Document:

exh10_1.htm

 

 

EXHIBIT 10.1

 

TRANSFER AND CONTRIBUTION AGREEMENT

 

BY AND AMONG

 

LEAF FINANCIAL CORPORATION

 

RESOURCE TRS, INC.

 

RESOURCE CAPITAL CORP.

 

MANAGEMENT PARTIES NAMED HEREIN

 

AND

 

LEAF COMMERCIAL CAPITAL, INC.

 

 

Dated as of January 4, 2011

 

  

  

  

 

 

TABLE OF CONTENTS

	
ARTICLE I DEFINITIONS

	
2

	  	
1.1

	
Certain Definitions.

	
2

	  	
1.2

	
Terms Defined Elsewhere in this Agreement

	
7

	  	
1.3

	
Other Definitional and Interpretive Matters

	
8

	
ARTCILE II TRANSFER AND CONTRIBUTION OF ASSETS

	
10

	  	
2.1

	
Transfer and Contribution of Assets

	
10

	  	
2.2

	
 Certain Provisions Relating to RCC Transferred Assets

	
10

	  	
2.3

	
Assumed Liabilities

	
11

	  	
2.4

	
Assumed Obligations

	
11

	  	
2.5

	
Retained Assets

	
11

	  	
2.6

	
Retained Liabilities

	
11

	  	
2.7

	
Section 351 of the Code

	
11

	
ARTICLE III CLOSING AND TERMINATION

	
11

	  	
3.1

	
Closing Date.

	
11

	  	
3.2

	
Termination of Agreement

	
12

	  	
3.3

	
Procedure Upon Termination.

	
12

	  	
3.4

	
Effect of Termination

	
12

	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF LEAF

FINANCIAL

	
13

	  	
4.1

	
Organization and Good Standing.

	
13

	  	
4.2

	
Authorization of Agreement.

	
13

	  	
4.3

	
Conflicts; Consents of Third Parties.

	
14

	  	
4.4

	
LEAF Financing Contracts

	
14

	  	
4.5

	
Financial Statements

	
17

	  	
4.6

	
Absence of Certain Developments

	
17

	  	
4.7

	
Taxes

	
17

	  	
4.8

	
Real Property

	
18

	  	
4.9

	
Tangible Personal Property

	
18

	  	
4.10

	
Intellectual Property.

	
18

	  	
4.11

	
Material Contracts.

	
19

	  	
4.12

	
Labor

	
19

 

 

  

  

  

 

	  	
4.13

	
Litigation.

	
19

	  	
4.14

	
Compliance with Laws; Permits

	
19

	  	
4.15

	
Environmental Matters.

	
20

	  	
4.16

	
Leasing Business

	
21

	  	
4.17

	
Financial Advisors

	
21

	  	
4.18

	
Basis in LEAF Transferred Assets

	
21

	  	
4.19

	
No Other Representations or Warranties; Schedules

	
21

	
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MANAGEMENTPARTIES

	
21

	  	
5.1

	
Authority to Enter into Agreement

	
22

	  	
5.2

	
Conflicts; Consents of Third Parties

	
22

	  	
5.3

	
No Liens

	
22

	  	
5.4

	
Financial Advisors

	
22

	  	
5.5

	
Basis in Management Party Transferred Assets

	
23

	  	
5.6

	
No Other Representations or Warranties; Schedules

	
23

	
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF TRS AND RCC

	
23

	  	
6.1

	
Organization and Good Standing

	
23

	  	
6.2

	
Authorization of Agreement

	
24

	  	
6.3

	
Conflicts; Consents of Third Parties

	
24

	  	
6.4

	
LRF Financing Contracts

	
25

	  	
6.5

	
RCC Financing Contracts

	
27

	  	
6.6

	
Litigation

	
29

	  	
6.7

	
Compliance with Laws; Permits

	
29

	  	
6.8

	
Environmental Matters

	
30

	  	
6.9

	
Financial Advisors.

	
30

	  	
6.10

	
Basis in RCC Transferred Assets

	
30

	  	
6.11

	
No Other Representations or Warranties; Schedules

	
30

	
ARTCILE VII REPRESENTATIONS AND WARRANTIES OF TRANSFEREE

	
31

	  	
7.1

	
Organization and Good Standing

	
31

	  	
7.2

	
Authorization of Agreement

	
31

	  	
7.3

	
Authorized Capitalization

	
31

	  	
7.4

	
Valid Issuance of Shares

	
31

	  	
7.5

	
Conflicts; Consents of Third Parties

	
32

	  	
7.6

	
Litigation

	
32

 

 

  

  

  

 

	  	  	  	  
	  	
7.7

	
Financial Advisors.

	
32

	  	
7.8

	
Condition of the Business and Assets

	
33

	
ARTICLE VIII COVENANTS

	
33

	  	
8.3

	
Services with Respect to Retained Assets; Transition Services

	
33

	  	
8.4

	
Conduct of Business Pending the Closing

	
33

	  	
8.3

	
Consents

	
33

	  	
8.4

	
Treatment of Transfer of RCC Transferred Assets

	
34

	  	
8.5

	
Further Assurances

	
34

	  	
8.6

	
Non-Competition; Non-Solicitation

	
34

	  	
8.7

	
Preservation of Records

	
36

	  	
8.8

	
Publicity

	
36

	  	
8.9

	
Use of Name

	
37

	  	
8.10

	
Employment and Employee Benefits

	
37

	  	
8.11

	
Disclosure Schedules; Supplementation and Amendment of Schedules

	
37

	
ARTICLE IX CONDITIONS TO CLOSING

	
37

	  	
9.1

	
Conditions Precedent to Obligations of Transferee.

	
37

	  	
9.2

	
Conditions Precedent to Obligations of the Contributors.

	
38

	  	
9.3

	
Frustration of Closing Conditions.

	
40

	
ARTICLE X INDEMNIFICATION

	
40

	  	
10.1

	
Survival of Representations and Warranties

	
40

	  	
10.2

	
Indemnification by the Contributors

	
40

	  	
10.3

	
Indemnification by Transferee

	
41

	  	
10.4

	
Indemnification Procedures

	
41

	  	
10.5

	
Certain Limitations on Indemnification.

	
43

	  	
10.6

	
Calculation of Losses.

	
43

	  	
10.7

	
Exclusive Remedy

	
43

	
ARTICLE XI MISCELLANEOUS

	
43

	  	
11.1

	
Tax Matters

	
43

	  	
11.2

	
Expenses

	
44

	  	
11.3

	
Submission to Jurisdiction; Consent to Service of Process

	
44

	  	
11.4

	
Entire Agreement; Amendments and Waivers

	
44

	  	
11.5

	
Governing Law

	
45

	  	
11.6

	
Notices

	
45

 

 

  

  

  

	  	  	  	  
	  	
11.7

	
Severability

	
46

	  	
11.8

	
Binding Effect; Assignment

	
46

	  	
11.9

	
Non-Recourse

	
46

	  	
11.10

	
Counterparts

	
47

 

 

  

  

  

Schedules and Exhibits

 

	
Exhibit A

Exhibit B

Schedule 1.1(a)(i)

Schedule 1.1(a)(ii)

Schedule 1.1(a)(iii)

Schedule 1.1(b)(i)

Schedule 1.1 (b)(ii)

Schedule 1.1 (c)(i)

Schedule 1.1 (c)(ii)

Schedule 1.1 (c)(iii)

Schedule 1.1 (d)(i)

Schedule 1.1 (d)(ii)

Schedule 1.1(e)(i)

Schedule 1.1(e)(ii)

Schedule 1.1(e)(iii)

Schedule 1.1(e)(iv)

Schedule 1.1(f)

Schedule 1.1(g)

Schedule 1.1(h)

	
Management Parties

Form of Exchange Letters

LEAF Financial Transferred Assets

Validity of LEAF Financing Contracts

Enforceability and Defaults of LEAF Financing Contracts

Assumed Liabilities

Assumed Obligations

LRF Financing Contacts

Validity of LRF Financing Contracts

Enforceability and Defaults of LRF Financing Contracts

Knowledge of LEAF Financial Persons

Knowledge of RCC and TRS Persons

TRS Interest in LRF

RCC Financing Contracts

Validity of RCC Financing Contracts

Enforceability and Defaults of RCC Financing Contracts

Retained Assets

Retained Liabilities

Series A Preferred Stock Designations

	
Schedule 2.1(b)(i)

	
Form of Warrant

	
Schedule 2.1(b)(ii)

	
Form of Share Purchase Agreement

	
Schedule 2.1(c)(i)

	
Management Non-Competition Agreement

	
Schedule 2.1(c)(ii)

	
Management Non-Solicitation Agreement

	
Schedule 2.1(c)(iii)

	
Assignment

	
Schedule 4.3(a)

	
Conflicts

	
Schedule 4.3(b)

	
Consents

	
Schedule 4.4(f)

	
Non-U.S. Obligors

	
Schedule 4.4(k)

	
Delivery of Property

	
Schedule 4.4(l)

	
Title to Property

	
Schedule 4.5

	
Financial Statements

	
Schedule 4.6

	
Absence of Certain Changes

	
Schedule 4.7

	
Non-Timely Tax Returns

	
Schedule 4.8(i)

	
Real Property and Real Property Leases

	
Schedule 4.8(ii)

	
Lien or Defaults on Real Property Leases

	
Schedule 4.8(iii)

	
Missouri Property Lease

	
Schedule 4.9

	
Tangible Personal Property

	
Schedule 4.10

	
Intellectual Property

	
Schedule 4.11(a)

	
Material Contracts

	
Schedule 4.11(b)

	
Material Contracts in Default

	
Schedule 4.13

	
Litigation

	
Schedule 4.18

	
Basis in LEAF Financial Transferred Assets

	
Schedule 5.5

	
Basis in Management Party Transferred Assets

	
Schedule 6.3 (a)

	
Conflicts

	
Schedule 6.3 (b)

	
Consents

 

 

  

  

  

 

	
Schedule 6.4 (g)

	
Non-U.S. Obligors

	
Schedule 6.4 (l)

	
Delivery of Property

	
Schedule 6.4 (m)

	
Title to Property

	
Schedule 6.5 (g)

	
Non-U.S. Obligors

	
Schedule 6.5 (l)

	
Delivery of Property

	
Schedule 6.5 (m)

	
Title to Property

	
Schedule 6.10

	
Basis of TRS in RCC Transferred Assets

	
Schedule 8.1(i)

	
Sub-Servicing Agreement

	
Schedule 8.1(ii)

	
Transition Services Agreement

 

 

  

  

  

TRANSFER AND CONTRIBUTION AGREEMENT

This TRANSFER AND CONTRIBUTION AGREEMENT (the “Agreement”), dated as of January 4, 2011, by and among LEAF Financial Corporation, a corporation existing under the laws of Delaware (“LEAF Financial”), Resource TRS, Inc., a corporation existing under the laws of Delaware (“TRS”) and Resource Capital Corp., a real estate investment trust existing under the laws of Maryland (“RCC”) (LEAF Financial, TRS and RCC are collectively sometimes referred to as the “Contributors” or individually as a “Contributor”), the Management Parties set forth in Exhibit A hereto (the “Management Parties”) and LEAF Commercial Capital, Inc., a corporation exiting under the laws of Delaware (the “Transferee”).

 

W I T N E S S E T H:

 

WHEREAS, LEAF Financial is engaged, either directly or through subsidiaries, in the business of originating and servicing equipment leases and notes (the “Leasing Business”), and in the business of equipment finance fund management and administration (the “Management Business”); and

 

WHEREAS, RCC, through its subsidiary, TRS, owns all of the equity interest of LEAF Receivables Funding 3, LLC (“LRF”) which owns certain equipment, equipment leases and notes (the “LRF Portfolio”); and

 

WHEREAS, LEAF Financial desires to transfer and contribute to Transferee, and Transferee desires to receive from LEAF Financial, the assets of LEAF Financial relating to the Leasing Business, and TRS desires to transfer and contribute to Transferee, and Transferee desires to receive from TRS, all of its interest in LRF; and

 

WHEREAS, as a result of such contributions, LEAF Financial will receive shares of Transferee’s common stock, no par value (“Common Stock”), and TRS will receive shares of Transferee’s Series A Preferred Stock, no par value (“Series A Preferred Stock”), and a warrant to acquire shares of Common Stock (the “Warrant”); and

 

WHEREAS, Transferee has agreed to assume certain specific liabilities of LEAF Financial; and

 

WHEREAS, the Management Parties desire to contribute to Transferee shares of LEAF Financial held by them in exchange for shares of Common Stock; and

 

WHEREAS, LEAF Financial desires that Transferee perform certain of LEAF Financial’s servicing obligations in connection with the Management Business, following consummation of the transactions contemplated by this Agreement and Transferee desires to perform such obligations upon the terms and conditions hereinafter set forth; and

 

WHEREAS, LEAF Financial has agreed to perform certain services for Transferee following consummation of the transactions contemplated by this Agreement; and

 

 

  

  

  

 

WHEREAS, certain terms used in this Agreement are defined in Section 1.1;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1           Certain Definitions.

 

(a)           For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

 

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

 

“Assumed Liabilities” means those liabilities set forth on Schedule 1.1(b)(i), attached hereto.

 

“Assumed Obligations” means those obligations set forth on Schedule 1.1(b)(ii), attached hereto, and Material Contracts.

 

 “Business Day” means any day of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

 

“Call Option Agreement” means the Call Option Agreement between Transferee and the Management Parties to be delivered at Closing regarding Transferee’s option to purchase common sock from the Management Parties under certain circumstances.

 

“Certificate of Designation” means the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Common Stock” means the Common Stock, no par value, of the Transferee.

 

 “Contract” means any written contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, or license.

 

  

2

  

 

“Environmental Law” means any applicable Law currently in effect relating to the protection of the environment or natural resources, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), as each has been amended and the regulations promulgated pursuant thereto.

 

“GAAP” means accounting principles generally accepted in the United States as of the date hereof.

 

“Governmental Body” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

 

“Hazardous Material” means any substance, material or waste which is regulated or defined as a “hazardous waste,” “hazardous substance,” “hazardous material,” “restricted hazardous waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic substance” under any provision of Environmental Law including petroleum, its by-products and asbestos.

 

“Intellectual Property” means all intellectual property rights used by LEAF Financial in the Leasing Business arising from or in respect of the following: (i) all patents and applications therefor, including continuations, divisionals, continuations-in-part, or reissues of patent applications and patents issuing thereon, (ii) all trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, Internet domain names and corporate names, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof, (iii) copyrights and registrations and applications therefor, works of authorship and mask work rights, (iv) all Software and Technology of LEAF Financial used in the Leasing Business, (v) telephone numbers, facsimile numbers, processes, business and product names, trade secrets, models, designs, methodologies, technical information and know-how relating to the origination and servicing of leases, and (vi) customer lists and vendor contracts relating to the Leasing Business.

 

“IRS” means the United States Internal Revenue Service and, to the extent relevant, the United States Department of Treasury.

 

“Knowledge” means the actual knowledge of those Persons identified on Schedule 1.1(d)(i) with respect to LEAF Financial and Schedule 1.1(d)(ii) with respect to RCC and TRS.

 

“Law” means any foreign, federal, state, local law, common law, statute, code, ordinance, rule or regulation including any stock exchange regulation.

 

 

  

3

  

 

“LEAF Financial Transferred Assets” means all assets of LEAF Financial relating to the Leasing Business, including Intellectual Property and those assets set forth on Schedule 1.1(a)(i) attached hereto, but excluding the Retained Assets.

 

“LEAF Financing Contract” means any Contract set forth on Schedule 1.1(a)(i) (including any schedule or amendment thereto or assignment, assumption, renewal or novation thereof) and any ancillary agreements relating thereto.

 

“LRF Financing Contract” means any contract set forth on Schedule 1.1 (c)(i) (including any schedule or amendment thereto or assignment, assumption, renewal or novation thereof) and any ancillary agreement relating thereto.

 

“Legal Proceeding” means any judicial, administrative or arbitral actions, suits or proceedings (public or private) by or before a Governmental Body.

 

“Liability” means any debt, liability or obligation (whether direct or indirect, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due) and including all costs and expenses relating thereto.

 

“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement, servitude or transfer restriction.

 

“Material Adverse Effect” with respect to any Person means a material adverse effect on (i) the business, assets, properties, results of operations or financial condition of the Person or (ii) the ability of the Person to consummate the transactions contemplated by this Agreement, other than an effect resulting from an Excluded Matter.  “Excluded Matter” means any one or more of the following: (i) changes in conditions in the U.S. or global economy or capital or financial markets generally except to the extent that such change has a materially disproportionate impact on the industry, or the business, assets, properties, results of operations or financial condition of the Person compared to other similarly situated companies in industry; (ii) the effect of any change arising in connection with earthquakes, hurricanes or other natural disasters, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date hereof; (iii) the effect of any action taken by Transferee or its Affiliates with respect to the transactions contemplated hereby or the LEAF Financial Transferred Assets, in the case of LEAF Financial, or the RCC Transferred Assets, in the case of RCC; (iv) any matter of which the Transferee is aware on the date hereof; (v) any effect resulting from the public announcement of this Agreement, compliance with the terms of this Agreement or the consummation of the transactions contemplated by this Agreement; and (vi) changes in general legal, tax, regulatory, political or business conditions that, in each case, generally affect the geographic regions in which the Person does business or the equipment leasing or equipment financing industries.

 

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Body.

 

 

  

4

  

 

“Ordinary Course of Business” means the ordinary and usual course of normal day-to-day operations of LEAF Financial or LRF, as applicable, substantially in accordance with past practice.

 

“Permits” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.

 

“Permitted Exceptions”  means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances with respect to real property or interests therein disclosed in policies of title insurance delivered to Transferee; (ii) statutory liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings; (iii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business; (iv) zoning, entitlement and other land use and environmental regulations by any Governmental Body; (v) title of a lessor under a capital or operating lease; and (vi) such other imperfections in title, charges, easements, restrictions and encumbrances which would not, individually or in the aggregate, result in a Material Adverse Effect.

 

“Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

 

“Portfolio Property” means any asset with respect to which a Contributor is the lessor, seller or secured party, as the case may be, pursuant to the terms of a LEAF Financing Contract, LRF Financing Contract or RCC Financing Contract (whether initially or as an assignee).

 

“RCC Financing Contract” means any Contract set forth on Schedule 1.1(e)(ii) (including any schedule or amendment thereto or assignment, assumption, renewal or novation thereof) and any ancillary agreement relating thereto.

 

“RCC Transferred Assets” means the entire interest of TRS in LRF, as set forth on Schedule 1.1(e)(i) attached hereto, and the RCC Financing Contracts set forth an Schedule 1.1(e)(ii) attached hereto, together with its entire interest in the Portfolio Properties or other assets relating to the RCC Financing Contracts.

 

“Release” means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, migration or leaching into the environment.

 

“Remedial Action” means all actions required under Environmental Laws to (i) clean up, remove, treat or address any Hazardous Material in the environment at levels exceeding those allowed by applicable Environmental Laws, including pre-remedial studies and investigations or post-remedial monitoring and care.

 

“Residual” means, with respect to any item of Portfolio Property, its estimated value upon expiration of the LEAF Financing Contract or LRF Financing Contract to which it is subject, as determined by LEAF Financial or TRS, respectively, and established on its books and records at the inception of such Financing Contract.

 

 

  

5

  

 

“Retained Assets” means those assets of LEAF Financial relating to the Management Business, as set forth on Schedule 1.1(f) attached hereto, which are not part of the sale and purchase contemplated hereunder, and are excluded from the LEAF Financial Transferred Assets and shall remain the property of LEAF Financial after the Closing.

 

“Retained Liabilities” means any other Liabilities or Indebtedness of LEAF Financial whatsoever not included in the Assumed Liabilities, including those set forth in Schedule 1.1(g) attached hereto.

 

“Series A Preferred Stock” means the Series A Preferred Stock, no par value, of Transferee which shall have those rights, designations and preferences set forth in Schedule 1.1(h) attached hereto.

 

“Software” means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, and (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise.

 

“Subsidiary” means, in respect of any Person, any Person in which such first Person, directly or indirectly, beneficially owns more than 50% of either the equity interest in, or the voting control of, such Person, whether or not existing on the date hereof.

 

“Tax” or “Taxes” means (i) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Taxing Authority in connection with any item described in clause (i).

 

“Taxing Authority” means the IRS and any other Governmental Body responsible for the administration of any Tax.

 

“Tax Return” means any return, report or statement required to be filed with respect to any Tax (including any attachments thereto, and any amendment thereof), including any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes any Contributor or any of its Affiliates.

 

“Technology” means, collectively, all information, designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development, technical data, programs, 

 

  

6

  

 

subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements, works of authorship and other similar materials, and all recordings, graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of the foregoing, in any form whether or not specifically listed herein, and all related technology, that are used in, incorporated in, embodied in, displayed by or relate to, or are used by LEAF Financial in the Leasing Business.

 

“Threat of Release” means a reasonable likelihood of a Release that may require action in order to prevent or mitigate damage to the environment that may result from such Release.

 

“Transaction Documents” means this Agreement, the Share Purchase Agreement the Sub-Servicing Agreement, the Transaction Services Agreement, the Warrants, the Call Option Agreement, the Management Non-Competition Agreement, the Management Non-Solicitation Agreement, the Exchange Letters, the Missouri Property Lease and the Certificate of Designation.

 

1.2           Terms Defined Elsewhere in this Agreement.

 

For purposes of this Agreement, the following terms have meanings set forth in the sections indicated:

 

	
Term

	
Section

 

	
Agreement

	
Recitals

	
Assignment

	
2.1(c)

	
Closing

	
3.1

	
Closing Date

	
3.1

	
Common Stock

	
Recitals

	
Confidential Information

	
8.6(c)

	
Contributor

	
Recitals

	
Contributor Indemnified Parties

	
10.3(a)

	
Exchange Letters

	
2.1(c)

	
Excluded Matter

	
1.1 (in definition of Material Adverse Effect)

	
Indemnification Claim

	
10.4(b)

	
LEAF Financial

	
Recitals

	
LEAF Financial Documents

	
Recitals

	
LEAF Financial Statements

	
4.5

	
LEAF Property

	
4.8

	
LEAF Transferred Subsidiary

	
4.1

	
Leasing Business

	
Recitals

	
Loss

	
10.2(a)

	
LRF Financing Contracts

	
6.4 (a)

	
LRF Portfolio

	
Recitals

	
Management Business

	
Recitals

 

 

  

7

  

 

	
Term

	
Section

 

	
Management Non-Competition Agreement

	
2.1(c)

	
Management Non-Solicitation Agreement

	
2.1(c)

	
Management Parties

	
Recitals; Exhibit A

	
Material Contracts

	
4.11(a)

	
Missouri Property

	
4.8

	
Missouri Property Lease

	
4.8

	
Non-Compete Period

	
8.6(a)

	
Owned Property

	
4.8

	
Personal Property Leases

	
4.9

	
RCC

	
Recitals

	
RCC Documents

	
6.2

	
Real Property Lease

	
4.8

	
Restricted Business

	
8.6

	
Series A Preferred Stock

	
Recitals

	
Share Purchase Agreement

	
2.1(b)

	
Sub-Servicing Agreement

	
8.1

	
Survival Period

	
10.1

	
Termination Date

	
3.2(a)

	
Transferee

	
Recitals

	
Transferee Documents

	
7.2

	
Transferee Indemnified Parties

	
10.2(a)

	
Transition Services Agreement

	
8.1

	
TRS

	
Recitals

	
Warrant

	
2.1(b)

 

1.3           Other Definitional and Interpretive Matters.

 

(a)           Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

 

Calculation of Time Period.  When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

 

Dollars.  Any reference in this Agreement to “$” shall mean U.S. dollars.

 

Gender and Number.  Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

 

 

  

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Headings.  The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.  All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.

 

Herein.  The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

 

Including.  The word “including” or any variation thereof means (unless the context of its usage otherwise requires) “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

 

Reflected On or Set Forth In.  An item arising with respect to a specific representation or warranty shall be deemed to be “reflected on” or “set forth in” a balance sheet or financial statements, to the extent any such phrase appears in such representation or warranty, if (a) there is a reserve, accrual or other similar item underlying a number on such balance sheet or financial statements that related to the subject matter of such representation, (b) such item is otherwise specifically set forth on the balance sheet or financial statements or (c) such item is reflected on the balance sheet or financial statements and is specifically set forth in the notes thereto.

 

Schedules.  The Schedules and any exhibits to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement.  All Schedules and any exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any matter or item disclosed on one Schedule shall be deemed to have been disclosed on each other Schedule.  Disclosure of any item on any Schedule shall not constitute an admission or indication that such item or matter is material or would have a Material Adverse Effect.  No disclosure on a Schedule relating to a possible breach or violation of any Contract, Law or Order shall be construed as an admission or indication that breach or violation exists or has actually occurred.  Any capitalized terms used in any Schedule or exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

 

(b)           The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

 

  

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ARTICLE II

 

TRANSFER AND CONTRIBUTION OF ASSETS

 

2.1           Transfer and Contribution of Assets.

 

(a)           Upon the terms and subject to the conditions contained herein, on the Closing Date, LEAF Financial shall transfer and contribute the LEAF Financial Transferred Assets to the Transferee in exchange for 3,700 shares of Common Stock.

 

(b)           Upon the terms and subject to the conditions contained herein, on the Closing Date, TRS shall (i) transfer to Transferee, and Transferee agrees to acquire from TRS, the RCC Transferred Assets and (ii) contribute $5,221,283 in cash to Transferee, in exchange for 2,626.783 shares of Series A Preferred Stock and a warrant, in the form annexed hereto as Schedule 2.1(b)(i), to acquire 4,800 shares of Common Stock for an exercise price of $.01 per share (the “Warrant”).  TRS shall also deliver to Transferee a Share Purchase Agreement in the form annexed hereto as Schedule 2.1(b)(ii) to permit Transferee, on the terms and subject to the conditions therein set forth, to put up to 1,000 shares of Series A Preferred Stock to TRS at a purchase price of $10,000 per share for up to six months following the Closing (the “Share Purchase Agreement”).

 

(c)           Upon the terms and subject to the conditions contained herein, on the Closing Date the Management Parties shall each contribute to Transferee all of the shares of LEAF Financial common stock held by them in exchange for Common Stock,  as set forth in their respective exchange letters (the “Exchange Letters”), a form of which is annexed hereto as Exhibit B, and shall deliver either (i) for Miles Herman and David English, a Management Non-Competition Agreement in the form annexed hereto as Schedule 2.1(c)(i) (the “Management Non-Competition Agreement”); (ii) for the other Management Parties, a Management Non-Solicitation Agreement in the form annexed hereto as Schedule 2.1(c)(ii) (the “Management Non-Solicitation Agreement”) or (iii) for Crit DeMent, the Assignment of Employment Agreement in the form annexed hereto as Schedule 2.1(c)(iii) (the “Assignment”).

 

2.2           Certain Provisions Relating to RCC Transferred Assets

 

(a)           The sale of the RCC Transferred Assets is intended to be a true and absolute sale (free and clear of any Liens) of all of the right, title and interest of TRS in, to and under the RCC Transferred Assets for all purposes and without recourse.

 

(b)           It is the intent of TRS and the Transferee that, after the transfer of the RCC Transferred Assets by TRS to Transferee pursuant to this Agreement, the RCC Transferred Assets shall not be part of the estate of TRS in the event of the filing of a bankruptcy petition by or against TRS under any bankruptcy or similar law.

 

(c)           After consummation of the transactions contemplated by this Agreement, TRS shall not agree to modify, amend, waive, release, supplement or otherwise change any of the terms or conditions of any RCC Transferred Asset.

 

 

  

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(d)           After consummation of the transactions contemplated by this Agreement, if TRS receives any dividends or other amounts in respect of the RCC Transferred Assets, it shall hold such amounts in trust for Transferee and immediately remit such amounts to the Transferee in accordance with the Transferee’s instructions, in the exact form received.

 

(e)           TRS shall have no right or obligation under this Agreement, by implication or otherwise, to repurchase from the Transferee any RCC Transferred Assets, or to rescind or otherwise retroactively effect any transfer of any RCC Transferred Assets, after the date of the transfer thereof.

 

(f)           After consummation of the transactions contemplated by this Agreement, TRS shall not take any action inconsistent with the Transferee’s ownership of the RCC Transferred Assets and shall not claim any ownership interest in the RCC Transferred Assets.

 

(g)           After consummation of the transactions contemplated by this Agreement, Transferee shall file a UCC-1 financing statement, as contemplated by Article 9 of the Uniform Commercial Code, in order to perfect its acquisition of the RCC Transferred Assets.

 

2.3           Assumed Liabilities. Upon the terms and subject to the conditions contained herein, on the Closing Date, Transferee shall assume responsibility for and pay, perform, discharge or otherwise satisfy all of the Assumed Liabilities as each Assumed Liability becomes due.

 

2.4           Assumed Obligations.  Upon the terms and subject to the conditions contained herein, on the Closing Date, Transferee shall assume responsibility for and pay, perform, discharge or otherwise satisfy all of the Assumed Obligations as each Assumed Obligation becomes due.

 

2.5           Retained Assets.  LEAF Financial shall retain, and Transferee is not acquiring, the Retained Assets.

 

2.6           Retained Liabilities.  Except as otherwise provided in this Agreement, Transferee will not assume or be responsible for any Retained Liabilities, and LEAF Financial shall remain liable and responsible for the Retained Liabilities.

 

2.7           Section 351 of the Code.  The parties hereto acknowledge and agree that the contributions effected pursuant to this Article II qualify as transfers to a controlled corporation within the meaning of Section 351 of the Code.

 

ARTICLE III

 

CLOSING AND TERMINATION

 

3.1           Closing Date.  The closing of the transactions set forth in this Agreement (the “Closing”) shall take place at the offices of  Ledgewood, 1900 Market Street, Philadelphia, Pennsylvania 19103, at 10:00 a.m. (Philadelphia Time) on a date to be specified by the parties (the “Closing Date”), which date shall be no later than the third Business Day after the satisfaction or waiver of the conditions set forth in Article IX (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time). Notwithstanding the foregoing, the parties shall use reasonable best efforts to effectuate the Closing on or before January 15, 2011.

 

 

  

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3.2        Termination of Agreement.  This Agreement may be terminated prior to the Closing as follows:

 

(a)           At the election of any of LEAF Financial, TRS or Transferee, on or after February 28, 2011 (the “Termination Date”), if the Closing shall not have occurred by the close of business on such date, provided that the terminating party is not in breach in any material respect of any of its obligations hereunder;

 

(b)           by mutual written consent of Contributors, Management Parties and Transferee;

 

(c)           by any of LEAF Financial, TRS, Management Parties or Transferee if there shall be in effect a final nonappealable Order of a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that, subject to Section 3.2(a) hereof, the parties hereto shall promptly appeal any adverse determination which is not nonappealable (and pursue such appeal with reasonable diligence); provided, however, that the right to terminate this Agreement under this Section 3.2(c) shall not be available to a party if such Order was primarily due to the failure of such party to perform any of its obligations under this Agreement;

 

(d)           by any party if there has been an event, change, occurrence or circumstance individually or in the aggregate with any other events, changes, occurrences or circumstances that have had a Material Adverse Effect on Contributors or Transferee; or

 

(e)           by any of Contributors or Transferee, if any of the consents set forth in Schedule 4.3(b) or Schedule 6.3(b) have not been obtained.

 

3.3        Procedure Upon Termination.  In the event of termination and abandonment by Transferee, the Management Parties or Contributors, or any of them, pursuant to Section 3.2 hereof, written notice thereof shall forthwith be given to the other parties, and this Agreement shall terminate, and the transactions contemplated by this Agreement shall be abandoned, without further action by any party.

 

3.4        Effect of Termination.  (1)  In the event that this Agreement is validly terminated in accordance with Section 3.2 and 3.3, then each of the parties shall be relieved of its duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to any party; provided, that no such termination shall relieve any party hereto from liability for any willful breach of this Agreement and, provided, further, that the obligations of the parties set forth in Articles X and XI hereof shall survive any such termination and shall be enforceable hereunder.

 

 

  

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(b)           Nothing in this Section 3.4 shall relieve any party of any liability for a breach of any of its covenants or agreements or willful breach of its representations and warranties contained in this Agreement prior to the date of termination.  The damages recoverable by the non-breaching party shall include all attorneys’ fees reasonably incurred by such party in connection with the transactions contemplated hereby.

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF LEAF FINANCIAL

 

LEAF Financial hereby represents and warrants to Transferee that:

 

4.1        Organization and Good Standing.  Each of LEAF Financial and its Subsidiaries whose interests are included in the LEAF Transferred Assets (“LEAF Transferred Subsidiaries”) is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of formation or organization, and has all requisite corporate or limited liability company power and authority to own, lease and operate its properties and to carry on its business as now conducted.  Each of LEAF Financial and the LEAF Transferred Subsidiaries is duly qualified or authorized to do business and is in good standing under the laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not have a Material Adverse Effect.

 

4.2        Authorization of Agreement.  LEAF Financial has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party and each other agreement, document, instrument or certificate contemplated by the Transaction Documents to which it is or will be a party or signatory (the “LEAF Financial Documents”), and to consummate the transactions contemplated thereby.  The execution and delivery by LEAF Financial of the LEAF Financial Documents and the consummation of the transactions contemplated thereby have been duly authorized by all requisite corporate action on the part of LEAF Financial.  This Agreement has been, and each of the other LEAF Financial Documents to be executed by it will be at or prior to the Closing, duly and validly executed and delivered by LEAF Financial and (assuming the due authorization, execution and delivery by the other parties to the respective LEAF Financial Documents, as applicable) this Agreement constitutes and each of the other LEAF Financial Documents when so executed and delivered will constitute the legal, valid and binding obligations of LEAF Financial, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

 

  

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4.3        Conflicts; Consents of Third Parties.

 

(a)           Except as set forth on Schedule 4.3(a), none of the execution and delivery by LEAF Financial of the LEAF Financial Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by LEAF Financial with any of the provisions hereof or thereof applicable to it will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and by-laws or other organizational documents of LEAF Financial or any of its Subsidiaries, or (ii) any Contract or Permit to which LEAF Financial or any of its Subsidiaries is a party or by which any of their properties or assets are bound; (iii) any Order of any Governmental Body applicable to it or its Subsidiaries or by which any of its or their properties or assets are bound; or (iv) any applicable Law, other than, in the case of clauses (ii), (iii) and (iv) such conflicts, violations, defaults, terminations or cancellations, that would not have a Material Adverse Effect.

 

(b)           Except as set forth on Schedule 4.3(b), no consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of LEAF Financial or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the LEAF Financial Documents or the compliance by LEAF Financial with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby, except for such other consents, waivers, approvals, Orders, Permits or authorizations the failure of which to obtain would not have a Material Adverse Effect.

 

4.4           LEAF Financing Contracts.

 

(a)           Schedule 1.1(a)(i), which may be in the form of a compact disk or other electronic medium, sets forth all of the LEAF Financing Contracts as of December 31, 2010.

 

(b)           Except as set forth on Schedule 1.1(a)(ii), to the Knowledge of LEAF Financial, each LEAF Financing Contract transferred by it or held by a LEAF Transferred Subsidiary, (i) is valid, binding and enforceable by it against the lessee, obligor or borrower thereunder in accordance with its written terms, except as may be limited by any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Law affecting creditors’ rights and remedies generally and, by general principles of equity, including principles of commercial reasonableness, good faith and fair dealing, and (ii) constitutes and arose out of a bona fide business transaction entered into in the ordinary and usual course of business of LEAF Financial or the respective LEAF Transferred Subsidiary consistent with its past practices.

 

(c)           Except as set forth in Schedule 1.1(a)(iii), (i) each LEAF Financing Contract is, or will be at the Closing Date, in full force and effect, free and clear of Liens other than Permitted Exceptions, and not subject to any defense, offset, claim, right of rescission or counterclaim by the obligor under such LEAF Financing Contract, or any Person claiming under any such right (subject to 

 

 

  

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applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer and other Laws relating to or affecting creditors’ rights generally, to general equitable principles and to the Servicemembers Civil Relief Act); (ii) neither LEAF Financial nor any LEAF Transferred Subsidiary is in material breach of or default under any LEAF Financing Contract, no other party is in payment breach thereof of more than ninety (90) days or in material default thereunder and, to the Knowledge of LEAF Financial, no other event has occurred which, with notice and/or lapse of time, would constitute a default by any party thereunder; (iii) LEAF Financial and each LEAF Transferred Subsidiary is the owner and holder of all right, title and interest in each respective LEAF Financing Contract held by it; (iv) no obligor under any such LEAF Financing Contract (A) has acquired any Portfolio Property, any interest in any Portfolio Property or the use of any Portfolio Property pursuant to such LEAF Financing Contract for personal, family or household use or (B) is a director, executive officer or five percent or greater shareholder of LEAF Financial or any LEAF Transferred Subsidiary, or to the Knowledge of LEAF Financial, is a Person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing; (v) LEAF Financial or the LEAF Transferred Subsidiaries have in their possession a fully executed original or a true and correct copy of any lease or note (and an executed original or a true and correct copy of all other documents) comprising each LEAF Financing Contract and all other documents required by LEAF Financial’s credit or investment approval process with respect to each LEAF Financing Contract; (vi) LEAF Financial or the LEAF Transferred Subsidiaries have in their possession documentation sufficient to establish the original cost or value of all Portfolio Property for purposes of determining personal property Tax Liability; (vii) all payments pursuant to each LEAF Financing Contract are made for the benefit of LEAF Financial or the LEAF Transferred Subsidiary holding such LEAF Financing Contract; (viii) LEAF Financial or the LEAF Transferred Subsidiaries have approved credit applications and otherwise entered into commitments with respect to LEAF Financing Contracts in a manner consistent in all material respects with LEAF Financial’s credit policies, collateral eligibility standards and credit quality classifications in effect at the time and otherwise complied in all material respects with standards of evaluating, originating, underwriting and funding new businesses which are in all material respects consistent with its past practices; and (ix) neither LEAF nor any LEAF Transferred Subsidiary is, nor is it committed to become, a party to any contract with respect to the Residual as to any Portfolio Property.

 

(d)           Each LEAF Financing Contract and each LRF Financing Contract has been administered and serviced, and the relevant files are being maintained, in accordance in all material respects with the relevant financing or lease documents and LEAF Financial’s underwriting standards and was originated, solicited or acquired, as the case may be, in all material respects in accordance with LEAF Financial’s policies, practices and procedures regarding such matters as in effect at the time of such origination, solicitation or acquisition.

 

 

  

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(e)           Neither LEAF Financial nor any Subsidiary of LEAF has received any written notice from any other Person indicating that LEAF Financial or a LEAF Transferred Subsidiary is presently in material default under or in material breach of any Financing Contract, except for notices of breach or default with respect to LEAF Financing Contracts which, in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Leasing Business.

 

(f)           Except as set forth in Schedule 4.4(f), to the Knowledge of LEAF Financial, each obligor under a LEAF Financing Contract is located in the United States or its territories.  All amendments, modifications, waivers, extensions, cancellations and releases in respect of any LEAF Financing Contract are in writing and are maintained in hard copy or are stored electronically in the documentation for such LEAF Financing Contract.

 

(g)           The LEAF Financing Contract files maintained by LEAF Financial and the LEAF Transferred Subsidiaries are in good order and contain all originals or copies of all material documents relating to the origination and enforcement of the LEAF Financing Contracts.

 

(h)           Each LEAF Financing Contract is evidenced by a written agreement, and there are no material understandings, agreements, undertakings or arrangements between any of LEAF Financial or any LEAF Transferred Subsidiary and the obligors under any LEAF Financing Contract which are not set forth therein or in a written agreement included in the LEAF Finance Contract files relating to such LEAF Financing Contract.

 

(i)           To the Knowledge of LEAF Financial, neither LEAF Financial nor any LEAF Transferred Subsidiary has acted, or failed to act, in a manner which would materially alter or reduce any of its rights or benefits under any manufacturers’ or vendors’ warranties or guarantees relating to property covered by any LEAF Financing Contract.

 

(j)           To the Knowledge of LEAF Financial, each LEAF Financing Contract (and any related guarantees) is and will be on the Closing Date a valid, binding and enforceable, non-cancelable obligation of the obligor thereunder (and guarantors thereof) in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally.  Each of such obligors and guarantors is a bona fide party thereto and, to the Knowledge of LEAF Financial, has the requisite legal capacity to enter into the respective agreements to which it is a party.

 

(k)           Except as set forth in Schedule 4.4(k) or as permitted by each applicable LEAF Financing Contract, the property that is the subject of each LEAF Financing Contract has been delivered to the obligor thereunder, and accepted by such obligor.

 

 

  

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(l)           Except as set forth in Schedule 4.4(l), or as permitted under LEAF Financial’s policies and procedures as described in Schedule 4.4(l), LEAF Financial and the LEAF Transferred Subsidiaries have absolute, complete and indefeasible title to the property subject to each LEAF Financing Contract (or a duly perfected first-lien security interest in the property subject to such LEAF Financing Contract) and all sums due thereunder; the supplier or vendor of said property has received payment in full for said property except for these amounts specifically identified as, and included in, Assumed Liabilities.

 

4.5        Financial Statements.  LEAF Financial has made available to Transferee copies of the consolidated balance sheets of LEAF Financial as at September 30, 2010 (unaudited), 2009 (audited) and 2008 (audited) and the related consolidated statements of income and of cash flows of LEAF Financial for the years then ended and will make available any consolidated balance sheet of LEAF Financial prepared for any subsequent quarterly period within 45 days following the end of such period and the related consolidated statements of income and cash flows of LEAF Financial for the three month period then ended (such statements, including the related notes and schedules thereto, are referred to herein as the “LEAF Financial Statements”).  Except as set forth in the notes thereto and as disclosed in Schedule 4.5, the LEAF Financial Statements have been prepared in accordance with GAAP consistently applied and present fairly in all material respects the consolidated financial position, results of operations and cash flows of LEAF Financial as at the dates and for the periods indicated therein.

 

4.6           Absence of Certain Developments.  Except as contemplated by this Agreement or as set forth on Schedule 4.6, since September 30, 2010, (i) LEAF Financial has conducted the Leasing Business only in the Ordinary Course of Business and (ii) there has not been any event, change, occurrence or circumstance that has had a Material Adverse Effect on the Leasing Business or the LEAF Transferred Assets.

