EXHIBIT 4.12
EXECUTION VERSION
SECURITY AGREEMENT
dated as of March 23, 2004
by
CALPINE GENERATING COMPANY, LLC
and
THE GUARANTORS PARTY HERETO FROM TIME TO TIME
and
WILMINGTON TRUST COMPANY,
as Collateral Agent
TABLE OF CONTENTS
PAGE
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ARTICLE I. Definitions............................................................................. 3
Section 1.1 General Definitions......................................................... 3
Section 1.2 Definitions; Interpretation................................................. 8
ARTICLE II. Grant of Security Interests............................................................ 9
Section 2.1 First Priority Lien Obligations............................................. 9
Section 2.2 Second Priority Lien Obligations............................................ 10
Section 2.3 Third Priority Lien Obligations............................................. 10
ARTICLE III. Security for Obligations.............................................................. 10
Section 3.1 Security for Obligations.................................................... 10
Section 3.2 Continuing Liability under Collateral....................................... 10
ARTICLE IV. Representations, Warranties and Covenants.............................................. 10
Section 4.1 Generally...............................,................................... 10
Section 4.2 Equipment................................................................... 12
Section 4.3 Investment Property......................................................... 12
Section 4.4 Contracts................................................................... 15
Section 4.5 Letter of Credit Rights..................................................... 15
ARTICLE V. Access; Right of Inspection and Further Assurances...................................... 15
Section 5.1 Access; Right of Inspection......,.....................................,.... 15
Section 5.2 Further Assurances.................................................'........ 16
ARTICLE VI. Collateral Agent Appointed Attorney-In-Fact............................................ 16
ARTICLE VII. Remedies.............................................................................. 17
Section 7.1 Generally................................................................... 17
Section 7.2 Application of Proceeds..................................................... 19
Section 7.3 Sales on Credit............................................................. 19
Section 7.4 Investment Property......................................................... 19
Section 7.5 Cash Proceeds............................................................... 20
ARTICLE VIII. Collateral Agent...................................................,................. 20
ARTICLE IX. Continuing Security Interest; Transfer of Secured Obligations.......................... 20
ARTICLE X. Standard of Care; Collateral Agent May Perform.......................................... 21
ARTICLE XI. Indemnity and Expenses................................................................. 21
ARTICLE XII. Miscellaneous......................................................................... 22
Section 12.1 Notices..................................................................... 22
Section 12.2 Amendments and Waivers...................................................... 22
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Section 12.3 Successors and Assigns...................................................... 22
Section 12.4 Independence of Covenants................................................... 22
Section 12.5 Severability................................................................ 22
Section 12.6 Headings.................................................................... 23
Section 12.7 APPLICABLE LAW.............................................................. 23
Section 12.8 CONSENT TO JURISDICTION..................................................... 23
Section 12.9 WAIVER OF JURY TRIAL........................................................ 23
Section 12.10 Counterparts................................................................ 24
Section 12.11 Effectiveness............................................................... 24
Section 12.12 Entire Agreement............................................................ 24
Section 12.13 Reinstatement............................................................... 24
Section 12.14 Collateral Trust Agreement.................................................. 24
Section 12.15 No Recourse Against the Grantors............................................ 24
ii
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of March 23, 2004 (as amended,
amended and restated, supplemented or otherwise modified from time to time, this
"Agreement"), is entered into by and among CALPINE GENERATING COMPANY, LLC, a
Delaware limited liability company (the "Company"'), the GUARANTORS party hereto
from time to time, and WILMINGTON TRUST COMPANY, acting in the capacity of
collateral agent for the benefit of the Secured Parties (together with its
successors and permitted assigns in such capacity, the "Collateral Agent").
RECITALS
WHEREAS, the Company:
(a) intends to issue, together with CalGen Finance Corp.
