EXHIBIT 4.3
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ASSIGNMENT AND SECURITY AGREEMENT
by and among
CEDAR BRAKES II, L.L.C.
as Issuer,
BANKERS TRUST COMPANY
as Trustee,
and
BANKERS TRUST COMPANY
as Accounts Agent
Dated as of December 12, 2001
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TABLE OF CONTENTS
Page
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1. Definitions..............................................................................................1
2. Grant of Security Interest...............................................................................3
3. Perfection of Collateral.................................................................................7
4. Representations and Warranties..........................................................................12
5. Covenants and Agreements................................................................................14
6. The Issuer's Obligations................................................................................15
7. Remedies; Rights upon Event of Default..................................................................15
8. Application of Proceeds.................................................................................18
9. Assignment of Government Approvals......................................................................18
10. Security Interest Absolute..............................................................................18
11. The Trustee Appointed Attorney-in-Fact..................................................................18
12. The Trustee May Perform.................................................................................20
13. No Duty on the Trustee's Part; Limitation on the Trustee's Obligations..................................20
14. Reasonable Care; Standards for Exercising Remedies; Marshalling Collateral..............................20
15. Role of the Trustee and Accounts Agent..................................................................21
16. Absence of Fiduciary Relation...........................................................................22
17. Survival of Representations and Warranties..............................................................22
18. Notices.................................................................................................22
19. No Waiver; Cumulative Remedies..........................................................................22
20. Severability............................................................................................22
21. Exculpatory Provisions; Reliance By the Trustee and the Accounts Agent..................................23
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22. Amendment...............................................................................................23
23. Successors and Assigns..................................................................................23
24. Headings................................................................................................24
25. Limitation of Recourse..................................................................................24
26. Governing Law; Consent to Jurisdiction; Service of Process..............................................24
27. Counterparts............................................................................................25
28. Continuing Security Interest; Termination...............................................................25
29. Payments Set Aside......................................................................................26
30. Conflicts, Etc..........................................................................................26
Schedule A Material Agreements
Schedule B Financing Statement Filings
Schedule C Accounts
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ASSIGNMENT AND SECURITY AGREEMENT
This
ASSIGNMENT AND SECURITY AGREEMENT (this "Agreement"),
dated as of December 12, 2001, is made by and among CEDAR BRAKES II, L.L.C., a
Delaware limited liability company (the "Issuer"), BANKERS TRUST COMPANY, a
New
York banking corporation, as trustee (together with its successors and permitted
assigns in such capacity, the "Trustee"), and BANKERS TRUST COMPANY, a
New York
banking corporation, as the "securities intermediary" in accordance with Article
8 of the UCC (as defined below) and as a "bank" with respect to any "deposit
accounts" (each as defined in the UCC) in which a security interest may be
granted under the UCC and herein (together with its successors and permitted
assigns in each such capacity, the "Accounts Agent").
WITNESSETH:
WHEREAS, the Issuer has duly authorized the execution and
delivery of an indenture, dated as of December 12, 2001 (the "Indenture"), to
provide for the creation and issuance (a) on the Closing Date (as defined below)
of 9.875% senior secured bonds due 2013 in the aggregate principal amount of
$431,407,000 and (b) additional senior secured bonds, subject to compliance with
Section 312 and the covenants contained in Article Eleven and Article Twelve of
the Indenture (the "Bonds");
WHEREAS, the Trustee has agreed to act as trustee under the
Indenture on the terms and conditions set forth therein;
WHEREAS, the Bonds are to be secured by the Collateral (as
defined below) pursuant to the terms and conditions set forth herein in order to
induce the purchase of the Bonds; and
WHEREAS, it is a condition precedent to the Trustee and the
Accounts Agent entering into the Indenture that the Issuer enter into this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Trustee
and the Accounts Agent to enter into the Indenture with the Issuer, the parties
hereto hereby agree as follows:
1. Definitions.
(a) Unless otherwise defined herein or unless the context
otherwise requires, capitalized terms defined in the Indenture shall have the
same meanings when used in this Agreement.
(b) All other terms, whether capitalized or not, used herein
and not otherwise defined herein that are defined in Articles 8 or 9 of the
Uniform Commercial Code (as the same may be in effect in the State of
New York
or any other applicable jurisdiction, the "UCC") shall have their respective
meanings as therein defined.
(c) In addition, wherever used in this Agreement, unless the
context otherwise requires, the following terms shall have the meanings opposite
them:
"Accounts" shall have the meaning ascribed to such term in
Section 2(a)(ii) hereof;
"Accounts Agent" shall have the meaning ascribed to such term in
the preamble hereof;
"Agreement" shall have the meaning ascribed to such term in
the preamble hereof;
"Assigned Agreements" shall have the meaning ascribed to such term in
Section 2(a)(i) hereof;
"Bonds" shall have the meaning ascribed to such term in
the first whereas clause hereof;
"Collateral" shall have the meaning ascribed to such term in
Section 2(a) hereof;
"Indemnified Liabilities" shall have the meaning ascribed to such term in
Section 5(g) hereof;
"Indenture" shall have the meaning ascribed to such term in
the first whereas clause hereof;
"Issuer" shall have the meaning ascribed to such term in
the preamble hereof;
"Obligations" shall have the meaning ascribed to such term in
Section 2(c) hereof;
"Security Interest" shall have the meaning ascribed to such term in
Section 2(a) hereof;
"Trustee" shall have the meaning ascribed to such term in
the preamble hereof; and
"UCC" shall have the meaning ascribed to such term in
Section 1(b) hereof.
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(d) The words "herein," "hereof," and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section, or other subdivision.
(e) All references in this Agreement to "Articles,"
"Sections," "Exhibits," and other subdivisions of this Agreement are to the
designated articles, sections, and other subdivisions of, and the exhibits to,
this Agreement, and all references to this Agreement include its Exhibits.
(f) Unless otherwise expressly specified or the context
otherwise requires, all references in this Agreement or any Exhibit to any
agreement, contract, or document (including this Agreement) shall include
reference to all exhibits to such agreement, contract, or document.
(g) Unless otherwise expressly specified or the context
otherwise requires, any agreement, contract, or document defined or referred to
herein shall mean such agreement, contract, or document as in effect as of the
date hereof, as the same may thereafter be amended, supplemented, or otherwise
modified from time to time in accordance with the terms thereof and hereof.
(h) Unless otherwise expressly specified or the context
otherwise requires, pronouns having a masculine or feminine gender shall be
deemed to include the other.
(i) Any reference to any Person shall include its permitted
successors and assigns in accordance with the terms of this Agreement and the
other Financing Documents and, in the case of any Governmental Agency, any
Person succeeding to its functions and capacities.
(j) The term "including" denotes an example and not a
limitation.