 

4.7           Taxes.  Except as set forth on Schedule 4.7, LEAF Financial and each LEAF Transferred Subsidiary has timely filed all material Federal, state and foreign Tax Returns and reports required to be filed by it, and all Taxes required to be paid by it have either been paid or are reflected as a reserve on the LEAF Financial Statements, and all such returns and reports are correct and complete in all material respects, or requests for extensions to file such returns or reports have been timely filed, granted and have not expired, except to the extent that such failures to file, to pay or to have extensions granted that remain in effect individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect, and the LEAF Financial Statements reflect an adequate reserve for all Taxes payable by LEAF Financial and each LEAF Transferred Subsidiary for all taxable periods and portions thereof through the date of such financial statements.  All material Taxes required to be withheld by LEAF Financial and the LEAF Transferred Subsidiaries have been withheld and have been duly and timely paid to the proper Taxing Authority, except for such failure as would not have a Material Adverse Effect on the Leasing Business or the LEAF Transferred Assets.  No deficiencies for any Taxes have been proposed, asserted or assessed against LEAF Financial or any LEAF Transferred Subsidiary that are still pending. No income Tax Return of LEAF Financial or any LEAF Transferred Subsidiary is under current examination by the IRS or by any state or foreign tax 

 

  

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authority.  All assessments for Taxes due with respect to any concluded litigation have been fully paid or have been adequately reserved on the LEAF Financial Statements in accordance with GAAP.  This Section 4.7 represents the sole and exclusive representation and warranty of LEAF Financial regarding tax matters.

 

4.8           Real Property.  Schedule 4.8(i) sets forth a complete list of (i) all material real property and interests in real property (excluding that certain property located in Moberly, Missouri (the “Missouri Property”)) owned in fee by LEAF Financial and the Transferred Subsidiaries and used in the Leasing Business (individually, an “Owned Property” and collectively, the “Owned Properties”), and (ii) all leases of real property by LEAF Financial or the LEAF Transferred Subsidiaries which are used in the Leasing Business (individually, a “Real Property Lease” and collectively, the “Real Property Leases” and, together with the Owned Properties, being referred to herein individually as a “LEAF Property” and collectively as the “LEAF Properties”) as lessee or lessor.  To the Knowledge of LEAF Financial, LEAF Financial and the LEAF Transferred Subsidiaries have fee title to all Owned Property, free and clear of all Liens of any nature whatsoever except (A) Liens set forth on Schedule 4.8 (ii) and (B) Permitted Exceptions.  Except as set forth in Schedule 4.8(ii), neither LEAF Financial nor any LEAF Transferred Subsidiary has received any written notice of any default or event that with notice or lapse of time, or both, would constitute a default by LEAF Financial or any LEAF Transferred Subsidiary under any of the Real Property Leases.  LEAF Financial represents and warrants with respect to the Missouri Property that (i) it has fee simple title in and to the Missouri Property, (ii) it has the right to lease the Missouri Property to Transferee pursuant to the lease in the form annexed hereto as Schedule 4.8(iii) (the “Missouri Property Lease”) for the entire term of the Missouri Property Lease, without obtaining the consent of any other Person, (iii) to LEAF Financial’s Knowledge, there are no zoning ordinances or building and use restrictions affecting the Missouri Property that would interfere with the use of the Missouri Property by Transferee for the conduct of the Leasing Business, and (iv) there are no underlying or superior leases with respect to the Missouri Property.

 

4.9           Tangible Personal Property.  Schedule 4.9 sets forth all leases of personal property by LEAF Financial or any LEAF Transferred Subsidiary which are used in the Leasing Business (“Personal Property Leases”).  Except as set forth in Schedule 4.9, neither LEAF Financial nor any LEAF Transferred Subsidiary has received any written notice of any default or any event that with notice or lapse of time, or both, would constitute a default, by LEAF Financial or any LEAF Transferred Subsidiary under any of the Personal Property Leases.

 

4.10           Intellectual Property.  LEAF Financial or a LEAF Transferred Subsidiary owns or has valid licenses to use the Intellectual Property.  To the Knowledge of LEAF Financial, (i) the Intellectual Property is not the subject of any challenge received by LEAF Financial or any LEAF Transferred Subsidiary in writing and (ii) neither LEAF Financial nor any LEAF Transferred Subsidiary has received any written notice of any default or any event that with notice or lapse of time, or both, would constitute a default under any material Intellectual Property license.

 

 

  

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4.11           Material Contracts.

 

(a)           Schedule 4.11(a) sets forth all of the material Contracts to which LEAF Financial or any LEAF Transferred Subsidiary is a party or by which it is bound (collectively, the “Material Contracts”).  The Material Contracts include the real property leases, office equipment leases, and supplier contracts of LEAF Financial and the LEAF Transferred Subsidiaries, but exclude the LEAF Financing Contracts.

 

(b)           Except as set forth on Schedule 4.11(b), to the Knowledge of LEAF Financial, neither LEAF Financial nor any LEAF Transferred Subsidiary has received any written notice of any default or event that with notice or lapse of time, or both, would constitute a default by LEAF Financial or any LEAF Transferred Subsidiary under any Material Contract, except for defaults that would not have a Material Adverse Effect.

 

4.12           Labor.

 

(a)           Neither LEAF Financial nor any LEAF Transferred Subsidiary is a party to any labor or collective bargaining agreement.

 

(b)           There are no (i) strikes, work stoppages, work slowdowns or lockouts pending or, to the Knowledge of LEAF Financial, threatened against or involving LEAF Financial or any LEAF Transferred Subsidiary, or (ii) unfair labor practice charges, grievances or complaints pending or, to the Knowledge of LEAF Financial, threatened by or on behalf of any employee or group of employees of LEAF Financial or any LEAF Transferred Subsidiary, except in each case as would not have a Material Adverse Effect.

 

4.13           Litigation.  Schedule 4.13 sets forth all Legal Proceedings pending or, to the Knowledge of LEAF Financial, threatened against LEAF Financial or any LEAF Transferred Subsidiary before any Governmental Body except for those Legal Proceedings occurring in the Ordinary Course of Business which, individually or in the aggregate, if decided adversely to the interest of LEAF Financial or such LEAF Transferred Subsidiary, do not and cannot reasonably be expected to have, a Material Adverse Effect on the Leasing Business.  Neither LEAF Financial nor any LEAF Transferred Subsidiary is subject to any Order of any Governmental Body except to the extent the same would not reasonably be expected to have a Material Adverse Effect on the Leasing Business.

 

4.14           Compliance with Laws; Permits.

 

(a)        LEAF Financial and each LEAF Transferred Subsidiary is in compliance with all Laws of any Governmental Body applicable to it or its operations, except where the failure to be in compliance would not have a Material Adverse Effect.  Neither LEAF Financial nor any LEAF Transferred Subsidiary has received any written notice of or been charged with the violation of any Laws, except where such violation would not have a Material Adverse Effect.

 

 

  

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(b)           LEAF Financial and each LEAF Transferred Subsidiary have all Permits which are required for the operation of the Leasing Business as presently conducted, other than those the failure of which to possess would not have a Material Adverse Effect.  Neither LEAF Financial nor any LEAF Transferred Subsidiary is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any Permit to which it is a party, except where such default or violation would not have a Material Adverse Effect.

 

4.15           Environmental Matters.  The representations and warranties contained in this Section 4.15 are the sole and exclusive representations and warranties of LEAF Financial pertaining or relating to any environmental, health or safety matters, including any arising under any Environmental Laws.  Except in each case as would not have a Material Adverse Effect:

 

(a)           the operations of LEAF Financial and the LEAF Transferred Subsidiaries are in compliance with Environmental Laws. Such compliance includes obtaining, maintaining and complying with any Permits required under all applicable Environmental Laws necessary to operate the Leasing Business;

 

(b)           Neither LEAF Financial nor any LEAF Transferred Subsidiary is subject to any pending, or to the Knowledge of LEAF Financial, threatened claim alleging that it may be in violation of any Environmental Law or Environmental Permit or may have any liability under any Environmental Law;

 

(c)           to the Knowledge of LEAF Financial, there are no pending or threatened investigations of the Leasing Business, nor with respect to the LEAF Financial Transferred Assets, are there any pending or threatened investigations related thereto;

 

(d)           there are no Hazardous Materials present on or in the environment at any LEAF Property at concentrations exceeding those allowed by applicable Environmental Laws including any Hazardous Materials contained in barrels, aboveground or underground storage tanks, landfills, land deposits, dumps, equipment (whether movable or fixed) or other containers, either temporary or permanent, and deposited or located in land, water, sumps, or any other part of the LEAF Property.  Neither LEAF Financial nor any LEAF Transferred Subsidiary has permitted or conducted, or is aware of, any Remedial Action conducted with respect to any LEAF Property or any other property or assets (whether real, personal or mixed) in which any of them has or had an interest in a manner that would reasonably be expected to result Liability to any of their under Environmental Laws; and

 

(e)           There has been no Release or, to the Knowledge of LEAF Financial, Threat of Release, of any Hazardous Materials at or from any LEAF Property or at any other location where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by any LEAF Property, or from any other property or asset (whether real, personal or mixed) in which the LEAF Financial or any Transferred Subsidiary has or had an interest in a manner that would reasonably be expected to result in Liability under Environmental Laws.

 

 

  

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4.16           Leasing Business.  The LEAF Financial Transferred Assets and the Missouri Property Lease to be entered into at Closing include all of the assets necessary for Transferee to operate the Leasing Business as the same has heretofore been operated by LEAF Financial and the LEAF Transferred Subsidiaries, excluding (i) the Retained Assets or (ii) the Retained Liabilities.

 

4.17           Financial Advisors.  No Person has acted, directly or indirectly, as a broker, finder or financial advisor for the LEAF Financial in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment from Transferee in respect thereof.

 

4.18           Basis in LEAF Financial Transferred Assets.  The basis of LEAF Financial in the LEAF Financial Transferred Assets (including the LEAF Transferred Subsidiaries) for tax purposes is as set forth in Schedule 4.18.

 

4.19           No Other Representations or Warranties; Schedules.  Except for the representations and warranties contained in this Article IV (as modified by the Schedules to this Agreement as supplemented or amended), neither LEAF Financial nor any other Person makes any express or implied representation or warranty with respect to LEAF Financial and the LEAF Transferred Subsidiaries, or the transactions contemplated by this Agreement, and LEAF Financial disclaims any and all other representations or warranties, whether made by LEAF Financial, or any of its Affiliates, officers, directors, employees, agents or representatives.  Except for the representations and warranties contained in this Article VI (as modified by the Schedules to this Agreement, as supplemented or amended), LEAF Financial hereby disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to any party hereto or its or his Affiliates or representatives (including any opinion, information, projection, or advice that may have been or may be provided by any director, officer, employee, member, agent, consultant, or representative of LEAF Financial or any of its respective Affiliates).  Neither LEAF Financial nor any LEAF Transferred Subsidiary makes any representation or warranty to Transferee, RCC, TRS the Management Parties or other Person regarding the probable success or profitability of the Leasing Business.  The disclosure of any matter or item in any schedule hereto shall not be deemed to constitute an acknowledgment that any such matter is required to be disclosed.

 

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF

MANAGEMENT PARTIES

Each of the Management Parties, with respect to himself and severally not jointly, hereby represents and warrants to Transferee that:

 

 

  

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5.1           Authority to Enter into Agreement.  Each Management Party has full power and capacity to execute and deliver the Transaction Documents to which he is or will be a party and any of the other agreements, documents, instruments or certificates contemplated by this Agreement to which he is or will be a party or signatory.  This Agreement has been and each of the other documents has been or will be duly and validly executed and delivered by him and (assuming the due authorization, execution and delivery by other parties thereto, as applicable) and this Agreement constitutes, and the other documents when so executed and delivered will constitute his legal, valid and binding obligations, enforceable against him in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

5.2           Conflicts; Consents of Third Parties.

 

(a)           None of the execution and delivery by a Management Party of this Agreement, the Transaction Documents to which he is or will be a party or any of the other documents to which he is or will be a party, the consummation of the transactions contemplated hereby or thereby, or compliance by him with any of the provisions hereof or thereof applicable to him will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) any Contract to which he is a party or by which any of his properties or assets are bound or (ii) any Order of any Governmental Body applicable to him or by which any of his properties or assets are bound; or (iii) any applicable Law, other than, for each of clauses (i), (ii) and (iii) such conflicts, violations, defaults, terminations or cancellations, that would not have a Material Adverse Effect.

(b)           No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or governmental Body is required on the part of him in connection with the execution and delivery of this Agreement or the other documents to which he is or will be a party or the compliance by him with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby, except for such other consents, waivers, approvals, Orders, Permits or authorizations the failure of which to obtain would not have a Material Adverse Effect.

5.3           No Liens.  The shares of LEAF Financial common stock being contributed by each Management Party is being and will be contributed free and clear of all Liens.

 

5.4           Financial Advisors.  No Person has acted, directly or indirectly, as a broker, finder or financial advisor for any Management Party in connection with the transactions contemplated by this Agreement and no person is entitled to any fee or commission or like payment from Transferee in respect thereof.

 

 

  

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5.5           Basis in Management Party Transferred Assets.  The basis of each Management Party in the LEAF Financial common stock being transferred by him to Transferee, for tax purposes, is as set forth in Schedule 5.5.

 

5.6           No Other Representations or Warranties; Schedules.  Except for the representations and warranties contained in this Article V (as modified by the Schedules to this Agreement as supplemented or amended), no Management Party makes any other express or implied representation or warranty with respect to himself or his participation in the transactions contemplated by this Agreement and each Management Party disclaims any and all other representations or warranties.  Except for the representations or warranties contained in this Article V (as modified by the Schedules to this Agreement as supplemented or amended), each Management Party, with respect to his participation in the transaction contemplated by this Agreement, hereby disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to any party hereto, or its or his Affiliates or representatives (including any opinion, information, projection, or advice that may have been or may be provided by any agent, consultant, or representative of such Management Party or any of their respective Affiliates).  No Management Party makes any representation or warranty to RCC, TRS, LEAF Financial, the LEAF Transferred Subsidiaries, or any other Management Party or any other Person regarding the probably success or profitability of LRF or the Leasing Business.  The disclosure of any matter or item in any schedule hereto shall not be deemed to constitute an acknowledgement that any such matter is required to be disclosed.

 

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF TRS AND RCC

 

TRS and RCC hereby represent and warrant to Transferee that:

 

6.1           Organization and Good Standing.

 

(a) RCC is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted.  RCC is duly qualified or authorized to do business and is in good standing under the laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not have a Material Adverse Effect.

 

(b) TRS is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted.  TRS is duly qualified or authorized to do business and is in good standing under the laws of each jurisdiction in which it owns or leases 

 

 

  

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real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not have a Material Adverse Effect.

 

(c) LRF is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as now conducted.  LRF is duly qualified or authorized to do business and is in good standing under the laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not have a Material Adverse Effect.

 

6.2           Authorization of Agreement.  Each of TRS and RCC has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party and each other agreement, document, instrument or certificate contemplated by the Transaction Documents to which it is or will be a party or signatory (the “RCC Documents”), and to consummate the transactions contemplated thereby.  The execution and delivery by RCC and TRS of the RCC Documents and the consummation of the transactions contemplated thereby have been duly authorized by all requisite corporate action on the part of each of TRS and RCC.  This Agreement has been, and each of the other RCC Documents to be executed by it will be at or prior to the Closing, duly and validly executed and delivered by TRS and RCC, as applicable, and (assuming the due authorization, execution and delivery by the other parties to the respective RCC Documents, as applicable) this Agreement constitutes, and each other RCC Transaction Document when so executed and delivered will constitute the legal, valid and binding obligations of each of TRS and RCC, as applicable to each, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

6.3           Conflicts; Consents of Third Parties.

 

(a)           Except as set forth on Schedule 6.3(a), none of the execution and delivery by TRS or RCC of the RCC Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by TRS or RCC with any of the provisions hereof or thereof applicable to it, will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and by-laws of RCC or TRS or the organizational documents of LRF; (ii) any Contract, or Permit to which either TRS, RCC, or LRF is a party or by which any of its properties or assets are bound; (iv) any Order of any Governmental Body applicable to TRS, RCC or LRF, or by which any of their properties or assets are bound; or (v) any applicable Law, other than, in the case of clauses (iii), (iv) and (v) such conflicts, violations, defaults, terminations or cancellations, that would not have a Material Adverse Effect.

 

 

  

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(b)           Except as set forth on Schedule 6.3(b), no consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of TRS or RCC in connection with the execution and delivery of this Agreement or the RCC Documents, the compliance by TRS or RCC with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby, except for such other consents, waivers, approvals, Orders, Permits or authorizations the failure of which to obtain would not have a Material Adverse Effect.

 

6.4           LRF Financing Contracts.

 

(a)           Schedule 1.1(c)(i), which may be in the form of compact disk or other electronic medium, sets forth all of the Financing Contracts held by LRF as of December 31, 2010, (the “LRF Financing Contracts”).

 

(b)           Except as set forth on Schedule 1.1(c)(ii), to the Knowledge of each LRF Financing Contract,  (i) is valid, binding and enforceable by TRS against the lessee, obligor or borrower thereunder in accordance with its written terms, except as may be limited by any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Law affecting creditors’ rights and remedies generally and, by general principles of equity, including principles of commercial reasonableness, good faith and fair dealing, and (ii) to the Knowledge of RCC, constitutes and arose out of a bona fide business transaction entered into in the ordinary and usual course of business.

 

(c)           Except as set forth in Schedule 1.1(c)(iii), (i) each LRF Financing Contract is, or will be at the Closing Date, in full force and effect, free and clear of Liens other than Permitted Exceptions, and not subject to any defense, offset, claim, right of rescission or counterclaim by the obligor under such LRF Financing Contract, or any Person claiming under any such right (subject to applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer and other Laws relating to or affecting creditors’ rights generally, to general equitable principles and to the Service members Civil Relief Act); (ii) LRF is not in material breach of or default under any LRF Financing Contract, no other party is in payment breach thereof of more than ninety (90) days or in material default thereunder and, to the Knowledge of RCC, no other event has occurred which, with notice and/or lapse of time, would constitute a default by such Contributor or any other party thereunder; (iii) LRF is the owner and holder of all right, title and interest in each LRF Financing Contract; (iv) no obligor under any LRF Financing Contract (A) has acquired any Portfolio Property, any interest in any Portfolio Property or the use of any Portfolio Property pursuant to such LRF Financing Contract for personal, family or household use or for agricultural purposes or (B) is a director, executive officer or five percent or greater shareholder of TRS, RCC or LRF, or to the Knowledge of RCC, is a Person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing; (v) LRF, or RCC, TRS or LEAF Financial on its behalf, have in their possession a fully executed original or a true and correct copy of any lease or note (and an executed original or a true and correct copy of all other documents)

 

 

  

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comprising each LRF Financing Contract; (vi) LRF, or RCC, TRS or LEAF Financial on its behalf, have in their possession documentation sufficient to establish the original cost or value of all Portfolio Property for purposes of determining personal property Tax Liability; (vii) all payments pursuant to each LRF Financing Contract are made for the benefit of LRF and (viii) LRF is not, nor is it committed to become, a party to any contract with respect to the Residual as to any Portfolio Property.

 

(d)           Each LRF Financing Contract is being maintained in accordance in all material respects with the relevant financing or lease documents and has been administered and serviced by LEAF Financial.

 

(e)            No LRF Financing Contracts purchased by LRF have been subsequently sold by it (nor has LRF sold a participation in any LRF Financing Contracts).

 

(f)           Neither TRS, RCC nor LRF has  received any written notice from any other Person indicating that LRF is presently in material default under or in material breach of any LRF Financing Contract except for notices of breach or default with respect to LRF Financing Contracts which, in the aggregate, could not reasonably be expected to have a Material Adverse Effect on LRF.

 

(g)           Except as set forth in Schedule 6.4(g), to the Knowledge of RCC, each obligor under an LRF Financing Contract is located in the United States or its territories.  All amendments, modifications, waivers, extensions, cancellations and releases in respect of any LRF Financing Contract are in writing and are maintained in hard copy or are stored electronically in the documentation for such LRF Financing Contract.

 

(h)           The LRF Financing Contract files maintained by LRF, or RCC, TRS or LEAF Financial on behalf of LRF, are in good order and contain all originals or copies of all material documents relating to the origination and enforcement of the LRF Financing Contracts.

 

(i)           Each LRF Financing Contract is evidenced by a written agreement, and there are no material understandings, agreements, undertakings or arrangements between LRF and the obligors under any LRF Financing Contract which are not set forth therein or in a written agreement included in the LRF Finance Contract files relating to such LRF Financing Contract.

 

(j)           To the Knowledge of RCC, neither it, TRS nor LRF has acted, or failed to act, in a manner which would materially alter or reduce any of its rights or benefits under any manufacturers’ or vendors’ warranties or guarantees relating to property covered by any LRF Financing Contract.

 

(k)           To the Knowledge of RCC, each LRF Financing Contract (and any related guarantees) is and will be on the Closing Date a valid, binding and enforceable, non-cancelable obligation of the obligor thereunder (and guarantors thereof) in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, reorganization, moratorium and other similar laws 

 

 

  

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affecting the rights of creditors generally.  Each of such obligors and guarantors is a bona fide party thereto and, to the Knowledge of RCC, has the requisite legal capacity to enter into the respective agreements to which it is a party.

 

(l)           Except as set forth in Schedule 6.4(l), to the knowledge of RCC, the property that is the subject of each LRF Financing Contract has been delivered to the obligor thereunder, and accepted by such obligor.

 

(m)           Except as set forth in Schedule 6.4(m), or as permitted under LEAF Financial’s policies and procedures as described in Schedule 4.4(l), LRF has absolute, complete and indefeasible title to the property subject to each LRF Financing Contract (or a duly perfected first-lien security interest in the property subject to such LRF Financing Contract) and, to the Knowledge of RCC, all sums due thereunder; to the Knowledge of RCC, the supplier or vendor of said property has received payment in full for said property.

 

(n)           Since May 27, 2010, (i) LRF has conducted its business only in the Ordinary Course of Business, and (ii) there has not been any event change, occurrences or circumstance that has had a Material Adverse Effect on LRF.

 

6.5           RCC Financing Contracts.

 

(a)           Schedule 1.1(e)(ii), which may be in the form of compact disk or other electronic medium, sets forth all of the RCC Financing Contracts held by TRS as of December 31, 2010.

 

(b)           Except as set forth on Schedule 1.1(e)(iii), to the Knowledge of RCC, each RCC Financing Contract,  (i) is valid, binding and enforceable by TRS against the lessee, obligor or borrower thereunder in accordance with its written terms, except as may be limited by any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Law affecting creditors’ rights and remedies generally and, by general principles of equity, including principles of commercial reasonableness, good faith and fair dealing, and (ii) to the Knowledge of RCC, constitutes and arose out of a bona fide business transaction entered into in the ordinary and usual course of business.

 

(c)           Except as set forth in Schedule 1.1(e)(iv), (i) each RCC Financing Contract is, or will be at the Closing Date, in full force and effect, free and clear of Liens other than Permitted Exceptions, and not subject to any defense, offset, claim, right of rescission or counterclaim by the obligor under such RCC Financing Contract, or any Person claiming under any such right (subject to applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer and other Laws relating to or affecting creditors’ rights generally, to general equitable principles and to the Service members Civil Relief Act); (ii) TRS is not in material breach of or default under any RCC Financing Contract, no other party is in payment breach thereof of more than ninety (90) days or in material default thereunder 

 

  

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and, to the Knowledge of RCC, no other event has occurred which, with notice and/or lapse of time, would constitute a default by TRS or any other party thereunder; (iii) TRS is the owner and holder of all right, title and interest in each RCC Financing Contract; (iv) no obligor under any RCC Financing Contract (A) has acquired any Portfolio Property, any interest in any Portfolio Property or the use of any Portfolio Property pursuant to such RCC Financing Contract for personal, family or household use or for agricultural purposes or (B) is a director, executive officer or five percent or greater shareholder of TRS or RCC, or to the Knowledge of RCC, is a Person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing; (v) TRS, or RCC or LEAF Financial on its behalf, have in their possession a fully executed original or a true and correct copy of any lease or note (and an executed original or a true and correct copy of all other documents) comprising each RCC Financing Contract; (vi) TRS, or RCC or LEAF Financial on its behalf, have in their possession documentation sufficient to establish the original cost or value of all Portfolio Property for purposes of determining personal property Tax Liability; (vii) all payments pursuant to each RCC Financing Contract are made for the benefit of TRS and (viii) TRS is not, nor is it committed to become, a party to any contract with respect to the Residual as to any Portfolio Property.

 

(d)           Each RCC Financing Contract is being maintained in accordance in all material respects with the relevant financing or lease documents and has been administered and serviced by LEAF Financial.

 

(e)            No RCC Financing Contracts purchased by TRS have been subsequently sold by it (nor has TRS sold a participation in any RCC Financing Contracts).

 

(f)           Neither TRS nor RCC has  received any written notice from any other Person indicating that TRS is presently in material default under or in material breach of any RCC Financing Contract except for notices of breach or default with respect to RCC Financing Contracts which, in the aggregate, are not material.

 

(g)           Except as set forth in Schedule 6.5(g), to the Knowledge of RCC, each obligor under an RCC Financing Contract is located in the United States or its territories.  All amendments, modifications, waivers, extensions, cancellations and releases in respect of any RCC Financing Contract are in writing and are maintained in hard copy or are stored electronically in the documentation for such RCC Financing Contract.

 

(h)           The RCC Financing Contract files maintained by TRS, or RCC or LEAF Financial on behalf of TRS, are in good order and contain all originals or copies of all material documents relating to the origination and enforcement of the RCC Financing Contracts.

 

(i)           Each RCC Financing Contract is evidenced by a written agreement, and there are no material understandings, agreements, undertakings or arrangements between TRS and the obligors under any RCC Financing Contract which are not set forth therein or in a written agreement included in the RCC Finance Contract files relating to such RCC Financing Contract.

 

 

  

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(j)           To the Knowledge of RCC, neither it nor TRS has acted, or failed to act, in a manner which would materially alter or reduce any of its rights or benefits under any manufacturers’ or vendors’ warranties or guarantees relating to property covered by any RCC Financing Contract.

 

(k)           To the Knowledge of RCC, each RCC Financing Contract (and any related guarantees) is and will be on the Closing Date a valid, binding and enforceable, non-cancelable obligation of the obligor thereunder (and guarantors thereof) in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally.  Each of such obligors and guarantors is a bona fide party thereto and, to the Knowledge of RCC, has the requisite legal capacity to enter into the respective agreements to which it is a party.

 

(l)           Except as set forth in Schedule 6.5(l), to the knowledge of RCC, the property that is the subject of each RCC Financing Contract has been delivered to the obligor thereunder, and accepted by such obligor.

 

(m)           Except as set forth in Schedule 6.5(m), or as permitted under LEAF Financial’s policies and procedures as described in Schedule 4.4(l), TRS has absolute, complete and indefeasible title to the property subject to each RCC Financing Contract (or a duly perfected first-lien security interest in the property subject to such RCC Financing Contract) and, to the Knowledge of RCC, all sums due thereunder; to the Knowledge of RCC, the supplier or vendor of said property has received payment in full for said property.

 

6.6           Litigation.  To the Knowledge of RCC, there are no Legal Proceedings pending or threatened against LRF before any Governmental Body as of the date hereof.  LRF is not subject to any Order of any Governmental Body except to the extent the same would not reasonably be expected to have a Material Adverse Effect.

 

6.7           Compliance with Laws; Permits.

 

(a)           LRF is in compliance with all Laws of any Governmental Body applicable to its business or operations, except where the failure to be in compliance would not have a Material Adverse Effect.  LRF has not received any written notice of or been charged with the violation of any Laws, except where such violation would not have a Material Adverse Effect.

 

(b)           LRF currently has all Permits which are required for operating its  business as presently conducted, other than those the failure of which to possess would not have a Material Adverse Effect.  LRF is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any Permit required for operating its business to which it is a party, except where such default or violation would not have a Material Adverse Effect.

 

 

  

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6.8           Environmental Matters.  The representations and warranties contained in this Section 6.8 are the sole and exclusive representations and warranties of RCC and TRS pertaining or relating to any environmental, health or safety matters, including any arising under any Environmental Laws.  Except in each case as would not have a Material Adverse Effect:

 

(a)           the operations of LRF are in compliance with Environmental Laws. Such compliance includes obtaining, maintaining and complying with any Permits required under all applicable Environmental Laws necessary to operate its business;

 

(b)           LRF is not subject to any pending, or to the Knowledge of RCC, threatened claim alleging that LRF may be in violation of any Environmental Law or Environmental Permit or may have any liability under any Environmental Law; and

 

(c)           to the Knowledge of RCC, there is no pending or threatened investigations of LRF or its assets or, to the knowledge of RCC, are there any pending or threatened investigations related thereto.

 

6.9           Financial Advisors. No Person has acted, directly or indirectly, as a broker, finder or financial advisor for RCC, TRS or LRF in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment from Transferee in respect thereof.

 

6.10           Basis in RCC Transferred Assets.  The Basis of TRS in the RCC Transferred Assets for tax purposes is as set forth in Schedule 6.10.

 

6.11           No Other Representations or Warranties; Schedules.  Except for the representations and warranties contained in this Article VI (as modified by the Schedules to this Agreement as supplemented or amended), neither RCC, TRS nor any other Person makes any other express or implied representation or warranty with respect to RCC, TRS, LRF or the transactions contemplated by this Agreement, and RCC and TRS disclaim any and all other representations or warranties, whether made by RCC, TRS or any of its or their Affiliates, officers, directors, employees, agents or representatives.  Except for the representations and warranties contained in this Article VI (as modified by the Schedules to this Agreement as supplemented or amended), RCC and TRS hereby disclaim all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to any party hereto or its or his Affiliates or representatives (including any opinion, information, projection, or advice that may have been or may be provided by any director, officer, employee, member, agent, consultant, or representative of the RCC, TRS or any of their respective Affiliates).  Neither RCC nor TRS makes any representation or warranty to Transferee, LEAF Financial, the LEAF Transferred Subsidiaries, the Management Parties nor any other Person regarding the probable success or profitability of LRF.  The disclosure of any matter or item in any schedule hereto shall not be deemed to constitute an acknowledgment that any such matter is required to be disclosed.

 

 

  

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ARTICLE VII

 

REPRESENTATIONS AND WARRANTIES OF TRANSFEREE

 

Transferee hereby represents and warrants to the Contributors and Management Parties that:

 

7.1           Organization and Good Standing.  The Transferee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and carry on its business.

 

7.2           Authorization of Agreement.  The Transferee has full corporate power and authority to execute and deliver the Transaction Documents to which it is a party and each other agreement, document, instrument or certificate contemplated by the Transaction Documents to which it is or will be a party or signatory (the “Transferee Documents”), and to consummate the transactions contemplated thereby.  The execution, delivery and performance by the Transferee of the Transferee Documents and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on behalf of Transferee.  This Agreement has been, and each Transferee Document will be at or prior to the Closing, duly executed and delivered by the Transferee and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Transferee Document when so executed and delivered will constitute, the legal, valid and binding obligation of the Transferee, enforceable against Transferee in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

7.3           Authorized Capitalization.    The authorized capital of Transferee as of the date hereof consists of (i) 10,000 shares of Common Stock; and (ii) 10,000 shares of Series A Preferred Stock.  Transferee has reserved 5,300 shares of Common Stock for issuance upon exercise of all warrants that will be outstanding immediately following Closing.

 

7.4           Valid Issuance of Shares.   The Common Stock and Series A Preferred Stock, when issued, sold and delivered pursuant to this Agreement, will be validly issued, fully paid and non-assessable and free of restrictions on transfer other than restrictions under this Agreement, the other Transaction Documents, applicable federal and state securities laws and liens and encumbrances created or imposed by a Contributor with respect to the Common Stock or Series A Preferred Stock received by it.  Each Contributor (i) represents and warrants to Transferee that it is acquiring the 

 

  

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Common Stock (LEAF Financial) and Series A Preferred Stock (TRS) for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof and that it is an “accredited investor” as such term is defined in Rule 501(a)(3) of Regulation D under the Securities Act of 1933, as amended, and has had the opportunity to ask questions and receive answers concerning Transferee, and the transactions contemplated by the Transaction Documents.  Each Contributor further understands that the Common Stock and Series A Preferred Stock may bear the following legend:

 

(a)           “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO  TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

 

7.5           Conflicts; Consents of Third Parties.

 

(a)           None of the execution and delivery by the Transferee of this Agreement or the Transferee Documents, the consummation of the transactions contemplated hereby or thereby, or the compliance by Transferee with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and by-laws of Transferee; (ii) any Contract or Permit to which the Transferee is a party or by which Transferee or its properties or assets are bound; (iii) any Order of any Governmental Body applicable to Transferee or by which any of the properties or assets of Transferee are bound; or (iv) any applicable Law.

 

(b)           No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Transferee in connection with the execution and delivery of this Agreement or the Transferee Documents, the compliance by Transferee with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or the taking by Transferee of any other action contemplated hereby.

 

7.6           Litigation.  There are no Legal Proceedings pending or, to the Knowledge of Transferee, threatened that are reasonably likely to prohibit or restrain the ability of Transferee to enter into this Agreement or consummate the transactions contemplated hereby.

 

7.7           Financial Advisors.  No Person  has acted, directly or indirectly, as a broker, finder or financial advisor for Transferee in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof.

 

 

  

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7.8           Condition of the Business and Assets.  Notwithstanding anything contained in this Agreement to the contrary, the Transferee acknowledges and agrees that Contributors and the Management Parties are not making any representations or warranties whatsoever, express or implied, beyond those expressly given by the them, respectively, in Article IV and Article VI (as modified by the Schedules hereto as supplemented or amended), and the Transferee acknowledges and agrees that, except for the representations and warranties contained therein, the Leasing Business, the LEAF Financial Transferred Assets, the RCC Transferred Assets and the LEAF Financial common stock being transferred by each Management Party, are being transferred on a “where is” and, as to condition, “as is” basis.  Any claims Transferee may have for breach of representation or warranty shall be based solely on the representations and warranties of Contributors or Management Parties set forth in Article IV, Article V and Article VI (as modified by the Schedules hereto as supplemented or amended).  The Transferee further represents that none of the Contributors or Management Parties, any of their Affiliates nor any other Person has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding any, the Leasing Business, the LEAF Financial Transferred Assets, the RCC Transferred Assets, or the LEAF Financial common stock being transferred by each Management Party or the transactions contemplated by this Agreement not expressly set forth in this Agreement, and none of the Contributors or Management Parties, nor any of their Affiliates or any other Person will have or be subject to any Liability to Transferee or any other Person resulting from the distribution to Transferee or its representatives or Transferee’s use of, any information or any other document in any form provided to Transferee or its representatives in connection with the transactions contemplated hereby.  As of the date hereof, Transferee is not aware of any facts, events or circumstances that would cause any of the representations and warranties set forth in Article IV, Article V and Article VI hereof to be untrue or incorrect in any material respect.

 

ARTICLE VIII

 

COVENANTS

 

8.1           Services with Respect to Retained Assets; Transition Services.  At Closing, LEAF Financial and Transferee shall enter into the Sub-Servicing Agreement in the form annexed as Schedule 8.1(i) hereto (the “Sub-Servicing Agreement”), the Transition Services Agreement in the form annexed hereto as Schedule 8.1(ii) (the “Transition Services Agreement”) and the Missouri Property Lease.

 

8.2           Conduct of Business Pending the Closing.

 

[Reserved]

 

8.3           Consents.  The Contributors shall apply for any consents requested by the Transferee, and the Contributors and the Management Parties shall cooperate with Transferee and use their commercially reasonable efforts to obtain at the earliest practicable date all consents and approvals required to consummate the transactions contemplated by this Agreement, including, without limitation, the consents and approvals referred to in Section 4.3(b) and Section 6.3(b) hereof; provided, however, that Contributors shall not be obligated to pay any consideration to any third party from 

 

 

  

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whom consent or approval is requested.  Transferee shall cooperate with the Contributors and use its commercially reasonable best efforts to assist the Contributors in performing their obligations hereunder; provided, however, that Transferee shall not be obligated to pay any consideration to any third party from whom consent or approval is requested.

 

8.4           Treatment of Transfer of RCC Transferred Assets .  RCC, TRS and the Transferee shall treat the transfer of the RCC Transferred Assets as a sale of such Transferred Assets for financial reporting and accounting purposes, but shall treat such transfer as a transaction coming within Section 351 of the Code for tax purposes.

 

8.5           Further Assurances.  Subject to, and not in limitation of, Section 8.3, each of Transferee, Contributors and the Management Parties shall use its, his or their commercially reasonable efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.

 

8.6           Non-Competition; Non-Solicitation; Confidentiality. (a) For a period of one (1) year from and after the Closing Date (the “Non-Compete Period”), Contributors and their Affiliates (excluding, for these purposes, Transferee and the Management Parties) shall not directly or indirectly, within any state or territory of the United States in which the Leasing Business is being conducted as of the Closing Date, own, manage, engage in, operate, control, work for, consult with, render services for, do business with, maintain any interest in (proprietary, financial or otherwise) or participate in the ownership, management, operation or control of, any business, whether in corporate, proprietorship or partnership form or otherwise, engaged in the origination through vendor programs and servicing of equipment leases or notes that competes with the Leasing Business (a “Restricted Business”); provided, however, that the restrictions contained in this Section 8.6 shall not (i) restrict the acquisition by LEAF Financial, RCC, TRS or any of their Affiliates, directly or indirectly, of (a) less than 5% of the outstanding capital stock of any publicly traded company engaged in a Restricted Business and (b) any company of which a Restricted Business is not the principal operation or purpose; (ii) apply to the Retained Assets, the Management Business or the ownership of equity (including warrants) or debt securities or other interests in Transferee; and (iii) limit the ability of LEAF Financial, RCC, TRS or any of their Affiliates from acquiring portfolios of equipment leases, equipment notes and the related equipment for investment.

 

(b)           No Contributor or any of its Affiliates (excluding, for these purposes, the Transferee and the Management Parties) will at any time during the Non-Compete Period:  (i) directly or indirectly, by or for itself, or as the agent of another, or through others as an agent, in any way solicit or induce, or attempt to solicit or induce, any employee, officer, representative, consultant, or other agent of Transferee, to leave Transferee’s employ, or otherwise interfere with the employment relationship between any such person and Transferee, unless Transferee first terminates the employment of such 

 

  

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employee or gives its written consent to such employment or offer of employment; (ii) directly or indirectly, by or for itself, or as the agent of another, or through others as an agent, in any way solicit, or attempt to divert, call upon or take away on behalf of a competitor of Transferee any customers or potential customers of Transferee; or (iii) do any act to impair, destroy or jeopardize the goodwill or relationship of Transferee with respect to any existing or potential customers and employees.

 

(c)           Except as and to the extent required by law, each Contributor agrees that neither it nor or any of its Affiliates (excluding, for these purposes, the Transferee and the Management Parties) will, during the Non-Compete Period, directly, indirectly or otherwise, disclose, publish, make available to, or use for its own benefit or the benefit of any person or entity for any reason or purpose whatsoever, any Confidential Information.  As used in this Agreement, the term “Confidential Information” means information disclosed to or known by Contributor or such Affiliates as a consequence of or through its or his relationship with the Transferee, the LEAF Financial Transferred Assets or the RCC Transferred Assets, about the customers, employees, business methods, public relations methods, organization, procedures or finances, including, without limitation, information of or relating to suppliers, customer lists, patents, copyrights, know-how, trade secrets, research, product plans, prices and costs, markets, developments, test data, forecasts, budgets and other confidential or proprietary business, technical, personnel or financial information, in written, graphic, oral or other tangible or intangible forms, including but not limited to specifications, samples, records, data, computer programs, services, suppliers, pricing policies, drawings, diagrams, models, customer names, IDs or email addresses and relationships, business or marketing plans, training materials, studies, analyses, projections and reports, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), hardware/software systems and processes and other valuable confidential business information, in each case that qualifies as a trade secret and has independent economic value.  Subject to the foregoing, any information that is not readily available to the public shall be considered to be a trade secret and confidential and proprietary, even if it is not specifically marked as such, unless Transferee advises a Contributor otherwise in writing; provided, however, that “Confidential Information” shall not include any information that: (i) was publicly known at the time of disclosure to Contributor or an Affiliate, (ii) becomes publicly known or available thereafter other than by any means in violation of this Agreement or any other duty owed to Transferee by any person or entity, which duty is known to Contributor or such Affiliate, or (iii) is lawfully disclosed to Contributor or such Affiliate by a third party owing no duty of confidentiality to Transferee.

 

(d)           At the Closing, each of the Management Parties and Transferee will enter into certain agreements as set forth in Section 2.1(c).

 

(e)           If any of the provisions of this Section 8.6 are determined by any court to be unenforceable by reason of its extending for too great a period of time or over too great a geographic area, or by reason of its being too extensive in any other respect, such covenants shall be interpreted to extend only for the longest period of time and over the greatest geographic area, and to otherwise have the 

 

  

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broadest application, as shall be enforceable.  The invalidity or unenforceability of any of the provisions of this Section 8.6 shall not affect the other provisions of this Agreement, which shall continue in full force and effect.  Contributors acknowledge and agree that the restrictions contained in this Agreement are reasonable.

 

8.7           Preservation of Records.  The Contributors and Transferee agree that they shall each preserve and keep the records held by them or their Affiliates relating to the LEAF Financial Transferred Assets, RCC Transferred Assets and, by LEAF Financial, the Leasing Business for a period of seven years from the Closing Date and shall make such books records and personnel available to the other as may be reasonably required by such party (i) in connection with  the preparation of financial statements, regulatory filings or Tax returns of the Contributors and their Affiliates in respect of periods ending on or prior to Closing, (ii) in connection with any insurance claims by, Legal Proceedings or tax audits against or governmental investigations of the Contributors or Transferee or any of their Affiliates (iii) in order to enable any Contributor or the Transferee to comply with its obligations under the LEAF Financial Documents or RCC Documents and each other agreement, document or instrument contemplated hereby or thereby, or (iv) for the purposes of administering the LEAF Financial Transferred Assets or the RCC Transferred Assets, the Assumed Liabilities, the Assumed Obligations, the Retained Assets, the Retained Liabilities and the Leasing Business.  In the event a Contributor or Transferee wishes to destroy such records after that time, such party shall first give 90 days prior written notice to the other parties and such other party shall have the right at its option and expense, upon prior written notice given to such party within that 90 day period, to take possession of the records within 180 days after the date of such notice.  Transferee and each of the Contributors shall be entitled, at its sole cost and expense, to make copies of the books and records to which it is entitled to access pursuant to this Section 8.7.

