental Approval. The information set forth in each application and other written material submitted by or on behalf of NRG Newark or, to the best knowledge of NRG Newark, submitted by or on behalf of each Newark Obligor (other than NRG Newark) to the applicable Governmental Authority in connection with each such Governmental Approval is accurate and complete in all material respects. NRG Newark has no reason to believe that any Governmental Approval that has not been obtained, but which will be required in the future, for the Newark Project, will not be granted in due course, on or prior to the date when required (unless the failure to obtain such Governmental Approvals could not reasonably be expected to result in a Material Adverse Effect), and such Governmental Approvals shall be free from any condition or requirement, the compliance with which could reasonably be expected to result in a Material Adverse Effect or which NRG Newark does not reasonably expect to be able to satisfy. The Newark Project complies in all respects with all covenants, conditions, restrictions and reservations in the Governmental Approvals relating to the Newark Project and the Newark Project Documents applicable thereto and all Laws applicable thereto, all to the extent necessary to avoid a Material Adverse Effect. (b) As of the Additional Funding Date, the execution, delivery and performance of each of the Parlin Project Agreements to which either NRG Parlin or Guarantor is a party, the granting of the Liens by either NRG Parlin or Guarantor and the making of the Loans and the Commitments do 46 not and will not require any registration with, consent or approval of, or notice to, or other action with or by, any Governmental Authority, regulatory body or any other Person which has not been made or obtained and in full force and effect, except for filings required by federal or state securities laws (which filings have been made and true and complete copies of which have been delivered to Agent, including, without limitation, all filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all New jersey asset transfer approvals). As of the Additional Funding Date, all Governmental Approvals, other than ministerial Governmental Approvals, required under Law in connection with the operation, maintenance and ownership of the Parlin Project (including, without limitation, those necessary for the operation of the Parlin Project at levels satisfactory to Agent after consultation with the Independent Engineer) now, or to the knowledge of NRG Newark, in the future, are set forth in Schedule 4.3B. As of the Additional Funding Date, except for the Governmental Approvals set forth in Part II of Schedule 4.3B with respect to the Parlin Project, each of such Governmental Approvals has been obtained, is validly issued, is in full force and effect, is not subject to appeal by any Person except Borrower and, to the best of NRG Parlin's knowledge, is free from conditions or requirements compliance with which could reasonably be expected to result in a Material Adverse Effect. As of the Additional Funding Date, there is no proceeding pending or, to the best knowledge of NRG Parlin, threatened which is reasonably likely to result in the rescission, revocation, material modification, suspension or determination of invalidity or limitation of effectiveness of any such Governmental Approval. As of the Additional Funding Date the information set forth in each application and other written material submitted by or on behalf of NRG Parlin or, to the best knowledge of NRG Parlin, submitted by or on behalf of each Parlin Obligor (other than the NRG Parlin) to the applicable Governmental Authority in connection with each such Governmental Approval is accurate and complete in all material respects. As of the Additional Funding Date, NRG Parlin has no reason to believe that any Governmental Approval that has not been obtained, but which will be required in the future, for the Parlin Project, will not be granted in due course, on or prior to the date when required (unless the failure to obtain such Governmental Approvals could not reasonably be expected to result in a Material Adverse Effect), and such Governmental Approvals shall be free from any condition or requirement, the compliance with which could reasonably be expected to result in a Material Adverse Effect or which NRG Parlin does not reasonably expect to be able to satisfy. As of the Additional Funding Date the 47 Parlin Project complies in all respects with all covenants, conditions, restrictions and reservations in the Governmental Approvals relating to the Parlin Project and the Parlin Project Documents applicable thereto and all Laws applicable thereto, all to the extent necessary to avoid a Material Adverse Effect. Section 4.4 No Conflicts. (a) The execution, delivery and performance of the Newark Project Agreements to which NRG Newark is a party and the Governmental Approvals and the Insurance Policies and the transactions contemplated hereunder and the making of the Loans and the provision of the Commitments will not (i) violate (A) the certificate of incorporation or by-laws (or comparable documents) of NRG Newark, (B) any Law applicable to NRG Newark, violation of which could reasonably be expected to result in a Material Adverse Effect or (C) any provision of any contract, agreement, indenture or instrument to which NRG Newark is a party or by which any of its respective properties is bound, the violation of which could reasonably be expected to result in a Material Adverse Effect or (ii) be in conflict with, or result in a breach of or constitute a default under, any contract, agreement, indenture or instrument referred to in Section 4.4(a)(i)(C) above or (iii) violate the provisions of the Newark Project Agreements or (iv) result in the creation or imposition of any Lien on the Newark Project, except Permitted Liens or (v) give to any Person rights to cancel, terminate or suspend performance of its obligations to NRG Newark under, or accelerate payments of amounts owed by NRG Newark to others under, any contract, agreement, indenture or instrument referred to in Section 4.4(a)(i)(C). (b) As of the Additional Funding Date, the execution, delivery and performance of the Project Agreements to which NRG Parlin is a party and the Governmental Approvals and the Insurance Policies and the transactions contemplated hereunder and the making of the Loans and the provision of the Commitments will not (i) violate (A) the certificate of incorporation or by-laws (or comparable documents) of NRG Parlin, (B) any Law applicable to NRG Parlin, violation of which could reasonably be expected to result in a Material Adverse Effect or (C) any provision of any contract, agreement, indenture or instrument to which NRG Parlin is a party or by which any of its respective properties is bound, the violation of which could reasonably be expected to result in a Material Adverse Effect or (ii) be in conflict with, or result in a breach of or constitute a default under, any contract, agreement, indenture or instrument referred to in Section 4.4(b)(i)(C) above or (iii) violate any provision of the Parlin Project Agreements or (iv) result in the creation 48 or imposition of any Lien on the Parlin Project, except Permitted Liens or (v) give to any Person rights to cancel, terminate or suspend performance of its obligations to NRG Parlin under, or accelerate payments of amounts owed by NRG Parlin to others under, any contract, agreement, indenture or instrument referred to in Section 4.4(b)(i)(C). Section 4.5 Enforceability of Project Agreements. (a) Each Newark Project Agreement to which NRG Newark is a party is a legal, valid and binding agreement of NRG Newark enforceable against NRG Newark in accordance with its respective terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors' rights (other than the Bankruptcy Case) and subject to general equitable principles. (b) As of the Additional Funding Date, each Parlin Project Agreement to which NRG Parlin is a party is a legal, valid and binding agreement of NRG Parlin enforceable against NRG Parlin in accordance with its respective terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors' rights (other than the Bankruptcy Case) and subject to general equitable principles. Section 4.6 Title to Property; Sufficiency of Assets. (a) NRG Newark has good, valid and sufficient (i) leasehold estate in and to the Leasehold Premises (as such term is defined in the Newark Mortgage), (ii) right to use and enjoy the Easements (as such term is defined in the Newark Mortgage), (iii) title to the Improvements and Equipment (such terms are as defined in the Newark Mortgage), and (iv) title to all other portions of the Mortgaged Property (as such term is defined in the Newark Mortgage), in each case free and clear of all Liens, except for Permitted Liens. The services to be performed, the materials to be supplied and the easements, licenses and other rights granted or to be granted to NRG Newark pursuant to the terms of the Newark Project Documents and Governmental Approvals for the Newark Project provide or will provide NRG Newark with all rights and property interests required to enable NRG Newark to obtain all services, materials or rights (including access) required for the operation and maintenance of the Newark Project, including NRG Newark's full and prompt performance of its obligations, and full and timely satisfaction of all conditions precedent to the performance by others of their obligations, under the Newark Project Documents and Governmental Approvals for the Newark Project, 49 other than those services, materials or rights that reasonably can be expected to be obtainable in the ordinary course of business without material additional expense or material delay. (b) As of the Additional Funding Date, NRG Parlin has good, valid and sufficient (i) leasehold estate in and to the Leasehold Premises (as such term is defined in the Parlin Mortgage), (ii) right to use and enjoy the Easements (as such term is defined in the Parlin Mortgage), (iii) title to the Improvements and Equipment (such terms are as defined in the Parlin Mortgage), and (iv) title to all other portions of the Mortgaged Property (as such term is defined in the Parlin Mortgage), in each case free and clear of all Liens, except for Permitted Liens. As of the Additional Funding Date, the services to be performed, the materials to be supplied and the easements, licenses and other rights granted or to be granted to NRG Parlin pursuant to the terms of the Parlin Project Documents and Governmental Approvals for the Parlin Project provide or will provide NRG Parlin with all rights and property interests required to enable NRG Parlin to obtain all services, materials or rights (including access) required for the operation and maintenance of the Parlin Project, including NRG Parlin's full and prompt performance of its obligations, and full and timely satisfaction of all conditions precedent to the performance by others of their obligations, under the Parlin Project Documents and Governmental Approvals for the Parlin Project, other than those services, materials or rights that reasonably can be expected to be obtainable in the ordinary course of business without material additional expense or material delay Section 4.7 Compliance with Laws. Each Borrower is in compliance with all Laws, other than those Laws the non compliance with which could not reasonably be expected to result in a Material Adverse Effect. Section 4.8 No Litigation. Except as disclosed on Schedule 4.8, there are no actions, suits, proceedings, claims or disputes pending or, to the best of Borrower's knowledge, threatened against or affecting either Borrower or any of their respective properties or assets before any arbitrator or other Governmental Authority. There is no injunction, writ, preliminary restraining order or any order of any nature issued by an arbitrator or other Governmental Authority directing that any material aspect of the transactions provided for in any of the Loan Instruments or Acquisition Documents not be consummated as herein or therein provided. 50 Section 4.9 Events of Default. (a) No event has occurred or would result from the incurring of obligations under any Newark Loan Instrument which is, or upon the lapse of time or notice or both would become, an Event of Default. NRG Newark is not in default under or with respect to any contractual obligation in any respect, the default of which could reasonably be expected to result in a Material Adverse Effect. NRG Newark is not in default under any order, award or decree of any court, arbitrator or Governmental Authority binding upon or affecting it or by which any of its properties or assets is bound or affected, the default of which could reasonably be expected to result in a Material Adverse Effect. NRG Newark has not received notice of, and neither Borrower is aware of, the occurrence of any event of force majeure with respect to the Newark Project. (b) As of the Additional Funding Date, no event has occurred or would result from the incurring of obligations under any Parlin Loan Instrument which is, or upon the lapse of time or notice or both would become, an Event of Default. As of the Additional Funding Date, NRG Parlin is not in default under or with respect to any contractual obligation in any respect, the default of which could reasonably be expected to result in a Material Adverse Effect. As of the Additional Funding Date, NRG Parlin is not in default under any order, award or decree of any court, arbitrator or Governmental Authority binding upon or affecting it or by which any of its properties or assets is bound or affected, the default of which could reasonably be expected to result in a Material Adverse Effect. As of the Additional Funding Date, NRG Parlin has not received notice of, and neither Borrower is aware of, the occurrence of any event of force majeure with respect to the Parlin Project. Section 4.10 Financial Condition. (a) The consolidated draft unaudited balance sheet of Guarantor as at June 30, 1994 and June 30, 1995 and the related consolidated statements of operations and retained earnings and changes in financial position for the fiscal years ended on such dates, prepared by the chief financial officer of Guarantor as of the date of such financial statements, copies of which have heretofore been furnished to Agent, with sufficient copies for each Lender, are complete and correct and present fairly the consolidated financial condition of Guarantor and each Borrower as at such dates, and the consolidated results of its operations and changes in financial position for the fiscal years then ended. The separate draft unaudited balance sheets of each Borrower as at December 31, 1995 and June 30, 1995 and the related 51 statements of operations and retained earnings and changes in financial position for the fiscal years ended on such dates, prepared by the chief financial officer of such Borrower as of the date of such financial statements, copies of which have heretofore been furnished to Agent, with sufficient copies for each Lender, are complete and correct and fairly present the financial condition of such Borrower as at such dates, and the results of its operations and changes in financial position for the fiscal years then ended. Such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants and as disclosed therein). Each Borrower is (and after giving effect to the transactions contemplated by the Loan Instruments and the Acquisition Documents will be) Solvent. (b) Except as fully reflected in the financial statements referred to above and agreements entered into in the ordinary course of business which are not required to be reflected in such financial statements in accordance with GAAP, or as contemplated by this Agreement, there are no liabilities or obligations with respect to either Borrower or Guarantor of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) for the period to which such financial statements relate. Section 4.11 No Material Adverse Effect. Since June 30, 1995, there has been no Material Adverse Effect. Section 4.12 Security Interests. (a) Except to the extent Consents set forth in Schedule 5.40 are required to create a first priority perfected security interest in the Newark Project Documents, the security interests created in favor of Agent on behalf of the Secured Parties hereunder and under the Newark Security Documents are valid and perfected, first-priority security interests (subject only to Permitted Liens) superior and prior to the rights of all Persons (except those rights of the holders of Permitted Liens), whether the property subject to the security interests is now owned by NRG Newark or Guarantor or is hereafter acquired. The Newark Security Documents (including the UCC financing statements) have been duly filed, recorded and/or registered in each office and in each jurisdiction where required to create and perfect the lien and security interest described above. The chief executive office of each of NRG Newark and Guarantor, as such term is used in the uniform commercial code adopted in the State of New Jersey, is located in the State of Minnesota, the principal place of business of each of NRG Newark and Guarantor is located in the States of New 52 Jersey, Delaware or Minnesota, and the offices where each of NRG Newark and Guarantor keeps its records regarding the Collateral covered by the Security Documents are located in the States of New Jersey, Delaware or Minnesota, and such locations are the sole offices or places of business maintained by each of them as of the date hereof. To the best of NRG Newark's knowledge none of NRG Newark or Guarantor have transacted any business under any name other than those set forth in Schedule 4.12. (b) As of the Additional Funding Date, the security interests created in favor of Agent on behalf of the Secured Parties hereunder and under the Parlin Security Documents are valid and perfected, first-priority security interests (subject only to Permitted Liens) superior and prior to the rights of all Persons (except those rights of the holders of Permitted Liens), whether the property subject to the security interests is now owned by NRG Parlin or Guarantor or is hereafter acquired. As of the Additional Funding Date, the Security Documents (including the UCC financing statements) have been duly filed, recorded and/or registered in each office and in each jurisdiction where required to create and perfect the lien and security interest described above. As of the Additional Funding Date, the chief executive office of each of NRG Parlin and Guarantor, as such term is used in the uniform commercial code adopted in the State of New Jersey, is located in the State of Minnesota, the principal place of business of each of NRG Parlin and Guarantor is located in the States of New Jersey, Delaware or Minnesota, and the offices where each of NRG Parlin and Guarantor keeps its records regarding the Collateral covered by the Security Documents are located in the States of New Jersey, Delaware or Minnesota, and such locations are the sole offices or places of business maintained by each of them as of the date hereof. As of the Additional Funding Date, to the best of NRG Parlin's knowledge none of NRG Parlin or Guarantor have transacted any business under any name other than those set forth in Schedule 4.12. Section 4.13 No Burdensome Restrictions;. No Contractual Obligation of either Borrower and no Requirement of Law has, or is reasonably expected to have, in light of all facts and circumstances of which either Borrower has actual knowledge, a Material Adverse Effect, it being understood that the mere existence of traditional project finance contractual provisions which provide lenders with security interests and restrictive covenants, including the ability to restrict cash distributions, would not constitute a burdensome restriction hereunder. 53 Section 4.14 Taxes. All tax returns which are required to be filed in respect of each Borrower, and all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than those the amount or validity of which is currently being contested in a Good Faith Contest and with respect to which reserves in conformity with GAAP have been provided on the books of such Borrower) have been filed and paid on behalf of the Borrower; and no tax Liens have been filed and, to the knowledge of Borrower, no claims are being asserted with respect to any such taxes, fees or other charges which are material either as to amount or potentially adverse effect when considered with respect to the financial and business condition of such Borrower. As of the Additional Funding Date, Guarantor, Borrower and Agent have entered into an indemnification agreement ("Tax Indemnification Agreement") substantially in the form of Exhibit K attached hereto, whereby Guarantor has unconditionally and irrevocably agreed to indemnify Borrower for all income and franchise taxes that may be imposed on either Borrower by any Governmental Authority. Section 4.15 ERISA and IRC Compliance and Liability. To the best of its knowledge and belief, each Borrower and each ERISA Affiliate is in compliance with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans and, to the extent that such compliance is required of such Borrower or such ERISA Affiliate, with respect to all Multiemployer Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the IRC has not yet expired. Each Employee Benefit Plan and Multiemployer Plan that is intended to be qualified under Section 401(a) of the IRC has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the IRC or an application for determination letter confirming such qualification and exemption is pending or will be filed prior to the expiration of the applicable remedial amendment period as defined in Section 401(b) of the IRC. To the best of its knowledge and belief, no material liability has been incurred by either Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan. Section 4.16 Funding. No Pension Plan has been terminated, nor has any accumulated funding deficiency (as defined in Section 412 of the IRC) been incurred (without 54 regard to any waiver granted under Section 412 of the IRC), nor has any funding waiver from the IRS been received or requested with respect to any Pension Plan, nor, to the best of its knowledge and belief, has either Borrower or any ERISA Affiliate failed to make any contributions or to pay any amounts due and owing as required by Section 412 of the IRC, Section 302 of ERISA or the terms of any Pension Plan prior to the due dates of such contributions under Section 412 of the IRC or Section 302 of ERISA, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan. Section 4.17 Prohibited Transactions and Payments. None of Borrower and Guarantor or, in the case of clauses (b) through (d) hereof, any ERISA Affiliate has, to the best of its knowledge and belief: (a) engaged in a nonexempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the IRC; (b) incurred any liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid; (c) failed to make a required contribution or payment to a Multiemployer Plan; or (d) failed to make a required installment or other required payment under Section 412 of the IRC. Section 4.18 No Termination Event. No Termination Event has occurred or is reasonably expected to occur. Section 4.19 ERISA Litigation. No proceeding, claim, lawsuit and/or investigation is existing or, to the knowledge of either Borrower, threatened concerning or involving any (a) employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by either Borrower or any ERISA Affiliate to which either Borrower or Guarantor may have liability, (b) Pension Plan or (c) to the knowledge of either Borrower, Multiemployer Plan which could reasonably be expected to have a Material Adverse Effect. Section 4.20 No Other Obligations. Except as set forth on Schedule 4.20, none of Borrower and Guarantor has any obligation to provide post-retirement welfare benefits under any Employee Benefit Plan or other plan or agreement, except for benefits due (i) under employee pension benefit plans (as defined in Section 3(2) of ERISA), (ii) to its disabled employees, (iii) under Section 4980B of the IRC or Section 601 et seq. of ERISA, or (iv) as otherwise required by law. 55 Section 4.21 Margin Regulations. Neither Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation G, T, U, or X of the Board of Governors of the Federal Reserve System) and no proceeds of any Loan will be used in a manner which would violate, or result in a violation of, such Regulation G, T, U, or X. Section 4.22 Investment Company Act. Neither Borrower is an "investment company" nor a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 4.23 Environmental Matters. (i) Except as described in Schedule 4.23 hereto, no Hazardous Material has been or is currently located at, in, on, under or about the Property (or any other property with respect to which either Borrower has or may have liability either contractually or by operation of law) in a manner which violates any applicable Environmental Requirement, or for which cleanup or corrective action of any kind is required or authorized under any applicable Environmental Requirement; (ii) no substantial risk to human health or the environment exists as a result of any condition on the Property; no Release of any Hazardous Material from the Property onto or into any other property or from any other property onto or into the Property has occurred or is occurring in violation of any applicable Environmental Requirement except as described in Schedule 4.23 hereto, or which could pose a substantial risk to human health or the environment; (iii) no notice of violation, Lien, complaint, suit, order or other notice with respect to the environmental condition of the Property (or any other property with respect to which either Borrower has or may have liability either contractually or by operation of law) is outstanding or anticipated, nor has any such notice been issued which has not been fully satisfied and complied with in a timely fashion so as to bring the Property (or any other property with respect to which either Borrower has or may have retained or assumed liability either contractually or by operation of law) into full compliance with every applicable Environmental Requirement except as described in Schedule 4.23 hereto. Section 4.24 Disclosure. No representation or warranty of either Borrower contained in any Loan Instrument, or any other document, certificate or written statement set 56 forth on Schedule 4.24 contained as of the date made any untrue statement of a fact or omitted, omits or will omit to state a fact necessary in order to make the statements contained herein or therein, when taken as a whole, not misleading in any respect in light of the circumstances in which, and on the date on which, the same were made. There is no fact known to either Borrower which has not been disclosed in writing to Agent and which materially adversely affects, or which could reasonably be expected in the future to materially adversely affect, the properties, business, prospects or financial condition of either Borrower or either Project. Section 4.25 Insurance. Schedule 4.25 hereto sets forth a complete and accurate description of all material policies of insurance that will be in effect as of the Initial Funding Date for NRG Newark and as of the Additional Funding Date for NRG Newark and NRG Parlin. To the best of Borrower's knowledge, such policies are with companies rated "A-" or better by Best's Insurance Guide and Key Rating or other insurance companies of recognized responsibility satisfactory to Agent, and the coverages provided by such policies are in amounts and cover such risks as are usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which each Borrower operates and, in any event the insurance coverages shall not be less than the insurance coverages set forth in Schedule 4.25. Section 4.26 Labor Matters. There are no strikes or other labor disputes or grievances or charges or complaints with respect to any employee or group of employees pending or, to the best of either Borrower's knowledge, threatened against a Borrower. Section 4.27 Additional Representations and Warranties and Conditions Precedent. All representations and warranties set forth in each Project Agreement and each writing delivered to any of the Secured Parties pursuant hereto or thereto made by either Borrower, or to the best of either Borrower's knowledge, any other Obligor are true and correct as though made as of the date hereof or, if not true and correct, could not reasonably be expected to result in a Material Adverse Effect. Section 4.28 Transactions With Affiliates. Set forth on Schedule 4.28 is a true, accurate and complete description of all transactions between a Borrower and any Affiliate of either Borrower or Guarantor since June 30, 1995 which required or which will require in the case of either 57 Borrower, the payment by such Borrower of an amount equal to or greater than $100,000 during any twelve-month period. Section 4.29 Projections. The Projections have been prepared by Borrower and Guarantor on the basis of assumptions which are set forth therein and which are acceptable to Agent, and (i) the assumptions related thereto have been made in good faith with due care, (ii) the Projections, taken as a whole, represent the best estimates of Borrower and Guarantor as of the date such Projections are delivered to Agent pursuant to Article III and based on the assumptions set forth therein, which assumptions are, to the best of Borrower's and Guarantor's knowledge, realistic and achievable, as to the matters covered thereby as of such date, it being understood and acknowledged that the Projections do not represent a guarantee that the Borrower will be able to achieve the results described in the Projections, (iii) the Projections are based on reasonable assumptions as to all factual and legal matters material to the estimates therein (including interest rates and costs), (iv) the Projections are in all material respects consistent with, and will be in all material respects consistent with, the material provisions of Project Agreements and the Governmental Approvals, and (v) the Projections reflect the transactions contemplated by the Project Agreements. Each Borrower intends to conduct its business, to the extent reasonably practicable, in order to achieve the Projections. Section 4.30 Patents and Other Similar Property. Each Borrower owns or has the right to use all patents, trademarks, service marks, trade names, copyrights, licenses and other rights, which are necessary for the ownership, operation and maintenance of its Project. No product, process, method, substance, part or other material presently contemplated to be sold by or used or employed by either Borrower in connection with its business does or will infringe any patent, trademark, service mark, trade name, copyright, license or other right owned by any other Person; there is no claim or litigation pending or, to the best of each Borrower's knowledge, threatened against or affecting either Borrower contesting its right to sell, use or employ any such product, process, method, substance, part or other material. Section 4.31 Bank Accounts. Schedule 4.31 sets forth the account numbers and location of all bank accounts of each Borrower. Section 4.32 Sources and Uses. The Sources and Uses Table delivered to Agent on or prior to the Initial 58 Funding Date accurately specifies, to the best of each Borrower's knowledge, all Qualifying Costs and costs incurred in connection with each Project during the period through and including the Initial Funding Date. As of the Additional Funding Date, the Sources and Uses Table delivered to Agent during the Additional Commitment Period accurately specifies, to the best of each Borrower's knowledge, all Qualifying Costs and costs incurred in connection with each Project during the period through and including the Additional Funding Date. Section 4.33 Operating Budget. The proposed Newark Operating Budget prepared for each month of the period commencing on the Initial Funding Date and ending on December 31, 1996 is attached hereto as Schedule 4.33A and is, to the best of Borrower's knowledge, a complete, fair and accurate projection of projected Gross Revenues and projected Operating Costs for the Newark Project for such period, it being understood and acknowledged that the projected Gross Revenues and projected Operating Costs set forth in the Newark Operating Budget do not represent a guarantee that NRG Newark will be able to achieve the results described in the Newark Operating Budget. The proposed Parlin Operating Budget, prepared for each month of the period commencing on the Initial Funding Date and ending on December 31, 1996 is attached hereto as Schedule 4.33B and is, to the best of Borrower's knowledge, a complete, fair and accurate projection of projected Gross Revenues and projected Operating Costs for the Parlin Project for such period, it being understood and acknowledged that the projected Gross Revenues and projected Operating Costs set forth in the Parlin Operating Budget do not represent a guarantee that Borrower will be able to achieve the results described in the Parlin Operating Budget. Section 4.34 Operation of the Project. Each Project will be able to be operated on a safe and commercially sound basis in compliance with all Governmental Requirements and applicable Project Agreements, except in cases where the non-compliance with such Governmental Requirements and Project Agreements could not reasonably be expected to result in a Material Adverse Effect, so that the performance and facility guarantees and specifications provided for in the applicable Project Agreements and Governmental Approvals can be substantially met during the term of this Agreement and each Borrower can duly and punctually meet its obligations under the applicable Project Agreements and Governmental Approvals in accordance with the terms thereof. Each Borrower has adequate inventories and spare parts to operate its respective Project in accordance 59 with the Project Agreements and the Governmental Requirements. Section 4.35 Regulation of Parties. None of NRG Newark, NRG Parlin, Guarantor or the Secured Parties is or will be, solely as a result of the participation by such parties separately or as a group in the transactions contemplated hereby or by any other Project Agreement, or by the ownership, use or operation of either Project, subject to regulation by any Governmental Authority as a "public utility", "electric utility", an "electric utility holding company", a "public utility holding company", a "holding company", or a subsidiary or affiliate of any of the foregoing under any Governmental Requirements (including, without limitation, PUHCA and the FPA); provided, however, that NRG Parlin alone shall be subject to regulation as a public utility under the FPA. So long as the Newark Project remains a Qualifying Cogeneration Facility, none of the Secured Parties will by reason of its or their ownership or operation of the Newark Project upon the exercise of remedies under the Newark Security Documents be subject to financial, organizational or rate regulation by any Governmental Authority as a "public utility", an "electric utility", and "electric utility holding company", "holding company", or a subsidiary or affiliate of any of the foregoing under any Governmental Requirements (including, without limitation, PUHCA and the FPA). Section 4.36 EWG Status/Qualifying Cogeneration Facility Status. Each of NRG Newark and NRG Parlin is an Exempt Wholesale Generator and the Newark Project is a Qualifying Cogeneration Facility. As of the Initial Funding Date, each of NRG Newark and NRG Parlin has made a good faith application for a certification of EWG status, and NRG Newark has maintained and established by filing the QF Certificate for the Newark Project, with such filings reflecting the intended ownership and operation of the Newark Project or the Parlin Project, as the case may be. As of the Initial Funding Date, the Newark Project is owned and operated in the manner contemplated in the QF Certificate. Section 4.37 Nature of Business. Neither Borrower (a) has engaged in any business other than the operation of its respective Project and (b) is a party to any contract, operating lease, agreement or commitment which, either individually, or in the aggregate is material to the operation of its respective Project, other than the applicable Project Agreements. 60 Section 4.38 No Material Adverse Change. To the best knowledge of Borrower, no material adverse change in the business, operations, results of operations, condition (financial or otherwise), prospects or property of any Obligor has occurred (except as previously disclosed to Agent in a writing delivered by or on behalf of Borrower or such Obligor) since (A) the date of such Obligor's most recent audited financial statements previously delivered to Agent, if such Obligor's financial statements have been delivered to Agent and (B) the date which is six months prior to the Initial Funding Date, if such Obligor's financial statements have not been delivered to Agent. Section 4.39 Private Offering by Borrower. It is not necessary in connection with the initial offering, sale or delivery of any of the Initial Loan Notes to register such Initial Loan Notes under the Securities Act. As of the Additional Funding Date, it is not necessary in connection with the initial offering, sale or delivery of any of the Funding Loan Notes and the Debt Service Loan Notes to register such Funding Loan Notes and Debt Service Loan Notes under the Securities Act. Section 4.40 Bankruptcy. The sale price for the Acquisition was not arrived at by collusion among the buyer and potential bidder, and the orders of the Bankruptcy Court authorizing the Acquisition and the transactions contemplated by the Project Agreements were not obtained through means such as mistake, inadvertence or fraud. Section 4.41 On-Site Alternate Fuel. Each Project includes facilities for the storage of Alternative Fuel (including kerosene) sufficient to meet its obligations under the applicable Project Documents and Governmental Requirements. Section 4.42 No Liabilities. Except as disclosed on Schedule 4.23 or Schedule 4.42, to the best of Borrower's knowledge, there are no Liabilities above $100,000, in the aggregate, existing or threatened against either Borrower or such Borrower's respective properties or assets that could reasonably be expected to result in a Material Adverse Effect. Section 4.43 Levelized Capacity Payments. NRG Parlin has elected levelized capacity payments under the Parlin Power Purchase Agreement. Section 4.44 Ownership. (i) NRG Newark is the sole owner of the Newark Project free and clear of all Liens 61 (other than Permitted Liens), (ii) as of the Additional Funding Date, NRG Parlin is the sole owner of the Parlin Project free and clear of all Liens (other than Permitted Liens) (ii) Guarantor owns 100% of the outstanding common stock of each Borrower free and clear of all Liens (other than Permitted Liens), and (iii) NRG owns at least 41.86% of the outstanding common stock of Guarantor free and clear of all Liens (other than Permitted Liens). ARTICLE V Covenants of Borrower Each Borrower hereby covenants and agrees that until payment in full in cash of all of the Obligations or so long as any of the Commitments shall remain available hereunder, Borrower will observe and fulfill, and will cause to be observed and fulfilled (other than with respect to Guarantor prior to the Additional Funding Date), each and all of the following covenants unless Majority Lenders shall otherwise consent in writing. Section 5.1 The Accounts. (a) Contingency Account. Borrower shall maintain a special depository account (the "Contingency Account") (Account No. 376620-01) (and such account shall be titled appropriately so as to identify the nature of such account). Borrower agrees and shall cause the Contingency Account to be funded with all insurance and condemnation proceeds payable to Agent in accordance with Section 5.18. (b) Project Account. Borrower shall maintain a special depository account (the "Project Account") (Account No. 376620-02) (and such account shall be titled appropriately so as to identify the nature of such account). All Cash Revenues shall be deposited in the Project Account. Borrower has irrevocably instructed all parties making payments to either Borrower under the Project Documents, and shall instruct all other parties at any time making cash payments to either Borrower, to make such payments directly to the Project Account. Neither Borrower shall make any withdrawal or transfer from the Project Account except in strict adherence to the provisions of this Agreement and the Security Documents. (c) Withdrawals from Project Account. Borrower shall make withdrawals from the Project Account pursuant to 62 the terms of this Agreement and for the purposes of satisfying the provisions of this Section 5.1, in the following order of priority: (i) Payment of Operating Costs: on any day after the Initial Funding Date, withdraw and transfer directly to such payees as Borrower specifies or to the Local Bank Account, but not more frequently than once per month, all amounts that Borrower reasonably determines are necessary in order to pay Operating Costs (including Cash Expenses and the management fees payable to Operator pursuant to the Operations and Maintenance Agreement); provided that prior written consent of the Agent shall be required (which consent shall not be unreasonably withheld) to transfer amounts exceeding 110% of the amounts allocated therefor in the approved Operating Budget for such month and, provided, further, that Borrower shall have provided a written notice to Agent for any such transfer (whether or not Agent's consent is required for such transfer hereunder) at least five Business Days prior to the date of withdrawal and transfer. At the end of each fiscal year, Agent shall withdraw all amounts in the Local Bank Account in excess of $200,000 that are not required to pay current Operating Costs and deposit such amounts in the Project Account; (ii) Payments of Fees; Interest on the Loans and Other Debt Service: after making the withdrawals specified in clause (i) above, on each Interest Payment Date or any other date as required, withdraw and transfer amounts to pay (A) accrued interest on the Loans, (B) accrued commitment fees on the Commitments, (C) any amounts payable pursuant to the Interest Rate Hedging Agreement, (D) the Agency Fee, and (E) any other Debt Service (other than principal on the Loans) in each instance then due; (iii) Principal of the Credit Facility: after making the withdrawals specified in clauses (i) and (ii) above, (A) if the Additional Funding Date does not occur on or prior to the Initial Maturity Date, then on the Initial Maturity Date withdraw and transfer amounts necessary to repay the outstanding principal amount of the Initial Loans, plus accrued and unpaid interest and fees thereon and (B) if the Additional Funding Date occurs on or prior to the Initial Maturity Date, then on each Repayment Date withdraw and transfer amounts necessary to repay Funding Loan Repayment Amounts. 63 (iv) Principal of the Debt Service Line of Credit Facility: after making the withdrawals specified in clauses (i), (ii) and (iii) above, on each Repayment Date withdraw and transfer amounts necessary to repay all outstanding principal amounts of the Debt Service Loans. (v) Funding of Maintenance Reserve Account: after making the withdrawals specified in clauses (i) through (iv) above, on each Repayment Date withdraw and transfer for deposit in the Maintenance Reserve Account an amount equal to the Maintenance Reserve Required Deposit; (vi) Funding of Debt Service Reserve Account: after making the withdrawals specified in clauses (i) through (v) above, (A) on the Additional Funding Date and on each Repayment Date withdraw and transfer for deposit in the Debt Service Reserve Account (x) at all times prior to the initial withdrawal of funds from the Debt Service Reserve Account, fifty percent (50%) of the Available Cash Flow and (y) at all times after the initial withdrawal of funds from the Debt Service Reserve Account, one hundred percent (100%) of the Available Cash Flow, in each case until such time that the amount on deposit in the Debt Service Reserve Account, when taken together with the undrawn portion of the Debt Service Line of Credit Facility Commitment, equals the Debt Service Required Balance and, (B) if on any Repayment Date the Debt Service Coverage Ratio, delivered on the immediately preceding Calculation Delivery Date pursuant to Section 5.2 is less than 1.25:1.00, withdraw and transfer for deposit in the Debt Service Reserve Account, in addition to the amounts deposited pursuant to clause (A) above, fifty percent (50%) of the Available Cash Flow remaining after making the withdrawals specified in clause (A) above, up to such amounts as shall cause the Additional Debt Service Required Balance to be deposited in the Debt Service Reserve Account (not including amounts that are counted towards the Debt Service Required Balance); provided, however, that amounts on deposit in the Debt Service Reserve Account representing the Additional Debt Service Required Balance shall be withdrawn from the Debt Service Reserve Account for deposit in the Project Account if the Debt Service Coverage Ratio is at least 1.25:1.00 for two consecutive Calculation Delivery Dates occurring after such amounts have been deposited into the Debt Service Reserve Account; otherwise, the amount 64 of the Additional Debt Service Required Balance shall be recalculated (and if necessary funded pursuant to this Section 5.1(c)(vi)) on each succeeding Repayment Date. For purposes of this Agreement, the term "Available Cash Flow" means, as of any Repayment Date, Cash Revenues for the period ending on such Repayment Date and commencing on the date which is three (3) months prior to such ending date plus any other amounts on deposit in the Project Account on such Repayment Date, less the sum of all payments made for such period pursuant to clauses (i) through and including (v) of this Section 5.1(c); (vii) Funding of Capital Improvements Reserve Account: after making the withdrawals specified in clauses (i) through (vi) above, on each Repayment Date, withdraw and transfer for deposit in the Capital Improvements Reserve Account an amount equal to the Capital Improvements Reserve Required Deposit; (viii) Restricted Payments Escrow Account: after making the withdrawals specified in clauses (i) through (vii) above, on each Repayment Date, if the Debt Service Coverage Ratio delivered on the immediately preceding Calculation Delivery Date pursuant to Section 5.2 is less than 1.15:1.00, withdraw and transfer amounts otherwise distributable to the Borrower pursuant to clause (x) below for deposit in the Restricted Payments Escrow Account, provided, however, that amounts on deposit in the Restricted Payments Escrow Account shall be withdrawn from the Restricted Payments Escrow Account for deposit in the Project Account if the Debt Service Coverage Ratio is at least 1.20:1.00 for two consecutive Calculation Delivery Dates occurring after such amounts have been deposited into the Restricted Payments Escrow Account, provided, further, however, that in the event amounts in the Restricted Payments Escrow Account are not transferred to the Project Account within 12 months of being deposited into the Restricted Payments Escrow Account, then such amounts shall be withdrawn and made available for prepayment of the Loans in accordance with Section 2.8(c) hereof; (ix) Pre-Existing Liabilities: after making the withdrawals specified in clauses (i) through (viii) above, on any Repayment Date, withdraw and transfer directly to such payees as Borrower specifies amounts that are necessary to pay Pre-Existing Liabilities; and 65 (x) Distribution to Borrower: (A) if the Debt Service Coverage Ratio delivered on the immediately preceding Calculation Delivery Date pursuant to Section 5.2 is at least 1.20:1.00 and (B) if the Additional Funding Date has occurred on or prior to the Initial Maturity Date and (C) so long as no Default or Event of Default has occurred and is continuing, and (D) so long as none of the events specified in clause (d) of the "Change of Control" definition have occurred and (E) after making the withdrawals and retentions specified in clauses (i) through (ix) above, then on each Repayment Date, withdraw and transfer the monies remaining in the Project Account to such account as Borrower shall direct, or for such other use as Borrower shall direct. (d) Debt Service Reserve Account; Restricted Payments Escrow Account. Commencing on the Initial Funding Date, Borrower shall maintain a special depository account (the "Debt Service Reserve Account") (Account No. 376620-03) (and such account shall be titled appropriately so as to identify the nature of such account). On the Additional Funding Date the balance in the Debt Service Reserve Account shall be $5 million (represented by the undrawn portion of the Debt Service Reserve Line of Credit Facility Commitment). After the Additional Funding Date, to the extent the balance in the Debt Service Reserve Account is less than the Debt Service Required Balance, and, if applicable, the Additional Debt Service Required Balance, the Debt Service Reserve Account shall be funded as set forth in Section 5.1(c)(vi) on each Repayment Date in an amount up to the Debt Service Required Balance and, if applicable, the Additional Debt Service Required Balance. During the Availability Period the Debt Service Reserve Account will be deemed to be funded to the extent of the undrawn portion of the Debt Service Reserve Line of Credit Facility Commitment plus the actual amounts on deposit in the Debt Service Reserve Account. Lenders shall be entitled to use the balance in the Debt Service Reserve Account to satisfy payment obligations of Borrower under this Agreement and the other Loan Instruments. So long as no Event of Default has occurred and is continuing, on each Repayment Date, Agent shall withdraw any amount in the Debt Service Reserve Account in excess of the sum of (A) the Debt Service Required Balance and (B) the Additional Debt Service Required Balance (if required to be funded) for deposit in the Project Account. Commencing on the Initial Funding Date, Borrower shall maintain a special depository account (the "Restricted 66 Payments Escrow Account") (Account No. 376620-05) (and such account shall be titled appropriately so as to identify the nature of such account). The Restricted Payments Escrow Account shall be funded as set forth in Section 5.1(e)(vii). (e) Pre-Existing Liabilities Account. Commencing on the Initial Funding Date, Borrower shall maintain a special depository account (the "Pre-Existing Liabilities Account") (Account No. 376620-06) (and such account shall be titled appropriately so as to identify the nature of such account). Amounts in the Pre-Existing Liabilities Account shall be used to satisfy Pre-Existing Liabilities. (f) Maintenance Reserve Account. Commencing on the Initial Funding Date, Borrower shall maintain a special depository account (the "Maintenance Reserve Account") (Account No. 376620-07) (and such account shall be titled appropriately so as to identify the nature of such account). Borrower shall fund the Maintenance Reserve Account on the Additional Funding Date in an amount equal to the Maintenance Reserve Required Deposit. After the Additional Funding Date, the Maintenance Reserve Account shall be funded as set forth in Section 5.1(c)(v) on each Repayment Date in an amount equal to the Maintenance Reserve Required Deposit or as otherwise instructed by Agent based on consultation with the Independent Engineer and Borrower, if Agent reasonably believes that any such amount needs to be adjusted due to the necessity to overhaul the Newark Project's or the Parlin Project's material equipment earlier or later than expected. Agent shall provide Borrower with ninety (90) days' prior written notice of any adjustment in such amount. Borrower may, with the consent of Agent based upon consultation with the Independent Engineer, not to be unreasonably withheld, from time to time withdraw funds from the Maintenance Reserve Account to pay expenses associated with major equipment inspection and major overhaul, with respect to either Project. (g) Capital Improvements Reserve Account. Commencing on the Initial Funding Date, Borrower shall maintain a special depository account (the "Capital Improvements Reserve Account") (Account No. 076620-04) (and such account shall be titled appropriately so as to identify the nature of such account). Borrower shall fund the Capital Improvements Reserve Account on the Additional Funding Date in an amount equal to the Capital Improvements Reserve Required Deposit. After the Additional Funding Date, the Capital Improvements Reserve Account shall be funded as set forth in Section 5.1(c)(vii) on each Repayment Date in an 67 amount equal to the Capital Improvements Reserve Required Deposit or as otherwise instructed by Agent based on consultation with the Independent Engineer and Borrower, if Agent reasonably believes that any such amount needs to be adjusted due to the necessity to repair any of the Newark Project's or Parlin Project's material equipment earlier or later than expected. Agent shall provide Borrower with ninety (90) days' prior written notice of any adjustment in such amount. Borrower may, with the consent of Agent based upon consultation with the Independent Engineer, not to be unreasonably withheld, from time to time withdraw funds from the Capital Improvements Reserve Account to pay expenses associated with capital improvements, major repair and major component part replacement with respect to either Project. (h) Permitted Investments. Pending the application of funds in the Project Account, Debt Service Reserve Account, Restricted Payments Escrow Account, Pre-Existing Liabilities Account, Maintenance Reserve Account or Capital Improvements Reserve Account in accordance with Sections 5.1(c), (d), (e), (f) or (g) hereof, respectively, such funds shall be invested, reinvested and liquidated (at the risk and expense of Borrower) in accordance with instructions given by Borrower (except upon the occurrence and during the continuance of an Event of Default when such investments, reinvestments and liquidations shall, at Agent's option, be determined by Agent); provided, however, that no such investment shall be made other than in Permitted Investments. Agent shall not be required to take any action with respect to investing the funds in any Account in the absence of written instructions by Borrower. Agent shall not be liable for any loss resulting from any Permitted Investment or the sale or redemption thereof (other than such loss resulting from Agent's gross negligence or willful misconduct). If and when cash is required for disbursement in accordance with Section 5.1(c), (d), (e), (f) or (g) hereof, Agent is authorized, without instructions from Borrower, to the extent necessary, to cause Permitted Investments to be sold or otherwise liquidated into cash (without regard to maturity) in such manner as Agent shall deem reasonable and prudent under the circumstances. Any funds held by Agent, and all such Permitted Investments made in respect thereof, shall be held by Agent, and the interest of Borrower therein, until withdrawn, shall constitute part of the security subject to the security interests created by the Security Documents. Section 5.2 Debt Service Coverage Ratio. On each Calculation Delivery Date, Borrower shall deliver to Agent 68 the Debt Service Coverage Ratio calculated for the four consecutive quarterly periods ending on the Repayment Date immediately preceding such Calculation Delivery Date. A sample calculation of the ratio to be provided hereunder is contained in Schedule 5.2. Such calculation shall be made by Borrower reasonably and in good faith. Section 5.3 Maintenance of Existence, Privileges, Etc. Each Borrower shall, and shall cause NPI to, at all times (i) preserve and maintain in full force and effect (A) its existence as a corporation in good standing under the laws of the State of Delaware, (B) its qualification to do business in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business as conducted or proposed to be conducted makes such qualification necessary and where the failure to maintain such qualification could reasonably be expected to result in a Material Adverse Effect and (C) all of its powers, rights, privileges and franchises necessary for the ownership, maintenance and operation of each Project and the maintenance of its existence, except, in the case of clause (C) only, where the failure to do so could not reasonably be expected to result in a Material Adverse Effect and (ii) obtain and maintain in full force and effect all Governmental Approvals and other consents and approvals required at any time in connection with the maintenance, ownership or operation of each Project and where the failure to obtain and maintain in full force and effect such Governmental Approvals, consents and approvals could reasonably be expected to result in a Material Adverse Effect. Section 5.4 Performance of Project Documents. Each Borrower will, and will cause NPI to, (i) perform and observe all of its covenants and agreements contained in the Governmental Approvals, Insurance Policies and any of the Project Agreements to which it is a party, unless the failure to perform or observe such covenants and agreements could not reasonably be expected to result in a Material Adverse Effect, (ii) preserve, protect and defend the rights of each of Borrower and NPI contained in the Governmental Approvals, Insurance Policies and any of the Project Agreements to which it is a party, unless the failure to preserve, protect or defend such rights could not reasonably be expected to result in a Material Adverse Effect and (iii) maintain in full force and effect each of the Project Agreements and all contracts, permits and approvals relating thereto which are necessary for the maintenance and operation of each Project. 69 Section 5.5 Operation and Maintenance. (a) Operations. Each Borrower will use, maintain and operate its respective Project in compliance with Prudent Electrical Practices (as defined in the relevant Power Purchase Agreement), all Project Documents, this Agreement, the Operating Budget and all applicable Governmental Approvals and Laws, the non-compliance with which could reasonably be expected to result in a Material Adverse Effect. Each Borrower will inspect, maintain, service and repair its respective Project so as to keep such Project (i) in good order, operating condition (normal wear and tear excepted) and repair in conformity with prudent industry standards and commercial practice, (ii) in compliance with all requirements under the Project Documents, the non-compliance with which could reasonably be expected to result in a Material Adverse Effect and (iii) in such condition that such Project will have the capacity and functional ability to perform, in normal commercial operation, the functions and at the ratings set forth in the Project Documents and all applicable Governmental Approvals for the remaining useful life of such Project, except where such failure could not reasonably be expected to result in a Material Adverse Effect. Each Borrower shall cause its respective Project to be operated so as to preserve and enforce all warranties and guaranties regarding such Project and to which such Borrower is a beneficiary, unless the failure to preserve and enforce such warranties and guaranties could not reasonably be expected to result in a Material Adverse Effect. (b) Repair and Replacement. Each Borrower will keep its respective Project and all other property necessary for its business in good repair, working order and condition, normal wear and tear excepted. In the event of any damage to or destruction of either Project, or any part thereof, by fire or other casualty not resulting in a prepayment under Section 2.8(a), each respective Borrower shall, at its own expense and whether or not such damage or destruction is covered by an insurance policy, but subject to the release by Agent of and having the benefit of any insurance proceeds released pursuant to Section 5.18, with reasonable promptness, repair, restore, replace or rebuild the same so that upon the completion of such repair, restoration, replacement or rebuilding, such Project shall be in the condition required by the foregoing provisions of this Section 5.5 and so that the productive capacity, value, utility and remaining useful life of such Project shall be at least equal to the greater of (i) the actual productive capacity, value, utility and remaining useful life of such Project immediately prior to the happening of such casualty 70 or (ii) the productive capacity, value, utility and remaining useful life that such Project would have had if such Project were used, maintained and operated in accordance with the requirements of this Section 5.5. Section 5.6 Operating Logs. Each Borrower will, at its sole cost and expense, (a) maintain at its respective Project daily operating logs showing, among other things, the electrical output of such Project, (b) keep maintenance and repair reports in sufficient detail to indicate the nature and date of all work done, (c) maintain a current operating manual and a complete set of plans, accounting records and specifications reflecting all alterations and (d) maintain all other records, logs and other materials required by the relevant Project Documents or any Governmental Requirements. Section 5.7 Compliance with Laws. (a) Generally. Each Borrower shall make such alterations to its respective Project as may be required for compliance with all applicable Governmental Requirements, except where non-compliance could not reasonably be expected to result in a Material Adverse Effect. NRG Newark and NRG Parlin shall take no action which would have an adverse impact upon the status of NRG Newark or NRG Parlin as an EWG or, until the Rate Approval Date, of the Newark Project as a Qualifying Cogeneration Facility, and shall ensure that each EWG certification and, until the Rate Approval Date for NRG Newark, the QF Certificate for the Newark Project is maintained. Upon the request of Agent, each Borrower shall deliver to Agent evidence of such Borrower's compliance with all applicable Governmental Requirements and, if such evidence is not reasonably available to such Borrower, certify to Agent that such Borrower is in full compliance, except where the non- compliance with such Governmental Requirements could not reasonably be expected to result in a Material Adverse Effect. (b) Resistance of Regulatory Change. If any litigation, investigation or proceeding specifically directed to either Borrower or either Project is commenced which causes, or may cause, any Governmental Authority to issue (or propose to issue) any order, judgment, regulation, decision or interpretation specifically directed to such Borrower or such Project the effect of which is, or may cause (i) a Material Adverse Effect or (ii) a rescission, termination, repeal, invalidation, suspension, injunction, or a material amendment or modification of any license, permit, authorization or Project Agreement, or any part thereof, with respect to such Borrower, and, if in the opinion of such 71 Borrower, there is a reasonable likelihood that such litigation, investigation or proceeding or action by any Governmental Authority could reasonably be expected to result in a Material Adverse Effect, such Borrower will use commercially reasonable efforts, in light of all circumstances at the time, to (A) contest and resist any such litigation, investigation or proceeding or such action by any Governmental Authority, (B) pursue all remedies and appeals as necessary in connection therewith and (C) take such other lawful action, in each case as such Borrower shall determine to be necessary or, in the opinion of Agent, is desirable in light of all relevant circumstances to prevent such litigation, investigation or proceeding or such action by any Governmental Authority from becoming final and nonappealable or otherwise irrevocable, to attempt to postpone the effectiveness of such litigation, investigation or proceeding or such action by any Governmental Authority, and to cause such litigation, investigation or proceeding or such action by any Governmental Authority to be terminated, revoked, amended or modified so as to eliminate the reasonable likelihood of such effect. (c) Compliance with Margin Stock Rules. No part of the proceeds of the Commitments will be used to purchase "margin stock" (as defined in the regulations referred to below) or for any other purpose which would result in a violation (whether by a Borrower, Agent or the Lenders) of Regulations G, T, U or X of the Board of Governors of the Federal Reserve System or to extend credit to others for any such purpose. Neither Borrower nor any of its Affiliates is engaged in, nor will any of them engage in, the business of extending credit for the purpose of purchasing or carrying any "margin stock." (d) Environmental Matters. Each Borrower will comply, and shall cause all tenants, licensees, invitees, any subcontractor, operator, and occupants of its respective Project to comply in all material respects with all applicable Environmental Requirements. Each Borrower will use its best efforts to cause all other Obligors to comply in all material respects with all Environmental Requirements applicable to its respective Project. Each Borrower will not, and will not permit any such other party to, generate, store, handle, process, transport, ship, dispose, or otherwise use Hazardous Materials at, in, on, under or from its respective Project, or onto any other property, in a manner that could lead to the imposition on such Borrower, any of the Secured Parties or such Project of any cleanup obligation, corrective action, liability, judgment, order or Lien under any Environmental Requirement. Each Borrower 72 shall promptly notify Agent when it learns of any information that would have resulted in a breach hereunder if such information had been known but not disclosed at the time such representation was made, or when it becomes aware of any Release of any Hazardous Material (whether or not such Release occurred prior to, on or after the Initial Funding Date) at, in, on, under or from its respective Project which is required to be reported to a Governmental Authority, or which could result in any cleanup obligation, corrective action, liability, judgment, order or Lien under any Environmental Requirement. Each Borrower shall immediately forward to Agent copies of any notices, complaints or summonses received by such Borrower relating to alleged violations of any Environmental Requirement or potential adverse actions in any way involving environmental or health matters. Each Borrower will promptly pay when due any fine, penalty, judgment, or assessment arising under any Environmental Requirement against such Borrower, its respective Project or against any of the Secured Parties to the extent the same arises in connection with such Project, except to the extent (x) any such fine, penalty, judgment or assessment is being contested in good faith by appropriate proceedings under applicable Laws, (y) the pendency of such proceedings is not likely to interfere with the operation of such Project by such Borrower and does not involve a material risk that such Project or any part thereof may be sold, lost or forfeited, and (z) adequate reserves in the judgment of Agent have been set aside with respect thereto to satisfy any adverse determination. If at any time the condition, operation or use of either Project violates or could result in liability under any applicable Environmental Requirement, or there are Hazardous Materials located at, in, on, under or from either Project for which cleanup or corrective action of any kind is required under any applicable Environmental Requirement or, because of any Release of any Hazardous Material, cleanup of or corrective action with respect to such Hazardous Material is authorized under CERCLA or any similar state or local Law, each respective Borrower shall, within 10 days after discovering such condition, operation or use, notify Agent and immediately initiate and thereafter diligently pursue, at its sole cost and expense, such actions as shall expeditiously result in full compliance in all material respects with and, to the maximum extent possible, elimination of any liability under all Environmental Requirements. If an Event of Default exists, Agent may cause an environmental audit of either Project or any portion thereof to be conducted at Borrower's expense, and each Borrower shall cooperate in all reasonable ways with any such audit. If either Mortgage is foreclosed or either Borrower tenders a deed or assignment in lieu of foreclosure, such 73 Borrower shall deliver the applicable Project to the purchaser at foreclosure or to Agent or the nominee of either, as the case may be, in a condition that complies in all respects with all applicable Environmental Requirements, and that does not contain Hazardous Materials for which cleanup or corrective action is required under any applicable Environmental Requirements or, because of any Release of Hazardous Material, cleanup of or corrective action with respect to such Hazardous Material is authorized under CERCLA or any similar state or local Law or may be necessary to prevent or eliminate a material risk to human health or the environment. (e) Changes in Laws; Compliance with Environmental Requirements. If (A) there shall occur any change effective after the Initial Funding Date in any Governmental Requirement that, in the reasonable judgment of the Majority Lenders, could reasonably be expected to result in a Material Adverse Effect on the ability of either Borrower to meet its obligations under the Loan Instruments or (B) in order to comply with any Environmental Requirements, including, without limitation, any regulations promulgated by the U.S. Environmental Protection Agency and any state implementing authority pursuant to the Clean Air Act Amendments of 1990, either Borrower is required to acquire pollution allowances, offsets or similar emission approvals, or is required to make other expenditures that could reasonably be expected to result in a Material Adverse Effect (including the installation or modification of equipment or technologies) to comply with such Environmental Requirements, then, in the case of any event described in the foregoing clause (A) or (B) such Borrower shall develop a plan of action ("Plan") for the purpose of (x) in the case of any event described in clause (A), (i) causing its respective Project to comply with such change, no later than the effective date thereof or (ii) otherwise curing the Material Adverse Effect, which Plan shall include (A) the proposed method for effecting changes required to such Project or for effecting such cure, (B) the schedule for implementation of any such changes or any such cure and (C) the method for financing the required changes to such Project or such cure and (y) in the case of any event described in clause (B), acquiring such allowances, offsets or approvals or otherwise complying with such Environmental Requirements. Any such Plan shall be reasonably acceptable in form and substance to Agent, in consultation with the Independent Engineer, and shall be submitted to Agent and the Independent Engineer for their review and approval within 90 days of such event or of recognition by such Borrower or Agent of the actual or potential applicability of such Environmental Requirements or such shorter period as, in the 74 reasonable judgment of Agent, in consultation with such Borrower and the Independent Engineer, may be necessary in order to effectively mitigate any Material Adverse Effect or otherwise comply with the change in the Governmental Requirement or Environmental Requirement. No funds shall be distributed pursuant to Section 5.1(c)(x) hereof until Agent and Borrower mutually agree as to the amounts, if any, needed to be reserved to implement any such Plan and upon such agreement Borrower shall, if required, establish a reserve account in such amounts and in accordance with a schedule to be determined by the Secured Parties, for the purpose of funding the anticipated cost of implementing such Plan. Such reserve account shall be funded from monies in the Project Account after making the withdrawals and retentions specified in Section 5.1(c)(i) through (vi) hereof. (f) Operating Reports. Each Borrower will provide to Agent and the Independent Engineer, on or before the 20th day of each month and at any other time when so requested by Agent, a report setting forth the principal operating data for its respective Project for the previous month, including, without limitation, (x) until the Rate Approval Date, evidence that NRG Newark is maintaining the Newark Project's status as a Qualifying Cogeneration Facility, (y) any reports as to significant operating, maintenance and management events, pursuant to the Operations and Maintenance Agreement, or otherwise, and (z) such other information as Agent may request. Each Borrower shall monitor the activities of its respective Project pertinent to the maintenance of its status as an EWG (or a Qualifying Cogeneration Facility, if applicable) in the manner deemed necessary or advisable from time to time by any Governmental Authority or Agent. (g) Intellectual Property Infringement. In the event that any product, process, method, substance, part or other material sold, used or employed, or contemplated to be sold, used or employed, by either Borrower in connection with its business or its respective Project does or will infringe any patent, trademark, service mark, trade name, copyright, license or other right owned by any other Person or any claim or litigation is pending or threatened against or affecting such Borrower contesting its right to sell, use or employ any such product, process, method, substance, part or other material, such Borrower shall give Agent notice promptly, but in no event more than five days after obtaining knowledge thereof and such Borrower shall effectively eliminate such infringement within 30 days of giving such notice to Agent (unless subject to a Good Faith Contest) or such longer period as in the reasonable judgment of Agent could not reasonably be expected to have a Material Adverse Effect. 75 (h) Tracking of Permits. Each Borrower shall maintain a tracking system to monitor the status of, the conditions contained in, and compliance with, Governmental Approvals required to be obtained by such Borrower, the non-compliance with which could reasonably be expected to result in a Material Adverse Effect, in form and substance reasonably satisfactory to the Independent Engineer. Section 5.8 Information. Borrower will furnish to Agent with sufficient copies for each Lender (as designated by Agent) the following information: (a) Quarterly Financial Statements of Borrower. As soon as available and in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of Borrower and Guarantor, consolidated balance sheets of Borrower and Guarantor as of the end of such quarter and consolidated (and consolidating) statements of operations, stockholders' equity and cash flows of Borrower and Guarantor for the period commencing at the beginning of such fiscal year and ending with the end of such quarter, all in reasonable detail and duly certified (subject to year-end audit adjustments) by an Authorized Officer of Borrower and Guarantor as having been prepared in accordance with GAAP, consistently applied, together with a Compliance Certificate as of the end of such fiscal quarter. Prior to the termination of the NRG Guaranty, Borrower shall also deliver, as soon as available and in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of NRG, the balance sheets of NRG as of the end of such quarter and statements of operations, stockholders' equity and cash flows of NRG for the period commencing at the beginning of such fiscal year and ending with the end of such quarter, all in reasonable detail and duly certified (subject to year-end audit adjustments) by an Authorized Officer of NRG as having been prepared in accordance with GAAP consistently applied, together with a Compliance Certificate as of the end of such fiscal quarter. Agent and Lenders agree to keep such financial statements of NRG confidential in accordance with the provisions of Section 8.15. At the same time as such quarterly financial statements are delivered, Borrower shall also deliver an operating statement in the same form as the Operating Budget which shall list in comparative form the approved Operating Costs and Operating Revenues as set forth in the approved Operating Budget for the year in which such quarterly financial statements are delivered and the actual Operating Costs and Operating Revenues for such quarter as set forth in such quarter's consolidated statements of operations; 76 (b) Annual Financial Statements of Borrower. As soon as available and in any event within 105 days after the end of each fiscal year of Borrower and Guarantor, the consolidated balance sheets of Borrower and Guarantor as of the end of such fiscal year and the consolidated (and consolidating) statements of operations, stockholders' equity and cash flows of Borrower and Guarantor for such fiscal year, in the case of such consolidated financial statements, certified, without material qualifications or limitations as to scope of the audit by independent public accountants of recognized standing, as having been prepared in accordance with GAAP, consistently applied, together with a Compliance Certificate as of the end of such fiscal year for Borrower and Guarantor. Prior to the termination of the NRG Guaranty, Borrower shall also deliver, as soon as possible and in any event within 105 days after the end of each fiscal year of NRG, the balance sheets of NRG as of the end of such fiscal year and the statements of operations, stockholders' equity and cash flows of NRG for such fiscal year, certified, without material qualifications or limitations as to the scope of the audit by independent public accountants of recognized standing, as having been prepared in accordance with GAAP, consistently applied, together with a Compliance Certificate as of the end of such fiscal year for NRG. Agent and Lenders agree to keep such financial statements of NRG confidential in accordance with the provisions of Section 8.15. (c) Accountants' Reports. Promptly upon receipt thereof, Borrower will deliver copies of all significant reports submitted to Borrower by independent public accountants in connection with each annual, interim or special audit of the financial statements of Borrower made by such accountants; (d) Notice of Defaults. As soon as possible and in any event within five days after obtaining actual knowledge of the occurrence of each Event of Default and each event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, a statement of an Authorized Officer of Borrower setting forth details of such Event of Default or event and the action which Borrower has taken and proposes to take with respect thereto; (e) PBGC Notices. Promptly and in any event within ten Business Days after receipt thereof by either Borrower or any ERISA Affiliate from the PBGC, copies of each notice received by such Borrower or any such ERISA Affiliate of the intention of the PBGC to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; 77 (f) Litigation. Subject to the terms of Section 5.7(d) hereof, notice (i) promptly after the commencement thereof, in the case of either Borrower, of all actions, suits and proceedings before any Governmental Authority affecting a Borrower or any of its respective assets or properties; (ii) promptly upon receipt by either Borrower of written notice thereof from an Obligor, of all actions, suits and proceedings before any Governmental Authority affecting such Obligor or any of its assets or properties; (iii) promptly after the commencement thereof, in the case of Guarantor, of all actions, suits and proceedings before any Governmental Authority affecting Guarantor or any of its respective assets or properties involving an amount greater than $100,000; and (iv) in any such case, promptly after the occurrence thereof, or (in the case of an Obligor) upon receipt of notice thereof, notice of any material development in any such actions, suits or proceedings; (g) Quarterly Officer's Certificate. Together with the financial statements referred to in Sections 5.8(a) and 5.8(b), a certificate signed by an Authorized Officer of Borrower or Guarantor as the case may be, in form and substance reasonably satisfactory to Agent, (x) certifying (i) as to the absence of any Default or Event of Default (or, if any exists, describing the nature thereof) and (ii) the absence of a Material Adverse Effect (or, if any exists, describing the nature thereof) and (y) setting forth a list, if applicable, of any and all unaccrued and unwaived payment defaults by either Borrower aggregating more than $100,000, or by Guarantor aggregating more than $250,000, on any Debt as of the last day of the prior fiscal quarter; (h) Employee Benefit Plans. With reasonable promptness, and in any event within thirty (30) days of the time that either Borrower reasonably becomes aware of such event or circumstance, such Borrower will give notice of and/or deliver to Agent and each Lender copies of: (1)(a) the establishment of any new Pension Plan or Multiemployer Plan, (b) the commencement of contributions to any Pension Plan or Multiemployer Plan to which such Borrower or any of its ERISA Affiliates were not previously contributing or becomes obligated to contribute or (c) any material increase in the benefits of any existing Pension Plan or Multiemployer Plan or (d) the establishment or amendment of any Employee Benefit Plan or other plan or agreement which creates or increases liability of such Borrower or any of its ERISA Affiliates with respect to health or welfare benefits to retirees and which could reasonably be expected to result in a Material Adverse Effect; (2) each funding waiver request filed with respect to 78 any Employee Benefit Plan and all communications received or sent by such Borrower or any ERISA Affiliate with respect to such request; and (3) the failure of such Borrower or any ERISA Affiliate to make a required installment or payment under Section 302 of ERISA or Section 412 of the IRC by the due date. (i) Termination Events. Promptly and in any event within ten (10) days of becoming aware of the occurrence of or forthcoming occurrence of any (1) Termination Event or (2) nonexempt material "prohibited transaction," as such term is defined in Section 406 of ERISA or Section 4975 of the IRC, in connection with any Pension Plan or any trust created thereunder, Borrower will deliver to Agent and each Lender a notice specifying the nature thereof, what action Borrower or any ERISA Affiliate have taken, are taking or propose to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; (j) ERISA Notices. With reasonable promptness but in any event within ten (10) days for purposes of clauses (1), (2) and (3), Borrower will deliver to Agent and each Lender copies of: (1) any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan or Multiemployer Plan under Section 401(a) of the IRC; (2) all notices received by either Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; (3) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by either Borrower or any ERISA Affiliate with the Internal Revenue Service with respect to each Pension Plan; and (4) all notices received by either Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA; provided that such notice shall be required for the event described in clause (1) above with respect to Multiemployer Plans only after either Borrower has obtained knowledge or has reason to know of such event. Borrower will notify Agent and each Lender in writing within two (2) Business Days of either Borrower obtaining knowledge or reason to know that such Borrower or any ERISA Affiliate have filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; (k) Transactions With Affiliates. Within 10 days after the end of each fiscal quarter of Borrower, Borrower will deliver to Agent a description of any transaction 79 (except for transactions undertaken pursuant to the Management Agreement as in effect on the date hereof and transactions undertaken pursuant to an operations and maintenance agreement entered into with any Affiliate of a Borrower in accordance with Sections 5.32 or 6.1(o)), that occurred during such fiscal quarter between either Borrower and any Affiliate of such Borrower requiring payments by such Borrower in excess of $100,000 for any 12-month period; (l) Annual Projections; Operating Budget. Within 30 days prior to the commencement of each fiscal year of Borrower, Borrower will deliver to Agent (with sufficient copies for each Lender and after consultation with Agent) (A) consolidated and consolidating projections of the operations of each Borrower for the immediately succeeding fiscal year, such projections to contain the types of information set forth on the Projections and (B) an annual Operating Budget for each Project which shall establish that each Borrower will be in compliance, on a pro forma projected basis, with the term of this Agreement, such projections and budgets to be accompanied by the certificate set forth in paragraph (m) below. If such budgets are not within 10% of the base case projections, then such budgets must be approved by Agent; (m) Projections and Budget Certificate. Together with the projections and budgets to be delivered pursuant to paragraph (l) above, a certificate executed by the chief financial officer of Borrower certifying that (i) the assumptions related thereto have been made in good faith with due care, (ii) the projections or budgets as applicable, taken as a whole, represent the best estimates of the Borrower as of the date thereof and based on the assumptions set forth therein, which assumptions are, to the best of Borrower's knowledge, realistic and achievable, of matters covered thereby for the periods covered thereby, it being understood and acknowledged that such projections and budgets do not represent a guarantee that the Borrower will be able to achieve the results described therein, (iii) the projections or budgets, as applicable, are based on reasonable assumptions as to all factual and legal matters material to the estimates therein (including interest rates and costs) and (iv) the projections or budgets as applicable, are in all respects consistent with, and will be in all respects consistent with, the provisions of the Project Agreements; (n) Debt Service Coverage Ratio Compliance Certificate. No later than 90 days after each fiscal year of Borrower, Borrower shall deliver to Agent (with sufficient 80 copies for the Lenders) a certificate, executed by an Authorized Officer of Borrower, stating that no event has occurred and neither Borrower has any reason to believe that any event will occur which would cause Borrower not to be in compliance with Section 5.37 for the then current fiscal year, such certificate to be in form and substance satisfactory to Agent; (o) Other Financial Statements. A copy of the annual and quarterly financial statements (consisting of a balance sheet and the related statements of income, equity and cash flows or, in the case of DuPont, JCP&L and PSE&G, Forms 10-K and 10-Q, respectively, filed with the SEC) of each of the Obligors, consolidated where any such party has subsidiaries, within 30 days of publication of such statements; provided that in the case of all Obligors other than Borrower, Guarantor and Newark Group, such quarterly financial statements shall be furnished to the extent publicly available or otherwise available to either Borrower or Guarantor; (p) Additional Project Information. Without duplication of any of the foregoing: (i) as soon as available and in any event within five Business Days after either Borrower (or in the case of clause (a) below an Authorized Officer of either Borrower or the plant manager of either Project) have knowledge thereof, written notice of: (a) any information, development or knowledge of any adverse change in the business, properties, condition (financial or otherwise) or operations of any party to any of the Project Documents which has had or could reasonably be expected to result in a Material Adverse Effect; (b) any fire or other casualty affecting either Project in any material respect; and (c) any actual or proposed termination, rescission, discharge (otherwise than by performance), amendment or waiver under, any material provision of any Project Agreement; (q) Additional Information. Such other information respecting the condition or operations, financial or otherwise, of either Borrower or, to the extent reasonably available, any other Obligor or any other party, as any 81 Lender through Agent may from time to time reasonably request; and (r) Significant Events. Promptly upon either Borrower's knowledge thereof, a written statement from an Authorized Officer of Borrower describing the details of: (A) any substantial dispute which may exist between either Borrower and any governmental regulatory body or law enforcement authority that could reasonably be expected to result in a Material Adverse Effect; (B) any labor controversy resulting in or reasonably likely to result in a strike or work stoppage or slowdown against either Borrower that could reasonably be expected to result in a Material Adverse Effect; (C) any proposal by any public authority to condemn or acquire any material assets or business of either Borrower; (D) any event or occurrence with respect to either Borrower or any of its respective businesses, assets or properties which gives rise to a claim in excess of $250,000 under any insurance policy insuring such Borrower or any of its respective businesses, assets or properties; and (E) any change of any Law, which change is reasonably likely to result in a Material Adverse Effect. Section 5.9 Bank Accounts. Each Borrower will maintain all of its bank accounts with Credit Suisse, except that (a) one or more bank accounts may be maintained at one or more commercial banks in Minnesota reasonably acceptable to Agent (the "Local Bank Accounts") for the sole purpose of paying Cash Expenses and management fees under the Operations and Maintenance Agreement, provided, that prior to depositing any funds in any Local Bank Account, such Borrower, Agent and such bank shall have entered into a blocked account agreement, each substantially in the form of Exhibit D ("Blocked Account Agreement") with respect to each such account and (b) one or more bank accounts may be maintained by Borrower for the deposit of funds transferable by Borrower pursuant to Section 5.1(c). 82 Section 5.10 Inspection; Maintenance of Records. (a) Inspection Rights. At any reasonable time and from time to time upon reasonable notice, each Borrower will permit Agent or any agents or representatives thereof, to examine (at the location where normally kept) and make abstracts from the records and books of account of, and visit the properties of such Borrower and to, upon reasonable notice to such Borrower, discuss the affairs, finances and accounts of such Borrower with any of its officers and discuss the affairs, finances and accounts of such Borrower with its independent certified public accountants (at which discussion, if such Borrower so requests, a representative of such Borrower shall be permitted to be present) and permit such accountants to disclose to Agent any and all financial statements and other reasonably requested information of any kind that they may have with respect to such Borrower. (b) Keeping of Books. Each Borrower will keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of such Borrower in a form such that such Borrower may readily produce no less frequently than at the end of each of its fiscal quarters, financial statements in accordance with GAAP consistently applied. Section 5.11 Maintenance of Properties, Etc. Each Borrower will preserve and maintain good and marketable title to all of its properties and assets which are necessary in the conduct of its business in good working order and condition, ordinary wear and tear excepted, subject to no Liens other than Permitted Liens. Section 5.12 Maintenance of Insurance. Each Borrower will maintain or cause to be maintained with insurance companies rated "A-" or better by Best's Insurance Guide and Key Ratings or other insurance companies of recognized responsibility satisfactory to Agent, insurance in such amounts and covering such risks as are usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which such Borrower operates (the "Industry Standard"), and in any event the insurance coverages shall not be less than the insurance coverages set forth on Schedule 4.25. Each Borrower shall, upon the request of Agent, promptly provide a schedule indicating the policies maintained by such Borrower, coverage limits of liability, effective dates of coverage, insurance carrier names and policy numbers. Each Borrower shall cause Agent to be named as loss payee or as an additional named insured, for the account of the Lenders and Agent itself. 83 Evidence of payment of premiums for Insurance Policies shall be delivered to Agent at least 30 days prior to the expiration thereof and each Borrower shall deliver the Insurance Policies to Agent promptly upon its request. Section 5.13 Payment of Taxes, Etc. Each Borrower will cause to be paid and discharged all taxes, assessments and governmental charges upon it, its income and properties prior to the date on which penalties are attached thereto, and all lawful claims which, if unpaid, might become a Lien upon the property of such Borrower (or any part thereof), except where failure to pay could not reasonably be expected to result in a Material Adverse Effect and such Borrower shall have the right, however, to commence a Good Faith Contest with respect to the validity or amount of any such tax, assessment or governmental charge, and may permit the taxes, assessments or governmental charges so contested to remain unpaid during the period of such Good Faith Contest if (a) such Borrower diligently prosecutes such contest, (b) adequate reserves, in the reasonable determination of Agent, are maintained with respect thereto and (c) during the period of such contest, the enforcement of any contested item is effectively stayed. Each Borrower will promptly pay or cause to be paid any valid, final judgment enforcing any such tax, assessment and governmental charge and cause the same to be satisfied of record. Guarantor shall, and each Borrower shall cause Guarantor to, indemnify such Borrower pursuant to the Tax Indemnification Agreement in an amount equal to any income and franchise taxes paid by such Borrower. Section 5.14 Syndication Efforts. Each Borrower will make itself reasonably available to assist Agent in syndicating the Commitments and the Loans. Without limiting the generality of the foregoing, each Borrower will, at the request of Agent, assist Agent and otherwise cooperate with Agent in the preparation of an information memorandum (which assistance may include reviewing and commenting on drafts of such information memorandum and drafting portions thereof) to facilitate the preparation and printing of such information memorandum and shall make its chief financial officer and the appropriate personnel having knowledge of either Project and the financing thereof available to attend a bank group meeting among prospective banks. Section 5.15 Interest Rate Hedge Agreements. (a) On or prior to the date which is 30 days after the Additional Funding Date, Borrower shall have entered into Interest Rate Hedge Agreements for a term ending on the Maturity Date with respect to at least 50% of the aggregate outstanding principal amount of the Notes. All obligations of Borrower 84 to make payments to the Hedge Parties pursuant to any Interest Rate Hedge Agreement shall be secured by the Security Documents pari passu with Borrower's obligations under this Agreement and the other Loan Instruments. Concurrently with the execution and delivery of any Interest Rate Hedge Agreement, Agent shall receive a legal opinion, in form and substance reasonably satisfactory to Agent, with respect to such Interest Rate Hedge Agreement. (b) If, upon making any prepayment pursuant to Section 2.7 (optional) and Section 2.8 (mandatory), the aggregate notional amount listed in all Interest Rate Hedge Agreements then in effect exceeds the aggregate outstanding principal amount of Funding Loans ("Excess Amount"), Borrower shall make corresponding adjustments to the notional amounts listed in all such Interest Rate Hedge Agreements and shall pay all settlement amounts due in accordance therewith; provided, however, that instead of making such adjustments to the notional amounts listed in the Interest Rate Hedge Agreements, Borrower may, with the prior written consent of each counterparty to each of the affected Interest Rate Hedge Agreements and at no cost to the Lenders, assign the Excess Amount listed in one or more Interest Rate Hedge Agreements to any other Person. In addition, upon making any prepayment pursuant to Section 2.7 or Section 2.8, Borrower shall pay all breakage expenses and other amounts, if any, due under any Interest Rate Hedge Agreement, provided that all such prepayments shall be deemed first applied against amounts not covered by any Interest Rate Hedge Agreement. Section 5.16 Other Contracts. (a) Additional Contracts. Except as provided for in Sections 5.32 and 6.1(o), neither Borrower shall become a party to any contract, operating lease, agreement or commitment, except upon such terms and with such parties as shall be approved in writing by the Independent Engineer and the Majority Lenders, other than (i) the agreements identified in the definition of the term Project Documents, but not replacements thereof and (ii) any Permitted Contract. (b) Project Document Amendment, Termination, Waiver, Etc. Except as provided for in Sections 5.32 and 6.1(o), without the prior written consent of the Agent, neither Borrower shall, or shall permit NPI to, directly or indirectly, terminate, cancel or suspend, or permit or consent to any termination, cancellation or suspension of, or enter into or consent to or permit the assignment of the rights or obligations of any party to, any of the Project Documents, Governmental Approvals or Insurance Policies 85 (unless and until, in the case of Insurance Policies, Borrower has entered into replacement Insurance Policies prior to such termination, cancellation or suspension, and such replacement Insurance Policies are in accordance with the provisions of Section 5.12). Neither Borrower shall, or shall permit NPI to, directly or indirectly, amend, modify, supplement or waive, or permit or consent to the amendment, modification, supplement or waiver of, any of the provisions of, or give any consent under, any of the Project Documents, Governmental Approvals or Insurance Policies without (i) first submitting to Agent a copy of such proposed amendment, modification, supplement, waiver or consent and (ii) if in the reasonable judgment of Agent, such proposed amendment, supplement, waiver, or consent could reasonably be expected to result in a Material Adverse Effect, the express prior written consent of the Majority Lenders thereto. Neither Borrower shall, or shall permit NPI to, directly or indirectly, amend, modify, supplement or waive, or permit or consent to the amendment, modification, supplement or waiver of, any of the provisions of, or give any consent under, any of the Project Documents, Governmental Approvals or Insurance Policies which does not require consent of the Majority Lenders, without the prior written consent of Agent which consent shall not be unreasonably withheld. Neither Borrower shall, or shall permit NPI to, directly or indirectly, exercise or refuse to exercise or waive any option or right to purchase any property or assets, nor exercise, or refuse to exercise or waive any right of first refusal pursuant to any of the Project Documents which does not require the consent of the Majority Lenders, without the prior written consent of Agent, which consent shall not be unreasonably withheld or delayed. (c) Acquisition of Property. If either Borrower shall at any time acquire any real property or leasehold or other interests therein not covered by the relevant Mortgage, such Borrower shall, in addition to fulfilling the requirements set forth in Section 5.16(a), promptly upon such acquisition notify Agent and promptly upon the request of Agent execute, deliver and record a supplement to such Mortgage satisfactory in form and substance to Agent, subjecting such real property or leasehold or other interests to the loan and security interest created by such Mortgage, as appropriate. Section 5.17 Use of Proceeds. Borrower will use the proceeds of all Funding Loans only for Qualifying Uses. Section 5.18 Obligations Upon Casualty. If an Event of Loss occurs in respect of a Project to an extent 86 that such Project would, in the reasonable determination of the Borrower as approved by Agent, be unable to operate on a commercially feasible basis (i.e., the Project would not be able to satisfy the Debt Service Coverage Ratios contained herein and in the Projections), and Restoration of such Project would, in the reasonable judgment of the Borrower as approved by Agent, be commercially feasible (i.e., after the Restoration, such Project would be able to achieve the Debt Service Coverage Ratios that existed immediately prior to the Event of Loss, such Debt Service Coverage Ratios not to be less than 1.30:1.00), then after deducting from any insurance proceeds (other than business interruption insurance proceeds) or condemnation proceeds (collectively, the "Proceeds") the reasonable expenses incurred by Agent and Borrower in collecting and disbursing such Proceeds or otherwise in connection therewith, the Proceeds shall be released to Borrower from time to time in installments sufficient to pay for restoration as it progresses upon the conditions set forth below (except that the following provisions shall not apply to the extent such proceeds aggregate less than $1,000,000 in which case such proceeds shall be released to Borrower directly for the prompt payment of the costs of repair or restoration of the damage giving rise to such proceeds): (a) Agent shall have received satisfactory assurances that all payments required to be made hereunder in connection with the Loan Instruments continue to be made by Borrower in a timely manner and that no Event of Default shall occur during or as a result of such restoration. (b) Agent, prior to the initial release of Proceeds, receives evidence satisfactory to it and the Independent Engineer that: (i) the Proceeds are sufficient to complete within a reasonable period of time the restoration of such Project to the equivalent condition that existed immediately prior to the casualty, or Borrower provide assurances reasonably acceptable to Agent and the Independent Engineer that the amount of any deficiency will be available to Borrower when needed for such completion; (ii) the capability of such Project to operate in a manner so as to allow Borrower to fulfill its obligations under the Project Documents, and the productive capacity, utility and remaining useful life of such Project after restoration (after taking into account relevant factors including without limitation 87 any cancellations, terminations or other consequences of such casualty loss with respect to any Project Document) will not be materially less than such capability immediately prior to the casualty; and (iii) a restoration budget and work plan reasonably satisfactory to Agent and the Independent Engineer has been prepared for the complete restoration of such Project. (c) For each subsequent release of Proceeds, in addition to evidence and certification required by paragraphs (a) and (d) hereof, Agent receives: (i) a certificate in form and substance satisfactory to Agent and the Independent Engineer (the "Certificate") of Borrower dated not more than 10 days prior to the application for such release stating the progress of the work up to the date of the Certificate and certifying that: (AA) the sum then requested to be released either has been paid by Borrower and/or is due to contractors, subcontractors, materialmen, engineers, architects or other named persons who have rendered services or furnished materials in connection with the approved restoration budget and work plan; (BB) the sum then requested to be released, plus all sums previously withdrawn, does not exceed the cost of the work actually finished up to the date of the Certificate, and that the remainder of the funds then held by Agent will be sufficient to pay in full for the completion of the work (or Borrower provides assurances reasonably acceptable to Agent that the amount of any deficiency will be available to Borrower when needed for such completion); (CC) no part of the cost of the services and materials described in the Certificate has been the basis for the release of any funds in any previous application; (DD) all materials and all property described in the Certificate are free and clear of all Liens (other than Permitted Liens), except for Liens securing indebtedness due to Persons specified in such Certificate and which will be 88 discharged upon payment of such indebtedness and Liens for retainage; and (EE) there is no outstanding indebtedness known, after due inquiry, which is then due and payable for work, labor, services or materials in connection with the work which, if unpaid, might become the basis of a vendor's, mechanic's, laborer's or materialman's statutory or other similar Lien upon such Project, except for amounts due and payable as retainage or to contractors, subcontractors, materialmen, engineers, architects or other persons for services rendered or materials furnished in connection with the approved restoration budget and work plan for which such Proceeds are to be released; (ii) evidence reasonably satisfactory to Agent and the Independent Engineer that Borrower has fulfilled such additional conditions as Independent Engineer may reasonably impose to provide assurance that the Proceeds will be used to restore such Project to the equivalent (but not necessarily identical) condition as existed prior to the damage, and Agent's and the Independent Engineer's prior approval of plans, specifications and construction contracts for such restoration and Agent's and the Independent Engineer's periodic inspections of such restoration work as it progresses. (d) Prior to the final release (in addition to evidence and certification required by Section 5.18(c) hereof) Agent receives: (i) evidence reasonably satisfactory to Agent and the Independent Engineer that the restoration has been completed and such Project conforms to all applicable Governmental Requirements, unless the failure to conform to such Governmental Requirements could not reasonably be expected to result in a Material Adverse Effect; and (ii) a certification by the Independent Engineer that the restoration has been completed in accordance with the budget and the work plan delivered pursuant to Section 5.18(b)(iii) hereof (as such budget and work plan may have been modified from time to time with the approval of Agent) and that the quality of such restoration work is good. 89 (e) The release of Proceeds received by Agent shall be made within three Business Days after Agent receives a proper application therefor. (f) If the amount of Proceeds exceeds the amount necessary to effect restoration and reimburse Agent for its expenses, then such excess Proceeds shall be deposited in the Project Account; provided, however, if (x) after the completion of the Restoration, the projections, in form and substance satisfactory to Agent, do not demonstrate the ability of Borrower to maintain at all times during the remaining term of this Agreement, the Required Coverages, or (y) an Event of Default shall have occurred and be continuing, then such excess Proceeds shall be paid over to Agent and shall be applied in the following order of priority: (A) first, to prepay all Debt Service Loans; (B) then, to fund the Debt Service Reserve Account, without taking into account the Debt Service Line of Credit Facility Commitment, up to the amounts specified in Section 5.1(c)(vi); and (C) then, to prepay Funding Loans in the same manner as a voluntary prepayment under Section 2.7. To the extent that the Debt Service Reserve Account is funded pursuant to clause (B) above, the Debt Service Line of Credit Facility Commitment shall be reduced by an amount equal to the amount so funded pursuant to clause (B) above. Section 5.19 Additional Documents; Filings and Recordings. Each Borrower shall execute and deliver from time to time as reasonably requested by Agent, at Borrower's expense, such other documents in connection with the rights and remedies of the Secured Parties granted or provided for by the Project Agreements, as applicable, which are necessary to consummate the transactions contemplated therein. Each Borrower shall, at its own expense, take all reasonable actions that have been or shall be requested by Agent to establish, maintain, protect, perfect and continue the perfection of the first priority security interests of the Secured Parties created by the Security Documents including the execution of such instruments, and providing such other information as may be required to enable Agent and any other appropriate Secured Party to effect any such action. Without limiting the generality of the foregoing, each Borrower shall execute or cause to be executed and shall file or cause to be filed such financing statements, continuation statements, 90 fixture filings and mortgages or deeds of trust in all places necessary or advisable (in the opinion of counsel for Agent) to establish, maintain and perfect such security interests and in all other places that Agent shall reasonably request. Section 5.20 Assignment by Borrower. Except for assignments to Agent for the benefit of the Secured Parties and except as provided in Section 5.24, neither Borrower shall assign any of its rights or obligations under any Project Agreement without the prior written consent of the Majority Lenders. Section 5.21 Advertising; Press Releases. Except as may be required by Law, none of Borrower, any Secured Party nor any Affiliate of Borrower shall issue or consent to the issuance of any press release or other announcement or advertisement that refers to the provision of financing by the Secured Parties without the prior written consent of Borrower and Agent, which consent shall not be unreasonably withheld or delayed. Section 5.22 Negative Pledge and Liens. Neither Borrower will create, incur, assume or suffer to exist any material Lien, except Permitted Liens, upon or with respect to any assets or property of such Borrower. Section 5.23 Limitation on Debt and Contingent Obligations. Neither Borrower will create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any Debt, except (a) Debt incurred pursuant to this Agreement or under any Interest Rate Hedge Agreement; or (b) unsecured Debt that is fully subordinated to all of Borrower's obligations under this Agreement and the other Loan Instruments pursuant to documents in form and substance satisfactory to Agent and containing the subordination provisions set forth in Exhibit I hereto; or (c) Debt incurred in connection with speciality handtools pursuant to the Agreement dated May 13, 1996 by and among Operator, NRG Newark, NRG Parlin, Guarantor and Stewart and Stevenson Services. Section 5.24 Fundamental Changes. (a) Neither Borrower will (i) enter into any transaction of consolidation or acquisition into any other Person; (ii) wind up, liquidate or dissolve its affairs; (iii) sell, lease, transfer or otherwise dispose of directly or indirectly (or agree to any of the foregoing at any future time), assets with a fair market value in excess of $50,000, except for (1) obsolete, worn or replaced property not used or useful in such Borrower's business unless Agent shall have consented to such 91 sale, lease, transfer or other disposition and (2) assets set forth in Schedule 5.24 hereto (unless such assets are sold, leased, transferred or disposed of pursuant to the Stipulation of Settlement or after the transactions contemplated by Stipulation of Settlement have been consummated); (iv) form any Subsidiary; or (v) purchase or otherwise acquire (in one or a series of related transactions) any material portion of the property or assets of any Person out of the ordinary course of business; and In the event that Agent consents to any sale, assignment or transfer of any ownership interest in either Borrower, such sale, assignment or transfer shall be only to a Qualified Transferee. For purposes of this Section, a "Qualified Transferee" means any person (i) who (a) has, or who is majority-owned by a person who has, a long term credit rating of at least BBB by S&P or Baa2 by Moody's or (b) is a substantially well-capitalized organization acceptable to Agent in its reasonable discretion; (ii) who has, in Agent's judgment, a reasonable amount of experience in the ownership or operation of energy facilities and (iii) who, in the reasonable discretion of the Agent, does not have a reputation either within the banking industry or in prior dealings with Agent for having failed to honor its obligations in a reasonable manner. Section 5.25 Restricted Junior Payments. Neither Borrower will make any Restricted Junior Payments except (i) from the proceeds of the Initial Loan for the purpose of (A) redeeming preferred stock of Guarantor issued in connection with the Acquisition or (B) repaying Debt or other obligations incurred by Guarantor in connection with the Acquisition; (ii) prior to the Additional Funding Date, in amounts necessary to permit Guarantor to make payments of state income taxes required to be made by Guarantor in respect of NRG Newark; (iii) prior to the Additional Funding Date, an amount, not to exceed $200,000 per month, sufficient to permit Guarantor to pay reasonable and normal operating expenses of Guarantor, provided that such amounts shall not be used to pay Pre-Existing Liabilities and, provided, further, that Borrower shall have delivered to Agent a certificate of an Authorized Officer of Guarantor certifying that such expenses are legitimate operating expenses of Guarantor; (iv) from the proceeds of the Additional Loan for the purpose of (A) redeeming preferred stock of Guarantor issued in connection with the Acquisition or (B) repaying Debt or other obligations incurred by Guarantor in connection with the Acquisition; and (v) following the Additional Funding Date, from monies withdrawn and transferred pursuant to Section 5.1(c)(x). 92 Section 5.26 Investments. Neither Borrower shall make any Investments except Permitted Investments or Cash Equivalents. Section 5.27 Nature of Business. Neither Borrower will (i) engage in any business activity, except (A) the ownership of its respective Project and (B) other related activities incident to any of the foregoing or (ii) have any employees. Section 5.28 Fiscal Year. Neither Borrower will not change its fiscal year except that a Borrower may change its fiscal year to a fiscal year ending on December 31. Section 5.29 Bankruptcy. Except with the prior written consent of Agent, neither Borrower will, or will permit NPI to, commence, or join with or solicit any other Person in commencing, any case or other proceeding seeking liquidation, reorganization or other relief with respect to either Borrower, Guarantor, NPI or NRG or their debts, under any bankruptcy, insolvency or other similar Law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of either Borrower, Guarantor, NPI or NRG. Section 5.30 Transactions with Affiliates. Neither Borrower will enter into any transaction, including, without limitation, the purchase, sale or exchange of property or the rendering of any service, with any Affiliate of either Borrower or with any director, officer or employee of either Borrower, except for (i) transactions contemplated by any Operations and Maintenance Agreement entered into with an Affiliate of Borrower in accordance with Sections 5.32 or 6.1(o), (ii) transactions contemplated by the Management Agreement as in effect as of the date hereof, (iii) transactions contemplated by the DuPont Power Purchase Agreement and (iv) other transactions in the ordinary course of and pursuant to the reasonable requirements of such Borrower's business and upon fair and reasonable terms no less favorable to such Borrower than would be obtained in an comparable arm's length transaction with a Person not an Affiliate of either Borrower. Section 5.31 Compliance with ERISA. Borrower will not and will cause Guarantor not to: (i) Permit the occurrence of any Termination Event; or 93 (ii) Permit the present value of all benefit liabilities (based on the then most recent actuarial assumptions) under all Pension Plans to exceed the current value of the assets of such Pension Plans; or (iii) Permit any accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the IRC) with respect to any Pension Plan, whether or not waived; or (iv) Fail to make any contribution or payment to any Multiemployer Plan which such Borrower or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; or (v) Engage, or permit any ERISA Affiliate to engage, in any prohibited transaction under Section 406 of ERISA or Section 4975 of the IRC for which a civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section 4975 of the IRC is imposed; or (vi) Permit the establishment of any Employee Benefit Plan or other plan or agreement providing post-retirement welfare benefits, except as may be required pursuant to Section 4980B of the IRC or Section 601 et seq. of ERISA or as otherwise required by law or establish or amend any Employee Benefit Plan which establishment or amendment could result in liability to such Borrower or Guarantor or increase the obligation of such Borrower or Guarantor, whether directly or indirectly through an ERISA Affiliate, to a Multiemployer Plan which liability or increase, is material to such Borrower or Guarantor; or (vii) Fail to establish, maintain and operate each Employee Benefit Plan or permit any ERISA Affiliate to fail to establish, maintain and operate each Pension Plan in compliance in all material respects with the provisions of ERISA, the IRC and all other applicable laws and the regulations and interpretations thereof; which in any such case in (i) through (vii) results in or could reasonably be expected to result in a Material Adverse Effect; provided, however, that any covenant made pursuant to this Section 5.31 with respect to any plan of any ERISA Affiliate shall be limited to events over which such Borrower or Guarantor have actual control or in which such Borrower or Guarantor have authority to engage or refrain from engaging. 94 Section 5.32 Other Transactions. Neither Borrower will enter into any partnership, profit-sharing, or royalty agreement or other similar arrangement whereby such Borrower's income or profits are, or might be, shared with any other Person, or enter into any management contract or similar arrangement (other than the Operation and Maintenance Agreement) whereby its business or operations are managed by any other Person, except that such Borrower may enter into an operating and maintenance agreement with any Affiliate of NSP or, with the prior written consent of Agent (such consent not to be unreasonably withheld), other experienced and reputable operator; provided that (i) any such replacement operator provides to Agent and the Lenders substantially the same instruments, documents or agreements as are required from Operator pursuant to Article III hereof, (ii) except with the prior written consent of Agent, the fees payable to any such replacement operator shall not exceed the amount specified therefor in the base case projections, (iii) at no time shall more than one operations and maintenance agreement exist for a Project, and (iv) (a) prior to terminating either Operations and Maintenance Agreement pursuant to Article XII(1)(d) of such Operations and Maintenance Agreement, NRG, the relevant Borrower and Agent shall enter into an indemnification agreement in form and substance satisfactory to Agent, whereby NRG shall agree to indemnify such Borrower for all costs and expenses incurred in connection with the termination of the Operations and Maintenance Agreement, or (b) prior to terminating either Operations and Maintenance Agreement pursuant to the second sentence of Article XII(1)(e) of such Operations and Maintenance Agreement, NRG shall unconditionally and irrevocably indemnify such Borrower in full for all costs and expenses incurred in connection with the termination of the Operations and Maintenance Agreement. Section 5.33 Abandonment. Neither Borrower will abandon or agree to abandon its respective Project or place it or agree to place it on a "care and maintenance basis" for more than 14 days in any calendar year, provided, however, that (i) nothing in this Section 5.33 shall prevent such Project from shut-downs necessary for repairs and maintenance or from putting such Project on a "care and maintenance basis" during any force majeure not within the control of such Borrower, which force majeure prevents such Borrower from operating such Project, (ii) nothing in this Section 5.33 shall prevent such Project from being shut down to the extent necessary during any restoration undertaken pursuant to Section 5.18 or required by Section 5.5(b), and (iii) nothing in this Section 5.33 shall be deemed to waive or limit in any way the right of any of the Lenders or Agent 95 to declare an Event of Default under any other provision of this Agreement. Section 5.34 Improper Use. Neither Borrower will use, maintain, operate or occupy, or allow the use, maintenance, operation or occupancy of, any portion of its respective Project for any purpose (to the extent that the same could reasonably be expected to result in a Material Adverse Effect): (i) which may be dangerous, unless safeguarded as required by Law (provided, however, that this clause (a) shall not be deemed to prohibit such Borrower from operating such Project in accordance with the terms of any Project Document in a reasonable and prudent manner); (ii) which violates any Law; (iii) which constitutes a public or private nuisance; (iv) which may make void, voidable, or cancelable or increase the premium of, any insurance then in force with respect to such Project or any part thereof unless, in the case of an increase in premium, such Borrower give proof of payment of such increase; or (v) otherwise than for the intended purpose thereof in the operation and maintenance of such Project. Section 5.35 Alternative Fuel. Each Borrower covenants and agrees that, with respect to the supply of Alternative Fuel for its respective Project (i) each year on September 30, the tanks for storage of Alternative Fuel for such Project shall be filled to its capacity with Alternative Fuel and such Borrower shall use its best efforts to keep such storage tanks filled to capacity from September 30 of such year through March 30 of the succeeding year; (ii) such Project shall maintain a supply of Alternative Fuel in its on-site fuel storage facilities adequate to meet any obligations under the Project Documents or under any Governmental Requirements; and (iii) such Borrower shall enter into Additional Contracts, approved by Agent in consultation with the Gas Consultant and/or the Independent Engineer, that will ensure a continuous supply of Alternative Fuel is available to enable such Borrower to meet its obligations under its Power Purchase Agreement when supplies of gas are not made available to such Borrower by JCP&L. 96 Section 5.36 Pre-Existing Liabilities. Borrower will pay, discharge or otherwise satisfy to the extent not adequately covered by insurance or amounts deposited in the Pre-Existing Liabilities Account, any Pre-Existing Liabilities in an amount greater than $100,000 in the aggregate before they become delinquent, except when the amount or validity thereof is the subject of a Good Faith Contest by Borrower, Guarantor or NRG. Section 5.37 Debt Service Coverage Ratio Covenant. Until payment in full in cash of all of the Obligations and the expiration or termination of the Commitments, Borrower agrees that the Debt Service Coverage Ratio delivered pursuant to Section 5.2 for any four consecutive quarterly periods shall not be less than 1.0 to 1.0 provided, however, that with respect to Section 5.37, if (A) within thirty days after the occurrence of a breach of Section 5.37, Borrower provide Agent with a business plan (satisfactory to Agent), including, without limitation, the projections for the immediately succeeding twelve month period, which incorporate the assumptions set forth in the business plan, describing the steps Borrower will take to cause the Debt Service Coverage Ratio to be 1.0 to 1.0 or better (together with such information as Agent may reasonably request) and (B) Borrower is proceeding with diligence and good faith to implement such business plan, then Borrower shall have up to ninety days after the occurrence of such breach to bring the Debt Service Coverage Ratio to a level of at least 1.0 to 1.0. Section 5.38 Environmental Covenant. NRG Parlin shall work diligently to obtain five-year operating certificates with respect to all regulated air emissions units at the Parlin Plant. NRG Parlin shall work diligently to resolve any and all issues upon which the NJDEP may condition the issuance of the five-year operating certificates for Stack No. 1, Stack No. 2, and the auxiliary boiler at the Parlin Plant. If the five-year operating certificates are not obtained within three months after the Additional Funding Date, NRG Parlin shall submit a status report to Agent describing what further steps, if any, must be taken by NRG Parlin to obtain such certificates and explaining the reasons for the delay in issuance of the certificates. NRG Parlin will continue to provide such status reports to Agent every two months thereafter until the five-year operating certificates have been issued for the Parlin Plant. Borrower shall also take all steps necessary under applicable Environmental Requirements to obtain a Clean Air Act Title V Operating Permit for the Plant and shall maintain the applicable permit shield throughout the application process and shall comply with all intermediate 97 deadlines, requirements and requests of Governmental Authorities under applicable Environmental Requirements in connection with the application for said operating permits. In addition, NRG Newark shall take all steps necessary to comply with New Jersey Reasonably Available Control Technology ("RACT") requirements at New Jersey Administrative Code Subchapter 7:27-19 with respect to the auxiliary boiler at the Newark Plant, including all necessary physical changes and modifications to said boiler and additional stack testing or other requirements to establish that said boiler is in compliance with RACT prior to the regulatory deadline of May 31, 1996. However, if NRG Newark fails to establish RACT compliance for the auxiliary boiler prior to May 31, 1996, there shall be no Event of Default hereunder, provided that NRG Newark shall, by June 10, 1996, submit to Agent a plan satisfactory to Agent describing all steps necessary to achieve compliance with and resolve all issues under such RACT requirements as soon as possible. Section 5.39 Flood Zone Insurance. In the event it is determined that either Project does or will include any improved real property that is located within an area that has been identified by the Director of the Federal Emergency Management Agency as an area having special flood hazards, then the relevant Borrower shall immediately thereafter obtain flood hazard insurance under the National Flood Insurance Act of 1968, as amended. Section 5.40 Additional Consents. Prior to the earlier to occur of (a) the Additional Funding Date and (b) the Initial Maturity Date, Borrower shall have obtained each item set forth on Schedule 5.40 hereto, including, without limitation, the PSE&G consent, substantially in the form of Exhibit G attached hereto. Section 5.41 Backup Gas Supply. If in any calendar year, either Project experiences 120 hours of forced outage resulting from a failure of such Project's gas supply and an inability to operate such Project using Alternative Fuel as a result of the terms of any Governmental Requirement, within 30 days of the 120th hour of forced outage, the Borrower experiencing such forced outages shall provide Agent with a plan for preventing such forced outages in the future (the "Backup Gas Plan"). After reviewing the Backup Gas Plan, and in consultation with the Gas Consultant, the Lenders may require such Project to enter into an Additional Contract(s) with gas suppliers and transporters as is necessary to ensure that a reliable supply of Backup Gas will be available to such Borrower to meet its obligations under its Power Purchase Agreement. 98 ARTICLE VI Events of Default Section 6.1 Events of Default. If any of the following events ("Events of Default") shall occur and be continuing (other than any event with respect to Guarantor occurring prior to the Additional Funding Date): (a) Payments. Borrower shall fail to pay any principal of, or interest on, any of the Loans within three Business Days of the date when the same becomes due and payable, or Borrower shall fail to pay any other sum due under this Agreement or any other Loan Instruments, including, without limitation, prepayments required pursuant to Section 2.8 hereof, within five Business Days of the date when the same becomes due and payable; or (b) Representations and Warranties. Any statement, representation or warranty made, deemed made or confirmed by either Borrower or Guarantor or NRG in any Project Agreement, financial statement or any other statement furnished at any time to any of the Secured Parties in connection with any of the Project Agreements and the transactions contemplated thereby shall prove to have been false, incorrect, incomplete or misleading on or as of the date made, deemed made or confirmed and could reasonably be expected to result in a Material Adverse Effect and such default is not cured within 30 days after written notice thereof; or (c) Particular Credit Agreement and Guaranty Covenant Defaults. Either Borrower shall fail to perform or observe any covenant contained in Section 5.1 (Accounts), Section 5.3 (Maintenance of Existence), Section 5.16 (Other Contracts), Section 5.17 (Use of Proceeds), Section 5.22 (Negative Pledge and Liens), Section 5.23 (Limitation on Debt and Contingent Obligations), Section 5.24 (Fundamental Changes), Section 5.26 (Investments), Section 5.27 (Nature of Business), Section 5.31 (Compliance with ERISA) or Section 5.38 (Environmental/Permitting Matters), or Guarantor shall fail to perform or observe any covenant contained in Section 7(a) of the Guaranty; or (d) Compliance with Laws; Insurance and Taxes Covenants. Either Borrower shall fail to perform or observe any covenant contained in Sections 5.7, 5.12 and 5.13 and such failure shall remain unremedied for ten 99 Business Days after the earlier of (i) such failure shall first become known to either Borrower or (ii) a written notice thereof shall have been given to either Borrower by Agent or any Lender; or (e) Other Covenants. Either Borrower or Guarantor or NRG shall fail to perform or observe any term, covenant or agreement contained herein, in any Project Agreement or in any other Loan Instrument (other than those referred to in paragraphs (a)-(d) above) on its part to be performed or observed and any such failure shall remain unremedied for 30 days or, if (i) such failure is incapable of being remedied in 30 days, and (ii) Borrower or Guarantor or NRG is proceeding with diligence and good faith to remedy such failure and such failure could not reasonably be expected to result in a Material Adverse Effect, and (iii) no distributions are made to Borrower pursuant to Section 5.1(c)(x) during the cure period provided in this paragraph (e), 90 days after the earlier of (i) such failure shall first become known to either Borrower or Guarantor or NRG, or (ii) a written notice thereof shall have been given to such Borrower or Guarantor or NRG by Agent or any Lender; or (f) Other Debts. Either Borrower or Guarantor shall fail to make any payment of $100,000 or more on any Debt (individually or in the aggregate) (other than the Loans or any refinancing, renewals, extensions or restructurings thereof) or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable notice and grace period, if any, specified in the agreement or instrument relating to such Debt; or any other default under any agreement or instrument relating to any Debt of a principal amount of, in the case of Borrower and Guarantor, $250,000 or more, or any other event, shall occur, if the effect of such default or event is to accelerate the maturity of such Debt of a principal amount of, in the case of Borrower and Guarantor, $250,000 or more; or any such Debt shall be declared to be due and payable prior to the stated maturity thereof; or (g) Judgments and Orders. Any judgment or order for the payment of money in excess of $250,000 shall be rendered against, and not be paid by, either Borrower or Guarantor and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order and are not promptly stayed or enjoined or 100 (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (h) Insolvency or Voluntary Proceedings. Either Borrower or Guarantor is generally not paying or admits in writing its inability to pay its debts as such debts become due, or files any petition or action for relief under any bankruptcy, reorganization, insolvency, or moratorium Law or any other Law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors, liquidates or dissolves, or takes any action in furtherance of any of the foregoing; or (i) Involuntary Proceedings. An involuntary petition is filed against either Borrower or Guarantor under any bankruptcy, reorganization, insolvency, or moratorium Law now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of such Borrower or Guarantor, and (i) such petition or appointment is not dismissed, set aside or withdrawn or otherwise ceases to be in effect within 60 days from the date of said filing or appointment, or (ii) an order for relief is entered against such Borrower or Guarantor with respect thereto, or (iii) such Borrower or Guarantor shall take any action indicating its consent to, approval of, or acquiescence in, any such petition or appointment; or (j) ERISA - Pension Plans. (1) Either Borrower or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Section 412 of the IRC, such Borrower or any ERISA Affiliate is required to pay as contributions thereto and such failure results in or could reasonably be expected to result in a Material Adverse Effect; or (2) an accumulated funding deficiency occurs or exists, whether or not waived, with respect to any Pension Plan which results in, or could reasonably be expected to result in, a Material Adverse Effect; or (3) a Termination Event occurs which results in or could reasonably be expected to result in a Material Adverse Effect; or (k) ERISA - Multiemployer Plans. Either Borrower or any ERISA Affiliate as employers under one or more 101 Multiemployer Plans makes a complete or partial withdrawal from such Multiemployer Plans and the plan sponsor of such Multiemployer Plans notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring payments in an amount which results in or could reasonably be expected to result in a Material Adverse Effect; or (l) ERISA - General Liability. Either Borrower or Guarantor incurs liability under or relating to any Employee Benefit Plan or Multiemployer Plan resulting from a violation of ERISA, the IRC and/or any other applicable federal, state or local law which results in, or could reasonably be expected to result in, a Material Adverse Effect; or (m) Loan Instruments. Any provision of any Loan Instrument shall for any reason cease to be valid and binding on either Borrower or Guarantor, or either Borrower or Guarantor or any Governmental Authority shall so state in writing, and such is reasonably expected to result in a Material Adverse Effect; or (n) Change of Control. A Change of Control (other than a Change of Control resulting from any of the events specified in clause (d) of the "Change of Control" definition) shall occur; or (o) Failures Under Project Documents, Etc. Any Project Document, any applicable Law, any Governmental Approval or any of the requirements of the Insurance Policies are not fully and timely complied with or are the subject of a breach or an event of default, in each case by any party thereto and such failure to comply, breach or default could reasonably be expected to result in a Material Adverse Effect and such failure to comply, breach or default shall not be remediable or, if remediable, shall continue unremedied for a period terminating on the last day of the applicable cure period, if any, specified in the relevant Project Document, Law, Governmental Approval or Insurance Policy, or shall not be waived by the appropriate party, provided that either Borrower, prior to waiving any failure to comply, breach or default, shall have obtained the written consent of Agent, provided, further, that each Borrower hereby irrevocably constitutes and appoints Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact (which appointment as attorney-in-fact shall be coupled with an interest), 102 with full authority in the place and stead of Borrower and in the name of Borrower or otherwise, from time to time upon the delivery of a notice of default to NRG Newark by the Newark Group pursuant to Section 16.2(i) of the Newark Steam Sales Agreement or to NRG Parlin by DuPont pursuant to Article 14(A) of the Parlin Steam Sales Agreement, as the case may be, to take any action and to execute any documents which Agent may deem necessary or advisable to cure the default, and Borrower shall defend, indemnify and hold harmless Agent and its officers, directors employees and agents ("Indemnified Parties") from any and all costs, expenses, liabilities, losses, damages, claims, penalties, fines, suits, judgments or demands (except to the extent caused by the gross negligence or willful misconduct of the Indemnified Parties) which are occasioned by or result from any actions of the Indemnified Parties to cure the default under the Steam Sales Agreement; or any material provision in any Project Document shall for any reason cease to be valid and binding on any party thereto (or any such party shall so state in writing) or shall be declared null and void, or the validity or enforceability thereof shall be contested by any party thereto (other than any of the Secured Parties) or any Governmental Authority, or any party thereto shall deny that it has any liability or obligation thereunder, except upon fulfillment of its obligations thereunder; provided that to the extent caused by the failure to comply, breach or default by a Person other than Borrower or Guarantor with respect to a Project Document other than the Power Purchase Agreement or the Ground Lease, such failure to comply, breach or default shall not be an Event of Default under this Section 6.1(o) if (A) such failure to comply, breach or default is cured within 60 days of the date of occurrence of such failure to comply, breach or default, or (B)(1) such Project Document is replaced within 60 days of the date of such failure to comply, breach or default with a substitute Project Document in form and substance reasonably satisfactory to Agent, (2) the party or parties (other than the Borrower) to such substitute Project Document are acceptable to Agent, and, in the opinion of Agent, are capable of performing their obligations under such substitute Project Document, (3) Agent shall have been granted a security interest in such substitute Project Document (other than in the case of the DuPont Power Purchase Agreement) for the benefit of the Secured Parties to the same extent as the Project Document being replaced, (4) in the case of substitution of either Operations and Maintenance Agreement, prior to 103 substituting such Operations and Maintenance Agreement, NRG, the relevant Borrower and Agent shall have entered into an indemnification agreement, in form and substance satisfactory to Agent, whereby NRG shall have agreed to indemnify such Borrower for all costs and expenses incurred in connection with the termination of such Operations and Maintenance Agreement and (5) in the case of replacement of either Steam Sales Agreement, the Ground Lease for the applicable Project shall not be terminable as a result of the termination of such Steam Sales Agreement; or (p) [Intentionally Omitted]. (q) Non-Maintenance of Governmental Approvals. Failure of either Borrower to obtain during the required period and to maintain thereafter all Governmental Approvals which are then required under Law for the operation of its respective Project or to ensure the continued rights of such Borrower under the Project Documents and failure to obtain or maintain such Governmental Approvals could reasonably be expected to result in a Material Adverse Effect; or (r) Modifications of Governmental Approvals. Any modification not previously approved by Agent (including, but without limitation, establishment of new requirements or revocation of any exemption or waiver) of any Governmental Approval or the inclusion of terms in any Governmental Approval issued after the date hereof, which has had or could reasonably expected to result in a Material Adverse Effect; or (s) Qualifying Cogeneration Facility and EWG Status. Failure of NRG Newark either to maintain the Newark Project's status as a Qualifying Cogeneration Facility until the Rate Approval Date or the failure of either Borrower to maintain its status as an EWG or any action by either Borrower, or any Affiliate thereof, which would have an adverse impact upon the Qualifying Cogeneration Facility status of the Newark Project until the Rate Approval Date or the status of either Borrower as an EWG; or (t) Dissolution of Borrower; Others. The liquidation, dissolution, termination, acquisition or consolidation of either Borrower, Guarantor any other Obligor or any other party to any of the Project Documents, or the transfer of all or substantially all of the assets of either Borrower, or Guarantor to any 104 other Person, except, in the case of any such other Obligor or other party to any Project Document, if the acquisition or consolidation is by a Person with (i) an investment grade rating or equivalent or better credit as such other Obligor or other party to a Project Document and (ii) equivalent or better ability to perform and reputation in the relevant area as such other Obligor or other party to a Project Document; or (u) Transfer of Collateral. Title to or any right in all or any part of either Project, any collateral purported to be covered by the Security Documents (other than obsolete or worn personal property promptly replaced by adequate substitutes of equal or greater value than the replaced items when new) shall become vested in any party other than the party named as owner and/or holder thereof in the applicable Security Document, whether by operation of Law or otherwise; or (v) Diminution of Property Rights. Without the prior written consent of Agent, either Borrower hereafter grants any easement or dedication, files any plat, declaration or restriction or enters into any lease or sub-lease concerning either Project and the effect thereof could reasonably be expected to result in a Material Adverse Effect; or (w) Impairment of Security Interests. Except to the extent caused by the termination of any Project Document in accordance with the terms of this Agreement, any provision in any Security Document shall for any reason cease to be valid and binding on the Obligors party thereto and the effect thereof is to materially impair the security purported to be created thereby, or any such Obligors shall so state in writing, or any Security Document shall cease to be in full force and effect, or shall for any reason cease to create a valid security interest having the priority and perfected in the manner contemplated hereunder in any of the collateral purported to be covered thereby, or either Borrower, or Guarantor 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 of the Security Documents and the effect thereof is to materially impair the security purported to be created thereby. then, (i) automatically upon the occurrence of any event specified in Section 6.1(h) or Section 6.1(i) or, with respect to Borrower only, Section 6.1(t) and at the option of 105 Majority Lenders, by notice from Agent to Borrower, in any other event, (A) the obligation of each Lender hereunder or under any other Loan Instruments to make any Loans, shall be immediately terminated, and (B) the total outstanding principal amount of all Loans, all interest thereon and all other amounts payable under this Agreement or under any other Loan Instrument shall be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Borrower, and (ii) Agent shall upon the request, or may with the consent, of Majority Lenders take such actions under and exercise such rights and remedies pursuant to the Loan Instruments, or any of them, as Agent may deem appropriate. Section 6.2. Limitation on Representations and Warranties. Notwithstanding any other term or provision of this Agreement or the Loan Instruments to the contrary, if any statement, certificate or representation or warranty made herein or in connection herewith is later determined to have been incorrect as of the date made or given as a result of a Pre-Existing Liability, which neither Borrower nor Guarantor was aware of as of such date, then such statement, certificate, representation or warranty shall be deemed to have been correct, and no Default or Event of Default shall exist hereunder as a result of such statement, certificate, representation or warranty having been incorrect so long as (a) such incorrectness can be cured by the payment of such Pre-Existing Liability and (b) NRG or Guarantor either pays such Pre-Existing Liability or funds the Pre-Existing Liability Account to the extent necessary to pay such Pre- Existing Liability within sixty (60) days of either Borrower, Guarantor or NRG becoming aware of such Pre-Existing Liability. ARTICLE VII Relationship of Agent and Lenders Section 7.1 Appointment. Each Lender hereby designates Credit Suisse, as Agent to act as specified herein and in any other Loan Instrument and hereby irrevocably authorizes the Agent to take such action on its behalf under the provisions of this Agreement, the other Loan Instruments 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 Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. 106 The Agent may perform any of its duties hereunder by or through its officers, directors, agents or employees. Section 7.2 Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the other Loan Instruments. Neither the 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 Loan Instrument, or in connection herewith or therewith, unless caused by its or their gross negligence or willful misconduct. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement or any other Loan Instrument a fiduciary relationship in respect of any Lender; and nothing in this Agreement or any other Loan Instrument, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement or any other Loan Instrument except as expressly set forth herein or therein. Section 7.3 Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Lender, 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 each Borrower and Guarantor 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 each Borrower and Guarantor and, except as expressly provided in this Agreement, the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender 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 Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or any other Loan Instrument or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority or sufficiency of this Agreement or any other Loan Instrument or the financial condition of any Borrower or Guarantor or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Loan Instrument or the financial condition of any Borrower or Guarantor or the existence or possible existence of any Default or Event of Default. 107 Section 7.4 Certain Rights of the Agent. If the Agent shall request instructions from the Majority Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Instrument, the Agent shall be entitled to refrain from such act or taking such action unless and until the Agent shall have received instructions from the Majority Lenders; and the Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder, under any other Loan Instrument in accordance with the instructions of the Majority Lenders. Section 7.5 Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the Agent believed to be the proper Person, and, with respect to all legal matters pertaining to this Agreement or any other Loan Instrument and its duties hereunder and thereunder, upon advice of counsel selected by it. Section 7.6 Indemnification. To the extent the Agent is not reimbursed and indemnified by the Borrower, the Lenders will reimburse and indemnify the Agent in proportion to their respective Commitment Percentages 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 Agent in performing its duties hereunder or under any other Loan Instrument or in any way relating to or arising out of this Agreement or any other Loan Instrument; provided 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 Agent's gross negligence or willful misconduct. Section 7.7 The Agent in its Individual Capacity. With respect to any obligation the Agent may have to make Loans under this Agreement, the Agent shall have the rights and powers specified herein for a "Lender", and a Secured Party and may exercise the same rights and powers as though it were not performing the duties of the Agent specified herein; and the term "Lenders", "Majority Lenders", "Secured Parties" or any similar terms shall, unless the context clearly otherwise indicates, include the Agent in its 108 individual capacity. The 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 or Guarantor for services in connection with this Agreement and otherwise without having to account for the same to the Lenders. Section 7.8 Resignation by the Agent. (a) The Agent may resign from the performance of all their respective functions and duties hereunder and/or under the other Loan Instruments at any time by giving thirty (30) days' prior written notice to the Borrower and the Secured Parties. Such resignation shall take effect upon the appointment of a successor Agent pursuant to clause (b) or (c) below or as otherwise provided below. (b) Upon any such notice of resignation, the Majority Lenders shall appoint a successor Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to the Borrower. (c) If a successor Agent shall not have been so appointed within such thirty (30) day period, the Agent, with the consent of the Borrower, may then appoint a successor Agent who shall serve as Agent hereunder or thereunder until such time, if any, as the Majority Lenders appoint a successor Agent, as provided above. (d) If no successor Agent has been appointed pursuant to clause (b) or (c) above by the forty-fifth (45th) day after the date such notice of resignation was given by the Agent, the Agent or any Lender may petition any court of competent jurisdiction for the appointment of a successor Agent. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Agent who shall serve as Agent hereunder until such time, if any, as the Majority Lenders appoint a successor Agent. Section 7.9 No Amendment to Duties of Agent Without Consent. The Agent shall not be bound by any waiver, amendment, supplement or modification of this Agreement which affects its rights or duties under this Agreement unless it shall have given its prior written consent, as Agent thereto. 