("CalGen Finance"), as co-issuer, on a non-recourse basis:
(i) $235,000,000 in aggregate principal amount of its
First Priority Secured Floating Rate Notes due 2009 (the "First
Priority Notes"), pursuant to the Indenture, dated as of the date
hereof (the "First Priority Indenture"), among the Company, CalGen
Finance, the guarantors party thereto from time to time and
Wilmington Trust FSB, as trustee (together with its successors and
permitted assigns in such capacity, the "First Priority Indenture
Trustee");
(ii) $640,000,000 in aggregate principal amount of its
Second Priority Floating Rate Notes due 2010 (the "Second Priority
Notes"), pursuant to the Indenture, dated as of the date hereof (the
"Second Priority Indenture"), among the Company, CalGen Finance, the
guarantors party thereto from time to time and Wilmington Trust FSB,
as trustee (together with its successors and permitted assigns in
such capacity, the "Second Priority Indenture Trustee"); and
(iii) (A) $680,000,000 in aggregate principal amount of
its Third Priority Secured Floating Rate Notes due 2011 (the "Third
Priority Floating Rate Notes"), and (B) $150,000,000 in aggregate
principal amount of its 11.50% Third Priority Secured Notes due 2011
(the "Third Priority Fixed Rate Notes" and, together with the First
Priority Notes, the Second Priority Notes and the Third Priority
Floating Rate Notes, the "Notes"), pursuant to the Indenture, dated
as of the date hereof (the "Third Priority Indenture" and, together
with the First Priority Indenture and the Second Priority Indenture,
the "Indentures"), among the Company, CalGen Finance, the guarantors
party thereto from time to time and Wilmington Trust FSB, as trustee
(together with its successors and permitted assigns in such
capacity, the "Third Priority Indenture Trustee");
(b) intends to borrow, on a non-recourse basis:
(i) $600,000,000 in aggregate principal amount of first
priority institutional term loans due 2009 (the "First Priority Term
Loans"), pursuant to a Credit and Guarantee Agreement, dated as of
the date hereof (the "First Priority
Term Loan Agreement"), among the Company, the guarantors party
thereto from time to time, Xxxxxx Xxxxxxx Senior Funding, Inc., as
the administrative agent (together with its successors and permitted
assigns in such capacity, the "First Priority Term Loan
Administrative Agent"). Xxxxxx Xxxxxxx Senior Funding, Inc., as sole
lead arranger, Xxxxxx Xxxxxxx Senior Funding, Inc., as sole
book-runner, and the lenders party thereto from time to time; and
(ii) $100,000,000 in aggregate principal amount of
second priority institutional term loans due 2010 (the "Second
Priority Term Loans" and, together with the First Priority Term
Loans, the "Term Loans"), pursuant to a Credit and Guarantee
Agreement, dated as of the date hereof (the "Second Priority Term
Loan Agreement" and, together with the First Priority Term Loan
Agreement, the "Term Loan Agreements"), among the Company, the
guarantors party thereto from time to time, Xxxxxx Xxxxxxx Senior
Funding, Inc., as the administrative agent (together with its
successors and permitted assigns in such capacity, the "Second
Priority Term Loan Administrative Agent"), Xxxxxx Xxxxxxx Senior
Funding, Inc. as sole lead arranger, Xxxxxx Xxxxxxx Senior Funding,
Inc., as sole book-runner, and the lenders party thereto from time
to time; and
(c) has entered into that certain Amended and Restated Credit
Agreement, dated as of the date hereof (the "Revolving Loan Agreement"),
among the Company, the guarantors party thereto from time to time, the
lenders party thereto from time to time, The Bank of Nova Scotia, as
administrative agent (together with its successors and permitted assigns
in such capacity, the "Revolver Administrative Agent"), and each of the
other agents and arrangers party thereto, which provides for the borrowing
on a non-recourse basis of up to $200,000,000 in aggregate principal
amount of first priority secured revolving loans (the "Revolving Loans");
WHEREAS, as a condition precedent to the effectiveness of each Term
Loan Agreement, the Revolving Loan Agreement and each Indenture, the Company and
the Guarantors are required to execute and deliver this Agreement, pursuant to
which the Company and the Guarantors will secure the Secured Obligations (as
defined in the Collateral Trust Agreement (as defined below)) with security
interests in all of their present and future personal property, except Excluded
Assets (as defined below), on the terms and conditions set forth below; and
WHEREAS, the Company, Calpine CalGen Holdings, Inc., the Guarantors
(as defined in the Collateral Trust Agreement), the First Priority Indenture
Trustee, the Second Priority Indenture Trustee, the Third Priority Indenture
Trustee, the First Priority Term Loan Administrative Agent, the Second Priority
Term Loan Administrative Agent, the Revolver Administrative Agent and the
Collateral Agent have entered into the Collateral Trust Agreement, dated as of
the date hereof (the "Collateral Trust Agreement"), which sets forth the terms
on which the Company, Calpine CalGen Holdings, Inc., CalGen Finance, and the
Guarantors, among others, have appointed the Collateral Agent as agent for the
present and future holders of the Secured Obligations, among others, to (a)
receive, hold, maintain, administer and enforce (i) all Security Documents (as
defined in the Collateral Trust Agreement) and (ii) all interests, rights,
powers and remedies of the Collateral Agent thereunder, and (b) distribute the
proceeds of
the Collateral (as defined in the Collateral Trust Agreement) in a manner
consistent with the priority of liens established by the Collateral Trust
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Collateral Agent
agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 General Definitions. In this Agreement, the following terms
shall have the following meanings:
"Account Debtor" shall mean an "account debtor" as defined in
Article 9 of the UCC.
