EXHIBIT 10.58
EXECUTION COPY
SECURITY DEPOSIT AGREEMENT
Among
EDISON MISSION HOLDINGS CO.,
EDISON MISSION FINANCE CO.,
XXXXX CITY PROPERTY HOLDINGS, INC.,
CHESTNUT RIDGE ENERGY CO.,
MISSION ENERGY WESTSIDE, INC.,
EME HOMER CITY GENERATION L.P.
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Collateral Agent
Dated as of March 18, 1999
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions........................................................................ 3
SECTION 1.1. Defined Terms......................................................... 3
SECTION 1.2. Other Definitional Provisions......................................... 16
ARTICLE II
Agreement of Collateral Agent; Creation of Accounts; Grant of
Security Interests............................................................ 16
SECTION 2.1. Agreement of Collateral Agent........................................ 16
SECTION 2.2. Creation of Accounts................................................. 17
SECTION 2.3. Delivery of Revenues, etc. to Collateral Agent....................... 19
SECTION 2.4. Security Interests................................................... 20
ARTICLE III
Deposits into Accounts............................................................. 22
SECTION 3.1. Revenue Account...................................................... 22
SECTION 3.2. Environmental Capital Expenditure Account............................ 22
SECTION 3.3. Recovery Event Proceeds Account...................................... 22
SECTION 3.4. Loan Principal Account............................................... 22
SECTION 3.5. Debt Service Reserve Accounts........................................ 23
SECTION 3.6. Deposits Irrevocable................................................. 23
ARTICLE IV
Transfers from Accounts............................................................ 23
SECTION 4.1. Revenue Account...................................................... 23
SECTION 4.2. [Reserved]........................................................... 24
SECTION 4.3. Environmental Capital Expenditure Account............................ 24
SECTION 4.4. Recovery Event Proceeds Account...................................... 25
SECTION 4.5. Loan Principal and Accrued Interest Accounts......................... 25
SECTION 4.6. Refinancing Indebtedness Principal and Accrued Interest Accounts..... 26
SECTION 4.7. Ordinary Course Letter of Credit Indebtedness Principal and Accrued
Interest Accounts............................................................. 26
SECTION 4.8. DSR Letter of Credit Indebtedness Principal and Accrued Interest
Accounts...................................................................... 26
SECTION 4.9. Additional Indebtedness Principal and Accrued Interest Accounts...... 27
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SECTION 4.10. Swap Indebtedness Termination Payment and Accrued Fixed Payment
Accounts................................................................... 27
SECTION 4.11. Equity Account................................................... 28
SECTION 4.12. Delivery of Request Letters...................................... 28
SECTION 4.13. Shortfall Notices................................................ 28
SECTION 4.14. Transfers from Accounts During a Default Period.................. 28
SECTION 4.15. Collateral Agent's Calculations.................................. 29
SECTION 4.16. Insufficient Amounts............................................. 29
ARTICLE V
Investment...................................................................... 30
ARTICLE VI
Collateral Agent................................................................ 31
SECTION 6.1. Rights, Duties, etc............................................... 31
SECTION 6.2. Resignation or Removal............................................ 32
ARTICLE VII
Determinations.................................................................. 32
ARTICLE VIII
Miscellaneous................................................................... 32
SECTION 8.1. Indemnification of Collateral Agent............................... 32
SECTION 8.2. Waiver of Right of Set-Off........................................ 33
SECTION 8.3. Termination....................................................... 33
SECTION 8.4. Severability...................................................... 33
SECTION 8.5. Counterparts...................................................... 33
SECTION 8.6. Amendments........................................................ 33
SECTION 8.7. APPLICABLE LAW.................................................... 33
SECTION 8.8. Notices........................................................... 34
SECTION 8.9. Benefit of Security Deposit Agreement............................. 34
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RECITALS
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A. The Borrower has entered into a Credit Agreement, dated as of
March 18, 1999 (as the same may be amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), with certain financial institutions
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(collectively, the "Lenders") and Citicorp USA, Inc., as administrative agent
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for the Lenders (in such capacity, the "Administrative Agent").
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B. Pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans (as defined below) to the Borrower upon the terms and
subject to the conditions set forth therein.
C. The Borrower will use the proceeds of the Loans under the Credit
Agreement to make valuable transfers to one or more of the other Loan Parties in
connection with the acquisition by EME Homer City of the Xxxxx City Electric
Generating Station and certain facilities and other assets associated therewith
and ancillary thereto (the "Generating Station"), certain capital expenditures
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related to the Generating Station and general working capital purposes.
D. Under Section 8.2.1(e) of the Credit Agreement, the Borrower is
permitted to incur certain indebtedness for the purpose of refinancing the Loans
and other indebtedness of the Borrower ("Refinancing Indebtedness"); under
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Section 8.2.1(d)(i) of the Credit Agreement, the Loan Parties are permitted to
incur certain indebtedness in the form of reimbursement obligations relating to
letters of credit, surety bonds and performance bonds used by the Loan Parties
in the ordinary course of their business ("Ordinary Course Letter of Credit
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Indebtedness"); under Section 8.2.1(d)(ii) of the Credit Agreement, the Borrower
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is permitted to incur certain indebtedness in the form of reimbursement
obligations relating to Debt Service Reserve Letters of Credit (as defined
below) ("DSR Letter of Credit Indebtedness"); under Section 8.2.1 of the
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Credit Agreement, the Borrower is permitted to incur certain additional
indebtedness ("Additional Indebtedness"); and, under Section 8.2.1(b) of the
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Credit Agreement, the Borrower is permitted to incur certain indebtedness under
Interest Rate Hedging Transactions (as defined below) entered into with respect
to the Loans ("Swap Indebtedness").
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E. In satisfaction of the requirements of the Lenders and the Secured
Parties providing any Refinancing Indebtedness or Additional Indebtedness, the
Loan Parties desire by this Agreement (as defined below) to provide for the
receipt of Revenues (as defined below) and the application thereof to the
payment of Operating Expenses (as defined below), Debt Service (as defined
below) and other purposes as described herein.
F. In order to simplify administration of the common collateral and
to provide for the orderly enforcement of their respective rights, the
Administrative Agent, the Lenders and the other Secured Parties have appointed
the Collateral Agent to serve as their common representative, to be the
beneficiary under any guarantee intended to benefit the Secured Parties and to
hold the liens created, or to be created, under the Financing Documents.
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G. Pursuant to the Collateral Agency and Intercreditor Agreement,
dated as of March 18, 1999 (as amended, supplemented or otherwise modified from
time to time, the "Collateral Agency and Intercreditor Agreement", among the
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Loan Parties, the Administrative Agent, the Collateral Agent and certain other
parties, the Collateral Agent has agreed to serve as a common collateral agent
for all Secured Parties.
H. The Borrower is a member of an affiliated group of companies that
includes each other Loan Party. The Borrower and the other Loan Parties are
engaged in related businesses, and each Loan Party will derive substantial
direct and indirect benefit from the making of the Loans and the incurrence of
any Refinancing Indebtedness or Additional Indebtedness.
I. It is a condition precedent to the obligations of the Lenders to
make their respective Loans to the Borrower under the Credit Agreement that the
Loan Parties shall have executed and delivered this Agreement to the Collateral
Agent for the benefit of the Secured Parties.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, each of the parties hereto hereby agrees as follows:
ARTICLE I
Definitions
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SECTION 1.1. Defined Terms. The following terms shall have the
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meanings indicated:
"Accounts" means all accounts established pursuant to Section 2.2 of
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this Agreement.
"Accrued Interest Accounts" means, collectively, the Loan Accrued
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Interest Account, the Refinancing Indebtedness Accrued Interest Accounts,
the Ordinary Course Letter of Credit Indebtedness Accrued Interest
Accounts, the DSR Letter of Credit Accrued Interest Accounts, the
Additional Indebtedness Accrued Interest Accounts and the Swap Indebtedness
Accrued Fixed Payment Accounts.
"Accrued Interest Amount" means, as of any date of calculation, (i)
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with respect to the Loan Accrued Interest Account, the Loan Accrued
Interest Amount calculated on such date, (ii) with respect to each
Refinancing Indebtedness Accrued Interest Account, the Refinancing
Indebtedness Accrued Interest Amount calculated for such Refinancing
Indebtedness Accrued Interest Account on such date, (iii) with respect to
each Ordinary Course Letter of Credit Indebtedness Accrued Interest
Account, the Ordinary Course Letter of Credit Indebtedness Accrued Interest
Amount calculated for such Ordinary Course Letter of Credit Indebtedness
Accrued Interest Account on such date, (iv) with respect to each DSR Letter
of Credit Indebtedness Accrued Interest Account, the DSR
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Letter of Credit Indebtedness Accrued Interest Amount calculated for such
DSR Letter of Credit Indebtedness Accrued Interest Account on such date,
(v) with respect to each Additional Indebtedness Accrued Interest Account,
the Additional Indebtedness Accrued Interest Amount calculated for such
Additional Indebtedness Accrued Interest Account on such date, and (vi)
with respect to each Swap Indebtedness Accrued Fixed Payment Account, the
Swap Indebtedness Accrued Fixed Payment Amount calculated for such Swap
Indebtedness Accrued Fixed Payment Account on such date.
"Additional Indebtedness" has the meaning specified in the recitals.
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"Additional Indebtedness Accrued Interest Accounts" has the meaning
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specified in Section 2.2.
"Additional Indebtedness Accrued Interest Amount" means, with respect
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to any Additional Indebtedness Accrued Interest Account, as of any date of
calculation, an amount sufficient to cause the balance of such Additional
Indebtedness Accrued Interest Account to equal the sum of (i) all accrued
and unpaid interest and fees in respect of the related Additional
Indebtedness on such date, (ii) all amounts in respect of funding losses,
increased capital costs, taxes, indemnities, costs and expenses associated
with such Additional Indebtedness due and payable on such date and (iii) if
the next succeeding Additional Indebtedness Interest Payment Date with
respect to such Additional Indebtedness will occur prior to the next
succeeding Monthly Transfer Date, all interest and fees projected to accrue
in respect of such Additional Indebtedness from the date of calculation to
but excluding such Additional Indebtedness Interest Payment Date and all
amounts in respect of funding losses, increased capital costs, taxes,
indemnities, costs and expenses associated with such Additional
Indebtedness projected to be due and payable on such Additional
Indebtedness Interest Payment Date.
"Additional Indebtedness Debt Service Reserve Accounts" has the
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meaning specified in Section 2.2.
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"Additional Indebtedness Debt Service Reserve Requirement", with
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respect to any Additional Indebtedness, has the meaning ascribed to the
term "Debt Service Reserve Requirement" in the Financing Documents relating
to such Additional Indebtedness.
