Common use of Priority and Liens Clause in Contracts

Priority and Liens. (a) Each of the Loan Parties hereby covenants and agrees that, pursuant to the Orders, its obligations hereunder and under the Loan Documents and under the Secured Agreements: (i) pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times constitute an allowed Superpriority Claim in the Cases (excluding a claim on Avoidance Actions, other than pursuant to Section 549 of the Bankruptcy Code, but including the proceeds of Avoidance Actions (provided that such proceeds shall be available to satisfy such Superpriority Claims)); (ii) pursuant to Section 364(c)(2) of the Bankruptcy Code, shall at all times be secured by a valid, binding, continuing, enforceable perfected Lien (that is subject to the terms of the New DIP Order and the Intercreditor Agreement) on all of the property of such Loan Parties, whether now existing or hereafter acquired, that is not subject to valid, perfected, non-voidable liens in existence at the time of commencement of the Cases or to valid, non-voidable liens in existence at the time of such commencement that are perfected subsequent to such commencement as permitted by Section 546(b) of the Bankruptcy Code (limited, in the case of voting equity interests of CFC’s to 65% of such voting equity interests), and on all of its cash maintained in the L/C Cash Deposit Account and any investment of the funds contained therein, provided that amounts in the L/C Cash Deposit Account or the Secured Agreements Cash Deposit Account (as defined in the Final Order) shall not be subject to the Carve-Out); (iii) pursuant to Section 364(c)(3) of the

Priority and Liens. (a) Each Subject to Section 2.20(c), each of the Loan Parties hereby covenants and agrees that, pursuant to upon the Ordersentry of the DIP Order, its obligations hereunder and under the Loan Documents and under the Secured AgreementsDocuments: (i) pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times constitute an allowed Superpriority Claim in the Cases (excluding a claim on Avoidance ActionsCases, other than pursuant subject to Section 549 of any limitations set forth in the Bankruptcy Code, but including the proceeds of Avoidance Actions (provided that such proceeds shall be available to satisfy such Superpriority Claims))DIP Order; (ii) pursuant to Section 364(c)(2) of the Bankruptcy Code, shall at all times be secured by a valid, binding, continuing, enforceable perfected first priority Lien (that is subject to the terms of the New Intercreditor Agreement and DIP Order and the Intercreditor AgreementOrder) on all of the property of such Loan Parties, whether now existing or hereafter acquired, that is not subject to valid, perfected, non-voidable liens in existence at the time of commencement of the Cases or to valid, non-voidable liens in existence at the time of such commencement that are perfected subsequent to such commencement as permitted by Section 546(b) of the Bankruptcy Code (limited, in the case of voting equity interests of CFC’s to ’s, 65% of such the voting equity interests), and on all of its cash maintained in the L/C Cash Deposit Account and any investment of the funds contained therein, provided that amounts in the L/C Cash Deposit Account or the Secured Agreements Cash Deposit Account (as defined in the Final Order) shall not be subject to the Carve-Out); (iii) pursuant to Section 364(c)(3) of thethe Bankruptcy Code, shall be secured by a valid, binding, continuing, enforceable perfected second Lien upon all property of such Loan Parties, whether now existing or hereafter acquired, that is subject to valid, perfected and non-voidable Liens in existence at the time of the commencement of the Cases or that is subject to valid Liens in existence at the time of the commencement of the Cases that are perfected subsequent to such commencement as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the existing Liens that secure obligations in respect of the Existing Second Lien Debt, which liens shall be primed by the liens described in the following clause (iv)); and (iv) pursuant to Section 364(d)(1) of the Bankruptcy Code, shall be secured by a valid, binding, continuing, enforceable perfected first priority senior priming Lien on all of the property of such Loan Parties that is subject to the existing liens which secure the Existing Second Lien Debt (collectively, the “Primed Liens”), all of which Primed Liens shall be primed by and made subject and subordinate to (to the extent set forth in the DIP Order) the perfected first priority senior Liens to be granted to the Agent, which senior priming Liens in favor of the Agent shall also prime any Liens granted after the commencement of the Cases to provide adequate protection Liens in respect of any of the Primed Liens, subject in each case to the Carve-Out and as set forth in the DIP Order and the Intercreditor Agreement. (a) As to all real property the title to which is held by a Loan Party (other than any Loan Party that is not a Debtor) or the possession of which is held by any such Loan Party