Commitment Letter
EXHIBIT 10.29
EXECUTION COPY
GENERAL ELECTRIC RAILCAR SERVICES CORPORATION
February 18, 2005
Mr. Dirk Cook
Manager Coal Transportation
NRG Power Marketing Inc.
211 Carnegie Center
Princeton, NJ ###-###-####
Subject: NRG Power Marketing Inc.
Dear Dirk:
The purpose of this letter is to convey a commitment on the part of General Electric Railcar Services Corporation (GE Railcar), to (a) acquire approximately 1,500 newly manufactured aluminum coal gondola cars (the Equipment) through the assignment by NRG Power Marketing Inc. (NRG) of its right to take delivery of the Equipment under the Johnstown American Corporation Proposal Number 04087, Revision 3, dated August 19, 2004 and accepted by NRG August 23, 2004 (the Purchase Agreement) between NRG and Johnstown America Corporation (Seller) and (b) to lease the Equipment to NRG pursuant to (i) the Railroad Car Full Service Master Leasing Agreement (the Master Lease) dated as of February 18, 2005 between GE Railcar and NRG and (ii) one or more Initial Riders between GE Railcar and NRG, each to be executed as to the Equipment specified therein with payment pursuant to the Purchase Agreement to be made as provided for therein (such date of payment is hereinafter referred to as a Funding Date). The lease of the Equipment shall be on the terms set forth in the form of Initial Rider (attached hereto as Exhibit A). Capitalized terms used herein without definition have the meanings described to them in the Master Lease.
This commitment is subject to (a) the execution and delivery of the Master Lease, and (b) satisfaction of the conditions precedent set forth in the Master Lease on the date hereof. In addition to the conditions set forth in the Lease Documents, the commitment to enter into each Initial Rider is subject to the conditions set forth in the form of Initial Rider attached hereto as Exhibit A. The Master Lease, the Guaranty, the Purchase Agreement Assignment, and each Initial Rider executed and delivered by the parties are collectively referred to as the Lease Documents. In addition to the conditions set forth in the Lease Documents, the commitment to make the payment due on any Funding Date is subject to the delivery and acceptance of the related Equipment on or prior to September 30, 2005.
GE Railcars commitment is based upon the foregoing and the terms and conditions set forth in the Master Lease and the form of Initial Rider. By execution and delivery of this letter to GE Railcar, NRG commits to lease the Equipment from GE Railcar upon the terms, and subject to
the conditions, set forth in the Lease Documents. If this agreement is acceptable, please indicate your acceptance by signing in the space below and returning one originally executed commitment to the undersigned. This agreement shall be governed by and construed in accordance with the laws of the State of Illinois without regard to its conflicts of laws.
Sincerely,
General Electric Railcar Services Corporation
Name: | ||
Title: | ||
Accepted & Agreed: | ||
NRG Power Marketing Inc. | ||
If this agreement is acceptable, please indicate your acceptance by signing in the space below and returning one originally executed commitment to the undersigned
Sincerely,
/s/ James N. Muday | ||||||
By: | James N. Muday | |||||
Title: | Vice President | |||||
General Electric Railcar Services Corporation | ||||||
Accepted & Agreed: | ||||||
NRG Power Marketing Inc. | ||||||
By: | ||||||
Name: | ||||||
Title: | ||||||
If this agreement is acceptable, please indicate your acceptance by signing in the space below and returning one originally executed commitment to the undersigned.
Sincerely,
By: | |
Title: General Electric Railcar Services Corporation |
Accepted & Agreed:
NRG Power Marketing Inc.
By: | /s/ Thomas N. May | |||
Name: | Thomas N. May | |||
Vice President | ||||
Title: | NRG Power Marketing Inc. |
EXHIBIT A TO COMMITMENT LETTER
General Electric Railcar Services Corporation
161 North Clark Street,
Chicago, IL 60601-
Phone ###-###-####, Fax ###-###-####
RIDER NO.
RAILROAD CAR FULL SERVICE MASTER LEASING AGREEMENT
This Rider (Rider) dated as of , 2005 is made by and between NRG Power Marketing Inc. (Lessee), and General Electric Railcar Services Corporation (Lessor), and hereby incorporates by reference all terms and conditions of that certain Railroad Car Full Service Master Leasing Agreement by and between Lessee and Lessor dated as of February 18, 2005 (the Master Lease) and, by such incorporation, this Rider hereby constitutes a separate agreement of lease with respect to the Cars described herein. The use of the terms Car or Cars shall mean the railcars listed below.