"Additional Indebtedness Interest Payment Date" means, with respect to
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any Additional Indebtedness, any date on which regularly scheduled
installments of interest are payable on such Additional Indebtedness.
"Additional Indebtedness Principal Accounts" has the meaning specified
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in Section 2.2.
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"Administrative Agent" has the meaning specified in the recitals.
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"Affiliate" has the meaning specified in the Credit Agreement.
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"Agreement" means this Security Deposit Agreement, dated as of March
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18, 1999, among the Loan Parties and the Collateral Agent.
"Authorized Representative" means, relative to any Loan Party, those
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of its officers and employees whose signatures and incumbency shall have
been certified by such Loan Party to the Collateral Agent and each Secured
Parties' Representative.
"Borrower" has the meaning specified in the preamble.
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"Borrower Obligations" means (a) the unpaid principal of and interest
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on the Loans, (b) the unpaid principal of and interest on the Refinancing
Indebtedness, if any, (C) the unpaid principal of and interest on the
Ordinary Course Letter of Credit Indebtedness, if any, (d) the unpaid
principal of and interest on the DSR Letter of Credit Indebtedness, if any,
(e) the unpaid principal of and interest on the Additional Indebtedness, if
any, (f) the unpaid amount of the Swap Indebtedness, if any, and (g) all
other obligations and liabilities of the Borrower (including interest
accruing at the then applicable rate or rates provided in the Financing
Documents after the maturity of the Loans, Refinancing Indebtedness,
Ordinary Course Letter of Credit Indebtedness, DSR Letter of Credit
Indebtedness, Additional Indebtedness and/or Swap Indebtedness, as
applicable, and interest accruing at the then applicable rate or rates
provided in the Financing Documents after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-
filing or post-petition interest is allowed in such proceeding) to the
Secured Parties, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, any Financing Document or any other
document made, delivered or given in connection with any of the foregoing,
in each case whether on account of principal, interest, reimbursement
obligations, guarantee obligations, fees, indemnities, costs, expenses or
otherwise (including all fees and disbursements of counsel to the
Collateral Agent or to the Secured Parties that are required to be paid by
the Borrower pursuant to the terms of any Financing Document).
"Business Day" means any day which is neither a Saturday or Sunday nor
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a legal holiday on which banks are authorized or required to be closed in
New York, New York.
"Business Interruption Insurance Proceeds" means any and all proceeds
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of any insurance, indemnity, warranty or guaranty payable to or received by
any Loan Party with respect to the partial or complete interruption of the
operation of the Generating Station.
"Chestnut Ridge" has the meaning specified in the preamble.
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"Collateral Agent" has the meaning specified in the preamble.
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"Collateral Agency and Intercreditor Agreement" has the meaning
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specified in the recitals.
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"Construction Term Loans" has the meaning specified in the Credit
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Agreement.
"Credit Agreement" has the meaning specified in the recitals.
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"Debt" Service" means, with respect to any Senior Debt, principal (or,
in the case of Swap Indebtedness, amounts payable on early termination of
the related Interest Rate Hedging Transaction), interest (or, in the case
of any Swap Indebtedness, fixed payments in respect of the related Interest
Rate Hedging Transaction), fees and amounts in respect of funding losses,
increased capital costs, taxes, indemnities, costs and expenses, in each
case payable in respect of such Senior Debt.
"Debt Service Reserve Accounts" means, collectively, the Loan Debt
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Service Reserve Account, the Refinancing Indebtedness Debt Service Reserve
Accounts and the Additional Indebtedness Debt Service Reserve Accounts.
"Debt Service Reserve Requirements" means the Loan Debt Service
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Reserve Requirement, any Refinancing Indebtedness Debt Service Reserve
Requirement and any Additional Indebtedness Debt Service Reserve
Requirement.
"Default Period" has the meaning specified in the Collateral
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Agency and Intercreditor Agreement.
"Depositary" means Bank of America NT&SA.
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"DSR Credit Instrument" means, with respect to any Senior Debt, a
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letter of credit, guarantee or other instrument that under the Financing
Documents relating to such Senior Debt may be delivered to the Collateral
Agent in total or partial satisfaction of the Debt Service Reserve
Requirement relating to such Senior Debt.
"DSR Letter of Credit Indebtedness" has the meaning specified in the
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recitals.
"DSR Letter of Credit Indebtedness Accrued Interest Accounts" has
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the meaning specified in Section 2.2.
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"DSR Letter of Credit Indebtedness Accrued Interest Amount" means,
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with respect to any DSR Letter of Credit Indebtedness Accrued Interest
Account, as of any date of calculation, an amount sufficient to cause the
balance of such DSR Letter of Credit Indebtedness Accrued Interest Account
to equal the sum of (i) all accrued and unpaid interest and fees in respect
of the related DSR Letter of Credit Indebtedness on such date, (ii) all
amounts in respect of funding losses, increased capital costs, taxes,
indemnities, costs and expenses associated with such DSR Letter of Credit
Indebtedness due and payable on such date and (iii) if the next succeeding
DSR Letter of Credit Indebtedness Interest Payment Date with respect to
such DSR Letter of Credit Indebtedness will occur prior to the next
succeeding Monthly Transfer Date, all interest and fees projected to
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accrue in respect of such DSR Letter of Credit Indebtedness from the date
of calculation to but excluding such DSR Letter of Credit Indebtedness
Interest Payment Date and all amounts in respect of funding losses,
increased capital costs, taxes, indemnities, costs and expenses associated
with such DSR Letter of Credit Indebtedness projected to be due and payable
on such DSR Letter of Credit Indebtedness Interest Payment Date.
"DSR Letter of Credit Indebtedness Interest Payment Date" means, with
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respect to any DSR Letter of Credit Indebtedness, any date on which
regularly scheduled installments of interest are payable on such DSR Letter
of Credit Indebtedness.
"DSR Letter of Credit Indebtedness Principal Accounts" has the meaning
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specified in Section 2.2.
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"DSR Letter of Credit Provider" means (i) with respect to the Loans, a
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commercial bank or other financial institution the long-term debt
securities of which are rated "A" or better by S&P and "A2" or better by
Xxxxx'x and (ii) with respect to any other Senior Debt, a commercial bank
or other financial institution the long-term unsecured debt securities of
which have at least the ratings specified in the Financing Documents
relating to such Senior Debt.
"Edison Mission Finance" has the meaning specified in the preamble.
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"Effective Date" has the meaning ascribed thereto in the Credit
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Agreement.
"EME Credit Support Amount" means, on any Senior Debt Payment Date,
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the lesser of (a) the aggregate amount available to be drawn on such date
under the EME Credit Support Guarantee and (b) the product of (i) the
amount of Debt Service payable on such date with respect to such Senior
Debt less the funds on deposit in the Accrued Interest Account for such
Senior Debt times (ii) a fraction, the numerator of which is the aggregate
Principal Amounts of all Senior Debt on such date and the denominator of
which is the Principal Amount of such Senior Debt.
"EME Credit Support Guarantee" means the Credit Support Guarantee,
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dated as of March 18, 1999, made by Edison Mission Energy in favor of the
Collateral Agent.
"EME Debt Service Reserve Guarantee" means, with respect to the Loans,
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the Debt Service Reserve Guarantee, dated as of March 18, 1999, made by
Edison Mission Energy in favor of the Collateral Agent and, with respect to
any other Senior Debt, has the meaning ascribed to the term "EME Debt
Service Reserve Guarantee" in the Financing Documents relating to such
Senior Debt.
"EME Homer City" has the meaning specified in the preamble.
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"Environmental Capital Expenditure Account" has the meaning specified
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in Section 2.2.
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"Environmental Capital Expenditure Program" means EME Homer City's
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proposed schedule and budget for the installation of a flue gas
desulfurization unit and three selective catalytic reduction units in the
Generating Station, as included in the projections delivered by the
Borrower pursuant to Section 6.1.6 of the Credit Agreement and as amended
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from time to time.
"Environmental Capital Expenditures" means capital expenditures in
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furtherance of the Environmental Capital Expenditure Program.
"Equity Account" has the meaning specified in Section 2.2.
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"Event of Default" means an "Event of Default" under the Credit
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Agreement or any other Financing Document.
"Excess Net Cash Proceeds" means the Net Cash Proceeds of the
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Refinancing Indebtedness incurred to refinance the 364-Day Term Loans
remaining after repayment of the 364-Day Term Loans.
"Financing Documents" means the Loan Documents and each indenture,
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loan agreement, underwriting agreement, security purchase agreement or
other document entered into in connection with any Senior Debt.
"Generating Station" has the meaning specified in the recitals.
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"Governmental Authority" means any nation or government, any state,
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provincial or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guarantee and Collateral Agreement" means the Guarantee and
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Collateral Agreement, dated as of March 18, 1999, made by the Loan Parties
in favor of the Collateral Agent.
"Guarantor" means each Loan Party other than the Borrower.
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"Guarantor Obligations" means, with respect to any Guarantor, all
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obligations and liabilities of such Guarantor which may arise under or in
connection with the Guarantee and Collateral Agreement or any other
Financing Document to which such Guarantor is a party, in each case whether
on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including all fees and
disbursements of counsel to the Collateral Agent and to the Secured Parties
that are required to be paid by such Guarantor pursuant to the terms of any
Financing Document).
"Xxxxx City Holdings" has the meaning specified in the preamble.
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"including" means including without limiting the generality of any
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description preceding such term, and, for purposes of each Loan Document,
the parties thereto agree that the rule of ejusdem generis shall not be
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applicable to limit a general statement, which is followed by or referable
to an enumeration of specific matters, to matters similar to the matters
specifically mentioned.
"Intercompany Loan Subordination Agreement" means the Intercompany
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Loan Subordination Agreement, dated as of March 18, 1999, among the Loan
Parties and the Collateral Agent.
"Interest Payment Dates" means Loan Interest Payment Dates,
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Refinancing Indebtedness Interest Payment Dates, Ordinary Course Letter of
Credit Indebtedness Interest Payment Dates, DSR Letter of Credit
Indebtedness Interest Payment Dates, Additional Indebtedness Interest
Payment Dates and Swap Indebtedness Accrued Fixed Payment Dates.
"Interest Rate Hedging Transactions" means, as to any Person, all
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interest rate swaps, caps or collar agreements or similar arrangements
entered into by such Person in order to protect against fluctuations in
interest rates or the exchange of nominal interest obligations, either
generally or under specific contingencies, and, in any event, not for
speculative purposes.
"Lenders" has the meaning specified in the recitals.
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"Lien" has the meaning specified in the Credit Agreement.