109 ARTICLE VIII General Terms And Conditions Section 8.1 Notices. Except as otherwise expressly provided herein, (a) all notices and other communications provided for hereunder shall be provided in writing (including telegraphic, facsimile or cable communication) and shall be sent by telecopy, telegraph or cable with the original of such communication dispatched by (if inland) overnight or (if overseas) international courier and, if such courier service is not available, by registered airmail (or, if inland, registered first-class mail) with postage prepaid to the Borrower and the Agent at their respective addresses specified below and to the Lenders, at their respective addresses specified in Schedule 8.1, or at such other address as shall be designated by such party in a written notice to the other parties hereto and (b) all such notices and communications shall, when mailed, telegraphed, telecopied, or cabled or sent by overnight courier, be effective seven (7) days after being deposited in the mails in the manner as aforesaid, when delivered to the telegraph company or cable company (if inland), one (1) day or (if overseas) three (3) days after delivery to a courier in the manner as aforesaid, as the case may be, or when sent by telecopier: Addresses: If to NRG Newark: NRG Generating (Newark) Cogeneration Inc. 1221 Nicollet Mall Suite 700 Minneapolis, Minnesota 55403 Attn.: Leonard A. Bluhm Tel. : (612) 373-5305 Fax : (612) 373-5312 with a copy to: NRG Energy, Inc. 1221 Nicollet Mall Suite 700 Minneapolis, Minnesota 55403 Attn.: James T. Hemphill Tel. : (612) 373-5451 Fax : (612) 373-5312 110 If to NRG Parlin: NRG Generating (Parlin) Cogeneration Inc. 1221 Nicollet Mall Suite 700 Minneapolis, Minnesota 55403 Attn.: Leonard A. Bluhm Tel. : (612) 373-5305 Fax : (612) 373-5312 with a copy to: NRG Energy, Inc. 1221 Nicollet Mall Suite 700 Minneapolis, Minnesota 55403 Attn.: James T. Hemphill Tel. : (612) 373-5451 Fax : (612) 373-5312 If to the Agent: CREDIT SUISSE Tower 49 12 East 49th Street New York, New York 10017 Attn.: Project Finance Tel. : (212) 238-5462 Fax : (212) 238-5390 Section 8.2 Indemnities and Expenses. (a) Borrower agrees to pay on demand, subject to the proviso set forth below, (i) all costs and expenses of Agent in connection with the syndication by Agent of the credit facility provided hereunder and in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Instruments and the other documents to be delivered under the Loan Instruments, including, without limitation, the reasonable fees and expenses of counsel (excluding allocated costs for in-house legal services) for Agent with respect thereto and with respect to advising Agent as to its rights and responsibilities under the Loan Instruments, (ii) all costs and expenses of Agent and each of the Lenders, if any (including, without limitation, reasonable counsel fees and expenses, but limited to costs and expenses of the same counsel and local counsel for Agent and the Lenders (excluding allocated costs for in-house legal services)), in 111 connection with the enforcement (whether through negotiations, legal proceedings or otherwise), restructuring (whether or not in the nature of a "work-out"), and the administration of the Loan Instruments and the other documents to be delivered under the Loan Instruments, (iii) all costs and expenses of Agent in connection with the disbursements of the Loans, and (iv) the fees of the Independent Engineer and the Insurance Consultant; provided that Borrower shall only be liable for costs or expenses incurred in connection with the initial syndication of the credit facility provided hereunder to any Lender that is or becomes party to this Agreement on or prior to the Initial Funding Date or within 90 days from the date of commencement of the initial syndication process. (b) Borrower shall, whether or not the transactions herein contemplated are consummated, (i) pay and hold each of the Lenders and the Agent harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each of the Lenders and the Agent harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to the Lenders) to pay such taxes; and (ii) indemnify each of the Lenders and the Agent and each of their respective officers, directors, employees, representatives, attorneys and agents from and hold each of them harmless against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, any investigation, litigation or other proceeding (whether or not any Lender or the Agent is a party thereto) related to the entering into and/or performance of this Agreement, each other Loan Instrument or any Project Document or the use of the proceeds of any Loans or the consummation of any transactions contemplated herein, each other Loan Instrument, in any Project Document or in the base case projections, including, without limitation, the reasonable fees and disbursements of counsel selected by such indemnified party incurred in connection with any such investigation, litigation or other proceeding or in connection with enforcing the provisions of this Section 8.2(b) (but excluding any such liabilities, obligations, losses, to the extent incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified or its officers, directors, employees, representatives, attorneys or agents, as the case may be as determined by a court of competent jurisdiction). The Agent or such Lender, as the case may be, shall (1) use its best efforts to, upon its becoming aware of 112 any event which may result in the Borrower being required to perform any of its indemnity obligations under this paragraph (b), promptly notify the Borrower (provided that failure to so notify shall not mitigate the obligations of the Borrower hereunder), (2) upon request from the Borrower consult the Borrower regarding any step (including any step which may mitigate the effect of such event) it proposes to take in respect of such event and (3) obtain the prior written consent of the Borrower before entering into any settlement or compromise in relation to any such claims, actions or suits. (c) Without limitation to the provisions of paragraph (b) above, each Borrower agrees to defend, protect, indemnify and hold harmless each of the Lenders and the Agent and each of their respective officers, directors, employees, representatives, attorneys and agents from and hold each of them harmless against any and all liabilities (including removal and remedial actions), obligations, losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including reasonable attorneys' and consultants' fees and disbursements) imposed on or asserted against any such Persons directly or indirectly based on, or arising or resulting from, (i) the actual or alleged presence of Hazardous Materials on, under or at either Project or either Property, (ii) any Environmental Claim relating to either Borrower or either Project or arising out of the use of either Project or either Property, or (iii) the exercise of the Agent's or the Lenders' rights under any of the provisions of this Section 8.2 regardless of when any such matters arise, but excluding (A) the Release by Agent or a Lender of any Hazardous Material on the Property and (B) any matter based solely on the gross negligence or willful misconduct of the Agent or any Lender or its officers, directors, employees, representatives, attorneys or agents, as the case may be. Such Lender or the Agent shall (1) use its best efforts to, upon its becoming aware of any event which may result in either Borrower being required to perform any of its obligations under this paragraph (c), promptly notify such Borrower (provided that failure to so notify shall not mitigate the obligations of such Borrower hereunder), (2) upon request from either Borrower consult such Borrower regarding any step (including any step which may mitigate the effect of such event) it proposes to take in respect of such event and (3) obtain the prior written consent of the Borrower before entering into any settlement or compromise in relation to any such claims, actions or suits. 113 (d) To the extent that the undertaking in the preceding paragraphs of this Section may be unenforceable because it is violative of any law or public policy, each Borrower will contribute the maximum portion that they are permitted to pay and satisfy under applicable law to the payment and satisfaction of such undertakings. (e) All sums paid and costs incurred by the Agent or the Lenders in respect to any matter indemnified hereunder shall bear interest at the Default Interest Rate from the date 35 days after the date of the invoice therefor provided by the Agent or such Lenders to the Borrower until reimbursed by the Borrower, and all such sums and costs not paid within such 35 day period shall be added to the debt and be secured by the Security Documents and shall be immediately due and payable on demand. (f) If any amount owing to the Agent or the Lenders under this Agreement shall be collected through any process of law or shall be placed in the hands of attorneys for collection, the Borrower shall pay (in addition to all monies then due in respect of the Loans otherwise payable under this Agreement) reasonable attorneys' and other fees and expenses incurred in respect of such collection. Section 8.3 Survival. All indemnities set forth herein, shall survive the execution and delivery of this Agreement and the Notes and the making and repayment of the Loans. Section 8.4 Governing Law; Submission to Jurisdiction. (a) This Agreement is a contract made under the laws of the State of New York of the United States and shall for all purposes be governed by and construed in accordance with the laws of such State without regard to the conflict of law rules thereof. (b) Any legal action or proceeding against the Borrower with respect to this Agreement or any Loan Instrument may be brought in the courts of the State of New York in the County of New York or of the United States for the Southern District of New York and, by execution and delivery of this Agreement, each Borrower hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each Borrower agrees that a judgment, after exhaustion of all available appeals, in any such action or proceeding shall be conclusive and binding upon the Borrower, and may be enforced in any other jurisdiction by a suit upon such judgment, a certified copy of which shall be conclusive 113 evidence of the judgment. Each Borrower hereby irrevocably designates, appoints and empowers CT Corporation System, 1633 Broadway, New York, New York, 10019, as its designee, appointee and agent to receive and accept service of any and all legal process, summons, notices and documents arising out of this Agreement. If for any reason such designee, appointee and agent shall cease to be available to act as such, the Borrower agrees to designate a new designee, appointee and agent in New York City on the terms and for the purposes of this provision satisfactory to the Agent. Each Borrower further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such Borrower, at its respective addresses set forth in Section 8.1 hereof, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of any Secured Party to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against either Borrower in any other jurisdiction. (c) Each Borrower hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Loan Instrument brought in the courts referred to in clause (b) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Section 8.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto, except that neither Borrower may assign or otherwise transfer all or any part of their rights or obligations under this Agreement without the prior written consent of the Lenders. Section 8.6 Assignments and Participations. (a) Additional Lenders. Any Lender may at any time sell to one or more financial institutions, with the consent of Agent and with the consent of Borrower, such consent not to be unreasonably withheld (a "Purchasing Lender"), all or any part of its rights and obligations under this Agreement and the Notes pursuant to a Commitment Transfer Supplement, executed by such Purchasing Lender, such transferor Lender and Agent. Borrower's consent shall not be deemed to have been unreasonably withheld if there is a 115 material risk that any such assignment would result in Borrower being liable to pay increased costs or other amounts pursuant to Section 2.5 hereof which the Borrower would not otherwise be obligated to pay. Upon (x) such execution of such Commitment Transfer Supplement, and (y) delivery of an executed copy thereof to Borrower and payment of the amount of its participation to Agent, such Purchasing Lender shall for all purposes be a Lender, party to this Agreement and shall have all the rights and obligations of a Lender, under this Agreement, to the same extent as if it were an original party hereto with the percentage of the Loans, Additional Commitment and the Facility Debt Service Line of Credit Facility Commitment as set forth in such Commitment Transfer Supplement, which shall be deemed to amend this Agreement (including, without limitation, Schedule 8.6 hereto) to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of percentage shares of the Loans, Additional Commitment and Debt Service Line of Credit Facility Commitment arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Notes. Upon the consummation of any transfer pursuant to this Section 8.6(a), the transferor Lender, Agent and Borrower shall make appropriate arrangements so that, if required, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchasing Lender, in each case in principal amounts reflecting their percentage shares of the Loans, the Additional Commitment and the Debt Service Line of Credit Facility Commitment. Except as otherwise agreed to, or consented by, Agent and Borrower, no Lender shall assign at any one time less than a $10,000,000 interest in this Agreement and the Notes, unless and until such Lender assigns all of its interest in this Agreement and the Notes. (b) Participations. Any Lender may, from time to time, sell or offer to sell any Loans owing to such Lender, any Notes held by such Lender, any commitment of such Lender or any other interests and obligations of such Lender hereunder, to one or more participants (each, a "Participant"), on such terms and conditions as may be determined by the selling party, without the consent of or notice to Borrower or any other Secured Party, and the grant of such participation shall not relieve any Lender of its obligations, or impair the rights of any Lender hereunder. A Participant shall not have any right to approve any amendment, modification, supplement or waiver of any provision of this Agreement; provided that the Lender selling its interest to the Participant may agree not to consent to 116 any amendment, modification, supplement or waiver of this Agreement of the type specified in clauses (i), (ii), (iii) and (iv) of Section 8.14 without the prior written consent of the Participant. Except as specified in the immediately preceding sentence, no Participant shall have any rights under this Agreement other than to receive payment of principal of and interest through such Lender. (c) Assignments to Federal Reserve Bank. Any Lender may at any time (without obtaining the consent of Agent or any other Person) assign and pledge all or any portion of its rights and obligations under this Agreement and the Notes to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder. (d) Qualified Loan Assignment by Credit Suisse. Notwithstanding anything to the contrary contained in this Agreement, but subject to the terms and conditions set forth in this Section, Credit Suisse may from time to time elect to grant to GFC, an option to (A) provide all or any part of the Debt Service Loans from Credit Suisse to the Borrower (a "Qualified Loan Assignment"), and (B) assign to GFC all or any undivided interest in the right of Credit Suisse to receive and collect payments from the Borrower respecting the Loans and the other applicable provisions of the Loan Instruments. No additional Note shall be issued with regard to a Qualified Loan Assignment; provided, however, to the extent GFC shall fund any Debt Service Loans, Credit Suisse shall be deemed to hold the Note in its possession as an agent for GFC to the extent of the Debt Service Loans funded by GFC. Notwithstanding any such Qualified Loan Assignment, (x) to the extent of any Loans funded or maintained by Credit Suisse, Credit Suisse individually, and to the extent of any Loans funded or maintained by GFC, Credit Suisse, as administrative agent for GFC, shall remain obligated for all obligations under this Agreement to the Agent, including, without limitation, any indemnity and expense reimbursement obligations under Section 7.6 hereof (which shall be solely for the account of Credit Suisse), the obligations of Credit Suisse under this Agreement to the Agent shall remain unchanged, except Credit Suisse shall be excused pro tanto from its payment obligations under Section 7.6 hereof to the extent any payments on such Loans are made to the Agent by GFC, (y) Credit Suisse shall remain primarily responsible for the performance of its obligations hereunder, and (z) the Agent may continue to deal solely and directly with Credit Suisse, as administrative agent for GFC, in connection with 117 all of GFC's rights and obligations under this Agreement, unless and until the Agent is notified that Credit Suisse has been replaced as administrative agent for GFC. (e) No Proceedings. Each of Credit Suisse, the Purchasing Lenders, the Borrower and the Agent hereby agrees that, at any time a Qualified Loan Assignment is in effect, it shall not institute against, or join any other person in instituting against, GFC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law, for one year and a day after the latest maturing commercial paper note issued by GFC is paid. This Section 8.6(e) shall survive the termination of this Agreement. Section 8.7 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. Section 8.8 Right of Setoff. 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, the Agent is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any 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 Debt at any time held or owing by any Lender (including without limitation by branches and agencies of any Lender, wherever located), to or for the credit or the account of the Borrower against and on account of the Obligations of the Borrower under this Agreement and liabilities of the Borrower to such Lender under this Agreement or any of the other Loan Instruments, including, without limitation, all interests in Obligations of the Borrower under this Agreement purchased by any Lender pursuant to Section 8.6, and all other claims of any nature or description arising out of or connected with this Agreement or any other Loan Instrument, irrespective of whether or not the Agent shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Section 8.9 No Waiver; Remedies Cumulative. No failure or delay on the part of the Agent or any Lender in exercising any right, power or privilege hereunder or under any Loan Instrument and no course of dealing between the Borrower and the Agent or any Lender shall impair any such right, power or privilege or operate as a waiver thereof; nor 118 shall any single or partial exercise of any right, power or privilege hereunder or under any Loan Instrument preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein, in any Loan Instrument expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Agent, or any Lender would otherwise have. No notice to or demand on any 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 Agent or any Lender to any other or further action in any circumstances without notice or demand. Section 8.10 Severability. Any provision of this Agreement, any Note and any other Loan Instrument which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability but that shall not invalidate the remaining provisions of this Agreement, any Note or any other Loan Instrument or affect such provision in any other jurisdiction. Section 8.11 Calculation. All financial calculations to be made under, or for the purposes of, this Agreement shall be determined in accordance with generally accepted accounting principles, applied on a consistent basis and, except as otherwise required to conform to the definitions contained in Exhibit X of this Agreement or any other provisions of this Agreement, shall be calculated from the then most recently issued quarterly financial statements which the Borrower is obligated to furnish to the Agent from time to time, as provided hereunder; provided, however, that (a) if the relevant quarterly financial statements should be in respect of the last quarter of a Fiscal Year then, at the option of the Majority Lenders, such calculations may instead be made from the audited financial statements for the relevant Fiscal Year, and (b) if there should occur any material adverse change in the financial condition or results of operations of the Borrower after the end of the period covered by the relevant financial statements, then such material adverse change shall also be taken into account in calculating the relevant figures. Section 8.12 Payments Pro Rata; Sharing. (a) Subject to Sections 2.10(c) (Priority of Application) and 2.12 (Replacement of a Lender), the Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Obligations of the Borrower to the Lenders hereunder, it shall distribute such payment to 119 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, 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 Loan Instruments or any Note or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans of a sum which with respect to the related sum or sums received by the other Lenders is in a greater proportion than the total amount of such Obligation then owed and due to such Lender bears to the total amount of such Obligation then owed and due to all the Lenders immediately prior to such receipt, 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. Section 8.13 Headings Descriptive. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. Section 8.14 Amendment or Waiver. Neither this Agreement nor any terms hereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the Majority Lenders and the Agent; provided, however, that no such change, waiver, discharge or termination shall, without the consent of each of the Lenders (i) extend the final maturity of any Loan or reduce the rate or extend the time of payment of interest or fees thereon, or reduce the principal amount thereof, or increase the commitments of any of the Lenders over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default shall not constitute a change in the terms of the commitments of any Lender), (ii) amend, modify or waive any provision of this Section 8.14 or Sections 8.2(b) and 8.2(c), (iii) reduce the percentage specified in the definition of Majority Lenders set forth in Exhibit X hereto or (iv) consent to the 120 assignment or transfer by the Borrower of any of its rights and obligations under this Agreement. Section 8.15 Confidentiality. Each Lender and the Agent agrees (on behalf of itself and each of its Affiliates, directors, officers, employees and representatives) to keep confidential, in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices, any and all projected financial information relating to the Borrower, Guarantor or NRG, and any other non-public information supplied to it by the Borrower, Guarantor or NRG pursuant to this Agreement; provided that nothing herein shall limit the disclosure of any such information (i) to the extent required by Law, statute, rule, regulation or judicial process, (ii) to counsel for any of the Lenders or Agent, (iii) to bank examiners, auditors or accountants, (iv) to Agent or any other Lender, (v) in connection with any litigation to which any one or more of the Lenders is a party (provided, that each such Lender will promptly notify the Company of such litigation and of such proposed disclosure prior to the disclosure of such information (unless prohibited from doing so by the relevant court)), (vi) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first executes and delivers to the respective Lender an agreement to be bound by this Section 8.15, (vii) to any consultant of Agent or any 121 other Lender so long as such consultant first executes and delivers to Agent or such Lender an agreement to be bound by this Section 8.15, or (viii) to any Affiliates, directors, officers or employees of Agent or any other Lender. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. CREDIT SUISSE, as Agent and Lender By: /s/ Guy R. Cirincione Name: Guy R. Cirincione Title: Member of Senior Management By: /s/ Louis D. Iaconetti Name: Louis D. Iaconetti Title: Associate NRG GENERATING (NEWARK) COGENERATION INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President NRG GENERATING (PARLIN) COGENERATION INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President GREENWICH FUNDING CORPORATION, as Lender By: Credit Suisse, New York Branch, as Attorney-In-Fact By: /s/ Carin L. Okita Name: Carin L. Okita Title: Associate By: /s/ Thomas Meier Name: Thomas Meier Title: Associate EX-10.8.2 17 EXHIBIT 10.8.2 AMENDMENT NO. 1 TO THE CREDIT AGREEMENT DATED JUNE 28, 1996. Exhibit 10.8.2 AMENDMENT NUMBER 1 TO CREDIT AGREEMENT by and among NRG GENERATING (NEWARK) COGENERATION INC. and NRG GENERATING (PARLIN) COGENERATION INC. CREDIT SUISSE, GREENWICH FUNDING CORPORATION AND ANY PURCHASING LENDER as Lender, and CREDIT SUISSE as Agent Dated as of June 28, 1996 AMENDMENT NUMBER 1 TO CREDIT AGREEMENT This AMENDMENT NUMBER 1 TO CREDIT AGREEMENT, dated as of June 28, 1996 ("Amendment"), is made by and among (i) NRG Generating (Newark) Cogeneration Inc., a Delaware corporation, and NRG Generating (Parlin) Cogeneration Inc., a Delaware corporation, (ii) CREDIT SUISSE, GREENWICH FUNDING CORPORATION, a Delaware corporation, and each Purchasing Lender (each, a "Lender" and collectively, the "Lenders"), and (iii) CREDIT SUISSE, as agent for the Lenders ("Agent"). W I T N E S S E T H : WHEREAS, the parties hereto have entered into the Credit Agreement dated as of May 17, 1996 (the "Credit Agreement"); and WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects on the terms and conditions set forth in this Amendment. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereby agree as follows: 1. Definitions. For purposes of this Amendment, the terms used herein and not otherwise defined herein shall have the respective meanings assigned to them in Exhibit X to the Credit Agreement. 2. Amendment to the Credit Agreement. (a) Section 5.40 of the Credit Agreement is hereby amended by deleting the phrase "earlier to occur of (a) the Additional Funding Date and (b) the Initial Maturity Date," in such section and inserting in its place, "date occurring thirty days after the Additional Funding Date,". (b) Section 2.8(b)(ii) of the Credit Agreement is hereby amended by inserting after the phrase "Newark Power Purchase Agreement", in each place such phrase occurs, the phrase "or the Parlin Power Purchase Agreement". 3. Amendment to Exhibit X and Schedule 4.3B to the Credit Agreement. (a) The definition of "Base Rate Margin" is hereby amended by inserting after the phrase "1.000% per annum" in such definition the following phrase: ";provided, however, that if on any Calculation Delivery Date the Debt Service Coverage Ratio exceeds 1.40, then for the quarterly period ending on the Repayment Date immediately preceding such Calculation Delivery Date, the Base Rate Margin shall be the percentage specified in clause (i), (ii) or (iii) above, as applicable, minus 0.125%". (b) The definition of "LIBOR Margin" is hereby amended by inserting after the phrase "1.75% per annum" in such definition the following phrase: ";provided, however, that if on any Calculation Delivery Date the Debt Service Coverage Ratio exceeds 1.40, then for the quarterly period ending on the Repayment Date immediately preceding such Calculation Delivery Date, the Base Rate Margin shall be the percentage specified in clause (i), (ii) or (iii) above, as applicable, minus 0.125%". (c) The definition of "Maturity Date" is hereby amended by deleting the phrase "the date which is 15 years after the Initial Funding Date" in such definition and inserting in its place "June 30, 2011". (d) Schedule 4.3B to the Credit Agreement is hereby deleted as of the Additional Funding Date and is replaced as of the Additional Funding Date with a new Schedule 4.3B attached hereto as Annex A. 4. Governing Law. This Amendment is a contract made under the laws of the State of New York of the United States and shall for all purposes be governed by and construed in accordance with the laws of such State without regard to the conflict of law rules thereof. 5. Effectiveness of Credit Agreement. Except as expressly provided in this Amendment, the Credit Agreement shall continue and remain in full force and effect in all respects. 6. Counterparts;. This Amendment may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. CREDIT SUISSE, as Agent and Lender By: /s/ Louis Iaconetti Name: Louis D. Iaconetti Title: Associate By: /s/ Steven Dowe Name: Steven Dowe Title: Associate NRG GENERATING (NEWARK) COGENERATION INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President NRG GENERATING (PARLIN) COGENERATION INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President GREENWICH FUNDING CORPORATION, as Lender By: Credit Suisse, New York Branch, as Attorney-In-Fact By: /s/ Carin Okita Name: Carin L. Okita Title: Associate By: /s/ Thomas Meier Name: Thomas Meier Title: Associate EX-10.8.3 18 EXHIBIT 10.8.3 STOCK PLEDGE AGREEMENT DATED JUNE 28, 1996 BETWEEN THE COMPANY AS PLEDGOR AND CREDIT SUISSE. Exhibit 10.8.3 STOCK PLEDGE AGREEMENT between NRG GENERATING (U.S.) INC. (as Pledgor) and CREDIT SUISSE (as Agent) Dated as of June 28, 1996 TABLE OF CONTENTS Page 1. Definitions 2 2. Grant of Security Interest 2 3. Delivery of Collateral 3 4. Representations and Warranties 4 5. Covenants and Agreements 6 6. Voting Power, Dividends; Pledgor's Obligations Upon Event of Default 10 7. Remedies; Rights Upon Event of Default 10 8. Application of Proceeds 13 9. Security Interest Absolute 13 10. Agent Appointed Attorney-in-Fact 14 11. Agent May Perform 15 12. No Duty on Agent's Part; Limitation on Agent's Obligations 16 13. Reasonable Care 16 14. Role of Agent 17 15. Notices 17 16. Subrogation, etc. 17 17. Absence of Fiduciary Relation 18 18. Survival of Representations and Warranties 18 19. No Waiver; Cumulative Remedies 18 20. Severability 18 21. Exculpatory Provisions; Reliance by Agent 19 22. Amendment 20 23. Successors and Assigns 20 24. Number and Gender 20 25. Headings Descriptive 20 26. Governing Law; Jurisdiction; Waiver of Trial by Jury 20 27. Continuing Pledge and Security Interest; Termination 21 28. Payments Set Aside 21 29. Counterparts 22 Schedule Schedule A: Pledged Shares Schedule B: Financing Statement Filings STOCK PLEDGE AGREEMENT This STOCK PLEDGE AGREEMENT (the "Stock Pledge Agreement"), dated as of June 28, 1996, by and between NRG GENERATING (U.S.) INC., a Delaware corporation ("Pledgor"), and CREDIT SUISSE, as agent ("Agent") on behalf of and for the benefit of the Secured Parties under the Credit Agreement (as defined below). W I T N E S S E T H : WHEREAS, Pledgor is the sole stockholder of NRG Generating (Parlin) Cogeneration Inc., a Delaware corporation ("Borrower"); WHEREAS, Borrower has entered into the Credit Agreement, dated as of May 17, 1996, by and among (i) Borrower and NRG Generating (Newark) Cogeneration Inc., a Delaware corporation ("NRG Newark"), (ii) Credit Suisse, Greenwich Funding Corporation and each Purchasing Lender and (iii) Agent (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), pursuant to which the Lenders are willing to provide the Loans and Commitments to Borrower and NRG Newark on the terms and subject to the conditions set forth in the Credit Agreement; WHEREAS, pursuant to this Stock Pledge Agreement, the Parlin Security Agreement, the Parlin Mortgage and certain other Loan Instruments, Agent is being appointed to assume and undertake, among other things, the rights and obligations conferred herein and therein on Agent for the equal and ratable benefit of the Secured Parties; WHEREAS, Pledgor shall derive substantial benefit from the making of the Additional Loan to Borrower and NRG Newark by the Lenders pursuant to the Credit Agreement; and WHEREAS, it is a condition precedent to the Lenders making of the Additional Loan under the Credit Agreement that Pledgor enter into this Stock Pledge Agreement and pledge the Pledged Shares (as defined below) to the Secured Parties in order to secure the obligations of Borrower and NRG Newark under the Credit Agreement and the other Loan Instruments; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lenders and Agent to make the Additional Loan and to make available the Debt Service Line of Credit Facility Commitment under the Credit Agreement, the parties hereto hereby agree as follows: 1. Definitions. Unless otherwise defined herein, all capitalized terms used herein which are defined in the Credit Agreement shall have their respective meanings as therein defined. For purposes of this Stock Pledge Agreement, all other terms used herein and not otherwise defined herein which are defined in Article 9 of the Uniform Commercial Code (as the same may be in effect in the State of New York or any other applicable jurisdiction, the "Code"), shall have their respective meanings as therein defined. 2. Grant of Security Interest. (a) Collateral. As security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of any and all of the Obligations (as defined below) now existing or hereafter arising, Pledgor hereby pledges, collaterally assigns, conveys, mortgages, hypothecates, transfers and delivers to Agent, and grants and creates a lien on and first priority security interest (the "Security Interest") in favor of Agent, for the equal and ratable benefit of the Secured Parties, in all right, title and interest of Pledgor in, to and under the following, whether now existing or hereafter acquired (the "Collateral"): (i) all shares of capital stock of Borrower now owned by Pledgor (as set forth on Schedule A) or hereafter acquired, directly or indirectly, by Pledgor (the "Pledged Shares"); (ii) any cash dividends or other cash payments, additional shares or securities or other property at any time receivable or otherwise distributable in respect of, in exchange for, or in substitution of, any and all of the Pledged Shares (other than any cash dividends or other cash payments which are derived from distributions permitted under Section 5.1(c)(ix) of the Credit Agreement); and (iii) to the extent not otherwise included, all proceeds, products and accessions of and to any and all of the foregoing, including, without limitation, "proceeds" as defined in Section 9-306(l) of the Code, including whatever is received upon any sale, exchange, collection or other disposition of any of the Collateral, and any property into which any of the Collateral is converted, whether cash or noncash proceeds, and any and all other amounts paid or payable under or in connection with any of the Collateral. (b) Obligations. This Stock Pledge Agreement secures, in accordance with the provisions hereof, the following obligations, now existing or hereafter arising (collectively, the "Obligations"): 2 (i) payment and performance of the Obligations (as defined in the Parlin Security Agreement) and each and every obligation, indebtedness, covenant and agreement of Pledgor now or hereafter existing contained in any Loan Instrument to which Pledgor is a party, including, without limitation, this Stock Pledge Agreement and any amendments or supplements thereto, extensions or renewals thereof or replacements therefor; (ii) payment of all sums advanced in accordance herewith or in accordance with any other Parlin Security Document by or on behalf of the Secured Parties (or any of them), to protect, retake, hold, prepare for sale or lease or otherwise dispose of or realize upon any of the collateral purported to be covered hereby or thereby, including, without limitation, those fees and expenses described in Section 5(c), with interest thereon at a rate equal to the Default Interest Rate from the date of demand therefor; (iii) performance of every obligation, indebtedness, covenant and agreement of Pledgor contained in any agreement now or hereafter executed by Pledgor which recites that the obligations thereunder are secured by this Stock Pledge Agreement; and (iv) payment of all sums, with interest thereon at the Default Interest Rate, that may become due and payable to or for the benefit of the Secured Parties (or any of them) pursuant to the terms of this Stock Pledge Agreement; in each case whether direct or indirect, joint or several, absolute or contingent, liquidated or unliquidated, now or hereafter existing, renewed or restructured, reinstated, created or incurred, and including, without limitation, all indebtedness of Pledgor under any instrument now or hereafter evidencing or securing any of the foregoing. 3. Delivery of Collateral. On or prior to the Initial Funding Date, the certificates evidencing the Pledged Shares pledged hereunder shall be delivered to Agent, duly endorsed in blank or with stock powers executed in blank annexed to each certificate. Agent shall have the right (a) to hold any certificate(s) representing the Pledged Shares in its own name, or in the name of Pledgor endorsed or assigned in blank or in favor of Agent, or (b) to have the Pledged Shares or any part thereof registered in the name of Agent or in the name or names of Agent's nominees. 3 4. Representations and Warranties. Pledgor hereby represents and warrants to each of the Secured Parties as follows: (a) Organization and Existence. Pledgor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business and is in good standing in each other jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business as presently conducted or proposed to be conducted makes such qualification necessary. Pledgor has the full power and authority to own its property and to carry on its business as now being conducted and as proposed to be conducted. (b) Authority, Enforceability. Pledgor has full power and authority to enter into and perform this Stock Pledge Agreement and any other Project Agreement to which it is a party and the entering into and performance of each such agreement by Pledgor has been duly authorized by all proper and necessary corporate action. This Stock Pledge Agreement and any other Project Agreement to which it is a party, when executed and delivered, will constitute the legal, valid and binding obligation of Pledgor, and the other parties thereto, enforceable in accordance with their respective terms. (c) No Breach. The execution, delivery and performance by Pledgor of this Stock Pledge Agreement do not and will not (i) require any Governmental Approval or any consent, filing or approval of any party which has not been obtained or made, (ii) violate any organization documents of Pledgor, (iii) violate any provisions of any Governmental Requirement applicable to Pledgor or any of its assets or the Parlin Project, (iv) contravene, violate or result in any breach of any provision of, or constitute a default under, any mortgage, indenture, contract, agreement or other undertaking to which Pledgor is a party or which purports to be binding upon Pledgor or upon any of Pledgor's assets or (v) result in the creation or imposition of any Lien (other than the Lien created pursuant to this Stock Pledge Agreement) on any of the assets of Pledgor pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which Pledgor is a party or which purports to be binding upon Pledgor or upon any of Pledgor's assets. (d) No Litigation. There is no action, suit, investigation or proceeding by or before any court, arbitrator, administrative agency or other Governmental Authority pending or, to the best knowledge of Pledgor, threatened, against or affecting Pledgor or any of its property, revenues or assets or either Project that could have a Material Adverse Effect. 4 Pledgor is not in default with respect to any order of any court, arbitrator, administrative agency, or other Governmental Authority. (e) Regulation of Pledgor. Pledgor is not now nor will it be, solely as a result of the participation by Pledgor or any of its Affiliates, separately or as a group, in the transactions contemplated hereby or any other Project Agreement to which it is a party, subject to regulation by any Governmental Authority as a "public utility," an "electric utility," an "electric utility holding company," a "public utility holding company," a "holding company," or a subsidiary or affiliate of any of the foregoing under any Governmental Requirements (including, without limitation, PUHCA and PURPA); provided, however, that Borrower alone shall be subject to regulation as a public utility under the FPA. (f) Compliance with Laws; Governmental Requirements. Pledgor is in compliance in all material respects with all Governmental Requirements. No Governmental Approvals are required in connection with the execution and delivery of this Stock Pledge Agreement or any other Project Agreement to which Pledgor is a party or the performance by Pledgor of its obligations hereunder or thereunder other than those which have been duly obtained or made and are in full force and effect, are final and are not subject to appeal or subject to any pending or, to Pledgor's knowledge, threatened judicial or administrative proceeding. (g) Title; No Other Liens. Pledgor is the legal and beneficial owner of the Collateral in existence on the date hereof and will be the sole owner of the Collateral hereafter acquired, free and clear of any and all Liens or claims of others (other than Permitted Liens), and Pledgor has full power and authority to grant the liens and security interests in and to the Collateral hereunder. (h) Perfection. Financing Statements or other appropriate instruments have been filed in the public offices set forth in Schedule B as may be necessary to perfect any Security Interest granted or purported to be granted hereby to the extent any such Security Interest may be perfected by the filing of a Financing Statement. All action necessary or desirable to perfect the Security Interest in each item of the Collateral will have been duly taken. Upon delivery of the Collateral to Agent, this Stock Pledge Agreement will constitute a valid and continuing Lien on and perfected Security Interest in the Collateral in favor of Agent for the equal and ratable benefit of the Secured Parties, superior and prior to the rights of all Persons, whether the Collateral subject to the Security Interest is now owned by Pledgor or is hereafter acquired. 5 (i) No Default. Pledgor is not in any material respect in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions applicable to Pledgor contained in any Project Agreement to which it is a party. (j) Governmental Authority. No authorization, approval or other action by, and no notice to or filing with, any Governmental Authority, any regulatory body or any other Person is required of Pledgor with respect to the exercise by Agent of the rights provided in this Stock Pledge Agreement or the remedies in respect of the Collateral pursuant to this Stock Pledge Agreement. (k) Taxes. Pledgor has filed or caused to be filed all tax returns that are required to be filed by it and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its assets and properties and all other taxes, fees or other charges imposed on it by any Governmental Authority (except taxes, fees and charges which are the subject of a Good Faith Contest by Pledgor), and Pledgor has no knowledge of any actual or additional assessment in connection therewith for which adequate provision is not made, and there is no assessment in connection therewith which is delinquent, unless it is the subject of a Good Faith Contest by Pledgor. (l) Chief Executive Office and Principal Place of Business. Pledgor's chief executive office is located in the State of Minnesota and its principal place of business and the place where Pledgor's records concerning the Collateral are kept is located in the States of New Jersey, Delaware or Minnesota. (m) Pledgor's Total Shares. The Pledged Shares pledged hereunder represent the total number of Pledged Shares owned by Pledgor and all of the issued and outstanding capital stock of Borrower, in each case, as of the date hereof. 5. Covenants and Agreements. Pledgor hereby covenants and agrees that Pledgor shall faithfully observe and fulfill, and shall cause to be observed and fulfilled, each and all of the following covenants until all Obligations have been paid and performed in full: (a) Notice of Adverse Claims. Pledgor shall, promptly and in no event later than five days after Pledgor becomes aware of any information or knowledge of any adverse claim against the Collateral which could have a Material Adverse Effect, deliver to Agent and each of the Lenders notice of each such claim. 6 (b) Further Assurances. Pledgor shall, from time to time, at Pledgor's expense, and upon request by Agent on behalf of the Secured Parties, promptly execute and deliver all further instruments and documents, and take all further action that Agent determines may be necessary, advisable or desirable in order to perfect and protect the Security Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to the Collateral. (c) Fees and Expenses. Pledgor shall upon demand pay or cause to be paid to Agent the amount of any and all out-of-pocket costs and expenses (including, without limitation, the fees and expenses of its counsel and of any experts, any special consultants engaged, and any local counsel who might be retained by Agent, in connection with the transactions contemplated hereby) which Agent may incur in connection with (i) the sale of, collection from, custody or preservation of or other realization upon, any of the Collateral pursuant to the exercise or enforcement of any of the rights of Agent hereunder or (ii) the failure by Pledgor to perform or observe any of the provisions hereof, together with interest thereon at the Default Interest Rate or (iii) the execution, delivery and performance of this Stock Pledge Agreement, any agreement supplemental hereto and any instruments of further assurance. Any amounts payable by Pledgor pursuant to this Section 5(c) shall be payable on demand and shall constitute Obligations; provided, that recourse with respect to the obligations of Pledgor under this Section 5(c) shall be limited to the Collateral. (d) Filing Fees, Taxes, etc. Pledgor shall pay or cause to be paid all filing, registration and recording fees or re-filing, re- registration and re-recording fees, and all federal, state, county and municipal stamp taxes and other similar taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Stock Pledge Agreement, any agreement supplemental hereto and any instruments of further assurance; provided, that recourse with respect to the obligations of Pledgor under this Section 5(d) shall be limited to the Collateral. (e) Certificated Interest. If Pledgor shall become entitled to receive or shall receive any certificate, instrument, option or rights, whether as an addition to, in substitution of, or in exchange for the Collateral or any part thereof, or otherwise, Pledgor shall accept any such certificate, instrument, option or rights as Agent's agent, shall hold them in trust for Agent, and shall deliver them forthwith to Agent in the exact form received, with Pledgor's endorsement when necessary, or accompanied by duly executed instruments of transfer or assignment in blank or, if requested 7 by Agent, an additional pledge agreement or security agreement executed and delivered by Pledgor, all in form and substance reasonably satisfactory to Agent, to be held by Agent, subject to the terms hereof, as further Collateral for the Obligations. (f) Change in Location, Name, etc. Pledgor shall not change its name, including, without limitation, any trade name or fictitious business, name or the location of its chief executive office, principal place of business or the place where its records concerning the Collateral are kept without giving Agent 30 days' advance written notice of such change. (g) Maintenance of Existence, Privileges, etc. Pledgor shall at all times (i) preserve and maintain in full force and effect (A) its existence as a corporation in good standing under the laws of the State of Delaware, (B) its qualification to do business in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business as conducted or proposed to be conducted makes such qualification necessary and where the failure to maintain such qualification could reasonably be expected to result in a Material Adverse Effect and (C) all of its powers, rights, privileges and franchises necessary for the ownership, maintenance and operation of the Project and the maintenance of its existence, except, in the case of clause (C) only, where the failure to do so could not reasonably be expected to result in a Material Adverse Effect and (ii) obtain and maintain in full force and effect all Governmental Approvals and other consents and approvals required to be obtained and maintained by Pledgor at any time in connection with the maintenance, ownership or operation of the Borrower and where the failure to obtain and maintain in full force and effect such Governmental Approvals, consents and approvals could reasonably be expected to result in a Material Adverse Effect; provided, however, Pledgor may be merged or consolidated with or into another Person if: (i) either (x) Pledgor shall be the surviving Person or (y) the Person (if other than Pledgor) formed by such consolidation or into which Pledgor is merged shall be a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia and shall expressly assume, by an agreement supplemental hereto, executed and delivered to the Lenders and the Agent in form and substance satisfactory to the Majority Lenders and the Agent, all of the obligations of Pledgor under this Stock Pledge Agreement, (ii) immediately before and immediately after giving effect to such transaction, no Default shall have occurred and be continuing, (iii) immediately after, and giving effect to, such transaction and the assumption contemplated by clause (i)(y) above, and the incurrence or anticipated incurrence of any Indebtedness to be incurred in connection therewith, the surviving Person shall have a Net Worth (as defined in the Tax 8 Indemnification Agreement) equal to or greater than the Net Worth of Pledgor immediately preceding such transaction and Pledgor shall have delivered to the Agent a certificate of an Authorized Officer of Pledgor stating that such consolidation or merger and such supplemental agreement comply with this Section 5(g) and that all conditions precedent herein provided relating to such transaction have been complied with. (h) Limitations on Liens on the Collateral. Pledgor shall not create, incur or permit to exist, shall defend the Collateral now owned or hereafter acquired by it against, and shall take such other action as is necessary to remove, any Lien or claim (other than Permitted Liens) on or to the Collateral, and shall defend the right, title and interest of Agent in and to any of the Collateral against the claims and demands of all Persons whomsoever. (i) Prohibition Against Transfers of Collateral. Without the prior written consent of the Majority Lenders, Pledgor shall not exchange, sell, transfer, pledge, hypothecate, assign, convey or otherwise dispose of, or permit to be exchanged, sold, transferred, pledged, hypothecated, assigned, conveyed or disposed of, any of the Pledged Shares. (j) No Additional Shares. Pledgor shall cause the Pledged Shares pledged hereunder to constitute at all times not less than all of the total number of shares of capital stock of Borrower then issued and outstanding (including treasury shares, if any), and shall not permit Borrower to issue or have outstanding any shares of any other class of its capital stock or to have outstanding any subscription agreements, warrants, rights or options to acquire any shares of any class of its capital stock. (k) Governmental Authority Requirements. Pledgor shall not take, or omit to take, any action (unless ordered to do so by a competent Governmental Authority having jurisdiction) in respect of Borrower and its business if, as a consequence directly or indirectly of such action or omission, Borrower becomes subject to regulation by any Governmental Authority as a "public utility," an "electric utility," an "electric utility holding company," a "public utility holding company" or a subsidiary or affiliate of any of the foregoing under any Governmental Requirement (including, without limitation, PUHCA, FPA and PURPA) or as a "holding company" within the meaning of PUHCA; provided, however, that Borrower shall be subject to regulation as a public utility under the FPA. 9 6. Voting Power, Dividends; Pledgor's Obligations Upon Event of Default. (a) Voting Power, Dividends. Notwithstanding any other provision contained in this Stock Pledge Agreement to the contrary, unless an Event of Default shall have occurred and be continuing, Pledgor shall be entitled to receive all dividends and other payments payable with respect to the Pledged Shares and exercise all voting and other consensual rights and take all action permitted to a stockholder of Borrower in its capacity as such, and Agent, upon the written request of Pledgor, shall promptly deliver such proxies and other documents, if any, as shall be reasonably requested by Pledgor which are necessary to allow Pledgor to exercise voting power with respect to any of the Pledged Shares; provided, Pledgor (i) shall not vote such Pledged Shares in any manner that would violate the terms of this Stock Pledge Agreement, the Credit Agreement or any other Loan Instrument or that would cause an Event of Default and (ii) agrees that any dividends and other payments paid by Borrower to Pledgor where such dividends and other payments, as the case may be, are derived from distributions made to Borrower in violation of the Credit Agreement shall be restored to Borrower by deposit into an account designated by Agent promptly upon demand by Agent or upon Pledgor becoming aware of receipt of such dividends made from a non-complying distribution. (b) Pledgor's Obligations Upon Event of Default. If an Event of Default shall occur and be continuing then, following notice from Agent to Pledgor, (i) all payments received by Pledgor under or in connection with any of the Collateral shall be held by Pledgor in trust for Agent, shall be segregated from other funds of Pledgor and shall, forthwith upon receipt by Pledgor, be turned over to Agent or its designee in the same form as received by Pledgor (duly endorsed by Pledgor to Agent, if requested), and (ii) any and all such payments so received by Agent or its designee (whether from Pledgor or otherwise) may, in the sole discretion of Agent or its designee, be held by Agent or such designee as collateral security for, and/or then or at any time thereafter be applied, subject only to the relevant provisions of the Credit Agreement or as otherwise may be required by applicable law, in whole or in part by Agent or its designee in the manner specified in Section 8 hereof, unless otherwise agreed to by the Majority Lenders in a writing delivered to Agent. 7. Remedies; Rights Upon Event of Default. Pledgor hereby relinquishes to Agent upon the occurrence and during the continuance of an Event of Default all right, title and interest which Pledgor has in the Collateral. Upon the occurrence and during the continuance of an Event of Default Agent, for the 10 equal and ratable benefit of and on behalf of the Secured Parties, may do one or more of the following: (a) Declare, without presentment, demand, protest or notice of any kind, all of which Pledgor hereby expressly waives, all Obligations to be immediately due and payable, whereupon all of such Obligations declared due and payable shall be and become immediately due and payable; provided, however, if an Event of Default occurs pursuant to Section 6.1(h), (i) or (t) of the Credit Agreement the acceleration provided for in this Section 7(a) shall be deemed to have been made upon the occurrence of such Event of Default without declaration or any other action by Agent; (b) Upon notice to Pledgor, which notice need not be in writing, make such payments and do such acts as Agent may deem necessary to protect, perfect or continue the perfection of the Secured Parties' Security Interest in the Collateral including, without limitation, paying, purchasing, contesting or compromising any Lien which is, or purports to be, prior to or superior to the Security Interest granted hereunder, and commencing, appearing or otherwise participating in or controlling any action or proceeding purporting to affect the Secured Parties' Security Interest in or ownership of the Collateral; (c) Foreclose on the Collateral as herein provided or in any manner permitted by law and exercise any and all of the rights and remedies conferred upon the Secured Parties by any of the Project Agreements either concurrently or in such order as Agent may determine without affecting the rights or remedies to which the Secured Parties may be entitled under the Credit Agreement or any other Loan Instrument. Pledgor hereby waives, to the extent permitted by applicable law, notice and judicial hearing in connection with Agent's taking possession or collection, recovery, receipt, appropriation, repossession, retention, set-off, sale, leasing, conveyance, assignment, transfer or other disposition of or realization upon any or all of the Collateral, including, without limitation, any and all prior notice and hearing for any prejudgment remedy or remedies and any such right which Pledgor would otherwise have under the constitution or any statute or other law of the United States of America or of any state; (d) Without notice, except as specified below, sell the Collateral, or any part thereof, in one or more parcels at public or private sale, at any of Agent's offices or elsewhere, at such time or times, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as Agent may deem commercially reasonable. Pledgor agrees that, to the extent notice of sale shall be required by law, at least 11 10 days' notice to Pledgor of the time and the place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. At any sale of the Collateral, if permitted by law, Agent may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase of the Collateral or any portion thereof for the account of Agent on behalf of the Secured Parties. Agent shall not be obligated to make any sale of the Collateral regardless of notice of sale having been given. Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Agent shall incur no liability as a result of the manner of sale of the Collateral, or any part thereof, at any private sale conducted in a commercially reasonable manner. Agent may, in its sole discretion, at any such sale restrict the prospective bidders or purchasers as to their number, nature of business and investment intention, including a requirement that the prospective bidders or purchasers represent and agree, to the satisfaction of Agent, that they are purchasing the Collateral for their own account, for investment, and not with a view to the distribution or resale of any thereof. Pledgor hereby waives, to the extent permitted by applicable law, any claims against Agent arising by reason of the fact that the price at which the Collateral, or any part thereof, may have been sold at a private sale was less than the price which might have been obtained at public sale or was less than the aggregate amount of the Obligations, even if Agent accepts the first offer received which Agent in good faith deems to be commercially reasonable under the circumstances and does not offer the Collateral to more than one offeree. To the full extent permitted by law, Pledgor shall have the burden of proving that any such sale of the Collateral was conducted in a commercially unreasonable manner. To the extent permitted by law, Pledgor hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any law now existing or hereafter enacted. Pledgor authorizes Agent, at any time and from time to time, to execute, in connection with a sale of the Collateral pursuant to the provisions of this Stock Pledge Agreement, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; (e) At any time, upon notice to Pledgor, register the Collateral in the name of Agent or its nominee as pledgee or otherwise take such action as Agent shall in its sole discretion deem necessary or desirable with respect to the Collateral, and Agent or its nominee may thereafter, in its sole discretion, without notice, exercise all voting and other rights relating to the Collateral and exercise any and all rights, privileges or options pertaining to the Collateral as if it were the absolute owner thereof, and exchange, at its sole discretion, any and all 12 of the Collateral upon the merger, consolidation, reorganization, recapitalization or other readjustment of either Borrower, all without liability except to account for property actually received by Agent, but Agent shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing, except to the extent that such failure or delay constitutes gross negligence or willful misconduct; (f) Exercise such voting and other consensual rights and rights to receive and hold as Collateral dividends and other payments which Pledgor would otherwise be entitled to receive or exercise, as the case may be, pursuant to Section 6(a) and all such voting and consensual rights and rights to receive the dividends and other payments which Pledgor would otherwise be authorized to exercise, receive and retain pursuant to Section 6(a) shall cease and all such rights shall thereupon become vested in Agent; and (g) Exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party after default under the Code. 8. Application of Proceeds. The net proceeds of any foreclosure, collection, recovery, receipt, appropriation, realization or sale of the Collateral shall be applied in the following order: (a) To the repayment of the costs and expenses of retaking, holding and preparing for the sale and the selling of the Collateral (including, without limitation, attorneys' fees and expenses and court costs and those amounts payable to Agent pursuant to Section 5(c)) and the discharge of all assessments, encumbrances, charges or liens, if any, on the Collateral prior to the lien hereof; (b) To the payment in full of the Obligations in accordance with the priority of application specified in Section 2.10(c) of the Credit Agreement; and (c) If all Obligations have been indefeasibly paid, satisfied and discharged in full, any surplus then remaining shall be paid to Pledgor, subject, however, to the rights of the holders of any then existing liens on the Collateral of which Agent has actual notice (without investigation). 9. Security Interest Absolute. All the rights of Agent and Secured Parties hereunder and the Security Interest 13 and all obligations of Pledgor hereunder shall be absolute and unconditional irrespective of: (i) any lack of validity or enforceability of any of the Project Agreements or any other agreement or instrument relating thereto; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any of the Project Agreements or any of the Collateral or any other agreement or instrument related thereto; (iii) any exchange or release of any Collateral or any other collateral, or the non-perfection of any of the Security Interest, or any release or amendment or waiver of or consent to or departure from any guaranty, for all or any of the Obligations; or (iv) to the full extent permitted by law, any other circumstance that might otherwise constitute a defense available to, or a discharge of, Pledgor or any third party pledgor other than payment in full of the Obligations. 10. Agent Appointed Attorney-in-Fact. (a) Powers. Pledgor hereby irrevocably constitutes and appoints Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact (which appointment as attorney-in-fact shall be coupled with an interest), with full authority in the place and stead of Pledgor and in the name of Pledgor or otherwise, from time to time upon the occurrence and during the continuance of an Event of Default in Agent's discretion, to take any action and to execute any and all documents and instruments which Agent may deem necessary or advisable to accomplish the purposes of this Stock Pledge Agreement, without notice to Pledgor, including, without limitation: (i) to exercise all rights, powers and privileges of a stockholder of Borrower; (ii) to receive, endorse and collect all instruments made payable to Pledgor representing any dividends, payments or other distributions in respect of the Collateral or any part thereof and to give full discharge for the same and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Agent for the purpose of 14 collecting any and all of such dividends, or other distributions; (iii) to pay or discharge taxes and liens levied or placed on the Collateral; and (iv) (A) to direct any party liable for any payment under or in respect of or arising out of any of the Collateral to make payment of any and all moneys due or to become due in connection therewith directly to Agent or as Agent shall direct, (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral, (D) to defend any suit, action or proceeding brought against Pledgor with respect to any Collateral, (E) to settle, compromise or adjust any suit, action or proceeding described in clauses (C) and (D) above and, in connection therewith, to give such discharges or releases as Agent acting in good faith may deem appropriate and (F) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Agent were the absolute owner thereof for all purposes, and (G) to do, at Agent's option and at Pledgor's expense, at any time, or from time to time, all acts and things which Agent deems necessary to protect, preserve or realize upon the Collateral and the Security Interest granted herein and to effect the intent of this Stock Pledge Agreement, all as fully and effectively as Pledgor might do. (b) Other Powers. Pledgor further authorizes Agent, at any time and from time to time (i) to execute, in connection with any sale provided for hereunder, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral and (ii) to the full extent permitted by applicable law, to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of Pledgor. 11. Agent May Perform. Upon the occurrence and during the continuance of an Event of Default, Agent, without releasing Pledgor from any obligation, covenant or condition hereof, itself may make any payment or perform, or cause the performance of, any such obligation, covenant, condition or agreement or any other action in such manner and to such extent as Agent may deem necessary to protect, perfect or continue the 15 perfection of the Secured Parties' Security Interest in the Collateral. Any costs or expenses incurred by Agent in connection with the foregoing shall be governed by the Loan Instruments, constitute a part of the Debt secured by the Parlin Security Documents, shall bear interest at a rate equal to the Default Interest Rate and be payable by Pledgor upon demand by Agent. 12. No Duty on Agent's Part; Limitation on Agent's Obligations. (a) No Duty on Agent's Part. The powers conferred on Agent hereunder are solely to protect Agent's and the other Secured Parties' interests in the Collateral and shall not impose any duty upon Agent to exercise any such powers. Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers. (b) Limitations on Agent's Obligations. Anything herein to the contrary notwithstanding, Pledgor shall remain liable with respect to the Collateral, and with respect to this Stock Pledge Agreement and any other Project Agreement to which it is a party to the extent set forth therein, to perform all of its duties and obligations in connection therewith or thereunder, to the same extent as if this Stock Pledge Agreement had not been executed. The exercise by Agent of any of the rights or remedies hereunder shall not release the Pledgor from any of its duties or obligations under this Stock Pledge Agreement or any other Project Agreement to which it is a party. All of the Collateral is hereby assigned to Agent solely as security, and Agent shall have no duty, liability or obligation whatsoever with respect to any of the Collateral, unless Agent so elects in writing consistent with its rights under this Stock Pledge Agreement. 13. Reasonable Care. Agent shall exercise the same degree of care hereunder as it exercises in connection with similar transactions for its own account. Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which Agent accords or would accord collateral held by Agent in similar transactions for its own account. Without limiting the generality of the foregoing and except as otherwise provided by applicable law, Agent shall not be required to marshall any collateral, including, without limitation, the Collateral subject to the Security Interest created hereby and any guaranties of the Obligations, or to resort to any item of Collateral or guaranties in any particular order; and all of Agent's rights hereunder and in respect of such Collateral and guaranties shall be cumulative and in addition to all other 16 rights, however existing or arising. To the extent that Pledgor lawfully may, Pledgor hereby (a) agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of Agent's rights under this Stock Pledge Agreement or under any other instrument evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or guaranteed and (b) irrevocably waives the benefits of all Laws and any and all rights to equity of redemption or other rights of redemption that it may have in equity or at law with respect to the Collateral. 14. Role of Agent. The rights, duties, liabilities and immunities of Agent and its appointment and replacement hereunder shall be governed by Article 7 of the Credit Agreement. 15. Notices. All notices, demands, requests and other communications required or permitted hereunder shall be in writing, and shall be given and deemed to have been given in accordance with Section 8.1 of the Credit Agreement and the information set forth immediately below shall apply to Pledgor: If to Pledgor: NRG Generating (U.S.) Inc. 1221 Nicollet Mall Suite 700 Minneapolis, MN 55403 Attn: Leonard A. Bluhm Tel: (612) 373-5305 Fax: (612) 373-5312 16. Subrogation, etc. Notwithstanding any payment or payments made by Pledgor or the exercise by Agent of any of the remedies provided under this Stock Pledge Agreement, the Credit Agreement or any other Loan Instrument, until all amounts owing to the Secured Parties by Borrower for or on account of the Obligations are indefeasibly paid in full, Pledgor shall not be entitled to be subrogated to any of the rights of the Secured Parties against Borrower or any collateral security or guaranty held by the Secured Parties for the satisfaction of any of the Obligations, nor shall Pledgor seek any reimbursement, indemnity, exoneration or contribution from Borrower in respect of payments made by Pledgor hereunder. Notwithstanding the foregoing, if any amount shall be paid to Pledgor on account of such subrogation, reimbursement, indemnity, exoneration or contribution rights at any time prior to such time as all Obligations are indefeasibly paid in full, such amount shall be held by Pledgor in trust for the Secured Parties, segregated from other funds of Pledgor, and shall be turned over to Agent 17 for the benefit of the Secured Parties, in the exact form received by Pledgor (duly endorsed by Pledgor to Agent for the benefit of the Secured Parties, if required), to be applied against such amounts in such order as Agent may elect. 17. Absence of Fiduciary Relation. Agent undertakes to perform or to observe only such of its agreements and obligations as are specifically set forth in this Stock Pledge Agreement or any other Loan Instrument, and no implied agreements, covenant or obligations with respect to Pledgor, any Affiliate of Pledgor or any other party to any of the Project Agreements shall be read into this Stock Pledge Agreement against Agent or any of the Secured Parties. Neither Agent nor any of the Secured Parties in its and their capacity as such is a fiduciary of and shall not owe or be deemed to owe any fiduciary duty to Pledgor or any Affiliate of Pledgor or any other party to any of the Project Agreements, except as otherwise specifically provided by applicable law. 18. Survival of Representations and Warranties. All agreements, representations and warranties made herein shall survive the execution and delivery of this Stock Pledge Agreement and the other Loan Instruments, and shall be deemed to be material and to have been relied upon by Agent and the Secured Parties, regardless of any investigation made by or on behalf of Agent or the Secured Parties. 19. No Waiver; Cumulative Remedies. By exercising or failing to exercise any of its rights, options or elections hereunder (without also expressly waiving the same in writing), Agent, on behalf of the Secured Parties, shall not be deemed to have waived any breach or default on the part of Pledgor or to have released Pledgor from any of its obligations secured hereby. No failure on the part of Agent to exercise, and no delay in exercising (without also expressly waiving the same in writing) any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. Agent, acting on behalf of the Secured Parties, shall have all of the rights and remedies granted under the Credit Agreement or any other Loan Instrument, and available at law or in equity, and these same rights and remedies may be pursued separately, successively or concurrently against Pledgor or any Collateral, at the discretion of Agent with the consent of the Majority Lenders. 20. Severability. Any provision of this Stock Pledge Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be 18 ineffective to the extent of such prohibition, unenforceability or non- authorization, without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Where provisions of any law or regulation resulting in such prohibition or unenforceability may be waived they are hereby waived by Pledgor and Agent to the full extent permitted by law so that this Stock Pledge Agreement shall be deemed a valid, binding agreement, and the Security Interest created hereby shall constitute a continuing first lien on and first perfected security interest in the Collateral, in each case enforceable in accordance with its terms. 21. Exculpatory Provisions; Reliance by Agent. (a) Exculpatory Provisions. Subject to Section 13 hereof, neither Agent nor any Secured Party, nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be liable to Pledgor for any action taken or omitted to be taken by it or them under or in connection with this Stock Pledge Agreement or any other Project Agreement, or responsible in any manner to any Person for any recitals, statements, representations or warranties made by Pledgor or any officer thereof contained in this Stock Pledge Agreement or any other Project Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by Agent or any Secured Party under or in connection with, this Stock Pledge Agreement or any other Project Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Stock Pledge Agreement or any other Project Agreement or for any failure of Pledgor to perform any of the Obligations. Neither Agent nor any Secured Party shall be under any obligation to any Person to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Stock Pledge Agreement or any other Project Agreement, or to inspect the properties or records of Pledgor. (b) Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Pledgor), independent accountants and other experts selected by Agent. Agent shall have no obligation to any Person to act or refrain from acting or exercising any of its rights under this Stock Pledge Agreement. 19 22. Amendment. This Stock Pledge Agreement may be amended, modified or rescinded only by a writing expressly referring to this Stock Pledge Agreement and signed by all the parties hereto. 23. Successors and Assigns. This Stock Pledge Agreement shall be binding upon and inure to the benefit of Pledgor and Agent for the benefit of the Secured Parties and their respective successors and permitted assigns. In the event of any assignment or transfer by any Secured Party of any instrument evidencing all or any part of the Obligations, the holder of such instrument shall, subject to the Credit Agreement, be entitled to the benefits of this Stock Pledge Agreement. 24. Number and Gender. Whenever used in this Stock Pledge Agreement, the singular number shall include the plural and the plural the singular, and the use of any gender shall be applicable to all genders. 25. Headings Descriptive. The captions or headings of the several sections and subsections and the table of contents of this Stock Pledge Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Stock Pledge Agreement. 26. Governing Law; Jurisdiction; Waiver of Trial by Jury. (a) Governing Law. This Stock Pledge Agreement shall be governed by and construed in accordance with the internal laws of the State of New York as to interpretation, enforcement, validity, construction, effect and in all other respects, but excluding perfection, which shall be governed by the laws of the jurisdiction relevant thereto. (b) Jurisdiction. With respect to any legal action or proceeding brought by Agent or the Secured Parties against Pledgor arising out of or in connection with this Stock Pledge Agreement, Pledgor hereby irrevocably (i) consents to the jurisdiction of any state or federal court located in the State of New York, (ii) consents to the service of process outside the territorial jurisdiction of said courts in any such action or proceeding by mailing copies thereof by registered United States mail, postage prepaid, to the address specified by Pledgor for the receipt of notices if such address is outside such territorial jurisdiction and (iii) waives any objection to the venue of the aforesaid courts. Pledgor hereby irrevocably designates, appoints and empowers CT Corporation System, 1633 Broadway, New York, NY, 10019, as its designee, appointee and agent to receive and accept service of any and all legal 20 process, summons, notices and documents arising out of this Stock Pledge Agreement. Pledgor agrees it will at all times continuously maintain either a registered office or an agent to receive service of process in the State of New York on behalf of itself and its properties with respect to this Stock Pledge Agreement. (c) Waiver of Trial by Jury. WITH REGARD TO THIS STOCK PLEDGE AGREEMENT, EACH OF THE PARTIES HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN. 27. Continuing Pledge and Security Interest; Termination. This Stock Pledge Agreement shall create a continuing assignment, pledge and first priority Security Interest in the Collateral and shall remain in full force and effect for the benefit of Agent and the Secured Parties until all Obligations have been paid and performed in full. Upon the happening of such event, the Security Interest granted hereby shall terminate. Upon such termination, Agent shall, upon the request and at the expense of Pledgor, execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination or expiration. 28. Payments Set Aside. To the extent that Pledgor or Borrower or any other Person on behalf of Pledgor or Borrower makes a payment or payments to Agent and/or any Secured Party, or Agent and/or any Secured Party enforce the Security Interests or exercise their rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the Obligations or any part thereof originally intended to be satisfied, and this Stock Pledge Agreement and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred. 21 29. Counterparts. This Stock Pledge Agreement may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties have caused this Stock Pledge Agreement to be duly executed as of the day and year first written above. NRG GENERATING (U.S.) INC., as Pledgor By: Name: Leonard A. Bluhm Title: President CREDIT SUISSE, as Agent By: Name: Title: By: Name: Title: Schedule A to the Stock Pledge Agreement Pledged Shares Issuer Class No. of Shares NRG Generating Common 100 (Parlin) Cogeneration, Inc. Schedule B to the Stock Pledge Agreement FINANCING STATEMENT FILINGS 1. Secretary of State, Delaware 2. Secretary of State, Minnesota 3. County Clerk, Hennepin County, Minnesota 4. Secretary of State, New Jersey 5. County Clerk, Middlesex County, New Jersey 6. Secretary of the Commonwealth, Pennsylvania 7. Prothanatary, Philadelphia County, Pennsylvania EX-10.8.4 19 EXHIBIT 10.8.4 GUARANTY DATED MAY 17, 1996. Exhibit 10.8.4 GUARANTY This GUARANTY dated as of May 17, 1996 by NRG Energy, Inc., a Delaware corporation ("Guarantor"), to Credit Suisse, as Agent for the benefit of the Lenders ("Agent") under the Credit Agreement referred to below. WHEREAS, pursuant to the Credit Agreement dated as of May 17, 1996 by and among (i) NRG Generating (Newark) Cogeneration Inc., a Delaware corporation ("NRG Newark"), and NRG Generating (Parlin) Cogeneration Inc., a Delaware corporation ("NRG Parlin"; NRG Newark and NRG Parlin are hereinafter collectively referred to as the "Borrowers"), (ii) Credit Suisse and each Purchasing Lender (each, a "Lender" and, collectively, the "Lenders"), and (iii) Agent (as amended, supplemented or otherwise modified from to time, the "Credit Agreement"), the Lenders have agreed, among other things, to make available to Borrowers certain Loans as well as a Debt Service Line of Credit Facility on the terms and subject to the conditions set forth in the Credit Agreement; WHEREAS, a portion of the proceeds of the Loans made to the Borrowers by the Lenders will be distributed to NRG Generating (U.S.) Inc., a Delaware corporation ("NRG Generating"), and used by NRG Generating to repay certain obligations of NRG Generating to Guarantor; WHEREAS, Guarantor will benefit from the Loans and the Debt Service Line of Credit Facility to be made available to NRG Newark and NRG Parlin by the Lenders pursuant to the Credit Agreement; and WHEREAS, the Credit Agreement requires as a condition precedent to the making available of the Loans and the Debt Service Line of Credit Facility that Guarantor shall have executed and delivered this Guaranty to Agent; NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make available and maintain the Loans and the Debt Service Line of Credit Facility under the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Guarantor hereby agrees with Agent as follows: 1. Definitions. Unless otherwise defined herein, any capitalized terms used herein shall have the meaning assigned to such term in the Credit Agreement. As used herein, the following terms shall have the following meanings and such meanings shall be applicable to the singular and plural form thereof giving effect to the numerical difference: "Appropriate NJDEP Notification" means either (a) a No Further Action Letter from NJDEP or (b) a Conditional No Further Action Letter from NJDEP accompanied by (i) a classification exception area determination from NJDEP in respect of the area which includes the Newark Project or (ii) institutional controls (including, without limitation, a Declaration of Environmental Restrictions) agreed to by NRG Newark and NJDEP and approved by Agent (such approval not to be unreasonably withheld). "Excess Amounts" means the sum of (a) amounts paid by Guarantor pursuant to Section 2.1(c) hereof to discharge Non-ISRA Environmental Pre- Existing Liabilities in excess of $1,000,000, (b) amounts paid by Guarantor pursuant to Section 2.1(c) hereof to discharge ISRA Related Pre-Existing Liabilities in excess of $2,000,000 and (c) amounts paid by Guarantor pursuant to Section 2.1(c) hereof to discharge General Pre-Existing Liabilities in excess of $2,000,000. "NJDEP" means the New Jersey Department of Environmental Protection. "Pre-Existing Liabilities Guaranty Amount" means an amount equal to (a) prior to the earlier of (i) the date NRG Newark receives an Appropriate NJDEP Notification and (ii) the fifth anniversary of the Initial Funding Date, $2,000,000, plus (b) prior to the third anniversary of the Initial Funding Date, $2,000,000, plus (c) prior to the fifth anniversary of the Initial Funding Date, $1,000,000, less (d) the Pre- Existing Liabilities Credit Amount; provided, however, that in no event shall the Pre-Existing Liabilities Guaranty Amount be less than zero; provided, further, however, (A) Guarantor's liability under, and the period set forth in, the foregoing clause (a) shall be extended if, and to the extent that, any formal proceeding or investigation by any Governmental Authority has been instituted against NRG Newark with respect to any ISRA Related Pre-Existing Liabilities until such proceeding or investigation has been resolved to the reasonable satisfaction of Agent, (B) Guarantor's liability under, and the period set forth in, the foregoing clause (b) shall be extended if, and to the extent that, any claim has been asserted in writing against either Borrower by a third party or any formal proceeding or investigation by any Governmental Authority has been instituted against either Borrower with respect to any General Pre-Existing Liabilities until such claim, proceeding or investigation has been resolved to the reasonable satisfaction of Agent and (C) Guarantor's liability under, and the period set forth in, the foregoing clause (c) shall be extended if, and to the extent that, any claim has been asserted in writing against either Borrower by a third party or any formal proceeding or investigation by any Governmental Authority has been instituted against either Borrower with respect to any 2 Non-ISRA Environmental Pre-Existing Liabilities until such claim, proceeding or investigation has been resolved to the reasonable satisfaction of Agent. "Pre-Existing Liabilities Credit Amount" means as of any date (a) prior to the third anniversary of the Initial Funding Date, the sum of (i) amounts paid by Guarantor pursuant to Section 2.1(c) hereof to discharge Non-ISRA Environmental Pre-Existing Liabilities and General Pre-Existing Liabilities, (ii) any Excess Amounts and (iii) amounts paid by Guarantor to discharge ISRA Related Pre-Existing Liabilities pursuant to Section 2.1(c) hereof prior to the date NRG Newark receives an Appropriate NJDEP Notification and (b) after the third anniversary of the Initial Funding Date, the sum of (i) amounts paid by Guarantor pursuant to Section 2.1(c) hereof to discharge Non-ISRA Environmental Pre-Existing Liabilities, (ii) any Excess Amounts and (iii) amounts paid by Guarantor to discharge ISRA Related Pre-Existing Liabilities pursuant to Section 2.1(c) hereof prior to the date NRG Newark receives an Appropriate NJDEP Notification. 2. Guaranty. 2.1 Guaranty Unconditional. (a) Guarantor hereby unconditionally and irrevocably guaranties, as a primary obligor and not merely as a surety, to the Lenders and their successors, indorsees, transferees and assigns, the prompt and complete payment of the Obligations on the Initial Maturity Date if on such date (i) the New Jersey Board of Public Utilities order approving the Third Amendment to the Newark Power Purchase Agreement has been appealed to an appropriate court and such appeal has not been dismissed on or prior to such date or (ii) the New Jersey Board of Public Utilities order approving the Interim Gas Service Agreement has been appealed to an appropriate court and such appeal has not been dismissed on or prior to such date. (b) Guarantor hereby unconditionally and irrevocably guaranties, as a primary obligor and not merely as a surety, to the Lenders and their successors, indorsees, transferees and assigns, the prompt and complete payment when due of any amount due pursuant to Section 2.8(d) of the Credit Agreement. (c) Guarantor hereby unconditionally and irrevocably guaranties, as a primary obligor and not merely as a surety, to the Lenders and their successors, indorsees, transferees and assigns, the prompt and complete payment when due of any Pre-Existing Liabilities; provided, however, that the obligations of Guarantor under this Section 2.1(c) shall be limited to the Pre-Existing Liabilities Guaranty Amount. 3 (d) Guarantor hereby unconditionally and irrevocably guaranties, as a primary obligor and not merely as a surety, to the Lenders and their successors, indorsees, transferees and assigns, the prompt and complete payment within five days following receipt by Guarantor of written notice by Agent containing a demand for payment of any damage, loss, cost or expense (including, without limitation, any loss of revenues under the Newark Power Purchase Agreement and reasonable legal fees) suffered or incurred by NRG Newark or the Secured Parties arising out of, relating to or resulting from the failure of NRG Newark to deliver to Agent each of the items required to be delivered pursuant to Section 5.40 of the Credit Agreement within the time period required thereby. 2.2 Payments by Guarantor. (a) All payments owing by Guarantor hereunder shall be made in cash in immediately available funds and shall be payable directly to Agent, for application as provided in the Credit Agreement. (b) Upon receipt of all payments owing by Guarantor pursuant to Section 2.1(a) or (b) hereof, each Lender shall endorse and deliver to Guarantor, without recourse to such Lender, the Initial Loan Note executed in favor of such Lender and shall, at Guarantor's expense, execute and deliver such instruments, documents, agreements or stock certificates as Guarantor shall reasonably request to transfer of record or otherwise perfect a lien in, all collateral security for, and other rights relating to, the Initial Loan Note to Guarantor. (c) Any payments owing by Guarantor pursuant to Section 2.1(c) hereof may be made, as between Guarantor and Borrowers, in the form of subordinated loans by Guarantor to Borrowers or its Affiliates, provided that any such loans shall be fully subordinated to all of Borrowers' obligations under the Loan Instruments pursuant to documents in form and substance reasonably satisfactory to Agent and containing the subordination provisions set forth in Exhibit I to the Credit Agreement. 2.3 No Effect on Guaranty. The obligations of Guarantor under this Guaranty shall not be altered, limited, impaired or otherwise affected by: (a) any rescission of any demand for payment of any of the Obligations or any failure by Agent or any of the other Lenders to make any such demand on Borrower or on any other guarantor or to collect any payments from Borrower or from any other guarantor or any release of Borrower or any other guarantor; (b) any renewal, extension, modification, amendment, acceleration, compromise, waiver, indulgence, rescission, 4 discharge, surrender or release, in whole or in part, of the Credit Agreement or any other Loan Instrument or the Obligations, or the liability of any party to any of the foregoing or for any part thereof or any collateral security therefor or guaranty thereof; (c) the validity, regularity or enforceability of any of the Obligations or of the Credit Agreement or any other Loan Instrument; (d) any failure by Agent or any of the other Lenders to protect, secure, perfect, record, insure or enforce any Security Document or Collateral subject thereto at any time constituting security for the Obligations; (e) any act or omission of Agent or any of the other Lenders relating in any way to the Obligations or to Borrower, including, without limitation, any failure to bring an action against any party liable on the Obligations, or any party liable on any guaranty of the Obligations, or any party which has furnished security for the Obligations, or to apply any funds of any such party held by Agent or any of the other Lenders, or to resort to any Collateral or collateral of any other guarantor; (f) any defense, set-off or counterclaim which may at any time be available to or be asserted by or on behalf of Borrower or Guarantor against Agent or any of the other Lenders or any circumstance which constitutes, or might be construed to constitute, an equitable or legal discharge of Borrower or of any other guarantor for any of the Obligations, in bankruptcy or in any other instance; (g) any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrower or any other guarantor or any defense which Borrower or any other guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding; or (h) any change, whether direct or indirect, in the Guarantor's relationship to Borrower, including, without limitation, any such change by reason of any merger or any sale, transfer, issuance, or other disposition of any stock of Borrower, Guarantor or any other entity. 2.4 Continuing Guaranty. This Guaranty shall be construed as a continuing, absolute and unconditional guaranty of payment when due, and not of collection only, and the obligations of Guarantor hereunder shall not be conditioned or contingent upon the pursuit by Agent or any of the other 5 Lenders at any time of any right or remedy against Borrower or against any other Person which may be or become liable in respect of all or any part of the Obligations or against any Collateral or guaranty therefor. This Guaranty shall remain in full force and effect until all of the Obligations shall have been satisfied by payment in full. 2.5 Reinstatement of Guaranty. This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of the Obligations is avoided, rescinded or must otherwise be restored or returned by Agent or any of the other Lenders to Borrower or its representative or to any other guarantor for any reason including as a result of any insolvency, bankruptcy or reorganization proceeding with respect to Borrower or Guarantor, all as though such payment had not been made. 2.6 Financial Condition of Borrower. Loans under the Credit Agreement may be granted to Borrower or continued from time to time without notice to or authorization from Guarantor regardless of the financial or other condition of Borrower at the time of any such grant or continuation. Neither Agent nor any of the other Lenders shall have any obligation to disclose or discuss with Guarantor its assessment of the financial or other condition of Borrower. 3. Right of Set-Off. Agent and the other Lenders are hereby authorized to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of Guarantor against any and all of the obligations of the Guarantor now or hereafter existing under this Guaranty, irrespective of whether or not such Lender shall have made any demand under this Guaranty and although such deposits, indebtedness, or obligations may be unmatured or contingent. Such Lender agrees to notify Guarantor promptly of any such set-off and the application thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. 4. Taxes. Any and all payments or reimbursements made hereunder shall be made net, free and clear of and without deduction for any and all Taxes, and all liabilities with respect thereto. If Guarantor shall be required by law to deduct any such Taxes from or in respect of any sum payable hereunder to Agent or any other Lender, then the sum payable hereunder shall be increased as may be necessary so that, after making all required deductions, the Lender receives an amount equal to the sum it would have received had no such deductions been made. Guarantor hereby indemnifies and agrees to hold 6 Agent and each other Lender harmless from and against all Taxes attributable to the transactions made under this Guaranty. 5. Subrogation. Guarantor hereby agrees that, notwithstanding anything to the contrary in this Guaranty or any other Loan Instrument, until all Obligations are paid in full Guarantor shall not be entitled to be subrogated to any of the rights of the Lenders against Borrower or any collateral security or guaranty held by the Lenders for the satisfaction of any of the Obligations, nor shall Guarantor seek any reimbursement, indemnity, exoneration or contribution from Borrower in respect of payments made by Guarantor hereunder. Notwithstanding the foregoing, if any amount shall be paid to Guarantor on account of such subrogation, reimbursement, indemnity, exoneration or contribution rights, such amount shall be held by Guarantor in trust for the Lenders, segregated from other funds of Guarantor, and shall be turned over to Agent for the benefit of the Lenders, in the exact form received by Guarantor (duly endorsed by Guarantor to Agent for the benefit of the Lenders, if required), to be applied against such amounts in such order as Agent may elect. This Section 5 shall inure to the benefit of the Agent and the other Lenders and their respective successors and assigns. 6. Representations and Warranties. The Guarantor represents and warrants to Agent and the other Lenders that: (a) Guarantor (i) is a corporation duly organized and validly existing under the Laws of its jurisdiction of incorporation and (ii) has all requisite corporate power and authority to execute, deliver and perform this Guaranty and each other Loan Instrument to which it is a party. (b) Guarantor is duly qualified and in good standing in each jurisdiction where the failure to maintain such qualification or good standing could reasonably be expected to result in a Material Adverse Effect. (c) The execution, delivery and performance by Guarantor of this Guaranty and each other Loan Instrument to which it is a party has been duly authorized by all necessary corporate action and shareholder action. (d) The execution, delivery and performance by Guarantor of this Guaranty and each other Loan Instrument to which it is a party does not and will not: (1) violate any provision of Law applicable to Guarantor, where such violation could reasonably be expected to result in a Material Adverse Effect; (2) violate the certificate of incorporation or by- laws of Guarantor, (3) violate, conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a 7 default under any contract, agreement, indenture or instrument to which Guarantor is a party or by which its respective properties are bound, where such violation, conflict, breach or default could reasonably be expected to result in a Material Adverse Effect; (4) result in or require the creation or imposition of any Lien upon any of the properties or assets of Guarantor (other than Permitted Liens); or (5) require any approval or consent of any Person under any contractual obligation of Guarantor. (e) The execution, delivery and performance by Guarantor of this Guaranty and each other Loan Instrument to which it is a party does not and will not require any filing or registration with, consent or approval or authorization of, or notice to, or other action to, with or by, any Governmental Authority, regulatory body or any other Person, except where the failure to so file or register could not reasonably be expected to result in a Material Adverse Effect. (f) This Guaranty and each other Loan Instrument to which Guarantor is a party are the legal, valid and binding obligation of Guarantor enforceable against Guarantor, in accordance with their terms except to the extent enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditor rights and subject to general equitable principles. 7. Costs and Expenses. Guarantor shall pay all reasonable costs and expenses of Agent and the other Lenders (including, without limitation, attorneys' fees and disbursements) incurred in connection with the enforcement of, or collection of any amounts due under, this Guaranty. Guarantor shall pay all reasonable costs and expenses of Agent (including, without limitation, attorneys' fees and disbursements) incurred in connection with (a) any waiver, extension, amendment or modification of any provision of this Guaranty, or (b) the administration of this Guaranty. 8. Termination of Guaranty. (a) Guarantor's obligations under Sections 2.1(a) and (b) hereof shall terminate at such time as the New Jersey Board of Public Utilities orders approving the Third Amendment to the Newark Power Purchase Agreement and the Interim Gas Service Agreement, as such orders are in effect on the date hereof, become final and nonappealable. (b) Guarantor's obligations under Section 2.1(c) hereof shall terminate on the date on which the Pre-Existing Liabilities Guaranty Amount is equal to zero. 8 (c) Guarantor's obligations under Section 2.1(d) hereof shall terminate upon receipt by Agent of each of the items required to be delivered by NRG Newark pursuant to Section 5.40 of the Credit Agreement within the time period required thereby. (d) From time to time upon written request of Guarantor, Agent shall provide written confirmation to Guarantor regarding the extent to which Guarantor's obligations under this Guaranty have terminated. 9. Renewals, Extensions, Modifications, etc. Guarantor hereby consents and agrees that, without the necessity of any reservation of rights against Guarantor, (a) any demand for payment of any of the Obligations made by Agent or any of the other Lenders may be rescinded and any of the Obligations continued; (b) the Obligations or the liability of any party upon or for any part thereof or any collateral security thereof or guaranty thereof, may from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, waived, surrendered or released by Agent or any of the other Lenders; (c) the Credit Agreement, the Notes, and any other instrument or agreement evidencing, relating to, securing or guaranteeing any of the Obligations, may be amended, modified, supplemented or terminated, in whole or in part, as Agent or any of the other Lenders may deem advisable from time to time; and (d) any collateral security at any time held by Agent for the payment of any of the Obligations may be sold, exchanged, waived, surrendered or released, all without notice to or further assent by Guarantor, who will remain bound hereunder as specified herein notwithstanding any such renewal, extension, modification, acceleration, compromise, amendment, supplement, termination, sale, exchange, waiver, surrender or release. Guarantor acknowledges and agrees that neither Agent nor any of the other Lenders has any obligation to provide Guarantor with any information regarding Borrower or any other guarantor of the Obligations and that Guarantor has the ability to obtain without the assistance of Agent or any other Lender all such information. 10. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of Agent or any other Lender in the exercise of any power, right or privilege under this Guaranty or any other Loan Instruments to which Guarantor is a party and no course of dealing with respect thereto shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any power, right or privilege thereunder preclude any other or further exercise thereof or the exercise of any other power, right or privilege. All rights and remedies existing under this Guaranty and the other Loan Instruments to which Guarantor is a 9 party are cumulative to, and not exclusive of, any rights and remedies provided by law or otherwise available. 11. Waiver of Demand, Protest, Notice, etc. Guarantor waives presentment, demand and protest and notice of presentment, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all notes, commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent or any of the other Lenders on which Guarantor may in any way be liable. 12. Amendment; Assignment. No amendment, modification, termination, or waiver of any provision of this Guaranty or any other Loan Instrument to which Guarantor is a party, or consent to any departure by Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by Agent. Guarantor hereby consents to any Lender's sale, assignment, transfer or other disposition (including participations and obtaining co-lenders) at any time and from time to time hereafter, of this Guaranty, the Loan Instruments or of any portion thereof, including, without limitation, Lender's rights, titles, interests, remedies, powers, duties and/or obligations hereunder or thereunder, in each case, to the extent permitted in Section 8.6 of the Credit Agreement. 13. Severability. The invalidity, illegality or unenforceability in any jurisdiction of any provision in or obligation under this Guaranty, or any other Loan Instrument to which Guarantor is party, shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Guaranty or any other Loan Instrument to which Guarantor is a party or of such provision or obligation in any other jurisdiction. 14. Successors and Assigns. This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that Guarantor may not assign its rights or obligations hereunder or any portion hereof without the prior written consent of Agent. 15. Applicable Law. This Guaranty shall be governed and controlled by, and shall be construed and enforced in accordance with, the Laws of the State of New York, without regard to the principles of conflict of laws. 16. Consent to Jurisdiction and Service of Process. (a) Any legal action or proceeding against Guarantor with respect to this Guaranty or any other Loan Instrument may be brought in the courts of the State of New York in the County of New York or of the United States for the Southern District of New York and, by execution and delivery of this Guaranty, 10 Guarantor hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Guarantor agrees that a judgment, after exhaustion of all available appeals, in any such action or proceeding shall be conclusive and binding upon the Borrowers, and may be enforced in any other jurisdiction by a suit upon such judgment, a certified copy of which shall be conclusive evidence of the judgment. Guarantor hereby irrevocably designates, appoints and empowers CT Corporation System, 1633 Braodway, New York, NY, 10019, as its designee, appointee and agent to receive and accept service of any and all legal process, summons, notices and documents arising out of this Guaranty. If for any reason such designee, appointee and agent shall cease to be available to act as such, Guarantor agrees to designate a new designee, appointee and agent in New York City on the terms and for the purposes of this provision satisfactory to Agent. Guarantor further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to Guarantor, at its address set forth in Section 18 hereof, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of any Lender to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against Guarantor in any other jurisdiction. (b) Guarantor hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Guaranty or any other Loan Instrument brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. 17. Waiver of Jury Trial. Guarantor and Agent hereby waive their respective rights to a jury trial of any claim or cause of action based upon or arising out of this Guaranty, any other documents, the Collateral or any dealings between them relating to the subject matter of this Guaranty and the other Loan Instruments and the lender/guarantor relationship that is being established. Guarantor and Agent also waive any bond or surety or security upon such bond which might, but for this waiver, be required of secured parties. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Guarantor and Agent each acknowledge that this waiver is a 11 material inducement to enter into a business relationship, that each has already relied on the waiver in entering into this Guaranty and that each will continue to rely on the waiver in their related future dealings. Guarantor and Agent further warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and the waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this Guaranty, the other Loan Instruments, or to any other documents or agreements relating thereto. In the event of litigation, this Guaranty may be filed as a written consent to a trial by the court. 18. Notices. Except as otherwise expressly provided herein, (a) all notices and other communications provided for hereunder shall be provided in writing (including telegraphic, facsimile or cable communication) and shall be sent by telecopy, telegraph or cable with the original of such communication dispatched by (if inland) overnight or (if overseas) international courier and, if such courier service is not available, by registered airmail (or, if inland, registered first-class mail) with postage prepaid to Guarantor and Agent at their respective addresses specified below, or at such other address as shall be designated by such party in a written notice to the other party hereto and (b) all such notices and communications shall, when mailed, telegraphed, telecopied, or cabled or sent by overnight courier, be effective seven (7) days after being deposited in the mails in the manner as aforesaid, when delivered to the telegraph company or cable company (if inland), one (1) day or (if overseas) three (3) days after delivery to a courier in the manner as aforesaid, as the case may be, or when sent by telecopier: Addresses: If to Guarantor: NRG Energy, Inc. 1221 Nicollet Mall Minneapolis, MN 55403-2445 Attn : Chief Financial Officer Tel : (612) 373-5391 Fax : (612) 373-5312 with a copy to: NRG Energy, Inc. 1221 Nicollet Mall 12 Suite 700 Minneapolis, MN 55403 Attn : General Counsel Tel : (612) 373-5367 Fax : (612) 373-5392 If to Agent: CREDIT SUISSE Tower 49 12 East 49th Street New York, New York 10017 Attn : Project Finance Tel : (212) 238-5462 Fax : (212) 238-5390 19. Headings. All headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect. 20. Financial Statements; Reports. Guarantor agrees that it will provide to the Agent on a timely basis all financial statements, reports, letters and certificates of Guarantor which Borrower is required to deliver to Agent pursuant to Section 5.8 of the Credit Agreement, and agrees that all such financial statements, reports, letters and certificates will be prepared in accordance with and conform to the provisions of such Section of the Credit Agreement. 13 21. Monitoring of Appeals. Guarantor hereby agrees to use reasonable efforts to monitor, and agrees to cause NRG Generating (U.S.) Inc. and NRG Newark to monitor, the filing of, and the progress of, any appeal of the New Jersey Board of Public Utilities orders approving the Third Amendment to the Newark Power Purchase Agreement and the Interim Gas Service Agreement. Upon obtaining actual knowledge thereof, Guarantor hereby agrees to provide to Agent and to cause NRG Generating (U.S.) Inc. and NRG Newark to provide to Agent, prompt notice of the filing of any appeal of the New Jersey Board of Public Utilities orders approving the Third Amendment to the Newark Power Purchase Agreement and the Interim Gas Service Agreement and to keep Agent reasonably informed of the progress of any such appeal. 22. Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided under any other Loan Instrument or by law. Agent and the Lenders shall have all of the rights and remedies granted under the other Loan Instruments, and available under law or in equity, and these same rights and remedies may be pursued separately, successively or concurrently. 23. Counterparts. This Guaranty and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by the different parties in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute one and the same instrument. This Guaranty shall become effective upon the execution of a counterpart hereof by each of the parties hereto. 24. No Third Party Beneficiaries. Nothing contained in this Guaranty shall be deemed to indicate that this Guaranty has been entered into for the benefit of any person other than the Agent and the Lenders. This Guaranty shall inure to the 14 sole benefit of the Agent and the Lenders and no other person or entity shall be entitled to rely thereon. IN WITNESS WHEREOF, this Guaranty has been duly executed as of the date and year first above written. NRG ENERGY, INC. By:/s/ Valorie A. Knudsen Name: Valorie A. Knudsen Title: V.P. Finance & Controller Agreed and Accepted as of this 20th day of May, 1996 CREDIT SUISSE, as Agent By: /s/ Guy Cirincione Name: Guy R. Cirincione Title: Member of Senior Management By: /s/ Louis Iaconetti Name: Louis D. Iaconetti Title: Associate EX-10.8.5 20 EXHIBIT 10.8.5 GUARANTY DATED JUNE 28, 1996. Exhibit 10.8.5 GUARANTY This GUARANTY dated as of June 28, 1996 by NRG Generating (U.S.) Inc., a Delaware corporation ("Guarantor"), to Credit Suisse, as Agent for the benefit of the Lenders ("Agent") under the Credit Agreement referred to below. WHEREAS, pursuant to the Credit Agreement dated as of May 17, 1996 by and among (i) NRG Generating (Newark) Cogeneration Inc., a Delaware corporation ("NRG Newark"), and NRG Generating (Parlin) Cogeneration Inc., a Delaware corporation ("NRG Parlin"), (ii) Credit Suisse and each Purchasing Lender (each, a "Lender" and, collectively, the "Lenders"), and (iii) Agent (as amended, supplemented or otherwise modified from to time, the "Credit Agreement"), the Lenders have agreed, among other things, to make available to Borrower certain Loans and Commitments on the terms and subject to the conditions set forth in the Credit Agreement; WHEREAS, each of NRG Newark and NRG Parlin is a wholly owned subsidiary of Guarantor; and WHEREAS, Guarantor will benefit from the Loans and the Commitments made or to be made available to NRG Newark and NRG Parlin by the Lenders pursuant to the Credit Agreement; and WHEREAS, the Credit Agreement requires as a condition precedent to the making available of the Additional Loan and the Debt Service Line of Credit Facility Commitment that Guarantor shall have executed and delivered this Guaranty to Agent; NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make available and maintain the Additional Loan and the Debt Service Line of Credit Facility Commitment under the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Guarantor hereby agrees with Agent as follows: 1. Definitions. Unless otherwise defined herein, any capitalized terms used herein shall have the meaning assigned to such term in the Credit Agreement. As used herein, the following terms shall have the following meanings and such meanings shall be applicable to the singular and plural form thereof giving effect to the numerical difference: "Bankruptcy Event" means (a) either Borrower is generally not paying or admits in writing its inability to pay its debts as such debts become due, or files any petition or action for relief under any bankruptcy, reorganization, insolvency, or moratorium Law or any other Law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors, liquidates or dissolves, or takes any action in furtherance of any of the foregoing; or (b) an involuntary petition is filed against either Borrower under any bankruptcy, reorganization, insolvency, or moratorium Law now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of such Borrower, and (i) such petition or appointment is not dismissed, set aside or withdrawn or otherwise ceases to be in effect within 60 days from the date of said filing or appointment, or (ii) an order for relief is entered against such Borrower with respect thereto, or (iii) such Borrower shall take any action indicating its consent to, approval of, or acquiescence in, any such petition or appointment. "Payment Amount" has the meaning set forth in Section 2.2 hereof. "Payment Default" means an Event of Default pursuant to Section 6.1(a) of the Credit Agreement. 2. Guaranty. 2.1 Guaranty Unconditional. Guarantor hereby unconditionally and irrevocably guaranties, as a primary obligor and not merely as a surety, to the Lenders and their successors, indorsees, transferees and assigns, the prompt and complete payment when due, whether at the stated maturity or on acceleration or otherwise, of the Obligations; provided, however, that the maximum aggregate liability of Guarantor hereunder with respect to the Obligations shall in no event exceed $25,000,000 which maximum amount shall be reduced from time to time in proportion to reductions, as a result of repayments and prepayments in accordance with the terms of the Credit Agreement, of the outstanding principal amount of the Funding Loans. 2.2 Payments by Guarantor. Subject to the limitation set forth in Section 2.1 hereof, Guarantor shall, immediately upon notice by Agent to Guarantor of the occurrence of a Payment Default, pay to Agent such portion of the Obligations ("Payment Amount") as is equal to the sum of (i) any principal of, or interest on, any of the Loans, or any other amounts, in each case due and payable at such time to the Lenders or Agent under the Credit Agreement or any other Loan Instruments, plus (ii) the amount required to fund the Debt Service Reserve Account up to the amounts specified in Section 5.1(c)(vi) of the Credit Agreement, without taking into account the Debt Service Line of Credit Facility Commitment. Each and 2 every Payment Default by Borrower shall give rise to a separate liability of Guarantor hereunder to pay the Payment Amount to Agent, subject, however, to the limitation set forth in Section 2.1 hereof of the maximum aggregate amount payable hereunder. For the avoidance of doubt, if an Event of Default has occurred and Agent exercises the remedies specified in Section 6.1(i)(B) of the Credit Agreement, the Guarantor shall, immediately upon notice by Agent to Guarantor, pay to Agent any principal of, or interest on, any of the Loans, or any other amounts, in each case due and payable at such time to the Lenders or Agent under the Credit Agreement or any other Loan Instruments, subject, however, to the limitation set forth in Section 2.1 hereof of the maximum aggregate amount payable hereunder. (b) Notwithstanding the provisions of Section 2.2(a) hereof, if an Event of Default has occurred and is continuing, and Agent notifies Guarantor of such Event of Default and, upon the request or with the consent of the Majority Lenders, requests Guarantor to pay to Agent all of Borrower's Obligations outstanding at such time, then Guarantor shall, subject to the proviso in Section 2.1 hereof, immediately pay to Agent all such amounts. (c) If a Bankruptcy Event has occurred and Agent notifies Guarantor of such Bankruptcy Event, Guarantor shall, subject to the proviso in Section 2.1 hereof, immediately pay to Agent all of Borrower's Obligations outstanding at such time. 2.3 No Effect on Guaranty. The obligations of Guarantor under this Guaranty shall not be altered, limited, impaired or otherwise affected by: (a) any rescission of any demand for payment of any of the Obligations or any failure by Agent or any of the other Lenders to make any such demand on either Borrower or on any other guarantor or to collect any payments from either Borrower or from any other guarantor or any release of either Borrower or any other guarantor; (b) any renewal, extension, modification, amendment, acceleration, compromise, waiver, indulgence, rescission, discharge, surrender or release, in whole or in part, of the Credit Agreement or any other Loan Instrument or the Obligations, or the liability of any party to any of the foregoing or for any part thereof or any collateral security therefor or guaranty thereof; (c) the validity, regularity or enforceability of any of the Obligations or of the Credit Agreement or any other Loan Instrument; 3 (d) any failure by Agent or any of the other Lenders to protect, secure, perfect, record, insure or enforce any Security Document or Collateral subject thereto at any time constituting security for the Obligations; (e) any act or omission of Agent or any of the other Lenders relating in any way to the Obligations or to either Borrower, including, without limitation, any failure to bring an action against any party liable on the Obligations, or any party liable on any guaranty of the Obligations, or any party which has furnished security for the Obligations, or to apply any funds of any such party held by Agent or any of the other Lenders, or to resort to any Collateral or collateral of any other guarantor; (f) any defense, set-off or counterclaim which may at any time be available to or be asserted by or on behalf of either Borrower or Guarantor against Agent or any of the other Lenders or any circumstance which constitutes, or might be construed to constitute, an equitable or legal discharge of either Borrower or of any other guarantor for any of the Obligations, in bankruptcy or in any other instance; (g) any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of either Borrower or any other guarantor or any defense which either Borrower or any other guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding; or (h) any change, whether direct or indirect, in the Guarantor's relationship to either Borrower, including, without limitation, any such change by reason of any merger or any sale, transfer, issuance, or other disposition of any stock of either Borrower, Guarantor or any other entity. 2.4 Continuing Guaranty. This Guaranty shall be construed as a continuing, absolute and unconditional guaranty of payment when due, and not of collection only, and the obligations of Guarantor hereunder shall not be conditioned or contingent upon the pursuit by Agent or any of the other Lenders at any time of any right or remedy against either Borrower or against any other Person which may be or become liable in respect of all or any part of the Obligations or against any Collateral or guaranty therefor. This Guaranty shall remain in full force and effect until all of the Obligations shall have been satisfied by payment in full. 2.5 Reinstatement of Guaranty. This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of the Obligations 4 is avoided, rescinded or must otherwise be restored or returned by Agent or any of the other Lenders to either Borrower or its representative or to any other guarantor for any reason including as a result of any insolvency, bankruptcy or reorganization proceeding with respect to either Borrower or Guarantor, all as though such payment had not been made. 2.6 Financial Condition of Borrower. Loans under the Credit Agreement may be granted to Borrower or continued from time to time without notice to or authorization from Guarantor regardless of the financial or other condition of Borrower at the time of any such grant or continuation. Neither Agent nor any of the other Lenders shall have any obligation to disclose or discuss with Guarantor its assessment of the financial or other condition of Borrower. 3. Right of Set-Off. Upon the occurrence and during the continuation of an Event of Default, Agent and the other Lenders are hereby authorized to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of Guarantor against any and all of the obligations of the Guarantor now or hereafter existing under this Guaranty, irrespective of whether or not such Lender shall have made any demand under this Guaranty and although such deposits, indebtedness, or obligations may be unmatured or contingent. Such Lender agrees to notify Guarantor promptly of any such set-off and the application thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. 4. Taxes. Subject to the proviso contained in Section 2.5(a)(i) of the Credit Agreement, any and all payments or reimbursements made hereunder shall be made net, free and clear of and without deduction for any and all Taxes, and all liabilities with respect thereto. Subject to the proviso contained in Section 2.5(a)(i) of the Credit Agreement, if Guarantor shall be required by law to deduct any such Taxes from or in respect of any sum payable hereunder to Agent or any other Lender, then the sum payable hereunder shall be increased as may be necessary so that, after making all required deductions, the Lender receives an amount equal to the sum it would have received had no such deductions been made. Subject to the proviso contained in Section 2.5(a)(i) of the Credit Agreement, Guarantor hereby indemnifies and agrees to hold Agent and each other Lender harmless from and against all Taxes attributable to the transactions made under this Guaranty. 5. Subrogation. Guarantor hereby agrees that, notwithstanding anything to the contrary in this Guaranty or any other Loan Instrument, until all Obligations are paid in 5 full Guarantor shall not be entitled to be subrogated to any of the rights of the Lenders against either Borrower or any collateral security or guaranty held by the Lenders for the satisfaction of any of the Obligations, nor shall Guarantor seek any reimbursement, indemnity, exoneration or contribution from either Borrower in respect of payments made by Guarantor hereunder. Notwithstanding the foregoing, if any amount shall be paid to Guarantor on account of such subrogation, reimbursement, indemnity, exoneration or contribution rights, such amount shall be held by Guarantor in trust for the Lenders, segregated from other funds of Guarantor, and shall be turned over to Agent for the benefit of the Lenders, in the exact form received by Guarantor (duly endorsed by Guarantor to Agent for the benefit of the Lenders, if required), to be applied against such amounts in such order as Agent may elect. This Section 5 shall inure to the benefit of the Agent and the other Lenders and their respective successors and assigns. 6. Representations and Warranties. The Guarantor represents and warrants to Agent and the other Lenders that: (a) Guarantor (i) is a corporation duly organized and validly existing under the Laws of its jurisdiction of incorporation and (ii) has all requisite corporate power and authority to execute, deliver and perform this Guaranty and each other Loan Instrument to which it is a party. (b) Guarantor is duly qualified and in good standing in each jurisdiction where the failure to maintain such qualification or good standing could reasonably be expected to result in a Material Adverse Effect. (c) The execution, delivery and performance by Guarantor of this Guaranty and each other Loan Instrument to which it is a party has been duly authorized by all necessary corporate action and shareholder action. (d) The execution, delivery and performance by Guarantor of this Guaranty and each other Loan Instrument to which it is a party does not and will not: (1) violate any provision of Law applicable to Guarantor, where such violation could reasonably be expected to result in a Material Adverse Effect; (2) violate the certificate of incorporation or by-laws of Guarantor, (3) violate, conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any contract, agreement, indenture or instrument to which Guarantor is a party or by which its respective properties are bound, where such violation, conflict, breach or default could reasonably be expected to result in a Material Adverse Effect; (4) result in or require the creation or imposition of any Lien upon any of the properties or assets of Guarantor (other than Permitted Liens); or (5) require any 6 approval or consent of any Person under any contractual obligation of Guarantor. (e) The execution, delivery and performance by Guarantor of this Guaranty and each other Loan Instrument to which it is a party does not and will not require any filing or registration with, consent or approval or authorization of, or notice to, or other action to, with or by, any Governmental Authority, regulatory body or any other Person, except where the failure to so file or register could not reasonably be expected to result in a Material Adverse Effect. (f) This Guaranty and each other Loan Instrument to which Guarantor is a party are the legal, valid and binding obligation of Guarantor enforceable against Guarantor, in accordance with their terms except to the extent enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditor rights and subject to general equitable principles. (g)Guarantor is in compliance with all Laws, other than those Laws the non compliance with which could not reasonably be expected to result in a Material Adverse Effect. (h) Except as disclosed on Schedule A hereto, there are no actions, suits, proceedings, claims or disputes pending or, to the best of the Guarantor's knowledge, threatened against or affecting Guarantor or any of its respective properties or assets before any arbitrator or other Governmental Authority. There is no injunction, writ, preliminary restraining order or any order of any nature issued by an arbitrator or other Governmental Authority directing that any material aspect of the transactions provided for in any of the Loan Instruments or Acquisition Documents not be consummated as herein or therein provided. (i) No event has occurred or would result from the incurring of obligations under this Guaranty or any other Loan Instrument to which Guarantor is a party or the consummation of the Acquisition which is, or upon the lapse of time or notice or both would become, an Event of Default. Guarantor is not in default under or with respect to any contractual obligation in any respect, the default of which could reasonably be expected to result in a Material Adverse Effect. Guarantor is not in default under any order, award or decree of any court, arbitrator or Governmental Authority binding upon or affecting it or by which any of its properties or assets is bound or affected, the default of which could reasonably be expected to result in a Material Adverse Effect. Guarantor has not received notice of, and is not aware of, the occurrence of any event of force majeure with respect to either Project. 7 (j) Guarantor is (and after giving effect to the transactions contemplated by the Loan Instruments and the Acquisition Documents will be) Solvent. (k) No Contractual Obligation of Guarantor and no Requirement of Law has, or is reasonably expected to have, in light of all facts and circumstances of which Guarantor has actual knowledge, a Material Adverse Effect, it being understood that the mere existence of traditional project finance contractual provisions which provide lenders with security interests and restrictive covenants, including the ability to restrict cash distributions, would not constitute a burdensome restriction hereunder. (l) All tax returns which are required to be filed in respect of each Borrower and Guarantor, and all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than those the amount or validity of which is currently being contested in a Good Faith Contest and with respect to which reserves in conformity with GAAP have been provided on the books of such Borrower) have been filed and paid by Guarantor; and no tax Liens have been filed and, to the knowledge of Guarantor, no claims are being asserted with respect to any such taxes, fees or other charges which are material either as to amount or potentially adverse effect when considered with respect to the financial and business condition of such Borrower or Guarantor. (m) Guarantor is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation G, T, U, or X of the Board of Governors of the Federal Reserve System) and no proceeds of any Loan will be used in a manner which would violate, or result in a violation of, such Regulation G, T, U, or X. (n) No representation or warranty of Guarantor contained in any Loan Instrument or Acquisition Document, or any other document, certificate or written statement set forth on Schedule 4.24 of the Credit Agreement contains any untrue statement of a fact or omitted, omits or will omit to state a fact necessary in order to make the statements contained herein or therein, when taken as a whole, not misleading in any respect in light of the circumstances in which the same were made. There is no fact known to Guarantor which has not been disclosed in writing to Agent and which materially adversely affects, or which could reasonably be expected in the future to materially adversely affect, the properties, business, prospects or financial condition of either Borrower or Guarantor or either Project. 8 7. Covenants. The Guarantor hereby covenants and agrees that until payment in full in cash of all of the Obligations or so long as any of the Commitments shall remain available pursuant to the Credit Agreement, the Guarantor will observe and fulfill each and all of the following covenants unless the Majority Lenders shall otherwise consent in writing: (a) The Guarantor shall at all times (i) preserve and maintain in full force and effect (A) its existence as a corporation in good standing under the laws of the State of Delaware, (B) its qualification to do business in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business as conducted or proposed to be conducted makes such qualification necessary and where the failure to maintain such qualification could reasonably be expected to result in a Material Adverse Effect and (C) all of its powers, rights, privileges and franchises necessary for the ownership, maintenance and operation of each Project and the maintenance of its existence, except, in the case of clause (C) only, where the failure to do so could not reasonably be expected to result in a Material Adverse Effect and (ii) obtain and maintain in full force and effect all Governmental Approvals and other consents and approvals required to be obtained and maintained by the Guarantor at any time in connection with the maintenance, ownership or operation of each Borrower and where the failure to obtain and maintain in full force and effect such Governmental Approvals, consents and approvals could reasonably be expected to result in a Material Adverse Effect; provided, however, Guarantor may be merged or consolidated with or into another Person if: (i) either (x) Guarantor shall be the surviving Person or (y) the Person (if other than Guarantor) formed by such consolidation or into which Gurantor is merged shall be a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia and shall expressly assume, by an agreement supplemental hereto, executed and delivered to the Lenders and the Agent in form and substance satisfactory to the Majority Lenders and the Agent, all of the obligations of Guarantor under this Guaranty, (ii) immediately before and immediately after giving effect to such transaction, no Default shall have occurred and be continuing, (iii) immediately after, and giving effect to, such transaction and the assumption contemplated by clause (i)(y) above, and the incurrence or anticipated incurrence of any Indebtedness to be incurred in connection therewith, the surviving Person shall have a Net Worth (as defined in the Tax Indemnification Agreement) equal to or greater than the Net Worth of Guarantor immediately preceding such transaction and Guarantor shall have delivered to the Agent a certificate of an Authorized Officer of Guarantor stating that such consolidation or merger and such supplemental agreement comply with this Section 7(a) and that all conditions 9 precedent herein provided relating to such transaction have been complied with. (b) Guarantor is not engaged in, nor will it engage in, any activity which would cause the Loans to be in violation of Regulation G, T, U, or X of the Board of Governors of the Federal Reserve System. (c) Promptly upon receipt thereof, Guarantor will deliver copies of all significant reports submitted to Guarantor by independent public accountants in connection with each annual, interim or special audit of the financial statements of Guarantor made by such accountants. (d) Guarantor will furnish to Agent with sufficient copies for each Lender (as designated by Agent) such information respecting the condition or operations, financial or otherwise, of Guarantor as any Lender through Agent may from time to time reasonably request. (e) Guarantor will furnish to Agent with sufficient copies for each Lender (as designated by Agent) promptly upon Guarantor's knowledge thereof, a written statement from an Authorized Officer of Guarantor describing the details of any substantial dispute which may exist between Guarantor and any governmental regulatory body or law enforcement authority that could reasonably be expected to result in a Material Adverse Effect. 8. Costs and Expenses. Guarantor shall pay all reasonable costs and expenses of Agent and the other Lenders (including, without limitation, attorneys' fees and disbursements) incurred in connection with (a) the enforcement of, or collection of any amounts due under, this Guaranty, (b) any waiver, extension, amendment or modification of any provision of this Guaranty, or (c) the administration of this Guaranty. 9. Indemnity. Guarantor shall indemnify Agent and each of the other Lenders and their respective officers, directors, employees, representatives and agents from and against any and all damages, losses, liabilities, costs and expenses (including, without limitation, attorneys' fees and disbursements) arising out of or resulting from, or otherwise in connection with, this Guaranty. 10. Renewals, Extensions, Modifications, etc. Guarantor hereby consents and agrees that, without the necessity of any reservation of rights against Guarantor, (a) any demand for payment of any of the Obligations made by Agent or any of the other Lenders may be rescinded and any of the Obligations continued; (b) the Obligations or the liability 10 of any party upon or for any part thereof or any collateral security thereof or guaranty thereof, may from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, waived, surrendered or released by Agent or any of the other Lenders; (c) the Credit Agreement, the Notes, and any other instrument or agreement evidencing, relating to, securing or guaranteeing any of the Obligations, may be amended, modified, supplemented or terminated, in whole or in part, as Agent or any of the other Lenders may deem advisable from time to time; and (d) any collateral security at any time held by Agent for the payment of any of the Obligations may be sold, exchanged, waived, surrendered or released, all without notice to or further assent by Guarantor, who will remain bound hereunder as specified herein notwithstanding any such renewal, extension, modification, acceleration, compromise, amendment, supplement, termination, sale, exchange, waiver, surrender or release. Guarantor acknowledges and agrees that neither Agent nor any of the other Lenders has any obligation to provide Guarantor with any information regarding Borrower or any other guarantor of the Obligations and that Guarantor has the ability to obtain without the assistance of Agent or any other Lender all such information. 11. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of Agent or any other Lender in the exercise of any power, right or privilege under this Guaranty or any other Loan Instruments to which Guarantor is a party and no course of dealing with respect thereto shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any power, right or privilege thereunder preclude any other or further exercise thereof or the exercise of any other power, right or privilege. All rights and remedies existing under this Guaranty and the other Loan Instruments to which Guarantor is a party are cumulative to, and not exclusive of, any rights and remedies provided by law or otherwise available. 12. Waiver of Demand, Protest, Notice, etc. Guarantor waives presentment, demand and protest and notice of presentment, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all notes, commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent or any of the other Lenders on which Guarantor may in any way be liable. 13. Amendment; Assignment. No amendment, modification, termination, or waiver of any provision of this Guaranty or any other Loan Instrument to which Guarantor is a party, or consent to any departure by Guarantor therefrom shall in any event be effective unless the same shall be in writing 11 and signed by Agent. Guarantor hereby consents to any Lender's sale, assignment, transfer or other disposition (including participations and obtaining co-lenders) at any time and from time to time hereafter, of this Guaranty, the Loan Instruments or of any portion thereof, including, without limitation, Lender's rights, titles, interests, remedies, powers, duties and/or obligations hereunder or thereunder, in each case, to the extent permitted in Section 8.6 of the Credit Agreement. 14. Severability. The invalidity, illegality or unenforceability in any jurisdiction of any provision in or obligation under this Guaranty, or any other Loan Instrument to which Guarantor is party, shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Guaranty or any other Loan Instrument to which Guarantor is a party or of such provision or obligation in any other jurisdiction. 15. Successors and Assigns. This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that Guarantor may not assign its rights or obligations hereunder or any portion hereof without the prior written consent of Agent. 16. Applicable Law. This Guaranty shall be governed and controlled by, and shall be construed and enforced in accordance with, the Laws of the State of New York, without regard to the principles of conflict of laws. 17. Consent to Jurisdiction and Service of Process. (a) Any legal action or proceeding against Guarantor with respect to this Guaranty or any other Loan Instrument may be brought in the courts of the State of New York in the County of New York or of the United States for the Southern District of New York and, by execution and delivery of this Guaranty, Guarantor hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Guarantor agrees that a judgment, after exhaustion of all available appeals, in any such action or proceeding shall be conclusive and binding upon the Guarantor, and may be enforced in any other jurisdiction by a suit upon such judgment, a certified copy of which shall be conclusive evidence of the judgment. Guarantor hereby irrevocably designates, appoints and empowers CT Corporation System as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and in respect of its property, service of any and all legal process, summons, notices and documents which may be served in any such action or proceeding. If for any reason such designee, appointee and agent shall cease to be available to act as such, Guarantor agrees to designate a new designee, appointee and agent in New York City on the terms and for the purposes of this provision 12 satisfactory to Agent. Guarantor further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to Guarantor, at its address set forth in Section 19 hereof, such service to become effective __ days after such mailing. Nothing herein shall affect the right of any Lender to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against Guarantor in any other jurisdiction. (b) Guarantor hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Guaranty or any other Loan Instrument brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. 18. Waiver of Jury Trial. Guarantor and Agent hereby waive their respective rights to a jury trial of any claim or cause of action based upon or arising out of this Guaranty, any other documents, the Collateral or any dealings between them relating to the subject matter of this Guaranty and the other Loan Instruments and the lender/guarantor relationship that is being established. Guarantor and Agent also waive any bond or surety or security upon such bond which might, but for this waiver, be required of secured parties. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Guarantor and Agent each acknowledge that this waiver is a material inducement to enter into a business relationship, that each has already relied on the waiver in entering into this Guaranty and that each will continue to rely on the waiver in their related future dealings. Guarantor and Agent further warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and the waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this Guaranty, the other Loan Instruments, or to any other documents or agreements relating thereto. In the event of litigation, this Guaranty may be filed as a written consent to a trial by the court. 19. NOTICES. 13 Except as otherwise expressly provided herein, (a) all notices and other communications provided for hereunder shall be provided in writing (including telegraphic, facsimile or cable communication) and shall be sent by telecopy, telegraph or cable with the original of such communication dispatched by (if inland) overnight or (if overseas) international courier and, if such courier service is not available, by registered airmail (or, if inland, registered first-class mail) with postage prepaid to Guarantor and Agent at their respective addresses specified below, or at such other address as shall be designated by such party in a written notice to the other party hereto and (b) all such notices and communications shall, when mailed, telegraphed, telecopied, or cabled or sent by overnight courier, be effective seven (7) days after being deposited in the mails in the manner as aforesaid, when delivered to the telegraph company or cable company (if inland), one (1) day or (if overseas) three (3) days after delivery to a courier in the manner as aforesaid, as the case may be, or when sent by telecopier: 14 Addresses: If to Guarantor: NRG Generating (US) Inc. 1221 Nicollet Mall Suite 700 Minneapolis, MN 55403 Attn : Leonard A. Bluhm Tel : (612) 373-5305 Fax : (612) 373-5312 If to Agent: CREDIT SUISSE Tower 49 12 East 49th Street New York, New York 10017 Attn : Project Finance Tel : (212) 238-5462 Fax : (212) 238-5390 20. Headings. All headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect. 21. Financial Statements; Reports. Guarantor agrees that it will provide to the Agent on a timely basis all financial statements, reports, letters and certificates of Guarantor which Borrower are required to deliver to Agent pursuant to Section 5.8 of the Credit Agreement, all such financial statements, reports, letters and certificates will be prepared in accordance with and conform to the provisions of such Section of the Credit Agreement. 22. Loan Instruments. Guarantor will perform and observe all of its covenants and agreements contained in any of the Loan Instruments to which it is a party. 23. Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided under any other Loan Instrument or by law. Agent and the Lenders shall have all of the rights and remedies granted under the other Loan Instruments, and available under law or in equity, and these same rights and remedies may be pursued separately, successively or concurrently. 15 24. Counterparts. This Guaranty and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by the different parties in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute one and the same instrument. This Guaranty shall become effective upon the execution of a counterpart hereof by each of the parties hereto. IN WITNESS WHEREOF, this Guaranty has been duly executed as of the date and year first above written. NRG GENERATING (U.S.) INC. By:/s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President Agreed and Accepted as of this 28th day of June, 1996 CREDIT SUISSE, as Agent By: /s/ Louis Iaconetti Name: Louis D. Iaconetti Title: Associate By: /s/ Steven Dowe Name: Steven Dowe Title: Associate EX-10.8.6 21 EXHIBIT 10.8.6 TAX IDEMNIFICATION AGREEMENT DATED JUNE 28, 1996 BETWEEN THE COMPANY, NRGG NEWARK, NRGG PARLIN AND CREDIT SUISSE. Exhibit 10.8.6 TAX INDEMNIFICATION AGREEMENT among NRG GENERATING (NEWARK) COGENERATION INC., NRG GENERATING (PARLIN) COGENERATION INC., NRG GENERATING (U.S.) INC. and CREDIT SUISSE, as Agent Dated as of June 28, l996 TABLE OF CONTENTS 1. Definitions 1 2. Obligations with respect to Taxes 2 3. Method of Payment 4 4. No Setoff 4 5. Nature of Obligations 5 6. Representations and Warranties 6 7. Covenants and Agreements 6 8. Enforcement 7 9. Notices 7 10. Survival of Representations and Warranties 7 11. Severability 7 12. Amendment 8 13. Successors and Assigns 8 14. Number and Gender 8 15. Headings Descriptive 8 16. Governing Law; Jurisdiction; Waiver of Trial by Jury 8 17. Counterparts 9 18. Term 10 (i) TAX INDEMNIFICATION AGREEMENT This TAX INDEMNIFICATION AGREEMENT, dated as of June 28, 1996 (this "Agreement"), is made by and among (i) NRG GENERATING (NEWARK) COGENERATION INC., a Delaware corporation ("NRG Newark"), NRG GENERATING (PARLIN) COGENERATION INC., a Delaware corporation ("NRG Parlin") (each of the foregoing parties, individually, a "Borrower" and, collectively, "Borrowers"), (ii) NRG GENERATING (U.S.) INC., a Delaware corporation ("NRG Generating"), and (iii) CREDIT SUISSE, as agent ("Agent") on behalf of and for the benefit of the Secured Parties (as defined in the Credit Agreement referred to below). W I T N E S S E T H : WHEREAS, Borrowers and Agent have previously entered into the Credit Agreement, dated as of May 17, 1996, by and among (i) each of the Borrowers (ii) Credit Suisee and each Purchasing Lender and (iii) Agent (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), pursuant to which the Lenders are willing to provide the Loans and the Commitments to Borrowers on the terms and subject to the conditions set forth in the Credit Agreement; WHEREAS, NRG Generating owns 100% of the issued and outstanding capital stock of each Borrower and is willing to pay on behalf of, and defer collection of, certain tax-related obligations of each Borrower due to NRG Generating; and WHEREAS, it is a condition precedent to the making of the Additional Loans and the availability of the Debt Service Line of Credit Facility Commitment by the Lenders under the Credit Agreement that NRG Generating and Borrowers shall have entered into this Agreement; NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, and in order to induce the Lenders and Agent to enter into the Credit Agreement with Borrowers, the parties hereto hereby agree as follows: 1. DEFINITIONS. Unless otherwise defined herein, all capitalized terms used herein which are defined in the Credit Agreement shall have their respective meanings as therein defined and the terms set forth immediately below shall have the respective meanings assigned thereto. "Income Tax" or "Income Taxes" means any Tax based upon, measured by, or calculated with respect to (i) net income or profits (including, but not limited to, any capital gains, minimum tax and any Tax on items of tax preference, but not including sales, use, real property gains, real or personal property, gross or net receipts, transfer or similar Taxes) or (ii) multiple bases (including, but not limited to, corporate franchise, doing business or occupation Taxes) if one or more of the bases upon which such Tax may be based upon, measured by, or calculated with respect to, is described in clause (i) above. "Income Tax Return" means any return, filing, questionnaire, information return or other document required to be filed, including requests for extensions of time, filings made with estimated tax payments, claims for refund and amended returns that may be filed, for any period with any taxing authority (whether domestic or foreign) in connection with any Income Tax or Income Taxes (whether or not a payment is required to be made with respect to such filing). "Minimum Net Worth" means the Net Worth of NRG Generating as set forth in the June 30, 1996 audited financial statements of NRG Generating. "Net Worth" means, as to any Person, all items which in conformity with GAAP would be included under stockholders' equity on a balance sheet of such Person. "Tax" or "Taxes" means all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a local, municipal, governmental, state, foreign, federal or other body, together with any related interest, penalties and additions to any such tax, or additional amounts imposed by any taxing authority (domestic or foreign) upon NRG Generating and any of its Subsidiaries. 2. OBLIGATIONS WITH RESPECT TO INCOME TAXES. (a) Filing of Income Tax Returns. Until all Obligations have been indefeasibly paid in full, NRG Generating shall prepare and timely file or shall cause to be prepared and timely filed all appropriate Federal, state, local or foreign Income Tax Returns that are required to be filed which include either of the Borrowers. Each Borrower hereby irrevocably designates NRG Generating as its agent to take any and all actions necessary or incidental to the preparation and filing of such Income Tax Returns and agrees to cooperate in good faith with NRG Generating in the preparation of such Income Tax Returns. Neither Borrower shall file any amended Income Tax Return for which such Borrower is not obligated to prepare or cause to be prepared the original of such Income Tax Return pursuant to this Section 2(a) without the prior written consent of NRG Generating. 