 

8.8           Publicity.

 

(a)           Neither the Contributors, the Management Parties nor the Transferee shall issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other parties hereto, which approval will not be unreasonably withheld, conditioned or delayed, unless, in the sole judgment of a Contributor or Transferee, as applicable, disclosure is otherwise required by applicable Law or by the applicable rules of any stock exchange or interdealer automated quotation system on which any Contributor or any of its Affiliates lists securities, provided that, to the extent required by applicable Law, the party intending to make such release shall use its commercially reasonable efforts consistent with such applicable Law to consult with the other parties with respect to the timing and content thereof.

 

(b)           Transferee and Contributors agree that the terms of this Agreement shall not be disclosed or otherwise made available to the public and that copies of this Agreement shall not be publicly filed or otherwise made available to the public, except where such disclosure, availability or filing is required by applicable Law and only to the extent required by such Law.

 

 

  

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8.9           Use of Name.  Transferee agrees that, from and after the Closing, LEAF Financial shall have a non-exclusive right and license, on a royalty-free basis, to use the names “LEAF” or “LEAF Financial,” and the “LEAF” logos, emblems, signs or insignia related thereto or containing or comprising the foregoing, including any name or mark confusingly similar thereto, in connection with the conduct of the Management Business.

 

8.10           Employment and Employee Benefits.

 

(a)           Employees. Transferee covenants and agrees that it shall extend offers of employment immediately following the Closing to each employee of LEAF Financial involved in the Leasing Business who is employed by LEAF Financial immediately prior to the Closing.

 

(i)           Compensation and Benefits.  Transferee shall employ those employees who accept the offers referred to in Section 8.10(a) at salaries and wages no less than their current salaries and wages from LEAF Financial as of the date hereof, and in the same positions as, or in positions no less senior than, those they had immediately prior to Closing.

 

8.11           Disclosure Schedules; Supplementation and Amendment of Schedules.  The Contributors and the Management Parties may, at their option, include in their respective Schedules items that are not material in order to avoid any misunderstanding, and such inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgement or representation that such items are material, to establish any standard of materiality or to define further the meaning of such terms for purposes of this Agreement.  Information disclosed in the Schedules shall constitute a disclosure for all purposes under this Agreement notwithstanding any reference to a specific section, and all such information shall be deemed to qualify the entire Agreement and not just such section.  From time to time prior to the Closing, Contributors and the Management Parties shall have the right to supplement or amend their respective Schedules to any matter hereafter arising or discovered after the delivery of the Schedules pursuant to this Agreement.  No such supplement or amendment shall have any effect on the satisfaction of the condition to closing set forth in Section 9.1(a).

 

ARTICLE IX

 

CONDITIONS TO CLOSING

 

9.1           Conditions Precedent to Obligations of Transferee.  The obligation of Transferee to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Transferee in whole or in part to the extent permitted by applicable Law):

 

(a)           [reserved];

 

 

  

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(b)           [reserved];

 

(c)           there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

 

(d)           the Contributors shall have delivered to Transferee those consents set forth in Schedule 4.3(b) and Section 6.3(b);

 

(e)           the Contributors shall have delivered to Transferee bills of sale, securities powers or other instruments of transfer executed by their duly authorized officers with respect to the LEAF Financial Transferred Assets and RCC Transferred Assets and the Management Parties shall have delivered to Transferee certificates for their shares of LEAF Financial common stock endorsed in blank or accompanied by executed stock powers;

 

(f)           the Contributors shall have delivered to Transferee such other deeds, bills of sale, assignments, certificates of title, other instruments of transfer and conveyance and other documents or certificates as may reasonably be requested by Transferee, each in a form and substance satisfactory to Transferee;

 

(g)           TRS shall have delivered, or caused to be delivered, to the Transferee evidence of the wire transfer of the $5,221,283 referred to in Section 2.1(b) to the account of Transferee;

 

(h)           TRS shall have delivered to Transferee the Share Purchase Agreement duly executed by TRS;

 

(i)           LEAF Financial shall have delivered the Transition Services Agreement to Transferee;

 

(j)           LEAF Financial shall have delivered the Missouri Property Lease to Transferee, duly executed by LEAF Financial;

 

(k)           LEAF Financial shall have delivered the Sub-Servicing Agreement to Transferee, duly executed by LEAF Financial;

 

(l)           Each Management Party shall have delivered an Exchange Letter;

 

(m)           Each Management Party shall have delivered, as applicable, either  a Management Non-Competition Agreement, a Management Non-Solicitation Agreement or the Assignment, to Transferee duly executed by him; and

 

(n)           Each Management Party shall have delivered a Call Option Agreement to Transferee duly executed by him.

 

9.2           Conditions Precedent to Obligations of the Contributors and the Management Parties.  The obligations of Contributors and the Management Parties to consummate the 

 

  

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transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by Contributors and the Management Parties in whole or in part to the extent permitted by applicable Law):

 

(a)           [reserved];

 

(b)           [reserved];

 

(c)           Transferee shall have delivered the Sub-Servicing Agreement to LEAF Financial duly executed by Transferee;

 

(d)           Transferee shall have delivered to the Missouri Property Lease to LEAF Financial duly executed by Transferee

 

(e)           Transferee shall have delivered the Share Purchase Agreement to TRS duly executed by Transferee

 

(f)           Transferee shall have delivered the Transition Services Agreement duly executed by Transferee;

 

(g)           Transferee shall have delivered the Management Non-Competition Agreements, Management Non-Solicitation Agreements or Assignment, duly executed by Transferee;

 

(h)           Transferee shall have delivered the Call Option Agreements duly executed by it;

 

(i)           Transferee shall have delivered certificates for the Common Stock set forth in Section 2.1(a) to LEAF Financial;

 

(j)           Transferee shall have delivered certificates for the Series A Preferred Stock set forth in Section 2.1(b) to TRS;

 

(k)           Transferee shall have delivered certificates for the Common Stock set forth in the Exchange Letters to the Management Parties;

 

(l)           Transferee shall have delivered the Warrant to TRS duly executed by Transferee;

 

(m)           there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

 

(n)           all consents, waivers and approvals listed in Schedule 4.3(b) and Section 6.3 (b) shall have been received; and

 

 

  

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(o)           Transferee shall have entered into a financing arrangement with Guggenheim Securities LLC, or an Affiliate thereof, for a securitized equipment lease warehouse credit facility on terms no less favorable than those set forth in that certain letter of Guggenheim Securities LLC to LEAF Financial, dated November 18, 2010, including Exhibit A thereto.

 

9.3           Frustration of Closing Conditions.  Neither the Contributors nor the Transferee may rely on the failure of any condition set forth in Sections 9.1 or 9.2, as the case may be, if such failure was caused by such party’s failure to comply with any provision of this Agreement.

 

ARTICLE X

 

INDEMNIFICATION

 

10.1           Survival of Representations and Warranties.  The representations and warranties of the parties contained in this Agreement shall survive the Closing through and including the two (2) year anniversary of the Closing Date; provided, however, that the representations and warranties of the Contributors set forth in Sections 4.7  and 4.15 (Environmental Matters) and 6.7 (Environmental Matters) shall survive the Closing until 90 days following the expiration of the applicable statute of limitations with respect to the particular matter that is the subject matter thereof (in each case, the “Survival Period”); provided, that any obligations under Sections 10.2(a) and 10.3(a) shall not terminate with respect to any Losses as to which the Person to be indemnified shall have given notice in writing setting forth the specific claim and the basis therefor to the indemnifying party in accordance with Section 10.4(a) before the termination of the applicable Survival Period; and provided, further, that the obligations of each Person under Section 10.6 shall survive without limitation.

 

10.2           Indemnification by the Contributors.

 

(a)           Subject to Section 10.5 hereof, each Contributor and Management Party hereby agrees to indemnify and hold Transferee, and its respective directors, officers, employees, Affiliates, stockholders, agents, attorneys, representatives, successors and permitted assigns (collectively, the “Transferee Indemnified Parties”) harmless from and against any and all losses, liabilities, claims, demands, judgments, damages (excluding incidental and consequential damages), fines, suits, actions, costs and expenses (individually, a “Loss” and, collectively, “Losses”):

 

(i)           based upon or resulting from the failure of any of the representations or warranties made by such Contributor or Management Party in this Agreement to be true and correct in all material respects at and as of the date hereof; and

 

(ii)           based upon or resulting from the breach of any covenant on the part of such Contributor or Management Party under this Agreement.

 

 

  

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(b)           For the purposes of calculating any Losses hereunder, any materiality or Material Adverse Effect qualifications in the representations, warranties, covenants and agreements shall be disregarded.

 

(c)           Transferee acknowledges and agrees that the no Contributor or Management Party shall have any Liability under any provision of this Agreement for any Loss to the extent that such Loss is caused by action taken by Transferee or any other Person (other than the Contributor or Management Party sought to be held liable for such Loss).  Transferee shall take and shall cause its Affiliates to take all reasonable steps to mitigate any Loss upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto.  In addition, no Contributor or Management Party shall have any Liability for any Loss to the extent the same includes any Losses on any LEAF Financial Transferred Assets or RCC Transferred Asset due to a lack of anticipated cash flow including, without limitation, amounts which are not collected, not paid or uncollectible on account of the insolvency, bankruptcy, or financial inability to pay of any obligor under any lease or loan contracts included as part of the LEAF Financial Transferred Assets or owned by LRF, but excluding any Losses resulting from a breach of a representation or warranty made by such party in this Agreement.

 

10.3           Indemnification by Transferee.

 

(a)           Transferee hereby agrees to indemnify and hold Contributors and the Management Parties and their respective directors, officers, employees, Affiliates, stockholders, agents, attorneys, representatives, successors and permitted assigns (collectively, the “Contributor Indemnified Parties”) harmless from and against, and pay to the applicable Contributor Indemnified Parties the amount of, any and all Losses:

 

(i)           based upon or resulting from the failure of any of the representations and warranties made by Transferee in this Agreement to be true and correct in all respects at the date hereof; and

 

(ii)           based upon or resulting from the breach of any covenant on the part of Transferee under this Agreement.

 

(b)           The Contributors and the Management Parties shall take and cause their Affiliates to take all reasonable steps to mitigate any Loss upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto.

 

10.4           Indemnification Procedures.

 

(a)           A claim for indemnification for any matter not involving a third-party claim may be asserted by notice to the party from whom indemnification is sought.

 

(b)           In the event that any Legal Proceedings shall be instituted, or that any claim shall be asserted, by any third party in respect of which payment may be sought under Sections 10.2 and 10.3 hereof (regardless of the limitations set forth in Section 10.5) ( an “Indemnification Claim”), the indemnified party shall promptly cause written notice of the assertion of any Indemnification Claim of which it has knowledge which is covered by this indemnity to be forwarded to the indemnifying party.  The failure of the indemnified party to give reasonably prompt notice of any Indemnification Claim shall 

 

 

  

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not release, waive or otherwise affect the indemnifying party’s obligations with respect thereto except to the extent that the indemnifying party is prejudiced as a result of such failure.  The indemnifying party shall have the right, at its sole option and expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnified party, and to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against by it hereunder.  If the indemnifying party elects to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against by it hereunder, it shall within 30 days (or sooner, if the nature of the Indemnification Claim so requires) notify the indemnified party of its intent to do so.  If the indemnifying party elects not to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against hereunder, the indemnified party may defend against, negotiate, settle or otherwise deal with such Indemnification Claim.  If the indemnifying party shall assume the defense of any Indemnification Claim, the indemnified party may participate, at his or its own expense, in the defense of such Indemnification Claim; provided, however, that such indemnified party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying party if, (i) so requested by the indemnifying party to participate or (ii) in the reasonable opinion of counsel to the indemnified party, a conflict or potential conflict exists between the indemnified party and the indemnifying party that would make such separate representation advisable; and provided, further, that the indemnifying party shall not be required to pay for more than one such counsel (plus any appropriate local counsel) for all indemnified parties in connection with any Indemnification Claim.  The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Indemnification Claim.  Notwithstanding anything in this Section 10.4 to the contrary, neither the indemnifying party nor the indemnified party shall, without the written consent of the other party, settle or compromise any Indemnification Claim or permit a default or consent to entry of any judgment unless the claimant and such party provide to such other party an unqualified release from all Liability in respect of the Indemnification Claim.  Notwithstanding the foregoing, if a settlement offer solely for money damages is made by the applicable third party claimant, and the indemnifying party notifies the indemnified party in writing of the indemnifying party’s willingness to accept the settlement offer and, subject to the applicable limitations of Sections 10.5 and 10.6, pay the amount called for by such offer, and the indemnified party declines to accept such offer, the indemnified party may continue to contest such Indemnification Claim, free of any participation by the indemnifying party, and the amount of any ultimate Liability with respect to such Indemnification Claim that the indemnifying party has an obligation to pay hereunder shall be limited to the lesser of (A) the amount of the settlement offer that the indemnified party declined to accept plus the Losses of the indemnified party relating to such Indemnification Claim through the date of its rejection of the settlement offer or (B) the aggregate Losses of the indemnified party with respect to such Indemnification Claim.

 

 

  

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(c)           After any final decision, judgment or award shall have been rendered by a Governmental Body of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified party and the indemnifying party shall have arrived at a mutually binding agreement with respect to an Indemnification Claim hereunder, the indemnified party shall forward to the indemnifying party notice of any sums due and owing by the indemnifying party pursuant to this Agreement with respect to such matter.

 

10.5           Certain Limitations on Indemnification.  Neither a Transferee Indemnified Party nor a Contributor Indemnified Party shall be entitled to indemnification pursuant to Section 10.2 or Section 10.3 with respect to any matter which had been duly waived prior to Closing.

 

10.6           Calculation of Losses.  Notwithstanding anything to the contrary elsewhere in this Agreement, no party shall, in any event, be liable to any other Person for any consequential, incidental, indirect, special or punitive damages of such other Person, including loss of future revenue, income or profits, diminution of value or loss of business reputation or opportunity relating to the breach or alleged breach hereof.

 

10.7           Exclusive Remedy.  From and after the Closing the sole and exclusive remedy for any breach or failure to be true and correct, or alleged breach or failure to be true and correct, of any representation or warranty or any covenant or agreement in this Agreement, shall be indemnification in accordance with this Article X.  In furtherance of the foregoing, the parties hereby waive, to the fullest extent permitted by applicable Law, any and all other rights, claims and causes of action (including rights of contributions, if any) known or unknown, foreseen or unforeseen, which exist or may arise in the future, that it may have against the other parties arising under or based upon any federal, state or local Law (including any such Law relating to environmental matters or arising under or based upon any securities Law, common Law or otherwise).  Notwithstanding the foregoing, this Section 10.7 shall not operate to limit the rights of the parties to seek equitable remedies (including specific performance or injunctive relief).

 

ARTICLE XI

 

MISCELLANEOUS

 

11.1           Tax Matters.

 

(a)           All sales, use, transfer, intangible, recordation, documentary stamp or similar Taxes or charges, of any nature whatsoever, applicable to, or resulting from, the transactions contemplated by this Agreement shall be borne equally by the Transferee on the one hand and by the person contributing the assets to which such tax or charge is applicable, on the other hand.

 

(b)           For purposes of the definitions of Leasing Business, LEAF Financial Transferred Assets, RCC Transferred Assets and Assumed Liabilities, in the case of a taxable period that includes the Closing Date, Taxes shall be allocated to the periods before and after the Closing Date as follows:  (i) in the case of Taxes such as property taxes, such Taxes shall be allocated to periods before 

 

 

  

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and after the Closing Date on a per diem basis and (ii) in the case of Taxes based on net or gross income, or transactional taxes such as sales taxes, the portion of such Taxes allocable to the period before the Closing Date shall be computed on the assumption that the taxable period ended on the Closing Date.

 

(c)           Each Contributor and each Management Party who, immediately following Closing shall own 1% or more of the outstanding Common Stock, covenants and agrees that it or he will comply with the record keeping and information filing requirements of Treasury Regulations §1.351-3 under the Code.

 

11.2           Expenses.  Except as otherwise provided in this Agreement, each of the Contributors, Management Parties and Transferee shall bear his or its respective expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.

 

11.3           Submission to Jurisdiction; Consent to Service of Process.

 

(a)           The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the City of Wilmington, State of Delaware over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action proceeding related thereto may be heard and determined in such courts.  The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute.  Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

(b)           Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by the delivery of a copy thereof in accordance with the provisions of Section 11.6.

 

11.4           Entire Agreement; Amendments and Waivers.  This Agreement (including the schedules and exhibits hereto) represents the entire understanding and agreement among the parties hereto with respect to the subject matter hereof.  This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or 

 

 

  

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subsequent breach.  No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

11.5           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such State without giving effect to the choice of law principles of such state that would require or permit the application of the laws of another jurisdiction.

 

11.6           Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt), (ii) when sent by facsimile (with written confirmation of transmission) or (iii) one Business Day following the day sent by overnight courier, in each case at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision):

 

If to RCC:

 

One Crescent Drive

Suite 203

Navy Yard Corporate Center

Philadelphia, PA 19112

Attention:  Chief Financial Officer

With a copy (which shall not constitute notice) to:

 

Ledgewood

1900 Market Street

Philadelphia, PA  19103

215-735-2513

Attention: J. Baur Whittlesey, Esq. and Richard J. Abt, Esq.

 

If to LEAF Financial:

 

LEAF Financial

LEAF Commercial Capital, Inc.

2005 Market Street, 15th Floor

Philadelphia, PA 19103

Attention:  Chief Executive Officer

 

If to Transferee:

 

 

  

45

  

 

LEAF Commercial Capital, Inc.

2005 Market Street, 15th Floor

Philadelphia, PA 19103

Attention:  Chief Executive Officer

 

If to Management Parties, to:

The addresses set forth opposite

their respective names in

Exhibit A to this Agreement

 

11.7           Severability.  If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

11.8           Binding Effect; Assignment.

 

(a)           This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.  Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person or entity not a party to this Agreement except as provided below.  No assignment of this Agreement or of any rights or obligations hereunder may be made by the Contributors or Management Parties, directly or indirectly (by operation of law or otherwise), without the prior written consent of the Transferee and any attempted assignment without the required consents shall be void.  Transferee may assign its rights and obligations hereunder to any Affiliate of Transferee.  No assignment of any obligations hereunder shall relieve the parties hereto of any such obligations.  Upon any such permitted assignment, the references in this Agreement to Transferee shall also apply to any such assignee unless the context otherwise requires. 

 

(b)           After consummation of the transactions contemplated by this Agreement, the Transferee may assign, without the consent of RCC or TRS, all or a portion of the Transferee’s rights to the RCC Transferred Assets.

 

11.9           Non-Recourse.

 

 

  

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(a)           No past, present or future director, officer, employee, incorporator, member, partner, stockholder, agent, attorney or representative of the Contributors or any of their Affiliates shall have any Liability for any obligations or liabilities of any Contributor under this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby.

 

(b)           TRS shall not pay any specified yield to the Transferee if the amounts received with respect to any RCC Transferred Asset differ from the amounts anticipated to be received as of the date of the sale of such RCC Transferred Asset.

 

(c)           There shall be no Transferee recourse against TRS, and Transferee expressly disclaims any and all liability whatsoever on the part of TRS, for any RCC Transferred Asset which does not provide any anticipated cash flow, including without limitation amounts which are not collected, not paid or uncollectible on account of the insolvency, bankruptcy, or financial inability to pay of any obligor under any lease or loan contracts owned by LRF, except to the extent that TRS has breached any of its representations and warranties in this Agreement.

 

11.10           Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers, as of the date first written above.

 

CONTRIBUTORS:

 

LEAF FINANCIAL CORPORATION

 

 

	
  

	
By:                               

 

	
  

	
Name:

 

	
  

	
Title:

 

 

RESOURCE TRS, INC.

 

 

	
  

	
By:                               

 

	
  

	
Name:

 

	
  

	
Title:

 

RESOURCE CAPITAL CORP.

 

 

	
  

	
By:                               

 

	
  

	
Name:

 

	
  

	
Title:

 

 

TRANSFEREE:

 

	
  

	
By:                               

 

	
  

	
Name:

 

	
  

	
Title:

 

 

  

48

  

 

	
  

	
MANAGEMENT PARTIES:

 

Pursuant to Section 11.10 hereof, each Management Party has executed a counterpart signature page to this Agreement

 

 

  

49

  

SCHEDULE 1.1(h)

CERTIFICATE OF DESIGNATION,

PREFERENCES AND RIGHTS

 

of

 

SERIES A PREFERRED STOCK

 

of

 

LEAF COMMERCIAL CAPITAL, INC.

 

(Pursuant to Section 151 of the

Delaware General Corporation Law)

 

LEAF Commercial Capital, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies that the Board of Directors of the Corporation (the “Board of Directors” or the “Board”), pursuant to the authority of the Board of Directors as required by Section 151 of the Delaware General Corporation Law, and in accordance with the provisions of its Certificate of Incorporation and Bylaws, each as amended and restated through the date hereof, has and hereby authorizes a series of the Corporation’s previously authorized Preferred Stock, no par value (the “Preferred Stock”), and hereby states the designation and number of shares, and fixes the relative rights, preferences, privileges, powers and restrictions thereof, as follows:

 

I.  DESIGNATION AND AMOUNT

 

The designation of this series, which consists of five thousand (5,000) shares of Preferred Stock, is the Series A Preferred Stock (the “Series A Preferred Stock”) and the face amount shall be Ten Thousand Dollars ($10,000.00) per share (the “Face Value”). Such number of shares may be increased to pay PIK Preferred Shares (as defined in Article III.C below) or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than that of the number of shares then outstanding.

 

II.  CERTAIN DEFINITIONS

For purposes of this Certificate of Designation, in addition to the other terms defined herein, the following terms shall have the following meanings:

 

“business day” means any day, other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law, regulation or executive order to close.

 

“Change of Control Event” shall occur if the Corporation shall:

 

(i)           sell, convey or dispose of all or substantially all of its assets (the presentation of any such transaction for stockholder approval being conclusive evidence that such transaction involves the sale of all or substantially all of the assets of the Corporation);

 

(ii)           merge or consolidate with or into, or engage in any other business combination with, any other person or entity, in any case, which results in either (A) the holders of the voting 

 

 

  

  

  

 

securities of the Corporation immediately prior to such transaction holding or having the right to direct the voting of fifty percent (50%) or less of the total outstanding voting securities of the Corporation or such other surviving or acquiring person or entity immediately following such transaction or (B) the members of the board of directors or other governing body of the Corporation comprising fifty percent (50%) or less of the members of the board of directors or other governing body of the Corporation or such other surviving or acquiring person or entity immediately following such transaction; or

 

(iii)           have fifty percent (50%) or more of the voting power of its capital stock owned beneficially by one person, entity or “group” (as such term is used under Section 13(d) of the Securities Exchange Act of 1934, as amended) other than Resource America, Inc. and its subsidiaries, including LEAF.

 

“Common Stock” means the Corporation’s common stock, no par value.

 

“Contribution Agreement” means the Contribution Agreement dated on or about the date hereof among LFC, Resource Capital Corp., Resource TRS, Inc. and the Corporation, including the Share Purchase Agreement annexed thereto.

“Dividend” means initially an amount equal to (Rate)x(N/365)x(Face Amount), where the “Rate” shall initially be equal to .10 and “N” means the number of days from the Dividend Commencement Date or the date that the last payment of the Dividend was made in full, as applicable.  Effective January 1, 2014 the Rate shall increase by .02.

“LFC” means LEAF Financial Corporation, a Delaware corporation.

“Liquidation Value” means, for each share of Series A Preferred Stock, the Face Value (to the extent not redeemed pursuant to Article III.B below) plus all accrued and unpaid Dividends and any amounts due pursuant to Article VIII. C.

“Majority Holders” means the holders of a majority of the then outstanding shares of Series A Preferred Stock.

“Required Cash Portion” means initially an amount equal to (Pay Rate)x(N/365)x(Face Amount), where the “Pay Rate” shall initially be equal to .02 and “N” means the number of days from the Dividend Commencement Date or the date that the last payment of the Dividend was made in full, as applicable.  Effective each of January 1, 2012 and January 1, 2013, the Pay Rate shall increase by .01, and effective January 1, 2014, the Pay Rate shall increase by .08 to .12.

III.  DIVIDENDS

 

A.           Accrual; Payment Dates.  Dividends on each share of Series A Preferred Stock shall accrue and shall be cumulative from the date of issuance of such share (the “Dividend Commencement Date”).  For each outstanding share of Series A Preferred Stock, Dividends shall be payable cumulatively, at the applicable Rate, upon each of January 20, April 20, July 20 and October 20 (each, a “Dividend Payment Date”) until such share is fully redeemed, except that if any Dividend Payment Date is not a business day, then such Dividend Payment Date shall be the immediately preceding business day. 

B.           Declaration of Dividends.  The Corporation shall not declare, pay or set aside any dividends, whether payable in cash, property or otherwise, on shares of any other class or series of 

 

  

2

  

 

capital stock of the Corporation unless the holders of the Series A Preferred Stock then outstanding shall first receive on each outstanding share of Series A Preferred Stock an amount at least equal to the sum of (i) the amount of the aggregate Dividends then accrued on such share of Series A Preferred Stock and not previously paid and (ii) an amount equal to the Face Value for such share of Series A Preferred Stock and not previously paid (the “Capital Return”). Any Capital Return paid pursuant to clause (ii) shall be deemed a redemption of that number of shares of Series A Preferred Stock equal to the Capital Return amount divided by 1,000.

C.           Payment.  Payment of the Required Cash Portion of the Dividend and the Capital Return shall be made in cash. With respect to any Dividend Payment Date on or prior to April 20, 2013, payment of the Dividend (other than the Required Cash Portion) shall be made, at the Corporation’s sole discretion, in cash or in kind in additional shares of Series A Preferred Stock in an amount equal to the Dividend amount (other than the Required Cash Portion) divided by the Face Value (the “PIK Preferred Shares”).  With respect to any Dividend Payment Date after April 20, 2013, payment of all of the Dividends shall be made in cash.

 

IV.  REDEMPTION

A.           Optional Redemption by the Corporation.  The Corporation shall have the right to redeem shares of the Series A Preferred Stock at any time for an amount equal to the Liquidation Value thereof, provided that the Corporation has paid in full (i) all accrued Dividends as of the most recent Dividend Payment Date and (ii) any amounts due under Article VIII.C.

 

B.           Notice; Segregation of Funds.  Any redemption made by the Corporation pursuant to this Article IV.A (the “Company Redemption”) shall be made by providing not less than thirty (30) days’ advance written notice (the “Company Redemption Notice”) to the holders of shares of Series A Preferred Stock specifying the date of the redemption, which shall be a business day (the “Company Redemption Date”).  The Corporation may redeem all or any portion of the outstanding shares of Series A Preferred Stock pursuant to this Article IV.A. The Corporation may not deliver to a holder a Company Redemption Notice unless on or prior to the date of delivery of such Company Redemption Notice, the Corporation shall have segregated on the books and records of the Corporation an amount of cash sufficient to pay the Liquidation Value.  Any Company Redemption Notice delivered shall be irrevocable and shall be accompanied by a statement executed by a duly authorized officer of the Corporation.

C.           Payment.  The price per share of Series A Preferred Stock required to be paid by the Corporation pursuant to Article IV.A (the “Company Redemption Amount”) shall be paid in cash to each holder whose Series A Preferred Stock is being redeemed on the Company Redemption Date to an account designated by such holder; provided, however, that the Corporation shall not be obligated to deliver any portion of the Company Redemption Amount until either the certificates for the shares of Series A Preferred Stock being redeemed are delivered to the office of the Corporation or the holder notifies the Corporation that such certificates have been lost, stolen or destroyed and delivers the appropriate documentation in accordance with Article VIII.B hereof. 

 

V.  LIQUIDATION PREFERENCE

 

A.           If the Corporation shall commence a voluntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency or similar law, or consent to the entry of an order for relief in an involuntary case under any law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial 

 

  

3

  

 

part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency or similar law resulting in the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order shall be unstayed and in effect for a period of 90 consecutive days and, on account of any such event, the Corporation shall liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve or wind up, including, but not limited to, a Change of Control Event and any consolidation or merger of the Corporation with any other entity (other than a merger in which the Corporation is the surviving or continuing entity and its capital stock is unchanged) (each a “Liquidation Event”), no distribution shall be made to the holders of any shares of capital stock of the Corporation upon liquidation, dissolution or winding up unless prior thereto the holders of shares of Series A Preferred Stock shall have received the Liquidation Value with respect to each share of Series A Preferred Stock.

 

B.           In the event the Liquidation Event is of the type described in subclause (i) or (ii) of the definition of “Change of Control Event” set forth herein or a consolidation or merger of the Corporation with any other entity in which the Corporation receives as consideration the securities of the acquiring or surviving entity (such securities, “Acquiror Securities”), then, to the extent commercially practicable, the Corporation may distribute such Acquiror Securities to the holders of the Series A Preferred Stock in connection with the payment of the Liquidation Value payable as a result of such Liquidation Event, and the distribution of the Acquiror Securities shall be made pro rata to each holder of Series A Preferred Stock in proportion to the aggregate amount of consideration to which such holder is entitled to receive as set forth in this Article V.  If in such a Liquidation Event the Acquiror Securities to be distributed are not divisible in a commercially practicable manner so as to effect the pro rata distribution contemplated by this Article V.B, then the Corporation shall use commercially reasonable efforts to liquidate such Acquiror Securities for cash.  The value of any Acquiror Securities distributable in connection with a Liquidation Event shall be the fair market value of such securities as determined in good faith by the Board of Directors.  In the event that the value of the Acquiror Securities (or cash distributed upon the liquidation of such Acquiror Securities) is insufficient to pay the full Liquidation Value payable to the holders of the Series A Preferred Stock as set forth in this Article V, than the Corporation shall pay the remaining balance of the Liquidation Preference to such holders in cash.

 

VI.  VOTING RIGHTS

 

The holders of shares of Series A Preferred Stock shall have the following voting rights:

 

A.           Appointment of Board Members.  So long as any share of Series A Preferred Stock is outstanding, the Majority Holders shall have the right to appoint one (1) member of the Board of Directors.  The Majority Holders may remove any Board member appointed by them at any time, with or without cause, and shall have the right to fill any resulting vacancy.

B.           Other Voting Rights.  Each of the following actions by the Corporation will at all times require the consent of the Majority Holders, voting as a separate class from the holders of the Common Stock:

 

 

  

4

  

 

(i)           alteration or change of the rights, preferences or privileges of the Series A Preferred Stock, or alteration or change of the rights, preferences or privileges of any capital stock of the Corporation that may affect adversely the Series A Preferred Stock;

 

(ii)           any material change in the nature and scope of the business of the Corporation and its subsidiaries;

 

(iii)           the amendment or repeal of any provision of the Corporation’s certificate of incorporation or bylaws;

 

(iv)           the approval of the annual business plan and budget of the Corporation or any material modification of the annual business plan and budget of the Corporation after approval by the Majority Holders;

 

(v)           any merger, consolidation, reorganization, reclassification, recapitaliza­tion, spin-off, sale of all or substantially all the assets or similar transactions involving the Corporation or its subsidiaries;

 

(vi)           any acquisition by the Corporation or any of its subsidiaries (in a single transaction or a series of related transactions) of any assets, business or operation in the aggregate with the value of more than $500,000 (other than in the ordinary course of business or as contemplated by the annual business plan and budget approved by the Majority Holders); and

 

(vii)           the liquidation, dissolution, winding up, voluntary bankruptcy, approval of receivers or similar events involving the Corporation and its subsidiaries.

 

VII.  RANK

 

All shares of the Series A Preferred Stock shall rank (i) prior to the Corporation’s Common Stock and any class or series of capital stock of the Corporation hereafter created (unless, with the consent of the Majority Holders obtained in accordance with Article VI hereof, such class or series of capital stock specifically, by its terms, ranks senior to or pari passu with the Series A Preferred Stock); (ii) pari passu with any class or series of capital stock of the Corporation hereafter created (with the written consent of the Majority Holders obtained in accordance with Article VI hereof) specifically ranking, by its terms, on parity with the Series A Preferred Stock; and (iii) junior to any class or series of capital stock of the Corporation hereafter created (with the written consent of the Majority Holders obtained in accordance with Article VI hereof) specifically ranking, by its terms, senior to the Series A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.

VIII.  MISCELLANEOUS

 

A.            Cancellation of Series A Preferred Stock.  If any shares of Series A Preferred Stock are redeemed or repurchased by the Corporation, the shares so converted or redeemed shall be canceled, shall return to the status of authorized, but unissued Preferred Stock of no designated series, and shall not be issuable by the Corporation as Series A Preferred Stock.

 

B.            Lost or Stolen Certificates.  Upon receipt by the Corporation of (i) evidence of the loss, theft, destruction or mutilation of any Preferred Stock certificate(s) and (ii) (y) in the case of loss, 

 

 

  

5

  

 

theft or destruction, indemnity (without any bond or other security) reasonably satisfactory to the Corporation, or (z) in the case of mutilation, the Preferred Stock certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Preferred Stock certificate(s) of like tenor and date. 

 

C.           Payment of Cash; Defaults.  Whenever the Corporation is required to make any cash payment to a holder of Series A Preferred Stock pursuant to this Certificate of Designation (as payment of any Dividend, upon redemption or otherwise), such cash payment shall be made to the holder within five business days of the payment date set forth herein.  If such payment is not delivered within such five business day period, such holder shall thereafter be entitled to interest on the unpaid amount at a per annum rate equal to the lower of eighteen percent (18%) and the highest interest rate permitted by applicable law until such amount is paid in full to the holder.

 

D.            Remedies Cumulative.  The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Corporation to comply with the terms of this Certificate of Designation. The Corporation acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holders of Series A Preferred Stock and that the remedy at law for any such breach may be inadequate.  The Corporation therefore agrees, in the event of any such breach or threatened breach, that the holders of Series A Preferred Stock shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

 

E.            Waiver.  Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of Series A Preferred Stock granted hereunder may be waived as to all shares of Series A Preferred Stock (and the holders thereof) upon the written consent of the Majority Holders, unless a higher percentage is required by applicable law, in which case the written consent of the holders of not less than such higher percentage of shares of Series A Preferred Stock shall be required.

 

F.              Notices.  Any notices required or permitted to be given under the terms hereof shall be delivered personally, or sent by nationally recognized overnight carrier and shall be effective upon receipt or refusal of receipt, if delivered personally or by nationally recognized overnight carrier in each case addressed to a party, at the address set forth for such party in the Purchase and Sale Agreement, or such other address as may be designated in writing hereafter, in the same manner, by such person.

 

 

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6

 

 

IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the Corporation this ____ day of December, 2010.

LEAF COMMERCIAL CAPITAL, INC.

By:______________________________

Name:____________________________

Its:_______________________________

 

 

  

7

  

 

SCHEDULE 2.1(b)(i)

THIS WARRANT AND THE SECURITIES FOR WHICH THIS WARRANT MAY BE EXERCISED (COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS.

ANY TRANSFEREE OF THIS WARRANT SHOULD CAREFULLY REVIEW THE TERMS OF THIS WARRANT, INCLUDING SECTION 2(d) HEREOF.  THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE NUMBER SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 2(d) HEREOF.

LEAF COMMERCIAL CAPITAL, INC.

Warrant To Purchase Common Stock

Warrant No.: Number of Shares:

LEAF COMMERCIAL CAPITAL, INC., a Delaware corporation (the “Company”), hereby certifies that, for Ten United States Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, RESOURCE TRS, INC., or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant (if required by Section 2(d)), at any time or times on or after the Warrant Date (as defined in Section 1 (ix)), but not after 11:59 P.M. New York Time on the Expiration Date (as defined herein) Four Thousand Eight Hundred (4,800) fully paid nonassessable shares of Common Stock (as defined in Section 1(iii) below) of the Company (the “Warrant Shares”) at the Warrant Exercise Price (as defined in Section 1(x) below).

 

Section 1.  Definitions. The following words and terms as used in this Warrant shall have the following meanings:

 

 

“Business Combination” means a merger, consolidation, statutory share exchange or similar transaction that requires approval of the Company’s stockholders.

 

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

 

  

  

  

 

“Common Stock” means (i) the Company’s common stock, no par value, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.

 

“Expiration Date” means the date that is five (5) years after the Warrant Date or, if such date does not fall on a Business Day, then the next Business Day.

 

“Ordinary Cash Dividend” means a cash dividend on shares of Common Stock out of surplus or net profits legally available therefore determined in accordance with accounting principles generally accepted in the United States from time to time.

 

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereof or any other legal entity.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Warrant” means this Warrant and all Warrants issued in exchange, transfer or replacement hereof pursuant to the terms of this Warrant.

 

“Warrant Date” means January 4, 2011.

 

“Warrant Exercise Price” shall be equal to, with respect to any Warrant Share, $0.01.

 

Section 2.  Exercise of Warrant.

 

 

Subject to the terms and conditions hereof, this Warrant may be exercised by the holder hereof then registered on the books of the Company, in whole or in part, at any time on any Business Day on or after the opening of business on the Warrant Date and prior to 11:59 P.M. New York Time on the Expiration Date by (i) delivery of a written notice, in the form of the subscription form attached as Exhibit A hereto (the “Exercise Notice”), of such holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, (ii) payment to the Company of an amount equal to the Warrant Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) by certified check or by wire transfer of immediately available funds, and (iii) if required by Section 2(e) or unless the Holder has previously delivered this Warrant to the Company and it or a new replacement Warrant has not yet been delivered to the Holder, the surrender to a common carrier for overnight delivery to the Company as soon as practicable following such date, this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction); provided, that if such Warrant Shares are to be issued in any name other than that of the registered holder of this Warrant, such issuance shall be deemed a transfer and the provisions of Section 7 shall be applicable.  In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2(a), the Company shall on the second (2nd) Business 

 

 

  

2

  

 

Day (the “Warrant Share Delivery Date”) following the date of its receipt of the later of the Exercise Notice, the Aggregate Exercise Price and if required by Section 2(d) (or unless the holder of this Warrant has previously delivered this Warrant to the Company and it or a new replacement Warrant has not yet been delivered to the holder), this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) (the “Exercise Delivery Documents”), issue and deliver to the address specified in the Exercise Notice, a certificate, registered in the name of the holder or its designee, for the number of shares of Common Stock to which the holder shall be entitled.  Upon the later of the date of delivery of (x) the Exercise Notice and (y) the Aggregate Exercise Price referred to in clause (ii) above, the holder of this Warrant shall be deemed for all purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised (the date thereof being referred to as the “Deemed Issuance Date”), irrespective of the date of delivery of this Warrant as required by clause (iii) above or of the certificates evidencing such Warrant Shares.

 

If this Warrant is submitted for exercise, as may be required by Section 2(d), and unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than four (4) Business Days after receipt of this Warrant (the “Warrant Delivery Date”) and at its own expense, issue a new Warrant identical in all respects to this Warrant except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which such Warrant is exercised.

 

No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of Warrant Shares issued upon exercise of this Warrant shall be rounded up or down to the nearest whole number (with 0.5 rounded up).

 

Book-Entry.  Notwithstanding anything to the contrary set forth herein, upon exercise of this Warrant in accordance with the terms hereof, the holder of this Warrant shall not be required to physically surrender this Warrant to the Company unless it is being exercised for all of the Warrant Shares represented by the Warrant.  The holder and the Company shall maintain records showing the number of Warrant Shares exercised and issued and the dates of such exercises or shall use such other method, reasonably satisfactory to the holder and the Company, so as not to require physical surrender of this Warrant upon each such exercise.  In the event of any dispute or discrepancy, such records of the Company establishing the number of Warrant Shares to which the holder is entitled shall be controlling and determinative in the absence of demonstrable error.  Notwithstanding the foregoing, if this Warrant is exercised as aforesaid, the holder may not transfer this Warrant unless the holder first physically surrenders this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the holder a new Warrant of like tenor, registered as the holder may request, representing in the aggregate the remaining number of Warrant Shares represented by this Warrant.  The holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following exercise of any portion of this Warrant, the number of Warrant Shares represented by this Warrant may be less than the number stated on the face hereof.  Each Warrant shall bear the following legend:

 

 

  

3

  

 

ANY TRANSFEREE OF THIS WARRANT SHOULD CAREFULLY REVIEW THE TERMS OF THIS WARRANT, INCLUDING SECTION 2(d) HEREOF.  THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE NUMBER SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 2(d) HEREOF.

Section 3.  Covenants.  The Company hereby covenants and agrees as follows:

 

 

This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued.

 

All Warrant Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable.

 

During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have duly authorized and reserved a sufficient number of shares of Common Stock to provide for the exercise of the rights then represented by this Warrant.

 

The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against impairment, consistent with the tenor and purpose of this Warrant.  Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant in accordance with its terms.

 

This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets.