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"Loan Accrued Interest Account" has the meaning specified in Section
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2.2.
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"Loan Accrued Interest Amount" means, as of any date of calculation,
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an amount sufficient to cause the balance of the Loan Accrued Interest
Account to equal the sum of (i) all accrued and unpaid interest and fees in
respect of the Loans on the related date, (ii) all amounts in respect of
funding losses, increased capital costs, taxes, indemnities, costs and
expenses associated with the Loans due and payable on such date and (iii)
if the next succeeding Loan Interest Payment Date will occur prior to the
next succeeding Monthly Transfer Date, all interest and fees projected to
accrue on the Loans from the date of calculation to but excluding such Loan
Interest Payment Date and all amounts in respect of funding losses,
increased capital costs, taxes, indemnities, costs and expenses associated
with the Loans projected to be due and payable on such Loan Interest
Payment Date.
"Loan Debt Service Reserve Account" has the meaning specified in
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Section 2.2.
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"Loan Debt Service Reserve Requirement" has the meaning ascribed to
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the term of "Debt Service Reserve Requirement" in the Credit Agreement.
"Loan Documents" has the meaning specified in the Credit Agreement.
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"Loan Interest Payment Date" means any date on which interest or other
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amounts referred to in the definition of the term "Loan Accrued Interest
Amount" are scheduled to be payable in accordance with the Credit
Agreement.
"Loan Principal Account" has the meaning specified in Section 2.2.
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"Loan Party" has the meaning specified in the preamble.
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"Loans" has the meaning specified in the Credit Agreement.
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"MEW" has the meaning specified in the preamble.
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"Minimum Ratings" means, with respect to any DSR Letter of Credit
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Provider for any Senior Debt, the long-term senior unsecured debt ratings
specified or referred to in the definition of the term "DSR Letter of
Credit Provider" applicable to such Senior Debt.
"Monthly Transfer Date" means the Effective Date and the last Business
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Day of each month.
"Moody's" means Xxxxx'x Investors Service, Inc.
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"Net Cash Proceeds" means (a) in connection with any Recovery Event,
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the proceeds thereof in the form of cash and cash equivalents of such
Recovery Event, net of any expenses reasonably incurred in respect of such
Recovery Event, including attorneys' fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
under the Credit Agreement and the other Financing Documents on any asset
which is the subject of such Recovery Event (other than any Lien pursuant
to a Security Document) and net of taxes paid or reasonably estimated to be
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), to the extent
that, in the case of Recovery Events relating to property or casualty
insurance claims, the amount of such proceeds exceeds $5,000,000 with
respect to any asset of any Loan Party and (b) in connection with any
issuance or sale of debt securities, the cash proceeds received from such
issuance or incurrence, net of attorneys' fees, investment banking fees,
accountants' fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith.
"New York UCC" means the Uniform Commercial Code as from time to time
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in effect in the State of New York.
"Notice of Action" has the meaning specified in the Collateral Agency
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and Intercreditor Agreement.
"Obligations" means (a) in the case of the Borrower, the Borrower
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Obligations, and (b) in the case of any Guarantor, the Guarantor
Obligations.
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"Operating Account" has the meaning specified in Section 2.2.
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"Operating Expenses" has the meaning ascribed to the term "Operating
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Expenses" in the Credit Agreement and, if applicable, the meaning ascribed
to the term "Operating Expenses" in the Financing Documents relating to any
other Senior Debt.
"Ordinary Course Letter of Credit Indebtedness" has the meaning
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specified in the recitals.
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"Ordinary Course Letter of Credit Indebtedness Interest Payment Date"
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means, with respect to any Ordinary Course Letter of Credit Indebtedness,
any date on which regularly scheduled installments of interest are payable
on such Ordinary Course Letter of Credit Indebtedness.
"Ordinary Course Letter of Credit Indebtedness Accrued Interest
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Accounts" has the meaning specified in Section 2.2.
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"Ordinary Course Letter of Credit Indebtedness Accrued Interest
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Amount" means, with respect to any Ordinary Course Letter of Credit
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Indebtedness Accrued Interest Account, as of any date of calculation, an
amount sufficient to cause the balance of such Ordinary Course Letter of
Credit Indebtedness Accrued Interest Account to equal the sum of (i) all
accrued and unpaid interest and fees in respect of the related Ordinary
Course Letter of Credit Indebtedness on such date, (ii) all amounts in
respect of funding losses, increased capital costs, taxes, indemnities,
costs and expenses associated with such Ordinary Course Letter of Credit
Indebtedness due and payable on such date and (iii) if the next succeeding
Ordinary Course Letter of Credit Indebtedness Interest Payment Date with
respect to such Ordinary Course Letter of Credit Indebtedness will occur
prior to the next succeeding Monthly Transfer Date, all interest and fees
projected to accrue in respect of such Ordinary Course Letter of Credit
Indebtedness from the date of calculation to but excluding such Ordinary
Course Letter of Credit Indebtedness Interest Payment Date and all amounts
in respect of funding losses, increased capital costs, taxes, indemnities,
costs and expenses associated with such Ordinary Course Letter of Credit
Indebtedness projected to be due and payable on such Ordinary Course Letter
of Credit Indebtedness Interest Payment Date.
"Ordinary Course Letter of Credit Indebtedness Principal Accounts" has
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the meaning specified in Section 2.2.
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"Organic Document" means, with respect to any Person that is a
----------------
corporation, its certificate of incorporation, its by-laws and all
shareholder agreements, voting trusts and similar arrangements applicable
to any of its authorized shares of capital stock, and, with respect to any
Person that is a limited partnership, its certificate of limited
partnership and partnership agreement.
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"Permitted Investments" means investments in securities with
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maturities of one year or less that are: (i) direct obligations of the
United States, or any agency thereof; (ii) obligations fully guaranteed by
the United States or any agency thereof; (iii) certificates of deposit,
bankers acceptances or other "money market instruments" issued by
commercial banks or trust companies (including the Collateral Agent, the
Depositary or any of their respective affiliates) organized under the laws
of the United States or any political subdivision thereof or under the laws
of Canada, Japan, Switzerland or any country that is a member of the
European Economic Community having a combined capital and surplus of at
least $250 million and having long-term unsecured debt securities then
rated "A" or better by S&P or "A2" or better by Moody's (but at the time of
investment not more than $25,000,000 may be invested in such certificates
of deposit from any one bank or trust company and its affiliates); (iv)
repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and (ii) above,
entered into with any financial institution meeting the qualifications
specified in clause (iii) above; (v) open market commercial paper of any
corporation incorporated or doing business under the laws of the United
States or of any political subdivision thereof having a rating of at least
"A-1" from S&P and "P-1" from Moody's (but at the time of investment not
more than $25,000,000 may be invested in such commercial paper from any one
corporation); (vi) auction rate securities or money market preferred stock
having one of the two highest ratings obtainable from either S&P or Moody's
(or, if at any time neither S&P nor Moody's may be rating such obligations,
then from another nationally recognized rating service acceptable to the
Collateral Agent); or (vii) investments in money market funds or money
market mutual funds sponsored by any securities broker-dealer of recognized
national standing (or an Affiliate thereof), having an investment policy
that requires substantially all the invested assets of such fund to be
invested in investments described in any one or more of the foregoing
clauses having a rating of "A" or better by S&P or "A2" or better by
Moody's (including money market funds for which the Collateral Agent or the
Depositary in their respective individual capacities or any of their
respective affiliates is investment manager or adviser).
"Person" means any natural person, corporation, partnership, limited
------
liability company, firm, association, trust, government, governmental
agency or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Principal Accounts" means the Loan Principal Account, the Refinancing
------------------
Indebtedness Principal Accounts, the Ordinary Course Letter of Credit
Indebtedness Principal Accounts, the DSR Letter of Credit Indebtedness
Principal Accounts, the Additional Indebtedness Principal Accounts and the
Swap Indebtedness Termination Payment Accounts.
"Principal Amount" means, at any time, (u) in the case of the Loans,
----------------
the Commitments at such time, (v) in the case of any class of Refinancing
Indebtedness, the aggregate principal amount of such class of Refinancing
Indebtedness outstanding at such time, (w) in the case of any class of
Additional Indebtedness, the aggregate principal amount of such class of
Additional Indebtedness outstanding at such time, (x) in the case
12
of any class of DSR Letter of Credit Indebtedness, the commitments with
respect thereto at such time, (y) in the case of any class of Ordinary
Course Letter of Credit Indebtedness, the commitments with respect thereto
at such time and (z) in the case of any class of Swap Indebtedness, (i)
prior to the occurrence of an Event of Default, zero, and (ii) after the
occurrence of an Event of Default, the termination value of the related
Interest Rate Hedging Transaction.
"Proceeds" has the meaning specified in the New York UCC, and, in any
--------
event, includes Recovery Event Proceeds and Business Interruption Insurance
Proceeds.
"Prudent Industry Practice" means, at a particular time, (a) any of
-------------------------
the practices, methods and acts engaged in or approved by a significant
portion of the competitive electric generating industry at such time, or
(b) with respect to any matter to which clause (a) does not apply, any of
the practices, methods and acts which, in the exercise of reasonable
judgment at the time the decision was made, could have been expected to
accomplish the desired result at a reasonable cost consistent with good
business practices, reliability, safety and expedition. "Prudent Industry
Practice" is not intended to be limited to the optimum practice, method or
act to the exclusion of all others, but rather to be a spectrum of possible
practices, methods or acts having due regard for, among other things,
manufacturers' warranties and the requirements of any Governmental
Authority of competent jurisdiction.
"Quarterly Payment Date" means the first Business Day of each January,
----------------------
April, July and October.
"Recovery Event" means any settlement of or payment of $5,000,000 or
--------------
more in respect of (a) any property or casualty insurance claim relating to
any asset of any Loan Party or (b) any seizure, condemnation, confiscation
or taking of, or requisition of title or use of, the Generating Station or
any part thereof by any Governmental Authority.
"Recovery Event Proceeds" means proceeds received in respect of a
-----------------------
Recovery Event.
"Recovery Event Proceeds Account" has the meaning specified in Section
------------------------------- -------
2.2.
---
"Refinancing Indebtedness" has the meaning specified in the recitals.
------------------------ --------
"Refinancing Indebtedness Accrued Interest Accounts" has the meaning
specified in Section 2.2.