pursuant to leasehold interest, such Loan Parties hereby assign and convey as security, grant a security interest in, hypothecate, mortgage, pledge and set over unto the Agent on behalf of the Lenders all of the right, title and interest of such Loan Parties in all of such owned real property and in all such leasehold interests, together in each case with all of the right, title and interest of such Loan Parties in and to all buildings, improvements, and fixtures related thereto, any lease or sublease thereof, all general intangibles relating thereto and all proceeds thereof. Such Loan Parties acknowledge that, pursuant to the DIP Order, the Liens in favor of the Agent on behalf of the Lenders in all of such real property and leasehold instruments of such Loan Parties shall be perfected without the recordation of any instruments of mortgage or assignment. Such Loan Parties further agree that, upon the request of the Agent, in the exercise of its business judgment, such Loan Parties shall enter into separate fee and leasehold mortgages in recordable form with respect to such properties on terms satisfactory to the Agent and including customary related deliverables, including, without limitation, a Standard Flood Hazard Determination and, to the extent applicable, a notification to the applicable Loan Party that that flood insurance coverage under the National Flood Insurance Program is not available or evidence of flood insurance with respect to such property consistent with the requirements set forth in Section 5.01(c). (b) The relative priorities of the Liens described in this Section 2.20 with respect to the Collateral shall be as set forth in the DIP Order and the Intercreditor Agreement. The relative priorities of the New Money Loans and the Junior Loans shall be as set forth in the DIP Order and Section 6.02. All of the Liens described in this Section 2.20 with respect to the Facilities shall be effective and perfected upon entry of the DIP Order. (c) Notwithstanding anything to the contrary herein, not more than 65% of the voting equity interests of any CFC or a Subsidiary of a CFC shall be pledged in favor of any Lender or the Agent.

Priority and Liens. (a) Each The Loan Parties hereby covenant, represent and warrant that, upon entry of the Interim Order (or the Final Order, as applicable), the Obligations of the Loan Parties hereby covenants and agrees that, pursuant to the Orders, its obligations hereunder and under the other Loan Documents and under the Secured Agreements: Interim Order (or the Final Order, as applicable), (i) pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times constitute an allowed Superpriority Claim in the Cases (excluding a claim on Avoidance ActionsClaims, other than pursuant to Section 549 of the Bankruptcy Code, but including the proceeds of Avoidance Actions (provided that such proceeds shall be available to satisfy such Superpriority Claims)); (ii) pursuant to Section 364(c)(2) of the Bankruptcy Code, shall at all times be secured by a validperfected first priority Lien on, bindingand security interest in, continuing, enforceable perfected Lien (that is subject to the terms all present and after-acquired property of the New DIP Order and the Intercreditor Agreement) on all of the property of such Loan Parties, whether now existing or hereafter acquired, that is Debtors not subject to a valid, perfected, perfected and non-voidable liens avoidable lien or security interest in existence at on the time of commencement of the Cases Petition Date or to valid, non-voidable liens a valid lien in existence at on the time of such commencement Petition Date that are is perfected subsequent to such commencement the Petition Date as permitted by Bankruptcy Code Section 546(b) (but excluding the Borrower’s and the Guarantors’ rights in respect of avoidance actions under the Bankruptcy Code and the proceeds thereof); and (iii) pursuant to Section 364(c)(3) of the Bankruptcy Code, shall be secured by a perfected junior Lien on, and security interest in, all present and after-acquired property of the Debtors that is otherwise subject to a valid, perfected and non-avoidable lien or security interest in existence on the Petition Date or a valid lien in existence on the Petition Date that is perfected subsequent to the Petition Date as permitted by Bankruptcy Code Section 546(b), subject and subordinate in each case with respect to subclauses (i) through (iii) above, only to, in the event of the occurrence and during the continuance of an Event of Default, the payment of (A) unpaid fees and expenses of professionals retained by the Debtors or any official committee (each a “Committee”) appointed in accordance with Section 1102 of the Bankruptcy Code and the reasonable expenses of members of the Committee of unsecured creditors or otherwise that are (I) incurred prior to the occurrence and continuance of an Event of Default and (II) allowed by the Bankruptcy Court, at any time, under sections 105(a), 330 and 331 of the Bankruptcy Code, (B) unpaid fees and expenses of professionals retained