 

Section 4.  Taxes.  The Company shall pay any and all taxes (excluding income taxes, franchise taxes or other taxes levied on gross earnings, profits or the like of the holder of this Warrant) that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

 

Section 5.  Warrant Holder Not Deemed a Shareholder.  No holder, as such, of this Warrant shall be entitled to vote or receive distributions or dividends or be deemed the holder of shares of the Company for any purpose (other than to the extent that the holder is deemed to be a beneficial holder of shares under applicable securities laws), nor shall anything contained in this Warrant be construed to 

 

 

  

4

  

 

confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the Deemed Issuance Date of the Warrant Shares that such holder is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this Warrant shall be construed as imposing any obligations or liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

Section 6.  Representations of Holder.  The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant, and upon exercise hereof will acquire the Warrant Shares, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption from the registration requirements of the Securities Act.  The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an “accredited investor” within the meaning of in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an “Accredited Investor”) and has had the opportunity to ask questions and receive answers concerning the Company, the Warrant and the offering thereof from the Company.  Each delivery of an Exercise Notice shall constitute confirmation at such time by the holder of the representations concerning the Warrant Shares set forth in the first two sentences of this Section 6, unless contemporaneous with the delivery of such Exercise Notice, the holder notifies the Company in writing that it is not making such representations (a “Representation Notice”).  If the holder delivers a Representation Notice in connection with an exercise, it shall be a condition to such holder’s exercise of this Warrant and the Company’s obligations set forth in Section 2 in connection with such exercise, that the Company receive such other representations and assurances, including an opinion of counsel satisfactory to the Company, as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of this Warrant shall not violate any applicable federal or state securities laws, and the time periods for the Company’s compliance with its obligations set forth in Section 2 shall be tolled until such holder provides the Company with such other representations.

 

Section 7.  Ownership and Transfer.

 

The Company shall maintain at its principal executive offices or at the offices of its transfer agent (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each 

 

 

  

5

  

 

transferee.  The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.

 

Subject to the limitations of Section 6, this Warrant and the rights granted hereunder shall be assignable by the holder hereof without the consent of the Company by delivery of a Warrant Power in the form attached as Exhibit B hereto.

 

Section 8.  Adjustments. The number of shares of Common Stock issuable upon exercise of this Warrant shall be subject to adjustment from time to time as follows; provided, that if more than one subsection of this Section 8 is applicable to a single event, the subsection shall be applied that produces the largest adjustment, and no single event shall cause an adjustment under more than one subsection of this Section 8 so as to result in duplication:

 

(a)           Stock Splits, Subdivisions, Reclassifications or Combinations. If the Company shall (i) declare and pay a dividend or make a distribution on its Common Stock in shares of Common Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares, or (iii) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, the number of Warrant Shares issuable upon exercise of this Warrant at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that the holder of this Warrant after such date shall be entitled to purchase the number of shares of Common Stock which such holder would have owned or been entitled to receive in respect of the shares of Common Stock subject to this Warrant after such date had this Warrant been exercised immediately prior to such date.

 

(b)           Business Combinations. In case of any Business Combination or reclassification of Common Stock (other than a reclassification of Common Stock referred to in Section 8(a)), the Warrantholder’s right to receive Warrant Shares upon exercise of this Warrant shall be converted into the right to exercise this Warrant to acquire the number of shares of stock or other securities or property (including cash) which the Common Stock issuable (at the time of such Business Combination or reclassification) upon exercise of this Warrant immediately prior to such Business Combination or reclassification would have been entitled to receive upon consummation of such Business Combination or reclassification; and in any such case, if necessary, the provisions set forth herein with respect to the rights and interests thereafter of the holder of this Warrant shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to the holder’s right to exercise this Warrant in exchange for any shares of stock or other securities or property pursuant to this paragraph. In determining the kind and amount of stock, securities or the property receivable upon exercise of this Warrant following the consummation of such Business Combination, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation of such Business Combination, then the consideration that the Warrantholder shall be entitled to receive upon exercise shall be deemed to be the types and amounts of consideration received by the majority of all holders of the shares of common stock that affirmatively make an election (or of all such holders if none make an election).

 

 

  

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(c)           Rounding of Calculations; Minimum Adjustments. All calculations under this Section 8 shall be made to the nearest one thousandth (1/1000th) of a share. Any provision of this Section 8 to the contrary notwithstanding, no adjustment in the number of Warrant Shares into which this Warrant is exercisable shall be made if the amount of such adjustment would be less than one hundredth (1/100th) of a share of Common Stock, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate one hundredth (1/100th) of a share of Common Stock, or more.

 

(d)           Timing of Issuance of Additional Common Stock Upon Certain Adjustments.  In any case in which the provisions of this Section 8 shall require that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (i) issuing to the holder of this Warrant exercised after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such exercise by reason of the adjustment required by such event over and above the shares of Common Stock issuable upon such exercise before giving effect to such adjustment and (ii) paying to such holder any amount of cash in lieu of a fractional share of Common Stock; provided, however, that the Company upon request shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment.

 

(e)           Statement Regarding Adjustments. Whenever the number of Warrant Shares into which this Warrant is exercisable shall be adjusted as provided in this Section 8, the Company shall forthwith file at the principal office of the Company a statement showing in reasonable detail the facts requiring such adjustment and the number of Warrant Shares into which this Warrant shall be exercisable after such adjustment, and the Company shall also cause a copy of such statement to be sent by mail, first class postage prepaid, to the holder of this Warrant at the address appearing in the Company’s records.

 

(f)           Notice of Adjustment Event. In the event that the Company shall propose to take any action of the type described in this Section 8 (but only if the action of the type described in this Section 8 would result in an adjustment in the number of Warrant Shares into which this Warrant is exercisable or a change in the type of securities or property to be delivered upon exercise of this Warrant), the Company shall give notice to the holder of this Warrant, in the manner set forth in Section 11, which notice shall specify the record date, if any, with respect to any such action and the approximate date on which such action is to take place. Such notice shall also set forth the facts with respect thereto as shall be reasonably necessary to indicate the effect on the number, kind or class of shares or other securities or property which shall be deliverable upon exercise of this Warrant.  In the case of any action which would require the fixing of a record date, such notice shall be given at least 10 days prior to the date so fixed, and in case of all other action, such notice shall be given at least 15 days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action.

 

 

  

7

  

 

(g)           Adjustment Rules. Any adjustments pursuant to this Section 8 shall be made successively whenever an event referred to herein shall occur.

 

 

Section 9.  Additional Rights.

 

(a)           Fundamental Transactions.  Prior to expiration of this Warrant or the Holder’s exercise in full hereof, the Company shall provide twenty (20) days advance notice to the holder of this Warrant of a Business Combination, the purchase or redemption of capital stock of the Company, an initial public offering of the Common Stock, a recapitalization of the Company, a voluntary or involuntary dissolution, liquidation or winding up of the Company, or the record date for the making of a distribution to all holders of shares of its Common Stock or securities, evidences of indebtedness, assets, cash, rights or warrants (excluding Ordinary Cash Dividends, dividends of its Common Stock and other dividends or distributions referred to in Section 8(a)). In the case of any action which would require the fixing of a record date, such notice shall be given at least 10 days prior to the date so fixed, and in case of all other action, such notice shall be given at least 15 days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action.

 

(b)           The holder of this Warrant shall have the right to conduct appropriate due diligence prior to exercise of the Warrant.

 

(c)           Registration Rights.  If the Company at any time while this Warrant is outstanding and unexpired shall grant any holder of its securities registration rights, it shall grant the holder of this Warrant identical registration rights.

 

Section 10.  Lost, Stolen, Mutilated or Destroyed Warrant.  If this Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt of an indemnification undertaking by the holder (or in the case of a mutilated Warrant, receipt of such Warrant), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.

 

 

  

8

  

 

Section 11.  Notice.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

LEAF Commercial Capital, Inc.

One Commerce Square

15th Floor

Philadelphia, PA 19103

Facsimile:

Attention:  General Counsel

If to the Warrant Holder:

Resource Capital Corp.

One Crescent Drive, Suite 203

Navy Yard Corporate Center

Philadelphia, PA 19112

Facsimile: (215) 465-0600

Attention:  Chief Financial Officer

With a copy (which shall not constitute notice) to:

Ledgewood

1900 Market Street, Suite 750

Philadelphia, PA 19103

Facsimile:                      (215) 735-2513

Attention:                      J. Baur Whittlesey, Esquire

 

Section 12.  Date.  The date of this Warrant is January 4, 2011.  This Warrant, in all events, shall be wholly void and of no effect after 11:59 P.M., New York Time, on the Expiration Date, except that notwithstanding any other provisions hereof, the provisions of Section 7 shall continue in full force and effect after such date as to any Warrant Shares or other securities issued upon the exercise of this Warrant.

 

Section 13.  Amendment and Waiver.  Except as otherwise provided herein, this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only with the written consent of the holder of this Warrant.

 

Section 14.  Descriptive Headings; Governing Law.  The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of 

 

  

9

  

 

this Warrant.  All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

 

Section 15.  Rules of Construction.  Unless the context otherwise requires, (a) all references to Sections, Schedules or Exhibits are to Sections, Schedules or Exhibits contained in or attached to this Warrant, (b) each accounting term not otherwise defined in this Warrant has the meaning assigned to it in accordance with generally accepted accounting principles (GAAP), (c) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter and (d) the use of the word “including” in this Warrant shall be by way of example rather than limitation.

 

* * * * * *

 

  

10

  

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as of the date first written above.

LEAF COMMERCIAL CAPITAL, INC.

 

	
  

	
By:                            

	
  

	
Title:

	
  

	
Title:

 

 

 

  

11

  

 

SCHEDULE 2.1(b)(ii)

 

SHARE PURCHASE AGREEMENT

 

THIS AGREEMENT, made the 4th day of January, 2011 by and between LEAF COMMERCIAL CAPITAL, INC., a corporation organized and existing under the laws of the State of Delaware (the “Company”) and RESOURCE TRS, INC., a corporation organized and existing under the laws of the State of Delaware (the “Purchaser”),

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to sell and issue to the Purchaser, and the Purchaser wishes to purchase from the Company an aggregate of 2,626.783 shares of the Company’s Series A Preferred Stock (the “Initial Series A Preferred Stock”), with the designation, preferences and rights set forth in that certain Certificate of Designation, Preferences and Rights (the “Certificate”), in form attached hereto as Exhibit A; and

 

WHEREAS, the Company and the Purchaser desire that the Company have an option (the “Option”) to sell, from time to time and subject to the terms and conditions of this Agreement, up to an additional 1,000 shares of the Company’s Series A Preferred Stock (the “Option Series A Preferred Stock”, and together with the Initial Series A Preferred Stock, the “Preferred Stock”) to the Purchaser;

NOW THEREFORE, in consideration of the premises, and the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:

Issuance of Initial Series A Preferred Stock.  Upon the terms and conditions, set forth in this agreement, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, the Initial Series A Preferred Stock.

 

Purchase Price.  The purchase price for the Initial Series A Preferred Stock to be acquired by the Purchaser (the “Initial Purchase Price”) shall be $5,221,283 million.

 

The Closing.

 

Timing.  Subject to the fulfillment or waiver of the conditions set forth in that certain Transfer and Contribution Agreement of even date herewith by and among the Company, Purchaser, LEAF Financial Corporation, Resource Capital Corporation and several individuals named therein (the “Contribution Agreement”) and the closing of the transactions contemplated thereby, the purchase and sale of the Initial Series A Preferred Stock shall take place at a closing (the “Initial Closing”), on or about the date on which closing is being held under the Contribution Agreement or such other date as the Purchaser and the Company may agree upon (the “Initial Closing Date”).

 

Form of Payment and Closing.  On the Initial Closing Date, the Company shall issue the Initial Series A Preferred Stock in book-entry form in the name of the Purchaser, and Purchaser shall deliver the Initial Purchase Price by wire transfer of immediately available funds to an account designated in writing by the Company.  In addition, at or before the Initial Closing, each party 

 

 

  

  

  

 

shall deliver such documents, instruments and writings as may be deemed to be reasonably necessary by the other party to complete the purchase and sale of the Initial Series A Preferred Stock.  Subject to the payment of the Initial Purchase Price in accordance with this Agreement, the Series A Preferred Stock will be fully paid for by the Purchaser as of the Initial Closing Date.

 

The Option.

 

From the date hereof until July 4, 2011 at any time and from time to time, the Company, may, by written notice (the “Option Notice”) to the Purchaser, exercise all or any portion of the Option, subject, however, to the conditions and limitations set forth in Section 1.4 (d) and Section 1.4(e).

 

In the event that the Option is exercised, the purchase price for the Option Series A Preferred Stock shall be $10,000 per share multiplied by the number of shares being purchased (the “Option Purchase Price”).  The purchase and sale of the Option Series A Preferred Stock shall take place at one or more closings (each, an “Option Closing”) at such day and time as the Company shall designate in the Option Notice, which shall be no less than 10 days nor more than 30 days from the date the Option Notice is first sent to the Purchaser (each, an “Option Closing Date”).

 

On an Option Closing Date, the Company shall issue the Option Series A Preferred Stock in book-entry form in the name of Purchaser, and Purchaser shall deliver the Option Purchase Price by wire transfer of immediately available funds to an account designated in writing by the Company.  In addition, before such Option Closing, each party shall deliver such documents, instruments and writings as may be deemed to be reasonably necessary by the other party to complete the purchase and sale of the Option Series A Preferred Stock being purchased.  Subject to the payment of the aggregate Option Purchase Price in accordance with this Agreement, the Option Series A Preferred Stock so issued will be fully paid for by the Purchaser as of such Option Closing Date.

 

Any exercise of the Option shall be subject to the following conditions:  (i) the sale of the Initial Series A Preferred Stock pursuant to Sections 1.3 above shall have been consummated; (ii) the Company shall be not be in default or breach of its obligations under the Certificate; (iii) there shall be no actions, suits, proceedings, inquiries or investigations pending or threatened against the Company, including those under bankruptcy, insolvency, receivership or similar laws, that could reasonably be expected to have a Material Adverse Effect (as such term is defined in the Contribution Agreement) on the Company; and (iv) the representations and warranties of the Company set forth in Article VII of the Contribution Agreement shall be true and correct as though made as of the Option Closing Date.

 

The number of shares of Option Series A Preferred Stock as to which the Company may exercise the Option may not, without the prior written consent of Purchaser, exceed that number of shares equal to (i) (A) the Additional Guggenham Facility Amount divided by 100,000,000 (B) multiplied by 1,000, less (ii) the number of shares of Option Series A Preferred Stock theretofore purchased by Purchaser.  For purposes of this Section 1.4(e), the “Additional Guggenham Facility Amount” shall mean any amount of fully committed, irrevocable funding available under the securitized 

 

 

  

  

  

 

equipment lease warehouse facility provided by Guggenheim Securities LLC and/or its affiliates, of even date herewith, in excess of Fifty Million Dollars (U.S. $50,000,000) to a maximum of One Hundred Fifty Million Dollars ($150,000,000).

 

Notwithstanding the provisions of Section 1.4(e), the Company may request that Purchaser purchase Series A Preferred Stock in excess of the limitations set forth in Section 1.4(e) or in addition to the total amount of Option Series A Preferred Stock which the Company may require Purchaser to purchase under this Agreement.  If Purchaser shall consent thereto, which such consent shall be in Purchaser’s sole and absolute discretion, the purchase of any such Series A Preferred Stock shall be on the terms and conditions, and subject to the procedures, set forth in this Agreement, subject, however, to such amendments or changes to which the Company and Purchaser shall mutually agree.

 

 

Section 2.1                        Representations and Warranties of the Company.  The Company represents and warrants to Purchaser as follows:

 

(a)           As of the date of this Agreement, and as of the Initial Closing Date, the representations of the Company set forth in Article VII of the Contribution Agreement are and will be true, correct and complete and, to the best of the Company’s Knowledge (as such term is defined in the Contribution Agreement), the representations and warranties of LEAF Financial Corporation set forth in Article IV of the Contribution Agreement are and will be true, correct and complete.

 

(b)           As of each Option Closing Date, the representations and warranties of the Company set forth in Article VII of the Contribution Agreement will true and correct.

 

 

Section 3.1                         Miscellaneous

 

(a)           Entire Agreement; Amendments and Waivers.  This Agreement (including the schedules and exhibits hereto) represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof.  This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

 

  

  

  

 

(b)           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such state without giving effect to the choice of law principles of such state that would require or permit the application of the laws of another jurisdiction.

 

(c)           Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt), (ii) when sent by facsimile (with written confirmation of transmission) or (iii) one Business Day (as such term is defined in the Contribution Agreement) following the day sent by overnight courier, in each case at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision):

 

If to Purchaser:

 

One Crescent Drive

Suite 203

Navy Yard Corporate Center

Philadelphia, PA 19112

Facsimile: (215) 465-0600

Attention:  Chief Financial Officer

With a copy (which shall not constitute notice) to:

 

Ledgewood

1900 Market Street

Philadelphia, PA  19103

Facsimile:  (215) 735-2513

Attention: J. Baur Whittlesey, Esq. and Richard J. Abt, Esq.

 

If to the Company, to:

 

One Commerce Square

2005 Market Street

15th Floor

Philadelphia, PA 19103

Facsimile: (215) 640-6371

Attention:  Chief Executive Officer

 

(d)           Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.  Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a party to this Agreement except as provided below.  No assignment of this Agreement or of any rights or obligations hereunder may be made, directly or indirectly (by operation of law or otherwise), without the prior written consent of both parties, and any attempted assignment without the required consents shall be void; provided, however, that Purchaser, may assign its rights and obligations hereunder to any Affiliate (as such term is defined in the Contribution Agreement) of Purchaser.  No 

 

 

  

  

  

 

assignment of any obligations hereunder by a party shall relieve such party hereto of any of its obligations hereunder.  Upon any such permitted assignment, the references in this Agreement to the assigning party shall also apply to any such assignee unless the context otherwise requires.

 

(e)           Non-Recourse.  No past, present or future director, officer, employee, incorporator, member, partner, stockholder, agent, attorney or representative of the Purchaser or any of its Affiliates shall have any liability for any obligations or liabilities of any Seller under this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby.

 

(f)           Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

 

 

** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK **

 

  

  

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers, as of the date first written above.

 

	
  

	
 RESOURCE TRS, INC.

 

	
  

	
By:                               

 

	
  

	
Name:

 

	
  

	
Title:

 

	
  

	
LEAF COMMERCIAL CAPITAL, INC.

 

	
  

	
By:                               

 

	
  

	
Name:

 

	
  

	
Title:Unassociated Document

Exhibit 10.1

 

 

 

 

	 	 
 
 
SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

	 

 

 

 

 

NUCLEAR INNOVATION NORTH AMERICA LLC,

NINA INVESTMENTS HOLDINGS LLC

NUCLEAR INNOVATION NORTH AMERICA INVESTMENTS LLC,

NINA TEXAS 3 LLC and

NINA TEXAS 4 LLC,

as Borrowers

 

_________________________________

$100,000,000

CREDIT AGREEMENT

Dated as of November 29, 2010

 

_________________________________

 

THE SHAW GROUP INC.

as Administrative Agent

  

  

  

 

TABLE OF CONTENTS

(continued)

Page

 

	
ARTICLE I DEFINITIONS

	1
	 	 	 
	
Section 1.01

	
Certain Defined Terms

	
1

	
Section 1.02

	
Accounting Principles

	
19

	
Section 1.03

	
Interpretation

	
20

	 	 
	
ARTICLE II THE LOANS

	21
	 	 	 
	
Section 2.01

	
The Loans

	
21

	
Section 2.02

	
Borrowing Procedure

	
21

	
Section 2.03

	
Non-Receipt of Funds

	
22

	
Section 2.04

	
Lending Offices

	
22

	
Section 2.05

	
Evidence of Indebtedness

	
22

	 	 
	
ARTICLE III INTEREST AND FEES

	23
	 	 	 
	
Section 3.01

	
Interest

	
23

	
Section 3.02

	
Default Rate of Interest

	
24

	
Section 3.03

	
Computations

	
24

	
Section 3.04

	
Highest Lawful Rate

	
24

	 	 
	
ARTICLE IV REDUCTION OF COMMITMENTS; REPAYMENT; PREPAYMENT

	24
	 	 	 
	
Section 4.01

	
Extension of Maturity Date; Reduction or Termination of the Commitments

	
24

	
Section 4.02

	
Repayment of the Loans

	
25

	
Section 4.03

	
Prepayments

	
25

	
Section 4.04

	
Discharge of Obligations by Conversion into Class A Membership Interests

	
26

	
Section 4.05

	
Net Payments

	
27

	 	 
	
ARTICLE V YIELD PROTECTION AND ILLEGALITY

	28
	 	 	 
	
Section 5.01

	
Compensation for Losses

	
28

	
Section 5.02

	
Regulatory Changes

	
28

	
Section 5.03

	
Illegality

	
29

	
Section 5.04

	
Obligation to Mitigate

	
29

	
Section 5.05

	
Substitution of Lenders

	
30

	 	 
	
ARTICLE VI PAYMENTS

	30
	 	 	 
	
Section 6.01

	
Pro Rata Treatment

	
30

	
Section 6.02

	
Payments

	
30

	
Section 6.03

	
[Reserved]

	
31

	
Section 6.04

	
Non-Receipt of Funds

	
31

	
Section 6.05

	
Sharing of Payments

	
31

	 	 
	
ARTICLE VII CONDITIONS PRECEDENT

	32
	 	 	 
	
Section 7.01

	
Conditions Precedent to the Initial Loans

	
32

	
Section 7.02

	
Conditions Precedent to All Loans

	
34

 

  

  

  

 

TABLE OF CONTENTS

(continued)

Page

 

	
ARTICLE VIII REPRESENTATIONS AND WARRANTIES

	35
	 	 	 
	
Section 8.01

	
Organization and Powers

	
35

	
Section 8.02

	
Authorization; No Conflict

	
35

	
Section 8.03

	
Binding Obligation

	
36

	
Section 8.04

	
Consents

	
36

	
Section 8.05

	
Title to Properties; Liens

	
36

	
Section 8.06

	
Litigation

	
36

	
Section 8.07

	
Compliance with Environmental Laws

	
37

	
Section 8.08

	
Investment Company Status

	
37

	
Section 8.09

	
ERISA

	
37

	
Section 8.10

	
Subsidiaries and Other Equity Investments

	
37

	
Section 8.11

	
Margin Regulations

	
38

	
Section 8.12

	
Taxes

	
38

	
Section 8.13

	
Patents and Other Rights

	
38

	
Section 8.14

	
Intellectual Property

	
38

	
Section 8.15

	
Insurance

	
38

	
Section 8.16

	
Financial Statements and Projections

	
39

	
Section 8.17

	
Compliance with Laws, Etc

	
39

	
Section 8.18

	
Solvency

	
39

	
Section 8.19

	
No Default

	
39

	
Section 8.20

	
Collateral

	
39

	
Section 8.21

	
Burdensome Agreements

	
40

	 	 
	
ARTICLE IX AFFIRMATIVE COVENANTS

	40
	 	 	 
	
Section 9.01

	
Reporting Covenants

	
41

	
Section 9.02

	
Preservation of Existence, Etc

	
44

	
Section 9.03

	
Payment of Certain Obligations

	
44

	
Section 9.04

	
Maintenance of Insurance

	
44

	
Section 9.05

	
Keeping of Records and Books of Account

	
45

	
Section 9.06

	
Inspection Rights

	
45

	
Section 9.07

	
Compliance with Laws, Etc

	
45

	
Section 9.08

	
Licenses

	
45

	
Section 9.09

	
Action Under Environmental Laws

	
46

	
Section 9.10

	
Use of Proceeds

	
46

	
Section 9.11

	
Reinvestment of Equity Proceeds

	
46

	
Section 9.12

	
Additional Guarantors and Collateral

	
46

	
Section 9.13

	
Further Assurances and Additional Acts

	
47

	
Section 9.14

	
Existing TANE Credit Agreement

	
47

	
Section 9.15

	
Maintenance of Properties

	
47

 

  

  

  

 

TABLE OF CONTENTS

(continued)

Page

 

	
ARTICLE X NEGATIVE COVENANTS.

	48
	 	 	 
	
Section 10.01

	
Indebtedness

	
48

	
Section 10.02

	
Liens; Burdensome Agreements

	
49

	
Section 10.03

	
Change in Nature of Business

	
50

	
Section 10.04

	
Restrictions on Fundamental Changes

	
50

	
Section 10.05

	
Sales of Assets

	
50

	
Section 10.06

	
Loans and Investments

	
51

	
Section 10.07

	
Capital Expenditures

	
52

	
Section 10.08

	
Sales and Leasebacks

	
52

	
Section 10.09

	
Restricted Payments

	
52

	
Section 10.10

	
Amendments of Certain Documents

	
53

	
Section 10.11

	
Restriction of Amendments to Certain Documents

	
53

	
Section 10.12

	
Redemption of Subordinated Debt

	
54

	
Section 10.13

	
Transactions with Related Parties

	
54

	
Section 10.14

	
ERISA

	
55

	 	 
	
ARTICLE XI EVENTS OF DEFAULT

	55
	 	 	 
	
Section 11.01

	
Events of Default

	
55

	
Section 11.02

	
Effect of Event of Default

	
58

	
Section 11.03

	
Rights Not Exclusive

	
58

	 	 
	
ARTICLE XII THE ADMINISTRATIVE AGENT

	59
	 	 	 
	
Section 12.01

	
Authorization and Action

	
59

	
Section 12.02

	
Limitation on Liability of the Administrative Agent; Notices; Closing

	
59

	
Section 12.03

	
The Administrative Agent and Affiliates

	
60

	
Section 12.04

	
Notice of Defaults

	
61

	
Section 12.05

	
Non-Reliance on the Administrative Agent

	
61

	
Section 12.06

	
Indemnification

	
61

	
Section 12.07

	
Delegation of Duties

	
62

	
Section 12.08

	
Successor Administrative Agent

	
62

	
Section 12.09

	
Collateral Matters

	
62

	
Section 12.10

	
The Administrative Agent May File Proofs of Claim

	
63

 

  

  

  

 

TABLE OF CONTENTS

(continued)

Page

 

	
ARTICLE XIII MISCELLANEOUS

	63
	 	 	 
	
Section 13.01

	
Amendments and Waivers

	
63

	
Section 13.02

	
Notices; Facsimile Copies

	
65

	
Section 13.03

	
No Waiver; Cumulative Remedies

	
66

	
Section 13.04

	
Costs and Expenses; Indemnification

	
66

	
Section 13.05

	
Right of Set-Off

	
68

	
Section 13.06

	
Survival

	
68

	
Section 13.07

	
Lender Obligations Several

	
68

	
Section 13.08

	
Co-Borrower Provisions

	
69

	
Section 13.09

	
Benefits of Agreement

	
70

	
Section 13.10

	
Binding Effect; Assignment

	
70

	
Section 13.11

	
Governing Law

	
73

	
Section 13.12

	
Submission to Jurisdiction

	
73

	
Section 13.13

	
Waiver of Jury Trial

	
73

	
Section 13.14

	
Limitation on Liability

	
74

	
Section 13.15

	
Confidentiality

	
74

	
Section 13.16

	
Entire Agreement

	
75

	
Section 13.17

	
Payments Set Aside

	
75

	
Section 13.18

	
No Advisory or Fiduciary Responsibility

	
76

	
Section 13.19

	
Severability

	
76

	
Section 13.20

	
Counterparts

	
76

	
Section 13.21

	
USA PATRIOT Act Notice

	
76

	
Section 13.22

	
Income Tax Treatment

	
77

	
Section 13.23

	
Recourse

	
77

  

  

  

 

	
SCHEDULES

	  
	  	  
	
Schedule 1

	
Commitments and Pro Rata Shares

	
Schedule 2

	
Administrative Agent’s Account; Lending Offices; Addresses for Notices

	
Schedule 8.05

	
Real Property of Borrowers

	
Schedule 8.06

	
Litigation

	
Schedule 8.10

	
Subsidiaries and Equity Investments

	
Schedule 10.02(a)

	
Existing Liens

	
Schedule 10.06(g)

	
Existing Investments

	
Schedule 10.13(e)

	
Affiliate Transaction Documents

	  	  
	
EXHIBITS

	  
	  	  
	
Exhibit A

	
Form of Assignment and Assumption

	
Exhibit B

	
Form of Intercreditor Agreement

	
Exhibit C

	
Form of Texas Genco Pledge Agreement

	
Exhibit D

	
Form of Notice of Borrowing

	
Exhibit E

	
Form of Borrowers Security Agreement

  

  

  

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT, dated as of November 29, 2010 (this “Agreement”), is made among Nuclear Innovation North America LLC, a Delaware limited liability company (“NINA”), NINA Investments Holdings LLC, a Delaware limited liability company (“NINA Holdings”), Nuclear Innovation North America Investments LLC, a Delaware limited liability company (“NINA Investments”), NINA Texas 3 LLC, a Delaware limited liability company (“NINA3”), NINA Texas 4 LLC, a Delaware limited liability company (“NINA4” and, together with NINA, NINA Holdings, NINA Investments and NINA3, the “Borrowers” and each, a “Borrower”), each lender party hereto (each a “Lender” and, collectively, the “Lenders”) and The Shaw Group Inc., a Louisiana corporation (“Shaw”), as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).

 

WITNESSETH:

 

WHEREAS, certain of the Borrowers shall enter into contemporaneously herewith an EPC Contract (as defined in Section 1.01) with TANE, S&W and the Consortium, pursuant to which the Consortium has agreed with the Owners (as defined in Section 1.01) to supply and procure equipment for and construct a two-unit advanced boiling water reactor nuclear power plant and to provide design, construction, engineering and services in connection therewith;

 

WHEREAS, pursuant to the terms of the EPC Contract, the Borrowers have agreed to purchase from the Co-Contractor the Equipment and Materials (as defined in Section 1.01) and design, construction, engineering and services; and

 

WHEREAS, in order to facilitate the foregoing, the Borrowers have requested the Lenders and the Administrative Agent (and the Lenders and the Administrative Agent have agreed, upon the terms and subject to the conditions set forth in this Agreement) to make available to the Borrowers a credit facility in an aggregate principal amount equal to $100,000,000 which shall be used to fund the costs and expenses of Shaw and its Subsidiaries with respect to their design, construction, engineering and services pertaining to the Project and shall also be used for other Permitted Uses of Proceeds as set forth below.

 

Accordingly, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                      Certain Defined Terms.  As used in this Agreement, the following terms shall have the following meanings:

 

“Additional Grantors” means additional Persons, if any, that pledge equity interests of any Grantor (as defined in the Borrower Security Agreement) pursuant to Section 5(q) of the Borrower Security Agreement, if any.

 

“Administrative Agent” has the meaning set forth in the introduction to this Agreement.

 

  

1

  

 

“Administrative Agent’s Account” means the account of the Administrative Agent set forth on Schedule 2 or such other account as the Administrative Agent from time to time shall designate in a written notice to the Borrowers and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affiliate” means any Person which, directly or indirectly, controls, is controlled by or is under common control with another Person.  For purposes of the foregoing, “control,” “controlled by” and “under common control with” with respect to any Person shall mean the possession, directly or indirectly, of the power (i) to vote 10% or more of the securities having ordinary voting power of the election of the board of directors (or such other similar governing body with respect to Persons that are not corporations) of such Person, or (ii) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

 

“Applicable Margin” means (i) if no Rating Agency has issued a rating of the long-term indebtedness of the Project (the “Rating”), six (6) percent per annum; and (ii) on and after the date on which any Rating Agency has first issued a Rating, a per annum rate determined in accordance with the following pricing grid based upon such Rating (or upon any other Rating issued by any other Rating Agency):

 

	
Rating

	
Applicable Margin

	
Level 1: A- or above

	
5%

	
Level 2: BBB+, BBB or BBB-

	
6%

	
Level 3: BB+, B or BB-

	
7%

	
Level 4: B+ or below

	
8%

Any increase or decrease in the Applicable Margin resulting from a change in the Rating shall become effective as of the first Business Day immediately following the date on which a change in the Rating is announced.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required hereby), and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form approved by the Administrative Agent with the consent of the Borrowers (which consent shall not unreasonably be withheld or delayed).

 

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease.

 

  

2

  

 

“Availability Period” means for any Tranche A Borrowing, the period from and including the date on which the conditions set forth in Sections 7.01 and 7.02 are first satisfied, until and excluding the Tranche A Maturity Date.

 

 “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy.”

 

“Borrower” and “Borrowers” have the meaning set forth in the introduction to this Agreement.

 

 “Borrower Security Agreement” means that certain security agreement dated as of November 29, 2010 (as amended) be executed by the Borrowers and the Administrative Agent.

 

“Borrowing” means a borrowing consisting of a Tranche A Loan or simultaneous Tranche A Loans made or deemed made at any one time by the Borrowers from the Lenders pursuant to Article II.

 

“Business Day” means a day (i) other than Saturday or Sunday, and (ii) on which commercial banks are open for business in Houston, Texas, New York, New York and Baton Rouge, Louisiana, and, if such day relates to any Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

 

“Business Plan” means, (i) initially, the budget and financing plan of the Project for the fiscal year ending December 31, 2011 (including a cost breakdown), and (ii) during any fiscal year thereafter, the annual budget and financing plan of the Project for such fiscal year, in each case, as approved by the board of managers of NINA from time to time.

 

“Capital Lease” means, for any Person, any lease of property (whether real, personal or mixed) which, in accordance with GAAP as in effect on the date hereof, would, at the time a determination is made, be required to be recorded as a capital lease in respect of which such Person is liable as lessee.

 

“Class A Membership Interests” means the Class A Membership Interests issued by NINA.

 

“Closing Date” means the first date all the conditions precedent in Section 7.01 are satisfied or waived in accordance with Section 13.01.

 

“Co-Contractor” means collectively, S&W (in its capacity as a Contractor under the EPC Contract and/or as a member of the  Consortium) and its Subsidiaries.

 

“Co-Contractor Invoice” means an invoice from the Co-Contractor to the Owners (or STPNOC, on behalf of the Owners) pursuant to which a Borrower (or STPNOC, on behalf of a Borrower) shall pay its portion of the construction, design or engineering costs with respect to the Project.

 

“Consortium” means an unincorporated consortium formed by S&W and TANE.

 

  

3

  

“Collateral” means the property described in the Collateral Documents, and all other property now existing or hereafter acquired, which in each case may at any time be or become subject to a Lien in favor of the Administrative Agent for the benefit of the Lenders pursuant to the Collateral Documents or otherwise, in each case securing the payment and performance of any Obligations, and which in no event shall include any Excluded Asset.

“Collateral Documents” means each Security Agreement and any other agreement pursuant to which any Lien on Collateral is perfected (or purported to be perfected), tenant subordination agreements with respect to any real property on which any Collateral is located, and all control agreements, financing statements, fixture filings, patent, trademark and copyright security agreements, acknowledgments and other material filings, documents and agreements made or delivered pursuant thereto. 

 

“Commitment” means the Tranche A Commitment.

 

 “CPS” means the city of San Antonio, Texas, acting through and by the City Public Services Board, a Texas municipal utility.

 

“Credit Parties” means each Borrower, each Guarantor, Texas Genco and any Additional Grantors.

 

“Default” means an Event of Default or an event or condition which with notice or lapse of time or both would constitute an Event of Default.

 

“Default Rate” means a rate of interest equal to four (4) percent per annum.

 

“Defaulting Lender” means any Lender that (i) has failed to fund any portion of the Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder unless such failure has been cured, (ii) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute or unless such failure has been cured, or (iii) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

 

“DOE” means the U.S. Department of Energy.

 

“DOE Application” means the application for a loan guaranty under Title XVII of the Energy Policy Act of 2005 (22 U.S.C. 16511-16514) from the DOE with respect to financing for the Project, including the Part I application submitted by NINA on July 31, 2008, the Part II application submitted by NINA on October 14, 2008, and all supporting materials or information submitted in writing to DOE in connection therewith.

 

“DOE Facility” means a definitive credit facility provided pursuant to the DOE Application.

 

“Dollars” and the sign “$” each means lawful money of the United States.

 

“Eligible Assignee” has the meaning set forth in Section 13.10.

 

  

4

  

 

“Environmental Laws” means any and all federal, state, local, laws, statutes, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements with a Governmental Authority or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

 

“EPC Contract” means that certain Amended and Restated Master Engineering, Procurement and Construction Agreement, dated as of November 29, 2010, among the Owners, executed by STPNOC as agent of the Owners, and the Consortium.

 

“Equipment and Materials” has the meaning set forth in the EPC Contract.

 

“Equity Securities” means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such person, including, if such person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of property of, such partnership.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, including (unless the context otherwise requires) any rules or regulations promulgated thereunder.

 

“ERISA Affiliate” means each trade or business under “common control” with any Credit Party, within the meaning of Section 4001(a)(14) of ERISA.

 

“ERISA Event” means: (i) a reportable event as defined in Section 4043 of ERISA with respect to a Pension Plan, excluding, however, such events as to which the PBGC by regulation has waived the notice requirement; (ii) a withdrawal by any Credit Party or any ERISA Affiliate from a Pension Plan or the termination of any Pension Plan resulting in liability under Sections 4063 or 4064 of ERISA; (iii) the withdrawal of any Credit Party or any ERISA Affiliate in a complete or partial withdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any liability therefore, or the receipt by any Credit Party or any ERISA Affiliate of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA; (iv) the filing of a notice of intent to terminate in a non-standard termination, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (v) the imposition of liability on any Credit Party or ERISA Affiliate pursuant to Sections 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vi) the failure by any Credit Party or any ERISA Affiliate to make any required contribution to a Pension Plan, or the failure to meet the minimum funding standard of Sections 412 and 430 of the Internal Revenue Code or Section 303 of ERISA with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (vii) an application for a funding waiver under Section 303 of ERISA; (viii) receipt from the IRS of notice of the failure of any Pension Plan intended to qualify under Section 401(a) of the Internal Revenue Code to so qualify, or the failure to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (ix) the imposition of any lien on any of the rights, properties or assets of any Credit Party or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to Section 430(k) of the Internal Revenue Code.

 

  

5

  

 

“Eurodollar Rate” means for each Interest Period for each Loan (i) the rate of interest per annum reasonably determined by the Administrative Agent to be the offered rate appearing on the Telerate Page (as defined below) for Dollar deposits having a maturity comparable to such Interest Period, at approximately 11:00 A.M. (London time) two Business Days prior to the commencement of such Interest Period, or (ii) if the rate referenced in the preceding clause (i) does not appear on such page or service or such page or service shall not be available, the rate of interest per annum equal to the rate reasonably determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for Dollar deposits (for delivery on the first day of such Interest Period) having a maturity comparable to such Interest Period, at approximately 11:00 A.M. (London time) two Business Days prior to the commencement of such Interest Period, or (iii) if the rates referenced in the preceding clauses (i) and (ii) are not available, the rate of interest per annum reasonably determined by the Administrative Agent to be the rate at which deposits in Dollars would be offered by major banks reasonably satisfactory to the Administrative Agent in the interbank eurodollar market at approximately 11:00 A.M. (London time), two Business Days before the first day of such Interest Period, in an amount substantially equal to the proposed Borrowing.  As used in this definition, “Telerate Page” means the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period).

 

“Event of Default” has the meaning set forth in Section 11.01.

 

“Event of Loss” means with respect to any asset of any Borrower or its Subsidiaries any of the following:  (i) any loss, destruction or damage of such asset; (ii) any pending institution of any proceedings for the condemnation or seizure of such asset or of any right of eminent domain by a Governmental Authority or lawfully brought by any other Person; or (iii) any actual condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise by a Governmental Authority or lawfully conducted by any other Person, of such asset, or confiscation of such asset or requisition of the use of such asset.

 

“Excluded Assets” has the meaning set forth in the Borrower Security Agreement.

 

“Excluded NINA Subsidiary” means any (i) direct Subsidiary of NINA formed or acquired after the date hereof not in violation of the terms hereof, (A) which Subsidiary does not hold, directly or indirectly, any equity interest in any Borrower, the Project or the Existing Plant or any property comprising the same and (B) the business purpose and operations of which do not directly relate to the Project, the Existing Plant or any property comprising the same or directly related thereto, or the business and operations of any Borrower (other than NINA) and (ii) any direct or indirect Subsidiary of any direct Subsidiary referred to in clause (i), provided that such Subsidiary also satisfies the requirements of clauses (i)(A) and (i)(B) above; provided, however, that a Subsidiary of NINA will not be deemed to have failed to satisfy the foregoing requirements solely because it directly or indirectly owns an interest in facilities that constitute “shared facilities” between Unit 3 and Unit 4, on the one hand, and the Existing Plant or any other units existing or to be developed at the “South Texas Project” site, on the other hand.

 

  

6

  

 

“Existing TANE Credit Agreement” means that certain Amended & Restated Credit Agreement, dated as of the date hereof (as amended, modified, supplemented or otherwise in effect from time to time), among NINA, as borrower, the other Borrowers party thereto, the lenders party thereto, Toshiba America Nuclear Corporation, as administrative agent and collateral agent.

 

“Existing Plant” means the “Existing Plant”, as defined in the EPC Contract; provided that, for the avoidance of doubt, the “Existing Plant” shall not be deemed to include any development rights with respect to additional nuclear units (i.e., other than Unit 3 or Unit 4) at the “South Texas Project” site.

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%), as determined by the Administrative Agent, equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for any day of determination (or if such day of determination is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“FNTP” has the meaning assigned to the term “Full Notice to Proceed” in the EPC Contract

 

“FNTP Date” has the meaning assigned to the term “Full Notice to Proceed Date” in the EPC Contract.

 

 “FRB” means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions.

 

“GAAP” means generally accepted accounting principles in the U.S. as in effect from time to time.

 

“Governmental Authority” means any federal, state, local or other governmental department, commission, board, bureau, agency, central bank, court, tribunal or other instrumentality or authority, domestic or foreign, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantor” means (i) each Restricted Subsidiary and (ii) any other Person at any time providing a Guaranty.

 

  

7

  

 

“Guarantor Documents” means each Guaranty and all other documents, agreements and instruments delivered to Administrative Agent or the Lenders under or in connection with such Guaranty.

 

“Guaranty” means any guaranty at any time made by any other Person in favor of the Administrative Agent and the Lenders with respect to the Obligations in form and substance reasonably acceptable to the Administrative Agent.

 

“Guarantee Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person guaranteeing any Indebtedness (the “primary obligations”) of another Person (the “primary obligor”), including any (a) obligation of that Person (i) to purchase, repurchase or otherwise acquire such primary obligations or any property constituting direct or indirect security therefor, or (ii) to advance or provide funds (A) for the payment or discharge of any such primary obligation, or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, or (iii) 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, (iv) in connection with any synthetic lease or other similar off balance sheet lease transaction, or (v) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect thereof, and (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided, however, that standard contractual indemnities not related to Indebtedness shall not be considered Guarantee Obligations.  The amount of any Guarantee Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.