-----------
"Refinancing Indebtedness Accrued Interest Amount" means, with respect
------------------------------------------------
to any Refinancing Indebtedness Accrued Interest Account, as of any date of
calculation, an amount sufficient to cause the balance of such Refinancing
Indebtedness Accrued Interest Account to equal the sum of (i) all accrued
and unpaid interest and fees in respect of the related Refinancing
Indebtedness on such date, (ii) all amounts in respect of funding
13
losses, increased capital costs, taxes, indemnities, costs and expenses
associated with such Refinancing Indebtedness due and payable on such date
and (iii) if the next succeeding Refinancing Indebtedness Interest Payment
Date with respect to such Refinancing Indebtedness will occur prior to the
next succeeding Monthly Transfer Date, all interest and fees projected to
accrue in respect of such Refinancing Indebtedness from the date of
calculation to but excluding such Refinancing Indebtedness Interest Payment
Date and all amounts in respect of funding losses, increased capital costs,
taxes, indemnities, costs and expenses associated with such Refinancing
Indebtedness projected to be due and payable on such Refinancing
Indebtedness Interest Payment Date.
"Refinancing Indebtedness Debt Service Reserve Accounts" has the
------------------------------------------------------
meaning specified in Section 2.2.
-----------
"Refinancing Indebtedness Debt Service Reserve Requirement", with
---------------------------------------------------------
respect to any Refinancing Indebtedness, has the meaning ascribed to the
term "Debt Service Reserve Requirement" in the Financing Documents relating
to such Refinancing Indebtedness.
"Refinancing Indebtedness Interest Payment Date" means, with respect
----------------------------------------------
to any Refinancing Indebtedness, any date on which regularly scheduled
installments of interest are payable on such Refinancing Indebtedness.
"Refinancing Indebtedness Principal Accounts" has the meaning
-------------------------------------------
specified in Section 2.2.
-----------
"Request Letter" means each letter from time to time delivered by an
--------------
Authorized Representative of any Loan Party to the Collateral Agent
requesting the transfer and/or release of funds from one or more Accounts
to or on behalf of any Loan Party in accordance with the terms of this
Security Deposit Agreement, each such letter to be in such form acceptable
to the Borrower, the Collateral Agent and the Secured Parties'
Representatives.
"Required Secured Parties" has the meaning specified in the Collateral
------------------------
Agency and Intercreditor Agreement.
"Restoration" means the replacement or restoration of any asset or
-----------
assets in respect of which any Loan Party has received Recovery Event
Proceeds.
"Restricted Payment Date" means (i) in the case of any Restricted
-----------------------
Payment being made exclusively with the proceeds of Indebtedness incurred
pursuant to Section 8.2.1(e) of the Credit Agreement remaining after
----------------
repayment in full of the 364-Day Term Loans, any Business Day specified by
the Borrower in a Request Letter, and (ii) in the case of any other
Restricted Payment, any Quarterly Payment Date.
14
"Restricted Payments" has the meaning ascribed to the term "Restricted
-------------------
Payments" in the Credit Agreement and, if applicable, the meaning ascribed
to the term "Restricted Payments" in the Financing Documents relating to
any other Senior Debt.
"Revenue Account" has the meaning specified in Section 2.2.
--------------- -----------
"Revenues" means, in respect of any period, all cash amounts received
--------
by the Loan Parties during such period, including revenues from the sale of
energy and capacity, Business Interruption Insurance Proceeds, Excess Net
Cash Proceeds and all interest and other income earned on amounts in the
Accounts but excluding Recovery Event Proceeds.
"Revolving Loans" has the meaning specified in the Credit Agreement.
---------------
"S&P" means Standard & Poor's Rating Group.
---
"Secured Parties" has the meaning specified in the Collateral Agency
---------------
and Intercreditor Agreement.
"Secured Parties' Representative" means the Administrative Agent and
-------------------------------
each Person that serves as indenture trustee, collateral agent, lenders'
representative or in any similar capacity for Persons that provide any
Senior Debt.
"Securities Intermediary" has the meaning specified in Section 2.5.
----------------------- -----------
"Security Documents" means (a) the Guarantee and Collateral Agreement,
------------------
the Mortgage and Security Agreement, the Intercompany Loan Subordination
Agreement, the Collateral Agency and Intercreditor Agreement, the Security
Deposit Agreement, (b) the Consent to Assignment, if delivered, and (c) the
EME Credit Support Guarantee and any other agreement or instrument
hereafter entered into by the Borrower or any other Person which guarantees
or secures payment of any Senior Debt.
"Senior Debt" means the Loans, any Refinancing Indebtedness, any
-----------
Ordinary Course Letter of Credit Indebtedness, any DSR Letter of Credit
Indebtedness, any Additional Indebtedness and any Swap Indebtedness.
"Senior Debt Payment Date" means each date on which any Debt Service
------------------------
in respect of any Senior Debt is due and payable.
"Swap Indebtedness" has the meaning specified in the recitals.
----------------- --------
"Swap Indebtedness Accrued Fixed Payment Accounts" has the meaning
------------------------------------------------
specified in Section 2.2.
-----------
"Swap Indebtedness Accrued Fixed Payment Amount" means, with respect
----------------------------------------------
to any Swap Indebtedness Accrued Fixed Payment Account, as of any date of
calculation, an
15
amount sufficient to cause the balance of such Swap Indebtedness Accrued
Fixed Payment Account to equal the sum of (i) all accrued and unpaid
amounts in respect of the related Swap Indebtedness on such date and (ii)
if the next succeeding Swap Indebtedness Accrued Fixed Payment Date with
respect to such Swap Indebtedness will occur prior to the next succeeding
Monthly Transfer Date, all amounts projected to accrue in respect of such
Swap Indebtedness from the date of calculation to but excluding such Swap
Indebtedness Accrued Fixed Payment Date.
"Swap Indebtedness Accrued Fixed Payment Date" means, with respect to
--------------------------------------------
any Swap Indebtedness, any date on which regularly scheduled amounts are
payable on such Swap Indebtedness.
"Swap Indebtedness Termination Payment Accounts" has the meaning
----------------------------------------------
specified in Section 2.2.
-----------
" 364-Day Term Loans " has the meaning ascribed thereto in the Credit
------------------
Agreement.
SECTION 1.2. Other Definitional Provisions. (a) The words "hereof",
-----------------------------
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and section, schedule, appendix and exhibit references are to
this Agreement unless otherwise specified.
(b) Each reference in this Agreement to a Financing Document or other
agreement shall be deemed to refer to such Financing Document or other agreement
as the same may be amended, supplemented or otherwise modified from time to
time.
(c) Any term defined by reference to an agreement, instrument or
other document shall have the meaning so assigned to it whether or not such
agreement, instrument or document is in effect.
(d) Each reference in this Agreement to a Person shall be deemed to
include such Person's successors and assigns.
(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE II
Agreement of Collateral Agent;
------------------------------
Creation of Accounts;
---------------------
Grant of Security Interests
----------------------------
SECTION 2.1. Agreement of Collateral Agent. The Collateral Agent
-----------------------------
agrees to accept all cash, cash equivalents, instruments, investments and other
securities to be delivered to or held by the Collateral Agent pursuant to the
terms of this Agreement, and, from such cash,
16
cash equivalents, instruments, investments and other securities, to make the
releases and transfers contemplated by this Agreement as and when required in
accordance with the terms hereof. The Collateral Agent shall hold and safeguard
the Accounts (other than the Operating Account) (and the cash, cash equivalents,
instruments, investments and other securities on deposit therein) during the
term of this Agreement and shall treat the cash, cash equivalents, instruments,
investments and other securities in such Accounts as pledged by the Loan Parties
to the Secured Parties, to be held by the Collateral Agent, as agent of the
Secured Parties, in trust in accordance with the provisions hereof and of the
Collateral Agency and Intercreditor Agreement.
SECTION 2.2. Creation of Accounts. (a) On or prior to the Effective
--------------------
Date, (i) the Collateral Agent shall establish in its corporate trust department
a special, segregated and irrevocable trust account designated the "Xxxxx City
Revenue Account" (the "Revenue Account") and (ii) the Borrower shall establish
---------------
with the Depositary a special and segregated account designated the "EME Homer
City Generation L.P. Operating Account" (the "Operating Account").
-----------------
(b) Within 10 Business Days after the Effective Date, the Collateral
Agent shall establish in its corporate trust department special, segregated and
irrevocable trust accounts as follows:
(i) one designated the "Xxxxx City Environmental Capital
Expenditure Account" (the "Environmental Capital Expenditure Account");
-----------------------------------------
(ii) one designated the "Xxxxx City Recovery Event Proceeds
Account" (the "Recovery Event Proceeds Account");
-------------------------------
(iii) one designated the "Xxxxx City Loan Accrued Interest
Account" (the "Loan Accrued Interest Account");
-----------------------------
(iv) one designated the "Xxxxx City Loan Principal Account" (the
"Loan Principal Account");
----------------------
(v) one designated the "Xxxxx City Loan Debt Service Reserve
Account" (the "Loan Debt Service Reserve Account"); and
---------------------------------
(vi) one designated the "Xxxxx City Equity Account" (the "Equity
------
Account").
-------
(c) On or prior to the date of incurrence of each class of
Refinancing Indebtedness, the Collateral Agent shall establish in its corporate
trust department special, segregated and irrevocable trust accounts as follows:
(i) one designated the "Xxxxx City Refinancing Indebtedness (Class )
--
Accrued Interest Account" (such account, together with each other such
account established in connection with the incurrence of each other class
of Refinancing Indebtedness, collectively, the "Refinancing Indebtedness
------------------------
Accrued Interest Accounts");
-------------------------
17
(ii) one designated the "Xxxxx City Refinancing Indebtedness (Class )
--
Principal Account" (such account, together with each other such account
established in connection with the incurrence of each other class of
Refinancing Indebtedness, collectively, the "Refinancing Indebtedness
------------------------
Principal Accounts"); and
------------------
(iii) one designated the "Xxxxx City Refinancing Indebtedness (Class
) Debt Service Reserve Account" (such account, together with each other
--
such account established in connection with the incurrence of each other
class of Refinancing Indebtedness, collectively, the "Refinancing
-----------
Indebtedness Debt Service Reserve Accounts").
------------------------------------------
(d) On or prior to the date of incurrence of each class of Ordinary
Course Letter of Credit Indebtedness, the Collateral Agent shall establish in
its corporate trust department special, segregated and irrevocable trust
accounts as follows:
(i) one designated the "Xxxxx City Ordinary Course Letter of Credit
Indebtedness (Class ) Accrued Interest Account" (such account, together
--
with each other such account established in connection with the incurrence
of each other class of Ordinary Course Letter of Credit Indebtedness,
collectively, the "Ordinary Course Letter of Credit Indebtedness Accrued
-----------------------------------------------------
Interest Accounts"); and
-----------------
(ii) one designated the "Xxxxx City Ordinary Course Letter of Credit
Indebtedness (Class ) Principal Account" (such account, together with
--
each other such account established in connection with the incurrence of
each other class of Ordinary Course Letter of Credit Indebtedness,
collectively, the "Ordinary Course Letter of Credit Indebtedness Principal
-------------------------------------------------------
Accounts").