"Accounts" shall mean all "accounts" as defined in Article 9 of the
UCC.
"Article 9 Collateral" shall mean:
(a) with respect to each Grantor that is not a Holding Company, any
and all personal property of such Grantor, now owned or at any time hereafter
acquired by such Grantor, or in which such Grantor now has or at any time in the
future may acquire any right, title or interest, including all (i) Documents;
(ii) Goods; (iii) Intellectual Property; (iv) Investment Property; (v) Letter of
Credit Rights; (vi) Money; (vii) General Intangibles; (viii) Receivables and
Receivable Records; (ix) Commercial Tort Claims; (x) to the extent not otherwise
included above, (A) all contracts or other agreements, motor vehicles and other
personal property of any kind, (B) all Collateral Records that at any time
evidence or contain information relating to or that are otherwise necessary or
helpful in the collection of any of the foregoing, (C) all personal property
assigned, hypothecated or otherwise securing any of the foregoing, including any
security agreement or other agreement granting a lien or security interest in
such personal property, and (D) all Supporting Obligations relating to any of
the foregoing; and (xi) to the extent not otherwise included above, all
Proceeds, products, accessions, rents and profits of or in respect of any of the
foregoing; and
(b) with respect to each Grantor that is a Holding Company, (i) such
Grantor's right to receive income, gain, profit, loss or other items allocated
or distributed to such Grantor pursuant to any limited liability agreement,
general partnership or other organizational agreement; (ii) all accounts,
deposits or credits of any kind with any Subsidiary of such Grantor; (iii) all
of such Grantor's right, title and interest in any Subsidiary of such Grantor or
in or to any and all of such Subsidiary's assets or properties; (iv) all claims
of such Grantor for damages arising out of any breach or default relating to any
Collateral; (v) all Qualifying Cash Equivalents of such Grantor; and (vi) to the
extent not otherwise included above, all Proceeds, products, accessions, rents
and profits of or in respect of any of the foregoing;
provided, however, that, in each case, notwithstanding the foregoing
provisions of this definition, in no event shall "Article 9 Collateral" include
any Excluded Assets.
"Authenticate" shall mean "authenticate" as defined in Article 9 of
the UCC.
"Cash Proceeds" shall mean all "cash proceeds" as defined in Article
9 the UCC.
"Chattel Paper" shall mean all "chattel paper" as defined in Article
9 of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in the UCC.
"Collateral Records" shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and other electronic storage
media and related data processing software and similar items.
"Commercial Tort Claims" shall mean all "commercial tort claims" as
defined in the UCC.
"Commodities Accounts" shall mean all "commodity accounts" as
defined in Article 9 of the UCC.
"Copyright Licenses" shall mean any and all agreements granting any
right in, to or under Copyrights (whether the Grantor is licensee or licensor
thereunder).
"Copyrights" shall mean all United States, state and foreign
copyrights, including but not limited to copyrights in software and databases,
and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act),
whether registered or unregistered, now or hereafter in force throughout the
world, all registrations and applications for any of the foregoing, all rights
corresponding thereto throughout the world, all extensions and renewals of any
thereof, the right to xxx for past, present and future infringements of any of
the foregoing, and all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.