2. Grant of Security Interest.
(a) Collateral. As security for the prompt and complete
payment and performance in full when due (whether at stated maturity,
declaration, acceleration, demand, or otherwise) of any and all of the
Obligations now existing or hereafter arising and the due performance and
compliance by the Issuer with all of the terms, conditions, and agreements
contained in the Indenture and the other Financing Documents, the Issuer hereby
collaterally assigns, pledges, hypothecates, and transfers to the Trustee (for
the equal and proportionate benefit of the Holders), and grants and creates a
continuing lien on and security interest in (the "Security Interest"), in favor
of the Trustee (for the equal and proportionate benefit of the Holders), all
right, title, and interest of the Issuer in, to, and under the following,
whether now existing or hereafter acquired (collectively, the "Collateral"):
(i) the Material Agreements (and the general
intangibles and contract rights thereunder), including,
without limitation, the Material
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Agreements listed on Schedule A, as each may be amended,
supplemented, replaced, or otherwise modified from time to
time (such Material Agreements, as amended, supplemented,
replaced, or otherwise modified, being individually referred
to herein as an "Assigned Agreement" and collectively referred
to herein as the "Assigned Agreements"), including, without
limitation (A) all rights of the Issuer to receive moneys due
and to become due under or pursuant to the Assigned
Agreements, (B) all rights of the Issuer to receive proceeds
of any performance or payment bond, insurance, indemnity,
warranty, or guaranty with respect to the Assigned Agreements,
(C) all claims of the Issuer for damages arising out of or for
breach of or default under the Assigned Agreements, and (D)
all rights of the Issuer to take any action to terminate,
amend, supplement, modify, or waive performance of the
Assigned Agreements, to perform thereunder, and to compel
performance and otherwise exercise all remedies thereunder;
provided, however, unless an Event of Default shall have
occurred and be continuing, the Issuer may exercise all
rights, interests, and benefits under the Assigned Agreements
in any lawful manner not prohibited by this Agreement, the
Indenture, or any of the other Financing Documents;
(ii) all investment property, including certificated
securities, uncertificated securities, securities accounts,
financial assets, and security entitlements, and all deposit
accounts and all other bank accounts and sub-accounts, in each
case established and maintained by the Accounts Agent in the
name of the Trustee for the benefit of the Holders in
accordance with Article Five of the Indenture and as set forth
on Schedule C (each of the securities accounts, deposit
accounts, other bank accounts, and sub-accounts being
individually referred to herein as an "Account" and
collectively referred to herein as the "Accounts"), together
with all funds, cash, monies, financial assets, investments,
instruments, certificates of deposit, promissory notes, and
any other property (including any Permitted Investments
deposited therein or credited thereto) at anytime on deposit
therein or credited to any of the foregoing (other than the
Additional Bonds' Net Proceeds, which shall in no event
constitute part of the Collateral), all rights to payment or
withdrawal therefrom, and all income, profits, gains, and
interest thereon;
(iii) all Government Approvals that have been issued
to or obtained or maintained by, or have otherwise been
created on behalf of, the Issuer;
(iv) all general intangibles (as such term is defined
in the UCC) now or hereafter owned by the Issuer, including,
without limitation, all trademarks, trademark applications,
trademark registrations, trade names,
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fictitious business names, business names, business
identifiers, prints, labels, trade styles and service marks
(whether or not registered), trade dress, including logos
and/or designs, copyrights, patents, patent applications,
goodwill of the Issuer's business symbolized by any of the
foregoing, trade secrets, license rights, license agreements,
franchises, and any rights to tax refunds to which the Issuer
is now or hereafter may be entitled;
(v) all of the Issuer's currently existing and future
accounts receivable and contract rights and all agreements,
rights, interests, inventory, goods, chattel paper, documents,
instruments, fixtures, trade fixtures, consumer goods, money,
and other assets owned by the Issuer on the date hereof or
hereafter arising or acquired, including, without limitation,
any right, title, or interest of the Issuer under any
indemnity, warranty, or guaranty and any rents, revenues,
incomes, and profits; and
(vi) to the extent not included in the foregoing, all
proceeds, products, and accessions of and to any and all of
the foregoing Collateral, including, without limitation,
whatever is received upon any collection, exchange, sale, or
other disposition of any of the Collateral, any property into
which any of the Collateral is converted, whether cash or
non-cash proceeds, and any and all other amounts paid or
payable under chattel paper or other general intangibles or in
connection with any of the Collateral;
provided, however, (x) any of the Government Approvals that by their terms or by
operation of law would become void, voidable, terminable, or revocable or would
constitute a breach or default thereunder or under any applicable law if pledged
or assigned hereunder or if a security interest therein were granted hereunder
are expressly excepted and excluded from the Security Interest and terms of this
Agreement to the extent necessary to avoid such voidness, voidability,
terminability, or revocability or breach or default, (y) any distributions,
payments, or releases (whether in the form of cash, instruments, or otherwise)
properly made by or to the Issuer pursuant to Section 502 of the Indenture, as
long as such distribution, payment, or release is made in accordance with the
Indenture, shall be released from the Security Interest granted hereunder and
shall no longer be part of the Collateral upon the making of such distribution,
payment, or release, and (z) any sale, lease, transfer, or other disposition of
the Collateral permitted by Section 1207 of the Indenture shall be released from
the Security Interest granted hereunder and shall no longer be a part of the
Collateral upon consummation of such sale or other disposition; provided,
further, that in the event any such Government Approvals described in clause (x)
above would no longer become void, voidable, terminable, or revocable or would
no longer constitute a breach or default thereunder or under any applicable law
if pledged or assigned hereunder or if a security interest therein were granted
hereunder, then such Government Approvals will automatically, without further
action by the Trustee or the Issuer, be
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included and subject to the lien and the terms of this Agreement. Any Additional
Bonds issued shall share equally and ratably in the Collateral with the Initial
Bonds.
(b) Sufficiency of Collateral Description. It is the intention
of the Issuer that the description of the Collateral set forth in Section 2(a)
be sufficient to enable the Trustee, on behalf of the Holders, upon exercise of
its remedies set forth in this Agreement and the other Financing Documents, to
take possession of, and foreclose upon, all of the right, title, and interest of
the Issuer in and to, without limitation, the Material Agreements, the
Government Approvals, the Accounts (other than any Additional Bonds' Net
Proceeds that may be on deposit therein), any insurance obtained by the Issuer,
and any monies payable to or accruing in favor of the Issuer, and to enable the
Trustee or its designee to sell or otherwise dispose of the entire interest of
the Issuer in and to such assets or any part thereof, in each case upon the
occurrence and during the continuance of an Event of Default and subject to the
limitations set forth in this Agreement and the other Financing Documents;
provided, however, that all of the Collateral is hereby assigned to the Trustee
solely as security and, subject to Section 14 below and the UCC, the Trustee
shall have no duty, liability, or obligation whatsoever with respect to any of
the Collateral unless the Trustee so elects in a writing delivered to the
Issuer.
(c) Obligations. This Agreement secures, and the Collateral is
collateral security for, in accordance with the provisions hereof, the following
obligations, now existing or hereafter arising (collectively, the
"Obligations"):
(i) payment and performance of each and every
obligation, indebtedness, covenant, agreement, and liability
of the Issuer, of every kind and character, now or hereafter
existing, owed to the Trustee for the benefit of the Holders
under the Bonds, contained in the Indenture or any other
Financing Document, in each case whether for principal,
Make-Whole Premium, if any, interest, fees, expenses, or
otherwise pursuant thereto, and any amendments or supplements
thereto, extensions or renewals thereof or replacements
therefor;
(ii) payment of all sums advanced in accordance
herewith or in accordance with any other Financing Document by
or on behalf of the Holders, to protect, retake, hold, or
prepare for sale, lease, or other disposition of, or realize
upon, any of the Collateral purported to be covered hereby or
thereby, including, without limitation, any fees and expenses
arising due to the failure of the Issuer to perform or observe
any provision of the Bonds and any other Financing Document,
with interest thereon at a rate per annum equal to the default
interest rate specified in Section 309(b) of the Indenture
from the date of demand therefor;
(iii) performance of every obligation, covenant, and
agreement of the Issuer contained in any agreement now or
hereafter executed by the Issuer and the Trustee that
expressly states that the obligations thereunder are secured
by this Agreement or any other Security Document; and
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(iv) payment of all sums, with interest thereon at a
rate per annum equal to the default interest rate specified in
Section 309(b) of the Indenture from the date of demand
therefor, that become due and payable to or for the benefit of
the Holders pursuant to the terms of this Agreement or any
other Financing Document;
in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, renewed or
restructured, reinstated, created or incurred, and, including, without
limitation, all indebtedness of the Issuer under any instrument now or hereafter
evidencing or securing any of the foregoing (including, in each and every case,
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
362(a) and any successor provision thereof).
3. Perfection of Collateral. In order to insure the
attachment, perfection, and first priority of, and the ability of the Trustee to
enforce, the Security Interest in the Collateral, the Issuer agrees, in each
case, at the Issuer's sole expense, to take the following actions with respect
to the Collateral:
(a) Financing Statements. The Issuer shall file or cause to be
filed, registered, and recorded all financing statements and other documents as
are necessary or required by applicable law to create, preserve, perfect, or
validate the Security Interest in favor of the Trustee, for the benefit of the
Holders, and each such document shall have been properly filed, registered, or
recorded in each jurisdiction in which the filing, registration, or recordation
thereof shall be necessary or required by applicable law to grant in favor of
the Trustee, for the benefit of the Holders, a perfected security interest in
the Collateral, and the Trustee shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration, or
recordation.