2 (b) Payment of Income Taxes. NRG Generating shall timely pay or cause to be paid, without contribution from either of the Borrowers (except out of amounts distributed or distributable pursuant to Section 5.1(c)(x) of the Credit Agreement), all Income Taxes (including estimated Income Taxes) with respect to Income Tax Returns which include either of the Borrowers and which NRG Generating is required to prepare and file or cause to be prepared and filed pursuant to this Agreement. (c) Refunds. NRG Generating shall be entitled to retain or receive immediate payment from the Borrowers of any refund or credit arising with respect to either of the Borrowers (including, without limitation, refunds and credits arising by reason of amended Income Tax Returns or otherwise) relating to Income Taxes paid by NRG Generating pursuant to this Agreement. (d) Tax Cooperation. Each of the Borrowers agrees to provide NRG Generating with such cooperation, information and records as NRG Generating shall reasonably request in connection with the preparation or filing of any Income Tax Return or claim for refund or in conducting any audit or other proceeding in respect of Taxes. Such cooperation and information shall include, without limitation, making such officers, directors, employees and agents available as may reasonably be requested by NRG Generating in connection with the preparation of any Income Tax Return or any Income Tax audit or other Income Tax proceeding that relates to such Borrower, promptly forwarding copies of appropriate notices and forms or other communications received from or sent to any taxing authority which relate to Income Taxes of such Borrower, providing copies of all relevant Income Tax Returns, together with accompanying schedules and related workpapers, documents relating to rulings or other determinations by taxing authorities, and records concerning the ownership and Tax basis of property. Each Borrower shall prepare or cause to be prepared prior to the due date for filing any Income Tax Return or the making of any Income Tax payment (including estimated payment thereof) the tax workpaper preparation package or packages and calculations necessary to enable NRG Generating to prepare the Income Tax Returns NRG Generating is required to prepare or cause to be prepared and to pay the Income Taxes NRG is required to pay or cause to be paid pursuant to this Agreement. (e) Indemnity. NRG Generating shall indemnify, defend and hold harmless each Borrower from and against (A) all liability for Income Taxes ("Tax Liabilities") of such Borrower, whether incurred as a result of the filing of a consolidated Federal Income Tax Return in which such Borrower is included or a separate state Income Tax Return on behalf of such Borrower or otherwise and (B) all claims, damages, losses, liabilities, costs or expenses (including, without limitation, reasonable legal, accounting and appraisal fees and expenses) arising out of, relating to or resulting from any Income Tax Liability. 3 (f) Tax Contests. (i) If a claim shall be made by any taxing authority which, if successful, might result in an indemnity payment under this Agreement, the relevant Borrower shall promptly notify NRG Generating of such claim (a "Tax Claim"); provided, however, that the failure to give such notice shall not affect the indemnification provided hereunder. (ii) NRG Generating shall control all proceedings and make all decisions taken in connection with such Tax Claim (including selection of counsel) and, without limiting the foregoing, may in its sole discretion pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any taxing authority with respect thereto, and may, in its sole discretion, either pay the Tax claimed and sue for a refund where applicable law permits such refund suits or contest the Tax Claim in any permissible manner. NRG Generating shall keep the relevant Borrower informed and shall consult in good faith with such Borrower prior to making decisions with regard to such proceedings. (iii) Each of NRG Generating and the Borrowers shall cooperate in contesting any Tax Claim, which cooperation shall include the retention and (upon request) the provision to the requesting party of records and information which are reasonably relevant to such Tax Claim, and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to such Tax Claim. 3. Method of Payment. Any payment required to be made pursuant to Section 2(e) hereof shall be paid in cash in immediately available funds within 10 Business Days after the affected Borrower or Agent makes written demand upon NRG Generating, together with reasonable documentation of the liability to be indemnified pursuant to Section 2(e)(A) or the expense to be indemnified pursuant to Section 2(e)((B). Any such payment shall be made directly to the appropriate taxing authorities, if such liability has not yet been paid by Borrowers, or, to the extent Borrowers have incurred an out-of-pocket expense as a result of such liability, to Agent for deposit in the Project Account. Nothing contained in this Agreement shall require either Borrower to pay or expend any sums with respect to this Agreement at any time before or after the making of a claim under this Agreement. 4. No Setoff. The payment obligations of NRG Generating hereunder shall be satisfied in all events at the times and in the amounts set forth herein without offset, abatement, withholding or reduction of any kind. 4 5. Nature Of Obligations. (a) Subrogation, etc. Notwithstanding any payment or payments made by NRG Generating hereunder or the exercise by Agent of any of the remedies provided under any Project Agreement, until all Obligations have been paid in full, NRG Generating shall not seek any reimbursement, indemnity, exoneration or contribution from either Borrower in respect of payments made by NRG Generating hereunder (other than from amounts distributed or distributable pursuant to Section 5.1(c)(x) of the Credit Agreement). Notwithstanding the foregoing, if any amount shall be paid to NRG Generating on account of such subrogation, reimbursement, indemnity, exoneration or contribution rights at any time prior to such time as all Obligations are indefeasibly paid in full (other than from distributed or distributable pursuant to Section 5.1(c)(x) of the Credit Agreement), such amount shall be held by NRG Generating in trust for the Secured Parties, segregated from other funds of NRG Generating, and shall be turned over to Agent for the benefit of the Secured Parties, in the exact form received by NRG Generating (duly endorsed to Agent for the benefit of the Secured Parties, if required), to be applied against such amounts in such order as Agent may elect. (b) Unconditional Obligations. The obligations of NRG Generating hereunder are absolute and unconditional, without regard to any circumstance of any nature whatsoever that constitutes or might constitute an equitable or legal discharge of either Borrower of any of its respective obligations under the Loan Instruments, in bankruptcy or in any other instance. NRG Generating hereby waives diligence, presentment, protest, demand for payment and notice of default or non-payment to or upon either Borrower or itself with respect to any amounts due under the Credit Agreement or any other Loan Instrument. NRG Generating shall remain obligated hereunder notwithstanding that, without any reservation of rights by or against NRG Generating and without notice to or further assent by NRG Generating, any demand for payment of any amount due pursuant to the Credit Agreement or any other Loan Instrument may be rescinded by the Secured Parties, or any of the loans or other extensions of credit thereunder continued or such amounts, or the liability of any other Person upon or for any part thereof, or any collateral security or guaranty therefor or right of offset with respect thereto, may, from time to time, in whole or part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Secured Parties, or the Credit Agreement, the Notes or any other Loan Instrument or any other document executed in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Secured Parties may deem advisable from time to time, or any collateral security or guaranty or right of offset at any time held by the Secured Parties for the payment of such amounts may be sold, exchanged, waived, surrendered or released. 5 (c) Reinstatement. The obligations of NRG Generating set forth herein shall continue to be effective or reinstated, as the case may be, if at any time and for any reason, any payment made hereunder by NRG Generating is rescinded or otherwise returned by either Borrower or the Secured Parties, all as though such payment had not been made. Without limiting the generality of the foregoing NRG Generating agrees that, to the extent that NRG Generating makes a payment or payments hereunder, which payment or payments or any part thereof are subsequently invalidated or repaid to NRG Generating, its estate, trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such payment or repayment, the obligations of NRG Generating hereunder or part thereof which has been paid, reduced or satisfied by such amount shall be reinstated and the obligations set forth herein shall be continued in full force and effect as though such payment, reduction or satisfaction had not been made or occurred. 6. REPRESENTATIONS AND WARRANTIES. NRG Generating hereby makes each and every representation and warranty made by it in Section 6 of the Guaranty to the same extent as if each such representation and warranty had been set forth in full herein, and each such representation and warranty is hereby incorporated by reference in this Section 6. 7. COVENANTS AND AGREEMENTS. NRG Generating hereby covenants and agrees that it shall faithfully observe and fulfill, and shall cause to be observed and fulfilled, each and all of the following covenants until all Obligations have been paid and performed in full; provided, that compliance with such covenants shall not be required for so long as NRG Generating maintains an investment grade rating by a nationally recognized rating agency; provided, further, that if NRG Generating subsequently fails to maintain an investment grade rating by a nationally recognized rating agency, it shall have a period of up to six months from the time of such failure to comply with such covenants: (a) Net Worth. NRG Generating shall not permit its Net Worth to be less than (i) the Minimum Net Worth on December 31, 1996; (ii) the Minimum Net Worth plus $2,000,000 on December 31, 1997; (iii) the Minimum Net Worth plus $6,000,000 on December 31, 1998; (iv) the Minimum Net Worth plus $11,000,000 on December 31, 1999; (v) the Minimum Net Worth plus $16,000,000 on December 31, 2000; (vi) the Minimum Net Worth plus $21,000,000 on December 31, 2001; and (vii) the Minimum Net Worth plus $26,000,000 on December 31 of each year thereafter. For purposes of this Section 7(a), Net Worth shall be reduced by any repayments or prepayments of the principal amount of subordinated debt owed by NRG Generating in excess of $15,000,000. 6 (b) Liquidity. NRG Generating shall not permit at any time its cash on hand (including short-term investments and other investments which are catergorized as cash under GAAP) to be less than the amount of all Income Taxes which is projected to be due and payable for the following twelve months. (c) Working Capital. NRG Generating shall not permit at any time its current assets minus current liabilities as determined in conformity with GAAP to be less than the amount of all Income Taxes which is projected to be due and payable for the following twelve months. 8. ENFORCEMENT. NRG Generating hereby agrees that Agent on behalf of the Secured Parties and/or Borrowers shall have the right to directly enforce the provisions hereof against it and NRG Generating agrees to pay all costs, including reasonable attorneys' fees, incurred by Agent with respect to any such enforcement. 9. Notices. All notices, demands, requests and other communications required or permitted hereunder shall be in writing, and shall be given and deemed to have been given in accordance with Section 8.1 of the Credit Agreement and the information set forth immediately below shall apply to NRG Generating: If to NRG Generating: NRG Generating (U.S.) Inc. 1221 Nicollet Mall Suite 700 Minneapolis, Minnesota 55403 Attention: President Telecopy: (612) 373-5312 10. Survival of Representations and Warranties. All agreements, representations and warranties made herein or made in writing by NRG Generating in connection herewith shall survive the execution and delivery of this Agreement and the performance of the obligations contained herein, and shall be deemed to be material and to have been relied upon by Agent and the Secured Parties, regardless of any investigation made by or on behalf of Agent or the Secured Parties. 11. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to 7 such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization, without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Where provisions of any law or regulation resulting in such prohibition or unenforceability may be waived they are hereby waived by NRG Generating and Agent to the full extent permitted by law so that this Agreement shall be deemed a valid, binding agreement, enforceable in accordance with its terms. 12. Amendment. This Agreement may be amended, modified or rescinded only by a writing expressly referring to this Agreement and signed by all the parties hereto. 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. In the event of any assignment or transfer by any Secured Party of any instrument evidencing all or any part of the Obligations, the holder of such instrument shall, subject to the Credit Agreement, be entitled to the benefits of this Agreement. 14. Number and Gender. Whenever used in this Agreement, the singular number shall include the plural and the plural the singular, and the use of any gender shall be applicable to all genders. 15. Headings Descriptive. The captions or headings of the several sections and subsections and the table of contents of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. 16. Governing Law; Jurisdiction; Waiver of Trial by Jury. (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of law rules thereof. (b) Jurisdiction. With respect to any legal action or proceeding brought by Agent or the Secured Parties against NRG Generating arising out of or in connection with this Agreement, NRG Generating hereby irrevocably (i) consents to the jurisdiction of any state or federal court located in the State of New York, (ii) consents to the service of process outside the territorial jurisdiction of said courts in any such action or proceeding by 8 mailing copies thereof by registered United States mail, postage prepaid, to the address specified by NRG Generating for the receipt of notices if such address is outside such territorial jurisdiction and (iii) waives any objection to the venue of the aforesaid courts. NRG Generating hereby irrevocably designates, appoints and empowers CT Corporation System (the "Process Agent", which has consented thereto) as agent to receive for and on behalf of NRG Generating service of process in the State of New York. NRG Generating agrees it will at all times continuously maintain either a registered office or an agent to receive service of process in the State of New York on behalf of itself and its properties with respect to this Agreement. (c) Waiver of Trial by Jury. WITH REGARD TO THIS AGREEMENT, EACH OF THE PARTIES HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN. 17. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 9 18. Term. This Agreement shall continue in effect until repayment in full of all Obligations. IN WITNESS WHEREOF, the parties hereto have executed this Agreement through their duly authorized representatives as of the date first written above. NRG GENERATING (NEWARK) COGENERATION INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President NRG GENERATING (PARLIN) COGENERATION INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President NRG GENERATING (U.S.) INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President CREDIT SUISSE, as Agent By: /s/ Louis Iaconetti Name: Louis D. Iaconetti Title: Associate By: /s/ Steven Dowe Name: Steven Dowe Title: Associate EX-10.8.7 22 EXHIBIT 10.8.7 ASSIGNMENT AND SECURITY AGREEMENT DATED JUNE 28, 1996 BETWEEN NRGG PARLIN AND CREDIT SUISSE. Exhibit 10.8.7 ASSIGNMENT AND SECURITY AGREEMENT by and between NRG GENERATING (PARLIN) COGENERATION INC. and CREDIT SUISSE, as Agent Dated as of June 28, 1996 TABLE OF CONTENTS Page 1. Definitions 1 2. Creation of Security Interest 2 3. Delivery of Collateral; Perfection and Use of Accounts 6 4. Representations and Warranties 6 5. Covenants and Agreements 7 6. Use of the Accounts 10 7. Debtors' Obligations upon Event of Default 10 8. Remedies; Rights Upon Event of Default 10 9. Application of Proceeds 13 10. Assignment of Permits 13 11. Security Interest Absolute 13 12. Agent Appointed Attorney-in-Fact 14 13. Agent May Perform 15 14. No Duty on Agent's Part; Limitation on Agent's Obligations 16 15. Reasonable Care 16 16. Role of Agent 17 17. Absence of Fiduciary Relation 17 18. Survival of Representations and Warranties 17 19. Notices 17 20. No Waiver; Cumulative Remedies 17 21. Severability 18 22. Exculpatory Provisions; Reliance by Agent 18 23. Amendment 19 24. Successors and Assigns 19 25. Number and Gender 19 26. Headings Descriptive 19 27. Governing Law; Jurisdiction 19 28. Counterparts 19 29. Continuing Security Interest; Termination 19 30. Payments Set Aside 20 Schedule Schedule A: Financing Statement Filings (i) ASSIGNMENT AND SECURITY AGREEMENT This ASSIGNMENT AND SECURITY AGREEMENT (this "Security Agreement"), dated as of June 28, 1996 by and between NRG GENERATING (PARLIN) COGENERATION INC., a Delaware corporation ("Debtor"), and CREDIT SUISSE, as agent ("Agent"), on behalf of and for the benefit of the Secured Parties under the Credit Agreement (as defined below). W I T N E S S E T H : WHEREAS, Debtor is the owner of a power plant located in Parlin, New Jersey; WHEREAS, Debtor has entered into the Credit Agreement, dated as of May 17, 1996, by and among (i) Debtor and NRG Generating (Newark) Cogeneration Inc., a Delaware corporation ("NRG Newark"), (ii) Credit Suisse, Greenwich Funding Corporation and each Purchasing Lender and (iii) Agent (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"), pursuant to which the Lenders are willing to provide the Loans and the Commitments to Debtor and NRG Newark on the terms and subject to the conditions set forth in the Credit Agreement; WHEREAS, it is a condition precedent to the making of the Additional Loan by the Lenders under the Credit Agreement that Debtor shall have granted the security interest contemplated by this Security Agreement to Agent for the equal and ratable benefit of the Secured Parties to secure the obligations of Debtor and NRG Newark under the Credit Agreement and the other Loan Instruments; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and in order to induce the Lenders to make the Additional Loan and to make available the Debt Service Line of Credit Facility Commitment under the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. For purposes of this Security Agreement and unless the context otherwise requires, all capitalized terms used herein which are defined in the Credit Agreement (and not otherwise defined herein) shall have their respective meanings as therein defined. For purposes of this Security Agreement, all other terms used herein and not otherwise defined herein which are defined in Article 9 of the Uniform Commercial Code (as the same may be in effect in the State of New York or any other applicable jurisdiction, the "Code"), shall have their respective meanings as therein defined. 2. Creation of Security Interest. (a) As security for the full payment or performance when due (whether at stated maturity, by acceleration or otherwise) of any and all of the Obligations (as defined below) now existing or hereafter arising, Debtor hereby grants to and creates in favor of Agent, for the equal and ratable benefit of the Secured Parties, a lien on and first priority security interest (the "Security Interest") in all right, title and interest of Debtor in, to and under the following collateral, whether now existing or hereafter acquired (the "Collateral"): (A) The following agreements: (i) the Parlin Power Purchase Agreement; (ii) the Parlin Steam Agreement; (iii) the Parlin Ground Lease; (iv) the Parlin Operations and Maintenance Agreement; (v) the Wholesale Power Purchase Agreement; (vi) the Agreement, dated as of May 1, 1996, by and among Stewart & Stevenson Operations, Inc., NRG Generating (Newark) Cogeneration Inc., Debtor, NRG Generating (U.S.) Inc. and Stewart & Stevenson Services, Inc.; (vii) the Parlin Operating Guaranty; (viii) the consent of each party (other than Debtor) to each of the Project Documents, where applicable, to the assignment thereof by either Debtor to Agent for the benefit of the Secured Parties; (ix) the Insurance Policies applicable to the Parlin Project; (x) each Parlin Permitted Contract which does not, by its terms, prohibit the assignment thereof as security in the manner contemplated herein or the assignment of which (as contemplated herein) would constitute a breach of or a default under such Parlin Permitted Contract; (xi) the Tax Indemnification Agreement; (xii) each Interest Rate Hedge Agreement; and 2 (xiii) any other agreement, commitment or understanding executed by (or on behalf of) Debtor in connection with the Parlin Project or any of the Parlin Project Documents (other than Parlin Permitted Contracts not assigned pursuant to clause (x) above); as each such document may be amended, supplemented or otherwise modified from time to time (said documents, as amended, supplemented or modified, being individually referred to herein as an "Assigned Agreement" and collectively referred to herein as the "Assigned Agreements"), including, without limitation, (1) all rights of Debtor to receive moneys due and to become due under or pursuant to the Assigned Agreements, (2) all rights of Debtor to receive proceeds of any performance or payment bond, insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (3) all claims of Debtor for damages arising out of or for breach of or default under the Assigned Agreements and (4) all rights of Debtor to take any action to terminate, amend, supplement, modify or waive performance of the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder; provided, however, unless an Event of Default shall have occurred and be continuing, Debtor may exercise all rights, interests and benefits under the Assigned Agreements to which it is a party in any lawful manner not inconsistent with this Security Agreement, the Credit Agreement or any of the other Loan Instruments; (B) (i) the Accounts (and any sub-accounts opened within any Account) and each cash collateral account or other bank account, if any, established by Agent (and designated by Agent as an Account) on behalf of Debtor in connection with the Loan Instruments, all sums of money, from any source whatsoever, now or hereafter transferred to and comprising the Accounts, including, without limitation, all credit balances therein, any and all funds, cash, investments, instruments and securities at any time on deposit in the Accounts, and any and all interest and dividends or other income derived from any such monies, credit balances, funds, cash, investments, instruments and securities, and (ii) all statements, certificates, passbooks and instruments representing the Accounts and all other property from time to time received, receivable or otherwise distributed in respect of or in exchange for the Accounts; (C) All automobiles, trucks, boats and other rolling stock or moveable personal property ("Rolling Stock"), including Rolling Stock for which the title thereto is evidenced by a certificate of title issued by the United States or a state which permits or requires a lien thereon to be evidenced upon such certificate, in which Debtor now or at any time in the future may have an interest; 3 (D) All authorizations, consents, approvals, waivers, exemptions, variances, registrations, leases, tariffs, certifications, franchises, permissions, permits and licenses now or hereafter of, and filings and declarations now or hereafter with, and rulings now or hereafter by, any Governmental Authority (including, without limitation, the QF Certificate), including those with respect to the reconstruction, repair, alteration, addition, improvement, replacement, use, operation or management of the Parlin Project (including, without limitation, all Government Approvals now or hereafter held in the name or for the benefit of Debtor) (collectively, the "Permits"); provided that any of the Permits which by their terms or by operation of law would become void, voidable, terminable or revocable or would constitute a breach or default thereunder if pledged or assigned hereunder or if a security interest therein were granted hereunder are expressly excepted and excluded from the lien and terms of this Security Agreement to the extent necessary to avoid such voidness, violability, terminability or revocability; (E) All equipment, machinery, apparatus, installations, facilities and other tangible property (the "Equipment") in which Debtor has an interest in on the date hereof or which is hereafter acquired by Debtor; (F) All accounts (other than the Accounts) now or hereafter owned by Debtor, including, without limitation, any and all of Debtor's currently existing and future accounts receivable and contract rights and all agreements, rights, interests, inventory, goods, chattel paper, documents, instruments, general intangibles, fixtures, trade fixtures, consumer goods, money and other assets owned by Debtor on the date hereof or hereafter arising or acquired, including, without limitation, the improvements and equipment associated with the Parlin Project, and designs, plans and specifications relating to the Parlin Project owned by Debtor on the date hereof or hereafter acquired, all acid rain allowances under the Clean Air Act Amendments of 1990 and any implementing state Laws and any right, title or interest of Debtor under any insurance, indemnity, warranty or guaranty in respect of the Parlin Project or of any of the foregoing and any rents, revenues, incomes and profits in respect of the Parlin Project; and (G) To the extent not included in the foregoing, all Permitted Investments of Debtor and proceeds, products and accessions of and to any and all of the foregoing, including, without limitation, "proceeds," as defined in Section 9-306(1) of the Code, including, without limitation, whatever is received upon any collection, exchange, sale or other disposition of any of the Collateral, and any property into which any of the Collateral is converted, whether cash 4 or non-cash proceeds, and any and all other amounts paid or payable under or in connection with any of the Collateral. It is the intention of the parties that the foregoing description of the Collateral be sufficient, together with the description of the Mortgaged Property (as defined in the Parlin Mortgage), to enable Agent on behalf of the Secured Parties to take possession of, or foreclose upon, all of the right, title and interest of Debtor in and to the Parlin Project and any and all real property and personal property, tangible and intangible, used or usable in connection therewith, and to enable Agent or its designee to operate, sell or otherwise dispose of the entire interest of Debtor in and to the Parlin Project or any part thereof, in each case upon the occurrence and during the continuance of an Event of Default; provided, however, that all of the Collateral is hereby assigned to Agent solely as security, and Agent shall have no duty, liability or obligation whatsoever with respect to any of the Collateral, unless Agent so elects in writing consistent with its rights under this Security Agreement. (b) This Security Agreement secures, in accordance with the provisions hereof, the following obligations, now existing or hereafter arising (collectively, the "Obligations"): (i) payment and performance of each and every obligation, indebtedness, covenant and agreement of Debtor now or hereafter existing contained in the Credit Agreement and any of the other Loan Instruments, including, without limitation, any obligation to any of the Secured Parties pursuant to any Interest Rate Hedge Agreement with a Secured Party, in each case whether for principal, interest, fees, expenses or otherwise pursuant thereto, and any amendments or supplements thereto, extensions or renewals thereof or replacements therefor; (ii) payment of all sums advanced in accordance herewith or in accordance with the other Parlin Security Documents by or on behalf of the Secured Parties (or any of them) to protect any of the collateral purported to be covered hereby or thereby, with interest thereon at a rate per annum equal to the Default Interest Rate from the date of demand therefor; (iii) performance of every obligation, indebtedness, covenant and agreement of Debtor contained in any agreement now or hereafter executed by Debtor which recites that the obligations thereunder are secured by this Security Agreement or any of the other Parlin Security Documents; and (iv) payment of all sums, with interest thereon at a rate per annum equal to the Default Interest Rate that may become due and payable to or for the benefit of the Secured 5 Parties (or any of them) pursuant to the terms of this Security Agreement or any of the other Parlin Security Documents; in each case whether direct or indirect, joint or several, absolute or contingent, liquidated or unliquidated, now or hereafter existing, renewed or restructured, reinstated, created or incurred, and including, without limitation, all indebtedness of Debtor under any instrument now or hereafter evidencing or securing any of the foregoing. 3. Delivery of Collateral; Perfection and Use of Accounts. (a) Delivery of Collateral. All sums of money, funds and cash, from time to time constituting the Collateral together with all certificates, instruments, investments and securities representing or evidencing such Collateral, shall be delivered to, dealt with and held by Agent pursuant to the terms of the Credit Agreement and the terms hereof. All such certificates, investments, securities and instruments shall be in suitable form for transfer by delivery or otherwise, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Agent. (b) Perfection of Accounts. For the purpose of perfecting the Security Interest of the Secured Parties in and to the Accounts and all funds, cash, investments, instruments and securities at any time on deposit in the Accounts, the Agent shall be deemed to be holding the Accounts and all such funds, cash, investments, instruments and securities as agent for Agent and the Secured Parties (other than the Local Bank Accounts (if any) and all funds, cash, investments, instruments and securities therein, which shall be held by the Local Bank as agent for Agent and the Secured Parties). 4. Representations and Warranties. Debtor hereby represents and warrants as follows: (a) Debtor is the legal and beneficial owner of the Collateral in existence on the date hereof and will be the only owners of the Collateral hereafter acquired, free and clear of any and all Liens or claims of others except for Permitted Liens, and Debtor has full power and authority to grant the liens and security interests in and to the Collateral hereunder. Except with respect to the Secured Parties and with respect to National Westminster Bank PLC, New York Branch and otherwise as required or permitted under this Security Agreement, no security agreement, financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office which could reasonably be expected to result in a Material Adverse Effect. 6 (b) Chief Executive Office and Principal Place of Business. Debtor's chief executive office and principal place of business and the place where Debtor's records concerning the Collateral and the originals of the Assigned Agreements to which it is a party are kept is: 1221 Nicollet Mall Suite 700 Minneapolis, Minnesota 55403 Telecopy: (612) 373-5312 (c) Perfection. Financing Statements or other appropriate instruments have been filed pursuant to the Code in the public offices set forth in Schedule A as may be necessary to perfect any Security Interest granted or purported to be granted hereby to the extent any such Security Interest may be perfected by the filing of a Financing Statement. All other action requested by Agent which is necessary or desirable to protect and perfect the Security Interest in each item of the Collateral has been duly taken. Subject to the requirements contained in the Code with respect to the filing of continuation statements, this Security Agreement constitutes a valid and continuing Lien on and perfected Security Interest in the Collateral in favor of the Agent for the equal and ratable benefit of the Secured Parties, prior to all other Liens (other than Permitted Liens), and is enforceable as such against creditors of and purchasers from Debtor and against any owner, lessee or mortgagee of the real property where any of the Collateral is located or to which any of the Collateral relates and against any purchaser of such real property and any present or future creditor obtaining a Lien on such real property. 5. Covenants and Agreements. Debtor hereby covenants and agrees that it shall faithfully observe and fulfill, and shall cause to be observed and fulfilled, each and all of the following covenants until all Obligations to be paid or performed by Debtor under the Loan Instruments have been paid and performed in full: (a) Notice of Adverse Claims. Debtor shall, promptly and in no event later than five days after Debtor becomes aware of any information or has knowledge of any adverse claim against the Collateral which could have a Material Adverse Effect, deliver to Agent and each of the Lenders notice of each such claim. (b) Further Assurances. Debtor shall, from time to time at Debtor's expense, and upon request by Agent on behalf of the Secured Parties, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or advisable, or that Agent determines may be necessary, in order to perfect and protect any Security Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to the Collateral. Without limiting the generality of the foregoing, Debtor shall (i) if any Collateral shall be evidenced by a 7 promissory note or other instrument, deliver and pledge to Agent hereunder such note or instrument duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and reasonable substance satisfactory to Agent and (ii) execute and file such financing and continuation statements, or amendments thereto, and such other instruments, endorsements and notices, as may be necessary, or as Agent may request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby, including, without limitation, consents, assignments, notices and other documentation reasonably requested by Agent. (c) Prohibition Against Transfer of Collateral. Debtor shall not sell, transfer, lease or otherwise dispose of any of the Equipment, or attempt, offer or contract to do so except as permitted pursuant to the Credit Agreement. (d) Fees and Expenses. Debtor shall upon demand pay to Agent the amount of any and all out-of-pocket costs and expenses (including, without limitation, the fees and expenses of its counsel and of any experts, any special consultants engaged, and any local counsel who might be retained by Agent, in connection with the transactions contemplated hereby) which Agent may incur in connection with (i) the sale of, collection from, custody or preservation of or other realization upon, any of the Collateral pursuant to the exercise or enforcement of any of the rights of Agent hereunder or (ii) the failure by Debtor to perform or observe any of the provisions hereof, together with interest thereon at the Default Interest Rate. Any amounts payable by Debtor pursuant to this Section 5(e) shall be payable on demand and shall constitute Obligations. (e) Filing Fees, Taxes, etc. Debtor shall pay all filing, registration and recording fees or re-filing, re-registration and re- recording fees, and all federal, state, county and municipal stamp taxes and other similar taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Security Agreement, any agreement supplemental hereto and any instruments of further assurance. (f) Maintenance of Records; Inspection. At all times Debtor shall keep and maintain at its own cost and expense records of the Collateral in accordance with prudent industry practice as determined in the reasonable judgment of Agent. Such records will be kept at Debtor's principal place of business set forth in Section 4(c) or at the Parlin Project. Debtor shall notify Agent immediately in writing of any change in the location of its chief executive office, principal place of business or the office where such records and the originals of the Assigned Agreements to which it is a party are kept, or the establishment by Debtor of any other office or place of business, or the adoption or change of its name or any trade name or fictitious business name and, upon written request of Agent, shall execute any additional documents or certificates necessary to reflect the adoption of or change in its name or any trade name or fictitious business name. Debtor shall 8 furnish to Agent statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Agent may reasonably request, all in reasonable detail. Subject to Section 5.10 of the Credit Agreement, Agent and the Secured Parties may inspect the Collateral. (g) Limitation on Liens on the Collateral. Debtor shall not create, incur or permit to exist, shall defend the Collateral against, and shall take such other action as is necessary to remove, any Lien or claim on or to the Collateral, other than Permitted Liens, and shall defend the right, title and interest of Agent in and to any of the Collateral against the claims and demands of all Persons whomsoever. (h) Additional Collateral. Debtor shall notify Agent promptly and in no event later than five Business Days after Debtor becomes aware that any of the Equipment, or any items that are to become Equipment (other than Rolling Stock), are to be stored for any length of time (other than temporary storage incident to transportation to the Parlin Project or repair or maintenance of such Collateral) in any location other than the Parlin Project. The notice shall specify, in such detail as is reasonably required by Agent (i) the items that are to be stored, (ii) the location at which such items are to be stored and the name and addresses of the owner and operator of the storage facility, (iii) the approximate length of time that such items are to be stored at that location and (iv) the name of the Person or entity who is the owner of such items. If required by Agent, Debtor shall execute additional financing statements and other related documents, all in form reasonably satisfactory to Agent, covering the items of Equipment that are to be stored at such other location. If for any reason Agent, on behalf and for the benefit of the Secured Parties, cannot perfect a first priority security interest in the items stored or to be stored at such other location, then upon instructions from Agent, Debtor shall promptly transport such items to the Parlin Project or to another location with respect to which Agent will be able to so perfect its security interest upon the request of Agent. Upon instructions from Agent, Debtor shall obtain such additional insurance on the Collateral stored at any location other than the Parlin Project as Agent deems reasonably necessary consistent with the requirements of the Credit Agreement to protect the Secured Parties' interests in the Collateral. (i) Indemnification. Debtor shall defend, indemnify and hold harmless Agent and each of the Secured Parties and their officers, directors and employees, from and against any and all costs, expenses, disbursements, liabilities, obligations, losses, damages, injunctions, judgments, suits, actions, causes of action, fines, penalties, claims and demands, of every kind or nature (including, without limitation, attorney's fees and expenses) (herein collectively called, the "Indemnified Liabilities") which are occasioned by or result from (i) any failure by Debtor or any party thereto to perform any of the terms, agreements, or covenants 9 to be performed by it under this Security Agreement or under any Assigned Agreement and (without duplication) (ii) this Security Agreement or any Assigned Agreement other than Indemnified Liabilities resulting from such Secured Party's gross negligence or willful misconduct. (j) Consents to Assignment. Debtor has obtained and provided to Agent executed copies of all consents to this Security Agreement from each of the parties (other than Debtor) to the Assigned Agreements to which Debtor is a party requested by Agent (the "Consenting Parties"), and agrees to obtain such consents from each future or successor Consenting Party requested by Agent, which consents shall be in form and substance satisfactory to Agent. 6. Use of the Accounts. Agent shall have exclusive possession of and sole dominion and control over the Accounts (with respect to any Local Bank Account, such possession, dominion and control shall be exercised through the Local Bank, as agent for Agent and the Secured Parties); provided, however, if no Event of Default shall have occurred and be continuing, Agent shall direct the disbursement of, and permit the disbursement by any Local Bank of, funds from each of the Accounts in accordance with the terms providing for the use of each of the Accounts set forth in the Credit Agreement or any other Loan Instrument. Upon the occurrence and during the continuance of an Event of Default, Agent shall have no further obligation to disburse or direct or permit the disbursement by any Local Bank of funds from the Accounts and any Local Bank Account. 7. Debtor's Obligations upon Event of Default. If an Event of Default shall occur and be continuing (a) all payments received by Debtor under or in connection with any of the Collateral shall be held by Debtor in trust for Agent, shall be segregated from other funds of Debtor and shall, forthwith upon receipt by Debtor, be turned over to Agent or its designee in the same form as received by Debtor (duly endorsed by Debtor to Agent, if requested), and (b) any and all such payments so received by Agent or its designee (whether from Debtor or otherwise) may, in the sole discretion of Agent or its designee, be held by Agent or such designee as collateral security for, and/or then or at any time thereafter be applied, subject only to the relevant provisions of the Credit Agreement or as otherwise may be required by applicable law, in whole or in part by Agent or its designee in the manner specified in Section 9 hereof, unless otherwise agreed to by the Majority Lenders in a writing delivered to Agent. 8. Remedies; Rights Upon Event of Default. Upon the occurrence and during the continuance of an Event of Default Agent, for the equal and ratable benefit of and on behalf of the Secured Parties, may do one or more of the following: (a) Declare, without presentment, demand, protest or notice of any kind, all of which Debtor hereby expressly 10 waives, the entire amount of Obligations to be immediately due and payable, whereupon all of such Obligations declared due and payable shall be and become immediately due and payable; provided, however, if an Event of Default occurs pursuant to Section 6.1(h), (i) or (t) of the Credit Agreement, the acceleration provided for in this Section 8(a) shall be deemed to have been made upon the occurrence of such Event of Default without declaration or any other action by Agent; (b) Take all cash held by it and by any Local Bank as agent for Agent and the Secured Parties (including any resulting from the liquidation of Permitted Investments) as Collateral, including any credit balances in the Accounts, and all cash proceeds received or receivable by it and by any Local Bank as agent for Agent and the Secured Parties in respect of the Collateral and, at the Majority Lenders' option, use such cash for such purposes as Agent and the Majority Lenders deem appropriate and in the interest of either Project and/or apply the same, in whole or in part, for the equal and ratable benefit of the Secured Parties in satisfaction of all or any part of the Obligations (whether or not due and payable) in the manner specified in Section 9 hereof, unless otherwise agreed to by the Majority Lenders in a writing delivered to Agent; (c) Upon notice to Debtor, which notice need not be in writing, make such payments and do such acts as Agent may deem necessary to protect, perfect or continue the perfection of the Security Interest, including, without limitation, paying, purchasing, contesting or compromising any Lien which is, or purports to be, prior to or superior to the Security Interest granted hereunder, and commencing, appearing or otherwise participating in or controlling any action or proceeding purporting to affect the Security Interest in or ownership of the Collateral; (d) Foreclose on the Collateral as herein provided or in any manner permitted by law and exercise any and all of the rights and remedies conferred upon the Secured Parties by any of the Parlin Project Agreements either concurrently or in such order as Agent may determine without affecting the rights or remedies to which the Secured Parties may be entitled under the Credit Agreement or any other Loan Instrument. Debtor hereby waives, to the extent permitted by applicable law, notice and judicial hearing in connection with Agent's taking possession or collection, recovery, receipt, appropriation, repossession, retention, set-off, sale, leasing, conveyance, assignment, transfer or other disposition of or realization upon any or all of the Collateral, including, without limitation, any and all prior notice and hearing for any prejudgment remedy or remedies and any such right which Debtor would otherwise have under the constitution or any statute or other law of the United States of America or of any state; 11 (e) Require Debtor to, and Debtor hereby agrees that it shall, at its expense and upon request of Agent, forthwith assemble as directed by Agent such part of the Collateral as may be reasonably assembled and make it available to Agent at a place to be designated by Agent; (f) Without notice or demand or legal process, enter upon any premises of Debtor and take possession of the Collateral; (g) Without notice, except as specified below, sell the Collateral, or any part thereof, in one or more parcels at public or private sale, at any of Agent's offices or elsewhere, at such time or times, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as Agent may deem commercially reasonable. Debtor agrees that, to the extent notice of sale shall be required by law, at least 10 days' notice to Debtor of the time and the place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. At any sale of the Collateral, if permitted by law, Agent may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase of the Collateral or any portion thereof for the account of Agent on behalf of the Secured Parties. Agent shall not be obligated to make any sale of the Collateral regardless of notice of sale having been given. Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Agent shall incur no liability as a result of the manner of sale of the Collateral, or any part thereof, at any private sale conducted in a commercially reasonable manner. Debtor hereby waives, to the extent permitted by applicable law, any claims against Agent arising by reason of the fact that the price at which the Collateral, or any part thereof, may have been sold at a private sale was less than the price which might have been obtained at public sale or was less than the aggregate amount of the Obligations, even if Agent accepts the first offer received which Agent in good faith deems to be commercially reasonable under the circumstances and does not offer the Collateral to more than one offeree. To the full extent permitted by law, Debtor shall have the burden of proving that any such sale of the Collateral was conducted in a commercially unreasonable manner. To the extent permitted by law, Debtor hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any law now existing or hereafter enacted. Debtor authorizes Agent, at any time and from time to time, to execute, in connection with a sale of the Collateral pursuant to the provisions of this Security Agreement, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and (h) Exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise 12 available to it, all the rights and remedies of a secured party after default under the Code. 9. Application of Proceeds. The net proceeds of any foreclosure, collection, recovery, receipt, appropriation, realization or sale of the Collateral shall be applied in the following order: (a) To the repayment of the costs and expenses of retaking, holding and preparing for the sale and the selling of the Collateral (including, without limitation, reasonable attorneys' fees and expenses and court costs and those amounts payable to Agent pursuant to Section 5(f)) and the discharge of all assessments, encumbrances, charges or liens, if any, on the Collateral prior to the lien hereof; (b) To the payment in full of the Obligations in accordance with the priority of application specified in Section 2.10(c) of the Credit Agreement; and (c) If all Obligations have been indefeasibly paid, satisfied and discharged in full, any surplus then remaining shall be paid to Debtors, subject, however, to the rights under applicable law of the holders of any then existing liens on the Collateral of which Agent has actual notice (without investigation). 10. Assignment of Permits. Debtor shall, upon the occurrence and during the continuance of an Event of Default at the request of Agent, contemporaneously with and at any other time in connection with any foreclosure by Agent on any part of the Parlin Project covered by the Parlin Mortgage assign, transfer or otherwise furnish to Agent or to any transferee of the interest of Agent (to the extent so assignable or transferable), all of Debtor's rights and interest in, to and under all Governmental Approvals, including, without limitation, all offsets, allowances and similar rights issued under or in connection with Governmental Requirements (including, without limitation, with respect to Environmental Requirements), which are required to permit the Parlin Project to be operated in accordance with all Governmental Requirements. Upon the request of Agent upon the occurrence and during the continuance of an Event of Default following foreclosure by Agent on the Parlin Project, Debtor agrees to use its diligent efforts to have renewed or extended in the name of Agent (or any other Person operating the Parlin Project) or otherwise to obtain for Agent (or any such other Person) the benefits of all of the Governmental Approvals and other rights referred to in the immediately preceding sentence to the extent that such Governmental Approvals and other rights shall not be assignable or transferable. 11. Security Interest Absolute. All the rights of Agent and the Secured Parties hereunder and the Security Interest and all 13 obligations of Debtor hereunder shall be absolute and unconditional irrespective of: (i) any lack of validity or enforceability of any of the Project Agreements or any of the Collateral or any other agreement or instrument relating thereto; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any Project Agreement or any of the Collateral or any other agreement or instrument related thereto; (iii) any exchange or release of any Collateral or any other collateral, or the non-perfection of any of the Security Interest, or any release or amendment or waiver of or consent to or departure from any guaranty, for all or any of the Obligations; or (iv) to the full extent permitted by law, any other circumstance that might otherwise constitute a defense available to, or a discharge of, Debtor or any third party pledgor other than payment and performance in full of the Obligations. 12. Agent Appointed Attorney-in-Fact. (a) Powers. Debtor hereby irrevocably constitutes and appoints Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact (which appointment as attorney-in-fact shall be coupled with an interest), with full authority in the place and stead of Debtor and in the name of Debtor or otherwise, from time to time upon the occurrence and during the continuance of an Event of Default in Agent's discretion, to take any action and to execute any and all documents and instruments which Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, without notice to Debtor, including, without limitation: (i) to receive, endorse and collect all instruments made payable to Debtor representing any dividends, interest payments or other distributions constituting Collateral or any part thereof and to give full discharge for the same and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Agent for the purpose of collecting any and all of such dividends, payments or other distributions; (ii) to enforce any provision of any Assigned Agreement; (iii) to pay or discharge taxes and liens levied or placed on the Collateral; and 14 (iv) (A) to direct any party liable for any payment under or in respect of or arising out of any of the Collateral to make payment of any and all moneys due or to become due thereunder or with respect thereto directly to Agent or as Agent shall direct, (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) to commence and prosecute any suits, action or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral, (D) to defend any suit, action or proceeding brought against Debtor with respect to any Collateral, (E) to settle, compromise or adjust any suit, action or proceeding described in clauses (C) and (D) above and, in connection therewith, to give such discharges or releases as Agent acting in good faith may deem appropriate, (F) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Agent were the absolute owner thereof for all purposes, and (G) to do, at Agent's option and at Debtor's expense, at any time, or from time to time, all acts and things which Agent deems necessary to protect, preserve or realize upon the Collateral and the Security Interest granted herein and to effectuate the intent of this Security Agreement, all as fully and effectively as Debtor might do. (b) Other Powers. Debtor further authorizes Agent, at any time and from time to time to (i) to execute, in connection with any sale provided for hereunder, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral, (ii) communicate in its own name with any party to any agreement or instrument included in the Collateral, at any time, with regard to any matter relating to such agreement or instrument and (iii) to the full extent permitted by applicable law, to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of Debtor. 13. Agent May Perform. Upon the occurrence and during the continuance of an Event of Default, Agent, without releasing Debtor from any obligation, covenant or condition hereof, may itself make any payment or perform, or cause the performance of, any such obligation, covenant, condition or agreement or any other action in such manner and to such extent as Agent may deem necessary to protect, perfect or continue the perfection of the Security Interest. Any costs or expenses incurred by Agent in connection with the foregoing shall be governed by the Loan Instruments, constitute a part of the Debt secured by the Parlin Security Documents, shall bear interest at a rate per annum equal to the Default Interest Rate and be payable by Debtor upon demand by Agent. 15 14. No Duty on Agent's Part; Limitation on Agent's Obligations. (a) No Duty on Agent's Part. The powers conferred on Agent hereunder are solely to protect Agent's and the other Secured Parties' interests in the Collateral and shall not impose any duty upon Agent to exercise any such powers. Agent shall be accountable only for amounts that it receives as a result of the exercise of such powers. (b) Limitations on Obligations. Anything herein to the contrary notwithstanding, Debtor shall remain liable under the Assigned Agreements and any other agreements to which it is a party included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Security Agreement had not been executed. The exercise by Agent of any of the rights or remedies hereunder shall not release Debtor from any of its duties or obligations under the Assigned Agreements or any other Project Agreement to which it is a party. All of the Collateral is hereby assigned to Agent solely as security, and Agent shall have no duty, liability or obligation whatsoever with respect to any of the Collateral, unless Agent so elects in writing consistent with its rights under this Security Agreement. 15. Reasonable Care. Agent shall exercise the same degree of care hereunder as it exercises in connection with similar transactions for its own account. Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which Agent accords or would accord collateral held by Agent in similar transactions for its own account; provided, however, in respect of any Collateral constituting "instruments" or "chattel paper" under the Code, Agent shall have no duty to preserve any rights therein against prior parties. Without limiting the generality of the foregoing and except as otherwise provided by applicable law, Agent shall not be required to marshall any collateral, including, without limitation, the Collateral subject to the Security Interest created hereby and any guaranties of the Obligations, or to resort to any item of Collateral or guaranties in any particular order; and all of Agent's rights hereunder and in respect of such Collateral and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the extent that Debtor lawfully may, Debtor hereby (a) agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of Agent's rights under this Security Agreement or under any other instrument evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or guaranteed and (b) irrevocably waives the benefits of all Laws and any and all rights to equity of redemption or other rights of redemption that it may have in equity or at law with respect to the Collateral. 16 16. Role of Agent. The rights, duties, liabilities and immunities of Agent and its appointment and replacement hereunder shall be governed by Article 7 of the Credit Agreement. 17. Absence of Fiduciary Relation. Agent undertakes to perform or to observe only such of its agreements and obligations as are specifically set forth in this Security Agreement or any other Loan Instrument, and no implied agreements, covenants or obligations with respect to Debtor, any Affiliate of Debtor or any other party to any of the Project Agreements shall be read into this Security Agreement against Agent or any of the Secured Parties. Neither Agent nor any of the Secured Parties in its and their capacity as such is a fiduciary of and shall not owe or be deemed to owe any fiduciary duty to Debtor, any Affiliate of Debtor or any other party to any of the Project Agreements, except as otherwise specifically required by applicable law. 18. Survival of Representations and Warranties. All agreements, representations and warranties made herein or incorporated by reference herein shall survive the execution and delivery of this Security Agreement and the other Loan Instruments and repayment of the Obligations, and shall be deemed to be material and to have been relied upon by Agent and the Secured Parties, regardless of any investigation made by or on behalf of Agent or the Secured Parties. 19. Notices. All notices, demands, requests and other communications required or permitted hereunder shall be in writing and shall be given and deemed to have been given in accordance with Section 8.1 of the Credit Agreement. 20. No Waiver; Cumulative Remedies. By exercising or failing to exercise any of its rights, options or elections hereunder (without also expressly waiving the same in writing), Agent, on behalf of the Secured Parties, shall not be deemed to have waived any breach or default on the part of Debtor or to have released Debtor from any of its obligations secured hereby. No failure on the part of Agent to exercise, and no delay in exercising (without also expressly waiving the same in writing) any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. Agent, acting on behalf of the Secured Parties, shall have all of the rights and remedies granted under the Credit Agreement or any other Loan Instrument, and available at law or in equity, and these same rights and remedies may be pursued separately, successively or concurrently against Debtor or any Collateral, at the discretion of Agent with the consent of the Majority Lenders. The application of the Collateral to satisfy the Obligations pursuant to the terms hereof shall not operate to 17 release Debtor from the Obligations until payment in full of any deficiency has been made in cash. 21. Severability. Any provision of this Security Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization, without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Where provisions of any law or regulation resulting in such prohibition or unenforceability may be waived they are hereby waived by Debtor and Agent to the full extent permitted by law so that this Security Agreement shall be deemed a valid, binding agreement, and the Security Interest created hereby shall constitute a continuing first lien on and first perfected security interest in the Collateral, in each case enforceable in accordance with its terms. 22. Exculpatory Provisions; Reliance By Agent. (a) Exculpatory Provisions. Neither Agent nor any Secured Party, nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be liable to either Debtor for any action taken or omitted to be taken by it or them under or in connection with this Security Agreement or any other Project Agreement, or responsible in any manner to any Person for any recitals, statements, representations or warranties made by Debtor or any officer thereof contained in this Security Agreement or any other Project Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by Agent or any Secured Party under or in connection with, this Security Agreement or any other Project Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Security Agreement or any other Project Agreement or for any failure of Debtor to perform any of the Obligations. Neither Agent nor any Secured Party shall be under any obligation to any Person to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Security Agreement or any other Project Agreement, or to inspect the properties or records of Debtor. (b) Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Debtor), independent accountants and other experts selected by Agent. Agent shall have no obligation to any Person to act or refrain from acting or exercising any of its rights under this Security Agreement. 18 23. Amendment. This Security Agreement may be amended, modified or rescinded only by a writing expressly referring to this Security Agreement and signed by all the parties hereto. 24. Successors and Assigns. This Security Agreement shall be binding upon and inure to the benefit of Debtor and Agent for the benefit of the Secured Parties and their respective successors and permitted assigns. In the event of any assignment or transfer by any Secured Party of any instrument evidencing all or any part of the Obligations, the holder of such instrument shall, subject to the Credit Agreement, be entitled to the benefits of this Security Agreement. 25. Number and Gender. Whenever used in this Security Agreement, the singular number shall include the plural and the plural the singular, and the use of any gender shall be applicable to all genders. 26. Headings Descriptive. The captions or headings of the several sections and subsections and the table of contents of this Security Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Security Agreement. 27. Governing Law; Jurisdiction. (a) Governing Law. This Security Agreement shall be governed by and construed in accordance with the internal laws of the State of New York as to interpretation, enforcement, validity, construction, effect and in all other respects, but excluding perfection, which shall be governed by the laws of the jurisdiction relevant thereto. (b) Jurisdiction. With respect to any legal action or proceeding brought by Agent or the Secured Parties against Debtor arising out of or in connection with this Security Agreement, Debtor hereby irrevocably (i) consents to the jurisdiction of any state or federal court located in the State of New York, (ii) consents to the service of process outside the territorial jurisdiction of said courts in any such action or proceeding by mailing copies thereof by registered United States mail, postage prepaid, to the address specified by Debtor for the receipt of notices if such address is outside such territorial jurisdiction and (iii) waives any objection to the venue of the aforesaid courts. 28. Counterparts. This Security Agreement may be executed in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 29. Continuing Security Interest; Termination. This Security Agreement shall create a continuing assignment, pledge and first priority security interest in the Collateral and shall remain 19 in full force and effect for the benefit of Agent and the Secured Parties until all Obligations to be paid or performed by Debtor under the Loan Instruments have been paid and performed in full. Upon the happening of such event, the Security Interest granted hereby shall terminate. Upon such termination, Agent shall, upon the request and at the expense of Debtor, execute and deliver to Debtor such documents as Debtor shall reasonably request to evidence such termination or expiration. 30. Payments Set Aside. To the extent that Debtor or any other Person on behalf of Debtor makes a payment or payments to Agent and/or any Secured Party, or Agent and/or any Secured Party enforce their security interests or exercise their rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the Obligations or any part thereof originally intended to be satisfied, and this Security Agreement and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as 20 if such payment had not been made or such enforcement or set-off had not occurred. IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed as of the day and year first written above. NRG GENERATING (PARLIN) COGENERATION INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President CREDIT SUISSE, as Agent By: /s/ Louis Iaconetti Name: Louis D. Iaconetti Title: Associate By: /s/ Steven Dowe Name: Steven Dowe Title: Associate Schedule A to Assignment and Security Agreement FINANCING STATEMENT FILINGS 1. Secretary of State, Delaware 2. Secretary of State, Minnesota 3. County Clerk, Hennepin County, Minnesota 4. Secretary of State, New Jersey 5. County Clerk, Middlesex County, New Jersey 6. Secretary of State, New York 7. County Clerk, New York County, New York 8. Secretary of the Commonwealth, Pennsylvania 9. Prothanatary, Philadelphia County, Pennsylvania EX-10.8.10 23 EXHIBIT 10.8.10 INTEREST RATE SWAP AGREEMENT DATED AUGUST 2, 1996 BETWEEN NRGG NEWARK, NRGG PARLIN AND CREDIT SUISSE. Exhibit 10.8.10 Via Facsimile August 2, 1996 Attn: Louis Iaconetti Telephone No.: 212/238-5387 Facsimile No.: 212/238-5461 Subject: Swap Transaction between NRG Generating (Newark) Cogeneration Inc. ("Newark") and NRG Generating (Parlin) Cogeneration Inc. ("Parlin") and Credit Suisse, New York Branch ("Credit Suisse") Dear Sirs: The purpose of this telecopy agreement (this "Confirmation") is to confirm the terms and conditions of the Transaction entered into between us on the Trade Date specified below (the "Transaction"). This confirmation constitutes a "Confirmation" as referred to in the Agreement specified below. 1. This confirmation supplements, forms part of, and is subject to, the 1992 ISDA Master Agreement dated as of August 2, 1996 as amended and supplemented from time to time (the "Agreement"), between you and us. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. Party A and Party B each represents to the other that it has entered into this Transaction in reliance upon such tax, accounting, regulatory, legal and financial advice as it deems necessary and not upon any view expressed by the other except as expressly set forth in the Agreement. Party A and Party B expressly acknowledge that, in reliance upon the other party's entering into the Transaction evidenced by this Confirmation, each party has made (or refrained from making) other material actions. In this Confirmation, "Party A" means Credit Suisse and "Party B" means Newark and Parlin. 2. The terms of the particular Swap Transaction to which this Confirmation relates are as follows: Notional Amount: USD 77,500,000, subject to amortization as set out in Appendix A attached hereto Trade Date: 2 August 1996 Effective Date: 6 August 1996 Termination Date: 23 May 2011, subject to adjustment in accordance with the Modified Following Business Day Convention Fixed Amount: Fixed Rate Payer Party B Fixed Rate Payer Payment Dates: The last day of March, June, September, and December, commencing on the last day of September 1996 and ending on the last day of March 2011, inclusive, thereafter on 23 May 2011, subject to adjustment in accordance with the Modified Following Business Day Convention. Fixed Rate: 6.90% Fixed Rate Day Count Fraction: Actual 360 Compounding: Inapplicable Floating Amounts: Floating Rate Payer: Party A Floating Rate Payer Payment Date: The last day of March, June, September, and December, commencing on the last day of September 1996 and ending on the last day of March 2011, inclusive, thereafter on 23 May 2011, subject to adjustment in accordance with the Modified Following Business Day Convention. Floating Rate for initial Calculation Period: 5,49141% Floating Rate Option: USD-LIBOR-BBA: provided. (i) in respect of the first Calculation Period the Designated Maturity shall be 2 months; (ii) the rate for the final Calculation Period shall be determined by Linear Interpolation of the rate for 1 month and the rate for 2 month. Designated Maturity: 3 months (except as noted above) Spread: None Floating Rate Day Count Fraction: Actual/360 Reset Dates: The first day of each Calculation Period Compounding: Inapplicable Business Days: New York Calculation Agent: Party A 3. Account Details: Payments to Party A Credit Suisse Loan Department One Liberty Plaza 165 Broadway New York, New York 10006 Acct No. 904996-02 (Loan Department Clearing Account) Ref.: NRG Newark Parlin Swap ABA No. 026009179 Payment to Party B Holder: NRG Generating (Newark) Cogeneration, Inc. Bank: Norwest Bank Minnesota N.A. Acct. No. 6355 03 7096 ABA No. 091 000 019 Please confirm that the foregoing correctly set forth the terms of our agreement by signing and returning this Confirmation to us via facsimile at 212/238-5461. Yours sincerely, CREDIT SUISSE By: /s/ Louis Iaconetti LOUIS D. IACONETTI ASSOCIATE By: /s/ Steven Dowe STEVEN DOWE ASSOCIATE Accepted and confirmed as of the Trade Date: NRG Generating (Newark) Cogeneration, Inc. By:/s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President NRG Generating (Parlin) Cogeneration, Inc. By:/s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President APPENDIX A TO A TRANSACTION BETWEEN NRG GENERATING (NEWARK) COGENERATION, INC. and NRG GENERATING (PARLIN) COGENERATION, INC. and CREDIT SUISSE, NEW YORK BRANCH Period up to, but excluding the Fixed and Floating Rate Payer Payment Date Scheduled Notional Amount to occur on: Outstanding (USD): 30-Sep-96 77,500,000 31-Dec-96 76,511,875 31-Mar-97 75,523,750 30-Jun-97 74,574,375 30-Sep-97 73,625,000 31-Dec-97 72,675,625 31-Mar-98 71,726,250 30-June-98 70,660,625 30-Sep-98 69,595,000 31-Dec-98 68,529,375 31-Mar-99 67,463,750 30-Jun-99 66,262,500 30-Sep-99 65,061,250 31-Dec-99 63,860,000 31-Mar-2000 62,658,750 30-Jun-2000 61,583,438 29-Sep-2000 60,508,125 29-Dec-2000 59,432,813 30-Mar-2001 58,357,500 29-Jun-2001 57,049,688 28-Sep-2001 55,741,875 31-Dec-2001 54,434,063 29-Mar-2002 53,126,250 28 Jun-2002 51,760,313 30-Sep-2002 50,394,375 31-Dec-2002 49,028,438 31-Mar-2003 47,662,500 30-Jun-2003 46,500,000 30-Sep-2003 45,337,500 31-Dec-2003 44,175,000 Period up to, but excluding the Fixed and Floating Rate Payer Payment Date Scheduled Notional Amount to occur on: Outstanding (USD): 31-Mar-2004 43,012,500 30-Jun-2004 41,879,063 30-Sep-2004 40,745,625 31-Dec-2004 39,612,188 31-Mar-2005 38,478,750 30-Jun-2005 37,296,875 30-Sep-2005 36,115,000 30-Dec-2005 34,933,125 31-Mar-2006 33,751,250 30-Jun-2006 32,637,188 29-Sep-2006 31,523,125 29-Dec-2006 30,409,063 30-Mar-2007 29,295,000 29-Jun-2007 27,958,125 28-Sep-2007 26,621,250 31-Dec-2007 25,284,375 31-Mar-2008 23,947,500 30-Jun-2008 22,504,063 30-Sep-2008 21,060,625 31-Dec-2008 19,617,188 31-Mar-2009 18,173,750 30-Jun-2009 16,720,625 30-Sept-2009 15,267,500 31-Dec-2009 13,814,375 31-Mar-2010 12,361,250 30-Jun-2010 10,946,875 30-Sep-2010 9,532,500 31-Dec-2010 7,149,375 31-Mar-2011 4,766,250 23-May-2011 2,383,125 /bhs (Multicurrency-Cross Border) ISDAr International Swap Dealers Association, Inc. MASTER AGREEMENT dated as of August 2, 1996 Credit Suisse, New York Branch and NRG Generating (Newark) Cogeneration, Inc., and NRG Generating (Parlin) Cogeneration, Inc. have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows: -- 1. Interpretation (a) Definitions. The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement. (b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such confirmation will prevail for the purpose of the relevant Transaction. (c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"), and the parties would not otherwise enter into any Transactions. 2. Obligations (a) General Conditions. (i) Each party will make each payment or delivery specified in each confirmation to be made by it, subject to the other provisions of this Agreement. (ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under Section 2(a)(I) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. (b) Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change. (c) Netting. If on any date amounts would otherwise be payable: -- (i) in the same currency; and (ii) in respect of the same Transaction. By each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries. (d) Deduction or Withholding for Tax. (i) Gross-Up. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party ("X") will: -- (1) promptly notify the other party ("Y") of such requirement; (2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y; (3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and (4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for - (A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(I), 4(a)(iii) or 4(d); or (B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law. 2 (ii) Liability. If: -- (1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4); (2) X does not so deduct or withhold; and (3) a liability resulting from such Tax is assessed directly against X. then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d). (e) Default Interest: Other Amounts. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement. 3. Representations Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that: -- (a) Basic Representations. (i). Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing: (ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorize such execution, delivery and performance; (iii) No validation or Conflict.. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; (iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with and; (v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). 3 (b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. (c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any of its Affiliates, any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Documents. (d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. (e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true. (f) Payer Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true. 4. Agreements Each party with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party: -- (a) Furnish Specified Information. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs: -- (i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation; (ii) any other documents specified in the Schedule or any Confirmation; and (iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification. In each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. (b) Maintain Authorizations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. (c) Comply with Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. (d) Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure. (e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, 4 organized, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party's execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party. 5. Events of Default and Termination Events (a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an "Event of Default") with respect to each party: -- (i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(I) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party; (ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(I), 4(a)(ii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party' (iii) Credit Support Default. (1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed; (2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or (3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support document; (iv) Misrepresentation. A representation (other than a representation under Section 3(e) or (f) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; (v) Default under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grade period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there able source requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); (vi) Cross Default. If "Cross Default" is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar conditions or event (however 5 described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period; (vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party: -- (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding- up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer: -- (1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or (2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement. (b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below , a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event 6 upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below: -- (i) Illegality. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party): -- (1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or (2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction; (ii) Tax Event. Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the ate on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(I)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(I)(4) (other than by reason of Section 2(d)(I)(4)(A) or (B)); (iii) Tax Event Upon Merger. The party (the "Burdened Party") on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(I)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(I)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii); (iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable Specified entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entry is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or (v) Additional Termination Event. If any "Additional Termination Event" is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation.) (c) Event of Default and Illegality. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default. 7 6. Early Termination (a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the "Defaulting Party") has occurred and is then continuing, the other party (the "Non-defaulting Party") may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, "Automatic Early Termination" is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto. (8). (b) Right to Terminate following Termination Event (i) Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require. (ii) Transfer to Avoid Termination Event. If either an Illegality under Section 5(b)(I)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist. If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i). Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party's policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed. (iii) Two Affected Parties. If an illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event. (iv) Right to Terminate. If: -- (1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or (2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party. Either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then 8 continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions. (c) Effect of Designation. (i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing. (ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). (d) Calculations. (i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation. (ii) Payment Date. An amount calculated as being due in respect in any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective ( in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (c) Payments on Early Termination. If an Early Termination Date occurs, the following provisions shall apply based on the parties' election in the Schedule of a payment measure, either "Market Quotation" or "Loss", and a payment method, either the "First Method" or the "Second Method". If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second Method", as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off. (i) Events of Default. If the Early Termination Date results from an Event of Default -- (1) First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non- defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non- defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. (2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party's Loss in respect of this Agreement. (3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the 9 Non-Defaulting Party) in respect of the Terminated Transactions and Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (4) Second Method and Loss. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party's Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non- defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (ii) Termination Events. If the Early Termination Date results from a Termination Event: -- (1) One Affected Party. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions. (2) Two Affected Parties. If there are two Affected Parties: -- (A) if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (f) the sum of (1) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount ("X") and the Settlement Amount of the party with the lower Settlement Amount ("Y") and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and (B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss ("X") and the Loss of the party with the lower Loss ("Y"). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y. (iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date (or payment determined under Section 6(d)(ii). (iv) Pre-Estimate. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre- estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses. 10 7. Transfer Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that: -- (a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and (b) a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e). Any purported transfer that is not in compliance with this Section will be void. 8. Contractual Currency (a) Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the "Contractual Currency"). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess. (b) Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amounts of the currency of the judgment or order actually received by such party. The term "rate of exchange" includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency. (c) Separate Indemnities. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement. (d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made. 11 9. Miscellaneous (a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto. (b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. (c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction. (d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law. (e) Counterparts and Confirmations. (i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. (ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation. (f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. (g) Headings. The hearings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. 10. Offices: Multibranch Parties (a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organization of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into. (b) Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party. (c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation. 11. Expenses A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document 12 to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection. 12. Notices (a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated: -- (i) if in writing and delivered in person or by courier, on the date it is delivered; (ii) if sent by telex, on the date the recipient's answerback is received; (iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine); (iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or (v) if sent by electronic messaging system, on the date that electronic message is received. unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. (b) Change of Addresses. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it. 13. Governing Law and Jurisdiction (a) Governing Law. This Agreement will be governed by and consorted in accordance with the law specified in the Schedule. (b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement ("Proceedings"), each party irrevocably: -- (i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non- exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and (ii) waives any objections which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. (c) Service of Process. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, services of process in any Proceedings. If for any 13 reason any party's Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law. (d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (I) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution of enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings. 14. Definitions As used in this Agreement: -- "Additional Termination Event" has the meaning specified in Section 5(b). "Affected Party" has the meaning specified in Section 5(b). "Affected Transactions" means (a)A with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions. "Affiliate" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, director or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of a majority of the voting power of the entity or person. "Applicable Rate" means: -- (a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii) by a Defaulting Party, the Default Rate: (b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate: (c) in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(ii) by a Non-defaulting Party, the Non- default Rate; and (d) in all other cases, the Termination Rate. "Burdened Party" has the meaning specified in Section 5(b). "Change in Tax Law" means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into. "consent" includes a consent, approval, action, authorization, exemption, notice, filing, registration or exchange control consent. "Credit Event Upon Merger" has the meaning specified in Section 5(b). "Credit Support Document" means any agreement or instrument that is specified as such in this Agreement. "Credit Support Provider" has the meaning specified in the Schedule. "Default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum. 14 "Defaulting Party" has the meaning specified in Section 6(a). "Early Termination Date" means the date determined in accordance with Section 6(a) or 6(b)(iv). "Event of Default" has the meaning specified in Section 5(a) and, if applicable, in the Schedule. "Illegality" has the meaning specified in Section 5(b). "Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document). "law" includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and "lawful" and "unlawful" will be construed accordingly. "Local Business Day" means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(I), in the place(s) specified in the relevant confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial center, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(I), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction. "Loss" means, with respect to this Agreement or one of more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out- of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. "Market Quotation" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(I) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, 15 have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. "Non-default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount. "Non-defaulting Party" has the meaning specified in Section 6(a). "Office" means a branch or office of a party, which may be such party's head or home office. "Potential Event of Default" means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "Reference Market-makers" means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city. "Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organized, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made. "Scheduled Payment Date" means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction. "set-off" means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer. "Settlement Amount" means, with respect to a party and any Early Termination Date, the sum of: -- (a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and (b) such party's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result. "Specified Entity" has the meaning specified in the Schedule. 16 "Specified Indebtedness" means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money. "Specified Transaction" means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rare transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation. "Stamp Tax" means any stamp, registration, documentation or similar tax. "Tax" means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax. "Tax Event" has the meaning specified in Section 5(b). "Tax Event Upon Merger" has the meaning specified in Section 5(b). "Terminated Transactions" means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date). "Termination Currency" has the meaning specified in the Schedule. "Termination Currency Equivalent" means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the "Other Currency"), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties. "Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable Credit Event Upon Merger or an Additional Termination Event. "Termination Rate" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts. "Unpaid Amounts" owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(ii9) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market 17 value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will e calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if such party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties. IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. Credit Suisse, New York Branch NGR Generating (Newark) Cogeneration Inc. By: /s/ Louis Iaconetti By: /s/ Leonard Bluhm Name: Louis D. Iaconetti Name: Leonard A. Bluhm Title: Associate Title: President Date: Date: 8-8-96 By: /s/ Steven Dowe Name: Steven Dowe Title: Associate Date: NGR Generating (Parlin) Cogeneration Inc. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President Date: 8-8-96 18 SCHEDULE to the MASTER AGREEMENT dated as of August 2, 1996 between CREDIT SUISSE acting through its New York Branch ("Party A") and NGR GENERATING (NEWARK) COGENERATION INC. and NGR GENERATING (PARLIN) COGENERATION INC. (collectively, "Party B") PART 1 Termination Provisions and Certain Other Matters (a) "Specified Entity" means, in relation to Party A, for the purpose of: Section 5(a)(v), none; Section 5(a)(vi), none; Section 5(a)(vii), none; and Section 5(b)(iv), none; and in relation to Party B, for the purpose of: Section 5(a)(v), none; Section 5(a)(vi), none; Section 5(a)(vii), none; and Section 5(b)(iv), none. (b) "Specified Transaction" will have the meaning specified in Section 14, which meaning specified in Section 14, which meaning shall be limited to "Interest RateHedge Agreements" (as defined in the Credit Agreement (as defined in Park 4(k) of this Schedule)). (c) The "Cross-Default" provisions of Section 5(a)(vi) of this Agreement will not apply to Party A. The "Cross-Default" provisions of Section 5(a)(vi) of this Agreement will apply to Party B. In connection therewith, "Specified Indebtedness" means all "Obligations", means $100,000 (or its "Equivalent"), as defined in the Credit Agreement). (d) The "Credit Support Default" provisions of Section 5(a)(iii) of this Agreement shall apply. (e) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of this Agreement will not apply to Party A. The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will apply to Party B. (f) The "Automatic Early Termination" provision of Section 6(a) will not apply to Party A and Party B. (g) Payments on Early Termination. For the purpose of Section 6(e): (i) Market Quotation. (ii) The Second Method will apply. (h) "Termination Currency" means United States Dollars. (i) Additional Termination Events. The following shall constitute Additional Termination Event. (i) It shall constitute an Additional Termination Event under this Agreement if (1) the Credit Agreement shall have expired or terminated or shall have otherwise ceased to be in full force and effect (other than as a result of an Event of Default (as such term is defined in the Credit Agreement) with respect to Party B (in which event Party B will be the Affected Party), or (2) Party B shall cease to be a party to the Credit Agreement (in which event Party B will be the Affected Party). (ii) It shall also constitute an Additional Termination Event under this Agreement if due to the occurrence of a natural or man-made disaster, armed conflict, act of terrorism, riot, labor disruption or any other circumstance beyond its control after the date on which a Transaction is entered into, it becomes impossible (an "Impossibility"), (other than as a result of its own misconduct) for such a party (which will be the Affected Party): (1) to perform any absolute or contingent obligation, to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or 2 (2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction. An Impossibility shall be treated as an Illegality for all purposes of this Agreement. (j) Partial Termination. The aggregate notional amount of all Transactions may be reduced as set forth in Section 5.5(b) of the Credit Agreement. In the event of any such reduction, Party B will be deemed to have designated an Early Termination Date only with respect to the amount by which the Notional Amounts are so reduced on the date of such partial prepayment. In any such event, Party B shall be the Affected Party. 3 PART 2: Tax Representations Payer Tax Representation. For the purpose of Section 3(e), each of Party A and Party B will make the following representation: It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d) or 6(e)) to be made by it to the other party under this Agreement. In making this representation, it may rely on: (i) the accuracy of any representation made by the other party pursuant to Section 3(f); (ii) the satisfaction of the agreement of the other party contained in Section 4(a)(iii) and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii); and (iii) the satisfaction of the agreement of the other party contained in Section 4(d); provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of a material prejudice to its legal or commercial position. Payee Tax Representations. For the purpose of Section 3(f), Party A shall make the following representation: Each payment received or to be received by it in connection with this Agreement will be effectively connected with its conduct of a trade or business in the United States. Party B makes no representations. 4 PART 3: Agreement to Deliver Documents For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents: (a) Tax forms, documents or certificates to be delivered are: Party required to Form/Document/ Date by which deliver document Certificate to be delivered Party A An Internal Revenue (A) Before the Service form 4224 or First Scheduled any successor form Payment Date; (B) to such Form 4224, promptly upon completed in a reasonable demand by manner reasonably Party B; and (C) satisfactory to promptly upon Party B learning that any Form 4224 or any successor form to such Form 4224 previously provided by Party A become obsolete or incorrect For purposes of Section 2(d)(i)(4)(A), Party A shall be deemed to have failed to comply with Section 4(a)(i) if the Internal Revenue Service Form 4224 (or any successor form) delivered to Party B is or becomes incomplete, obsolete or incorrect until such time as (i) Party A delivers a new tax form as required by Section 4(a)(i) or (ii) such previously delivered tax form is no longer incomplete, obsolete or incorrect. (b) Other documents to be delivered are: Party required Date by which Covered by to Form/Document/ to be Section 3(d) Deliver Certificate delivered Representation document Party B Opinion of Upon execution No counsel and delivery satisfactory to of this Party A Agreement Party B Certified Upon execution Yes copies of all and delivery corporate of this authorizations Agreement and any other documents with respect to the execution, delivery and performance of this Agreement. 5 Party B Certificate of Upon execution Yes authority and and delivery specimen of this signatures of Agreement and individuals thereafter executing this upon request Agreement and of Party A Confirmations 6 PART 4: Miscellaneous (a) Address for Notices. For the purpose of Section 12(a) of this Agreement. Address for notice or communications to Party A: Any notice shall be delivered to the address or facsimile or telex number specified in the relevant Confirmation of a Transaction. For purposes of Section 5 and 6 of this Agreement, any notice shall also be delivered to the following address: Credit Suisse, New York Branch Tower 49 12 East 49th Street New York, New York 10017 Attention: Project Finance Tel: (212) 238-2000 Fax No.: (212) 238-5390 Address for notice of communications to Party B: NRG Generating (Newark) Cogeneration Inc. NRG Generating (Parlin) Cogeneration Inc. 1221 Nicollet Mall Suite 610 Minneapolis, Minnesota 55403 Attention: Leonard A. Bluhm Tel: (612) 373-5305 Fax No.: (612) 373-8833 (b) Process Agent. For the purpose of Section 1(c): Party A appoints as its Process Agent: Not applicable. Party B appoints as its Process Agent: See Section 5(j) of this Schedule. (c) Offices. This provisions of Section 10(a) will not apply to this Agreement. (d) Multibranch Party. For the purpose of Section 10 of this Agreement. Party A is not a Multibranch Party. 7 Party B is not a Multibranch Party. (e) Calculation Agent. The Calculation Agent is Party A, unless otherwise specified in a Confirmation in relation to the relevant Transaction. (f) Credit Support Provider. Details of any Credit Support Document: Each of the "Security Documents" (as defined in the Credit Agreement), together with any and all other documents which by their terms secure, guarantee or otherwise support Party B's obligations hereunder from time to time, shall be Credit Support Documents for the benefit of Party A. (g) Credit Support Provider. None. (h) Governing Law. This Agreement is a contract made under the laws of the State of New York of the United States and for all purposes shall be governed by and construed in accordance with the laws of such State without regard to any conflicts of laws provisions thereof. (i) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply to any Transaction unless specified in the relevant Confirmation. (j) "Affiliate" will have the meaning specified in Section 14 of this Agreement. (k) "Credit Agreement" shall mean the Credit Agreement, dated as of May 17, 1996, among Party B, Party A, as a lender and Agent for the benefit of the Secured Parties, Greenwich Funding Corporation as a Lender and any Purchasing Lender thereunder, as the same may be amended, supplemented or modified from time to time. 8 PART 5: Other Provisions (a) Set off; Counterclaim. In addition to the provisions set forth in Section 8.8 of the Credit Agreement, without affecting the provisions of this Agreement requiring the calculation of certain net payment amounts, all payments under this Agreement shall be made without set off or counterclaim and will not be subject to any conditions except as provided in Section 2 and 6(c) of this Agreement and except if Party B is a Defaulting Party and Party A is a Noon-defaulting Party, Party A will have the right to set off, counterclaim or withhold payment of any obligation, whether matured or unmatured, under this Agreement or any other agreement between or involving the parties against any payment or performance of any obligation, whether matured or unmatured, of Party A under this Agreement or any other agreement between or involving the parties or their Affiliates regardless of the office or branch through which a party is acting, and Party A's obligations hereunder or thereunder to Party B shall be deemed to be satisfied and discharged to the extent of such set off, counterclaim or withholding. (b) Notice of Facsimile Transmission. Section 12(a) is hereby amended by inserting the words "or 13(c)" between the number "6" and the word "may" in the second line thereof. (c) Additional Events of Default. With respect to Party B only, it shall constitute an Event of Default under the Agreement if an Event of Default, as such term is defined in the Credit Agreement, shall occur and be continuing. (d) Further Agreements of Party B. Party B agrees with Party A that, so long as it has or may have any obligation under this Agreement, it will comply with the covenants set forth in the Credit Agreement and Financing Documents (as defined in the Credit Agreement), to which it is a party. (e) Further Representations. In addition to the representations contained in Section 3, Party B represents to Party A (which representations will be deemed to be repeated by Party B on each date on which a Transaction is entered into) that each of the representations and warranties contained in Article IV of the Credit Agreement are true and correct. 9 (f) Interest Rate Hedge Agreement. The parties hereto acknowledge and agree that the Schedule and any confirmation and the Agreement of which it forms a part shall constitute an "Interest Rate Hedge Agreement", as such term is defined in the Credit Agreement, and Party A is and shall be deemed, and shall be entitled to the benefits and security accruing to, a party to such an Interest Rate Hedge Agreement and a "Secured Party" under the Credit Support Documents and the other Financing Documents, in each case to the extent expressly set forth therein. (g) Application of Payments. Section 2 of this Agreement is hereby amended to insert the following clause (f) thereto: "(f) With respect to Party B only, Party B agrees (1) to apply any payments made by Party A to Party B on any Scheduled Payment Date (after giving effect to the netting provisions of Section 2(c) of this Agreement) to the payment of interest then due or soon to become due, on the relevant due date, under the Dollar Loan Notes (as defined under the Credit Agreement) or any instrument that replaces the Dollar Loan Notes and to any other Obligations under the Credit Agreement then due or soon to become due on the relevant due date under the Credit Agreement and (2) that, if any such interest or other Obligation is due and owing on a date on which Party A is obligated to make a payment hereunder to Party B and if an Event of Default has occurred and is continuing under the Credit Agreement, Party A shall make any payment to the Agent (as defined in the Credit Agreement)." (h) Submission to Jurisdiction. (i) Any legal action or proceeding against Party B with respect to this Agreement and any Credit Support Document or the transactions in connection with or relating hereto or thereto, may be brought in the courts of the State of New York in the County of New York or of the United States for the Southern District of New York and, by execution and delivery of this Agreement, Party B hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Party B agrees that a judgment, after exhaustion of all available appeals, in any such action or proceeding shall conclusive and binding upon 10 Party B, and may be enforced in any other jurisdiction, including without limitation Chile, by a suit upon such judgment, a certified copy of which shall be conclusive evidence of the judgment. (ii) Party B hereby irrevocably designates, appoints and empowers CT Corporation System, Inc. (the "Process Agent"), with offices on the date hereof at 1633 Broadway, New York, NY 10019, as its designee, appointee and agent to receive and accept service of any and all legal process, summons, notices and documents arising out of this Agreement. If for any reason such designee, appointee and agent shall cease to be available to act as such, Party B agrees to designate a new designee, appointee and agent in New York City on the terms and for the purposes of this provision satisfactory to Party A. Party B further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such Borrower, at its respective addresses set forth herein such service to become effective 30 days after such mailing. Nothing herein shall affect the right of Part A to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against Party B in any other jurisdiction. (iii) Party B hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any Credit Support Document or the transactions in connection with, or relating hereto or thereto brought in the courts referred to in clause (i) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (iv) WITH REGARD TO THIS AGREEMENT AND THE CREDIT SUPPORT DOCUMENTS TO WHICH IT IS A PARTY, EACH OF THE PARTIES HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN. (v) Party A and Party B agree, regardless of cause, not to assert any claim whatsoever against the 11 other party for loss of anticipatory profits or consequential damages. (j) Confirmations. Notwithstanding anything to the contrary in the Agreement: (i) The parties hereto agree that with respect to each Transaction hereunder a legally binding agreement shall exist from the moment that the parties hereto agree on the essential terms of such Transaction, which the parties anticipate will occur by telephone. (ii) For each Transaction Party A and Party B agree to enter into hereunder, Party A shall promptly send to Party B a Confirmation, setting forth the terms of such Transaction. Party B shall execute and return the Confirmation to Party A or request correction of any error within three Business Days of receipt. Failure of Party B to respond within such period shall not affect the validity of enforceability of such Transaction and shall be deemed to be an affirmation of such terms. (k) ISDA Definitions. Unless otherwise specified in a Confirmation, this Agreement incorporates, and is subject to and governed by the 1991 ISDA Definitions (the "1991 Definitions") published by the International Swap Dealers Association Inc. ("ISDA"). In the event of any inconsistency among the provisions of this Agreement and the 1991 Definitions, this Agreement will prevail. (l) Transfers. The parties agree that Party A may transfer its rights and obligations under this Agreement (with such modifications and representations relating to Taxes as shall be reasonably requested by Party B to preserve the position of Party B), in whole but not in part, to any other Affiliate of Party A with a guarantee by Party A or to any other branch or agency of Credit Suisse, provided that such assignment will not give rise to a Termination Event or an Event of Default with respect to such assignee of Party A or to Party B. Additionally, notwithstanding the provisions of Section 12 of this Agreement, Party A may sell and assign one or more participation interests in one or more Transactions. 12 (m) Section 3. Section 3 of the Agreement is hereby amended by adding at the end thereof the following subsections (g) and (h): (g) Eligible Swap Participant. It is an "eligible swap participant" as that term is defined by the Commodity Futures Trading Commission at 17 C.F.R. 35.1(b)(2). (h) No Reliance, etc. (i) the other party hereto is not acting as a fiduciary or financial or investment advisor for it; (ii) it is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the other party hereto; (iii) the other party hereto has not given to it (directly or indirectly through any other person) any assurance, guarantee, or representation whatsoever as to the expected or projected success, profitability, return, performance, result, effect, consequence, or benefit (either legal, regulatory, tax, financial, accounting, or otherwise) of this transaction; (iv) it has consulted with its own legal, regulatory, tax business, investment, financial and accounting and other advisors to the extent it has deemed necessary, and it has made its own investment, hedging and trading decisions (including decisions regarding transaction) based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by the other party hereto; and (v) it is entering into this transaction and any other documentation relating hereto with a full understanding of all of the terms, conditions and risks hereof and thereof (economic and otherwise) and it is capable of assuming and willing to assume (financially and otherwise) those risks. (n) Escrow Payments. If by reason of the time difference between the cities in which payments are to be made, it is not possible for simultaneous payments to be made on any date on which both parties are required to make payments hereunder, either party may at its option and in its sole discretion notify the other party at its option and in its sole discretion notify the other party that payments on that date are to be made in escrow. In this case deposit of the payment due earlier on that date shall be made by 2:00 p.m. (local time at the place for earlier payment) on that date with an escrow agent selected by the party giving the notice, accompanied by irrevocable payment 13 instructions (i) to release the deposited payment to the intended recipient upon receipt by the escrow agent of the required deposit of the corresponding payment from the other party o the same date accompanied by irrevocable payment instructions to the same effect or (ii) if the required deposit of the corresponding payment is not made on that same date, to return the payment deposited to the party that paid it into escrow. The party that elects to have payments made in escrow shall pay the costs of the escrow arrangements and shall cause those arrangements to provide that the intended recipient of the payment due to be deposited first shall be entitled to interest on that deposited payment for each day in the period of its deposit at the rate offered by the escrow agent for that day for overnight deposits in the relevant currency in the office where it holds that deposited payment (at 11:00 a.m. local time on that day) if that payment is not released by 5:00 p.m. local time on the date it is deposited for any reason other than the intended recipient's failure to make the escrow deposit it is required to make hereunder in a timely fashion. (o) Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of the Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. The parties hereto shall endeavor in good faith negotiations to replace the prohibited or unenforceable provision with a valid provision, the economic effect of which comes as close as possible to that of the prohibited or enforceable provision. (p) Telephonic Recording. The parties agree that, with respect to Transactions, each party may electronically record all telephonic conversations between them and that any such tape recordings may be submitted in evidence to any court or in any proceedings relating to this Agreement. 14 (q) Joint and Several Obligations. The obligations of each of the two counterparties collectively referred to herein as Party B are joint and several. References to "Party B, "it" and similar terms when used in this Agreement shall be deemed to refer NRG Generating (Newark) Cogeneration Inc. and NRG Generating (Parlin) Cogeneration Inc. both singularly and collectively. Accepted and agreed: CREDIT SUISSE, NRG GENERATING (NEWARK) acting through its New York COGENERATION INC. Branch By: /s/ Leonard Bluhm By: /s/ Louis Iaconetti Name: Leonard A. Bluhm Name: Louis D. Iaconetti Title: President Title: Associate By: /s/ Leonard Bluhm By: /s/ Steven Dowe Name: Leonard A. Bluhm Name: Steven Dowe Title: President Title: Associate 15 EX-10.11.2 24 EXHIBIT 10.11.2 LETTER AGREEMENT DATED JUNE 2, 1986 BETWEEN THE COMPANY AND JCP&L AMENDING THE LONG TERM POWER PURCHASE CONTRACT. Exhibit 10.11.2 Agreement entered into this Second Day of June, 1986 by and between O'Brien Energy Systems (Seller) and Jersey Central Power & Light Co., a New Jersey Corporation (collectively referred to as "parties"). Whereas, the parties agreed to certain terms and conditions concerning the sale of electricity to JCP&L from O'Brien as set forth in a contractual agreement dated 3/10/86, and Whereas, the parties desire to amend Article 4.1.8 as set forth below: Notwithstanding the preceding paragraph, if the date of Initial Commercial Operation has not occurred prior to July 1, 1988 JCP&L may thereafter terminate this Agreement by providing Seller forty-five (45) days' written notice, unless prior to such date, Seller has commenced a program of continuous construction of the Facility such that the Initial Delivery Date will not be later than December 31, 1988, and does not, of its own volition, subsequently discontinue such construction program and subject to force majeure provisions of Article 11. Now therefore, in witness whereof, the parties have caused this amendment to be signed by their respective officers thereunto duly authorized as of the day and year set forth above: Attest: /s/ Sanders Newman O'Brien Energy Systems, Inc. /s/ Jeffrey Baines Executive Vice President Attest: /s/ C.A. Marks Jersey Central Power & Light Co. /s/ E.J. McCarthy EX-10.11.3 25 EXHIBIT 10.11.3 SECOND AMENDMENT TO POWER PURCHASE AGREEMENT DATED MARCH 1, 1988 BETWEEN THE COMPANY AND JCP&L. Exhibit 10.11.3 SECOND AMENDMENT TO POWER PURCHASE AGREEMENT _________________ This SECOND AMENDMENT, dated as of March 1, 1988 ("Second Amendment"), to the Power Purchase Agreement, dated March 10, 1986, between O'Brien Energy Systems, Inc. ("Seller") and Jersey Central Power & Light Company ("JCP&L"). W I T N E S S E T H : WHEREAS, the Power Purchase Agreement provides for the purchase by JCP&L of the capacity and energy from Seller's Cogeneration Facility with a nameplate rating of 52 MW/Hr. to be constructed by Seller at the Newark Boxboard plant in Newark, New Jersey; WHEREAS, by letter agreement dated June 2, 1986 ("First Amendment"), the Parties have amended the Power Purchase Agreement in certain respects (the Power Purchase Agreement, as so amended by the First Amendment being hereinafter referred to as the "Agreement"); WHEREAS, Seller has advised JCP&L that construction of the Facility has been delayed and has requested that the Date of Initial Commercial Operation as provided in the Agreement therefore be extended; WHEREAS, JCP&L is willing to extend the Date of Initial Commercial Operation as requested by Seller, subject, however, to the terms and conditions hereof; and WHEREAS, the Parties desire to amend the Agreement in certain other respects. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the Parties hereby agree as follows: 1. Article III - Definitions. Article III of the Agreement is hereby amended as follows: (a) By revising the definition of "Contract Capacity" in Article 3.6 to read in its entirety as follows: 3.6 "Contract Capacity" means the maximum summer Peak Period producing capability the Generating Facility shall demonstrate according to GPU/PJM guidelines, as in effect from time to time, in MWH/Hr. which, in any event, shall not be less than 52 MWH/Hr. (b) By adding the following defined term therein: 3.16(a) "Major Facility Overhaul" means an outage of the Cogeneration Facility for a complete replacement or reconditioning of the Cogeneration Facility's electrical prime mover, one or more of its turbine-generators or its related boiler(s) due to ordinary wear and tear. Each such outage may occur not more often than once every five (5) years for a period of up to ninety (90) days each. 2 (c) By revising the definition of "On-Peak Period" in Article 3.19 to read in its entirety as follows: 3.19 "On-Peak Period" means all hours from 8:00 A.M. to 8:00 P.M. prevailing time Monday through Friday, other than on New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. (d) By adding definitions of the terms "Off-Peak Season" and "On-Peak Season" as follows: 3.18(a) "Off-Peak Season" means the months of March, April, May, October and November. 3.19(a) "On-Peak Season" means the months of December through February and June through September. 2. Article 4.1 - Duration of Agreement. Paragraph B of Article 4.1 of the Agreement is hereby amended in its entirety and new Paragraphs (C) through (H) are hereby added thereto to read in full as follows: (B) Seller has furnished JCP&L with a revised detailed engineering, permitting and construction schedule identifying all critical path items for project development and providing for Initial Commercial Operation of the Facility by April 1, 1990. Seller shall promptly advise JCP&L of any material revisions, modifications or changes to such schedules. 3 (C) Seller shall furnish JCP&L with quarterly status reports describing the progress of the engineering, permitting and construction of the Facility. Such reports shall include, in reasonably sufficient detail, explanations of any delays in meeting scheduled dates for commencement or completion of any listed item. (D) Seller shall immediately notify JCP&L if Seller has not (i) obtained all critical path Federal, State and local environmental construction permits and authorizations to construct and operate the Facility and (ii) issued a purchase order, or entered into a legally binding commitment, for the Facility's principal energy conversion device on or prior to the dates specified in the schedules as initially submitted to JCP&L or as such schedules may subsequently be revised. (E) If the Initial Delivery Date has not occurred on or prior to April 1, 1990, JCP&L may terminate this Agreement upon written notice to Seller unless prior to such date, (1) Seller demonstrates to JCP&L's reasonable satisfaction that Seller has (a) commenced and there is ongoing a program of continuous construction of the Facility pursuant to which Seller has incurred or legally obligated itself to pay for direct construction expenses of not less than fifty (50%) percent of the projected direct construction costs of the Facility (which Seller shall 4 certify to JCP&L on the basis of appropriate documentation) and (b) furnished JCP&L with a revised construction schedule for the Facility under which the Facility will be in Commercial Operation not later than April 1, 1991 and (2) Seller pays to JCP&L the full amount of liquidated damages set forth in Article XXII hereof, subject to refund as provided in paragraph (G) below. In such event, the Initial Delivery Date shall be extended to April 1, 1991, or such earlier date as Seller shall specify in such revised construction schedule. (F) If the Initial Delivery Date has not occurred on or prior to April 1, 1991, JCP&L may terminate this Agreement upon written notice to Seller unless prior to such date (a) Seller demonstrates to JCP&L's reasonable satisfaction that a continuous program of construction of the Facility is ongoing pursuant to which Seller has incurred or legally obligated itself to pay for direct construction expenses of not less than seventy-five (75%) percent of the projected direct construction costs of the Facility (which Seller shall certify to JCP&L on the basis of appropriate documentation) and (b) Seller has furnished JCP&L with a revised construction schedule for the Facility under which the Facility will be in Commercial Operation not later than April 1, 1992. In such event, the Initial Delivery Date shall be extended to April 1, 1992, or such earlier date as Seller shall specify in such revised construction schedule. 5 (G) In the event this Agreement is not otherwise terminated pursuant to the provisions of this Article IV and Seller pays to JCP&L the liquidated damages amount as provided in Paragraph (E) above, then within thirty (30) days of the end of the billing period following the Initial Delivery Date, JCP&L shall credit Seller for amounts due to JCP&L hereunder or otherwise reimburse Seller for the full amount of such liquidated damage payment but without interest thereon. (H) If the Initial Delivery Date has not occurred for any reason, including but not limited to Force Majeure, on or prior to April 1, 1992, this Agreement may be terminated by JCP&L upon written notice to Seller. 3. Article V - Operation and Maintenance. Article V of the Agreement is hereby amended in the following respects: (a) Paragraph A of Article 5.5 is amended to read in its entirety as follows: A. Each Party shall keep the other Party's Operating Representative informed as to the operating schedules of their respective facilities affecting each other's obligations hereunder, including any reduction in availability of Contract Capacity. In addition, Seller shall furnish JCP&L with an annual forecast not later than January 1 of each year following the Initial Delivery Date setting forth the expected dates 6 and anticipated duration of each scheduled outage for the succeeding twelve (12) months. Seller shall notify JCP&L not less than thirty (30) days prior to the commencement of any scheduled outage, and of the anticipated duration thereof, and as soon as possible with respect to any unscheduled outage. (b) Article 5.7 is hereby amended to read in its entirety as follows: 5.7 Seller shall use its best efforts to schedule and conduct routine maintenance outages of the Facility only during the Off-Peak Season except that Seller may conduct such scheduled outages of the Facility up to a total of thirty (30) hours during On-Peak Periods in the On-Peak Season in any year, exclusive, however, of a Major Facility Overhaul and any inspections required by law. (c) Article 5.8 is amended by adding the following at the end thereof: Seller shall furnish to JCP&L on each January 1 following the Initial Delivery Date reasonably satisfactory evidence that Seller has performed or caused to be performed all manufacturer-recommended maintenance and testing with respect to the Facility and any protective apparatus and interconnection equipment, including circuit breakers, relays and auxiliary equipment. Seller shall provide JCP&L with 7 at least thirty (30) days prior written notice of its intent to test such equipment and JCP&L personnel may, if JCP&L desires, observe such testing. (d) Article 5.10 of is amended to read in its entirety as follows: 5.10 (a) Seller shall generate and sell electric energy to JCP&L throughout the term of this Agreement and any extensions or renewals hereof at an annual level for On-Peak Periods which, commencing on January 1 of the fourth full year of operation of the Facility following the Initial Delivery Date and for each year thereafter ("Production Year"), shall be not less than 85% of the average annual generation output achieved for On-Peak Periods during the three (3) immediately preceding years of operation of the Facility ("Average Generation"). (b) If the actual annual amount of electric energy delivered from the Facility to JCP&L during On-Peak Periods for any Production Year ("Actual Generation") is less than 85% of the Average Generation, then Seller shall pay JCP&L a performance deficiency payment equal to the number of kwh by which (x) 85% of the Average Generation exceeds (y) the Actual Generation, multiplied by the then variable pricing component as paid during On-Peak Periods in cents per kwh. 8 (c) For purposes of calculating the Actual Generation of the Facility during a Production Year, there shall be added to the actual amount of electricity delivered from the Facility to JCP&L during On-Peak Periods 85% of any kwh which the Facility does not deliver (based upon the Contract Capacity of the Facility) during On-Peak Periods during such Production Year due to (i) Force Majeure as provided in Article XI hereof, (ii) a Major Facility Overhaul and (iii) a disconnection of the Facility or an interruption, curtailment or reduction of purchases of electricity by JCP&L pursuant to Articles 5.3 or 7.6 hereof, other than pursuant to Article 7.6(e) hereof. (d) Seller shall make any performance deficiency payment due to JCP&L in six (6) equal monthly payments by applying said monthly payments against amounts due from JCP&L for electric energy delivered during the first six (6) months of the year following the year for which the performance deficiency payment statement applies. If Seller does not deliver sufficient electric energy to JCP&L in any month to allow the full set-off of the monthly payment as provided herein, Seller shall pay to JCP&L within ten (10) days after the end of such month, any amount which cannot be set- off. Any and all amounts due and owing to JCP&L under this Article V shall be immediately due 9 be at Seller's expense and conducted at a time and pursuant to procedures as may be required by applicable PJM rules, regulations and guidelines and, to the extent not inconsistent therewith, as mutually agreed upon by the Parties. If Seller fails to demonstrate the ability of the Facility to provide Contract Capacity, the Contract Capacity component (fixed price component) of the price to be paid for energy, as set forth in Appendix A hereto, shall be reduced to the following amount for so long as Seller is unable to demonstrate the ability of the Facility to provide Contract Capacity: Demonstrated Capacity x Capacity Component of Price Contract Capacity (fixed price component) 4. Articles 5.11, 5.15 and 5.16. Articles 5.11, 5.15, and 5.16 of the Agreement are hereby deleted in their entirety and shall have no further force or effect. 5. Article VI - Measurement and Metering. Paragraph A of Article 6.5 is hereby amended by revising the first sentence thereof to read in full as follows: A. The accuracy of the Wheeling Utility's measuring equipment shall be tested and verified by Seller or the Wheeling Utility at reasonable intervals, but not less often than once annually, and, if requested, in JCP&L's presence. 11 6. Article VII - Terms of Sale. (a) Article 7.1 is hereby amended by including the language at the end thereof before the period: "up to a maximum of 52 MWH/Hr.; provided, however, that if offered by Seller, JCP&L may agree to purchase additional energy from the Facility up to a maximum of 56 MWH/Hr. except that notwithstanding anything contained in this Agreement or Appendix A to the contrary, the price paid for such additional energy shall be 90% of the On-peak or Off-peak, as applicable, PJM billing rate as then in effect". (b) Article 7.3(c) is hereby amended to read in full as follows: (c) On or before Thursday of each week, Seller shall also furnish to JCP&L estimates of the Facility's energy production for that week. Actual performance information as required from time to time for PJM reporting purposes will be supplied by Seller to JCP&L upon request. (c) Article 7.6(d) is hereby amended by changing the reference "400 kwh" in the penultimate line thereof to "400 hours". 7. Article IX - Billings and Records. Article 9.1 is hereby amended by replacing the phrase "the end of each monthly billing period" in the third line thereof with the phrase "receipt by JCP&L of an official billing statement from the Wheeling Utility showing the 12 amount of Electricity delivered from the Facility to JCP&L during a monthly billing period in sufficient detail for JCP&L to calculate amounts due to Seller hereunder." 8. Article XII - Insurance, Liability and Indemnification. Article 12.1 is hereby amended to read in full as follows: 12.1 Insurance. (A) Seller agrees to keep the Facility continuously insured with reputable insurance companies against loss or damage in the amounts and for the risks that property of similar character is usually so insured by entities owning and operating like properties. (B) Seller shall maintain in effect insurance coverage for the Facility with initial minimum limits as follows: Insurance Limits 1.a. Worker's Compensation As required by Insurance statute b. Employer's Liability $500,000 Insurance 2.Comprehensive General Liability (Public Liability) Insurance including: a. Bodily Injury $1,000,000 per occurrence and Property Damage $1,000,000 combined single limit per occurrence 13 b. Bodily Injury and Property $1,000,000 combined Damage single limit per occurrence c. Personal Injury $500,000 per occurrence 3.Automobile Liability Insurance (owned, hired & non- owned): a. Bodily Injury $500,000 per Accident b. Property Damage $500,000 per Accident 4. Seller shall also procure and maintain in effect business interruption and property hazard insurance in sufficient amounts to cover and otherwise insure against reasonable business risks associated with damage to or other interruption or loss of use of the Facility and appurtenant equipment. 5. JCP&L may, upon ninety (90) days prior written notice, require Seller and Seller shall, from time to time, increase the foregoing initial limits to amounts which shall be reasonable, based upon commercial availability of such increased limits at commercially reasonable terms and the location, size and type of the Facility, to meet changed circumstances and then current industry practice. (C) Seller's liability insurance (other than its worker's compensation insurance) shall include provisions or endorsements providing that such policies shall not be cancelled or their limits of liability reduced without thirty (30) days prior written notice to JCP&L. 14 (D) A copy of each such insurance policy, certified as a true copy by an authorized representative of the issuing insurance company or in lieu thereof, a certificate in form satisfactory to JCP&L certifying to the issuance of such insurance, shall be furnished to JCP&L on or before the Initial Delivery Date and fifteen (15) days prior to the expiration date of each such policy. 9. Article 13.2 - Remedies for Breach. Article 13.2 is hereby amended to read in its entirety as follows: 13.2(A) Remedies for Breach. (i) In the event of a breach of this Agreement, as defined in Article 13.1 hereof, the non-breaching Party may terminate this Agreement by giving written notice of such breach and termination to the Party in breach, whereupon the non-breaching Party shall be excused and relieved of all further liability and obligations hereunder. (ii) Notwithstanding the foregoing, in the event of a breach of this Agreement the non-breaching Party shall be entitled (x) to commence an action in the nature of specific performance to require the breaching Party to cure such breach and specifically perform its duties and obligations under this Agreement in accordance with the terms and conditions hereof and (y) to exercise such other rights and remedies as it may have at equity or at law. 15 13.2(B) JCP&L's Right to Operate. If at any time during the term of this Agreement Seller breaches this Agreement, or Seller fails to operate and maintain the Facility in accordance with the terms and conditions hereof for a period of sixty (60) days after written notice from JCP&L and during such period Seller does not take or has not taken reasonable steps to cure such breach or correct such failure, JCP&L may, at its sole election and without any obligation to so do, assume management control of, and otherwise operate, the Facility and all the appurtenant equipment necessary to deliver electricity to JCP&L's system. Such right to assume operation of the Facility shall be limited by and subject to the following: (1) JCP&L may exercise its option to assume management control and operation of the Facility and the appurtenant equipment after having given ten (10) days written notice of its intentions to Seller. (2) JCP&L shall promptly return operation and management control of the Facility to Seller at such time as Seller demonstrates to JCP&L's satisfaction that Seller is able to resume performance of its obligations, duties, and responsibilities under this Agreement. (3) Seller shall at all times retain legal title to and ownership of the Facility. 16 (4) JCP&L's assumption of management control and/or operation of the Facility and appurtenant equipment shall not be construed as creating any duty or responsibility on JCP&L's part for the continued or economic operation of the Facility for the benefit of Seller or any third party. (5) Seller shall indemnify, defend, and hold JCP&L harmless from and against all damages, claims, actions, and lawsuits (including but not limited to legal fees and expenses) which JCP&L may suffer or incur as a result of assuming management control and operation of the Facility. (6) Seller shall reimburse JCP&L for any and all costs and expenses reasonably incurred by JCP&L in assuming operation of and operating the Facility, or at its sole discretion, JCP&L may set off such costs and expenses against any amounts due Seller under this Agreement. (7) Seller hereby waives any and all claims, damages, actions and lawsuits which it may have against JCP&L (other than claims for damages arising out of JCP&L's gross negligence) as a result of any personal injury, damage to or impairment of the environment, or damage resulting to any property (including but not limited to the Facility) during such time that JCP&L has undertaken management control and operation of the Facility pursuant hereto; provided, however, that JCP&L shall at all times take such reasonable steps as may be necessary to operate the Facility in accordance with all applicable laws, governmental regulations and regulatory requirements. 17 (8) Notwithstanding the foregoing, should JCP&L assume management control and operation of the Facility hereunder, JCP&L may at any time return operation and control of the Facility to Seller without any further liability or obligation on the part of JCP&L. 10. Article 15.2 - Service of Notice. Article 15.2(l) is hereby amended to provide that notices to Seller shall be addressed as follows: O'Brien Energy Systems, Inc. 225 South Eighth Street Philadelphia, Pennsylvania 19106 Attention: Jeffrey Barnes, Executive Vice President 11. A new Article 22 is hereby added to the Agreement to provide as follows: ARTICLE 22 LIQUIDATED DAMAGES 22.1 If Seller shall abandon or fail to complete the Facility before the Initial Delivery Date and this Agreement is therefore terminated, it is acknowledged and agreed that JCP&L will suffer damages which, as the result of JCP&L's dependence upon the delivery of the Facility's energy and capacity hereunder, JCP&L would be unable to mitigate fully. JCP&L and Seller agree that the amount of actual damages suffered by JCP&L under the foregoing circumstances would be difficult or impossible to measure. Therefore, JCP&L and Seller agree that 18 if the Facility shall fail to commence Commercial Operation on or before the Initial Delivery Date, as the same may be extended, set forth in Article 4 of this Agreement, Seller shall pay to JCP&L a one-time liquidated damage amount equal to ten dollars ($10.00) per kw of the anticipated Contract Capacity of the Facility as set forth in Preface A (Project Summary) to this Agreement. Seller will secure payment of this amount by providing to JCP&L not later than thirty (30) days following the issuance of an order by the New Jersey Board of Public Utilities approving the Second Amendment to the Agreement, a non-cancellable surety bond or irrevocable bank letter of credit in form and substance reasonably acceptable to JCP&L upon which JCP&L can draw if the Facility does not achieve Commercial Operation by the Initial Delivery Date. Said surety bond or letter of credit will be renewed by Seller not later than 10 days prior to its stated expiration date. At Seller's option, the surety bond or letter of credit may be replaced with other security acceptable to JCP&L. Notwithstanding anything contained in this Agreement to the contrary, if Seller should fail to renew the surety bond, letter of credit or other security accepted by JCP&L on or before the tenth day prior to its stated expiration date, JCP&L shall be entitled, without further notice to Seller, to draw on such surety bond, letter of credit or other security. Upon receipt of payment thereunder, JCP&L shall hold the funds pending (i) a renewal of the surety bond, letter of credit or 19 other security, in which event JCP&L shall refund such funds to Seller or (ii) a termination of this Agreement as herein provided in which case JCP&L shall retain the funds in accordance with the terms hereof. 12. A new Article 23 is hereby added to the Agreement to provide as follows: ARTICLE 23 COVENANTS 23.1 Seller hereby covenants and agrees that prior to the Initial Delivery Date, Seller shall at its own cost and expense obtain all material permits, licenses and other authorizations from governmental authorities as may be required to construct, operate and maintain the Facility and to perform its obligations hereunder, and during the term hereof, Seller shall furnish to JCP&L copies of each such permit, license and authorization promptly following receipt thereof. Seller shall maintain in full force and effect all such governmental permits, licenses and authorizations as may be necessary for the construction, operation or maintenance of the Facility. 13. Appendix A - Schedule of Electricity Purchase Prices. Paragraph A.1 of Appendix A is hereby amended to read in its entirety as follows: Price: Buyer shall pay the following amounts to Seller for electricity delivered to Buyer: 20 A. For electricity delivered in an On-Peak Period prior to January 1, 2000, 120% of the applicable rate times the electricity delivered in the On-Peak Period. For electricity delivered in the On-Peak Period after January 1, 2000, 110% of the applicable rate times the electricity delivered in the On-Peak Period. B. For electricity delivered in an Off-Peak Period prior to January 1, 2000, 88.9% of the applicable rate times the electricity delivered in the Off-Peak Period. For electricity delivered in an Off-Peak Period after January 1, 2000, 92% of the applicable rate times the electricity delivered in the Off-Peak Period. 14. Paragraph A.2B of Appendix A is hereby amended and a new Paragraph A.2C is hereby added to read in their entirety as follows: B. The Adjusted Base Rate (as determined pursuant to Article A.3) for deliveries on or after April 1, 1986, excluding deliveries prior to the demonstration of Contract Capacity as provided in this Agreement. C. The applicable On-Peak or Off-Peak PJM billing rate to GPU minus 10% for energy delivered prior to the demonstration of Contract Capacity as provided in this Agreement. 21 15. Effectiveness; Regulatory Approval. This Second Amendment shall become effective and binding upon the Parties hereto upon execution hereof and issuance of a final order by the New Jersey Board of Public Utilities approving this Second Amendment as so executed, and without terms and conditions unreasonably to either Party. 16. Captions; Miscellaneous. All indexes, titles, subject headings, section titles and similar items are provided for the purpose of reference and convenience only and are not intended to be inclusive, definitive or to affect the meaning of the contents or scope of this Second Amendment. Unless otherwise defined in this Second Amendment, capitalized terms shall have the meaning ascribed to them in the Agreement. 17. Choice of Law. This Second Amendment shall be governed by and construed in accordance with the laws of the State of New Jersey applicable to contracts made and to be performed in that State. 18. Entire Agreement; Severability. The Agreement, as further amended by this Second Amendment, supersedes any and all oral or written agreements and understandings heretofore made relating to the subject matter hereof, and constitutes the entire agreement and understanding of the Parties relating 22 hereto. Should any provision of this Amendment be held invalid or unenforceable, such provision shall be invalid or unenforceable only to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable any other provision thereof. Except as amended by this Second Amendment, the Agreement shall remain in full force and effect. 19. Counterparts. This Second Amendment may be executed in any number of counterparts, and all such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties by their authorized representatives have executed this Second Amendment as of the day and year first set forth above. ATTEST: JERSEY CENTRAL POWER & LIGHT COMPANY /s/ C.A. Marks By: /s/ E.J. McCarthy Asst. Secretary ATTEST: O'BRIEN ENERGY SYSTEMS, INC. /s/ C.B. Balickie By: /s/ Sanders Newman Secretary Sr. V.P. - Sec. & Gen. Counsel 23 EX-10.11.4 26 EXHIBIT 10.11.4 LETTER AGREEMENT DATED APRIL 30, 1996 BETWEEN O'BRIEN (NEWARK) COGENATION, O'BRIEN (PARLIN) COGENERATION AND JCP&L. Exhibit 10.11.4 April 30, 1996 O'Brien (Newark) Cogeneration, Inc. O'Brien (Parlin) Cogeneration, Inc. 1221 Nicollet Mall Suite 700 Minneapolis, Minnesota 55403 Re: Amended and Restated Agreement for Purchase and Sale of Electric Power (the "Parlin PPA") between O'Brien (Parlin) Cogeneration, Inc. ("Parlin") and Jersey Central Power & Light Company ("JCP&L") and the Third Amendment to Power Purchase Agreement ("Newark Third Amendment") between O'Brien (Newark) Cogeneration, Inc. ("Newark") and JCP&L Gentlemen: Please refer to the above-referenced Parlin PPA and Newark Third Amendment and to the Other of Approval dated April 29, 1996 in docket numbers EM8804-396 and EM88121345, of the State of New Jersey Board of Public Utilities (the "BPU Approval"), a copy of which is attached hereto. This letter is to confirm our mutual understanding and agreement that, the BPU Approval having been received, executed signature pages to the Third Amendment and the Parlin PPA having been exchanged, the bankruptcy court order approving the NRG Plan (as defined in the Parlin PPA and the Newark Third Amendment) having been entered on February 23, 1996 and the gas supply agreement between JCP&L and Public Service Electric and Gas Company having been entered into and approved by the New Jersey Board of Public Utilities, air conditions precedent to the Newark Third Amendment and the Parlin PPA have been satisfied and the Parlin PPA and the Newark Third Amendment have become effective as of April 30, 1996. If the foregoing accurately sets forth our agreement, please so indicate by executing this letter in the space provided below and sending it to us by facsimile transmitter. JERSEY CENTRAL POWER & LIGHT COMPANY By: /s/ M.P. Morrell Name: Michael P. Morrell Title: Vice President AGREED: O'BRIEN (NEWARK) COGENERATION, INC. By: /s/ Leonard Bluhm Leonard A. Bluhm President O'BRIEN (PARLIN) COGNERATION, INC. By: /s/ Leonard Bluhm Leonard A. Bluhm President EX-10.11.5 27 EXHIBIT 10.11.5 THIRD AMENDMENT TO POWER PURCHASE AGREEMENT DATED APRIL 30, 1996 BETWEEN O'BRIEN (NEWARK) COGENERATION AND JCP&L. Exhibit 10.11.5 THIRD AMENDMENT TO POWER PURCHASE AGREEMENT This Third Amendment, dated as of April 30, 1996 ("Third Amendment") is made and entered into by and O'Brien (Newark) Cogeneration, Inc. ("Seller") and Jersey Central Power & Light Company ("JCP&L") with respect to the Agreement, dated March 10, 1986, between O'Brien Energy Systems, Inc. ("O'Brien") and JCP&L. WHEREAS, the Power Purchase Agreement as heretofore amended (the "Agreement") provides for the purchase by JCP&L of the capacity and energy from the Cogeneration Facility having a nameplate rating of 52 MW and located at the Newark Boxboard plant in Newark, New Jersey; WHEREAS, O'Brien has, with JCP&L's consent, assigned the Agreement to Seller; WHEREAS, NRG Energy Inc. ("NRG") is seeking approval of its proposed Plan of Reorganization (the "NRG Plan") of O'Brien Environmental Energy, Inc. ("OEE") which provides for the acquisition by NRG of 49% of the outstanding stock of OEE; WHEREAS, Seller is a wholly owned subsidiary of OEE; and WHEREAS, JCP&L and Seller now desire further to amend the Agreement in the manner and subject to the terms and conditions hereinafter set forth and intend that the Agreement, as amended by this Third Amendment, become effective and govern the purchase by JCP&L of the capacity and energy from the Cogeneration Facility from and after the Effective Date (as hereinafter defined). NOW, THEREFORE, in consideration of the premises, the mutual covenants and conditions hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereby agree as follows: 1. Definitions. Capitalized terms used in this Third Amendment shall have the meaning given to them in the Agreement unless otherwise defined herein. 2. Exempt Wholesale Generator Status. Promptly following entry of the Approval Order (as hereinafter defined), Seller will file with the Federal Energy Regulatory Commission ("FERC") an appropriate application for determination that Seller is an "exempt wholesale generator" ("EWG") under Section 32(a)(1) of the Public Utility Holding Company Act of 1935, as amended, and the regulations of the FERC thereunder. If requested by Seller, JCP&L shall, at no cost to JCP&L, use reasonable efforts to support Seller's filing with the FERC for approval of the rates provided in the Agreement. In the event the FERC grants Seller's application, Seller shall have no further obligation under the Agreement, as further amended by this Third Amendment, to maintain the Facility as a Qualifying Facility for so long as Seller maintains EWG 2 status. JCP&L agrees that, until either the Effective Date has occurred or it has been definitively established that the Effective Date will not occur (e.g., the time period for the occurrence of the Effective Date under Section 7 shall have expired), JCP&L will not pursue any rights or remedies that it may have against Seller, OEE or its or their predecessors in interest with respect to any past failure or inability of Seller or the Facility to satisfy applicable FERC requirements for Qualifying Facilities and further agrees that, if the Effective Date does occur, on and after the Effective Date, it shall have no further rights or remedies against Seller, OEE or its or their predecessors in interest with respect to any past failure or inability of Seller or the Facility to satisfy applicable F~RC requirements for Qualifying Facilities, all of which shall be deemed to be waived by JCP&L. Seller shall, however, maintain the Facility as a Qualifying Facility in the event the FERC denies Seller's EWG application or revokes Seller's EWG status. If the Effective Date does occur as provided herein and the FERC denies Seller's EWG application or revokes Seller's EWG status, JCP&L will allow Seller a reasonable period of time, not to exceed 180 days, to make such modifications to the Facility and/or to enter into or modify such contracts as may be necessary to meet the applicable FERC requirements for Qualifying Facilities, and, if Seller does so, JCP&L shall have no further rights or remedies against Seller with respect to any past failure or inability (including any failure or inability during such cure period) of Seller or the Facility to satisfy such requirements. 3 3. A new paragraph (g) is hereby added to Section 7.6 of the Agreement to read in its entirety as follows: In addition to JCP&L's rights set forth in paragraph (d) of this Section 7.6, JCP&L shall have the right, in its sole and absolute discretion, to disconnect, interrupt, curtail or otherwise refuse to accept or purchase energy and capacity from the Facility for a total of 700 hours each calendar year during the term hereof; provided, however, that such discretionary disconnections, curtailments, interruptions and refusals may occur only during Saturdays, Sundays and Holiday periods and shall, in each case, be of a duration of not less than six (6) hours each. Curtailment occurring on Sundays and Holidays may be extended through 4:00 a.m. the following morning. For purposes of the foregoing calculation, it is understood and agreed that the time during which Facility output moves between full output and net zero output (including both startup and shutdown periods) shall not be considered in the calculation. JCP&L shall use its reasonable best efforts to provide Seller with prior notice of any such disconnection, interruption, curtailment or refusal to the extent practicable under the circumstances. 4. Section A.3 of Appendix A is hereby amended to read in its entirety as follows: Adjusted Base Rate. The Adjusted Base Rate for each Rate Year beginning April 1, 1996, shall be the sum of the Rate Components for such year, rounded to the nearest one-thousandth of one cent. The Rate Components, the 1995 Rate Year Values and Index Factors are as follows: Rate Component 1995 Rate Index Factor Year Value Fixed Component $.03085 None Retail Rate Component $.01240 Retail Rate Index Factor Total $.04325 5. Paragraph (B) of Section A.5 of Appendix A is hereby deleted in its entirety. 4 6. Sections A.8 through A.l0 of Appendix A are hereby added to read in their entirety as follows: A.8 Fuel Related Charges The cost for all natural gas fuel consumed by the Facility's combustion turbine and duct burners will be borne by JCP&L which shall also be responsible for the supply of, and which shall supply, such fuel to the Facility subject to the terms and conditions hereinafter provided. A.9 Heat Rate Adjustment The Average Heat Rate, as defined below, will be used to calculate the Heat Rate Adjustment. This adjustment will be reflected as either an increase or decrease in the payments to be made by JCP&L to Seller hereunder for energy and capacity, depending upon whether the Average Heat Rate is below or above 9750 BTU/kWh HHV (High Heating Value). Any such adjustment shall be applied to JCP&L's payments to Seller beginning the second calendar month following each anniversary of the Effective Date (as defined below). At the conclusion of each Contract Year (as defined in Section B.2.5 of Appendix B hereto), JCP&L will calculate the Facility's Average Heat Rate ("AHR") for the previous12 months using the following formula: AHR = Total Fuel Input AG where: Total Fuel Input represents the fuel supplied and paid for by JCP&L. This includes fuel used during startup and shutdown. AG, or the Annual Generation, is the annual total of kWhs produced by the Facility, exported to, registered at the billing meter and purchased by JCP&L. The Heat Rate Adjustment ("HRA") will be calculated at the end of each contract year as follows: HRA= 9750 BTU/kWh - AHR x AAFC x AG 1,000,000 where: AAFC, or the Average Annual Fuel Cost, is the average cost for fuel supplied by JCP&L to the Facility in 5 $/MMBTU for the period corresponding to the Average Heat Rate calculation. For example, by way of illustration only, if: AHR = 9550 Btu/kWh AAFC = $2. 