 

“Hazardous Substances” means any explosive or radioactive substances or wastes and any toxic or hazardous substances, materials, wastes, contaminants or pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances defined or listed as “hazardous substances,” “hazardous materials,” “hazardous wastes” or “toxic substances” (or similarly identified), regulated under or forming the basis for liability under any applicable Environmental Law.

 

“Indebtedness” means, for any Person:  (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all obligations evidenced by notes, bonds, debentures or similar instruments; (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (iv) all obligations under Capital Leases and Synthetic Lease Obligations; (v) all reimbursement or other obligations of such Person under or in respect of letters of credit and bankers acceptances, and all net obligations in respect of Swap Contracts in an amount equal to the Swap Termination Values thereof; (vi) all reimbursement or other obligations of such Person in respect of any bank guaranties, shipside bonds, surety bonds and similar instruments issued for the account of such Person or as to which such Person is otherwise liable for reimbursement of drawings or payments; (vii) all Guarantee Obligations; (viii) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any preferred equity interest in such Person or any other Person, valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and (ix) all of the foregoing types of Indebtedness of another Person secured by any Lien upon or in property owned by the Person for whom indebtedness is being determined, whether or not such Person has assumed or become liable for the payment of such Indebtedness of such other Person (which, for the purpose of calculating any amount of Indebtedness, shall equal the amount of the fair market value of such property owned by the Person providing the Lien); provided, however, that for the avoidance of doubt Operating Leases shall not be considered Attributable Indebtedness (regardless of whether GAAP requires any such Operating Lease to be accounted for as Indebtedness).  For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or otherwise is an entity the liabilities of which do not constitute liabilities of the joint venturer) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person (subject only to recourse exceptions acceptable to the Majority Lenders). The amount of any Capital Lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

 

  

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“Insolvency Proceeding” means (i) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (ii) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of any Person’s creditors generally or any substantial portion of such Person’s creditors, in each case undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated November 29, 2010, amongst the Borrowers, Toshiba America Nuclear Corporation and the Administrative Agent.

 

“Interest Payment Date” means a date specified for the payment of interest pursuant to Section 3.01(c).

 

“Interest Period” means, with respect to any Loan, the period determined in accordance with Section 3.01(b) applicable thereto.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, including (unless the context otherwise requires) any rules or regulations promulgated thereunder.

 

“Investment” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of (i) loans or advances to, or guarantees of the obligations of, or (ii) capital contributions to, or purchases or other acquisitions for consideration of Indebtedness of, equity interests in, other securities of, or all or substantially all of the assets (or assets constituting a business unit) of, such other Person, in each case to the extent, and together with all items that are or would be, classified as investments on a balance sheet prepared in accordance with GAAP.  Except as otherwise provided in this Agreement, the amount of an Investment will be determined at the time the Investment is made based on the fair market value thereof and without giving effect to subsequent changes in value.

 

  

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Notwithstanding anything to the contrary herein, in the case of any Investment made by any Company in a Person substantially concurrently with a cash distribution by such Person to the any Company (a “Concurrent Cash Distribution”), then the amount of such Investment shall be deemed to be the fair market value of the Investment, less the amount of the Concurrent Cash Distribution.

 

“IRS” means the Internal Revenue Service, or any successor thereto.

 

“Lender” and “Lenders” each has the meaning set forth in the introduction to this Agreement.

 

“Lending Office” has the meaning set forth in Section 2.04.

 

“Lien” means any mortgage, deed of trust, pledge, security interest, assignment as collateral, deposit arrangement, charge or encumbrance, lien (statutory or other), or other preferential arrangement in the nature of a security interest (including any conditional sale or other title retention agreement or any financing lease having substantially the same economic effect as any of the foregoing).

 

“Loan Documents” means this Agreement, the Collateral Documents, the Intercreditor Agreement, each Guaranty, each Guarantor Document, each Subordination Agreement and all other certificates, documents, agreements and instruments delivered to the Administrative Agent and the Lenders under or in connection with this Agreement.  For the avoidance of doubt, the Existing TANE Credit Agreement, the EPC Contract and the agreements entered into in accordance therewith for the design, engineering, procurement and construction of the Project are not Loan Documents.

 

“Loans” means, collectively, the Tranche A Loans.

 

“Majority Lenders” means, at any time, Lenders holding at least 50% of then aggregate unpaid principal amount of the Loans, or, if no such principal amount is then outstanding, Lenders having at least 50% of the aggregate Commitments at such time; provided that the Commitment of, and the portion of the Loans held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Majority Lenders.

 

“Material Adverse Effect” means a material adverse effect upon (i) the business, assets, properties, liabilities (actual or contingent), operations or condition (financial or otherwise) of the Borrowers and the Guarantors, taken as a whole, or (ii) the nuclear industry in the U.S., in a manner disproportionately more adverse to the Borrowers than to other participants in such industry.

 

  

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 “Material Contract” means any contract that, if terminated, such termination would result in a Material Adverse Effect, including the South Texas Project Participation Agreement, the TEPCO Agreements and the Owner Agency Agreement.

 

“Multiemployer Plan” means a “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) to which any Credit Party or any ERISA Affiliate is making, or is obligated to make contributions.

 

“Net Cash Proceeds” means when used in respect of any issuance of any debt or equity securities of, or incurrence of any Indebtedness for borrowed money by, any Borrower or any Restricted Subsidiary thereof, the gross proceeds thereof in cash received by such Borrower or such Subsidiary, as and when received, net of any and all taxes (federal, state, local, foreign or otherwise) and fees, commissions, costs and other expenses incurred or reasonably expected to be incurred by such Borrower or Subsidiary in connection therewith.

 

“NINA” has the meaning set forth in the introduction to this Agreement.

 

“NINA3” has the meaning set forth in the introduction to this Agreement.

 

“NINA4” has the meaning set forth in the introduction to this Agreement.

 

“NINA Holdings” has the meaning set forth in the introduction to this Agreement.

 

“NINA Investments” has the meaning set forth in the introduction to this Agreement.

 

“NINA’s Operating Agreement” means the “Operating Agreement” as defined in the Texas Genco Pledge Agreement.

 

“Non-Shaw Costs” means any and all costs and expenses the payment, financing or refinancing of which constitute a Permitted Use of Proceeds, other than any such costs and expenses related to the Co-Contractor, Shaw and/or its Subsidiaries or their respective direct sub-contractors in connection with their design, construction, engineering and services pursuant to the EPC Contract. 

 

“Non-U.S. Subsidiary” means any Subsidiary (i) that is a Person organized under the laws of a jurisdiction other than the United States, any state thereof or the District of Columbia, or (ii) that is exclusively a holding company of equity interests in Persons included in clause (i) above.

 

“Notice of Borrowing” has the meaning set forth in Section 2.02(a).

 

“Notice of Prepayment” has the meaning set forth in Section 4.03(c).

 

 “NRC” means the United States Nuclear Regulatory Commission, or any successor thereto.

 

“NRG” means NRG Energy Inc., a Delaware corporation.

 

  

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“NRG Debt Documents” means, collectively, (i) the Third Amended and Restated Credit Agreement dated as of June 30, 2010 among NRG, Citicorp North America Inc., as administrative agent, and the lenders and other Persons party thereto or (ii) any “Note” under and as defined in that certain Base Indenture, dated as of February 2, 2006, by and between NRG and Law Debenture Trust Company of New York, as trustee, or any supplemental indenture thereto, in each case, as amended, restated, refinanced and otherwise modified from time to time.

 

“Obligations” means the indebtedness, liabilities and other obligations of the Credit Parties to Administrative Agent or any Lender under or in connection with the Loan Documents, including all Loans, all interest accrued thereon (including interest that accrues after the commencement by or against any Credit Party or any other Person of any Insolvency Proceeding naming any such Person as the debtor in such proceeding), all fees due under this Agreement and all other amounts payable by the Borrowers to Administrative Agent or any Lender hereunder or in connection herewith, whether now or hereafter existing or arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined.

 

“Operating Lease” means, for any Person, any lease of any property of any kind by that Person as lessee which is not a Capital Lease or a Synthetic Lease Obligation.

 

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutional documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the articles of formation and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation with the applicable Governmental Authority in the jurisdiction of its formation, in each case as amended from time to time.

 

“Owners” means, collectively, NINA3 and NINA4.

 

“Owner Agency Agreement” means the South Texas Project Operating Agreement dated as of the Effective Date (as defined therein) between Central Power and Light Company, Houston Lightning & Power Company, the City of Austin and STPNOC, as amended, modified, supplemented, modified, replaced, or otherwise in effect from time to time.

 

“Participant” has the meaning set forth in Section 13.10(b).

 

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

 

“Pension Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (i) that is maintained or sponsored by any Credit Party or any ERISA Affiliate, to which any Credit Party or any ERISA Affiliate is obligated to make contributions or with respect to which any Credit Party or any ERISA Affiliate has any outstanding liability, and (ii) that is subject to Section 412 of the Internal Revenue Code, Section 302 of ERISA or Title IV of ERISA.

 

“Permitted Cash Equivalent Investments” means any investments in cash, cash equivalents and other short term marketable debt securities and similar investments, in each case owned or acquired in accordance with the Borrowers’ investment policy as from time to time in effect.

 

  

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“Permitted Liens” means:

 

(i)           Liens in favor of the Lenders or the Administrative Agent (for the benefit of the Lenders and Administrative Agent) to secure the Obligations;

 

(ii)           Liens in favor of the Toshiba America Nuclear Corporation and the agents thereunder for the benefit of the lenders under the Existing TANE Credit Agreement to secure obligations thereunder and under the other “Loan Documents” (as defined in the Existing TANE Credit Agreement, as long as the Intercreditor Agreement is in full force and effect (except as a result of any action or inaction by the Administrative Agent or any Lender);

 

(iii)           the existing Liens listed in Schedule 10.02(a) or incurred in connection with the extension, renewal or refinancing of the Indebtedness or other obligation secured by such existing Liens to the extent such extension, renewal or refinancing is not prohibited hereunder, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness or other obligation being extended, renewed or refinanced does not increase;

 

(iv)           Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and which are adequately reserved for in accordance with GAAP;

 

(v)           Liens of materialmen, mechanics, warehousemen, carriers or employees or other like Liens arising in the ordinary course of business and securing obligations either not delinquent or being contested in good faith by appropriate proceedings which are adequately reserved for in accordance with GAAP and which do not in the aggregate materially impair the use or value of the applicable property or risk loss or forfeiture of title thereto;

 

(vi)           Liens consisting of cash deposits to secure (A) the payment of worker’s compensation, unemployment insurance or other social security benefits or obligations or (B) the performance of bids, trade contracts, leases (other than Capital Leases), public or statutory obligations, surety or appeal bonds or other obligations of a like nature incurred in the ordinary course of business (other than for indebtedness or any Liens arising under ERISA);

 

(vii)           statutory landlord’s Liens under leases to which any Borrower or any Subsidiary thereof is a party;

 

(viii)           Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution;

 

(ix)           Liens on cash and Permitted Cash Equivalent Investments in an amount at any time outstanding not to exceed the sum of $10,000,000 plus the Specified Equity Proceeds (i) deposited by any Borrower or Restricted Subsidiary thereof in accounts with or on behalf of futures contract brokers to secure Indebtedness under Permitted Swap Contracts or (ii) deposited or delivered by any Borrower or Restricted Subsidiary thereof as collateral to a Permitted Swap Contract counterparty or issuer of surety bonds or letters of credit issued to support obligations of a Borrower or Restricted Subsidiary thereof that are incurred in the ordinary course of business;

 

  

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(x)           Liens, on property described in Section 10.01(i), securing Indebtedness described in Section 10.01(i);

 

(xi)           survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

 

(xii)           Liens arising from UCC financing statements filed on a precautionary basis in respect of operating leases intended by the parties to be true leases (other than any such leases entered into in violation of this Agreement);

 

(xiii)           non-exclusive licenses of patents, trademarks, copyrights or other intellectual property rights;

 

(xiv)           leases, licenses or other agreements pursuant to which any Borrower or any Subsidiary thereof conveys or grants any Person a leasehold estate in, or the right to use or occupy, any real property or portion thereof, which do not materially impair the current use or value of the applicable property or risk the loss of forfeiture thereto;

 

(xv)           Liens (including judgment Liens) arising in connection with legal proceedings not constituting an Event of Default under Section 11.01(h);

 

(xvi)           Liens on any equity interests in any Excluded NINA Subsidiary or in any assets thereof; and

 

(xvii)           any Lien on any note, bill, check or other instrument held by Citibank Japan Limited or an Affiliate (a “Permitted Japanese Bank”), solely to the extent that (A) such Lien secures an outstanding overdraft amount with respect to the Deposit Account (as defined in the Borrower Security Agreement) of NINA that is located at a Permitted Japanese Bank and denominated in Japanese Yen and (B) such Lien arises solely due to language, contained in such depositary bank’s terms and conditions governing such Deposit Account, providing that if and when there is an outstanding overdraft amount, notes, bills, checks or other instruments held by the depositary bank shall be deemed to have been assigned to the depositary bank as collateral for the overdraft in addition to the rights granted to the depositary bank by operation of law.

 

“Permitted Swap Contracts” means non-speculative Swap Contracts entered into by any Borrower or Restricted Subsidiary thereof in accordance with a hedging policy or transaction approved by NINA’s board of managers (including in any event any power purchase agreements and interconnection agreements).

 

  

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“Permitted Use of Proceeds” means the use of proceeds of any Loans to pay, finance and/or refinance 100% of the Borrowers’ portion of any and all costs and expenses of the Project (including construction, engineering and design services, materials and equipment provided by the Consortium, the Co-Contractor and/or any of its affiliates), and any costs associated with equipment, material, labor and/or payroll, any working capital requirements and/or general corporate purposes of any of the Borrowers (including costs and expenses of STPNOC and other costs and expenses reasonably expected to maintain the Project’s compliance with its construction schedule).

 

“Person” means an individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or any other entity of whatever nature or any Governmental Authority.

 

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan or a Pension Plan which is maintained or sponsored by any Credit Party or any Subsidiary thereof or with respect to which any Credit Party or Subsidiary thereof has any outstanding liability.

 

“Pro Rata Share” means, as to any Lender at any time, the percentage equivalent (expressed as a decimal) at such time of such Lender’s Commitments divided by the combined Commitments of all Lenders (or, if all Commitments have been terminated, the aggregate principal amount of such Lender’s Loans divided by the aggregate principal amount of the Loans then held by all Lenders).  The initial Pro Rata Share of each Lender is set forth opposite such Lender’s name in Schedule 1 under the heading “Pro Rata Share” or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Project” has the meaning set forth in the EPC Contract.

 

“Rating Agency” means each or any of Fitch Ratings, Inc., Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor to any of the foregoing.

 

“Recovery Act” means the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5.

 

 “Regulation D” means Regulation D of the FRB.

 

“Regulatory Change” has the meaning set forth in Section 5.02.

 

“Related Person” has the meaning set forth in Section 12.06.

 

“Responsible Officer” means, with respect to any Person, the chief executive officer, the president, the chief financial officer, the controller, the treasurer or the general counsel of such Person, or any other senior officer of such Person having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer, the controller or the treasurer of any such Person, or any other senior officer of such Person involved principally in the financial administration or controllership function of such Person and having substantially the same authority and responsibility.  Any document delivered hereunder that is signed by a Responsible Officer of a Person shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Person and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Person.

 

  

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“Restricted Payments” has the meaning set forth in Section 10.09.

 

“Restricted Subsidiary” means each Subsidiary of each Borrower, other than (i) any other Borrower and (ii) any Excluded NINA Subsidiary.

 

“SEC” means the Securities and Exchange Commission, or any successor thereto.

 

“Security Agreement” means the Borrower Security Agreement, the Texas Genco Pledge Agreement and any other agreement (including any deed of trust) pursuant to which any Credit Party provides (or purports to provide) a Lien on its assets in favor or for the benefit of any Lender or the Administrative Agent (for the benefit of the Lenders and Administrative Agent and other “Secured Parties” identified therein) in respect of the Obligations.

 

“Shaw/TANE ABWR Joint Venture” means an entity to be established and jointly owned by The Shaw Group Inc. and Toshiba America Nuclear Energy Corporation for, among other purposes, investing in Nuclear Innovation North America, LLC’s South Texas Project Units 3 and 4 and pursuing other Advanced Boiling Water Reactor opportunities.

 

“Solvent” means, as to any Person at any time, that (i) the fair value of the property of such Person is greater than the amount of such Person’s liabilities (including contingent liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code; (ii) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (iii) such Person is able to realize upon its property and pay its debts and other liabilities (including contingent liabilities) as they mature in the normal course of business; (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (v) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital.  For purposes of this definition, contingent liabilities shall be valued in good faith, as of the calculation date, by the Chief Financial Officer of the relevant Person (or other officer of such Person qualified to make such calculation and acceptable to the Majority Lenders) at the amount which, in light of all the facts and circumstances existing at such time, represents the amount which would reasonably be expected to become an actual matured liability.

 

“Specific License” means a license that is issued to a named person upon application filed pursuant to regulations issued by the NRC.

 

“Specified Equity Proceeds” means an amount equal to the sum of the Net Cash Proceeds received by any Borrower and/or its Subsidiaries from any new issuance of Equity Securities:

 

 (i) issued by NINA to any Person, and/or

 

  

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(ii) issued by any Borrower (other than NINA) and/or any Subsidiary thereof to a Person other than NINA and/or its Subsidiaries (except to the extent of an issuance to NINA and/or its Subsidiaries that is required to downstream proceeds described in clause (i), which shall be deemed to result in Specified Equity Proceeds),

 

in each case, (A) as allocated (and in respect of any unused portion, reallocated) by such Person acquiring the relevant Equity Securities without duplication to either (x) the basket set forth in clause (ix) of "Permitted Liens" and/or (z) the basket set forth in Section 10.06(j), and (B) except as would result in an Event of Default pursuant to Section 11.01(j).

 

“STPNOC” means STP Nuclear Operating Company, a Texas nonprofit company.

 

“Subordinated Debt” means any Indebtedness of any Borrower or any Subsidiary thereof, which is subject to a Subordination Agreement.

 

“Subordination Agreement” means any subordination agreement with respect to any Indebtedness of any Borrower, or any Subsidiary thereof, at any time contractually subordinated to the Obligations in right of payment and exercise of remedies against the applicable Borrower and Subsidiary and the Collateral, among the applicable Borrower, the applicable creditor(s) and the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent and the Majority Lenders.

 

“Subsidiary” means any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting stock or other equity interest is owned directly or indirectly by any Person or one or more of the other Subsidiaries of such Person or a combination thereof.

 

“Swap Contract” means with respect to any specified Person (i) any and all rate swap transactions (whether from fixed to floating or from floating to fixed), basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, (ii) other agreements or arrangements designed to manage interest rates or interest rate risk, (iii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates, (iv) agreements (including each confirmation entered into pursuant to any master agreement) providing for swaps, caps, collars, puts, calls, floors, futures, options, spots, forwards, or hedges of, any energy, generation capacity or fuel, or any other energy related commodity or service, any emissions credit, price or price indices for any such commodities or any other similar derivative agreements and (v) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any master agreement.

 

  

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“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (i) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (ii) for any date prior to the date referenced in the foregoing clause (i) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender or any Affiliate of any Lender).

 

“Synthetic Lease Obligation” means the monetary obligation of a Person under (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) other than an Operating Lease, an agreement for the use or possession of property creating obligations that as of the date hereof, do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

“S&W” means Stone & Webster Inc., a Louisiana corporation and an affiliate of Shaw.

 

“TANE” means Toshiba America Nuclear Energy Corporation, a Delaware corporation.

 

 “TEPCO Agreements” means, collectively, the Investment and Option Agreement dated as of May 10, 2010, by and among NINA Holdings,  NINA, and TEPCO Nuclear Energy America LLC, and any agreements entered into in connection therewith.

 

“Texas Genco” means Texas Genco Holdings, Inc., a Texas corporation.

 

“Texas Genco Pledge Agreement” means that certain pledge agreement to be executed by Texas Genco in favor of the Administrative Agent (for the benefit of the Lenders and the Administrative Agent) substantially in the form of as Exhibit C.

 

“Tranche A Commitment” means, when used with reference to any Lender at any time, the amount then set forth opposite the name of such Lender on Schedule 1 under the caption “Tranche A Commitment”, or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as from time to time reduced pursuant to Section 4.01, or, where the context so requires, the obligation of such Lender to make Tranche A Loans up to such amount on the terms and conditions set forth in this Agreement.

 

“Tranche A Loans” means a Loan funded pursuant to Section 2.01(a) of this Agreement.

 

“Tranche A Maturity Date” means the earlier to occur of:

 

(a) the third anniversary of the Closing Date;

 

(b) the Business Day immediately after the later of financial closing and the first draw under the DOE Facility;

 

  

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(c) the date on which the Project is terminated by any of the Borrowers;

 

(d) the date on which the EPC contract is terminated by S&W, TANE or the Consortium (other than due to a Contractor Event of Default (as defined in the EPC Contract));

 

(e) the date on which the DOE Application is denied in a final and non-appealable manner;

 

(f) the Borrower issuing FNTP;

 

(g) the first date on which the commitments under the Existing TANE Credit Agreement are reduced below $300,000,000, whether on a stated maturity date or otherwise; and

 

(h)  with respect to all Pre-FNTP work (as FNTP may be extended as the result of any delay caused by any regulatory event or force majeure event) the Co-Contractor is not working on a continuous basis under approved Pre-FNTP Task Orders (as defined in the EPC Contract) with the Co-Contractor at a level required to perform and invoice for at least 50% of its monthly scope of work covered by such Task Orders, in each case other than if such failure to work results from existence of a Contractor Event of Default (as defined in the EPC Contract).

 

“UCC” means the Uniform Commercial Code of the jurisdiction the law of which governs the Loan Document in which such term is used or the attachment, perfection or priority of the Lien on any Collateral.

 

“Unit 3” has the meaning assigned to such term in the EPC Contract.

 

“Unit 4” has the meaning assigned to such term in the EPC Contract.

 

“United States” and “U.S.” each means the United States of America.

 

Section 1.02                      Accounting Principles.

 

(a)           Accounting Terms.  Unless otherwise defined or the context otherwise requires, all accounting terms not expressly defined herein shall be construed, and all accounting determinations and computations required under the Loan Documents shall be made, in accordance with GAAP, consistently applied.

 

(b)           GAAP Changes.  If GAAP shall have been modified after the date hereof and the application of such modified GAAP shall have a material effect on any financial computations hereunder, then such computations shall thereafter be made and the financial statements, certificates and reports due hereunder shall be prepared, and all accounting terms not otherwise defined herein shall be construed, in accordance with GAAP as in effect prior to such modification, unless and until the Majority Lenders and the Borrowers shall have agreed upon the terms of the application of such modified GAAP. Notwithstanding any other provision of this Agreement or any other Loan Document to the contrary, for all purposes during the term of this Agreement and any other Loan Document, each lease that pursuant to GAAP as in effect on the date hereof would be classified as a capital lease or an operating lease will continue to be so classified, notwithstanding any change in characterization of that lease subsequent to the date hereof based on changes in GAAP or interpretation of GAAP.

 

  

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(c)           “Fiscal Year” and “Fiscal Quarter”.  References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of the Borrowers.

 

Section 1.03                      Interpretation.  In the Loan Documents, except to the extent the context otherwise requires:

 

(a)           Any reference to an Article, a Section, a Schedule or an Exhibit is a reference to an article or section thereof, or a schedule or an exhibit thereto, respectively, and to a subsection or a clause is, unless otherwise stated, a reference to a subsection or a clause of the Section or subsection in which the reference appears.

 

(b)           The words “hereof,” “herein,” “hereto,” “hereunder” and the like mean and refer to this Agreement or any other Loan Document as a whole and not merely to the specific Article, Section, subsection, paragraph or clause in which the respective word appears.

 

(c)           The meaning of defined terms shall be equally applicable to both the singular and plural forms of the terms defined.

 

(d)           The words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation.”

 

(e)           References to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of the Loan Documents.

 

(f)           References to statutes or regulations are to be construed as including all statutory and regulatory provisions consolidating, amending, supplementing, interpreting or replacing the statute or regulation referred to.

 

(g)           Any table of contents, captions and headings are for convenience of reference only and shall not affect the construction of this Agreement or any other Loan Document.

 

(h)           In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.”

 

(i)           The use of a word of any gender shall include each of the masculine, feminine and neuter genders.

 

(j)           This Agreement and the other Loan Documents are the result of negotiations among the Administrative Agent, the Borrowers and the other parties thereto, if any, have been reviewed by counsel to the Administrative Agent, the Borrowers and such other parties, if any, and are the product of the negotiation thereof by all parties.  Accordingly, they shall not be construed against any party thereto merely because of such party’s involvement in their preparation.

 

  

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ARTICLE II

 

THE LOANS

 

Section 2.01                      The Loans.

 

(a)           Tranche A Loans.  Each Lender severally agrees, on the terms and conditions set forth herein, to make to the Borrowers cash loans in respect of, and for the sole and exclusive purpose of financing, any and all Permitted Use of Proceeds (each a “Tranche A Loan” and, collectively, the “Tranche A Loans”) from time to time on any Business Day during the Availability Period, in an aggregate principal amount not exceeding such Lender’s Tranche A Commitment.  Within the limits of each Lender’s Commitment (as the same may be modified hereunder), during the Availability Period, the Borrowers may borrow, repay the Loans in whole or in part, and reborrow, all in accordance with the terms and conditions hereof.

 

Section 2.02                      Borrowing Procedure.

 

(a)           Notice to the Administrative Agent.  Each Borrowing shall be made on a Business Day upon written notice from the Borrowers to the Administrative Agent, which notice shall be received by the Administrative Agent not later than 11:00 A.M. (New York time) at least four Business Days prior to the date of such proposed Borrowing.  Each such notice shall be in substantially the form of Exhibit D (a “Notice of Borrowing”) and shall include the other certifications and information and attachments required thereby related to such proposed Borrowing to the extent applicable (including a copy of the Co-Contractor Invoice in respect of Borrowings other than for Non-Shaw Costs).  Notwithstanding Section 2.01(a), the Lenders shall have no obligation to fund Borrowings (i) in excess of $10,000,000 in any fiscal month in respect of Non-Shaw Costs, and (ii) in excess of $40,000,000 in respect of Borrowings to finance Non-Shaw Costs, in each case without the consent of the Majority Lenders.

 

(b)           Notice to the Lenders.  Promptly (and in any case within one Business Day) following each Notice of Borrowing (as defined in Section 2.02(a)), the Administrative Agent shall give each Lender prompt notice by telephone (confirmed promptly in writing) or by facsimile of the applicable Borrowing, specifying the information contained in the applicable Notice of Borrowing and such Lender’s Pro Rata Share of the Borrowing.  On the date of each Borrowing, each Lender shall make available a Loan in an amount equal to such Lender’s Pro Rata Share of such Borrowing in same day or immediately available funds, to the Administrative Agent for the Administrative Agent’s Account not later than 12:00 noon (New York time).  Upon fulfillment of the applicable conditions set forth in Article VII and after receipt by the Administrative Agent of such funds advanced to the Administrative Agent by a Lender the Administrative Agent shall make such funds available to the Co-Contractor (or its designee) under the Contractor Invoice attached to the Notice of Borrowing to the extent applicable by wire transfer to an account designated by the Co-Contractor, or to the Borrower (as applicable) in same day or immediately available funds on such Borrowing date.  If any Lender makes available to the Administrative Agent funds for any Borrowing as provided in this Article, and such funds are not made available to the Borrowers by the Administrative Agent because the applicable conditions set forth in Article VII are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

  

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Section 2.03                      Non-Receipt of Funds.  Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender shall not make available to the Administrative Agent (if applicable) a Loan in an amount equal to such Lender’s Pro Rata Share of such Borrowing, the Administrative Agent may assume that such Lender has made such Loan available to the Administrative Agent on the date of such Borrowing in accordance with Section 2.02(b) and the Administrative Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount.  If and to the extent such Lender shall not have so made such Loan available to the Administrative Agent, and the Administrative Agent in such circumstances shall have made available funds to the Borrowers such amount, such Lender agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrowers until the date such amount is repaid to the Administrative Agent, at the Federal Funds Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing.  If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.  If such amount is not made available by such Lender to the Administrative Agent on the Business Day following the Borrowing date, the Administrative Agent shall notify the Borrowers of such failure to fund and, upon demand by the Administrative Agent, the Borrowers shall pay such amount to the Administrative Agent for the Administrative Agent’s Account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing.

 

Section 2.04                      Lending Offices.  The Loans made or deemed made by each Lender may be made from and maintained at such offices of such Lender (each a “Lending Office”) as such Lender may from time to time designate (whether or not such office is specified on Schedule 2).  A Lender shall not elect a Lending Office that, at the time of making such election, increases, by more than a de minimis amount, the amounts which would have been payable by any Borrower to such Lender under this Agreement in the absence of such election (including as a result of taxes imposed by any jurisdiction).  With respect to Loans made from and maintained at any Lender’s non-U.S. offices, the obligation of the Borrowers to repay such Loans shall nevertheless be to such Lender and shall, for all purposes of this Agreement (including for purposes of the definition of the term “Majority Lenders”) be deemed made or maintained by it, for the account of any such office.

 

Section 2.05                      Evidence of Indebtedness.  The Loans made by each Lender shall be evidenced by one or more loan accounts maintained by such Lender and the Administrative Agent in accordance with their usual practices.  The accounts or records maintained by the Administrative Agent and each Lender shall be prima facie evidence of the amount of Loans made by the Lenders to the Borrowers and the interest and payments thereon.  Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Loans.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of demonstrable error.

 

  

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ARTICLE III

 

INTEREST AND FEES

 

Section 3.01                      Interest.

 

(a)           Interest Rate; Payment in Cash and Capitalization.  The Borrowers shall pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount shall be paid in full, at a rate per annum equal at all times during each Interest Period for such Loan to the Eurodollar Rate for such Interest Period plus the Applicable Margin.  At their election (in their sole discretion), the Borrowers may pay interest (x) in cash, (y) by increasing the principal amount of the Loans by the amount of interest accrued since the previous interest payment date pursuant to Section 3.01(c); or (z) a combination of the foregoing.

 

(b)           Interest Periods.  Each Interest Period for each Loan shall be one-month, three-month, and six-month period as selected by the Borrower; provided, however, that no Interest Period shall extend beyond the Maturity Date.  The determination of Interest Periods shall be subject to the following provisions:

 

(i)           in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires;

 

(ii)           if any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Loan, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; and

 

(iii)           any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the ending calendar month of such Interest Period) shall end on the last Business Day of the ending calendar month of such Interest Period.

 

(c)           Interest Payment Dates.  Subject to Section 3.01(a) and Section 3.02, interest on the Loans shall be payable in arrears on the last day of each Interest Period (and every three months for Interest Periods of longer than three months) and at maturity, provided that if any prepayment is effected other than on a date set forth above, accrued interest on such Loan shall be due on such prepayment date as to the principal amount of such Loan prepaid.

 

(d)           Notice to the Borrowers and the Lenders.  Each determination by the Administrative Agent hereunder of a rate of interest and of any change therein shall be prima facie evidence thereof and shall be promptly notified by the Administrative Agent to the Borrowers and the Lenders.  Such notice shall set forth in reasonable detail the basis for any such determination or change.  The failure of the Administrative Agent to give any such notice specified in this subsection shall not affect any Borrower’s obligation to pay such interest.

 

  

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Section 3.02                      Default Rate of Interest.  Notwithstanding Section 3.01, in the event that any amount of principal on any Loan, or any amount of interest on any Loan or other amount payable hereunder or under the Loan Documents, is not paid in full when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, the Borrowers shall pay interest on such unpaid principal, interest or other amount, from the date such amount becomes due until the date such amount is paid in full, and after as well as before any entry of judgment to the extent permitted by law, at a rate per annum equal at all times to the rate of interest (if any) otherwise applicable to such Obligation, plus the Default Rate.  Additionally, during the continuance of any Event of Default, the Borrowers shall pay interest on the outstanding Obligations thereof, at a rate per annum equal to the rate of interest otherwise applicable to the Loans, plus the Default Rate.  Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand by the Majority Lenders.

 

Section 3.03                      Computations.  All computations of interest hereunder shall be made on the basis of a year of 360 days for the actual number of days occurring in the period for which such fee or interest is payable (which results in more interest, as applicable, being paid than if computed on the basis of a 365-day or 366-day year).  Notwithstanding the foregoing, if any Loan is repaid on the same day on which it is made, such day shall not be included in computing interest on such Loan.

 

Section 3.04                      Highest Lawful Rate.  Anything herein to the contrary notwithstanding, if during any period for which interest is computed hereunder, the applicable interest rate, together with all charges and other payments which are treated as interest under applicable law, as provided for herein or in any other Loan Document, would exceed the maximum rate of interest which may be charged, contracted for, reserved, received or collected by any Lender in connection with this Agreement under applicable law (the “Maximum Rate”), the Borrowers shall not be obligated to pay, and such Lender shall not be entitled to charge, collect, receive, reserve or take, interest in excess of the Maximum Rate, and during any such period the interest payable hereunder shall be limited to the Maximum Rate.

 

 

ARTICLE IV

 

REDUCTION OF COMMITMENTS;

 

REPAYMENT; PREPAYMENT

 

Section 4.01                      Extension of Maturity Date; Reduction or Termination of the Commitments.

 

(a)           Extension.  On the date (the “Scheduled Maturity Date”) set forth in clause (A) of the definition of “Tranche A Maturity Date”, such Scheduled Maturity Date shall automatically be extended for an additional one year period if:

 

(i)           on or within ten (10) Business Days preceding such Scheduled Maturity Date, the Borrowers deliver to the Administrative Agent, in form and substance reasonably satisfactory to it (A) evidence of the consent of the Guarantors and Texas Genco (and any Additional Grantors) to such extension, and (B) a certificate of the Borrowers dated as of the Scheduled Maturity Date signed by a Responsible Officer of each Borrower certifying (1) the resolutions adopted by each Borrower approving or consenting to such extension and (2) that, before and after giving effect to such extension, the representations and warranties contained in Article VIII and in the other Loan Documents shall be true and correct in all respects (with respect to representations and warranties that are qualified by materiality or Material Adverse Effect) or in all material respects (with respect to representations and warranties that are not so qualified) on and as of the Scheduled Maturity Date as though made on and as of such date, except for such representations and warranties that by their terms relate to a different date, in which case the Borrowers shall certify that such representations and warranties are true and correct (with respect to representations and warranties that are qualified by materiality or Material Adverse Effect) or in all material respects (with respect to representations and warranties that are not so qualified) as of such date (provided that the certification made pursuant to this clause (2) by bringdown of the representations and warranties contained in Section 8.16(a) shall be deemed a certification not of the financial statements identified in such Section 8.16(a), but of the financial statements most recently delivered pursuant to Sections 9.01(a)(i) and (ii)), and that no Default shall have occurred and be continuing; and

 

  

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(ii)           the certifications made by the Borrowers in clause (i)(B) above are in fact true and correct to the extent set forth herein;

 

(iii)           provided, however, that:

 

(A)            (1) in no event shall the Scheduled Maturity Date be extended past the earlier of (x) the fourth anniversary of the Closing Date, and (y) the FNTP Date.

 

(b)           Mandatory Termination.  The Tranche A Commitments shall terminate on the Tranche A Maturity Date.

 

Section 4.02                      Repayment of the Loans.  The Borrowers shall repay to the Lenders, in full, the aggregate principal amount of all outstanding Borrowings on the Tranche A Maturity Date therefor subject to any extensions pursuant to Section 4.01.

 

Section 4.03                      Prepayments.

 

(a)           Optional Prepayments.  Subject to Section 5.01, the Borrowers may, upon written notice to the Administrative Agent at least three Business Days prior to the date of any prepayment pursuant to this subsection, prepay the outstanding amount of the Loans in whole or ratably in part, without premium or penalty.  Partial prepayments shall be in the amount of $500,000 or a greater amount which is an integral multiple of $100,000 (or, if less, the entire principal amount of the Loans then outstanding).

 

(b)           Mandatory Prepayments.

 

(i)           If at any time the aggregate principal amount of the outstanding Tranche A Loans shall exceed the aggregate amount of all Lenders’ Tranche A Commitments, the Borrowers shall immediately prepay the Tranche A Loans in the amount of such excess.

 

(ii)           Following any incurrence by any Borrower or any Restricted Subsidiary thereof of Indebtedness described in clause (i) of the definition thereof (other than any such Indebtedness permitted under Section 10.01(a), (b), (d), (f), (g), (i), (j), (n) and (o)), the Borrowers shall, within five Business Days of receipt of the Net Cash Proceeds thereof, prepay the outstanding principal amount of the Loans in an amount equal to the lesser of (1) such Net Cash Proceeds and (2) the outstanding principal amount of the Loans then outstanding, all accrued interest thereon and all other Obligations then due and payable.  The provisions of this subsection shall not be deemed to be implied consent to any such issuance or incurrence otherwise prohibited by the terms and conditions of this Agreement.

 

  

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(c)           Notice; Application.  The notice given of any prepayment (a “Notice of Prepayment”) shall specify the date and amount of the prepayment and whether such prepayment is pursuant to Section 4.03(a) or Section 4.03(b).  Upon receipt of the Notice of Prepayment the Administrative Agent shall promptly notify each Lender thereof.  If the Notice of Prepayment is given, the Borrowers shall make such prepayment and the prepayment amount specified in such Notice of Prepayment shall be due and payable on the date specified therein, with accrued interest to such date on the amount prepaid and any amounts due pursuant to Section 5.01.

 

Section 4.04                      Discharge of Obligations by Conversion into Class A Membership Interests. **

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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(b)           Upon the conversion pursuant to Section 4.04(a), the Borrowers shall deliver to the Administrative Agent for distribution to the Lenders (in accordance with their Pro Rata Shares as appropriate pursuant to Section 6.01) the membership interest certificates evidencing such Conversion Class A Membership Interests in such amounts as appropriate pursuant to Section 4.04(a), and each Lender shall become a party to the NINA Operating Agreement (other than Section 5.6 thereof) as long as the NINA Operating Agreement shall have been amended in a manner reasonably satisfactory to the Lenders to provide the Lenders with treatment equal in all material respects to that of TANE as an equity holder thereunder (other than with respect to Section 5.6 of the NINA Operating Agreement) to the extent of the Lenders’ Membership Percentage (as defined in the NINA Operating Agreement) resulting from such conversion.

 

(c)           If on the Conversion Date pursuant to Section 4.04(a) the Conversion Tranche A Outstandings (after giving effect to the adjustments set forth in such Section) are less than the Obligations outstanding in respect of the Tranche A Loans, then the amount of such difference shall be payable in cash by the Borrowers.

 

(d)           Upon the delivery of the Conversion Class A Membership Interest to the Administrative Agent for distribution to the Lenders in the amounts and on the dates set forth in Section 4.04(a) in respect of Conversion Tranche A Outstandings and the making of any payments set forth in Section 4.04(c), the Obligations will have been paid and discharged up (including for purposes of the first paragraph of Article IX and Article X of this Agreement) to the amount of the Conversion Tranche A Outstandings (plus any interest added to principal pursuant to Section 3.01(a) which is included in the Conversion Tranche A Outstandings due to the adjustments set forth in Section 4.04(a)) and the payments made pursuant to Section 4.04(c).

 

Section 4.05                      Net Payments.  The Borrowers’ obligations to make payments of principal and interest on the Borrowings and of other amounts under the Loan Documents to the extent set forth therein, and the rights of the Administrative Agent and Lenders in and to such payments, shall be absolute and unconditional and shall not be subject to any abatement, reduction, set-off, defense, counterclaim or recoupment for any reason whatsoever, including without limitation abatements or reductions due to any present or future claims of any Borrower against the Co-Contractor, the Administrative Agent or any Lender under any Loan Document or otherwise, against any vendor of Equipment and Materials used or planned to be used, or against any other Person for whatever reason.  Except as otherwise expressly provided herein, this Agreement shall not terminate, nor shall the obligations of any Borrower be affected, by reason of (i) any defect in or damage to, or any loss or destruction of, any of the Equipment and Materials or otherwise from any cause whatsoever, (ii) any bankruptcy, insolvency, reorganization or other proceeding relating to, or any action taken by any trustee or receiver of, the Administrative Agent, any Lender or any other Person, or (iii) for any other cause, whether similar or dissimilar to the foregoing, any present or future law or regulation to the contrary notwithstanding, whether or not such cause shall give rise to a claim by any Borrower against any Lender or other Person under the EPC Contract, Pre-FNTP Task Order (as defined in the EPC Contract), or otherwise, it being the express intention of the parties hereto that all amounts payable by the Borrowers under the Loan Documents to the extent set forth therein shall be, and continue to be, payable in all events unless the obligation to pay shall be terminated pursuant to the express provisions of this Agreement or such other applicable Loan Document.  All payments made by the Borrowers hereunder or under any other Loan Document as required hereby or thereby shall be final, and the Borrowers shall not seek to recover any such payment or any part thereof for any reason whatsoever.  Nothing in this Agreement, including the preceding sentence, shall, however, release any claim any Borrower may have against the Co-Contractor (and any Person providing credit support for the Co-Contractor’s obligations), whether in connection with the EPC Contract, Pre-FNTP Task Order (as defined in the EPC Contract), or otherwise. If for any reason whatsoever this Agreement shall be terminated in whole or in part by operation of law or otherwise (other than by the written agreement of the Lenders), the Borrowers shall nonetheless, to the extent permitted by applicable law, pay to the Administrative Agent, on behalf of Lenders, an amount equal to each payment due and payable by the Borrowers hereunder at the time and in the manner that such payment would have become due and payable under the terms of this Agreement if it had not been terminated in whole or in part.