Pursuant to the terms of that certain Purchase Agreement Assignment, Lessor has agreed to purchase and lease to Lessee up to 1500 Cars for an aggregate Capitalized Lessors Cost of up to $94,447,276 pursuant to one or more Riders (collectively, the Initial Riders). The Delivery Dates for such Initial Riders shall occur on the dates as the parties may agree, but unless otherwise agreed by the parties (i) each Rider shall relate to one Train Set, (ii) the last Delivery Date shall occur no later than September 30, 2005 and (iii) the monthly rental is to be $465.00 per Car, subject to a one-time adjustment pursuant to Section 4.B of the Master Lease. In no event shall the aggregate Capitalized Lessors Cost with respect to all of the Cars to be leased under the Initial Riders exceed the amount of $94,447,276.
Matrix
Monthly | Hi-U | Hi-U | Delivery | |||||||||||||||||||||||||||||
Rental | Term | #of | Lease | Charge | Threshold | New | Schedule | |||||||||||||||||||||||||
Car Description | Rate | (Months) | Cars | Type | (per mile) | Miles | Cars | Weeks | ||||||||||||||||||||||||
286 GRL Coal Gondola | $ | ____ | 120 | * | ____ | Full | $ | .015 | 110,000 | Yes | ____ | |||||||||||||||||||||
Cars 122 Ton Aluminum manufactured by Johnstown America (Seller) |
* | Following the Interim Term |
Capitalized Lessors Cost: [ ] [to include applicable sales tax amounts].
Past Due Rate: The rate equal to the lower of (i) the Deutsche Bank Prime Rate plus 2.0% and (ii) the maximum rate permitted under applicable law.
Stipulated Loss Value: As set forth in Schedule I to this Rider.
Definitions
Capitalized terms used but not otherwise defined herein shall have the meanings specified in the Master Lease.
Car Reporting Marks
The Cars subject to this Rider shall enter Lessees service with Lessors reporting marks and numbers as set forth on Schedule II to this Rider.
Term
Interim Term: The period beginning on the Delivery Date through September 30, 2005.
Lease Term Commencement Date: October 1, 2005
Lease Term Expiration Date: September 30, 2015.
The lease of the Cars pursuant to this Rider shall commence on the date of this Rider upon satisfaction of the conditions set forth in Section 15B of the Master Lease.
Lessees obligation to pay rent under this Rider with respect to each of the Cars will be deemed to have terminated on the later of the expiration date of this Rider or the day after the respective Car arrives at a location within 100 miles of the BNSF route running from the Powder River Basin to Chicago, Illinois or St. Louis, Missouri or as otherwise agreed between Lessor and Lessee. For the avoidance of doubt, all Cars leased pursuant to this Rider will be returned to a single location.
Renewal Term
So long as no Event of Default has occurred and is continuing and Lessee has not exercised its option to terminate this Rider pursuant to the provisions of the Early Termination Option set forth below, Lessee shall have the right to renew the Lease for all but not less than all of the Cars subject to this Rider for one renewal term for a term to be agreed upon by Lessee and Lessor (the Renewal Term), provided that Lessee has delivered to Lessor irrevocable written notice not earlier than January 1, 2015 nor later than March 30, 2015. Rent during the Renewal Term shall equal the Fair Market Rental Value of the Cars.
Early Termination Option
So long as no Event of Default has occurred and is continuing, Lessee shall have the right to terminate this Rider with respect to the lease of all but not less than all of the Cars on September 30, 2010, by returning the Cars to Lessor in accordance with Section 10 of the Master Lease and paying to Lessor a termination price of S4,850.00 per Car plus all other amounts due and owing to Lessor on and as of such date, provided that Lessee has delivered to Lessor irrevocable written notice of Lessees exercise of its option to terminate substantially in the form of Exhibit A hereto not earlier than January 1, 2010 nor later than March 30, 2010. Upon delivery by Lessee of such notice exercising its option to terminate this Rider, Lessee shall be deemed to have exercised and delivered notice of its option to terminate each other Initial Rider with respect to the lease of all but not less than all of the Cars subject to each other Initial Rider.