"Deposit Accounts" shall mean all "deposit accounts" as defined in
Article 9 of the UCC.
"Designated Deposit Account" shall mean any Deposit Account
designated as such on Schedule II hereto.
"Documents" shall mean all "documents" as defined in Article 9 of
the UCC.
"Documents Evidencing Goods" shall mean all Documents evidencing,
representing or issued in connection with Goods.
"Equipment" shall mean: (a) all "equipment" as defined in the UCC,
(b) all machinery, manufacturing equipment, data processing equipment,
computers, office equipment, furnishings, furniture, appliances, and tools (in
each case, regardless of whether characterized as
equipment under the UCC), (c) all Fixtures, and (d) all accessions or additions
thereto, all parts thereof, whether or not at any time of determination
incorporated or installed therein or attached thereto, and all replacements
therefor, wherever located, now or hereafter existing.
"Event of Default" shall mean an "Event of Default" under and as
defined in any of the Indentures, any of the Term Loan Agreements, the Revolving
Loan Agreement or any other Secured Debt Document.
"Fixtures" shall mean all "fixtures" as defined in Article 9 of the
UCC.
"General Intangibles" (a) shall mean all "general intangibles" as
defined in Article 9 of the UCC, including "payment intangibles" also as defined
in Article 9 of the UCC and (b) shall include, without limitation, all interest
rate or currency protection or hedging arrangements, all contracts, all tax
refunds and all licenses, permits, concessions and authorizations, (in each
case, regardless of whether characterized as general intangibles under the UCC).
"Goods" (a) shall mean all "goods" as defined in Article 9 of the
UCC and (b) shall include, without limitation, all Inventory, Equipment,
Documents Evidencing Goods and Software Embedded in Goods.
"Grantor" shall mean the Company, each Guarantor and any Person that
becomes a "Grantor" by executing a Security Agreement Supplement.
"Holding Company" shall mean each Guarantor that is identified as a
"Holding Company" on the signature pages hereto or that is designated as a
Holding Company in the Security Agreement Supplement pursuant to which such
Subsidiary becomes a Grantor hereunder.
"Indemnitee" shall mean the Collateral Agent, its Affiliates, and
their officers, partners, directors, trustees, employees, agents of the
Collateral Agent, and their successors and assigns.
"Instruments" shall mean all "instruments" as defined in Article 9
of the UCC.
"Intellectual Property" shall mean, collectively, the Copyrights,
the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.
"Intellectual Property Licenses" shall mean, collectively, the
Copyright Licenses, Patent Licenses, Trademark Licenses, and Trade Secret
Licenses.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter, and any
successor statute.
"Inventory" shall mean: (a) all "inventory" as defined in the UCC
and (b) all goods held for sale or lease or to be furnished under contracts of
service or so leased or furnished, all raw materials, work in process, finished
goods and materials used or consumed in
the manufacture, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in the Grantor's business, and all accessions thereto
and products thereof (in each case, regardless of whether characterized as
inventory under the UCC).
"Investment Accounts" shall mean the Revenue Account, Securities
Accounts, Commodities Accounts and Deposit Accounts.
"Investment Property" shall mean all "investment property" (as such
term is defined in Article 9 of the UCC) and all Investment Accounts (regardless
of whether classified as investment property under the UCC).
"Letter of Credit Right" shall mean "letter-of-credit right" as
defined in Article 9 of the UCC.
"Money" shall mean "money" as defined in Article 1 of the UCC.
"Non-Assignable Contract" shall mean any agreement, contract or
license to which the Grantor is a party that by its terms purports to restrict
or prevent the assignment or granting of a security interest therein (either by
its terms or by any federal or state statutory prohibition or otherwise
irrespective of whether such prohibition or restriction is enforceable under
Section 9-406 through 409 of the UCC).
"Patent Licenses" shall mean all agreements granting any right in,
to, or under Patents (whether the Grantor is licensee or licensor thereunder).
"Patents" shall mean all United States, state and foreign patents
and applications for letters patent, all reissues, divisions, continuations,
continuations-in-part, extensions, renewals, and reexaminations of any of the
foregoing, all rights corresponding thereto throughout the world, the right to
xxx for past, present and future infringements of any of the foregoing and all
proceeds of the foregoing including, without limitation, royalties, income,
payments, claims, damages, and proceeds of suit.