(b) Delivery of Collateral. With respect to all sums of money,
funds, and cash and all certificates, instruments, promissory notes, tangible
chattel paper, and negotiable documents whether now existing or hereinafter
acquired by or arising in favor of the Issuer that constitute Collateral, the
Issuer shall deliver the same to the Trustee pursuant to the terms of the
Indenture and the terms hereof. All such monies, funds, cash, certificates,
instruments, promissory notes, tangible chattel paper, and negotiable documents
that constitute Collateral shall be in suitable form for transfer by delivery or
otherwise, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Trustee, in
order to grant in favor of the Trustee, for the benefit of the Holders, a
perfected security interest in such monies, funds, cash, certificates,
instruments, promissory notes, tangible chattel paper, and negotiable documents
that constitute Collateral.
(c) Establishment of and Perfection of Security Interest in
the Accounts.
(i) The Accounts Agent hereby agrees and confirms
that it has established, in strict accordance with the
provisions of Article Five of the Indenture, the Accounts
specified on Schedule C attached hereto, in the
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name of the Trustee for the benefit of the Holders, and shall
maintain such Accounts in accordance with the terms hereof and
the Indenture until the termination of this Agreement. Each of
these Accounts shall be established and maintained by the
Accounts Agent at the office of the Accounts Agent located at
0 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Amounts shall be
deposited into, managed and administered, and withdrawn from
each of the Accounts in strict accordance with the provisions
of Articles Five and Seven of the Indenture.
(ii) The Accounts are and will be maintained by the
Accounts Agent as "securities accounts" (as defined in the
UCC) to the extent "financial assets" (as defined in the UCC)
are deposited in or credited to the Accounts. The Accounts
Agent hereby agrees to treat each item of property that
constitutes Collateral (including cash and investment
property) held by it in or credited to the Accounts as
financial assets to the extent such property can be treated as
a "financial asset" under the UCC. The Accounts Agent will
treat and identify the Trustee as the "entitlement holder" (as
defined in the UCC) with respect to the Accounts and all
financial assets that constitute Collateral credited thereto.
No financial asset that constitutes Collateral deposited in or
credited to the Accounts shall be registered in the name of,
payable to the order of, or specially indorsed to any person
other than the Trustee, unless indorsed to the Accounts Agent
or in blank. The Trustee, acting for the benefit of the
Holders, will have control of all security entitlements with
respect to financial assets that constitute Collateral
credited to the Accounts. The Accounts Agent will comply
strictly with all "entitlement orders" (as defined in the UCC)
originated by the Trustee without further consent by the
Issuer or any other Person. The Accounts Agent will not comply
or agree to comply with any entitlement order with respect to
the Accounts or any financial assets that constitute
Collateral credited thereto given by any Person other than the
Trustee. The Accounts Agent is a "securities intermediary" (as
defined in the UCC) and will act in such capacity. The
Accounts Agent is not a "clearing corporation" (as defined in
the UCC).
(iii) In the event that the Accounts are not
considered "securities accounts" (as defined in the UCC) under
applicable law, the Accounts shall be deemed to be "deposit
accounts" (as defined in the UCC) to the extent a security
interest can be granted and perfected under the UCC in the
Accounts as deposit accounts, which the Trustee shall maintain
with the Accounts Agent acting not as a securities
intermediary but as a "bank" (as defined in the UCC). The
Trustee, acting on behalf of the Holders, shall be deemed the
customer of the Accounts Agent for purposes of the Accounts
and as such shall be entitled to all the rights that customers
of banks have under applicable law with respect to deposit
accounts,
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including the right to withdraw funds that constitute
Collateral from, or close, the Accounts. The Issuer, the
Trustee, and the Accounts Agent agree that the Accounts Agent
will comply with instructions originated by the Trustee
directing disposition of the funds that constitute Collateral
in the Accounts without further consent by the Issuer or any
other Person. The Accounts Agent shall not have title to the
funds on deposit in the Accounts, and shall credit the
Accounts with all receipts of interest, dividends, and other
income received on the property held in the Accounts. The
Accounts Agent shall administer and manage the Accounts in
strict compliance with all the terms applicable to the
Accounts pursuant to the terms of the Indenture and this
Agreement, and shall be subject to and comply with all the
obligations that the Accounts Agent owes to the Trustee and
the Holders with respect to the Accounts, including all
subordination obligations, pursuant to the terms of the
Indenture and this Agreement.
(iv) In the event that the Accounts are not
considered "securities accounts" or "deposit accounts" (each
as defined in the UCC) under applicable law or a security
interest cannot be granted and perfected in the Accounts under
the UCC, then the Accounts and all property deposited therein
that constitute Collateral shall be deemed under the exclusive
dominion and control of the Holders, which the Holders
maintain through the Trustee and the Accounts Agent, as their
agents for such purpose, and the Trustee and the Accounts
Agent will act and will be deemed to be acting as the Holders'
agents in respect of the Accounts for the purpose of
maintaining such exclusive dominion and control for the
purpose of the creation and perfection of security interests
in favor of the Holders.
(d) Representations, Warranties, and Covenants of the Accounts
Agent.
(i) The Accounts Agent does not have any adverse
claim in respect of any Account or any financial assets or
other property credited thereto and, except for the rights and
interests of the Trustee, the Holders, and the Issuer (to the
extent provided in this Agreement, the Indenture, or any other
Financing Document), the Accounts Agent has not been advised
of any right or claim (including any adverse claim) to or
interest in the Accounts or any financial assets or other
property credited thereto. The Accounts Agent will promptly
notify the Trustee upon obtaining any such adverse claim or
notice of adverse claim.
(ii) All property delivered to the Accounts Agent to
be held in the Accounts will be held by the Accounts Agent and
promptly credited to the appropriate Account by appropriate
entries in the records of the Accounts Agent. The Accounts
Agent will not change the names or
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account numbers of the Accounts without the prior written
consent of the Trustee.
(iii) Other than this Agreement and the Indenture,
the Accounts Agent has not entered into and will not enter
into any agreement with any Person relating to the Accounts or
any financial assets or other property credited thereto under
which it has agreed or will agree to comply with entitlement
orders or other instructions of that Person directing the
disposition of the property credited thereto, or any agreement
that purports to limit or condition the obligation of the
Accounts Agent to comply with entitlement orders or other
instructions directing dispositions with respect to the
Accounts and the financial assets or other property credited
thereto.
(iv) The Accounts Agent acknowledges the Security
Interest granted hereby to the Trustee by the Issuer for the
benefit of the Holders. In the event that the Accounts Agent
has or subsequently obtains by agreement, operation of law, or
otherwise a right of recoupment or set-off or any security
interest in any of the Accounts or any financial asset or
other property credited thereto or any security entitlement
related thereto, the Accounts Agent hereby agrees that such
right of recoupment, set-off, and/or security interest shall
be subordinate to the Security Interest of the Trustee. The
Accounts Agent agrees that it shall not assert or enforce any
such right of recoupment, set-off, and/or security interest
until all Obligations owing to the Trustee and the Holders
under the Financing Documents shall have been indefeasibly
paid in full.
(v) The Accounts Agent represents, warrants, and
covenants that each Account has been established as set forth
in Article Five of the Indenture and each Account will be
maintained in the manner set forth herein and therein until
the termination of this Agreement.
(vi) The Accounts Agent represents, warrants, and
covenants that no financial asset is or will be registered in
the name of the Issuer, payable to its order, or specially
indorsed to it, except to the extent such financial asset has
been subsequently indorsed by the Issuer to the Accounts Agent
or in blank.
(vii) The Accounts Agent represents and warrants that
this Agreement constitutes the legal, valid, and binding
obligation of the Accounts Agent enforceable in accordance
with its terms except as the enforceability hereof may be
limited by general principles of equity and by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the rights of creditors generally.
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(e) Collateral in Possession of Bailee; Perfection. If any
goods that the Issuer owns or in which it has a right are now or at any time in
the possession of a bailee, the Issuer shall promptly notify the Trustee thereof
and shall promptly obtain an acknowledgment from the bailee, in form and
substance reasonably satisfactory to the Trustee, that the bailee holds such
Collateral for the benefit of the Trustee and the Holders and, if an Event of
Default has occurred and is continuing, shall act upon instructions from the
Trustee without the further consent of the Issuer. If for any reason the
Trustee, on behalf and for the benefit of the Holders, cannot perfect a Security
Interest in the items in possession of a bailee, then, upon instructions from
the Trustee, the Issuer shall promptly transport such items to a location with
respect to which the Trustee will be able to so perfect its Security Interest
upon the request of the Trustee.