--------
(e) On or prior to the date of incurrence of each class of DSR Letter
of Credit Indebtedness, the Collateral Agent shall establish in its corporate
trust department special, segregated and irrevocable trust accounts as follows:
(i) one designated the "Xxxxx City Debt Service Reserve Letter of
Credit Indebtedness (Class ) Accrued Interest Account") (such account,
--
together with each other such account established in connection with the
incurrence of each other class of DSR Letter of Credit Indebtedness,
collectively, the "DSR Letter of Credit Indebtedness Accrued Interest
--------------------------------------------------
Accounts"); and
--------
(ii) one designated the "Xxxxx City DSR Letter of Credit Indebtedness
(Class ) Principal Account" (such account, together with each other such
--
account established in connection with the incurrence of each other class
of DSR Letter of Credit Indebtedness, collectively, the "DSR Letter of
-------------
Credit Indebtedness Principal Accounts").
--------------------------------------
(f) On or prior to the date of incurrence of each class of Additional
Indebtedness, the Collateral Agent shall establish in its corporate trust
department special, segregated and irrevocable trust accounts as follows:
18
(i) one designated the "Xxxxx City Additional Indebtedness (Class )
--
Accrued Interest Account" (such account, together with each other account
established in connection with the incurrence of each other class of
Additional Indebtedness, collectively, the "Additional Indebtedness Accrued
-------------------------------
Interest Accounts");
-----------------
(ii) one designated the "Xxxxx City Additional Indebtedness (Class )
--
Principal Account" (such account, together with each other such account
established in connection with the incurrence of each other class of
Additional Indebtedness, collectively, the "Additional Indebtedness
-----------------------
Principal Accounts"); and
------------------
(iii) if applicable, one designated the "Xxxxx City Additional
Indebtedness (Class ) Debt Service Reserve Account" (such account,
--
together with each other account established in connection with the
incurrence of each other class of Additional Indebtedness, collectively,
the "Additional Indebtedness Debt Service Reserve Accounts").
-----------------------------------------------------
(g) On or prior to the date of incurrence of each class of Swap
Indebtedness, the Collateral Agent shall establish in its corporate trust
department special, segregated and irrevocable trust accounts as follows:
(i) one designated the "Xxxxx City Swap Indebtedness (Class )
--
Accrued Fixed Payment Amount Account" (such account, together with each
other such account established in connection with the incurrence of each
other class of Swap Indebtedness, collectively, the "Swap Indebtedness
-----------------
Accrued Fixed Payment Accounts"); and
------------------------------
(ii) one designated the "Xxxxx City Swap Indebtedness (Class )
--
Termination Payment Account" (such account, together with each other
account established in connection with the incurrence of each other class
of Swap Indebtedness, collectively, the "Swap Indebtedness Termination
-----------------------------
Payment Accounts").
----------------
SECTION 2.3. Delivery of Revenues, etc. to Collateral Agent. Each
----------------------------------------------
Loan Party shall cause all Revenues and all cash, cash equivalents, instruments,
investments and other securities in its possession (excluding amounts received
by such Loan Party as transfers from the Operating Account, the Environmental
Capital Expenditures Account or the Equity Account in accordance with this
Agreement) to be delivered immediately to the Collateral Agent for deposit into
the Accounts pursuant to Article III. All such Revenues, cash, cash
equivalents, instruments, investments and other securities at any time on
deposit in the Accounts shall be held in the exclusive custody of the Collateral
Agent for the purposes and on the terms set forth in this Agreement.
SECTION 2.4. Security Interests. In order to secure the payment of
------------------
the Obligations, and the performance and observance by the Loan Parties of all
of their respective covenants, agreements and obligations to the Secured Parties
under the Financing Documents, each Loan Party hereby pledges and assigns to the
Collateral Agent, and creates in favor of the Collateral Agent: (a) for the
benefit of the Secured Parties, a security interest in all of such Loan
19
Party's right, title and interest, whether now owned or hereafter acquired and
whether now existing or hereafter coming into existence, in, to and under this
Agreement and in and to all Revenues and each of the Accounts (except as
otherwise provided in clauses (b), (c), (d), (e), (f) and (g) of this Section
2.4) and all cash, cash equivalents, instruments, investments and other
securities on deposit therein and all Proceeds of the foregoing; (b) for the
exclusive benefit of the Lenders, a security interest in all of such Loan
Party's right, title and interest, whether now owned or hereafter acquired and
whether now existing or hereafter coming into existence, in and to the Loan
Accrued Interest Account, the Loan Principal Account, the Loan Debt Service
Reserve Account and the Environmental Capital Expenditures Account and all cash,
cash equivalents, instruments, investments and other securities on deposit
therein and all Proceeds of the foregoing; (c) for the exclusive benefit of the
Persons that provide each class of Refinancing Indebtedness, a security interest
in all of such Loan Party's right, title and interest, whether now owned or
hereafter acquired and whether now existing or hereafter coming into existence,
in and to the Refinancing Indebtedness Accrued Interest Account, the Refinancing
Indebtedness Principal Account and the Refinancing Indebtedness Debt Service
Reserve Account related to such class of Refinancing Indebtedness, and all cash,
cash equivalents, instruments, investments and other securities on deposit
therein and all Proceeds of the foregoing; (d) for the exclusive benefit of the
Persons that provide each class of Ordinary Course Letter of Credit
Indebtedness, a security interest in all of such Loan Party's right, title and
interest, whether now owned or hereafter acquired and whether now existing or
hereafter coming into existence, in and to the Ordinary Course Letter of Credit
Indebtedness Accrued Interest Account and the Ordinary Course Letter of Credit
Indebtedness Principal Account related to such class of Ordinary Course Letter
of Credit Indebtedness and all cash, cash equivalents, instruments, investments
and other securities on deposit therein and all Proceeds of the foregoing; (e)
for the exclusive benefit of the Persons that provide each class of DSR Letter
of Credit Indebtedness, a security interest in all of such Loan Party's right,
title and interest, whether now owned or hereafter acquired and whether now
existing or hereafter coming into existence, in and to the DSR Letter of Credit
Indebtedness Accrued Interest Account and the DSR Letter of Credit Indebtedness
Principal Account related to such class of DSR Letter of Credit Indebtedness and
all cash, cash equivalents, instruments, investments and other securities on
deposit therein and all Proceeds of the foregoing; (f) for the exclusive benefit
of the Persons that provide each class of Additional Indebtedness, a security
interest in all of such Loan Party's right, title and interest, whether now
owned or hereafter acquired and whether now existing or hereafter coming into
existence, in and to the Additional Indebtedness Accrued Interest Account, the
Additional Indebtedness Principal Account and the Additional Indebtedness Debt
Service Reserve Account related to such class of Additional Indebtedness and all
cash, cash equivalents, instruments, investments and other securities on deposit
therein and all Proceeds of the foregoing; and (g) for the exclusive benefit of
the Persons that provide each class of Swap Indebtedness, a security interest in
all of such Loan Party's right, title and interest, whether now owned or
hereafter acquired and whether now existing or hereafter coming into existence,
in and to the Swap Indebtedness Accrued Fixed Payment Account and the Swap
Indebtedness Termination Payment Account related to such class of Swap
Indebtedness and all cash, cash equivalents, instruments, investments and other
securities on deposit therein and all Proceeds of the foregoing. The Accounts
(other than the Operating Account) and all cash, cash equivalents, instruments,
investments and other securities on deposit therein shall, subject to the
provisions of this Agreement and the Security Documents, be subject to the
exclusive dominion
20
and control of the Collateral Agent, and the Collateral Agent shall have the
sole and exclusive right to withdraw or order a transfer of funds from such
Accounts, and each Loan Party hereby appoints the Collateral Agent as its true
and lawful attorney, with full power of substitution, for the purpose of making
any such withdrawal or ordering any such transfer of funds from any such
Account, which appointment is coupled with an interest and is irrevocable. The
Loan Parties shall not have any rights or powers with respect to any amounts in
the Accounts (other than the Operating Account) or any part thereof except (i)
as provided in Article V and (ii) the right to have such amounts applied in
accordance with the provisions of this Agreement.
Section 2.5. Securities Accounts. The parties hereto hereby agree
-------------------
that:
(a) the Accounts (other than the Operating Account) shall be treated
as "securities accounts" as such term is defined in Section 8-501 of the New
York UCC;
(b) United States Trust Company of New York, in its capacity as
"securities intermediary" as such term is defined in Section 8-102(a)(14) of the
New York UCC (the "Securities Intermediary"), shall, subject to the terms of
-----------------------
this Agreement, treat the Loan Parties as the persons entitled to exercise the
rights that comprise any financial assets credited to the Accounts;
(c) all property delivered to the Securities Intermediary, pursuant to
the terms of this Agreement, will be promptly credited to the appropriate
Account;
(d) all securities or other property underlying any financial assets
credited to such Accounts shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in blank and in no case
will any financial asset credited to any Account be registered in the name of
any Loan Party, payable to the order of any Loan Party or specially indorsed to
any Loan Party except to the extent the forgoing have been specially indorsed to
the Securities Intermediary or in blank;
(e) each item of property (whether investment property, financial
asset, security, instrument or cash) credited to such Accounts shall be treated
as a "financial asset" within the meaning of Section 8-102(a)(9) of the New York
UCC; and
(f) at any time the Securities Intermediary shall receive an
"entitlement order" (within the meaning of Section 8-102(a)(8) of the New York
UCC) issued by the Collateral Agent and relating to such Accounts, the
Securities Intermediary shall comply with such entitlement order without further
consent by any Loan Party or any other person.
21
ARTICLE III
Deposits into Accounts
----------------------
SECTION 3.1. Revenue Account. The Loan Parties agree that there
---------------
shall be deposited into the Revenue Account all Revenues received by or on
behalf of any Loan Party. If, notwithstanding the foregoing, any Loan Party
receives any Revenues, it shall immediately deliver such Revenues in the exact
form received (duly indorsed, if appropriate, in a manner satisfactory to the
Collateral Agent) to the Collateral Agent for deposit into the Revenue Account.
The Collateral Agent shall have the right to receive all Revenues directly from
the Persons owing the same. All Revenues received by the Collateral Agent shall
be deposited into the Revenue Account.