Upon return of the Cars to Lessor pursuant to and in accordance with Section 10 of the Master Lease and payment of the termination price set forth above, plus all other amounts due and owing to Lessor, this Rider shall terminate.
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Commodities
Lessee intends to use the Car(s) for service with the following commodities: Coal and Synthetic Fuel. The Lessee agrees that the class of car listed above is correct for service with the following commodities: Coal and Synthetic Fuel. Lessor, upon written request from Lessee, will evaluate and either approve or disapprove the shipment of alternative commodities.
Permitted Use
Lessee shall use the Cars in accordance with the terms of the Master Lease and Schedule III to this Rider.
Cleaning
Lessee assumes full responsibility for all costs associated with the removal, disposal and cleaning of commodities from any Car during and at the end of the lease term, except to the extent Lessor and Lessee expressly agree in writing.
High Mileage Utilization
For each mile reported by the railroads that each Car covered by this Rider travels in excess of the Hi-U Threshold Miles set forth in the matrix set forth on page 1, there will be an additional charge with respect to such Car in an amount equal to the Excess Mileage multiplied by the Hi-U Charge set forth in the. This charge will be calculated by Lessor and paid annually by Lessee in arrears.
For purposes of this section, Excess Mileage for any Car equals the miles for such Car reported by the railroad to Lessor minus the Hi-U Threshold Miles set forth in the matrix set forth on page 1; provided, that the Hi-U Threshold Miles shall be prorated to the extent that this Rider is in effect with respect to such Car for less than a full calendar year.
Delivery Location
Subject to availability, the Car(s) will be delivered to Lessee at Sellers shop at Danville, Illinois (the Delivery Location).
Maintenance Locations
Pursuant to Section 7.C. of the Master Lease, Lessee shall make the Cars available to Lessor at any shop designated by Lessor on the Lessees normal routes of movement running from the Powder River Basin to Chicago, Illinois or St. Louis, Missouri or such other locations as Lessor and Lessee may agree.
Tax Benefits
The Tax Benefits available to Lessor are as follows: (A) Lessor shall be entitled to cost recovery deductions under section 168 of the Code with respect to 100% of Capitalized Lessors Cost computed assuming that each Item of Equipment is 7-year property, using the 200% declining balance method over a seven-year recovery period, switching to the straight-line method for the first taxable year for which using the straight-line method with respect to the adjusted basis as of the beginning of such year will yield a larger allowance and using the half-year convention, and (B) Lessor will not, at any time, be required to include in its gross income any amounts attributable to the transactions contemplated by this Agreement other than (i) Interim Rent and Basic Term Rent in the amounts and no earlier than at the times such payments are accrued in accordance with Section 4A of this Agreement, (ii) any gain realized by Lessor on a sale or other disposition of the Car(s), and (iii) the receipt of any payment of the amount set forth in the paragraph titled Early Termination Option in this Rider.
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Additional Provisions
A. Lessee hereby certifies that (i) the representations and warranties set forth in Section 11 of the Master Lease are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), and (ii) since February 18, 2005 there has been no amendment, modification or repeal of the certificate of incorporation, bylaws or the corporate authority of the Lessee that would adversely affect the ability of the Lessee to perform its obligations under, or the enforceability of, this Rider, the Master Lease or any other Operative Agreement to which it is a party.
B. So long as no Event of Default has occurred and is continuing, if a Car shall have been deemed to have suffered an Event of Loss pursuant to Section 7.A or 20 of the Master Lease, then Lessee shall have the right to purchase such Car at a purchase price equal to the sum of (A) the higher of (i) the Stipulated Loss Value and (ii) the fair market value for such Car plus (B) all other amounts due and owing to Lessor, in each case, on and as of such date of purchase. Lessee shall give Lessor ten (10) days irrevocable prior written notice of its election to exercise the purchase option provided for in this section. Payment of the purchase price described above shall be made on the date specified in Lessees notice to Lessor at the place of payment specified by Lessor in immediately available funds. Upon Lessors receipt of such purchase price for such Car, the provisions of Section 10 of the Master Lease relating to such Car shall not apply and Lessor shall deliver a bill of sale transferring and assigning to Lessee all right, title and interest of Lessor in and to such Car on an as-is where-is basis and without any representation or warranty except as to the absence of any Lessor Lien. The costs of preparing the bill of sale and all other documentation relating to any purchase by Lessee pursuant to this section, the costs of all necessary filings relating to such purchase and any transfer, sales and similar taxes relating to such purchase will be borne by Lessee. In the event of any such purchase and receipt by Lessor of all of the amounts provided in this section, the obligation of Lessee to pay rent hereunder in respect of the applicable Cars shall cease for the period after such purchase and the term of this Rider shall terminate with respect to such Cars.