(f) Electronic Chattel Paper and Transferable Records. With
respect to all electronic chattel paper or any "transferable record," as that
term is defined in Section 201 of the federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, now or hereafter
acquired by or arising in favor of the Issuer, the Issuer shall promptly notify
the Trustee thereof and, at the request of the Trustee, shall take such action
as the Trustee may reasonably request to vest in the Trustee "control" (as
defined in the UCC) of such electronic chattel paper or "control" under Section
201 of the federal Electronic Signatures in Global and National Commerce Act or,
as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so
in effect in such jurisdiction, of such transferable record. The Trustee agrees
that the Trustee will arrange, pursuant to procedures satisfactory to the
Trustee and so long as such procedures will not result in the Trustee's loss of
control, for the Issuer to make alterations to the electronic chattel paper or
transferable record permitted under the UCC or, as the case may be, Section 201
of the federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act for a party in control to
make without loss of control, unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by the Issuer
with respect to such electronic chattel paper or transferable record.
(g) Letter-of-Credit Rights. With respect to any letter of
credit now or hereafter issued in favor of the Issuer, the Issuer shall promptly
notify the Trustee thereof and, at the request and option of the Trustee, the
Issuer shall, pursuant to an agreement in form and substance satisfactory to the
Trustee, either (i) arrange for the issuer and any confirmer of such letter of
credit to consent to an assignment to the Trustee, for the benefit of the
Holders, of the proceeds of any drawing under the letter of credit or (ii)
arrange for the Trustee, for the benefit of the Holders, to become the
transferee beneficiary of or nominee under the letter of credit.
(h) Commercial Tort Claims. With respect to any commercial
tort claim that the Issuer may hereafter hold, the Issuer shall immediately
notify the Trustee in a writing signed by the Issuer of the brief details
thereof and grant to the Trustee, for the benefit of the Holders, in such
writing a perfected Security Interest therein and the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Trustee.
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(i) Further Assurances. To the extent not included in the
foregoing, the Issuer shall, from time to time at the Issuer's expense, promptly
execute and deliver all further agreements, instruments, and documents, and take
all further action, that may be necessary or advisable, or that the Trustee
determines may be necessary, in order to create, perfect, or protect any
Security Interest granted or purported to be granted hereby or to enable the
Trustee to exercise and enforce its rights and remedies hereunder with respect
to the Collateral. Without limiting the generality of the foregoing, the Issuer
shall (i) prepare, execute, and file such financing and continuation statements,
or amendments thereto, and such other instruments, endorsements, and notices, as
may be necessary, or as the Trustee may request, in order to perfect and
preserve the Security Interest granted or purported to be granted hereby,
including consents, assignments, notices, and other documentation reasonably
requested by the Trustee, (ii) cause the Trustee's name to be noted as secured
party on any certificate of title for a titled good if such notation is a
condition to attachment, perfection, or priority of, or ability of the Trustee
to enforce, the Trustee's Security Interest in such Collateral, (iii) comply
with any provision of any statute, regulation, or treaty of the United States as
to any Collateral if compliance with such provision is a condition to
attachment, perfection, or priority of, or ability of the Trustee to enforce,
the Trustee's Security Interest in such Collateral, (iv) obtain governmental and
other third party consents and approvals, including any consent of any licensor,
lessor, or other Person obligated on Collateral, (v) obtain waivers from
mortgagees and landlords in form and substance reasonably satisfactory to the
Trustee, (vi) execute any agreement, or deliver any Collateral to the Trustee,
in form and substance reasonably satisfactory to the Trustee, in order to
provide the Trustee with "control" (as such term is defined in the UCC) with
respect to the relevant Collateral (including, without limitation, with respect
to such Collateral that is evidenced by a promissory note or other instrument,
delivering and pledging to the Trustee such promissory note or instrument duly
indorsed and accompanied by duly executed instruments of transfer or assignment)
in order for the Trustee to obtain, for the benefit of the Holders, a perfected
Security Interest in such Collateral, and (vii) take all actions required by any
earlier versions of the UCC or by other laws, as applicable in any relevant
jurisdiction, or by other laws as applicable in any foreign jurisdiction.
4. Representations and Warranties. The Issuer hereby
represents and warrants as follows:
(a) Organization and Power. The Issuer is a limited liability
company duly organized, validly existing, and in good standing under the laws of
the State of Delaware and is in good standing in all jurisdictions where
necessary in light of its business or properties and has all requisite power and
authority to conduct its business, to own its properties, and to execute and
deliver, and perform its obligations under, this Agreement.
(b) Authorization. The execution, delivery, and performance by
the Issuer of this Agreement have been duly authorized by all necessary action,
and do not and will not (i) require any consent or approval of its board of
directors, managers, members, or any other Person that has not been obtained,
(ii) violate any provision of its certificate of formation or operating
agreement, or any law, rule, regulation, order, writ, judgment, injunction,
decree, or
12
award having applicability to it, the violation of which could reasonably be
expected to have a material adverse effect on its ability to perform its
obligations under this Agreement, (iii) result in a breach of or constitute a
default under any agreement relating to the management of its affairs or any
indenture or loan or credit agreement or other agreement, lease, or instrument
to which it is a party or by which it or its properties may be bound or
affected, the breach of which could reasonably be expected to have a material
adverse effect on the Issuer's ability to perform its obligations under this
Agreement.
(c) Enforceability. This Agreement has been duly executed and
delivered and is in full force and effect and constitutes the legal, valid, and
binding obligation of the Issuer enforceable in accordance with its terms except
as the enforceability hereof may be limited by general principles of equity and
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the rights of creditors generally.
(d) Actions and Proceedings. There is no pending or, to the
Issuer's knowledge, threatened, action or proceeding affecting the Issuer before
any court, governmental agency, regulatory body, or arbitrator that could affect
its ability to perform its obligations under, or that purports to affect the
legality, validity, or enforceability of, this Agreement.
(e) Title; No Other Liens. The Issuer is the legal and
beneficial owner of the Collateral in existence on the date hereof and will be
the sole owner of the Collateral hereafter acquired, free and clear of any and
all Liens or claims of others (other than Liens permitted under Section 1201 of
the Indenture), and the Issuer has full power and authority to grant the
Security Interest in and to the Collateral hereunder. Except with respect to
Liens permitted under Section 1201 of the Indenture, and otherwise as required
or permitted under this Agreement, no security agreement, financing statement,
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office.
(f) Chief Executive Office and Principal Place of Business.
The Issuer's chief executive office and principal place of business and the
place where the Issuer's records concerning the Collateral are kept is located
at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000. The Issuer's name on its
Certificate of Formation is Cedar Brakes II, L.L.C. and the Issuer is a limited
liability company organized under the laws of the State of Delaware.
(g) Other Perfection Matters. A financing statement or other
appropriate instrument has been filed pursuant to the UCC in the public offices
set forth in Schedule B as may be necessary to perfect the Security Interest
granted or purported to be granted hereby to the extent any such Security
Interest may be perfected by the filing of a financing statement. All other
action necessary or requested by the Trustee to protect and perfect the Security
Interest in each item of the Collateral has been duly taken, including those
actions set forth in Section 3 with respect to any Collateral that the Issuer
now owns or in which the Issuer now has a right. Subject to the requirements
contained in the UCC with respect to the filing of continuation statements, this
Agreement constitutes a valid, continuing, and perfected Security Interest in
the Collateral in favor of the Trustee for the equal and ratable benefit of the
Holders, subject to no
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other Liens (other than Liens permitted under Section 1201 of the Indenture),
and is enforceable as against creditors of and purchasers from the Issuer.
5. Covenants and Agreements. The Issuer hereby covenants and
agrees that it shall faithfully observe and fulfill, and shall cause to be
observed and fulfilled, each and all of the following covenants until all
Obligations have been indefeasibly paid and performed in full:
(a) Notice of Adverse Claims. Unless and to the extent that
the Issuer has already provided such notice to the Trustee pursuant to the
Indenture or any other Financing Document, the Issuer shall, promptly and in no
event later than five (5) days after the Issuer becomes aware of or should have
become aware of any information related to any adverse claim against the
Collateral, deliver to the Trustee notice of each such claim.