by the Debtors or any Committee and the reasonable expenses of members of the Committee of unsecured creditors up to an aggregate amount not to exceed $25,000,000 that (I) are incurred after the occurrence and during the continuance of an Event of Default and (II) allowed by the Bankruptcy Court, at any time, under Sections 105(a), 330 and 331 of the Bankruptcy Code or otherwise, (C) in the event of a conversion of the Cases, the reasonable fees and expenses of a chapter 7 trustee under section 726(b) of the Bankruptcy Code in an amount not exceeding $2,000,000, and (limitedD) fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United States Trustee under 28 U.S.C. §1930(a) (collectively, the “Carve-Out”), provided, however that the Carve-Out shall not include any fees or expenses incurred in challenging the Liens or Superpriority Claims of the Collateral Agent, Administrative Agents or Lenders granted under this Agreement, the Security and Pledge Agreement and the Orders (it being understood that, in the case event of voting equity interests a liquidation of CFCthe Borrower’s and the other Debtors’ estates an amount equal to the Carve-Out shall be reserved from the proceeds of such liquidation, or from cash held in the estates at such time, and held in a segregated account prior to the making of the distributions); provided, further, however, no Loan Party shall be required to pledge to the Collateral Agent (i) in excess of 65% of the voting Capital Stock of its direct Foreign Subsidiaries or any of the Capital Stock or interests of its indirect Foreign Subsidiaries if adverse tax consequences would result to the Borrower from such voting equity interestspledge, (ii) the Capital Stock of Calpine Pasadena Cogeneration, Inc. and Calpine Texas Cogeneration, Inc., to the extent the pledge thereof is prohibited by the documents governing the leveraged lease transaction under which Pasadena Cogeneration L.P. is the facility lessee, and such entities are not Debtors, (iii) the Capital Stock of Androscoggin Energy, LLC, Bethpage Exxxxx Xxxxxx 0, XXX, Xxxxxxx Xxxxxx Energy Finance ULC, Calpine Canada Energy Ltd., Calpine Merchant Services Company, Inc., Calpine Newark, LLC, Calpine Pxxxxx, LLC and CPN Insurance Corporation or (iv) the stock of any Subsidiary that is not a Debtor owned by any Subsidiary that becomes a Debtor after the Closing Date to the extent such pledge would constitute a default under project documents, result in a right of refusal, call or put options being activated, or to the extent such entity is a debtor in another bankruptcy case in another jurisdiction, or insurance company or such grant of a security interest is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument, other document or any applicable shareholder or similar agreement relating thereto or conflicts with any applicable law. For clarity, the Administrative Agents and Lenders agree that so long as no Event of Default shall have occurred and be continuing, the Debtors shall be permitted to pay compensation and reimbursement of fees and expenses allowed and payable under Bankruptcy Code Sections 105(a), 330, and 331, as the same may be due and payable, and neither such amounts nor any retainers paid to the professionals retained by the Debtors or any Committee, nor any fees, expenses, indemnities or other amounts paid to any Agent, Lender or their respective attorneys and agents under this Agreement, shall reduce the Carve-Out, provided, that nothing herein shall be construed to impair the ability of any party to object to any of the fees, expenses, reimbursement or compensation described in clauses (ii) and (iii) above, and provided, further, that cash or other amounts on all of its cash maintained deposit in the L/C Cash Deposit Collateral Account and any investment of the funds contained therein, provided that amounts in the L/C Cash Deposit Account or the Secured Agreements Cash Deposit Account (as defined in the Final Order) shall not be subject to the Carve-Out); . (iiib) As to all Collateral, each Loan Party hereby assigns and conveys as security, grants a security interest in, hypothecates, mortgages, pledges and sets over unto the Collateral Agent all of the right, title and interest of the Borrower and such Guarantor in all of such Collateral. The Borrower and each Guarantor acknowledges that, pursuant to Section 364(c)(3the Orders, the Liens granted in favor of the Collateral Agent (on behalf of the Lenders) in all of thethe Collateral shall be perfected without the recordation of any Uniform Commercial Code financing statements, notices of Lien or other instruments. The Borrower and each Guarantor further agrees that (a) the Collateral Agent shall have the rights and remedies set forth in the Security and Pledge Agreement in respect of the Collateral and (b) if requested by the Collateral Agent, the Borrower and each of the Guarantors shall enter into separate security agreements, pledge agreements and fee and leasehold mortgages with respect to such Collateral on terms reasonably satisfactory to the Collateral Agent.