60/MMBtu AG = 350,000,000 kWh [7000 hours at 50MW] HRA = (9750-9530) BTU/ kWh x $2.60/MMBtu 1 1000,000 x 350,000,000 kWh = $182,000 JCP&L will provide Seller with an average Heat Rate Adjustment statement not later than 15 days after each anniversary of the Effective Date. The Heat Rate Adjustment payment, if any, will be made by Seller or by JCP&L (as either an increase in or offset t~ payments otherwise made by JCP&L to Seller hereunder) in six equal monthly installments (without interest) commencing the second calendar month following each anniversary of the Effective Date; provided, however, that any remaining Heat Rate Adjustment payment for the last full Contract Year during the term hereof and for the partial Contract Year commencing on the last anniversary of the Effective Date during the term hereof and ending on November 10, 2015 shall be invoiced by JCP&L on or before December 1, 2015, and the net amount thereof shall be paid, in cash, by Seller or JCP&L, as the case may be, within 30 days of submission of such invoice. A.l0 Fuel Procurement (a) JCP&L will be responsible for the supply of, and shall supply, the natural gas required for use by the Facility (including, without limitation, the auxiliary boilers and, notwithstanding anything in Section 5.10(g) of the Agreement to the contrary, all fuel used in connection with capacity tests and demonstrations of Contract Capacity performed pursuant to Section 5.10(g)) and will bear all the costs thereof other than the costs to supply such fuel as may be necessary to generate steam from the Facility's auxiliary boiler. Seller shall maintain on the Facility site kerosene inventories for fuel when gas supply to the Facility is interrupted. JCP&L shall reimburse Seller for the cost of kerosene used during periods of gas interruptions at the replacement price thereof (except for kerosene used to generate steam from the Facility's 6 auxiliary boiler) at the then prevailing market rate therefor in the area in which the Facility is located. However, if the conditions in the Facility's air permit or other permits or regulatory requirements would limit or prohibit the further use of kerosene, and if JCP&L is unable to obtain appropriate waivers from the applicable permitting or regulatory authorities to permit the additional kerosene use, Seller may procure gas from third parties for use by the Facility for SQ long as JCP&L is unable to provide the necessary gas for the Facility. JCP&L shall allow Seller to use transportation capacity which JCP&L may have available (taking into account JCP&L's system-wide needs) for such third party gas and shall reimburse Seller for such gas (except for gas used to generate steam from the Facility's auxiliary boiler) and all related transportation costs (except any transportation made available without charge by JCP&L) at a rate equal to the lesser of (i) Seller's actual costs for such gas and transportation or (ii) the maximum reimbursement to which Seller would be entitled pursuant to the last sentence of Section B.2.l of Appendix B hereto. (b) Fuel procurement and supply shall be on the terms and conditions set forth in Appendix B hereto. 7. Effective Date; Regulatory Approval. This Third Amendment shall become effective and binding upon the Parties hereto ("Effective Date") upon the last to occur of (a) the date on which the New Jersey Board of Public Utilities ("BPU") issues a final order (which order shall be acceptable in form and substance to JCP&L in its sole discretion) approving this Third Amendment and the full recovery by JCP&L from its customers of all amounts payable under the Agreement, as so amended, through JCP&L's levelized energy adjustment clause or similar rate recovery mechanism, (b) 10 days following the entry of a final order ("Approval Order") by the United States Bankruptcy Court for the District of New Jersey approving the NRG Plan, (c) the existing Gas Service Agreement dated May 13, 1993 between Seller and Public Service Electric & Gas 7 Company ("PSE&G") shall have been terminated or assigned to JCP&L without any liability to Seller or the Facility, (d) JCP&L shall have executed a gas supply agreement for the Facility with PSE&G or, if the existing Gas Supply Agreement described in clause (c) shall have been assigned to JCP&L, such agreement shall have been amended or modified to JCP&L's satisfaction, in its sole discretion, and in either case such agreement shall have received all necessary regulatory approvals and shall otherwise have become effective in accordance with its terms, and (e) that certain Amended and Restated Agreement For Purchase and Sale of Electric Power dated as of December 1995 by and between O'Brien (Parlin) Cogeneration, Inc. and JCP&L shall have become effective in accordance with its terms. If the Effective Date does not occur by the earlier of (a) 75 days after the date of entry of the Approval Order or (b) June 15, 1996, this Third Amendment shall, unless otherwise mutually agreed by the Parties, automatically terminate and be of no force or effect and the Parties shall thereupon have no further rights, liabilities or obligations hereunder. 8. Captions; Miscellaneous. All indexes, titles, subject headings, section titles and similar items are for convenience of reference and are not intended to affect the meaning or contents hereof. 9. Governing Law. This Third Amendment shall be governed by and construed in accordance with the laws of the State of New Jersey applicable to contracts made and to be performed in that State. 8 10. Entire Agreement. The Agreement, as further amended by this Third Amendment, supersedes any and all prior understanding and agreements made between the Parties regarding the subject matter hereof, and constitutes the entire agreement and understanding of the Parties relating thereto. 11. Counterparts. This Third Amendment may be executed in any number of counterparts, each of which shall be an original but all of which, when taken together, shall constitute one and the same agreement. IN WITNESS WHEREOF, the Parties have caused this Third Amendment to be signed by their respective officers thereunto duly authorized as of the date and year first above written. Attest: O'BRIEN (NEWARK) COGENERATION, INC. By: /s/ Leonard Bluhm Title: Title: Attest: JERSEY CENTRAL POWER & LIGHT COMPANY By: /s/ M.P. Morrell Assistant Secretary Title: Vice President 9 Newark Boxboard Appendix B Facility Fuel Management Services B. 1 GPU Natural Gas Private Pooling Point ("PPP") B.1.1 GPU Service Corporation ("GPUSC") is authorized to act on behalf of and as agent for JCP&L in all matters pertaining to the procurement and delivery of natural gas for consumption by those participating gas-fired generating facilities owned by JCP&L or certain facilities owned by an Independent Power Producer with a Power Purchase Agreement with JCP&L, including the Facility. JCP&L and GPUSC shall hereafter collectively be referred to as the "Company". B.1.2 GPUSC has established a Natural Gas Private Pooling Point ("PPP"), which is a portfolio of natural gas supply and transportation assets, that is managed collectively by New Jersey Natural Energy Corporation ("NJNE") and GPUSC pursuant to a Master Fuel Management Agreement. NJNE is a wholly owned subsidiary of New Jersey Resources Corporation. B.1.3 Facilities served by the PPP, including the Facility, will be provided a comprehensive natural gas management service such that neither the Facility's owners nor operator shall be responsible nor held liable for procuring, transporting, scheduling, nominating or delivering natural gas to the Facility's burner tip. In the case of the Facility, this shall include serving the full requirements of the Facility (including the Facility's auxiliary boilers) provided that Seller both complies with the explicit notification requirements set forth herein and elects to accept delivery of such natural gas at the price specified in Section B.2.4 below. B.1.4 GPUSC has designated a full time employee assigned to the PPP, and officed at GPUSC's dispatch center, to coordinate all natural gas procurement and scheduling for PPP facilities including the Facility. Such employee shall hereafter be referred to as the "Fuel Manager". The Fuel Manager or his designee shall be available twenty-four hours per day, seven days per week. B.2 Operations B.2.1 The PPP shall provide natural gas to the Facility's Burner Tip to operate the Facility unless the Seller notifies the GPUSC dispatcher that the Facility is not available as a consequence of a planned or forced outage. In the event of a forced outage, the Seller shall immediately notify the Company dispatcher of the outage condition and its anticipated duration. The Seller shall notify JCP&L of a major Planned Outage, i.e., scheduled outages expected to last longer than seven (7) consecutive days, at least two (2) months prior to the planned start of said outage. Further, the Seller shall notify JCP&L of its intent to resume operation of the Facility at least one (1) week prior to the completion of a major Planned Outage. Seller shall use reasonable best efforts to notify the Company of Maintenance Outages and short duration Planned Outages, i.e., unscheduled Planned Outages or Planned Outages expected to take less than seven (7) days, within one day of the decision to conduct such an outage. If the PPP fails to properly procure and cause to be delivered an adequate supply of natural gas to operate the Facility during periods when PSE&G has not interrupted Or recalled the interstate or intrastate transportation that it supplies to the PPP pursuant to its agreement with the Company to support, among other things, the operation of the Facility, then the Seller shall, nonetheless, ensure that an adequate supply of kerosene is available at all times and agree to operate the Facility on kerosene provided that the Company shall pay for said kerosene pursuant to Section A. 10 of Appendix A to the Agreement and that operation of the Facility on kerosene does not cause the Facility to violate its air permits. Alternatively, the Seller may procure and cause to be delivered a supply of natural gas to the facility from third party supplier to operate the Facility during such periods. The Company shall reimburse the Seller for the all- in cost of such natural gas up to the sum of the mid-point of the range of the most recent price to Mid-Atlantic Citygates, Transco, Zone 6, or Texas Eastern, Zone M-3, whichever is greater, as published in the following day's Gas Daily, Eastern Edition, and PSE&G's reasonable charge to transport said natural gas to the Facility. B.2.2 In accordance with Section A. 10 of Appendix A to the Agreement, the PPP shall be responsible for tendering natural gas to the Facility's auxiliary boilers to produce steam for Newark Boxboard during periods when the Facility is not operating, either because 3CP&L has elected to exercise its rights to curtail. operation or because of a full or partial outage. The Seller shall notify the Fuel Manager of its intention to operate the auxiliary boilers and the amount of natural gas required prior to 0900 hours of the preceding day or, If notice by such time is not feasible (e.g., because notice of curtailment was not given by JCP&L by that time or because of the sudden occurrence of a full or partial forced outage), as much notice as is feasible under the circumstances. The Fuel Manager shall fax confirmation of the Seller's request by 1200 hours on that day (or, if response by that time is not feasible because shorter notice was given by Seller as permitted under the previous sentence, as soon as is feasible). Seller shall pay for such additional gas at the rate provided in Section B.2.4 below. B.2.3 Once nominated, the Seller is obligated to consume within plus or minus five percent (5%) of any additional gas requested pursuant to Section B.2.2 hereof in the aggregate during each calendar month, unless other arrangements can be made at the time between the Seller and the Fuel Manager. In the event the Facility, for whatever reason, is unable or fails to consume the additional gas that it had previously requested, the Company shall use reasonable efforts to redirect, place into storage, or remarket such excess gas so as to mitigate the cost of disposing of said excess gas. Should the Facility consume an amount of natural gas greater than one hundred and five percent (105%) of the aggregate amount requested during any calendar month, then the Company shall use reasonable efforts to remedy any resulting imbalances including, when practicable, withdrawal of natural gas 2 reserves from storage, if an adequate supply of such natural gas exists and can be accessed. However, the incremental cost of such gas along with any and all penalties or claims that may nonetheless be applied by a third party, including but not limited to an interstate pipeline company or PSE&G, as a result of an imbalance, shall be paid by the Seller. B.2.4 The Fuel Manager shall provide the Company and the Seller with a monthly weighted average cost of gas ("WACOG") to the PSE&G city gate that shall be combined with the cost of variable intrastate transportation charged to the PPP by PSE&G to deliver gas to the Facility's burner tip. The combined WACOG and intrastate transportation charges will be used in the calculation of Seller3s reimbursement to JCP&L for steam sales to Newark Boxboard when the auxiliary boiler is used. The WACOG shall be the PPP's overall WACOG at PSE&G's city gate and shall be reported to the Company and the Seller no later than three (3) business days after the end of the month. Upon receipt of the Seller's written request, the Fuel Manager shall provide documentation supporting the calculation of the WACOG and shall provide access, as required, to relevant supporting detail including invoices and LDC metering summaries. B.2.5 Unless otherwise advised by the Seller, the Fuel Manager shall utilize the Average Heat Rate of the preceding "Contract Year' (which shall mean each twelve month period during the term of the Agreement commencing on the Effective Date and each anniversary of the Effective Date), or 9750 BTU/kWh (HHV), to determining the natural gas requirements of the Facility. Seller shall use reasonable efforts to maintain an accurate estimate of the Facility's Heat Rate and shall report any significant variations (i.e., +/- 5%) from the Average Heat Rate then in effect, either due to the materiel condition of the Facility or temperature conditions. Seller shall not be responsible for any cost or charges, including storage or remarketing costs or imbalance charges, resulting from any difference between such estimates and the Facility's actual usage provided that (i) Seller operates the Facility as contemplated and (ii) Seller has properly notified the Fuel Manager of any significant variations in the Heat Rate used by the Fuel Manager in calculating the natural gas requirements of the Facility. B.2.6 From time to time, the Company may direct the Seller to operate the Facility on kerosene instead of natural gas during periods when natural gas is either unavailable or prohibitively expensive. The Company shall reimburse Seller for the cost of kerosene as provided in Section A. 10 of Appendix A to the Agreement. The Company shall provide at least a comparable level of natural gas service to the Facility for the purpose of operating the Facility to that provided by PSE&G to its QF customers under its prevailing CIG Tariff. B.3 Metering of Natural Gas Flows to the Facility B.3.1 Both Seller and JCP&L shall maintain meters for measuring the quantity of fuel used by the Facility. The meters shall be capable of recording total MCFs and associated calculated BTUs delivered to the Facility on a continuous, real time basis and shall be calibrated at regular intervals based on manufacturer's recommendations. The parties will 3 use these meter readings to cheek the readings obtained by PSE&G. In the event of a discrepancy between meters, the readings obtained by PSE&G shall prevail until such time as all of the meters can be recalibrated. If such recalibration demonstrates that the PSE&G meter data was in error, an appropriate adjustment shall be made for the period in question. It is contemplated by the Parties at the time of this Agreement that ~CP&L shall be afforded ~ to PSE&G's billing meter and shall further be permitted to connect its remote telemetering unit ("RTU") to such billing meter for the purpose of electronically transmitting real time fuel consumption data to the GPUSC's dispatch center. In the event that, for whatever reason, access to PSE&G's billing meter is denied or deemed to be impracticable, then the 3CP&L shall have the right to cause to be installed at its own expense a meter capable of recording and electronically transmitting required real time fuel consumption data at the Facility. B.3.2 The Fuel Manager will monitor the consumption of natural gas at the Facility to ensure that an adequate supply of natural gas is available to operate Facility. In the event that the Fuel Manager determines that, during periods when PSE&G has not interrupted or recalled the interstate or intrastate transportation that it supplies to the PPP pursuant to its agreement with the Company to support, among other things, the operation of the Facility, an insufficient quantity of natural gas remains to continue to operate the Facility at its current level of output, provided that the insufficiency is not the result of a material change in the Facility's performance or output, the PPP may request the Company to exercise, and the Company may exercise, the Company's right to curtail Facility output under the Agreement in order to conserve the remaining supply of natural gas until additional quantities of natural gas can arranged. If the shortfall is substantial i.e., greater than 5% variation from anticipated consumption at the point in time that the comparison is made and cannot be readily explained), the Company and/or the Seller may request that any or all gas measuring meters be recalibrated. If it is determined that the additional fuel consumption is the result of a material change in the Facility's performance or output, the Fuel Manager shall notify the Seller in writing immediately, who shall, in turn, confirm receipt of such notification and explain the cause or causes of the change in performance and what steps will be taken to remedy the situation. The extent of the change in performance may necessitate that the Facility be declared to be in a full or partial forced outage until the condition is remedied. In such circumstances where the additional fuel consumption is the result of a material change in the Facility's performance or output, the Seller shall be responsible for paying the reasonable incremental cost of either operating the Facility on kerosene, or on a supplemental supply of "no notice" natural gas that the Fuel Manager may arrange until such time as the Fuel Manager, using reasonable efforts, is able to nominate additional quantities of natural gas. In any event, the provisions set forth in Section A.9 of Appendix A to the Agreement shall apply. B.3.3 The Company shall seek to cause PSE&G to deliver natural gas of interstate pipeline quality to the Facility at its system operating pressure. B.4 Title 4 B.4.l Title to the natural gas supply used to fuel the Facility shall remain with GPUSC. B.4.2 Title to the natural gas requested by the Seller to fuel the auxiliary boiler shall transfer to the Seller at the PSE&G billing meter. Such tide transfer shall create an obligation on the part of the Seller to reimburse the Company the full cost of the natural gas as provided herein. B.4.3 At all times, tide to any interstate transportation which may be used from time to time to transport natural gas to the PSE&G city gate for the purpose of operating the Facility including the auxiliary boiler shall remain with GPUSC. B.4.4 The Company warrants that it will have good and marketable tide to all natural gas supplied to Seller and full authority to deliver such natural gas to Seller free and clear of any liens, claims or encumbrances of any third party. B.5 Liability B.5.1 The Seller shall have no responsibility to procure natural gas for the Facility, nor shall it be liable for any claims or penalties resulting from the supply and or transportation of natural gas to the Facility when operation of the Facility is within the prescribed terms of the Agreement. Such operation shall include operating the Facility and operating the auxiliary boiler either during periods when the Facility is in an outage condition or, during periods when the Company elects to exercise its rights pursuant to Section 7.6(g) of the Agreement. B.5.2 The Seller shall be liable for the unmitigated cost of disposing of additional gas supplies previously requested by the Seller referenced in Section B.2.3 of this Appendix but not consumed at the Facility pursuant to the terms and limitations set forth in that Section. B.5.3 The Seller shall be liable for the entire cost of any natural gas consumed by the auxiliary boiler. Further, in addition to the full cost of the natural gas consumed, the Seller shall be entirely liable for any penalties or claims that might result as a consequence of its failure to properly notify the Fuel Manager of its intention to operate the auxiliary boiler. B.5.4 The Company shall not be held liable for any fines imposed by the New Jersey Department of Environmental Protection on the Seller resulting from the Facility exceeding the authorized level of operations on kerosene. It is the Seller's responsibility to ensure compliance with all of its permits. However, Seller shall not be obligated to operate the Facility if the PPP has not provided adequate natural gas for such production during periods when PSB&G has not interrupted or recalled the interstate or intrastate transportation that it supplies to the PPP, pursuant to its agreement with the Company, to support, among other things, the operation of the Facility, if such production would cause the Facility to exceed 5 authorized levels of operation on kerosene. Such failure to operate the Facility shall not be considered a forced outage under the Agreement. B.5.5 Pursuant to Section B.2.6 of this Appendix, the PPP shall provide a level of service comparable to PSE&G's CIG Tariff which contemplates some number of days of interruption during periods when the ambient air temperature falls below some predetermined contract level. During such periods of natural gas interruption, the Seller may operate the Facility on kerosene, provided that such operation does not exceed the authorized levels of operation on kerosene under the Facility's permit. The Company shall reimburse the Seller the cost of said kerosene pursuant to Section A.10 of Appendix A to the Agreement. However, if the Seller is unable to operate the Facility due to the unavailability of kerosene or, because the Facility has exceeded the authorized number of hours of operation under the air permit, the Company shall not be liable to the Seller for any lost revenue that would otherwise be paid pursuant to Article 8 and Appendix A to the Agreement and the Facility shall be considered to be in a forced outage and all provisions related thereto shall apply. B.6 Conflicts B.6.1 Nothing contained in this Appendix shall supersede or nullify any portion or provision of the Agreement. In the event of conflict between this Appendix and the Agreement, the terms and conditions set forth in the Agreement shall always prevail. B.7 Billing and Payments B.7.1 The Parties shall establish and maintain guidelines which shall govern the billing and subsequent payment for natural gas volumes supplied by the Company and delivered to the Seller at the PSE&G billing meter. Such guidelines shall be established and amended, as required, through letter agreement. 6 EX-10.15.2 28 EXHIBIT 10.15.2 AMENDMENT TO STEAM PURCHASE AGREEMENT DATED MARCH 15, 1988 BETWEEN O'BRIEN COGENERATION IV, INC. AND NEWARK BOXBOARD CO. Exhibit 10.15.2 AMENDMENT TO STEAM PURCHASE AGREEMENT BETWEEN O'BRIEN CONGENERATION IV, INC. AND NEWARK BOXBOARD CO. WHEREAS, O'Brien Cogeneration IV, Inc., a Delaware corporation, and Newark Boxboard Co., a New Jersey corporation, signed a Steam Purchase Agreement dated October 3, 1986 under which O'Brien intends to supply steam to the paperboard plant located in Newark, new Jersey; and WHEREAS, the parties desire to ratify said Agreement and make certain modifications thereto; NOW THEREFORE, in consideration of the mutual covenants container herein, the sufficiency of which is acknowledged by both parties, the parties do hereby agree as follows: 1) Modification to Section 5.1 (Effective Date and Term): The first sentence in Section 5.1 (A) is modified to read as follows: "Except as otherwise provided in Article 15 or 16, the term of this Agreement shall begin upon the execution of this Agreement, and shall terminate on June 30, 1988 unless the conditions precedent as specified in Section 5.4 are then satisfied in Section 5.4 are then satisfied or compliance therewith waived." 2) Modification to Section 5.4: The first sentence of Section 5.4 is replaced in its entirety as follows: "The Parties' respective obligations under this Agreement are conditioned upon, and subject to the satisfaction of each of the following conditions precedent or on prior to June 30, 1988: (i) Seller's executing an amendment to its Electricity Contract with JCP&L, reasonably satisfactory to Seller, covering an extension of the Facility completion deadline: (ii) Seller's obtaining all remaining necessary permits, authorizations and certifications, including,, but not limited to the following permits: (a) soil erosion, (b) FAA permit, (c) preliminary and final site plan approval, (d) approval of the Facility's sewer connection (e) building permit and any required DOT permits; (iii) Seller obtaining FERC approval of the Wheeling Contract signed with PSE&G; (iv) Seller's obtaining financing that Seller, in its reasonable discretion, deems acceptable; (v) Seller's entering into a turnkey contract, to design, construct, startup and test the Cogeneration Facility; and (vi) Seller obtaining a long-term fuel supply either, at its option, (a) through contracting for gas under the CIG tariff or (b) obtaining a long-term fuel contract of at least fifteen (15) years in duration plus necessary transportation commitments where the price of fuel escalates on essentially the same terms and conditions as the variable component of Seller's electricity sales to JCP&L." 3. Modification to Section 9.1: "Buyer agrees to lease to Seller, for a term expiring 120 days after the termination of this Agreement, the Site, as described in Appendix E attached hereto, upon the timely satisfaction of all of the conditions precedent specified in Section 5.4, at an annual lease rate of $1.00 per year. The lease shall be on terms mutually acceptable to Buyer and Seller. The Site shall consist of approximately 1.02 acres, as more fully described in Appendix E attached hereto. In addition, Buyer shall provide all necessary easements, with respect to property owned by Buyer, for as long as Seller operates the Facility, to permit the installatin9 of the Steam Interconnection Facilities; and to permit Seller to install and maintain such electrical and steam transmission facilities as shall be necessary to deliver steam or electricity or both from the Cogeneration Facility to any person other than the Buyer so long as the same do not interfere with the operation of the Plant." 4, Elimination of Section 9.2 This Section is eliminated in its entirety. 5. Modification to Appendix E: The original Appendix E is eliminated and replaced with modified Appendix E (attached: E-SP81-Y-102 dated January 18, 1988 entitled "Proposed Site Location for Newark Boxboard"). 6. Complete Agreement: This Amendment along with the Steam Purchase Agreement constitutes the complete Agreement between the parties and may only be further modified by a written amendment signed by both parties. AGREED AND ACCEPTED: NEWARK BOXBOARD CO. O'BRIEN COGENERATION IV, INC. By: /s/ William D. Harper By: /s/ Sanders Newman Title: Vice President Title: Secretary Dated: March 8, 1988 Dated: March 15, 1988 2 GUARANTY OF O'BRIEN ENERGY SYSTEMS, INC. Guarantor agrees to and acknowledges the terms and provisions of the attached Amendment and confirms that its Guaranty shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or affected by the execution of said Amendment. O'BRIEN ENERGY SYSTEMS, INC. By: /s/ Sanders Newman 3 EX-10.15.3 29 EXHIBIT 10.15.3 AMENDMENT TO STEAM PURCHASE AGREEMENT DATED JULY 18, 1988 BETWEEN O'BRIEN (NEWARK) COGENERATION, INC. AND NEWARK GROUP INDUSTRIES, INC. Exhibit 10.15.3 AMENDMENT TO STEAM PURCHASE AGREEMENT between O'BRIEN (NEWARK) COGENERATION, INC. and NEWARK GROUP INDUSTRIES, INC. Amendment dated July 18, 1988 to Steam Purchase Agreement between O'Brien (Newark) Cogeneration, Inc. (formerly know as O'Brien Energy Systems IV, Inc.) ("Seller") and Newark Group Industries, Inc. (as assignee of Newark Boxboard Co.) (the "Buyer"). WHEREAS, Seller and Buyer are parties to a Steam Purchase Agreement dated as of October 3, 1986, as amended on March 8, 1988 (as so amended, "the Agreement"); and WHEREAS, Seller and Buyer desire to ratify said Agreement and to make certain modifications thereto. NOW, THEREFORE, in consideration of the mutual covenants contained herein and for good and valuable consideration, the adequacy and receipt of which are hereby acknowledged by both parties, the parties hereto hereby agree as follows: 1. Section 5.1B(1) of the Agreement is hereby amended by adding the following sentence at the end thereof: "In the event of a sale of the Plant to the Seller pursuant to this Section, Buyer shall be released from any and all liabilities and obligations hereunder arising on or after the sale date." 2. Section 5.1B(3) is hereby amended by adding the following at the end of the first paragraph thereof: "If the Seller does purchase the Plant pursuant to this paragraph, then the Buyer shall be released from any and all liabilities and obligations hereunder arising on and after the sale date." 3. The first sentence of Section 5.4 of the Agreement is hereby amended by changing the date referred to therein to August 30, 1988 rather than June 30, 1988. 4. Section 11.2 of the Agreement is hereby amended by adding the following sentence at the end thereof: "Nothing in this Section 11.2 is intended or shall be construed as amending, diminishing or otherwise affecting Buyer's obligation to purchase steam under Article 3 of, and Appendix A to, this Agreement." 5. Article 17 of the Agreement is hereby amended to provide as follows: "Buyer agrees to provide to Seller and to one or more financial institutions providing Seller with financing annual income statements with regard to the operation by Buyer by its Plant if, and only if, all of such financial institutions covenant and agree to keep confidential all information provided to them pursuant to t his provision. Seller covenants and agrees to keep any and all such information confidential and not to release it to any third party without the prior written consent of the Buyer." 6. Article 24 of the Agreement is hereby amended to provide as follows: 2 Article 24 Governing Law This Agreement will be governed by and interpreted in accordance with the laws of the State of New Jersey." 7. The first two sentences in Appendix A to the Agreement are hereby amended to provide as follows: "Required Maximum Output of Steam: 75,000 pounds per hour, except during scheduled maintenance outages at the Facility, during which times the required maximum output of Steam shall be that capable of being produced by the back-up facility. "Minimum Required Purchase of Steam Per Annum: 250,000,000 pounds." 8. Notwithstanding any provision to the contrary in the Agreement, in the event of a sale of the Plant by the Buyer to the Seller, then the Plant shall be conveyed from the Buyer to the Seller subject to such mortgages, liens or encumbrances as may have been placed by the Buyer on the Plant as permitted by the Ground Lease between the Buyer and the Seller. In the event of a sale of the Cogeneration Facility to the Buyer pursuant to the terms of the Agreement, then the Cogeneration Facility shall be conveyed to the Buyer subject to the liens, encumbrances and mortgage, if then outstanding, granted by O'Brien to National Westminister Bank PLC on the Cogeneration Facility and all mortgages consented to in writing by the Buyer or permitted by the Ground Lease. 3 9. Except as amended hereby, the Steam Purchase Agreement remains in full force and effect. O'Brien hereby acknowledged its liability for any and all obligations of the Seller under the Agreement, as hereby amended. The Company hereby acknowledges its liability for any and all obligations of the Buyer under the Agreement, as hereby amended. 10. Capitalized terms defined in the Agreement and not otherwise defined herein shall have the same meanings herein as in the Agreement. 4 IN WITNESS WHEREOF, the undersigned have executed this Amendment this 8 day of July, 1988. O'BRIEN (NEWARK) COGENERATION, INC. By: /s/ Sanders D. Newman Sanders D. Newman, Secretary NEWARK GROUP INDUSTRIES, INC. By: /s/ Connie B. Smith Connie B. Smith, V.P. 4 EX-10.17.3 30 EXHIBIT 10.17.3 AMENDED AND RESTATED AGREEMENT FOR PURCHASE AND SALE OF ELECTRIC POWER BETWEEN O'BRIEN (PARLIN) COGENERATION, INC. AND JERSEY CENTRAL POWER & LIGHT COMPANY. Exhibit 10.17.3 AMENDED AND RESTATED AGREEMENT FOR PURCHASE AND SALE OF ELECTRIC POWER BETWEEN O'BRIEN (PARLIN) COGENERATION, INC. AND JERSEY CENTRAL POWER & LIGHT COMPANY AMENDED AND RESTATED AGREEMENT entered into this 30 day of April 1996 by and between O'BRIEN (PARLIN) COGENERATION, INC., a Delaware corporation (the "Seller"), and JERSEY CENTRAL POWER & LIGHT COMPANY, a New Jersey corporation ("JCP&L") (collectively referred to as "Parties"). ARTICLE 1 RECITALS WHEREAS, JCP&L and Seller have entered into a certain Agreement for the Purchase and Sale of Electric Power, dated October 20, 1986, covering the purchase and sale of electrical output from the cogeneration facility constructed by Seller at the DuPont facility in Parlin, New Jersey which facility is a "qualifying cogeneration facility" as defined in the Public Utility Regulatory Policies Act of 1978 and the applicable regulations of the Federal Energy Regulatory Commission thereunder; WHEREAS, JCP&L and Seller have entered into a First Amendment dated as of April 9, 1991 to that Agreement amending the Agreement in certain respects (the Agreement as so amended being referred to herein as the "Power Purchase Agreement"); WHEREAS, the New Jersey Board of Public Utilities or its predecessors has entered appropriate orders approving the Power Purchase Agreement and the recovery by JCP&L of all payments to Seller thereunder from JCP&L's customers through JCP&L's. levelized energy adjustment clause; WHEREAS, NRG Energy Inc. ("NRG") is seeking approval of its proposed Plan of Reorganization (the "NRG Plan") of O'Brien Environmental Energy, Inc. ("O'Brien") which provides for the acquisition by NRG of 49% of the outstanding stock of O'Brien; WHEREAS, Seller is a wholly owned subsidiary of O'Brien; and WHEREAS, the Parties now desire, subject to satisfaction of the conditions set forth below, further to amend 1 and to restate the Power Purchase Agreement in order to provide, among other things, that the Facility shall be operated subject to the partial dispatching control of JCP&L and that JCP&L shall assume responsibility for the Facility's fuel supply and intend that this Amended and Restated Agreement become effective and govern the purchase and sale of electrical output from the aforesaid cogeneration facility from and after the Effective Date (as hereinafter defined). NOW THEREFORE, in consideration of the mutual covenants contained herein and other valuable consideration, receipt of which is hereby acknowledged, the Parties hereby agree as follows: ARTICLE 2 CONVERSION OF FACILITY TO EWG STATUS Promptly following entry of the Approval Order (as hereinafter defined), Seller will file with the FERC an appropriate application for determination that Seller is an "exempt wholesale generator" ("EWG") under Section 32(a) (1) of the Public Utility Holding Company Act of 1935, as amended, and the regulations of the FERC thereunder. JCP&L will cooperate with Seller in connection with Seller's application to become an EWG and will, in order to enable Seller to become an EWG, agree, subject to receipt of requisite regulatory approvals (which JCP&L will use reasonable efforts to pursue and obtain), to purchase from Seller and sell to DuPont such electrical energy as DuPont may require under its agreement with Seller, in addition to JCP&L's purchase of the Base Capacity and Dispatchable Capacity as provided herein, provided that the terms of such purchase from Seller and sale to DuPont do not result in any net increase in cost to JCP&L (e.g., the purchase price of such energy from Seller shall equal the sale price of such energy to DuPont) and provided, further, that Seller promptly reimburse JCP&L for any and all reasonable expenses incurred by JCP&L in carrying out its obligations as set forth in this sentence, including, without limitation, the expenses incurred in obtaining requisite regulatory approval of the sale of electrical energy to DuPont. Seller and JCP&L shall enter into such amendments and modifications to this Amended and Restated Agreement as may be reasonably necessary, and not detrimental to JCP&L, to implement such change. If requested by Seller, JCP&L shall, at no cost to JCP&L, use reasonable efforts to support Seller's filing with the FERC for approval of the rates provided for in this Amended and Restated Agreement. In the event the FERC grants Seller's EWG application, Seller shall have no further obligation under the Agreement to maintain the Facility as a Qualifying Facility for so long as Seller maintains EWG status. JCP&L agrees that, until either the Effective Date has occurred or it has been definitely established that the Effective Date will not occur (e.g., the time period for the occurrence of the Effective Date 2 under Section 4.1(b) shall have expired), JCP&L will not pursue any rights or remedies that it may have against Seller, O'Brien or its or their predecessors in interest with respect to any past failure or inability of Seller or the Facility to satisfy applicable FERC requirements for Qualifying Facilities and further agrees that, if the Effective Date does occur, on and after the Effective Date, it shall have no further rights or remedies against Seller, O'Brien or its or their predecessors in interest with respect to any past failure or inability of Seller or the Facility to satisfy applicable FERC requirements for Qualifying Facilities, all of which shall be deemed to be waived by JCP&L. Subject to the next sentence, Seller shall, however, maintain the Facility as a Qualifying Facility in the event that the FERC denies Seller's EWG application or revokes Seller's EWG status. If the Effective Date does occur as provided herein and the FERC denies Seller's EWG application or revokes Seller's EWG status, JCP&L will allow Seller a reasonable period of time, not to exceed 180 days, to make such modifications to the Facility and/or to enter into or modify such contracts as may be necessary to meet the applicable FERC requirements for Qualifying Facilities, and, if Seller does so, JCP&L shall have no further rights or remedies against Seller with respect to any past failure or inability (including any failure or inability during such cure period) of Seller or the Facility to satisfy such requirements. ARTICLE 3 DEFINITIONS The following terms when used herein and in any appendices hereto shall have the following meanings, unless a different meaning shall be expressly stated or shall be apparent from the context: 3.1 "Affiliate" means a corporation or other entity that directly, or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, another corporation or other entity. 3.2 "Agreement" means this Amended and Restated Agreement including all appendices attached hereto and all amendments thereto that may be made from time to time. 3.3 "Anniversary Date" means the date in every year that the Effective Date recurs. 3.4 "Base Capacity" means that portion of the Facility which shall be operated as base load or must run. The Base Capacity shall be 41 MW, rated and demonstrated at 92 3 Degrees F. The output of the Base Capacity will not vary with changes in ambient temperature. 3.5 "Billing Period" means the approximate 30 day period between monthly meter readings. 3.6 "BPU" means the New Jersey Board of Public Utilities or successor agency thereto. 3.7 "BPU Order" means the order issued by the BPU approving the Amended and Restated Agreement in the form executed by the Parties and permitting JCP&L fully to recover all payments made to Seller thereunder or otherwise in respect thereof from JCP&L's customers through JCP&L's levelized energy adjustment clause or similar rate recovery mechanism, which Order shall in form and substance be satisfactory to JCP&L. 3.8 "Capacity Test" means a test pursuant to applicable PJM guidelines during the Initial Test Period or subsequent test periods, conducted to measure the output of the Facility at ambient conditions in order to determine the Facility Capacity at 92 Degrees F. 3.9 "Cogeneration Facility" means the waste heat boiler, gas and steam turbines, reciprocating engine, fuel cell, generators and all appurtenant structures, equipment, including Seller's interconnection facilities, and real property interests owned or leased and operated by Seller at Parlin, New Jersey, for the purposes of sequentially generating electricity and steam and other forms of useful thermal output. 3.10 "Commercial Operation" means the sale of Electricity by Seller to JCP&L from Seller's Facility. 3.11 "Contract Availability" is the measure of Facility Availability as calculated pursuant to the formula set forth in Article 8.3. Contract Availability shall be measured on an annual basis. 3.12 "Contract Capacity" shall be 114 MW, rated and demonstrated at 92 Degrees F. 3.13 "Contract Year" shall mean each twelve month period during the term hereof commencing on the Effective Date and each anniversary of the Effective Date; provided that the last Contract Year shall end on June 17, 2011 even if less than a twelve month period. 4 3.14.1 "Dispatchable Capacity" shall mean that portion of the Facility which shall operate and export electricity to JCP&L only when called for by JCP&L. The Dispatchable Capacity shall be 73 MW at 92 Degrees F., as adjusted for ambient temperature. 3.14.2 "Dispatch Capacity (Second Combined Cycle)" shall mean the temperature adjusted output of the second combined cycle train above the Base Capacity, shown in the Base Combined Cycle Temperature vs. Capacity curve contained in Appendix C, to be mutually agreed upon and attached to this Amended and Restated Agreement after the completion of testing to be conducted by Seller within 90 days after the Effective Date pursuant to test procedures and protocols mutually agreed upon by Seller and JCP&L. Only the Combined Cycle portion of the Facility, without using the duct burners, shall be used to achieve this output. This shall be the first level of dispatch requested by JCP&L. 3.14.3 "Dispatch Capacity (Duct Fired)" shall mean the temperature adjusted output of the combined cycle with duct firing for additional power output, shown in the Combined Cycle with Duct Firing Temperature vs. Capacity curve contained in Appendix C, to be mutually agreed upon and attached to this Amended and Restated Agreement after the completion of testing to be conducted by Seller within 90 days after the Effective Date pursuant to test procedures and protocols mutually agreed upon by Seller and JCP&L. The Combined Cycle portion of the Facility, using the duct burners, shall be used to achieve this output. This shall be the second level of dispatch requested by JCP&L. 3.14.4 "Dispatch Capacity (Max Output)" shall mean the temperature adjusted output of the combined cycle with duct firing and Combustion Turbine overfiring for additional power output, shown in the Max Output Temperature vs. Capacity curve contained in Appendix C, to be mutually agreed upon and attached to this Amended and Restated Agreement after the completion of testing to be conducted by Seller within 90 days after the Effective Date pursuant to test procedures and protocols mutually agreed upon by Seller and JCP&L. This shall be the third and final level of dispatch requested by JCP&L. Dispatch Capacity (Max Output) will only be requested during a System Emergency. 3.15 "DuPont" means the E.I. DuPont de Nemours Company, the owner of the leased premises occupied by the Facility, and Seller's steam purchaser. 3.16 "Effective Date" shall mean the last to occur of (a) the date on which the BPU issues the BPU Order, (b) ten (10) 5 days following the entry of an order (the "Approval Order") by the United States Bankruptcy Court for the District of New Jersey ("Bankruptcy Court") approving the NRG Plan, (c) the date on which the existing Gas Service Agreement dated May 13, 1993 between Seller and PSE&G shall have been terminated or assigned to JCP&L without any liability to Seller or the Facility, (d) the date on which JCP&L shall have entered into the PSE&G Gas Supply Agreement, or, if the existing Gas Service Agreement described in clause (c) shall have been assigned to JCP&L, such agreement shall have been amended or modified to JCP&L's satisfaction, in its sole discretion, and in either case such agreement shall have received all necessary regulatory approvals and otherwise shall have become effective in accordance with its terms, and (e) the date on which that certain Third Amendment to Power Purchase Agreement dated as of December ___, 1995 by and between O'Brien (Newark) Cogeneration, Inc. and JCP&L shall have become effective in accordance with its terms. 3.17 "Emergency" or a "System Emergency" means a condition or situation which in JCP&L's sole judgment affects JCP&L Electric System Integrity, which judgment shall not be capriciously or arbitrarily exercised. Such conditions include but are not limited to forced outages, potential overloading of JCP&L's transmission and distribution circuits, unusual operation conditions on either JCP&L's or Seller's system, conditions such that JCP&L is unable to back down its own generation sufficiently to accept electricity from the facility without jeopardizing the integrity of JCP&L's system, or conditions on the PJM system are such that JCP&L has received a request from the PJM Interconnection Dispatcher to reduce or interrupt purchases from generation external to PJM. 3.18 "Exempt wholesale Generator" or "EWG" shall have the meaning given to that term in Section 32(a) (1) of the Public Utility Holding Company Act of 1935, as amended, and the regulations of the FERC thereunder. 3.19 "Facility Heat Rate" means the quantity of fuel (HHV), expressed in British Thermal Units (BTUs), required to generate one kWh of output from the Facility at a known temperature. 3.20 "FERC" means the Federal Energy Regulatory Commission or successor agency thereto. 3.21 "Fixed Capital Payment" shall have the meaning given to such term in Article 8.2 hereof. 6 3.22 "Fixed O&M Payment" shall have the meaning given to such term in Article 8.2 hereof. 3.23 "Forced Outage" means the unscheduled removal of the Facility or a portion thereof from service or the inability of the Facility to operate in accordance with the Temperature vs. Capacity Tables of Appendix C. 3.24 "Generating Facility" or "Facility" means the Cogeneration Facility or the Exempt wholesale Generator as required by the context. 3.25 "GPU System" means the integrated electric generating system of General Public Utilities Corporation, a Pennsylvania corporation, which is the parent of JCP&L. 3.26 "Gross Domestic Product Deflator Index" or "GDPDI" means the value of the average of the four quarters ending on September 30 of the previous year divided by the value of the average of the four quarters ending on September 30 of the year preceding the previous year of the Implicit Price Deflator for Gross Domestic Product as reported by the United States Department of Commerce with a 1987 index value of 100. 3.27 "Interconnection Facilities" means all apparatus required and associated equipment installed to interconnect and deliver power from the Facility to JCP&L's electric system including, but not limited to, connection, transformation, switching, metering, communication, and safety equipment, such as equipment required to protect (1) JCP&L's electric system and its customers from faults occurring at the Facility, and (2) the Facility from faults occurring on JCP&L's electric system or on the systems of others to which JCP&L's electric system is directly or indirectly connected. Interconnection Facilities also include any necessary additions and reinforcements by JCP&L to JCP&L's electric system required as a result of the interconnection of the Facility to JCP&L's electric system. 3.28 "JCP&L" means Jersey Central Power & Light Company. 3.29 "JCP&L Electric System Integrity" or "System Integrity" means the state of operation of JCP&L's electric system which is deemed to minimize the risk of injury to persons and/or property and enable JCP&L to provide adequate and reliable electric service to its customers. 3.30 "kWh" means kilowatt hours of Electricity, the unit of measure of energy. 7 3.31 means reactive kilovolt-ampere, the unit of measure of reactive power. 3.32 "Maintenance Outage" means the scheduled removal of the Facility from service in order to perform necessary repairs on specific components of the Facility where removal of the Facility could have been postponed to the weekend past the immediately succeeding weekend. A Maintenance Outage must be scheduled with PJM through JCP&L and accepted by JCP&L and PJM, which approval shall not unreasonably be withheld or delayed by JCP&L. The duration of the outage will initiate with the removal of the Facility from service and last until notice is given that the Facility is available for dispatch. 3.33 "Major Facility Overhaul" means any Planned Outage of the Facility, or a portion thereof, for replacement or reconditioning of the Facility's gas turbine(s), turbine generator(s) or related boiler(s) due to ordinary wear and tear. 3.34 "Maximum Emergency Generation" means placing all available JCP&L generating capacity in service and generating the maximum net plant output to meet peak load demands or to safeguard the operation of JCP&L's electric system and/or the PJM Interconnection. 3.35 "MWh" means megawatt hours or one thousand kWhs. 3.36 "Electric Energy" or "Electricity" means the amount of electricity in MWH generated by the Facility, less any transformation and transmission line losses and station usage, delivered by the Seller to JCP&L at the Point of Interconnection. 3.37 "Non Dispatch Periods" means the uninterrupted interval, measured in time, during which there is no request for Output of the Dispatchable Capacity. 3.38 "Operate" means to provide the engineering, purchasing, repair, supervision, training, inspection, testing, protection, operation, use, management, replacement and maintenance of and for the Facility in accordance with applicable industry standards and Prudent Electrical Practices. 3.39 "Output" means the net amount of electrical energy (MWH), as metered by JCP&L, generated by the Facility and delivered to JCP&L at the Point of Interconnection. Output excludes transformation losses and station usage. 8 3.40.1 "Off-Peak Hours" means all hours other than "On-Peak Hours." 3.40.2 "Off-Peak Period" means all hours not falling within an "On-Peak Period." 3.40.3 "On-Peak Hours" means all hours from 8:00 a.m. to 8:00 p.m. prevailing time Monday through Friday 52 weeks per year other than New Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas. 3.40.4 "On-Peak Period" means all hours from 8:00 a.m. to 8:00 p.m. prevailing time Monday through Friday, December - February and June - September, minus four (4) Holidays: New Years Day, Independence Day, Labor Day and Christmas. 3.41 "Party" or "Parties" means the signatories to this Agreement and their permitted successors and assigns. 3.42 "PJM" or "PJM System" means the Pennsylvania/New Jersey/Maryland Interconnected Power Pool cooperatively operated under the Pennsylvania/New Jersey/Maryland Interconnection Agreement dated as of September 26, 1956 as amended or supplemented from time to time. 3.43 "Planned Outage" means the scheduled removal of the Facility from service for inspection or repair. A Planned Outage must be scheduled by the Seller two (2) months in advance and approved by JCP&L and PJM, which approval shall not be unreasonably withheld by JCP&L. A Planned Outage will initiate with the removal of the Facility from service and will terminate when the Seller notifies JCP&L that it is available for dispatch. 3.44 "Point of Interconnection" means the point at which the Electrical Interconnection Facilities of Seller connect with JCP&L's electric system. 3.45 "Project" means the Generating Facility, the Protective Apparatus and Interconnection Facilities required to permit operation of Seller's generator in parallel with JCP&L's electrical system. 3.46 "Protective Apparatus" means that equipment and apparatus which shall be installed by Seller as required by JCP&L in accordance with Section 10 of the Standard Terms and Conditions, entitled, "General Interconnect Requirements for Customer's Generation" forming part of JCP&L's Tariff for Electric Service on file with the BPU. 9 3.47 "Prudent Electrical Practices" means those practices, methods, standards, and equipment commonly used, from time to time, in prudent electrical engineering and operations to operate electrical equipment lawfully and with safety, dependability, and efficiency and in accordance with the National Electrical Safety Code, the National Electrical Code or any other applicable federal, state and local codes. 3.48 "PSE&G" means Public Service Electric & Gas Company. 3.49 "PSE&G Gas Supply Agreement" means the Gas Supply Agreement to be entered into between PSE&G and JCP&L providing for the supply of natural gas to the Facility. 3.50 "Qualifying Facility" means a Cogeneration or Small Power Production Facility which meets the criteria set forth in Title 13, Code of Federal Regulations, Part 292, Subpart B, Section 292.203 through 292.207, inclusive. 3.51 "Scheduled Dispatch Period" or "SD" means the time duration of a request for delivery of Output beginning and ending at the time specified by JCP&L. Such periods are exclusive of Start Up and Shut Down Periods and shall require at least thirty (30) minutes notice in advance of commencement of a Start Up Period. 3.52 "Shut-Down Period" means the period necessary to shut down the Facility in accordance with good engineering practices and manufacturer's recommendations immediately following a Scheduled Dispatch Period, which may not exceed 30 minutes. 3.53 "Special Facilities" means those additions and reinforcements to JCP&L's electric system which are needed to accommodate the maximum delivery of energy and capacity from the Facility as provided herein and those parts of the Interconnection Facilities which are owned and maintained by JCP&L at Seller's request, including metering and data processing equipment. All Special Facilities shall be owned, operated, and maintained by JCP&L pursuant to Section 4.05 of JCP&L's Electric Tariff Standard Terms and Conditions. 3.54 "Standby Demand" means Seller's electrical load requirement that JCP&L is expected to supply when Seller's Generating Facility is not in operation. 3.55 "Start-Up Period" means the one and a half hour period necessary to ramp up the gas turbines and the steam turbines (if such steam turbines are "hot") in order for 10 these turbines to reach steady state operation during the period preceding a Scheduled Dispatch Period. 3.56 "Supplemental Start-Up Period" means the three (3) additional hours required to bring the steam turbine(s) up to full load prior to the commencement of a Scheduled Dispatch Period, where such steam turbines are "cold" at the beginning of a Scheduled Dispatch Period. Under such conditions, references herein to the "Start-Up Period" shall be understood to mean the Start-Up Period defined above plus the Supplemental Start-Up Period. For the purposes of the definition, a steam turbine shall be considered to be "cold" if it has not been kept in a state of readiness, i.e., maintained at 500 Degrees F with a vacuum on the exhaust and steam to steam turbine glands. 3.57 "Temperature" means the ambient dry bulb temperature in degrees Fahrenheit measured at the monitoring station at Newark Airport. 3.58 "Unit" means a single gas turbine train and associated steam turbine. 3.59 "Unscheduled Outage" means the unscheduled removal of a Unit of the Facility from service for inspection or repair. ARTICLE 4 TERM 4.1 Duration of Agreement a) This Amended and Restated Agreement shall be effective upon the Effective Date, as herein provided, and shall continue in full force and effect until June 17, 2011. (the "Initial Term"). b) If the Effective Date does not occur by the earlier of (i) 75 days after the date of entry of the Approval Order or (ii) June 15, 1996, this Amended and Restated Agreement shall, unless otherwise mutually agreed by the Parties, immediately terminate and be of no further force or effect, and neither Party shall have any further rights, obligations, or liabilities hereunder. 11 4.2 Renewal of Agreement This Amended and Restated Agreement shall be automatically renewed for a period of three (3) additional years, commencing with the expiration of the Initial Term pursuant to Article 4.1, unless either Party elects to terminate this Amended and Restated Agreement as of the expiration of the Initial Term. Such termination shall be valid only if the terminating Party provides written notice of its intent to terminate to the other Party at least three (3) full years prior to the expiration of the Initial Term. 4.3 Electrical Services Supplied by JCP&L This Amended and Restated Agreement does not provide for any electric service by JCP&L to Seller. If Seller requires supplemental or standby electric service from JCP&L, Seller shall enter into separate contract arrangements with JCP&L in accordance with JCP&L's applicable electric tariffs on file with and authorized by the BPU. ARTICLE 5 CONSTRUCTION 5.1 Land Rights Seller hereby grants to JCP&L for the term hereof all necessary rights of way and easements to install, operate, maintain, replace and remove JCP&L's metering and other Interconnection Facilities and Special Facilities, including adequate and continuing access rights on property of Seller and Seller agrees to execute such other grants, deeds or documents as JCP&L may require to enable it to record such rights of way and easements. If any part of JCP&L's facilities are to be installed on property owned by others than Seller, Seller shall, if JCP&L is unable to do so without cost to JCP&L, procure from the owners thereof, all necessary permanent rights of way and easements for the construction, operation, maintenance and replacement of JCP&L's facilities upon such property in a form satisfactory to JCP&L. In the event Seller is unable to secure them (i) by condemnation proceedings or (ii) by other means at such cost as may be agreeable to Seller, Seller shall reimburse JCP&L for all costs incurred by JCP&L in securing such rights, it being understood however, that JCP&L shall have no obligation to do so. 12 5.2 Facility and Equipment Design and Construction Seller shall design, construct, install, own, operate and maintain the Facility and all equipment needed to generate and deliver energy or energy and capacity specified herein, except for any Special Facilities constructed, installed and maintained by JCP&L pursuant to JCP&L's Electric Tariff Standard Terms and Conditions. Such Facility and equipment shall meet all requirements of applicable codes and all standards of Prudent Electrical Practices. Seller also agrees to meet reasonable JCP&L requirements for Seller's Facility and equipment. 5.3 Interconnection Facility and Protective Apparatus Design and Construction JCP&L will coordinate with Seller in Seller's development of an electrical interconnect system for the supply of electrical service by Seller to DuPont, and for the interlock of such system with JCP&L's interconnect system to be installed for the supply of stand-by electrical service to DuPont. Seller shall construct, install, own and maintain the Interconnection Facilities and Protective Apparatus as required for JCP&L to receive energy or energy and capacity from Seller's Facility. Seller shall also reimburse JCP&L for all reasonable costs associated with the routine maintenance of interconnection equipment on JCP&L's side of the Point of Interconnection. Upon thirty days notice by Seller, prior to the planned Effective Date and on each subsequent anniversary of such Effective Date, JCP&L shall provide an estimate (for planning purposes only) and a description of the work to be performed in the succeeding year to conduct routine maintenance of interconnection equipment on JCP&L's side of the Point of Interconnection. Except for the metering facilities pursuant to Article 7, Seller's ownership of the Interconnection Facilities shall begin at the point of connection to the JCP&L service line. Seller's Interconnection Facilities shall be of a size to accommodate the delivery of the energy or energy and capacity in the form of three (3) phase, 60 cycle alternating current at 230 KV and shall conform to the requirements of Section 10 of JCP&L's Electric Tariff Standard Terms and Conditions concerning interconnection requirements attached hereto and made a part hereof. In the event it is necessary for JCP&L to install Special Facilities or other Interconnection Facilities or to reinforce its electric system for purposes of this Amended and Restated Agreement, Seller shall reimburse JCP&L its costs in accordance with JCP&L's Electric Tariff Standard Terms and Conditions. Any reinforcements, Special 13 Facilities and other Interconnection Facilities required by JCP&L shall be justified by Prudent Electrical Practices and applicable industry standard. 5.4 Special Facilities constructed or installed by JCP&L shall be paid for by Seller in accordance with the provisions of Section 4.05 of JCP&L's Electric Tariff Standard Terms and Conditions 5.5 Seller shall indemnify, hold harmless and agrees to defend JCP&L from and against any and all liability, loss, cost and expense, associated with any and all Federal, State and/or Local income tax liability, arising out of or connected with the transfer from Seller to JCP&L of Seller's Interconnection Facilities, Protective Apparatus, Special Facilities and/or any and all associated and/or related structures, equipment, facilities and devices in performance of, pursuant to and/or in connection herewith. JCP&L and Seller intend that such transfer shall be a Qualifying Facility transfer pursuant to IRS Advance Notice 88-129. Accordingly, Seller shall obtain, at its own expense, the report of an independent engineer regarding electricity sales by JCP&L to Seller as provided by that Advance Notice. ARTICLE 6 OPERATION AND MAINTENANCE 6.0 The Generating Facility, the Interconnection Facilities and the Protective Apparatus shall be operated and maintained in accordance with applicable New Jersey utility industry standards and Prudent Electrical Practices with respect to the operation and maintenance of such equipment generally and in particular with respect to synchronizing, voltage and reactive power control. JCP&L shall have the right to monitor operation of the Project and may require changes in Seller's method of operation if such changes are, in JCP&L's sole judgment, necessary to maintain JCP&L Electric System Integrity. Seller agrees to operate the Facility in parallel with JCP&L's electric system and, subject to its right to sell electric energy to DuPont if Seller is not an EWG, and except as otherwise agreed in writing by JCP&L, to deliver the Net Electric Energy of the Facility to JCP&L at the Point of Interconnection in the form of three (3) phase, 60 cycle alternating current at 230 KV. Momentary voltage fluctuations shall be permitted, provided they neither disturb service provided by JCP&L to its customers, nor 14 hinder JCP&L in maintaining proper voltage conditions of its electric system. Unless otherwise requested by JCP&L, Seller shall operate the Facility at a unity power factor or supply reactive power to JCP&L's electric system. At JCP&L's request, Seller shall to the fullest extent practicable operate the Facility at any excitation level within the range of the Facility's capability as determined from the equipment manufacturer's recommendations. Seller agrees to use its best efforts to comply with any such request made by JCP&L. 6.1 At JCP&L's request, Seller shall use its best efforts to deliver power at an average rate of delivery at least equal to the Contract Capacity during periods when Maximum Emergency Generation is required by PJM or JCP&L. In the event that Seller has previously scheduled an outage during a period of Maximum Emergency Generation or coincident with an Emergency, Seller shall use its best efforts to reschedule the outage. 6.2 Conditions Requiring Curtailment or Interruption of Deliveries of Electricity a) JCP&L shall have the right upon reasonable notice to Seller when it can reasonably be given to require Seller to disconnect the generator from JCP&L's electric system or to reduce the electrical output of the generator and deliveries of Electricity into JCP&L's electric system, whenever JCP&L determines, in its sole judgment, that such a disconnection or reduction is necessary to facilitate construction, installation, maintenance, repair, replacement or inspection of any of JCP&L's facilities, or equipment, or to maintain JCP&L's Electric System Integrity, or because of emergencies, forced outages, potential overloading of JCP&L's transmission and distribution circuits, force majeure, operating conditions on either JCP&L's or Seller's system, or conditions on the PJM System are such that generators of all PJM member utilities are required to reduce generation to minimum levels during periods of low load in accordance with the applicable GPU/PJM emergency operating procedures and JCP&L has received a request from the PJM Interconnection Dispatcher to reduce or interrupt purchases from generation external to PJM; provided, however, that any such PJM requirement to reduce or interrupt such purchases of Base Capacity may not exceed 600 hours in any calendar year, of which no more than 400 such hours shall occur during On-Peak Periods. 15 b) If at any time Seller fails to operate and maintain the Project as provided in Article 6 or the operation of the Project endangers the safety of JCP&L's personnel or the safe operation of JCP&L's electric system1 JCP&L may disconnect from the Seller's Facility until such condition has been corrected. c) If JCP&L requires Seller to disconnect the generator from JCP&L's electric system or reduce deliveries of Electricity pursuant to Article 6.2, Seller shall have the right, during such time period, to continue to serve Seller's native load, if any, and to sell electric energy to DuPont if Seller is not an EWG. d) In the event of a force majeure, Seller shall not be obligated to deliver, and may curtail, interrupt or reduce deliveries of energy to JCP&L. Seller shall promptly notify JCP&L of any such curtailment, interruption or reduction of deliveries. e) Each Party shall endeavor to correct, within a reasonable period, the condition on its system which necessitates the disconnection or the reduction of electrical Output. The duration of the disconnection or the reduction in electrical Output shall be limited to the period of time such a condition exists. 6.3 The Generating Facility shall be operated with all of Seller's Protective Apparatus in service whenever the generator is connected to or operating in parallel with JCP&L's electric system. Any deviation for brief periods of emergency or maintenance shall only be by agreement of the Parties. 6.4 Seller shall furnish JCP&L with an annual forecast not later than December 15 of each year setting forth the expected dates and anticipated duration of each Planned Outage for the succeeding 36 months, provided that the dates and anticipated duration of such Planned Outages may be changed as hereinafter provided. Seller shall update, on a monthly basis, the outage request schedule by the 15th day of each month. Such updates shall be transmitted to JCP&L by telephone and promptly confirmed in writing. JCP&L shall forward its response to an outage request not later than 10 days following JCP&L's receipt of such outage request. Seller shall notify JCP&L's dispatcher approximately 15 minutes prior to the approved outage period of its intent to remove the Generating Facility from service. Seller shall also notify JCP&L concerning the cause and duration of any Forced Outage. 16 6.5 Seller shall not schedule or conduct Planned Outages during On-Peak Periods. a) Seller shall keep and maintain accurate and complete records for the Generating Facility containing such information regarding operation and maintenance of the Generating Facility and all associated equipment as is appropriate and consistent with industry practice and as may be necessary for JCP&L to comply with its applicable requirements. JCP&L will advise Seller of such requirements as are in effect from time to time. Seller shall make such records available to JCP&L for inspection and copying from time to time as JCP&L may reasonably request. b) Seller shall maintain and classify outage statistics for the Generating Facility in accordance with the GPU System outage classification procedures as the same may be in effect from time to time. Seller shall supply such statistics to JCP&L upon request. In addition, Seller shall maintain or cause to be maintained such other records relating to the Generating Facility as may be reasonably required by the GPU System of cogeneration projects, and, upon written notice from JCP&L, will maintain or cause to be maintained such other records as the NJBPU, FERC or other regulatory body having jurisdiction, may from time to time require. 6.7 If, at any time, JCP&L doubts the integrity of any of Seller's Protective Apparatus and believes that such loss of integrity would impair the JCP&L Electric System Integrity, Seller shall demonstrate, to JCP&L's satisfaction, the correct calibration and operation of the equipment in question. 6.8 Seller shall furnish to JCP&L on each January 1 following the Effective Date satisfactory evidence that during the previous calendar year, Seller has performed or caused to be performed all manufacturer-recommended maintenance and testing of the Generating Facility and the Protective Apparatus and interconnection equipment, including circuit breakers, relays and auxiliary equipment. Seller shall provide JCP&L with at least 30 days prior written notice of its intent to test such equipment and JCP&L personnel or their representatives may, if JCP&L desires, observe such testing. 6.9 Seller shall provide reactive power for its own requirements and the reactive power losses of interfacing transformers. Seller shall not deliver excess reactive 17 power to JCP&L unless otherwise agreed upon between the Parties. 6.10 The Generating Facility shall at all times be operated and maintained to conform to all applicable laws and regulations. Seller shall obtain and maintain any governmental authorizations and permits for the continued operation of the Generating Facility. 6.11 Dispatch of the Facility a) Seller agrees to deliver, or cause to be delivered, and sell to JCP&L, and JCP&L agrees to accept and purchase from Seller the electric energy associated with the Base Capacity which is produced by the Facility and delivered to JCP&L whenever it is made available, and the electric energy associated with the Dispatchable Capacity which is produced and delivered to JCP&L during Start Up, Supplemental Start Up, Shut Down, and Scheduled Dispatch Periods up to the Dispatch Capacity at the rates set forth herein. Seller and JCP&L further agree that, except for the energy which Seller may sell to DuPont if Seller is not an EWG, all energy associated with the Contract Capacity will be fully committed to JCP&L and may not be sold to any other entity unless otherwise agreed by JCP&L in writing. Subject to the terms and conditions set forth below, JCP&L shall have the right to request any of the three Dispatch Capacity levels above the Base Capacity. Dispatch of the Facility shall be in accordance with the rules and procedures of JCP&L and PJM. The first level of dispatch above the Base Capacity which JCP&L may call for is the Dispatch Capacity (Second Combined Cycle). At any time while the Facility is at the Dispatch Capacity (Second Combined Cycle) level, JCP&L shall have the option to request the next level of dispatch which is Dispatch Capacity (Duct Fired). JCP&L shall have the option to request the Facility to return to the Dispatch Capacity (Second Combined Cycle) level without requesting the Facility to shut down entirely. During a System Emergency, JCP&L may request the third level of dispatch which is Dispatch Capacity (Max Output). Notwithstanding anything in this Amended and Restated Agreement to the contrary, Seller shall not be obligated to provide more than 73 MW, as may be adjusted to reflect temperature variations from 92 Degrees F, of Dispatch Capacity at any time. JCP&L further recognizes that the Seller is only capable of firing the duct burners on natural gas; it has no capacity to fire said duct burners on kerosene. 18 When the Facility must burn kerosene, JCP&L agrees not to request more Scheduled Dispatch Hours than are authorized under the Facility's air permit issued by the New Jersey Department of Environmental Protection. Accordingly, should JCP&L wish to dispatch the Facility on kerosene in excess of such maximum permitted hours, it shall obtain an appropriate variance from the New Jersey Department of Environmental Protection prior to making a request for additional dispatch hours on kerosene. b) On or about the twenty-seventh day of each month, JCP&L will supply a weekly operating plan for the following month. Thereafter, JCP&L will provide a weekly operating plan to the Seller by 3:00 p.m. Friday of each week for implementation the following Monday. Nothing in any weekly operating plan provided by JCP&L pursuant to the two preceding sentences shall preclude JCP&L from modifying any such plan at any time and for any reason and from scheduling Scheduled Dispatch Periods at such time or times as JCP&L, in its sole discretion, deems necessary or appropriate. Nonetheless, the weekly operating plan as amended shall be used by Seller to plan maintenance and work schedules. Unless otherwise agreed, Seller will be prepared to commence a Start-Up Period within thirty (30) minutes of receiving a Scheduled Dispatch Period request from JCP&L between 5:00 a.m. and 10:00 p.m. on weekdays. During other periods, JCP&L will use reasonable efforts except during System Emergencies to provide Seller with two (2) hours between the communication of a Scheduled Dispatch Period request and the commencement of a Start-Up Period. No change in a Scheduled Dispatch Period request will become effective unless Seller is provided with at least thirty (30) minutes notice before being required to commence a Start-Up Period. Shut-Down Periods will commence immediately upon notification by JCP&L. d) If JCP&L requests that the Dispatch Capacity (Second Combined Cycle) be dispatched, it shall have the right during the same day to request the shut down of one (1) Unit, and shall have the further right to restart such Unit on one additional occasion during the same calendar day. e) No Contract Availability penalties shall apply during Start-Up Periods except any partial or full outage condition which may exist at the time the Start-Up Period begins. If the Facility is in a partial outage at the commencement of a Start-Up Period and the 19 Facility fails to reach an output level which would end such partial outage, the Facility will only be entitled to the appropriate partial level of availability credit for the Start-Up Period. f) Seller shall be permitted a Shut-Down Period not to exceed 30 minutes in order to shut down the Facility in accordance with good engineering practice and manufacturer's recommendations immediately following a Scheduled Dispatch Period. No Contract Availability penalties shall apply during Shut-Down Periods except any partial or full outage condition which may exist at the time the Shut-Down Period begins. 6.12 Any review by JCP&L of the design, construction, operation, or maintenance of the Project is solely for the information of JCP&L. By making such reviews, JCP&L makes no representation as to the economic and technical feasibility, operational capability, or reliability of the Project. Seller shall in no way represent to any third party that any such review by JCP&L of the Project, including, but not limited to, any review of the design, construction, operation, or maintenance of the Project by JCP&L is a representation by JCP&L as to the economic and technical feasibility, operational capability, or reliability of said facilities. Seller is solely responsible for economic and technical feasibility, operational capability, or reliability of said facilities. 6.13 Generation in Excess of Base Capacity During Periods of Non- Dispatch Seller will not be paid for the export of any generation of electricity in excess of 41 MW (the Base Capacity, which will be 41 MW during all hours of the year) at times when JCP&L has not called for any portion of the Dispatchable Capacity to be operated. Notwithstanding the foregoing, the Seller may, at its option, generate up to 50 MW during periods of non-dispatch; provided, however, that Seller shall pay JCP&L for the proportional amount of natural gas fuel expense for fuel required to generate such excess energy, and JCP&L will pay Seller the hourly PJM billing rate for any such excess energy so delivered between 41 MW and 50 MW. No other payments (fixed energy or capacity) will be made for energy in excess of 41 MW. The foregoing shall not, however, effect JCP&L's right to curtail all Facility output during System Emergencies. Seller must give proper advance notice as provided in Appendix A and operate the Facility consistently with the requirements of Appendix A. 20 ARTICLE 7 DELIVERY AND METERING 7.0 Delivery and Metering All Electricity shall be delivered to JCP&L at the Point of Interconnection with the characteristics and at the voltage level specified in Article 6.0. All meters and equipment used for the measurement of electric power for determining JCP&L's payments to Seller hereunder shall be provided, owned, maintained, inspected and tested by JCP&L. Seller shall reimburse JCP&L for the reasonable costs of all meters and equipment used for the measurement of Electricity, and shall also reimburse JCP&L for costs involved with the inspection and periodic testing of such meters. 7.1 Meters will be read monthly by JCP&L to determine the amount of Electricity delivered to it. Seller may install additional metering for its own use, but the determination of delivered Electricity will be measured by JCP&L's meters for billing purposes. 7.2 For purposes of monitoring the generator operation, JCP&L shall have the right to require, at Seller's expense, the installation of generation telemetering and control of selected breakers and switching equipment. Seller will also be responsible for the operating and maintenance costs associated with the metering and telemetering equipment. 7.3 JCP&L's meters shall be sealed and the seals shall be broken only when the meters are to be inspected, tested, or adjusted by JCP&L. Seller shall be given reasonable notice of testing and have the right to have its Operating Representative present on such occasions. 7.4 If, upon testing, any electrical measuring equipment is found to be in error by not more than plus or minus two percent (2%), previous recordings of such equipment shall be considered accurate in computing deliveries of Electricity hereunder, but such equipment shall be promptly adjusted to record correctly. If, upon testing, any electrical measuring equipment shall be found to be inaccurate by an amount exceeding plus or minus two percent(2%), then such equipment shall be promptly adjusted to record properly and any previous recordings by such equipment shall be corrected to zero error. If no reliable informationexists as to when the equipment became inaccurate, it shall be assumed for correction 21 purposes hereunder that such inaccuracy began at a point in time midway between the testing date and the last previous date on which the equipment was tested and found to be accurate. Should the primary meter equipment at any time fail to register, or should the registration thereof be so erratic so as to be meaningless, the energy deliveries shall be determined from the best information available, including, but not limited to, operator's log and telemetry data of the meter results. ARTICLE 8 TERMS OF SALE 8.1 Base Capacity Pricing The price for Base Capacity delivered to JCP&L shall consist of an energy component and a capacity component. The energy component shall be a Fixed component equal to 1.362 cents per kWh and shall be paid from and after the Effective Date through June 17, 2003. The energy component of the price for Base Capacity shall be varied according to the time of delivery as follows: (i) during On-Peak Hours, the Fixed energy component of price shall be multiplied by 127%. (ii) during Off-Peaks Hours, the Fixed energy component of price shall be multiplied by 85%. The Fixed energy component of price shall not be paid from and after June 18, 2003 through the end of the Initial Term. The capacity component for Base Capacity shall be as follows: (iii) 1.21 cents per kWh averaged over all hours. The capacity component will, however, be paid only for kWh delivered during the On-Peak Period at the rate of 5.97 cents per kWh. (iv) There will be no capacity component payment during the Off-Peak Period. 22 8.2 Full Fixed Payment Components for Dispatchable Capacity. (a) Fixed Capital Payment: The Fixed Capital Payment (Based on 100% Contract Availability) is equal to $9.90/kW-month through June 17, 2003, and shall be $6.40/kW-month for the remaining term of the Agreement. Prior to March 1, 1996, Seller may elect to convert the foregoing Fixed Capital Payments to a levelized rate of $9.02/kW-month for the remaining duration of the term commencing with the month immediately following the months in which Seller provides written notification thereof to JCP&L. (b) Fixed O&M Payment: The Fixed O&M Payment (based on 100% Contract Availability) is equal to $3.50/kW per month in 1996. This payment shall be adjusted annually by the change in the GDPDI upon the anniversary of the Effective Date. The annual Full Fixed Payment shall mean the sum of the Fixed Capital Payment and the Fixed O&M Payment. 8.3 Fixed Payment Procedure. A Fixed Payment shall be made to Seller in each Billing Period during the term hereof commencing with the Effective Date, in accordance with the procedures described below. The Fixed Payment is dependent upon the Contract Availability and Dispatchable Capacity, as described in Section 8.3(d). The Full Fixed Payment is composed of the following components: a) Fixed Capital Payment. This component of the Full Fixed Payment shall be equal to the values listed in Section 8.2(a). b) Fixed O&M Payment. The 1996 value of this component shall equal to the value listed in Section 8.2(b). Commencing with the first anniversary of the Effective Date and on each subsequent anniversary thereof through- out the term of this Agreement, this component shall be calculated as the product of the prior year's Fixed O&M Payment and the ratio of the average of the four quarterly GDPDI values ending with the third quarter of the prior year, to the average of the four quarterly GDPDI values ending with the third quarter of the year prior to such prior year. All eight GDPDI 23 values will be referenced from the January publication of the Survey of Current Business. Illustrative Example of Fixed O&M Payment. Assume that the Fixed O&M Payment for 1998 is $4.00/kW month and the Effective Date is January 1, 1996. Assume also that the GDPDI values are as follows: Quarter GDPDI Index 4th Quarter, 1996 150.4 1st Quarter, 1997 152.1 2nd Quarter, 1997 153.5 3rd Quarter, 1997 156.2 4th Quarter, 1997 157.8 1st Quarter, 1998 160.1 2nd Quarter, 1998 162.0 3rd Quarter, 1998 164.3 Then the Fixed O&M Payment for 1999 is computed as: = ($4.00) * (161.1) (153.1) = ($4.00) * (1.0523) = $4.21/kW month c) Estimated Fixed Payment: An Estimated Fixed Payment shall be made to the Seller in each Billing Period of the Term of this Agreement commencing with the Effective Date which is equal to the product of the (a) Full Fixed Payment; (b) the Dispatchable Capacity; and (c) the Target Availability Multiplier defined below. d) Actual Fixed Payment: The annual Actual Fixed Payment is the sum of the monthly Full Fixed Payments for each Contract Year, adjusted for Dispatchable Capacity and Contract Availability, that will be paid to Seller on an annual basis. It is equal to the product of: (a) the sum of the monthly Full Fixed Payments, (b) the Dispatchable Capacity; and (c) the Contract Availability. A single adjustment to the monthly Estimated Fixed Payment due to Seller (the "Fixed Payment Adjustment") will be made with the first payment to Seller of each Contract Year, commencing with the second Contract Year and for each Contract Year thereafter. 24 The Fixed Payment Adjustment will be equal to the annual Actual Fixed Payment for the prior Contract Year less the sum of the twelve (12) monthly Fixed Payments for the prior Contract Year. If the Fixed Payment Adjustment is a debit to Seller, then such amount shall be fully set off against amounts owed to Seller pursuant to this Agreement during the next Billing Period. If following such setoff, a net amount is still due JCP&L, such payment will be made to JCP&L within thirty (30) days of receipt of JCP&L's invoice for such payment. If the Fixed Payment Adjustment is a credit to Seller, this credit shall be included with the first payment of each Contract Year, commencing with the second Contract Year. In all cases, the Fixed Payment Adjustment shall have no interest component added. e) The Target Availability Multiplier. The Target Availability Multiplier shall equal: i) For the first Contract Year, the Target Availability Multiplier will be equal to 95%. ii) Commencing with the second Contract Year and for each subsequent Contract Year, the Target Availability Multiplier will equal the Contract Availability for the prior Contract Year unless modified by the Parties' mutual agreement to reflect an unusual occurrence. NOTE: Target Availability Multiplier shall never be greater than one (l.0). f) Contract Availability. The Contract Availability is calculated as follows: Total Hours - Equivalent contract Unavailable Hours Total Hours where: i) Total Hours = total hours in the Contract Year. (ii) Equivalent Contract Unavailable Hours = total of all hours during the Contract Year during which there occurred a full or partial Planned, Forced, or Maintenance Outage, as those terms are defined in Article 3 of this Agreement (including outages resulting from Force Majeure events, but excluding outages resulting from (x) JCP&L's failure to supply 25 natural gas to the Facility during periods when PSE&G has not interrupted or recalled the interstate or intrastate transportation that it supplies under the PSE&G Gas Supply Agreement and (y) JCP&L's failure to accept available Output from the Facility). Partial outages are measured on an equivalency basis, e.g., a 50% outage for one hour would be equivalent to a full outage for one-half hour, and so forth. NOTE: The Contract Availability Multiplier shall never be greater than one (1.0). g) Measurement of Contract Availability. For purposes of determining Contract Availability, the following procedure will be used to measure periods of unavailability: When a Scheduled Dispatch Period has been requested by JCP&L in accordance with the terms of this Amended and Restated Agreement, Seller shall have until the end of the Start-Up Period (plus the Supplemental Start-Up Period, in the case of "cold" start-ups) to produce the requested Dispatch Capacity. If, at the end of the Start-Up Period (plus the Supplemental Start-Up Period, in the case of "cold" start-ups), the Facility is unable to produce the requested Dispatch Capacity, the Facility is then considered to be in a full or partial Forced Outage, as the case may be, provided, however, that Seller shall not be obligated to, and the Facility shall not be considered to be in a full or partial Forced Outage as a result of any failure to, produce Dispatch Capacity in excess of 73 MW, as may be adjusted to reflect temperature variations from 92 Degrees F, at any time. If the Dispatch Capacity (Second Combined Cycle) is requested and is successfully responded to, the remaining Dispatchable Capacity will be considered available unless a partial outage had existed at the time Start-up Period was requested. If the Dispatch Capacity (Second Combined Cycle) is requested and is not successfully responded to, the Facility operators and System dispatchers must use Prudent Electric Practices to assess the effects on the availability of the remaining Dispatchable Capacity. The Facility will remain in a full or partial Forced Outage until such time as JCP&L is notified by Seller 26 that the Facility is again available for full or partial dispatch and, at JCP&L's option, can demonstrate this availability over a two (2) hour period. At the end of a fully or partially successful demonstration, the Facility will be considered to be fully or partially available, respectively. If, however, JCP&L elects not to dispatch the Facility when Seller notifies JCP&L of the Facility's availability, the Seller may at its own cost, choose to demonstrate Facility availability as specified above subject to Seller being responsible for any energy costs above the current PJM billing rate related to such demonstration; provided, however, that JCP&L is able to accept the energy so produced. If JCP&L, in its sole judgment, would not be able to accept the energy produced during such a demonstration, then JCP&L will recognize the Facility as being available; provided, however, that if the Facility is unavailable at the next Scheduled Dispatch Period request, the Facility will then be considered to have been continuously unavailable from the time of the Original Request. No Dispatchable Capacity will be considered available unless the full 41 MW of Base Capacity (or so much thereof as has not been curtailed or interrupted by JCP&L) is being exported to the JCP&L System. Notwithstanding the foregoing, if Seller notifies JCP&L that the Base Capacity is being curtailed for Seller's economic benefit and Seller wishes the Facility to be considered available, JCP&L will consider the Base Capacity and balance of Facility available if Seller agrees to make the Base Capacity available along with the balance of the Facility should JCP&L desire it. In each event, Seller will receive no payments for Base Capacity when it is not delivered and only the prices associated with Base Capacity should JCP&L request the Facility to run. h) Heat Rate Incentive The Average Heat Rate, as defined below, will be used to calculate the Heat Rate Adjustment depending upon whether the Average Heat Rate is above or below 9500 BTU/kWh HHV (High Heating Value). At the conclusion of each Contract Year, JCP&L will calculate the Average Heat Rate (AHR) for the Facility over the past 12 months using the following formula 27 which will result in either an increase or decrease to the payments made by JCP&L to Seller hereunder: AHR = Net Fuel Input AG where: Net Fuel Input is all the fuel paid for by JCP&L less fuel associated with and paid for by Seller with respect to (a) its steam and electric sales made to DuPont and (b) the fuel used during Facility startup and shutdown (with the amount of fuel to be deducted pursuant to (b) to be determined within 90 days after the Effective Date pursuant to test procedures and protocols mutually agreed upon by Seller and JCP&L). AG, or the Annual Generation, is the annual total of kWhs produced by the Facility, exported to, registered at the billing meter and purchased by JCP&L. The Heat Rate Adjustment (HRA) will be calculated at the conclusion of each Contract Year as follows: HRA = 0.25 x GHR - AHR x AAFC x AG 1,000,000 where GHR, or the Guaranteed Heat Rate, is 9500 BTU/kWh for l996. Thereafter, GHR shall be adjusted in accordance with the degradation curves supported by the manufacturer's data as set forth in Appendix D, to be mutually agreed upon and attached to this Amended and Restated Agreement within 90 days after the Effective Date. Such degradation adjustment, however, shall in no event result in an increase in GHR of more than 2% above 9500 Btu/kWh. AAFC, or the Average Annual Fuel Cost, is the average cost for fuel paid for by JCP&L for the Facility in $/MMBTU for the time period corresponding to the Average Heat Rate calculation. For example, by way of illustration only, if during 1996: AHR = 9300 Btu/kWh 28 AAFC = $2.60 MMBtu AG = 700,000,000 kWh [7000 hours at 100MW] HRA = 0.25 x (9500-9300) BTU/kWh x $2.60/MMBtu 1,000,000 x 700,000,000 kWh = $91,000 JCP&L will provide Seller with an average Heat Rate Adjustment statement not later than 15 days after each anniversary of the Effective Date. The Heat Rate Adjustment payment, if any, will be made by Seller or by JCP&L (as either an increase in or offset to payments otherwise made by JCP&L to Seller hereunder) in six equal monthly installments (without interest) commencing the second calendar month following each anniversary of the Effective Date; provided, however, that any remaining Heat Rate Adjustment payment for the last full Contract Year during the term hereof and for the partial Contract Year commencing on the last anniversary of the Effective Date during the term hereof and ending on June 17, 2011 shall be invoiced by JCP&L on or before July 1, 2011, and the net amount thereof shall be paid, in cash, by Seller or JCP&L, as the case may be, within 30 days of submission of such invoice. 8.4 Demonstration of Contract Capacity Seller shall demonstrate the ability of the Generating Facility to provide JCP&L Base Capacity within 30 days after the Effective Date. Thereafter, twice annually at JCP&L's request, Seller shall, once during On-Peak Period summer months and once during On-Peak Period winter months demonstrate the ability of the Generating Facility to provide Base Capacity for such period of time as is required by PJM from time to time for all PJM suppliers. Seller's demonstration of Base Capacity shall be at Seller's expense (except for the cost of fuel) and conducted at a time and pursuant to procedures as may be required by applicable GPU System rules, regulations and guidelines. JCP&L and Seller agree to use their reasonable best efforts to cause the capacity demonstration to be scheduled as early as practicable in each peak period. If Seller fails to demonstrate the ability of the Generating Facility to provide at least 90% of the Base Capacity, the Capacity Component of the price 29 to be paid for Electricity pursuant to Article 8.1 thereof shall be reduced to the following amount until Seller is able to demonstrate the ability to provide at least 90% of the Base Capacity: Demonstrated Capacity x 5.97 cents/kWh Base Capacity If Seller does not demonstrate the ability of the Generating Facility to provide at least 90% of the Base Capacity during the applicable On-Peak Period, then a retroactive reduction of the Capacity Component of the price to be paid for Electricity pursuant to Article 8.1 based upon the above formula will be applied to the entire applicable On-Peak Period. However, should Seller's failure to demonstrate the ability of the Generating Facility to provide 90% of Base Capacity be caused by a "force majeure" event as defined in Article 12 hereof, the provisions of this Article 8.4 for Base Capacity shall not apply until the "force majeure" has ceased to exist. As part of the foregoing Capacity Test, Seller shall demonstrate the ability of the Generating Facility to provide JCP&L the Dispatchable Capacity. This test shall be conducted pursuant to procedures as may be required by applicable GPU System rules, regulations and guidelines. If Seller fails to demonstrate the ability of the Generating Facility to provide the sum of the Base Capacity and 90% of the Dispatchable Capacity, the Facility will be considered in either a full or partial Forced Outage for Contract Availability calculation purposes. This Forced Outage will remain in effect until the sum of the Base Capacity and 90% of the Dispatchable Capacity is demonstrated. If the Facility is unable to demonstrate the sum of the Base Capacity and 90% of the Dispatchable Capacity at least once during the entire On-Peak Period summer months in any year, a penalty will be applied which is equal to: [Dispatchable Capacity - Demonstrated Capacity In Excess of Base Capacity] x PJM Capacity Deficiency ($/kW year A penalty for failure to demonstrate Dispatchable Capacity during an entire annual On-Peak Period can be collected only one time per Contract Year. 30 Note: The data used to temperature correct the Capacity Test will be taken from the temperature provided by Newark Airport to the National Weather Agency. However, should Seller's failure to demonstrate the ability of the Generating Facility to provide the sum of the Base Capacity and 90% of the Dispatchable Capacity be caused by a "force majeure" event as defined in Article 12 hereof, the provisions of this Article 8.4 relating to demonstration of the availability of at least the sum of the Base Capacity and 90% of the Dispatchable Capacity shall not apply until the "force majeure" has ceased to exist. 8.5 Variable O&M and Start-up Payments A) Variable O&M Payment A Variable O&M Payment, whose initial 1996 value shall be $0.004/kWh, shall be paid for the Net Electrical Energy associated with the Dispatchable Capacity. The Variable O&M Payment shall be adjusted upon each anniversary of the Effective Date by the change in the GDPDI. B) Seller shall be paid a Start-up Payment for each requested and successfully completed Start-up Period of a gas turbine train associated with the Dispatch Capacity (this payment will not be made for the unit- used to satisfy the Base Capacity output). The initial 1996 values of the Start-up Payments are contained in the table below. Start-up fuel costs shall be borne by JCP&L pursuant to the terms of Article 9 hereof and Appendix A hereto. The first 150 starts/year $1500/Start All starts over 150 starts/year $4,000/Start These values shall be adjusted by the GDPDI annually. These payments are intended to compensate the Seller for the increased O&M costs associated with Start-ups, ramp ups, ramp downs and stops. 8.6 DuPont Service 31 Seller will supply electricity (but only if Seller is not an EWG) and steam to DuPont during all periods when the Facility is supplying Base Capacity and/or Dispatchable Capacity to JCP&L. To the extent JCP&L is not providing all required electric energy to DuPont (i.e., if Seller is not an EWG), standby service for electricity will be supplied by JCP&L to service Depot's needs during all other periods under the applicable tariff rates that are in effect at the time of service. Seller will be responsible for providing Depot's steam needs during periods of Facility downtime. 8.7 In recognition of the understanding of the Parties hereto that any payments made pursuant hereto are intended by the Parties to be treated as received in the year in which such payments are due, Seller acknowledges that the Parties intend that JCP&L shall have a deductible expense, and Seller shall have taxable income or expense, as the case may be, with respect to any payments made to Seller under this Agreement. Seller shall not take a contrary or inconsistent position with respect to the foregoing on any federal, state or local tax return, before any taxing authority or in any related tax proceeding. ARTICLE 9 FUEL MANAGEMENT 9.1 JCP&L Responsibility for Facility Fuel Requirements From and after the Effective Date, JCP&L will be responsible for the supply of, and shall supply to Seller, the natural gas required for use by the Facility including the natural gas required by the auxiliary boiler to supply DuPont with steam when steam is not available from the heat recovery steam generators, on the terms and conditions set forth in Appendix A hereto. Seller will be responsible for maintaining on site kerosene inventories for periods of gas interruption. All costs for the supply of natural gas shall be borne by JCP&L; provided, however, that Seller shall reimburse JCP&L for the cost of any fuel used to generate steam from the auxiliary boiler. JCP&L will reimburse Seller for any kerosene used during periods of gas curtailment at the replacement price of kerosene (except for kerosene used to generate steam for DuPont from the auxiliary boiler) at the then prevailing market rate therefor in the area in which the Facility is located. 32 Seller will reimburse JCP&L, at the average monthly price for natural gas, for the cost of fuel necessary to provide DuPont with a quantity of BTU/lb of steam from the Facility which shall be determined within 90 days of the Effective Date pursuant to the methodology set forth in Appendix B. Until such determination has been made, such quantity shall be deemed to be 500 BTU/lb of steam. Seller will also reimburse JCP&L the proportional amount of fuel used to supply DuPont electricity using the following formula: DEFP = DEC x FS x FC [DEC + JCEE] Where: DEFP is the DuPont electric fuel payment, in dollars, which would be made monthly to JCP&L. DEC is the DuPont electrical consumption, measured in MWH, for the month in question. JCEE is the JCP&L electrical exports, measured in MWH, made by the Facility to JCP&L for the month in question. FS is the fuel supplied by JCP&L, measured in MMBTU HHV, to Facility less the fuel Seller pays for due to steam sales for the month in question. FC is the average monthly fuel cost, measured in $/MMBTU, to the facility for the month in question. 9.2 Natural Gas Fuel Unavailability During periods when JCP&L is unable to provide gas to the Facility, it is the responsibility of Seller to maintain an on-site supply of kerosene to fuel the Facility. If this fuel is used by Seller, Seller will be reimbursed for the replacement cost of the kerosene (except for kerosene used to generate steam for DuPont from the auxiliary boiler) at the then prevailing market rate therefor in the area in which the Facility is located. However, if the Facility's air permit would limit or prohibit the use of kerosene (e.g., if the allowed number of hours of kerosene use has already been exceeded) and JCP&L has been unable to obtain an appropriate variance from the New Jersey Department of Environmental protection which would permit the necessary additional kerosene use, Seller may procure 33 gas from third parties for use by the Facility for so long as JCP&L is unable to provide the necessary gas for the Facility. JCP&L shall allow Seller to use transportation capacity which JCP&L may have available (taking into account JCP&L's system-wide needs) for such third party gas and shall reimburse Seller for such gas (except for gas used to generate steam for DuPont from the auxiliary boiler) and all related transportation costs (excluding any transportation made available without charge by JCP&L) at a rate equal to the lesser of (i) Seller's actual costs for such gas and transportation or (ii) the maximum reimbursement to which Seller would be entitled pursuant to the last sentence of Section A.2.l of Appendix A hereto. 9.3 Metering Responsibilities Both Seller and JCP&L shall maintain meters for measuring the quantity of fuel used by the Facility. The meters shall be capable of recording total MCFs and associated calculated BTUs delivered to the Facility on a continuous, real time basis and shall be calibrated at regular intervals based on manufacturer's recommendations. The Parties will use these meter readings to check the readings obtained by PSE&G. In the event of a discrepancy between meters, the readings obtained by PSE&G shall prevail until such time as all of the meters can be recalibrated. If such recalibration demonstrates that the PSE&G meter data was in error, an appropriate adjustment shall be made for the period in question. ARTICLE 10 BILLINGS AND RECORDS 10.1 Billing JCP&L shall mail to Seller not later than thirty (30) days after the end of each monthly billing period (1) a statement showing the Electricity delivered to JCP&L from the Facility for that monthly billing period, (2) JCP&L's computation of the amount due Seller, (3) such other amounts as may then be due and payable by Seller to JCP&L hereunder. Together with such monthly statement, JCP&L shall mail to Seller JCP&L's check in payment of the said amount shown due Seller. If Seller desires a wire transfer, such wire transfer shall be made within 33 days after the end of the related monthly billing period. 34 10.2 Records Both Seller and JCP&L shall keep a record of all invoices, receipts, charts, computer printouts, punch cards or magnetic tapes related to the volume or price of Electricity sales made hereunder. Such records shall be made available for inspection by either Party upon reasonable notice. All such materials shall be kept on record for a minimum of six (6) years from the date of their preparation. 10.3 Commencing with the Effective Date, Seller shall pay to JCP&L a monthly administration fee in the amount of $1,440, as such amount shall have been adjusted annually on each June 18 commencing June 18, 1991 based upon the change in the GDPDI. Such fee shall be offset against JCP&L's payment to Seller pursuant to Section 10.1. This fee is to be further adjusted annually on each June 18 after the Effective Date based upon the change in the GDPDI. 10.4 JCP&L shall have the right to set off at any time against any and all amounts which may be due and owing from JCP&L to Seller under this Amended and Restated Agreement the full cost of any and all materials, equipment, services and supplies for which payment is past due. 10.5 a) In the event adjustments or corrections to billing statements are required as a result of inaccurate meters or other errors in computation or billing, the Parties shall recompute amounts due from or to JCP&L during the period of inaccuracy as provided in Article 7 hereof and otherwise correct any errors in such billing statement. If the total amount, as recomputed, due from a Party for the period of inaccuracy varies from the total amount due as previously computed, and payment of the previously computed amount has been made, the difference shall be paid to the Party entitled to it within thirty (30) days after the recomputation. b) If JCP&L or Seller does not receive written notice from the other Party of an objection to a billing statement within thirty (30) days from the rendering thereof, said billing statement shall be deemed correct. ARTICLE 11 ACCESS TO SELLER'S FACILITY 35 Properly accredited representatives of JCP&L shall, at reasonable times, with reasonable notice to Seller and subject to compliance with all of Seller's reasonable safety rules, have access to Seller's Facility for any purpose reasonably connected with this Amended and Restated Agreement or the exercise of any right secured to JCP&L by law or its Tariff for Electric Service. ARTICLE 12 FORCE MAJEURE 12.1 a) The term "force majeure" as used herein means unforeseeable causes beyond the reasonable control of and without the fault or negligence of the party claiming "force majeure", including but not limited to acts of God, strike, flood, earthquake, storm, fire, lightening, epidemic, war, riot, civil disturbance, sabotage, change in law or applicable regulation subsequent to the date thereof and action or inaction by any federal, state or local legislative, executive, administrative or judicial agency or body which, in any of the foregoing cases, by exercise of due foresight such party could not reasonably have been expected to avoid, and which by the exercise of due diligence, it is unable to overcome. b) Anything to the contrary contained in Section 12.1(a) or otherwise herein notwithstanding, except as may expressly be provided in Section 12.1(a), the term "force majeure" shall not include any of the following:' i) Any reduction, curtailment or interruption of generation or operation of the Generating Facility, whether in whole or in part, or the ability of JCP&L to accept or transmit electricity generated by the Generating Facility which reduction, curtailment or interruption is caused by or arises from the action or inaction of any third party, including without limitation, any vendor or supplier to the Generation Facility or JCP&L of material, equipment, supplies or services, unless, and then only to the extent that, any such action or inaction would itself be excused hereunder as a "force majeure"; provided, however, that failure of JCP&L to supply natural gas to the Facility during periods when PSE&G has not interrupted or recalled the interstate or intrastate transporta- tion that it supplies under the PSE&G Gas Supply Agreement and to accept available Output from the Facility shall be considered a "force majeure" event with respect 36 to the obligations of Seller hereunder, provided, further, that the non-supply of natural gas by JCP&L during periods when PSE&G has interrupted or recalled the interstate or intrastate transportation that it supplies under the PSE&G Gas supply Agreement shall not be considered a "force majeure" event hereunder; ii) Any outage, whether or not due to the fault or negligence of JCP&L or Seller, of the Generating Facility or JCP&L's electric system attributable to a defect or inadequacy in the manufacture, design or installation of the Generating Facility or JCP&L's facilities or equipment or to a breakdown of their mechanical or electrical equipment that prevents, curtails, interrupts or reduces the ability of the Generating Facility to generate electricity or the ability of JCP&L to perform its obligations hereunder; or iii) Changes in market conditions that affect the cost or availability of the Generating Facility's primary or alternate fuel supply or demand for Seller's products or affect JCP&L's fuel supplies or alternate supplies of electric energy or customer demand therefor. 12.2 Except for the obligation of either Party to make any required payments hereunder, the Parties shall be excused from performing their respective obligations under this Amended and Restated Agreement and shall not be liable in damages or otherwise if and to the extent that they are unable to so perform or are prevented from performing by a "force majeure", provided that: a) the non-performing Party, as promptly as practicable after the occurrence of the "force majeure", but in no event later than 14 days thereafter, gives the other Party written notice describing the particulars of the occurrence; b) the suspension of performance is of no greater scope and of no longer duration than is reasonably required by the "force majeure"; c) the non-performing Party uses its best efforts to remedy its inability to perform; and d) as soon as the non-performing Party is able to resume performance of its obligations excused as a result of 37 the occurrence, it shall give prompt written notification thereof to the other Party. 12.3 Neither Party shall be required to settle any strike, walkout, lockout or other labor dispute on terms which, in the sole judgment of the Party involved in the dispute, are contrary to its interest, it being understood and agreed that the settlement of strikes, walkouts, lockouts or other labor disputes shall be entirely within the discretion of the Party having such dispute. 12.4 a) Either Party may terminate this Amended and Restated Agreement upon 10 days written notice if, following the Effective Date (1) the Generating Facility is either destroyed or substantially damaged and Seller advises JCP&L that it does not intend promptly to reconstruct or repair the Generating Facility, or (2) an event of "force majeure" hereunder prevents either Party from substantial performance of its respective obligations hereunder for a period of 24 consecutive months; provided, however, that this Amended and Restated Agreement may not be so terminated if the Party prevented from performing due to such "force majeure" event (i) is, to the reasonable satisfaction of the other Party, unable despite the use of its best efforts to overcome the effects of such "force majeure" during such 24 months and (ii) demonstrates to the reasonable satisfaction of the other Party that the effects of such "force majeure" can nevertheless be overcome and that it is diligently applying its best efforts to do so. The Party prevented from performing shall at its expense provide the other Party not later than 60 days following a request therefor or with an opinion of an independent engineering firm, reasonably acceptable to such other Party, supporting the matters set forth in (ii) above. Failure to provide such an opinion shall be adequate ground for termination of this Amended and Restated Agreement. b) Upon termination of this Amended and Restated Agreement as provided in subparagraph (a) above, the Parties shall have no further liability or obligation to each other except for any obligations arising prior to the date of such termination. 38 ARTICLE 13 INSURANCE LIABILITY AND INDEMNIFICATION 13.1 Insurance a) Seller agrees to keep, or cause its contractors to keep, the Generating Facility continuously insured with reputable insurance companies against loss or damage in the amounts and for the risks that property of similar character is usually so insured by entities owning and operating like properties. b) Seller shall maintain, or cause its contractors to maintain, in effect insurance coverage for the Generating Facility with initial minimum limits as follows: Insurance Limits 1. a. Worker's Compensation Insurance As required by statute b. Employer's Liability Insurance $1,000,000 2. Comprehensive General Liability (Public Liability) Insurance including: a. Bodily Injury $5,000,000 per occurrence and Property Damage $5,000,000 per occurrence or b. Bodily Injury $5,000,000 combined and single occurrence Property Damage c. Personal Injury $5,000,000 per occurrence 3. Automobile Liability Insurance (Owned, hired and non-owned): 39 a. Bodily Injury $2,000,000 per Accident b. Property Damage $2,000,000 per Accident c) Seller shall also procure or cause to be procured and maintain in effect business interruption insurance (or in lieu thereof, an operation and maintenance agreement for the Generating Facility with a reputable equipment manufacturer containing availability guarantees for the Generating Facility which agreement shall be satisfactory to JCP&L). d) JCP&L may, upon 90 days prior written notice, require Seller and Seller shall, from time to time, increase the foregoing initial limits to amounts which shall be reasonable, based upon. (a) commercial availability of such increased limits on commercially reasonable terms, and (b) the location, size and type of the Generating Facility, to meet changed circumstances and then current industry practice. e) Seller's liability insurance (other than its worker's compensation insurance) shall include provisions or endorsements (a) naming JCP&L as an additional insured, (b) stating that such insurance is primary insurance with respect to the interest of JCP&L and that any insurance maintained by JCP&L is excess and not contributory insurance with the insurance required hereunder, and providing that such policies shall not be canceled or their limits of liability reduced except upon 30 days prior written notice to JCP&L. f) A copy of each such insurance policy, certified as a true copy by an authorized representative of the issuing insurance company or in lieu thereof, a certificate in form satisfactory to JCP&L certifying that such insurance is in effect, shall be furnished to JCP&L not less than 30 days prior to the commencement of construction of the Interconnection Facilities and 15 days prior to the expiration date of each such policy. 13.2 Liability Neither JCP&L nor Seller, nor their respective officers, directors, agents, employees, parent or affiliates, or their respective officers, directors, agents or employees shall be liable to the other Party or its parent, subsidiaries, affiliates, officers, directors, agents, employees, successors, or assigns, for claims for incidental, special, 40 indirect or consequential damages of any nature connected with or resulting from performance or non-performance of this Amended and Restated Agreement, including, without limitation, claims in the nature of lost revenues, income or profits (other than payments properly due under this Amended and Restated Agreement) irrespective of whether such claims are based upon warranty, negligence, strict liability, contract operation of law or otherwise. Seller shall be liable to JCP&L for any and all direct damage caused to JCP&L's facilities and property resulting from or caused by the presence, operation, maintenance, condition, electrical output or removal of Seller's Facility. Nothing in this Amended and Restated Agreement shall be construed to create any duty to, any standard of care with reference to, or any liability to, any person not a Party hereto. Except where specifically stated in the Amended and Restated Agreement to be otherwise, the duties, obligations and liabilities of the Parties are intended to be several and not joint or collective. Nothing contained herein shall ever be construed to create an association, trust, partnership, or joint venture or impose a trust or partnership duty, obligation or liability on or with regard to either Party. Each Party shall be individually and severally liable for its own obligation hereunder. 13.3 Seller hereby indemnifies and agrees to defend JCP&L, its Affiliates, officers, directors, partners, agents and. employees against all loss, damage, expense, and liability to third persons for injury to or death of persons or damage to property, proximately caused by the negligent design, construction, ownership, operation or maintenance of any of Seller's works or facilities used in connection with this Amended and Restated Agreement, and JCP&L indemnifies and agrees to defend Seller, its Affiliates, officers, directors, agents, partners, and employees against all loss, damage, expense and liability to third persons for injury to or death of persons or injury to property proximately caused by the negligence of JCP&L, in connection therewith; provided, however, that neither Party, nor their respective Affiliates, officers, agents, directors, partners, or employees shall be liable to the other Party, its Affiliates, agents, officers, directors, partners, or employees for incidental, special, indirect or consequential damages of any nature connected with or resulting from performance or non- performance of this Amended and Restated Agreement. Each Party hereto shall furnish the other Party with written notification as soon as practicable (but in no event later than ten (10) days prior to 41 the time any response is required by law) after such Party becomes aware of any event of circumstances, or the threat thereof, which might give rise to such indemnification. At the indemnified Party's request, the indemnifying Party shall defend any suit asserting a claim covered by this indemnity and shall pay all costs and expenses (including the cost of investigation and attorney's fees and expenses) that may be incurred in enforcing this indemnity. The indemnified Party may, at its own expense, retain separate counsel and participate in the defense of any such suit or action. ARTICLE 14 EVENTS OF DEFAULT 14.1 Definition The following shall constitute an Event of Default hereunder: a) JCP&L fails to make payment of any amount undisputed due Seller hereunder, which failure continues for a period of thirty (30) days after notice of such nonpayment; b) JCP&L or Seller fails to perform fully any material and essential obligation hereunder, which failure is not excused by force majeure or the non-performance of the other Party and such failure continues for more than thirty (30) days after notice of such failure to perform. However, the notice and thirty (30) day grace period of the Paragraph (b) shall not apply to the breaches covered by paragraphs (c), (d) and (e) below; c) Except for sales of electricity to DuPont as may be specifically provided herein, Seller sells or supplies any Electricity from the Facility to a party other than JCP&L without JCP&L's prior written consent; d) By order of a court of competent jurisdiction, a receiver or liquidator or trustee of either Party or of any of the property of either Party shall be appointed, and such receiver or liquidator or trustee shall not have been discharged within a period of sixty (60) days; or if by decree of such a court, a Party shall be adjud- icated bankrupt or insolvent or any substantial part of the property of such Party shall have been sequestered, and such decree shall have continued undischarged and unstayed for a period of sixty (60) days after the entry thereof; or if a petition to declare bankruptcy or to reorganize a Party pursuant to any of the provisions of 42 the Federal Bankruptcy Act, as it now exits or as it may hereafter be amended, or pursuant to any other similar state statute applicable to such Party, as now or thereafter in effect, shall be filed against such Party and shall not be dismissed within sixty (60) days after such filing; or e) If either Party shall file a voluntary petition in bankruptcy under any provision of any federal or state bankruptcy law or shall consent to the filing of any bankruptcy or reorganization petition against it under any similar law; or, without limitation of the generality of the foregoing, if a Party shall file a petition or answer or consent seeking relief or assisting in seeking relief in a proceeding under any of the provisions of the Federal Bankruptcy Act, as it now exists or as it may hereafter be amended, or pursuant to any other similar state statute applicable to such Party, as now or hereafter in effect, or an answer admitting the material allegation of a petition filed against it in such a proceeding; or if a Party shall make an assignment for the benefit of its creditors; or if a Party shall admit in writing its inability to pay its debts generally as they become due; or if a Party shall consent to the appointment of a receiver or receivers, or trustees, or liquidator or liquidators of it or of all or any part of its property. 14.2 Remedies for Breach a) If the defaulting Party fails to cure any default within thirty (30) days of receipt of notice of said default, the non-defaulting Party may seek all available remedies at law or in equity, including without limitation the right to recover damages caused by such default; provided, however, that neither Party, nor their respective Affiliates, officers, agents, directors, partners or employees shall be liable to the other Party, its Affiliates, officers, agents, directors, partners or employees for incidental, special, indirect or consequential damages of any nature connected with or resulting from performance or non-performance of this Amended and Restated Agreement. b) Secured Party's Option In the event that Seller has assigned this Amended and Restated Agreement as a security interest to a lender pursuant to and in accordance with Article 18 hereof, then such lender shall be entitled to receive notice of any breach hereof by Seller and such lender shall have 43 the same opportunity as Seller to cure such breach to the extent Seller has agreed to give such right to its lender. c) If either Party breaches this Amended and Restated Agreement, the other Party has the right (but not the duty) to bring an action in a court of competent jurisdiction to require the breaching Party to terminate such breach and to specifically perform the breaching Party's obligation in accordance with the terms and conditions of the Amended and Restated Agreement. 14.3 JCP&L's Rights and Obligations Except as herein. otherwise provided, unless and until this Amended and Restated Agreement has been terminated, JCP&L shall not, as a result of any breach or alleged breach by Seller, refuse to make, suspend or delay any of the payments due Seller hereunder. 14.4 Waiver of Breach Either Party may waive breach by the other Party, provided that no waiver by or on behalf of either JCP&L or Seller of any breach of any of the covenants, provisions, conditions, restrictions or stipulations contained herein shall take effect or be binding on JCP&L or Seller unless the waiver is reduced to writing and executed by JCP&L or Seller, and any such waiver shall be deemed to extend only to the particular breach waived and shall not limit or otherwise affect any rights that JCP&L or Seller may have with respect to any other or future breach. ARTICLE 15 REGULATORY APPROVAL 15.1 This Amended and Restated Agreement shall not become effective until each of the following shall have occurred: a) the BPU Order shall have been issued; b) the Bankruptcy Court shall have issued the Approval Order; c) the existing Gas Service Agreement dated May l3, 1993 between Seller and PSE&G shall have been terminated or 44 assigned to JCP&L without any liability to Seller or the Facility; d) JCP&L shall have entered into the PSE&G Gas Supply Agreement or, if the existing Gas Service Agreement described in clause (c) shall have been assigned to JCP&L, such agreement shall have been amended or modified to JCP&L's satisfaction, in its sole discretion, and in either case such agreement shall have received all necessary regulatory approvals and otherwise become effective in accordance with its terms; and e) that certain Third Amendment to Power Purchase Agreement dated as of December ___, 1995 by and between O'Brien (Newark) Cogeneration, Inc. and JCP&L shall have become effective in accordance with its terms. The Parties agree to use all reasonable efforts to obtain such approvals in a timely manner, and if requested by Seller, agree to negotiate in good faith any changes which the BPU may request as a condition to the issuance of the BPU Order. Any changes herein which may be requested by Seller's Lenders will be negotiated by Seller and JCP&L in good faith. ARTICLE 16 NOTICES AND SERVICE 16.1 All notices required or permitted hereunder shall be in writing and shall be personally delivered or sent by certified United States mail, postage prepaid, telex, facsimile transmission, or overnight express mail or courier service addressed as follows: If to Seller to: O'Brien (Parlin) Cogeneration, Inc. c/o NRG Energy 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403 If to the Company to: Jersey Central Power & Light Company Attn: Manager -Cogeneration 300 Madison Avenue Morristown, New Jersey 07962-1911 or to other person at such other address as a Party shall designate by like notice to the other Party. 45 16.2 Unless otherwise provided herein, all notices hereunder shall be deemed to be given when sent or personally delivered. ARTICLE 17 AMENDMENTS No amendment or modification of the terms of this Amended and Restated Agreement shall be binding on either JCP&L or Seller unless reduced to writing and signed by both Parties. Unless otherwise agreed by the Parties, no such amendment or modification shall become effective unless approved by the BPU in form and substance satisfactory to each Party. ARTICLE 18 RIGHT OF FIRST REFUSAL AND CONSENT FOR THIRD PARTY INTERESTS Neither Party shall transfer, assign, merge or delegate its rights, interest or duties hereunder without the prior written consent of the other Party, nor shall Seller sell or transfer all or any part of the Project facilities covered by this Amended and Restated Agreement, without the prior written consent of JCP&L. Such prior written consent will not be unreasonably withheld, but will, in addition to any other reasonable conditions, require that: (1) the proposed transferee, purchaser, assignee, delegatees or acquirer has agreed in writing to be bound by all the terms and conditions hereby, and (2) in the case of a proposed sale or transfer by Seller of part or all of the Project facilities covered hereby, Seller shall have first offered in writing to sell or transfer such facilities to JCP&L pursuant to the same terms and conditions that Seller will enter into with the proposed transferee or purchaser, and JCP&L in writing has rejected such offer. Upon presentation of said offer to JCP&L by Seller, JCP&L shall have thirty (30) days to review and approve said offer. If Seller does not receive written notification from JCP&L within said thirty (30) days, it shall be presumed that JCP&L has no objection to the proposed transaction and has rejected such offer. Any sale, transfer, assignment, merger or delegation made without such prior written consent shall be null and void. It is specifically understood and agreed by and between the Parties that JCP&L may at any time, without Seller's consent, assign this Amended and Restated Agreement to any successor to JCP&L, or to Pennsylvania Electric Company, Metropolitan Edison Company, or any other electric utility which is part of the General Public Utilities' System, provided that such assignee agrees to be 46 bound by all of the terms and conditions of the Amended and Restated Agreement. ARTICLE 19 CHOICE OF LAW The Parties hereto hereby agree that all disputes arising under the Amended and Restated Agreement not resolved between the Parties shall be decided by a court of competent jurisdiction in the State of New Jersey and Seller hereby submits itself to the jurisdiction of such court for such purposes. ARTICLE 20 CERTAIN JCP&L COSTS Seller hereby agrees to reimburse JCP&L for JCP&L's costs and expenses (including reasonable fees and expenses of JCP&L's counsel) incurred in connection with JCP&L's review, execution and delivery of any instruments agreements, or documents necessary in connection with Seller's assignment, transfer, sale or other disposition of this Amended and Restated Agreement or any interest in the Facility. ARTICLE 21 OTHER AGREEMENTS From and after the Effective Date, this Amended and Restated Agreement shall supersede any and all oral or written agreements and understandings heretofore made relating to the subject matter hereof, including without limitation the Power. Purchase Agreement, and this Amended and Restated Agreement constitutes the entire agreement and understanding of the Parties relating to the subject matter hereof. ARTICLE 22 CAPTIONS All indices, titles, subject headings, section titles and similar items are provided for the purpose of reference and convenience and are not intended to be inclusive, definitive or to affect the meaning, content or scope hereof. 47 ARTICLE 23 PARTIES Wherever in the Amended and Restated Agreement any Party shall be designated or referred to by name or general reference, such designation is intended to and shall have the same effect as if the words, "heirs, executors, administrators, personal or legal representatives, and permitted successors, purchasers, transferees, grantees, delegatees, and assignees" had been inserted after each and every such designation and all the terms, covenants and conditions herein contained shall be for and shall inure to the benefit of and shall bind the respective Parties hereto, and their heirs, executors, administrators, personal or legal representatives, and their permitted successors, purchasers, transferees, grantees, delegatees and assignees, respectively. In all references herein to any parties, persons, entities or corporations the use of any particular gender or the plural or singular number is intended to include the appropriate gender or number as the text hereof may require. ARTICLE 24 COUNTERPARTS This Amended and Restated Agreement may be executed in any number of counterparts, and all such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. ARTICLE 25 WAIVER Any waiver at any time by either Party of its rights with respect to a default hereunder, or with respect to any other matters arising in connection with this Amended and Restated Agreement, shall not be deemed a waiver with respect to any subsequent default or any other matter. ARTICLE 26 DISPUTES Should a dispute between the Parties arise hereunder, the Parties hereto shall continue in good faith to perform their respective obligation hereunder. The Parties shall negotiate with 48 each other in a bona fide effort to resolve any such dispute without resorting to judicial proceeding, and failing settlement, they shall submit any unresolved dispute for settlement by alternative dispute resolution techniques. If the dispute remains unresolved for more than ninety (90) days after formal commencement of such efforts to resolve the dispute, either Party may seek judicial enforcement of its rights and remedies hereunder as herein provided. Notwithstanding the foregoing, the rights and remedies of the Parties hereto set forth in Article 14 shall in no way be impaired, restricted or otherwise affected. ARTICLE 27 GRATUITIES JCP&L shall prohibit its employees from using their official position for personal financial gain, or from accepting any personal advantage from anyone under circumstances which might reasonably be interpreted as an attempt to influence the recipients in the conduct of their duties. Seller and its employees and representatives shall not, under circumstances which might reasonably be interpreted as an attempt to influence the recipients in the conduct of their duties, extend any gratuity or special favor to employees of JCP&L. IN WITNESS WHEREOF, the Parties hereto have caused this Amended and Restated Agreement to be signed by their respective officers thereunto duly authorized as of the day and year first set forth above. IN WITNESS ATTEST: O'BRIEN (PARLIN) COGENERATION, INC. By: /s/ Leonard Bluhm Title: Title: ATTEST: JERSEY CENTRAL POWER & LIGHT COMPANY By: /s/ M. P. Morell Assistant Secretary Title: Vice President 49 Appendix A Facility Fuel Management Services A.1 GPU Natural Gas Private Pooling Point ("PPP") A.1.1 GPU Service Corporation ("GPUSC") is authorized to act on behalf of and as agent for JCP&L in all matters pertaining to the procurement and delivery of natural gas for consumption by those participating gas-fired generating facilities owned by JCP&L or certain facilities owned by an Independent Power Producer with a Power Purchase Agreement with JCP&L, including the Facility. JCP&L and GPUSC shall hereafter collectively be referred to as the "Company". A.l.2 GPUSC has established a Natural Gas Private Pooling Point ("PPP"), which is a portfolio of natural gas supply and transportation assets, that is managed collectively by New Jersey Natural Energy Corporation ("NJNE") and GPUSC pursuant to a Master Fuel Management Agreement. NJNE is a wholly owned subsidiary of New Jersey Resources Corporation. A.1.3 Facilities served by the PPP, including the Facility, will be provided a comprehensive natural gas management service such that neither the Facility's owners nor operator shall be responsible nor held liable for procuring, transporting, scheduling, nominating or delivering natural gas to the Facility's burner tip. In the case of the Facility, this shall include serving the requirements of the base load portion of the Facility, the additional loads when the Facility's dispatchable operation is directed by the Company's dispatchers, or the additional loads and requirements for producing steam (and, if applicable, electricity) for DuPont (including the Facility's auxiliary boilers) provided that Seller both complies with the explicit notification requirements set forth herein and elects to accept delivery of such natural gas at the price specified in Sections A.2.2 and A.2.3 below, as appropriate. A.l.4 GPUSC has designated a full time employee assigned to the PPP, and officed at GPUSC's dispatch center, to coordinate all natural gas procurement and scheduling for PPP facilities including the Facility. Such employee shall hereafter be referred to as the "Fuel Manager". The Fuel Manager or his designee shall be available twenty-four hours per day, seven days per week. A.2 Operations A.2.l The PPP shall provide natural gas to the Facility's Burner Tip to operate the Base Capacity of the Facility unless the Seller notifies the GPUSC dispatcher that such Base Capacity is not available as a consequence of a planned or forced outage. In the event of a forced outage, the Seller shall immediately notify the Company dispatcher of the outage condition and its anticipated duration. The Seller shall notify JCP&L of a major Planned Outage, i.e., scheduled outages expected to last longer than seven (7) consecutive days, at least two (2) months prior to the planned start of said outage. Further, the Seller shall notify JCP&L of its intent to resume operation of the Base Capacity at least one (1) week prior to the completion of a major Planned Outage. Seller shall use best efforts to notify the Company of Maintenance Outages and short duration Planned Outages, i.e., unscheduled Planned Outages or Planned Outages expected to take less than seven (7) days, within one day of the decision to conduct such an outage. If the PPP fails to properly procure and cause to be delivered an adequate supply of natural gas to operate the Base Capacity of the Facility during periods when PSE&G has not interrupted or recalled the interstate or intrastate transportation that it supplies to the PPP pursuant to its agreement with the Company to support, among other things, the operation of the Facility, then the Seller shall, nonetheless, ensure that an adequate supply of kerosene is available at all times and agree to operate the Base Capacity of the Facility on kerosene provided that the Company shall pay for said kerosene pursuant to Article 9 of the Agreement and that operation of the Facility on kerosene does not cause the Facility to violate its air permits. Alternatively, the Seller may Procure and cause to be delivered a supply of natural gas to the Facility from a third party supplier to operate the Base Capacity of the Facility during such periods. The Company shall reimburse the Seller for the all-in cost of such natural gas up to the sum of the mid-point of the range of the most recent price to Mid- Atlantic Citygates, Transco, Zone 6, or Texas Eastern, Zone M-3, whichever is greater, as published in the following day's Gas Daily, Eastern Edition, and PSE&G's reasonable charge to transport said natural gas to the Facility. A.2.2 In accordance with Section 6.13 of the Agreement, the Seller may elect to generate up to 50 MW during periods of non-dispatch if it agrees to pay for the proportional amount of fuel to generate such excess. The Seller shall notify the Fuel Manager by telephone and fax of its intention to generate such excess prior to 0900 hours of the day preceding Seller's proposed generation in order for the PPP to make proper arrangements for additional supplies and delivery of natural gas. The Fuel Manager shall fax confirmation of the Seller's request by 1200 hours on that day and shall also provide to the Seller a firm price quote for the additional fuel. The Fuel Manager shall use reasonable efforts to procure and cause to be delivered such gas at a competitive, market based price. Upon receipt of such firm price quote, Seller shall have the option, to be exercised by telephone or fax notice by 1300 hours on that day, (i) to accept such firm price quote, or (ii) to elect not to take the requested gas from the PPP, but instead to procure and pay for other gas directly from a third party supplier, or (iii) to elect not to generate additional energy above the Base Capacity. In the event Seller elects to procure and pay for gas from a third party supplier, JCP&L shall seek to cause such gas to be delivered to the Facility through its intrastate transportation agreement with PSE&G, at the contract rates provided therein, all at Seller's expense. A.2.3 In accordance with Section 9.1 of the Agreement, the PPP shall be responsible for tendering natural gas to the Facility for production of steam (and, if applicable, electricity) for DuPont, including natural gas required for the Facility's auxiliary boiler which shall be operated, from time to time, by the Seller to produce steam for sale to DuPont. The Seller shall notify the Fuel Manager of its intention to operate the Facility to 2 produce steam and electricity, if applicable, for DuPont, if such operation would require operating the Facility at a greater load than would otherwise be required to provide Base Capacity and/or Dispatch Capacity to JCP&L under the Agreement, including Seller's intention to operate the auxiliary boiler, and the amount of natural gas required prior to 0900 hours of the day preceding Seller's proposed operation in order for the PPP to make proper arrangements for additional supplies and delivery of natural gas or, if notice by such time is not feasible (e.g., because notice of reduction in the Dispatch Capacity was not given by JCP&L by that time or because of the sudden occurrence of a full or partial Forced Outage), as much notice as is feasible under the circumstances. The Fuel Manager shall fax confirmation of the Seller's request by 1200 hours on that day (or, if response by that time is not feasible because shorter notice was given by Seller as permitted under the previous sentence, as soon as is feasible). Seller shall pay for such additional natural gas at the rate provided in Section A.2.5 below. A.2.4 Once nominated, the Seller is obligated to consume within plus or minus five percent (5%) any additional gas requested pursuant to Sections A.2.2 and A.2.3 hereof, in the aggregate during each calendar month, unless other arrangements can be made at the time between the Seller and the Fuel Manager. In the event the Facility, for whatever reason, is unable or fails to consume the additional gas that it had previously requested, the Company shall use reasonable efforts to redirect, place into storage, or remarket such excess gas so as to mitigate the cost of disposing of said excess gas. Should the Facility consume an amount of natural gas greater than one hundred and five percent (105%) of the aggregate amount requested during the calendar month, then the Company shall use reasonable efforts to remedy any resulting imbalances including, when practicable, withdrawal of natural gas reserves from storage if an adequate supply of such natural gas exists and can be accessed. However, the incremental cost of such gas along with any and all penalties or claims that may nonetheless be applied by a third party, including but not limited to an interstate pipeline company or PSE&G, as a result of an imbalance, shall be paid by the Seller. A.2.5 The Fuel Manager shall provide the Company and the Seller with a monthly weighted average cost of gas ("WACOG") to the PSE&G city gate that shall be combined with the cost of variable intrastate transportation charged to the PPP by PSE&G to deliver gas to the Facility's burner tip. The combined WACOG and intrastate transportation charges will be used in the calculation of Seller's reimbursement to ICP&L for steam (and, if applicable, electric) sales to DuPont. The WACOG shall be the PPP's overall WACOG at PSE&G's city gate and shall be reported to the Company and the Seller no later than three (3) business days after the end of the month. Upon receipt of the Seller's written request, the Fuel Manager shall provide documentation supporting the calculation of the WACOG and shall provide access, as required to relevant supporting detail including invoices and LDC metering summaries. A.2.6 The Company may request that the Seller operate the Dispatch Capacity of the Facility. A Scheduled Dispatch Period shall require a minimum of thirty (30) minutes advanced notice prior to the commencement of a Start-up Period which shall not exceed one and one half hours (plus the supplemental Start-up period in the case of a cold start). The PPP shall provide all natural gas required by the Facility during a Start-Up Period (plus the 3 supplemental Start-up period in the case of a cold start), the Scheduled Dispatch Period and the subsequent Shut-Down Period. It is the responsibility of the PPP to ensure that an adequate supply of natural gas is available to operate the Dispatch Capacity of the Facility, subject to the adjustments contemplated in Sections 6.11. The Fuel Manager shall estimate the amount of natural gas required based upon the anticipated duration of the Scheduled Dispatch Period, the level of Dispatch requested (i.e., second combined cycle, duct firing, or maximum output), the typical natural gas consumption during regular Start-Ups and Shut- Downs and the expected heat rate of the Facility. Unless otherwise advised by the Seller, the Fuel Manager shall utilize the Average Heat Rate of the preceding Contract Year, or 9500 BTU/kWh, to determining the natural gas requirements of the Facility. Seller shall use reasonable efforts to maintain an accurate estimate of the Facility's Heat Rate and shall report any significant variations (i.e., +1-5%) from the Average Heat Rate then in effect, either due to the material condition of the Facility or temperature conditions. Seller shall not be responsible for any cost or charges, including storage or remarketing costs or imbalance charges, resulting from any difference between such estimates and the Facility's actual usage provided that (i) Seller operates the Facility as contemplated and (ii) Seller has properly notified the Fuel Manager of any significant variations in the Heat Rate used by the Fuel Manager in calculating the natural gas requirements of the Facility. If the PPP fails to properly procure and cause to be delivered an adequate supply of natural gas to operate the Dispatch Capacity of the Facility during periods when PSE&G has not interrupted or recalled the interstate or intrastate transportation that it supplies to the PPP pursuant to its agreement with the Company to support, among other things, the operation of the Facility, then the Seller shall, nonetheless, ensure that an adequate supply of kerosene is available at all times and agree to operate the Dispatch Capacity of the Facility on kerosene provided that the Company shall pay for said kerosene and that operation of the Facility on kerosene, as provided in the Agreement, does not cause the Facility to violate its air permits. In either event, should the Company not elect to operate the Dispatch Capacity on kerosene either because of cost or air permit restrictions, not withstanding anything else herein to the contrary, the Seller shall be entitled to receive compensation pursuant to Article 8 of the Agreement. A.2.7 From time to time, the Company may direct the Seller to operate the Facility on kerosene instead of natural gas during periods when natural gas is either unavailable or prohibitively expensive. In accordance with Section 6.11(a) of the Agreement, the Company shall not request the Seller to operate the Dispatch Capacity for more hours than is currently authorized under the Facility's air permit without first obtaining an appropriate variance from the New Jersey Department of Environmental Protection. The Company shall reimburse Seller for the cost of kerosene as provided in Article 9 of the Agreement. The Company shall provide at least a comparable level of natural gas service to the Facility for the purpose of operating the Base Capacity to that provided by PSB&G to its QF customers under its prevailing CIG Tariff. 4 A.3 Metering of Natural Gas Flows to the Facility A.3.l In accordance with Section 9.3 of the Agreement, both Seller and JCP&L shall maintain meters for measuring the quantity of fuel used by the Facility. It is contemplated by the Parties at the time of this Agreement that JCP&L shall be afforded access to PSE&G's billing meter and shall further be permitted to connect its remote telemetering unit ("RTU") to such billing meter for the purpose of electronically transmitting real time fuel consumption data to GPUSC's dispatch center. In the event that, for whatever reason, access to PSE&G's billing meter is denied or deemed to be impracticable, then JCP&L shall have the right to cause to be installed at its own expense a meter capable of recording and electronically transmitting required real time fuel consumption data at the Facility. A.3.2 The Fuel Manager will monitor the consumption of natural gas at the Facility to ensure that an adequate supply of natural gas is available to operate both the Facility's Base Capacity and, when requested by ICP&L, the Dispatch Capacity. In the event that the Fuel Manager determines that an insufficient quantity of natural gas remains to continue to operate the Facility at its current level of output, it may request the Company, and the Company may direct the Seller, that the a Scheduled Dispatch Period be shortened unless additional supplies can be secured. If the shortfall is substantial (i.e., greater than 5% variation from anticipated consumption at the point in time that the comparison is made and cannot be readily explained), the Company and/or the Seller may request that any or all gas measuring meters be recalibrated. If it is determined that the additional fuel consumption is the result of a material change in the Faci1ity's performance, the Fuel Manager shall notify the Seller in writing immediately, who shall, in turn, confirm receipt of such notification and explain the cause or causes of the change in performance and what steps will be taken to remedy the situation. The extent of the change in performance may necessitate that the Facility be declared to be in a full or partial Forced Outage until the condition is remedied.. In any event, the provisions set forth in Section 8.3h of the Agreement shall apply. A.3.3 The Company shall seek to cause PSE&G to deliver natural gas of interstate pipeline quality to the Facility at its system operating pressure. A.4 Title A.4. 1 Title to the natural gas supply used to fuel the Base Capacity and Dispatch Capacity of the Facility shall remain with GPUSC. A.4.2 Title to the natural gas requested by the Seller to fuel the auxiliary boiler, to provide steam (and, if applicable, electricity) to DuPont, or to operate the Base Capacity above the 41 MW contractual limit pursuant to Section 6.13 of the Agreement shall transfer to the Seller at the PSE&G billing meter. Such title transfer shall create an obligation on the part of the Seller to reimburse the Company the full cost of the natural gas as provided herein. 5 A.4.3 At all times, tide to any interstate transportation which may be used from to time to transport natural gas to the PSE&G city gate for the purpose of operating the Facility including the auxiliary boiler shall remain with GPUSC. A.4.4 The Company warrants that it will have good and marketable tide to all natural gas supplied to Seller and full authority to deliver such natural gas to Seller free and clear of any liens, claims or encumbrances of any third party. A.5 Liability A.5.1 The Seller shall have no responsibility to procure natural gas for the Facility, nor shall it be liable for any claims or penalties resulting from the supply and or transportation of natural gas to the Facility when operation of the Facility is within the prescribed terms of the Agreement. Such operation shall include operating the Base Capacity of the Facility at the 41 MW limit, operating the Dispatch Capacity of the Facility when done so in the prescribed manner in response to a request made by the Company, operating the auxiliary boiler during Non-Dispatch Periods upon proper notification by the Seller to the Fuel Manager, and generating any additional output above the Base Capacity up to 50 MW upon proper notification by the Seller to the Fuel Manager. A.5.2 The Seller shall be liable for the unmitigated cost of disposing of additional gas supplies previously requested by the Seller referenced in Section A.2.4 of this Appendix but not consumed at the Facility pursuant to the terms and limitations set forth in that Section. A.5.3 The Seller shall be liable for the entire cost of any natural gas consumed by the Base Capacity of the Facility in excess of 41 MW or by the auxiliary boiler during Non-Dispatch Periods as provided in Sections A.2.2 and A.2.3 above. Further, in addition to the full cost of the natural gas consumed, the Seller shall be entirely liable for any penalties or claims that might result as a consequence of its failure to properly notify the Fuel Manager of its intention to operate the Base Capacity at a level greater than 41 MW or to operate the auxiliary boiler. Under no circumstances shall the Seller operate the Dispatch Capacity without the direct knowledge and consent of the Company. Such an action on the part of the Seller shall constitute a breach of the Agreement. Further, the Seller shall be entirely liable for the full cost of the natural gas consumed as well as any and all penalties or claims that might result as a consequence of its actions. A.5.4 The Company shall not be held liable for any fines imposed by the New Jersey Department of Environmental Protection on the Seller resulting from the Facility exceeding the authorized level of operations on kerosene. It is the Seller's responsibility to ensure compliance with all of its permits. However, Seller shall not be obligated to produce either the Base Capacity or the Dispatch Capacity if the PPP has not provided adequate natural gas for such production during periods when PSB&G has not interrupted or recalled the interstate or intrastate transportation that it supplies to the PPP, pursuant to its agreement with the Company, to support, among other things, the operation of the Facility, if such production would cause the Facility to exceed authorized levels of operation on kerosene. Such failure 6 to produce either Base Capacity or Dispatch Capacity shall not be considered a Forced Outage under the Agreement. A.5.5 Pursuant to Section A.2.7 of this Appendix, the PPP shall provide a level of service comparable to PSE&G's CIG Tariff which contemplates some number of days of interruption during periods when the ambient air temperature falls below some predetermined contract level. During such periods of natural gas interruption, the Seller may operate the Facility on kerosene, provided that such operation does not exceed the authorized levels of operation on kerosene under the Facility's permit. The Company shall reimburse the Seller the cost of said kerosene pursuant to Sections 9.1 and 9.2 of the Agreement. However, if the Seller is unable to operate the Base Capacity due to the unavailability of kerosene or because the Facility has exceeded the authorized number of hours of operation under the air permit, the Company shall not be liable to the Seller for any lost revenue that would otherwise be paid pursuant to Section 8.1 of the Agreement and the Base Capacity shall be considered to be in a Forced Outage and all provisions related thereto shall apply. If the Seller is unable to operate the Dispatch Capacity on kerosene because Seller has failed to maintain an adequate supply of kerosene available, then the Dispatch Capacity shall be considered to be in a Forced Outage and all provisions related thereto shall apply. A.6 Conflicts A.6.1 Nothing contained in this Appendix shall supersede or nullify any portion or provision of the Agreement. In the event of conflict between this Appendix and the Agreement, the terms and conditions set forth in the Agreement shall always prevail. A.7 Billing and Payments A.7.1 The Parties shall establish and maintain guidelines which shall govern the billing and subsequent payment for natural gas volumes supplied by the Company and delivered to the Seller at the PSB&G billing meter. Such guidelines shall be established and amended, as required, through letter agreement. 7 Appendix B Sample DuPont Steam Credit Calculation Actual value will be determined by plant test