"Payment Intangible" shall have the meaning specified in Article 9
of the UCC.
"Permitted Liens" shall have the meaning given such term in each of
the Indentures, the Term Loan Agreements and the Revolving Loan Agreement.
"Proceeds" shall mean: (a) all "proceeds" as defined in Article 9 of
the UCC, (b) payments or distributions made with respect to any Investment
Property and (c) whatever is receivable or received when Collateral or proceeds
are sold, leased, licensed, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.
"Qualifying Cash Equivalents" shall mean any cash or cash
equivalents contributed to or otherwise invested in a Holding Company that is
promptly contributed to or otherwise invested in a direct Subsidiary of such
Holding Company; provided, that such cash or cash equivalents constituted
Article 9 Collateral immediately prior to being contributed to or invested in
such Holding Company.
"Receivables" shall mean all (a) Accounts, (b) Chattel Paper, (c)
Payment Intangibles, (d) Instruments and (e) to the extent not otherwise covered
above, all other rights to payment, whether or not earned by performance, for
goods or other property sold, leased, licensed, assigned or otherwise disposed
of, or services rendered or to be rendered, regardless of how classified under
the UCC together with all of the Grantors' rights, if any, in any goods or other
property giving rise to such right to payment.
"Receivables Records" shall mean (a) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables, (b) all books, correspondence, credit or other
files, Records, ledger sheets or cards, invoices, and other papers relating to
Receivables, including, without limitation, all tapes, cards, computer tapes,
computer discs, computer runs, record keeping systems and other papers and
documents relating to the Receivables, whether in the possession or under the
control of the Grantor or any computer bureau or agent from time to time acting
for the Grantor or otherwise, (c) all evidences of the filing of financing
statements and the registration of other instruments in connection therewith,
and amendments, supplements or other modifications thereto, notices to other
creditors or agents thereof, and certificates, acknowledgments, or other
writings, including, without limitation, lien search reports, from filing or
other registration officers, (d) all credit information, reports and memoranda
relating thereto and (e) all other written or non-written forms of information
related in any way to the foregoing or any Receivable.
"Record" shall have the meaning specified in Article 9 of the UCC.
"Revenue Account" shall mean account number A/C 65572-1 (short
title: CALGEN REV A/C SUB SEC INT of WTC AS CA) in the name of the Company
maintained at Wilmington Trust Company and any successor account or accounts.
"Securities" shall mean any stock, shares, partnership interests,
membership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Accounts" shall mean "securities accounts" as defined in
Article 8 of the UCC.
"Security Agreement Supplement" shall mean an agreement in
substantially the form of Exhibit A hereto.
"Software Embedded in Goods" shall mean, with respect to any Goods,
any computer program embedded in Goods and any supporting information provided
in connection with a transaction relating to the program if (a) the program is
associated with the Goods in such a manner that it customarily is considered
part of the Goods or (b) by becoming the owner of the Goods a person acquires a
right to use the program in connection with the Goods.
"Supporting Obligations" shall mean all "supporting obligations" as
defined in Article 9 of the UCC.
"Third Party Project Documents" shall mean each of the agreements
listed on Schedule III hereto.
"Trade Secret Licenses" shall mean any and all agreements granting
any right in or to Trade Secrets (whether the Grantor is licensee or licensor
thereunder).
"Trade Secrets" shall mean all trade secrets and all other
confidential or proprietary information and know-how (all of the foregoing being
collectively called a "Trade Secret"), whether or not reduced to a writing or
other tangible form, including all documents and things embodying,
incorporating, or referring in any way to such Trade Secret, the right to xxx
for past, present and future infringement of any Trade Secret, and all proceeds
of the foregoing, including, without limitation, royalties, income, payments,
claims, damages, and proceeds of suit.
"Trademark Licenses" shall mean any and all agreements granting any
right in or to Trademarks (whether the Grantor is licensee or licensor
thereunder).