C. For purposes of this Rider, the last sentence of Section 3 of the Master Lease is hereby amended and restated as follows:
The date a Car subject to a Rider is moved by a railroad from Sellers plant pursuant to Lessees disposition instructions shall be the Delivery Date for such Car.
D. Section 15.B of the Master Lease is hereby amended to include the following additional conditions precedent:
i. | Each Car shall be a 286 GRL Coal Gondola Car 122 Ton Aluminum manufactured by Johnstown America. | |||
ii. | The last Delivery Date with respect to the Cars covered by the Initial Riders shall occur no later than September 30, 2005. | |||
iii. | After giving effect to this Rider, the aggregate Capitalized Lessors Cost with respect to all of the Cars leased under the Initial Riders shall be less than or equal to $94,447,276. | |||
iv. | The Purchase Agreement Assignment dated as of February 18, 2005 by and between Lessee and Lessor and acknowledged by Seller (the Purchase Agreement Assignment) |
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shall have been duly executed and delivered by the parties thereto and shall be in full force and effect with respect to the Cars subject to this Rider.
D. Notwithstanding the provisions of Section 21 of the Master Lease, Lessor shall not substitute for any Car another Car, except as permitted under Section 8 of the Master Lease.
E. Section 31 of the Master Lease is hereby amended to include the following additional definitions:
Balance Sheet Date means December 31, 2003.
Operative Agreements means the Master Lease, this Rider, the Guaranty, the Purchase Agreement Assignment and the Commitment Letter, dated February 18, 2005, between the Lessor and Lessee.
Reference Date means December 17, 2004.
Counterparts
This Agreement may be executed in any number of counterparts, each executed counterpart constituting an original and in each case such counterparts shall constitute but one and the same instrument. To the extent that any Rider would constitute chattel paper, as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction, no security interest therein may be created without the transfer or possession of the original of this Rider; and no security interest in this Rider may be created by the transfer or possession of any counterpart of a Rider other than the original thereof, which shall be identified as the document marked Original and all other counterparts shall be marked Duplicate.
[signature page follows]
5
IN WITNESS WHEREOF, the parties hereto intending to be legally bound hereby have caused this Rider to be duly executed by their respective authorized representatives all as of the day and year first above written.
Accepted on behalf of: | Accepted on behalf of: | |||||||
NRG Power Marketing Inc. | General Electric Railcar Services Corporation | |||||||
By: | By: | |||||||
Name: | Name: | |||||||
Title: | Title: Vice President | |||||||
Guarantor hereby (i) certifies that the representations and warranties in Section 15 of the Guaranty are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were true and correct on and as of such earlier date), (ii) certifies that since February 18, 2005 there has been no amendment, modification or repeal of the certificate of incorporation, bylaws or the corporate authority of the Guarantor that would adversely affect the ability of the Guarantor to perform its obligations under, or the enforceability of, the Guaranty, this Rider, the Master Lease or any other Operative Agreement to which it is a party, (iii) acknowledges and consents to the terms and conditions of this Rider and (iv) reaffirms its obligations under the Guaranty.