(b) Legal Status. The Issuer shall not change its name, place
of business or, if more than one, chief executive office, or its mailing address
or organizational identification number if it has one, or change its type or
organization, jurisdiction of organization, or other legal status, without
providing at least thirty (30) days' prior written notice to the Trustee and
having taken, at the Issuer's expense, all action necessary or requested by the
Trustee in order to continue the perfection and priority of the Security
Interest in the Collateral. If the Issuer does not have an organizational
identification number and later obtains one, the Issuer shall forthwith notify
the Trustee of such organizational identification number.
(c) Fees and Expenses. The Issuer shall upon demand pay to the
Trustee and the Accounts Agent the amount of any and all reasonable
out-of-pocket costs and expenses (including, without limitation, the reasonable
fees and expenses of their respective counsel, any special consultants
reasonably engaged, and any local counsel who might reasonably be retained by
the Trustee or the Accounts Agent, as the case may be, in connection with the
transactions contemplated hereby) that the Trustee, the Accounts Agent, or the
Holders, as the case may be, may incur in connection with (i) the sale of,
collection from, or other realization upon, any of the Collateral pursuant to
the exercise or enforcement of any of their respective rights hereunder, (ii)
the exercise of their respective rights under this Agreement, or (iii) the
execution, delivery, and performance of this Agreement, any agreement
supplemental hereto, and any instruments of further assurance pursuant to
Section 3(i). Any amounts payable by the Issuer pursuant to this Section 5(c)
shall be payable on demand and shall constitute Obligations together with
interest thereon at the default interest rate specified in Section 309(b) of the
Indenture from the date of demand thereof.
(d) Filing Fees, Taxes, etc. The Issuer shall pay all filing,
registration, and recording fees or re-filing, re-registration, and re-recording
fees, and all federal, state, county, and municipal stamp taxes and other
similar taxes, duties, imposts, assessments, and charges arising out of or in
connection with the execution and delivery of this Agreement, any agreement
supplemental hereto and, subject to Section 3(i), any instruments of further
assurance.
(e) Maintenance of Records; Inspection. At all times the
Issuer shall keep and maintain at its own cost and expense complete records of
the Collateral. Such records will be
14
kept at the Issuer's principal place of business set forth in Section 4(f). The
Issuer shall furnish to the Trustee statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Trustee may reasonably request, all in reasonable detail.
Subject to Section 1108 of the Indenture, the Trustee and its representatives
may inspect the Collateral.
(f) Limitation on Liens on the Collateral. The Issuer shall
not create, incur, or permit to exist, shall defend the Collateral against, and
shall take such other action as is necessary to remove, any Lien or claim on or
to the Collateral, other than Liens permitted under Section 1201 of the
Indenture, and shall defend the right, title, and interest of the Trustee in and
to any of the Collateral against the claims and demands of all Persons
whomsoever other than with respect to Liens permitted under Section 1201 of the
Indenture.
(g) Indemnification. The Issuer shall defend, indemnify, and
hold harmless the Trustee, the Accounts Agent, and their respective officers,
directors, employees, agents, and advisors authorized in accordance with the
terms of the Indenture, from and against any and all costs, expenses,
disbursements, liabilities, obligations, losses, damages, injunctions,
judgments, suits, actions, causes of action, fines, penalties, claims, and
demands, of every kind or nature (including, without limitation, reasonable
attorneys' fees and expenses) (herein collectively called the "Indemnified
Liabilities") that are occasioned by or result from or in connection with any of
the terms, agreements, or covenants to be performed by the Trustee or the
Accounts Agent under this Agreement or under any Assigned Agreement, other than
Indemnified Liabilities to the extent resulting from the Trustee's or the
Accounts Agent's gross negligence or willful misconduct. The provisions of
Sections 5(c), (d), and (g) shall survive the termination of this Agreement.
6. The Issuer's Obligations. (a) All payments received by the
Issuer under or in connection with any of the Collateral shall be held by the
Issuer in trust for the Trustee, shall be segregated from other funds of the
Issuer and shall, forthwith upon receipt by the Issuer, be turned over to the
Trustee or its designee in the same form as received by the Issuer (duly
endorsed by the Issuer to the Trustee, if requested), and (b) any and all such
payments so received by the Trustee or its designee (whether from the Issuer or
otherwise) shall be deposited into the Collections Account, or upon and during
the continuance of an Event of Default any such payments that constitute
Collateral shall be applied, subject only to the relevant provisions of the
Indenture and this Agreement and as otherwise may be required by applicable law,
in whole or in part by the Trustee or its designee in the manner specified in
Section 8 hereof, unless otherwise consented to by the Trustee.
7. Remedies; Rights upon Event of Default. Upon the occurrence
and during the continuance of an Event of Default, the Trustee, for the benefit
of and on behalf of the Holders, may do one or more of the following:
(a) in addition and without limitation to any rights arising
out of the Indenture and the other Financing Documents, take the following
enforcement action with respect to the Accounts and any other securities account
or deposit account constituting part of the Collateral,
15
without being required to give any notice to the Issuer, the Accounts Agent, or
any other securities intermediary or bank (except as may be required by
applicable law): (i) direct the Accounts Agent and any other securities
intermediary or bank, or the Issuer (as applicable) to deliver such Accounts or
other securities accounts or deposit accounts constituting part of the
Collateral to the Trustee at any place or places designated by the Trustee, it
being understood that such obligations are of the essence under this Agreement
and that, accordingly, upon application to a court of equity having
jurisdiction, the Trustee shall be entitled to a decree requiring specific
performance by the Accounts Agent, any other securities intermediary or bank, or
the Issuer, as the case may be, of such obligations; (ii) withdraw any and all
cash and liquidate any and all Permitted Investments, other financial assets,
and other property not constituting cash in any of the Accounts or any other
securities account or deposit account constituting part of the Collateral, and
apply such cash and the liquidation proceeds of Permitted Investments, financial
assets, or other property, if any, then held in any Account or any other
securities account or deposit account constituting part of the Collateral, to
the equal and ratable benefit of the Holders in satisfaction of all or any part
of the Obligations then due and payable in the manner specified in Section 8
hereof; and (iii) sell, assign, or otherwise liquidate the Accounts or any other
securities account or deposit account constituting part of the Collateral, or
any part thereof, at a public or private disposition, for cash, upon credit, or
for future delivery, and at such prices as the Trustee may deem satisfactory,
and take possession of the proceeds of any such sale or liquidation; provided,
that in no event shall the Trustee or any Holder be entitled to take any such
actions described in this Section 7(a) with respect to the Additional Bonds' Net
Proceeds. The Accounts Agent and the Issuer hereby acknowledge that if an Event
of Default has occurred and is continuing, the Trustee is entitled to apply
amounts (other than the proceeds of any Additional Bonds issued under the
Indenture) standing to the credit of any Account or any other securities account
or deposit account constituting part of the Collateral as contemplated in this
Section 7(a);
(b) make such payments and do such acts as the Trustee may
deem necessary to protect, perfect, or continue the perfection of the Security
Interest in the Collateral, including, without limitation, (i) paying,
purchasing, contesting, or compromising any Lien that is, or purports to be,
prior to or superior to the Security Interest granted hereunder and (ii)
commencing, appearing, or otherwise participating in or controlling any action
or proceeding purporting to affect the Security Interest in or ownership of the
Collateral;
(c) foreclose on the Collateral as herein provided or in any
manner permitted by law and exercise any and all of the rights and remedies
conferred upon the Trustee or the Holders either concurrently or in such order
as the Trustee may determine without affecting the rights or remedies to which
the Trustee or the Holders may be entitled under the Indenture or any other
Financing Document. The Issuer hereby waives, to the extent permitted by
applicable law and except as expressly provided in Section 7(f) below, notice
and judicial hearing in connection with the Trustee's taking possession or
commencing any collection, recovery, receipt, appropriation, repossession,
retention, set-off, sale, leasing, conveyance, assignment, transfer, or other
disposition of or realization upon any or all of the Collateral, including,
without limitation, any and all prior notice and hearing for any prejudgment
remedy or remedies and any such right
16
that the Issuer would otherwise have under the constitution or any statute or
other law of the United States of America or of any state thereof;
(d) require the Issuer to, and the Issuer hereby agrees that
it shall, at its expense and upon request of the Trustee, forthwith assemble all
or part of the Collateral as directed by the Trustee and make it available to
the Trustee at a location designated by the Trustee;
(e) without notice or demand or legal process (to the extent
permitted by applicable law), enter upon any premises of the Issuer and take
possession of the Collateral;
(f) without notice, except as specified below, sell the
Collateral, or any part thereof, in its then present condition or following any
commercially reasonable preparation or processing. Any such sale of the
Collateral may be made by one or more contracts, in one or more parcels, at
public or private sale at any of the Trustee's offices or elsewhere, at such
time or times, for cash, on credit, or for future delivery, and at such price or
prices and upon such other terms as the Trustee may deem commercially
reasonable. The Issuer agrees that, to the extent notice of sale shall be
required by law, at least twenty (20) Business Days' notice to the Issuer of the
time and the place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Trustee may bid and
purchase (which bid and purchase may be, in whole or in part, in the form of a
pro rata, dollar-for-dollar reduction of indebtedness) Collateral at a public
sale or at a private sale; provided, however, that the Trustee may bid and
purchase Collateral at a private sale only if the Collateral is of a kind that
is customarily sold on a recognized market or the subject of widely distributed
standard price quotations. The Trustee shall not be obligated to make any sale
of the Collateral regardless of notice of sale having been given. The Trustee
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The Trustee shall incur
no liability as a result of the manner of sale of the Collateral, or any part
thereof, at any private sale conducted in a commercially reasonable manner. The
Issuer hereby waives, to the extent permitted by applicable law, any claims
against the Trustee arising by reason of the fact that the price at which the
Collateral, or any part thereof, may have been sold at a private sale was less
than the price that might have been obtained at a public sale or was less than
the aggregate amount of the Obligations, even if the Trustee accepts the first
offer received that the Trustee deems to be commercially reasonable under the
circumstances and does not offer the Collateral to more than one offeree. To the
full extent permitted by law, the Issuer shall have the burden of proving that
any such sale of the Collateral was conducted in a commercially unreasonable
manner. To the extent permitted by law, the Issuer hereby specifically waives
all rights of redemption, stay, or appraisal that it has or may have under any
law now existing or hereafter enacted. The Issuer authorizes the Trustee, at any
time and from time to time, to execute, in connection with a sale of the
Collateral pursuant to the provisions of this Agreement, any endorsements,
assignments, or other instruments of conveyance or transfer with respect to the
Collateral; and
17
(g) exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party after default under the UCC and any
relevant law in any jurisdiction.