Plant Plant STG GTG GTG GTG Fuel HHV HHV DuPont Net GMC NMW GMW GMW LOAD as % Consumption Fuel Fuel Steam Ht Rate of Use Reduction BTU/kWh GMW MMBTU MMBTU Full Load 5325 4825 1491 3834 100% 720% 100% 4612 9,558 40 MW & 20,000 46 41 1288 3312 864% 720% 8975% 4139 20,000 10.095 lb/hr No Extraction 476 426 14.5 3312 864% 696% 8975% 4139 0 9.716 Loan Reduction 160 05 1.1 40 MW & no 46 41 140 320 835% 696% 8756% 4038 101 0 9,849 Extraction DuPont Steam Credit 504.2 BTU/l.b Assumptions 12.500 lb/MWh calculated by (3413 BTU/kWh)/(303 BTU/lb)/098 (for gen)/092 (for mechanical) 1.60 MW steam electric value 0753 fuel reduction/loan reduction
EX-10.17.4 31 EXHIBIT 10.17.4 LETTER AGREEMENT DATED APRIL 30, 1996 BETWEEN O'BRIEN (PARLIN) COGENERATION, INC. AND JCP&L. Exhibit 10.17.4 April 30, 1996 O'Brien (Newark) Cogeneration, Inc. O'Brien (Parlin) Cogeneration, Inc. 1221 Nicollet Mall Minneapolis, Minnesota 55403 Re: Amended and Restated Agreement for Purchase and Sale of Electric Power (the "Parlin PPA") between O'Brien (Parlin) Cogeneration, Inc. ("Parlin") and Jersey Central Power & Light Company ("JCP&L") and the Third Amendment to Power Purchase Agreement ("Newark Third Amendment") between O'Brien (Newark) Cogeneration, Inc. ("Newark") and JCP&L. Gentlemen: Please refer to the above-referenced Parlin PPA and Newark Third Amendment and to the Order of Approval dated April 29, 1996 in docket numbers EM6604396 and EM66121345, of the State of New Jersey Board of Public Utilities (the "BPU Approval"), a copy of which is attached hereto. This letter is to confirm our mutual understanding and agreement that, the BPU Approval having been received, executed signature pages to the Third Amendment and the Parlin PPA having been exchanged, the bankruptcy court order approving the NRG Plan (as defined in the Parlin PPA and the Newark Third Amendment) having been entered on February 23, 1996 and the gas supply agreement between JCP&L and Public Service Electric and Gas Company having been entered into and approved by the New Jersey Board of Public Utilities, all conditions precedent to the Newark Third Amendment and the Parlin PPA have been satisfied and the Parlin PPA and the Newark Third Amendment have become effective as of April 30, 1996. O'Brien (Newark) Cogeneration, Inc. O'Brien (Parlin) Cogeneration, Inc. April 30, 1996 Page 2 If the foregoing accurately sets forth our agreement, please so indicate by executing this letter in the space provided below and sending it to us by facsimile transmitter. Jersey Central Power & Light Company By: /s/ M. P. Morrell Name: Michael P. Morrell Title: Vice President Agreed: O'Brien (Newark) Cogeneration, Inc. By: /s/ Leonard Bluhm Leonard A. Bluhm President O'Brien (Parlin) Cogeneration, Inc. By: /s/ Leonard Bluhm Leonard A. Bluhm President EX-10.20.1 32 EXHIBIT 10.20.1 STEAM PURCHASE CONTRACT DATED DECEMBER 8, 1996 BETWEEN THE COMPANY AND E.I. DU PONT NEMOURS AND COMPANY ("DU PONT"). Exhibit 10.20.1 STEAM PURCHASE CONTRACT This STEAM PURCHASE CONTRACT [the "Agreement"], dated as of December 8th, 1986, by and between E. I. DU PONT DE NEMOURS AND COMPANY, a Delaware Corporation with its principal office located at 1007 Market Street, Wilmington, Delaware 19898 ["Du Pont"] and O'BRIEN ENERGY SYSTEMS, INC., a Delaware corporation with its principal office located at 225 South 8th Street, Philadelphia, Pennsylvania 19106 ["O'BRIEN"]. RECITALS: A. Du Pont owns and operates a plant at Parlin, New Jersey, ["Du Pont's Plant"] which uses substantial quantities of steam. B. O'Brien is engaged in the business of building and operating cogeneration facilities which produce steam for sale to industries companies. C. O'Brien wishes to provide Du Pont with all steam required for use in the operation of Du Pont's Plant up to the maximum quantities and in accordance with the specifications set forth herein, and will finance, design, construct, own, operate and maintain a cogeneration facility [the "Facility"] to be located adjacent to Du Pont's Plant and has on even date herewith entered into a Lease with Du Pont covering certain real property on which the Facility will be constructed [the "Ground Lease"]. NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, Du Pont and O'Brien hereby agree as follows: Article 1. Representations and Warranties A. Du Pont represents that it is a corporation organized, validly existing and in good standing under the laws of Delaware with full power and authority to enter into this agreement. B. Du Pont represents that the person executing and delivering this agreement on Du Pont's behalf is acting pursuant to proper authorization and that this agreement is the valid and binding obligation of Du Pont and is enforceable in accordance with its terms. C. O'Brien represents that it is a corporation organized, validly existing and in good standing under the laws of Delaware with full power and authority to enter into this agreement. D. O'Brien represents that the person executing and delivering this agreement on O'Brien's behalf is acting pursuant to proper authorization and that this agreement is the valid and binding obligation of O'Brien and is enforceable in accordance with its terms. Article 2. Construction and Operation of Cogeneration Facility. A. O'Brien agrees to construct the Facility with a capacity adequate to deliver at least 120,000 pounds per hour of steam to Du Pont on a continuous uninterrupted basis. To insure this capacity, O'Brien will build two heat recovery boilers (including supplemental firing capability) associated with the gas turbines and a back-up boiler, each of which will be capable of producing at least 120,000 pounds per hour. The Facility will be capable of using natural gas or fuel oil. The back-up boiler shall be capable of burning 0.3% sulphur No. 6 fuel oil, and O'Brien shall provide storage tank capable of holding at least a 14 day inventory of the fuel oil. As part of the construction process, O'Brien will dismantle and remove, at its cost, Du Pont buildings numbered 145, 826, 1939, and such foundations, supports underground lines and any other items which the parties agree are required to be removed in order to build the Facility. The Facility will be located on land leased to O'Brien by Du Pont consisting of approximately four (4) acres pursuant to the terms and description set out in the Ground Lease for the nominal rent of $10.00 per annum for a term expiring 120 days after the expiration of this Agreement. The Facility Site is described more fully in the Ground Lease. B. O'Brien shall operate the Facility twenty-four hours per day, seven days a week. C. O'Brien will obtain all permits and variances necessary for the lawful construction and operation of the Facility and will apply to the Federal Energy Regulatory Commission ["FERC"] for a certificate stating that the Facility is a Qualifying Facility under the Public Utility Regulatory Policies Act of 1978, as amended ["PURPA"]. If O'Brien has been unable to obtain all necessary permits or the Facility has not been certified as a Qualifying Facility by FERC by October 1, 1987, or within twelve months of the signing of this Agreement, whichever is later, either party may, by written notice to the other, terminate this Agreement without liability to the other. D. All costs associated with the Facility, including without limitation costs associated with engineering, licensing, construction and operation of the Facility will be the responsibility of O'Brien. Du Pont's sole responsibilities shall be: (1) to provide land and provide easements as are necessary for the construction and operation of the Facility both pursuant to the attached Ground Lease, (2) to purchase steam as hereinafter provided, and (3) to supply treated mainswater, at cost. E. O'Brien shall obtain all governmental licenses and permits needed for the sale of steam under this Agreement, and Du Pont will cooperate with O'Brien and take any reasonable actions requested by O'Brien, at O'Brien's expense, in obtaining such licenses and permits. Article 3. Sale and Purchase of Steam A. O'Brien agrees to sell steam to Du Pont for use in Du Pont's Plant in quantities required by Du Pont up to a maximum of 120,000 pounds of steam per hour in accordance with the terms and conditions hereof and the pressures, temperatures and other specifications set forth in Exhibit A, Water and Steam Supply Specifications, for a period of twenty (20) years commencing with the Initial Delivery Date as defined in Article 4 below. If Du Pont's needs exceed 120,000 pounds per hour for short duration peaks (less than 4 hours), O'Brien will supply up to 150,000 pounds per hour for such short duration peaks at the contract price. So long as Du Pont materially complies with the terms and conditions of this Agreement and continues to purchase during each Operating Year, O'Brien will deliver the steam at pressures and at such temperatures and according to such other specifications as set forth in Exhibit A hereto or as are otherwise mutually agreed to in writing by Du Pont and O'Brien. "Operating Year" as used herein shall be the period beginning with the Initial Delivery Date as defined in Article 4 hereof and ending one year thereafter, and yearly thereafter shall mean each one year period from the anniversary of the Initial Delivery Date. B. O'Brien will install, maintain, operate and own such meters as shall be necessary to measure and record the steam delivered and received in accordance with the terms and conditions of this Agreement and any other data necessary for the sale of steam to Du Pont and the computation of appropriate invoices. Meters utilized for this purpose shall meet the specifications and shall be subject to calibration and testing as set forth in Exhibit B hereto. Upon request, O'Brien will allow Du Pont access to this instrumentation at reasonable hours, but all instrument reading, calibrating and adjustment will be done only by O'Brien. C. Du Pont will not be required to take or pay for any steam not required for its operations at the Du Pont plant. Insofar as Du Pont has requirements for steam at the Plant during a twenty (20) year period beginning with the Initial Delivery Date, it will purchase from O'Brien its requirements for steam for the Plant up to the minimum quantity necessary for O'Brien toQualifying Facility Status under PURPA as of the date of this Agreement ("Minimum PURPA Obligation"), which quantity is equal to 48,000 pounds of steam per hour, annual average. If Du Pont has requirements greater than the Minimum PURPA Obligation, it may elect to purchase the additional requirements from O'Brien up to a maximum total amount of 120,000 pounds per hour. D. Should Du Pont not take the annual Minimum PURPA Obligation and after a one-year cure period, and if O'Brien is unable to obtain relief from the regulatory authorities as regards its minimum Qualifying Facility status under PURPA, O'Brien shall have the right to conduct an affiliated thermal consuming business acceptable to Du Pont on the property leased from Du Pont under the Ground Lease. If required by O'Brien, Du Pont will grant continued necessary and reasonable access across its property to allow O'Brien to continue to operate the cogeneration Facility and the affiliated thermal consuming business for the term of this Agreement or any extension thereof. Du Pont will also continue to provide the water supply for the Facility, as provided in Article 9 hereof, if Du Pont's plant remains in operation. E. O'Brien agrees that so long as Du Pont purchases the Minimum PURPA Obligation in each Operating Year (except to the extent limited by Force Majeure). O'Brien will not sell steam from the Facility to any other person. Furthermore, O'Brien's commitment to supply steam to Du Pont shall take priority over any obligation to use steam to provide electricity to any other party. F. O'Brien shall maintain a fuel oil supply sufficient to meet Du Pont's maximum steam requirement for fourteen days. Article 4. Initial Delivery Date A. The parties will begin to deliver and receive steam under this Agreement within five (5) business days after O'Brien has notified Du Pont that the Facility is commercially operational (such date of commencement of delivery is herein referred to as the "Initial Delivery Date"). O'Brien represents that the Initial Delivery Date shall be on or before November 30, 1989, provided that the Initial Delivery Date shall be extended by the occurrence and the continuation of an event of Force Majeure as defined in Article 7 below. Should O'Brien fail to commence delivery of steam by the Initial Delivery Date (or the Extended Initial Delivery Date as a result of an event of Force Majeure), O'Brien agrees to pay Du Pont as liquidated damages a sum equal to the difference between what Du Pont would have had to pay to produce steam for itself and the price which Du Pont is obligated to pay under this Agreement. These liquidated damages shall be calculated pursuant to the formula set out in Exhibit C. In lieu of accepting these liquidated damages, or in the event that O'Brien should fail to pay them, Du Pont shall have the right to pursue all available remedies at law or in equity. B. At least six months prior to the Initial Delivery Date, O'Brien shall deliver to Du Pont steam from the back-up boiler which will allow Du Pont to evaluate the steam condensate from that boiler. With respect to condensate from the steam turbine and heat recovery boiler systems, Du Pont's evaluation will begin at start up and be completed within three months after the Initial Delivery Date. Article 5. Term; Termination A. This Agreement shall be effective as of the date of its execution and shall continue in effect thereafter for a period of twenty (20) years beyond the Initial Delivery Date, and remain in effect thereafter unless terminated by three years notice by either party. B. Upon expiration or if the Agreement is terminated pursuant to Paragraph 5.A, Du Pont shall have the option to buy part or all of the Facility equipment at its then fair market value. In constructing the Facility, O'Brien shall install the back-up boiler and all necessary auxiliaries in such a way that it and the land on which it is located can be severed from the rest of the Facility in the event of termination. C. If the Agreement expires or is terminated for any reason, O'Brien shall remove at its expense that part of the Facility not purchased by Du Pont from the Parlin site within twelve months unless the parties otherwise agree in writing. Article 6. Purchase Price A. Throughout the term of this Agreement, the price Du Pont shall pay O'Brien for the purchase of steam shall be as provided in Exhibit D, the Purchased Steam Rate Schedule. B. If Du Pont can secure or otherwise provide gas equivalent to its steam demand (as defined in Exhibit A) at a price lower than the cost of the gas supply being used by O'Brien, then O'Brien will contract with Du Pont for such gas if O'Brien's existing gas supply agreement does not prohibit or penalize O'Brien for taking such gas. Assuming the Du Pont gas can be used by O'Brien, the parties will negotiate in good faith to arrive at a mutually acceptable price for the gas and steam. Article 7. Force Majeure; Contingency A. As used in this Agreement, "Force Majeure" shall be an event by which either party shall be prevented from delivering or receiving steam by reason of or through flood, earthquake, storm, tornado, lightning, fire, explosion, war, riot, civil disturbances, strikes or other labor stoppage, sabotage, restraint by governmental authority (including any delay or failure by a governmental authority to issue any necessary permit or license), major equipment breakdown not due to the sole negligence of O'Brien or Du Pont, inability to obtain necessary labor or unforeseen shortages in materials or work from subcontractors, and other like events beyond the control of the parties, but shall not include economic hardship, the price O'Brien receives for electricity, the price O'Brien pays for natural gas or other fuel, or lack of a customer for the electricity. B. If an event of Force Majeure results in a party's being unable to perform in full or in part its obligations under this Agreement, that party shall not be deemed to be in breach of this Agreement if the hindered party used its best efforts to perform its obligations under this Agreement and to reduce the losses to the other party arising from the event of Force Majeure. If an event of Force Majeure shall occur, the hindered party shall promptly notify the other party of its extent and probable duration and the parties shall meet to decide if this Agreement should be revised in light of the impact of the event upon the implementation hereof. In the event of an O'Brien strike or other work stoppage, O'Brien will use its supervisory personnel to maintain full steam supply to Du Pont. Article 8. Interconnection with Du Pont's Plant A. O'Brien shall be responsible for all required auxiliary equipment and systems required to supply steam to the point of interconnection with Du Pont's Plant as indicated in Exhibit B. The meter shall be located at or near the point of interconnection. O'Brien will supply and maintain, at its cost, all piping systems and interconnection points with Du Pont's Plant specified on Exhibit B hereto. B. Du Pont will be responsible for the construction, operation and maintenance, at its cost, of the piping and other equipment and apparatus to be located in Du Pont's Plant and required to receive the delivery of steam from the Facility to Du Pont's Plant at the point of interconnection. C. Both Du Pont's and O'Brien's interconnection facilities shall be designed to generally accepted engineering standards. Du Pont and O'Brien agree to cooperate in determining appropriate and compatible equipment specifications for interconnection facilities, provided, however, that notwithstanding anything to the contrary herein, Du Pont shall not be responsible for any damage to the Facility due to demand from du Pont's systems. O'Brien will deliver steam at the interconnection point at 155 psig dry and saturated. O'Brien will provide necessary safety valves and control equipment that will limit steam to a maximum of 165 psig and a maximum steam temperature of 398 DEGREES. O'Brien shall cause these valves to be tested once each year by persons holding a Relief Valve (RV) Stamp from the National Board of Boiler and Pressure Vessel Inspectors and the results of such test shall be supplied to Du Pont. D. O'Brien accepts responsibility for all necessary cleanup and correction of all environmental contamination of Du Pont's property that may result from O'Brien's operations. O'Brien shall not be responsible for any environmental contamination on or within the leased Facility Site if such contamination originated prior to the effective date of the lease. Article 9. Water Supply Facilities; Provisions for Disposal of Waste Water Du Pont will supply 1,000 gallons per minute peak and 702 gallons per minute average of treated mainswater and bill O'Brien at Du Pont's actual cost on a monthly basis. The current cost range as of the execution of this Agreement is $1.20-$1.50 per 1,000 gallons. In order to permit routine maintenance of Du Pont's water supply system, O'Brien will provide, as part of its Facility, water storage capacity adequate to sustain the Facility operation for a period of twelve hours. Waste water will be disposed of into the Borough of Sayreville's sanitary sewer, hence to the Middlesex County Utilities Authority Systems. O'Brien will bear all disposal costs based on current and future regulations (which at the time of execution of this Agreement include flow, biological oxygen demand, suspended solids, chlorine demand) and sampling and analysis costs. Waste water pH must be maintained between 5 and 9 and no toxic or corrosive effluents will be permitted in the waste water. Any future discharge parameter imposed by any regulatory agency must be met by O'Brien. O'Brien shall be responsible for all treatment of waste water and all permits required for discharge thereof. O'Brien will provide flow meters for the mainswater and the waste water and a 24-hour composite sampling system for the waste water. Monthly supplies and daily flow data will be provided to Du Pont for analysis and billing purposes. Waste water flow and constituents will be provided to the Borough of Sayreville for billing purposes. O'Brien will be responsible for the design, construction, operation and maintenance of these water supply and waste water disposal facilities. Article 10. Service Interruptions A. O'Brien shall exercise all reasonable effort to provide a continuous supply of steam to Du Pont at the quantities described in Article 3. In this connection O'Brien agrees to consult with Du Pont on a regular basis and to schedule to the extent reasonably possible all routine boiler maintenance to coincide with periods when Du Pont's operations are shut down or steam needs are reduced. O'Brien agrees to keep at least one heat recovery boiler in operation at all times when Du Pont's Plant is requiring steam. O'Brien agrees to conduct monthly tests of the back-up boiler which it will install as part of the Facility. Du Pont shall have a right to witness such tests and will be provided with a copy of the report of such tests. If both heat recovery boilers are out of service, O'Brien shall operate the back-up boiler and move in an additional boiler of equal size through its Mobile Power Division at no cost to Du Pont. B. If for reasons other than Force Majeure events O'Brien fails to supply steam to equal Du Pont's requirements (up to a maximum of 120,000 pounds per hour), Du Pont shall have the right immediately to take over operation of the auxiliary boiler installed by O'Brien in order to provide steam to meet its requirements, and to operate said boiler until such time as O'Brien or its successor can resume steam deliveries on a reliable basis pursuant to this Agreement. Du Pont may retrofit one of the heat recovery boilers in order that the boiler can operate independently of the gas turbine. In such event, Du Pont shall also have the right to operate the retrofitted heat recovery boiler to provide additional back up. O'Brien shall obtain in its loan agreement any necessary waiver from its lender to permit Du Pont to exercise the foregoing option. In addition to the above rights, Du Pont shall also have the right either (1) to recover from O'Brien liquidated damages calculated pursuant to the formula in Exhibit C or (2) to pursue any available remedies at law or in equity. Article 11. Billings On or immediately after Du Pont's monthly closing date (which shall be supplied O'Brien by Du Pont at the beginning of the year) O'Brien will bill Du Pont for the steam purchased by Du Pont during the previous month. Each invoice will include all necessary information for calculation of the payment pursuant to Article 4 hereof. Payment for such invoices shall be made by Du Pont within thirty (30) days after receipt. Payments made thereafter shall be subject to a late payment charge on the unpaid amount of such invoice of one percent per month. Should Du Pont fail to pay any invoice within thirty (30) days after receipt, O'Brien, in addition to collecting the interest set out herein, may pursue any available remedy at law or in equity. Article 12. Assignment and Subcontracting A. Neither party may assign this Agreement in whole or in part, or any rights granted hereunder, or delegate or subcontract to another party any of the duties hereunder, without the prior written consent of the other party, which consent shall not be unreasonably withheld. Any transfer, assignment, delegation, or attempted transfer, assignment or delegation under this Agreement or of any of the rights or duties herein granted or imposed, whether voluntary, by operation of law or otherwise, without consent in writing, shall, at the option of the party whose written consent shall have been obtained, cause this Agreement to be terminated. B. O'Brien may mortgage, hypothecate, pledge or encumber its interest in this Agreement to any financial institution lending funds for construction of the Facility, provided that such lender does not reassign its interest in the Agreement without Du Pont's prior written consent. C. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns. D. If Du Pont should elect to sell its Parlin operations or site, it agrees to make assumption of its obligations under this Agreement a condition to the purchase of such operations. If Du Pont elects to close down or abandon the Parlin operations or site, its obligations under this Agreement shall terminate except for (1) the lease of the Facility Site and the adjoining land described in the Ground Lease to O'Brien, (2) the provision of continued access to the Facility Site and adjoining plot, and (3) provision of the water supply pursuant to this agreement assuming that Du Pont is still operating its water treatment plant. Article 13. Preconditions to Performance The parties' obligations under this Agreement are conditioned upon and subject to (1) the execution of a mutually acceptable Ground Lease covering the Facility Site: (2) O'Brien's executing a contract, satisfactory to O'Brien, requiring Public Service Electric and Gas or some other supplier to supply O'Brien with all natural gas necessary for O'Brien's operation of the Facility; (3) O'Brien's arranging necessary financing for construction of the Facility; (4) O'Brien's obtaining all required permits for construction and operation of the Facility; and (5) O'Brien's executing a contract, satisfactory to O'Brien, with Jersey Central Power and Light Company for the purchase of electricity generated by the Cogeneration Facility. Article 14. Remedies A. Should either O'Brien or Du Pont breach this Agreement, the other party shall give written notice of such breach, and if such breach is not cured within thirty (30) days of receiving such notice, the non-breaching party may seek any remedy available at law or in equity. Where this Agreement provides for the payment of specific liquidated damages to Du Pont, Du Pont shall have the option of either accepting such damages or pursuing available remedies at law or in equity. B. The parties agree that if one party brings an action against the other with respect to this Agreement, or any act or representation made herein, the successful party will be indemnified by the unsuccessful party for all court costs, legal fees and other expenses. The party will be deemed successful in any action if (1) a final applicable order has been entered by the court or government agency having jurisdiction over such action and (2) all appeals have been exhausted or rights to appeal have elapsed. Article 15. Compliance with Laws, Rules and Regulations A. In all matters pertaining to the subject matter of this Agreement, both parties shall comply with all applicable laws, rules and regulations of all governmental authorities having control over either party of this Agreement. B. O'Brien warrants and represents that throughout the term of this Agreement and any renewals thereof it shall maintain and operate the Facility in compliance with all federal, state and local statutes, ordinances, rules and regulations including but not limited to statutes, ordinances, rules and regulations pertaining to human safety, protection of property, and protection of the environment. Without limiting in any way the foregoing, O'Brien shall comply with (1) the New Jersey Department of Labor's Division of Workplace Standards, Rules and Regulations for Boilers, Pressure Vessels and Refrigeration, as amended from time to time, and (2) those applicable noise control standards specified by the New Jersey State Department of Environmental Protection, Title 7, Chapter 29, subchapter 1, as amended from time to time, a copy of which has been supplied to O'Brien. Article 16. Indemnification A. O'Brien agrees to defend, indemnify and hold harmless Du Pont (including, its officers, directors, employees, subcontractors and agents) from and against any and all liability, claim, injury (including death resulting therefrom), property damage, fine, penalty or assessment by any public agency, cost or expense (including costs of defense, settlement and reasonable attorneys' fees), which (1) are solely and directly or indirectly caused by any act or omission of O'Brien, its agents, employees or subcontractors associated with, or arising from the performance of this Agreement, including any failure to comply with any pertinent Federal, state or local law, statute, regulation, rule or (2) are caused jointly by any such act or omission by O'Brien, its agents, employees or subcontractors and any such act or omission by any third party or parties. The term "liabilities" employed in the preceding sentence, and O'Brien's indemnification obligation, includes any strict liability and other liability without fault, however named, asserted against Du Pont. B. Du Pont agrees to defend, indemnify and hold harmless O'Brien (including its officers, directors, employees and agents) from and against any and all liability, claim, injury (including death resulting therefrom), property damage, fine, penalty or assessment by any public agency, cost or expense, (including costs of defense, settlement and reasonable attorneys' fees) which (1) are solely and directly or indirectly caused by any act or omission of Du Pont, its agents, employees or subcontractors associated with, or arising from Du Pont's obligations under this Agreement, or (2) are caused jointly by any such act or omission by Du Pont, its agents, employees or subcontractors and any such act or omission by any third party or parties. C. Where acts or omissions of the nature referred to above by both O'Brien and Du Pont (including their respective officers, directors, employees, subcontractors or agents) have caused any liabilities, damages, fines, penalties, costs, claims, demands and expenses, whether or not a third party's acts or omissions also were causal, O'Brien and Du Pont shall contribute to their common liability a pro rata share based upon the relative degree of fault of each. In such a case, O'Brien shall bear all costs (including attorneys' fees and other costs of defense, if the parties choose common counsel; but if Du Pont selects its own counsel, Du Pont shall bear its own attorneys' fees and cost of defense, subject to reimbursement by O'Brien pursuant to the last sentence of this paragraph) until (i) there is a final court judgment allocating fault between the parties, or (ii) the parties agree to such an allocation. If neither (i) nor (ii) occurs within one (1) year of the date on which O'Brien first incurs such costs (or within such other period to which the parties agree in writing), then (iii) either party may require submission of the issue of allocation or arbitration, pursuant to the rules of the American Arbitration Association, of two disinterested and competent persons mutually chosen, and a third person whom the two shall select. A majority decision by the three arbitrators shall be conclusive and binding on both parties. Upon the concurrence of (i), (ii) or (iii), Du Pont shall reimburse O'Brien for that portion of the past costs paid by O'Brien which is equal to Du Pont's share of the allocation; O'Brien shall reimburse Du Pont for that portion of any attorneys' fees and defense costs paid by Du Pont which is equal to O'Brien's share of the allocation; and the parties shall share the costs of any arbitration and any future costs according to the allocation. Article 17. Insurance At all times during the term of this Agreement, O'Brien shall obtain and keep in force a Comprehensive General Liability, Bodily Injury and Property Damage policy in an amount not less than $5 million to cover O'Brien's obligations under this Agreement. This policy shall name Du Pont as an additional insured, and O'Brien shall furnish Du Pont as an additional insured, and O'Brien shall furnish Du Pont with certificates of insurance evidencing the coverage for the period of the Agreement. O'Brien shall also obtain and keep in force Workers Compensation Insurance in the statutory amount and Employer's Liability insurance of $100,000 per accident, which policies shall provide a waiver of subrogation against Du Pont. In the event any subcontractor is employed, with or without Du Pont's consent, for the services covered in this Agreement, then O'Brien assumes full responsibility to insure that the subcontractor's services are covered by the same insurance limits as set forth herein. Article 18. Amendments; Waiver This Agreement may not be terminated, amended, supplemented, waived or modified except by an instrument in writing signed by both of the parties hereto. Any failure by either party to enforce any provisions hereof shall not constitute a waiver by that party of its right subsequently to enforce the same or any other provision hereof. Article 19. Severability Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Article 20. Governing Law This Agreement is executed and delivered in the State of Delaware and shall in all respects be governed and construed in accordance with the laws of the State of Delaware including all matters of construction, validity and performance. Article 21. Employee Displacement In an effort to assist Du Pont in minimizing employee layoffs or discharges which may result from the parties entering into this Agreement, O'Brien shall make a good faith effort to employ or cause its contractors to employ those employees of Du Pont directly displaced due to Du Pont's discontinuing its own steam production where such employees have the requisite skills and experience to be considered for available positions at the Cogeneration Facility. Article 22. Possible Supply of Electricity O'Brien has expressed an interest in supplying electricity to Du Pont. The parties will explore the feasibility of O'Brien's providing electricity to Du Pont under mutually acceptable conditions. Article 23. Notices All notices and other communications hereunder shall be in writing and shall become effective, if sent by first class certified or registered mail with postage prepaid and return receipt requested, three (3) days after deposit in the mails, or when received (whichever is earlier), and shall be directed (a) if to Du Pont, to E. I. du Pont de Nemours and Company, Wilmington, Delaware 19898, Attention: Manager-Chemicals and Energy Section, Materials and Logistics Department; (b) if to O'Brien, to O'Brien Energy Systems, Inc., 225 South 8th Street, Philadelphia, Pennsylvania 19106, Attention: Executive Vice President; or (c) to such other address as any such person may designate by notice given to the other party hereto. IN WITNESS WHEREOF, this Agreement is executed by the duly authorized officers of the parties, pursuant to the authority vested in them by the lawful action of their Boards of Directors, on the date and year first above written. E. I. du Pont de Nemours and Company By /s/ W. E. Datum Title Sr. Vice President, Materials and Logistics O'Brien Energy Systems, Inc. By /s/ Jeffrey Barnes Title Exec. V. P. EXHIBIT A WATER AND STEAM SUPPLY SPECIFICATIONS Water Quality Treated mainswater supplied to O'Brien by Du Pont will meet Du Pont Specification 29-279, dated August 21, 1979, a copy of which has been supplied to O'Brien. Boiler feedwater treatment by O'Brien must meet Du Pont Specification 29-427, dated September 12, 1979, a copy of which has been supplied to O'Brien. Condensate from steam delivered to the point of interconnection must meet Du Pont Specification 29-317, dated August 23, 1979, a copy of which has been supplied to O'Brien. No organic additive shall be introduced into the feedwater, condensate or steam systems without prior approval from Du Pont. Steam Quality 155 psig plus 10 or minus 0 psig, dry and saturated at the point of interconnection. The quality of the steam delivered shall have no more than 25 degrees F superheat. Steam, at the point of interconnection, shall have at total solids content not in excess of 3 parts per million, as determined in accordance with Method A of the latest published edition of "Methods of Testing for Suspended and Dissolved Solids in Industrial Waters," by the American Society for Testing Materials, or a similar method embodying the same essential principles of that specification. EXHIBIT B STEAM SUPPLY METER SPECIFICATIONS POINT OF INTERCONNECTION O'Brien guarantees the accuracy of its instruments for measuring the quantity of steam to within + 1 percent. Instruments will be tested periodically as necessary, but not less than semiannually. If Du Pont requests that any meter be tested between O'Brien's normal testing dates, O'Brien will arrange for the meter to be promptly tested. All instrument testing will be arranged by O'Brien and conducted by an independent testing service satisfactory to both parties. O'Brien will pay the expense of normal periodic tests; the expense of any test requested by Du Pont will be paid by Du Pont, if the meters are within the guaranteed accuracy. O'Brien will give Du Pont sufficient notice of any periodic or special instrument test to enable Du Pont to witness the test. If any test reveals that O'Brien's instruments for measuring the quantity of steam are inaccurate by + 1 percent or more, and underpayment or overpayment occurs, the aggrieved party is entitled to a retroactive adjustment. Any instrument inaccuracy will be deemed to have commenced on the date which fell exactly halfway between the date of the test revealing the inaccuracy and the date of the last previous instrument test. The amount of underpayment or overpayment will be calculated daily by Du Pont in good faith commencing on the date on which O'Brien's instruments are deemed to have been inaccurate. Amounts reflecting underpayments and overpayments are payable immediately upon receipt of the payment invoice. The point of interconnection for steam shall be at a point agreed upon by the parties. EXHIBIT C LIQUIDATED DAMAGES Liquidated Damages shall be calculated according to the following formula: LDS = T X C - (T X S) Where: 1) LDS equals liquidated damages sustained by Du Pont during an unexcused supply interruption; and 2) T equals million BTU's of steam not provided Du Pont during an unexcused supply interruption (limited to Du Pont's requirements-not to exceed 120,000 lbs/hr) the enthalpic value of steam used to compute T shall be 1,096 BTU's per pound; and 3) C equals Du Pont's rolled up cost for steam per million BTU's [costs include operation, maintenance, fuel, and rental (calculated on a monthly rental basis unless the parties agree to a longer term) of any steam producing equipment]; and 4) S equals cost of steam per million BTU's under this Agreement (calculated pursuant to Exhibit D). EXHIBIT D STEAM PURCHASE RATE The Base Steam Charge shall be $1.00 per thousand pounds for 155 psig, 368 degree Fahrenheit steam. The steam charge per billing month shall be determined according to the following formula: SC = BSC x LBS where: 1. SC equals the steam charge per billing month; 2. BSC equals the base steam charge of $1.00 per thousand pounds for 155 psig, 368 degree Fahrenheit steam; 3. LBS equals thousands of pounds of steam delivered per billing month. When the most recent quarterly average spot purchase cost of No. 6 oil received at New Jersey utility facilities of 50 MW or larger, as reported in the Electric Power Quarterly, exceeds $4.55 per million BTU's, the steam charge per billing month shall be determined according to the following formula: SC = BSC x MFC x LBS BFC where: 1. SC equals the steam charge per billing month; 2. BSC equals the base steam charge of $1.00 per thousand pounds for 155 psig, 368 degree Fahrenheit steam; 3. MFC equals the most recent quarterly average spot purchase cost of No. 6 oil received at New Jersey Electric Utility Facilities of 50 MW capacity or larger, as reported in Electric Power Quarterly, published by the Energy Information Administration. If the data upon which this pricing component is based ceases to be published by the Electric Power Quarterly, the parties shall mutually agree upon another source of comparable information on fuel price changes; 4. BFC equals $4.55 per million BTU's as derived from the facility base delivered fuel cost of $28/BBL No. 6 oil at 6.15 MM BTU/BBL; and 5. LBS equals thousands of pounds of steam delivered per billing month. If condensate is returned to the facility, Du Pont will be credited according to the following: CRCR = SC X 1000 1196 BTU/lb 1. CRCR equals the condensate return credit rate $/MM BTU, to Du Pont, 2. SC equals the steam charge per billing month, $/M lb; and, 3. 1196 BTU/lb equals the number of BTU's per pound of 155 psig, 368 degree Fahrenheit steam. The energy return to Du Pont will be determined as follows: ER = W x Cp x T where: 1. W equals the return flow of condensate, lb/month; 2. Cp equals the specific heat of water. 1 BTU/lb, degree Fahrenheit, and; 3. T equals condensate return temperature in degrees Fahrenheit. 4. ER equals the energy returns per month, MM BTU/month. Finally, the condensate credit to Du Pont would then be determined by: DCC = CRCR x ER where: 1. DCC equals the Du Pont condensate credit, $/month; 2. CRCR equals the condensate return credit rate, $/MM BTU; and 3. ER equals the energy return; MM BTU/month. [E.I. Du Pont de Nemours & Company letterhead] Mr. Robert A. Shinn Vice President O'Brien Energy Systems 225 S. Eighth St. Philadelphia, PA 19106 Dear Bob: This letter hereby acknowledges that O'Brien Energy Systems and E. I. du Pont de Nemours & Co. mutually agree to extend the required date by which O'Brien must obtain all necessary permits to October 1, 1988, as is defined in Paragraph 2 of Amendment #1 to the Steam Purchase contract for the proposed Parlin, NJ Cogeneration Project, dated January 12, 1988. If you have any questions or need additional information, please call. Sincerely, /s/ G. R. Carson G. R. Carson Senior Purchasing Agent cc: Chet George - Du Pont EX-10.20.2 33 EXHIBIT 10.20.2 AMENDMENT NO. 1 TO STEAM PURCHASE CONTRACT DATED JANUARY 12, 1988 BETWEEN THE COMPANY AND E.I. DU PONT. Exhibit 10.20.2 AGREEMENT BETWEEN O'BRIEN ENERGY SYSTEMS, INC. AND E. I. DU PONT DE NEMOURS AND COMPANY AMENDMENT 1 TO TEAM PURCHASE CONTRACT O'Brien Energy Systems, Inc. ("O'Brien") and E. I. du Pont de Nemours and Company ("Du Pont") entered a steam purchase contract dated December 8, 1986, pursuant to which O'Brien will supply steam from its Cogeneration Facility to Du Pont's Parlin, New Jersey plant. The Parties now desire to amend that Contract. Therefore, in consideration of the mutual covenants contained herein, the sufficiency of which is acknowledged by both parties, Du Pont and O'Brien hereby agree that the Steam Purchase Contract of December 8, 1986, is amended as follows: 1. Article 2, Section A is revised to read as follows: O'Brien agrees to construct the Facility with a capacity adequate to deliver at least 120,000 pounds per hour of steam to Du Pont on a continuous uninterrupted basis. To insure this capacity, O'Brien will build two heat recovery boilers (including supplemental firing capability) associated with the gas turbines and a backup boiler, each of which will be capable of producing at least 120,000 pounds per hour. The Facility will be capable of using natural gas or fuel oil. Space will be provided in the facility design to accommodate all equipment necessary to bur #6, 0.3% sulfur fuel oil in the backup boiler. The backup boiler shall be capable of burning oil whose sulfur content is low enough to satisfy air quality permit requirements, and O'Brien shall provide a storage tank capable of holding at least a fourteen day inventory of the fuel oil. If air quality emission requirements applicable to the Facility are changed to allow the use of #6, 0.3% sulfur fuel oil, O'Brien will obtain a permit to use such fuel. O'Brien will obtain approval for the installation of such equipment from the New Jersey Department of Environmental Protection (NJDEP), and when obtained, O'Brien will provide and install the equipment and modifications required to burn #6 oil. As part of the construction process, O'Brien will dismantle and remove, at its cost, Du Pont buildings numbered 145, 826, 1939, and such foundations, supports, underground lines and any other items which the parties agree are required to be removed in order to build the Facility. The Facility will be located on land leased to O'Brien consisting of approximately four (4) acres pursuant to the terms and description set out in the Ground Lease for the nominal rent of $10.00 per annum for a term expiring 120 days after the expiration of this Agreement. The Facility Site is described more fully in the Ground Lease. 2. Article 2, Section C is amended to read as follows: O'Brien will obtain all permits and variances necessary for the lawful construction and operation of the Facility and will apply to the Federal Energy Regulatory Commission ("FERC") for a certificate stating that the Facility is a qualifying Facility under the Public Utilities Regulatory Policies Act of 1978, as amended ("PURPA"). If O'Brien is unable to obtain all necessary permits or the Facility has not been certified as a Qualifying Facility by NERC by June 1, 1988, either party may, by written notice to the other party, terminate this Agreement without liability to the other. 3. A new Section is added to Article 2, and shall be designated Section F. It shall read as follows: a) SAFETY AND HEALTH: O'Brien acknowledges that safety, health and security are priority concerns of Du Pont and agrees that as a condition for Du Pont's allowing O'Brien employees, contractors, employees or subcontractors of such contractors or anyone else providing services for O'Brien or its contractors to come upon Du Pont's premises at any time, O'Brien shall comply with and contractually obligate its contractors and others acting on its behalf to comply with (1) all federal, state and local occupational safety and health laws and regulations and (2) such other special safety provisions as may be provided by Du Pont in writing to O'Brien from time to time, including those set forth in Du Pont's Safety Information and Instructions for Contractors, the most recent copy of which has been furnished to O'Brien. b) O'Brien shall designate one person to be responsible for carrying out its obligations under this 2 Section. O'Brien shall promptly report to Du Pont cases of death, occupational disease and OSHA-recordable injury caused by work on the job. O'Brien shall also arrange for first-aid treatment of job-incurred injuries in accordance with requirements of its insurer. O'Brien shall defend, indemnify and hold Du Pont harmless with respect to any claim or lawsuit as provided in Article 16 of this Agreement. c) If Du Pont notifies O'Brien of any noncompliance with the provisions of this Section and the action to be taken, O'Brien shall make all reasonable efforts to correct or have corrected the existing conditions immediately, if directed by Du Pont to do so, or, if not so directed, no later than forty-eight (48) hours after receipt of such notice. If O'Brien fails to do so, Du Pont may forthwith refuse entry on Du Pont premises to O'Brien, its employees, contractors or anyone else acting on behalf of O'Brien or its contractors until such time as such noncompliance has been remedied. d) Although O'Brien must arrange for first-aid treatment of its employees, its contractors or anyone else acting on behalf of O'Brien or its contractors while on Du Pont's premises, Du Pont may provide first-aid to such persons, in consideration for which O'Brien, its successors and assigns assume full and complete responsibility and liability for all injuries and damagaes to any of its employees arising out of or allegedly attributable to such first-aid treatment. O'Brien, further, shall indemnify and save harmless Du Pont, its employees, contractors, successors, and assigns from any and all actions, rights of action, suits, debts, claims, damages, expenses and demands with respect to or any account of any injury to or the death of any employee of O'Brien or its Contractors attributable to or in connection with the performance by Du Pont of such first-aid treatment, whether or not such injury or death is caused by or alleged to have been caused by the negligence of Du Pont. Nothing contained herein shall be construed as imposing any duty upon Du Pont to provide first-aid treatment to O'Brien's employees or those of its Contractors or of anyone else acting on behalf of O'Brien or its contractors while on Du Pont's premises. e) O'Brien shall advise its employees, contractors or anyone acting on behalf of O'Brien or its contractors that (I) it is the policy of the Du Pont Company to prohibit use, possession, sale, and distribution of alcohol, drugs, or other controlled substances on 3 Du Pont's premises, and to prohibit the presence of an individual with such substances in the body for nonmedical reasons in the workplace; (ii) entry onto Du Pont property constitutes consent to an inspection of O'Brien's employees' or its contractors' employees' person, vehicle, and personal effects when entering, while on, or upon leaving Du Pont property; and 9iii) any employee of O'Brien or its contractors who is found in violation of the policy or who refuses to permit inspection may be removed and barred from Du Pont property at the direction of Du Pont. f) HAZARDS: As there may be hazards involved in providing the services which O'Brien and its contractors' and their employees undertake on Du Pont's premises, O'Brien shall perform and shall cause its contractors or anyone else providing services for O'Brien or its contractors to perform all services in a careful, workmanlike manner and, in the event that the services to be provided involve processing, handling, transporting, or disposing hazardous materials or products, shall take all precautions necessary to avoid an unhealthy or unsafe work environment, injuries to persons, or damage to property or the environment. O'Brien shall submit and shall cause its contractor to submit Material Safety Data Sheets complying with the Federal Hazard Communication Standard and obtain Du Pont's approval before introducing any hazardous materials onto Du Pont's property. Such materials shall be properly labeled and strictly controlled by Contractor as to use and disposal. Storage and use of and personal protection for handling such materials must comply with the instructions in the Material Safety Data Sheets. g) EMPLOYEES: While on Du Pont's property, O'Brien's employees, its Contractors and their employees and anyone else providing services for O'Brien or its contractors (I) shall confine themselves to areas designated by Du Pont and (ii) will be subject to Du Pont's badge and pass requirements in effect at the site of the work. 4. The sentence in Article 4 (A) beginning "O'Brien represents that ." is modified to read as follows: O'Brien represents that the Initial Delivery Date shall be on or before April 30, 1990, provided that the Initial Delivery Date shall be extended by the occurrence and continuation of an event of Force Majeure as defined in Article 7 below. 4 5. As amended, the Steam Purchase Contract of December 8, 1986, remains in full force and effect. O'Brien Energy Systems, Inc. By /s/ Jeffrey D. Baines E. I. du Pont de Nemours and Company By /s/ G.R. Carson 5 EX-10.20.3 34 EXHIBIT 10.20.3 LETTER AGREEMENT DATED JULY 25, 1988 BETWEEN THE COMPANY AND E.I. DU PONT. Exhibit 10.20.3 July 25, 1988 Mr. Robert A. Shinn Vice President O'Brien Energy Systems 225 S. Eighth Street Philadelphia, PA 19106 Dear Bob: This letter hereby acknowledges the O'Brien Energy Systems and E. I. du Pont de Nemours & Co. mutually agree to extend the required date by which O'Brien must obtain all necessary permits to October 1, 1988, as is defined in Paragraph 2 of the Amendment #1 to the Steam Purchase contract for the proposed Parlin, NJ Cogeneration Project, dated January 12, 1988. If you have any questions or need additional information, please call. Sincerely, /s/ G. R. Carson G. R. Carson Senior Purchasing Agent cc: Chet George - Du Pont EX-10.20.4 35 EXHIBIT 10.20.4 AMENDMENT NO. 3 TO STEAM PURCHASE CONTRACT DATED DECEMBER 12, 1988 BETWEEN THE COMPANY AND E.I. DU PONT. Exhibit 10.20.4 AGREEMENT BETWEEN O'BRIEN ENERGY SYSTEMS, INC. AND E. I. DU PONT DE NEMOURS AND COMPANY AMENDMENT NO. 3 TO STEAM PURCHASE CONTRACT O'Brien Energy Systems, Inc. ("O'Brien") and E. I. du Pont de Nemours and Company ("DuPont") entered into a Steam Purchase Contract dated December 8, 1986, as amended by Amendment No. 1 to Steam Purchase Contract dated January 12, 1988, and by a letter agreement dated July 25, 1988 (Amendment 2), pursuant to which O'Brien has agreed to supply steam to DuPont's Parlin, New Jersey plant, from a cogeneration facility which O'Brien will build on land leased from Du Pont. Du Pont and O'Brien now desire to amend further that Contract. Therefore, in consideration of the mutual covenants contained herein, the sufficiency of which is acknowledged by both parties, DuPont and O'Brien hereby agree that the Steam Purchase Contract of December 8, 1986, as previously amended, is further amended as follows: 1. The sentence in Article 4(A) beginning "O'Brien represents that." is modified to read as follows: O'Brien represents that the Initial Delivery Date shall be on or before August 31, 1990, provided that the Initial Delivery Date shall be extended by the occurrence and continuation of an event of Force Majeure as defined in Article 7 below. 2. The sentence in Article 4(A) beginning "In lieu of accepting these." is modified to read as follows: In lieu of accepting these liquidated damages, or in the event that O'Brien should fail to pay them, DuPont shall have the right topursue all available remedies at law or in equity, provided, however, that in the event construction of the Facility has begun prior to August 31, 1989 and O'Brien can demonstrate a program of continuous construction that is at least 75 percent complete by August 31, 1990, unless excused by Force Majeure, DuPont agrees not to exercise any remedy which could result in termination of this Agreement prior to February 1, 1992. 3. Four new Sections are added to Article 9. The current paragraph in Article 9 beginning "DuPont will supply 1,000 gallons." shall be designated Section A and three new Sections to be added shall be designated Sections B, C, D and E. They shall read as follows: B. Du Pont agrees, subject to DuPont's determination that it has available adequate capacity to do so, to permit O'Brien to interconnect the Facilitie's waste water disposal system with DuPont's existing sanitary sewer system. The discharges from the Facility are estimated to be an average flow of 120 gallons per minute. O'Brien agrees to construct the necessary interconnection and shall install monitoring as required by the Middlesex County Utilities Authority. O'Brien further agrees to indemnify DuPot in accordance with Article 16 of this Agreement should such indemnity be required in connection with waste generated by O'Brien into the sanitary sewer system. If O'Brien connects to DuPont's sanitary sewer system, it agrees to pay its proportionate share of any maintenance costs or costs related to blockage repair on that portion of the sewer sanitary system being utilized by O'Brien, such costs to be computed by determining the pro-rata usage by DuPont and O'Brien for that shared portion. C. Du Pont agrees to permit O'Brien to provide a storm water detention basin and connect into the existing plant storm sewer piping system, so that rain water maybe discharged from the site. D. Du Pont agrees to provide temporary parking and access to the O'Brien site during construction and operation of the Facility until such time as a proposed traffic light at the intersection of Washington Road, Lakeview Drive, and the O'Brien entrance is operational. E. DuPont agrees, subject to Du Pont's determination that it has available adequate capacity to do so, to permit O'Brien, at O'Brien's option, to provide a new supply line from the fire pump house to the Facility and to connect the Facility with DuPont's fire protection water supply system for the purpose of designing and developing a fire protection system for the Facility. If O'Brien exercises this option, O'Brien will be responsible 2 at it expense for maintaining, repairing and, if necessary, upgrading that portion of the fire protection water supply system beginning at the existing DuPont fire pump station (including the fire lake reservoir) and ending at the Facility. DuPont shall have the right to do this work itself, but at O'Brien's expense. DuPont agrees not to repair or alter its fire protection water supply system in a manner which would deprive O'Brien of a sufficient water supply for its fire protection system without the consent of O'Brien. O'Brien further agrees to indemnify DuPont in accordance with Article 16 of this Agreement should such indemnity be required in connection with a failure of DuPont's fire protection water supply system to put out a fire at the Facility. If O'Brien connects the Facility to DuPont's fire protection water supply system, it agrees to pay its proportionate share of any repair costs due to a failure of the fire protection water supply system on that portion of the fire protection water supply system being utilized by O'Brien, such costs to be computed on a pro-rata basis with reference to the percentage of square footage comprising buildings at O'Brien's Facility as compared to square footage comprising buildings owned or occupied by duPont at the Parlin site. O'Brien further agrees to design the Facility fire protection system via a fire "loop" which will tie into the DuPont fire protection water supply system at both connection points at the outer boundaries of the leased premises and which will eliminate the existing DuPont fire protection water supply system piping on the leased premises. 4. The sentence in Article 12(D) beginning "If DuPont elects to close down." is modified to read as follows: If DuPont elects to close down or abandon the Parlin operations or site, its obligations under this Agreement shall terminate except for (1) the lease of the Facility site and the adjoining land described in the Ground Lease to O'Brien, (2) the provision of continued access to the Facility Site and adjoining plot, (3) provision of the water supply pursuant to this agreement assuming that DuPont is still operating its water treatment plant, (4) the allocation of responsibility for environmental contamination set forth in Article 8(D) of this Agreement, and (5) the provisions 3 regarding the rebuilding of the Facility set forth in Article 17(B) of this Agreement. 5. A new Section is added to Article 17. The current paragraph in Article 17 beginning "At all times during." shall be designated Section A and the new Section shall be designated Section B. Section B to Article 17 shall read as follows: B. Notwithstanding anything contained in this Agreement or in Section 17 of the Ground Lease between O'Brien and DuPont, dated January 2, 1987, in the event that any part of the Facility shall be destroyed or damaged in whole or in part by fire or other cause covered within the extended coverage of the fire insurance policies carried by O'Brien, O'Brien may, but shall not be required to repair, replace or rebuild any such portion of the Facility except as is hereinafter provided. If the back-up boiler and all necessary auxiliaries or both heat recovery boilers or any such greater part of the Facility including, either or both of the back-up boiler and all necessary auxiliaries and both heat recovery boilers, shall be destroyed or damaged in whole or in part by fire or other causes within the extended coverage of the fire insurance policies carried by O'Brien, in such event, if DuPont continues to require steam in accordance with the terms of this Agreement, O'Brien agrees to dedicate such portion of the insurance proceeds paid under applicable policies as may be necessary to repair or replace or rebuild the back-up boiler, one of the heat recovery boilers and the electrical interconnection facilities necessary to supply electricity to DuPont. In addition, in the event that the Facility is not replaced following destruction thereof by fire or other cause covered within the extended coverage of the fire insurance policy carried by O'Brien, insurance proceeds sufficient to pay for the cost of demolition, removal of equipment from site (excluding foundation) and restoration to a safe condition will be dedicated by O'Brien for such purposes. * * * * 4 As amended by this Amendment 3, the Steam Purchase Contract as earlier amended, remains in full force and effect. O'BRIEN ENERGY SYSTEMS, INC. BY: /s/ Sanders Newman Title: Senior V.P. Secretary & General Counsel Date: 12/14/88 E. I. DU PONT DE NEMOURS AND COMPANY BY: /s/ George R. Carson Title: Sr. Purchasing Agent Date: 12/12/88 5 EX-10.20.5 36 EXHIBIT 10.20.5 AMENDMENT NO. 4 TO STEAM PURCHASE CONTRACT DATED JULY 14, 1989 BETWEEN THE COMPANY AND E.I. DU PONT. Exhibit 10.20.5 AMENDMENT NUMBER FOUR TO STEAM PURCHASE CONTRACT BETWEEN O'BRIEN ENERGY SYSTEMS, INC. AND E. I. DUPONT DE NEMOURS & COMPANY (Parlin Cogeneration Facility) WHEREAS, O'Brien Energy Systems, Inc. (O'Brien") and E. E. DuPont de Nemours & Company ("DuPont") entered into a Steam Purchase Contract dated December 8, 1986, which was subsequently modified by Amendment Number One, dated January 12, 1988, but Amendment Number Two in the form of a Letter Agreement dated July 25, 1988, and by Amendment Number Three, dated December 12, 1988; and WHEREAS, the Steam Purchase Contract was assigned by O'Brien Energy systems to O'Brien (Parlin) Cogeneration Inc. on December 12, 1988, which assignment was consented to by DuPont on the same date; and WHEREAS, the Parties desire to ratify said Agreement, as amended, and make certain further modifications thereto; NOW THEREFORE, in consideration of the mutual covenants contained herein, the sufficiency of which is acknowledged by both Parties, the Parties do hereby agree as follows: 1. Agreement Regarding Disposal of Process Waste Water, Storm Water, and Domestic Water from the Cogeneration Facility: Paragraphs 3 (B) and (C) of the Third Amendment to the Steam Purchase Agreement, are hereby replaced with the following language: "(B) DuPont agrees to permit O'Brien to provide a storm water detention basin and connect into the existing plant industrial/storm piping system, so that rain water may be discharged from the site. Additionally, DuPont agrees to permit O'Brien to discharge non-contact process water from the Facility into the industrial/storm sewer piping system subject to the following terms and conditions: (1) O'Brien shall conduct a detailed analysis of the existing piping system to certify that the piping system has the capacity to handle all of the existing flow, including storm water and non-contact process water from the Fabricated Products portion of the DuPont Plant, in addition to projected storm water and non-contact process water flows from the Cogeneration Facility. In the event that the existing piping system is inadequate to handle all the foregoing flows, O'Brien shall have the right, at its cost, to implement remedial measures such as a storage tank, to ensure adequate capacity. 1 (2) The maximum non-contact process water, i.e. cooling tower and boiler blowdown, and water treatment regeneration, flow from O'Brien shall be 193 gpm. (3) The water discharged into the DuPont system from the Facility shall meet all current, proposed, and future government regulations. (4) O'Brien shall provide a continuous monitoring system to measure flow and collect a sample for analysis of constituents, in order to audit O'Brien's discharges. DuPont shall be responsible at its costs for obtaining operating permits, sampling and testing. (5) O'Brien and DuPont shall share costs, prorated based on projected respective volumes, for permitting, maintenance, sampling and testing. This will include an initial TV camera survey of the line and any necessary repairs to the line. (6) DuPont shall obtain written assurances from the New Jersey Department of Environmental Protection that O'Brien's flow may be discharged under DuPont's permit. Specifically, DuPont shall obtain authorization for the discharge of up to 193 gpm of non-contact process waste water from O'Brien's Facility. Dupont agrees, during the term of the Steam Purchase Agreement, to allocate to O'Brien, 193 gpm of capacity under its permit. The Parties further agree that, as long as the process waste water discharged by O'Brien does not exceed the contaminant parameters set out in Exhibit A, O'Brien's discharge falls within the requirements of DuPont's existing permit. Should DuPont's permit conditions change, the Parties agree to amend Exhibit A to assure continued compliance. DuPont shall use its best efforts to keep its discharges within permit requirements, and will use its best efforts to make certain that O'Brien's ability to discharge is not impaired due to the failure of DuPont's discharge to meet applicable standards. (C) DuPont hereby agrees that it has adequate available capacity to handle the discharge of the Facility's domestic wastes into the DuPont sanitary sewer system. O'Brien shall bear the cost of connecting to that system, and shall provide sampling and monitoring facilities to continuously test effluent flows. DuPont has represented to O'Brien that 2 the Middlesex County Utility Authority (MCUA) has stated that the estimated 2 GPM of additional flow will not require any changes to DuPont's MCUA permit. DuPont agrees to obtain a letter from MCUA to this effect. DuPont will be responsible for any operation, maintenance and permitting costs associated with the sanitary sewer line for the discharge of domestic wastes." 2. Agreement Concerning Fire Protection System: The parties agree to replace Paragraph 3 (E) of Amendment Number Three with the following new sections 3 (E) and (F): "(E) Dupont hereby confirms that it has available adequate capacity to supply 2500 gpm at 90 psig of water and agrees to permit O'Brien to connect the Facility to DuPont's existing fire protection water supply system, in order to provide fire protection for the Facility, subject to O'Brien undertaking the following improvements. First, O'Brien shall replace the existing eight inch line from DuPont's feed point with a new line which is adequate to carry 2500 gallons per minute. Second, O'Brien will provide an automatic flow control valve. Third, O'Brien agrees to pay DuPont for the cost of repairing the fire water lake bottom. This cost shall not exceed $25,000, and DuPont assumes responsibility for an any liability associated with disposal of dredged soil. Design and construction of the above additions and modifications to the fire protection system and the certification that the system has the capacity to meet O'Brien's needs will be O'Brien's responsibility and expense. O'Brien agrees to an annual test by DuPont in accordance with DuPont standards, of the piping system on the Facility site. (F) DuPont agrees not to repair or alter its fire protection water supply system in a manner which would deprive O'Brien of a sufficient water supply for its fire protection system without the consent of O'Brien. O'Brien further agrees to indemnify DuPont in accordance with Article 16 of this Agreement should such indemnity be required in connection with a failure of DuPont's fire protection water supply system to put out a fire at the Facility. If O'Brien connects the Facility to DuPont's fireprotection water supply system, it agrees to pay its proportionate share of any repair costs due to a failure of the fire protection water supply system on that portion of the fire protection water supply system being utilized by O'Brien, such costs to be computed on a pro-rata basis with reference to the percentage of square footage comprising buildings at O'Brien's Facility as compared to square footage comprising buildings owned by DuPont at the Parlin site. O'Brien further agrees to design the Facility fire protection system via a fire "loop" which will tie into the 3 DuPont fire protection water supply system at both connection points at the outer boundaries of the leased premises and which will eliminate the existing DuPont fire protection water supply system piping on the leased premises." 3. Complete Agreement: This Fourth Amendment, combined with the original contract, as amended, constitutes the complete agreement between the Parties. Any further amendment shall be in writing, and signed by both Parties. AGREED AND ACCEPTED: E. I. DUPONT DE NEMOURS & COMPANY O'BRIEN (PARLIN) COGENERATION INC. By: /s/ George R. Carson By: /s/ Joel D. Cooperman Date: 7/26/89 Date: 7/14/89 4 EX-10.20.6 37 EXHIBIT 10.20.6 AMENDMENT NO. 5 TO STEAM PURCHASE CONTRACT DATED FEBRUARY 16, 1993 BETWEEN THE COMPANY AND E.I. DU PONT. Exhibit 10.20.6 AMENDMENT NO. 5 TO STEAM PURCHASE CONTRACT WHEREAS, E. I. DuPont de Nemours and company ("Du Pont") and O'Brien Energy Systems, Inc. ("O'Brien") entered into a Steam Purchase Contract dated December 8, 1986, as amended by Amendment No. 1 dated January 12, 1988 (Amendment No. 2), Amendment No. 3 dated December 14, 1988, and Amendment No. 4 dated July 6, 1989 pursuant to which O'Brien has agreed to supply steam to Du Pont's Parlin, New Jersey plant from a cogeneration facility which O'Brien has constructed on land leased from Du Pont; and WHEREAS, said Agreement, as amended, was assigned with Du Pont's consent to O'Brien (Parlin) Cogeneration, Inc. on December 12, 1988; and WHEREAS, Steam delivery to Du Pont by O'Brien was delayed beyond the amended and agreed upon Initial Delivery Date, and the Parties wish to resolve a dispute concerning the amount of liquidated damages to be paid to Du Pont; and WHEREAS, the Parties desire to ratify said Agreement, as amended, and to make certain further modifications thereto: NOW, THEREFORE, in consideration of the mutual covenants contained herein, the sufficiency of which is acknowledged by both Parties, the Parties do hereby agree as follows: 1. Modifications to Article 2: A new Paragraph 2.G, entitled Option to Lease Additional Land; Permitted Uses is hereby added to Article 2 as follows: (1) Du Pont hereby grants O'Brien a five-year option commencing January 1, 1993) to lease from Du Pont an additional two acres of land, contiguous to O'Brien's existing leasehold, subject to the conditions set out below. As consideration for this option, O'Brien agrees to pay Du Pont the sum of $1,000 on February 1, of each year (beginning February 1, 1993) until such time as the option is exercised or O'Brien terminates the option, or it expires. (2) Du Pont shall have no obligation to lease the additional two acres unless it has received a Certificate of Non-applicability from the State of New Jersey evidencing that the proposed transaction is not subject to New Jersey'/s Environmental Clean-up Responsibility Act ("ECRA"). In the event the proposed lease is subject to ECRA, Du Pont shall repay to O'Brien the option payments provided in the preceding subparagraph. 2 (3) If the option is exercised, the additional two acres leased to O'Brien will be used by O'Brien and only for the following purposes: (a) a depot for mobile generator sets; (b) additional office space for training or other corporate purposes acceptable to Du Pont, such approval not to be unreasonably withheld; (c) a replacement steam customer acceptable to Du Pont, in its reasonable discretion, in the event Du Pont does not take the annual minimum quantity of steam required to maintain Qualified Facility status under the Public Utility Regulatory Act, as amended; (d) an expanded cogeneration facility, provided that Du Pont and O'Brien can reach agreement on an amount to be paid to Du Pont as additional, reasonable compensation for Du Pont's consent to erection of an expanded cogeneration facility. (It is the intent of the Parties that "reasonable compensation" as used herein shall mean a share of the value of the new or expanded cogeneration facility and is in no way limited to the fair market lease value of the two acre site.); and (e) such other uses as are approved in writing by Du Pont, such approval not to be unreasonably withheld. 3 (4) If O'Brien exercises the option to lease the additional two acres, O'Brien shall pay Du Pont fair market lease rates for the additional leasehold. Fair market value shall be established by an independent appraiser familiar with industrial real estate values in the Parlin, New Jersey area who is acceptable to both Du Pont and O'Brien. If the Parties cannot agree on a neutral appraiser, each Party shall select an appraiser and the two appraisers shall then agree on a third appraise. If no two of the appraisers agree on a fair market vale, then the three appraisals shall be averaged, and the result shall be the fair market value. (5) If O'Brien exercises its option, the parties shall execute a separate lease agreement for the two acres which shall have terms and conditions identical to the Ground Lease for the Facility, except as specifically modified by this Article 2. The term of the additional Lease, if O'Brien exercises the option for the additional two contiguous acres, shall equal the remaining term of this Steam Purchase Contract. In the event that Du Pont chooses not to exercise its option to purchase the Facility under Paragraph 5.B at the end of the initial twenty-year term, the term of the original lease covering the Cogeneration Facility as well as the term of any lease executed by O'Brien 4 for the additional two contiguous acres shall be extended an additional ten years, without any further action being required of the Parties. In the event that Du Pont does choose to exercise its option to purchase the Facility at the end of the initial twenty-year term, the lease of the additional contiguous two acres shall terminate, unless the Parties otherwise mutually agree." 2. Modifications to Article 4, "Initial Delivery Date": A new Paragraph 4.C is added to Article 4 as follows: "(1) O'Brien agrees to pay Du Pont a portion, as set out more fully in subparagraph (2) of this paragraph, of certain liquidated damages which O'Brien expects to receive from Hawker Siddeley Power Engineering Inc., ("HSPE"), the contractor for the Parlin Cogeneration Facility, due to delayed completion of the Facility. De Pont acknowledges that HSPE is contesting these liquidated damages in similar cases now pending in New Jersey and Texas state courts, and that, with respect to the expected award in those cases, O'Brien shall be obligated to pay Du Pont only that portion of such damages as is set out in this Paragraph 4.C. (2) If the damages awarded to O'Brien in the same litigation exceed 5 (a) the total amount withheld by O'Brien from Hawker Siddeley under the Turnkey Construction Contract for the Parlin project (which O'Brien represents to be $5.1 million) and (b) any contingent legal fees paid to O'Brien's attorneys, Sills, Cummis, Zuckerman, Radin, Tischman, Epstein & Gross ("Sills Cummis") for that firm's representation of O'Brien in the said HSPE litigation as set forth in the next sentence, O'Brien shall pay fifty percent (50%) of such remainder of the award to Du Pont, up to a maximum payment to Du Pont of $1 million. O'Brien represents that it has agreed to pay Sills Cummis as part of its fee for representing O'Brien in the said litigation (but not for sums which O'Brien may owe Sills Cummis for any services other than in the said HSPE liquidated damages litigation) a contingent component of twenty percent (20%) of the first million dollars of damages received from HSPE (without regard to the $5.1 million which O'Brien represents that it has retained from payment to HSPE), and fifteen percent (15%) of any subsequent award up to a total ceiling on all such litigation fees (both current and contingent) equal to 150% of Sills Cummis' normal hourly billing rates. (3) O'Brien shall pay Du Pont the amount agreed upon in this paragraph within thirty (30) days of 6 receipt by O'Brien, and O'Brien shall furnish Du Pont an accounting of all damages received from Hawker Siddeley for the said Parlin case." 3. Waiver of Liquidated Damage Claims: Du Pont hereby agrees to waive any and all claims which it may have against O'Brien under Article 4 for alleged delays in the delivery of steam by the Initial Delivery Date. Du Pont also waives any alternative right to pursue available remedies at law or in equity in lieu of such damages. 4. Modifications to Article ;5, "Term; Termination:. Paragraph 5.A is modified to read as follows: "This Agreement shall be effective as of the d ate of its execution and shall continue in effect thereafter for a period of thirty (30) years beyond the Initial Delivery Date, unless Du Pont exercises its purchase option at the end of Year Twenty pursuant to Article 5.B. Assuming Du Pont does not exercise this purchase option or the option at the end of Year Thirty, the Agreement shall remain in effect after the initial thirty-year term unless terminated by three year's notice by either party." 7 Paragraph 5.B is modified to read as follows: "At the end of twenty (20) years following the Initial Delivery Date, Du Pont shall have the option; to buy the Facility at the greater of its then fair market value or $34 million. In the event of a dispute regarding the fair market value, each side shall appoint an appraiser experienced in valuing cogeneration facilities, and if the two appraisers cannot agree, they shall appoint a third appraiser. If not two of the appraisers agree on a fair market value, then the three appraisals shall be averaged, and the result shall be the fair market value. Du Pont shall have sixty (60) days from the end of the twentieth year following the Initial Delivery D ate (extended for the period necessary to establish fair market value) to exercise the option to purchase the Facility; if the option is not exercised within that period, the Agreement shall continue for an additional ten (10) years at the expiration of which Du Pont shall have the option to purchase the Facility at its then fair market value. In constructing the Facility, O'Brien shall install the back-up boiler and all necessary auxiliaries in such a way that it and the land on which it is located can be severed from the rest of the Facility in the event of termination." 8 5. Modifications to Article ;6, "Purchase Price": A new paragraph 6.C is added to Article 6 as follows: "On or before February ;1, 1993, O'Brien will pay Du Pont One Hundred Seventy Five Thousand Dollars ($175,000) in cash or as a credit on steam or electricity purchased by Du Pont during January 1993. Beginning January 1, 1993, and each month thereafter for a total of nineteen 919) years, Du Pont shall receive a credit against steam purchases equal to $14,583.33 per month. Prior to the end of the Nineteenth Year, if Du Pont does not utilize the full amount of the credit in any given month for steam purchases, any unused credit may be carried over to the following month or months or, at Du Pont's option, applied to electricity purchases from under the separate Electricity Purchase Contract between the Parties. In the event that Du Pont exercises its option to purchase the Facility at the end of Year 20, any remaining unused credit (based on the full nineteen years) may be applied by Du Pont against the purchase price, as determined under Article 5.B." 6. Modifications to Exhibit D (Steam Purchase Rate): Exhibit D is modified by adding to the end of the current Exhibit D the following language: "Assuming that the contract continues beyond Year 20, as provided in Paragraph 5.A, the price of steam 9 delivered to Du Pont at the beginning of Year 21 shall be determined as follows: The ending steam price for the last month of Contract Year 20 shall be the Base Price for Years 21 through 30; the Base Price shall be adjusted monthly (up or down) by the percentage change in the U. S. Producer Price Index for All Commodities (or its successor); and any credits for condensate returned by Du Pont shall be calculated in accordance with this Exhibit, based on the adjusted price. 7. Complete Agreement: This Amendment No. 5 combined with the original Steam Purchase Contract as previously amended, constitutes the complete agreement between the Parties as to the subject matter thereof. Any further amendment shall be in writing and shall be executed by both Parties. AGREED AND ACCEPTED E. I. Du Pont de Nemours & Company By: /s/ Frank Wright Date: 1/22/93 O'Brien (Parlin) Cogeneration, Inc. By: /s/ Joel Cooperman Date: 2/16/93 10 EX-10.21.1 38 EXHIBIT 10.21.1 ELECTRICITY PURCHASE CONTRACT DATED JANUARY 18, 1988 BETWEEN THE COMPANY AND E.I. DU PONT. Exhibit 10.21.1 ELECTRICITY PURCHASE CONTRACT This Electricity Purchase Contract, dated as of Jan. 18, 1988, is by and between E. I. DU PONT DE NEMOURS AND COMPANY, a Delaware corporation with its principal office located at 1007 Market Street, Wilmington, Delaware 19898 ("Du Pont"), and O'BRIEN ENERGY SYSTEMS INC., a Delaware corporation with its principal office located at 225 South Eighth Street, Philadelphia, Pennsylvania 19106 ("O'BRIEN"). RECITALS A. O'Brien and Du Pont entered a Steam Purchase Contract (the "Steam Purchase Contract") on December 8, 1986, in which O'Brien agreed to supply Du Pont with s team from a cogeneration facility (the "Facility") which O'Brien will build and operate on a site leased from Du Pont adjacent to Du Pont's Parlin, New Jersey, Plant (the "Plant"). B. O'Brien and Du Pont now want to enter into an electricity purchase contract in accordance with the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, Du Pont and O'Brien agree as follows: ARTICLE I. Definitions A. Unless otherwise specified in this Contract, the terms used herein shall have the same meanings as those used in the Steam Purchase Contract. Where the word "steam" is used in the definition in the Steam Purchase Contract, for purposes of this Contract, the word "electricity" shall be understood unless the context requires otherwise. B. "JCP&L" shall mean Jersey Central Power & Light Company. ARTICLE II. Sale and Purchase of Electricity A. Quantity: O'Brien agrees to sell electricity to Du Pont for use in Du Pont's Plant in quantities required by Du Pont up to a maximum of 9MW and Du Pont agrees to buy its purchase requirements for electricity up to 9MW in accordance with the terms and conditions hereof for a twenty (20) year period commencing with the Initial Delivery Date. If Du Pont should require more than 9M, O'Brien will supply the additional requirements on such terms and conditions as the parties shall agree at the time, but under no circumstances will the price be greater and the terms more stringent than those covering the initial 9MW under this agreement. B. Type and Character of Service: The electrical energy furnished by O'Brien shall be of the type known as t twenty four hundred (2400) volts, three (3) phase, three (3)( wire, sixty (60) cycles, alternating current. he variation of the voltage shall remain within plus or minus 5% of 2400 volts. 2 C. Description of the System: All equipment (except the 2.4kv switchgear and feeders) will be owned, operated and maintained by O'Brien. This configuration and ownership is shown on the Functional Diagram to Define Operation of Equipment attached as Exhibit A. O'Brien will supply, design, install, and interconnect the 2.4kv switchgear and feeders, which upon start-up will be conveyed to Du Pont. Upon Du Pont's acceptance of O'Brien's conveyance of the 2.4kv switchgear and feeders, Du Pont shall be responsible for their operation and maintenance and shall indemnify O'Brien against any liability or claims which may arise out of operation thereafter of said equipment. O'Brien shall provide Du Pont with any warranties obtained by O'Brien on such equipment upon conveyance. ARTICLE III. Term and Termination The term and termination provisions of the Steam Purchase Contract, as may be amended from time to time, shall be applicable to this Contract. ARTICLE IV. Purchase Price o Du Pont shall pay O'Brien for purchased electricity as follows: EC = JCP&L rate x 0.65 Where: EC == The Electricity Charge per ;month; and JCP&L rate = The applicable Jersey Central Power & Light General Service Primary Rate at the 3 then current delivered voltage or its applicable successor, including all demand charges, energy charges, fuel adjustments, taxes, and any other charges that would have been paid to JCP&L if Du Pont had purchased a comparable amount of power from JCP&L. o In the event that Du Pont does not have any requirement for electricity, the bill for that month, or any such period, will be zero. ARTICLE V. Construction and Operation of the Cogeneration Facility. A. O'Brien has agreed in the Steam Purchase Contract to construct and operate the Facility to furnish steam to Du Pont. In addition to the commitments made in that document, O'Brien agrees to the further provisions in this Article V to allow O'Brien to supply Du Pont with the electricity covered buy this Electricity Purchase Agreement. B. O'Brien agrees to construct the facility with a capacity adequate to deliver at least 9MW of electricity to D Pont on a continuous basis. To ensure this capacity, O'Brien will install two Frame Six Combustion Turbine Combined Cycle Systems, each of which is more than capable of meeting Du Pont's projected demand. C. In the event O'Brien fails to supply Du Pont's electricity requirements for a period of six consecutive months or, in the alternative, if O'Brien notifies Du Pont that it can no longer meet such requirements, O'Brien will immediately make available to du Pont for Du Pont's use all equipment necessary to serve Du Pont from the 230kv system until Du Pont's service can be returned to the 34.5kv system or Du Pont finds other electric service acceptable to Du Pont. 4 O'Brien shall obtain in its loan agreement any necessary waiver from its lender to permit Du Pont to exercise the foregoing option. Furthermore, the two 13.8kv to 2.4kv transformers shall be installed in such a way that they can be replaced with 34.5kv to 2.4kv transformers and reconnected to the existing JCP&L 34.5kv feeders. To the extent JCP&L requires Du Pont to pay for this conversion, O'Brien agrees to contribute up to $ 500,000 toward the cost of such conversion and will secure such obligation by establishing at the time the cogen facility starts up either an escrow account or a letter of credit with a credit worthy bank in the amount of $500,000. ARTICLE VI. Interconnection with Du Pont's Plant A. O'Brien shall provide at its expense all equipment and systems necessary to supply electricity to Du Pont's Plant as shown on Exhibit A. Upon completion of construction, O'Brien will convey to Du Pont all of the equipment below the Point of Interconnection as shown on Exhibit A. O'Brien will be responsible for maintenance of all equipment and systems above the Point of Interconnection, and Du Pont will be responsible for maintenance of all equipment and systems below the Point of Interconnection., B. The interconnection facilities shall be designed to generally accepted engineering standards. Du Pont and O'Brien agree to cooperate in determining appropriate and compatible equipment specifications for interconnection 5 facilities; provided, however, that notwithstanding anything to the contrary herein, Du Pont shall not be responsible for any damage to the Facility due to demand from Du Pont's systems. O'Brien will give Du Pont at least forty-five days notice prior to commencing operation and interconnection. Du Pont and O'Brien shall develop written procedures for interconnection, prior to interconnection. Du Pont shall have the right to witness testing and start up of all interconnection facilities. C. O'Brien shall at its expense, and in accordance with Exhibit B, dismantle and remove, including transportation to JCP&L's facilities for storage or disposal in accordance with appropriate regulations, JCP&L's existing 34.5kv substations and transmission lines, and the 2.4kv metering installations from the Parlin Site. D. The existing 34.5kv feeders supplying the Du Pont plant shall be maintained in operation throughout the construction of the Facility. Shutdowns during feeder relocations should be limited to one feeder at a time and to a maximum duration of twelve (12) hours for any one shutdown. Switchover from the JCP&L a34.5 feeders to O'Brien's 13.8kv feeders shall not be made until O'Brien's generating facility is fully on line and has demonstrated for a sixty (60) day period a 100% ability to meet Du Pont's electric requirements. ARTICLE VII. Service Interruptions A. Subject to force majeure and normal maintenance requirements, O'Brien agrees to provide a continuous supply 6 of electricity to Du Pont at the quantities and characteristics described in Article II hereof. B. O'Brien agrees to consult with Du Pont on a regular basis and to schedule, to the extent reasonably possible, all routine maintenance of the electrical generating system to coincide with periods when Du Pont's operations are shut down or Du Pont's electricity needs are reduced. C. If for any reason other than force majeure O'Brien fails to provide Du Pont with the contract amounts of electricity and replacement power is not received from JCP&L due to the fault of O'Brien, O'Brien will reimburse Du Pont for its losses incurred (including out-of-pocket cost, loss of product, raw materials, direct labor and any damaged equipment) up to a maximum of $10,000 per hour, but not to exceed $250,000 for any one incident and furthermore not to exceed in any contract year the total electricity revenues received from Du Pont in any such year. ARTICLE VIII. Priority of Service If at any time O'Brien is unable to supply the contract amounts of electricity to both Du Pont and to JCP&L, it shall first supply Du Pont's needs up to the contractual amount before supplying any other customer for its electricity. 7 ARTICLE IX. Standby Power A. O'Brien and Du Pont agree that Du Pont will enter an agreement with JCP&L whereby JCP&L will sell standby power directly to Du Pont, in accordance with a letter agreement from JCP&L to Du Pont dated October 9, 1987, copy attached as Exhibit B. This standby Power Agreement will be maintained by Du Pont during the life of this agreement. O'Brien will compensate Du Pont for the amount Du Pont pays JCP&L for the standby power, that is, the flat charge per ;month whether power is used or not, but Du Pont will pay for any power when used. B. O'Brien guarantees that the bill paid by Du Pont to JCP&L will be capped at the then current General Service Primary Rate as defined in Article 4. C. If at any time O'Brien's performance is such that JCP&L, in accordance with its Standby Tariff in other applicable rules, requires Du Pont to sign a firm power contract in order to continue receiving power, Du Pont shall have the right to terminate Du Pont's obligation to purchase electricity from O'Brien, effective as of the same date that JCP&L requires Bu Pont to sign a contract for the firm power. Such termination shall not affect Du Pont's right or O'Brien's obligation to continue the electrical interconnection parts of this contract, and O'Brien will take all reasonable steps to assure uninterrupted electrical service from JCP&L to Du Pont. D. If JCP&L's tariffs or the rules of the New Jersey Board of Public Utilities change so that Du Pont cannot 8 receive the equivalent of firm power without signing a new contract with JCP&L, Du Pont shall have the right to reduce purchases from O'Brien to the e extent power is purchased from JCP&L under such new contract. ARTICLE X. Metering A. O'Brien will own, operate, and maintain all necessary meters and associated equipment, including, without limitation, generation metering and the telemetering equipment, utilized for measuring energy deliveries and for determining Du Pont's payments to O'Brien. The metering point will be at the Point as shown on Exhibit A. Du Pont can install check meters at their expenses, if deemed necessary by Du Pont./ B. O`Brien shall permit Du Pont employees to enter upon its leased premises at any reasonable time for the purpose of inspecting and/or testing or witnessing the testing of the accuracy of the metering equipment. C. The owners of meters and metering equipment shall inspect, test, and calibrate their equipment at regular intervals of not more than one 91) year, as agreed between the parties, and any inaccuracy disclosed by such tests shall be promptly corrected. Either party shall have the right to have any meter tested at any time at its expense. Representatives of the other party shall be afforded a reasonable opportunity to be present at all meter inspections and tests. If at any time a meter is found inaccurate by more than 1%, an adjustment shall be made in settlements between the parties to 9 compensate for the effect of such inaccuracy over a preceding period of thirty (30) days from removal or testing of the meter or over any shorter period during which such inaccuracy may be determined to have existed. If at any time a meter should fail to register or its registration should be so erratic as to be meaningless, the quantities such meter was intended to record shall be determined from check meters, if available, or otherwise from the best obtainable data. ARTICLE XI. Billings, Credits and Payments On or immediately after Du Pont's monthly closing data (which shall be supplied O'Brien by Du Pont at the beginning of the year) O'Brien will prepare a monthly bill and bill Du Pont for the electricity purchased by Du Pont during the previous month. Each invoice will include all necessary information for calculation of the payment pursuant to Article IV hereof, and credit Du Pont each month for an amount equal to the contracted power times the standby rate plus any applicable taxes. Payment for such invoices shall be made by Du Pont within thirty (30) days after receipt. Payments made thereafter shall be subject to a late payment charge on the unpaid amount of such invoice of one percent per month. Should DuPont fail to pay any invoice within thirty (30) days after receipt, O'Brien, in addition to collecting the interest set out herein, may pursue any available remedy at law or in equity. 10 ARTICLE XII. Other Provisions The following Provisions of the Steam Purchase Contract are hereby incorporated by reference into this Contract and shall be applicable to this Contract as if they were fully set forth herein: Article 7. Force Majeure; Contingency] Article 12. Assignment and Subcontracting Article 13. Preconditions to Performance Article 14. Remedies Article 15. Compliance with Laws, Rules and Regulations Article 16. Indemnification Article 17. Insurance Article 18. Amendments; Waiver Article 19. Severability Article 20. Governing Law Article 21. Notices IN WITNESS WHEREOF, Du Pont and O'Brien have caused this Agreement to be executed by their duly authorized representatives on the date and year first above written. E. I. DU PONT DE NEMOURS AND COMPANY By /s/ W. Datum Title: Senior Vice President - Materials and Logistics O'BRIEN ENERGY SYSTEMS, INC. By: /S/ Jeffrey Baines Title: Executive Vice President 11 EXHIBIT A FUNCTIONAL DIAGRAM TO DEFINE EQUIPMENT OPERATION [DIAGRAM INSERT] EX-10.21.2 39 EXHIBIT 10.21.2 ELECTRICITY PURCHASE CONTRACT APRIL 30, 1996 BETWEEN O'BRIEN (PARLIN) COGENERATION, INC. AND NRG PARLIN INC. Exhibit 10.21.2 ELECTRICITY PURCHASE CONTRACT This Electricity Purchase Contract (the "Contract"), dated as of April 30, 1996, is by and between O'BRIEN (PARLIN) COGENERATION INC. ("O'Brien") and NRG PARLIN INC. ("NPI"). RECITALS: A. O'Brien and E. I. Du Pont Nemours and Company ("Du Pont") entered that certain Electricity Purchase Contract (the "Electricity Purchase Contract") dated January 18, 1988, under which O'Brien agreed to supply Du Pont with electricity from O'Brien's cogneration facility (the "Facility") adjacent to DuPont's Parlin, New Jersey plant (the "Plant"). B. Whereas O'Brien's rights and obligations under the Electricity Purchase Contract were assigned to NPI; and C. Whereas O'Brien and NPI wish to enter into this Contract to provide for the sale from O'Brien to NPI of the electricity required for NPI to fulfill its obligations to Du Pont under the Electricity Purchase Contract by and between Du Pont and O'Brien, as assigned by O'Brien Energy Systems, Inc., dated January 18, 1988, as amended from time to time (the "Du Pont Contract"). NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, O'Brien and NPI agree as follows: ARTICLE I. Definitions A. Unless otherwise specified in this Contract, the terms used herein shall have the same meanings as those used in the Steam Purchase Contract (as defined below). Where the word "steam" is used in the relevant definition in the Steam Purchase Contract, for the purposes of this Contract, the word "electricity" shall be understood unless the context requires otherwise. B. "JCP&L" shall mean Jersey Central Power & Light Company. C. "Steam Purchase Contract" shall mean that certain Steam Purchase Contract between O'Brien and Du Pont on December 8, 1986, as amended from time to time. ARTICLE II. Sale and Purchase of Electricity A. Quantity: O'Brien agrees to sell electricity to NPI for resale to Du Pont the quantities required by Du Pont under Article II A. of the Du Pont Contract, up to a maximum of 9MW and NPI agrees to buy this electricity (up to 9MW), inaccordance with the terms and conditions hereof for a period commencing on the date hereof. If Du Pont should require more than 9MW from NPI, O'Brien will supply NPI with the additional requirements on such terms and conditions as the parties shall agree at the time, but under no circumstances will the price be greater of the terms more stringent than those covering the initial 9MW under this Contract (or than the terms agreed for the sale of this additional electricity between NPI and Du Pont under Article II A. of the Du Pont Contract). 2 B. Type and Character of Service: The electrical energy furnished by O'Brien shall be of the type known as twenty four hundred (2400) volts, three (3) phase, three (3) wire, sixty (60) cycles, alternating current. The variation of the voltage shall remain within plus or minus 5% of 2400 volts. C. O'Brien will provide any and all assistance and support required by [NPI] in order for NPI to fulfill the obligations it has to Du Pont to operate and maintain the equipment under Article II.C of the Du Pont Contract. ARTICLE III. Term: Termination This agreement shall terminate upon the termination of the Du Pont Contract. ARTICLE IV. Purchase Price NPI shall pay O'Brien for purchased electricity as follows: EC = JCP&L rate x 0.65 Where: EC = The Electricity Charge per month; and, JCP&L rate = The applicable Jersey Central Power & Light General Service Primary Rate at the then current delivered voltage or its applicable successor, including all demand charges, energy charges, fuel adjustments, taxes, and any other charges that would have been paid to JCP&L if NPI or Du Pont had purchased a comparable amount of power from JCP&L. In the event that NPI does not have any requirement for electricity, the bill for that month, or any such period, shall be zero. 3 ARTICLE V. Operation of the Cogeneration Facility. A. O'Brien has agreed with Du Pont in the Steam Purchase Contract to operate the Facility to furnish steam to Du Pont. In addition to the commitments made in the Steam Purchase Contract, O'Brien agrees to the further provisions in this Article V to allow O'Brien to supply NPI with the electricity covered by this Contract. B. O'Brien agrees to maintain the Facility with a capacity adequate to deliver at least 9MW of electricity to NPI for resale to Du Pont on a continuous basis. To ensure this capacity, O'Brien will operate and maintain the two Frame Six Combustion Turbine Combined Cycle Systems installed in the Facility pursuant to Article V.B of the Du Pont Contract. C. In the event O'Brien fails to supply NPI's electricity requirements for a period of six consecutive months or, in the alternative, if O'Brien notifies NPI that it can no longer meet such requirements, O'Brien will immediately make available to NPI for NPI's or Du Pont's use all equipment necessary for NPI to serve Du Pont from the 230kv system until the service hereunder can be returned to the 34.5kv system or until Du Pont finds other electric service acceptable to Du Pont. O'Brien shall obtain in its loan agreement any necessary waiver from its lender to permit NPI to exercise the foregoing option. Furthermore, O'Brien shall maintain the two 13.8kv to 2.4kv transformers referred to in Article V.C of the Du Pont Contract in such way that they can be replaced with 34.5kv to 2.4v transformers and reconnected to the existing JCP&L feeders. To the extent JCP&L requires Du Pont to pay for this conversion, O'Brien agrees to reimburse NPI for any contribution it is required to make toward the cost of such conversion under Article V.C. of the Du Pont Contract. 4 ARTICLE VI. Interconnection with Du Pont's Plant A. O'Brien will be responsible for the maintenance of all equipment and systems above the Point of Interconnection as shown on Exhibit "A" to the Du Pont Contract. B. O'Brien will provide any reasonable assistance and support required by NPI to enable NPI to implement and further develop the written operating procedures referred to in Article VI.B of the Du Pont Contract. ARTICLE VII. Service Interruptions A. Subject to force majeure and normal maintenance requirements, O'Brien agrees to provide a continuous supply of electricity to NPI at the quantities and characteristics described in Article II hereof. B. O'Brien agrees to consult with NPI and Du Pont on a regular basis and to schedule, to the extent reasonably possible, all routine maintenance of the electrical generating system to coincide with periods when Du Pont's operations are shut down or Du Pont's electricity needs are reduced. C. If for any reason other than force majeure O'Brien fails to provide NPI with the contract amounts of electricity and replacement power is not received by Du Pont from JCP&L due to the fault of O'Brien, O'Brien will reimburse NPI for any liability to Du Pont or NPI suffers under Article VII.C of the Du Pont Contract. 5 ARTICLE VIII. Priority of Service If at any time O'Brien is unable to supply the contract amounts of electricity to both NPI and to JCP&L, it shall first supply NPI needs up to the contractual amount before supplying any other customer for its electricty. ARTICLE IX. Standby Power A. O'Brien will compensate NPI for any amount that NPI pays Du Pont under Article IX.A of the Du Pont Contract. B. O'Brien guarantees to NPI that the bill paid by Du Pontn to JCP&L will be capped at the then current General Service Primary Rate defined in Article IV of the Du Pont Contract. C. If at any time O'Brien's performance hereunder effects NPI's performance under the Electricity Purchase Contract such that JCP&L, in accordance with its Standby Tariff and other applicable rules, requires Du Pont to sign a firm power contract in order to continue receiving power, and O'Brien terminates the Du Pont Contract, NPI shall have the right to terminate its obligation to purchase electricity from O'Brien, effective as of the same date that Du Pont terminates the Du Pont Contract. Such termination shall not affect Du Pont's or NPI's right or O'Brien's obligation to continue the electrical interconnection parts of this Contract, and O'Brien will take all reasonable steps to assure uninterrupted electrical service from JCP&L to Du Pont. 6 D. If JCP&L's tariffs or the rules of the New Jersey Board of Public Utilities change so that Du Pont cannot receive the equivalent of firm power without signing a new contract with JCP&L, and Du Pont exercises the right contained in Article IX.C of the Du Pont Contract to reduce purchases from NPI to the extent power is purchased from JCP&L under such new contract, NPI may make a corresponding reduction in its purchases from O'Brien hereunder. ARTICLE X. Metering. A. O'Brien will own, operate, and maintain all necessary meters and associated equipment, including, without limitation, generation metering and telemetering equipment, utilized for measuring energy deliveries and for determining NPI payments to O'Brien. The metering point will be at the point as shown on Exhibit "A" to the Du Pont Contract. O'Brien will provide Du Pont with such access and other reasonable assistance Du Pont requires should Du Pont decide to install check meters as provided in Article X.A of the Du Pont Contract. B. O'Brien shall permit Du Pont employees and NPI's employees to enter upon its leased premises at any reasonable time for the purpose of inspecting and/or testing or witnessing the testing of the accuracy of the metering equipment. C. O'Brien shall (and shall permit Du Pont to) inspect, test, and calibrate their respective equipment at regular intervals of not more than one (1) year, as agreed between the parties, and any inaccuracy in the O'Brien meters disclosed by such tests shall be promptly corrected. O'Brien shall allow Du Pont any required access to enable Du Pont to promptly correct inaccurate Du Pont meters disclosed by such tests. O'Brien, NPI and Du Pont shall have the right to have any meter tested at any time at its expense. Representatives of teh other party 7 and of Du Pont shall be afforded a reasonable opportunity to be present at all meter inspections and tests. If at any time a meter is found inaccurate by more than 1% an adjustment shall be made in settlements between the parties to compensate for the effect of such inaccuracy over a preceding period of thirty (30) days from removal or testing of the meter or over any shorter period during which such inaccuracy may be determined to have existed. It at any time a meter should fail to register or its registration should be so erratic as to be meaningless, the quantities such meter was intended to record shall be determined from check meters, if available, or otherwise from the best obtainable data. ARTICLE XI. Billings, Credits and Payments At the time that it would have billed Du Pont under the Du Pont Contract, O'Brien will prepare a monthly bill and bill NPI for the electricity purchased by NPI during the previous month. Each invoice will include all necessary information for calculation of the payment pursuant to Article IV hereof, and credit NPI each month for any credits due to Du Pont under Article XI of the Du Pont Contract. Payment shall be made by NPI contemporaneously with each receipt of payment by NPI from Du Pont pursuant to the Du Pont Contract. Should NPI fail to pay any invoice within thirty (30) days after receipt, O'Brien, in addition to collecting the interest set out herein, may pursue any viable remedy at law or in equity. ARTICLE XII. Notices All notices and other communications hereunder shall be in writing and shall become effective, if sent by first class certified or registered mail with postage prepaid and return receipt 8 requested three (3) days after deposit in the mails, or when received (whichever is earlier), and shall be directed (a) if to NPI, to NPI, O'Brien (Parlin) Cogeneration, Inc., c/o NRG Energy, Inc., 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403, Attention: David H. Peterson, with a copy to E.I. Du Pont Nemours and Company, Wilmington, Delaware 19898; (b) if to O'Brien, to O'Brien (Parlin) Cogeneration, Inc., c/o NRG Energy, Inc., 1221 Nicollet Mall, Suite 700, Minneapolis, MN 55403, Attention: Leonard H. Bluhm, with a copy to E.I. Du Pont De Nemours and Company, Wilmington, Delaware 19898, Attention: Manager-Chemicals and Energy Section, Materials and Logistics Department; or (c) to such other address as any such person may designate by notice given to the other party hereto. ARTICLE XIII. Other Provisions The following Provisions of the Steam Purchase Contract are hereby incorporated by reference in to this Contract (as modified below) and shall be applicable to this Contract as if they were fully set forth herein. Article 7. Force Majeure; Contingency (a) The reference to "steam" contained therein shall be understood as a reference to "electricity" for the purposes hereof. Article 12. Assignment and Subcontracting (a) Neither the consent of Du Pont nor NPI shall be required for any action by O'Brien referred to in Article 12 B. Article 14. Remedies (a) References to Du Pont shall be taken as a reference to NPI. Article 15. Compliance with Laws, Rules and Regulations 9 Article 16. Indemnification (a) References to Du Pont shall be taken as references to NPI. Article 17. Insurance Article 18. Amendments; Waiver Article 19. Severability Article 20. Governing Law IN WITNESS WHEREOF, O'Brien and NPI have caused this Agreement to be executed by their duly authorized representatives on the date and year first above written. NRG PARLIN INC. By: /s/ Craig A. Mataczynski Craig A. Mataczynski Vice President O'BRIEN (PARLIN) COGENERATION, INC. By: /s/ Leonard Bluhm Leonard A. Bluhm President 10 EX-10.21.3 40 EXHIBIT 10.21.3 ASSIGNMENT OF ELECTRICITY PURCHASE CONTRACT APRIL 30, 1996 BETWEEN O'BRIEN (PARLIN) COGENERATION, INC., NRG PARLIN INC. AND E.I. DU PONT. Exhibit 10.21.3 ASSIGNMENT OF ELECTRICITY PURCHASE CONTRACT The ASSIGNMENT OF ELECTRICITY PURCHASE CONTRACT ("Assignment"), dated as of April 30, 1996, by and between E.I. DU PONT DE NEMOURS AND COMPANY, a Delaware corporation ("DuPont"), O'BRIEN (PARLIN) COGENERATION, INC., a Delaware corporation ("O'Brien"), and NRG PARLIN INC. ("NPI"). RECITALS A. O'Brien and DuPont entered into that certain Electricity Purchase Contract dated January 18, 1988 (the "Electricity Purchase Contract"). B. O'Brien and NPI desire that O'Brien's rights and obligations under the Electricity Purchase Contract be assigned to NPI, and DuPont is prepared to consent to the assignment. NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 1. Assignment of Electricity Purchase Contract. O'Brien's rights and obligations under the Electricity Purchase Contract are hereby assigned to NPI. 2. Consent of DuPont. DuPont hereby consents to this assignment pursuant to Article XII of the Electricity Purchase Contract, which incorporates by reference the consent requirements of Article 12 of that certain Steam Purchase Contract between O'Brien and DuPont dated December 8, 1986. 3. Acknowledgment by DuPont. DuPont acknowledges and agrees that this Assignment is being made "without recourse". DuPont hereby releases O'Brien from all obligations under the Electricity Purchase Contract, and NPI hereby agrees to assume O'Brien's rights and obligations under said Electricity Purchase Contract. 4. Amendments; Waiver. This Agreement may not be terminated, amended, supplemented, waived or modified except by an instrument in writing signed by both of the parties hereto. Any failure by either party to enforce any provisions hereof shall not constitute a waiver by that party of its right subsequently to enforce the same or any other provision hereof. 5. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 6. Governing Law. This Assignment shall, in all respects, be governed and construed under the laws of Delaware, including all matters of construction, validity and performance. 7. Counterparts; Telefacsimile Execution. This Agreement may be executed in any number of counterparts, and by each of the parties on separate counterparts, each of which, when so executed, shall be deemed an original, but all of which shall constitute but one and the same instrument. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver a manually executed counterpart of this Agreement, but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability or binding effect of this Agreement. IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the date first written above. E.I. DU PONT DE NEMOURS AND COMPANY By: /s/ G. Kenneth Towe Name: G. Kenneth Towe Title: Energy Sourcing Manager O'BRIEN (PARLIN) COGENERATION, INC. By: /s/ Leonard Bluhm Name: Leonard A. Bluhm Title: President NRG PARLIN INC. By: /s/ Craig A. Mataczynski Name: Craig Mataczynski Title: EX-10.23 41 EXHIBIT 10.23 AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF GRAYS FERRY COGENERATION PARTNERSHIP ("GRAYS FERRY") DATED MARCH 1, 1996. Exhibit 10.23 AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF GRAYS FERRY COGENERATION PARTNERSHIP This Amended and Restated Partnership Agreement ("Agreement") is executed this 1st day of March, 1996, by and among O'Brien (SCHUYLKILL) COGENERATION, INC., a Delaware corporation, with its principal offices located at 225 South Eighth Street, Philadelphia, Pennsylvania (hereinafter "O'Brien"), ADWIN (SCHUYLKILL) COGENERATION, INC., a Pennsylvania corporation, with its principal offices located at 300 Stevens Drive, Airport Business Center, Lester, Pennsylvania (hereinafter "Adwin"), and TRIGEN-SCHUYLKILL COGENERATION, INC., a Pennsylvania corporation, with its principal offices located at 2600 Christian Street, Philadelphia, Pennsylvania (hereinafter "Trigen"). All three parties are sometimes collectively referred to as "the Partners." BACKGROUND A. As of October 28, 1991, O'Brien and Adwin Equipment Company ("AEC"), the parent company of Adwin, formed a general partnership know as the Grays Ferry Cogeneration Partnership (the "Partnership") pursuant to a Partnership Agreement of Grays Ferry Cogeneration Partnership dated as of such date, which agreement was amended by the First Amendment to Partnership Agreement of Grays Ferry Cogeneration Partnership dated as of September 17, 19193, and the Second Amendment to Partnership Agreement of Grays Ferry Cogeneration Partnership, dated September 27, 1994 (collectively the "Partnership Agreement"). B. AEC has assigned all of its right, title and interest in and to the Partnership to Adwin pursuant to the Third Amendment to Partnership Agreement of Grays Ferry Cogeneration Partnership, dated January 23, 1996, and, simultaneously therewith, Adwin has been admitted to the Partnership as a partner, has assumed the Managing Partner position, and AEC has withdrawn from the Partnership as a Partner. C. O'Brien is a wholly owned subsidiary of O'Brien Environmental Energy, Inc., which is a corporation involved in the development, ownership, operation, and management of cogeneration facilities which produce steam and electric power for sale to industrial and commercial users and public utilities. D. Adwin is a wholly owned subsidiary of AEC, which, in turn, is a wholly owned subsidiary of Eastern Pennsylvania Development Company, which, in turn, is a wholly-owned subsidiary of PECO Energy Company ("PECO"). E. Philadelphia United Power Corporation ("PUPCO") has agreed to terminate its option to purchase a one-third interest in the Partnership in consideration of Trigen's purchase of such interest directly from the Partnership. F. The terms of the acquisition of the Partnership interest by Trigen are set out in the Acquisition Agreement among Adwin, O'Brien, and Trigen dated March __, 1996 (the "Acquisition Agreement"). G. Adwin, O'Brien and Trigen wish to amend and restate the Partnership Agreement in its entirety for the purpose of continuing development of a qualifying cogeneration facility to be located at the Schuylkill Station of the Trigen-Philadelphia Energy Corporation ("TPEC") in Philadelphia, Pennsylvania, and to provide for the ownership, operation and maintenance of said cogeneration facility by the Partnership once completed. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the sufficiency of which is acknowledged by all parties, Adwin, O'Brien and Trigen, intending to be legally bound, hereby agree as follows: SECTION 1. DEFINITIONS Except as otherwise expressly stated, the singular includes the plural and the plural includes the singular; a reference to any law or rule includes any amendment or modification to such law or rule and all regulations, rulings and other governmental interpretations promulgated thereunder; a reference to any person includes such person's permitted successors and permitted assigns; the words "include," "includes" and "including" are not limiting, and references to any document includes all amendments, modifications and supplements thereto. The capitalized terms used in this Agreement shall have the meanings set forth below: "Affiliate" means, with respect to any Partner, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with (including, but not limited to, 2 any Person that, directly or indirectly, is a beneficial owner of fifty percent (50%) or more of any class of equity securities of) such Partner. "Affiliated Party Decision" is defined in Section 7.03. "As Adjusted" means with respect to any dollar amount specified as such in the Agreement, such dollar amount as adjusted for inflation on an annual basis measured by the change in the Consumer Price Index (Philadelphia, for all urban Consumers) (1982 - 1984 equals 100) since the execution and delivery of this Agreement. "Agreement Date" means the date of this Agreement. "Capital Account" means the account maintained for each partner pursuant to Section 12. "Carrying Value" of any asset means its adjusted basis for federal income tax purposes, except that the initial Carrying Value of any property contributed to the Partnership by a partner shall be its Fair Value at the time of contribution. Carrying Value of assets shall be adjusted to Fair Value at the following times: (I) acquisition of an additional interest in the Partnership by a new or existing Partner in exchange for more than a de minimis capital contribution, (ii) disposition by the Partnership of assets to a partner in exchange for more than a de minimis amount of money or Partnership property as consideration for an interest in the Partnership, and (iii) upon liquidation of the Partnership. Carrying Value of an asset shall be reduced for depreciation, amortization, and other cost recovery deductions allowable for federal income tax purposes, but to the extent that the Carrying Value of an asset differs from its adjusted tax basis, such Carrying Value shall be reduced by the same ratio used to compute depreciation of the asset's adjusted basis for tax purposes. "Code" means the Internal Revenue Code of 1986, as amended. "Credit Agreement" means the Construction and Term Loan Agreement between the Lenders and the Partnership dated March 1, 1996. "Disbursable Assets" means the sum of (a) all Gross Receipts of the Partnership less Operating Expenses plus (b) any other assets of the Partnership that the Partnership determines to be in excess of the current needs of the Partnership. "Disinterested Partner" is defined in Section 7.02. 3 "Electric Contract" means collectively (1) the Agreements for Purchase of Electric Output (Phase 1) and (Phase 2) dated as of July 8, 1992, between the Partnership and PECO, and (2) the Phase 1 and Phase 2 Contingent Capacity Purchase Addendums, dated as of September 17, 1993, between the Partnership and PECO, as well as the Letter Agreement, dated March 30, 1995, pursuant to which PECO tendered its Activation Notice under Section 3.3 of the Phase 1 and Phase 2 Electric Capacity Contractors, as the foregoing Agreements may be amended, modified, or supplemented from time-to-time. "Event of Default" is defined in Section 20. "Fair Value" of any property, other than of interests in the Partnership, means the fair market value of such property as determined by the Partners through the same procedure provided for in Section 22.04. "FERC" means the Federal Energy Regulatory Commission. "Financial Closing Date" means the date on which the Partnership closes on construction financing for the Project. "GAAP" means generally accepted accounting principles, consistently applied. "Gross Receipts" means, collectively, all receipts from operations of the Partnership, receipts from the sale, exchange, transfer, assignment or other disposition of property of the Partnership, proceeds of insurance and receipts from any other source by the Partnership. "Lenders" means Chase Manhattan Bank, N.A., and such other participating lenders as are signatories to the Credit Agreement, or participate in any additional financing or re-financing of the Project. "Major Decision" has the meaning set forth in Section 7.04. "Management Committee" means the committee established pursuant to Section 7.01(b). "Managing Partner" means the partner responsible for day-to- day administration of the Partnership's business, as more fully described in Section 6.01. "Operating Expenses" means all expenses necessary for the construction, repair, operation, and maintenance of the Project including, without limitation, payments, if any, required to be made to any Affiliate of the Partnership pursuant to the Project 4 Documents, debt service, capital expenditures, amounts used for the creation or restoration of reserves, and taxes. "Overdue Rate" means the prime rate of the Chase Manhattan Bank, N.A., as announced from time-to-time, plus three percent. "Partner" means each of Adwin, O'Brien and Trigen, as long as it remains a Partner of the Partnership and each other Person or entity who becomes a partner of the partnership pursuant to the terms of this Partnership Agreement. "Partnership" means the Grays Ferry Cogeneration Partnership, the partnership formed by the Partners pursuant to this Agreement. "Partner Percentage" means the respective percentage interest of each Partner in the Partnership, initially as set forth in Section 3.01, as such percentage may be adjusted in connection with the assignment, from time-to-time, by a Partner of its interest I the Partnership pursuant to the terms hereof. "PECO" means the PECO Energy Company, a Pennsylvania corporation, its successors and permitted assigns. "Person" means any individual, corporation, partnership, association, joint stock company, limited liability company, unincorporated organization, or other entity. "Project" means the cogeneration facility to be developed, constructed, owned and operated by the Partnership, located at 2600 Christian Street, Philadelphia, Pennsylvania, of at least 150 megawatts of nominal capacity. "Project Documents" means the Credit Agreement, all agreements, permit applications, final permits, surety bonds, and other documents material to the development, financing, construction and operation of the Project, including, without limitation, those set out in Exhibit B. "Project Equity Contribution" means the amount required by the Lenders for the construction of the Project to be contributed as equity by the Partners to the Partnership. "Project Services and Development Agreement" means the Amended and Restated Project Services and Development Agreement, dated as of September 17, 1993, by and between the Partnership and PUPCO, as clarified by the Acquisition Agreement and as further amended, modified or supplemented from time-to-time pursuant to the terms thereof. 5 "PUPCO" means Philadelphia United Power Corporation, a Delaware Corporation, its successors and permitted assigns. "PURPA" means the Public Utility Regulatory Policies Act of 1978, as amended. "Steam Venture Agreement" means the Amended and Restated Steam Venture Agreement, dated September 17, 1993, by and among AEC, O'Brien Environmental Energy, Inc., TPEC and PUPCO (which Agreement has been assigned by AEC and O'Brien Environmental Energy, Inc. to the Partnership), as clarified by the Acquisition Agreement and as the same may be further amended, supplemented, and modified from time-to-time pursuant to the terms thereof. "TPEC" means Trigen-Philadelphia Energy Corporation, formerly known as Philadelphia Thermal Energy Corporation, its successors and permitted assigns. "Turnkey Contractor" means Westinghouse, or such substitute contractor as may be engaged by the Partnership to complete construction of the Project. "Unreimbursed Development Costs" means those costs to develop the Project incurred by O'Brien and AEC and/or Adwin, as set out in Exhibit A. "Westinghouse" means Westinghouse Electric Corporation, its successors and assigns. "Work Product" means all work products produced by, or on behalf of, a Partner prior to the Agreement Date that relate to the development, construction and operation of the Project, including without limitation, engineering drawings and feasibility studies, plans and specifications, construction costs estimates, financial studies, surveys, and governmental approvals and permits. SECTION 2. FORMATION OF PARTNERSHIP 2.01 Adwin and O'Brien hereby continue the Partnership for the purposes set forth in this Agreement, and Trigen hereby joins the Partnership for said purposes. The Partnership will be governed by the Uniform Partnership Act of the Commonwealth of Pennsylvania ("the Act) as from time-to-time amended. 2.02 A duly executed application for registration of fictitious name will be filed with the offices of the Secretary of State of Pennsylvania. The Managing Partner shall execute and cause to be filed amended applications for registration of 6 fictitious name and shall take any and all other actions as may be necessary or advisable to perfect and maintain the Partnership as qualified to do business in accordance with this Agreement in any state which may be required from time-to-time. 2.03 The name of the Partnership is Grays Ferry Cogeneration Partnership. 2.04 The principal office of the Partnership shall be located at the offices of the Managing Partner. 2.05 Title to any assets acquired to effectuate or implement the purposes of the Partnership shall be held in the name of the Partnership or at any time, from time-to-time, in the name of a nominee of the Partnership selected by the Managing partner, and approved by the other Partners. The Managing Partner shall obtain such documents as may be necessary to reflect the Partnership's ownership of such assets. SECTION 3. PARTNER PERCENTAGES; CAPITAL CONTRIBUTIONS 3.01 The Partner Percentage of each Partner is set forth below: Partner Partner Percentage Adwin 33 1/3% O'Brien 33 1/3% Trigen 33 1/3% 3.02 Simultaneously with the execution of this Agreement, Adwin and O'Brien shall be deemed to have contributed to the capital of the Partnership the Unreimbursed Development Costs set out in Exhibit A. 3.03 Trigen will have no obligation to contribute to development expenses paid prior to the Financial Closing Date. Certain development costs listed in Schedule 3.03 have been incurred, but not paid prior to Financial Closing Date. These will be paid by the Partnership at or after the Financial Closing Date. 3.04 Each Partner shall contribute Ten Million Dollars ($10,000,000) as its share of the Project Equity Contribution, for a total of Thirty Million Dollars ($30,000,000). Such Project Equity Contributions shall be made after all construction loan proceeds under the Credit Agreement have been utilized, or at such time as is required by the Lenders under the Credit Agreement, and prior to any drawdowns under the subordinated debt 7 to be provided by Westinghouse. On, or prior to, the Financial Closing Date, each Partner shall post one or more letters of credit, corporate guarantees or other security, in each case acceptable to the Lenders, to secure its obligation under this paragraph. 3.05 (a) Following completion of the Project and except as provided in subparagraph (b), any subsequent equity contributions shall be subject to the unanimous approval of the Partners, and unless otherwise agreed, shall be in accordance with the Partner Percentage of each Partner. (b) In the event that one or more Partners fail to make part or all of any subsequent equity contributions approved pursuant to subparagraph (a) or approved by the Management Committee in order to avoid default under the Project Documents, or which, in the reasonable judgment of the Management Committee, may be necessary to avoid default under such Project Documents, the interest of each such non-contributing Partner shall be subject to the following restrictions until such time as the default is cured: (i) loss of all voting rights under this Agreement, and (ii) suspension of all distributions to which such Partner would otherwise be entitled, with the stipulation that such distributions shall be placed in escrow by the Management Committee until such time as the default is either cured or the interest of the non-contributing Partner is purchased pursuant to the procedures set out below. (c) A non-contributing Partner under this Section 3.05 shall have six (6) months from the date the Management Committee sets for payment of the subsequent equity contribution to cure any default. Cure shall consist of payment in full of the subsequent equity contribution required of the Partner plus interest on the unpaid amount at the Default Rate applicable to late payments under the Credit Agreement. If any such Partner has failed to cure the default within said six (6) month period, the remaining Partners shall have the opportunity, pro rata to their respective Partner Percentages, to purchase the Partnership interest of the non-contributing Partner, pursuant to the provisions of Section 22, except that the purchase price shall equal the amount of the subsequent equity contribution which the non-contributing Partner failed to make. (d) As a condition to participating in any such buyout, a Partner shall have paid to the Partnership, pro rata to its Partner Percentage, that part of the capital shortfall 8 created by the non-contributing Partner either through an additional equity contribution to the Partnership (which shall be added to the Partner's Capital Account) or, if approved by the Management Committee, and permitted by the Credit Agreement, through a loan to the Partnership. To the extent that a partner fails to pay its pro rata share of the subsequent equity contribution required of the non-contributing Partner, the remaining Partners shall have the opportunity, pro rata to their respective Partner Percentages, to make up the shortfall, and thereby be eligible to participate in the purchase of the non- contributing Partner's interest should a cure not be effected by such non-contributing Partner within the six (6) months set out herein. If none of the Partners make up the shortfall created by the non-contributing Partner, the contributing Partners shall take action as they deem appropriate. (e) In addition to its other obligations under subparagraphs (a) and (b) of this Section, each Partner agrees to contribute additional capital to the Partnership pursuant to the provisions of this Section 3.05 to satisfy obligations owed third parties if, as a result of such obligations, the Partnership's liabilities exceed its assets. SECTION 4. PURPOSE AND POWERS 4.01 The purpose of the Partnership is to develop, construct, own, maintain, and operate the Project. Unless all of the Partners otherwise agree, the Project shall at all times be a "qualifying cogeneration facility" within the meaning of Section 3(18)(B) of the Federal Power Act, as amended by Section 201 of PURPA and the applicable rules and regulations of FERC. 4.02 The Partnership shall have the following powers: (a) To buy, lease, own or sell any personal or real property useful or necessary for the development, construction and operation of the Project; (b) To borrow money and issue evidences of indebtedness in furtherance of any or all of the objects of the Partnership's business or for the refinancing of any indebtedness, and to secure the same by mortgage, pledge or other liens on any or all of the Partnership's property; (c) To enter into, perform and carry out contracts of any kind necessary to, or in connection with, or incidental to, the accomplishment of the foregoing purposes; 9 (d) Negotiate for and conclude agreements for the sale, exchange or other disposition of all, or substantially all, of the property of the Partnership; (e) Make Permitted Investments of Partnership funds, as such Permitted Investments are defined in the Credit Agreement; (f) Bring or defend actions at law or in equity; (g) Sell, purchase, cancel, or otherwise dispose of, the interest of any Partner in the Partnership in accordance with the terms of this Agreement; and (h) Undertake any other action or thing reasonably necessary to carry out the purposes set forth in this. 4.03 Partners may not engage in or possess interests in business ventures of any kind other than in accordance with this Agreement. Affiliates of a Partner may engage in or possess interests in other business ventures of any kind for their own account including, without limitation, owning or participating in or serving as a partner or other owner of other entities that own, either directly or through interests in other Persons, projects similar to, or that compete with, the Project. Neither the Partnership nor any of the Partners shall have any rights by virtue of this Agreement in, or to, such other business ventures or to the income or profits derived from Affiliate activities. SECTION 5. DESCRIPTION OF THE PROJECT; RELEASE OF CERTAIN PRIOR FINANCIAL COMMITMENTS 5.01 Initially, the Project will consist of a Westinghouse 501D5A Econopac combustion turbine, a heat recovery steam generator, a condensing-extraction steam turbine which, in combination with the combustion turbine, is expected to be capable of generating 170 MW at 90 degrees Fahrenheit, and an auxiliary boiler whose capacity shall be approximately 730,000 pounds of steam per hour, and shall be capable of burning both No. 2 oil and natural gas. 10 SECTION 6. MANAGEMENT OF PARTNERSHIP BUSINESS; ROLE OF THE MANAGING PARTNER 6.01 (a) The day-to-day responsibility to administer the business of the Partnership shall be vested in the Managing Partner, pursuant to guidelines and policies issued by the Management Committee established by Section 7.01(b) herein. The Managing partner shall report on a regular basis to the Management Committee. The intent of the Partners is that policy decisions be referred to the Management Committee by the Managing Partner, but that the Managing partner perform all administrative or ministerial duties of the Partnership within the guidelines and policies approved by the Partnership. Subject to any requirement under Section 7.02 that a Disinterested Partner handle such activities, the Managing Partner shall have the authority and responsibility to undertake the following actions without the need to seek approval from the Management Committee: (i) prepare for the Partnership an annual budget for approval by the Partners (to be presented to the Partnership no later than ninety (90) days prior to the beginning of each year), which budget shall include a narrative description of construction, repair, operating and maintenance activities proposed to be undertaken by the Partnership during such year and a description of such other information, plans, agreements and other matters as are necessary to inform the Partners of matters materially relevant to the operation and management of the Partnership and the Project during such year; (ii) recommend staffing and compensation to the Management Committee for consultants, attorneys, accountants and other professionals utilized by the Partnership; (iii) pursue all permits required for the development, financing, construction and operation of the Project; (iv) except as specifically provided herein with respect to transactions with Affiliates, negotiate and administer the Partnership's obligations under the Project Documents; (v) provide the other Partners with copies of new Project Documents promptly after each has been executed by the Partnership; (vi) promptly notify the other Partners of any material impediments to the expected completion of 11 construction of the Project within the proposed capital budget which is attached hereto as Schedule 6.01; (vii) monthly notify the Partnership of any anticipated deviations of five percent (5%) or more from any line item of the annual approved budget; (viii) invest and re-invest the funds of the Partnership in accordance with Section 4.02(e); (ix) execute and deliver in accordance with the terms of this Agreement, on behalf of the Partnership, construction contracts, instruments for the transfer of real property, loan agreements, any and all instruments and documents which shall be required by the Lenders, or any other document or instrument in any way related thereto or necessary or appropriate in connection therewith; (x) provide all required risk management services, including development of an indemnity program and maintenance of adequate insurance to insure compliance by the Partnership with the Project Documents; (xi) provide administration of the Partnership including, without limitation, its accounting requirements, and administration for the Project while under construction and, after completion, for its operation; (xii) handle all public relations matters; and (xiii) handle all environmental, regulatory and contractual reporting requirements. (b) Any Person dealing with the Partnership may rely (without duty of further inquiry) upon a certificate signed by the Managing Partner as to the identity of any Partner; the existence or nonexistence of any fact or facts which constitute a condition precedent to acts by the Partnership or which are in any other manner germane to the affairs of the Partnership; the Persons who are authorized to execute and deliver any instrument or document of the Partnership; and any act or failure to act by the Partnership or any other matter whatsoever involving the Partnership; subject in each case to any requirements under Section 7.02 that a Disinterested partner handle such activity. (c) Subject to the Managing Partner's compliance with Sections 7 and 17 herein, the signature of the Managing Partner shall be sufficient to convey title to any assets or property owned by the Partnership, or to lease, mortgage, lien or 12 encumber the same, and all of the Partners agree that a copy of this Agreement may be shown to the appropriate parties in order to confirm the same, and further agree that the signature of the Managing Partner shall be sufficient to execute any "statement of partnership' or other documents necessary to effectuate this or any other provision of this Agreement or to satisfy any requirement of the Act or of other applicable law. (d) The Managing Partner may not, except with approval of the Partnership under Section 7.04: (i) Knowingly take any action in contravention of this Agreement; (ii) Deal with or assign rights in any Partnership property for other than Partnership purposes; (iii) Confess judgment against the Partnership or make an assignment for the benefit of creditors; (iv) Take any action which would make it impossible to carry on the business of the Partnership; or (v) Cause the Partnership to cease to be a partnership for any reason, including federal income tax purposes. 6.02 Adwin shall serve as the Managing Partner until the Financial Closing Date, at which time, it shall automatically be replaced by O'Brien. O'Brien shall serve as the Managing Partner until care, custody and control of the Project is turned over to the Partnership by the turnkey Contractor, (or at such earlier time as the Management Committee determines is necessary to avoid ownership problems under PURPA), at which point O'Brien will automatically be replaced by Trigen as the Managing Partner until it resigns or is replaced pursuant to Section 6.03, or until it ceases to be a Partner. 6.03 If an Event of Default by the Managing partner occurs, the non-Managing Partners may elect to remove the Managing Partner by serving notice of the election on the Managing Partner. If, at the time of removal, there is only one other Partner, such Partner will become the Managing Partner. If there is more than one non-Managing Partner, the non-Managing Partners shall jointly agree on a substitute Managing partner. The substituted Managing Partner shall be formally designated by an amendment to this Agreement signed by all the non-Managing Partners. 13 6.04 Notwithstanding any other provision of this Agreement, no Partner shall become Managing partner or remain in such position if fulfillment of such responsibilities will jeopardize the Project's qualifying facility status under PURPA. 6.05 Any Partner (including the Managing Partner) may appoint, employ, or contract with any Person to assist it in fulfilling its duties hereunder, but may not delegate its powers, rights or obligations hereunder to such Person, and only so long as any such appointment, employment, contract, or other dealing is at no cost to the other Partners or to the Partnership. 6.06 Each Partner hereby makes, constitutes, and appoints the Managing Partner its true and lawful attorney-in- fact for the express purposes contained in this Section 6.06 (and no others) and authorizes it to act in its name, place, and stead and for its use and benefit, to sign, execute, certify, acknowledge, swear to, file, publish and record (i) all amended name certificates to be filed by the Partnership under the laws of any jurisdiction in which the Partnership is doing business; (ii) any amendments and the instruments described in clause (i), as now or hereafter amended, which are required to admit any substituted Partner in accordance with the terms of this Agreement; and (iii) all certificates of cancellation and other instruments which shall be required by applicable law to effect the dissolution and termination of the Partnership; provided that any such actions are taken in accordance with the terms and provisions of this Agreement. The power of attorney granted herein may be exercised by any such attorney-in-fact by listing the Partners executing any agreement, certificate, instrument, or other document with the single signature of any such attorney-in- fact acting as attorney-in-fact for such Partners. 6.07 To reimburse the Managing Partner for all of its internal costs incurred in performing its responsibilities hereunder, the Partnership shall provide the Managing Partner with an annual fee of One Hundred fifty Thousand Dollars ($150,000), As Adjusted, which fee shall be pro-rated on a monthly basis for any periods less than a year during which a Partner serves as Managing Partner. Third party expenses, including legal and accounting costs, shall be payable by the Partnership, consistent with the annual budget approved by the Partners. SECTION 7. PARTNERSHIP DECISION MAKING; MAJOR DECISIONS 7.01 (a) For those decisions requiring a vote of the Partners (i.e., those decisions for which the Managing Partner does not have sole authority under paragraph 6.01), the Partners 14 shall have a vote equal to their respective Partner Percentage. The Partnership shall execute its decision making through a Management Committee, established pursuant to sub-paragraph (b) below. (b) The Management Committee shall consist of one non-voting General Manager appointed by the Managing Partner, and one voting member from each of Adwin, O'Brien and Trigen. The Management Committee shall be chaired by the General Manager, and shall meet quarterly at the offices of the Managing Partner, or at such other location as may be mutually agreeable. The agenda for each meeting of the Management Committee will consist of an Operations Report (which shall address Project availability, efficiency, net projection, equipment runtime, PURPA calculations, equipment condition, permit compliance, and explanation of any downtime), a Financial Report (which shall address net income, balance sheet, available cash, deviations from approved budgets, loan balances, and recommendations for distributions), a Third Party Relationships Report (which shall address relations with lenders, customers, contractors/vendors, permitting and regulatory bodies, neighbors and the press), and a Major Decision Report, with recommendations on Major Decisions to be made. Minutes of the meetings of the Management Committee shall be maintained by the General Manager and a copy served on each Partner within five (5) business days after any meeting of the Committee. The General Manager shall ensure that (1) unaudited annual financial statements are ready for review and approval by the end of February of each year and that audited financial statements are ready for approval by the end of March of each year, (2) annual tax returns are ready for review and approval by April 1 of each year, and (3) annual staffing plans and proposed annual budgets are ready for review by October 1 of each year. To the extent possible, the Management Committee will seek to make "Major Decisions" (as defined in Section 7.04) by consensus. In the absence of a consensus, the provisions of Section 7 shall control. (c) Special meetings of the Management Committee may be called by Partners holding at least thirty-three and one- third percent (33 1/3%) of the voting interests in the Partnership upon reasonable written or telephonic notice to the other Partners. Meeting of the Management Committee shall be authorized if a quorum representing fifty0one percent (51%) or more of the voting interests in the Partnership is represented either in person or by proxy. Any meeting of the Management Committee may be held by conference telephone or similar telecommunications arrangement whereby all Partners in attendance may hear one another. Any action that may betaken at a meeting of the Partners may be taken, without a meeting, by the unanimous written consent of those Partners holding voting interests 15 sufficient to approve such action pursuant to the terms of this Agreement. 7.02 To avoid the appearance of any conflict of interest, the Management Committee shall assign primary responsibility for the negotiation and monitoring of any agreements, or amendments thereto, between the Partnership and a Partner (or an Affiliate thereof) to a Disinterested Partner unless there is no Disinterested Partner. For purposes of this Agreement, a "Disinterested partner" as to a particular decision is one which neither (1) is a contracting party or an Affiliate of such contracting party with respect to said decisions, nor (2) has a financial interest in the agreement that is the subject of the decision which is materially different from the financial interest of the remaining partners or the Partnership, due to a separate agreement with the contracting party or its Affiliate. The Disinterested Partner shall have no authority to make final decisions with respect to said agreements, but shall have the primary responsibility for negotiating or monitoring the terms of such agreements or amendments, subject to approval by the Partnership, as set out in Sections 7.03 and 7.04. If the Managing Partner is not a Disinterested Partner and is, therefore, not assigned to any such negotiation or monitoring responsibility, it shall nevertheless assist and consult with the assigned Disinterested Partner, including attendance at negotiation sessions, if requested. 7.03 With the exception of those decisions set out in Sections 7.04, any decisions which is supported by fifty-one percent (51%) or more of the voting interests of the Partners shall be deemed to be a decision or act of the Partnership. Unless there is no Disinterested Partner, and notwithstanding any provisions herein to the contrary, the vote of a majority of the voting interests held by the Disinterested Partners (or the unanimous consent of the voting interests held by the Disinterested Partners for decisions covered by Section 7.04) shall be required for those actions of the Partnership which specially affect the interests of one Partner, either because such Partner or an Affiliate thereof has a separate contract with the Partnership involving such decision or has a financial interest in the decision which is materially different from the financial interests of the remaining Partners or the Partnership, due to a separate agreement with the contracting party or its Affiliate (such a decision is hereinafter referred to as "Affiliated party Decision"). Without limiting the foregoing, an Affiliated party Decision shall include waivers, elections, default notices and the initiation of enforcement actions under, and the execution, modification, or termination or, contracts between the Partnership and a Partner or Affiliate of such Partner. 16 7.04 Any of the actions specified below (each, a "Major Decision") may be taken only if agreed upon by a unanimous vote of the Disinterested Partners with respect to any such decision if such decision involves an "Affiliated party Decision"; otherwise, the unanimous vote of all partners shall be required. The following actions shall be covered by this paragraph: (a) Any action which would change or materially or adversely affect the purpose or business of the Partnership as specified in Section 4; (b) Any issuance of additional interests in the Partnership or the admission of any Person as a Partner; (c) Any material modification to the Project Documents, including any modification which involves an expenditure or incurrence of liability, or a potential liability, on the part of the Partnership in excess of an annual aggregate total of Two Hundred Thousand Dollars ($20,000), As Adjusted; (d) Any execution by the Partnership of any unbudgeted agreement with a term greater than one year or involving the expenditure or incurrence of liability, or a potential liability, in excess of One Hundred Thousand Dollars ($100,000), As Adjusted, in the aggregate; (e) Any sale, assignment, or grant of mortgage or other encumbrance involving all or substantially all of the assets of the Partnership; provided, however, that this clause shall not apply to the leasing or installment purchase of office and related equipment and vehicles; (f) The incurring of unbudgeted indebtedness, or a potential indebtedness, by the Partnership in excess of One Hundred Thousand Dollars ($100,000), As Adjusted, per occurrence or Five Hundred Thousand ($500,000), As Adjusted, in the aggregate on an annual basis; (g) The determination of compensation for professionals and consultants retained by the Partnership; (h) Any material modifications to an insurance and indemnity program for the Partnership, including any modification which involves an expenditure or the incurrence of liability, or a potential liability, in excess of Two Hundred Thousand Dollars ($200,000), As Adjusted, in the aggregate; (i) Approval of the annual operating budget for any calendar year and approval of any action or actions, which 17 in the aggregate result is an increase than five percent (5%) in the expenditures or a decrease of greater than five percent (5%) in the revenues of or to the Partnership as set forth in the approved annual operating budget; (j) The dissolution of the Partnership, except under Section 21.01(iv); (k) Disposition of assets of the Partnership upon dissolution or termination of the Partnership; (l) The distribution of cash or other assets to the Partners, the establishment of any reserves not required by the Lenders or the determination of Disbursable Assets; (m) The merger or consolidation of the Partnership with or into any Person; and (n) The decisions identified in Section 6.01(d). 