 

  

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ARTICLE V

 

YIELD PROTECTION AND ILLEGALITY

 

 

 

 

Section 5.01                      Compensation for Losses.  In addition to such amounts as are required to be paid by any Borrower pursuant to Section 5.02, the Borrowers shall compensate each Lender, promptly upon receipt of such Lender’s written request made to the Borrowers (with a copy to the Administrative Agent), for all actually incurred losses, costs and expenses (including any loss or expense incurred by such Lender in obtaining, liquidating or re-employing deposits or other funds to fund or maintain its Loans), if any, which such Lender sustains: (i) if the Borrowers repay or prepay any Loan on a date other than the last day of an Interest Period for such Loan (whether as a result of an optional prepayment, mandatory prepayment, a payment as a result of acceleration or otherwise); (ii) if the Borrowers fail to borrow any Loan after giving a Notice of Borrowing; (iii) if the Borrowers fail to prepay any Loan after giving a Notice of Prepayment; or (iv) if any Loan is assigned pursuant to Section 5.05 other than on the last day of an Interest Period for such Loan.

 

Section 5.02                      Regulatory Changes.

 

(a)           Increased Costs.  If after the date hereof, the adoption of, or any change in, any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof (a “Regulatory Change”), or compliance by any Lender (other than Shaw) or such Lender’s Lending Office with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including any such requirement imposed by the FRB, but excluding with respect to any Loan any such requirement included in the calculation of the Eurodollar Rate) against assets of, deposits with or for the account of, or credit extended by, any Lender’s Lending Office or shall impose on any Lender (or its Lending Office) or on the interbank eurodollar market any other condition affecting its Loans or its obligation to make Loans, and the result of any of the foregoing is to increase the cost to such Lender (or its Lending Office) of making, funding or maintaining any Loan, or to reduce the amount of any sum received or receivable by such Lender (or its Lending Office) under this Agreement with respect thereto, by an amount deemed by such Lender to be material, then from time to time, within 30 days after demand by such Lender (with a copy to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as shall compensate such Lender for such increased cost or reduction.

 

  

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(b)           Capital Requirements.  If any Lender (other than Shaw) shall have determined that any Regulatory Change regarding capital adequacy, or compliance by such Lender (or any corporation controlling such Lender) with any request, guideline or directive regarding capital adequacy (whether or not having the force of law) of any Governmental Authority, has or shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of such Lender’s obligations hereunder to a level below that which such Lender or such corporation would have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy), by an amount deemed by such Lender to be material, then from time to time, within 30 days after demand by such Lender (with a copy to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as shall compensate such Lender for such reduction.

 

(c)           Requests.  Any such request for compensation by a Lender under this Section 5.02 shall be in writing and set forth in reasonable detail the basis of calculation thereof and shall be prima facie evidence of the amount of such compensation.  In determining the amount of such compensation, such Lender may use any reasonable averaging and attribution methods generally used in the marketplace.

 

Section 5.03                      Illegality.  If any Lender shall determine that it has become unlawful, as a result of any Regulatory Change, for such Lender to make or maintain Loans as contemplated by this Agreement, such Lender shall promptly give notice of such determination to the Borrowers (through the Administrative Agent), and the obligation of such Lender to make Loans shall be suspended until such Lender gives notice that the circumstances causing such suspension no longer exist.  Any such determination shall be prima facie evidence thereof.  Upon receipt of such notice, the Borrowers shall, within thirty (30) days of demand from such Lender (with a copy to the Administrative Agent), prepay all Loans of such Lender, unless such Lender may not lawfully continue to maintain such Loans, in which case the relevant Loans shall be prepaid within five (5) Business Days of such notice.  Upon any such prepayment, the Borrower shall also pay accrued interest on the amount so prepaid.

 

Section 5.04                      Obligation to Mitigate.  Each Lender (other than Shaw) agrees that as promptly as practicable after it becomes aware of the occurrence of an event that would entitle it to give notice pursuant to Section 5.02(a), 5.02(b) or 5.03, and in any event if so requested by any Borrower, such Lender shall use commercially reasonable efforts to make, fund or maintain its affected Loans through another Lending Office if as a result thereof the increased costs would be avoided or reduced by an amount reasonably determined by such Lender to be material, the making, funding or maintaining of such Loans through such other Lending Office would not in any material respect be disadvantageous to such Lender or contrary to such Lender’s normal generally applied banking practices.

 

Section 5.05                      Substitution of Lenders.  Upon the receipt by any Borrower from any Lender (an “Affected Lender”) of a request for compensation under Section 5.02 or a notice under Section 5.03, the Borrowers may (i) request one or more of the other Lenders to acquire and assume all or part of such Affected Lender’s Loans and Commitment(s), or (ii) designate a replacement lending institution (which shall be an Eligible Assignee) to acquire and assume all or a ratable part of such Affected Lender’s Loans and Commitment(s) (a “Replacement Lender”); provided, however, that the Borrowers shall be liable for the payment promptly upon demand of all costs and other amounts arising under Section 5.01 that result from the acquisition of any Affected Lender’s Loan and/or Commitment (or any portion thereof) by a Lender or Replacement Lender, as the case may be, on a date other than the last day of the applicable Interest Period with respect to any Loan then outstanding.  Any such designation of a Replacement Lender under the foregoing clause (ii) shall be effected in accordance with, and subject to the terms and conditions of, the assignment provisions contained in Section 13.10 (with the assignment fee to be paid by the Borrowers in such instance), and shall in any event be subject to the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld).

 

  

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ARTICLE VI

 

PAYMENTS

 

Section 6.01                      Pro Rata Treatment.  Except as otherwise provided in this Agreement, each Borrowing hereunder, each Commitment reduction, each payment (including each prepayment and each payment in Conversion Class A Membership Interests pursuant to Section 4.04(a))by any Borrower on account of the principal of and interest on the Loans shall be made ratably in accordance with the respective Pro Rata Shares of the Lenders (other than in respect of prepayments made as a result of Article V above).

 

Section 6.02                      Payments.

 

(a)           Payments to the Administrative Agent.  Subject to Section 4.04(a) of this Agreement, the Borrowers shall make each payment under the Loan Documents, unconditionally in full without set-off, counterclaim or other defense, not later than 1:00 P.M. (New York time) on the day when due to the Administrative Agent, and (except with respect to interest paid in kind pursuant to Section 3.01(a)) in Dollars and in same day or immediately available funds, to the Administrative Agent’s Account.

 

(b)           Payments to Lenders.  Subject to Section 4.04 of this Agreement, the Administrative Agent shall promptly distribute like funds relating to the payment of principal or interest or any other amounts payable to the Lenders, ratably (except as a result of the operation of Article V) to the Lenders in accordance with their Pro Rata Shares.

 

(c)           Application.  After the exercise of remedies provided for in Section 11.02 (or after the Loans have automatically become immediately due and payable as set forth in Section 11.02), any amounts received on account of the Obligations shall be applied in the following order: (A) first, to any fees, costs, expenses and other amounts due the Administrative Agent (including interest thereon, if any); (B) second, to any fees, costs, expenses and other amounts due the Lenders (excluding principal and interest); (C) third, to accrued and unpaid interest on any principal and other Obligations due the Lenders; and (D) fourth, to principal due the Lenders.

 

  

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(d)           Extension.  Whenever any payment hereunder shall be stated to be due, or whenever any Interest Payment Date or any other due date specified for the discharge of any Obligation hereunder would otherwise occur, on a day other than a Business Day, then, except as otherwise provided herein, such payment shall be made, and such Interest Payment Date or other Obligation shall be due, 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.

 

Section 6.03                      [Reserved]

 

(a)

 

Section 6.04                      Non-Receipt of Funds.  Unless the Administrative Agent shall have received notice from any Borrower prior to the date on which any payment is due to any of the Lenders hereunder that the Borrowers shall not make such payment in full, the Administrative Agent may assume that the Borrowers have made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent the Borrowers shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate.

 

Section 6.05                      Sharing of Payments.  If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the principal of or interest on any Loans made by it (other than pursuant to a provision hereof providing for non-pro rata treatment, including Article V hereof) in excess of its Pro Rata Share of payments on account of the Loans obtained by all the Lenders, such Lender shall forthwith advise the Administrative Agent of the receipt of such payment, and within five Business Days of such receipt purchase (for cash at face value) from the other Lenders (through the Administrative Agent), without recourse, such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them in accordance with the respective Pro Rata Shares of the Lenders; provided, however, that if all or any portion of such excess payment is thereafter recovered by or on behalf of any Borrower from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.  The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 6.05 may exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation.  No documentation other than notices and the like referred to in this Section 6.05 shall be required to implement the terms of this Section 6.05.

 

  

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ARTICLE VII

 

CONDITIONS PRECEDENT

 

Section 7.01                      Conditions Precedent to the Initial Loans.  The obligation of each Lender to make its initial Loan as part of the initial Borrowing shall be subject to the satisfaction of each of the following conditions precedent on or before the date thereof:

 

(a)           Fees and Expenses.  The Borrowers shall have paid to the Administrative Agent (unless waived by the Administrative Agent) all invoiced costs and expenses, if any, then due in accordance with Section 13.04(a).

 

(b)           Material Adverse Effect.  On and as of the date of such Borrowing, there shall have occurred no Material Adverse Effect since December 31, 2009.

 

(c)           Loan Documents.  The Administrative Agent shall have received the following Loan Documents, each in form and substance reasonably satisfactory to it and signed by each party thereto:

 

(i)           this Agreement;

 

(ii)           the Intercreditor Agreement in substantially the form of Exhibit B hereto;

 

(iii)           the Texas Genco Pledge Agreement in substantially the form of Exhibit C hereto;

 

(iv)           the Borrower Security Agreement in substantially the form of Exhibit E hereto;

 

(v)           except as otherwise agreed upon by the Administrative Agent in writing, the Administrative Agent shall hold a perfected first priority security interest for the benefit of the Administrative Agent and the Lenders on the Collateral (including with respect to (A) deposit account control agreements with respect to each deposit account comprising Collateral of each Borrower and (B) securities account control agreements with respect to each securities account comprising Collateral of each Borrower; and intellectual property security agreements with respect to patents, trademarks, copyrights or applications therefor filed with the United States Patent and Trademark Office or the United States Copyright Office (as applicable) that constitute part of the Collateral as of the date of the initial Borrowing (if any).

 

(d)           Documents and Actions Relating to Collateral.  The Administrative Agent  shall have received the following, in form and substance reasonably satisfactory to it:

 

(i)           evidence that all filings, registrations and recordings have been made in the appropriate governmental offices, and all other action has been taken, which shall be necessary to create, in favor of the Administrative Agent or the Administrative Agent, as applicable (for the benefit of the Lenders and Administrative Agent), a perfected first priority Lien on the Collateral (subject to Permitted Liens), including evidence of the filing of completed UCC-1 financing statements in the appropriate governmental offices;

 

  

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(ii)           the results, dated as of a recent date prior to the date of such initial Borrowing, of searches conducted (A) in the UCC filing records in the office of the Secretary of State of each State where a Credit Party is organized and in each of the governmental offices in each jurisdiction in which a material portion of fixture Collateral (including that which will be part of the Project) is or is intended to be located, and (B) of the public records maintained by the U.S. Patent and Trademark Office and the U.S. Copyright Office with respect to all United States patents and patent applications and all United States registered trademarks and trademark applications owned by each Borrower or all copyrights and copyright applications owned by each Borrower (as applicable), which in each case shall have revealed no Liens with respect to any of the Collateral, except in each case for Permitted Liens or Liens as to which the Administrative Agent shall have received (and is authorized to file) termination statements or documents (Form UCC-3 or such other termination statements or documents as shall be required by applicable law) fully executed for filing; and

 

(iii)           copies of the certificates or instruments representing any pledged Collateral, together with copies of undated stock powers or endorsements, as the case may be, executed in blank, with respect thereto.

 

(e)           Additional Closing Documents and Actions.  The Administrative Agent shall have received the following, in form and substance reasonably satisfactory to it:

 

(i)           except as otherwise agreed upon by the Administrative Agent in writing, certificate of insurance and endorsements, naming the Administrative Agent as loss payee and naming the Administrative Agent as an additional insured, in respect of the insurance policies (other than business interruption insurance, workers’ compensation insurance and any directors and officers insurance and other non-assignable insurance) required under this Agreement and Collateral Documents;

 

(ii)           a certificate of a Responsible Officer of each Borrower, dated the date of the initial Borrowing, certifying that: (A) attached thereto is evidence that all authorizations or approvals of any Governmental Authority and approvals or consents of any other Person, required in connection with the execution, delivery and performance of the Loan Documents have been obtained (if any); (B) the representations and warranties contained in Article VIII and in the other Loan Documents are true and correct in all respects (with respect to representations and warranties that are qualified by materiality or Material Adverse Effect) or in all material respects (with respect to representations and warranties that are not so qualified) on and as of the date of such certificate as though made on and as of such date, and (C) on and as of the date of such Borrowing, no Default shall have occurred and be continuing or shall result from such Borrowing;

 

(iii)           the initial Business Plan and copies of the financial statements referred to in Section 8.16(a);

 

(iv)           certificates as to good standing from the Secretary of State of (A) each Credit Party’s jurisdiction of organization, (B) the jurisdiction in which the chief executive office or principal place of business of each Credit Party is situated (if different from its jurisdiction of organization), and (C) each other jurisdiction in which the failure of any Credit Party to be in good standing would result in a Material Adverse Effect, each dated as of a recent date prior to the date hereof and prior to the date of the initial Borrowing; and

 

  

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(v)           a certificate of the Secretary or Assistant Secretary (or, if no such officer has been appointed, another officer) of each Credit Party, dated the date hereof, and a certificate of the Secretary or Assistant Secretary of each Credit Party, dated the date of such initial Borrowing, certifying (A) copies of the Organization Documents of such Credit Party, (B) the resolutions of the Board of Directors of such Credit Party authorizing the execution, delivery and performance of the Loan Documents and (C) the incumbency, authority and signatures of each officer of such Credit Party authorized to execute and deliver the Loan Documents and act with respect thereto.

 

(f)           Legal Opinions.  The Administrative Agent shall have received an opinion of counsel to the Credit Parties, dated the date of such Borrowing and addressed to the Administrative Agent and the Lenders in form and substance reasonably satisfactory to the Administrative Agent and the Lenders.

 

(g)           DOE Filings.  The Borrowers shall have delivered to the Administrative Agent copies of the DOE Application and material filings related thereto. 

 

(h)           Ratings Information.  The Borrowers shall have delivered to the Administrative Agent copies of all material information, if any, submitted to credit ratings agencies, financial institutions, and insurers in conjunction with their customary due diligence.

 

Section 7.02                      Conditions Precedent to All Loans.  The obligation of each Lender to make a Loan on the occasion of each Borrowing shall be subject to the satisfaction of each of the following conditions precedent:

 

(a)           Notice.  The Borrowers shall have given the Notice of Borrowing as provided in Section 2.02(a).

 

(b)           Representations and Warranties; No Default.  On the date of such Borrowing, both immediately before and immediately after giving effect thereto and to the application of proceeds therefrom:  (i) the representations and warranties contained in Article VIII and in the other Loan Documents shall be true and correct in all respects (with respect to representations and warranties that are qualified by materiality or Material Adverse Effect) or in all material respects (with respect to representations and warranties that are not so qualified) on and as of the date of such Borrowing as though made on and as of such date, except for such representations and warranties that by their terms relate to a different date, in which case such representations and warranties shall be true and correct in all respects (with respect to representations and warranties that are qualified by materiality or Material Adverse Effect) or in all material respects (with respect to representations and warranties that are not so qualified) as of such date (provided that for purposes of this clause (i) for periods after the initial delivery under Sections 9.01(a)(i) and (ii); the representations and warranties contained in Section 8.16(a) shall be deemed to refer not to the financial statements identified in such Section 8.16(a), but to the financial statements most recently delivered pursuant to Sections 9.01(a)(i) and (ii)); and (ii) no Default shall have occurred and be continuing or shall result from such Borrowing.  The giving of any Notice of Borrowing shall each be deemed a certification to Administrative Agent and the Lenders that on and as of the date of such Borrowing such statements are true.

 

  

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(c)           EPC Contract.  The EPC Contract shall be in full force and effect.

 

(d)           Tranche A Maturity Date. The Tranche A Maturity Date shall not have occurred.

 

(e)           Additional Documents. The Administrative Agent shall have received, in form and substance reasonably satisfactory to it, such additional approvals, documents and other information as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request.

 

ARTICLE VIII

 

REPRESENTATIONS AND WARRANTIES

 

The Borrowers represent and warrant to each Lender and the Administrative Agent that:

 

Section 8.01                      Organization and Powers.  Each Credit Party (i) is duly organized or formed, as the case may be, validly existing and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the laws of the jurisdiction of its incorporation or organization, (ii) is qualified to do business and is in good standing in each jurisdiction in which the failure so to qualify or be in good standing would result in a Material Adverse Effect, (iii) has all requisite power and authority to own its assets and carry on its business, except where the failure so to have would not reasonably be expected to have a Material Adverse Effect, and (iv) has all requisite power and authority to execute, deliver and perform its obligations under the Loan Documents to which it is a party.

 

Section 8.02                      Authorization; No Conflict.  The execution, delivery and performance by each Credit Party of the Loan Documents to which such Person is a party have been duly authorized by all necessary action of such Credit Party and do not and will not (i) subject to any action, consent or approval that may be required under NINA’s Operating Agreement or any other operating agreement of any Borrower (which actions, consents or approvals have been obtained and are in full force and effect), contravene the terms of the Organization Documents of such Credit Party, (ii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which any Credit Party is a party or by which any Credit Party or its properties may be bound or affected where such breach or default would not reasonably be expected to result in a Material Adverse Effect, or result in a breach of, or constitute a default under, any material indenture or credit agreement to which NRG is a party (including the NRG Debt Documents) (iii) subject to obtaining any required approvals as set forth in Section 8.04, violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree or the like binding on or affecting such Credit Party where such violation would reasonably be expected to result in a material adverse effect on the interests of the Lenders, taken as a whole, or (iv) except as contemplated by this Agreement, result in, or require, the creation or imposition of any Lien upon or with respect to (A) any of the properties of any Borrower or Guarantor (other than Permitted Liens) or (B) any of the Collateral pledged under the Texas Genco Pledge Agreement (other than Permitted Liens) or pledged by any Additional Grantor.

 

  

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Section 8.03                      Binding Obligation.  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Credit Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws now or hereafter in effect relating to creditors’ rights generally and (including with respect to specific performance), to general principles of equity, regardless of whether considered in a proceeding in equity or at law, and to the discretion of the court before which any proceeding therefor may be brought.

 

Section 8.04                      Consents.  No authorization, consent, approval, license, exemption of, or filing or registration with, any Governmental Authority, or approval or consent of any other Person, is required for the due execution, delivery or performance by any Credit Party of any of the Loan Documents, except for (i) recordings or filings or other action in connection with the perfection of the Liens on the Collateral in favor of the Administrative Agent (for the benefit of the Lenders and Administrative Agent), (ii) following the issuance of any Specific License issued by the NRC to any Borrower or any Subsidiary thereof, any Specific License or authorization for direct or indirect transfer of control of a Specific License that may be required by the NRC for the exercise of any remedy provided for under the Security Documents, (iii) following the generation or transmission of electric energy by any Borrower or any Subsidiary thereof, applicable state or federal regulatory approvals that may be required for the exercise of certain remedies provided for under the Security Documents, (iv) any actions, consents, approvals, registrations or filings where the failure to obtain or make the same would not reasonably be expected to have a material adverse effect on the interests of the Lenders, taken as a whole, or (v) such as have been made or granted and are in full force and effect.

 

Section 8.05                      Title to Properties; Liens.  Each Borrower and each Restricted Subsidiary thereof (and Texas Genco, only with respect to the assets pledged pursuant to the Texas Genco Pledge Agreement) has title to, or valid and subsisting leasehold or license interests in, its material properties and assets (except for intellectual property rights, for which representations and warranties under this Agreement are addressed exclusively in Section 8.13 and Section 8.14), including all property forming a part of the Collateral, and there is no Lien upon any of such properties or assets, including any of the Collateral, except for Permitted Liens.  All real property in which as of the date hereof any Borrower or Restricted Subsidiary thereof has an ownership interest is listed on Schedule 8.05.

 

Section 8.06                      Litigation.  Except as set forth in Schedule 8.06, there are no actions, suits, investigations or proceedings pending or, to the best of any Borrower’s knowledge, threatened in writing against or affecting any Credit Party or the properties of any Credit Party before any Governmental Authority or arbitrator that involve any Loan Document or that, as to which there is a reasonable possibility of an adverse determination, and that if determined adversely to such Credit Party, would result in a Material Adverse Effect.  To the knowledge of any credit party, no injunction, write, temporary restraining order of any nature has been issued and is outstanding any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement, any other Loan Documents, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided.

 

  

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Section 8.07                      Compliance with Environmental Laws.  Each Borrower and each Subsidiary thereof is in compliance with all Environmental Laws, including possession of all permits required by Environmental Laws, whether in connection with the ownership, use, maintenance or operation of their respective properties or the conduct of any business thereon, or otherwise, except for such noncompliance that would not result in a Material Adverse Effect.  Neither any Borrower, any of its Subsidiaries nor to the best of each Borrower’s knowledge, any previous owner, tenant, occupant, user or operator of their respective businesses, operations or properties, or any present tenant or other present occupant, user or operator of their respective businesses, operations or properties has used, generated, manufactured, installed, treated, released, stored or disposed of any Hazardous Substances on, under, or at their respective properties, except in each case for such noncompliance that would not result in a Material Adverse Effect.  There are no actions, suits, claims, notices of violation, hearings, investigations or proceedings pending or, to the best of each Borrower’s knowledge, threatened in writing against or affecting any Borrower or any Subsidiary thereof or with respect to the ownership, use, maintenance and operation of their respective properties, relating to Environmental Laws or Hazardous Substances, except as would not result in a Material Adverse Effect.

 

Section 8.08                      Investment Company Status.  No Borrower or Subsidiary thereof is an “investment company,” or a company “controlled” by an “investment company,” in each case required to be registered as such pursuant to, and within the meaning of the Investment Company Act of 1940.

 

Section 8.09                      ERISA.  Except as would not result in a Material Adverse Effect:

 

(a)           each Credit Party is in compliance in all material respects with all applicable provisions and requirements of ERISA with respect to each Pension Plan;

 

(b)           no ERISA Event has occurred; and

 

(c)           all liabilities under each Plan are (i) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing the Plan, (ii) insured with a reputable insurance company, (iii) provided for or recognized in the financial statements most recently delivered to the Administrative Agent and the Lenders pursuant hereto or (iv) estimated in the formal notes to the financial statements most recently delivered to the Administrative Agent and the Lenders pursuant hereto.

 

Section 8.10                      Subsidiaries and Other Equity Investments.

 

(a)           Each Subsidiary of each Borrower on the date of this Agreement is listed in Schedule 8.10.  Except as set forth in such Schedule, on the date of this Agreement no Borrower holds, directly or indirectly, any equity interest in any other Person.

 

(b)           Schedule 8.10 sets forth as of the date hereof (i) the jurisdiction of organization of each Subsidiary of each Borrower, (ii) the nature of the legal organization of each such Subsidiary, (iii) the number and percentage of the capital stock or other equity interests of each such Subsidiary that any Borrower owns, and (iv) any other Persons directly owning any interest in any such Subsidiary and the number and percentage of the capital stock or other equity interests of such Subsidiary owned by such other Persons.  All of the issued and outstanding capital stock or other equity interests of each such Subsidiary have been duly authorized and are validly issued and are fully paid and non-assessable.  No securities convertible into or exchangeable for any shares of capital stock or other ownership interests of any Borrower’s Restricted Subsidiaries, or any options, warrants or other commitments entitling any Person to purchase or otherwise acquire any shares of capital stock or other ownership interests of such Subsidiaries, are issued and outstanding, except in each case as set forth in the TEPCO Agreements.

 

  

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Section 8.11                      Margin Regulations.  The proceeds of the Loans shall be used solely for Permitted Use of Proceeds and within the limitations set forth in Section 2.02(a).  No Borrower an no Restricted Subsidiary of any Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying “margin stock” (within the meaning of Regulation U of the FRB) in contravention of Regulation U of the FRB.

 

Section 8.12                      Taxes.  Each Borrower and each Subsidiary thereof have duly filed all material tax and information returns required to be filed, and have paid or caused to be paid all taxes, fees, assessments and other governmental charges or levies that have become due and payable, except to the extent such taxes, fees, assessments or other charges or levies are being contested in good faith and are adequately reserved against in accordance with GAAP.  There is no proposed tax assessment against any Borrower or any Subsidiary that would, if made, have a Material Adverse Effect or cause any Borrower or Subsidiary thereof not to be Solvent.  No Borrower and no Subsidiary thereof is party to any tax sharing agreement except as consented by the Majority Lenders.

 

Section 8.13                      Patents and Other Rights.  To the best of each Borrower’s knowledge, in respect of all material patents, trademarks, trade names, service marks, copyrights and all rights with respect thereto of the Borrowers and the Restricted Subsidiaries thereof, no Borrower and no Restricted Subsidiary thereof is in violation of any rights of others with respect to the use of the foregoing, except for such violation that would not reasonably be expected to have a Material Adverse Effect.

 

Section 8.14                      Intellectual Property.  Each Borrower and each of its Restricted Subsidiaries owns, or is licensed or has rights to use, all Intellectual Property used by it except in each case as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  To the best of each Borrower’s knowledge, no other Person has contested any right, title or interest of any Borrower or any Restricted Subsidiary of any Borrower in, or relating to, any Intellectual Property, other than as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 8.15                      Insurance.  The properties of each Borrower and each Subsidiary thereof are insured, with financially sound and reputable insurance companies not Affiliates of any Borrower (except to the extent that such companies cease to be financially sound or reputable and the Borrowers are otherwise in compliance with Section 9.04), in such amounts, with such deductibles and covering such risks as is customarily carried by companies engaged in similar businesses and owning similar properties in the localities where such Borrower or such Subsidiary operates.

 

  

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Section 8.16                      Financial Statements and Projections.

 

(a)           (i) The consolidated balance sheets of the Borrower and its Subsidiaries and the related consolidated statements of income, stockholders’ equity and cash flow, as of December 31, 2009, audited by KPMG LLP, independent public accountants, copies of which have been furnished to the Administrative Agent, have been prepared in accordance with GAAP except to the extent provided in the notes to said financial statements, and present fairly in all material respects the consolidated financial condition of the Borrowers and its Subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended and (ii) the unaudited consolidated balance sheet of NINA and its Subsidiaries as of September 30, 2010, and the related consolidated statements of income, shareholders’ equity and cash flows, for the applicable fiscal period then ended, are complete and correct in all material respects and fairly present the financial condition of NINA and its Subsidiaries as of such dates and the results of operations of NINA and its Subsidiaries for the periods covered by such statements, in each case in accordance with GAAP consistently applied, subject, in the case of financial statements other than annual financial statements, to year-end adjustments and the absence of notes.

 

(b)           Since December 31, 2009, there has been no Material Adverse Effect.

 

Section 8.17                      Compliance with Laws, Etc.  Each Borrower and each Subsidiary thereof is in compliance with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority, and all orders, writs, injunctions and decrees applicable to it or to its properties, except in each case for such noncompliance that would not result in a Material Adverse Effect or a material adverse effect on the interests of the Lenders taken as a whole.

 

Section 8.18                      Solvency.  As of the date hereof, the Credit Parties, taken as a whole, are Solvent.  The Borrowers, taken as a whole, are Solvent.

 

Section 8.19                      No Default.  No Default of Event of Default exists or would result immediately after the incurrence of any Obligations by any Credit Party or the grant or perfection of the Administrative Agent’s Liens on the Collateral or the consummation of this Agreement.

 

Section 8.20                      Collateral.  Each Security Agreement executed by all parties thereto (i) creates in favor of the Administrative Agent (for the benefit of the Lenders and Administrative Agent) a legal, valid, binding and (subject, with respect to perfection against third parties, to the following sentence) enforceable security interest (provided that perfection against third parties is addressed in the following sentence) in the Collateral described therein in which the applicable Credit Party now has rights and proceeds thereof, and (ii) will create in favor of the Administrative Agent (for the benefit of the Lenders and Administrative Agent) a legal, valid, binding and enforceable security interest (provided that perfection against third parties is addressed in the following sentence) in the Collateral described therein in which the applicable Credit Party hereafter acquires rights upon such Credit Party’s acquisition of rights therein, in each case, subject to applicable insolvency, bankruptcy, reorganization, moratorium, fraudulent transfer and other laws now or hereafter in effect generally affecting rights of creditors (including with respect to specific performance) and principles of equity and to the discretion of a court before which any procedure may be brought, whether considered in a proceeding in equity or in law and to the discretion of the court before which any proceeding therefore may be brought.  Such security interest will constitute, upon execution thereof by all parties thereto (or, as applicable, upon the applicable Credit Party’s acquisition of rights in the Collateral subject thereto), a fully perfected Lien on all right, title and interest of the Credit Parties in such Collateral and proceeds thereof, as security for the Obligations hereunder, in each case prior and superior to the rights of any other Person (except, in the case of all Collateral, with respect to Permitted Liens to the extent set forth above); provided, however, that such security interest shall not be perfected until (A) in the case of the certificated securities, the time at which such certificated securities are delivered to the Administrative Agent or its designee or agent or financing statements in appropriate form are filed in the appropriate offices, (B) in the case of cash, the time at which the Administrative Agent or its designee or agent acquires possession thereof, (C) in the case of Deposit Accounts, Securities Accounts, Commodities Accounts and letter-of-credit rights not constituting Supporting Obligations, the time at which the Administrative Agent or its designee or agent acquires “control” thereof, as described in Section 9-104, 9-106 and 9-107 (as applicable) of the UCC, (D) in the case of intellectual property, the time at which each intellectual property security agreement is filed in the United States Patent and Trademark Office or the United States Copyright Office, respectively, together with financing statements in appropriate form filed in the appropriate offices, (E) in the case of all other personal property Collateral described therein, the time at which financing statements in appropriate form are filed in the appropriate offices, and (F) in the case of all real property Collateral, the time at which the applicable deed of trust or mortgage is recorded in the appropriate filing office therefor.  Nothing in this Agreement or any Security Agreement shall be given effect as requiring that any Borrower make any filing, registration or undertake any other action to create or perfect any security interest under the laws of any jurisdiction other than the United States, any state thereof or the District of Columbia.

 

  

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Section 8.21                      Burdensome Agreements.  No Borrower or Restricted Subsidiary thereof is party to any contractual obligation (other than any Loan Documents, the EPC Contract, the Existing TANE Credit Agreement, the operating agreement of any Borrower as each may be amended from time to time and NINA’s Operating Agreement and the TEPCO Agreements), that (i) limits the ability (A) of any Restricted Subsidiary of any Borrower to make Restricted Payments to such Borrower or any Guarantor or to otherwise transfer property to such Borrower or any Guarantor, (B) of any Restricted Subsidiary of any Borrower to incur any Guarantee Obligation with respect to the Indebtedness of such Borrower or (C) of any Borrower or any Restricted Subsidiary thereof to create, incur, assume or suffer to exist Liens on property of such Person, except as permitted in Section 10.02 hereof or (ii) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

 

ARTICLE IX

 

AFFIRMATIVE COVENANTS

 

So long as any of the Obligations (other than indemnities and other contingent Obligations not then due and payable, unless a written demand or invoice shall have been delivered to the applicable Borrower or Guarantor with respect thereto) shall remain unpaid or any Lender shall have any Commitment, the Borrowers agree that:

 

Section 9.01                      Reporting Covenants.

 

  

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(a)           Financial Statements.  The Borrowers shall furnish (or cause to be furnished) to the Administrative Agent:

 

(i)           as soon as available and in any event within 45 days after the end of the first three fiscal quarters of each fiscal year (beginning with such fiscal quarter ending March 31, 2011), the consolidated balance sheet of NINA and its Subsidiaries as of the end of such quarter, and the related consolidated statements of income, shareholders’ equity and cash flows of NINA and its Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, prepared in accordance with GAAP consistently applied, all in reasonable detail and setting forth in comparative form the figures for the corresponding period in the preceding fiscal year, together with a certificate of a Responsible Officer of NINA stating that such financial statements fairly present the financial condition of NINA and its Subsidiaries as at such date and the results of operations of NINA and its Subsidiaries for the period ended on such date and have been prepared in accordance with GAAP consistently applied, subject to changes resulting from year-end audit adjustments and except for the absence of notes;

 

(ii)           as soon as available and in any event within 90 days after the end of each fiscal year, the consolidated balance sheet of NINA and its Subsidiaries as of the end of such fiscal year, and the related consolidated statements of income, shareholders’ equity and cash flows of NINA and its Subsidiaries for such fiscal year, prepared in accordance with GAAP consistently applied, all in reasonable detail and setting forth in comparative form the figures for the previous fiscal year, accompanied by a report and opinion thereon of KPMG or other independent certified public accountant reasonably acceptable to the Administrative Agent;

 

(iii)           as soon as available and in any event on or before the last calendar day of each month, a written report prepared by a Responsible Officer of NINA (A) covering the immediately preceding calendar month and reporting on any material developments in respect of the ongoing business and operations of NINA and its Subsidiaries occurring in such immediately preceding calendar month and (B) comparing actual general and administrative expenses for such immediately preceding calendar month to budgeted general and administrative expenses for such month;

 

(iv)           promptly upon receipt thereof, copies of all material written reports submitted to any Borrower by the Borrowers’ independent certified public accountants in connection with each annual, interim or special audit examination of NINA and its Subsidiaries made by such accountants, including the “management letter” submitted by such accountants to any Borrower in connection with their annual audit;

 

(v)           as soon as available and in any event not less than 30 days prior to the start of each fiscal year, the Business Plan for such fiscal year in a form reasonably satisfactory to the Administrative Agent (it being understood and agreed that a Business Plan in substantially the form of Business Plan delivered on or prior to the date hereof is acceptable);

 

(vi)           promptly after delivery thereof to the applicable recipient, copies of any material information submitted in writing by any Borrower to any Rating Agency, financing institution or insurer as part of such Person’s due diligence process; and

 

  

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(vii)           At the Majority Lenders’ reasonable request, a reasonably detailed report regarding the progress of due diligence discussions and negotiations with DOE or any Rating Agency and any prospective financing institution, in each case, with respect to material transactions with such institution with respect to any financing arrangement (but excluding any fee letters);

 

(b)           Additional Information.  The Borrowers shall furnish to the Administrative Agent:

 

(i)           promptly after any Borrower has knowledge or becomes aware thereof, notice of the occurrence (or written threat) of any Event of Loss with respect to its property or assets aggregating $5,000,000 (or its equivalent in another currency) or more as reasonably determined by the Borrower;

 

(ii)           promptly after any Borrower has knowledge or becomes aware thereof, notice of the occurrence or existence of any Default;

 

(iii)           prompt written notice of (A) any proposed acquisition of stock, assets or property by any Borrower or any Subsidiary thereof that would reasonably be expected to result in a material environmental liability under Environmental Laws and (B) any unpermitted spillage, leakage, discharge, disposal, leaching, migration or release of any Hazardous Substances required to be reported to any Governmental Authority under applicable Environmental Laws;

 

(iv)           prompt written notice of all actions, suits, claims, notices of violation, hearings, investigations or proceedings pending, or to the best of each Borrower’s knowledge, threatened in writing against or affecting any Borrower or any Subsidiary thereof or with respect to the ownership, use, maintenance and operation of their respective businesses, operations or properties, relating to Environmental Laws or Hazardous Substances unless such action, suit, claim, notice of violation, hearing, investigation or proceeding would not reasonably be expected to involve an aggregate liability greater than $5,000,000;

 

(v)           prompt written notice of the initiation of all actions, suits and proceedings before any Governmental Authority or arbitrator pending, or to the best of each Borrower’s knowledge, threatened in writing against or affecting any Borrower or any Subsidiary thereof which (A) if adversely determined would involve an aggregate liability equal to $5,000,000 or more, or (B) otherwise may have a Material Adverse Effect;

 

(vi)           promptly after any Borrower has knowledge or becomes aware of any of the following events affecting any Borrower or any ERISA Affiliate (but in no event more than ten days after such event), together with a copy of any notice with respect to such event that is required to be filed with a Governmental Authority and any notice delivered by a Governmental Authority to any Borrower or any ERISA Affiliate with respect to such event, in each case to the extent such event would be reasonably expected to result in a Material Adverse Effect:  (A) an ERISA Event; (B) the adoption of any new Pension Plan by any Borrower or any ERISA Affiliate; (C) the adoption of any amendment to a Pension Plan, if such amendment will result in a material increase in benefits or unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA); or (D) the commencement of contributions by any Borrower or any ERISA Affiliate to any employee benefit plan that is subject to Title IV of ERISA or Section 412 of the Internal Revenue Code;

 

  

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(vii)           promptly after the giving, sending or filing thereof, or the receipt thereof, copies of (A) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Borrower or any ERISA Affiliate with the IRS with respect to each Pension Plan, (B) all notices received by any Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning an ERISA Event, and (C) copies of such other documents or governmental reports or filings relating to any Pension Plan as the Administrative Agent shall reasonably request.

 

(viii)           the information regarding insurance maintained by NINA and its Subsidiaries as required under Section 9.04 and, if any, the Collateral Documents;

 

(ix)           the reports and notices as required by the Collateral Documents and notice of any material changes in accounting or financial reporting practices;

 

(x)           promptly after the occurrence thereof, notice of any labor controversy resulting in or threatening to result in any strike, work stoppage, boycott, shutdown or other material labor disruption against or involving any Borrower or any Subsidiary thereof which could reasonably be expected to result in a Material Adverse Effect;

 

(xi)           prompt written notice of any other condition or event which has resulted, or that would reasonably be expected to result, in a Material Adverse Effect;

 

(xii)           such other information respecting the operations, properties, business or condition (financial or otherwise) of any Borrower or its Restricted Subsidiaries (including with respect to the Collateral) as any Lender (through the Administrative Agent) may from time to time reasonably request;

 

(xiii)           promptly upon filing, deliver to the Administrative Agent copies of any material filings with the DOE made in connection with the DOE Application;

 

(xiv)           promptly upon filing, deliver to the Administrative Agent copies of any material information delivered to any ratings agency in connection with such agency’s customary due diligence procedures; and

 

(xv)           deliver to the Administrative Agent copies of any material information delivered to any financial institution in connection with such institution’s customary due diligence procedures in connection with any proposed refinancing of this Agreement and the Existing TANE Credit Agreement.

 

Each notice pursuant to this subsection (other than clauses (vii), (viii), (ix) and (xii)) shall be accompanied by a written statement by a Responsible Officer of the applicable Borrower setting forth information on the occurrence referred to therein, and stating what action the Borrowers propose to take with respect thereto.

 

  

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Section 9.02                      Preservation of Existence, Etc.  Each Borrower shall, and shall cause each of its Restricted Subsidiaries to, maintain and preserve (i) its legal existence and its rights to transact business and (ii) all other rights, franchises and privileges necessary or desirable in the normal course of its business and operations and the ownership of its properties, except in connection with transactions not prohibited by Article X or, in the case of clause (ii) only, as would not result in a Material Adverse Effect.

 

Section 9.03                      Payment of Certain Obligations.  Each Borrower shall, and shall cause each of its Restricted Subsidiaries to, pay and discharge (i) all taxes, fees, assessments and governmental charges or levies imposed upon it or upon its properties or assets prior to the date on which penalties attach thereto, and all lawful claims for labor, materials and supplies which, if unpaid, might become a Lien (other than a Permitted Lien) upon any properties or assets of any Borrower or any Subsidiary thereof, except to the extent such taxes, fees, assessments or governmental charges or levies, or such claims, are being contested in good faith by appropriate proceedings and are adequately reserved against in accordance with GAAP; and (ii) all lawful claims which, if unpaid, would by law become a Lien upon its property that constitutes Collateral not constituting a Permitted Lien.

 

Section 9.04                      Maintenance of Insurance.  Each Borrower shall, and shall cause each of its Restricted Subsidiaries to, carry and maintain in full force and effect, at its own expense and with financially sound and reputable insurance companies not Affiliates of any Borrower (provided, however, that no Borrower nor any Guarantor or Subsidiary shall be in breach of any Loan Document if any such insurance company ceases to be financially sound or reputable if the Borrower or Guarantor or its Subsidiaries promptly obtains insurance coverage from a different financially sound or reputable insurance company), insurance in such amounts, with such deductibles and covering such risks as is customarily carried by companies engaged in the same or similar businesses and owning similar properties in the localities where any Borrower or such Subsidiary operates.  Insurance on the Collateral shall name the Administrative Agent (for the benefit of the Lenders and the Administrative Agent), as additional insured and as loss payee.  Upon the request of the Administrative Agent or any Lender, the Borrowers shall furnish the Administrative Agent from time to time (but not more frequently than once per year) with reasonably detailed information as to the insurance carried by the Borrowers and, if so requested, copies of all such insurance policies.  The Borrowers shall also furnish to the Administrative Agent from time to time (but not more frequently than once per year) upon the request of the Administrative Agent or any Lender a certificate, to the extent such insurance broker customarily issues such certificates, of the Borrowers’ insurance broker stating that all premiums then due on the policies relating to insurance on the Collateral have been paid, that such policies are in full force and effect and that such insurance coverage and such policies comply with all the requirements of this Section 9.04.  All insurance policies required under this Section 9.04 shall provide that they shall not be terminated or cancelled nor shall any such policy be materially changed in a manner adverse to any Lender or Administrative Agent without at least 30 days’ prior written notice to the Borrowers and the Administrative Agent.  Receipt of notice of termination or cancellation of any such insurance policies or reduction of coverages or amounts thereunder (other than pursuant to a reasonable request of the Borrowers) shall entitle the Administrative Agent, acting reasonably and in good faith, to renew any such policies, cause the coverages and amounts thereof to be maintained at levels required pursuant to the first sentence of this Section 9.04 or otherwise to obtain similar insurance in place of such policies, in each case at the expense of the Borrowers.

 

  

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Section 9.05                      Keeping of Records and Books of Account.  Each Borrower shall, and shall cause each of its Subsidiaries to, keep adequate records and books of account, in which appropriate entries shall be made in accordance with GAAP, reflecting all financial transactions of such Borrower and its Subsidiaries.