8. Application of Proceeds. The net proceeds of any
foreclosure, collection, recovery, receipt, appropriation, realization, or sale
of the Collateral shall be applied in the manner specified in Section 711 of the
Indenture.
9. Assignment of Government Approvals. The Issuer shall, upon
the occurrence and during the continuance of an Event of Default, at the request
of the Trustee, contemporaneously with and at any other time following any
foreclosure by the Trustee on any part of the Collateral, assign, transfer, or
otherwise furnish to the Trustee or to any transferee of the interest of the
Trustee (to the extent so assignable or transferable), all of the Issuer's
rights and interest in, to, and under all Government Approvals. Upon the request
of the Trustee upon the occurrence and during the continuance of an Event of
Default following foreclosure by the Trustee on the Collateral, the Issuer
agrees to use reasonable efforts to assist the Trustee in renewing or extending
in the name of the Trustee or otherwise obtaining the benefits of all of the
Government Approvals and other rights referred to in the immediately preceding
sentence to the extent that such Government Approvals and other rights shall not
be assignable or transferable.
10. Security Interest Absolute. All the rights of the Trustee
and the Holders hereunder and the Security Interest and all obligations of the
Issuer hereunder shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the
Financing Documents or any of the Collateral or any other agreement or
instrument relating thereto;
(b) any change in the time, manner, or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from any Financing Document or any of
the Collateral or any other agreement or instrument related thereto;
(c) any exchange or release of any Collateral or any other
collateral, or the non-perfection of any of the Security Interests, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations; or
(d) to the fullest extent permitted by law, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Issuer or any third-party pledgor other than payment in full
of the Obligations.
11. The Trustee Appointed Attorney-in-Fact. The Issuer hereby
irrevocably constitutes and appoints the Trustee and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact (which appointment as attorney-in-fact shall be coupled with an
interest), with full authority in the place and stead of the Issuer and in the
name of the Issuer or otherwise, from time to time upon the occurrence and
during the
18
continuance of an Event of Default in the Trustee's discretion, to take any
action and to execute any and all documents and instruments that the Trustee may
deem necessary or advisable to accomplish the purposes of this Agreement in a
commercially reasonable manner to the extent required by the UCC, without notice
to or assent by the Issuer, including, without limitation:
(a) to receive, endorse, and collect all instruments, chattel
paper, or letter-of-credit-rights made payable to the Issuer or investment
property in which the Issuer has an interest, in each case representing any
dividends, interest payments, or other distributions constituting Collateral or
any part thereof and to give full discharge for the same and to file any claim
or to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Trustee for the purpose of collecting any
and all of such dividends, payments, or other distributions;
(b) to enforce the rights of the Issuer under any provision of
any Assigned Agreement;
(c) to pay or discharge taxes and Liens levied or placed on
the Collateral;
(d) (i) to direct any party liable for any payment under or
with respect to any of the Collateral to make payment of any and all moneys due
or to become due thereunder or with respect thereto directly to the Trustee or
as the Trustee shall direct, including drawing under any
letter-of-credit-rights, (ii) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims, and other amounts due or to become
due at any time in respect of or arising out of any Collateral, (iii) to
commence and prosecute any suits, actions, or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or any part
thereof and to enforce any other right in respect of any Collateral, (iv) to
defend any suit, action, or proceeding brought against the Issuer with respect
to any Collateral, (v) to settle, compromise, or adjust any suit, action, or
proceeding described in clauses (iii) and (iv) above and, in connection
therewith, to give such discharges or releases as the Trustee may deem
appropriate, (vi) generally, to sell, transfer, pledge, and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Trustee were the absolute owner thereof for all
purposes, and (vii) to do, at the Trustee's option and at the Issuer's expense,
at any time, or from time to time, all acts and things that the Trustee deems
necessary to protect, preserve, or realize upon the Collateral and the Security
Interest granted herein and to effectuate the intent of this Agreement, all as
fully and effectively as the Issuer might do; and
(e) (i) to execute, in connection with any sale permitted to
be made by the Trustee hereunder, any endorsements, assignments, or other
instruments of conveyance or transfer with respect to the Collateral, (ii) to
communicate in its own name with any party to any agreement or instrument
included in the Collateral, at any reasonable time, with regard to any matter
relating to such agreement or instrument, or (iii) to the fullest extent
permitted by applicable law, to file one or more financing or continuation
statements, and amendments thereto, or such other filings or instruments as may
be necessary to perfect and maintain the Security Interest in each item of
Collateral, relative to all or any part of the Collateral without the signature
of the Issuer provided that the Trustee shall give notice to the Issuer promptly
after
19
taking any action described in this Section 11(e) (but failure to give such
notice shall not subject the Trustee to liability).
12. The Trustee May Perform. Upon the occurrence and during
the continuance of an Event of Default, with prior notice to the Issuer, the
Trustee, without releasing the Issuer from any obligation, covenant, or
condition hereof, itself may (but shall have no obligation to) make any payment
or perform, or cause the performance of, any such obligation, covenant,
condition, or agreement or any other action in such manner and to such extent as
the Trustee may deem necessary to protect, perfect, or continue the perfection
of the Security Interest. Any costs or expenses incurred by the Trustee in
connection with the foregoing shall be governed by the Indenture, constitute a
part of the Obligations secured by the Security Documents, bear interest at a
rate per annum equal to the default interest rate specified in Section 309(b) of
the Indenture, and be payable by the Issuer upon demand by the Trustee.
13. No Duty on the Trustee's Part; Limitation on the Trustee's
Obligations.
(a) No Duty on the Trustee's Part. The powers conferred on the
Trustee hereunder are solely to protect the Trustee's and the Holders' interests
in the Collateral and shall not impose any duty upon the Trustee to exercise any
such powers, including, without limitation, with respect to any calls,
conversions, maturities, tenders, or other matters relative to any Collateral,
or as to the taking of any necessary steps to preserve rights against any
parties or other rights pertaining to such Collateral. The Trustee shall be
accountable only for amounts that it receives as a result of the exercise of
such powers.