SECTION 3.2. Environmental Capital Expenditure Account. The Loan
-----------------------------------------
Parties agree that there shall be deposited into the Environmental Capital
Expenditure Account all proceeds of Construction Term Loans. If,
notwithstanding the foregoing, any Loan Party receives any proceeds of
Construction Term Loans, it shall immediately deliver such proceeds in the exact
form received (duly indorsed, if appropriate, in a manner satisfactory to the
Collateral Agent) to the Collateral Agent, and the Collateral Agent shall
deposit such proceeds into the Environmental Capital Expenditure Account. The
Collateral Agent shall have the right to receive all proceeds of Construction
Term Loans directly from the Lenders making the same. All proceeds of
Construction Term Loans received by the Collateral Agent shall be deposited into
the Environmental Capital Expenditure Account.
SECTION 3.3. Recovery Event Proceeds Account. The Loan Parties agree
-------------------------------
that there shall be deposited into the Recovery Event Proceeds Account all
Recovery Event Proceeds. If, notwithstanding the foregoing, any Loan Party
shall receive any such proceeds, it shall immediately deliver such proceeds in
the exact form received (duly indorsed, if appropriate, in a manner satisfactory
to the Collateral Agent) to the Collateral Agent for deposit into the Recovery
Event Proceeds Account. The Collateral Agent shall have the right to receive
all such proceeds directly from the Persons owing the same. All such proceeds
received by or on behalf of the Collateral Agent shall be deposited into the
Recovery Event Proceeds Account.
SECTION 3.4. Loan Principal Account. The Loan Parties agree that,
----------------------
until the 364-Day Term Loans have been repaid in full, all Net Cash Proceeds of
any Refinancing Indebtedness shall be deposited into the Loan Principal Account.
If, notwithstanding the foregoing, any Loan Party shall receive any such
proceeds, it shall immediately deliver such proceeds in the exact form received
(duly indorsed, if appropriate, in a manner satisfactory to the Collateral
Agent) to the Collateral Agent for deposit into the Loan Principal Account. The
Collateral Agent shall have the right to receive all such Net Cash Proceeds
directly from the Persons owing the same. All such Net Cash Proceeds received by
the Collateral Agent shall be deposited into the Loan Principal Account.
SECTION 3.5. Debt Service Reserve Accounts. The Loan Parties agree
-----------------------------
that any DSR Credit Instrument delivered to the Collateral Agent in total or
partial satisfaction of any
22
Debt Service Reserve Requirement for any Senior Debt and all proceeds thereof
shall be deposited in the Debt Service Reserve Account established for such
Senior Debt.
SECTION 3.6. Deposits Irrevocable. Any deposit made into the
--------------------
Accounts hereunder shall be irrevocable and all cash, cash equivalents,
instruments, investments and other securities on deposit shall be held in trust
by the Collateral Agent, and applied solely as provided herein.
ARTICLE IV
Transfers from Accounts
-----------------------
SECTION 4.1. Revenue Account. (a) Subject to Section 4.14, on each
---------------
Monthly Transfer Date the Collateral Agent shall transfer, from the funds on
deposit in the Revenue Account, the following amounts in the following order of
priority:
first, to the Operating Account, the amount certified in such
-----
Request Letter to be the excess, if any, of the aggregate amount of
Operating Expenses then due and payable or projected to become due and
payable in the next succeeding month over the balance then on deposit in
the Operating Account;
second, to the Collateral Agent and each Secured Parties'
------
Representative, the amount certified in the Request Letter delivered in
connection with such Monthly Transfer Date to be the sum of the unpaid
fees, indemnities, costs and expenses then due and payable to the
Collateral Agent and such Secured Parties' Representative in respect of
their respective services in such capacities;
third, (i) into each Accrued Interest Account, the Accrued
-----
Interest Amount calculated for such Accrued Interest Account, together with
the amount of all deficiencies, if any, with respect to deposits of Accrued
Interest Amounts required in all prior months, as certified in such Request
Letter, (ii) into each Principal Account (other than (A) the Loan Principal
Account and any other Principal Account established in respect of non-
amortizing Senior Debt, (B) any DSR Letter of Credit Indebtedness Principal
Account, (C) any Ordinary Course Letter of Credit Indebtedness Principal
Account and (D) any Swap Indebtedness Termination Payment Account), an
amount equal to 1/6th of the principal amount, if any, which is payable on
or within six months following such Monthly Transfer Date on account of the
Senior Debt with respect to which such Principal Account was established,
together with the amount of all deficiencies, if any, with respect to
deposits of principal required in all prior months, as certified in such
Request Letter, (iii) into each Ordinary Course Letter of Credit
Indebtedness Principal Account, the amount certified in such Request Letter
to be sufficient to repay in full the related Ordinary Course Letter of
Credit Indebtedness then outstanding, and (iv) to the Administrative Agent,
the amount specified in the Request Letter to be applied to the repayment
of Revolving Loans;
23
fourth, into each DSR Letter of Credit Indebtedness Principal
------
Account, the amount certified in such Request Letter to be sufficient to
repay in full the related DSR Letter of Credit Indebtedness then
outstanding;
fifth, into each Debt Service Reserve Account, the amounts
-----
certified in the Request Letter to be necessary to cause the amount on
deposit (in the form of one or more DSR Credit Instruments, cash, Permitted
Investments or a combination thereof) in such Debt Service Reserve Account
to be equal to the related Debt Service Reserve Requirements;
sixth, into the Equity Account, the balance remaining in the
-----
Revenue Account.
(b) If, on any Monthly Transfer Date, the funds on deposit in the
Revenue Account are insufficient to make in full any transfer required pursuant
to clause first, second, third, or fourth of Section 4.1(a), the Collateral
----- ------ ----- ------
Agent shall make such transfer with funds then on deposit in the Equity Account.
(c) If on any Senior Debt Payment Date, after giving effect to any
transfer to be made on such date pursuant to Sections 4.1(a) and 4.1(b), the
funds on deposit in the Accrued Interest Account for any Senior Debt for which
Debt Service is payable on such date are less than such Debt Service, the
Collateral Agent shall demand payment under the EME Credit Support Guarantee of
the EME Credit Support Amount. The Collateral Agent shall allocate the proceeds
of such payment received under the EME Credit Support Guarantee among all
Accrued Interest Accounts (without regard to whether there is any shortfall
therein) pro rata based on the Principal Amounts of all Senior Debt outstanding
--- ----
on such date.
(d) If on any Senior Debt Payment Date, after giving effect to any
transfer to be made on such date pursuant to Sections 4.1(a), 4.1(b) and 4.1(c),
the funds on deposit in the Accrued Interest Account or Principal Account for
any Senior Debt for which Debt Service is payable on such date are less than
such Debt Service, the Collateral Agent shall obtain the funds necessary to pay
such Debt Service: first, from funds in the Debt Service Reserve Account with
-----
respect to such Senior Debt, if any, including funds obtained from drawings
under any DSR Credit Instrument (other than any EME Debt Service Reserve
Guarantee) held by the Collateral Agent in respect of such Senior Debt; and,
second, from the proceeds of any EME Debt Service Reserve Guarantee held by the
------
Collateral Agent in respect of such Senior Debt.
SECTION 4.2. [Reserved].
--------
SECTION 4.3. Environmental Capital Expenditure Account. Subject to
-----------------------------------------
Section 4.14, on each Business Day specified in a Request Letter, the Collateral
Agent shall transfer to any Loan Party, from the funds on deposit in the
Environmental Capital Expenditure Account, the amount certified in such Request
Letter to be the aggregate amount then due and payable in respect of
Environmental Capital Expenditures.
24
SECTION 4.4. Recovery Event Proceeds Account. (a) Except as otherwise
-------------------------------
provided in Section 4.4(b) and subject to Section 4.14, on each Monthly Transfer
Date occurring after a Recovery Event and until Restoration with respect thereto
is completed, the Collateral Agent shall transfer to the Borrower, from the
funds on deposit in the Recovery Event Proceeds Account, the amount certified in
the Request Letter delivered in connection with such Monthly Transfer Date to be
the aggregate amount then due and payable in respect of such Restoration.
(b) Subject to Section 4.14, on any Senior Debt Payment Date on which
any Senior Debt is required to be prepaid with any Recovery Event Proceeds, the
Collateral Agent shall transfer, from the funds on deposit in the Recovery Event
Proceeds Account, the following amounts in the following order of priority:
first, to each Secured Parties' Representative for Senior Debt
-----
required to be so prepaid, the amount certified in the Request Letter
delivered in connection with such Senior Debt Payment Date to be the
aggregate amount of principal, premium and interest then due and payable in
respect of such Senior Debt; and
second, to each such Secured Parties' Representative, the amount
------
certified in such Request Letter to be the aggregate amount of all Debt
Service (other than principal, premium and interest) then due and payable
in respect of such Senior Debt.
SECTION 4.5. Loan Principal and Accrued Interest Accounts. (a) On
--------------------------------------------
any Senior Debt Payment Date on which any amount of principal is due and payable
in respect of the Loans, after giving effect to any transfers to be made on such
date pursuant to Section 4.1, the Collateral Agent shall transfer to the
Administrative Agent, from the funds on deposit in the Loan Principal Account,
the aggregate amount of such principal then due and payable to the Lenders, as
certified in the Request Letter delivered in connection with such Senior Debt
Payment Date.
(b) On any Senior Debt Payment Date on which any Debt Service (other
than principal) in respect of the Loans is due and payable in respect of the
Loans, after giving effect to any transfers to be made pursuant to Section 4.1,
the Collateral Agent shall transfer to the Administrative Agent, from the funds
on deposit in the Loan Accrued Interest Account, the aggregate amount of such
Debt Service then due and payable to the Lenders, as certified in the Request
Letter delivered in connection with such Senior Debt Payment Date.
(c) On the Senior Debt Payment Date on which any Net Cash Proceeds
were applied to repay the 364-Day Term Loans, the Collateral Agent shall
transfer to the Equity Account, from the funds on deposit in the Loan Principal
Account, the aggregate amount of the Excess Net Cash Proceeds.
SECTION 4.6. Refinancing Indebtedness Principal and Accrued Interest
-------------------------------------------------------
Accounts. (a) On any Senior Debt Payment Date on which any amount of principal
--------
or premium is due and payable in respect of any class of Refinancing
Indebtedness, after giving effect to any transfers to be made on such date
pursuant to Section 4.1, the Collateral Agent shall transfer to the Secured
Parties' Representative for such class of Refinancing Indebtedness, from the
funds on
25
deposit in the Refinancing Indebtedness Principal Account established for the
benefit of such class of Refinancing Indebtedness, the aggregate amount of such
principal and premium then due and payable to the holders of such Refinancing
Indebtedness, as certified in the Request Letter delivered in connection with
such Senior Debt Payment Date.