 

Section 9.06                      Inspection Rights.  Each Borrower shall at any reasonable time and from time to time (but in no event more frequently than once per year, unless an Event of Default has occurred and is continuing, in which case such frequency limitation shall not apply) permit the Administrative Agent or any of their respective agents or representatives to visit and inspect any of the properties of such Borrower and its Restricted Subsidiaries and to examine and make copies of and abstracts from the records and books of account of such Borrower and its Subsidiaries, and to discuss the business affairs, finances and accounts of such Borrower and any such Subsidiary with any of the officers, employees or accountants of such Borrower or such Subsidiary, all at the expense of such Borrower.

 

Section 9.07                      Compliance with Laws, Etc.  Each Borrower shall, and shall cause each of its Subsidiaries to, comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (other than Environmental Laws, which are addressed in Section 9.09) and the material terms of any indenture, contract or other instrument to which it may be a party or under which it or its properties may be bound, except in each case where any failure to comply would not reasonably be expected to have a Material Adverse Effect or a material adverse effect on the interests of the Lenders taken as a whole.  Without limiting the generality of the foregoing, except as would not reasonably be expected to result in a Material Adverse Effect each Borrower shall, and shall cause each ERISA Affiliate to:  (i) maintain each Plan and each Pension Plan in compliance in all respects with the applicable provisions of ERISA, the Internal Revenue Code or other Federal or state law; (ii) cause each Plan and each Pension Plan that is intended to be qualified under Section 401(a) of the Internal Revenue Code to maintain its qualified status under Section 401(a) of the Internal Revenue Code; (iii) ensure that all liabilities under each Plan are (A) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing the Plan, (B) insured with a reputable insurance company, (C) provided for or recognized in the financial statements most recently delivered to the Administrative Agent and the Lenders pursuant hereto, or (D) estimated in the formal notes to the financial statements most recently delivered to the Administrative Agent and the Lenders pursuant hereto; and (iv) make all required contributions to any Pension Plan or Multiemployer Plan.

 

Section 9.08                      Licenses.  Each Borrower shall, and shall cause each of its Restricted Subsidiaries to, obtain and maintain all licenses, authorizations, consents, filings, exemptions, registrations and other governmental approvals necessary in connection with the execution, delivery and performance of the Loan Documents, the consummation of the transactions therein contemplated or the operation and conduct of its business and ownership of its properties, except in each case as would not result in a Material Adverse Effect or a material adverse effect on the interests of the Lenders taken as a whole.

 

  

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Section 9.09                      Action Under Environmental Laws.  Each Borrower shall, and shall cause each of its Subsidiaries to, comply with all applicable Environmental Laws, including requirements of all applicable laws, rules, regulations and orders of any Governmental Authority relating to Hazardous Substances, except where any failure to comply would not have a Material Adverse Effect or a material adverse effect on the interests of the Lenders taken as a whole. Each Borrower shall, and shall cause each of its Restricted Subsidiaries to, obtain, maintain and comply with all licenses, authorizations, consents, filings, exemptions, registrations and other governmental approvals required by Environmental Laws for the operation and conduct of its business and ownership of its properties, except in each case as would not result in a Material Adverse Effect or a material adverse effect on the interests of the Lenders taken as a whole.  Each Borrower shall, and shall cause each of its Subsidiaries to, use, generate, manufacture, install, treat, release, handle, store and dispose of any Hazardous Substances in compliance with all applicable Environmental Laws except where any failure to comply would not have a Material Adverse Effect or a material adverse effect on the interests of the Lenders taken as a whole.  Each Borrower shall, and shall cause each of its Subsidiaries to, upon becoming aware of i) the presence or release of any Hazardous Substance, other than the presence or release of a Hazardous Substances in material compliance with Environmental Laws, or ii) the existence of any material environmental liability under applicable Environmental Laws with respect to their respective businesses, operations or properties, take all actions, at their cost and expense, to the extent required by Environmental Laws to investigate and clean up the condition of their respective businesses, operations or properties, including all required removal, containment and remedial actions, and restore their respective businesses, operations or properties to a condition in material compliance with applicable Environmental Laws.

 

Section 9.10                      Use of Proceeds.  The Borrowers shall use the proceeds of the Loans solely for Permitted Use of Proceeds and within the limitations set forth in Section 2.02(a).

 

Section 9.11                      Reinvestment of Equity Proceeds.  Each Borrower and each Restricted Subsidiary shall apply the Net Cash Proceeds of any issuance by it of equity to capital expenditures or working capital of the Borrower or Restricted Subsidiaries thereof; provided, that any Specified Equity Proceeds may be applied as set forth in the definition thereof to the extent permitted thereby.

 

Section 9.12                      Additional Guarantors and Collateral.

 

(a)           Within ten (10) Business Days following the date on which any Borrower or Restricted Subsidiary incorporates, creates or acquires any additional Restricted Subsidiary (other than a Non-U.S. Subsidiary), such Borrower shall (i) cause such new Restricted Subsidiary to execute and deliver a guaranty of the Obligations in substantially the form of the Guaranty  (or a supplement to any such existing guaranty pursuant to which it agrees to be bound by the terms and conditions thereof) to the Administrative Agent and a security agreement in substantially in the form of the Security Agreement (or a supplement to any such existing Security Agreement pursuant to which it agrees to be bound by the terms and conditions thereof) to the Administrative Agent and (ii) cause such new Restricted Subsidiary to file any UCC-1 financing statements furnished by the Administrative Agent in each jurisdiction in which such filing is necessary to perfect the security interest of the Administrative Agent for the benefit of the itself and the Lenders in the Collateral of such Subsidiary and in which the Administrative Agent requests that such filing be made.

 

  

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(b)           Within ten (10) Business Days after the date any Borrower or Restricted Subsidiary incorporates, creates or acquires any additional Restricted Subsidiary, such Borrower or Restricted Subsidiary shall pledge the capital stock or other equity interests of such new Restricted Subsidiary to the Administrative Agent pursuant to a supplement to the Borrower Security Agreement, which equity interests shall be in certificated form; provided, however, that with respect to any such additional Restricted Subsidiary that is a Non-U.S. Subsidiary, any such pledge shall be subject to the same limitations as are set forth in Section 2(g) of the Borrower Security Agreement.

 

(c)           If at any time any Borrower or any Restricted Subsidiary thereof (other than a Non-U.S. Subsidiary) shall become the owner of any real property (including pursuant to Section 6.5.2 of the South Texas Project Participation Agreement (as defined in the form of Borrower Security Agreement)), promptly, and in any event within sixty (60) days following acquisition of such real property, such Borrower shall (and shall cause any of its Restricted Subsidiaries to) enter into and deliver to the Administrative Agent a deed of trust, mortgage or similar Lien in respect to such property, in form and substance reasonably satisfactory to the Administrative Agent, together with such title insurance policies, evidence of insurance, insurance certificates and endorsements, surveys, appraisals, consents, subordination agreements and other documents and other instruments as the Administrative Agent or the Majority Lenders shall reasonably request.

 

Section 9.13                      Further Assurances and Additional Acts.  Each Borrower shall (and shall cause its Restricted Subsidiaries to) execute, acknowledge, deliver, file, notarize and register at its own expense all such further agreements, instruments, certificates, documents, assurances and other items (including resolutions, incumbency and officers’ certificates, opinions of counsel, control agreements, search reports and other certificates and documents) and perform such acts as Administrative Agent or the Majority Lenders shall deem necessary or appropriate to effectuate the purposes of the Loan Documents, and promptly provide the Administrative Agent with evidence of the foregoing reasonably satisfactory in form and substance to the requesting Administrative Agent or the Majority Lenders.

 

Section 9.14                      Existing TANE Credit Agreement.  The Borrowers shall maintain the Existing TANE Credit Facility in force and effect in all material respects with commitments from the lenders thereunder of at least $300,000,000, except as such Existing TANE Credit Facility may be terminated on a date no earlier than its stated termination date (as such termination date is in effect on the date hereof) or as otherwise agreed by the Majority Lenders.

 

Section 9.15                      Maintenance of Properties.  The Borrowers will, and will cause each of their Subsidiaries to, maintain, preserve, protect and keep its material properties and assets in good repair, working order and condition (ordinary wear and tear and loss from casualty or condemnation excepted), and make necessary repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times; provided that nothing in this Section 9.15 shall prevent the Borrowers from discontinuing the operation and maintenance of any of its properties or any portion thereof or any of those of its Subsidiaries if such discontinuance is, in the reasonable commercial judgment of the Borrowers, desirable in the conduct of its or their business and could not, in the aggregate, be reasonably expected to have a Material Adverse Effect.

 

  

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ARTICLE X

 

NEGATIVE COVENANTS.

 

So long as any of the Obligations shall remain unpaid (other than indemnities and other contingent Obligations not then due and payable, unless a written demand or invoice shall have been delivered to the applicable Credit Party with respect thereto) or any Lender shall have any Commitment, the Borrowers agree that:

 

Section 10.01                                Indebtedness.  Each Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or otherwise become liable for or suffer to exist any Indebtedness, other than:

 

(a)           Indebtedness of the Borrowers to the Administrative Agent and the Lenders hereunder;

 

(b)           Indebtedness under the Existing TANE Credit Agreement in an aggregate principal amount not to exceed $500,000,000 at any time outstanding;

 

(c)           accounts payable to trade creditors for goods and services and incurred or for the deferred purchase price of property or services in the ordinary course of business;

 

(d)           Indebtedness consisting of guarantees resulting from endorsement of negotiable instruments for collection by any Borrower or any Subsidiary thereof in the ordinary course of business, and any and all Indebtedness under the EPC Contract;

 

(e)           Indebtedness under Permitted Swap Contracts;

 

(f)           [Reserved]

 

(g)           Indebtedness of the Borrowers to any Restricted Subsidiary thereof, or of any Restricted Subsidiary of a Borrower to another such Person;  

 

(h)           (i) Indebtedness of NINA or any Restricted Subsidiary to any Excluded NINA Subsidiary, and (ii) subject to compliance with Section 10.06(j), Indebtedness of any Excluded NINA Subsidiary to NINA or any Restricted Subsidiary;

 

(i)           Attributable Indebtedness, capital lease obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement or lease of property (real or personal), plant or equipment used in the business of any Borrower or Subsidiary thereof, or incurred within 270 days after any of the foregoing, in an aggregate principal amount not to exceed $5,000,000 at any time outstanding;

 

(j)           Indebtedness, outstanding for no longer than thirty (30) days, arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) inadvertently drawn against insufficient funds;

 

  

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(k)           Indebtedness in respect of workers’ compensation claims, bankers’ acceptance and performance and surety bonds in the ordinary course of business;

 

(l)           Indebtedness of any Excluded NINA Subsidiary (i) in favor of Persons other than any Credit Party with respect to which no Borrower or Restricted Subsidiary has provided any Guarantee Obligation, and (ii) to a Credit Party of the type referred to in clause (viii) of the definition of “Indebtedness”;

 

(m)           Indebtedness that may be deemed to arise as a result of agreements of any Borrower or any Subsidiary providing for indemnification, adjustment of purchase price or any similar obligations, in each case, incurred in connection with the acquisition or disposition of any business, assets or equity interests of any Subsidiary not prohibited under Section 10.05 or 10.06 or any business, assets or equity interests acquired by any Borrower or any Subsidiary not prohibited under Section 10.05 or 10.06; provided that in the case of any such disposition the aggregate maximum liability associated with such provisions may not exceed the gross proceeds (including non-cash proceeds) of such disposition;

 

(n)           Indebtedness consisting of letters of credit, Guarantee Obligations or other similar instruments to the extent (i) such Indebtedness, including instruments supporting Permitted Swap Contracts, are cash collateralized and (ii) such Borrower or such Subsidiary would not have been prohibited from expending the funds used to cash collateralize such instrument directly under the terms of this Agreement; provided, such Indebtedness does not exceed  $2,500,000 at any time outstanding; and 

 

(o)           Indebtedness consisting of (i) obligations to pay insurance premiums or (ii) take-or-pay obligations contained in supply agreements, in each case arising in the ordinary course of business.

 

Section 10.02                                Liens; Burdensome Agreements.

 

(a)           No Borrower shall, or shall permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any of its properties, revenues or assets, whether now owned or hereafter acquired, other than Permitted Liens.

 

(b)           No Borrower shall, or shall permit any of its Restricted Subsidiaries to, enter into or suffer to exist any agreement (other than any Loan Document and/or any “Loan Document” as defined in the Existing TANE Credit Agreement, and the TEPCO Agreements) (A) requiring the grant of a Lien to secure an obligation of any such Person if a Lien is granted to secure another obligation of such Person, or (B) prohibiting or conditioning the creation or assumption by such Borrower or any Subsidiary of any Lien upon any of its properties, revenues or assets generally, whether now owned or hereafter acquired; provided, however, that this subsection shall not prohibit any requirement, prohibition or condition (i) incurred or provided in favor of any holder of Indebtedness permitted under Section 10.01(b) or Section 10.01(i) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness, (ii) under any applicable law, rule, regulation or order, or any governmental permit or license, (iii) under any agreement between any Borrower or any Affiliate thereof, on the one hand, and the Consortium, the Co-Contractor or any Affiliate thereof, on the other hand and/or under any agreement between any Borrower or any Affiliate thereof, on the one hand, and Toshiba America Nuclear Corporation or any Affiliate thereof, on the other hand; or (iv) provisions limiting the disposition or distribution of assets or property in any joint venture agreements, ownership, participation, shareholders, partnership or limited liability company agreements relating to project interests, asset sale agreements, sale leaseback agreements, stock sale agreements and other similar agreements, which limitation is applicable only to the assets that are the subject of such agreements (provided that such agreement specifically permits the Lien in favor of the Lenders and Administrative Agent).

 

  

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Section 10.03                                Change in Nature of Business.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, engage in any material line of business substantially different from those lines of business carried on by it at the date hereof.

 

Section 10.04                                Restrictions on Fundamental Changes.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, merge with or consolidate into any Person, or sell, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets, except that:

 

(a)           each Borrower and the Restricted Subsidiaries thereof may sell or dispose of assets in accordance with the provisions of Section 10.05;

 

(b)           each Borrower and the Restricted Subsidiaries thereof may make any investment not prohibited by Section 10.06; and

 

(c)           each Borrower and the Restricted Subsidiaries thereof may merge with or consolidate into any other Person, provided that (A) such Borrower or Restricted Subsidiary is the surviving Person, and (B) no such merger or consolidation shall be made while there exists a Default or if a Default would occur as a result thereof; provided, however, that any such transaction is permitted pursuant to Section 10.06 .

 

Section 10.05                                Sales of Assets.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, sell, assign, lease, transfer, license or otherwise dispose of (whether in one transaction or a series of transactions) (each of the foregoing, a “Disposition”) any assets (including any shares of stock in any Subsidiary or other Person and intellectual property rights), except:

 

(a)           Dispositions of cash and Permitted Cash Equivalent Investments;

 

(b)           Dispositions of assets that have become worn out, damaged or obsolete or that are promptly being replaced, in each case, in the ordinary course of business;

 

(c)           Dispositions of any assets by any Restricted Subsidiary of any Borrower to another such Restricted Subsidiary, or to any Borrower;

 

(d)           (i) non-exclusive licenses of patents, trademarks, copyrights and other intellectual property rights granted in the ordinary course of business, and (ii) non-exclusive licenses of patents, trademarks, copyrights and other intellectual property rights granted to TEPCO and/or its Affiliates pursuant to licenses approved by the Administrative Agent (such approval not to be unreasonably withheld); and

 

  

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(e)           Dispositions of (i) equity interests in any Borrower to the extent the same would not constitute an Event of Default under Section 11.01(j) or (ii) any equity interests in any Excluded NINA Subsidiary, provided in each case that such Disposition is for at least fair market value;

 

provided, however, in no event shall any Borrower sell any interest in the Project, Unit 3 or Unit 4, except in each case as permitted by the EPC Contract.

Section 10.06                                Loans and Investments.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, make any Investments in any Person, other than:

 

(a)           extensions of credit in the nature of accounts receivable or notes receivable arising from the sales of goods or services in the ordinary course of business;

 

(b)           (i) Investments by any Borrower in the capital stock or other equity interests of any Subsidiary thereof that is a Borrower, or of any Restricted Subsidiary of such Borrower, and (ii) unless otherwise prohibited under this Agreement, extensions of credit and advances (x) by any Borrower to any Subsidiary thereof that is a Borrower, or to any Restricted Subsidiary of such Borrower, or (y) by any Restricted Subsidiary to any Borrower or Restricted Subsidiaries;

 

(c)           Permitted Cash Equivalent Investments;

 

(d)           employee loans and guarantees in accordance with such Borrower’s usual and customary practices with respect thereto (to the extent permitted by applicable law) and in an amount not to exceed $250,000 at any time outstanding;

 

(e)           Investments received in connection with any Insolvency Proceeding in respect of any customers, Co-Contractor or clients and in settlement of delinquent obligations of, and other disputes with, customers, suppliers or clients;

 

(f)           Investments by a Borrower or any Restricted Subsidiary thereof, to the extent they are deemed to arise as a result of the incurrence of any Indebtedness permitted under Section 10.01;

 

(g)           Investments listed on Schedule 10.06(g) and any extensions, renewals or reinvestments thereof, so long as the aggregate amount of all Investments pursuant to this subsection is not increased at any time above the amount of such Investments existing on the date hereof;

 

(h)           Except as would result in an Event of Default pursuant to Section 11.01(j), Investments made with equity interests of any Borrower or any Restricted Subsidiary of any Borrower;

 

(i)           Investments made to repurchase or retire common stock or membership interests of any Borrower issued to any employee or director of the Borrower or any Restricted Subsidiary thereof pursuant to any employee equity ownership or incentive plan or policy and approved by the board of managers of NINA in an amount not to exceed $500,000 during any fiscal year; and

 

  

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(j)           Investments by NINA and any Restricted Subsidiaries in any Excluded NINA Subsidiaries and in any Non-U.S. Subsidiaries provided such Investments (when combined with loans made under Section 10.01(h)) do not exceed in the aggregate the sum of (x) $10,000,000 plus (y) the Specified Equity Proceeds (as determined based on the fair market value of such Investments as of the time made (without regard to any subsequent changes in value)).

 

Section 10.07                                Capital Expenditures.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, make or become legally obligated to make any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (including obligations under Capital Leases), except for (i) any expenditures in respect of any normal replacements and maintenance which are properly charged to current operations, (ii) expenditures made to restore, rebuild or replace property following any damage, loss, destruction or condemnation of fixed or capital assets, to the extent such expenditures are made or financed with proceeds received or to be received from a recovery event, (iii) expenditures constituting reinvestment proceeds from the sale or other disposition of assets otherwise permitted herein, (iv) expenditures made to the extent reimbursed by a Person other than the Credit Parties, (v) expenditures constituting capitalized interest, (vi) expenditures pursuant to the EPC Contract, and (vii) capital expenditures not otherwise permitted by this Section 10.07 in an amount not to exceed $1,000,000 per fiscal year of NINA (provided that, if in any fiscal year, the capital expenditures of the Borrowers and their Restricted Subsidiaries is less than $1,000,000, then such shortfall can be carried forward and incurred in the following fiscal year but, regardless of whether it is spent, no fiscal year after that).

 

Section 10.08                                Sales and Leasebacks.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, become liable, directly or indirectly, with respect to any lease, whether an Operating Lease or a Capital Lease, of any property (whether real, personal or mixed), whether now owned or hereafter acquired, (i) which such Borrower or such Restricted Subsidiary has sold or transferred or is to sell or transfer to any other Person or (ii) which such Borrower or such Restricted Subsidiary intends to use for substantially the same purposes as any other property which has been or is to be sold or transferred by such Borrower or such Restricted Subsidiary to any other Person in connection with such lease.

 

Section 10.09                                Restricted Payments.

 

(a)           No Borrower shall declare or pay any dividends in respect of such Borrower’s capital stock or other equity interests, or purchase, redeem, retire or otherwise acquire for value any of its capital stock or other equity interests now or hereafter outstanding, return any capital to its shareholders as such, or make any distribution of assets to its shareholders (or members) as such, or permit any of its Subsidiaries to purchase, redeem, retire, or otherwise acquire for value any stock or other equity interests of such Borrower (collectively, “Restricted Payments”), except that each Borrower may (i) declare and deliver dividends and distributions payable only in common stock of such Borrower; (ii) purchase, redeem, retire, or otherwise acquire shares of its capital stock or other equity interests with the proceeds received from a substantially concurrent issue of new shares of its capital stock or other equity interests; and (iii) make payments to holder of such Borrower’s equity interests in an amount sufficient to permit such holder to pay income taxes to the extent are attributable to the operations of such Borrower and its Subsidiaries; provided, however, that for so long as no Event of Default has occurred and is continuing, (A) NINA may make Restricted Payments in an amount that does not exceed the net proceeds of Restricted Payments received from Excluded NINA Subsidiaries, within 90 days after receipt of such net proceeds (except to the extent such Restricted Payments are funded with proceeds of Investments made pursuant to Section 10.06(j)(x) or Indebtedness described in Section 10.01(h)(ii) of this Agreement), (B) any Borrower may make Restricted Payments to any other Borrower and any Subsidiary may make Restricted Payments to its equity holders (provided that no proceeds of any Restricted Payment permitted under this clause (B) shall be used, directly or indirectly, to make Investments in any Excluded NINA Subsidiary) and (C) any Borrower and any Subsidiary thereof may make Restricted Payments pursuant to any employee, stock, compensation or other similar plan or agreement approved by the board of managers of NINA from time to time in an amount not to exceed $500,000 in any fiscal year.

 

  

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(b)           No Borrower shall, or shall permit any Restricted Subsidiary thereof to, grant or otherwise agree to or suffer to exist any consensual restrictions on the ability of such Subsidiary to pay dividends and make other distributions to its equity holders, or to pay any Indebtedness owed to its equity holders or generally transfer properties and assets to such Borrower; provided, however, that this subsection shall not prohibit any condition imposed under (i) applicable law, rule, regulation or order, or any governmental permit or license, (ii) the Existing TANE Credit Agreement and the TEPCO Agreements, (iii) any agreement for the sale or other disposition of the stock or assets of a Borrower or a Subsidiary that restricts distributions of those assets by that Subsidiary pending the sale or other disposition, or (iv) for the avoidance of doubt, provisions in any document or agreement relating to any Indebtedness permitted under Section 10.01(i) to the extent that such restriction on transfer applies to the assets financed with such Indebtedness.

 

Section 10.10                                Amendments of Certain Documents.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, agree to or permit any amendment, modification or waiver of any provision of any agreement related to any Subordinated Debt (including any amendment, modification or waiver pursuant to an exchange of other securities or instruments for outstanding Subordinated Debt), except as permitted by any Subordination Agreement with respect thereto.

 

Section 10.11                                Restriction of Amendments to Certain Documents.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, amend or otherwise modify, or waive any rights under the Existing TANE Credit Agreement, the organizational documents of the Borrowers or any Material Contract, in each case, other than amendments, modifications and waivers that would not reasonably be expected to (i) affect the interests of Administrative Agent or any Lender (in their respective capacities as such) under the Loan Documents in any material and adverse respect, or (ii) have a Material Adverse Effect; provided, however, that in each case the Borrower and any Restricted Subsidiary may replace any Material Contract (other than the South Texas Project Participation Agreement, the Existing TANE Credit Agreement, the TEPCO Agreements and the Owner Agency Agreement) with any replacement Material Contract within 60 days of the term notice, expiration or ineffectiveness of any Material Contract.

 

  

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Section 10.12                                Redemption of Subordinated Debt.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, make any voluntary or optional payment or repayment on, redemption, exchange or acquisition for value of, or any sinking fund or similar payment with respect to, any Subordinated Debt.

 

Section 10.13                                Transactions with Related Parties.  No Borrower shall, or shall permit any of its Restricted Subsidiaries to, enter into any transaction, including the purchase, sale or exchange of property or the rendering of any services, with any Affiliate, any officer or director thereof or any Person which beneficially owns or holds 10% or more of the equity securities, or 10% or more of the equity interest, thereof (a “Related Party”), or enter into, assume or suffer to exist, or permit any Subsidiary to enter into, assume or suffer to exist, any employment or consulting contract with any Related Party, except:

 

(a)           any transaction that is upon fair and reasonable terms not less favorable to such Borrower or Subsidiary thereof than it would obtain in a comparable arm’s length transaction with a Person not a Related Party;

 

(b)           transactions between any Borrower and any Restricted Subsidiary or between any Restricted Subsidiaries;

 

(c)           any employment agreement or director’s engagement agreement, employee benefit plan, officer and director indemnification agreement or any similar arrangement entered into by any Borrower or Subsidiary thereof in the ordinary course of business, or approved by the Borrowers in good faith, and any transaction pursuant to which a Borrower or a Restricted Subsidiary thereof repurchase or redeems equity interests in such Borrower or Restricted Subsidiary from any employee or director thereof that were issued pursuant to any benefit or incentive plan or policy;

 

(d)           payment of reasonable fees and other compensation to directors of any Borrower or any Subsidiaries;

 

(e)           any transaction contemplated by or permitted under any agreement listed on Schedule 10.13(e), and any amendment thereto or replacement thereof, so long as any such transaction, agreement, amendment or replacement taken as a whole would not result in a Material Adverse Effect,

 

(f)           payments or advances to employees or consultants that are incurred in the ordinary course of business or that are approved by any Borrower in good faith;

 

(g)           unless otherwise prohibited under any other provision of this Article X, the issuance of any letters of credit and/or the granting of any credit support by any Affiliate of a Credit Party, in each case to support the obligations of any Borrower and/or any of its Subsidiaries, and the payment by any Borrower and/or any of its Subsidiaries of any reasonable fees and other compensation on account of such letters of credit and/or other credit support;

 

(h)           any tax sharing agreement between or among any Borrower, any Subsidiary of the Borrowers and/or any of their Affiliates so long as such tax sharing agreement is on fair and reasonable terms with respect to the Borrowers and their Subsidiaries and is approved in writing by the Majority Lenders;

 

  

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(i)           transactions between any Borrower or any Affiliate thereof, on the one hand, and the Consortium, the Co-Contractor or any Affiliate thereof and/or TANE or any Affiliate thereof, on the other hand;

 

(j)           unless otherwise prohibited under any other provision of this Article X, (i) any Guarantee Obligation of any Borrower or any Subsidiary thereof in respect of any Subsidiary of such Borrower or (ii) any Guarantee Obligation of any Borrower or any Subsidiary thereof in respect of any Person that does not constitute a Subsidiary of such Borrower, but in which such Borrower directly or indirectly holds an investment, so long as all holders of equity interests in such Person (including such Borrower or Subsidiary thereof, as applicable) shall participate directly or indirectly in such Guarantee Obligation, or shall provide a commitment in respect of any related obligation, in each case, on a pro rata basis relative to such equityholder’s equity interests in such Person; provided that any such transaction shall be fair and reasonable and beneficial to such Borrower and its Subsidiaries (taken as a whole) and consistent with prudent industry practice;

 

(k)           the transactions with TEPCO which are described in the TEPCO Agreements; and

 

(l)           any agreement to do any of the foregoing.

 

Section 10.14                                ERISA.  Except as would not result in a Material Adverse Effect, no Borrower shall, or shall permit any ERISA Affiliate to:  (i) terminate any Pension Plan so as to result in any liability to a Credit Party; (ii) permit to exist any ERISA Event which presents the risk of a liability to any Credit Party; or (iii) make a complete or partial withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in any liability to a Credit Party.

 

ARTICLE XI

 

EVENTS OF DEFAULT

 

Section 11.01                                Events of Default.  Each of the following events shall constitute an “Event of Default”:

 

(a)           Payments.  Any Borrower shall fail to pay (i) when due, any amount of principal of any Loan, or (ii) within five Business Days of when due, any amount of interest on any Loan, or any fee payable hereunder or under any of the Loan Documents.

 

(b)           Representations and Warranties.  Any representation or warranty by any Credit Party under or in connection with the Loan Documents shall prove to have been incorrect in any material respect when made or deemed made.

 

(c)           Failure by Borrower to Perform Certain Covenants.  Any Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 9.04 (solely to the extent that such failure consists of a lapse of the insurance required under such Section) and in Section 9.02, 9.10, 9.13 or Article X.

 

  

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(d)           Failure to Perform Other Covenants.  Any Borrower shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed, and any such failure shall remain unremedied for a period of 30 days from the receipt of notice of default from the Administrative Agent or any Secured Party following the occurrence thereof.

 

(e)           Insolvency; Voluntary Proceedings.  Any Credit Party (i) ceases or fails to be Solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise, (ii) voluntarily ceases to conduct its business in the ordinary course, (iii) shall liquidate, wind up or dissolve, or suffer any liquidation, wind-up or dissolution (except to the extent expressly permitted by Article X), (iv) commences any Insolvency Proceeding with respect to itself, or (v) takes any material and direct action to effectuate or authorize any of the foregoing.

 

(f)           Involuntary Proceedings.  (i) Any involuntary Insolvency Proceeding is commenced or filed against any Credit Party, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of such Person’s properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) any Credit Party admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) any Credit Party acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business.

 

(g)           Default Under Other Indebtedness.  (i) Any Credit Party (other than Texas Genco) shall fail (A) to make any payment of any principal of, or interest or premium on, any Indebtedness (other than in respect of the Loans) having an aggregate principal amount (including undrawn committed or available amounts) of $10,000,000 or more when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable notice or grace period, if any, specified in the agreement or instrument relating to such Indebtedness as of the date of such failure; or (B) to perform or observe any term, covenant or condition on its part to be performed or observed under any agreement or instrument relating to any such Indebtedness, when required to be performed or observed, or any other event shall occur or condition shall exist under any such agreement or instrument, and such failure, event or condition shall continue after the applicable notice or grace period, if any, specified in such agreement or instrument, if the effect of such failure, event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness (provided that this clause (i) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness); or (ii) any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; or (iii) any “Event of Default” under and as defined in the Existing TANE Credit Agreement shall have occurred and be continuing.

 

  

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(h)           Judgments.  (i) A judgment or order for the payment of money in excess of $10,000,000, which is not fully covered by third-party insurance shall be rendered against any Credit Party; or (ii) any non-monetary judgment or order shall be rendered against any Credit Party which has or would reasonably be expected to have a Material Adverse Effect; and in either case (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect.

 

(i)           ERISA.  There shall occur one or more ERISA Events which individually or in the aggregate results in liability of any Credit Party (including any liability of an ERISA Affiliate for which a Credit Party could become responsible) in an amount that results in a Material Adverse Effect.

 

(j)           Change in Ownership or Control.  (a) NINA shall fail to own, directly or indirectly, at least 40% of the equity interests in NINA Holdings, (b) NINA Holdings shall fail to own, directly or indirectly, at least 50% of the equity interests in, and hold voting control of, NINA Investments; (c) failure of NINA Investments to own, directly or indirectly, 100% of the equity interests in, and hold voting control of, NINA3 and NINA4; or (d) failure of NRG to own, directly or indirectly, at least 25% of the Class A Membership Interests.

 

(k)           Other Loan Documents.

 

(i)           (A) Any Guarantor Document, Collateral Document, Intercreditor Agreement (other than as a result of any action or inaction by the Administrative Agent or any Lender) or Subordination Agreement, after delivery thereof, shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect (other than as agreed in accordance with its terms), or any Credit Party shall contest in any manner the validity or enforceability thereof, or (B) any Credit Party or any other party to any such Loan Document shall contest in writing in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder.

 

(ii)           Any Guarantor shall fail to perform or observe any term, covenant or agreement contained in its Guaranty or any other Guarantor Document to which it is a party on its part to be performed or observed and any such failure shall remain unremedied for a period of 30 days from the receipt of notice of Default from the Administrative Agent beyond the grace period, if any, specified therein.

 

(iii)           (A) Any Credit Party shall fail to perform or observe any term, covenant or agreement contained in the Collateral Documents on its part to be performed or observed and any such failure shall remain unremedied beyond the grace period, if any, specified therein, or (B) any of the Collateral Documents for any reason, except to the extent permitted by the terms thereof, shall cease to create a valid and perfected first priority (subject only to Permitted Liens) Lien in any of the Collateral purported to be covered thereby (to the extent such perfection can be accomplished under applicable law in the applicable jurisdiction).

 

(l)           DOE Facility.  The DOE shall deny (in a final and non-appealable manner) the Borrowers’ request for the DOE Facility.

 

  

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(m)           TANE Credit Facility.  The obligations under the TANE Credit Facility and the other Loan Documents (as defined therein) have been paid off and in full or have been terminated or accelerated, in each case other than at its stated maturity date (as such maturity date is in effect on the date hereof) or the commitments from the lenders thereunder have been reduced below $300,000,000.

 

(n)           EPC Contract.  Any “Owner Event of Default” as defined in the EPC Contract shall have occurred and be continuing.

 

Section 11.02                                Effect of Event of Default.  If any Event of Default shall occur:

 

(a)           The Administrative Agent shall, at the request of, or may, with the consent of, the Majority Lenders, (i) by notice to the Borrowers, (A) declare the Commitments of the Lenders to be terminated, whereupon the same shall forthwith terminate, and (B) declare the entire unpaid principal amount of the Loans, all interest accrued and unpaid thereon and all other Obligations to be forthwith due and payable, whereupon the Loans, all such accrued interest and all such other Obligations shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrowers, provided that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Credit Party under the Bankruptcy Code, or any other Event of Default specified in Section 11.01(e) or (f) which has the effect of staying actions against any Credit Party, the result which would otherwise occur only upon giving of notice by the Administrative Agent to the Borrowers as specified in this subsection shall occur automatically, without the giving of any such notice; and (ii) whether or not the actions referred to in the foregoing clause (i) have been taken, exercise any or all of the Administrative Agent’s rights and remedies under the Loan Documents.

 

(b)           The Administrative Agent shall, at the request of or may, with the consent of, the Majority Lenders, whether or not the actions referred to in Section 11.02(a) have been taken, (i) exercise any or all of the Administrative Agent’s rights and remedies under the Collateral Documents, and (ii) proceed to enforce all other rights and remedies available to the Administrative Agent and the Lenders under the Collateral Documents and applicable law.

 

Section 11.03                                Rights Not Exclusive.  The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.

 

ARTICLE XII

 

THE ADMINISTRATIVE AGENT

 

Section 12.01                                Authorization and Action.  Each Lender hereby appoints Shaw as the Administrative Agent, and authorizes the Administrative Agent to execute the Intercreditor Agreement, and any Subordination Agreement and to take such action as agent on its behalf and to exercise such powers and perform such duties under this Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto.  The duties and obligations of the Administrative Agent are strictly limited to those expressly provided for herein, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent.  As to any matters not expressly provided for by the Loan Documents (including enforcement or collection of the Loan Documents), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided, however, that except for action expressly required of the Administrative Agent hereunder, the Administrative Agent shall in all cases be fully justified in failing or refusing to act under any Loan Document unless it shall be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by reason of taking or continuing to take any such action, and that the Administrative Agent shall not in any event be required to take any action which exposes the Administrative Agent to liability or which is contrary to any Loan Document or applicable law.  Nothing in any Loan Document shall, or shall be construed to, constitute the Administrative Agent a trustee or fiduciary for any Lender.  In performing its functions and duties hereunder, the Administrative Agent shall act solely as the Administrative Agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for any Credit Party.  Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement and the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

  

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Section 12.02                                Limitation on Liability of the Administrative Agent; Notices; Closing.

 

(a)           Limitation on Liability of the Administrative Agent.  Neither the Administrative Agent nor any Affiliate thereof nor any of their respective directors, officers, employees or agents shall be liable for any action taken or omitted to be taken by it or them under or in connection with any Loan Document, except for its or their own gross negligence, bad faith, willful misconduct.  Without limitation of the generality of the foregoing, the Administrative Agent (i) may treat a Lender as the holder of its Loans for all purposes hereof unless and until such Lender and its assignee shall have delivered to the Administrative Agent and the Borrowers a fully executed Assignment and Assumption and the other conditions to assignment set forth in Section 13.10 shall have been satisfied; (ii) may consult with legal counsel (including counsel to the Credit Parties), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; and (iii) shall incur no liability to any Lender under or in respect of any Loan Document by acting upon any notice, consent, certificate, telegram, facsimile, electronic mail, telex or teletype message, statement or other instrument or writing believed by it to be genuine and signed or sent by the proper party or parties or by acting upon any representation or warranty made or deemed to be made hereunder or under any other Loan Document.  Further, the Administrative Agent (A) makes no warranty or representation to any Lender and shall not be responsible to any Lender for the accuracy or completeness of any information, exhibit or report furnished under any Loan Document, for any statements, warranties or representations (whether written or oral) made or deemed made in or in connection with any Loan Documents; (B) shall have no duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Loan Document on the part of any Credit Party or any other Person or to inspect the property, books or records of any Credit Party or any other Person; and (C) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency, value or collectability of this Agreement or any other Loan Document or any of the Collateral.

 

  

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(b)           Notices.  Except for agreements, instruments, opinions, financial statements, notices and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrowers which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

 

(c)           Closing.  For purposes of determining compliance with the conditions specified in Section 7.01, each Lender that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent (or made available) by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender, unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender prior to the date of the initial Borrowing specifying its objection thereto and either such objection shall not have been withdrawn by notice to the Administrative Agent to that effect on or prior to the date of the initial Borrowing, such Lender shall not have made available to the Administrative Agent on or prior to the date hereof such Lender’s Pro Rata Share of such Borrowing.

 

Section 12.03                                The Administrative Agent and Affiliates.  With respect to its Commitment, the Loans made by it and all other Obligations owing to it as a Lender, the Administrative Agent shall have the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Shaw in its individual capacity as a Lender.  The Administrative Agent and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of and generally engage in any kind of business with any Credit Party and any Affiliate thereof, all as if the Administrative Agent were not an Agent hereunder and without any duty to account therefor to the Lenders.

 

Section 12.04                                Notice of Defaults.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default hereunder (other than nonpayment of principal of or interest on the Loans or of any fees or any of its costs and expenses) unless the Administrative Agent has actual knowledge thereof or has received notice in writing from a Lender or the Borrowers referring to this Agreement, describing such event or condition and expressly stating that such notice is a “notice of default.”  Should the Administrative Agent receive such notice of the occurrence of a Default, the Administrative Agent shall promptly give notice thereof to the Lenders.  The Administrative Agent thereupon shall take such action with respect to such Default as shall be reasonably directed by the Majority Lenders; provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interests of the Lenders.

 

  

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Section 12.05                                Non-Reliance on the Administrative Agent.  Each Lender has itself been, and will continue to be, based on such documents and information as it has deemed appropriate, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of any Credit Party or any of its Subsidiaries and the nature and value of any of the Collateral.  Accordingly, each Lender confirms to the Administrative Agent that it has not relied, and will not hereafter rely, on the Administrative Agent (i) to check or inquire on such Lender’s behalf into the adequacy, accuracy or completeness of any information provided by any Credit Party or any other Person under or in connection with the Loan Documents or the transactions herein contemplated (whether or not such information has been or is hereafter distributed to such Lender by the Administrative Agent), or (ii) to assess or keep under review on such Lender’s behalf the financial condition, creditworthiness, condition, affairs, status or nature of any Credit Party, any Subsidiary or the nature or value of any of the Collateral.

 

Section 12.06                                Indemnification.  The Lenders agree to indemnify the Administrative Agent, and any Affiliates, directors, officers, employees, agents, counsel and other advisors (collectively, the “Related Persons”) of the Administrative Agent (to the extent not reimbursed by any Credit Party), ratably in accordance with the respective Pro Rata Shares of the Lenders, against and hold each of them harmless from any and all liabilities, obligations, losses, claims, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including the reasonable fees and disbursements of counsel to the Administrative Agent (including allocated costs of internal counsel), which may be imposed on, incurred by, or asserted against the Administrative Agent or any such Related Person to be indemnified, in any way relating to or arising out of the Loan Documents, the use or intended use of the proceeds of the Loans or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent or other such Related Person to be indemnified in connection with any of the foregoing; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent they are found by a final decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Administrative Agent, or any other Related Person to be indemnified.  Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent and its Affiliates promptly upon demand for such Lender’s Pro Rata Share of any costs and expenses or other charges incurred by the Administrative Agent or its Affiliates and payable by the Borrowers pursuant to Section 13.04(a) or any other Loan Document, or by any Guarantor pursuant to any Guarantor Document.

 

Section 12.07                                Delegation of Duties.  The Administrative Agent may, in its discretion, employ from time to time one or more agents or attorneys-in-fact (including any of the Administrative Agent’s Affiliates) to perform any of the Administrative Agent’s duties under the Loan Documents.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

 

  

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Section 12.08                                Successor Administrative Agent.  Subject to the appointment and acceptance of a successor Administrative Agent as provided below, and subject to the consent of the Borrowers (not to be unreasonably withheld), the Administrative Agent may resign at any time by giving 30 days’ written notice thereof to the Lenders and the Borrowers.  Upon any such resignation, the Majority Lenders shall have the right to appoint a successor Administrative Agent from among the Lenders, and the Lenders shall use their best efforts so to appoint a successor the Administrative Agent (subject to consent of the Borrowers not to be unreasonably withheld).  If no successor Administrative Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, prior to the effective date of the retiring Administrative Agent’s resignation, the retiring Administrative Agent may, on behalf of and after consulting with the Lenders, appoint a successor Administrative Agent from among the Lenders (subject to consent of the Borrowers not to be unreasonably withheld).  Notwithstanding anything in this Section 12.08 to the contrary, Any such successor Administrative Agent shall be consented to by the Borrowers at all times other than during the existence of an Event of Default (which consent of the Borrowers shall not be unreasonably withheld or delayed).  Upon the effectiveness of the acceptance of any appointment as the Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges, duties and obligations of the retiring the Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under the Loan Documents.  After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article XII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under the Loan Documents.  If no successor has accepted appointment as the Administrative Agent by the date which is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Majority Lenders appoint a successor agent as provided for above.  It is understood and agreed the Shaw/TANE ABWR Joint Venture shall be an acceptable successor Administrative Agent to the Borrowers and the Lenders, in the event that Shaw shall have assigned to the Shaw/TANE ABWR Joint Venture 100% of the total Commitments hereunder.

 

Section 12.09                                Collateral Matters.

 

(a)           Guaranty Matters.  The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Guarantor from its obligations under its Guaranty if such Person ceases to be a Restricted Subsidiary as a result of a transaction permitted hereunder.  Upon request by the Administrative Agent at any time, the Lenders shall confirm in writing the Administrative Agent’s authority to release any Guarantor pursuant to this Section 12.09, provided that the absence of any such confirmation for whatever reason shall not affect the Administrative Agent’s rights under this Section 12.09.