(b) Limitations on Obligations. Except as provided in the next
sentence, anything herein to the contrary notwithstanding, the Issuer shall
remain liable under the Assigned Agreements and any other agreements included in
the Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed. The exercise by the Trustee of any of the rights or remedies hereunder
shall not release the Issuer from any of its duties or obligations under the
Assigned Agreements or any other agreements included in the Collateral unless
expressly assumed by the Trustee in writing. All of the Collateral is hereby
assigned to the Trustee solely as security, and the Trustee shall have no duty,
liability, or obligation whatsoever with respect to any of the Collateral,
including, without limitation, the filing of any continuation statements, unless
the Trustee so elects in writing consistent with its rights under this Agreement
or fails to act in a commercially reasonable manner to the extent required by
the UCC.
14. Reasonable Care; Standards for Exercising Remedies;
Marshalling Collateral.
(a) The Trustee shall exercise the same degree of care
hereunder as it exercises or would exercise in connection with similar
transactions for its own account. The Trustee shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Trustee accords or would accord collateral held by the Trustee in
similar transactions
20
for its own account; provided, however, it is expressly understood that the
Trustee shall not have responsibility for taking any steps to preserve rights
against any parties with respect to the Collateral. In furtherance of the
foregoing, to the extent applicable law imposes on the Trustee an obligation to
exercise remedies in a commercially reasonable manner, the Issuer acknowledges
and agrees that it is not commercially unreasonable for the Trustee (i) to fail
to incur expenses reasonably deemed significant by the Trustee to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third-party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental or
third-party consents for the collection or disposition of Collateral to be
collected or disposed of, (iii) to fail to exercise collection remedies against
account debtors or other Persons obligated on Collateral or to remove Liens or
encumbrances on or any adverse claims against Collateral, (iv) to exercise
collection remedies against account debtors and other Persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other Persons, whether or not in the
same business as the Issuer, for expressions of interest in acquiring all or any
portion of the Collateral, (vii) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral is of a
specialized nature, (viii) to dispose of Collateral by utilizing internet sites
that provide for the auction of assets of the types included in the Collateral
or that have reasonable capability of doing so, or that match buyers and sellers
of assets, (ix) to dispose of assets in wholesale rather than retail markets,
(x) to disclaim disposition warranties, (xi) to purchase insurance or credit
enhancements to insure the Trustee against the risk of loss, collection, or
disposition of Collateral, or (xii) to the extent deemed appropriate by the
Trustee, to obtain the services of other brokers, investment bankers,
consultants, and other professionals to assist the Trustee in the collection or
disposition of any of the Collateral.
(b) Without limiting the generality of the foregoing and
except as otherwise provided by applicable law, the Trustee shall not be
required to xxxxxxxx any collateral, including, without limitation, the
Collateral subject to the Security Interest created hereby and any guaranties of
the Obligations, or to resort to any item of Collateral or guaranties in any
particular order, and all of the Trustee's rights hereunder and in respect of
such Collateral and guaranties shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that the Issuer lawfully may,
the Issuer hereby (i) agrees that it will not invoke any laws relating to the
marshaling of collateral that might cause delay in or impede the enforcement of
the Trustee's rights under this Agreement or under any other instrument
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or guaranteed and (ii)
irrevocably waives the benefits of all laws and any and all rights to equity of
redemption or other rights of redemption that it may have in equity or at law
with respect to the Collateral.
15. Role of the Trustee and Accounts Agent. The rights,
duties, liabilities, and immunities of each of the Trustee and the Accounts
Agent and its appointment and replacement
21
hereunder shall be governed by this Agreement, the Indenture, and the relevant
provisions contained in the other Financing Documents.
16. Absence of Fiduciary Relation. Each of the Trustee and the
Accounts Agent undertakes to perform or to observe only such of its agreements
and obligations as are specifically set forth in this Agreement or any other
Financing Document, and no implied agreements, covenants, or obligations with
respect to the Issuer, any Affiliate of the Issuer, or any other party to any of
the Assigned Agreements shall be read into this Agreement against the Trustee or
the Accounts Agent. Neither the Trustee nor the Accounts Agent in its capacity
as such is a fiduciary of and shall not owe or be deemed to owe any fiduciary
duty to the Issuer, any Affiliate of the Issuer, or any other party to any of
the Assigned Agreements, except as otherwise specifically required by applicable
law.
17. Survival of Representations and Warranties. All
agreements, representations, and warranties made herein or incorporated by
reference herein shall survive the execution and delivery of this Agreement and
the other Financing Documents and repayment of the Obligations, and shall be
deemed to be material and to have been relied upon by the Trustee and the
Accounts Agent, regardless of any investigation made by or on behalf of the
Trustee or the Accounts Agent.
18. Notices. All notices, demands, requests, and other
communications required or permitted hereunder shall be in writing and shall be
given in accordance with Section 105 of the Indenture.
19. No Waiver; Cumulative Remedies. By exercising or failing
to exercise any of its rights, options, or elections hereunder (without also
expressly waiving the same in writing), the Trustee, on behalf of the Holders,
shall not be deemed to have waived any breach or default on the part of the
Issuer or to have released the Issuer from any of its obligations secured
hereby. No failure on the part of the Trustee to exercise, and no delay in
exercising (without also expressly waiving the same in writing) any right,
power, or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power, or privilege preclude any
other or further exercise thereof, or the exercise of any other right, power, or
privilege. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law. The Trustee, acting on behalf of the Holders, shall
have all of the rights and remedies granted under the Indenture or any other
Financing Document, and available at law or in equity, and these same rights and
remedies may be pursued separately, successively, or concurrently against the
Issuer or any Collateral, at the discretion of the Trustee. The application of
the Collateral to satisfy the Obligations pursuant to the terms hereof shall not
operate to release the Issuer from its Obligations until payment in full of any
deficiency has been made in cash.
20. Severability. Should any clause, sentence, paragraph,
subsection, or Section of this Agreement be judicially declared to be invalid,
unenforceable, or void, such decision will not have the effect of invalidating
or voiding the remainder of this Agreement and the parties hereto agree that the
part or parts of this Agreement so held be invalid, unenforceable,
22
or void will be deemed to have been stricken here by the parties hereto, and the
remainder will have the same force and effect as if the stricken part or parts
had never been included herein.
21. Exculpatory Provisions; Reliance by the Trustee and the
Accounts Agent.
(a) Exculpatory Provisions. None of the Trustee, the Accounts
Agent, or any of their respective officers, directors, employees, agents,
attorneys-in-fact, or Affiliates shall be liable to the Issuer for any action
taken or omitted to be taken by it under or in connection with this Agreement,
or responsible in any manner to any Person for any recitals, statements,
representations, or warranties made by the Issuer or any officer thereof
contained in this Agreement or in any certificate, report, statement, or other
document referred to or provided for in, or received by the Trustee or the
Accounts Agent under or in connection with, this Agreement or for the value,
validity, effectiveness, genuineness, enforceability, or sufficiency of this
Agreement or for any failure of the Issuer to perform any of the Obligations.
Neither the Trustee nor the Accounts Agent shall be under any obligation to any
Person to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or to inspect the
properties or records of the Issuer. Notwithstanding anything to the contrary
contained herein, none of the Trustee, the Accounts Agent, or any of their
respective officers, directors, employees, agents, attorneys-in-fact, or
Affiliates shall be exonerated from any liability arising from its or their own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction.
(b) Reliance by the Trustee and the Accounts Agent. Each of
the Trustee and the Accounts Agent shall be entitled to rely conclusively, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex,
or teletype message, statement, order, or other document or conversation
believed by it in good faith to be genuine and correct and to have been signed,
sent, or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Issuer),
independent accountants, and other experts selected by the Trustee or the
Accounts Agent. Each of the Trustee and the Accounts Agent shall have no
obligation to any Person to act or refrain from acting or exercising any of its
rights under this Agreement; provided, however, anything to the contrary
contained herein notwithstanding, each of the Trustee and the Accounts Agent
shall be liable for its own gross negligence or willful misconduct as determined
by a court of competent jurisdiction.