"Trademarks" shall mean all United States, state and foreign
trademarks, service marks, certification marks, collective marks, trade names,
corporate names, d/b/as, business names, fictitious business names, internet
domain names, trade styles, logos, other source or business identifiers, designs
and general intangibles of a like nature, rights of publicity and privacy
pertaining to the right to use names likeness and biographical data as real, all
registrations and applications for any of the foregoing, the goodwill of the
business symbolized by the foregoing, the right to xxx for past, present and
future infringement or dilution of any of the foregoing or for any injury to
goodwill, and all proceeds of the foregoing, including, without limitation,
royalties, income, payments, claims, damages, and proceeds of suit.
"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York; provided, however, that in
the event that, by reason of mandatory provisions of law, any or all of the
perfection or priority of the security interest in any Article 9 Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or priority and for purposes of definitions
related to such provisions.
Section 1.2 Definitions; Interpretation. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Collateral Trust Agreement dated
as of the date hereof (or as amended in accordance with the terms of the
Collateral Trust Agreement) or, if not defined therein, in the UCC. Unless the
context otherwise requires:
(a) Any of the terms used or defined herein may be used in the
singular or the plural, depending on the reference.
(b) Except as expressly provided in any Secured Debt Document,
any reference to any agreement or instrument shall be deemed to include a
reference to such agreement or instrument as assigned, amended, amended
and restated, supplemented, otherwise modified from time to time or
replaced in accordance with the terms of this Agreement.
(c) The use in this Agreement of the word "include" or
"including," when following any general statement, term or matter, shall
not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar
items or matters, whether or not nonlimiting language (such as "without
limitation" or "but not limited to" or words of similar import) is used
with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such
general statement, term or matter. The word "will" shall be construed to
have the same meaning and effect as the word "shall."
(d) References to "Articles", "Sections" and "clauses" shall
be to Articles, Sections and clauses, respectively, of this Agreement
unless otherwise specifically provided.
(e) References to "Exhibits", "Annexes", "Appendices" and
"Schedules" shall be to Exhibits, Annexes, Appendices and Schedules,
respectively, to this Agreement unless otherwise specifically provided.
(f) The use in this Agreement of the words "herein," "hereof,"
and "hereunder," and words of similar import, shall be construed to refer
to this Agreement in its entirety and not to any particular provision
hereof.
(g) This Agreement and any documents or instruments delivered
pursuant hereto or thereto shall be construed without regard to the
identity of the party who drafted the various provisions of the same. Each
and every provision of this Agreement and any instruments and documents
entered into and delivered in connection therewith shall be construed as
though the parties participated equally in the drafting of the same.
Consequently, each of the parties acknowledges and agrees that any rule of
construction that a document is to be construed against the drafting party
shall not be applicable to this Agreement or the instruments and documents
entered into and delivered in connection therewith.
If any conflict or inconsistency exists between this Agreement and the
Collateral Trust Agreement, the Collateral Trust Agreement shall govern.
ARTICLE II.
GRANT OF SECURITY INTERESTS
Section 2.1 First Priority Lien Obligations. Each Grantor hereby grants to
the Collateral Agent, for the benefit of the Collateral Agent and the First
Priority Secured Parties, a security interest and continuing lien on all of such
Grantor's right, title and interest in, to and under all Article 9 Collateral
now owned or anytime hereafter acquired by such Grantor or such Grantor now has
or at any time in the future may acquire any right, title or interest.
Section 2.2 Second Priority Lien Obligations. Each Grantor hereby grants
to the Collateral Agent, for the benefit of the Collateral Agent and the Second
Priority Secured Parties, a security interest and continuing lien on all of such
Grantor's right, title and interest in, to and under all Article 9 Collateral
now owned or anytime hereafter acquired by such Grantor or such Grantor now has
or at any time in the future may acquire any right, title or interest.
Section 2.3 Third Priority Lien Obligations. Each Grantor hereby grants to
the Collateral Agent, for the benefit of the Collateral Agent and the Third
Priority Secured Parties, a security interest and continuing lien on all of such
Grantor's right, title and interest in, to and under all Article 9 Collateral
now owned or anytime hereafter acquired by such Grantor or such Grantor now has
or at any tune in the future may acquire any right, title or interest.
ARTICLE III.