NRG Energy, Inc. | ||||
By: | ||||
Name: | ||||
Title: | ||||
Schedule 1
Stipulated Loss Values
Payment | SLV As a Percentage | |||
# | Of OEC | |||
1 | 100 ###-###-#### | |||
2 | 100 ###-###-#### | |||
3 | 101.126099 | |||
4 | 101 ###-###-#### | |||
5 | 101 ###-###-#### | |||
6 | 101 ###-###-#### | |||
7 | 101 ###-###-#### | |||
8 | 101 ###-###-#### | |||
9 | 101 ###-###-#### | |||
10 | 102.1294908 | |||
11 | 102 ###-###-#### | |||
12 | 102 ###-###-#### | |||
13 | 102 ###-###-#### | |||
14 | 102 ###-###-#### | |||
15 | 102.726608 | |||
16 | 102 ###-###-#### | |||
17 | 102 ###-###-#### | |||
18 | 103.0134822 | |||
19 | 103.0981325 | |||
20 | 103.1757541 | |||
21 | 103 ###-###-#### | |||
22 | 103 ###-###-#### | |||
23 | 103 ###-###-#### | |||
24 | 103 ###-###-#### | |||
25 | 103 ###-###-#### | |||
26 | 103 ###-###-#### | |||
27 | 103 ###-###-#### | |||
28 | 103 ###-###-#### | |||
29 | 103 ###-###-#### | |||
30 | 103 ###-###-#### | |||
31 | 103 ###-###-#### | |||
32 | 103 ###-###-#### | |||
33 | 103 ###-###-#### | |||
34 | 103 ###-###-#### | |||
35 | 103 ###-###-#### | |||
36 | 103 ###-###-#### | |||
37 | 103 ###-###-#### | |||
38 | 103 ###-###-#### | |||
39 | 103 ###-###-#### | |||
40 | 103.810375 |
Schedule I
Stipulated Loss Values
Payment | SLV As a Percentage | |||
# | Of OEC | |||
41 | 103 ###-###-#### | |||
42 | 103 ###-###-#### | |||
43 | 103 ###-###-#### | |||
44 | 103 ###-###-#### | |||
45 | 103.7112861 | |||
46 | 103 ###-###-#### | |||
47 | 103 ###-###-#### | |||
48 | 103 ###-###-#### | |||
49 | 103.562987 | |||
50 | 103 ###-###-#### | |||
51 | 103 ###-###-#### | |||
52 | 103 ###-###-#### | |||
53 | 103 ###-###-#### | |||
54 | 103.1651773 | |||
55 | 103.0539804 | |||
56 | 102 ###-###-#### | |||
57 | 102.802172 | |||
58 | 102 ###-###-#### | |||
59 | 102 ###-###-#### | |||
60 | 102 ###-###-#### | |||
61 | 102.1919971 | |||
62 | 102.0314006 | |||
63 | 101 ###-###-#### | |||
64 | 101 ###-###-#### | |||
65 | 101 ###-###-#### | |||
66 | 101 ###-###-#### | |||
67 | 101 ###-###-#### | |||
68 | 101.0305305 | |||
69 | 100 ###-###-#### | |||
70 | 100.681339 | |||
71 | 100 ###-###-#### | |||
72 | 100 ###-###-#### | |||
73 | 100.1428191 | |||
74 | 99.96153568 | |||
75 | 99 ###-###-#### | |||
76 | 99.60085174 | |||
77 | 99.42145119 | |||
78 | 99.23964627 | |||
79 | 99.05846897 | |||
80 | 98.87791928 |
Schedule I
Stipulated Loss Values
Payment | SLV As a Percentage | |||
# | Of OEC | |||
81 | 98.69496522 | |||
82 | 98.51263878 | |||
83 | 98.33093994 | |||
84 | 98.14683675 | |||
85 | 97 ###-###-#### | |||
86 | 97.77444926 | |||
87 | 97.58919692 | |||
88 | 97 ###-###-#### | |||
89 | 97.22057508 | |||
90 | 97.03417361 | |||
91 | 96.84839974 | |||
92 | 96.66325349 | |||
93 | 96.47570287 | |||
94 | 96.28877987 | |||
95 | 96.10248447 | |||
96 | 95.91378471 | |||
97 | 95 ###-###-#### | |||
98 | 95 ###-###-#### | |||
99 | 95 ###-###-#### | |||
100 | 95.15313391 | |||
101 | 94.96454024 | |||
102 | 94 ###-###-#### | |||
103 | 94.58317177 | |||
104 | 94.39342896 | |||
105 | 94.20128178 | |||
106 | 94.00976221 | |||
107 | 93.81887025 | |||
108 | 93.62557394 | |||
109 | 93.42987326 | |||
110 | 93.23480019 | |||
111 | 93.04035474 | |||
112 | 92.84653689 | |||
113 | 92.65334665 | |||
114 | 92.45775205 | |||
115 | 92.26278506 | |||
116 | 92.06844568 | |||
117 | 91.87170195 | |||
118 | 91.67558582 | |||
119 | 91 ###-###-#### | |||
120 | 91.28220442 |
Schedule II
Car Reporting Marks
Schedule II-Page l