(b) On any Senior Debt Payment Date on which any Debt Service (other
than principal) is due and payable in respect of any class of Refinancing
Indebtedness, after giving effect to any transfers to be made on such date
pursuant to Section 4.1, the Collateral Agent shall transfer to the Secured
Parties' Representative for such class of Refinancing Indebtedness, from the
funds on deposit in the Refinancing Indebtedness Accrued Interest Account
established for the benefit of such class of Refinancing Indebtedness, the
aggregate amount of such Debt Service then due and payable to the holders of
such Refinancing Indebtedness, as certified in the Request Letter delivered in
connection with such Senior Debt Payment Date.
SECTION 4.7. Ordinary Course Letter of Credit Indebtedness Principal
-------------------------------------------------------
and Accrued Interest Accounts. (a) On any Senior Debt Payment Date on which
-----------------------------
any amount of principal is due and payable in respect of any class of Ordinary
Course Letter of Credit Indebtedness, after giving effect to any transfers to be
made on such date pursuant to Section 4.1, the Collateral Agent shall transfer
to the Secured Parties' Representative for such class of Ordinary Course Letter
of Credit Indebtedness, from the funds on deposit in the Ordinary Course Letter
of Credit Indebtedness Principal Account established for the benefit of such
class of Ordinary Course Letter of Credit Indebtedness, the aggregate amount of
principal then due and payable to the holders of such class of Ordinary Course
Letter of Credit Indebtedness, as certified in the Request Letter delivered in
connection with such Senior Debt Payment Date.
(b) On any Senior Debt Payment Date on which any Debt Service (other
than principal) is due and payable in respect of any class of Ordinary Course
Letter of Credit Indebtedness, after giving effect to any transfers to be made
on such date pursuant to Section 4.1, the Collateral Agent shall transfer to the
Secured Parties' Representative for such class of Ordinary Course Letter of
Credit Indebtedness, from the funds on deposit in the Ordinary Course Letter of
Credit Indebtedness Accrued Interest Account established for the benefit of such
class of Ordinary Course Letter of Credit Indebtedness, the aggregate amount of
such Debt Service then due and payable to the holders of such class of Ordinary
Course Letter of Credit Indebtedness, as certified in the Request Letter
delivered in connection with such Senior Debt Payment Date.
SECTION 4.8. DSR Letter of Credit Indebtedness Principal and Accrued
-------------------------------------------------------
Interest Accounts. (a) On any Senior Debt Payment Date on which any amount of
-----------------
principal is due and payable in respect of any class of DSR Letter of Credit
Indebtedness, after giving effect to any transfers to be made on such date
pursuant to Section 4.1, the Collateral Agent shall transfer to the Secured
Parties' Representative for such class of DSR Letter of Credit Indebtedness,
from the funds on deposit in the DSR Letter of Credit Indebtedness Principal
Account established for the benefit of such class of DSR Letter of Credit
Indebtedness, the aggregate amount of principal then due and payable to the
holders of such class of DSR Letter of Credit Indebtedness, as certified in the
Request Letter delivered in connection with such Senior Debt Payment Date.
26
(b) On any Senior Debt Payment Date on which any Debt Service (other
than principal) is due and payable in respect of any class of DSR Letter of
Credit Indebtedness, after giving effect to any transfers to be made on such
date pursuant to Section 4.1, the Collateral Agent shall transfer to the Secured
Parties' Representative for such class of DSR Letter of Credit Indebtedness,
from the funds on deposit in the DSR Letter of Credit Indebtedness Accrued
Interest Account established for the benefit of such class of DSR Letter of
Credit Indebtedness, the aggregate amount of such Debt Service then due and
payable to the holders of such class of DSR Letter of Credit Indebtedness, as
certified in the Request Letter delivered in connection with such Senior Debt
Payment Date.
SECTION 4.9. Additional Indebtedness Principal and Accrued Interest
------------------------------------------------------
Accounts. (a) On any Senior Debt Payment Date on which any amount of principal
--------
or premium is due and payable in respect of any class of Additional
Indebtedness, after giving effect to any transfers to be made on such date
pursuant to Section 4.1, the Collateral Agent shall transfer to the Secured
Parties' Representative for such class of Additional Indebtedness, from the
funds on deposit in the Additional Indebtedness Principal Account established
for the benefit of such class of Additional Indebtedness, the aggregate amount
of principal and premium then due and payable to the holders of such class of
Additional Indebtedness, as certified in the Request Letter delivered in
connection with such Senior Debt Payment Date.
(b) On any Senior Debt Payment Date on which any Debt Service (other
than principal) is due and payable in respect of any class of Additional
Indebtedness, after giving effect to any transfers to be made on such date
pursuant to Section 4.1, the Collateral Agent shall transfer to the Secured
Parties' Representative for such class of Additional Indebtedness, from the
funds on deposit in the Additional Indebtedness Accrued Interest Account
established for the benefit of such class of Additional Indebtedness, the
aggregate amount of such Debt Service then due and payable to the holders of
such class of Additional Indebtedness, as certified in the Request Letter
delivered in connection with such Senior Debt Payment Date.
SECTION 4.10. Swap Indebtedness Termination Payment and Accrued Fixed
-------------------------------------------------------
Payment Accounts. (a) On any Senior Debt Payment Date on which any termination
----------------
payment is due and payable in respect of any class of Swap Indebtedness, after
giving effect to any transfers to be made on such date pursuant to Section 4.1,
the Collateral Agent shall transfer to the Secured Parties' Representative for
such class of Swap Indebtedness, from the funds on deposit in the Swap
Indebtedness Termination Payment Account established for the benefit of such
class of Swap Indebtedness, the aggregate termination payments then due and
payable to the holders of such class of Swap Indebtedness, as certified in the
Request Letter delivered in connection with such Senior Debt Payment Date.
(b) On any Senior Debt Payment Date on which any Debt Service (other
than termination payments) is due and payable in respect of any class of Swap
Indebtedness, after giving effect to any transfers to be made on such date
pursuant to Section 4.1, the Collateral Agent shall transfer to the Secured
Parties' Representative for such class of Swap Indebtedness, from the funds on
deposit in the Swap Indebtedness Accrued Fixed Payment Account established for
the benefit of such class of Swap Indebtedness, the aggregate amount of such
Debt Service
27
then due and payable to the holders of such class of Swap Indebtedness, as
certified in the Request Letter delivered in connection with such Senior Debt
Payment Date.
SECTION 4.11. Equity Account. Except during a Default Period, on
--------------
each Restricted Payment Date, the Collateral Agent shall transfer, from the
funds on deposit in the Equity Account, the amount certified by the Borrower in
the Request Letter delivered in connection with such Restricted Payment Date to
be then available for use in making Restricted Payments in accordance with the
terms of the Financing Documents. In addition, the Collateral Agent shall make
transfers from the funds on deposit in the Equity Account in accordance with
Sections 4.1(b) and 4.14(b).
SECTION 4.12. Delivery of Request Letters. Each Request Letter to be
---------------------------
delivered by any Loan Party pursuant to this Article IV shall be delivered to
the Collateral Agent not later than one day prior to the date that the
Collateral Agent is required to make any transfer specified therein. At the
time any Loan Party delivers to the Collateral Agent any Request Letter or other
written communication relating to the Accounts, such Loan Party shall deliver a
copy thereof to each Secured Parties' Representative.
SECTION 4.13. Shortfall Notices. Not later than the Business Day
-----------------
preceding each date on which any transfer is to be made pursuant to this Article
IV, the Collateral Agent shall notify the Borrower and each Secured Parties'
Representative if the amounts requested to be transferred on such date in the
Request Letter delivered in connection therewith exceed the funds available in
the relevant Accounts.
SECTION 4.14. Transfers from Accounts During a Default Period. (a)
-----------------------------------------------
During a Default Period, the Borrower shall be entitled to issue Request Letters
and otherwise direct the transfer of funds from the Accounts until the
Collateral Agent receives a Notice of Action directing that action be taken
pursuant to Section 4.14(b).
(b) At any time after the Collateral Agent receives a Notice of
Action specifying that action be taken pursuant to this Section 4.14(b), the
Collateral Agent shall: (i) transfer all amounts in the Environmental Capital
Expenditure Account to the Administrative Agent (and such transfer shall be
deemed to be a payment made on account of the Debt Service then due and payable
in respect of the Construction Term Loans); (ii) with respect to any Senior
Debt, transfer all amounts in the Debt Service Reserve Account with respect to
such Senior Debt, including amounts obtained from drawings under any DSR Credit
Instrument held by the Collateral Agent in respect of such Senior Debt, to the
Secured Parties' Representative for such Senior Debt (and such transfer shall be
deemed to be a payment made on account of the Debt Service then due and payable
in respect of such Senior Debt); and (iii) with respect to any Senior Debt,
transfer all amounts in the Accrued Interest Account and the Principal Account
with respect to such Senior Debt to the Secured Parties' Representative for such
Senior Debt (and such transfer shall be deemed to be a payment made on account
of the Debt Service then due and payable in respect of such Senior Debt). After
making the transfers specified by the immediately preceding clauses (i), (ii)
and (iii), the Collateral Agent shall take or discontinue to take all actions
specified in such
28
Notice of Action and/or shall transfer all amounts remaining in the Accounts in
the following order of priority:
first, to the Collateral Agent and each Secured Parties'
-----
Representative, the amount certified by such Person to be the sum of the
unpaid fees, indemnities, costs and expenses then due and payable to such
Person for its services in such capacity;
second, to each Secured Parties' Representative for Senior Debt, the
------
amount certified by such Secured Parties' Representative to be the
aggregate amount of principal, premium and interest then due and payable in
respect of such Senior Debt under the related Financing Documents;
third, to each Secured Parties' Representative for Senior Debt, the
-----
amount certified by such Secured Parties' Representative to be the
aggregate amount of all Debt Service (other than principal, premium and
interest) then due and payable in respect of such Senior Debt under the
related Financing Documents;
fourth, any surplus then remaining shall be paid to the Borrower or
------
its successors or assigns or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct.
SECTION 4.15. Collateral Agent's Calculations. In making the
-------------------------------
determinations and allocations required by Section 4.14, the Collateral Agent
may rely upon information specified in Sections 6.2 and 6.3 of the Collateral
Agency and Intercreditor Agreement, as applicable, and the Collateral Agent
shall have no liability to any of the Secured Parties for actions taken in
reliance on such information. All transfers and releases made by the Collateral
Agent pursuant to Section 4.14 shall be (subject to any decree of any court of
competent jurisdiction) final, and the Collateral Agent shall have no duty to
inquire as to the application by any Secured Party of any amounts distributed to
them.