7.05 Whenever any Partner is requested to evidence its approval of or agreement to any decision or action of any nature whatsoever that requires consent of the Partners, the Partner to whom such request has been made shall respond to such request with reasonable promptness. Commensurate with the nature of the approval, action or agreement being sought, the partner to whom the request is made shall advise the requesting Partner(s) of its approval or its reasons for withholding the same. If the request for approval, agreement or other action is in writing, the response must also be in writing. SECTION 8. TERM; TERMINATION 8.01 The Partnership shall continue in existence until the first to occur of the following events: (a) the date determined by unanimous decision of the Partners to dissolve the Partnership; (b) the sale of all or substantially all of the assets of the Partnership; (c) the withdrawal by any Partner resulting in less than two remaining Partners, unless, if there is a sole remaining Partner, a second Partner is admitted within the time required by applicable law; (d) the occurrence of an event specified under applicable law resulting in a dissolution of the Partnership unless, pursuant to applicable law, the Partners elect to continue the business of the Partnership; (e) December 31, k2035; or (f) the dissolution of the Partnership due to an Event of Default or otherwise in accordance with this Agreement. 18 8.02 Upon termination of this Agreement, none of the Partners shall have any further liability to each other, except any liability which expressly survives pursuant to Section 30.02 of this Agreement. SECTION 9. SCOPE OF AUTHORITY 9.01 Except as otherwise expressly provided in this Agreement, no Partner shall have any authority to bind or act for, or in the name of, or assume any obligations or responsibilities on behalf of, the other Partners or the Partnership. Neither the Partnership nor any Partner shall be responsible or liable for any indebtedness of a Partner, whether incurred or arising before or after the execution of this Agreement, except those responsibilities, liabilities, indebtedness or obligations expressly assumed by such Partner or the Partnership in writing. This Agreement shall not be deemed to create a general partnership among the Partners with respect to any activities whatsoever, other than activities within the scope and purpose of the Partnership. SECTION 10. INDEMNIFICATION 10.01 Each Partner hereby indemnifies and holds harmless the partnership as well as the other Partners(s) and their or its Affiliates, officers, directors, employees and agents from and against any and all claims, demands, losses, damages, liabilities, lawsuits and other proceedings, judgments and awards, and costs and expenses (including but not limited to reasonable attorneys' fees) arising directly or indirectly, in whole or in part, out of any breach of the provisions of this Agreement by such Partner or its Affiliate, director, officer, employee or agent. 10.02 Except as provided in non-waivable provisions of applicable law: (a) The Partnership hereby indemnifies each Partner (and its officers, directors, employees and agents) from and against any liability resulting from any act omitted or performed by such Partner (or its officer, director, employee or agent) in good faith on behalf of the Partnership and in a manner reasonably believed by such Partner (or its officer, director, employee, or agent) to be within the scope of the authority conferred upon such Partner by this Agreement and in the best interests of the Partnership. 19 (b) No Partner (and no officer, director, employee or agent of a Partner) shall be liable, responsible or accountable, in damages or otherwise, to the Partnership or the partners for or as a result of any act, omission or error in judgment which was taken, omitted or made by it in good faith on behalf of the Partnership and in a manner reasonably believed by it to be within the scope of the authority granted to it by this Agreement and in the best interests of the Partnership. A Partner may consult with such legal or other professional counsel as it may select. Any action taken or omitted by it in good faith reliance on, and in accordance with, the opinion or advice of such counsel shall afford full protection and justification to it with respect to the action taken or omitted. (c) The Partnership may reimburse a partner for all expenses, including reasonable legal fees, and losses in connection with any suit or action involving Partnership business (but no in connection with any action brought by one Partner against another). Any such indemnification and advancement of expenses agreed to by the Partnership shall not be exclusive of any other right available to the Partners, unless otherwise provided in extending the offer thereof. The Partnership shall purchase and maintain insurance on behalf of the Partners against liability. SECTION 11. LIMITATION OF LIABILITIES 11.01 No Partner, except as provided in Section 3.05, shall be liable to any third Person for losses, liabilities or obligations of the Partnership (except as otherwise expressly agreed to in writing by such Partner) unless the assets of the Partnership shall first have been exhausted. 11.02 Unless otherwise decided by the Partnership, the Partnership shall not enter into any contract, lease, sublease, note, deed of trust, or other agreement unless there is contained in such instrument an appropriate provision which (a) limits the claims of all parties to, and beneficiaries under, such instrument to the assets of the Partnership and (b) expressly waives any rights of such parties and other beneficiaries to proceed against the Partners individually. To the extent the Partnership has entered into any contract, lease, sublease, note or other agreement in violation of this requirement prior to the date of this Agreement, the Partners hereby waive any violation of the provisions of this Section. 11.03 Unless due to a Partner's willful misconduct, gross negligence, actions taken in bad faith, or actions taken by a Partner for which there was no basis for the Partner to form a 20 reasonable belief that such actions were in compliance with the Affiliated Party Decision requirements of Section 7.03, in no event shall any Partner be liable to any other Partner for indirect, incidental, special or consequential damages including, but not limited to loss of revenue, loss of profit, cost of capital, or loss of opportunity, regardless of whether such liability arises out of contract, tort (including negligence), strict liability, or otherwise. SECTION 12. CAPITAL ACCOUNTS 12.01 A separate "Capital Account" shall be maintained for each Partner in accordance with applicable United States Treasury regulations. Upon execution of this Agreement, the Capital Accounts of Adwin and O'Brien shall consist of the Unreimbursed Development Costs set out in Exhibit A plus their respective shares of the Project Equity Contribution set out in Section 3.03. The Capital Account of Trigen shall consist of its share of the Project Equity Contribution. The resulting initial Capital Accounts of the Partners are set out in Exhibit A. Following execution of this Agreement, the Capital Account of each Partner shall be: (a) increased by (i) the amount of cash and Fair Value of any property (net of liabilities assumed by the Partnership and liabilities to which the property is subject) contributed by such Partner to the Partnership pursuant to this Agreement; (ii) the items of income and gain allocated to such Partner in accordance with Section 13.01; and (iii) any positive adjustment to such Capital Account by reason of an adjustment to the Carrying Value of Partnership Assets; (b) decreased by (i) the amount of case and Fair Value of any property (net of liabilities assumed by the Partner and liabilities to which the property is subject) distributed to such Partner by the Partnership pursuant to this Agreement; (ii) the items of loss and deduction allocated to such Partner in accordance with Section 13.01; and (iii) any negative adjustment to such Capital Account by reason of an adjustment to the Carrying Value of Partnership Assets. 12.02 Immediately prior to the distribution of any property (other than cash) to a Partner, the Capital Account of each Partner shall be increased or decreased, as the case may be, to reflect the manner in which the unrealized income, gain, loss and deduction inherent in such property (that has not previously been reflected in the Capital Accounts of the Partners) would be allocated among the Partners in accordance with GAAP as if there 21 had been a taxable disposition of such property for its Fair Value. SECTION 13. ALLOCATION 13.01 For purposes of making allocations to Capital Accounts, all items of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners in accordance with their respective Partner Percentages. 13.02 Any allocation pursuant to Section 13.01 will, however, be subject to any adjustment required to comply with Sections 704(b) and 704(c) of the Code and the Treasury Regulations thereunder including, without limitation, adjustments with respect to any nonrecourse deduction or minimum gain chargeback within the meaning of Treasury regulation Section 1.704-2. Any special allocations of items pursuant to this Section 13.02 shall be taken into account, to the extent permitted by the Treasury Regulations, in computing subsequent allocations of income, gain, loss or deductions pursuant to Section 13.01 or 13.03 so that the net amount of any items so allocated and all other items allocated to each Partner over the life of the Partnership shall, to the extent possible, be equal to the amount that would have been allocated to each Partner pursuant to Section 13.02 had such special allocation not occurred. 13.03 For purposes of making allocations for federal, state, and local income tax purposes, all items of income, gain, loss, deduction and credit realized by the Partnership shall, for each fiscal period, be allocated, among the Partners in the same manner as the correlative items of income, gain, loss, deduction and credit were allocated pursuant to Section 13.01. SECTION 14. DISTRIBUTIONS TO PARTNERS 14.01 Subject to Section 24, and as permitted by the Partnership's Lenders, the Partnership shall distribute its Disbursable Assets, if any, for each fiscal quarter to the Partners simultaneously in accordance with the Partner Percentage of each Partner. SECTION 15. BOOKS, RECORDS AND ACCOUNTS 15.01 The Partnership shall maintain, at its principal office, full and accurate accounts and financial records which all Partners shall have the right to inspect and examine during 22 reasonable business hours. In addition, each Partner may designate a Person or Persons to inspect, examine and audit such accounts and financial records and to make copies of documents deemed appropriate during regular business hours at such Partner's sole cost and expense. The Managing Partner shall keep or cause such books to be kept and shall fully and accurately enter all transactions of the Partnership in the books. Such books and records of account shall be maintained on the accrual basis and shall be adequate to provide each partner with all financial information that may be needed buy such Partner or any of its Affiliates for purposes of satisfying the financial and tax reporting obligations of such Partner or Affiliate. Such books shall be closed and balanced at the end of each fiscal year. The Managing Partner will furnish financial statements, prepared in accordance with GAAP, to each Partner within thirty (30) days following the end of each quarter. On or before March 1 of each year, the partnership will furnish each Partner, for the prior calendar year, audited financial statements of the Partnership. At the request of any Partner, the Partnership shall give specific answers to questions upon which information is desired from time-to-time relative to the income, assets, liabilities, contracts, operations, condition of the property, status of any loans and any other data with respect to the Partnership or its property. 15.02 The Partnership shall engage as independent auditors for the Partnership the firm recommended by the Managing Partner, and approved by the Management Committee. The independent auditors shall at the end of each fiscal year (i) audit the records and accounts of the Partnership and (ii) render their opinion on the statements of financial condition of the Partnership as of the end of each fiscal year and related statements of income and changes in financial condition for each fiscal year. SECTION 16. TAX RETURNS; TAX ACCOUNTING; TAX ELECTIONS 16.01 It is the intention of the parties that the relationship created by this Agreement will, for federal, state, local and foreign purposes, be treated as a partnership. The Partners agree to take all action, including the amendment of this Agreement and the execution of other documents, as may be required to qualify for and receive such tax treatment. Subject to the provisions of Section 16.04, all of the Partnership's elections for federal and state tax purposes, except those specifically reserved by the Code to be made by the individual Partners, shall be determined by the "Tax Matters Partner" (as defined in Section 16.05) and approved by the other Partners. Subject to the provisions of this Section 16.01, the 23 Partnership's federal and state tax returns of the Partnership shall be reviewed and approved by each Partner. Any Partner who objects to the presentation of any Partnership item on any such return shall so notify the Managing partner in writing within fifteen (15) days after the date on which the income tax return in question was furnished to such Partner by the Partnership's independent auditors. Such notice shall set forth in reasonable detail the nature of, and basis for, each such objection. Copies of such notice shall be provided to the other Partners and to the independent auditors. If the Partners cannot agree upon a mutually satisfactory resolution of any disputed item, any Partner who objects to the majority decision of the Partners shall be entitled to take an inconsistent position with respect to any unresolved items on its own income tax return. In all other respects each partner shall report the results of the operation of the partnership on its own returns in a manner consistent with the manner in which such results were reported by the Partnership. 16.02 Income tax returns of the Partnership shall be prepared by the independent auditors. Copies of all income tax returns of the Partnership shall be furnished to each of the Partners for review and approval by April 1 of each year for filing such returns, including extensions, if any. If any Partner shall fail to approve any such return, an application for an extension of time to file shall be timely filed. If all Partners fail to approve the return prior to the expiration of the extension period, the Managing Partner shall file the return as approved by a majority-in-interest of the Partners, subject to the provisions of Section 16.01. 16.03 The fiscal year and the tax year of the Partnership shall end on December 31 of each year. 16.04 The Partnership shall, if requested by any Partner, make the election provided under Section 754 of the Code. 16.05 The Managing Partner is hereby designated as the "Tax Matters Partner," pursuant to Section 6231 of the Code and the applicable regulations thereunder. 16.06 Prompt notice shall be given to the Partners upon receipt of notice that the Internal Revenue Service or any other taxing authority intends to examine partnership tax returns for any period. The Tax Matters partner shall promptly supply to the other Partners copies of any communications with any taxing authority relating to any audit of any tax returns filed by or on behalf of the Partnership which involve any material issue and shall take such other steps as may be appropriate to keep the 24 other Partners fully informed about the course of the audit and any other administrative or judicial proceeding relating thereto. The Tax Matters partner shall not settle any material claim for additional taxes, interest or penalties, or other adjustments to the Partnership's tax returns without first obtaining the approval of the Management Committee. SECTION 17. BANK ACCOUNTS 17.01 Except as otherwise required by the Lenders, all funds shall be deposited in the name of partnership in such account or accounts as shall be designated by the Managing Partner. Except as provided below or as otherwise required by the Partnership's Lenders, all withdrawals therefrom shall be made upon checks signed (i) by the chief executive officer, the chief operations office, or the chief financial officer of the Managing Partner and (ii) by such additional person or persons as shall be designated by the Managing Partner from time-to-time. Any withdrawal in excess of Twenty Thousand Dollars ($20,000) which is out of the ordinary course of business of the Partnership or outside the scope of the approved annual budget, shall be approved in writing by the Managing Partner and at least one other Partner. The Managing Partner shall have no authority to approve withdrawals to itself or its Affiliates that are outside the scope of the approved annual budget, without the approval of the Partnership, which decision shall not be unreasonably delayed. SECTION 18. TRANSFER OF A PARTNER'S INTEREST 18.01 No Partner may sell, assign or encumber all or any part of its interest in the partnership unless each of the conditions set forth herein are satisfied or waived by consent of the partners; provided, however, that each partner may transfer all or a portion of its interest in the Partnership to an Affiliate without the consent of, but with notice to the other Partner(s); provided, however, that such transfer does not cause the Project to lose its status as a "qualifying cogeneration facility" under PURPA. Notwithstanding any other provision of this agreement, no partner may sell or assign all or any part of its interest in the Partnership if such sale or assignment would result in a total of more than three (3) Partners in the Partnership, unless to remedy a failed capital call under Section 3.05, or to remedy a potential violation of the ownership requirements under PURPA, pursuant to Section 18.02 below. 18.02 If it is determined that the ownership of interests in the Partnership by any Partner would cause the 25 Project to cease being a "qualifying cogeneration facility" under PURPA or would cause the Partnership to be regulated pursuant to the Public Utility Holding Company Act, each Partner agrees, consistent with the provisions of the Agreement, to reduce its Partnership Interest, pro rata to its Partner Percentage, to a level which avoids loss of "qualifying facility" status. Each Partner agrees that it will not transfer any interest in the Partnership, the result of which transfer would cause a loss of "qualify facility" status. No transfer shall be allowed or be effective unless an opinion of counsel satisfactory to the Management Committee is obtained stating that such transfer would not (i) cause the Partnership to be classified as an entity other than a partnership for purposes of the Code or to be treated as a publicly traded partnership within the meaning of Section 7704 of the Code, (ii) require registration under the Securities Act of 1933 and would not violate or cause the Partnership to violate any applicable law, and (iii) adversely affect the status of the Project as a qualifying facility under PURPA. 18.3 As a condition to the transfer of any interest, the transferee shall execute and deliver to each remaining Partner an instrument pursuant to which it agrees to be bound by the terms of this Agreement and such additional instruments and documents as may be reasonably required by the remaining Partners. SECTION 19. FIRST RIGHT OF PURCHASE 19.01 If, at any time, any Partner desires to sell all or any portion of its interest (other than a sale by a Partner to any Affiliate), such Partner shall give the other Partners notice of its intention to seek a purchaser for such interest promptly after making the determination to do so. Such Partner, upon securing a bona fide offer to purchase such interest intended to be sold shall give the other Partners notice of (a) the price (which shall be a dollar sum), (b) the identity of the proposed purchaser (if then known to the seller) and (c) all other terms of sale. The Remaining Partners shall have the right pro rata to their Partner Percentage, during the forty-five (45) day period after the giving of the notice of the proposed sale and its terms to enter into agreement to purchase all of the interest specified in the notice (which price shall be prorated if the Remaining Partners want o purchase only a portion of the interest being offered for sale) and upon the terms set forth in the notice. In the event less than all of the Remaining Partners determine to purchase the interest to be sold within the said forty-five (45) day period, those Remaining Partners who elect to purchase shall have the right within the ten (10) day period to 26 purchase the interest to be sold in the same proportion as the Partner Percentage of each purchasing Remaining Partner bears to the total Partner Percentage of all such purchasing Remaining Partners. If none of the remaining Partners elect to purchase the seller Partner's interest to be sold within the said time periods, the selling Partner shall be free for a period of thirty (30) days thereafter to sell the interest to be sold to the proposed purchaser on the same terms and conditions contained in the notice to the Remaining Partners of the proposed sale. If the said sale is not effected within the said thirty (30) day period, any subsequent sale must again comply with the requirements of this Section. Settlement under any purchase agreement entered into by one or more of the Remaining Partners pursuant to this Section shall occur within ninety (90) days of the execution of a written purchase agreement. SECTION 20. EVENTS OF DEFAULT 20.01 Each of the following shall be considered to be an "Event of Default" by a partner: (a) such Partner shall be named a debtor in any petition, whether voluntary or involuntary, in any bankruptcy or insolvency proceeding, whether state or federal, and such petition is not stayed or dismissed within sixty days; (b) such Partner shall enter into an assignment for the benefit of creditors; (c) such Partner shall have a receiver appointed to administer its interest in the Partnership; (d) such Partner shall have its Partnership interest seized by a general creditor; (e) it shall become unlawful for such Partner to carry on the business of owning an interest in the Partnership; (f) Except for a failure to make a capital call pursuant to Section 3.05, such Partner defaults in the performance of, or fails to comply with, any material obligation or agreement set out in this Agreement, and has not cured such default within thirty (30) days after notice from any of the remaining Partners of such default; (g) such Partner commits fraud, is convicted of a crime, or violates the Affiliated Party provisions of Section 7.02; or 27 (h) such Partner is either dissolved or liquidated. 20.02 Upon the occurrence of an Event of Default, the nondefaulting Partner(s) may, in addition to all other remedies at law or in equity to which such Partner(s) may be entitled, elect to purchase the defaulting Partner's interest in the Partnership pursuant to the provisions of Section 22. SECTION 21. DISSOLUTION 21.01 The Partnership shall dissolve upon the first to occur of (i) termination of the Partnership pursuant to Section 8.01, (ii) such time as the last Project Document expires by its terms and no longer requires, or prospectively could require, administration by the Partnership, (iii) upon the withdrawal of a Partner or upon the occurrence of an Event of Default as to a Partner under Sections 20.01(a), (b), (c), (d), or (e), unless all of the remaining, non-defaulting Partners agree, in writing, to continue the business of the Partnership, or (iv) upon an Event of Default as to Partner under Section 20.01(f) if the non-defaulting Partners elect to dissolve the Partnership. SECTION 22. PURCHASE OF DEFAULTING PARTNER'S INTEREST 22.01 Upon the occurrence of any Event of Default by any Partner (the "Defaulting Partner"), the other Partner(s) (the "Remaining Partner(s)") shall have the right to acquire the Partnership interest of the Defaulting Partner for cash, in proportion to the respective Partner Percentage of the Remaining Partners, or if only one Partner remains, all of the Defaulting Partner's interest, at a price determined pursuant to the procedure set forth in Section 22.04. If any Remaining Partner should elect not to purchase its pro rata share of the Defaulting Partner's interest, the remaining Partner(s) may purchase the pro rata share of the Defaulting Partner's interest to which the Partner who chooses not to participate in the buy out of the Defaulting Partner's interest would otherwise be entitled. The Remaining Partner(s) may notify the Defaulting Partner at any time within thirty (3) days of their knowledge of an Event of Default of its or their election to institute the procedures set forth in Section 22.04. Upon receipt of notice of the determination of the Net Fair Market Value of the Defaulting Partner's interest, the Remaining Partner(s) may notify the Defaulting Partner of its or their election to purchase the interest of the Defaulting Partner. 28 22.02 The closing of any purchase pursuant to this Section 22 shall take place at the principal office of the Partnership, unless otherwise mutually agreed by the Remaining Partner(s), on a date specified by the Remaining Partner(s) that is not less than ten (10) days following receipt of notice of determination of the Net Fair Market Value of the Defaulting Partner's Partnership interest pursuant to Sections 22.04 or 22.05. Upon closing of such purchase, the Remaining Partner or Partners may elect to offset against the purchase price the amount of any loss, damage or injury, the amount of which has been established by a final nonappealable judgment, suffered by it or incurred as a result of the default of the Defaulting Partner. 22.03 The right of a single Remaining Partner to elect to acquire the entire interest of the Defaulting Partner as set forth in this Section 22, is independent of the Remaining Partner' s right to elect to dissolve and terminate the Partnership pursuant to Section 21 of this Agreement by sixty (60) days written notice to the Defaulting Partner. 22.04 The "Net Fair Market Value" of an interest in the Partnership for purposes of a purchase pursuant to this Section 22 shall be determined as follows: (a) The Partners shall first attempt to agree upon the "Net Fair Market Value" of the Partnership as a whole. The "Net Fair Market Value" of the Partnership shall mean the cash price at which a sophisticated purchaser would purchase, and a sophisticated seller would sell, one hundred percent (100%) of the interests in the Partnership, with neither party being under any compulsion to effect such transaction and with both parties being reasonably informed as to all material facts. (b) In the event the Partners are unable to mutually agree upon the Net Fair Market Value of the Partnership for purposes of Section 22.04 within thirty (30) days of the date the remaining Partners notify the Defaulting Partner to institute the procedures set forth in Section 22.04, the Partners shall then attempt to agree upon the appointment of two disinterested appraisers who shall be members of the American Institute of Appraisers. If the Partners are unable to agree upon the selection of two appraisers within seventy five days, then each partner shall, within ten (10) days thereafter, select a single appraiser so qualified and such two appraisers shall select a third appraiser so qualified. Each appraiser so selected shall furnish the Partners with a written appraisal within ninety (90) days of the selection, setting forth such appraiser's determination of the Net Fair Market Value of the Partnership. The average of the two closest valuation of such appraisers 29 shall be treated as the Net Fair Market Value of the Partnership, and such amount shall be final and binding on the Partners. The cost of such appraisal shall be an expense of the Defaulting Partner. (c) The Net Fair Market Value of the Defaulting Partner's Interest to be purchased pursuant to this Section 22 shall equal the greater of the positive balance, if any, in the defaulting Partner's "Adjusted Capital Account" or $100. For this purpose, the Defaulting Partner's Adjusted Capital Account shall equal such Partner's Capital Account on the date of the valuation of the Net Fair Market Value plus or minus the net gain or loss which would have been credited or debited to such account if: (i) the Partnership's assets had been sold on such date at a price equal to the Net Fair Market Value of the Partnership and (ii) the net gain or net loss so determined were allocated among the Partners in accordance with the provisions of Section 13. SECTION 23. WINDING UP 23.01 Upon dissolution of the Partnership pursuant to Section 21 the Partnership shall immediately commence to wind up its affairs and the Managing Partner shall proceed with reasonable promptness to liquidate the business of the Partnership and take account of the assets and liabilities of the Partnership as promptly as is consistent with obtaining the Fair Value of such assets. During the period of the winding up of the affairs of the Partnership, the rights and obligations of the Partners set forth herein with respect to the management of the Partnership shall continue to act as such subject to Section 7.02, unless Section 6.04 applies. SECTION 24. DISTRIBUTIONS ON TERMINATION 24.01 The proceeds from a liquidation, together with assets distributed in kind, shall be applied and distributed in the following order: (a) First, to the payment of debts and liabilities of the third-party creditors of the Partnership, in the order of priority provided by law and to the expenses of liquidation; (b) Second, to the establishment of any reserve that the Partnership may deem reasonably necessary for any contingent or unforeseen liabilities of the Partnership or of the Partners arising out of or in connection with the Partnership. Such reserves shall be paid to a trust to be held for the purpose of disbursing such reserves in payment of any contingencies, and, 30 at the expiration of such period as the Partnership shall deem advisable, to distribute the balance thereafter remaining in the manner provided by this Section 25; (c) Third, to the payment of any net indemnity obligations owed Trigen by either Adwin and/or O'Brien under Section 13 of the Acquisition Agreement, subject to the requirement that any such indemnity payments be deducted from the Unreimbursed Development Costs otherwise payable to Adwin and/or O'Brien under subparagraph (d) below; (d) Fourth, to the payment of any Unreimbursed Development Costs as set out in Exhibit A (as adjusted pursuant to subparagraph (c)), pro rata to the amounts owed to individual Partners; (e) Fifth, to the payment of any indebtedness owed to the Partners by the Partnership, pro rata to the amounts owed to individual Partners; (f) Any balance then remaining shall be distributed to the Partners (i) to the extent of the positive balances of their Capital Accounts (after adjustments, if any, for payments under (c) and (d) and any net indemnity payments owed Adwin and O'Brien by Trigen pursuant to Section 14 of the Acquisition Agreement, which amounts, if any, shall be deducted from Trigen's Capital Account and credited to Adwin's and O'Brien's Capital Accounts, as the case may be), as determined after taking into account all adjustments to Capital Accounts for the Partnership taxable year during which the liquidation occurs, in the proportion of such positive balances and (ii) any excess over Capital Account balances being distributed according to the Partner Percentage of each Partner, by the end of such taxable year or, if later, within ninety (90) days after the date of such liquidation. For purposes of determining Capital Accounts on liquidation, all unrealized gains, losses and accrued income and deductions are treated as realized and recognized immediately before the date of distribution; and (g) Every reasonable effort shall be made to dispose of the assets of the Partnership so that all distributions may be made to the Partners in cash. To the extent such assets are not disposed of for cash, they will be offered to each Partner and the Partner offering the highest cash price for such assets shall have the right to purchase them, and the proceeds from such sale(s) distributed to the Partners as otherwise provided herein. 31 SECTION 25. DOCUMENTS AND RECORDS 25.01 All documents and records of the Partnership including, without limitation, all financial records, vouchers, canceled checks and bank statements shall be delivered to the Managing Partner upon termination of the Partnership. Unless otherwise approved by the Partnership, the Managing partner shall retain such documents and records for a period of not less than seven (7) years and shall make such documents and records available during normal business hours to the other Partners for inspection and copying at the other Partners' cost and expense; provided, however, that if there is an audit or threat of audit, such documents and records shall be retained until the audit is completed and any tax liability finally determined. SECTION 26. COMPLIANCE WITH LEGAL REQUIREMENTS 26.01 This Agreement, and the obligations and rights of the Partners under this Agreement, shall be construed and applied, so as to be in conformity with all environmental, regulatory and other laws and rules and regulations of governmental bodies applicable to the Partnership, or any Partner, or any Affiliate of a Partner. In the event that this Agreement, or the performance by any party of its obligations hereunder, shall conflict with, or be contrary to, any such law, rule or regulation, the parties agree to negotiate in good faith to amend or modify this Agreement so as to comply with such law, rule or regulation. In furtherance thereof, the Partners acknowledge their intent to have the Project be and remain a "qualifying cogeneration facility" under PURPA. Accordingly and except for the provisions of Section 18.02 as to the transfer of interests in the Partnership to maintain" qualifying cogeneration facility" status, if the operation of any provision in this Agreement results or, with the passage of time, will result in the loss of such "qualifying cogeneration facility" status, the Partners agree to negotiate in good faith to amend or modify this Agreement so as to retain and continue such "qualifying cogeneration facility" status. SECTION 27. RESOLUTION OF DISPUTES 27.01 In the event of a dispute under this Agreement involving (1) the legal interpretation of the terms of this Agreement, or (2) an amount of money owed a Partner under this Agreement: (a) Each Partner involved in the dispute and/or the Partnership shall appoint a senior manager from its 32 management, or in the case of the Partnership, the Chief Executive Officer of the Managing Partner, or of a Disinterested Partner if required under Section 7.02, who shall meet within ten (10) days of notice of such a dispute in an effort to resolve the matter. (b) If the matter has not been resolved within ten (10) days of the first meeting of the managers, or if the managers fail to meet within ten (10) days, the parties will attempt in good faith to resolve the dispute or claim by mediation administered by the American Arbitration Association ("AAA") under its Commercial Mediation Rules, before resorting to arbitration. Either party may initiate mediation by filing a submission to mediation with the AAA. The mediation shall be conducted in Philadelphia, Pennsylvania. (c) (i) If the matter has not been resolved pursuant to mediation within sixty (60) days of the initiation of mediation, or if either party fails to participate in the mediation, the controversy shall be resolved by binding arbitration under the commercial Arbitration Rules of the American Arbitration Association. Where no disclosed claim or counterclaim exceeds One Million Dollars ($1,000,000), exclusive of interest and arbitration costs, the arbitration shall be heard and determined by one neutral arbitrator. Where any disclosed claim or counterclaim exceeds One Million Dollars ($1,000,000), exclusive of interest and arbitration costs, the arbitration shall be heard and determined by three neutral arbitrators and shall be conducted under the Supplementary Procedures of Large, Complex Disputes then in effect. (ii) Either party may initiate arbitration under this Section 27.01 by filing a demand for arbitration with the AAA or the parties may jointly initiate arbitration by filing a submission to arbitration. The arbitration shall be conducted as a common law arbitration under Pennsylvania law, 42 Pa. Cons. Stat Ann. Section 7341, and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The arbitrator(s) shall have no authority to award punitive or treble damages. The arbitration process shall be concluded not later than three (3) months after the date that it is initiated and the award of the arbitrator(s) shall be accompanied by a reasoned opinion if requested by either party. The arbitration shall be conducted in Philadelphia, Pennsylvania. (d) (i) All deadlines specified in this Section 27 may be extended by mutual agreement of the parties. (ii) The procedures specified in this Section 27 shall be the sole and exclusive procedures for the 33 resolution of disputes covered by this Section 27; provided, however, that a party may seek a preliminary injunction or other preliminary judicial relief if, in its judgment, such action is necessary to avoid irreparable damage or to preserve the status quo. Despite such action, the parties will continue to participate in good faith in the procedures specified in this Section 27. (iii) All applicable statutes of limitation and defenses based upon the passage of time shall be tolled while the procedures specified in this Section 27 are pending. The parties will take such actions, if any, required to effectuate such tolling. (iv) All negotiations pursuant to this Section 27 shall be confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and state rules of evidence. (e) (i) Pending final resolution of any dispute, the parties shall continue to fulfill their respective obligations under this Agreement. (ii) During any dispute concerning the payment of money due under the Agreement, the amount in controversy shall not be paid unless and until the dispute is resolved in favor of the party claiming entitlement to the disputed payment. SECTION 28. NOTICES 28.01 All notices, requests and other communications to any Partner shall be in writing (including bank wire, telecopier or similar writing) and shall be given to such party at its address or telecopier number set forth at the heading of this Agreement or such other address or telecopier number as such Partner may specify for the purpose by notice to such Partner. Each such notice, request or other communication shall be effective (a) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and the appropriate answer back is received, (b) if given by mail, seventy-two (72) hours after such communication is deposited in the mail with first class postage prepaid, addressed as required, or (c) if given by any other means, when delivered at the address specified in this section. 34 SECTION 29. CONFIDENTIALITY 29.01 (a) Confidential Information consists of: (i) information identified at the time of disclosure as confidential, proprietary or secret by the provider or its partners, employees, agents, attorneys or consultants; (ii) information involving the economic plans, development, construction, permitting, financing, equipment procurement, fuel procurement, power sales, feasibility assessments of, or parties involved with, the Project; (iii) the terms or proposed terms of any existing or proposed agreement between or among the Partners; and (iv) analyses, computations, studies, documents and records, prepared by either party or its employees, agents or representatives which contain or otherwise reflect or are generated from information furnished by the other party, its partners, employees, agents, attorneys or consultants with respect to the Partnership or the Project. (b) Confidential Information shall not include: (i) information which is in the public domain at the time of disclosure; (ii) information which becomes publicly known through no wrongful act of the receiver, its Affiliates, attorneys, consultants or other third party; (iii) information which is or becomes known to the receiver from a third party without a similar confidentiality obligation to the provider, and without breach of this Agreement; (iv) information which is approved for release in writing by the provided; or (v) information which the Partners unanimously agree should be made public as part of the financing or development or operation of the Project. 29.02 Confidential Information may be disclosed as required to carry out the purpose of the Partnership; provided, however, that any Confidential Information disclosed, to or obtained by, any Partner with respect to the Project and all other Confidential Information obtained by any Partner shall be held in the strictest confidence by the receiver. The receiver 35 shall not disclose, make public, or disseminate in any way any Confidential Information except as expressly permitted by this Agreement. The receiver shall take the strictest precautions to protect against unauthorized and inadvertent disclosure of Confidential Information and shall not disclose Confidential Information to any party without the prior written consent of the provider. SECTION 30. GENERAL CONTRACT TERMS 30.01 Further Assurances. Each of the Partners will execute and deliver such further instruments, and do such further acts and things as may be reasonably requested to carry out the intent and purposes of this Agreement. 30.02 Survival. All payment obligations which shall have arisen under this Agreement shall survive termination of this Agreement. The indemnification obligations of the Partners under this Agreement shall survive termination of this Agreement. 30.03 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania. Subject to the provisions of Section 27, for the purposes of any suit, action or proceeding arising out of the Project, this Agreement, or any of the Project Documents, each Partner hereby consents and submits to the exclusive jurisdiction and venue of any of the courts of the Commonwealth of Pennsylvania and the United States District Court for the Eastern District of Pennsylvania and irrevocably agrees that service of process by certified mail, return receipt requested addressed as provided in Section 28 shall be deemed in every respect effective and valid personal service of process. Each Partner irrevocably waives any objection which it may now or hereafter have to the laying of venue in such courts and any claim that such suit, action or proceeding has been brought in an inconvenient forum. 30.04 Complete Agreement; Amendments. This Agreement represents the complete agreement and understanding of the parties with respect to the Project and there are no other agreements, oral or written, with respect to the subject matter hereof. With the exception of an amendment pursuant to Section 6.03, this Agreement may not be modified or amended except by written consent of all Partners. 30.05 Successors in Interest. All provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the successors and permitted assigns of any of the parties to this Agreement. 36 30.06 Severability. Each provision of this Agreement shall be considered severable, and if for any reason any provision which is not essential to the effectuation of the basic purposes of the Agreement is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Agreement that are valid. IN WITNESS WHEREOF, the Partners have executed this Amended and Restated Partnership Agreement as of the date written above. O'BRIEN (SCHUYLKILL) COGENERATION, TRIGEN-SCHUYLKILL INC. COGENERATION, INC. By: /s/ Sanders Newman By: /s/ S.B. Smith Date March 1, 1996 Date March 1, 1996 ADWIN (SCHUYLKILL) COGENERATION, INC. By: /s/ William Brady Date March 1, 1996 37 Exhibit A Partner Capital Accounts Unreimbursed Project Equity Total Development Costs Contribution Adwin $3,599,666 $10,000,000 $13,599,666 O'Brien $3,473,988 $10,000,000 $13,473,988 Trigen -0- $10,000,000 $10,000,000 1 Exhibit B List of Project Documents Amended and Restated Project Services and Development Agreement, dated as of September 17, 1993, by and between Grays Ferry Cogeneration Partnership and Philadelphia United Power Corporation. Amended and Restated Site Lease dated December 17, 1993, between Philadelphia Thermal Energy Corporation and Grays Ferry Cogeneration Partnership. Amended and Restated Steam Venture Agreement dated September 17, 1993, by and among Philadelphia Thermal Energy Corporation, Philadelphia United Power Corporation, Adwin Equipment Company, and O'Brien Environmental Energy, Inc. Agreement Relating to Amended and Restated Steam Venture Agreement and Amended and Restated Project Services and Development Agreement dated September 29, 1995, by and among Trigen-Philadelphia Energy Corporation, Philadelphia United Power Corporation, Adwin Equipment Company, O'Brien Environmental Energy, Inc., and Grays Ferry Cogeneration Partnership. Dock Facility Service Agreement dated as of November 11, 1991, by and among Philadelphia Thermal Development Corporation, Philadelphia Thermal Energy Corporation, and Grays Ferry Cogeneration Partnership. Fuel Management Agreement dated ___, by and between Adwin (Schuylkill) Cogeneration, Inc. and Grays Ferry Cogeneration Partnership. Construction Management Agreement dated February 20, 1996, by and between NRG Generating Company and Grays Ferry Cogeneration Partnership. Agreement for Engineering, Procurement, and Construction Services, as amended by Amendments Nos. 1 through 4, between Grays Ferry Cogeneration Partnership and Westinghouse Electric Corporation, dated as of August 31, 1995. Agreement for Purchase of Electric Output (Phases I and II) dated as of July 28, 1992, between Grays Ferry Cogeneration Partnership and PECO Energy Company. Contingent Capacity Purchase Addendum to the Agreement for Purchase of Electric Output (Phases I and II) dated as of B-1 September 17, 1993, between Grays Ferry Cogeneration Partnership and PECO Energy Company. Letter Agreement dated March 30, 1995, pursuant to which PECO Energy Company tendered its Activation Notice under Section 3.3 of the Agreement for Purchase of Electric Output (Phases 1 and 2). Amended and Restated Steam Purchase Agreement dated September 17, 1993, among Grays Ferry Cogeneration Partnership, Adwin Equipment Company, O'Brien Environmental Energy, Inc. and Trigen-Philadelphia Energy Corporation. Credit Agreement by and between Grays Ferry Cogeneration Partnership and Westinghouse Electric Corporation dated as of August 31, 1995. Credit Agreement dated March 1, 1996, by and between Grays Ferry Cogeneration Partnership and Chase Manhattan Bank, and its participating Lenders. Acquisition Agreement dated March 1, 1996, by and among Adwin (Schuylkill) Cogeneration, Inc., O'Brien (Schuylkill) Cogeneration, Inc., and Trigen-Schuylkill Cogeneration, Inc. Gas Sales Agreement dated March 1, 1996, by and among Aquila Energy Marketing Corporation, Utilicorp United, Inc., and Grays Ferry Cogeneration Partnership. Amended and Restated Utility Relocation Agreement for Engineering and Construction Services dated as of September 27, 1995, by and between Grays Ferry Cogeneration Partnership and Westinghouse Electric Corporation. Gas Service Agreement dated March 1, 1996; by and between Philadelphia Facilities Management Corporation and Grays Ferry Cogeneration Partnership. Relocation Agreement dated February 28, 1996, by and between Grays Ferry Cogeneration Partnership and PECO Energy Company. Equipment Subcontract Agreement dated as of August 31, 1995, by and between Grays Ferry Services Partnership and Ferry Services Partnership and Westinghouse Electric Corporation.* * To be terminated pursuant to Termination Agreement dated March 1, 1996, by and between Grays Ferry Services Partnership and Westinghouse Electric Corporation. B-2 Agreement for Assignment and Assumption of Option to Purchase Combusion Turbine dated as of August 31, 1995, by and among Westinghouse Electric Corporation, Adwin Equipment Company, O'Brien (Schuylkill) and Cogeneration, Inc. and O'Brien Environmental Energy, Inc.** Agreement for Use In Commonn of Water Conveyance System dated March 1, 1996, by and between PECO Energy Company, Trigen- Philadelphia Energy Corporation and Grays Ferry Cogeneration Partnership. Amended and Restated Option to Purchase Capacity Agreement between Grays Ferry Cogeneration Partnership and Adwin Equipment Company, dated March 1, 1996. Consent with respect to the Project Services Agreement between PUPCO and Grays Ferry Cogeneration Partnership dated March 1, 1996. Consent with respect to the Steam Venture Agreement among PUPCO, TPEC, AEC and O'Brien Environmental Energy dated March 1, 1996. Consent with respect to the Steam Purchase Agreement between the Partnership and TPEC dated March 1, 1996. Consent with respect to the Dock Facility Agreement among Philadelphia Thermal Development Corporation, TPEC, and the Partnership dated March 1, 1996. Assignment and Assumption Agreement among the Partnership, O'Brien, and Adwin dated March 1, 1996. Escrow Agreement among O'Brien, Adwin, Purchaser and Ballard, Spahr, Andrews & Ingersoll. ** To be terminated pursuant to Termination Agreement dated February , 1996, by and among Westinghouse Electric Corporation, Adwin Equipment Company, O'Brien (Schuylkill) Cogeneration, Inc. and O'Brien Environmental Energy, Inc. B-3 Schedule 3.03 Grays Ferry Congeneration Partnership Current Liabilities C.C. Pace 616.73 826.62 1,443.35 R. Raufer 2,163.54 4,271.87 2,829.74 2,500.00 11,765.15 Schnader, Harrison 58,370.00 1,318.50 57,890.50 4,658.09 122,237.09 Dames & Moore 1,988.75 1,462.94 1,525.81 894.86 1,335.05 7,207.41 Dilworth 177,782.10 14,282.00 2,536.18 65,000.00 259,600.28 Skadden, Arps 1,016,465.00 150,000.00 600,000.00 1,766,465.00 Chadbourne Park 850,000.00 Calpine 8,255.00 2,839.31 755.00 2,585.84 3,840.84 250,000.00 268,275.99 Stone & Webster 61,493.13 PECO - Raytheon 5,238.19 Westinghouse 88,000.00 Clark Ladner 84,731.98 Sedgewick & James 7,000.00 Glass & Associates 4,406.11 5,902.23 10,308.34 J. Stewart 1,500.00 Total A/P at 2/29/96 3,545,265.91 Schedule 3.03 Grays Ferry Cogeneration Partnership Contingent Liabilities WEC a) $550,000 due upon termination, per EPC AM #2 b) $100,000 due upon termination, per EPC AM #3 Chase a) $500,000 Cancellation Payment, per 10/23/95 Commitment Letter Trigen a) $55,176 Legal Reimbursement, per 9/93 negotiations b) $300,000 Past Due Development Fees, per 9/93 SNA Reserve Against Phase Ia) $300,000 Development work and other minor liabilities GRAYS FERRY COGENERATION PARTNERSHIP Estimated Project Budget $103,000 Base EPC Price 2,000 Phantom (Subdebt Contingent Rebate) 5,670 Options 670 Amendment #2 1,230 Amendment #3 1,414 Amendment #4; Underground 550 Technical Changes in Letter Agreement 1,434 Time Value for NRG milestones, less umbrella insr $116,017 Estimated as of 3/1/96 WESTINGHOUSE EPC BUDGET $116,100 $110,295 DRAWDOWN SCHEDULE Retainage = 5% 5,805 PECO INTERCONNECT 3,800 PECO 11/10 Letter OWNER'S COSTS FUEL OIL LINE CONSTR $ 1,200 NGR CONSTR MGMT COSTS 964 + MGP COSTS CLOSING LEGAL COSTS 2,200 CLOSING & POST CLOSING G & A 525 CIBC Consultants 850 TETCO Res Charge 378 $.07 X 15000 X 390 DAYS - Worst PROJECT CONTINGENCY 10,000 START UP COST 2,000 GFCP Liability Contingency 300 LENDER FEES: Up - Front fee (Arrangement & Advisory)1.75% $ 2,978 Cost Reimbursement 1,250 Commitment Fee 0.38% 249 Agency Fee 150 LOC Comm Fee 63 WEC Up - Front Fee (Sub Debt) $515 ACQUILA Up Front Fee 500 Calpine Financial Advisory 250 PUPCO FEES: Up - front Fee and Pipeline Reimbursement $860 Pre-Occupational Development Fees 900 Mobilization Fees 200 DEBT SERVICE RESERVE FUND $ 0 O&M SPARE PARTS INVENTORY $2,500 6.10% 148,731 1.10% 7.20% 8,772 $157,503 EX-10.24.1 42 EXHIBIT 10.24.1 ACQUISITION AGREEMENT DATED MARCH 1, 1996 BETWEEN ADWIN SCHUYLKILL, O'BRIEN SCHUYLKILL AND TRIGEN-SCHUYLKILL. Exhibit 10.24.1 ACQUISITION AGREEMENT THIS ACQUISITION AGREEMENT is entered into this 1st day of March, 1996, by and among ADWIN (SCHUYLKILL) COGENERATION, INC., a Pennsylvania corporation ("Adwin"), O'BRIEN (SCHUYLKILL) COGENERATION, INC., a Delaware corporation ("O'Brien"), and TRIGEN-SCHUYLKILL COGENERATION, INC., a Pennsylvania corporation (the "Purchaser"). (Adwin and O'Brien are sometimes hereinafter referred to collectively as the "Partners") BACKGROUND WHEREAS, on October 29, 1991, the Partners entered into a Partnership Agreement to form Grays Ferry Cogeneration Partnership, a Pennsylvania general partnership (hereinafter the "Partnership"), which Partnership Agreement was amended by the First Amendment to Partnership Agreement, dated September 17, 1993, the Second Amendment to Partnership Agreement dated September 27, 1994, and the Third Amendment to Partnership Agreement dated January 23, 1996; and WHEREAS, the Partnership was formed to develop a cogeneration facility to be located at 2600 Christian Street, Philadelphia, Pennsylvania, such facility to be known as the "Grays Ferry Cogeneration Project" (the "Project"); and WHEREAS, on September 17, 1993, the Partnership and Philadelphia United Power Corporation ("PUPCO") entered into an Amended and Restated Project Services and Development Agreement (the "Project Services Agreement"); and WHEREAS, on September 17, 1993, PUPCO, Trigen- Philadelphia Energy Corporation (then known as Philadelphia Thermal Energy Corporation) ("Trigen Philadelphia"), Adwin Equipment Company ("AEC"), and O'Brien Environmental Energy, Inc. entered into an Amended and Restated Steam Venture Agreement (the "Steam Venture Agreement"); and WHEREAS, Purchaser desires to purchase a one-third interest in the Partnership, pursuant to the terms of this Agreement; and WHEREAS, in consideration of the Purchaser's purchase of a one-third interest in the Partnership, PUPCO has agreed to terminate its option to purchase an interest directly from the Partnership; and WHEREAS, contemporaneously with the closing under this Acquisition Agreement, the Purchaser desires to be admitted to the Partnership as an equal partner, and Adwin and O'Brien desire that the Purchaser be so admitted, with each of Adwin, O'Brien and the Purchaser having a one-third interest in the Partnership following the consummation of the transactions contemplated by this Agreement; and WHEREAS, as a condition to the closing hereunder, the parties contemplate that the Partnership Agreement shall be amended by an Amended and Restated Partnership Agreement that will be executed by all of the parties hereto, which Amended and Restated Partnership Agreement is attached as Exhibit A to this Agreement (the "Restated Partnership Agreement"); and WHEREAS, in connection with the execution of this Agreement, the Partnership, the Partners, PUPCO and Trigen- Philadeiphia desire to clarify certain matters contained in the Project Services Agreement and the Steam Venture Agreement; and WHEREAS, the parties have agreed that the Purchaser's participation in the Partnership shall be on the terms set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: 1. The Transaction. 1.1 Purchase Price; Purchaser Partnership Interest. Closing Date (as hereinafter defined), the Purchaser shall pay an aggregate amount of $2,000,000 (the "Purchase Price") for a one third interest in the Partnership, one-half of which shall be paid to O'Brien and one-half to Adwin. Upon paying the Purchase Price hereunder, the Purchaser shall receive a one- third interest in the Partnership as provided in the Restated Partnership Agreement (the "Partnership Interest"). 2 1.2 Certain Understandings with Regard to the Project Services Agreement. PUPCO and the Partnership agree that the Project Services Agreement is clarified as follows: (a) Sections 19.1, 19.4, 19.5, 19.6 and 19.7 are no longer effective. (b) Section 19.2 shall be interpreted as if the Equity Purchase Option (as defined in the Project Services Agreement) has been exercised. (c) Section 19.3 remains in full force and effect. 1.3 Certain Payments to PUPCO Under the Steam Venture Agreement. The Partnership shall continue to pay PUPCO the quarterly development fees of $150,000 per month described in Section 7D(i) of the Steam Venture Agreement through the date of commercial operation of the Project. 1.4 Fees Due PUPCO at Financial Closing. The Partnership agrees that the following fees due PUPCO shall be paid on the Financial Closing Date (as defined in the Restated Partnership Agreement): (a) the $600,000 fee identified in Section 7F of the Steam Venture Agreement, (1) the reimbursement of $55,176 in legal costs and $300,000 in past due development fees due PUPCO under the Steam Venture Agreement and, (c) development costs associated with the alternative natural gas pipeline in the amount of $259,200. 1.5 Restated Partnership Agreement. In connection with the consummation of the transactions contemplated hereby and as a condition precedent thereto, the Restated Partnership Agreement shall be executed by all of the parties hereto at Closing. 1.6 Construction Manager. The Purchaser acknowledges that the Partnership will retain NRG Energy, Inc. ("NRG") as the Construction Manager of the Project, pursuant to the terms of a Construction Management Agreement dated February 20, 1996, entered into by and between the Partnership and NRG with respect thereto. 3 2. Closing. The closing of the transactions contemplated by this Agreement shall be held at the offices of Ballard Spahr Andrews & Ingersoll, counsel for Adwin, on or before the Financial Closing Date, but in no event later than March 9,1996 (the "Expiration Date"), or at such other place as the parties may agree (the "Closing"). (The date of the Closing shall be referred to herein as the "Closing Date.") Ballard Spahr Andrews & Ingersoll shall serve as Escrow Agent for the parties pursuant to a letter agreement among Ballard Spahr Andrews & Ingersoll, the Partners and the Purchaser dated the same date as this Agreement (the "Escrow Agreement"). All Deliverables received from the parties by the Escrow Agent, pursuant to Section 9 of this Agreement on the Closing Date, shall be held in escrow until delivered or disposed of by the Escrow Agent in accordance with the terms of the Escrow Agreement. 3. Joint Representations and Warranties of the Partners. For purposes of the following representations and warranties which are based on the Partners' knowledge, the knowledge of the Partners shall be deemed to include, but is not necessarily limited to, that of Reed Wills, who was formerly employed by O'Brien Environmental Energy, Inc. The Partners, jointly and severally, represent and warrant to the Purchaser as follows: 3.1 Organization and Standing; Qualification. The Partnership is a general partnership duly constituted, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. The Partnership has all requisite partnership power and authority under its Partnership Agreement to: (a) own or lease its properties and assets; (b) conduct its business as currently conducted; (c) develop, construct, own, operate and manage the Project, as contemplated by the Restated Partnership Agreement; and (d) enter into and perform this Agreement and all other agreements entered into in connection with the transactions contemplated hereby. Copies of the Partnership's Partnership Agreement, as amended or restated to date, have been delivered by the Partnership to the Purchaser and are complete and correct. The Partnership has not qualified to do business in any other jurisdiction and neither the ownership of its properties nor the conduct of its business requires such qualification. 3.2 Conflict with Partnership Documents. None of the execution, delivery and performance of, and compliance with, this Agreement nor the consummation of the transactions contemplated hereby will (with or without the giving 4 of notice or lapse of time, or both) contravene or violate the Partnership Agreement, or, to the best knowledge of the Partners, conflict with, result in a breach or violation of, be in conflict with, entitle any party to terminate, or constitute a default with respect to, any contract, bond, note, indenture or other agreement or any restriction on the Project, the Partnership, or its properties or assets, or any judgment, decree, order, statute, rule or regulation to which the Project, the Partnership, or its properties or assets, are subject or by which they may be bound, or result in the creation of any liens, mortgages, pledges, prior assignments, encumbrances, claims, charges, restrictions or security interests of any kind or character (collectively, "Encumbrances") upon the Project, the Partnership or any of its properties or assets. The Partnership is not a party to, nor subject to, nor bound by any judgment, injunction or decree of any court or governmental authority and no judgment, action or proceeding in law is pending or, to the knowledge of the Partners, threatened against or involving the Partnership, which may restrict or interfere with the performance of this Agreement by the Partnership. 3.3 Investments. The Partnership does not own any material amount of stock in and has made no material equity investment in or material acquisition of any other interest in, nor has it made any material advances or loans to, any corporation, association, partnership, joint venture or other entity. 3.4 Financial Statements. Attached hereto as Exhibit B are copies of the Partnership's unaudited financial statements as of and for each of the calendar years ended December 31, 1995, and 1994 (December 31, 1995 being hereinafter referred to as the "Balance Sheet Date"), with each of the financial statements consisting of a balance sheet as of December 31 of each such year, an Income Statement as of December 31 of each such year, and a General Ledger for the years then ended. Attached hereto as Exhibit C is a copy of an unaudited financial statement of the Partnership for the two-month period ended February 29, 1996, and a General Ledger for the period then ended. (Exhibits B and C are hereinafter referred to as the "Financial Statements.") To the best knowledge of the Partners, the Financial Statements are true, correct and complete in all material respects and, to the best knowledge of the Partners, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis for the period covered by such statements, and, to the best knowledge of the Partners, fairly and accurately present the financial condition and operating results of the Partnership as of the dates and for the period thereof. To the best knowledge of the Partners, all transactions between 5 the Balance Sheet Date and the Closing Date shall be or have been accounted for on the Partnership's books and records of original entry in accordance with generally accepted accounting principles, consistently applied. 3.5 Business Condition; Absence of Certain Changes. Since February 29, 1996, there has not been: (a) Any material adverse change in the financial condition, properties, assets, liabilities, business operations or, to the knowledge of the Partners, prospects of the Partnership taken as a whole (hereinafter referred to as the Partnership's "Business or Condition"); (b) Any damage, destruction or loss, whether covered by insurance or not, materially and adversely affecting the Partnership's Business or Condition; (c) Any declaration, setting aside, or payment of any distribution (whether in cash, securities, property or otherwise) by the Partnership; (d) Any discharge or satisfaction of any Encumbrance, or any payment or satisfaction of any liability, absolute or contingent, other than those performed in the ordinary course of business; (e) Any secured or unsecured borrowing or any guaranty of the borrowing of any money by the Partnership or the issuance or creation of (or any commitment with respect thereto) any bonds, debentures, notes or other obligations for the payment of money by the Partnership, other than those performed in the ordinary course of business; person or entity; (f)Any loans or advances made by the Partnership to any person or entity. (g) Any cancellation, modification or waiver of any evidence of indebtedness for borrowed money held by the Partnership; (h) Any change in any method of accounting or accounting practice of the Partnership; 6 (i) Any sale, assignment, transfer, mortgage, pledge or other Encumbrance by the Partnership of any assets (real, personal or mixed, tangible or intangible), or waiver by the Partnership of any rights of the Partnership; or (j) Any agreement or commitment by the Partnership to take any of the actions described in clauses (c) through (i) above, except those actions required in connection with the Financial Closing. 3.6 Permits. Except as set forth in Schedule 3.6, and specifically excluding building permits, the Partnership has, to the best of the Partners' knowledge, all governmental permits, licenses and authorizations issued by any federal, state or local governmental authority (hereinafter referred to, collectively, as the "Permits") that are required to commence construction of the Project. To the best of the Partners' knowledge, all such Permits were validly issued and are in full force and in effect, have not been suspended or revoked, nor are there proceedings pending or threatened to suspend or revoke any of such Permits. 3.7 Contracts. (a) Schedule 3.7 sets out a list of the material contracts to which the Partnership is currently a party. (b) The Partners have delivered to the Purchaser a true, correct and complete copy of (or, if oral, a true, correct and complete description of) each material agreement, contract, plan, instrument, arrangement and commitment listed on Schedule 3.7, including all amendments thereto, whether written or oral. To the best of Partners' knowledge, all of such agreements were duly authorized and approved by appropriate action of the Partnership and, to the best of the Partners' knowledge, each such agreement is valid and in full force and effect. To the best of the Partners' knowledge, neither the Partnership nor the Partners is in default under any such agreement in a manner which could have a material adverse effect on the Project, the Partnership or the Partnership's future activities, and, to the best of Partners' knowledge, there exists no condition or event which, with the lapse of time or notice, would constitute any such default by the Partnership. To the best of the Partners' knowledge, there is no outstanding notice of cancellation or termination in connection with any such agreement. 7 3.8 Environmental Reports. To the best of the Partners' knowledge, the Partners have delivered to the Purchaser all environmental reports commissioned by the Partners regarding the Project. 3.9 Liabilities. Except as and to the extent reflected or reserved against in the Financial Statements, and except those incurred subsequent to the Balance Sheet Date that are fully recorded and reflected on the books of original entry of the Partnership, to the best of the Partners' knowledge, the Partnership does not have any liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise. 3.10 Books and Records. The books and accounts and other records of the Partnership relating to the Project and the Partnership's properties and assets are complete and correct in all material respects and have been maintained in accordance with good business practices. All transactions of the Partnership relating to the Project and the properties and assets of the Partnership have been recorded in all material respects in such books and records. The Partnership's principal place of business is 300 Stevens Drive, Lester, Pennsylvania. 3.11 Compliance with Laws. To the best of the Partners' knowledge, the Partnership is in compliance with all existing requirements of all laws, statutes, rules, regulations and orders, federal, state and local, and all existing requirements of all governmental bodies or agencies having jurisdiction over the Project, the Partnership, its properties or assets, except where such failure to be in compliance will not have a material adverse effect on the Partnership's Business or Condition or on its ability to perform its obligations under this Agreement or any other agreement to which it is a party. To the best of the Partners' knowledge, neither the Partnership nor the Project are in violation 6f, nor have they received any notice of any violation or alleged violation of, or claim under any federal, state or local law, statute, rule, regulation or order, nor do the Partners have any knowledge of any pending or threatened governmental proceeding or investigation. 3.12 Employees. The Partnership does not now have nor has it ever had any employees or any commitment to hire or engage any employees. 3.13 Litigation. The Partnership is not a party to, nor, to the knowledge of the Partners, threatened with any suit, action, arbitration or other legal 8 or governmental proceeding relating to or affecting the Project, the Partnership or its properties or assets. There is no material judgment, decree, award or order outstanding or unsatisfied against the Partnership relating to or affecting the Project, the Partnership or its properties or assets, nor, to the knowledge of the Partners, is there any basis for any such suit, action, arbitration or other legal or governmental proceeding. To the best of the Partners' knowledge, no notice, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed, and no investigation, review or proceeding is pending or, to the best of the Partners' knowledge, threatened, of any kind, by any person, firm or entity, with respect td the Project, the Partnership or its properties or assets. 3.15 Exhibits and Schedules. To the best of the Partners' knowledge, all exhibits, schedules and other documents relating to the Partnership which are attached to this Agreement are accurate and shall constitute an integral part of this Agreement with the same force and effect as if such exhibits, schedules and documents were set forth in their entirety herein. 4. Individual Representations and Warranties of the Partners. For purposes of the following individual representations and warranties made by O'Brien which are based on the knowledge of O'Brien, such knowledge shall be deemed to include, but is not necessarily limited to, the knowledge of Reed Wills, who was formerly employed by O'Brien Environmental Energy, Inc. Each Partner individually (but not jointly and severally) represents and warrants to the Purchaser as follows: 4.1 Organization and Standing; Qualification. Such Partner is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation. Such Partner has all requisite corporate power and authority to own or lease its properties and assets, to conduct its business as currently conducted and to enter into and perform this Agreement and all other agreements entered into by it in connection with the transactions contemplated hereby. Copies of the Articles or Certificate of Incorporation, as amended to date, and By-Laws, as amended to date, of such Partner have been delivered to the Purchaser and are complete and correct. Such Partner, if such Partner is Adwin, is not qualified to do business as a foreign corporation in any jurisdiction and neither the ownership of its properties nor the conduct of its business requires such qualification. If such Partner is O'Brien, it is qualified to do business in Pennsylvania. 9 4.2 Authority; Binding Effect. Such Partner has the full corporate power and authority to make, execute, deliver and perform this Agreement, and the other instruments and documents required or contemplated hereunder to which it is a party, to perform its obligations hereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement, and all documents and instruments required to be executed, delivered and performed hereunder or thereunder by such Partner, have been duly and validly authorized and approved by all necessary action by it, and have been duly and validly executed and delivered by such Partner. This Agreement constitutes, and all other documents and instruments to be executed, delivered, and performed hereunder by such Partner will constitute, the valid and binding obligation of such Partner, enforceable against it in accordance with their respective terms. 4.3 Performance of this Agreement. Such Partner is not a party to, nor subject to, nor bound by any judgment, injunction or decree of any court or governmental authority and no judgment, action or proceeding in law is pending or, to the knowledge of such Partner, threatened against or involving such Partner, which may restrict or interfere with the performance of this Agreement by such Partner. 4.4 Compliance with Laws. To the best of such Partner's knowledge, it is in compliance with all existing requirements of all laws, statutes, rules, regulations and orders, federal, state and local, and all existing requirements of all governmental bodies or agencies having jurisdiction over it or its properties or assets, except where such failure to be in compliance will not have a material adverse affect on such Partner's business or financial condition or on its ability to perform its obligations under this Agreement or any other agreement to which it is a party. To the best knowledge of such Partner, it has received no notice of any violation of, or claim under any federal, state or local law, statute, rule, regulation or order, nor does it have any knowledge of any pending or threatened governmental proceeding or investigation. 4.5 No Consents. Except as set forth on Schedule 4.5, no consent of any governmental or judicial authority or agency, or of any bank, other financial institution or other third party, is required in connection with the execution and delivery by such Partner of this Agreement and the other documents and instruments required or contemplated herein or the consummation of the transactions contemplated hereunder by such Partner. 10 4.6 Ownership of Partnership Interests. The only ownership interests in the Partnership in existence on the date hereof are those owned by the Partners, each of which owns a one- half interest in the Partnership. Upon the consummation of the transactions contemplated hereby, each of Adwin, O'Brien and the Purchaser shall own a one-third interest in the Partnership. The partnership interests outstanding on the date hereof have been, and such Partner's portion of the Partnership Interest, when delivered in accordance with the terms of this Agreement and based upon the representations of Purchaser set forth in Sections 5.7 and 5.8 will be issued in compliance with applicable federal and state securities laws. No action has been taken by the Partnership, the Partners or, to the best of the Partners' knowledge, any third party that would cause the Partnership to be deemed to be a publicly-traded partnership within the meaning of Section 7704(b) of the Internal Revenue Code of 1986, as amended. Neither the Partnership nor such Partner has issued, nor is the Partnership or such Partner bound by, any outstanding subscriptions, options, warrants, contracts, calls, rights or commitments of any character relating to the issuance of or granting of a right in or to acquire any interest of or in the Partnership, whether equitable or otherwise, nor, to the knowledge of such Partner, is there any basis for any third party making a claim to or against its interest in the Partnership. 4.7 Partnership Contributions and Loan. Except as set forth on Schedule 4.7 hereto, such Partner has not made any capital contributions to the Partnership, loaned any money to the Partnership, borrowed any money from the Partnership, guaranteed any obligation of the Partnership or been the beneficiary of any guarantee made by the Partnership. 4.8 Partnership Interest. Following the consummation of the transactions contemplated hereby, such Partner shall have transferred to the Purchaser title to one-half (1/2) of the Partnership Interest conveyed hereunder, free and clear of any liens, claims or encumbrances, excepting only those created or granted by or arising through the Purchaser. 4.9 Litigation. Such Partner is not a party to, nor to its knowledge, threatened with any suit, action, arbitration or other legal or governmental proceeding relating to or affecting the Project, the Partnership or its properties or assets. There is no material judgment, decree, award or order outstanding or unsatisfied against such Partner relating to, or affecting, the Project, the Partnership, or its properties or 11 assets, nor to the knowledge of such Partner, is there any basis for any such suit, action, arbitration or other legal or governmental proceeding. To the best knowledge of such Partner, no notice, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed, and no investigation, review or proceeding is pending, or to the best of such Partner's knowledge, threatened, of any kind, by any person, firm or entity, with respect to the Project, the Partnership or its properties or assets 5. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Partners as follows: 5.1 Organization: Existence and Authority. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. The Purchaser has all requisite corporate power and authority to own or lease its properties and asserts, to conduct its business as currently conducted and to enter into and. perform this Agreement and all other agreements entered into in connection with the transactions contemplated hereby. Copies of the Purchaser's Articles of Incorporation, as amended to date, and By-Laws, as amended to date, have been delivered by the Purchaser to the Partners, and are complete and correct. 5.2 Authority: Binding Effect. The Purchaser has the full corporate power and authority to make, execute, deliver and perform this Agreement, and the other instruments and documents required or contemplated hereunder, to perform its obligations hereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement, and all documents and instruments required to be executed, delivered and performed hereunder or thereunder by the Purchaser, have been duly and validly authorized and approved by all necessary action by it, and have been duly and validly executed and delivered by the Purchaser. This Agreement constitutes, and all other documents and instruments to be executed, delivered and performed hereunder or thereunder by the Purchaser shall constitute, the valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms. 5.3 Conflict with Documents. Neither the execution, delivery and performance of, and compliance with, this Agreement nor the consummation of the transactions contemplated hereby will (with or without the giving of notice of lapse of 12 time, or both) contravene or violate the Articles of Incorporation or By-Laws of the Purchaser, or, to the best knowledge of Purchaser, conflict with, result in a breach or violation of, entitle any party to terminate, or constitute a default with respect to any contract, bond, notice, indenture or other agreement or any restriction on the Purchaser or its properties or assets, or any judgment, decree, order, statute, rule or regulation to which the Purchaser or its properties or assets are subject or by which they may be bound or result in the creation of any Encumbrance upon the Purchaser or any of its properties or assets. The Purchaser is not a party to, nor subject to, nor bound by any judgment, injunction or decree of any court or governmental authority and no judgment, action or proceeding in law is pending or, to the knowledge of the Purchaser, threatened against or involving the Purchaser, which may restrict or interfere with the performance of this Agreement by the Purchaser. 5.4 Litigation. The Purchaser is not a party to nor, to its knowledge, threatened with any suit, action, arbitration or other legal or governmental proceeding relating to or affecting it or its properties or assets. There is no material judgment, decree, award or order outstanding or unsatisfied against the Purchaser relating to or affecting it or its properties or assets, nor, to the knowledge of the Purchaser, is there any basis for any such suit, action, arbitration or other legal or governmental proceeding. To the best of Purchaser's knowledge, no notice, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed, and no investigation, review or proceeding is pending or, to the best of the Purchaser's knowledge, threatened, of any kind, by any person, firm or entity, with respect to the Purchaser, its properties or assets. 5.5 Compliance with Laws. To the best knowledge of Purchaser's knowledge, Purchaser is in compliance with all existing requirements of all laws, statutes, rules, regulations and orders, federal, state and local, and all existing requirements of all governmental bodies or agencies having jurisdiction over it or its properties or assets, except where such failure to be in compliance will not have a material adverse affect on the Purchaser's business or financial condition or on its ability to perform its obligations under this Agreement or any other agreement to. which it is a party. To the best knowledge of Purchaser, the Purchaser has received no notice of any violation or alleged violation of, or claim under any federal, state or local law, statute, rule, regulation or order, nor does the Purchaser have knowledge of any pending or threatened governmental proceeding or investigation. 13 5.6 No Consents. Except as set forth on Schedule 5.6, no consent of any governmental or judicial authority or agency, or of any bank, other financial institution or other third party, is required in connection with the execution and delivery by the Purchaser of this Agreement and the other documents and instruments required or contemplated herein or the consummation of the transactions contemplated hereunder by the Purchaser. 5.7 No Distribution. The Partnership Interest being acquired by the Purchaser hereunder is being acquired for its own account for investment and not with a view to distribution or resale of such Partnership Interest to others, and Purchaser recognizes that it may not transfer such Partnership Interest in violation of securities laws. 5.8 Requisite Knowledge; Undertaking of Risks. The Purchaser possesses the requisite knowledge and experience in business and financial matters to be capable of evaluating the merits and risks of investment in the Partnership, and is not relying on any representations and warranties of the Partners except those explicitly set out herein. The Purchaser recognizes that participation in the Partnership involves a substantial degree of risk, and that it may lose some or all of its investment in the Partnership. 6. Covenants of the Partners. The Partners covenant to and with the Purchaser as follows: 6.1 Conduct of Business. From the date hereof through the Financial Closing Date, the Partnership and each of the Partners will conduct their operations according to their normal course of business, including without limitation their reasonable efforts to preserve intact their respective business organizations, and to maintain satisfactory relationships with third parties having business relationships with them. The Partners shall confer on a regular and frequent basis with the Purchaser to report operational matters of a material nature and to report the general status of the ongoing operations of the business of the Partnership. The Partners shall promptly notify the Purchaser of: (a) any fact or event, the existence or occurrence of which would render any of the Partners' representations or warranties untrue or inaccurate; (b) any fact or event, the existence or occurrence of which would have a material adverse impact on the Project, the Partnership or the Partnership's future activities; (c) any unexpected emergency or other material change in the normal course of 14 business or in the operations of the business of the Partnership or the Partners; and (d) any investigation or review, pending or threatened, by any governmental entity involving any material business, asset or property of the Partnership or the Partners. The Partners shall keep the Purchaser fully informed of all developments with respect to any such facts and events and shall permit the Purchaser's representatives access to all materials prepared in connection therewith or relevant thereto. 6.2 Forbearance by the Partnership. Prior to the Financial Closing Date, the Partners shall be required to obtain the Purchaser's approval of major decisions affecting the Partnership. These "Major Decisions" shall include, but are not necessarily limited to, a decision to do any of the following: (a) Issue additional partnership interests or any options, warrants or other rights to acquire an interest in the Partnership; (b) Declare or pay any distribution; (c) Sell any of its properties or assets; (d) Extend credit, or issue, incur or prepay any indebtedness for borrowed money; (e) Mortgage, pledge or otherwise encumber any of its properties or assets; (f) Make any investment in third parties of a capital nature either by purchasing stock or securities, contributing to capital, transferring property or otherwise; (g) Enter into any employment agreement or any incentive compensation, profit sharing, partnership interest purchase, option, savings, consulting, deferred compensation, retirement, pension or other employee benefit plan or arrangement with or for the benefit of any Partner, officer, employee or other person; (h) Terminate or voluntarily allow to lapse any insurance policy naming the Partnership as a beneficiary or a loss payee unless, simultaneously with 15 such termination or lapse, replacement policies providing substantially the same coverage are in full force and effect; (i) Amend the Partnership Agreement; or (j) Enter into any agreement to do any of the things described in clauses (a) through (i) above 6.3 Investigations and Purchaser Due Diligence. Purchaser acknowledges that it has had the opportunity to conduct due diligence regarding the proposed acquisition of the Partnership Interest, and to investigate the business and properties of the Partnership, as well as its financial and legal condition. Purchaser has satisfied itself with respect to such investigations. Notwithstanding completion of Purchaser's due diligence, no investigation by or on behalf of the Purchaser heretofore or hereafter made shall affect the representations and warranties of the Partners contained herein, and such representations and warranties shall survive any such investigation as and to the extent provided in this Agreement. 6.4 Negotiations with Others. From the date hereof through the Financial Closing Date, the Partners shall not, directly or indirectly, without the prior written consent of the Purchaser, initiate or engage in discussions or negotiations with any corporation, partnership, person or other entity (other than the Purchaser) concerning any sale of an interest in the Partnership or any merger, sale of assets, or similar transaction involving the Partnership. 7. Conditions of the Purchaser to the Breaking of Escrow. The obligations of the Purchaser under this Agreement, and the authority of the Escrow Agent to break escrow, are subject to the satisfaction and fulfillment, or waiver by the Purchaser, at or before the Expiration Date, of each of the following conditions: 7.1 Bankruptcy Court Approval Opinion. The Purchaser shall have received from counsel to O'Brien reasonably satisfactory to the Purchaser an opinion to the effect that the approval of the bankruptcy court is not necessary or required for the execution, delivery and/or performance by O'Brien of this Agreement or the other Instruments and documents required or contemplated hereunder to perform O'Brien's obligations hereunder or to consummate the transactions contemplated hereby, or, if required, any necessary approval has been obtained. 16 7.2 Financial Closing. The Financial Closing shall have been consummated on terms satisfactory to Purchaser. 7.3 Deliverables. Escrow Agent shall have received, on behalf of Purchaser, the documents required to be delivered to Purchaser under Section 9.1 below. 7.4 Payments Due PUPCO. PUPCO shall have received at Financial Closing those payments due PUPCO under Section 1.4 hereof. 7.5 Letter or Credit or Corporate Guaranty. The Escrow Agent shall have received a letter of credit or a corporate guaranty securing the Project Equity Contribution under the Restated Partnership Agreement of each of the Partners in a form satisfactory to the Lenders under the Credit Agreement. 7.6 Certain Consents. The Lender shall have received Consents executed by the Partners and other necessary parties with respect to the Steam Purchase Agreement, the Steam Venture Agreement, the Project Services Agreement, and the Dock Facility Services Agreement in form satisfactory to Lender. 7.7 Opinion. Insofar as counsel to O'Brien delivers an opinion to the Lenders on the Financial Closing Date (as each such term is defined in the Restated Partnership Agreement) which addresses matters of law which are also addressed directly or by implication in the opinion delivered at the Closing by O'Brien's general counsel, Purchaser shall receive the permission of counsel delivering such opinion to the Lenders to rely on the portions of such opinion addressing such matters of law. 7.8 Lien Searches. To the extent lien searches are received prior to the Financial Closing, they shall not reveal anything inconsistent with the representations and warranties made by the Partners herein. 8. Conditions of the Partners to the Breaking of Escrow. The obligations of the Partners under this Agreement, and the authority of the Escrow Agent to break escrow, are subject to the satisfaction and fulfillment, or waiver by the Partners, at or before the Expiration Date, of each of the following conditions: 17 8.1 Financial Closing. The Financial Closing shall have been consummated on terms satisfactory to each of the Partners. 8.2 Deliverables. The Escrow Agent shall have received, on behalf of the Partners, documents required to be delivered to the Partners under Section 9.2 below. 8.3 Letter of Credit. The Escrow Agent shall have received a letter of credit from Purchaser in a form satisfactory to the Lenders under the Credit Agreement guaranteeing the Project Equity Contribution of Purchaser under the Restated Partnership Agreement. 8.4 Certain Consents. The Lender shall have received Consents executed by the Purchaser and other necessary parties with respect to the Steam Purchase Agreement, the Steam Venture Agreement, the Project Services Agreement, and the Dock Facility Services Agreement in form satisfactory to Lender. 8.5 Opinion. Insofar as counsel to O'Brien delivers an opinion to the Lenders on the Financial Closing Date (as each such term is defined in the Restated Partnership Agreement) which addresses matters of law which are also addressed directly or by implication in the opinion delivered at the Closing by O'Brien's general counsel, Adwin shall receive the permission of counsel delivering such opinion to the Lenders to rely on the portions of such opinion addressing such matters of law. 9. Closing; Deliverables at Closing. All Deliverables required of the Purchaser and the Partners set out below shall be delivered on or before the Closing to Escrow Agent and Escrow Agent shall hold the Deliverables in escrow until such time as the conditions to the breaking of escrow set out in Paragraphs 7 and 8 herein have been fulfilled. If the conditions to the breaking of escrow set out in Paragraphs 7 and 8 have not been satisfied by the Expiration Date, or if this Agreement is terminated by mutual consent of the Purchaser and the Partners under Section 10 hereof, Escrow Agent shall return all Deliverables to the parties, pursuant to the terms of the Escrow Agreement, and the rights and obligations of the parties shall be determined in accordance with Paragraph 11 herein. Upon satisfaction of all of the conditions to the breaking of escrow set out in Paragraphs 7 and 8 or upon such termination, Escrow Agent shall deliver or dispose of the Deliverables in accordance with the terms of the Escrow Agreement. 18 9.1 Deliverables from the Partners. At or prior to the Closing, the Partners shall execute and/or deliver to the Escrow Agent: (a) Restated Partnership Agreement. The Restated Partnership Agreement, in the form of Exhibit A hereto, duly executed by the Partners. (b) PUPCO Side Letter. A side letter agreement dated date the hereof, duly executed by the Partnership, the Partners, the Purchaser and PUPCO (the "PUPCO Side Letter"). (c) Acknowledgement. An acknowledgement letter dated the date hereof duly executed by Trigen- Philadelphia, PUPCO, AEC, O'Brien and the Partnership. (d) Updated Balance Sheet. An updated, unaudited balance sheet of the Partnership, effective as of February 29, 1996. (e) Opinion Letter. An opinion of counsel to each of the Partners, dated the Closing Date, in the form set forth in Exhibit D hereto. (f) Certificate Regarding Continuous Validity of Representations and Warranties. A certificate executed by the respective President or Chief Executive Officer of each of the Partners certifying that all representations and warranties of such Partner made in or pursuant to this Agreement are true and correct at and as of the Closing Date. (g) Certificate Regarding Fulfillment of Obligations and Conditions. A certificate from each of the Partners signed by its respective President or Chief Executive Officer certifying that such Partner has performed, observed, and complied with all the obligations and conditions required of it by this Agreement to be performed, observed or completed at or prior to the Closing Date. (h) Other Documents. A Certificate of Good Standing with respect to each of the Partners from the Secretary of State of its incorporation; (ii) certified copies of resolutions duly adopted by the Board of Directors of each of the Partners respectively authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated herein by such Partner; (iii) certified 19 copies of the Articles of Incorporation and by-laws, as amended, of each of the Partners; and (iv) the Escrow Agreement in a form satisfactory to the Escrow Agent, Purchaser, and the Partners. (i) Consents of Third Parties. The consents or approvals of any third parties whose consent is required for each of the Partners to consummate the transactions contemplated by this Agreement. (j) Governmental Approvals. All necessary consents, authorizations and approvals of all governmental agencies, commissions and similar bodies, the consent, authorization or approval of which is required under any applicable law, rule, order or regulation for the consummation by each of the Partners of the transactions contemplated by this Agreement. 9.2 Deliverables from the Purchaser. At or prior to the Closing, the Purchaser shall execute and/or deliver to the Escrow Agent: (a) Restated Partnership Agreement. The Restated Partnership Agreement in the form of Exhibit A hereto, duly executed by the Purchaser. (b) Purchase Price. The sum of $2,000,000, $1,000,000 of which shall be represented by a cashier's check, payable to O'Brien, drawn on a bank reasonably acceptable to O'Brien, and $1,000,000 of which shall be represented by a cashier's check payable to Adwin, drawn on a bank reasonably acceptable to Adwin, representing the amount of the Purchase Price to be paid by the Purchaser under Section 1.1. (c) PUPCO Side Letter. The PUPCO Side Letter, duly executed by the Partnership, the Partners, the Purchaser and PUPCO. (d) Opinion Letter. An opinion of counsel to the Purchaser, dated the Closing Date, in the form set forth in Exhibit I hereto. (e) Certificate Regarding Continuing Validity of Purchaser's Representations and Warranties. A Certificate executed by the President of 20 Purchaser certifying that all representations and warranties of the Purchaser made in or pursuant to this Agreement are true and correct at and as of the Closing Date. (f) Certificate Regarding Fulfillment of Obligations and Conditions. A Certificate signed by the President of Purchaser certifying that Purchaser has performed, observed and complied with all the obligations and conditions required by this Agreement to be performed, observed, or complied with prior to the Closing Date. (g) Other Documents. Purchaser shall have delivered to the Escrow Agent: (i) A certificate of Good Standing with respect to the Purchaser from the Secretary of the Commonwealth of Pennsylvania; (ii) Certified copies of resolutions duly adopted by the Board of Directors of the Purchaser, authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated herein; (iii) Certified copies of the Articles of Incorporation and by-laws, as amended, of the Purchaser; and (iv) The Escrow Agreement in a form satisfactory to the Escrow Agent, Purchaser and the Partners. (h) Consents of Third Parties. The consents or approvals of any third parties whose consent is required for the Purchaser to consummate the transactions contemplated by this Agreement. (i) Governmental Approvals. All necessary consents, authorizations and approvals of all governmental agencies, commissions and similar bodies, the consent, authorization or approval of which is required under any applicable law, rule, order or regulation for the consummation by the Purchaser of the transactions contemplated by this Agreement. 21 10. Termination. This Agreement and the transactions contemplated hereby may be terminated as follows: 10.1 Mutual Termination. By written mutual consent of the Purchaser and the Partners on or prior to the Expiration Date. 10.2 Expiration Date. By the Purchaser, on the one hand, or by the Partners, on the other hand, if the conditions to the breaking of escrow set out in Sections 7 and 8 hereby have not been satisfied by the Expiration Date. 11. Effect of Termination. If this Agreement and the transactions contemplated hereby are terminated on or before the Expiration Date, then, except as set forth in this Section 11, no party hereto shall be liable to any other party hereto under this Agreement or otherwise and this Agreement shall become void and be without any force of effect. Notwithstanding the foregoing, upon any such termination, the rights and obligations of the parties shall be governed by the other agreements in effect between and among them, including, without limitation, the Project Services Agreement, the Steam Venture Agreement, and the Escrow Agreement. 12. Survival. The right to make a claim for breach of the representations and warranties made as of the Closing Date shall survive the Closing Date for a period of three years from and after the Closing Date, with the exception of those representations and warranties set out in Sections 3.1, 3.2, 4.1, 4.2, 4.8, 5.1, and 5.2, as to which the right to make a claim shall survive for a period as is provided under applicable Pennsylvania law. Any claim by the Purchaser for indemnification under Section 13 for a breach of any representation or warranty made as of the Closing Date, or by the Partners under Section 14 for a breach of any representation or warranty made as of the Closing Date, must be made on or prior to the date on which the survival period for such representation or warranty expires, it being understood that the indemnity obligations of the Purchaser and the Partners, as the case may be, with respect to claims that are asserted on or prior to such expiration date shall survive such expiration date. 22 13. Indemnification of the Purchaser. 13.1 Indemnification of the Purchaser. The Partners shall, up to an aggregate maximum of $3,000,000 per Partner, indemnify, defend and hold harmless Purchaser (and its directors, officers, employees and affiliates) from and against any and all "Purchaser Losses" as hereafter defined. "Purchaser Losses" means any and all claims, liabilities, losses, damages, reasonable costs and expenses, including reasonable attorneys' fees and court costs incurred (i) by the Partnership where the result is a diminution of the Fair Value (as defined in the Restated Partnership Agreement) of the Purchaser's interest in the Partnership including, without limitation, a diminution in cash distributions, or (ii) by the Purchaser, that results in either case, from the breach of a representation or warranty of a Partner under this Agreement. The $3,000,000 limit per Partner shall apply even if the aggregate indemnity obligation of such Partner for joint representations and warranties made under Section 3 herein, plus its liability for individual representations and warranties made under Section 4, exceeds $3,000,000. Notwithstanding the foregoing, no indemnification obligation of any Partner for Purchaser Losses shall arise under this Section 13.1 until such time as the Purchaser Losses, in the aggregate, exceed $300,000. 13.2 Notice of Claim by the Purchaser. Within ten business days after the Purchaser receives notice of any claim, in respect of which the Partners may be liable under this Section 13, the Purchaser shall give written notice thereof to the Partners. The Purchaser may at its option give notice and claim indemnity under this Section 13 as soon as a claim has been threatened by a third party, regardless of whether a loss has been suffered, so long as the Purchaser shall in good faith determine that such claim is not frivolous and that the Purchaser may be liable or otherwise incur a loss as a result thereof and shall give notice of such determination to the Partners. The Purchaser shall permit the Partners, at the sole option and expense of the Partners, to assume the defense of any such claim by counsel satisfactory to the Purchaser and to settle or otherwise dispose of the same. In any such event, the Purchaser will cooperate with the Partners and may at all times participate in such defense, at its own expense; provided, however, that the Partners shall not, in defense of any such claim, except with the prior written consent of the Purchaser, consent to the entry of any judgment or enter into any settlement that does not include the giving by the claimant or plaintiff in question to the Purchaser a release of all liabilities in 23 respect of such claims, or that does not result solely in the payment of money damages by the Partners. 13.3 Purchaser's Remedy Upon Dissolution. As Purchaser's exclusive remedy for Purchaser Losses under Section 13.1, Purchaser shall have the right, upon liquidation of the assets of the Partnership pursuant to Section 24 of the Restated Partnership Agreement, to receive priority payment of any Net Indemnity Obligations, as defined below, which are owed to it by either Adwin and/or O'Brien pursuant to the provisions of Section 13.1. For purposes of this Section, "Net Indemnity Obligations" shall mean all Purchaser Losses under Section 13.1, the amount of which shall have been established by mutual agreement or a final, nonappealable judgment of a court of competent jurisdiction, and which shall represent the excess of the indemnity obligations of Adwin and/or O'Brien owed Purchaser under Section 13.1, over any indemnity obligations owed by Purchaser to Adwin and/or O'Brien pursuant to Section 14.1. Such "Net Indemnity Obligations" shall be deducted from the Unreimbursed Development Costs otherwise due Adwin and/or O'Brien under Section 24 of the Restated Partnership Agreement, and shall be paid prior to the reimbursement of such Unreimbursed Development Costs due Adwin and/or O'Brien, pursuant to the provisions of Section 24 of the Restated Partnership Agreement. The indemnity cap, calculation of Net Indemnity Obligation, and calculation of Net Indemnity Amount shall be applied and made on a per Partner basis, and neither Partner shall be liable for the other Partners' indemnity obligation. In the event of a dispute over any indemnity claims of Purchaser, the parties agree to mediate the dispute initially pursuant to the Commercial Mediation Rules of the American Arbitration Association, but if such mediation efforts have not produced a settlement within ninety (90) days, any party may refer the matter to a court of competent jurisdiction for resolution. 14. Indemnification of the Partners. 14.1 Indemnification of the Partners. The Purchaser shall, up to an aggregate maximum of $3,000,000, indemnify, defend and hold harmless the Partners (and their respective directors, officers, employees and affiliates) from and against any and all "Partner Losses" as hereafter defined. "Partner Losses" means any and all claims, liabilities, losses, damages, reasonable costs and expenses, including reasonable attorneys' fees and court costs and expenses incurred (i) by the Partnership where the result is a diminution of the Fair Value (as defined in the Restated 24 Partnership Agreement) of the Partners' interest in the Partnership including, without limitation, a diminution in cash distributions, or (ii) by the Partners, that results in either case, from the breach of a representation or warranty of the Purchaser under this Agreement. Notwithstanding the foregoing, no indemnification obligation of the Purchaser for Partner Losses shall arise under this Section 14.1 until such time as the Partner Losses, in the aggregate, exceed $300,000. 14.2 Notice of Claims by the Partners. Within ten business days after the Partners receive notice of any claim, in respect of which the Purchaser may be liable under this Section 14, the Partners shall give written notice thereof to the Purchaser. The Partners and the Partnership may at their option give notice and claim indemnity under this Section 14 as soon as a claim has been threatened by a third party, regardless of whether an actual loss has been suffered, so long as the Partners shall in good faith determine that such claim is not frivolous and that the Partners may be liable or otherwise incur a loss as a result thereof and shall give notice of such determination to the Purchaser. The Partners shall permit the Purchaser, at its sole option and expense, to assume the defense of any such claixi~ by counsel satisfactory to the Partners and to settle or otherwise dispose of the same. In any such event, the Partners will cooperate with the Purchaser and may at all times participate in such defense, at its own expense; provided, however, that the Purchaser shall not, in defense of any such claim, except with the prior written consent of the Partners, consent to the entry of any judgment or enter into any settlement that does not include the giving by the claimant or plaintiff in question to the Partners a release of all liabilities in respect of such claims, or that does not result solely in the payment of money damages by the Purchaser. 14.3 The Partners' Remedy Upon Dissolution. As the Partners' exclusive remedy for Partner Losses under Section 14.1, the Partners shall have the right, upon liquidation of the assets of the Partnership pursuant to Section 24 of the Restated Partnership Agreement, to collect from Purchaser's share of distributions under Section 24.01(e) of the Restated Partnership Agreement any "Net Indemnity Amounts Owed by Purchaser,,' as defined below, owed to the Partners by Purchaser pursuant to the provisions of Section 14.1. For the purposes of this Section, "Net Indemnity Amounts Owed by Purchaser" shall mean the excess of all Partner Losses under Section 14.1 owed to the Partners by Purchaser over any indemnity amounts owed by the Partners to Purchaser pursuant to the provisions of Section 13.1. Such "Net Indemnity Amounts Owed by Purchaser" shall be established through either 25 mutual consent of the parties, or by a final, nonappealable order of a court of competent jurisdiction, and once established, shall be deducted from the Capital Account of Purchaser, pursuant to the provisions of Section 24.01(e) of the Restated Partnership Agreement. In the event of a dispute over any indemnity claims of the Partners, the parties agree to mediate the dispute initially pursuant to the Commercial Mediation Rules of the American Arbitration Association, but if such mediation efforts have not produced a settlement within ninety (90) days, any party may refer the matter to a court of competent jurisdiction for resolution. 15. Agreement to Consummate; Further Assurances. Subject to the terms and conditions herein provided, including the termination rights under Section 10 hereof, each of the parties hereto agrees to use commercially reasonable efforts to do all things necessary, proper or advisable under this Agreement (including satisfaction of the conditions set forth in Sections 7 and 8 hereof), applicable laws and regulations to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement, including without limitation the acquisition of all consents, authorizations, orders and approvals of any governmental commission, board of other regulatory body required in connection therewith. The parties hereto shall execute and deliver all such other instruments and take all such other actions as any party may reasonably request from time-to-time, before or after the date hereof and without any further consideration, in order to effectuate the transactions provided for herein. The parties shall cooperation fully with each other and with their respective counsel in connection with any steps required to be taken as part of their respective obligations under this Agreement. 16. Miscellaneous. 16.1 Amendments. No change, amendment, waiver or modification of any provisions of this Agreement will be effective unless it is in writing and signed by the party against whom enforcement of the waiver, change or amendment is sought. 16.2 Waiver. No waiver of any right under this Agreement will be deemed effective unless contained in writing signed by the party charged with such waiver, and no waiver of any right arising from any breach or failure to perform will be deemed to be a waiver of any future such right or of any right arising under this Agreement. 26 16.3 Successors and Assigns. None of the parties hereto may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of all of the other parties hereto. Except as otherwise expressly provided herein, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, representatives, successors and permitted assigns. 16.4 Titles. The titles of the Sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing the terms and provisions hereof. 16.5 Notices. All notices, requests, demands and other communications required or permitted to be made hereunder shall be in writing and shall be deemed duly given if hand delivered against a signed receipt therefor, sent by registered or certified mail, return receipt requested, first class postage prepaid, or sent by nationally recognized overnight delivery service, in each case addressed to the party entitled to receive the same at the address specified below: (a) If to Adwin, then to: William J. Brady, Vice President Adwin (Schuylkill) Cogeneration, Inc. 300 Stevens Drive Suite 155 Lester, PA 19113 With a copy, sent in the manner prescribed above, to: John Halderman, Esquire PECO Energy Company 2301 Market Street Philadelphia, PA 19101 27 (b) If to O'Brien, then to: Peter Ford O'Brien (Schuylkill) Cogeneration, Inc. 225 South Eighth Street Philadelphia, PA 19106 With a copy, sent in the manner prescribed above, to: Robert J. Rauch, Esquire 17 Glen Andrew Road White Sulphur Springs, WV 24986 (c) If to the Purchaser, then to: Steve Smith, President Trigen-Schuylkill Cogeneration, Inc. 2600 Christian Street Schuylkill Station Philadelpliia, PA 19146 With a copy, sent in the manner prescribed above, to: Barnett Satinsky, Esquire Fox, Rothschild, O'Brien & Frankel 2000 Market Street 10th Floor Philadelphia, PA 19103 And, with an additional copy, sent in the manner prescribed above, to: Eugene E. Murphy, Esquire Trigen Energy Corporation 1 Water Street White Plains, NY 10601 28 Any party may alter the address to which communications are to be sent by giving notice of such change of address in conformity with the provisions of this Section providing for the giving of notice. Notice shall be deemed to be effective, if personally delivered, when delivered; if mailed, at midnight on the third business day after being sent by registered or certified mail; and if sent by nationally recognized overnight delivery service, on the next business day following delivery to such delivery service. 16.6 Provisions Separable. The provisions of this Agreement are' independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. 16.7 Exhibits; Schedules. All exhibits and schedules to this Agreement are hereby incorporated by reference into, and made a part of, this Agreement. 16.8 Execution; Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories hereto. 16.9 Expenses. Whether or not the transactions contemplated by this Agreement shall be consummated and except as otherwise provided herein, each party shall pay its own expenses incident to the negotiation, execution and performance of this Agreement and the transactions contemplated hereby. The Partnership shall each be solely responsible for, and shall timely pay in accordance with applicable law, all transfer taxes and other similar taxes, in either case, imposed by any taxing authority, federal, state or local, with respect to the Partnership Interest issued to the Purchaser under this Agreement (if any). 16.10 Entire Agreement. This Agreement and the other documents delivered pursuant hereto shall constitute the full and entire understanding and agreement among the parties with regard to. the subject matter hereof and thereof, and supersede all prior agreements, understandings, inducements or conditions, express or 29 implied, oral or written, except as herein contained. The express terms hereof shall control and supersede any course of performance and/or usage of trade inconsistent with any of the terms hereof. 16.11 Governing Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. 16.12 Conflict Among Documents. In the event of any conflict between or among the terms of this Agreement and the terms of the Project Services Agreement or the Steam Venture Agreement, such conflict shall be controlled and governed by the terms of this Agreement. In the event of any conflict between any other documents, the later dated document shall control and govern. All terms and provisions of the Project Services Agreement and the Steam Venture Agreement that are not expressly amended or modified by this Agreement or any other document entered into by the parties after the date thereof shall remain in full force and effect. 30 IN WITNESS WHEREOF, the authorized representatives of each party hereby execute this Agreement as of the date first set forth above. ADWIN (SCHUYLKILL) O'BRIEN (SCHUYLKILL) COGENERATION, INC. COGENERATION, INC. By: /s/ William Brady By: /s/ Sanders Newman Date: March 1, 1996 Date: March 1, 1996 TRIGEN-SCHUYLKILL COGENERATION, INC. By: /s/ S.B. Smith Date: March 1, 1996 Agreeing and intending to be legally bound only with respect 1.2 through 1.4 of this Agreement as of the date of this Agreement: PHILADELPHIA UNITED POWER GRAYS FERRY COGENERATION CORPORATION PARTNERSHIP By: /s/ S.B. Smith By: Adwin (Schuykill) Cogeneration, Inc. By: William Brady EX-10.24.2 43 EXHIBIT 10.24.2 SIDE AGREEMENT DATED MARCH 1, 1996 BETWEEN ADWIN SCHUYLKILL, O'BRIEN SCHUYLKILL AND TRIGEN-SCHUYLKILL. Exhibit 10.24.2 SIDE AGREEMENT This SIDE AGREEMENT (the "Agreement") is entered into as of March 1, 1996 by and among O'Brien (Schuylkill) Cogeneration, Inc., a Delaware corporation ("O'Brien"), Adwin (Schuylkill) Cogeneration, Inc., a Pennsylvania corporation ("Adwin"), and Trigen-Schuylkill Cogeneration, Inc., a Pennsylvania corporation ("Trigen"). O'Brien, Adwin and Trigen will sometimes be referred to collectively as the "Partners" and individually as a "Partner." BACKGROUND WHEREAS, the Partners have as of the date hereof entered into that certain Acquisition Agreement (the "Acquisition Agreement"), pursuant to which O'Brien and Adwin are together selling to Trigen a one-third general partnership interest in Grays Ferry Cogeneration Partnership (the "Partnership"); NOW, THEREFORE, the Partners, intending to be legally bound agree as follows: 1. Sections 7 and 8 of the Acquisition Agreement set forth certain conditions to the obligations of the Partners and the authority of the Escrow Agent (as defined in the Acquisition Agreement) to break escrow. The Partners agree that it shall be an additional condition to the obligations of the Partners and to the breaking of escrow that the partners shall have executed an agreement with regard to the consents referenced in Sections 7.6 and 8.4 of the Acquisition Agreement and similar consents, in form and substance satisfactory to the Partners, in which the partners agree to use their best efforts to preserve the benefit of such consents for the Partners unless partnership counsel advises that it is legally imprudent to execute such an agreement. IN WITNESS WHEREOF, the Partners have signed this Agreement letter as of the date set forth above. O'Brien (Schuylkill) Cogeneration, Inc. By: /s/ Sanders Newman Adwin (Schuylkill) Cogeneration, Inc. By: /s/ William Brady Trigen-Schuylkill Cogeneration, Inc. By: /s/ S.B. Smith EX-10.25.1 44 EXHIBIT 10.25.1 CONTINGENT CAPACITY PURCHASE ADDENDUM TO THE AGREEMENT FOR PURCHASE OF ELECTRIC OUTPUT (PHASE I) DATED SEPTEMBER 17, 1993 BETWEEN PECO AND GRAYS FERRY. Exhibit 10.25.1 CONTINGENT CAPACITY PURCHASE ADDENDUM TO THE AGREEMENT FOR PURCHASE OF ELECTRIC OUTPUT (PHASE 1) This ADDENDUM is made as of this 17th day of September, 1993, by and between Grays Ferry Cogeneration Partnership, a Partnership with offices located at 225 South Eighth Street, Philadelphia, Pennsylvania 19106 ("SELLER"), and Philadelphia Electric Company, a Pennsylvania corporation with offices located at 2301 Market Street, Philadelphia, Pennsylvania 19101 ("PECO"). BACKGROUND PECO is a regulated public utility engaged in, among other things, the generation, purchase, transmission, distribution and sale of electric power within the Commonwealth of Pennsylvania and the State of Maryland. SELLER intends to design, construct, own and operate an electric generation facility and certain associated equipment located at 2600 Christian Street, Philadelphia, Pennsylvania 19146 ("FACILITY") of up to 31 MW in size which will be constructed as Phase I of the entire project. SELLER intends to design, construct, own and operate another electric generation facility and certain associated equipment also located at 2600 Christian Street, Philadelphia, Pennsylvania 19146 ("FACILITY"), which will be constructed as Phase II of the entire project, of up to 119 MW in size. PECO and SELLER entered into an Agreement for Purchase of Electric Output dated July 28, 1992, as amended and revised, regarding PECO'S purchase of the net electric output from the FACILITY ("AGREEMENT"). PECO and SELLER desire further to provide for the purchase by PECO, under certain circumstances, of electric capacity from the FACILITY through this Contingent Capacity Purchase Addendum to the AGREEMENT ("ADDENDUM"). NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the PARTIES, intending to be legally bound hereby, agree as follows: ARTICLE I DEFINITIONS 1.1 Agreement Definitions. Terms, when used herein with capitalization, shall have the meaning specified in Article I of the AGREEMENT, unless added or modified pursuant to Section 1.2 hereof. 1.2 Definitions. The following terms, when used herein with capitalization, shall have the following meanings: ACTIVATION NOTICE means a written notice from PECO to SELLER that PECO elects to purchase some or all of the NOMINATED CAPACITY of the FACILITY as described in Article III hereof. ADDENDUM means this Contingent Capacity Purchase Addendum to the Agreement for Purchase of Electric Output (Phase I). AVAILABLE CAPACITY means the NOMINATED CAPACITY of the FACILITY minus any outages or miscellaneous adjustments reported from time to time to PECO's System Operations Group pursuant to Article VI hereof. CALENDAR YEAR means any twelve month period beginning on the first day of January and ending on the last day of the subsequent December. CAPACITY CREDIT means the price per MW-day paid by PECO to SELLER for DESIGNATED CAPACITY under this ADDENDUM. DESIGNATED CAPACITY means the portion of NOMINATED CAPACITY of the FACILITY which PECO elects to purchase from SELLER under Section 3.4 hereof. EFOR means the demand-based Equivalent Forced Outage Rate, Calculated using data developed during the three (3) preceding CALENDAR YEARS, as defined in the "GUS Reference Manual" issued by the PJM INTERCONNECTION and as revised from time to time. FACILITY EFOR means the EFOR of the FACILITY calculated with respect to the summer NOMINATED CAPACITY. GREEN BOOK means the PJM INTERCONNECTION's "Rules and Procedures for Determination of Generating Capacity" as revised from time to time. MW means megawatt. NOMINATED CAPACITY means the FACILITY's ability to provide power, expressed in MW, as determined under Article V hereof. PEAK SEASON means the weeks containing the 24th through 36th Wednesdays of a CALENDAR YEAR. Each such week shall begin on a Monday. 2 PECO EFOR means the weighted average EFOR for generating units, exclusive of the FACILITY, for which PECO receives credit in meeting its installed capacity obligations under the PJM INTERCONNECTION AGREEMENT. PERFORMANCE STANDARD means the PECO EFOR calculated using plant data developed during the three (3) preceding CALENDAR YEARS. PLANNING PERIOD means any twelve (12) month period beginning on the first day of June and ending on the last day of the subsequent May. ARTICLE II EFFECTIVE DATE AND TERM 2.1 Effective Date. This ADDENDUM shall be effective as of the date first above written, subject to SELLER and PECO obtaining all necessary regulatory approvals for this ADDENDUM without change or condition, to which end the PARTIES agree to support this ADDENDUM in its original form. 2.2 Term. This ADDENDUM shall have the same term as the AGREEMENT. ARTICLE III PURCHASES 3.1 Availability. Throughout the term of this ADDENDUM, SELLER, shall make available to PECO the NOMINATED CAPACITY of the FACILITY, as determined in Article V hereof, for purchase by PECO exclusively. 3.2 Conditions. PECO shall be obligated to tender an ACTIVATION NOTICE pursuant to Section 3.3 hereof when the following conditions are satisfied: (a) PECO delivers capacity or capacity and energy to cooperative utility under a contract with (i) an effective date after the effective date of this ADDENDUM and (ii) a term of ten (10) years or greater ("EXTERNAL SALE"), and (b) the amount of the EXTERNAL SALE exceeds the amount of capacity PECO can purchase under the contingent capacity purchase agreements listed in Appendix A of this ADDENDUM ("OTHER SOURCES"). 3 Additionally, PECO may at its sole discretion purchase NOMINATED CAPACITY for any reason at any time. 3.3 Activation. If the conditions of Section 3.2 hereof are satisfied or PECO otherwise desires to purchase some or all of the NOMINATED CAPACITY, then PECO shall tender to SELLER an ACTIVATION NOTICE specifying the commencement date, duration, amount of NOMINATED CAPACITY which PECO elects to purchase from SELLER as DESIGNATED CAPACITY and the initial value of the CREDIT described in Section 4.2 hereof. In no case shall the elected duration extend beyond the term of this ADDENDUM. In the event of an EXTERNAL SALE, the proposed DESIGNATED CAPACITY shall be the lesser of the NOMINATED CAPACITY of the FACILITY or the amount by which the EXTERNAL SALE exceeds OTHER SOURCES, and the duration shall, subject to the condition specified in the preceding sentence, be no less than that of the EXTERNAL SALE. (a) If tendered after the COMMERCIAL OPERATION DATE, the ACTIVATION NOTICE shall be deemed to be immediately accepted by SELLER for any proposed amount of DESIGNATED CAPACITY up to the NOMINATED CAPACITY then in operation, and shall initiate certain obligations of the SELLER contained in Sections 4.1, 4.2, 6.5 and 6.9 of this ADDENDUM. (b) If tendered before the COMMERCIAL OPERATION DATE, the ACTIVATION NOTICE then applies to NOMINATED CAPACITY which SELLER has not yet constructed or otherwise put in operation. Within ninety (90) days from receipt of such ACTIVATION NOTICE, SELLER shall notify PECO in writing whether it will or will not accept the ACTIVATION NOTICE, thereby committing to provide PECO all or part of the proposed DESIGNATED CAPACITY and by what date. Acceptance by SELLER of an ACTIVATION NOTICE shall initiate certain obligations of the SELLER contained in Sections 4.1, 4.2, 6.5 and 6.9 of this ADDENDUM. (c) If SELLER informs PECO it will provide NOMINATED CAPACITY beginning on a date after the date requested by PECO in the ACTIVATION NOTICE, then PECO may procure capacity from alternate sources for the period between the specified date and available date. If SELLER informs PECO it will not provide NOMINATED CAPACITY in the total amount specified in the ACTIVATION NOTICE, then PECO may procure capacity not provided by SELLER from alternate sources, and SELLER shall have no rights 4 to supply capacity for such purpose at any time in the future, except at the sole discretion of PECO, the provisions of Section 3.2 notwithstanding. 3.4 Purchases. When (a) the conditions specified in Section 3.2 hereof are satisfied, (b) an ACTIVATION NOTICE is tendered and accepted per Section 3.3 hereof, and (c) SELLER otherwise complies with its obligations under this ADDENDUM, then the amount of NOMINATED CAPACITY accepted by SELLER according to Section 3.3 hereof shall be DESIGNATED CAPACITY, which SELLER shall provide to PECO under the terms of this ADDENDUM. PECO may specify levels of DESIGNATED CAPACITY that vary over different time periods, but in no event shall DESIGNATED CAPACITY exceed NOMINATED CAPACITY. Pursuant to Section 3.3(b) hereof, SELLER and PECO may commit to a purchase of DESIGNATED CAPACITY in excess of NOMINATED CAPACITY at the time the commitment is made, but not exceeding the maximum NOMINATED CAPACITY according to Section 5.1 hereof. 3.5 Capacity Credit. PECO shall establish annually, at the beginning of a PLANNING PERIOD, a CAPACITY CREDIT for such PLANNING PERIOD in the following manner. Except as provided in Section 6.5 hereof, the CAPACITY CREDIT shall be $178 per NW day for DESIGNATED CAPACITY received by PECO from the FACILITY less the product of: (a) $178 per MW day; (b) 1.5; and (c) the greater of: (i) zero (0); or (ii) the most recently calculated FACILITY EFOR less the PERFORMANCE STANDARD. In no event shall the CAPACITY CREDIT be less than $0 or more than $178 per MW. 3.6 Initial EFOR. For any CALENDAR YEAR covering a period of time preceding the COMMERCIAL OPERATION DATE, the FACILITY EFOR shall be deemed to be ten percent (10%) or the PECO EFOR for that CALENDAR YEAR, whichever is less. After the COMMERCIAL OPERATION DATE, the FACILITY EFOR shall be calculated according to the "GUS Reference Manual," using such deemed FACILITY EFOR together with actual FACILITY data until three (3) CALENDAR YEARS following the COMMERCIAL OPERATION DATE. 3.7 PJM Acceptance. SELLER shall operate the FACILITY in accordance with PJM INTERCONNECTION requirements for operating capacity and installed capacity and installed capacity credit, including those rules 5 specified in the GREEN BOOK. PECO shall not be obligated to purchase DESIGNATED CAPACITY or pay any CAPACITY CREDIT under this ADDENDUM if PECO is prohibited from using such DESIGNATED CAPACITY in meeting its installed capacity obligations under the PJM INTERCONNECTION AGREEMENT. If such use of DESIGNATED CAPACITY is limited, PECO shall only be required to pay CAPACITY CREDIT for the portion of DESIGNATED CAPACITY which is deemed to satisfy PECO's installed capacity obligation under the PJM INTERCONNECTION AGREEMENT. 3.8 Planning. PECO may, at its sole discretion, include the NOMINATED CAPACITY of the FACILITY in PECO's future planning. Such inclusion shall not obligate PECO to purchase any of said NOMINATED CAPACITY. Any purchase of NOMINATED CAPACITY by PECO from FACILITY after the term of this ADDENDUM shall be at prices, terms and conditions agreed upon by PECO and SELLER. ARTICLE IV DAMAGES AND SECURITY 4.1 Liquidated Damages. The PARTIES agree that after acceptance of an ACTIVATION NOTICE, IF (A) SELLER defaults under the AGREEMENT, (B) the FACILITY fails to deliver energy and PECO does not reasonably expect the FACILITY to be able to resume or to begin deliveries of energy within three (3) years, or (C) the COMMERCIAL OPERATION DATE has not occurred within one (1) year after the date on which SELLER committed to supply DESIGNATED CAPACITY pursuant to Section 3.3(b) hereof, then SELLER shall pay liquidated damages to PECO in the amount of the product of: (a) the greater of: (i) then DESIGNATED CAPACITY, or (ii) the maximum capacity SELLER agreed to supply within the next three (3) years by accepting an ACTIVATION NOTICE. (iii)the maximum capacity SELLER agreed to supply within the next three (3) years by accepting an ACTIVATION NOTICE, (b) three (3), (c) three hundred sixty-five (365), and (d) the greater of: (i) zero (0), or (ii) the then-effective PJM INTERCONNECTION capacity credit in $/MWk-day calculated under Schedule 4.01 of the PJM INTERCONNECTION AGREEMENT less $178. Notwithstanding any of the above, if the FACILITY returns to service and is able to deliver DESIGNATED CAPACITY in the manner set forth in t his ADDENDUM within three (3) years, PECO shall repay a share of any liquidated damages received by PECO under 6 this Section 4.1 or Section 4.2. Such share shall be the amount of liquidated damages actually received by PECO in excess of the amount obtained by applying the method of this Section 4.1 to the actual duration and amount of DESIGNATED CAPACITY not available to PECO for purchase. 4.2 Security. To guarantee SELLER's performance of its obligations under Section 4.1 hereof, SELLER shall provide a CREDIT within thirty (30) days of accepting an ACTIVATION NOTICE, in the amount designated by PECO in the ACTIVATION NOTICE, from which PECO shall be entitled to draw any sum due as liquidated damages under Section 4.1 hereof. The CREDIT shall be payable by an ISSUER in the City of Philadelphia on terms and conditions acceptable to PECO. PECO shall not unreasonably withhold approval of any ISSUER or CREDIT. The CREDIT shall be established and structured to permit PECO to make multiple demands for payment from the ISSUER, and shall require the ISSUER to honor on sight, in immediately available funds and without demand for payment, any written demand by PECO for payment. The CREDIT shall be reviewed at the end of each PLANNING PERIOD. PECO may designate a change at that time in the amount of the CREDIT, which amount shall not exceed the then current amount of potential liquidated damages calculated under Section 4.1 hereof. Upon the failure of SELLER to provide such CREDIT within ninety (90) days after PECO designates a new CREDIT amount during the term of this ADDENDUM, PECO shall have the right to withhold payment to SELLER for DESIGNATED CAPACITY that SELLER delivers to PECO and to apply such amounts to an escrow account until the balance in the escrow account, when added to the amount of the CREDIT established hereunder, equals the required CREDIT amount. Any amount remaining in such escrow account at the termination or expiration of this ADDENDUM upon which PECO has no claim under the terms of this ADDENDUM, shall be paid to SELLER with interest at the prime rate specified in Section 14.4(a) of the AGREEMENT. 4.3 Additional Remedies. In addition to PECO's right to liquidated damages provided in Sections 4.1 and 4.2 hereof, upon the occurrence of any of the events set forth in Section 4.1 hereof PECO shall have the further right to obtain capacity from alternate sources and to cease payments to SELLER under this ADDENDUM. If SELLER cures the event causing action under this Section 4.3, SELLER shall be restored to its full privileges under this ADDENDUM. 7 ARTICLE V CAPACITY 5.1 Nomination of Capacity. SELLER plans to construct a FACILITY expected to produce NET ELECTRIC OUTPUT of up to 31 MW with a COMMERCIAL OPERATION DATE of :July 1, 1995. SELLER shall inform PECO of the status of and any changes to this plan. After the COMMERCIAL OPERATION DATE THE nominated capacity OF THE facility SHALL BE 31 MW winter. The NOMINATED CAPACITY may be revised at any time by agreement of the PARTIES. Prior to the COMMERCIAL OPERATION DATE, PECO shall not purchase any DESIGNATED CAPACITY from the FACILITY. 5.2 Capacity Tests. SELLER shall conduct capacity tests twice a year, once during the summer (June through August) and once during the winter (December through February) periods, in accordance with procedures specified by PECO. The procedures shall be based on and consistent with the GREEN BOOK. PECO shall have the right to require additional tests to meet specific PECO needs that are not required by the GREEN BOOK. PECO shall pay all costs incurred by the SELLER for such additional tests. PECO shall be the sole judge of the tests required. 5.3 Test Results. If any test performed pursuant to Section 5.2 hereof demonstrates that the FACILITY cannot achieve the appropriate summer or winter NOMINATED CAPACITY set forth in Section 5.1 hereof, a partial forced outage shall be recorded from the beginning of the relevant test period prescribed in Section 5.2 hereof and continuing until the FACILITY satisfactorily proves the appropriate NOMINATED CAPACITY> 5.4 Retest. If SELLER is dissatisfied with the result of a test described in Section 5.2, SELLER may request permission to conduct a retest within ten (10) days of being notified of the test result. PECO shall not unreasonably withhold permission for such a retest. The result of the retest shall be binding upon SELLER. If such retest is not performed within fourteen (14) days of PECO granting permission, then the result of the previous test shall be binding upon SELLER. The SELLER may request as many retests as the test period permits. 5.5 Failure to Test. If SELLER fails to perform an acceptable test required by Section 5.2 hereof, PECO may at its sole discretion reduce the DESIGNATED CAPACITY of the FACILITY which PECO purchases for one year after the latest date upon 8 which an acceptable test could have been performed, or until the FACILITY completes an acceptable test. 5.6 Information Requirements. SELLER shall, from time to time, provide PECO with any information regarding operation of the FACILITY required by PECO to fulfill its PJM INTERCONNECTION obligations or other operating needs, and shall endeavor to provide an historical information requested by PECO on intervals as short as a quarter hour. The information required includes but is not limited to: (a) During a Test Period (i) Gross Generation (ii) Auxiliary Loads (iii) Process Electrical Loads (iv) Net generation to PECO (b) During Normal Operation (i) Gross Generation (ii) Auxiliary Loads (iii) Net Generation to PECO (iv) Fuel Consumption ARTICLE VI OUTAGE COORDINATION AND REPORTING 6.1 Redundancy. Certain sections of this ADDENDUM and this Article VI in particular require actions or information from the SELLER which are redundant to provisions of the AGREEMENT. Restating requirements here does not imply a need to take redundant actions or to provide redundant information, but is done to collect in one location all the actions and information required to implement the requirements of this ADDENDUM. 6.2 Outage Coordination. SELLER shall coordinate all planned and maintenance outages with PECO. 6.3 Outage Scheduling. Unless otherwise directed by PECO, SELLER shall periodically submit for PECO's approval, such approval not to be unreasonably withheld, its planned maintenance schedule conforming to Section 6.5 hereof, for the subsequent thirty-six (36) months of operation. SELLER shall revise its planned and maintenance outage dates upon PECO's request for such changes. 6.4 Operating Information. Except for forced outages which require the immediate removal of equipment from service to avoid either damage to equipment or risk to personnel or the 9 public, SELLER shall coordinate daily operation of the FACILITY with PECO, as required by Section 6.2 hereof and good electrical system operating practice. This includes notifying PECO's System Operations Group of any change in operating capability or removal of equipment from service which results in full or partial reductions of FACILITY operating capability. 6.5 Peak Season Outages. After accepting an ACTIVATION NOTICE, SELLER shall schedule planned outages so that no portion of any such planned outage shall occur during the PEAK SEASON, without the prior written consent of PECO. PECO shall not be obligated to approve requests for planned outages during such periods. PECO shall have the right, upon one (1) year's notice, to revise the months or days during which SELLER shall not schedule a planned outage. If the FACILITY is wholly or partially unavailable due to a planned or maintenance outage during the PEAK SEASON, PECO shall not be required to pay SELLER for any DESIGNATED CAPACITY purchased by PECO from the FACILITY during such an outage. 6.6 Reporting. SELLER shall comply with all PECO and PJM INTERCONNECTION generating unit outage reporting requirements as revised form time to time. PECO will advise SELLER of such requirements and any changes. PECO shall have the right to audit FACILITY operating and maintenance logs upon twenty-hour (4) hours notice. 6.7 Forced Outage Reporting. SELLER shall notify PECO's System Operations Group of the occurrence, nature and expected duration of any forced outage as soon as practical but not later than one (1) hour after the forced outage begins. SELLER shall thereafter promptly inform PECO's System Operations Croup of any change in the expected duration of the forced outage unless relieved of this obligation by PECO's System Operations Group for the duration of that forced outage. 6.8 Monthly Outage Reporting. Within five (5) working days after the end of each month, SELLER shall report to PECO all full or partial planned, maintenance or forced outages and any miscellaneous adjustments that occurred during the preceding month. Data shall be presented according to the PJM INTERCONNECTION's "Generating Unit Outage Data Reporting Instructions," as revised from time to time. 6.9 Dispatch. SELLER shall, within thirty (30) minutes after notification by PECO, deliver energy to PECO at the 10 AVAILABLE CAPACITY level, and shall continue to deliver energy at that level until released by PECO. Each such period, commencing thirty (30) minutes after such a notification and ending upon such a release by PECO, shall be known as a DISPATCH PERIOD. The scheduling of DISPATCH PERIODS shall be at the sole discretion of PECO, except that (A) a DISPATCH PERIOD shall not exceed sixteen (16) hours in duration and (B) PECO shall not schedule more than twenty (20) DISPATCH PERIODS in a CALENDAR YEAR. After accepting an ACTIVATION NOTICE, if SELLER files to attain and maintain the level of its AVAILABLE CAPACITY during any DISPATCH PERIOD, the payment under Section 7;.1 for the month in which such failure occurs shall be reduced by: (a) the CAPACITY CREDIT, multiplied by (b) the number of days in that month, multiplied by (c) the greatest UNDISPATCHED CAPACITY during any DISPATCH PERIOD in that month. UNDISPATCHED CAPACITY means: (i) AVAILABLE CAPACITY in effect at the time PECO notifies SELLER of a DISPATCH PERIOD, minus (ii) the total amount of energy delivered during that DISPATCH PERIOD divided by the duration of the DISPATCH PERIOD. In addition to such reduction in payments and regardless of whether or not SELLER has accepted an ACTIVATION NOTICE, SELLER shall record a forced outage for the difference between the AVAILABLE CAPACITY and the level of delivery actually attained. Such forced outage shall remain in effect until the FACILITY delivers energy at the AVAILABLE CAPACITY. 6.10 Minimum Generation. During a LIGHT LOAD CONDITION, SELLER shall, upon notice from PECO, reduce FACILITY output during the LIGHT LOAN CONDITION to zero or such other level designated by PECO. If FACILITY output exceeds the level designated by PECO during the LIGHT LOAD CONDITION to zero or such other level designated by PECO. If FACILITY output exceeds the level designated by PECO during any day or part thereof during the LIGHT LOAN CONDITION, the payment due SELLER under Section 7.1 hereof shall be reduced on a daily basis by the product of: (a) $178 per MKW day; and (b) the greater of: (i) zero (0); or (ii) the average output of the FACILITY during the LIGHT LOAD CONDITION, less the FACILITY output level designated by PECO under this Section 6.10. 11 6.11 Waiver. PECO ;may waive any of the testing or reporting requirements under this Article VI by providing written ;notice to SELLER. ARTICLE VII BILLING AND PAYMENT 7.1 Billing and Payment. Within 30 days of the end of each BILLING MONTH, PECO shall prepare a statement showing for each day in the BILLING MONTH at least: (a) the capacity purchased, being the DESIGNATED CAPACITY as adjusted by Sections 3.7 and 6.5 hereof; (b) the CAPACITY CREDIT as determined in Section 3.4 hereof; and (c) the product of (a) and (b) above. With each such statement, PECO shall include payment in the sum of (c) above, less (i) the administrative charge specified in Section 7.2 hereof, (ii) any UNDISPATCHED CAPACITY charge specified in Section 6.9 hereof, and (iii) any minimum generation charge specified in Section 6.10 hereof. 7.2 Administrative Charge. PECO shall reduce its payments under this ADDENDUM by an administrative charge of $200 per month, which shall be updated and increased periodically by a percentage related to the annual percentage change in PECO's wages for regular and probationary employees. In the event the administrative charge is greater than the payment for DESIGNATED CAPACITY, SELLER shall be responsible for and pay to PECO the difference within thirty (30) days of the issuance of the billing statement. No administrative charge shall be assessed for months during which PECO purchases no DESIGNATED CAPACITY from SELLER. 7.3 Late Charges. Interest on unpaid amounts shall accrue according to Section 14.4 of the AGREEMENT. ARTICLE VIII RELATIONSHIP TO AGREEMENT 8.1 General. This ADDENDUM is ;an addition or supplement to the AGREEMENT and shall be governed by all the terms and conditions of the AGREEMENT, unless specifically provided otherwise in this ADDENDUM. 8.2 Regulatory Approval. The effectiveness of this ADDENDUM is contingent upon the PUC allowing PECO to recover the 12 costs incurred under the AGREEMENT pursuant to the COST RECOVERY PETITION as specified in Section 2.2 of the Agreement. ARTICLE IX MISCELLANEOUS 9.1 Affiliated Interest. The effectiveness of this ADDENDUM is contingent upon the PUC approving an affiliated interest filing with respect to this ADDENDUM. PECO will submit such filing with the PUC within sixty (60) days of the effective date of this ADDENDUM with a request it be promptly approved. 9.2 Non-Reliance. After the eighth anniversary of the effective date of this ADDENDUM, the SELLER may terminate this ADDENDUM without any further obligation to PECO by ninety (90) days written notice to PECO, if PECO has never tendered an ACTIVATION NOTICE to the SELLER> IN WITNESS WHEREOF, the PARTIES have caused t his ADDENDUM to be executed as of the day and year first above written. PHILADELPHIA ELECTRIC COMPANY: Attest: /s/ By: /s/ William H. Smith William H. Smith, III Secretary Vice President GRAYS FERRY COGENERATION PARTNERSHIP Attest: /s/ By: /s/ Robert A. Shinn Robert A. Shinn Vice President O'Brien (Schuylkill) Cogeneration, Inc. 13 Appendix A Contingent Capacity Purchase Addendum To The Agreement For Purchase Of Electric Output with Grays Ferry Cogeneration Partnership No Contracts Signed Prior to This Addendum 14 EX-10.25.2 45 EXHIBIT 10.25.2 CONTINGENT CAPACITY PURCHASE ADDENDUM TO THE AGREEMENT FOR PURCHASE OF ELECTRIC OUTPUT (PHASE II) DATED SEPTEMBER 17, 1993 BETWEEN PECO AND GRAYS FERRY. Exhibit 10.25.2 CONTINGENT CAPACITY PURCHASE ADDENDUN TO THE AGREEMENT FOR PURCHASE OF ELECTRIC OUTPUT (PHASE II) This ADDENDUM is made as of this l7th day of September, 1993, by and between Grays Ferry Cogeneration Partnership, a Partnership with offices located at 225 South Eighth Street, Philadelphia, Pennsylvania 19106 ("SELLER"), and Philadelphia Electric Company, a Pennsylvania corporation with offices located at 2301 Market Street, Philadelphia, Pennsylvania 19101 ("PECO"). BACKGROUND PECO is a regulated public utility engaged in, among other things, the generation, purchase, transmission, distribution and sale of electric power within the Commonwealth of Pennsylvania and the State of Maryland. SELLER intends to design, construct, own and operate an electric generation facility and certain a5sociated equipment located at 2600 Christian Street, Philadelphia, Pennsylvania 19146 ("FACILITY") of up to 119 MW in size which will be constructed as Phase II of the entire project. SELLER intends to design, construct, own and operate another electric generation facility and certain associated equipment also located at 2600 Christian Street, Philadelphia, Pennsylvania 19146 ("FACILITY"), which will be constructed as Phase I of the entire project, of up to 31 MW in size. PECO and SELLER entered into an Agreement for Purchase of Electric Output dated July 28, 1992, as amended and revised, regarding PECO's purchase of the net electric output from the FACILITY ("AGREEMENT"). PECO and SELLER desire further to provide for the purchase by PECO, under certain circumstances, of electric capacity from the FACILITY through this Contingent Capacity Purchase Addendum to the AGREEMENT ("ADDENDUM"). NOW THEREFORE, in consideration of the mutual covenants set forth herein, the PARTIES, intending to be legally bound hereby, agree as follows: ARTICLE I DEFINITIONS 1.1 Agreement Definitions. Terms, when used herein with capitalization, shall have the meaning specified in Article I of the AGREEMENT, unless added or modified pursuant to Section 1.2 hereof. 1.2 Definitions. The following terms, when used herein with capitalization, shall have the following meanings: ACTIVATION NOTICE means a~ written notice from PECO to SELLER that PECO elects to purchase some or all of the NOMINATED CAPACITY of the FACILITY as described in Article III hereof. ADDENDUM means this Contingent Capacity Purchase Addendum to the Agreement for Purchase of Electric Output (Phase II). AVAILABLE CAPACITY means the NOMINATED CAPACITY of the FACILITY minus any outages or miscellaneous adjustments reported from time to time to PECO'S System Operations Group pursuant to Article VI hereof. CALENDAR YEAR means any twelve month period beginning on the first day of January and ending on the last day of the subsequent December. CAPACITY CREDIT means the price per MW-day paid by PECO to SELLER for DESIGNATED CAPACITY under this ADDENDUM. DESIGNATED CAPACITY means the portion of NOMINATED CAPACITY of the FACILITY which PECO elects to purchase from SELLER under Section 3,4 hereof. EFOR means the demand-based Equivalent Forced Outage Rate, calculated using data developed during the three (3) preceding CALENDAR YEARS, as. defined in the "GUS Reference Manual" issued by the PJM INTERCONNECTION and as revised from time to time. FACILITY EFOR means the EFOR of the FACILITY calculated with respect to the summer NOMINATED CAPACITY. GREEN BOOK means the PJM Interconnection's "Rules and Procedures for Determination of Generating Capacity" as revised from time. to time. MW means megawatt. NOMINATED CAPACITY means the Facility's ability to provide power, expressed in MW, as determined under Article V hereof. PEAK SEASON means the weeks containing the 24th through 36th Wednesdays of a CALENDAR YEAR. Each such week shall begin on a Monday. 2 PECO EFOR means the weighted average EFOR for generating units, exclusive of the FACILITY, for which PECO receives credit in meeting its installed capacity obligations under the PJM INTERCONNECTION AGREEMENT. PERFORMANCE STANDARD means the PECO EFOR calculated using plant data developed during the three (3) preceding CALENDAR YEARS. PLANNING PERIOD means any twelve (12) month period beginning on the first day of June and ending on the last day of the subsequent May. ARTICLE II EFFECTIVE DATE AND TERM 2.1 Effective Date. This ADDENDUM shall be effective as of the date first above written, subject to SELLER and PECO obtaining all necessary regulatory approvals for this ADDENDUM without change or condition, to which end the PARTIES agree to support this ADDENDUM in its original form. 2.2 Term. This ADDENDUM shall have the same term as the AGREEMENT. ARTICLE III PURCHASES 3.1 Availability. Throughout the term of this ADDENDUM., SELLER shall make available to PECO the NOMINATED CAPACITY of the FACILITY, as determined in Article V hereof, for purchase by PECO exclusively. 3.2 Conditions. PECO shall be obligated to tender an ACTIVATION NOTICE pursuant to Section 3.3 hereof when the following conditions are satisfied: (a) PECO delivers capacity or capacity and energy to an unaffiliated investor-owned, municipal, or cooperative utility under a contract with (i) an effective date after the effective date of this ADDENDUM and (ii) a term of ten (10) years or greater ("EXTERNAL SALE"), and (b) the amount of the EXTERNAL SALE exceeds the amount of capacity PECO can purchase under the contingent capacity purchase agreements listed in Appendix A of this ADDENDUM ("OTHER SOURCES"). 3 Additionally, PECO may at its sole discretion purchase NOMINATED CAPACITY for any reason at any time. 3,3 Activation. If the conditions of Section 3.2 hereof are satisfied or PECO otherwise desires to purchase some or all of the NOMINATED CAPACITY, then PECO shall tender to SELLER an ACTIVATION NOTICE specifying the commencement date, duration, amount of NOMINATED CAPACITY which PECO elects to purchase from SELLER as DESIGNATED CAPACITY and the initial value of the CREDIT described in Section 4.2 hereof. In no case shall the elected duration extend beyond the term of this ADDENDUM. In the event of an EXTERNAL SALE, the proposed DESIGNATED CAPACITY shall be the lesser of the NOMINATED CAPACITY of the FACILITY or the amount by which the EXTERNAL SALE exceeds OTHER SOURCES, and the duration shall, subject to the condition specified in the preceding sentence, be no less than that of the EXTERNAL SALE. (a) If tendered after the COMMERCIAL OPERATION DATE, the ACTIVATION NOTICE shall be deemed to be immediately accepted by SELLER for any proposed amount of DESIGNATED CAPACITY up to the NOMINATED CAPACITY then in operation, and shall initiate certain obligations of the SELLER contained in Sections 4.1, 4.2, 6.5 and 6.9 of this ADDENDUM. (b) If tendered before the COMMERCIAL OPERATION DATE, the ACTIVATION NOTICE then applies to NOMINATED CAPACITY which SELLER has not yet constructed or otherwise put in operation. Within ninety (90) days from receipt of such ACTIVATION NOTICE, SELLER shall notify PECO in writing whether it will or will not accept the ACTIVATION NOTICE, thereby committing to provide PECO all or part of the proposed DESIGNATED CAPACITY and by what date. Acceptance by SELLER of an ACTIVATION NOTICE shall initiate certain obligations of the SELLER contained in Sections 4.1, 4.2, 6.5 and 6.9 of this ADDENDUM. (c) If SELLER informs PECO it will provide NOMINATED CAPACITY beginning on a date after the date requested by PECO in the ACTIVATION NOTICE, then PECO may procure capacity from alternate sources for the period between the specified date and available date. If SELLER informs PECO it will not provide NOMINATED CAPACITY in the total amount specified in the ACTIVATION NOTICE, then PECO may procure capacity not provided by SELLER from alternate sources, and SELLER shall have no rights 4 to supply capacity for such purpose at any time in the future1 except at the sole discretion of PECO, the provisions of Section 3.2 notwithstanding. 