22. Amendment. Any amendment or waiver of, or any consent
given under, any provision of this Agreement shall be in writing and, in the
case of an amendment, signed by the parties hereto.
23. Successors and Assigns. This Agreement binds and benefits
the respective successors and assignees of the parties. However, the Issuer may
not assign or delegate any of its rights or obligations under this Agreement
without the prior consent of the Trustee.
23
24. Headings. The captions, headings, and table of contents
used in this Agreement are for convenience only and do not and shall not be
deemed to affect, limit, amplify, or modify the terms and provisions hereof.
25. Limitation of Recourse. Anything herein to the contrary
notwithstanding, the obligations of the Issuer under this Agreement are special
obligations of the Issuer and do not constitute an obligation of (and no
recourse shall be had with respect thereto to) any parent company, officer,
agent, employee, manager, or Affiliate of the Issuer, or any shareholder,
member, partner, officer, agent, employee, or director of any parent company or
Affiliate of the Issuer as such, and no judgment for any personal liability or
deficiency upon or with respect to, or otherwise in connection with, the
obligations under this Agreement shall be obtainable by the Trustee, the
Accounts Agent, or any of the Holders (or any Person claiming by, through, or
under such Persons) against any parent company, officer, agent, employee,
manager, or Affiliate of the Issuer, or any shareholder, member, partner,
officer, agent, employee, or director of any thereof absent fraud,
misrepresentation, or willful misconduct on the part of such Person; provided
that nothing in this Section 25 shall limit EP's obligations under any Material
Agreement to which it is a party or EP's or Mesquite's obligations under their
respective letter agreements with Credit Suisse First Boston Corporation
("CSFB") dated December 7, 2001.
26. Governing Law; Consent to Jurisdiction; Service of
Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE
NEW
YORK GENERAL OBLIGATIONS LAW. The Accounts Agent's jurisdiction (within the
meaning of section 8-110(e) of the UCC) in its capacity as the "securities
intermediary" with respect to all securities accounts, and the Accounts Agent's
jurisdiction (within the meaning of section 9-304 of the UCC) in its capacity as
the "bank" with respect to all deposit accounts, established and maintained by
the Accounts Agent in the name of the Trustee is, and will continue to be for as
long as the Security Interest shall be in effect, the State of
New York.
(b) The Issuer consents to the non-exclusive jurisdiction of
any court of the State of
New York or any United States federal court sitting in
the Borough of Xxxxxxxxx, Xxx Xxxx Xxxx, Xxx Xxxx, Xxxxxx Xxxxxx, and any
appellate court from any thereof, and waives any immunity from the jurisdiction
of such courts over any suit, action, or proceeding that may be brought in
connection with this Agreement. The Issuer irrevocably waives, to the fullest
extent permitted by law, any objection to any suit, action, or proceeding that
may be brought in connection with this Agreement in such courts whether on the
grounds of venue, residence, or domicile or on the ground that any such suit,
action, or proceeding has been brought in an inconvenient forum. The Issuer
agrees that final judgment in any such suit, action, or proceeding brought in
such court shall be conclusive and binding upon the Issuer and may be enforced
in any court of the jurisdiction of which the Issuer is subject by a suit upon
such judgment.
24
(c) The Issuer agrees that service of all writs, process, and
summonses in any suit, action, or proceeding brought in connection with this
Agreement against the Issuer, or with respect to its property and assets, in any
court of the State of
New York or any United States federal court sitting in the
Borough of Manhattan,
New York City may be made upon CT Corporation System at
000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, whom the Issuer appoints as
its authorized agent for service of process. The Issuer represents and warrants
that CT Corporation System has agreed to act as the Issuer's agent for service
of process. The Issuer agrees that such appointment shall be irrevocable so long
as any of the Bonds remain outstanding or until the irrevocable appointment by
the Issuer of a successor in
New York City as its authorized agent for such
purpose and the acceptance (on terms reasonably satisfactory to the Trustee) of
such appointment by such successor. The Issuer further agrees to take any and
all action, including the filing of any and all documents and instruments, that
may be necessary to continue such appointment in full force and effect as
aforesaid. If CT Corporation System shall cease to act as the Issuer's agent for
service of process, the Issuer shall appoint without delay another such agent
and provide prompt written notice to the Trustee of such appointment. With
respect to any such action in any court of the State of New York or any United
States federal court in the Borough of Manhattan, New York City, service of
process upon CT Corporation System, as the authorized agent of the Issuer for
service of process, and written notice of such service to the Issuer, shall be
deemed in every respect effective service of process upon the Issuer. Without
prejudice to the foregoing, the Issuer hereby irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Issuer at the address of its principal office specified
in Section 105 of the Indenture or at any other address previously furnished in
writing to the Trustee by the Issuer.
(d) Nothing in this Section 26 shall affect the right of any
party to serve legal process in any other manner permitted by law or affect the
right of any party to bring any action or proceeding against any other party or
its property in the courts of other jurisdictions.
27. Counterparts. This Agreement may be executed in several
counterparts, each of which is an original, but all of which together constitute
one and the same agreement.
28. Continuing Security Interest; Termination. This Agreement
shall create a continuing assignment, pledge, and first priority security
interest in the Collateral and shall remain in full force and effect for the
benefit of the Trustee until (a) the indefeasible payment in full of all
Obligations to be paid, and performance in full of all Obligations to be
performed, as determined by the Trustee, or (b) defeasance of the Bonds in
compliance with the provisions of Article Fourteen of the Indenture. Upon the
termination of this Agreement in accordance with clause (a) or (b) above, the
Security Interest granted hereby shall terminate. Upon such termination, the
Trustee shall, within ten (10) days of its receipt of a request from the Issuer
and at the expense of the Issuer, (a) pay to the Issuer or deposit into a
deposit account in the Issuer's name the balance on deposit in any Account that
is a deposit account, (b) send to the Accounts Agent an authenticated statement
that releases the Accounts Agent from any further obligation to comply with
entitlement orders originated by the Trustee with respect to any Account that is
a
25
securities account, (c) communicate the authoritative copy of any electronic
chattel paper constituting part of the Collateral to the Issuer or its
designated custodian, (d) send to each Person having an unfulfilled obligation
to pay or deliver to the Trustee proceeds arising from any letter of credit
right constituting Collateral an authenticated release from any further
obligation to pay or deliver to the Trustee proceeds arising from any such
letter of credit right, and (e) execute and deliver to the Issuer such documents
as the Issuer shall reasonably request to evidence such termination or
expiration, including termination statement(s) for any financing statement on
file with respect to the Collateral and statements terminating any Consent then
in effect.
29. Payments Set Aside. To the extent that the Issuer or any
other Person on behalf of the Issuer makes a payment or payments of the
Obligations to the Trustee and/or any Holder, or the Trustee and/or any Holder
enforces the Security Interests or exercises its rights of set-off, and such
payment or payments or the proceeds of such enforcement or set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, and/or required to be repaid to a trustee, receiver, or any other
party under any bankruptcy law, state or federal law, common law, or equitable
cause, then to the extent of such recovery, the Obligations or any part thereof
originally intended to be satisfied, and this Agreement and all Security
Interests, rights, and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or
set-off had not occurred.
30. Conflicts, Etc. To the extent that any provision of this
Agreement shall be determined to conflict with any provision of the Indenture,
such provision of the Indenture shall govern.
[The remainder of this page was left blank intentionally.]
26
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Security Agreement to be duly executed as of the day and year
first written above.
CEDAR BRAKES II, L.L.C.,
as Issuer
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
BANKERS TRUST COMPANY,
as Trustee
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
BANKERS TRUST COMPANY,
as Accounts Agent
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Schedule A
to
Security Agreement
MATERIAL AGREEMENTS
1. Amended and Restated Power Purchase Agreement
2. EPM Power Purchase Agreement
3. Administrative Services Agreement
4. Funding Agreement
5. EP Guaranty
6. EP Consent
7. EPM Consent
8. PSE&G Consent
Schedule B
to
Security Agreement
FINANCING STATEMENT FILING
Debtor: Cedar Brakes II, L.L.C.
Secured Party: Bankers Trust Company, as Trustee
Jurisdictions: Secretary of State of the State of Delaware
Schedule C
to
Security Agreement
ACCOUNTS
1. Collections Account
2. Liquidity Account
3. Damages and Indemnity Account