SECTION 4.16. Insufficient Amounts. To the extent the amounts on
--------------------
deposit in any Account are insufficient to fully satisfy any transfer
requirement from such Account under this Article IV, such transfer shall be made
to the extent of the amounts on deposit in such Account. In addition, if (i)
any transfer requirements from any Account in this Article IV share the same
level of priority and (ii) there are insufficient funds in such Account to
satisfy in full all such transfer requirements which share such level of
priority, such transfers shall be made on a pro rata basis to the extent of the
--- ----
amounts on deposit in such Account, provided that if payments on account of
--------
principal, interest and other Debt Service due on the Senior Debt share the same
level of priority, the funds released on account of such payment of Senior Debt
shall be applied, first, to the payment of accrued interest (or, in the case of
-----
Swap Indebtedness, accrued amounts) on such Senior Debt to the date of such
payment, second, to the payment of the principal amount (or, in the case of Swap
------
Indebtedness, termination payments) of such Senior Debt then due and payable,
and third, to the payment of any other Debt Service then due and payable with
-----
respect to such Senior Debt.
29
SECTION 4.17. DSR Credit Instruments. (a) Except during a Default
----------------------
Period, the Collateral Agent may release funds from the Debt Service Reserve
Account for any Senior Debt in exchange for one or more DSR Credit Instruments
certified by the Borrower to meet the requirements of the Financing Documents
related to such Senior Debt. Any amounts so released shall forthwith be
transferred to the Equity Account.
(b) The Collateral Agent shall draw upon any DSR Credit Instrument:
(i) during a Default Period, at the direction of the Required
Secured Parties;
(ii) at any time the cash on deposit in any Debt Service Reserve
Account in which it is held is insufficient for making any
transfer in accordance with terms of this Agreement; and
(iii) if the related DSR Letter of Credit Provider shall cease to
have the Minimum Ratings and such DSR Credit Instrument is
not replaced within 30 days.
ARTICLE V
Investment
----------
Cash held by the Collateral Agent in the Accounts shall not be
invested or reinvested except as provided below:
(a) cash held in the Accounts shall be invested and reinvested in
Permitted Investments by the Collateral Agent who shall make such Permitted
Investments (i) except during a Default Period, at the written direction of
the Borrower and (ii) during a Default Period, in Permitted Investments
selected by the Collateral Agent unless specific investment instructions
are given to the Collateral Agent by the Required Secured Parties;
(b) the Collateral Agent shall sell or liquidate all or any designated
part of the Permitted Investments held in any Account at any time the
proceeds thereof are required to make a release from any Account or any
transfer between Accounts pursuant to Article IV hereof; and
(c) all such Permitted Investments, the interest thereon, and the net
proceeds of the sale, liquidation or payment thereof, shall be held in the
appropriate Account for the same purposes as the cash used to purchase such
Permitted Investments.
The Collateral Agent shall take such action as may be necessary to perfect the
security interest created by this Agreement in all Permitted Investments.
30
ARTICLE VI
Collateral Agent
----------------
SECTION 6.1. Rights, Duties, etc. The acceptance by the Collateral
-------------------
Agent of its respective duties hereunder is subject to the following terms and
conditions which the parties to this Agreement hereby agree shall govern and
control with respect to the rights, duties, liabilities and immunities of the
Collateral Agent:
(a) it shall not be responsible or liable in any manner whatever for
soliciting any funds or for the sufficiency, correctness, genuineness or
validity of any funds or securities deposited with or held by it;
(b) it shall be protected in acting or refraining from acting upon any
written notice, certificate, instruction, request or other paper or
document, as to the due execution thereof and the validity and
effectiveness of the provisions thereof and as to the truth of any
information therein contained, which it in good faith believes to be
genuine;
(c) it shall not be liable for any error of judgment or for any act
done or step taken or omitted except in the case of its gross negligence,
willful misconduct or bad faith;
(d) it may consult with and obtain advice from counsel of its own
choice in the event of any dispute or question as to the construction of
any provision hereof;
(e) it shall have no duties hereunder, except those which are
expressly set forth herein and in any modification or amendment hereof;
provided, however, that no such modification or amendment hereof shall
-------- -------
affect its duties unless it shall have given its prior written consent
thereto;
(f) it may execute or perform any duties hereunder either directly or
through administrative agents or attorneys selected with reasonable care;
(g) it may engage or be interested in any financial or other
transactions with any party hereto and may act on, or as depositary,
collateral agent or administrative agent for, any committee or body of
holders of obligations of such Persons as freely as if it were not
Collateral Agent hereunder; and
(h) it shall not be obligated to take any action which in its
reasonable judgment would involve it in expense or liability unless it has
been furnished with reasonable indemnity.
SECTION 6.2. Resignation or Removal. The Collateral Agent may resign
----------------------
or be removed as set forth in Section 2.6 of the Collateral Agency and
Intercreditor Agreement.
31
ARTICLE VII
Determinations
--------------
In the event of any dispute as to any amount to be distributed or paid
by the Collateral Agent from the Accounts, the Collateral Agent is authorized
and directed to retain in its possession without liability to anyone all or any
part of the amounts then on deposit in the Accounts, until such dispute shall
have been settled by mutual agreement of the Borrower and the Secured Parties or
by a final order, decree or judgment of a Federal or State court of competent
jurisdiction located in the State of New York (with respect to disputes in
connection with amounts on deposit in the Accounts), and time for an appeal has
expired and no appeal has been perfected, but the Collateral Agent shall be
under no duty whatsoever to institute or defend any such proceedings.
ARTICLE VIII
Miscellaneous
-------------
SECTION 8.1. Indemnification of Collateral Agent. Each Loan Party
-----------------------------------
assumes liability for, and agrees to indemnify, protect, save and keep harmless
the Secured Parties and the Collateral Agent and their respective successors,
assigns, agents and servants from and against, any and all claims, liabilities,
obligations, losses, damages, penalties, costs and expenses (including
reasonable attorneys' fees) that may be imposed on, incurred by, or asserted
against, at any time, the Secured Parties or the Collateral Agent and in any way
relating to or arising out of the execution and delivery of this Agreement, the
establishment of the Accounts, the acceptance of deposits, the purchase or sale
of Permitted Investments, the retention of cash and Permitted Investments or the
proceeds thereof, draws on the DSR Credit Instruments and any payment, transfer
or other application of cash, Permitted Investments or the proceeds of draws of
DSR Credit Instruments by the Collateral Agent in accordance with the provisions
of this Agreement, or as may arise by reason of any act, omission or error of
the Collateral Agent made in good faith in the conduct of its duties; except
that the Borrower shall not be required to indemnify, protect, save and keep
harmless the Collateral Agent or any Secured Party, against its own gross
negligence or willful misconduct. The indemnities contained in this Section 8.1
shall survive the termination of this Agreement.
SECTION 8.2. Waiver of Right of Set-Off. The Collateral Agent
--------------------------
waives, with respect to all of its existing and future claims against the
Borrower, all existing and future rights of set-off and banker's liens against
the Accounts and all items (and proceeds thereof) that come into its possession
in connection with the Accounts.
SECTION 8.3. Termination. The provisions of Articles III and IV with
-----------
respect to the Accounts shall terminate on the date on which the Obligations
under Financing Documents shall have been paid in full. Promptly after such
termination, the Secured Parties shall notify the Collateral Agent of such
termination and the Collateral Agent hereby agrees that at the time of
32
such termination (x) any Permitted Investments in the Accounts shall be
liquidated as soon as commercially prudent, (y) a reconciliation shall be made
of the distributions made from the Accounts and any necessary adjustments to the
balances of such Accounts as a result of such reconciliation shall be made and
(z) the moneys in the Accounts (after giving effect to such liquidation and such
adjustments) shall be distributed to the Borrower or as it may direct.
SECTION 8.4. Severability. If any one or more of the covenants or
------------
agreements provided in this Agreement on the part of the parties hereto to be
performed should be determined by a court of competent jurisdiction to be
contrary to law, such covenant or agreement shall be deemed and construed to be
severable from the remaining covenants and agreements herein contained and shall
in no way affect the validity of the remaining provisions of this Agreement.
SECTION 8.5. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be an original and all of which shall
constitute one and the same instrument.
SECTION 8.6. Amendments. The provisions of this Agreement may be
----------
amended, modified or waived if such amendment, modification or waiver is in
writing and is entered into in accordance with the provisions of the Collateral
Agency and Intercreditor Agreement.
SECTION 8.7. APPLICABLE LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
--------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
REGARDLESS OF ANY OTHER PROVISION IN ANY OTHER AGREEMENT, FOR PURPOSES OF THE
NEW YORK UCC, NEW YORK SHALL BE DEEMED TO BE THE SECURITIES INTERMEDIARY'S
JURISDICTION AND THE ACCOUNTS (AS WELL AS THE SECURITIES ENTITLEMENTS RELATED
THERETO) SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.8. Notices. Except as otherwise specifically provided
-------
herein, all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof to be given to
any Person shall be in writing and shall be deemed to have been duly given or
made when delivered if delivered by hand or courier or when received if sent by
mail or telecopy, in each case addressed to the party to which such notice is
required or permitted to be given or made hereunder set forth below its
signature hereto, or such other address as may be specified from time to time by
such party in a notice to the other parties hereto.
SECTION 8.9. Benefit of Security Deposit Agreement. This Security
-------------------------------------
Deposit Agreement shall inure to the benefit of, and be enforceable by, the
parties hereto and their respective successors and permitted assigns, and no
other Person shall be entitled to any of the benefits of this Security Deposit
Agreement.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be duly executed by their duly authorized officers, all as of the day and year
first above written.
EDISON MISSION HOLDINGS CO.
By:________________________
Name:
Title:
Address for Notices:
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000-0000
EDISON MISSION FINANCE CO.
By:________________________
Name:
Title:
Address for Notices:
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000-0000
XXXXX CITY PROPERTY HOLDINGS, INC.
By:________________________
Name:
Title:
Address for Notices:
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000-0000
CHESTNUT RIDGE ENERGY CO.
By:
-------------------------
Name:
Title:
Address for Notices:
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000-0000
MISSION ENERGY WESTSIDE, INC.
By:
---------------------------
Name:
Title:
Address for Notices:
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000-0000
EME HOMER CITY GENERATION L.P.
By: Mission Energy Westside, Inc.,
its General Partner
By:
-----------------------------
Name:
Title:
Address for Notices:
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000-0000
XXXXXX XXXXXX TRUST COMPANY OF NEW
YORK, as Collateral Agent
By:
-----------------------------
Name:
Title:
Address for Notices:
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