3.4 Purchases. When (a) the conditions specified in Section 3.2 hereof are satisfied,.(b) an ACTIVATION NOTICE is tendered and accepted per Section 3.3 hereof, and (c) SELLER otherwise complies with its obligations under this ADDENDUM, then the amount of NOMINATED CAPACITY accepted by SELLER according to Section 3.3 hereof shall be DESIGNATED CAPACITY, which SELLER shall provide to PECO under the terms of this ADDENDUM. PECO may specify levels of DESIGNATED CAPACITY that vary over different time periods, but in no event shall DESIGNATED CAPACITY exceed NOMINATED CAPACITY. Pursuant to Section 3.3(b) hereof, SELLER and PECO may commit to a purchase of DESIGNATED CAPACITY in excess of NOMINATED CAPACITY at the time the commitment is made, but not exceeding the maximum NOMINATED CAPACITY according to Section 5.1 hereof. 3.5 Capacity Credit. PECO shall establish annually, at the beginning of a PLANNING PERIOD, a CAPACITY CREDIT for such PLANNING PERIOD in the following manner. Except as provided in Section 6.5 hereof, the CAPACITY CREDIT shall be $179 per MW day for DESIGNATED CAPACITY received by PECO from the FACILITY less the product of: (a) $178 per MW day; (b) 1.5; and (c) the greater of: (i) zero (0); or (ii) the most recently calculated FACILITY EFOR less the PERFOLMANCE STANDARD. In no event shall the CAPACITY CREDIT be less than $0 or more than $178 per MW. 3.6 Initial EFOR For any CALENDAR YEAR covering a period of time preceding the COMMERCIAL OPERATION DATE, the FACILITY EFOR shall be deemed to be ten percent (l0%) or the PECO EFOR for that CALENDAR YEAR, whichever is less. After the COMMERCIAL OPERATION DATE, the FACILITY EFOR shall be calculated according to the "GUS Reference Manual," using such deemed FACILITY EFOR together with actual FACILITY data until three (3) CALENDAR YEARS following the COMMERCIAL OPERATION DATE. 3.7 PJM Acceptance. SELLER shall operate the FACILITY in accordance with PJ,M INTERCONNECTION requirements for operating capacity and installed capacity credit, including those rules 5 specified in the GREEN BOOK. PECO shall not b; obligated to purchase DESIGNATED CAPACITY or pay any CAPACITY CREDIT under this ADDENDUM if PECO is prohibited from using such DESIGNATED CAPACITY in meeting its installed capacity obligations under the PJM INTERCONNECTION AGREEMENT. If such use of DESIGNATED CAPACITY is limited1 PECO shall only be required to pay CAPACITY CREDIT for the portion of DESIGNATED CAPACITY which is deemed to satisfy PECO's installed capacity obligation under the PJM INTERCONNECTION AGREEMENT. 3.8 Planning. PECO may, at its sole discretion, include the NOMINATED CAPACITY of the FACILITY in PECO's future planning. Such inclusion shall not obligate PECO to purchase any of said NOMINATED CAPACITY. Any purchase of NOMINATED CAPACITY by PECO from FACILITY after the term of this ADDENDUM shall be at prices, terms and conditions agreed upon by PECO and SELLER. ARTICLE IV DAMAGES AND SECURITY 4.1 Liquidated Damages The PARTIES agree that after acceptance of an ACTIVATION NOTICE, if (A) SELLER defaults under the AGREEMENT, (B) the FACILITY fails to deliver energy and PECO does not reasonably expect the FACILITY to be able to resume or to begin deliveries of energy within three (3) years, or (C) the COMMERCIAL OPERATION DATE has not occurred within one (1) year after the date on which SELLER committed to supply DESIGNATED CAPACITY pursuant to Section 3.3(b) hereof, then SELLER shall pay liquidated damages to PECO in the amount of the product of: (a) the greater of: (i) then DESIGNATED CAPACITY, or (ii) the maximum capacity SELLER agreed to supply within the next three (3) years by accepting an ACTIVATION NOTICE, (b) three (3), (c) three hundred sixty-five (365), and (d) the greater of: (i) zero (0), or (ii) the then-effective PJM INTERCONNECTION capacity credit in S/MW-day calculated under Schedule 4.01 of the PJK INTERCONNECTION AGREEMENT less $178. Notwithstanding any of the above, if the FACILITY returns to service and is able to deliver DESIGNATED CAPACITY in the manner set forth in this ADDENDUM within three (3) years, PECO shall repay a share of any liquidated damages received by PECO under 6 this Section 4.1 or Section 4.2. Such share shall be the amount of liquidated damages actually received by PECO in excess of the amount obtained by applying the method of this Section 4.1 to the actual duration and amount of DESIGNATED CAPACITY not available to PECO for purchase. 4.2 Security. To guarantee SELLER's performance of its obligations under Section 4.1 hereof. SELLER shall provide a CREDIT within thirty (30) days of accepting an ACTIVATION NOTICE, in the amount designated by PECO in the ACTIVATION NOTICE. From which PECO shall be entitled to draw any sum due as liquidated damages under Section 4.1 hereof. The CREDIT shall be payable by an ISSUER in the City of Philadelphia on terms and conditions acceptable to PECO. PECO shall not unreasonably withhold approval of any ISSUER or CREDIT. The CREDIT shall be established and structured to permit PECO to make multiple demands for payment from the ISSUER, and shall require the ISSUER to honor on sight. in immediately available funds and without requiring PECO to submit documents to accompany PECO's draft or demand for payment, any written demand by PECO for payment. The CREDIT shall be reviewed at the end of each PLANNING PERIOD. PECO may designate a change at that time in the amount of the CREDIT1 which amount shall not exceed the then current amount of potential liquidated damages calculated under Section 4.1 hereof. Upon the failure of SELLER to provide such a CREDIT within ninety (90) days after PECO designates a new CREDIT amount during the term of this ADDENDUM, PECO shall have the right to withhold payment to SELLER for DESIGNATED CAPACITY that SELLER delivers to PECO and to apply such amounts to an escrow account until the balance in the escrow account, when added to the amount. of the CREDIT established hereunder, equals the required CREDIT amount. Any amount remaining in such escrow account at the termination or expiration of this ADDENDUM upon which PECO has no claim under the terms of this ADDENDUM, shall be paid to SELLER with interest at the prime rate specified in Section 14.4(a) of the AGREEMENT. 4.3 Additional Remedies In addition to PECO's right to liquidated damages provided in Sections 4.1 and 4.2 hereof, upon the occurrence of any of the events set forth in Section 4.1 hereof PECO shall have the further right to obtain capacity from alternate sources and to cease payments to SELLER under this ADDENDUM. If SELLER cures the event causing action under this Section 4.3, SELLER shall be restored to its full privileges under this ADDENDUM. 7 ARTICLE V CAPACITY 5.1 Nomination of Capacity. SELLER plans to construct a FACILITY expected to produce NET ELECTRIC OUTPUT of up to 119 MW with a COMMERCIAL OPERATION DATE of July 1, 1996. SELLER shall inform PECO of the status of and any changes to this plan. After the COMMERCIAL OPERATION DATE the NOMINATED CAPACITY of the FACILITY shall be 119 MW summer and 119 MW winter. The NOMINATED CAPACITY may be revised at any time by agreement of the PARTIES. Prior to the COMMERCIAL OPERATION DATED PECO shall not purchase any DESIGNATED CAPACITY from the FACILITY. 5.2 Capacity Tests SELLER shall conduct capacity tests twice a year, once during the summer (June through August) and once during the winter (December through February) periods, in accordance with procedures specified by PECO. The procedures shall be based on and consistent with the GREEN BOOK. PECO shall have the right to require additional tests to meet specific PECO needs that are not required by the GREEN BOOK. PECO shall pay all costs incurred by the SELLER for such additional tests. PECO shall be the sole judge of the tests required. 5.3 Test Results. If any test performed pursuant to Section 5.2 hereof demonstrates that the FACILITY cannot achieve the appropriate summer or winter NOMINATED CAPACITY set forth in Section 5.1 hereof, a partial forced outage shall be recorded from the beginning of the relevant test period prescribed in Section 5.2 hereof and continuing until the FACILITY satisfactorily proves the appropriate NOMINATED CAPACITY. 5.4 Retest. If SELLER is dissatisfied with the result of a test described in Section 5.2, SELLER may request permission to conduct a retest within ten (10) days of being notified of the test result. PECO shall not unreasonably withhold permission for such a retest. The result of the retest shall be binding upon SELLER. If such retest is not performed within fourteen (14) days of PECO granting permission, then the result of the previous test shall be binding upon SELLER. The SELLER may request as many retests as the test period permits. 5.5 Failure to Test. If SELLER fails to perform an acceptable test required by Section 5.2 hereof, PECO may at its sole discretion reduce the DESIGNATED CAPACITY of the FACILITY which PECO purchases for one year after the latest date upon 8 which an acceptable test could have been performed, or until the FACILITY completes an acceptable test. 5.6 Information Requirements. SELLER shall, from time to time, provide PECO with any information regarding operation of the FACILITY required by PECO to fulfill its PJM INTERCONNECTION obligations or other operating needs, and shall endeavor to provide any historical information requested by PECO on intervals as short as a quarter hour. The information required includes but is not limited to: (a) During a Test Period (i) Gross Generation (ii) Auxiliary Loads (iii)Process Electrical Loads (iv) Net Generation to PECO (b) During Normal Operation (i) Gross Generation (ii) Auxiliary Loads (iii)Net Generation to PECO (iv) Fuel Consumption ARTICLE VI OUTAGE COORDINATION AND REPORTING 6.1 Redundancy. Certain sections of this ADDENDUM and this Article VI in particular require actions or information from the SELLER which are redundant to provisions of the AGREEMENT. Restating requirements here does not imply a need to take redundant actions or to provide redundant information, but is done to collect in one location all the actions and information required to implement the requirements of this ADDENDUM. 6.2 Outage Coordination. SELLER shall coordinate all planned and maintenance outages with PECO. 6.3 Outage Scheduling. Unless otherwise directed by PECO, SELLER shall periodically submit for PECO's approval, such approval not to be unreasonably withheld, its planned maintenance schedule conforming to Section 6.5 hereof, for the subsequent thirty-six (36) months of operation. SELLER shall revise its planned and maintenance outage dates upon PECO's request for such changes 6.4 Operating Information. Except for forced outages which require the immediate removal of equipment from service to avoid either damage to equipment or risk to personnel or the 9 public, SELLER shall coordinate daily operation of the FACILITY with PECO, as required by Section 592 hereof and good electrical system operating practice. This includes notifying PECO's System Operations Group of any change in operating capability or removal of equipment from service which results in full or partial reductions of FACILITY operating capability. 6.5 Peak Season Outages. After accepting an ACTIVATION NOTICE, SELLER shall schedule planned outages so that no portion of any such planned outage shall occur during the PEAK SEASON, without the prior written consent of PECO. PECO shall not be obligated to approve requests for planned outages during such periods. PECO shall have the right, upon one (1) year's notice, to revise the months or days during which SELLER shall not schedule a planned outage. If the FACILITY is wholly or partially unavailable due to a planned or maintenance outage during the PEAK SEASON, PECO shall not be required to pay SELLER for any DESIGNATED CAPACITY purchased by PECO from the FACILITY during such an outage. 6.6 Reporting. SELLER shall comply with all PECO and PJM INTERCONNECTION generating unit outage reporting requirements as revised from time to time. PECO will advise SELLER of such requirements and any changes. PECO shall have the right to audit FACILITY operating and maintenance logs upon twenty-four (24) hours notice. 6.7 Forced Outage Reporting. SELLER shall notify PECO's System. Operations Group of the occurrence, nature and expected duration of any forced outage as soon as practical but not later than one (1) hour after the forced outage begins. SELLER shall thereafter promptly inform PECO1s System Operations Group of any change in the expected duration of the forced outage unless relieved of this obligation by PECO's System Operations Group for the duration of that forced outage. 6.8 Monthly Outage Reporting. Within five (5) working days after the end of each month, SELLER shall report to PECO all full or partial planned, maintenance or forced outages and any miscellaneous adjustments that occurred during the preceding month. Data shall be presented according to the PJM INTERCONNECTION'S "Generating Unit Outage Data Reporting Instructions," as revised from time to time. 6.9 Dispatch. SELLER shall, within thirty (30) minutes after notification by PECO, deliver energy to PECO at the 10 AVAILABLE CAPACITY level, and shall continue to deliver energy at that level until released by PECO. Each such period, commencing thirty (30) minutes after such a notification and ending upon such a release by RECO, shall be known as a DISPATCH PERIOD. The scheduling of DISPATCH PERIODS shall be at the sole discretion of PECO, except that (A) a DISPATCH PERIOD shall not exceed sixteen (16) hours in duration and (B) shall not schedule more than twenty (20) DISPATCH PERIODS in a Calendar Year. After accepting an ACTIVATION NOTICE, if SELLER fails to attain and maintain the level of its AVAILABLE CAPACITY during any DISPATCH PERIOD, the payment under Section 7.1 for the month in which such failure occurs shall be reduced by: (a) the CAPACITY CREDIT, multiplied by (b) the number of days in that month, multiplied by (c) the greatest UNDISPATCHED CAPACITY curing any DISPATCH PERIOD in that month. UNDISPATCHED CAPACITY means: (i) AVAILABLE CAPACITY in effect at the time PECO notifies SELLER of a DISPATCH PERIOD, minus (ii) the total amount of energy delivered during that DISPATCH PERIOD divided by the duration of the DISPATCH PERIOD. In addition to such reduction in payments and regardless of whether or not SELLER has accepted an ACTIVATION NOTICE, SELLER shall record a forced outage for the difference between the AVAILABLE CAPACITY and the level of delivery actually attained. Such forced outage shall remain in effect until the FACILITY delivers energy at the AVAILABLE CAPACITY. 6.10 Minimum Generation. During a LIGHT LOAD CONDITION, SELLER shall, upon notice from PECO, reduce FACILITY output during the LIGHT LOAD CONDITION to zero or such other level designated by PECO. If FACILITY output exceeds the level designated by PECO during any day or part thereof during the LIGHT LOAD CONDITION, the payment due SELLER under Section 7.1 hereof shall be reduced on a daily basis by the product of: (a) $178 per MW; and (b) the greater of: (i) zero (0); or (ii) the average output of the FACILITY during the output level designated by PECO under this Section 6.10. 11 6.11 Waiver. PECO may waive any of the testing or reporting requirements under this Article VI by providing written notice to SELLER. ARTICLE VII BILLING AND PAYMENT 7.1 Billing and Payment. Within 30 days of the end of each BILLING MONTH, PECO shall prepare a statement showing for each day in the BILLING MONTH at least: (a) the capacity purchased, being the DESIGNATED CAPACITY as adjusted by Sections 3.7 and 6.5 hereof; (b) the CAPACITY CREDIT as determined in Section 3.4 hereof; and (c) the product of (a) and (b) above. With each such statement, PECO shall include payment in the sum of (c) above, less (i) the administrative charge specified in Section 7.2 hereof, (ii) any UNDISPATCHED CAPACITY charge specified in Section 6.9 hereof, and (iii) any minimum generation charge specified in Section 6.10 hereof. 7.2 Administrative Charge. PECO shall reduce its payments under this ADDENDUM by an administrative charge of $200 per month, which shall be updated and increased periodically by a percentage related to the annual percentage change in PECODS wages or regular and probationary employees. In the event the administrative charge is greater than the payment for DESIGNATED CAPACITY, SELLER shall be responsible for and pay to PECO the difference within thirty (30) days of the issuance of the billing statement. No administrative charge shall be assessed for months during which FECO purchases no DESIGNATED CAPACITY from SELLER. 7.3 Late Charges. Interest on unpaid amounts shall accrue according to Section 14.4 of the AGREEMENT. ARTICLE VIII RELATIONSHIP TO AGREEMENT 8.1 General. This ADDENDUM is an addition or supplement to the AGREEMENT and shall be governed by all the terms and conditions of the AGREEMENT, unless specifically provided otherwise in this ADDENDUM. 8.2 Regulatory Approval. The effectiveness of this ADDENDUM is contingent upon the PUC allowing PECO to recover the 12 costs incurred under the AGREEMENT pursuant to the COST RECOVERY PETITION as specified in Section 2.2 of the AGREEMENT. ARTICLE IX MISCELLANEOUS 9.1 Affiliated Interest. The effectiveness of this ADDENDUM is contingent upon the PUC approving an affiliated interest filing with respect to this ADDENDUM. PECO will submit such filing with the PUC within sixty (60) days of the effective date of this ADDENDUM with a request it be promptly approved. 9.2 Non-Reliance. After the eighth anniversary of the effective date of this ADDENDUM, the SELLER may terminate this ADDENDUM without any further obligation to PECO by ninety (90) days written notice to PECO, if PECO has never tendered an ACTIVATION NOTICE to the SELLER. IN WITNESS WHEREOF, the PARTIES have ADDENDUM to be executed as of the day and year first above written. PHILADELPIA ELECTRIC COMPANY Attest: /s/ By: /s/ William Smith III William R. Smith, III Secretary Vice President GRAYS FERRY COGENERATION PARTNERSHIP: Attest: /s/ By: /s/ Robert A. Shinn Robert A. Shinn Vice President O'Brien (Schuylkill) Cogeneration, Inc. 13 Appendix A Contingent Capacity Purchase Addendum To The Agreement For Purchase Of Electric Output with Grays Ferry Cogeneration Partnership 1. CCP Addendum dated as of September 17, 1993 between GFCP and PECO regarding Phase I, with a capacity of 31 MW. 2. No Other Contracts. 14 EX-10.26.1 46 EXHIBIT 10.26.1 AMENDED AND RESTATED STEAM PURCHASE AGREEMENT DATED SEPTEMBER 17, 1993. Exhibit 10.26.1 AMENDED AND RESTATED STEAM PURCHASE AGREEMENT This Amended and Restated Steam Purchase Agreement is made this 17th day of September, 1993 by and among PHILADELPHIA THERMAL ENERGY CORPORATION ("PTEC"), ADWIN EQUIPMENT COMPANY ("Adwin"), O'BRIEN ENVIRONMENTAL ENERGY, INC. (O'Brien") and GRAYS FERRY COGENERATION PARTNERSHIP, a Pennsylvania general partnership ("Seller"). BACKGROUND TO RESTATEMENT PTEC, Philadelphia United Power Corporation. formerly known as United Thermal Development Corporation ("PUPC0"), Adwin, O'Brien and Seller are parties to some or all of a series of agreements1 each dated November 11, 1991. as follows (collectively1 "Original Agreements"): (1) Steam Venture Agreement by and among O'Brien, Adwin, PUPCO and PTEC ("Original Venture Agreement"); (2) Site Lease by and between PTEC and Seller ("Original Lease"); (3) Steam Purchase Agreement by and among PTEC1 Adwin, O'Brien and Seller ("Original Purchase Agreement"); (4) Project Services and Development Agreement by and between Seller and PUPCO ("Original Development Agreement"); (5) Penn Selection Agreement by and among PTEC1 PUPCO, Adwin, O'Brien and Seller ("Original Penn Agreement"); and (6) Dock Facilities by and among PTEC, Seller and Philadelphia Thermal Development Corporation ("Original Dock Agreement"). The Original Agreements set forth the terms and conditions under which Adwin and O'Brien formed Seller for the purpose. of constructing and owning a Cogeneration Facility (as defined hereafter). which will be located on a portion of PTEC's Schuylkill Station site. The Cogeneration Facility will produce steam and electrical power, and will be operated and maintained by PUPCQ. Steam from the Cogeneration Facility will be purchased by PTEC for use in PTEC's steam distribution system. The parties have subsequently agreed to terminate the Original Penn Agreement. The original Agreements contemplated that the Cogeneration Facility would consist of a Phrase 7 Gas Turbine, a Heat Recovery Steam Generator9 a steam turbine and high pressure auxiliary boiler with a minimum 500,000 lbs/hour of capacity (No. 6 oil rating) which would be capable of burning both No. 6 oil and natural gas. The Original Agreements further contemplated that the auxiliary boiler would, under certain circumstances, be constructed on an accelerated basis prior to the remainder of the equipment described above. Adwin and O'Brien have now requested, and PTEC and PUPCO have agreed. that the installation of the Cogeneration Facility ("Project") be restructured in certain ways, including the development of the Project in two discrete phases, consisting of (i) installation in Phase I of a high pressure auxiliary boiler with a 40 megawatt steam turbine ("Phase I Project"), and (ii) installation in Phase II of the Frame 7 Gas Turbine and related equipment ("Phase II Project"). The parties intend that the Phase I Project be completed on an expedited basis. The parties have further agreed to amend certain of the Original Agreements and to restate those Original Agreements,. so amended, in their entirety, to reflect the changes to. the Project described above. Now, therefore, intending to be legally bound hereby, the parties hereby amend the Original Purchase Agreement and restate the Original Purchase Agreement in its entirety, as follows: BACKGROUND Seller is a general partnership formed by Adwin and O'Brien. Adwin and O'Brieen are parties to an Amended and Restated Steam Venture Agreement with PTEC of even date herewith ("Amended Steam Venture Agreement"), pursuant to which Adwin and O'Brien will, together, through Seller, develop, construct, own and operate a cogeneration facility for the production of steam and electric energy (the "Project"). The Project will be located in the Schuylkill Station facility owned or leased by PTEC, a portion of which will be leased to Seller under an Amended and Restated Site Lease of even date herewith ("Amended Site Lease"). The Project will be owned by Seller and operated by PUPCO, under an Amended and Restated Project Services and Development Agreement of even date herewith ("Amended Project Services Agreement", and with the Amended Site Lease, the Amended Steam Venture Agreement and this Agreement, collectively the "Amended Project Documents"). 2 PTEC is a public utility certificated by the Pennsylvania Public Utility Commission to sell steam in a defined area of the City of Philadelphia consisting of portions of Center City and West Philadelphia ("PTEC's Service Area") through a steam distribution system ("Steam Loop"). Seller is willing to sell and PTEC is willing to purchase the steam produced by Seller, on the terms and conditions - hereunto set forth. All capitalized terms not otherwise defined herein shall have the same meanings as in the Amended Project Services Agreement. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 1. Steam Purchase by PTEC A. During Phase I Project testing and prior to the Phase I Project Acceptance Date, PTEC 8hall not be obliged to purchase any minimum amount or requirement of steam, but shall purchase Project steam flow to the extent such purchases are consistent with prudent operation and system reliability of the Steam Loop, and any steam purchased by PTEC during such Phase I Project testing and prior to the Phase I Project Acceptance Date shall be at PTEC's Avoided Cost of Steam (as defined in Appendix 1 hereto). However, after the Phase I Project Acceptance Date, PTEC shall pay the full price for steam delivered from Phase I as provided in Section 2 below. The Project will supply and PTEC shall be obligated to purchase Distribution Sendout Steam (low pressure steam) as defined in Appendix 2 of this Agreement (210- 240 psi, 40 degrees F above saturation, but not greater than 450 degrees F) from the Phase I Project for the full term of this Agreement, in the amounts and at the prices specified herein, until the Phase II Project Acceptance Date. All references in this Agreement and the other Amended Project Agreements to the purchase of "steam" prior to the Phase II Project Acceptance Date shall refer to Distribution Sendout Steam. B. During Phase II Project testing and prior to the Phase II Project Acceptance Date, PTEC shall not be obliged to purchase any minimum amount or requirement of steam in excess of the minimum take requirement for Phase I, but shall purchase such excess Project steam flow to the extent such purchases are consistent with prudent operation and system reliability of the Steam Loop, and any steam in excess of the Phase I minimum take 3 requirement purchased by PTEC during such Phase II Project testing and prior to the Phase II Project Acceptance Date shall be at PTEC's Avoided Cost of Steam (as defined in Appendix 1 hereto). However, after the Phase II Project Acceptance Date., PTEC shall pay the full price for steam delivered from Phase II as provided in Section 2 below. C. During the term of this Agreement, (i) after the Phase I Project Acceptance Date, PTEC shall be obliged to purchase steam at the minimum take obligations as described in subsection E(i) below, and (ii) after the Phase II Project Acceptance Date, PTEC shall be obliged to purchase steam at the minimum take obligations as described in subsection E(ii) below. D. During the term of this Agreement, following Phase I Project Acceptance and following Phase II Project Acceptance, Seller will sell all steam produced by the Project (net of the Project's internal requirements) to PTEC, and PTEC will purchase all of its steam requirements from Seller, except that PTEC shall be free to utilize other sources of steam when necessary (i) to operate boilers at other PTEC facilities to meet the minimum loading requirements for maintaining adequate pressure and to provide system reliability, or (ii) to satisfy PTEC steam send out requirements above and beyond the capabilities of the Project. E. (i) Beginning on the Phase I Project Acceptance Date, PTEC will pay on an annual basis for the greater of (i) the amount of steam actually accepted by or (ii) 3.0 million thousand pounds ("Mlbs."). If the Project is unable to deliver at least 3.0 million Mlbs. of steam in any year, for reasons other than a default by PTEC under any agreement to supply demineralized water to Seller, the 3.0 million Mlbs. minimum requirement will be reduced to the amount of steam actually delivered by the Project. The 3.0 million Mlbs. minimum take requirement will also be reduced in the event of a Penn Event by an amount equal to the volume of steam PTEC is unable to purchase from the Project directly attributable to the reduction in purchases by the University of Pennsylvania. (ii) Beginning on the Phase II Project Acceptance Date, PTEC will pay on an annual basis for the greater of (i) the amount of steam actually accepted by PTEC or (ii) 3.3 million Mlbs. If the Project is unable to deliver at least 3.3-million Mlbs. of steam in any year, for reasons other than a default by PTEC under any agreement to supply demineralized water to Seller, the 3.3 million Mlbs. minimum requirement will be reduced to the amount of steam actually delivered by the Project. The 3.3 million Mlbs. minimum take requirement will also be reduced in 4 the event of a Penn Event by an amount equal to the volume of steam PTEC is unable to purchase from the Project directly attributable to the reduction in purchases by the University of Pennsylvania. F. If neither PUPCO nor any of its affiliates is serving as operator of the Project, then PTEC's obligation to purchase steam hereunder is conditional on the steam produced by Seller conforming fully with the minimum requirements for temperature. pressure. p55 content and other specifications set forth in Appendix 2 hereto. G. All Project equipment will be designated for continuous utility grade service and designed for a useful life of at least thirty (30) years. PTEC shall have the right to approve in advance the equipment selection and the location of the equipment on the site, such approval not to be unreasonably withheld. 2. Price A. The price for low-pressure steam in dollars per Mlb. For each month following the Phase I Project Acceptance Date shall be calculated according to the following formula: SP = (BF x 1.69) + ($0.31 x CWT/PWT) + ($1.00 x CPIC/CPIb) where, SP = Steam price for the current month BF = weighted Average Price of Fuel (natural gas, No. 6 oil, and No.2 oil) in U.S. dollars per MMBtu (higher heating value) utilized by the Project at the Burner Tip of the gas turbine and Auxiliary Boiler in each month following the Phase I Project Acceptance Date or the Phase II Project Acceptance Date, as the case may be. 5 CPIc = The Consumer Price Index - Urban, All Items for Philadelphia recorded for the current month. CPIb = The Consumer Price Index - Urban, All Items for Philadelphia for the first month following the Phase I Project Acceptance date or the Phase II Project Acceptance Date, as the case may be. CWT = Current City of Philadelphia Tariff Water & Sewer Rate for Domestic and Commercial Customers effective in the first month following the Phase I Project Acceptance Date or the Phase II Project Acceptance Date, as the case may be. PWT = City of Philadelphia Tariff Water & Sewer Rate for Domestic and Commercial Customers effective January 10, 1986. The steam price shall not be increased as a result of the use of different fuels or fuel mixes by Seller or b any change in steam production efficiency associated with the two-Phase approach set forth in the preamble to this Agreement. B. Notwithstanding the provisions of Section 2.A, the price to be paid by PTEC for steam under any renewal or extension of the Amended Project Documents beyond the Initial Term shall be equal to or less than the Avoided Cost of Steam (as defined in Appendix 1) available to PTEC (including the unamortized capital costs of the Project's steam generating equipment, fuel, water, chemicals and any other appropriate costs). C. PTEC will pay for high pressure steam from Phase II at an auxiliary high pressure steam price equal to the Base Price plus $0.50 per Mlb. The auxiliary high pressure steam price shall be adjusted monthly in accordance with the Steam Price adjustment set forth in subsection B above. If, after the Phase I Project Acceptance Date but prior to the Phase II Project Acceptance Date, Seller sells electrical capacity to the Philadelphia Electric Company or any other utility or any party purchasing capacity for its own direct end use, PUPCO's fee as set forth in Section 6.4 of the Amended Project Development Agreement shall be modified as set forth therein. 6 3. Term and Extension A. This agreement will be for an initial term ("Initial Term") equal to (a) the period commencing on the Commencement Date (as defined in the Site Lease) and ending on the Full Operation Date (as defined in the Site Lease), plus (b) twenty-five (25) years, commencing on the Full Operation Date and ending on the date which is twenty-five (25) years thereafter, Seller shall have the option to extend the term hereof as set forth in more detail in Section 5 of the Amended Steam venture Agreement. B. Seller will have the right to extend the terms hereof beyond the Initial Term only if Seller agrees to adjust the steam price charged to PTEC to be equal to or less than PTEC's Avoided Cost of Steam (including the unamortized capital cost of the Project's steam generating equipment, fuel, water, chemicals, and any other appropriate costs). 4. Additional Charges. In contemplation of the "all requirements" provisions and "minimum take" provisions of this Agreement, if, during the life of the Project, O'Brien, whether directly or indirectly, whether through Seller or otherwise, whether as an owner or a developer, and whether through a cogeneration facility or other steam producing facility, sells or makes available steam to any entity, and such act causes or would cause a reduction in the steam required from the Project to serve the then current system steam load, then O'Brien shall pay to PTEC for each thousand pounds of steam sold or generated by such other project or facility, an amount equal to the sum PTEC pays for equivalent amounts and quality of steam from the Project. 5. Default and Remedies. A. Seller shall be in default under this Agreement (a "Major Seller Default") if an Owner's Major Default occurs under the Amended Project Services Agreement. B. PTEC shall be in default under this Agreement (a "Major PTEC Default") if in any Agreement Year PTEC fails to pay in full for at least the minimum take requirements set forth in Section 1.D of steam (as adjusted in accordance with the terms of Section 1.D and as a result of Force Majeure as described in Section 11.1 the Amended Project Services Agreement) within thirty (30) days after the end of such Agreement Year. C. PTEC shall be in default under this Agreement (a "Minor PTEC Default"). if PTEC fails to pay for any steam purchased within thirty (30) days after payment is due. 7 D. Upon the occurrence of a Major Seller Default, PTEC shall have the rights and remedies available to equity, but not the right to terminate. E. Upon the occurrence of a Major PTEC Default, Seller shall have the right to (i) recover from PTEC the difference between (x) the sale price for the minimum annual take requirement set forth in Section 1.D, and (y) the actual amount paid by PTEC to Seller for steam during that year, less (z) the marginal cost of fuel. water and other supplies which Seller would have incurred had PTEC purchased the minimum required amount of steam. Upon the occurrence of a Minor PTEC Default, Seller shall have the right to recover from PTEC the unpaid amount due for steam sold plus interest at two percent (2%) over the Prime Rate. 6. Miscellaneous A. No change, amendment or modification of this Agreement shall be valid or binding on the parties unless made in a writing signed by all parties. B. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. Titles of Sections are for convenience only, and neither limit nor amplify the provisions of this Agreement. C. Notices. Any notice, demand, offer, consent, report, approval or other written instrument required or permitted to be given pursuant to this Agreement shall be in writing signed by the party giving such notice and shall be hand delivered, or sent by overnight delivery or by certified mail to the other parties at the following addresses and shall be effective upon receipt. PTEC: President Philadelphia Thermal Energy Corporation 2600 Christian Street Philadelphia, PA 19146 8 With a copy to: President Philadelphia United Power Corporation 2600 Christian Street Philadelphia, Pa 19146 Seller: Grays Furry Cogeneration Partnership 225 S. 8th Street Philadelphia, PA 19106 O'Brien: Vice President, Operations O'Brien Environmental Energy. Inc. 225 S. 8th Street Philadelphia, PA 19106 Adwin: Vice President Adwin Equipment Company 300 Stevens Drive Lester, PA 19113 Each party shall have the right to change the place to which notice shall be sent or delivered by notice to the other parties. The effective date of any notice issued pursuant to this Agreement shall be as of the addressee's receipt of such notice. D. Assignment. No party shall either assign or otherwise transfer this Agreement (or any right or obligation contained herein) without the prior written consent of the other parties, and any assignment, subletting or other transfer without such consent shall be void. Notwithstanding the foregoing, this Agreement may be assigned by Seller for security purposes to any construction or permanent lender for the Project or to any entity purchasing electricity from the Project. E. No Waiver. No consent or waiver, express or implied, by a party to or of any breach or default by the party in the performance by it of any of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such party of the same or any other obligation of such party hereunder. F. Applicable Law. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, exclusive of conflicts of laws provisions. G. Successors and Assigns. Subject to the restrictions on transfers set forth herein, this Agreement shall inure to the benefit of, be binding upon and be enforceable by 9 and against the parties and their respective successors and assigns. H. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one agreement. It shall not be necessary that any counterpart be signed by all parties so long as each party shall have executed two counterparts. 10 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives on the date first above written. PTEC: PHILADELPHIA THERMAL ENERGY CORPORATION By:/s/ S. G. Smith SELLER: GRAYS FERRY COGENERATION PARTNERSHIP By: O'Brien Environmental Energy, Inc. By: /s/ Robert A. Shinn By: Adwin Equipment Company By: /s/ Daniel A. Neely ADWIN: ADWIN EQUIPMENT COMPANY By:/s/ Daniel A. Neely O'BRIEN: O'BRIEN ENVIRONENNTAL ENERGY, INC. By: /s/ Robert A. Shinn 11 LIST OF APPENDICES APPENDIX 1 Avoided Cost of Steam APPENDIX 2 Usable Steam Requirements APPENDIX 1 TO STEAM PURCHASE AGREEMENT AVOIDED COST OF STEAM APPENDIX 1 Avoided Cost of Steam PTEC's avoided cost of steam to be used in accordance with section 1A of the Steam Purchase Agreement shall be calculated as follows: Avoided Cost per Mlb = F + W + C Mlb Where: F = Actual gallons of fuel consumed by PTEC during the month for steam production (net of TG 3 usage) times average purchased cost per gallon for the month (or previous month if no current purchase made). W = Actual gallons of water consumed by PTEC during the month for steam production times the current City of Philadelphia water and sewer tariff rate. C = Actual quantity of chemicals used by PTEC during the month for steam production times the current month chemical unit cost purchase price. Mlb = PTEC Schuylkill plant boiler out. APPENDIX 2 TO STEAM PURCHASE AGREEMENT USABLE STEAM REQUIREMENTS APPENDIX 2 USABLE STEAM REQUIREMENTS High Pressure Steam Pressure 1300 max - 1200 psi min Temperature 925F max - 900F min Sodium < 15 ppb Chloride < 10 ppb Silica < 15 ppb Cation Conductivity < 0.35 umhos Distribution Sendout Steam Pressure 240 psi max - 210 psi min Temperature Steam temperature shall be 40F above saturation temperature but not higher than 450F. M Alkalinity < 1.0 ppm Free CO2 < 1.5 ppm TDS < 0.2 ppm All chemicals carried over into the distribution steam system must be suitable for use in the preparation of food, humdification and sterilization of surgical instruments as specified by the FDA and USDA. All desuperheating spray water must meet the same criteria established for boiler feed water. EX-10.26.2 47 EXHIBIT 10.26.2 AMENDED AND RESTATED STEAM PURCHASE AGREEMENT DATED SEPTEMBER 17, 1993 AMONG PTEC, PHILADELPHIA UNITED POWER CORPORATION ("PUPCO"), ADWIN AND O'BRIEN. Exhibit 10.26.2 AMENDED AND RESTATED STEAM VENTURE AGREEMENT This Amended and Restated Steam Venture Agreement is made this 17th day of September, 1993 by, between and among Philadelphia Thermal Energy Corporation ("PTEC"), Philadelphia United Power Corporation, formerly known as United Thermal Development Corporation ("PUPCO"), Adwin Equipment Company ("Adwin") and O'Brien Environmental Energy, Inc. ("O'Brien"). BACKGROUND TO RESTATEMENT PTEC, PUPCO, Adwin, O'Brien and Grays Ferry Cogeneration Partnership, a general partnership formed by Adwin and O'Brien ("Project Developer"), are parties to some or all of a series of agreements, each dated November 11, 1991, as follows (collectively, "Original Agreements"): (1) Steam Venture Agreement by and among O'Brien, Adwin, PUPCO and PTEC ("Original Venture Agreement"); (2) Site Lease by and between PTEC and Project Developer ("Original Lease"); (3) Steam Purchase Agreement by and among PTEC, Adwin, O'Brien and Project Developer ("Original Purchase Agreement"); (4) Project Services and Development Agreement by and between Project Developer and PUPCO ("Original Development Agreement"); (5) Penn Selection Agreement by and among PTEC, PUPCO, Adwin, O'Brien and Project Developer ("Original Penn Agreement"); and (6) Dock Facilities by and among PTEC, Project Developer and Philadelphia Thermal Development Corporation ("Original Dock Agreement"). The Original Agreements set forth the terms and conditions under which Adwin and O'Brien formed the Project Developer for the purposes of constructing and owning a Cogeneration Facility (as defined hereafter), which will be located on a portion of PTEC's Schuylkill Station site. The Cogeneration Facility will produce steam and electrical power, and will be operated and maintained by PUPCO. Steam from the Cogeneration Facility will be purchased by PTEC for use in PTEC's steam distribution system. The parties have subsequently agreed to terminate the Original Penn Agreement. The Original Agreements contemplated that the Cogeneration Facility would consist of a Frame 7 Gas Turbine, a Heat Recovery Steam Generator, a steam turbine and a high pressure auxiliary boiler with a minimum 500,000 lbs/hour of capacity (No. 6 oil rating) which would be capable of burning both No. 6 oil and natural gas ("Auxiliary Boiler"). The Original Agreements further contemplated that the Auxiliary Boiler would, under certain circumstances, be constructed on an accelerated basis prior to the remainder of the equipment described above. Adwin and O'Brien have now requested, and PTEC and PUPCO have agreed, that the installation of the Cogeneration Facility ("Project") be restructured in certain ways, including the development of the Project in two discrete phases, consisting of (i) installation in Phase I of a high pressure auxiliary boiler with a 40 megawatt steam turbine ("Phase I Project"), and (ii) installation in Phase II of the Frame 7 Gas Turbine and related equipment ("Phase II Project"). The parties intend that the Phase I Project be completed on an expedited basis. The parties have further agreed to amend certain of the Original Agreements and to restate those Original Agreements, as so amended, in their entirety, to reflect the changes to the Project described above. Now, therefore, intending to be legally bound hereby, the parties hereby amend the Original Venture Agreement and restate the Original Venture Agreement in its entirety, as follows: BACKGROUND PTEC is a public utility certificated by the Pennsylvania Public Utility Commission ("PUC") to sell steam in certain portions of a defined area of the City of Philadelphia consisting of Center City and West Philadelphia ("Service Area"). Adwin is a wholly-owned subsidiary of the Eastern Pennsylvania Development Company, which itself is a wholly-owned subsidiary of the Philadelphia Electric Company ("PECO"). O'Brien is a developer, owner and operator of cogeneration, alternative fuel and waste heat recovery projects that produce steam and electric energy for sale to industrial and commercial users and public utilities. PTEC is the only certificated utility authorized to sell steam to the public for compensation in PTEC's Service Area. However, customers and potential customers located therein may, individually, produce steam and other forms of energy for their own use. PTEC presently has a need to both upgrade and add to its steam production facilities to continue generating steam in the quantities and with the reliability needed to serve the public in its Service Area. PTEC, PUPCO, Adwin and O'Brien each believes that it can participate in the steam market for the Service Area and realize 2 significant efficiencies by the joint development of a facility (the "Cogeneration Facility") which would (i) provide new capacity and base steam load for PTEC, and (ii) provide steam energy to PECO or other utility. The parties believe that an agreement which provides, among other things, for the construction and operation of a steam production facility which would supply steam exclusively to PTEC on a "take or pay with minimum takes" basis which PTEC could then resell to customers within PTEC's Service Area would be in their mutual best interests. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 1. Project Description A. O'Brien and Adwin acting together through a Pennsylvania general partnership known as Grays Ferry Cogeneration Partnership (the "Project Developer") will design, construct, start-up, test and own the Cogeneration Facility (as defined below) to be located at PTEC's existing Schuylkill Station site (the "Project") or at another mutually acceptable site owned by PTEC or an affiliate of PTEC. B. Prior to the Project Developer entering into contracts for the construction of the Project, PTEC will be entitled to review and approve a list of prospective steam generating equipment options and, if approval by an independent engineer engaged by any lender to the Project is also required, PTEC's review will be prior to such approval as well. PTEC will not unreasonably withhold its approval of the Project Developer's nominees or selections for these lists. Project Developer has provided, and PTEC has approved, the list of prospective project engineering and construction firms attached hereto as Exhibit F. C. The Project will be constructed in two phases, based, inter alia, on the availability of financing. Phase I of the Project, ("Phase I" or the "Phase I Project") will include the installation of a high pressure auxiliary boiler with a 40 megawatt steam turbine. Phase II of the Project ("Phase II" or the "Phase II Project") will include the installation of a Frame 7 Gas Turbine and a Heat Recovery Steam Generator (as used herein, the term "Cogeneration Facility" shall refer to Phase I of the Project and, if completed, Phase II of the Project). Phase II of the Project will have the capacity to deliver to PTEC at least 1,000,000 pounds per hour of steam in accordance with the technical specifications of PTEC attached hereto as Exhibit A. PUPCO and PTEC agree that the Project Developer may purchase and utilize a used steam turbine that is approved in advance of acquisition by PTEC. The Project will supply and PTEC shall be obligated to purchase Distribution Sendout Steam (low pressure 3 steam) as defined in Appendix 2 of the Amended Steam Purchase Agreement (210-240 psi, 40 degrees F) from the Phase I Project for the term of this Agreement, in the amounts and at the prices specified herein, until the Phase II Project Acceptance Date. All references in this Agreement and the other Amended Project Agreements to the purchase of "steam" prior to the Phase II Project Acceptance Date shall refer to Distribution Sendout Steam. 2. Project Schedule; Amended Project Services and Development Agreement A. The target date for completion of the construction, testing and make ready for the Phase II Project ("Phase II Project Acceptance Date") shall be thirty (30) months from the date Phase II Project financing is closed. B. The Project Developer has delivered to PUPCO, and PUPCO has approved, the following: (i) a list of major pieces of equipment to be purchased for Phase I and Phase II of the Project and (ii) a schematic and simplified single line diagram showing how the equipment is to be arranged. Before financing closing for Phase I, Project Developer will deliver to PUPCO the following: (i) the control systems for the equipment, (ii) the mechanical and electrical interconnection points, and (iii) the vendor warranties and guarantees that are standard and which will be requested in soliciting equipment bids, as further described in the Project Services Agreement (as defined below). C. The parties shall hereafter promptly negotiate the Availability Standards to be attached to the Amended Project Services and Development Agreement among PTEC, PUPCO and the Project Developer of even date herewith attached hereto as Exhibit B ("Amended Project Services Agreement"), pursuant to which the Project Developer will, inter alia, retain PUPCO to operate the Cogeneration Facility and agree to make certain payments to PUPCO. D. Phase I will be constructed by Project Developer on an accelerated basis. E. The parties hereto shall diligently expedite and assist Project contractors in the completion and submission of all applications for Permits (as defined in Section 7(D)) necessary for the construction of the Project ("Construction Permits"). 3. Amended Site Lease A. Schuylkill Station, which is PTEC's main plant within the existing steam system owned and operated by PTEC, is situated on real estate located at 2600 Christian Street, Philadelphia, Pennsylvania ("Land") which is owned by PECO and 4 leased to PTEC under a long-term lease which may impose upon PTEC at the end of the term (either 50 or 100 years) the obligation to purchase the property at the current market value (the "PECO Lease"). Schuylkill Station was used by PECO prior to 1987 to generate both electric energy and steam energy; now Schuylkill Station has been divided into two sections, and, with some exceptions, PTEC owns or leases and operates the sections of the buildings located on the Land (the "Buildings") which relate to steam production. B. Under the terms of the PECO Lease, certain of the modifications to be made by PTEC to the Schuylkill Station is connection with this Agreement will require the prior consent of PECO. C. The lease for the site from PTEC to the Project shall otherwise be on the terms and conditions set forth in Exhibit C attached hereto ("Amended Site Lease"). 4. Sales of Steam by the Project A. During the term of this Agreement and following Phase I Project Acceptance (as defined in the Amended Project Services Agreement), the Project will sell all steam produced by the Project (net of the Project's requirements) to PTEC, and PTEC will purchase all of its steam requirements from the Project, except that PTEC shall have the right to access alternate sources of steam when necessary (i) to operate boilers at other PTEC facilities to meet minimum loading requirements for maintaining adequate pressure and to provide system reliability, or (ii) to satisfy PTEC steam send out requirements above and beyond the capabilities of the Project. B. On an annual basis, PTEC will pay for the greater of (i) the amount of steam actually accepted by PTEC, or (ii) as follows: (x) after the Phase I Project Acceptance Date (as defined in the Amended Project Services Agreement) and before the Phase II Project Acceptance Date, 3.0 million Mlbs., subject to adjustment as set forth in the Amended Project Services Agreements and the Amended Steam Purchase Agreement; and (y) after the Phase II Project Acceptance Date, 3.3 million Mlbs., subject to adjustment as set forth in the Amended Project Services Agreements and the Amended Steam Purchase Agreement. C. The sale of steam by the Project shall otherwise be on the terms and conditions set forth in Exhibit D attached hereto ("Amended Steam Purchase Agreement"). 5 5. Term A. The term of this Agreement and of the Amended Site Lease, Amended Project Services Agreement and Amended Steam Purchase Agreement (collectively, "Amended Project Agreements") will be for a minimum term consisting of (i) the period commencing on the date hereof and ending on t he date ("Full Operation Date") which will be the Phase II Project Acceptance Date unless construction of the Phase II Project has not been initiated (as described in Section 9 below) within one (1) year after the Phase I Acceptance Date, in which event the Full Operation Date will be the Phase I Project Acceptance Date, plus (ii) twenty-five (25) years commencing on the Full Operation Date ("Initial Term"), with the Project Developer having the option to extend the term of the Amended Steam Purchase Agreement, the Amended Project Services Agreement and the Amended Site Lease for an additional term of ten (10) years, such option to be exercised no earlier than the twentieth anniversary, and no later than the twenty-third anniversary, of the Full Operation Date. If the Project Developer does not elect to extend for an additional term, then PUPCO shall have the option to purchase the Project pursuant to Section 5C; if PUPCO does not so elect by notice given no later than eighteen (18) months before the expiration of the Initial Term, Project Developer shall have the option to extend the term of the Project Documents for an additional term of fifteen (15) years. If Project Developer does not so elect by notice given no later than twelve (12) months before the expiration of the Initial Term, this Agreement and all the Amended Project Documents shall terminate at the expiration of the Initial Term. B. Extension of the term of this Agreement and the Amended Project Agreements beyond the Initial Term shall be permitted only if agreement is reached among the parties to adjust the steam price charged to PTEC to be equal to or less than PTEC's avoided cost of steam (including the unamortized capital cost of the Project's steam generating equipment, fuel, water, chemicals, and any other appropriate costs) as of the commencement of each extended term. C. If PUPCO elects to purchase the Project pursuant to Section 5A, PUPCO shall purchase the Project pursuant to Section 19.3 of the Amended Project Services Agreement. 6. Access During the term of the Amended Project Agreements, including any extensions thereof, and for a period of three (3) years thereafter, the Project Developer, upon reasonable notice, shall grant PTEC or its auditors access to such of the Project's books and records and audit workpapers as shall in the reasonable opinion of TEC or its auditors be necessary for them to prepare and support filings which PTEC may be obligated to make with regulatory agencies, including but not limited to the PUC, with 6 respect to PTEC's ownership interest in, operation of, or contractual agreements with, the Project. 7. Fees A. O'Brien and Adwin shall each have the right to recover their actual development expenses incurred with respect to the Project and to earn a development fee ("Development Fee") equal to three percent (3%) of total Project costs, except that the interest costs during construction shall not exceed $9 million for the purpose of calculating the Development Fee. The $9 million interest allowance shall be allocated pro rata between the financing for the Phase I Project and the financing for the Phase II Project, based on the relative amount of each financing. Notwithstanding the preceding sentence, however, the maximum allowable interest for the financing of the Phase I Project shall not exceed nine percent (9%) of the debt incurred for the Phase I Project. Since PUPCO will receive a services and deferred development fee, PUPCO and its affiliates shall have no right or interest in the Development Fee. B. O'Brien and Adwin have heretofore paid $150,000 to PUPCO for PUPCO's development services in connection with the Cogeneration Facility. C. O'Brien and Adwin have paid to PUPCO an additional sum of $150,000 upon the execution of the Original Agreement. D. O'Brien and Adwin will cause the Project Developer to pay to PUPCO the following payments: (i) beginning on December 17, 1992, the sum of $150,000, and each quarter thereafter (i.e., the 17th day of each subsequent March, June, September and December), the sum of $150,000, pro-rated monthly until the Phase I Project Acceptance Date; (ii) after the Phase I Project Acceptance Date, beginning on the Phase II Project Acceptance Date, annual payments equal to the sum of (1) $1,200,000 plus (2) the product of (x) $2,000 times (y) the number of full or partial calendar months between the Phase I Project Acceptance Date and the Phase II Project Acceptance Date ("Phase II Fee"), subject to the installments, for so long as (1) neither PUPCO or PTEC are currently in default under any of the terms and conditions of any amended Project Agreement to which they are a party and (2) Penn remains a PTEC steam system customer and (3) the minimum take provisions in the Amended Steam Purchase Agreement have remained unadjusted. This payment will be divided as follows: one-third of the Phase II Fee shall be a fixed annual payment and two- thirds of the Phase II Fee shall be escalated at three percent (3%) per year. 7 E. If, prior to the date any party terminates the Amended Project Agreements in accordance with Section 9, any of the parties or their affiliates seeks to participate in or facilitate any project which will primarily serve, the energy needs of Penn, that party will make a binding offer to the other parties to this Agreement to participate on an equal basis in such project. For purposes of this section, PUPCO AND PTEC shall be considered one party. Nothing in this section shall be deemed to refer to contractual arrangements between Penn and Philadelphia Electric Company or PTEC which would be required to be entered into by law, and this Section E will not apply to the execution by Penn and PTEC of a long-term steam purchase agreement under PTEC's Large Volume Rider. F. O'Brien and Adwin, jointly, will pay to PUPCO the sum of (i) $550,000 at financial closing for the construction of Phase I of the Project, and (ii) $50,000 at financial closing for the construction of Phase II of the Project. 8. Confidentiality O'Brien, Adwin, PUPCO, and PTEC each agree that the technical and financial information and materials which may be disclosed to the other party during the course of negotiations shall be treated by the receiving party as confidential. 9. Termination If construction of the Phase II Project has not been initiated (i) within six (6) months after the date PECO, or another utility, becomes unconditionally contractually bound to pay the equivalent of $65 per kilowatt per year ($65/kw/year) for a minimum of twenty (20) years, for a minimum of 120 megawatts of capacity ("Capacity Contract"), or (ii) in any event within two (2) years after the Phase I Project Acceptance Date, either party may terminate Phase II of the Project, and any party hereto shall have the right, by written notice to the other parties, to terminate all obligations contained in any of the Amended Project Agreements regarding Phase II, including, without limitation, any obligations to develop, construct, operate or purchase steam from Phase II, and, at PUPCO's option and request, Project Developer will use its best efforts to have all agreements with PECO and other agreements and permits affecting the Phase II Project assigned to PUPCO (upon which assignment Project Developer, O'Brien and Adwin shall each be released from any further liability hereunder). In the event that the Phase II Project is terminated as set forth above and the Project Developer is unable, despite its best efforts, to obtain PECO's consent to the assignments required in this Section 9, O'Brien, Adwin and Project Developer shall be released from any further liability with respect to the Phase II Project. For purposes of this Agreement, construction will only be deemed to have been initiated if (i) a building permit for Phase II has been obtained by the Project Developer, (ii) a general construction contract 8 has been executed for such construction, and (iii) work has started on the site for Phase II. 10. Withdrawal Penalty If any party withdraws from the negotiations relating to the Project or from the Amended Project Agreements at any time prior to the Phase I Project Acceptance Date, the remaining parties will receive the withdrawing party's equity interest on a pro-rata basis and will assume all responsibilities and benefits flowing from such equity interest. The withdrawing party shall pay all direct out-of-pocket costs, up to an aggregate of $50,000 to all other parties together, incurred by the remaining parties and the Project as a result of such withdrawal. For purposes of this Paragraph 10, PTEC shall be deemed not to be a party. 11. Miscellaneous A. Amendments. No change, amendment of modification of this Agreement shall be valid or binding upon the parties unless made in a writing signed by all parties. B. Terminology. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. Titles of Sections are for convenience only, and neither limit nor amplify the provisions of this Agreement. This Agreement shall always be deemed to mean this Agreement and the Exhibits and Schedules hereto. C. Notices. Any notice, demand, offer, consent, report, approval or other written instrument required or permitted to be given pursuant to this Agreement shall be in writing signed by the party giving such notice and shall be hand delivered, or sent by overnight delivery or by certified mail to the other parties at the following addresses and shall be effective upon receipt. PTEC: President Philadelphia Thermal Energy Corporation 2600 Christian Street Philadelphia, PA 19146 PUPCO: President Philadelphia United Power Corporation 2600 Christian Street Philadelphia, PA 19146 O'Brien: Vice President O'Brien Environmental Energy, Inc. 225 S. 8th Street Philadelphia, PA 19106 9 Adwin: Vice President Adwin Equipment Company 300 Stevens Drive Lester, PA 19113 Each party shall have the right to change the place to which notice shall be sent or delivered by notice to the other parties. The effective date of any notice issued pursuant to this Agreement shall be as of the addressee's receipt of such notice. D. Severability. If any provision of this Agreement or the application thereof to any persons or circumstances shall be invalid or unenforceable to any extent, (a) the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and (b) each such provision shall be enforced to the greatest extent permitted by law. E. Assignment. No party shall either assign or otherwise transfer this Agreement (or any right or obligation contained herein) without the prior written consent of the other parties, and any assignment, subletting or other transfer without such consent shall be void. Notwithstanding the foregoing, Adwin and O'Brien may assign this Agreement as security for or as required by any lender of funds to the Project Developer. F. No Waiver. No consent or waiver, express or implied, by a party to or of any breach or default by the party in the performance by it of any of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such party of the same or any other obligation of such party hereunder. G. Applicable Law. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, exclusive of conflicts of laws provisions. H. Successors and Assigns. Subject to the restrictions on transfers set forth herein, this Agreement shall inure to the benefit of, be binding upon and be enforceable by and against the parties and their respective successors and assigns. I. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one agreement. It shall not be necessary that any counterpart be signed by all parties so long as each party shall have executed two counterparts. J. Proprietary Information. If any party transmits to any other party information (including, without limitation, drawings, technology, reports and designs) which the 10 disclosing party designated in writing as "proprietary information", the receiving party shall receive and hold such proprietary information in confidence, shall use it exclusively in connection with the Project (including necessary disclosures on a proprietary basis to others directly engaged in the operation or financing of the Project such as consultants, trustees and lenders engaged for that purpose provided that such third party shall consent in writing to be bound by the provision of this Section 11.J, but in any event avoiding any disclosures to other Project suppliers) and shall not publish or otherwise disclose it to others. Notwithstanding the foregoing restrictions, any party will have the right to disclose proprietary information furnished hereunder to a governmental authority to the extent required by such governmental authority; provided, however, that if such party undertakes to so disclose such proprietary information, it agrees to give the other parties advance written notice of such undertaking, to make reasonable efforts to secure confidential treatment of such proprietary information by the governmental authority in question and to permit such other parties to participate in discussions with the governmental authority with regard to confidential treatment. In the event that efforts to secure confidential treatment are unsuccessful, the owner of the proprietary information shall have the right, if legally permissible, to revise such proprietary information to make it nonproprietary or to minimize the loss of its proprietary value. K. Assignment of electric Purchase Agreement. (i) Upon the occurrence of a Phase I Project Termination Event (as defined below), Project Developer shall assign to PUPCO (subject to PECO's prior consent) Project Developer's interest in (a) the Electric Output Purchase Agreement dated July 28, 1992 ("Electric Purchase Agreement") and (b) and capacity related addendum to the Electric Purchase Agreement or other agreement that Project Developer executes with PECO or any other utility, and (c) the "Permit to Construct, Install and Operate the Cogeneration Process" granted by the City of Philadelphia Department of Public Health dated November 4, 1992. (ii) A Phase I Project Termination Event shall occur hereunder upon the earlier to occur of (a) termination of the Project by O'Brien, Adwin or Project Developer for any reason, or (b) failure by Project Developer to obtain construction financing for the Phase I Project, as evidenced by a binding executed commitment letter from a reputable lender subject only to conditions accepted in writing by Project Developer, consistent with the Amended Project Documents and not requiring any amendment to the price of steam payable by PTEC or imposing any additional financial obligations on PTEC ("Binding Commitment"), by the later to occur of the following ("Commitment Deadline"): (a) January 1, 1994 or (b) ninety (90) days after the date on which the Pennsylvania Public Utility Commission approves 11 the Amended Project Agreements, provided that Project Developer may extend the Commitment Deadline for an additional three months by making payments to PUPCO on the first day of each extension month in the amount of $50,000 for each full or partial month extended. (iii) In the event that the Project Developer has not executed a noncontingent contract to receive the Contract Capacity as defined in Section 9 above for the Phase II portion of the Project by January 1, 1995, or the Project Developer terminates Phase II for any reason, PUPCO may terminate the Phase II Project and Project Developer shall assign to PUPCO (subject to PECO's consent) Project Developer's interest in (a) 110 megawatts of the 150 megawatt Electric Purchase Agreement and (b) any remaining capacity in excess of 31.5 megawatts available under any capacity-related addendum to the Electric Purchase Agreement or other or agreement Project Developer executes. O'Brien and Adwin may extend the January 1, 1995 date an additional three months by making payments to PUPCO on the first day of each extension month in the amount of $50,000 for each full or partial month extended. L. Reimbursement of Expenses. O'Brien and Adwin will reimburse PUPCO and PTEC for all approved out of pocket costs associated with the change in Project configuration evidenced by the Amended Project Agreements up to a maximum amount of $75,000 for legal, environmental and engineering costs. Such payments will be made on a quarterly basis with the first payment on March 23, 1993. O'Brien and Adwin agree to negotiate an increased maximum amount if the $75,000 is exceeded. M. Conversion of PTEC Boiler. If necessary to obtain an AMS permit for the Project, Adwin and O'Brien will pay all of the cost to convert PTEC's Boiler No. 26 to a low NOx dual fuel (natural gas and No. 6 oil). This obligation of Adwin and O'Brien is limited to the first $500,000 expended for this conversion plus 50% of any costs in excess of the $500,000. O'Brien and Adwin are entitled to 50% of any environmental allowances received by PTEC for emission offsets associated with this conversion, up to a maximum amount equal to the amount in excess of $500,000 paid by O'Brien and Adwin for the conversion. Project Developer will use its best efforts to ensure that the air permit will be assignable to PTEC in whole or part consistent with Section 11.K. N. PECO Consent. This Amended Steam Venture Agreement is contingent upon Project Developer using its best efforts, as provided in Section 9 above, to obtain on or before January 1, 1994 PECO's agreement to allow PTEC to utilize the Schuylkill site to construct a cogeneration project (Phase I and Phase II) and to utilize any approved interconnection agreement obtained by the Project Developer if (a) either subsection of Section 11.K is effected or (b) Phase II of the Project is terminated. The Project Developer will provide to PTEC all design, 12 engineering and any other work products associated with the electric interconnection between the cogeneration project Phase I and Phase II) and the PECO interconnection point/s if (a) either subsection of Section 11.K is effected or (b) Phase II of the Project is terminated. The Project Developer will allow PTEC to utilize these work products for any purpose subject only to restrictions which may be imposed by PECO. O. Release. Each of the parties hereto, for themselves, their successors and assigns, hereby remises, releases and forever discharges the other Parties and their respective successors and assigns of and from all, and all manner of, actions and causes of actions, suits, debts, dues, accounts, bonds, covenants, contracts, agreements, judgments, claims and demands whatsoever in law or equity (collectively, "Claims") by reason of any cause, matter or thing whatsoever, from the beginning of the world until the date of this Agreement. The parties hereby acknowledge that, except as expressly set forth herein, (i) no party has any Claim of any nature or sort against any other party as of the date hereof, (ii) there are no defaults of any kind by any party under the Original Agreements, and (iii) each party expressly waives the right to initiate or pursue any action of any kind against any other party based on any act or omission occurring prior to the date hereof. Each party shall indemnify, defend and hold the other parties harmless from any violation of this Section 11.O by such party. 13 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives on the date first above written. PHILADELPHIA THERMAL ENERGY CORPORATION By: /s/ S. B. Smith PHILADELPHIA UNITED POWER CORPORATION By: /s/ S. G. Smith ADWIN EQUIPMENT COMPANY By: /s/ Daniel A. Neely O'BRIEN ENVIRONMENTAL ENERGY, INC. By: /s/ Robert A. Shinn 14 LIST OF SCHEDULES AND EXHIBITS EXHIBIT A Steam Purity Requirements EXHIBIT B Amended Project Services Agreement EXHIBIT C Amended Site Lease EXHIBIT D Amended Steam Purchase Agreement EXHIBIT E List of Project Engineering and Construction Firms 15 EXHIBIT E ENGINEERING AND CONSTRUCTION FIRMS Raytheon Corp. (United Engineers) Dick Corp. (Gilbert Commonwealth) Walsh Construction (Black & Veetch) 16 EXHIBIT A to STEAM VENTURE AGREEMENT STEAM PURITY REQUIREMENTS EXHIBIT "A" Steam Purity Requirement High Pressure Steam Pressure 1300 max - 1200 psi min Temperature 925 max - 900 min Sodium < 15 ppb Chloride < 10 ppb Silica < 15 ppb Cation-Conductivity < 0.35 umhos Distribution Sendout Steam Pressure 240 psi max - 210 psi min Temperature Steam temperature shall be 40 F above sanitation temperature but not higher than 450 F. M Allcalinity < 1.0 ppm Free CO2 < 1.5 ppm TDS < 0.2 ppm All chemicals carried over into the distribution steam system must be suitable for use in the preparation of food, humidification and sterilization of surgical instruments as specified by the FDA and USDA All desuperheating spray water must meet the same criteria established for boiler feed water. EX-10.27.2 48 EXHIBIT 10.27.2 CONSENT TO ASSIGNMENT OF AGREEMENT DATED MARCH 1, 1996 BETWEEN PUPCO, GRAYS FERRY COGENERATION PARTNERSHIP AND THE CHASE MANHATTAN BANK, N. A. Exhibit 10.27.2 CONSENT TO ASSIGNMENT OF AGREEMENT This CONSENT TO ASSIGNMENT OF AGREEMENT ("Consent to Assignment"), dated as of March 1, 1996, is executed by PHILADELPHIA UNITED POWER CORPORATION, a Pennsylvania corporation, ("PUPCO"), GRAYS FERRY COGENERATON PARTNERSHIP, a Pennsylvania general partnership ("Assignor"), and THE CHASE MANHATTAN BANK, N.A., ("Assignee"), as agent for the Banks under the Credit Agreement (as defined below). RECITALS A. Pursuant to the Amended and Restated Project Services Agreement, dated September 17, 1993, by and between PUPCO and Assignor, as modified by that certain Agreement Relating to Amended and Restated Steam Venture Agreement and Amended and Restated Project Services Agreement, dated September 29, 1995 (as the same may be amended from time to time as permitted hereby (the "Project Services Agreement"), the parties thereto have set forth certain agreements regarding, inter alia, operation and maintenance of the Project. The Project Services Agreement is referred to herein as the "Assigned Agreement". B. Pursuant to the Credit Agreement, as the same may be amended from time to time, dated as of March 1, 1996 (the "Credit Agreement"), by and among Assignor, Assignee and the financial institutions named therein (the "Banks"), Assignee shall make available to Assignor certain construction and term loans and issue certain letters of credit as described therein, each on the terms and conditions set forth therein, to enable Assignor to finance the development, construction and equipping of the Facility (as defined therein). It is a condition precedent to the funding by Assignee under the Credit Agreement that PUPCO execute and deliver this Consent to Assignment to Assignee. AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto agree as follows: 1. Definitions. Capitalized terms used but not defined herein shall have the meaning specified in the Assigned Agreement or, if not defined therein, as defined in the Credit Agreement. 2. Consent to Assignment. PUPCO acknowledges receipt of the Security Agreement dated as of March 1, 1996 (as the same may be amended from time to time, "Security Agreement"), by and between Assignor and Assignee, pursuant to which Assignor has assigned its interest under the Assigned Agreement to Assignee on behalf of Assignee and the Banks and consents to the Assignor's transfer, assignment, grant of a security interest and all other provisions described therein, and agrees with Assignee for the Benefit of the Banks as follows: (a) Assignee shall be entitled (but not obligated) to exercise all rights and to cure any defaults of Assignor under the Assigned Agreement. Upon receipt of notice from Assignee, PUPCO agrees to accept such exercise and cure by Assignee and to render all performance due by it under the Assigned Agreement and this Consent to Assignment to the Banks. PUPCO agrees to make all payments to be made by It under the Assigned Agreement directly to Assignee for the benefit of the Banks upon receipt of Assignee's written instructions. (b) PUPCO will not, without the prior written consent of Assignee (such consent not to be unreasonably withheld), (i) cancel or terminate the Assigned Agreement except as provided in the Assigned Agreement and in accordance with paragraph 2(c) hereof, or consent to or accept any cancellation or termination thereof by Assignor, (ii) sell, assign or otherwise dispose (by operation of law or otherwise) of any part of its interest in the Assigned Agreement, or (iii) amend or modify the Assigned Agreement in any material respect. PUPCO agrees to deliver duplicates or copies of all notices of default delivered under or pursuant to the Assigned Agreement to Assignee promptly upon receipt or delivery thereof and will advise Assignee of any non- material amendments to the Assigned Agreement. 2 (c) PUPCO will not terminate the Assigned Agreement on account of any default or breach of Assignor thereunder without written notice to Assignee and first providing to Assignee (i) thirty (30) days from the date notice of default or breach is delivered to Assignee to cure such default if such default is the failure to pay amounts to PUPCO which are due and payable under the Assigned Agreement or (ii) a reasonable opportunity, but not fewer than ninety (90) days following the date notice of default or breach is delivered to Assignee to cure such breach or default if the breach or default cannot be cured by the payment of money to PUPCO so long as Assignee or its designee shall have commenced to cure the breach or default within such ninety day period and thereafter diligently pursues such cure to completion and continues to perform any monetary obligations under the Assigned Agreement and all other obligations under the Assigned Agreement are performed by Assignor or Assignee. If possession of the "Project" (as defined in the Credit Agreement) is necessary to cure such breach or default, and Assignee or its designee(s) or assignee(s) declare Assignor in default and commence foreclosure proceedings, Assignee or its designee(s) or assignee(s) (will be allowed a reasonable period to complete such proceedings. If Assignee or its designee(s) or assignee(s) are prohibited by any court order or bankruptcy or insolvency proceedings from curing the default or from commencing or prosecuting foreclosure proceedings, the foregoing time periods shall be extended by the period of such prohibition. PUPCO consents to the transfer of Assignor's interest under the Assigned Agreement to the Banks or any of them or a purchaser or grantee at a foreclosure sale by judicial or nonjudicial foreclosure and sale or by a conveyance by Assignor in lieu of foreclosure and agrees that upon such foreclosure, sale or conveyance, PUPCO shall recognize the Banks or any of them or other purchaser or grantee as the applicable party under the Assigned Agreement (provided that such Banks or purchaser or grantee assumes the obligations of Assignor under the Assigned Agreement). (d) In the event that the Assigned Agreement is rejected by a trustee or debtor-in-possession in any bankruptcy or insolvency proceeding, or if the Assigned Agreement is terminated for any reason other than a default which could have been but was not cured by Assignee as provided in paragraph 2(c) above, and if, within forty-five (45) days after such rejection or termination, the Banks or their successors or assigns shall so request, PUPCO will execute and deliver to the Banks, and if applicable, their successors and assigns, a new Assigned Agreement, which Assigned Agreement shall be on the terms and conditions as the original Assigned Agreement for the remaining term of the Assigned Agreement before giving effect to such termination. 3 (e) In the event the Banks or their designee(s) or assignee(s) elect to perform Assignor's obligations under the Assigned Agreement or to enter into a new Assigned Agreement as provided in subparagraph (c) or (d) respectively above, the Banks, their designee(s) and assignee(s), shall have no personal liability to PUPCO for the performance of such obligations, and the sole recourse of PUPCO in seeking the enforcement of such obligations shall be to such parties' interest in the Project. (f) In the event the Banks or their designee(s) or assignee(s) succeed to Assignor's interest under the Assigned Agreement, the Banks or their designee(s) or assignee(s) shall cure any defaults for failure to pay amounts owed under the Assigned Agreement, but shall not otherwise be required to perform or be subject to any defenses or offsets by reason of any of Assignor's other obligations under the Assigned Agreement that were unperformed at such time. The Banks shall have the right to assign all or a pro rata interest in the Assigned Agreement or a new Assigned Agreement entered into pursuant to subparagraph (d) to a person or entity to whom the Project is transferred, provided such transferee assumes the obligations of Assignor (or the Banks) under the Assigned Agreement. Upon such assignment, Assignee and, if applicable, the Banks (including their agents and employees) shall be released from any further liability thereunder to the extent of the interest assigned. (g) The parties hereto agree that this Consent to Assignment is given by PUPCO on the condition that if there are any inconsistencies between this Consent to Assignment and the Assigned Agreement, this Consent to Assignment shall control. 3. Specific Provisions Related to the Assigned Agreement. (a) The Section of the Assigned Agreement entitled "Background to Restatement" is deleted in its entirety and replaced by the following: "[Intentionally Omitted]" (b) The Section of the Assigned Agreement entitled "Recitals" is deleted in its entirety and replaced by the following: 4 RECITALS Owner is a general partnership owned by O'Brien (Schuylkill) Cogeneration, Inc. ("O'Brien"), a wholly owned subsidiary of O'Brien Environmental Energy, Adwin (Schuylkill) Cogeneration, Inc. ("Adwin"), a wholly owned subsidiary of Adwin Equipment Company, and Trigen-Schuylkill Cogeneration, Inc. ("TSC"), a wholly owned subsidiary of Trigen Energy Corporation and an affiliate of Trigen-Philadelphia Energy Corporation ("Trigen"), formerly known as Philadelphia Thermal Energy Corporation ("PTEC"). All references hereinafter to PTEC shall mean Trigen. O'Brien, Adwin and TSC each hold 1/3 interests in Owner. The steam will be sold to Trigen pursuant to an Amended and Restated Steam Purchase Agreement dated September 17, 1993 (the "Amended Steam Purchase Agreement"), and Owner is leasing space for the cogeneration facility pursuant to an Amended and Restated Site Lease between Owner and Trigen dated September 17, 1993. Owner now wishes to retain Operator to operate and maintain the cogeneration facility." (c) The definition of "Agreement Year" is amended to delete the "Phase I" throughout the definition. (d) The definition of "Auxiliary Boiler" is deleted in its entirety and replaced by the following: "means the high-pressure boiler to be constructed by Owner pursuant to the Steam Venture Agreement." (e) The following is inserted at the end of the definition of "Credit Agreement": ", as such agreement may be amended, restated or supplemented from time to time." 5 (f) The definition of "Electricity Purchase Agreement" is deleted in its entirety and replaced by the following: "means, collectively, (a) the Agreement for Purchase of Electric Output (Phase I) dated as of July 28, 1992, ~) the Agreement for Purchase of Electric Output Phase II) dated as of July 28, 1992, (c) the Contingent Capacity Purchase Addenda Phase I), dated as of September 17, 1993, and (d) the Contingent Capacity Purchase Addenda Phase II), dated as of September 17, 1993, (e) Amendment Agreement to Power Purchase Agreements, dated January 31, 1994, each between Assignor and PECO, as such agreements may be amended, restated or supplemented from time to time." (g) The following is added to the definition of "Energy Revenues" after Steam Purchase Agreement": "in respect of sales of electricity and/or steam generated by the Project". (h) The definition of "Final Acceptance" is deleted in its entirety and replaced by the following: "'Final Acceptance' shall have the meaning ascribed thereto in the Turnkey Construction Contract." (i) The word "formal" is deleted from the definition of "Fuel". (j) The definition of "Full Operation Date" is deleted in its entirety and replaced by the following: "'Full Operation Date' means the Project Acceptance Date." 6 (k) The definition of "Interconnection Facilities" is amended to add the following in the second line after the word "facilities": "which are to be maintained by Owner, except for facilities which are the property of PECO"; and the words in the fourth line beginning "which are maintained..." through the end of the sentence are deleted and replaced by the following: "(including the Project's transmission lines)." (l) The definition of "lender" is deleted in its entirety and replaced by the following: "'Lender' means the lending institution(s) holding the senior secured debt of the Project from time to time." (m) In the fourth line of the definition of "Manuals" after the word "Operator" insert the following: "and approved by the Independent Engineer (with respect to the original issue of Manuals only)". (n) The following definitions are added to the Assigned Agreement in alphabetical order: "'Availability' means has the meaning as defined in Appendix 2 of the Assigned Agreement. 'Independent Engineer' means Stone & Webster or its successors and assigns. 'Project Acceptance' has the meaning given in the Steam Purchase Agreement. 'Project Acceptance Date' has the meaning given in the Steam Purchase Agreement." 7 (o) The definition of "Gas Turbine" is deleted in its entirety and replaced by the following: "'Gas Turbine' means a Westinghouse 501D5A combustion turbine." (p) The following definitions are deleted in their entirety: "Phase I"; "Phase II"; "Phase I Availability"; "Phase II Availability"; "Phase I Minimum Take Requirement"; "Phase H Minimum Take Requirement"; "Phase I Project Acceptance Date"; and "Phase H Project Acceptance Date". (q) The last sentence of the definition of "Project" is deleted and the following is inserted in the fourth line of such definition after the word "Site": ",including the Interconnection Facilities to the extent such facilities do not belong to PECO". (r) The definition of "Project Agreements" is amended to include the Electricity Purchase Agreement and the Turnkey Construction Contract and the following is inserted at the end of such definitions: ",as any of the same may be modified or amended from time to time". (s) The following is inserted at the end of the definition of "PTEC": ",including any successor(s) to the assets of PTEC." (t) The following is inserted at the end of the definition of Site: ", including any easements with respect to the Project related thereto." (u) The definition of "Substantially Completed" is deleted in its entirety and replaced by the following: "'Substantially Complete' means that Provisional Acceptance, as such term is defined in the Turnkey Construction Contract, has been achieved." 8 (v) Section 2.1 is deleted in its entirety and replaced by the following: "[Intentionally Omitted]" (w) In Section 2.2, all references to "Phase I" and "Phase II" are deleted. (x) In Section 2.3, delete the word "each" in the first line; in the fifth line after the word "hours" insert ", capacity revenues; in the tenth line after the word "Operator" insert ",after consultation with Owner"; in the eleventh line after the word "Revenues" insert "and capacity revenues"; and at the end of the Section add the following: "Operator shall perform the foregoing services in accordance with the requirements of all insurance policies, warranties, specifications and guarantees of Operator and Owner and of their respective suppliers, contractors, subcontractors and vendors." (y) In Section 2.4, the reference to "Phase II" is deleted and the word "either" is deleted in both places in the last sentence of such Section and replaced with the word "the". In addition, the following language is added to the end of the fourth sentence in such section: ", after Operator providing Owner and lender's independent engineer with a reasonable opportunity to approve the bid documentation prepared by Operator". (z) In Section 2.5.1, the word "each" in the third line is deleted. (aa) In Section 2.5.2, in the second line the words "each Phase of" are deleted; in the fourth line the words "for each Phase" (as hereinafter defined) are deleted; in the sixth line the words "either Phase of" are deleted; and in the ninth line the words "that Phase of' are deleted. 9 (bb) In Section 2.9, delete the words "described in Appendix 1 hereto which shall be prepared within sixty (60) days after execution of the Electricity Purchase Agreement" and insert the words "as described herein". (cc) The following is added to the end of Section 2.10: "provided that, where the subject matter in the Manual which is being revised had previously been approved by Owner, revision of such subject matter shall not be made without the prior written approval of Owner." (dd) The following parenthetical is added to the first sentence of Section 2.11: "(in the case of subcontracts having a value of $100,000 or more, after Owner's prior written consent)". (ee) Section 2.12 is deleted in its entirety and replaced with the following: "During the Mobilization Period, Owner shall be responsible for reimbursing Operator for all costs of staffing and start-up in accordance with a phased staffing plan to be agreed by the Parties and for a fee equal to twenty-five thousand dollars ($25,000.00) per month to a maximum aggregate total of one hundred fifty thousand dollars ($150,000)." (ff) The words "Phase I" are deleted from Section 2.13. 10 (gg) Section 3.1 is deleted in its entirety and replaced with the following: "3.1 Acceptance of Project. The responsibility for the continuous operation of the Project, as provided in Section 2.3, shall belong to Operator, and Operator shall accept and shall be deemed to have accepted such responsibility on the Project Acceptance Date, or in the event neither Provisional Acceptance nor Final Acceptance under the Turnkey Construction Agreement occurs, the date Owner takes over the operation of the Project and commences to utilize the Project for its intended use. Any defects in the Project and the performance levels achieved in each Final Performance Test of the Project shall be noted on a schedule (the "Acceptance Schedule") to be executed by Owner and Operator as of the date of Final Acceptance. If Owner elects to accept or occupy the Project from Construction Contractor in a less than Substantially Completed condition, appropriate adjustments may be made in the Annual Operating Plans to reflect increased costs reasonably expected to be incurred by Operator in operating the Project in a less than Substantially Completed condition and such adjustments shall be included on the Acceptance Schedule. Execution of the Acceptance Schedule shall not constitute a waiver or release of any claim, right or remedy which Owner may have against Construction Contractor pursuant to the Turnkey Construction Agreement nor shall it otherwise affect the obligations of the Parties pursuant hereto." 11 (hh) In Section 4.2, in the third sentence after the word "visitors" the following is inserted: "(including lender or lender's independent engineer)". (ii) Section 4.3 is deleted in its entirety and replaced by the following: "4.3 Annual Operating Plan. Attached hereto as Appendix 6 is the first Annual Operating Plan. Not later than 95 days prior to the first day of each Agreement Year, Operator shall submit to Owner and Independent Engineer for approval a proposed Annual Operating Plan for the upcoming Agreement Year. Each Annual Operating Plan shall describe in detail projected maintenance and overhaul schedules, capital expenditure requirements, equipment acquisitions and spare parts and consumables inventories (including a breakdown of capital items and expense items), hours of operation, purchased electricity, projected Fuel usage and other variable costs, projected electricity and steam generated for sale, projected capacity revenues and Energy Revenues, staffing plans, data regarding expected environmental performance and such other matters as Owner may reasonably require. The proposed Annual Operating Plan shall also include a budget for operation and maintenance of the Project, including the estimated prices based on time and materials for all anticipated operating and maintenance costs for the upcoming Agreement Year. Owner and Independent Engineer shall indicate in writing their approval or disapproval of the Annual Operating Plan within fifteen (15) days of such submission, and in the event of disapproval by either Owner or 12 Independent Engineer, the Parties shall meet and resolve in good faith any areas of disagreement. If a new Agreement Year begins without an Annual Operating Plan having been accepted by Owner, Independent Engineer and Operator, the Annual Operating Plan for the prior Agreement Year shall continue in effect, with all costs set forth therein increased monthly by the Consumer Price Index Percentage for the most recent month for which the Consumer Price Index is available. Any actions proposed under the Annual Operating Plan shall be consistent with the Manuals and Operator's obligations as described in Sections 2.2 and 2.3. Operator shall notify Owner and Independent Engineer as soon as reasonably possible of any significant deviations or discrepancies from the projects contained in the Annual Operating Plan. Any material adjustment proposed by Operator shall be subject to Owner's and Independent Engineer's prior written approval (the Parties agree that a deviation or discrepancy of 10% will constitute a significant deviation or discrepancy for purposes of this section)." (jj) The words "and the Independent Engineer" are inserted after the word "Owner" both times such word appears in line six of Section 4.4. (kk) The words "Phase I Availability and Phase II" are deleted from the thirteenth line of such section. (ll) The first sentence of Section 4.6 is deleted in its entirety and replaced by the following: "Operator shall maintain the Project in accordance with the requirements of all manufacturer's warranties, which warranties shall be owned by Owner and enforced by Operator on behalf of Owner.". 13 (mm) The words "and 2B (For Phase I and Phase II, respectively)" are deleted from the seventh line of Section 5.5(a); the words "for Phase I and for Phase II are" in the eighth line of such section are deleted and replaced by the word "is"; the word "collectively" is deleted from the ninth line of such section; and the word "PUPCO" in the nineteenth line is deleted and replaced by "Trigen". (nn) The last sentence of Section 5.5(b) is deleted in replaced by the following: "Except to the extent Liquidated Damages include a component of consequential damages, Operator shall not be liable to Owner for consequential damages for Operator's failure to achieve the Performance Standards. In addition to collecting such Liquidated Damages, Owner may terminate this Agreement as provided in Section 5.5(a). Notwithstanding the foregoing, the parties agree and acknowledge that Owner's sole remedies shall be limited to Liquidated Damages and termination of the Assigned Agreement." (oo) The words "or otherwise undesirable" are deleted from Section 5.6 and the "," between the words ";illegal" and "uneconomical" in the eighth line is deleted and replaced by the word "or". (pp) In the first sentence of Section 5.8, the words "for each Phase" are deleted. (qq) Attached hereto as Appendix 2 is the Appendix 2 referred to in the Assigned Agreement. (rr) Section 6.1(a) is deleted in its entirety and replaced by the following: "[Intentionally Omitted]". (ss) In Section 6.1(1)), the words "Subject to .... Phase I Annual Fee," are deleted and all references to "Phase II" are deleted. The last paragraph of Section 6.1(1)) is also deleted. 14 (tt) Section 6.1(c), (d) and (e) are each deleted in their entirety and replaced by the following: "[Intentionally Omitted]". (uu) The references to "Phase I" and "Phase II" in each of Sections 6.1(f), (g) and (h) and 6.2(a), (b) and (e) are deleted. (vv) In the second sentence of Section 6.2(1), the words "Phase I Minimum Take Requirement or the Phase II" are deleted. (ww) Section 6.2(d) is deleted in its entirety and replaced with the following: "[Intentionally Omitted]" (xx) The following language is added to the end of Section 6.2(e): ", subject to the provisions of Article 7 of the Credit Agreement and the terms of the PUPCO Subordination Agreement" (yy) The following language is added to the end of Section 6.3(d): ",unless such failure is due to Owner's inability to pay such amount pursuant to the provisions of Article 7 of the Credit Agreement, an Event of Default under the Credit Agreement or the terms of the PUPCO Subordination Agreement." (zz) Section 6.3(e) is deleted in its entirety and replaced with the following: "[Intentionally Omitted]" 15 (aaa) Section 6.4 is deleted in its entirety and replaced with the following: "6.4 Electric Capacity Fee. In addition to the Annual Fees set forth above, Owner shall pay PUPCO thirty percent (30%) of all payment received by Owner pursuant to the Contingent Capacity Purchase Addendum, payable within five (5) days after Owner receives each such payment, unless Owner is unable to make such payment due to the provisions of Article 7 of the Credit Agreement, an Event of Default under the Credit Agreement or the terms of the PUPCO Subordination Agreement." (bbb) In Section 8.1, the references to "Phase I" and deleted and the following is added: "8.1.5 Reimbursable Costs shall not include taxes based on Operator's income or gross receipts." (ccc) The reference to Section 6.1(e) in Section 9.1(a) is deleted. (ddd) Section 9.1 is deleted in its entirety and replaced by the following: "[Intentionally Omitted]" (eee) The reference to "Phase I" in Section 12.1(1,) is deleted. (fff) In Section 16.7, the reference to "Phase I" is deleted and the word "either" in the seventh line is deleted. (ggg) The reference to "Phase I" in Section 17.5 is deleted and the word "either" in the seventh line is deleted and replaced with the word "the". (hhh) The reference to "Phase I" in Section 17.6 is deleted. 16 (iii) Section 19.1 is hereby deleted in its entirety and replaced with the following: "19.1 Option to Acquire Interest. Operator confirms that it has exercised its option to acquire a one third (1/3) interest ("Acquired Interest") in Owner and has no further rights under Section 19.1." Section 19.2 is hereby deleted in its entirety and replaced by the following: "19.2 Effect on Annual Fee. The portion of the Annual Fee described in Section 6.1(11) is no longer due or payable. Notwithstanding anything to the contrary contained herein, Operator shall have no claim to any portion of the purchase price paid for the Acquired Interest." (jjj) The following language is added following Section 19.4(c): "(d) This Section 19.4 shall not apply to Lender's assumption of any Partnership interest pursuant to the Project Agreements or sale of any interest in the Project or Partnership." (kkk) The reference to "Phase I" in Section 19.5(a) is deleted. The words "or the Entire Project Option Period (as defined in Section 19.1)" are deleted. (lll) The words "Phase I Option Period or the Entire Project" are hereby deleted from Section 19.6. (mmm) The last sentence of Section 19.7 is deleted in its entirety. (nnn) The second reference to "Operator" in the ninth line of Section 20.21(c) and the reference to "Operator" in the tenth line of such Section shall be amended to refer to "Owner". 17 (ooo) Operator represents that, other than the Steam Venture Agreement, the Assigned Agreement and the other Project Agreements, it has not entered into any other agreement with Assignor relating to the subject matter addressed in the Assigned Agreement. 4. PUPCO hereby represents and warrants that: (a) The execution, delivery and performance by PUPCO of this Consent to Assignment (i) has been duly authorized by all necessary corporate action, (ii) does not and will not require any further consents or approvals which have not been obtained (provided that, with respect to this clause (a) (ii), Trigen makes no representation with respect to future consents and approvals of the Pennsylvania Public Utility Commission), and (iii) does not violate any provision of any law, regulation, order, judgment, injunction or similar matters or breach any agreement presently in effect with respect to or binding on PUPCO; (b) This Consent to Assignment is a legal, valid and binding obligation of PUPCO, enforceable against PUPCO in accordance its terms; and (c) All permits, authorizations, licenses and government approvals necessary for the execution, delivery and performance by PUPCO of its obligations under this Consent to Assignment have been obtained and are in full force and effect; 5. All notices required or permitted hereunder shall be in writing and shall be effective (a) upon receipt if hand delivered, (1) upon telephonic verification of receipt if sent by facsimile and (c) if otherwise delivered, upon the earlier of receipt or two (2) "Banking Days," (as defied in the Credit Agreement) after being sent registered or certified mail, return receipt requested, with proper postage affixed thereto, or by private courier or delivery service with charges prepaid, and addressed as specified below: 18 If to PUPCO: PHILADELPHIA UNITED POWER CORPORATION 2600 Christian Street Philadelphia, PA 19146 Attn: President Telecopy No: (202) 875-691O Telephone No: (215) 875-6900 If to Assignee: THE CHASE MANHATTAN BANK, N.A. One Chase Plaza, Sixth Floor New York, New York 10081 Attn: Project Finance Group Telecopy No.: (212) 552-4276 Telephone No.: (212) 552-5813 If to Assignor: GRAYS FERRY COGENERATION PARTNERSHIP c/o Adwin (Schuylkill) Cogeneration, Inc. 300 Stevens Drive Airport Business Center Lester, PA 19113 Telecopy No.: (610) 595-1068 Telephone No.: (610) 595-1072 6. This Consent to Assignment shall be binding upon and inure to the benefit of PUPCO, the Assignor, the Assignee, the Banks and their respective successors, transferees and assigns. PUPCO agrees to confirm such continuing obligation in writing upon the reason-able request of Assignor, Assignee, the Banks or any of their respective successors, transferees or assigns. No termination, amendment, variation or waiver of any provisions of this Consent shall be effective unless in writing and signed by PUPCO, Assignor and Assignee. This Consent to Assignment shall be governed by the internal laws of the State of New York, without reference to principles of conflict of laws (other than Section 5- 1401 of the New York General Obligations law). 19 7. This Consent may be executed in one or more duplicate counterparts, and when executed and delivered by all the patties listed below, shall constitute a single binding agreement. IN WITNESS WHEREOF, PUPCO by its officer thereunto duly authorized, has duly executed this Consent to Assignment as of the date first set forth above. PHILADELPHIA UNITED POWER CORPORATION a Pennsylvania corporation By: /s/ S. G. Smith Name: Steven G. Smith Title: President Accepted and agreed to: THE CHASE MANHATTAN BANK, N.A., as Agent for the Banks By: /s/ James G. Brown, Jr. Name: James G. Brown, Jr. Title: Vice President GRAYS FERRY COGENERATION PARTNERSHIP, a Pennsylvania general partnership By: Adwin (Schuylkill) Company, managing general partner By: /s/ William J. Brady III Name: William Brady III Title: Vice President EX-10.28 49 EXHIBIT 10.28 AMENDED AND RESTATED SITE LEASE, DATED SEPTEMBER 17, 1993 BETWEEN PTEC AND GRAYS FERRY. Exhibit 10.28 AMENDED AND RESTATED SITE LEASE This Amended and Restated Lease is dated September 17, 1993, and made by and between PHILADELPHIA THERMAL ENERGY CORPORATION, a Pennsylvania corporation (herein called "Lessor") and GRAYS FERRY COGENERATION PARTNERSHIP, a Pennsylvania general partnership (herein called "Lessee"). BACKGROUND TO RESTATEMENT Lessor, Philadelphia United Power Corporation, formerly known as United Thermal Development Corporation ("PUPCO"), Adwin Equipment Company ("Adwin"), O'Brien Environment Energy, Inc. ("O'Brien") and Leasee are parties to some or all of a series of agreements, each dated November 11, 1991, as follows (collectively, "Original Agreement"): (1) Steam Venture Agreement by and among O'Brien, Adwin, PUPCO and Lessor ("Original Venture Agreement"); (2) Site Lease by and between Lessor and Lessee ("Original Lease"); (3) Steam Purchase Agreement by and among Lessor, Adwin, O'Brien and Leasee ("Original Purchase Agreement"); (4) project Services and Development Agreement by and between Lessee and PUPCO ("Original Development Agreement"); (5) Penn Selection Agreement by and among Lessor, PUPCO, Adwin, O'Brien and Lessee ("Original Penn Agreement"); and (6) Dock Facilities by and among Lessor, Lessee and Philadelphia Thermal Development Corporation ("Original Dock Agreement"). The Original Agreements set forth the terms and condition under which Adwin and O'Brien formed Lessee for the purposes of constructing and owning a Cogeneration Facility (as defined hereafter), which will be located on a portion of Lessor's Schuylkill Station site. The Cogeneration Facility will produce steam and electrical power, and will be operated and maintained by PUPCO. Steam from the Cogeneration Facility will be purchased by Lessor for use in Lessor's steam distribution system. The parties have subsequently agreed to terminate the Original Penn Agreement. The Original Agreements contemplated that the Cogeneration Facility would consist of a Frame 7 Gas Turbine, a Heat Recovery Steam Generator, a steam turbine and a high pressure auxiliary boiler with a minimum 500,000 lbs/hour of capacity (No. 6 oil natural gas. The Original Agreements further contemplated that the auxiliary boiler would, under certain circumstances, be constructed on an accelerated basis prior to the remainder of the equipment described above. Adwin and O'Brien have now requested, and Lessor and PUPCO have agreed, that the installation of the Cogeneration Facility ("Project") be restructured in certain ways, including the development of the Project in two discrete phases, consisting of (i) installation in Phase I of a high pressure auxiliary boiler with a 40 megawatt steam turbine ("Phase I Project"), and (ii) installation in Phase II of the Frame 7 Gas Turbine and related equipment ("Phase II Project"). The parties intend that the Phase I Project be completed on an expedited basis. The parties have further agreed to amend certain of the Original Agreements and to restate those Original Agreements, as so amended, in their entity, to reflect the changes to the Project described above. Now, Therefore, intending to be legally bound hereby, the parties hereby amend the Original Lease and restate the Original Lease in its entirety, as follows: BACKGROUND Lessor is the owner of a portion of a building erected on land ("Land") owned by the Philadelphia Electric Company ("PECO") located at 26th and Christian Streets, Philadelphia, Pennsylvania and known as Schuylkill Station ("Building"). The Land is described more particularly on the legal description attached hereto as Exhibit A. Lessor utilizes the Building to operate a steam generation and distribution system ("Steam Loop"). Lessee is an entity formed by O'Brien and Adwin to design, construct, start-up, test and own a cogeneration facility to produce steam and electricity, as described in more detail in Section 5.1 hereof ("Cogeneration Facility"). The steam will be sold to Lessor pursuant to an Amended and Restated Steam Purchase Agreement of even date herewith between Lessor and lessee ("Amended Steam Purchase Agreement"), and the electricity will be sold to PECO or another utility. The cogeneration facility will be owned by Lessee and operated by PUPCO, an affiliate of Lessor, pursuant to an Amended and Restated Project Services and Development Agreement of even date herewith ("Amended Project Services Agreement"). The agreements among Lessor, Adwin, 2 O'Brien and PUPCO are further set forth in an Amended and Restated Steam Venture Agreement of even date herewith ("Amended Steam Venture Agreement"). Lessor and Lessee have now agreed that Lessor will lease a portion of the Building to Lessee for the construction and operation of the cogeneration facility pursuant to the terms and conditions set forth below. NOW, THEREFORE, intending to be legally bound hereby, the parties agree as follows: 1. Premises. 1.1 Premises. (a) Lessor hereby leases to Lessee and Lessee leases from Lessor for the term, at the rental, and upon all of the conditions set forth herein, (i) that certain portion of the Land as designated on the plan attached hereto as Exhibit B ("Phase I Premises") and (ii) that certain portion of the Building as designated on the plan attached hereto as Exhibit B extending from the base of the foundation of the Building (and including any underground utilities) to the exterior surface of the roof of the Building and inward from the exterior surface of each outside well of the Building ("Phase II Premises"). For purposes of this Lease, the term "Premises" shall refer only to the Phase I Premises effective as of the Commencement Date, and, effective as of the Phase II Commencement Date (as defined below), to the Phase I Premises and the Phase II Premises collectively, and the term "Cogeneration Facility" shall refer only to Phase I of the Project effective as of the Commencement Date and, effective as of the Phase II Commencement Date, to the Phase I Project and the Phase II Project collectively. (b) Lessee acknowledges that, subject to the provisions of Section 14.1, Lessee has inspected the Premises and determined that the premises is suitable for installation and operation of the cogeneration 7acility with respect to its dimensions, weight-carrying capacity. construction access and environmental condition. and Lessee is not relying on any representation by Lessor except as expressly set forth herein. Lessee further acknowledges that the Premises currently contains several inoperative boilers and associated Systems and equipment, some of which may be inoperative, which were neither installed nor operated by Lessor, which has no specific knowledge of the condition of the premises or such equipment except for information received by Lessor from PECO. 3 1.2 Parking. The use end occupation by Lessee of the premises shall include the use in common with others entitled thereto of the common areas, service areas, sidewalks and other facilities on or appurtenant to the Lend or the Building. subject to the terms of this Lease and to reasonable rules and regulations established by Lessor from time to time. Notice of changes shall be provided by Lessor to Lessee in writing. Lessee shall have the right to utilize up to eight (8) parking spaces in the parking areas designated by Lessor from time to time, of which six (6) shall be used by the operator of the Cogeneration Facility. Lessee shall be responsible for limiting parking on the Lend by Lessee's employees, invitees, licensees, agents and visitors to those parking spaces specifically designated by Lessor from time to time. Lessee acknowledges that the Lend is owned by PECO and the availability of parking is subject to the terms of the lease between PECO and Lessor, as such lease may be modified from time to time, and any rules or regulations issued by PECO from time to time. 1.3 Shared Facilities. Lessee shall have the right to utilize existing stacks. doorways. rail facilities, engines. cranes and similar facilities owned by Lessor and described in Exhibit C (collectively. "Lessor's Facilities") as necessary or appropriate for the construction. operation and maintenance of the Cogeneration Facility, provided that (i) such use does not unreasonably interfere with Lessor' a ongoing operation of the Steam Loop, and (ii) Lessee's use of Lessor's Facilities shall comply with reasonable rules and regulations promulgated by Lessor in writing. Lessee acknowledges that many of Lessor's Facilities are old and may not be suitable for use in their present condition for construction or operation of the Cogenera tion Facility. Any of Lessor's Facilities that require replacement or substantial repair as a result of Lessee's use shall be replaced or repaired by Lessee and the cost thereof (except as otherwise set forth in Exhibit C) shall be divided as follows: if the equipment in question has not previously been in regular use by Lessor, Lessee shall bear the full cost of such repair or replacement; if the equipment in question is in regular use by Lessor at the time the repair or replacement becomes necessary, the cost thereof shall be shared by Lessor and Lessee based on projected relative use of the equipment during the expected lifetime of the equipment. The operating cost of using Lessor's Facilities by Lessee shall be determined by Lessor on the basis of (i) the actual incremental cost of such use, if such can be readily determined, or (ii) Lessor's reasonable estimate of the relative use made by Lessee of various Lessor's Facilities in proportion to Lessor's use thereof, based on market rental value of the equipment where possible. utility charges and maintenance, repair and replacement costs shall be included in calculating the cost of Lessee's use of Lessor's Facilities. 4 1.4 Permits. (a) To the extent available to Lessor from existing facilities owned by Lessor. or from the operation of the cogeneration Facility (through the displacement of steam production from other boilers), Lessor shall assign emission offsets and allowances available at Schuylkill Station to Lessee without charge1 to the extent reasonably required by Lessee to permit the construction and operation of the Cogeneration Facility. without interfering with Lessor's ability to meet the steam requirements of its customers. Lessee shall request such offsets and allowances in writing9 accompanied by appropriate engineering reports supporting Lessee's requirements. Lessee shall be solely responsible for acquiring any additional offsets or allowances required by Lessee for the Cogeneration Facility beyond those available from Lessor under this Section 1.4. (b) Lessee shall not violate and this Lease shall be subject to any applicable zoning ordinances and any municipal. county and state constitution1 laws and regulations governing and regulating the use of the Premises and the Building. The Land is currently zoned G-2. Lessor expressly makes no representation or warranty that. the use of the Premises contemplated by Lessee does not conflict with or violate any applicable zoning ordinances or municipal, county or state laws and regulations regarding the use of the Premises. Lessor represents to Lessee that Lessor's present use of the Building for operation of the Steam Loop is not in violation of any applicable zoning or other use-related ordinance, law or regulation. 1.5 Ground Lease. Lessee acknowledges that the Building is located on land which Lessor leases from PECO pursuant to a Schuylkill Station Lease Agreement dated January 30, 1987 ("Ground Lease"), a copy of which is attached hereto as Exhibit D. Any conflict between the terms of this Lease and the terms of the Ground Lease shall be controlled by the terms of the Ground Lease. 2. Term. 2.1 This Lease shall be for an initial term ("Initial Term") consisting of (a) the period commencing on the Commencement Date (as defined hereinafter) and ending on the date ("Full Operation Date") which will be the Phase II Project Acceptance Date (as defined in the Amended Project Services Agreement) unless construction of the Phase II Project has not been initiated (as described in Section 9 of the Amended Steam Venture Agreement) within one (1) year after the Phase I Acceptance Date, in which event the Full Operation Date will be 5 the Phase I Project Acceptance Date. plus (b) twenty-five (25) years. commencing on the Full Operation Date and ending on the date which is twenty-five (25) years thereafter. or. if the Full Operation Date is not the first day of a month, twenty-five (25) years after the last day of the month in. which the Full Operation Date occurs, unless sooner terminated pursuant to any provision hereof (the "Expiration Date"). Any Philadelphia or Pennsylvania transfer tax due and payable as a result of this Lease shall be paid by Lessee. 2.2 Commencement Date. The term of this Lease shall commence on the date construction of Phase I of the Cogeneration Facility begins, but in no event later than the date set forth in the Amended Steam Venture Agreement (herein called the "Commencement Date"). The Premises leased hereunder shall be extended to include the Phase II Premises on the date construction of Phase II of the Cogeneration Facility begins ("Phase II Commencement Date"). but not later than the date set forth in the Steam Venture Agreement. The Commencement Date and the Phase II Commencement Date shall each be recorded in an addendum tc this Lease to be prepared by Lessor and executed by both parties. 2.3 Options to Extend. Lessee shall have the option to renew this Lease under the terms and conditions set forth in Section 5 of the Steam Venture Agreement. 3. Rent; Additional Rent 3.1 Minimum Annua1 Rent. Lessee shall pay a minimum annual rent of One Dollar ($l.00) in advance, on each anniversary of the Commencement Date. In addition, Lessee shall pay Lessor without set-off the Additional Rent as hereinafter set forth. Unless otherwise specifically provided, all sums shall be paid to Lessor at the address set forth on the signature page. 3.3 Additional Rent. (a) As used herein, the term "Additional Rent shall refer to any and all sums payable by Lessee to Lessor hereunder, including, without limitation, those sums specifically described as Additional Rent in this Lease. All Additional Rent shall be payable within thirty (30) days following written demand from Lessor, unless a different period is specified elsewhere in this Lease. (b) Lessee shall be solely responsible for, and shall pay Lessor as Additional Rent, all increases in real estate taxes, use and occupancy taxes or other taxes1 impositions, levies, fees or governmental impositions and charges of any kind 6 incurred by Lessor or imposed against the Lend9 the Building Or the premises as a direct result of the installation and operation Cf the cogeneration Facility (including. without limitation. real estate taxes resulting from any increase in the assessment of the Building due to the installation of the Cogeneration Facility) Lessor shall give Lessee notice of any such increase in taxes, and Lessee shall pay all amounts due hereunder to Lessor within thirty (30) days following receipt of such notice by Lessor; provided, however, that Lessee may contest any such tax increase with the taxing authority in good faith so long as such contest prevents any lien for unpaid taxes from being levied against Lessor or the Premises. To the extent feasible. all sums due from Lessee under this Section 3.2(b) shall be paid directly to the taxing entity. (c) Lessee shall be solely responsible for all incremental site costs incurred because of the restructuring of the project into two distinct phases. 4. Construction of Cogeneration Facility. 4.1 Construction by Lessee. The Cogeneration Facility shall be constructed in accordance with the terms of the Amended Project Services Agreement. Lessee shall be solely responsible to repair any underground or other utilities or systems damaged by Lessee or Lessee's contractors, employees or agents. 4.2 Access During Construction Period. During Lessee's construction of the Cogeneration Facility, Lessor shall provide reasonable access to the Premises for Lessee's workers and equipment and make available (or request PECO to make available) additional space on the Lend for staging. laydown and storage to facilitate the construction process, in the area outlined and identified as. "laydown area" on Exhibit B, or such additional area as may be reasonably required by Lessee's contractors without materially interfering with Lessor's operations. Lessee's workers shall not park in the parking lot unless authorized in writing by Lessor, which shall have no obligation to provide such parking. 5. Use; Compliance with Law. 5.1 Use. Except as set forth in Section 5.1(b), the Premises shall be used and occupied only for (i) the construction, hookup, testing, operation, maintenance and repair of the Cogeneration Facility, as described in plans and specifications prepared by Lessee pursuant to the Amended Project Services Agreement, and (ii) office and control room space for 7 operation of the Cogeneration Facility end other uses associated with operating the Cogeneration Facility (including, without limitation, the construction, hookup, testing, operation maintenance and repair of a water demineralization plant which Lessee may deem necessary in lieu of the existing Water Plant (hereinafter defined)) that do not interfere with Lessor's use of the Building. Except as set forth in Section 5.1(b), the Premises shall be used for no other purpose. 5.2 Compliance with Law. With regard to all or. any part of the Premises or to the use or manner of use of the Premises. or to the fixtures and equipment in the Premises, throughout the term of this Lease, and at its sole cost and expense, Lessee shall: (i) comply promptly with all laws, ordinances, notices. orders; rules, regulations and requirements of all federal, state and municipal governments and all departments. commissions, boards and officers thereof, and of the ?1ational Board of Fire Underwriters or any other body now or hereafter constituted exercising similar functions; and (ii) keep in force at all times all licenses, consents and permits necessary for the lawful use of the Premises for the purposes herein provided. Lessee shall have the right to contest the validity of any purported violation, provided that such contest operates to prevent enforcement of any remedy by any party for such purported violation. Lessee shall not use nor permit the use of the Premises in any manner that will tend to create waste or a nuisance, or shall tend to unreasonably disturb Lessor or PECO in their respective operations. Lessee shall comply with all reasonable rules and regulations established by Lessor from time to time. 6. Maintenance, Repairs and Alterations. 6.1 Maintenance, Repairs and Alterations. (a) Except as specifically otherwise provided in Paragraph 6.1(c) hereof, Lessee, at its sole cost and expense, shall maintain, repair and replace, and keep in good order, condition and repair the Premises, including, without limitation, (i) all heating, air conditioning, ventilating, plumbing and electrical systems servicing the Premises (as described in subsection (b) below) and (ii) the portion of the Building roof, walls (external and internal) and foundation located within the Premises. Lessee shall also be responsible for any repairs, replacements or maintenance necessary or appropriate to render existing systems and utilities located in the Premises available and operative for use by Lessee. 8 (b) Exhibit C attached hereto lists certain systems, equipment and services (collectively. "Services") which will be required by the cogeneration Facility, and describes the scope of Lessee's maintenance. repair and replacement responsibilities for each of the Services. (c) Lessor, throughout the term of this lease and at Lessor's sole cost and expense. shall make all necessary repairs to the footings and foundations and the structural steel columns and girders forming a part of the Building outside the Premises. and to exterior walls outside the Premises; provided. however, that Lessor shall have no responsibility to make any repair unless and until Lessor receives written notice of the need for such repair. and provided further that Lessor shall have no responsibility to repair any damage (other than ordinary wear and tear) which arises out of or is caused by Lessee's use, manner of use or occupancy of the Premises, or by Lessee's installations in or upon the Premises, or by any act or omission of Lessee or any employee, agent, contractor or invitee of Lessee. Lessor shall initiate repair of any problems described in this section that materially affect the operation of the Cogeneration Facility within seven (7) business days following receipt of notice, and shall diligently pursue such repairs thereafter to completion, subject to delays for circumstances beyond Lessor's reasonable control. 6.2 Surrender. On the last day of the term hereof, or on any sooner termination, Lessee shall surrender the Premises to Lessor in the condition required by the Amended Project Services Agreement. Lessee shall repair any structural damage to the Premises occasioned by the removal of Lessee's equipment. 6.3 Lessor's Rights. If Lessee fails to perform any of Lessee's obligations under this Section 6. Lessor may at its option (but shall not be required to) enter upon the Premises, after five (5) days prior written notice to Lessee, and put the same in good order, condition and repair consistent with its condition on the date that the Cogeneration Facility begins operation, and the cost thereof together with interest thereon shall become due and payable as Additional Rent to Lessor immediately upon demand. 6.4 Lessee's Remedies. If Lessor shall fail to perform any of the terms, provisions, covenants or conditions to be performed or complied with by Lessor pursuant to this Lease, and any such failure shall remain uncured for a period of thirty (30) days after Lessee shall have served upon Lessor notice of such failure, then Lessee may at Lessee's option perform any such term, provision, covenant or condition, and the cost entailed shall immediately be owing by Lessor to Lessee; provided, 9 however, that Lessee proceeds to perform any such term, provision, covenant or condition in strict accordance with the following procedure: (a) Lessee shall serve notice upon Lessor of Lessor's failure to perform any of the terms, provisions, covenants or conditions to be performed or complied with by Lessor pursuant to this Lease and Lessor shall have thirty (30) days after service of such notice to cure; (b) If Lessor has not cured such failure or has not commenced to cure such failure within said 30-day period, Lessee shall notify Lessor that Lessee intends to engage in independent consulting engineer, or other appropriate consulting personnel, to advise Lessee of the nature of work which should be undertaken to effect a long-term care; (c) If at the time Lessee receives a report from the consulting engineer, or other appropriate consulting personnel, Lessor has not cured such failure or has not commenced to cure such failure, Lessee shall notify Lessor of the nature of work which was recommended to be performed to effect a long-term cure and that Lessee intends to seek competitive bids for the performance of the work; (d) Upon receiving such bids, Lessee shall send Lessor a copy of the bids received and if Lessor has not cured or commenced to cure such failure within ten (10) days of Lessor's receipt of the copy of bids, Lessee my proceed to cure Lessor's failure and recover the cost thereof from Lessor with interest of two percent (2%) over the Prime Rate (as defined in the Project Services Agreement). In the event a dispute arises between Lessor and Lessee regarding either party's performance under any provision of this Section 6,4, the aggrieved party shall promptly notify the other party to this Lease of the dispute within ten (10) business days after such dispute arises. If the parties shall have failed to resolve the dispute within ten (10) business days after delivery of such notice, each party shall, within five (5) business days thereafter. nominate a senior officer of its management to meet at the Premises, or at any other mutually agreed location, to resolve the dispute. Should the parties be unable to resolve the dispute to their mutual satisfaction within ten (10) business days after such nomination, each party shall have the right to pursue any and all remedies available at law or in equity. Without limiting the validity of the foregoing covenants, the failure or inability of either party to give the required notice or make the required nomination shall never be construed to stop or deny such party's right to pursue any and all remedies otherwise available to such party at law or in equity. 10 (e) Notwithstanding the foregoing Lessee may take reasonable immediate action, with telephone notice to Lessor, to cure any default by Lessor if necessary to prevent imminent danger to persons or imminent material damage to property. 6.5 Alteration and Additions. (a) Following installation of the cogeneration Facility pursuant to Section 4, Lessee shall not, without Lessor's prior written consent (not to be unreasonably withheld), make any alterations. improvements, or additions on or about the premises. except for minor nonstructural alterations. (b) Any alterations9 improvements or additions in or about the Premises that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with proposed plans. If Lessor shall give its consent. the consent shall be deemed conditioned upon Lessee acquiring all permits required to do so from appropriate governmental agencies, the furnishing of a copy thereof to Lessor prior to the commencement of the work and the compliance by Lessee with all conditions of the permits in a prompt and expedi tious manner. (c) Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use in the Premises which claims are or may be secured by any mechanics' or materialmen's lien against the Premises or any interest therein. If Lessee shall, in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense, defend itself and Lessor against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises, upon the condition that if Lessor or its mortgagee shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to such contested lien, claim or demand indemnifying Lessor; against liability for the same and holding the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor's reasonable attorneys' fees and costs if Lessor is named as a party in such action. (d) All alterations, improvements, and additions which may be made on the Premises shall become the property of Lessor and remain upon and be surrendered with the Premises at the expiration of the term, as the term may be extended under Section 2.3. Notwithstanding the provisions of this Section 6.5(d), the Cogeneration Facility, other than that portion which 11 is affixed to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Lessee and may be removed by Lessee, unless Lessee's interest or a portion thereof in the Cogeneration Facility has previously been acquired by PUPCO pursuant to the Amended Project Services Agreement. 7. Insurance; Indemnity. 7.1 Casualty Insurance. Lessee, at Lessee's sole cost and expense, shall maintain and keep in effect throughout the term of this Lease insurance against loss or damage to the premises by fire and such other casualties as may be included within all-risk insurance and other insurance as may be reason ably needed, for not less than the cost of replacing the Premises with a utility grade permanent structure ("Replacement Structure") which is (a) in compliance with all applicable governmental and quasi-governmental laws, rules and regulations (including, without limitation, all applicable building codes), and (b) otherwise sufficient so that the Replacement Structure contains the same number of square feet as the Premises and it can be used for all of the purposes set forth in Section 5. Lessor and Lessee acknowledge that the Replacement Structure need not be constructed using the same materials which are currently a part of the Premises, provided. the Replacement Structure is otherwise in compliance with the requirements set forth in this Section 7.1. Such insurance shall include rental coverage in an amount equal to one year's Additional Rent hereunder (as reasonably estimated by Lessor from time to time, based on actual results once available). Lessor and Lessee shall both be named as insured and as loss payee AS their interests may appear. The aforesaid insurance shall be in companies and in form, substance and amount (where not stated above) reasonably satisfactory to Lessor and any mortgagee of Lessor. and shall contain standard mortgage clauses satisfactory to Lessor's mortgagee. The aforesaid insurance shall not be subject to cancellation except after at least thirty (30) days prior written notice to Lessor and any mortgagee of Lessor. At least thirty (30) days prior to the Commencement Date, and thirty (30) days prior to any subsequent date on which the insurance would expire by its term, a certificate evidencing the required coverage shall be provided to Lessor, and original insurance policies shall be delivered Lessor within sixty (60) days following the date on which certificates are due hereunder. Lessor shall also maintain similar all-risk insurance for the Building, and shall name Lessor and Lessee as insured as their interests may appear. 7.2 Liability Insurance. Lessee, at Lessee's sole cost and expense, shall maintain and keep in effect throughout the term of this Lease insurance against liability for bodily 12 injury (including death) or property damage in or about the Premises, under a policy of comprehensive general public liability insurance, naming Lessor and Lessee as insured parties, with such limits as to each as may reasonably be required by Lessor from time to time but not less than $25,000,000 for each person and $25,000,000 for each occurrence of bodily injury (including death) and for property damage. Lessee shall also maintain Workers' Compensation in statutory amounts, and employer's liability and automobile liability coverage in the amount of $10,000,000 each. Each such policy of insurance shall provide that it shall not be canceled without at least thirty (30) days prior written notice to Lessor. At least thirty (30) days prior to the Commencement Date, and thirty (30) days prior to any subsequent date on which the insurance would expire by its terms, a certificate evidencing the required coverage shall be delivered to Lessor by Lessee. If Lessee shall fail, refuse or neglect to obtain or to maintain any insurance that it is required to provide, or to furnish Lessor with satisfactory evidence of coverage within the time required, Lessor shall have the right to purchase such insurance. All payments for such insurance made by Lessor shall be recoverable by Lessor from Lessee, together with interest thereon, as Additional Rent promptly upon being billed therefor. 7.3 Waiver of Subrogation. Each of the parties hereto releases the other. to the extent of the releasing party's insurance coverage. from all liability for any loss or damage covered by such insurance which may be inflicted upon the property of such party even if such loss or damage shall be brought about by the fault or negligence of the other party. its agents or employees; provided. however, that this release shall be. effective only with respect to loss or damage occurring during such time as the appropriate policy of insurance shall contain a clause to the effect that this release shall not affect said policy or the right of the insured to recover thereunder. If any policy does not permit such a waiver, and if the party to benefit therefrom requests that such a waiver be obtained, the other party agrees to obtain an endorsement to its insurance policies permitting such waiver of subrogation if it is available. If an additional premium is charged for such waiver, the party benefiting therefrom agrees to pay the amount of such additional premium promptly upon being billed therefor. 7.4 Equipment, Etc. Lessee shall, at its expense, insure its fixtures, equipment and improvements. 13 7.5 Indemnity. (a) Lessee shall indemnify and hold harmless Lessor from and against any and all claims arising from Lessee' a use of the Premises or from the conduct of Lessee's business or from any activity. work, or things done1 permitted, or suffered by Lessee in or about the Premises or elsewhere and shall further indemnify and hold harmless Lessor from and against any and all claims arising from any breach or default in the performance of any obligation on Lessee's part to be performed under the terms of this lease, or arising from any negligence of the Lessee or any of Lessee's agents. contractors or employees, and from and against all costs, attorney's fees, expenses and liability incurred in the defense of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against Lessor by reason of any such claim, Lessee upon notice from Lessor shall defend the same at Lessee's expense by counsel satisfactory to Lessor. (b) Lessor shall indemnify and hold harmless Lessee from and against any and all claims arising from. Lessor's use of the Building or from the conduct of Lessor's business or from any activity. work, or things done. permitted. or suffered by Lessor in or about the Building or elsewhere and shall further indemnify and hold harmless Lessee from and against any and all claims arising from any breach or default in the performance of any obligation on Lessor's part to be performed under the terms of this lease, or arising from any negligence of Lessor or any of Lessor's agents, contractors or employees. and from and against all costs, attorney's fees. expenses and liability incurred in the defense of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against Lessee by reason of any such claim. Lessor upon notice from Lessee shall defend the same at Lessor's expense by counsel satisfactory to Lessee. 7.6 Exemption. Neither Lessor nor its agents shall be liable for injury to Lessee's business, for loss of income therefrom or for injury or damage which may be sustained by the person or property of Lessee, its employees. invitees, customers, agents or contractors, or any other person in or about the Premises caused by or resulting from fire, explosion, falling wall and/or ceiling materials, steam, electricity, gas, dampness, water or rain which may leak or flow from or into any part of the Premises from the roof, street or subsurface condition or from any other place, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or by any other cause of any nature, whether such damage or injury results from conditions arising upon the Premises or from other sources or 14 places, and regardless of whether the cause of such damage or injury or the means of repairing same is inaccessible to Lessee, except for claims for which Lessor is liable to indemnify Lessee under Section 7.5(b). Neither Lessor nor its agents shall be liable for any damage caused by other tenants or persons in the Premises, occupants of adjacent property of the Building. or the public. or caused by operations in construction of any private, public or quasi-public work. Lessor shall not be liable for any latent defect in the Premises. 8. Damage by Fire or Other Casualty. 8.1 Restoration. If the Premises shall be damaged or destroyed by fire or other casualty, Lessee shall promptly notify Lessor, and Lessor shall elect. by notice to Lessee within ten (10) business days following receipt of Lessee's notice. to (i) terminate this Lease. (ii) subject to any mortgagee's consent and to the conditions set forth in this Section 8, to repair. rebuild, replace such damage and restore the Premises to substantially the same condition in which they were immediately prior to such damage or destruction. or (iii) subject to any mortgagee's consent and to the conditions set forth in this Section 8, to construct a Replacement Structure. In the event Lessor elects not to make such restoration or construct a Replacement Structure, as applicable. Lessee shall have the right, but not the obligation, to (i) reject the termination of this Lease, whereupon the Lease shall remain in effect but the parties' maintenance obligations shall be suspended during reconstruction, and (ii) repair. rebuild or replace such damage or construct a Replacement Structure. and Lessor shall in either such event release to Lessee any portion of any insurance proceeds received by Lessor for the portion of the Premises damaged or destroyed. 8.2 Time for Repair. If Lessor or Lessee elects to rebuild and restore the Premises. the work shall be commenced promptly with due diligence. taking into account the time required by Lessor or Lessee to effect a settlement with, and procure insurance proceeds from, the insurer, and for delays beyond Lessor's or Lessee's reasonable control. 8.3 Lessee's Property. Lessor's election to restore the Premises under this Section shall not include the repair. restoration or replacement of the cogeneration Facility. fixtures, alterations, furniture or any other property owned, installed, made by. or in the possession of Lessee. 15 9. Utilities. 9.1 Oil. (a) Lessee shall have the right to receive No. 2 and No. 6 oil throughput required for operation of the Cogeneration Facility on the terms and conditions set forth in the agreement attached hereto as Exhibit E. (b) All costs and expenses associated with making No.2 oil available to the Cogeneration Facility shall be the sole responsibility of Lessee. provided that Lessor shall cooperate in providing at no charge easements and/or licenses for the installation of pipes, storage tanks, pumps and related facilities so long as such installation does not interfere with Lessor's operations. Any easement or licenses required from PECO as owner of the Land or from any other party except Lessor shall be obtained by Lessee at Lessee's expense. and Lessor shall have no liability of any kind for PECO's or such other party's failure or refusal to grant any easement. Oil shall only be delivered to Lessee by truck during emergencies. such as adverse weather preventing barge delivery. 9.2 Natural Gas. All costs and expenses associated with making natural gas available to the Cogeneration Facility shall be the sole responsibility of Lessee provided that Lessor shall provide at no charge easements and/or licenses for the installation of pipes and related facilities so long as such installation does not interfere with Lessor's operations. Any easement or licenses required from PECO as owner of the Land, or from any party other than Lessor shall be obtained by Lessee at Lessee's expense. and Lessor shall have no liability of any kind for PECO's or such other party's failure or refusal to grant any easement. If Lessee elects to make natural gas available to the Cogeneration Facility. Lessor shall have the right to purchase natural gas from Lessee, or to utilize gas piping installed by or at the request of Lessee to obtain natural gas from any supplier provided (i) that such gas is available above and beyond Lessees reasonable requirements, and (ii) Lessor shall pay for such natural gas at the same rate paid by Lessee plus any additional cost incurred by Lessee for such additional use including a pro rata portion of any local distribution pipeline transportation costs, including losses if applicable. If Lessor's existing Boiler 26 is converted to burn natural gas and oil (or Lessee is advised in writing by Lessor o( Lessor's intention to so convert Boiler 26), Lessee shall ensure that the natural gas distribution pipeline installed to supply the Project, from the interconnection with an interstate pipeline to the burner tip, will be of sufficient size so that both the Project (Phase I and Phase II) and Boiler 26 can utilize natural gas alone when 16 operating simultaneously at their respective maximum output levels. Unless otherwise agreed by the parties in writing, Lessor shall not be obligated to purchase natural gas from Lessee and Lessee shall not be obligated to contract for or supply natural gas to Lessor. Lessee shall utilize high pressure gas pipelines to the extent required by Phase II of the Project and economically practical. Lessee shall use its best .efforts to obtain fuel for the Project at the lowest price consistent with system reliability, long term availability, and the needs of the Project (as defined in the Amended Project Services Agreement) to maintain reasonably predictable fuel prices and shall not enter into any agreements with suppliers that will contain terms 3ore onerous to Lessee (with consideration for price, contract terms, duration, reliability and delivery), than are available in the marketplace at the time any such agreement for fuel is executed on behalf of the Project. Lessee shall make available to Lessor all information and documentation with respect to gas purchases as Lessor may be required to provide to the Pennsylvania Public utility Commission. In addition, Lessee shall give to Lessor reasonable prior notice of any meetings, discussions, or negotiations that Lessee may have with the Philadelphia Gas Works ("PGW") which relate to the Project and Lessor shall be permitted to attend and participate in any such meetings, discussions, or negotiations. Lessee shall provide to Lessor copies of all correspondence and documents related to such meetings, discussions, or negotiations. Lessee represents. warrants and covenants that neither Lessee, O'Brien, Adwin nor any affiliate of any of them (collectively, "Lessee's Group") has executed or will execute any contract or arrangement in connection with supplying natural gas to the Project under which any other property or project owned, operated or controlled by any of Lessee's Group would receive beneficial terms (including, without limitation, a more favorable price) gained solely by the Lessee's Group's acceptance of less beneficial terms for the Project. 9.3 Demineralized Water. (a) Lessee shall have the right to purchase water treated at Lessor's existing demineralization plant ("Water Plant") in accordance with the terms of this Section 9.3. All modifications, additions or expansions to the Water Plant required to produce demineralized water for Lessee's use shall be performed by Lessor at Lessee's sole expense pursuant to plans, specifications and construction contracts obtained by Lessor at Lessee's expense and approved in advance by Lessee in Lessee's reasonable judgment. Lessor shall use its best efforts to secure regulatory approval to increase the price of steam to recover the cost of modifying or expanding the Water Plant over the shortest possible cost recovery period. All significant contracts in 17 connection with such construction shall be chosen from at least three bids and Lessor shall select the lowest qualified bid. (b) Lessee shall initially pay the amounts for demineralized water for Phase I and for Phase II of. the Project as set forth in Exhibit F attached hereto, such price to increase proportionately from time to time as Lessor's cost of production increases ("water Price"). Lessor shall bill Lessee for all demineralized water used by Lessee on a monthly basis. and the water Price shall constitute Additional Rent. To the extent reasonably feasible. electricity from the Cogeneration Facility shall be used to operate the Water Plant and the cost of the electricity shall be offset against the Water Price. Any electrical interconnection cost required to enable the Cogeneration Facility to provide power for the Water Plant or any other use by Lessor shall be prorated between Lessee and Lessor based on relative cost savings. Back-up electricity for the water Plant will be obtained by Lessor, and the expense thereof prorated between Lessor and Lessee. If Lessor obtains such back- up electricity from the Cogeneration Facility, Lessor's prorated portion of the expense therefor shall be offset against the Water Price. 9.4 Other Utilities. Potable water and sanitary sewer for Lessee's use shall be supplied by Lessor to the extent currently available at the Building, provided that Lessor shall not be liable for any failure to provide such utilities not within Lessor's reasonable control. All usage charges and all connection fees for all utilities shall be paid for by Lessee. 9.5 Electricity. (a) Lessee shall bear the cost of all electricity used by Lessee or by the Cogeneration Facility based on a sub- meter, at the same rate paid by Lessor plus any additional cost incurred by Lessor for such additional use. All billing by Lessor for electricity shall constitute Additional Rent payable by Lessee. (b) As a condition to Lessor's obligations hereunder, Lessee shall obtain PECO's consent to connecting the Cogeneration Facility's electric bus to Lessor's electrical system and provide evidence to Lessor of such consent, such connection to be paid for by Lessor. When such connection occurs, Lessor shall pay for electricity at the same rate as PECO or any other purchasing utility pays to Lessee for electric power. Any standby charges associated with Lessor'' connection to the Cogeneration Facility'' electrical bus shall be paid by Lessor on a pro rata basis. 18 9.6 Cost. The cost of all utilities used by Lessee shall be the sole responsibility of Lessee and shall be the sole directly to the supplier (if separately metered) or to Lessor as Additional Rent upon demand, if not separately metered. All interconnect costs for all utilities. including any required demolitions and site modifications. will be paid by Lessee, except that Lessee shall be responsible only for those interconnection costs that Lessee would have to incur' if Lessor elected not to interconnect with the Cogeneration Facility's electric bus. Such demolitions and modifications will not unreasonably interfere with Lessor's operations in the Building. 10. Assignment and Subletting. 10.1 Lessor's Consent Required. Except as set forth in the Amended Project Services Agreement and except for security assignments to any construction or permanent lender to Lessee or to any electricity purchaser, Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent, which Lessor may unreasonably withhold. Any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void, and shall constitute a breach of this Lease, at Lessor's option. Notwithstanding the foregoing, Lessee may assign this Agreement as security for or as required by any lender of funds to the Lessee. 10.2 No Release of Lessee. Except as set forth in the Amended Project Services Agreement, no subletting or assignment, regardless of Lessor's consent, shall release Lessee from Lessee's obligations hereunder or alter the primary liability of Lessee to pay the rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of Additional Rent by Lessor from any other person shall not be deemed to be a waiver by Lessor of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by any assignee of Lessee or any successor of Lessee in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of exhausting remedies against such assignee. Lessor may consent to amendments or modifications to this Lease with assignees of Lessee after notice thereof to Lessee if Lessee is still liable hereunder, and such action shall not relieve Lessee of liability under this Lease. No notice to Lessee of such amendments or modifications shall be required. Any permitted assignee shall assume the obligations of Lessee hereunder, by a writing satisfactory to 19 Lessor, and a copy thereof shall be delivered to Lessor and to Lessee. 10.3 Attorney's Fees. In the event Lessee shall assign this Lease or sublet the Premises (subject to Lessor's consent as set forth in Section 10.1) or request the consent of Lessor to any assignment or subletting or if Lessee shall request the consent of Lessor for any act that Lessee proposes to do, then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection therewith. 10.4 Conflict. In the event of any conflict between the terms of this Section 10 and the terms of the Amended Project Services Agreement, the terms of the Amended Project Services Agreement shall control. 11. Defaults; Remedies. 11.1 Lessee's Major Default. The occurrence of a Seller's Major Default under the Amended Steam Purchase Agreement or an Owner's Major Default under the Amended Project Services Agreement shall constitute a Lessee's Major Default hereunder and entitle Lessor to terminate this Lease and to re-enter the Premises. together with all additions, alterations and improvements. and, at the option of Lessor. remove all persons and all or any property therefrom. either by summary dispossess proceedings or by any suitable action or proceeding at law, without being liable for prosecution or damages therefor (other than those arising from Lessor's gross negligence or willful misconduct), and repossess and enjoy the Premises. 