 

Section 12.10                                The Administrative Agent May File Proofs of Claim.  In case of the pendency of any Insolvency Proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of any Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered, by intervention in such Insolvency Proceeding or otherwise (i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due under Section 13.04) allowed in such judicial proceeding; and (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such Insolvency Proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 13.04.  Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

 

  

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ARTICLE XIII

 

MISCELLANEOUS

 

Section 13.01                                Amendments and Waivers.

 

(a)           Except as otherwise provided herein or in any other Loan Document, (1) no amendment to any provision of this Agreement or any of the other Loan Documents shall in any event be effective unless the same shall be in writing and signed by the Borrowers (and/or any Guarantor or other party thereto, as applicable), the Administrative Agent and the Majority Lenders (or the Administrative Agent with the written consent of the Majority Lenders); and (2) no waiver of any provision of this Agreement or any other Loan Document, or consent to any departure by any Credit Party or other party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent and the Majority Lenders (or the Administrative Agent with the consent of the Majority Lenders).  Any such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that, unless in writing and signed by all of the Lenders (or by the Administrative Agent with the written consent of all the Lenders), no amendment, waiver or consent shall do any of the following:

 

(i)           increase the amount, or extend the stated expiration or termination date, of the Commitments of the Lenders or change the aggregate amount by which or to which the Commitments are required to be reduced as provided in Section 4.01(b), except for any such extension made in accordance with Section 4.01(a) which shall occur automatically upon satisfaction of the terms and conditions set forth therein;

 

(ii)           reduce the principal of, or interest on, the Loans or any fee payable to the Lenders hereunder provided, however, that only the consent of the Majority Lenders shall be necessary to amend the Default Rate, to waive any obligation of any Borrower to pay interest or any fee at the Default Rate;

 

  

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(iii)           postpone any date fixed for any payment in respect of principal of, or interest on, the Loans or any fee payable to the Lenders hereunder (excluding the date of any mandatory prepayment hereunder;

 

(iv)           change the definition of “Majority Lenders” or any definition or provision of this Agreement requiring the approval of Majority Lenders or all of the Lenders;

 

(v)           consent to the assignment or transfer by any Credit Party of any of its rights and obligations under the Loan Documents;

 

(vi)           release any Guaranty or all or a material portion of the Collateral, except as contemplated in the Loan Documents;

 

(vii)           contractually subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document, except as contemplated herein and in the Collateral Documents relating thereto;

 

(viii)           waive any of the conditions specified in Section 7.01;

 

(ix)           amend, modify or waive the provisions of Section 6.01 or 6.05; or

 

(x)           amend, modify or waive the provisions of this Section 13.01(a); and

 

provided further, however, that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required hereinabove to take such action, affect the rights, obligations or duties of the Administrative Agent under any Loan Document.  Notwithstanding anything to the contrary herein, a Defaulting Lender shall not have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitments of such Lender may not be increased without its consent.

 

(b)           Notwithstanding anything in this Agreement to the contrary, any Schedule hereto may be amended by Borrowers on the first date on which each of the following has occurred: (i) Borrowers have delivered to the Administrative Agent a replacement Schedule and (ii) the Administrative Agent and the Majority Lenders have provided written approval thereof.

 

If any Lender (such Lender, a “Non-Consenting Lender”) has failed to consent to a proposed amendment, waiver, discharge or termination that pursuant to the terms of this Section 13.01 requires the consent of all of the Lenders and with respect to which the Majority Lenders shall have granted their consent, then provided no Event of Default then exists, the Borrowers shall have the right (unless such Non-Consenting Lender grants such consent) to replace such Non-Consenting Lender by requiring such Non-Consenting Lender to assign its Loans and its Commitments hereunder to one or more assignees reasonably acceptable to the Majority Lenders, provided that:  (a) all Obligations of the Borrowers due and payable to such Non-Consenting Lender being replaced shall be paid in full to such Non-Consenting Lender concurrently with such assignment, and (b) the replacement Lender shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to the principal amount thereof plus accrued and unpaid interest thereon.  In connection with any such assignment, the Borrowers, the Administrative Agent, such Non-Consenting Lender and the replacement Lender shall otherwise comply with Section 13.10.

 

  

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Section 13.02                                Notices; Facsimile Copies.

 

(a)           Notices.  All notices and other communications provided for hereunder and under the other Loan Documents shall, unless otherwise stated herein, be in writing (including, unless the context expressly otherwise provides, by facsimile transmission and, subject to subsection (c), by electronic mail) and mailed (by certified or registered mail), sent or delivered to the respective parties hereto at or to their respective addresses, facsimile numbers or email addresses set forth in Schedule 2 or in any Administrative Questionnaire, or at or to such other address or facsimile number or email address as shall be designated by any party in a written notice to the other parties hereto.  All such notices and communications shall be effective (i) if delivered by hand, sent by certified or registered mail or sent by an overnight courier service, when received; and (ii) if sent by facsimile transmission or electronic mail, when sent; provided, however, that notices and communications to the Administrative Agent shall not be effective until received.  Each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

 

(b)           Reliance by the Administrative Agent and the Lenders.  The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic notice of a Borrowing) purportedly given by or on behalf of any Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrowers shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrowers.  All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and the parties hereto hereby consent to such recording.

 

(c)           Electronic Mail.  Electronic mail may be used only to distribute routine communications, such as financial statements and other information, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose.

 

(d)           Effectiveness of Facsimile Documents and Signatures.  Loan Documents may be transmitted and/or signed by facsimile or electronically (including by delivery of a .pdf or .tif file).  The effectiveness of any such documents and signatures shall, subject to applicable law, have the same force and effect as manually-signed originals and shall be binding on the Credit Parties, Administrative Agent and the Lenders.  Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile or electronic document or signature.

 

  

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Section 13.03                                No Waiver; Cumulative Remedies.  No failure on the part of Administrative Agent or any Lender to exercise, and no delay in exercising, any right, remedy, power or privilege under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights and remedies under the Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges that may otherwise be available to Administrative Agent or any Lender.  Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Credit Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 11.02 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (i) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as the Administrative Agent) hereunder and under the other Loan Documents, (ii) any Lender from exercising setoff rights in accordance with Section 13.05 (subject to the terms of Section 6.05), or (iii) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of any Insolvency Proceeding relative to any Credit Party; and provided, further, that if at any time there is no Person acting as the Administrative Agent hereunder and under the other Loan Documents, then (A) the Majority Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 11.02 and (B) in addition to the matters set forth in clauses (ii) and (iii) of the preceding proviso and subject to Section 6.05, any Lender may, with the consent of the Majority Lenders, enforce any rights and remedies available to it and as authorized by the Majority Lenders.

 

Section 13.04                                Costs and Expenses; Indemnification.

 

(a)           Costs and Expenses.  The Borrowers agree to pay on demand, whether or not the transactions contemplated hereby shall be consummated:

 

(i)           all title, appraisal, survey, audit, environmental inspection, search, recording, filing and similar reasonable and documented out-of-pocket costs, fees and expenses incurred or sustained by Administrative Agent or any of its Affiliates in connection with the Loan Documents or the Collateral;

 

(ii)           all reasonable documented out-of-pocket costs and expenses of outside counsel to the Administrative Agent in connection with due diligence conducted by or on behalf of the Administrative Agent with respect to the Borrowers, the negotiation of this Agreement and the other Loan Documents, the preparation, execution, delivery  of this Agreement and the other Loan Documents (in each case, to the extent accrued on or after October 30, 2010) and of administration of this Agreement and the other Loan Documents or any amendments, modifications, waivers or other supplements of the provisions hereof or thereof; and

 

(iii)           all documented out-of-pocket costs and expenses of Administrative Agent, its Affiliates and the Lenders, and documented out-of-pocket fees and disbursements of counsel, in connection with (A) any Default, (B) the enforcement or attempted enforcement of, and preservation of any rights or interests under, the Loan Documents, (C) any out-of-court workout or other similar refinancing or restructuring or any Insolvency Proceeding, and (D) the preservation of and realization upon any of the Collateral, including any losses, costs and expenses sustained by Administrative Agent or any Lender as a result of any failure by any Credit Party to perform or observe its obligations contained in the Loan Documents in connection therewith.

 

  

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(b)           Indemnification.  From and after the date of this Agreement, the Borrowers hereby agree to indemnify Administrative Agent, each Lender and any Related Person thereof (each an “Indemnified Person”) against, and hold each of them harmless from, any and all liabilities, obligations, losses, claims, damages, penalties, actions, judgments, suits of any kind or nature whatsoever, including the reasonable fees and disbursements of counsel to an Indemnified Person, and, to the extent payable by Borrowers pursuant to subsection (a), all costs, expenses or disbursements of any kind or nature whatsoever, which may be imposed on or incurred by any Indemnified Person, or asserted against any Indemnified Person by any third party, in any way, relating to or arising out of, in connection with, or as a result of (i) the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of Administrative Agent (and any sub-agent thereof) and its Related Persons only, the administration and enforcement of this Agreement and the other Loan Documents, (ii) the Loans or the use or intended use of the proceeds thereof, (iii) the use, generation, manufacture, installation, treatment, storage or presence, or the spillage, leakage, leaching, migration, dumping, deposit, discharge, disposal or release, at any time, of any Hazardous Substances on, under, at or from the properties of any Borrower or any Subsidiary thereof, including any personal injury or property damage suffered by any Person, and any investigation, site assessment, environmental audit, feasibility study, monitoring, clean-up, removal, containment, restoration, remedial response or remedial work undertaken by or on behalf of the any Indemnified Person at any time, voluntarily or involuntarily, with respect to the properties of any Borrower or any Subsidiary thereof, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Credit Party (the “Indemnified Liabilities”); provided that no Borrower shall be liable to any Indemnified Person for any portion or all of such Indemnified Liabilities to the extent (A) they are found by a final decision of a court of competent jurisdiction to have resulted from any Indemnified Person’s gross negligence, bad faith or willful misconduct or solely to the extent such claims are made by one Indemnified Person against another; (B) such Indemnified Liabilities pertain to any taxes or other governmental charges, levies, increased costs, regulatory costs, breakage costs and generally Liabilities addressed in Section 5.02(a) hereof; or (C) such Indemnified Liabilities constitute any costs or expenses in connection with the Loan Documents or the Collateral (which are fully addressed in Section 13.04(a) hereof).  If and to the extent that the foregoing indemnification is for any reason held unenforceable, the Borrowers agree to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 

(c)           Other Charges.  The Borrowers agree to indemnify Administrative Agent and each of the Lenders against and hold each of them harmless from any and all present and future stamp, transfer, documentary taxes, levies, fees, assessments and other charges made by any jurisdiction by reason of the execution, delivery, performance and enforcement of the Loan Documents.

 

  

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Section 13.05                                Right of Set-Off.  Upon the occurrence and during the continuance of any Event of Default, each Lender hereby is authorized at any time and from time to time, without notice to the Borrowers (any such notice being expressly waived by the Borrowers), 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 the Borrowers against any and all of the Obligations of the Borrowers now or hereafter existing under this Agreement and the other Loan Documents, irrespective of whether or not such Lender shall have made any demand under this Agreement or any such other Loan Document.  Each Lender agrees promptly to notify the Borrowers (through the Administrative Agent) after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of each Lender under this Section 13.05 are in addition to other rights and remedies (including other rights of set-off) which such Lender may have.

 

Section 13.06                                Survival.  All covenants, agreements, representations and warranties made in any Loan Documents shall, except to the extent otherwise provided therein, survive the execution and delivery of this Agreement, the making of the Loans, and shall continue in full force and effect so long as the Lenders have any Commitments, any Loans remain outstanding or any other Obligations remain unpaid or any obligation to perform any other act under any Loan Document remains unsatisfied (other than indemnities and other contingent obligations not then due and payable unless a written demand or invoice shall have been delivered to the applicable Borrower or Guarantor).  Without limiting the generality of the foregoing, the obligations of the Borrowers under Sections 5.01, 5.02 and 13.04, and of the Lenders under Section 12.06, and all obligations to pay costs and expenses and all indemnity obligations under the other Loan Documents, shall survive the repayment of the Loans and the termination of the Commitments.

 

Section 13.07                                Lender Obligations Several

 

.  The obligations of the Lenders under the Loan Documents are several.  The failure of any Lender or Administrative Agent to carry out its obligations thereunder shall not relieve any other Lender or Administrative Agent of any obligation thereunder, nor shall any Lender or Administrative Agent be responsible for the obligations of, or any action taken or omitted by, any other Person hereunder or thereunder.  Nothing contained in any Loan Document shall be deemed to cause any Lender or Administrative Agent to be considered a partner of or joint venturer with any other Lender or Lenders, Administrative Agent, any Guarantor or any Borrower.

 

Section 13.08                                Co-Borrower Provisions.

 

(a)           Borrower Agent.  Each Borrower appoints NINA its agent for purposes of the giving and receiving of any notice, and the agreement to any consent or waiver under this Agreement (NINA, in such capacity, the “Borrower Agent”).  The Borrower Agent shall have no duties or responsibilities hereunder by virtue of such appointment other than to grant consents by the Borrowers pursuant hereto.  Any notice required by this Agreement to be delivered to any Borrower shall be deemed to have been delivered to such Borrower upon delivery of such notice to the Borrower Agent, and receipt of any notice by the Borrower Agent shall constitute receipt of such notice by each Borrower.  Any notice or consent to be delivered hereunder by any Borrower shall be deemed to have been delivered by such Borrower upon delivery thereof by the Borrower Agent.

 

  

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(b)           Joint and Several Nature of Obligations.  All Loans made to the Borrowers shall be deemed to have been made to all Borrowers and each Borrower hereby agrees that it shall jointly and severally, and unconditionally, be obligated to pay the Obligations, including, without limitation, the Obligations incurred for the benefit of each of the other Borrowers.

 

(c)           Co-Borrower Waivers.

 

(i)           General Waivers.  Each Borrower hereby expressly waives (A) diligence, presentment, demand for payment, protest, benefit of any statute of limitations affecting any Borrower’s liability under the Loan Documents; (B) discharge due to any disability of any Borrower; (C) any defenses of any Borrower to obligations under the Loan Documents not arising under the express terms of the Loan Documents or from a material breach thereof by any Agent or any Lender which under applicable law has the effect of discharging any Borrower from the Obligations as to which this Agreement is sought to be enforced; (D) the benefit of any act or omission by any Agent or Lender which directly or indirectly results in or aids the discharge of any Borrower from any of the Obligations by operation of law or otherwise; (E) all notices whatsoever, including, without limitation, notice of acceptance of the incurring of the Obligations; (F) any right it may have to require Agent or Lenders to disclose to it any information that any Agent or Lender may now or hereafter acquire concerning the financial condition or any circumstances that bear on the risk of nonpayment by any other Borrower, including without limitation the release of such other Borrower from its Obligations hereunder; and (G) any requirement that any Agent or Lender exhaust any right, power or remedy or proceed against the other Borrower or any other security for, or any guarantor of, or any other party liable for, any of the Obligations, or any portion thereof.  Each Borrower specifically agrees that it shall not be necessary or required, and Borrowers shall not be entitled to require, that any Agent or Lender (1) file suit or proceed to assert or obtain a claim for personal judgment against any other Borrower for all or any part of the Obligations; (2) make any effort at collection or enforcement of all or any part of the Obligations from any Borrower; (3) foreclose against or seek to realize upon the Collateral or any other security now or hereafter existing for all or any part of the Obligations; (4) file suit or proceed to obtain or assert a claim for personal judgment against any Borrower or any guarantor or other party liable for all or any part of the Obligations; (5) exercise or assert any other right or remedy to which Administrative Agent or any Lender is or may be entitled in connection with the Obligations or any security or guaranty relating thereto to assert; or (6) file any claim against assets of one Borrower before or as a condition of enforcing the liability of any other Borrower under any Loan Document.

 

(ii)           Real Property Security Waivers.  Each Borrower acknowledges that all or any portion of the Obligations may now or hereafter be secured by a Lien or Liens upon real property evidenced by certain documents including, without limitation, deeds of trust and assignments of rents.  The Administrative Agent and Lenders may, pursuant to the terms of said real property security documents and applicable law, foreclose under all or any portion of one or more of said Liens by means of judicial or nonjudicial sale or sales.  Each Borrower agrees that the Administrative Agent and Lenders may exercise whatever rights and remedies they may have with respect to said real property security, all without affecting the liability of any Borrower hereunder, except to the extent the Administrative Agent and Lenders realize payment by such action or proceeding.  No election to proceed in one form of action or against any party, or on any obligation shall constitute a waiver of the Administrative Agent’s or Lenders' rights to proceed in any other form of action or against any Borrower or any other Person, or diminish the liability of any Borrower, or affect the right of the Administrative Agent or Lenders to proceed against any Borrower for any deficiency, except to the extent the Administrative Agent and Lenders realize payment by such action, notwithstanding the effect of such action upon any Borrower’s rights of subrogation, reimbursement or indemnity, if any, against Borrower or any other Person.

 

  

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(iii)           Waiver of Specific Rights.  WITHOUT LIMITING THE FOREGOING IN ANY WAY, EACH BORROWER HEREBY IRREVOCABLY WAIVES AND RELEASES TO THE EXTENT PERMITTED BY LAW ANY AND ALL RIGHTS IT MAY HAVE AT ANY TIME (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY OPERATION OF LAW, CONTRACT OR OTHERWISE) TO REQUIRE THE MARSHALING OF ANY ASSETS OF ANY BORROWER, WHICH RIGHT OF MARSHALING MIGHT OTHERWISE ARISE FROM ANY SUCH PAYMENTS MADE OR OBLIGATIONS PERFORMED.

 

Section 13.09                                Benefits of Agreement.  The Loan Documents are entered into for the sole protection and benefit of the parties hereto and their successors and assigns, and no other Person other than Affiliates of Administrative Agent and the Related Persons referred to in Sections 12.06, 13.04 and 13.14 shall be a direct or indirect beneficiary of, or shall have any direct or indirect cause of action or claim in connection with, any Loan Document.

 

Section 13.10                                Binding Effect; Assignment.

 

(a)           Binding Effect.  This Agreement shall become effective when it shall have been executed by each Borrower and Administrative Agent and when the Administrative Agent shall have been notified by each Lender that such Lender has executed it, and thereafter shall be binding upon, inure to the benefit of and be enforceable by the Borrowers, the Administrative Agent and each Lender and their respective successors and assigns.

 

(b)           Assignment.  No Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder, except (1) to an Eligible Assignee in accordance with the provisions of subsection (b)(i), (2) by way of participation in accordance with the provisions of subsection (b)(iii) or (3) by way of pledge or assignment of a security interest subject to the restrictions of subsection (b)(iv) (and any other attempted assignment or transfer by any party hereto shall be null and void).

 

(i)           Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it); provided that (A) so long as no Event of Default has occurred hereunder since the Closing Date (whether or not such Event of Default is continuing) Shaw, as Lender, may not assign more than 49% of its rights and obligations in respect of each of (x) the Loans and (y) the Commitments to any Person (including to any Eligible Assignee), (but other than the Shaw/TANE ABWR Joint Venture, to whom assignments shall be permitted at all times) (B) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitments and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as defined in subsection (b)(vi)) with respect to a Lender, the aggregate amount of the Commitments (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitments are not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $10,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrowers otherwise consents (each such consent not to be unreasonably withheld or delayed); (C) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitments assigned; (D) any assignment of any Commitments must be approved by the Administrative Agent unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (E) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (except in the case of assignments to the Affiliates), and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.  Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (b)(ii), from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Article V and Section 13.04 with respect to facts and circumstances occurring prior to the effective date of such assignment).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection (b)(i) shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (b)(iii).  Notwithstanding anything in this Section 13.10(b)(i) to the contrary, Shaw may assign 100% of its Commitments to the Shaw/TANE ABWR Joint Venture.

 

  

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(ii)           The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at its office in Baton Rouge, LA a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrowers, the Agents and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

  

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(iii)           Any Lender may at any time, without the consent of, or notice to, the Borrowers or any Agent, sell participations to any Person (other than a natural person or any Borrower or any Affiliate or Subsidiary thereof) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitments and/or the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (C) the Borrowers, each Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement and (D) no Borrower or Subsidiary thereof becomes exposed to a claim pursuant to Article V due to, and upon the occurrence of, such transaction; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification which would require unanimous consent as described in the second proviso to Section 13.01(a) that directly affects such Participant.  Each Participant shall be entitled to the benefits of Sections 5.01, 5.02 and 13.04 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b)(i).  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 13.05 as though it were a Lender, provided such Participant agrees to be subject to Section 6.05 as though it were a Lender.

 

(iv)           Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto and no Borrower or Subsidiary thereof becomes exposed to a claim pursuant to Article V due to, and upon the occurrence of, such transaction.

 

(v)           As used herein, the following terms have the following meanings:

 

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent and (ii) unless an Event of Default has occurred and is continuing, the Borrowers (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include any Borrower or any Affiliate or Subsidiary thereof (other than Shaw and any of its Affiliates that is not a Borrower); provided, however, Shaw/TANE ABWR Joint Venture shall be deemed to be an Eligible Assignee.

 

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

  

72

  

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Section 13.11                                Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION); PROVIDED THAT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY.

 

Section 13.12                                Submission to Jurisdiction.

 

(a)           Submission to Jurisdiction.  Each party hereto hereby (i) submits to the non-exclusive jurisdiction of the courts of the State of New York and the Federal courts of the United States sitting in the State of Southern District of New York for the purpose of any action or proceeding arising out of or relating to the Loan Documents, (ii) agrees that all claims in respect of any such action or proceeding may be heard and determined in such courts, (iii) irrevocably waives (to the extent permitted by applicable law) any objection which it now or hereafter may have to the laying of venue of any such action or proceeding brought in any of the foregoing courts, and any objection on the ground that any such action or proceeding in any such court has been brought in an inconvenient forum and (iv) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner permitted by law.

 

(b)           No Limitation.  Nothing in this Section 13.12 shall limit the right of Administrative Agent or the Lenders to bring any action or proceeding against such Borrower or its property in the courts of other jurisdictions.

 

Section 13.13                                Waiver of Jury Trial.  EACH BORROWER, LENDER AND AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  EACH BORROWER, THE LENDERS AND ADMINISTRATIVE AGENT HEREBY AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 13.13 AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.  A COPY OF THIS SECTION 13.13 MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND CONSENT TO TRIAL BY COURT.

 

  

73

  

 

Section 13.14                                Limitation on Liability.  No claim shall be made by any party hereto against any other party or any of their respective Related Persons for any special, indirect, exemplary, consequential or punitive damages in respect of any breach or wrongful conduct (whether or not the claim therefor is based on contract, tort or duty imposed by law), in connection with, arising out of or in any way related to the transactions contemplated by the Loan Documents or any act or omission or event occurring in connection therewith; and each Borrower hereby waives, releases and agrees not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

Section 13.15                                Confidentiality.  (a)  The parties hereto agree to maintain the confidentiality of the Confidential Information (as defined below), except that Confidential Information may be disclosed (i) to it, Affiliates of any party hereto and their respective directors, officers, employees, agents and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including the DOE and any self-regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section 13.15, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Borrower and its obligations, (vii) with the consent of the Borrowers or Lenders, as applicable (viii) to the extent such Confidential Information (A) becomes publicly available other than as a result of a breach of this Section 13.15 or (B) becomes available to the Administrative Agent or any Lender (or Borrowers) on a non-confidential basis from a source other than any Borrower (or the Administrative Agent or any Lender) (as applicable) or (ix) any Rating Agency and/or prospective financing institution and/or their advisors.   For purposes of this Section 13.15, “Confidential Information” means, with respect to a specific party, all information received from any other relevant party or any affiliate thereof relating to any such specific party or any affiliate thereof or any of their respective businesses, other than any such information that is available to the party receiving such information on a non-confidential basis prior to disclosure by any relevant party or any affiliate thereof.  Any Person required to maintain the confidentiality of Confidential Information as provided in this Section 13.15 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such Person would accord to its own confidential information.

 

Section 13.16                                Entire Agreement.

 

  

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(a)           The Loan Documents reflect the entire agreement among the Borrowers, the Lenders and Administrative Agent with respect to the matters set forth herein and therein and supersede any prior agreements, commitments, drafts, communications, discussions and understandings, oral or written, with respect thereto.

 

(b)           Notwithstanding anything herein to the contrary in this Agreement or any other Loan Document, prior to the “Discharge” (as defined in the Intercreditor Agreement) of the “Toshiba Obligations” (as defined in the Intercreditor Agreement), the requirements of this Agreement to deliver any possessory Collateral or Pledged Collateral (as defined in the Borrower Security Agreement) to the possession or control of the Administrative Agent shall be deemed satisfied by delivery of such Collateral to the Toshiba Collateral Agent (as defined in the Intercreditor as in effect on the date hereof) (as bailee for, and for the benefit of, the Administrative Agent), and to the extent so delivered, such delivery shall be given effect for purposes of determining the correctness of any representations and warranties (including without limitation Section 8.20 of this Agreement and Section 4(j) of the Borrower Security Agreement) in any Loan Document.

 

Section 13.17                                Payments Set Aside.  To the extent that any payment by or on behalf of any Credit Party under any Loan Document is made to Administrative Agent or any Lender, or Administrative Agent or any Lender exercises its right of set-off as to any Credit Party, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under the Bankruptcy Code or other U.S. Federal, state or foreign liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws, or otherwise, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (ii) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.

 

Section 13.18                                No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that:

 

(a)           (i) the arranging and other services regarding this Agreement provided by the Administrative Agent (including in its capacity as arranger), are arm’s-length commercial transactions between the Borrowers, each other Credit Party and their respective Affiliates, on the one hand, and the Administrative Agent, on the other hand, (ii) each of such Borrower and the other Credit Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii)  such Borrower and each other Credit Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents;

 

  

75

  

 

(b)           (i) Administrative Agent is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for such Borrower, any other Credit Party or any of their respective Affiliates, or any other Person and (ii) Administrative Agent has no obligation to such Borrower, any other Credit Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and

 

(c)           Administrative Agent and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of such Borrower, the other Credit Parties and their respective Affiliates, and Administrative Agent has no obligation to disclose any of such interests to such Borrower, any other Credit Party or any of their respective Affiliates.  To the fullest extent permitted by law, such Borrower (for itself and on behalf of the other Credit Parties) hereby waives and releases any claims that it may have against Administrative Agent with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

Section 13.19                                Severability.  Whenever possible, each provision of the Loan Documents shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations.  If, however, any provision of any of the Loan Documents shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of such Loan Document, or the validity or effectiveness of such provision in any other jurisdiction.

 

Section 13.20                                Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.

 

Section 13.21                                USA PATRIOT Act Notice.  Each Lender that is subject to the Act (as defined below) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies such Borrower, which information includes the name and address of such Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.  Each Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

 

Section 13.22                                Income Tax Treatment. The Borrowers, the Administrative Agent and the Lenders, and any other person from time to time party hereto, hereby acknowledge and agree that the Loans hereunder are to be treated as equity interests in NINA for federal and applicable state income tax purposes, and none of the Borrowers, the Administrative Agent and the Lenders, and any other person from time to time party hereto, shall take any position that is inconsistent with such treatment unless required by applicable law.

 

  

76

  

 

Section 13.23                                Recourse.  The recourse and claims of the Administrative Agent, the Lenders, any Indemnified Person and/or any other Secured Party under or in connection with this Agreement and the other Loan Documents with respect to the Borrowers and its Affiliates shall be solely and exclusively against the Borrowers and the Restricted Subsidiaries and, to the limited extent set forth in the Texas Genco Pledge Agreement, to Texas Genco and its assets, and to any Additional Grantors to the extent set forth in their applicable security documents required pursuant to the Borrower Security Agreement.  Administrative Agent and Lenders agree that the Obligations are non-recourse to the equity or assets of NRG and its Subsidiaries other than the Borrower, the Restricted Subsidiaries and, to the limited extent set forth in the Texas Genco Pledge Agreement, to Texas Genco and its assets, and to any Additional Grantors to the extent set forth in their applicable security documents required pursuant to the Borrower Security Agreement.  The foregoing acknowledgement, waiver and agreement shall be enforceable by the Borrowers and any of their Affiliates.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

  

77

  

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

 

	 	
NUCLEAR INNOVATION NORTH AMERICA LLC, as a Borrower

	 	 
	 	By:	 
	 	  	Name:
	 	  	
Title:

 

	 	
NINA INVESTMENTS HOLDINGS LLC, as a Borrower

	 	 
	 	By:	 
	 	  	Name:
	 	  	
Title:

 

	 	
NUCLEAR INNOVATION NORTH AMERICA INVESTMENTS LLC, as a Borrower

	 	 
	 	By:	 
	 	  	Name:
	 	  	
Title:

 

	 	
NINA TEXAS 3 LLC, as a Borrower

	 	 
	 	By:	 
	 	  	Name:
	 	  	
Title:

 

	 	
NINA TEXAS 4 LLC, as a Borrower

	 	 
	 	By:	 
	 	  	Name:
	 	  	
Title:

  

78

  

 

	 	
THE SHAW GROUP INC., as Administrative Agent and Lender

	 	 
	 	By:	 
	 	  	Name:
	 	  	
Title:

  

79

  

Schedule 1

to Credit Agreement

 

COMMITMENTS AND PRO RATA SHARES

	
Lender

	
Tranche A Commitment

	
Pro Rata Share

	
The Shaw Group Inc.

	
$100,000,000

	
100%

	  	  	  
	
Total

	
$100,000,000

	
100%

  

80

  

Schedule 2

to Credit Agreement

 

ADMINISTRATIVE AGENT’S ACCOUNT; LENDING OFFICES; ADDRESSES FOR NOTICES  **

 

 

 

 

  

81

  

Schedule 8.05

to Credit Agreement

 

REAL PROPERTY OF BORROWERS

None.

 

  

82

  

 

Schedule 8.06

to Credit Agreement

 

LITIGATION

None.

 

  

83

  

 

Schedule 8.10

to Credit Agreement

 

SUBSIDIARIES AND EQUITY INVESTMENTS

	
Borrower/ Owner

	
Subsidiary Owned

	
Subsidiary’s Jurisdiction of Organization

	
Subsidiary’s Type of Organization

	
Number of Units owned by Borrower/ Owner

	
Borrower/ Owner’s Percentage of all Outstanding Units

	 	
Other Owners; Other Owners’ Number of Units and Percentage Ownership

	 
	
Nuclear Innovation North America LLC

	
NINA Investments Holding LLC

	
Delaware

	
Limited liability company

	 	1000	 	100	%	 	n/a	 
	
NINA Investments Holdings LLC

	
Nuclear Innovation North America Investments LLC

	
Delaware

	
Limited liability company

	 	1000	 	100	%	 	n/a	 
	
Nuclear Innovation North America Investments LLC

	
NINA Texas 3 LLC

	
Delaware

	
Limited liability company

	 	1000	 	100	%	 	n/a	 
	
Nuclear Innovation North America Investments LLC

	
NINA Texas 4 LLC

	
Delaware

	
Limited liability company

	 	1000	 	100	%	 	n/a	 
	
Nuclear Innovation North America LLC

	
NINA Construction LLC

	
Delaware

	
Limited liability company

	 	1000	 	100	%	 	n/a	 
	
NINA Construction LLC

	
NINA Nuclear Training LLC

	
Delaware

	
Limited liability company

	 	1000	 	100	%	 	n/a	 
	
NINA Construction LLC

	
NINA Modularization LLC

	
Delaware

	
Limited liability company

	 	1000	 	100	%	 	n/a	 
	
NINA Construction LLC

	
NINA Steel Investments

	
Delaware

	
Limited liability company

	 	1000	 	100	%	 	n/a	 

 

  

84

  

Schedule 10.02(a)

to Credit Agreement

 

EXISTING LIENS

Nuclear Innovation North America LLC

 

	
1.

	
The terms and conditions of the Transferred Contracts or Permits that constitute Liens.

 

“Transferred Contracts or Permits” is defined as:

 

	
  

	
a.

	
Amended and Restated South Texas Project Participation Agreement, dated November 17, 1997, between CPS, the City of Austin and NRG South Texas LP(as successor in interest to Central Power and Light Company and Houston Lighting & Power Company).

 

	
  

	
b.

	
Letter Agreement regarding Agency, dated July 26, 2006, between NRG South Texas LP and STPNOC;

 

	
  

	
c.

	
Agency Agreement, dated October 30, 2007, by and between CPS, NRG South Texas LP and STPNOC;

 

	
  

	
d.

	
South Texas Project Supplemental Agreement, dated October 29, 2007, between CPS and NRG South Texas LP;

 

	
  

	
e.

	
Addendum to the South Texas Project Supplemental Agreement, dated October 29, 2007, between CPS and NRG South Texas LP;

 

	
  

	
f.

	
Amendment to the South Texas Project Supplemental Agreement dated December 12, 2007, between CPS and NRG South Texas LP;

 

	
  

	
g.

	
Memorandum of Understanding, dated July 20, 2007, between NRG South Texas LP and Dow Pipeline Company;

 

	
  

	
h.

	
Memorandum of Understanding, dated July 26, 2007, between NRG South Texas LP and the Lower Colorado River Authority;

 

	
  

	
i.

	
Deloitte engagement letter for consulting services in connection with the pollution control facilities application;

 

	
  

	
j.

	
Letter Agreement regarding tax pollution control and consulting services, dated November 9, 2007, between NRG South Texas LP and Thomson Property Tax Services;

 

	
  

	
k.

	
Tax Abatement Applications:  (i) Palacios Independent School District; (ii) Matagorda County, Texas; and (iii) Comptroller of the State of Texas;

 

	
  

	
l.

	
Application to the Texas Commission on Environmental Quality with respect to pollution control facilities;

 

  

85

  

 

	
  

	
m.

	
South Texas Project Operating Agreement, dated November 17, 1997, among CPS, the City of Austin, NRG South Texas LP (as successor in interest to Central Power and Light Company and Houston Lighting & Power Company) and STPNOC;

 

	
  

	
n.

	
South Texas Project Interconnection Agreement, dated August 15, 2001, by and between CPS, the City of Austin, NRG South Texas LP (as successor in interest to Central Power and Light Company and Houston Lighting & Power Company) and STPNOC on behalf of the owners of the South Texas Project;

 

	
  

	
o.

	
South Texas Project Transmission Maintenance Agreement, dated November 17, 1997, by and between CPS, the City of Austin, NRG South Texas LP (as successor in interest to Central Power and Light Company and Houston Lighting & Power Company) and STPNOC on behalf of the owners of the South Texas Project;

 

	
  

	
p.

	
Amendment One to the South Texas Project Transmission Lines Maintenance Agreement, dated April 7, 2006, by and among CPS, AEP Texas Central Company, the City of Austin and CenterPoint Energy Houston Electric, LLC;

 

	
  

	
q.

	
Switchyard Maintenance Agreement, dated November 17, 1997, by and between CPS, the City of Austin, NRG South Texas LP (as successor in interest to Central Power and Light Company and Houston Lighting & Power Company) and STPNOC on behalf of the owners of the South Texas Project; and

 

	
  

	
r.

	
Amended and Restated Interim Restructuring Agreement, dated March 1, 2006, by and among CPS, AEP Texas Central Company, CenterPoint Energy Houston Electric, LLC, NRG South Texas, LLC (formerly known as Texas Genco, LP) and the City of Austin.

 

  

86

  

 

Schedule 10.06(g)

to Credit Agreement

 

EXISTING INVESTMENTS

 

None.

 

  

87

  

 

Schedule 10.13(e)

to Credit Agreement

 

AFFILIATE TRANSACTION DOCUMENTS

 

	
  

	
(a)

	
Support Services Agreement, dated as of May 3, 2008, as amended September 25, 2009 and May 11, 2010, by and between NRG Energy, Inc., a Delaware corporation and Nuclear Innovation North America LLC, a Delaware limited liability company.

 

	
  

	
(b)

	
Confidentiality Agreement, dated as of January 29, 2010, by and between NRG Energy, Inc., a Delaware corporation and Nuclear Innovation North America LLC, a Delaware limited liability company.

 

  

88

  

 

Exhibit A

to the Credit Agreement

 

[FORM OF] ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between _________ [insert name of Assignor] (the “Assignor”) and _______ [insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other Loan Documents to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other Loan Documents, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “Assigned Interest”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

(a)           Assignor:                      ______________________________

 

(b)           Assignee:                      ______________________________

 

	
  

	
[and is an Affiliate/Approved Fund of [identify Lender]1]

 

(c)           Borrower(s):                      Nuclear Innovation North America LLC, a Delaware limited liability company (“NINA”), NINA Investments Holdings LLC (“Holdings”), Nuclear Innovation North America Investments LLC, a Delaware limited liability company, NINA Texas 3 LLC, a Delaware limited liability company (“NINA3”), NINA Texas 4 LLC, a Delaware limited liability company (“NINA4” and, together with NINA, Holdings and NINA3, the “Borrowers”)

	
  

	
1 Select as applicable.

 

 

  

89

  

 

(d)           Administrative Agent:                        The Shaw Group Inc., a Louisiana corporation, as administrative agent under the Credit Agreement

 

(e)           Credit Agreement:                                Credit Agreement, dated as of ___________, 2010, among the Borrowers, each lender party thereto (each a “Lender”), the Administrative Agent The Shaw Group Inc., a Louisiana corporation, as collateral agent.

 

(f)           Assigned Interest2:

 

	
Aggregate Amount of Commitment/Loans for all Lenders

	
Amount of Commitment/Loans Assigned3

	
Percentage Assigned of Commitment/Loans4

	
$

	
$

	
%

[7.      Trade Date:                                      ______________]5

 

Effective Date:  ______________________ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

	
  

	
2 Also, if a CUSIP number exists, add a column to the table.

 

	
  

	
3 Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

 

	
  

	
4 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

	
 

	

5 To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

 

  

90

  

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By _______________________________________

Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By _______________________________________

Title:

[Consented to and]6 Accepted:

THE SHAW GROUP INC., as

Administrative Agent

By:                                                           

Title:                                                           

[Consented to:]7

[NAME OF RELEVANT PARTY]

By:                                                           

Title:                                                           

 

 

	
  

	
6 To be added only if the consent of the Agent is required by the terms of the Credit Agreement.

 

	
  

	
7 To be added only if the consent of the Borrower and/or other parties is required by the terms of the Credit Agreement.

 

  

91

  

 

 ANNEX 1

[__________________]8

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.           Representations and Warranties.

 

1.1           Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrowers, any of their Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrowers, any of their Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2           Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, and (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 9.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2.           Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.9

 

 

	
  

	
8 Describe Credit Agreement at option of Administrative Agent.

 

  

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3.           General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the state of New York (without regard to principles of conflicts of laws that would result in the application of the laws of another jurisdiction); provided that section 5-1401 of the New York general obligations law shall apply.

 

	
  

	
9 The Administrative Agent should consider whether this method conforms to its systems.  In some circumstances, the following alternative language may be appropriate:  “From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to, on or after the Effective Date.  The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.”

 

  

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Exhibit D

to Credit Agreement

 

[FORM OF] NOTICE OF BORROWING

Date:           _____________________

	
To:

	
The Shaw Group Inc., as Administrative Agent under the Credit Agreement referred to below

[ADDRESS]

	
Re:

	
Credit Agreement, dated as of _____________, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Nuclear Innovation North America LLC, a Delaware limited liability company (“NINA”), NINA Investment Holdings LLC (“Holdings”), Nuclear Innovation North America Investments LLC, a Delaware limited liability company (“NINA Investments”), NINA Texas 3 LLC, a Delaware limited liability company (“NINA3”), NINA Texas 4 LLC, a Delaware limited liability company (“NINA4” and, together with NINA, Holdings, NINA Investments and NINA3, the “Borrowers”), the Lenders party thereto, and The Shaw Group Inc. as the Administrative Agent

Ladies and Gentlemen:

The Borrowers make reference to the Credit Agreement (capitalized terms used herein without definition having the meanings set forth in the Credit Agreement), and pursuant to Section 2.02 of the Credit Agreement, hereby irrevocably request a Borrowing as follows:

 

The Business Day of the proposed Borrowing is _______________;

 

The Borrowers hereby certify that the following statements are true on the date hereof, and will be true on the date of the proposed Borrowing, immediately before and immediately after giving effect thereto and to the application of the proceeds therefrom:

 

(a)           the representations and warranties contained in Article VIII of the Credit Agreement and in the other Loan Documents are true and correct in all respects (with respect to representations and warranties that are qualified by materiality or Material Adverse Effect) or in all material respects (with respect to representations and warranties that are not so qualified) as though made on and as of each such date (except for such representations and warranties that by their terms relate solely to a different date, in which case such representations and warranties are true and correct in all respects (with respect to representations and warranties that are qualified by materiality or Material Adverse Effect) or in all material respects (with respect to representations and warranties that are not so qualified) as of such date); provided that, the certification made in this paragraph (a) by bringdown of the representations and warranties contained in Section 8.16(a) of the Credit Agreement shall be deemed a certification not of the financial statements identified in such Section 8.16(a), but of the financial statements most recently delivered pursuant to Sections 9.01(a)(i) and (ii);

 

  

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(b)           no Default has occurred and is continuing or will result from such proposed Borrowing;

 

(c)           The EPC Contract is in full force and effect; and

 

(d)           The Tranche A Maturity Date has not occurred.

 

	 	
NUCLEAR INNOVATION NORTH AMERICA LLC

	 	 
	 	By:	  
	 	  	
Name:

	 	  	
Title:

 

	 	
NINA INVESTMENTS HOLDINGS LLC

	 	
 

	 	By:	  
	 	  	
Name:

	 	  	
Title:

 

	 	
NUCLEAR INNOVATION NORTH AMERICA INVESTMENTS LLC

	 	
 

	 	By:	  
	 	  	
Name:

	 	  	
Title:

 

	 	
NINA TEXAS 3 LLC

	 	
 

	 	By:	  
	 	  	
Name:

	 	  	
Title:

 

	 	
NINA TEXAS 4 LLC

	 	
 

	 	By:	  
	 	  	
Name:

	 	  	
Title:

 

95

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