11.2 Lessee's Minor Default. The occurrence of any one or more of the following events shall constitute a Lessee's Minor Default: (a) The failure by Lessee to make any payment of Additional Rent when due or any other payment required to be made by Lessee hereunder when due. (b) The failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessee, other than as described in paragraph (a) above, where such failure shall continue for a period of 30 days after written notice thereof from Lessor to Lessee; provided. however, that if the nature of Lessee's default is such that more than 30 days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commences such cure within said 30 day period and thereafter diligently pursues such cure to completion. 20 (c) (i) The making by Lessee of any general assignment. or general arrangement for the benefit of creditors; (ii) the. filing by or against Lessee of a case or petition to have Lessee adjudged a bankrupt or a case or petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a case or petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest. in this Lease, where such seizure is not discharged within 30 days. (d) The abandonment or vacating of the Premises by Lessee, which shall include any cessation of operation of the Cogeneration Facility for a period in excess of ten (10) consecutive days other than for repair or scheduled maintenance. 11.03 Remedies. In the event of a Lessee's Minor Default, Lessor shall have the right (i) to collect from Lessee by legal action all amounts owing with interest at two percent over Prime Rate (as defined in the Amended Project Services Agreement), or (ii) to seek injunctive relief. 11.4 Default by Lessor. (a) Lessor's Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default by Lessor: (b) The failure by Lessor to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessor. where such failure shall continue for a period of 30 days after written notice thereof from Lessee to Lessor; provided, however, that if the nature of Lessor's default is such that more than 30 days are reasonably required for its cure, then Lessor shall not be deemed to be in default if Lessor commences such cure within such 30 day period and thereafter diligently pursues such cure to completion. (c) Upon the occurrence of an Event of Default by Lessor hereunder, Lessee may exercise Lessee's rights under Section 6.4(a)-(d), or if such Event of Default is persistent and is continuing and threatens irreparable harm to Lessee, to seek injunctive relief. Upon the occurrence of an Event of Default under the Amended Steam Purchase Agreement, the Amended Steam Venture Agreement or the Amended Project Services Agreement that 21 would permit Lessee to terminate these agreements, Lessee shall also be entitled to terminate this Agreement. 11.5 Late Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of Additional Rent will cause Lessor to incur costs not contemplated by this Lease. the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Lessor by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of Additional Rent shall not be received by Lessor or Lessor's designee or within thirty (30) days after any such amount shall otherwise be due, Lessee shall pay to Lessor a late charge equal to 3% of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment of Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. 11.6 Curing Defaults. If Lessee shall be in default in the performance of any of its obligations hereunder, Lessor, without any obligation to do so, in addition to any other rights it may have in law or equity, may elect to cure such default on behalf of Lessee after ten (10) days' written notice (except in the case of emergency) to Lessee. Lessee shall reimburse Lessor upon demand for any sums paid or costs actually incurred by Lessor in curing such default, including interest thereon from the respective dates of Lessor's making the payments and incurring such costs, which sums and costs together with interest thereon shall be deemed Additional Rent payable promptly upon being billed therefor. 11.7 Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserve to Lessor is intended to be exclusive of any other right or remedy herein or by law, but each shall be cumulative and in addition to every other right or remedy given herein or now or hereafter existing at law or in equity or by statute. 12. Condemnation. 12.1 Termination. (i) If all of the Premises are taken by a condemnation; or (ii) if any portion of the Premises is taken by a condemnation and, in Lessor's reasonable opinion, it would be impractical or the condemnation proceeds will be insufficient to restore the remainder of the Premises; or (iii) if any portion of the Premises is taken by a condemnation and, in 22 Lessee's reasonable opinion, the taking is so extensive or constitutes the taking of a part of the Premises so vital to its operation that such partial taking has the same practical effect as a total taking, then, in any such event, this Lease and the other Project Agreements shall terminate and all obligations hereunder shall cease as of the date upon which possession is taken by the condemnor. 12.2 Partial Condemnation. If there is a partial condemnation and this Lease has not been terminated pursuant to Section 12.1 hereof, Lessor shall restore the Building and the improvements which are part of the Premises to a condition and size as nearly comparable as reasonably possible to the condition and size thereof immediately prior to the date upon which possession shall have been taken by the condemnor. If the condemnation proceeds are more than adequate to cover the cost of the restoration and Lessor's expenses in collecting the condemnation proceeds, any excess proceeds shall be retained by Lessor or applied to repayment of any mortgage secured by the Premises. 12.3 Award. In the event of a condemnation affecting Lessee, Lessee shall have the right to make a claim against the condemnor for removal expenses, business dislocation damages, moving expenses, and the value of special purpose equipment installed by Lessee; provided and to the extent, however, that such claims or payments do not reduce the sums otherwise payable by the condemnor to Lessor. 12.4 Mortgagee. If the first mortgagee of the Premises in the reasonable exercise of its judgment deems it impractical or the condemnation proceeds insufficient to restore the Premises, the decision of the mortgagee shall be binding upon Lessor and Lessee. 13. General Provisions. 13.1 Estoppel Certificate. Lessee shall at any time upon not less than ten (10) days' prior written notice from Lessor execute, acknowledge and deliver to Lessor a written instrument in recordable form certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that it is in full force and effect as modified and stating the modifications); certifying that Lessee has accepted possession of the Premises (if true); stating the date on which the term of the Lease commenced and the dates to which minimum rent, Additional Rent and other charges have been paid in advance, if any; stating that to the best knowledge of the signer of such instrument Lessor is not in default of this Lease (or specifying any default); stating any other fact or certifying any 23 other condition reasonably requested by Lessor or reasonably required by any mortgagee or prospective mortgagee or purchaser of the Premises or any interest therein; and stating that it is understood that such instrument may be relied upon by any mortgagee or prospective mortgagee or purchaser of the Premises or any interest therein or by any assignee of Lessor's interest in this Lease or by any assignee of any mortgagee. The foregoing instrument shall be addressed to Lessor and to any mortgagee, prospective mortgagee, purchaser or other party specified by Lessor. 13.2 Certain Definitions. (a) "Lessor". The word "Lessor" is used herein to include the Lessor named above as well as its successors and assigns, each of whom shall have the same rights, remedies, powers, authorities and privileges as he would have had he originally signed this lease as Lessor. Any such person, whether or not named herein, shall have no liability hereunder after it ceases to hold title to the Premises. Neither Lessor nor any principal of Lessor shall have any personal liability with respect to any of the provisions of this Lease or the Premises, and if Lessor is in breach or default with respect to Lessor's obligations under this Lease or otherwise, Lessee shall look solely to the equity of Lessor in the Premises for the satisfaction of Lessee's claims. (b) "Lessee". The word "Lessee" is used herein to include the Lessee named above as well as its successors and assigns, each of which shall be under the same obligations and liabilities and each of which shall have the same rights, privileges and powers as it would have possessed had it originally signed this lease as Lessee. Each and every of the persons named above as Lessee shall be bound, jointly and severally, by the terms, covenants and agreements contained herein. However, no such rights, privileges or powers shall inure to the benefit of any assignee of Lessee, immediate or remote, unless the assignment to such assignee is permitted or has been approved in writing by Lessor. (c) "Mortgage" and "Mortgagee". The word "mortgage" is used herein to include any lien or encumbrance on the Land, the Premises or any part of or interest in or appurtenance to the Premises. The word "mortgagee" is used herein to include the holder of any mortgage. The term "first mortgage" refers to the holder of the most senior lien on the Premises. Wherever any right is given to a mortgagee, that right may be exercised on behalf of such mortgagee by a representative or servicing agent of such mortgagee. 24 13.3 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance(s) shall be invalid or unenforceable to any extent, (a) the remainder of this Agreement and the application of such provision to other Person(s), entity(ies) or circumstance(s) shall not be affected thereby and (b) each such provision shall be enforced to the greatest extent permitted by law. 13.4 Time of Essence. Time is of the essence of all provisions hereof. 13.5 Captions. Article and paragraph captions are not a part hereof. 13.6 Amendments. This Lease may be modified in writing only, signed by both of the parties. 13.7 Notices. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal delivery, overnight delivery or certified mail. If given personally, such notice shall be deemed to be given on the date delivered; if sent by overnight delivery, such notice shall be deemed to be given as of the day it is delivered; or if sent by certified mail, such notice shall be deemed to be given three (3) days after mailing. If given personally, by overnight delivery or by certified mail, notice shall be deemed sufficiently given if addressed to Lessee or to Lessor at the address noted below the signature line of the respective parties, as the case may be, and to each party's counsel as set forth on the signature page. Either party may by notice to the other specify a different address for notice purposes. 13.8 Waivers. No waiver by Lessor of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Lessee of the same or any other provision. Lessor's consent to or approval of any act shall not be deemed to render unnecessary the obtaining of Lessor's consent to or approval of any subsequent act by Lessee. The acceptance of rent or Additional Rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent. The payment of any rent or Additional Rent hereunder by Lessee shall not be a waiver of any preceding breach by Lessor of any provision hereof, regardless of Lessee's knowledge of such preceding breach at the time of acceptance of such rent. 13.9 Recording. Lessee or Lessor, at any time and from time to time and within five(5) days after the other party's written request, shall execute, acknowledge and deliver 25 to the other party a short form or memorandum of this Lease for recording purposes. 13.10 Holding Over. If Lessee remains in possession of the Premises or any part thereof after the expiration of the term hereof without the express written consent of Lessor, such occupancy shall be a tenancy from month to month under the same terms and conditions set forth in this Lease. Anything to the contrary notwithstanding, any holding over by Lessee without Lessor's prior written consent shall constitute Lessee's Major Default hereunder without notice or cure period and shall be subject to all the remedies set forth herein. 13.11 Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 13.12 Binding Effect: Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Lessee, this Lease shall bind the parties and their successors and assigns. This Lease shall be governed by the laws of the commonwealth of Pennsylvania. 13.13 Subordination and Attornment. (a) This Lease and the estate, interest and rights hereby created are subordinate to any mortgage now or hereafter placed upon the Land, the Building or any interest therein, and to all renewals, modifications, consolidations, replacements and extensions of same as well as any substitutions therefor. Lessee agrees that in the event any person, firm, corporation or other entity acquires the right to possession of the Land and the Building including any mortgages, Lessee shall, if requested, attorn to and become the tenant of such person, firm, corporation or other entity, upon the same terms and conditions as are set forth herein for the balance of the Lease term. The foregoing shall be operative with respect to any lien hereafter created only if Lessor shall deliver to Lessee the written agreement of the lienholder that such lienholder shall not disturb Lessee's possession under this Lease, in the event of foreclosure, transfer in lieu thereof, or other enforcement proceedings, provided that Lessee shall not be in default hereunder. Any such agreement shall be in reasonable form, may require Lessee to confirm the subordination of this Lease and to agree to attorn to the lienholder, and may provide that the lienholder is not bound by the acts or omissions of Lessor, and Lessee shall not unreasonably withhold or delay execution or delivery of such agreement. Lessee, if requested by Lessor, shall execute any such instruments in recordable form as may be reasonably required by Lessor in order to confirm or effect the subordination of this 26 Lease and the attornment of Lessee to future landlords in accordance with the terms hereof. (b) Lessor has obtained the consent of lessor's mortgage lender to transaction contemplated in this Lease. 13.14 Lessor's Access. Lessor and Lessor's agents shall have the right to enter the Premises at all reasonable times for the purposes of inspecting the Premises, showing the Premises to prospective lenders and making required alterations, repairs, improvements or additions to the Premises or to the Building. 13.15 Signs. Except for signs which are located wholly within the interior of the Building and which are not visible from the exterior of the Building, no signs shall be placed, erected, maintained or painted at any place upon the Premises without the prior written consent of lessor as to the size, design, color, location, content, illumination, composition, or material and mobility thereof, which consent shall not be unreasonably withheld. All signs shall be installed and maintained by by Lessee, at its cost, in good condition during the term of this Lease, and Lessee shall remove all signs at the termination of this lease and shall repair and restore any damage caused by the installation or removal thereof. 13.16 Merger. The voluntary of other surrender of this Lease by Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall not work a merger unless lessor so stipulates in writing, and shall, at the option of lessor, terminate all or any existing subtenancies or may, at the option of Lessor, operate as an assignment to Lessor of any or all of such subtenancies. 13.17 Corporate Authority. If Lessee or any partner of Lessee is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of the corporation, in accordance with a duly adopted resolution of the Board of Directors of the corporation or in accordance with the Bylaws of the corporation, and that this Lease is binding upon the corporation as a partner of lessee in accordance with its terms. If lessee or any partner of Lessee is a corporation, lessee shall, upon execution of this Lease, deliver to Lessor a certified copy of a resolution of the Board of Directors of the corporation authorizing or ratifying the execution of this Lease. 13.18 Interest. Wherever interest is required to be paid hereunder, such interest shall be at the rate two percent 27 (2%) in excess of the Prime Rate in effect from time to time by the first mortgages of the Premises. 13.19 Quiet Possession. Upon Lessee paying the rent reserved hereunder and observing and performing all of the covenants, conditions and provisions on lessee's part to be observed and performed hereunder, Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this lease. 13.20 Entire Agreement. This Lease and the Related Agreements represent the entire agreement between the parties hereto and there are no collateral or oral agreements or understandings between Lessor and Lessee with respect to the Premises. Lessee agrees to make such changes to this lease as are reasonably required by any mortgagee, provided such changes do not substantially affect Lessee's rights and obligations hereunder. The masculine (or neuter) pronoun, singular number, shall include the masculine, feminine and neuter genders and the singular and plural number. 13.21 Brokers. Lessor and lessee each represent and warrant to the other that it has caused or incurred no claims for brokerage commissions, finder's fees of similar claims in connection with this Lease, and each party shall indemnify, defend and hold the other harmless from any liabilities arising from any such claim caused or incurred by it. 13.22 Waiver of Trial of Jury. Lessor and Lessee each waive trial by jury in any action or counterclaim brought by either party against the other under this Lease. 14. Hazardous Waste. 14.1 Inspection Contingency. (a) Lessee shall have the right to conduct an environmental inspection of the Premises at Lessee's expense, provided that Lessee shall release, defend, indemnify and hold Lessor harmless from any injury to person or property arising from such inspection, and shall restore the Premises to its condition prior to the inspection to the extent reasonably possible. In the event lessee is dissatisfied with the results of such inspection, Lessee may terminate this Agreement and all the Project Agreements by notice to Lessor received no later than ninety (90) days after Lessor's receipt of the environmental inspection report. Lessee shall provide Lessor with copies of all reports generated by any inspection. 28 (b) If any such environmental inspection reveals contamination on the Premises by Hazardous Material (as defined in Section 14.6), or, if subsequent to the commencement of construction of the Cogeneration Facility, further inspection reveals contamination of the Premises by Hazardous Material, (i) Lessee will be entitled to relocate the Cogeneration Facility to the parking lot of the Schuylkill Station ("Parking Lot"), or, subject to the terms of this Section 14.1(b), to another location "Alternate Site") owned by Lessor or any of its affiliates which is mutually acceptable to Lessee, Lessor and the affiliate of Lessor which is the owner of the Alternate Site, if applicable, and (ii) all dates set forth in Sections 7(D)(i and ii) of the Steam Venture Agreement shall be revised to provide for an extension of the time for performance by the respective parties to the Steam Venture Agreement required under such Sections 7(D)(i and ii) for a period equal to the length of the delay resulting from such contamination of the Premises by Hazardous Material, provided, however, in no event shall such extension exceed six (6) months. If Lessee so elects, Lessee will be entitled to perform an environmental inspection of the Parking Lot and/or alternate Site at Lessee's sole cost and expense. If such environmental inspection reveals contamination of the Parking Lot or Alternate site by Hazardous Material, or, if subsequent to the commencement of construction of the Cogeneration Facility on the Parking Lot or Alternate Site, further inspection reveals contamination of the Parking Lot or Alternate site by Hazardous Material, Lessee may terminate this Lease and all Project Agreements without further liability to lessor. If Lessee elects to relocate the Cogeneration Facility to the Parking Lot or Alternate Site, the appropriate modifications will be made to this Lease through written amendment, which modifications (if the Alternate Site is selected) shall include, without limitation, revising the minimum annual rent due to Lessor to be a rent equivalent to that which Lessor would otherwise be able to command for the Alternate site in the marketplace. (c) Lessor shall be responsible for making all notifications required by applicable law to all applicable governmental bodies which become necessary as a result of any inspection of the Premises or Alternate Site, as applicable, in accordance with the terms of this Section 14.1. Notwithstanding the foregoing, Lessee shall advise Lessor of all issues related to the environmental condition of the Premises or Alternate Site, as applicable, which may require notification to any governmental bodies. 14.2 Acknowledgment. Lessee acknowledges that Lessor has advised Lessee that (i) Lessor acquired a portion of the Building from PECO, (ii) PECO had previously used a portion 29 of the Building for operation of the Steam Loop, and (iii) PECO has used and continues to use a portion of the Building for generating electrical power. Any environmental problem or liability created by any use of the Building or the Land, prior to Lessor's acquisition or lease thereof, shall not be imputed to either Lessor or Lessee. 14.3 Lessee's Representations and Warranties. Lessee represents and warrants to Lessor that it will: (a) not store, use, release, produce, install or dispose of any Hazardous Material on the Premises except in full compliance with all applicable laws and regulations and with Lessor's prior written consent; (b) provide Lessor with written notice; (i) upon Lessee obtaining knowledge of any potential or known release, or threat or release, of any Hazardous Material at or from the Premises; (ii) upon Lessee's receipt of any notice to such effect from any federal, state, or other governmental authority; and (iii) upon the Lessee obtaining knowledge of any incurring of any expense or loss by such governmental authority in connection with the assessment, containment, or removal of any Hazardous Material for which such expense or loss Lessee may be liable or for which such expense or loss a lien may be imposed on the Premises; (c) provide Lessor with written notice of all Hazardous material brought onto the Premises and fully cooperate with lessor in complying with all tracking and monitoring requirements of any governmental agency. 14.4 Lessee's Indemnity. Lessee shall indemnify, defend, and hold Lessor harmless of and from any claim brought or threatened against lessor on account of the introduction by Lessee of Hazardous Material onto the Premises, or the release of such Hazardous Material on or from the Premises, or the release of such Hazardous Material on or from the Premises, or the failure by Lessee to comply with the terms and provisions hereof (each of which may be defended, compromised, settled, or pursued by Lessor with counsel of Lessor's selection, but at the expense of Lessee). This indemnification shall survive any termination of this Lease. 14.5 Inspection. Lessor shall have the right to enter the Premises at any time to inspect the Premises to ascertain whether they are clean and free of Hazardous Material. 14.6 Definition. The term "Hazardous Material" is used in this Lease in its broadest sense and includes but is not limited to (i) "hazardous substances" as that term is defined in Section 101(14) of the comprehensive Environmental Response, 30 Compensation and Liability Act, 42 U.S.C. 9601(14), (ii) "hazardous waste" or "solid waste" as defined in 40 CFR 261, (iii) "hazardous waste," "residual waste" and "solid waste," as defined in Section 103 of the Pennsylvania solid Waste Management Act, 35 P.S. 6018.103 or 25 Pa. Code 75.260 and 75.261; and (iv) petroleum base products, paint and solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonium compounds, asbestos, PCB's and other chemical products. 14.7 Lessor's Representation and Warranties. Lessor represents and warrants to Lessee that Lessor has no actual knowledge of any Hazardous Material stored, used, released, produced, installed or disposed of in the Building except in compliance with all applicable laws and regulations. 14.8 Lessor's Indemnity. Lessor shall indemnify, defend, and hold Lessee harmless of and from any claim brought or threatened against Lessee on account of the introduction by Lessor of Hazardous Material, onto the Premises or the Building, or the release of such Hazardous Material, on or from the Premises, or the failure by Lessor to comply with the terms and provisions hereof (each of which may be defended, compromised, settled, or pursued by Lessee with counsel of Lessee's selection, but at the expense of Lessor). This indemnification shall survive any termination of this Lease. IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year first above written. Address: LESSEE: 225 S. 8th Street GRAYS FERRY COGENERATION Philadelphia, PA 19106 PARTNERSHIP By: O'Brien Environmental Energy, Inc. By: /s/ Robert A. Shinn Attest: /s/ By: Adwin Equipment Company By: /s/ Daniel A. Neely Attest: /s/ 31 Address: LESSOR: 2600 Christian Street Philadelphia, PA 19146 PHILADELPHIA THERMAL ENERGY CORPORATION By: /s/ S.B. Smith Attest: /s/ COUNSEL FOR LESSOR: Barnett Satinsky, Esquire Fox, Rothschild, O'Brien & Frankel 2000 Market Street, 10th Floor Philadelphia, PA 19103 32 EXHIBITS AND SCHEDULES EXHIBIT A Site Plan EXHIBIT B Building Plan (Laydown and Interconnect) EXHIBIT C Lessor's Facilities and Services EXHIBIT D Ground Lease EXHIBIT E Dock Facility Service Agreement EXHIBIT F Demineralized Water Charges EXHIBIT A TO SITE LEASE LEGAL DESCRIPTION OF LAND PARCEL C-1 BLOCK 156 LOT 1 EXHIBIT F 172 ALL THAT CERTAIN lot or piece of ground with the building and improvements thereon erected, described as follows to wit: SITUATE in the 30th Ward of the said City of Philadelphia. BEGINNING at the Southwest corner of Christian Street and 26th (formerly called Burnett) Street; thence extending Southwardly along the said 26th Street; 349 feet 7 inches to the South side of Carpenter Street; thence Eastward along the South side of said Carpenter Street 12 feet 6-5/8 inches to the Northwesterly side of Grays Ferry Road; thence along the Northwesterly side of said Grays Ferry Road 250 feet 11-5/6 inches to a point in the said Northwesterly side of Grays Ferry Road which point is at the distance of 32 more or less Northeastwardly from the limit line of the right of way of the Delaware Extension of the Penna. Railroad co. Northeastwardly 165 feet be the same more or less by a line running parallel with and at the distance of 32 feet more or less from the said Northwesterly limit line of the said right of way of the Delaware Extension of the Penna. Railroad Co.; thence Northward 70 feet more or less to Christian Street aforesaid by a line running parallel with and in a Westerly direction 240 feet from the Westernmost building line of said 26th Street and thence Eastwardly along the Southerly building line of said Christian Street 240 feet to the place of beginning. PARCEL C-2 BLOCK 156 LOT 3 ALL THAT CERTAIN tract or piece of land with the buildings and improvements composing the Electric Light and Power Plant and other buildings and improvements thereon erected. SITUATE in the 30th Ward of the City of Philadelphia, described as follows to wit: BEGINNING at a point on the South side of Christian Street at the distance of 240 feet Westward from the West side of 26th (formerly called Burnett) Street; thence extending Westward along the South side of said Christian Street 638 feet 10/1-2 inches to the Southeasterly side of Schuylkill (formerly called Sutherland) Avenue; thence Southwestwardly along the said side of Schuylkill Avenue 53 feet more or less to a point thence Northwestwardly 73 feet more or less to a point on the Northwesterly side of said Schuylkill Avenue the distance of 22 feet 9-7/8 inches Southweswardly from the Southerly line of Christian Street extended; thence North 59 degrees, 45 minutes West by ground now or ___ of Charles Robb 320 feet 7-5/8 inches to the Port Wardens line in the River Schuylkill; thence Southwestwardly along the said Port Wardens line 211 feet; thence South 55 degrees East by ground of the United States Arsenal 276 feet 7-1/4 inches to the Southwesterly side of said Schuylkill Avenue; thence Southeastwardly along the said side of Schuylkill Avenue 52 feet 8-7/8 inches to a point; thence South 55 degrees East recrossing the said Schuylkill Avenue and along tract of ground used by the Pennsylvania Railroad co., said railroad 1071 feet 7-1/2 inches more or less to the Northwesterly side of Grays Ferry Road; thence Northeastwardly along the said side of Grays Ferry Road 32 feet to a point; thence Northwestwardly on a line parallel with and at the distance of 32 feet Northeastwardly from the said strip of ground used by the Penna. Railroad Co. as a railroad 164 feet 1-1/2 inches to a point and thence Northwesterly on a line parallel with the said 26th Street 475 feet 6-5/8 inches to the place of beginning. RESERVING AND EXCEPTING THEREOUT: EXHIBIT F ALL THAT CERTAIN strip or piece of land with the buildings and improvements thereon erected. SITUATE in the 30th Ward of the said City of Philadelphia and State of Pennsylvania bounded and described as follows viz: BEGINNING at a point in the Northeasterly line of land conveyed by Edward Harris and wife to The Penna. Railroad Co. by Deed dated 2/23/1860 at the distance of 764 feet 8- 1/2 inches Northwestwardly measured along said line from the West Side of Grays Ferry Road as said road is laid down on the general plan of the said City of Philadelphia and extending: thence Northwestwardly by said land 235 feet 3- 2/4 inches to a point in the Southeasterly line of the strip of land formerly known as Schuylkill Avenue; thence Northeastwardly along said lines of land 25 feet 6-3/4 inches to a point; thence Southeastwardly by other land of the said Southern Electric Light and Power Co. 228 feet 8- 1/4 inches to the place of beginning. CONTAINING 2740.66 square feet more or less. PARCEL C-3 BLOCK 156 LOT 7 ALL THAT CERTAIN triangular lot or piece of ground described according to a survey thereof made by John M. Dobre the 3rd day of July A.D., 1901 as follows: BEGINNING at a point at the intersection of the South house line of Christian Street with the center line of Schuylkill Avenue (now vacated) in the 30th Ward of the City of Philadelphia; thence extending Westward; along the Southerly line of Christian Street extended 115 feet 8-1/8 inches to the line of land formerly of the Southern Electric Light and Power co. and hereinabove described and granted; thence extending Southeastwardly along the said line making an angle of 17 degrees, 32 minutes, 26 seconds with the above described line 95 feet 10-3/8 inches to a point in the center line of said Schuylkill Avenue (now vacated); thence Northeastwardly along the center line of said Schuylkill Avenue (now vacated) 37 feet 8-3/4 inches to the first mentioned point and place of beginning. BEING as to Premises C-1 the and premises which Southern Electric Light and Power Company, a Pennsylvania Corporation by Deed dated 11-16-16 and recorded 1-30-17 in the County of Philadelphia in Deed Book JMH 140 page 420 conveyed unto The Philadelphia Electric Company, a Pennsylvania Corporation in fee. BEING as to Premises C-2 and C-3 the same premises which The Southern Electric Light and Power Company, a Pennsylvania Corporation by Deed dated 4-8-04 and recorded 1-16-06 in the County of Philadelphia in Deed Book WSY 561 page 470 conveyed unto The Philadelphia Electric Company, a Pennsylvania Corporation, in fee. EXHIBIT B to the Site Lease Building Plan (Laydown & Interconnect) EXHIBIT C LESSOR'S FACILITIES AND SERVICES Service Shared Facilities & Lessee's Maintenance/Repair/Replacement Responsibility 1. 1.200 PSI Header Lessor to maintain up to (but not including) valve separating the Project from the existing Lessor system. Project will install and maintain metering system. 2. 250 PSI Header Lessor to maintain up to (but not including) valve separating the Project from the existing Lessor system. Project will install and maintain metering system. 3. Condensate Project will install and maintain its own condensate system. Lessor may interconnect to and/or utilize the Project's condensate system but must maintain piping and equipment not related to the installation of the Project. 4. Treated Feedwater Lessor to maintain up to (but not including) valve separating the Projet from the existing Lessor system. 5. River Cooling Water Lessee solely responsible for the costs of the system from Schuylkill River channel throughout Premises. 6. Bearing Cooling Water Lessee solely responsible for the cost of the system servicing Project. 7. Power and Loan Centers Lessee solely responsible for the cost of the system servicing Project. 8. DC System and/or UPS Lessee solely responsible for the cost of the system servicing Project. i 9. Plant Master Steam Control Leases solely responsible for the cost of the system servicing Project. 10. Chemical Feed Control Leases solely responsible for the cost of the system servicing Project. 11. Exhaust Gas Stacks Stack for #25 & #26 boilers will be common to both facilities. Maintenance costs will be shared proportional to the total steam production through #25 and #26 boilers for the prior year, with the first year based on a pro forma heat and material balance. 12. station Air Lessee will own and maintain compressed air system for Project. 13. Instrument Air Lessee solely responsible for the cost of the system servicing Project. 14. Control Room To be extended to include Lessee's system. Lessee shall be solely responsible for all costs associated with the maintenance of equipment and control room facilities installed to operate the Cogeneration Facility and the Auxiliary Boiler. Lessor shall be responsible for all maintenance costs associated with all other equipment and control room facilities. 15. Fire Projection Lessor to maintain up to the valve separating the existing fire system from the new system to be installed for the Project. Existing fire pump, motor, breaker and other miscellaneous equipment, if adequate to service both Lessor and Project, to be cost shared on a 50/50 basis. ii 16. Lighting Lessor to service existing lighting. Project to service Project-related lighting. 17. Exhaust Steam from Project to provide its own Auxiliaries exhaust system. 18. Boiler Blowdown Project will install and maintain its own boiler blowdown system. Lessor may interconnect to and/or utilize system but must maintain piping and equipment not related to the installation of the Project. 19. Boiler Wash Drains Lessee solely responsible for the cost of connecting Boiler Wash Drains to the system servicing the Project and shall be responsible for all costs in proportion to its use of the system. 20. #3 T-G Electrical Lessor's responsibility. Excitation, Synchronizing & Indication 21. New Turbine Extraction Lessee solely responsible for Point the cost of the system servicing Project. 22. Central Data Collection Lessee solely responsible for System Project. the cost of the system servicing. 23. #6 Fuel Oil System Lessee solely responsible for the cost of the system up to valve separating the Project from shared facilities. Any shared facilities to be cost- shared based on ratio of: Total Oil Burned By Project Total Oil Received in #2 Tank 24. #2 Fuel Oil System Lessee solely responsible for the cost of the system servicing Project including tank, piping, pumps, instrumentation and controls and most enclosures. iii 25. Gas Fuel System Lessee solely responsible for the cost of the system servicing Project. Lessor may interconnect to and/or utilize system. Lessor to share costs of common system based on Lessor's gas use in relation to total gas use. 26. Demineralized Water Supply Costs for pumping and piping to be shared proportional with steam production. 27. Boiler Fill Lessee solely responsible for the cost of the system servicing Project. Lessor may interconnect to and/or utilize the system. 28. Crane If the Lessee elects to use the crane, Lessee solely responsible for the cost to overhaul/upgrade and maintain. 29. Rail Project to overhaul/upgrade and maintain. 30. P.A. System/Telephone Project to install any new equipment and interconnect to existing system. Operating and maintenance costs to be shared proportional with steam production. 31. 500,000 Gallon Oil Storage Lessee to convert Oil Storage Tank Tank for storage of #2 oil and to construct piping to tie in to Cogeneration Facility, at Lessee's sole cost and expense. Lessor may tie in to Oil Storage Tank for Lessor's use at Lessor's sole cost and expense. Upon termination of this Lease, Lessee to convert Oil Storage Tank for storage of #6 oil at Lessee's sole cost and expense. iv EXHIBIT D TO SITE LEASE GROUND LEASE SCHULKILL STATION LEASE AGREEMENT SCHULKILL STATION LEASE AGREEMENT made this 30th day of January, A.D., 1987 by and between PHILADELPHIA ELECTRIC COMPANY, a Pennsylvania corporation, hereinafter called Lessor, of the one part and PHILADELPHIA THERMAL CORPORATION, a Pennsylvania corporation, hereinafter called Lessee, of the other part. WHEREAS, Lessor is the owner of certain property situated on the northwest side of Grays Ferry Avenue in the Thirtieth Ward of the City of Philadelphia, Pennsylvania more fully described by metes and bounds on Exhibit "D1" attached hereto and made a part hereof, together with the buildings and improvements thereon erected and other appurtenant facilities and equipment used in the operation of Lessor's Schuylkill Generating Station, hereinafter called "Station", as more particularly shown on Exhibit "02" attached hereto and made a part hereof; AND WHEREAS, Lessor by Deed bearing even date herewith has transferred the A-2 Building, the Water Treatment Building, the Office and Shop building and by Bill of Sale bearing even date herewith has transferred, inter alis, certain equipment, facilities, and other related appurtenances, located upon those portions of Lessor's Station identified by shading on the aforesaid Exhibit "D2" and WHEREAS, Lessee wishes to take and hire from Lessor and Lessor wishes to lease to Lessee (i) the land shaded on 1 Exhibit "D2" constituting part of the Station and (ii) that portion identified by shading on attached Exhibit "D3" of the building located at the Station known as the A-1 Building (jointly, the "Demised Premises"); NOW, THEREFORE, for and in consideration of the mutual covenants herein set forth, and intending to be legally bound hereby the parties hereto for themselves, their respective successors and assigns, agree as follows: 1. LEASED AREA: Lessor hereby demises unto Lessee the Demised Premises aforesaid containing 305,347 square feet, more or less, together with the right of ingress, egress and regress for the maintenance and operation thereof. 2. OWNERSHIP: Lessee understands and agrees that Lessor's ownership of the Station includes but is not limited to all of the real property, equipment, facilities or improvements not specifically sold to Lessee in the aforementioned Deed and Bill of Sale and Lessee has only the right to possession and use of the Demised Premises upon the terms, covenants and conditions set forth herein. 3. TERM: FIFTY (50) YEARS beginning the day and year first above written and ending the 29th day of January A.D. 2037, subject to renewal as extended pursuant to paragraph 4, unless sooner terminated pursuant to any conditions or limitations or other provision of this Lease or pursuant to law. 4. RENEWAL OPTIONS: Provided there does not exist 2 any default hereunder which has not been effectively cured or expressly waived by Lessor in writing, Lessee shall have the option to renew this Lease for five successive periods of ten (10) years each under the same terms and conditions hereof, except for the rent which shall be determined in the manner hereinafter set forth; provided, however, that Lessee shall have notified Lessor in writing, by certified mail, at least six (6) months prior to the then current expiration date of this Lease, of Lessee's intention so to do. 5. (a) OBLIGATION TO PURCHASE: If at any time during the term of this Lease or any renewal or extension thereof, the Lessor shall determine and notify Lessee that its property at the Station, possibly excluding the 66 kv Substation, is not longer required for Lessor's current or anticipated needs, then the Lessee shall have the obligation within one year of notification hereof to purchase the entire Station property, including the herein Demised Premises but excluding, at Lessor's option, the 66 kV Substation, subject to such easements as Lessor may require, in its own name or in the name of a nominee, for a purchase price equal to the then current fair market value of the underlying land as raw land without regard to the buildings or improvements thereon ("Fair Market Value"). If Lessor and Lessee are unable to agree upon the then current Fair Market Value of the land within thirty (30) days after Lessor's notice, Lessor and Lessee shall each appoint an MAI appraiser having at least ten years of 3 experience in Pennsylvania ("Appraiser") to conduct a Fair Market Value appraisal of the premises to be sold and the purchase price shall be the statistical mean of the two appraisals unless the difference between the two appraisals shall be greater than ten percent of the smaller thereof, in which case the two appraisers shall appoint a third Appraiser, whose Fair Market Value appraisal shall determine the purchase price. The cost of all appraisals shall be shared equally. At such time, any improvements or personal property belonging to Lessor or the land to be sold and no longer required for Lessor's current or anticipated needs shall be purchased by Lessee concurrent with its aforementioned purchase of the raw land, at a price equal to the commercial value thereof, if any, as determined by negotiation of the parties. In the event of such purchase by lessee, this Lease shall thereupon be terminated. Lessor may sell or dispose of the underlying land and equipment to a third party, and the purchaser or transferee shall be subject to this Lease. (b) OPTION TO PURCHASE. If Lessor has not sold the Demised Premises to Lessee pursuant to paragraph (a) hereof by the end of the fifth ten (10) year renewal period provided for under paragraph A hereof, and further provided that there does not exist at that time any default hereunder which has not been effectly cured or expressly waived by Lessor in writing, then at the end of the said fifth ten (10) year renewal period Lessee shall have the 4 right at its option to purchase portion of Lessor's property at the Station consisting of the Demised Premises plus such other land, improvements, and personal property as Lessor no longer required, for a purchase price determined by the same procedure specified in paragraph 5(a) hereof. 6. ANNUAL MINIMUM RENT: Lessee covenants to pay Lessor without notice, deduction, setoff or previous demand therefor, a minimum annual rent of $98,283 payable annually in advance on the first day of April of each calendar year of this Lease, or any renewal or extension thereof, subject to adjustment as hereinafter provided, with the first installment-prorated from the date of execution to the following thirty-first day of Hatch - - to be paid upon the execution hereof, all installments to be paid to Lessor on the Sixteenth Floor, 2301 Market Street, Philadelphia, Pennsylvania, 19101, or at such other place as lessor may from time to time designate. Each and every payment and expenditure, other than Minimum Rental, which are required to be paid by Lessee under this Lease shall be deemed to be additional rent hereunder, whether or not the provision requiring payment of such amounts specifically so states, and shall be payable, unless otherwise provided in this Lease, within thirty (30) days of demand by lessor. 7. UTILITY CHARGES: Lessee shall furnish, at its own expense, all utilities of every type and nature required by 5 it in its use of the Demised Premises and shall pay or cause to be paid, when due, all bills for water, sewerage, electricity and other utilities, if any, used on in connection with or chargeable against the Demised Premises until the termination of this lease and the Lessee shall indemnify and save harmless the Lessor from and against any loss, cost and expense in connection therewith. Until such time as metering is installed or isolation is accomplished, Lessor and Lessee each agree to accept the other's estimate of the use of unmetered services, such as electricity, water, auxiliary steam, fuel oil, etc., supplied by the other, and to pay for such services at the fully-allocated direct costs based on relative use or consumption. 8. TAXES: Lessee shall be required to pay, prior to delinquency, all taxes levied upon or assessed against the Demised Premises or its personal property or operations and activities thereon, and Lessee's proportionate shares of local real estate taxes and/or Lessee's proportionate share of any taxes due the Commonwealth of Pennsylvania by virtue of the Pennsylvania Utility Realty Tax Act on the larger parcel of which Demised Premises is a part. 9. NET LEASE: All costs, expenses and obligations of every kind and nature whatsoever, relating to the Demised Premises but not the portion of the Station other than the Demised Premised which may arise or become due during the term of this lease or any renewals hereof, or as a result 6 of Lessee's occupancy, shall be paid by Lessee and Lessee hereby indemnifies and saves Lessor harmless from and against the same. It is further understood that except as may separately be agreed Lessor shall not be required or obligated to furnish any services or facilities or to make any repairs or alternations in or to the Demised Premises, or to comply with any notice from the constituted authorities. Lessee hereby assumes all of the responsibilities normally identified with the ownership of the Demised Premises, such as, but not limited to, responsibility for the condition of the premises, such as operation, repair, replacement, maintenance and management of the Demised Premises, including, without limitation, repairs to the paved areas and driveways on the Demised Premises. 10. NO REPRESENTATINS: Lessor has leased the Demised Premises in its present condition without any representations on the part of the lessor, its officers, employees, servants and/or agents, except as follows: (a) All taxes levied upon or assessed against the Demised Premises which may be due or payable prior to the date hereof have been paid. (b) Except as disclosed in writing to Lessee, there is no action, suit, investigation or proceeding pending or, to the knowledge of Lessor threatened, against Lessor before any court or administrative or governmental body which questions title to the Station, the right of 7 Lessor, or any assignee of Lessor, to own, operate, lease or sell the Station, the validity of this Lease or any action taken or to be taken pursuant hereto. (c) No notice has been received by Lessor from any governmental authority of any proceeding to condemn, purchase or otherwise acquire the Station through the power of eminent domain or otherwise and, to Lessor's knowledge, no such proceeding is contemplated or threatened. (d) Except as previously disclosed in writing, Lessor has received no notice of non-compliance with laws, ordinances and governmental rules and regulations to which it is subject with respect to the ownership and operation of the Station. 11. USE OF PREMISES: (a) Lessee shall not use or occupy the premises for any other purpose whatsoever than for the maintenance and operation of Lessee's facilities in connection with the production of steam for Lessee's Steam Heating System and related activities. (b) PLANS: Lessee shall submit detailed plans to Lessor showing any proposed improvements or alterations, including removals. Lessee shall not commence the construction or installation of any improvements by - alternations upon the Demised Premises now or at any future time until Lessee has received written approval from Lessor of Lessee's plans and notified Lessor as required in paragraph NO. 29(f). Such approval shall not be unreasonably withheld or delayed. Lessee shall notify 8 Lessor immediately upon the completion of any approved construction in order that a final inspection can be made by Lessor to insure compliance with plans approved by Lessor. (c) RELOCATION OF FACILITIES: Any relocation of lessor's facilities, if acceptable to Lessor, to accommodate Lessee's improvements upon the Demised Premises shall be performed by Lessor at the sole cost and expense of Lessee. 12. MECHANICS' LIENS: (a) it is understood that no materialman, mechanic or contractor shall have the right as a result of any action by Lessee to file any lien against the estate of Lessor in the said premises, by reason of any work or materials furnished to the Demised Premises and in the event that as a result of any action by Lessee any lien against the estate of either Lessor or Lessee is filed, Lessee within 15 days thereof will cause the said lien to be discharged or satisfied or record or in any other manner, pursuant to Law, removed from the records so that the same shall not any longer be a lien against the said premises. Lessee agrees to hold Lessor harmless and indemnify Lessor against any and all loss, liability, costs, damage, counsel fees and expenses suffered or incurred by reason of any such liens. (b) Lessee further agrees that Lessee will cause the work to be done in a good and workman like manner and to Lessor's reasonable satisfaction, and will cause any and 9 all costs and charges in connection therewith to be paid forthwith upon submission of bills therefor, unless the same is being contested in good faith. It is understood that in causing the said work to be done, Lessee is not acting as the agent of Lessor but that Lessee shall cause the same to be made for Lessee's own use in the Demised Premises. 13. MAINTENANCE, REMOVAL AND RESTORATION: (a) Lessee shall keep and deliver up the Demised Premises in good order and condition at the end of the term hereof or sooner termination, reasonable wear and tear excepted. It is understood and agreed that, at Lessor's option, any or all said steam facilities and any alterations and improvements thereto shall be removed by Lessee at the expiration of this Lease, subject to Lessor's written approval of plans pursuant to Paragraph 11(b) hereof, in which event Lessee shall remove the same promptly and shall restore any part of the premises injured by such removal at Lessee's sole cost and expense; should Lessee fail to remove the said improvements Lessor shall have the right to do so at the sole cost and expense of Lessee which cost and expense Lessee agrees to pay promptly upon demand. The above notwithstanding, Lessee may with the written consent of Lessor, abandon in place any of the said steam facilities, alterations, and improvements thereto. (b) Lessee shall have an obligation to operate its facilities in a manner which does not interfere with or 10 cause direct hazard to the facilities and operations of Lessor. Lessor shall have the right to repair any of Lessee's steam facilities which in the opinion of Lessor violates this provision if reasonable time has been allowed and Lessee has not performed or if any emergency exists threatening Lessor's equipment or personnel. In either case, Lessee agrees to reimburse Lessor for the cost of any work performed. (c) Lessee agrees that should Lessor sustain any damages to its facilities or to the premises or adjoining property of Lessor or be required to expend any monies as a result of a rupture to Lessee's steam facilities or any other cause whatsoever resulting from Lessee's occupancy of said premises to reimburse Lessor, in full, promptly upon demand. 14. NOTIFICATION: (a) Any formal notification (i.e., notice to terminate, extend the term of Lease or to exercise an option, etc.) given by either party to the other shall be deemed to have been effected when written notice or other written statement or document, as the case may be, has been served either personally upon the other party, or has been deposited in the United States mail in a postpaid, sealed, return receipt requested, certified envelope addressed to the other party at its address (in the case of service upon Lessor): PHILADELPHIA ELECTRIC COMPANY, Attention Manager, Real Estate Department, 2301 Market Street, Philadelphia, Pennsylvania 19101, and (in 11 the case of service upon Lessee): PHILADELPHIA THERMAL CORPORATION, 2600 Christian Street, Philadelphia, Pennsylvania 19146 or to such address as either party shall designate by notice in writing to the other. (b) Lessor and Lessee shall share a mutual responsibility to give prompt, format notification to the other of any problems, hazards, or changes which may affect the operations or safety of the parties hereto. 15. COMPLIANCE WITH LAWS: Lessee shall comply with any requirements of any of the constituted public authorities, and with the terms of any state or federal statute or local ordinance or regulation including the National Electrical Safety Code, applicable to Lessee or its use of the Demised Premises, and save Lessor harmless from penalties, fines, costs, or damages resulting from failure so to do. This Lease and all the terms , covenants and conditions hereof are in all respects subject and subordinate to all zoning laws and ordinances affecting the Demised Premises. Lessee agrees to be bound by the same. Lessor does not represent or warrant that any Licenses or permits which may be required for Lessee's use of the premises will be granted. With respect to discharges into the Schuylkill River via the Station river water discharge tunnel, which is a common discharge conduit for plant facilities or by any other means, Lessor and Lessee agree that all such 12 discharges shall continue under the Lessor's National Pollution Discharge Elimination System discharge permit. Lessor and Lessee agree that should any discharge occur in violation of that permit, the party responsible for the violation shall bear all costs associated therewith, including but not limited to control, cleanup and remediation of the violation or spill, and any fines, assessments or penalties assessed therefor. Lessor and Lessee agree to cooperate in determining responsibility. In the event that responsibility cannot be determined, Lessor and Lessee agree to share equally all such costs. 16. MUTUAL RELEASE: Each of the parties hereto assumes all risk of loss, injury or damage to its property, its business and its business operations from any cause other than the willful fault of the other party. Each of the parties hereto releases the other from any and all liability for any loss, injury or damage which may be inflicted upon the property, business and business operations of the releasing party arising from any cause other than the willful fault of the other party. 17. INSURANCE: Lessee agrees that it shall carry insurance with limits not less than indicated below, for the duration of Lessee's occupancy and use of the premises: Comprehensive General Liability Insurance including Broad Form Contractual Liability with a 13 combined single limit for bodily injury and property damage of not less than $10,000,000 per occurrence. Such insurance shall name the Lessor, its officers, agents and employees as additional insured, be primary insurance for all purposes and contain cross- liability provisions. Evidence of the above insurance shall be forwarded to Lessor and contain a provision that Lessor be notified with at least ten (10) days prior notice, in the event of cancellation of insurance. The amount of insurance required shall from time to time be revised, commensurate with levels of coverage normally carried by comparable operations. 18. WORKMEN'S COMPENSATION INSURANCE: In addition to the above insurance requirements Lessee shall carry all necessary Workmen's Compensation Insurance on its own employees and shall furnish Lessor with evidence of any and all such coverage. 19. ASSIGNMENT: Lessee shall not assign or transfer this Lease nor underlet the said premises without the written consent of the Lessor first obtained, except to an entity which simultaneously acquires and is authorized to operate essentially all the steam system of Lessee. Any lawful levy, sale, execution or other legal process or any assignment or sale in bankruptcy, insolvency or any 14 compulsory procedure, may, at the option of the Lessor, be deemed and taken to be an assignment within the meaning of this Lease. 20. (a) MAJOR CONDEMNATION: In the event all of the said premises should be taken by right of eminent domain, for public or quasi-public use, or in the event of a partial taking which effectively prevents the use of the said premises for the purposes herein, then this lease shall terminate as of the date possession is required by the condemning authority and all unearned rent and prepaid charges, if any, shall be refunded to the Lessee and Lessee shall surrender possession of said premises to Condemnor. (b) MINOR CONDEMNATION: In the event of partial taking which will not prevent the use of the Demised Premises for the purposes aforesaid, this Lease shall continue in full force and effect upon the same terms and conditions hereof. (c) AWARD: If there are not separate awards available upon any major condemnation for the interests of Lessor and Lessee, then Lessor and Lessee will cooperate in negotiating with the condemnor, neither party will execute any settlement without the consent of the other, and the parties will share the award on an equitable basis. 15 21. COST OF LIVING INCREASE: Effective with the commencement date of the Fifth (5th) year of this Lease and every five (5) years thereafter throughout the initial term or any renewal or extensions hereof, the annual minimum rent set forth in Paragraph 6 shall be increased by an amount computed to offset any net decline in the purchasing power of the dollar, as reflected in the U.S. Department of Labor Consumer Price Index, hereinafter referred to as CPI, with a minimum rental increase of 15% for each five (5) year adjustment as more particularly shown in the following examples: 1. April 91 = 160% = 1.185 x $ 98,283 = April 86 = 135% (New Annual Rental) $116,465 (CPI exceeds 15% minimum increase) 2. April 96 = 180% = 1.125 April 91 = 160% therefore use (1.15) x $116,465 = (New Annual Rental) $133,935 (governed by 15% minimum increase) AND SO FORTH all such figures being stated in terms of a basic dollar value compared to the CPI Index for the same month five (5) years prior thereto. These figures will be calculated by Lessor and written notice will be forwarded by Lessor to Lessee. If the CPI or a successor or substitute index is 16 not available, a reliable governmental or other non-partisan publication evaluating the information therefore used in determining the CPI shall be used. In no event, however, shall the provisions of this paragraph be construed to reduce the increase in rental hereunder to an amount less than 15% above the rental calculated five (5) years prior thereto. Payments of adjusted hereunder shall be made to Lessor within ten (10) days after the date of notification said increases are due in accordance with Lessor's calculations. 22. COST: Throughout this lease agreement, "cost" shall be understood to compromise all applicable components thereof set forth in Exhibit "D4" attached hereto. 23. NOTICE AND GRACE PERIODS: (a) Subject to subparagraphs (b) below, Lessor shall not exercise any right or remedy provided for in this lease because of any default of Lessee unless Lessor shall have first given Lessee written notice of the default sent by Registered Mail, specifying the nature and extent of it, and (I) in the event of a monetary default, Lessee shall have failed to pay the outstanding sums within a period of thirty calendar days after the date of Lessor's notice of default or (ii) in the event of a non-monetary default, Lessee shall have failed within a period of thirty days 17 after the date of Lessor's notice of default to begin correcting the non-monetary default, and to proceed diligently with its efforts to cure the default until it shall be fully cured. (b) Notwithstanding anything to the contrary in this Lease, Lessor shall be permitted to make any payment which Lessee shall be permitted to make any payment which Lessee should have paid, or perform any act which Lessee should have performed, without giving any such notice or allowing any part of the grace period, if Lessor determines, in its sole judgment, that by reason of default (I) the Station may be jeopardized; (ii) there is a serious potential for significant injury to persons or property on or in the vicinity of the Station; (iii) there is material interference with Lessor's operations on the Station. 24. LESSOR'S RIGHT TO CURE: Subject to the notice and grace periods provided in Paragraph 23 above, if Lessee shall be in default in the performance of any of its obligations under this Lease, Lessor may (but shall not be obligated to do so) cure such default on behalf of Lessee, and Lessee shall reimburse lessor upon demand for all costs incurred by Lessor in curing such default, together with interest thereon at the prime rate of interest per annum publicly announced from time to time by First Pennsylvania Bank, National Association, or its successor, 18 which costs and interest thereon shall be deemed to be additional rent under this Lease. 25. NON-WAIVER: (a) Neither a failure by the Lessor to exercise any of its operations hereunder, nor failure to enforce its right or seek its remedies upon any default, nor the acceptance by the Lessor of any rent accruing before or after any default, shall effect or constitute a waiver of the Lessor's rights to exercise such option, to enforce such right, or seek such remedy with respect to that default or to any prior or subsequent default. The remedies provided in this Lease shall be cumulative and the exercise of one shall not in any way abridge, modify or preclude any other rights or remedies to which Lessor may be entitled either at law or in equity. (b) Neither a failure by the Lessee to exercise any of its options hereunder, nor failure to enforce its right or seek its remedies upon any default shall effect or constitute a waiver of the Lessee's rights to exercise such option, to enforce such right, or seek such remedy with respect to that default or to any prior or subsequent default. The remedies of Lessee shall be cumulative and the exercise of one shall not in any way abridge, modify or preclude any other rights or remedies to which Lessee may be entitled either at law or in equity. 19 26. QUIET ENJOYMENT: If the Lessee pays the rent it is obligated hereunder to pay, and observes all other terms, covenants and conditions hereof, it may peaceably and quietly have, hold and enjoy the Demised Premises during the term of this Lease, subject, however, to all the conditions of this Lease. Failure by Lessor to comply with the foregoing covenant shall give Lessee the right to cancel or terminate this Lease, provided Lessee gives Lessor notice of disruption of its quiet enjoyment and gives Lessor thirty (30) days to effect a cure, or in the event more than thirty (30) days are required, then Lessor shall begin within thirty (30) days. The foregoing right of termination shall not be deemed to exclude any remedies available to Lessee at law or in equity. 27. WAIVER AND DISTRAINT: :Lessee hereby waives all right to the benefit of all laws now made or hereafter to be made exempting its personal property from levy and sale for arrears of rent, and hereby agrees that all of its personal property on said premises shall be liable to distress and sale for rent, and that all of its personal property, if removed therefrom, shall for thirty (30) after removal, be liable to distress and may be distrained and sold for said rent in arrears. 28. EJECTMENT: In the event that Lessee (i) fails to pay any sum of money due Lessor for any reason hereunder, 20 or (ii) takes any action which violates the provisions of paragraph 13(b) hereof, and in the further event that any such action has not been cured within the grace period following notice as specified in paragraph 23 hereof, then this Lease shall at Lessor's discretion thereupon cease and absolutely determine. No such termination of this Lease, nor taking or recovering possession of the premises, shall deprive Lessor of any other action against Lessee for possession, for rent or for damages, nor shall any distress or suit for rent or damages prevent Lessor from proceeding to recover possession on a breach of any of the terms or conditions hereof. 29. ADDITION CONDITIONS: (a) It is understood by the parties hereto that the business of the Lessor involves, among other things, the construction, installation, maintenance, operation, and use of structures, fixtures, facilities and instrumentalities with appurtenances, now or which may hereafter be erected or installed on the Demised Premises, or property adjacent thereto, which are used or useful in connection with the generation, conversion, transmission or distribution of electricity. The Lessee covenants and agrees (as a specific condition of this Lease) that Lessee and Lessee's agents, employees, invitees, and others will not, under any circumstances whatsoever, touch, handle, tamper with or 21 contact, directly or indirectly any of the said structures, fixtures, facilities and instrumentalities of the Lessor and Lessee further covenants and agrees that Lessor shall not be held responsible for and Lessor is hereby especially relieved from all liability by reason of injury or damage of any nature whatsoever to Lessee or to its agents, employees, invitees, customers and others who are on the premises under, through or by the authority of the Lessee, or other property in, upon or about the Demised Premises. (b) The Lessor covenants and agrees (as a specific condition of this Lease) that Lessor and Lessor's agents, employees, invitees, and others will not under any circumstances whatsoever, touch, handle, tamper with or contact, directly or indirectly any of the structures, fixtures, facilities and instrumentalities of the Lessee and Lessor further covenants and agrees that Lessee shall not be held responsible for and Lessee is hereby especially relieved from all liability by reason of injury or damage of any nature whatsoever to Lessor or to its aents, employees, invitees, customers and others who are on the Demised Premises under, through or by the authority of Lessor. (c) This Lease is under and subject to the right of Lessor, its successors and assigns, at any time hereafter to erect, construct, install, operate, maintain, renew, add 22 to, relocate, and remove facilities, and grant easements on, over and under the Demised Premises as necessary for the performance of its corporate business and Lessor reserves the right of continuous access to and from its facilities located upon said premises and those adjacent thereto. In exercising these rights, Lessor will endeavor to cooperate with Lessee so as to minimize interference with Lessee's operations to the extent possible. (d) Neither Lessor nor Lessee shall use or keep explosives in any form on the premises without prior notice to and permission of the other. (e) In the event it should be deemed necessary to Lessor to take precautionary measures based on Lessee's use of the Demised Premises such as, but not limited to relocating its facilities, supplying safety inspectors to insure that any work performed is done in a safe and proper manner, or de-energizing conductors due to the rental, removal, or maintenance of Lessee's improvements, then Lessee shall pay for the cost of any such measures taken by Lessor, it being understood and agreed that this shall, in no way, relieve Lessee from any liability in connection with this Lease. (f) Prior to the commencement of any proposed improvements or alteration, Lessee shall contact Lessor's Superintendent of Schuylkill Station to make arrangements 23 with Lessor's representatives to review Lessee's plans and determine what precautionary measures are required. Lessee shall again contact Lessor as hereinabove required as notice that work is to commence and to confirm previously made precautionary measures and other arrangements. Prior approval of Lessee's plans by Lessor does not constitute notice to or approval by Lessor for Lessee to commence work on Lessor's property. Lessee agrees that absolutely no work shall begin on Lessor's property, initially or at any future time, unless Lessee has made proper arrangements and given the required notice. (g) All work on the premises shall be performed in accordance with accepted engineering practices including, if necessary, the bonding and/or grounding of Lessee's improvements if required by Lessor pursuant to its review and approval of plans, as herein provided, to eliminate the effects of induced voltage. 30. SUBORDINATION TO CORPORATE MORTGAGE: Lessee shall subordinate this Lease to the lien of the First and Refunding Mortgage dated May 1, 1923, of the Counties Gas and Electric Company (to which Philadelphia Electric Company is successor) to Fidelity Trust Company, (to which Fidelity Bank, National Association, is successor) as the same has been heretofore and may hereafter be amended and supplemented, and to the lien of any mortgage which may 24 hereafter be placed upon the demised premises, without the necessity of any further instrument or act on the part of the Lessee to effectuate such subordination, provided that the holder of any such mortgage shall execute and deliver a non-disturbance agreement with Lessee in substantially the form attached hereto as Exhibit "D5". 31. INVALIDITY OF PARTICULAR PROVISIONS: If any term or provision of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and provision of this lease shall be valid and be enforced to the fullest extent permitted by law. 32. CONSENTS: Lessor and Lessee understand and agree that it will be necessary for both parties hereto to gain access to certain areas under the control of the other party, from time to time (i.e. access, use of railroad sidings, parking areas, delivery of fuel, etc.) and both the Lessor and Lessee hereby agree that whenever the consent of party hereto is required such consent shall not be unreasonably withheld or used to extract any concessions from the requesting party. 25 33. RELATIONSHIP OF THE PARTIES: It is the intention of the parties hereto to create the relationship of Lessor and Lessee, and no other relationship whatsoever, and nothing herein shall be construed to make the parties hereto liable for any of the debts, liabilities or obligations of the other party by reason of this Lease. 34. CAPTIONS: The captions of this lease are for convenience only and shall not be construed as defining or limiting in any way the scope or intent of the provision hereof. 35. AMENDMENT: Except as herein otherwise provided, no subsequent alteration, amendment, change or addition to this Lease shall be binding upon Lessor or Lessee unless reduced to writing and signed by the parties hereto. 36. SUCCESSORS AND ASSIGNS: The parties hereto further agree, subject to the provisions aforesaid, that the covenants and agreements herein contained shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto, respectively. 37. LEASEBACK OF PORTION OF A-2 BUILDING: Lessee hereby leases to Lessor and Lessor hereby takes and hires from Lessee the portion ("Leaseback Space") shaded on attached Exhibit "D6" of the building identified on Exhibit "D2" as the A-2 Building, for a term commencing on the date 26 hereof and expiring on the termination of this Lease, for rent for the entire term of $1, receipt whereof is hereby acknowledged. Lessor in its capacity as tenant hereunder will perform all maintenance which it desires to have performed in the Leaseback Space at its own expense, and Lessee in its capacity as landlord hereunder will have no responsibility therefor. If in the opinion of Lessor Lessee takes any action inconsistent with this leaseback or with Lessor's use of and access to the Leaseback Space, then Lessor shall have all remedies hereunder including specifically those of paragraph 13(b) hereof. IN WITNESS WHEREOF, .Lessor and Lessee have caused this agreement to be executed the day and year first above written. PHILADELPHIA ELECTRIC COMPANY Attest: /s/ By: /s/ R. Holman Vice President PHILADELPHIA THERMAL CORPORATION Attest: /s/ By: /s/ Vice President Exhibit D2 Diagram and Legal Description of Leased Land, Schuylkill Station Exhibit D3 Leased Space, A-1 Building Schuylkill Station Exhibit D4 Components of Cost The following components shall be included in the charges computed under Article 22 of the Schuylkill Station Lease Agreement. Direct Costs Labor - hours worked at PECo hourly charge rate Material Transportation Contract Services Overheads Administration and General - 25% additive to labor, material, transportation and contract services. (This includes pensions and benefits, indirect labor and supervision and other indirect costs normally charged to Administrative and General Accounts). Exhibit D5 Non-Disturbance Agreement THIS NON-DISTURBANCE AGREEMENT, dated the _____ day of __________, A.D. 19__, between and among PHILADELPHIA ELECTRIC COMPANY, hereinafter called Owner; FIDELITY BANK, NATIONAL ASSOCIATION, hereinafter called Trustee and PHILADELPHIA THERMAL CORPORATION, hereinafter called Tenant. WITNESSETH: WHEREAS, Owner has leased to Tenant property situated on the northwest side of Grays Ferry Avenue in the Thirteenth Ward of the City of Philadelphia, Pennsylvania, containing 303,347 square feet, more or less, hereinafter called "Premises", as more particularly set forth in a Lease Agreement between Owner and Tenant dated __________, 19__; and WHEREAS, Trustee has a first lien on said premises by virtue of the First and Refunding Mortgage (Mortgage) dated May 1, 1923, of the Counties Gas and Electric Company, to which Owner is successor, to Fidelity Trust Company, to which Trustee is successor, to which said lease is subordinate; and WHEREAS, Tenant desires to be assured of continued occupancy of such premises under the terms of said lease and subject to the terms of the Mortgage; 1 NOW, THEREFORE, in consideration of the sum of ONE HUNDRED DOLLARS ($100.00) paid by Tenant to Owner, the receipt of which is hereby acknowledged (which sum shall be deposited by Owner with Trustee), the parties intending to be legally bound agree as follows: 1. Said lease is and shall be subject and subordinate to the Mortgage insofar as the Mortgage affects the property of which the said premises form a part and to any advances, renewals, extensions, replacement, modifications, consolidations or supplements thereto. 2. In the event it should become necessary to foreclose the Mortgage during the term of said lease, Trustee shall foreclose said Mortgage subject to Tenant's lease and in the event Trustee comes into possession as a result of a foreclosure sale during the term of said lease, Trustee shall recognize said lease as being in full force, so long as Tenant is not in default under any of the terms, covenants and conditions of said lease. 3. In the event that Trustee shall, in according with the foregoing, succeed to the interest of Owner under said lease, Tenant and Trustee agree to be bound to one another under all of the terms, covenants and conditions of said lease and Trustee and Tenant shall, from and after such event, have the same remedies against one another for the breach of an agreement contained in the lease that Owner 2 and Tenant might have had under the lease against one another if Trustee had not succeeded to the interest of Owner, provided however, that Trustee shall not be; a. liable for any act or omission of Owner; or b. subject to any defenses or right of offset which Tenant might have against Owner; c. bound by any rent or additional rent which Tenant might have paid for more than the current month to Owner; d. bound by any agreement or modification of the Lease made without Trustee's consent. 4. Although the foregoing provisions of this Agreement shall be self-operative , Tenant agrees to execute and deliver to Trustee or to any person to whom Tenant herein agrees to attorn, such other instrument or instruments as Trustee or such other person shall from time to time request in order to confirm said provisions. 5. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their successors and assigns and without limiting such, it is expressly understood that all references herein to Trustee shall be deemed to include also any subsequent holder of the mortgage and/or any other persons succeeding to title to the premises encumbered by the mortgage, or any part 3 thereof, whether by virtue of foregoing of foreclosure, or sale or transfer in lieu of foreclosure, or pursuant to the exercise of any rights and remedies under the mortgage, or otherwise. 6. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, the parties hereto have executed these presents the day and year first above written. PHILADELPHIA ELECTRIC COMPANY ATTEST: By: Secretary Vice President FIDELITY BANK, NATIONAL ASSOCIATION ATTEST: By: Secretary President PHILADELPHIA THERMAL CORPORATION ATTEST: By: Secretary President 5 COMMONWEALTH OF PENNSYLVANIA : : SS. COUNTY OF PHILADELPHIA : On the _____ day of __________, 19__, before me, the subscriber, a Notary Public in and for the Commonwealth and County aforesaid, personally appeared _______________, who acknowledged himself/herself to be the _____ President of PHILADELPHIA ELECTRIC COMPANY, a corporation, and that he/she, as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself/herself as such officer, and desired that the same instrument be recorded as such. IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year aforesaid. Notary Public My Commission Expires COMMONWEALTH OF PENNSYLVANIA : : SS. COUNTY OF PHILADELPHIA : On the _____ day of __________, 19__, before me, the subscriber, a Notary Public in and for the Commonwealth and County aforesaid, personally appeared _______________, who acknowledged himself/herself to be the _____ President of PHILADELPHIA THERMAL CORPORATION, a corporation, and that he/she, as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself/herself as such officer, and desired that the same instrument be recorded as such. IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year aforesaid. Notary Public My Commission Expires 5 STATE OF PENNSYLVANIA : : SS. COUNTY OF PHILADELPHIA: I, the undersigned, a Notary Public in and for the County and State aforesaid, DO HEREBY CERTIFY, that _______________ personally known to me to be a Vice President of the Fidelity Bank, National Association, and _______________ personally known to me to be an Assistant Secretary of said corporation, and personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and severally acknowledged that as such Vice President and Assistant Secretary, they signed and delivered the said instrument and caused the corporate seal of said corporation to be affixed thereto, pursuant to authority given by the Board of Directors of said corporation, as their free and voluntary act, and as the free and voluntary act and deed of said corporation, for the uses and purposes therein set forth. Given under my hand and official seal, the _____ day of __________, 19__. Commission expires ______________, 19__. Notary Public 6 Exhibit D6 Diagram and Legal Description of Leaseback Space, A-2 Building Schuylkill Station EXHIBIT E to the SITE LEASE DOCK FACILITY SERVICE AGREEMENT DOCK FACILITY SERVICE AGREEMENT This Dock Facility Service Agreement ("Agreement") is made as of the 11th day of November, 1991, by and among Philadelphia Thermal Development Corporation, a Pennsylvania Corporation ("PTDC"), Philadelphia Thermal Energy Corporation, a Pennsylvania corporation ("PTEC") and Grays Ferry Cogeneration Partnership, a Pennsylvania joint venture partnership ("GFCP"). BACKGROUND PTDC is the current owner of certain lands situated at 2900- 2960 and 2901-2953 Alter Street, 2900-2944 Peltz Street and 2929 Ellsworth Street, Philadelphia, Pennsylvania (collectively, the "Land"), including, without limitation, (a) all of the buildings and improvements erected on the Land (together with the Land, the "Real Property"), and (b) the dock located on the Schuylkill River adjacent to the Land, together with the facilities, machinery and equipment appurtenant to such dock or used in connection with the interconnection and forwarding of oil into the existing piping system that connects the dock with oil storage facilities located at PTEC's Schuylkill Station (collectively, the "Dock"). PTEC and PTDC are parties to a Dock Facility Service Agreement dated October 8, 1990 ("PTEC/PTDC Agreement") pursuant to which PTDC agreed to provide certain services to PTEC in connection with the receipt, delivery and storage of oil. The PTEC/PTDC Agreement expires by its terms on October 8, 1997, whereupon PTEC has the right to acquire from PTDC the Dock and, under certain conditions, the Real Property. PTEC and GFCP are parties to a Site Lease of even date herewith ("Site Lease"), pursuant to which PTEC has leased to GFCP a portion of PTEC's building located at Schuylkill Station, 2600 Christian Street, Philadelphia, Pennsylvania. GFCP intends to install a cogeneration facility ("Cogeneration Facility") in the leased portion of Schuylkill Station, and to burn No. 2 oil and/or No. 6 oil to produce steam and electricity. GFCP will utilize the existing piping system owned by PTDC to transport No. 6 oil from the Dock to the Cogeneration Facility. GFCP further intends to install all piping and related equipment necessary to transport GFCP's No. 2 oil from the Dock to the Cogeneration Facility. PTDC, PTEC and GFCP now desire to enter into this Agreement to document their relationship regarding the receipt of oil at the Dock, the transportation of oil from the Dock to a designated storage tank at Schuylkill Station, the storage of oil by PTDC on behalf of GFCP, and certain other rights and obligations of the parties with respect to this arrangement. Accordingly, in consideration of the mutual promises contained herein and intending to be legally bound hereby, the parties hereto agree as follows: 1. Definition. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings: (a) The term "Barrel" shall mean forty-two (42) 2 U.S. gallons, corrected to sixty (60) degrees Fahrenheit. (b) The term "Force Majeure" shall mean acts of God, acts of any governmental body, whether civil or military, foreign or domestic, acts of a public enemty, riots, strikes, labor disputes, all perils and accidents on the seas or other waters, fires, explosions, floods, other casualties, breakdown of or damage to production or transportation facilities, embargoes or any cause whatsoever beyond the control of the party to whom the term is being applied. (c) The term "GFCP Piping System" means the piping system and related machinery and equipment necessary or appropriate to transport No. 2 oil (i) from the Dock to the GFCP Tank, or (ii) from the Storage Tanks to the Cogeneration Facility. (d) The term "GFCP Product" shall mean Product to be purchased by GFCP. (e) The term "GFCP Tank" shall mean the 500,000 gallon oil storage tank owned by PTEC in Schuylkill Station. (f) The term "Index" shall mean the Consumer Price Index for Fuel and Other Utilities (1982-1984=100) issued for the Philadelphia region from time to time by the Federal Bureau of Labor Statistics ("BLS") or any successor agency that shall issue the Index, or any other measure hereafter employed by the BLS or any successor agency in lieu of the Index. (g) The term "All Items Index" shall mean the Consumer Price Index for All Items (1982-1984=100) issued for the Philadelphia region from time to time by the BLS or any successor 3 agency that shall issue the All Items Index, or any other measure hereafter employed by the BLS or any other measure hereafter employed by the BLS or any successor agency in lieu of the All Items Index. (h) The term "Product" shall mean fuel oil with quality characteristics falling within the limits set forth in the Fuel Oil Specifications for No. 2 oil and No. 6 oil attached hereto as Exhibit "A" and made a part hereof, as modified by mutual agreement of PTDC and GFCP from time to time. (i) The term "PTEC Product" shall mean Product to be purchased by PTEC for use by PTEC or by Philadelphia Electric Company. (j) The term "Storage Tanks" shall mean the tanks located on the Real Property which may be used to store GFCP Product. 2. Procedure for Receipt and Delivery of Product by PTDC. (a) Procedure for Receipt of Product. PTDC agrees to make berth space at the Dock available for barges delivering GFCP Product, no later than twenty-four (24) hours after the arrival at the Dock of any barge carrying GFCP Product. Barges shall be given priority in the order needed to maintain optimal steam production in accordance with the Steam Purchase Agreement between PTEC and GFCP of even date herewith. GFCP shall give PTDC notice by telephone of (i) scheduled arrival of GFCP Product at the Dock at least forty-eight (48) hours prior to such arrival, with such notice to include the name and specifications of the barge, the quantity and specifications of the arriving GFCP Product to be unloaded, and the expected day and hour of 4 such arrival; (ii) such confirmation of the time of such arrival not more than eighteen (18) hours and not less than twelve (12) hours prior to such arrival; (iii) readiness of the barge to discharge, and (iv) either that GFCP is ready to accept GFCP Product upon such arrival for transmission to the GFCP Tank through the GFCP Piping System, or that the GFCP Product is to be stored in the Storage Tanks (if available pursuant to Section 3 hereof) on behalf of GFCP ( collectively, the "Notice Requirements"). PTDC agrees that PTDC shall be responsible for any demurrage charges arising from any delay caused by PTDC in the receipt of GFCP Product and its delivery into the GFCP Piping System or Storage Tanks (as the case may be) beyond the twenty- four (24) hour period specified in the first sentence of this Paragraph 2(a), provided that GFCP has fulfilled all of the Notice Requirements. In the event that the berth time for any barge shall exceed (20) hours for any reason other than the negligence of PTDC or a default by PTDC under this Agreement, PTDC may, in its discretion, (A) permit the barge to continue to lie at berth, provided, however, that PTDC shall not be responsible for any demurrage charges by or on behalf of any vessel or vessels delayed beyond such twenty (20) hour period or (B) require GFCP to cause the barge to leave the Dock. (b) Title to Product. The parties agree that GFCP shall at all times have title to and ownership of all GFCP Product delivered at the Dock on behalf of GFCP from the point the Product enters the discharge flange on the barge. GFCP shall indemnify, defend and hold PTDC harmless from and against any and 5 all causes of action, damages, liabilities, costs and expenses arising out of a claim of title to or ownership of any Product delivered to the Dock on behalf of GFCP. (c) Delivery of Product to GFCP. PTDC shall receive at the Dock and implement the interconnection and forwarding into the GFCP Piping System of all GFCP Product; provided, however, that (i) PTDC shall have no obligation to handle any lines, make any hose connections or perform any related services on board any barge in connection with the delivery of GFCP Product to GFCP, and (ii) at GFCP's request (made in accordance with Paragraph 2(a) hereof), PTDC shall store GFCP Product in the Storage Tanks (if available pursuant to Section 3) and implement the forwarding and interconnection of such stored GFCP Product into the GFCP within twenty-four (24) hours after GFCP's request (which may be made by telephone) to do so. Barge unloading at the Dock shall be by PTDC personnel assisted by barge company personnel and/or personnel supplied by the contract operator of the Cogeneration Facility ("Operator"). Operator personnel shall be responsible for, and coordinate with PTDC personnel, barge unloading to ensure safe operation of the Schuylkill Station fuel oil systems, including monitoring of tank levels. Upon completion of barge unloading, GFCP may request that the pipeline be flushed. All flush oil utilized to flush lines after GFCP Product is delivered shall be accounted for as a delivery to GFCP into the GFCP No. 6 oil system of Schuylkill Station. (d) Standard of Care. PTDC agrees to exercise the established industry standards of care in receiving, handling and 6 storing GFCP Product; product, however, that PTDC shall have no liability for any claims, causes of action, liabilities, damages, costs or expenses which, as a result of Force Majeure, could not have been avoided by the exercise of such care. (e) Regulatory Requirements. PTDC represents and warrants to GFCP that the Dock and the Storage Tanks (if available) shall be maintained and operated by PTDC in accordance with all applicable laws, statutes, ordinances, rules and regulations. (f) Pollution. In the event that GFCP Product is discharged upon or beneath the Dock, or upon or beneath any waters or land, GFCP shall indemnify, defend and hold PTDC harmless from and against any and all claims, causes of action, damages, liabilities, costs and expenses arising out of such discharge, unless such discharge was caused by the negligence of PTDC or PTDC's failure to fulfill its obligations under this Agreement. In the event of any such discharge, PTDC shall promptly notify PTDC's Fuels Section Dispatcher and take reasonable measures to effectuate containment or removal of the GFCP Product. Any such measures taken by PTDC shall be at the sole cost and expenses of GFCP unless the discharge was caused by PTDC's failure to fulfill its obligations under this Agreement. 3. Storage Tanks. PTDC has advised GFCP that the Storage Tanks sold or leased on a long-term basis to one or more buyers or lessees. So long as PTDC or PTEC owns the Storage Tanks and has available unleased capacity therein, GFCP shall be entitled to store GFCP Product in the available Storage Tanks on 7 the terms set forth herein. Nothing contained herein, however, shall in any way limit PTDC or PTEC from selling or leasing the Storage Tanks, and GFCP shall not be entitled to any damages or other remedies of any kind if the Storage Tanks are unavailable at any time or from tie to time for GFCP use because of such sale or lease. 4. Installation and Maintenance Obligations. (a) GFCP shall, at GFCP's expense, construct, install and interconnect the GFCP and acquire all permits, easements and rights of way necessary for the GFCP Piping System. Any easements or rights of way required from PTDC shall be at no additional charge to GFCP. (b) PTDC shall maintain and repair the Dock and the Storage Tanks so as to keep the same in good operating condition throughout the term of this Agreement, and so as to permit barges carrying GFCP Product to arrive at the Dock, discharge GFCP Product, and depart in an orderly manner and in accordance with the terms of this Agreement. GFCP shall maintain, repair and replace he GFCP Piping System . 5. Charges Payable by GFCP. (a) Operating Charge. In consideration of PTDC's performance of its obligations under this Agreement, GFCP agrees to pay to PTDC (i) through October 31, 1997, GFCP's Proportional Share (as defined below) of PTDC's estimated operating costs ("Estimated Operating Charge") with respect to the Real Property and Dock (collectively, the "Facility") which shall consist of the following items (collectively, "Costs"): (A) utility 8 services consumed in connection with the Facility, (B) operation, maintenance and repair of the Facility, (C) demurrage, interconnecting and forwarding and inspection charges associated with GFCP Product, (D) insurance and taxes related to the Facility, and (E) principal and interest due (amortized over fifteen (15) years in accordance with the amortized over fifteen (15) years in accordance with the amortization table attached as Exhibit "C") on that certain loan in the amount of $2,850,000 from Fidelity Bank, National Association ("Fidelity") to PTDC, evidenced by that certain Mortgage Note, dated October 8, 1990, executed by PTDC in favor of Fidelity, (ii) for the period beginning November 1, 1997 and ending December 31, 1998, $.50 per barrel of GFCP Product received at the Dock ("Base Operating Charge"), and (iii) for any calendar year thereafter, a sum equal to the product of the Base Operating Charge during the prior calendar year multiplied by a fraction (not less than one), the numerator of which shall equal the All Items Index for one prior Numerator Year (hereinafter defined in Section 5(e)(ii) below) and the denominator of which shall equal the All Items Index for November of the calendar year prior to the Numerator Year. The Estimated Operating Charge shall be based on a calendar year operating budget ("Budget") for the Costs to be submitted by PTDC to GFCP on January 1 of each calendar year this Agreement is in effect (except that the Budget for the first calendar year this Agreement is in effect shall be submitted by PTDC to GFCP on the date hereof). (b) Proportional Share. GFCP's Proportional Share of the Costs shall be determined annually based on the relative 9 projected annual Product to be handled by PTDC on behalf of GFCP in relation to the projected annual Project to be handled by PTDC on behalf of PTEC. GFCP and PTEC shall each provide one another and PTDC with estimated Project Projections no later than thirty (30) days before the Commencement Date and thirty (30) days before the Commencement Date and thirty (30) days before each anniversary of the Commencement Date of this Lease, and GFCP's Proportional Share shall be determined by PTDC based on the amount of projected GFCP Product in relation to the amount of projected PTEC Product. Within thirty (30) days following each anniversary of the Commencement Date, the actual Product usage of GFCP and PTEC for the previous twelve (12) month period shall be determined by PTDC, and PTEC and GFCP shall thereafter, within thirty (30) days following receipt of PTDC's determination, make appropriate adjustments to reconcile any discrepancy between the amounts paid by each of them based estimated usage and the amount actually used by each of them. (c) Monthly Payments. On the first day of each calendar month during the portion of the term of this Agreement prior to October 31, 1997, GFCP shall pay to PTDC, in advance, one-twelfth (1/12) of GFCP's Proportional Share of the Estimated Operating Charge ("Estimated Monthly Operating Payment"). Thereafter, during the term of this Agreement, GFCP shall pay to PTDC or its successor in interest, as applicable, the Base Operating Charge, as adjusted pursuant to Section 5(a) above within thirty (30) days after receipt of a bill therefor ("Billed Monthly Operating Payment", and together with each Estimated Monthly Operating Payment, each, a "Monthly Operating Payment"). 10 If the date hereof is not the first day of a calendar month, GFCP' payment of the Monthly Operating Payment for the fractional month between the date hereof and the first day of the first full calendar month in the term of this Agreement shall be prorated on a per diem basis (calculated on a thirty (30) day month). (d) Monthly Adjustments to Estimated Operating Charge. Following the end of each calendar month during the portion of the term of this Agreement prior to October 31, 1997, PTDC shall furnish to GFCP a written statement ("Adjustment Statement") showing the actual Costs for a specified period prior to the date of such Adjustment Statement, which Costs have not been verified in any previous Adjustment Statement ("Actual Operating Charge"). If GFCP's Proportional Share of the Actual Operating Charge exceeds GFCP's payment with respect to the period covered by the Adjustment Statement, GFCP shall pay to PTDC the deficiency ("Deficiency Payment") within ten (10) days after the date of the furnishing of the Adjustment Statement from PTDC. If GFCP's Monthly Operating Payment exceeds GFCP's Proportional Share of the Estimated Operating Charges for the balance of the term of this Agreement, PTDC shall refund to GFCP the amount of such excess. 11 (e) Monthly Storage Fees. (i) Determination of Storage Fee. In addition to the Monthly Operating Payments and Deficiency Payments paid by GFCP to PTDC under this Agreemet, GFCP shall pay PTDC a monthly charge obtained by multiplying the Base Storage Charge (hereinafter defined) by each barrel of GFCP Product stored by PTDC in the Storage Tanks ("Storage Fee"). The Base Storage Charge for the calendar year 1991 shall be agreed to within ten (10) days after the date of the Agreement, and the Base Storage Charge for each subsequent calendar year of the term of this Agreement shall be agreed to by the parties prior to January 1, of each such calendar year. The Base Storage Charge shall be consistent with the market commercial rate for storing fuel oil in the City of Philadelphia ("Industry Rate"), and if the parties do not agree upon the Base Storage Charge for any calendar year, either party apply to the American Arbitration Association (in Philadelphia) for a determination of the Industry Rate, which, when determined by arbitration, shall be binding upon the parties (and a judgment with respect to such determination may be entered by a court of competent jurisdiction) as the Base Storage Charge for the calendar year in question. Each party hereby consents to arbitration of the Industry Rate and Base Storage Charge as aforesaid, and agrees to pay one-half of the cost of any such arbitration proceeding. The Base Storage Charge shall be prorated (based on the number of days in the calendar month in question) as applied to any Barrels of GFCP Product which are stored in the Storage Tanks for a portion of a calendar month. 12 (ii) Maximum Base Storage Charge. Notwithstanding anything to the contrary set forth in this Paragraph 5(d), in no event shall the Base Storage Charge exceed (A) $.50 for calendar year 1991, or (B) for any calendar year thereafter, a sum equal to the product of the Base Storage Charge during the prior calendar year multiplied by a fraction (not less than one), the numerator of which shall equal the Index for November of the prior calendar year ("Numerator Year"), and the denominator of which shall equal the Index for November of the calendar year prior to the Numerator Year. (iii) Method of Payment. All Storage Fees shall be billed by PTDC and paid by GFCP fifteen (15) days after receipt of each monthly invoice. (f) Separate Calendar Years. Each calendar year of the term of this Agreement shall be treated separately for the purposes of the calculations described in this Paragraph 5. (g) PTDC Purchase of Facility. Upon acquisition of the Facility by PTEC, PTEC shall assume PTDC's right and obligations hereunder, and GFCP shall make all payments due to PTDC hereunder to PTEC. 6. Term of Agreement. This Agreement shall commence on thirty (30) days written notice from GFCP to PTDC ("Commencement Date"), and shall expire on the same date as the Site Lease, as the term thereof may be extended pursuant to the terms thereof. 13 7. Access to PTDC Property. (a) General Access. Throughout the term of this Agreement, GFCP and its agents and employees shall have access to the Dock for the purposes of observation, testing and inspection of (i) berthing and fuel unloading activities upon the arrival of barges carrying GFCP Product at the Dock berth and during such times as GFCP Product is being unloaded, and (ii) the performance of PTDC's maintenance and repair obligations described in Paragraph 4 hereof. PTDC shall arrange for independent quality and quantity inspections of barges unloading at the Dock. The independent inspector will be mutually satisfactory to GFCP and PTDC. (b) Emergency Access. In the event that the Storage Tanks then in use by GFCP contain less than twenty-four (24) hours live storage of GFCP Product, and PTDC fails, refuses or is unable to implement the interconnection and forwarding into the GFCP Piping System of GFCP Product, then GFCP may take such measures as are required to accomplish such interconnection and forwarding of GFCP Product into the GFCP Piping System, provided, however, that if such failure, refusal or inability of PTDC to implement the interconnection and forwarding into the GFCP Piping System of GFCP Product was justified under other provisions of this Agreement, then GFCP shall pay any and all costs, expenses, damages and liabilities incurred by PTDC as a result of any action taken by GFCP pursuant to this Paragraph 7(b). 14 8. Insurance. (a) PTDC's Insurance. Throughout the term of this Agreement, PTDC shall maintain the following insurance at its sole cost and expense: (i) Workmen's compensation insurance (or its statutorily required equivalent with respect to employees working at the dock) for all labor employed by PTDC in connection with the Agreement who may come within the protection of workmen's compensation, as required by the laws of the Commonwealth of Pennsylvania, and employer's liability insurance for the benefit of its employees not protected under such workmen's compensation laws. Employer's liability insurance shall be in an amount not less than $1,000,000. (ii) Comprehensive general liability and property damage insurance, including contractual liability, non-owned water craft and automobile liability endorsements, in an amount not less than $2,000,000, for injuries, including death, to any one person, and subject to the same limits per person, in an amount not less than $5,000,000 on account of one accident, and in an amount not less than $2,000,000 for property damage on account of one accident. (iii) Fire and extended coverage casualty insurance with respect to the Dock and the Storage Tanks, in an amount equal to no less than the replacement cost thereof. (iv) Environmental impairment liability insurance with respect to the discharge of any GFCP Product on, in or beneath any bodies of water or land, from any vessel 15 berthed at the Dock, the Storage Tanks or any portion of the Dock, in an amount not less than $2,000,000. (b) GFCP's Insurance. Throughout the term of this Agreement, GFCP shall maintain the following insurance at its sole cost and expense: (i) Workmen's compensation insurance (or its statutorily required equivalent with respect to employees working at the Dock) for all labor employed by GFCP in connection with this Agreement who may come within the protection of workmen's compensation, as required by the laws of the Commonwealth of Pennsylvania, and employer's liability insurance for the benefit of its employees not protected under such workmen's compensation, as required by the laws of the Commonwealth of Pennsylvania, and employer's liability insurance for the benefit of its employees not protected under such workmen's compensation laws. Employer's liability insurance shall be in an amount not less than $1,000,000. (ii) Comprehensive general liability and property damage insurance, including contractual liability, non-owned water craft and automobile liability endorsements, in an amount not less than $2,000,000, for injuries, including death, to any one person, and subject to the same limits per person, in an amount not less than $5,000,000 on account of one accident, and in an amount not less than $2,000,000 for property damage on account of one accident. (iii) Environmental impairment liability insurance with respect to the discharge of any GFCP Product from the GFCP Piping System on, in or beneath any bodies of water or land, in an amount not less than $2,000,000. 16 (c) Evidence of Coverage. Within ten (10) days after financial closing, with respect to Section 8(b)(i) and (ii), and at least ten days prior to the delivery of GFCP Product to the Dock with respect to Section 8(b)(iii), and prior to the expiration of any of the insurance coverage required of any party hereunder, each party shall furnish the other party with a certificate of insurance evidencing in particular that (i) the party who is required to maintain the insurance and the other party to this Agreement are both named insureds, as their interests may appear, (ii) the extent of the insurance, (iii) the amount of the insurance, (iv) the location and operations to which the insurance applies, and (v) the effective date and the date of expiration of the insurance. Such certificate shall also provide that the coverages evidenced thereby shall not be cancelled or changed in any manner for any reason, except upon thirty (30) days prior written notice to the party who is maintaining the insurance and the other party to this Agreement. 9. Defaults and Remedies. (a) Defaults. The occurrence of any one of the following events shall constitute an "Event of Default" under this Agreement: (i) The failure of GFCP to pay any Monthly Operating Payments, Deficiency Payments or Storage Fees due to PTDC or PTEC or GFCP of such failure. (ii) The failure of PTDC, PTEC or GFCP to perform any of their respective material obligations under this 17 Agreement within thirty (30) days after delivery of written notice to the party who has failed to perform its obligation by another party to this Agreement; provided, however, that such thirty (30) day period shall be extended by any period of time during which a party has failed to perform an obligation under this Agreement due to Force Majeure. (iii) Any assignment by PTDC, PTEC or GFCP for the benefit of creditors, the appointment of a receiver, liquidator or trustee of PTDC, PTEC or GFCP, or of any of their respective property, the insolvency of PTDC, PTEC or GFCP or the adjudication of PTDC, PTEC or GFCP (or against PTDC, PTEC or GFCP if the same shall not be discharged within sixty (60) days) of any case for the bankruptcy, reorganization or arrangement of such party pursuant to the Federal Bankruptcy Code or any similar statute, or the institution of any proceeding for the dissolution or liquidation of PTDC, PTEC or GFCP. (iv) The occurrence of an Event of Default by GFCP or PTEC under the Site Lease, if such Event of Default would permit the termination of the Site Lease by the non-defaulting party under the terms thereof. (b) Remedies. If an Event of Default occurs, the party not in default shall have the right to terminate this Agreement, seek specific performance of this Agreement, and exercise all of the rights and remedies, including, without limitation, all rights and remedies for damages caused by the Event of Default and/or occasioned by the termination of this 18 Agreement resulting from such Event of Default, which are available to the party not in default at law or in equity. 10. Notices. All notices, requests, and demands upon either party hereto shall be in writing (except as provided in Paragraphs 2(a) and (c) hereof) and deemed effective (a) if personally delivered, on the date delivered, (b) if mailed by United States registered or certified mail, postage prepaid, on the second business day after the date on which it is mailed, or (c) if mailed by private overnight courier service, such as Federal Express, on the next business day after the date on which it is mailed, when addressed to the part to receive such notice, request or demand as follows: If to PTDC: Philadelphia Thermal Development Corporation Schuylkill Station 2600 Christian Street Philadelphia, PA 19146 If to PTEC: Philadelphia Thermal Energy Corporation Schuylkill Station 2600 Christian Street Philadelphia, PA 19146 If to GFCP: Grays Ferry Cogeneration Partnership 225 S. 8th Street Philadelphia, PA Attention: or to such other address as either party may notify the other party of in the foregoing manner. 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. 12. No Waiver. No delay or failure of any party to exercise any right, option or remedy herein given or reserved 19 shall constitute a waiver of such right or prevent the party from afterwards shall constitute a waiver of such right or prevent the party from afterwards exercising such right, option or remedy. The rights, options and remedies provided herein shall be cumulative and no one or more of them shall be exclusive of the other or others, or of any other right, option or remedy now or hereafter given or allowed by law or equity. 13. Successors and Assigns. This Agreement shall be binding upon, and the benefits hereof shall inure to, the parties hereto and their respective successors and assigns; provided, however, that no party hereto may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other parties except that in the event PTEC acquires the Dock, the Storage Tanks and any other assets of PTDC in accordance with the terms of the PTEC/PTDC Agreement (collectively, the "PTDC Assets") from PTDC, GFCP's consent shall not be required for PTEC to assume certain applicable obligations or enjoy certain applicable benefits accruing to PTDC hereunder. In the event PTEC acquires any of the PTDC Assets from PTDC, PTEC shall be deemed to have assumed certain obligations of PTDC and PTDC shall be deemed to have assigned to PTEC certain benefits accruing to PTDC under this Agreement, which obligations and benefits are more fully set forth in the PTEC/PTDC Agreement. Upon PTEC's acquisition of the Dock, all applicable references to PTDC in this Agreement shall be deemed referenced to PTEC. 14. Entire Agreement. This Agreement contains the entire Agreement and understanding of the parties hereto with respect to the subject matter hereof, and may not be changed, modified or amended in any manner except by a written agreement signed by the 20 party against whom enforcement of the change, modification or amendment is sought. 15. Headings. The headings and captions appearing in the text of this Agreement are used for convenience of reference only and shall not affect the meaning or interpretation of this Agreement in any manner. IN WITNESS WHEREOF, the parties hereto have executed this Dock Facility Service Agreement as of the day and year first above written. PHILADELPHIA THERMAL DEVELOPMENT CORPORATION ATTEST: By: /s/ S.G. Smith (Assistant) Secretary) Steven G. Smith, President PHILADELPHIA THERMAL ENERGY CORPORATION ATTEST: By:/s/ (Assistant) Secretary) Steven G. Smith, President GRAYS FERRY COGENERATION PARTNERSHIP By: O'Brien Environmental Energy, Inc., General Partner ATTEST: By: /s/ Robert A. Shinn (Assistant) Secretary) Title: Vice President By: Adwin Equipment Company, General Partner ATTEST: By: /s/ Daniel A. Neely (Assistant) Secretary) Title: Vice President 21 EXHIBIT "A" Any No. 2 or No. 6 oil meeting the requirements of GFCP's air quality permits and equipment manufacturers' recommendations, but excluding recycled oil. EXHIBIT B TO DOCK FACILITY SERVICE AGREEMENT INTENTIONALLY OMITTED EXHIBIT C TO DOCK FACILITY SERVICE AGREEMENT AMORTIZATION SCHEDULE [PHILADELPHIA THERMAL DEVELOPMENT CORPORATION PETRO PROPERTY PURCHASE LOAN AMORTIZATION SCHEDULE ASSUMED INTEREST RATE: PRIME + 1/4% = 10.25%] Exhibit F to the Site Lease Demineralized Water Charges EXHIBIT F Per Thousand Pounds of Water As of 1/1/93 Water & Sewer $ 0.33 Chemicals $ 0.18 Labor $ 0.09 Repairs & Maintenance $ 0.05 Electricity from Utility $ 0.03 Depreciation $ 0.05 Cost of Modifications, Additions & Expansion required $ 0.00 by GFCP* Electricity from GFCP $ 0.00 Back-up Electricity from $ 0.00 Utility Cost of Electrical $ 0.00 Interconnect* Less: Cost of Electric from GFCP ($ 0.00) Total $ 0.73 * Includes Financing Costs EX-10.31.2 50 EXHIBIT 10.31.2 FORM OF AN INCENTIVE STOCK OPTION AGREEMENT. Exhibit 10.31.2 NRG GENERATING (U.S.) INC. 1996 STOCK OPTION PLAN GRANT OF INCENTIVE STOCK OPTION Date of Grant: ______________________ THIS GRANT, dated as of the date of grant first stated above (the "Date of Grant"), is delivered by NRG Generating (U.S.) Inc. (the "Company") to _____________________ ("Grantee"), who is an Employee of the Company or a Subsidiary. WHEREAS, the Board of Directors of the Company (the "Board") on September 20, 1996 adopted the NRG Generating (U.S.) Inc. 1996 Stock Option Plan (the "Plan"), and the shareholders of the Company approved the Plan on , 1996; WHEREAS, the Plan provides for the granting of Incentive Stock Options by the Board to directors, officers and key employees of the Company (excluding officers and directors who are not employees) to purchase shares of the Common Stock of the Company (the "Stock"), in accordance with the terms and provisions thereof; and WHEREAS, the Board considers Grantee to be a person who is eligible for a grant of Incentive Stock Options under the Plan, and has determined that it would be in the best interest of the Company to grant the Incentive Stock Options documented herein. NOW THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set forth, the Company, with the approval and at the direction of the Board, hereby grants to Grantee, as of the Date of Grant, an option to purchase up to __________ shares of Stock at a price of $___________ per share, its Fair Market Value as of the Date of Grant. The shares of stock purchasable upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is intended by the parties hereto to be, and shall be treated as, an Incentive Stock Option under Code Section 422. 2. Installment Exercise. Subject to such further limitations as are provided herein, the Option shall become exercisable in three (3) installments, Grantee having the right hereunder to purchase from the Company the following number of Options Shares upon exercise of the Option, on and after the following dates, in cumulative fashion: (i) on and after the first anniversary of the Date of Grant up to one- third (ignoring fractional shares) of the total number of Option Shares; (ii) on and after the second anniversary of the Date of Grant, up to an additional one-third (ignoring fractional shares) of the total number of Option Shares; and (iii) on and after the third anniversary of the Date of Grant, the remaining Option Shares. 3. Termination of Option. (a) The Option and all rights hereunder with respect thereto, to the extent such rights shall not have been exercised, shall terminate and become null and void after the expiration of ten (10) years from the Date of Grant (the "Option Term"). (b) Upon the occurrence of Grantee's ceasing for any reason to be employed by the Company, the Option, to the extent not previously exercised, shall terminate and become null and void immediately upon the Separation Date, except in a case where the termination of Grantee's employment is by reason of retirement, Disability or death or otherwise as follows. Upon a termination of Grantee's employment by reason of Disability or death, all unexercised portions of the Option shall become immediately exercisable and the Option may be exercised during the period beginning upon such termination and ending one year after such date. In the event of any other termination, the Option may be exercised within the three-month period following the date of retirement, but only to the extent that the Option was outstanding and exercisable upon the date of such retirement. In no event, however, shall any such period extend beyond the Option Term. (c) In the event of Grantee's death, the Option may be exercised by Grantee's legal representative(s) as and to the extent that the Option would otherwise have been exercisable by Grantee, subject to the provisions of Section 3(b) hereof. (d) A transfer of Grantee's employment between the Company and its Parents or Subsidiaries shall not be deemed to be a termination of Grantee's employment. (e) Notwithstanding any other provisions set forth herein or in the Plan, if Grantee shall: (I) commit any act of malfeasance or wrongdoing affecting the Company, its Parents or Subsidiaries, (ii) breach any covenant not to compete, or employment contract, with the Company, its Parents or Subsidiaries), or (iii) engage in conduct that would warrant Grantee's discharge for cause (excluding general dissatisfaction with the performance of Grantee's duties, but including any act of disloyalty or any conduct clearly tending to bring discredit upon the Company, its Parents or Subsidiaries), any unexercised portion of the Option shall immediately terminate and be void. 4. Exercise of Options. (a) Grantee may exercise the Option with respect to all or any part of the number of Option Shares that are exercisable hereunder by giving the Secretary of the Company written notice of intent to exercise. The notice of exercise shall specify the number of Option Shares as to which the Option is to be exercised and date of exercise thereof, which date shall be at least five (5) days after the signing of such notice unless an earlier time shall have been mutually agreed upon. (b) Full payment (in U.S. dollars) by Grantee of the Option Price for Option Shares purchased shall be made on or before the exercise date specified in the notice of exercise in cash, or [insert alternative payment provisions if desired]. On the exercise date specified in Grantee's notice or as soon thereafter as is practicable, the Company shall cause to be delivered to Grantee, a certificate or certificates for the Option Shares then being purchased (out of theretofore unissued Stock or reacquired Stock, as the Company may elect) upon full payment for such Option Shares. The obligation of the Company to deliver Stock shall, however, be subject to the condition that if at any time the Board shall determine in its discretion that the listing, registration or qualification of the Option or the Option Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Option or the issuance or purchase of Stock thereunder, the Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board. (c) If Grantee fails to pay for any of the Option Shares specified in such notice or fails to accept delivery thereof, Grantee's right to purchase such Option Shares may be terminated by the Company or the exercise of the Option may be ignored, as the Board in its sole discretion may determine. The date specified in Grantee's notice as the date of exercise shall be deemed the date of exercise of the Option, provided that payment in full for the Option Shares to be purchased upon such exercise shall have been received by such date. 5. Adjustment of and Changes in Stock. In the event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision, or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure of shares of capital stock of the Company, the Board shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in such option price; provided, however, that no such adjustment shall give Grantee any additional benefits under the Option. 6. Fair Market Value. As used herein, the term "Fair Market Value" shall mean: (a) If the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, the Nasdaq National Market, its fair market value shall be the closing selling price for such stock on the principal securities exchange or national market system on which the Common Stock is at the time listed for trading. If there are no sales of Common Stock on that date, then the closing selling price for the Common Stock on the next preceding day for which such closing selling price is quoted shall be determinative of fair market value; or, (b) If the Common Stock is not traded on an exchange or a national market system, its fair market value shall be determined in good faith by the Board, and such determination shall be conclusive and binding on all persons. In no event shall the Fair Market Value equal less than the par value of the Common Stock. 7. No Rights as Shareholders. Grantee shall have no rights as a shareholder with respect thereto unless and until certificates for shares of Common Stock are issued to him. 8. Non-Transferability of Option. During Grantee's lifetime, this Option shall be exercisable only by Grantee or his or her guardian or legal representative. 9. Employment Not Affected. The grant of the Option hereunder shall not be construed as conferring on Grantee any right to continued employment, and Grantee's employment may be terminated without regard to the effect which such action might have upon him as a holder of this Option. 10. Amendment of Option. The Option may be amended by the Board at any time (I) if the Board determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in the Code or in the regulations issued thereunder, or any federal or state securities law or other law of regulation, which change occurs after the Date of Grant and by its terms applies to the Option; or (ii) other than in the circumstances described in clause (I), with the consent of Grantee. 11. Notice. Any notice to the Company provided for in this instrument shall be addressed to it in care of its Secretary at its executive offices and any notice to Grantee shall be addressed to Grantee at the current address shown on the payroll records of the Employer. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 12. Incorporation of Plan by Reference. The Option is granted pursuant to the Plan, the terms and definitions of which are incorporated herein by reference, and the Option shall in all respects by interpreted in accordance with the Plan. 13. Governing Law. To the extent that federal law shall not be held to have preempted local law, this Option shall be governed by the laws of the State of Delaware. If any provision of the Option shall be held invalid or unenforceable, the remaining provisions hereof shall continue in full force and effect. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Grant of Incentive Stock Option, and Grantee has placed his or her signature hereon, effective as of the Date of Grant. NRG Generating (U.S.) Inc. By: GRANTEE Signature Name: (Print) Address: EX-10.31.3 51 EXHIBIT 10.31.3 FORM OF A NONQUALIFIED STOCK OPTION AGREEMENT. Exhibit 10.31.3 NRG GENERATING (U.S.) INC. 1996 STOCK OPTION PLAN GRANT OF EMPLOYEE NONQUALIFIED STOCK OPTION Date of Grant: THIS GRANT, dated as of the date of grant first stated above (the "Date of Grant"), is delivered by NRG Generating (U.S.) Inc. (the "Company") to ________________ (the "Grantee"), who is an Employee of the Company or a Subsidiary. WHEREAS, the Board of Directors of the Company (the "Board") on September 20, 1996, adopted the NRG Generating (U.S.) Inc. 1996 Stock Option Plan (the "Plan"); WHEREAS, the Plan provides for the granting of Nonqualified Stock Options by the Board to directors of the Company and to officers and key employees of the Company and its Subsidiaries to purchase shares of the Common Stock of the Company (the "Stock"), in accordance with the terms and provisions thereof; and WHEREAS, the Board considers Grantee to be a person who is eligible for a grant of Nonqualified Stock Options under the Plan, and has determined that it would be in the best interest of the Company to grant the Nonqualified Stock Options documented herein. NOW THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set forth, the Company, with the approval and at the direction of the Board, hereby grants to Grantee, as of the Date of Grant, an option to purchase up to _____ shares of Stock at a price of _____ per share. The shares of stock purchasable upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is intended by the parties hereto to be, and shall be treated as, a Nonqualified Stock Option which is not subject to the provisions of Code Section 422. 2. Installment Exercise. Subject to such further limitations as are provided herein, the Option shall become exercisable in three (3) installments, Grantee having the right hereunder to purchase from the Company the following number of Options Shares upon exercise of the Option, on and after the following dates, in cumulative fashion: (i) on and after the first anniversary of the Date of Grant up to one-third (ignoring fractional shares) of the total number of Option Shares; (ii) on and after the second anniversary of the Date of Grant, up to an additional one-third (ignoring fractional shares) of the total number of Option Shares; and (iii) on and after the third anniversary of the Date of Grant, the remaining Option Shares. 3. Termination of Option. (a) The Option and all rights hereunder with respect thereto, to the extent such rights shall not have been exercised, shall terminate and become null and void after the expiration of ten (10) years from the Date of Grant (the "Option Term"). (b) Upon the occurrence of Grantee's ceasing for any reason to be employed by the Company, the Option, to the extent not previously exercised, shall terminate and become null and void immediately upon the Separation Date, except in a case where the termination of Grantee's employment is by reason of retirement, Disability or death or otherwise as follows. Upon a termination of Grantee's employment by reason of Disability or death, all unexercised portions of the Option shall become immediately exercisable and the Option may be exercised during the period beginning upon such termination and ending one year after such date. Upon termination of Grantee's employment, the Option may be exercised during the three-month period following the date of retirement, but only to the extent that the Option was outstanding and exercisable on the date of such retirement. In no event, however, shall any such period extend beyond the Option Term. (c) In the event of Grantee's death, the Option may be exercised by Grantee's legal representative(s) as and to the extent that the Option would otherwise have been exercisable by Grantee, subject to the provisions of Section 3(b) hereof. (d) A transfer of Grantee's employment between the Company, its parents, subsidiaries or affiliates, shall not be deemed to be a termination of Grantee's employment. (e) Notwithstanding any other provisions set forth herein or in the Plan, if Grantee shall: (i) commit any act of malfeasance or wrongdoing affecting the Company, its Parents or Subsidiaries, (ii) breach any covenant not to compete, or employment contract, with the Company, its Parents or Subsidiaries, or (iii) engage in conduct that would warrant Grantee's discharge for cause (excluding general dissatisfaction with the performance of Grantee's duties, but including any act of disloyalty or any conduct clearly tending to bring discredit upon the Company, its Parents or Subsidiaries), any unexercised portion of the Option shall immediately terminate and be void. 4. Exercise of Options. (a) Grantee may exercise the Option with respect to all or any part of the number of Option Shares that are exercisable hereunder by giving the Secretary of the Company written notice of intent to exercise. The notice of exercise shall specify the number of Option Shares as to which the Option is to be exercised and date of exercise thereof, which date shall be at least five (5) days after the signing of such notice unless an earlier time shall have been mutually agreed upon. (b) Full payment (in U.S. dollars) by Grantee of the Option Price for Option Shares purchased shall be made on or before the exercise date specified in the notice of exercise in cash or as the Company may otherwise permit as further set forth in the Plan. On the exercise date specified in Grantee's notice or as soon thereafter as is practicable, the Company shall cause to be delivered to Grantee, a certificate or certificates for the Option Shares then being purchased (out of theretofore unissued Stock or reacquired Stock, as the Company may elect) upon full payment for such Option Shares. The obligation of the Company to deliver Stock shall, however, be subject to the condition that if at any time the Board shall determine in its discretion that the listing, registration or qualification of the Option or the Option Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Option or the issuance or purchase of Stock thereunder, the Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board. (c) If Grantee fails to pay for any of the Option Shares specified in such notice or fails to accept delivery thereof, Grantee's right to purchase such Option Shares may be terminated by the Company or the exercise of the Option may be ignored, as the Board in its sole discretion may determine. The date specified in Grantee's notice as the date of exercise shall be deemed the date of exercise of the Option, provided that payment in full for the Option Shares to be purchased upon such exercise shall have been received by such date. 5. Adjustment of and Changes in Stock. In the event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision, or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure of shares of capital stock of the Company, the Board shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in such option price; provided, however, that no such adjustment shall give Grantee any additional benefits under the Option. 6. No Rights as Shareholders. Grantee shall have no rights as a shareholder with respect thereto unless and until certificates for shares of Common Stock are issued to him. 7. Non-Transferability of Option. During Grantee's lifetime, this Option shall be exercisable only by Grantee or his or her guardian or legal representative. 8. Employment Not Affected. The grant of the Option hereunder shall not be construed as conferring on Grantee any right to continued employment, and Grantee's employment may be terminated without regard to the effect which such action might have upon him as a holder of this Option. 9. Amendment of Option. The Option may be amended by the Board at any time (i) if the Board determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in the Code or in the regulations issued thereunder, or any federal or state securities law or other law of regulation, which change occurs after the Date of Grant and by its terms applies to the Option; or (ii) other than in the circumstances described in clause (i), with the consent of Grantee. 10. Notice. Any notice to the Company provided for in this instrument shall be addressed to it in care of its Secretary at its executive offices and any notice to Grantee shall be addressed to Grantee at the current address shown on the payroll records of the Employer. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 11. Incorporation of Plan by Reference. The Option is granted pursuant to the Plan, the terms and definitions of which are incorporated herein by reference, and the Option shall in all respects by interpreted in accordance with the Plan. 12. Governing Law. To the extent that federal law shall not be held to have preempted local law, this Option shall be governed by the laws of the State of Delaware. If any provision of the Option shall be held invalid or unenforceable, the remaining provisions hereof shall continue in full force and effect. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Grant of Nonqualified Stock Option, and Grantee has placed his or her signature hereon, effective as of the Date of Grant. NRG Generating (U.S.) Inc. By: Its: President and CEO: GRANTEE Signature____________________________ Name: Address: EX-10.31.4 52 EXHIBIT 10.31.4 FORM OF A NONEMPLOYEE DIRECTOR NONQUALIFIED STOCK OPTION AGREEMENT. Exhibit 10.31.4 NRG GENERATING (U.S.) INC. 1996 STOCK OPTION PLAN GRANT OF NONEMPLOYEE DIRECTOR NONQUALIFIED STOCK OPTION Date of Grant: ______________________ THIS GRANT, dated as of the date of grant first stated above (the "Date of Grant"), is delivered by NRG Generating (U.S.) Inc. (the "Company") to _____________________ (the "Grantee"), who is a director of the Company who is not an Employee of the Company or a Subsidiary. WHEREAS, the Board of Directors of the Company (the "Board") on September 20, 1996 adopted the NRG Generating (U.S.) Inc. 1996 Stock Option Plan (the "Plan"); WHEREAS, the Plan provides for the granting of Nonqualified Stock Options by the Board to directors of the Company to purchase shares of the Common Stock of the Company (the "Stock"), in accordance with the terms and provisions thereof; and WHEREAS, the Board considers Grantee to be a person who is eligible for a grant of Nonqualified Stock Options under the Plan, and has determined that it would be in the best interest of the Company to grant the Nonqualified Stock Options documented herein. NOW THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set forth, the Company, with the approval and at the direction of the Board, hereby grants to Grantee, as of the Date of Grant, an option to purchase up to __________ shares of Stock at a price of $___________ per share. The shares of stock purchasable upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is intended by the parties hereto to be, and shall be treated as, a Nonqualified Stock Option which is not subject to the provisions of Code Section 422. 2. Installment Exercise. Subject to such further limitations as are provided herein, the Option shall become exercisable in three (3) installments, Grantee having the right hereunder to purchase from the Company the following number of Options Shares upon exercise of the Option, on and after the following dates, in cumulative fashion: (i) on and after the first anniversary of the Date of Grant up to one-third (ignoring fractional shares) of the total number of Option Shares; (ii) on and after the second anniversary of the Date of Grant, up to an additional one-third (ignoring fractional shares) of the total number of Option Shares; and (iii) on and after the third anniversary of the Date of Grant, the remaining Option Shares. 3. Termination of Option. (a) The Option and all rights hereunder with respect thereto, to the extent such rights shall not have been exercised, shall terminate and become null and void after the expiration of ten (10) years from the Date of Grant (the "Option Term"). (b) When the Grantee ceases to be a director of the Company, the Option, to the extent not previously exercised, shall terminate and become null and void immediately upon the Separation Date, except in a case where the Grantee's service as a director of the Company ceases by reason of Disability or death or otherwise as follows. If the Grantee ceases to be a director of the Company by reason of Disability or death, all unexercised portions of the Option shall become immediately exercisable and the Option may be exercised during the period beginning upon such termination and ending one year after such date. In no event, however, shall any such period extend beyond the Option Term. If the Participant's service as a director of the Company terminates for any other reason prior to the exercise of all portions of the Option, the Participant shall have the right within three (3) months of his Separation Date, but not beyond the expiration date of the Option, to exercise such unexercised portions of the Option. (c) In the event of Grantee's death, the Option may be exercised by Grantee's legal representative(s) as and to the extent that the Option would otherwise have been exercisable by Grantee, subject to the provisions of Section 3(b) hereof. (d) Notwithstanding any other provisions set forth herein or in the Plan, if Grantee shall: (i) commit any act of malfeasance or wrongdoing affecting the Company, its Parents or Subsidiaries, or (ii) engage in conduct that would warrant Grantee's removal for cause (excluding general dissatisfaction with the performance of Grantee's duties, but including any act of disloyalty or any conduct clearly tending to bring discredit upon the Company, its Parents or Subsidiaries), any unexercised portion of the Option shall immediately terminate and be void. 4. Exercise of Options. (a) Grantee may exercise the Option with respect to all or any part of the number of Option Shares that are exercisable hereunder by giving the Secretary of the Company written notice of intent to exercise. The notice of exercise shall specify the number of Option Shares as to which the Option is to be exercised and date of exercise thereof, which date shall be at least five (5) days after the signing of such notice unless an earlier time shall have been mutually agreed upon. (b) Full payment (in U.S. dollars) by Grantee of the Option Price for Option Shares purchased shall be made on or before the exercise date specified in the notice of exercise in cash or as the Company may otherwise permit as further set forth in the Plan. On the exercise date specified in Grantee's notice or as soon thereafter as is practicable, the Company shall cause to be delivered to Grantee, a certificate or certificates for the Option Shares then being purchased (out of theretofore unissued Stock or reacquired Stock, as the Company may elect) upon full payment for such Option Shares. The obligation of the Company to deliver Stock shall, however, be subject to the condition that if at any time the Board shall determine in its discretion that the listing, registration or qualification of the Option or the Option Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Option or the issuance or purchase of Stock thereunder, the Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board. (c) If Grantee fails to pay for any of the Option Shares specified in such notice or fails to accept delivery thereof, Grantee's right to purchase such Option Shares may be terminated by the Company or the exercise of the Option may be ignored, as the Board in its sole discretion may determine. The date specified in Grantee's notice as the date of exercise shall be deemed the date of exercise of the Option, provided that payment in full for the Option Shares to be purchased upon such exercise shall have been received by such date. 5. Adjustment of and Changes in Stock. In the event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision, or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure of shares of capital stock of the Company, the Board shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in such option price; provided, however, that no such adjustment shall give Grantee any additional benefits under the Option. 6. No Rights as Shareholders. Grantee shall have no rights as a shareholder with respect thereto unless and until certificates for shares of Common Stock are issued to him. 7. Non-Transferability of Option. During Grantee's lifetime, this Option shall be exercisable only by Grantee or his or her guardian or legal representative. 8. Amendment of Option. The Option may be amended by the Board at any time (i) if the Board determines, in its sole discretion, that amendment is necessary or advisable in light of any addition to or change in the Code or in the regulations issued thereunder, or any federal or state securities law or other law of regulation, which change occurs after the Date of Grant and by its terms applies to the Option; or (ii) other than in the circumstances described in clause (i), with the consent of Grantee. 9. Notice. Any notice to the Company provided for in this instrument shall be addressed to it in care of its Secretary at its executive offices and any notice to Grantee shall be addressed to Grantee at the address below. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 10. Incorporation of Plan by Reference. The Option is granted pursuant to the Plan, the terms and definitions of which are incorporated herein by reference, and the Option shall in all respects by interpreted in accordance with the Plan. 11. Governing Law. To the extent that federal law shall not be held to have preempted local law, this Option shall be governed by the laws of the State of Delaware. If any provision of the Option shall be held invalid or unenforceable, the remaining provisions hereof shall continue in full force and effect. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Grant of Nonqualified Stock Option, and Grantee has placed his or her signature hereon, effective as of the Date of Grant. NRG Generating (U.S.) Inc. By: Its: President and CEO GRANTEE Signature____________________________ Name: Address: EX-10.32 53 EXHIBIT 10.32 EMPLOYMENT AGREEMENT DATED APRIL 30, 1996 BETWEEN THE COMPANY AND LEONARD A. BLUHM. Exhibit 10.32 LEASED EMPLOYEE AGREEMENT This Agreement is made and entered into on this 30th day of April, 1996, by and between NRG Generating (U.S.) Inc. ("Generating"), a Delaware corporation, and NRG Energy, Inc. ("Energy"), a Delaware corporation. RECITALS 1. Generating needs a qualified executive to temporarily serve as its president and chief executive officer. 2. Leonard A. Bluhm ("Bluhm") is an executive employee of Energy. 3. Generating and Energy, with Bluhm's concurrence, desire that Energy lease the services of Bluhm to Generating pursuant to the terms and conditions of this agreement. NOW, THEREFORE, the parties agree as follows: AGREEMENT 1. Agreement to Lease Bluhm. Energy hereby leases to Generating the services of Bluhm to serve as the president and chief executive officer of Generating and its related entities, and to perform such other duties commensurate with the position of president and chief executive officer of Generating, as Generating, in its sole discretion, directs or authorizes (collectively referred to herein as the "Work"). 2. Duration and Termination. This agreement shall be for an indefinite term. It will terminate upon the earliest of any of the following events: a) Bluhm's death. b) As permitted by applicable law, because of Bluhm's disability, as determined by a qualified medical provider of Generating's choice, whose opinion it is that Bluhm cannot perform the duties of his position for a period of 90 consecutive days or longer because of disability. c) Bluhm's completion of the Work. d) Either Generating or Energy serves written notice on the other terminating this agreement. Such termination may be with or without cause. e) Duties on Termination. Upon termination of this agreement, Energy shall immediately cause Bluhm to discontinue his performance of the Work. Energy shall also cause Bluhm to immediately surrender any and all of Generating's property in his possession, including all copies of same. Any remaining portion of the Contract Price due and owing for the lease of Bluhm's services up to the date of termination of this agreement shall be due and payable thirty (30) days thereafter. 3. Contract Price and Time of Payment. (a) Generating will pay to Energy for the leasing of Bluhm's services the actual total payroll and benefit cost of Bluhm. (b) Energy will periodically submit to Generating a request for payment setting forth the portion of the Contract Price then due and owing. Generating shall pay such amount within thirty (30) days of receipt of such request. 4. Status of Parties. (a) The status of Energy is that of an independent contractor, and not of an agent or employee, of Generating. As such, Energy shall have no authority to enter into contracts or any other commitments on behalf of Generating. (b) The status of Bluhm in performing the Work is that of an employee of Energy and of an independent contractor of Generating. Energy will be solely responsible for the hiring, dismissal, and control of Bluhm. As such, Generating shall have no liability to any individual or entity arising from Bluhm's employment by Energy except as provided in section 5 below. (c) Generating and Energy shall not in any manner make any representations that an employer/employee relationship exists between them or between Generating and Bluhm. Energy shall cause Bluhm to covenant that he shall not in any manner make any representations that such employer/employee relationships exist. 5. Indemnification. (a) Generating hereby indemnifies and holds harmless Energy, its officers, directors and shareholders from and against any and all liabilities, suits, actions, judgments, costs, losses, damages or claims of whatsoever nature, arising out of any acts or omissions of Bluhm while he is acting on behalf of Generating in performance of the Work hereunder, including, without limitation, any injuries to or deaths of persons or any damage to 2 property or equipment. In the event any liability of Generating shall arise by reason of the sole negligence of Energy or Energy I s employees or agents, excluding Bluhm, then Generating shall not be liable under the provisions of this subparagraph (a) of this section five (5)- 2 (b) Notwithstanding anything herein to the contrary, in the event that liability is incurred as a result of the actions or inactions of Bluhm while he is acting on behalf of Energy, then Energy hereby indemnities and holds harmless Generating, its officers, directors and shareholders against any and all suits, actions, judgments, costs, losses, damages or claims of whatsoever nature arising out of or related to such actions or inaction of Bluhm, including, without limitation, any injuries to or deaths of persons or any damage to property or equipment. (c) In case any claim, demand, action, suit or proceeding shall be made, asserted or brought against any party entitled to indemnity under this section five (5) ("Indemnified Party") , such Indemnified Party shall notify the party obligated to indemnify under this section five (5) ("Indemnifying Party") in writing of the commencement thereof within fifteen (15) days, and the Indemnifying Party shall be entitled, at its expense and through counsel reasonably acceptable to such Indemnified Party, to participate in and, to the extent that the Indemnifying Party desires, to assume and control the defense thereof; provided, however, that the Indemnifying Party shall not be entitled to assume and control the defense of any such claim, demand, action, suit or proceeding, if and to the extent that, in the reasonable opinion of such Indemnified Party, such action, suit or proceeding involves the potential imposition of criminal liability on such Indemnified Party or a conflict of interest between such Indemnified Party and the Indemnifying Party; and provided, further, that the Indemnifying Party shall not agree to any settlement or compromise with respect to such claim, demand, action, suit or proceeding unless such settlement or compromise is concluded without expense to the Indemnified Party and includes a full release from liability of the Indemnified Party from such claim, demand, action, suit or proceeding, and all related claims, liabilities and causes of action. The Indemnified Party shall have no liability under this subsection (c) of section five (5) with respect to any claim, demand, action, suit or proceeding for which the required 15 day notice is not provided, to the extent that the failure to give such notice prejudices the Indemnifying Party. The 3 Indemnified Party shall supply the Indemnifying Party with such information and documents requested by such Indemnifying Party as are necessary or advisable for such Indemnifying Party to participate in the defense of any claim, demand, action, suit or proceeding to the extent permitted by this section five (5). No Indemnified Party shall enter into any settlement or other compromise with respect to any such claim, demand, action, suit or proceeding without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, unless such Indemnified Party waives its right to indemnification therefor. Notwithstanding anything to the contrary contained in this section five (5), with respect to any claim, demand, action, suit or proceeding the defense of which an Indemnifying Party shall have assumed, if any Indemnified Party determines that such Indemnifying Party is not conducting such defense in a diligent and reasonable manner, such Indemnified Party may assume and control such defense at the cost and expense of the Indemnifying Party; provided, however, that in the event such Indemnified Party assumes such defense: (1) such Indemnified Party shall conduct such defense in a diligent and reasonable manner with a view to incurring only such expenses as are reasonable in light of the claim, demand, action, suit or proceeding; (2) such Indemnified Party shall advise the Indemnifying Party of all settlement offers received in respect thereof; and (3) such Indemnified Party shall agree in writing that the Indemnifying Party shall not have liability in respect of the related claim, demand, action, suit or proceeding in excess of the amount of any settlement offer (which settlement offer shall include a full release from liability of the Indemnified Party from the claim, demand, action, suit or proceeding and all related claims, liabilities and causes of action) proposed to such Indemnified Party or to the Indemnifying Party, which the Indemnifying Party shall have offered to fund. 6. Duties as Employer. As Bluhm's employer, Energy shall be solely responsible for all expenses, costs, liabilities, assessments, taxes, insurance, and other obligations arising from and incidental to its employment of Bluhm. This includes, without limitation, payment of Bluhm's wages, benefits, and payroll and other employment-related taxes. Bluhm shall be covered under any 4 of Energy's liability and workers compensation insurance policies as Energy obtains in connection with its employment of employees similarly situated to Bluhm or as required by applicable law. 7. Proprietary Information. As a material condition of the lease of Bluhm's services hereunder, Energy shall cause Bluhm to execute any and all appropriate agreements with Generating for protecting against misappropriation or unauthorized disclosure of Generating's intellectual property, and its confidential information and other trade secrets. Energy will not employ Bluhm in any capacity which causes or requires him to disclose such material except as necessary for him to perform the Work. In the course of leasing Bluhm's services hereunder, Generating shall not cause or require him to disclose or misappropriate in any manner Energy's intellectual property, or confidential information and other trade secrets. In the event either Energy or Generating intentionally or unintentionally comes into possession of any of the other's foregoing property or information, it shall immediately surrender the originals and all copies of same. 8. Miscellaneous. (a) Each signatory hereto represents and warrants that he/she has the requisite legal and corporate authority to enter into this agreement on behalf of the party he/she represents, and that any necessary corporate action for the execution and performance of the obligations hereunder has been taken. (b) Neither party may assign this agreement or any rights, duties, obligations, or covenants herein without the prior written consent of the other. Any purported assignment without such consent shall have no force or effect. (c) Failure by either party hereto on any occasion to enforce and require the strict keeping and performance of any of the terms and conditions of this agreement shall not constitute a waiver of any such terms and conditions at any future time and shall not prevent such party from insisting on the strict keeping and performance of such terms and conditions at any time. (d) The provisions of sections 4, 5 and 7 of this agreement shall survive its termination and remain in full force and effect. (e) The unenforceability or invalidity of any provision of this agreement shall not affect the validity or enforceability of the remaining provisions hereof. (f) This agreement and its terms shall be 5 governed by, construed, and enforced in accordance with the laws of the State of Delaware. (g) Any modification of this agreement shall be binding only if evidenced in a writing signed by each party through its authorized representative. (h) This agreement constitutes the entire agreement between Generating and Energy concerning the leasing of Bluhm's services for the performance of the Work. Any prior agreements or understandings of any kind or nature whatsoever preceding the effective date of this agreement shall not be binding on either party except as incorporated herein. IN WITNESS WHEREOF, the parties have each caused this agreement to be executed by their duly authorized representatives below. Date: 10-25-96 NRG Energy, Inc. By:/s/ David H. Peterson Its: President Date: 10-25-96 NRG Generating (U.S.), Inc. By:/s/ Leonard Bluhm Its: President & CEO 6 STATE OF MINNESOTA ) COUNTY OF Hennepin) On October 25, 1996 before me, Karen A. Brennan, a Notary Public in and for said State, personally appeared Leonard A. Bluhm personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature /s/ Karen A. Brennan -----END PRIVACY-ENHANCED MESSAGE-----