SECURITY FOR OBLIGATIONS
Section 3.1 Security for Obligations. The Article 9 Collateral is
collateral security for the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a) (and any successor provision
thereof)), of the Secured Obligations.
Section 3.2 Continuing Liability under Collateral. Notwithstanding
anything herein to the contrary, (a) each Grantor shall remain liable for all of
its obligations under any Article 9 Collateral and nothing contained herein is
intended or shall be a delegation of such obligations to the Collateral Agent or
any Secured Party, (b) neither the Collateral Agent nor any Secured Party shall
have any obligation or liability under, by reason of or arising out of this
Agreement or any other Security Document nor shall the Collateral Agent nor any
Secured Party have any obligation to make any inquiry as to the nature or
sufficiency of any payment received by it or have any obligation to take any
action to collect or enforce any rights under any agreement included in the
Article 9 Collateral and (c) the exercise by the Collateral Agent of any of its
rights or remedies hereunder shall not release any Grantor from any of its
duties or obligations under any Article 9 Collateral.
ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 Generally.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants to the Collateral Agent and each Secured Party on the
Closing Date that:
(i) when UCC financing statements naming such Grantor as
"debtor" and the Collateral Agent as "secured party" and describing the Article
9 Collateral are filed in the filing offices set forth opposite such Grantor's
name on Schedule I(D) hereof, this Agreement will create a perfected security
interest in all right, title and interest of such Grantor in the Article 9
Collateral to the extent perfection can be obtained by filing UCC financing
statements in such jurisdictions;
(ii) upon execution and delivery by all parties thereto
of a control agreement substantially in the form of Annex A hereto, the security
interests granted to the Collateral Agent hereunder with respect to the Revenue
Account will constitute perfected Liens;
(iii) Schedule I(A) hereto sets forth: (A) the type of
organization of such Grantor, (B) the jurisdiction of organization of such
Grantor, (C) its organizational identification number and (D) the jurisdiction
where such Grantor's chief executive office or sole place of business is
currently, and for the one-year period preceding the date hereof has been,
located;
(iv) the full legal name of such Grantor is as set forth
on Schedule I(A) and it has not done in the last five (5) years, and does not
do, business under any other name (including any trade-name or fictitious
business name) except for those names set forth on Schedule I(B);
(v) except as provided on Schedule I(C), such Grantor
has not changed its name, jurisdiction of organization, chief executive office
or sole place of business or its corporate structure in any way (e.g., by
merger, consolidation, change in corporate form or otherwise) within the past
five (5) years;
(vi) none of the Article 9 Collateral constitutes, or is
the Proceeds of, "farm products" (as defined in the UCC); and
(vii) with respect to each Grantor that is a Holding
Company, such Grantor has no property, rights or other assets other than
property, rights and other assets that constitute Article 9 Collateral or
Excluded Assets.
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that:
(i) it shall not change its name, identity, corporate
structure (e.g. by merger, consolidation, change in corporate form or
otherwise), sole place of business, chief executive office, type of organization
or jurisdiction of organization unless it (A) promptly (and in any event at
least 30 days prior to any such change) notifies the Collateral Agent in writing
of such change, and (B) all actions reasonably necessary to maintain the
continuous validity, perfection and the same or better priority of the
Collateral Agent's security interest in the Article 9 Collateral granted or
intended to be granted hereunder;
(ii) it shall pay promptly when due all material
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including claims for labor, materials and supplies)
against, the Article 9 Collateral, except to the extent the validity thereof is
being contested in good faith; and
(iii) with respect to each Grantor that is a Holding
Company, such Grantor shall not acquire any property, rights or other assets
other than property, rights and other assets that constitute Article 9
Collateral or Excluded Assets.
Section 4.2 Equipment. Each Grantor covenants and agrees that it shall
take all actions reasonably necessary to maintain the continuous validity,
perfection and the same or better priority of the Collateral Agent's security
interest in any Article 9 Collateral consisting of Equipment intended to be
granted hereunder, or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to such Article 9 Collateral.
Section 4.3 Investment Property.
(a) Investment Accounts.
(i) Representations and Warranties. Each Grantor hereby
represents and warrants to the Collateral Agent and each Secured Party on the
Closing Date that:
(1) (A) there are no Securities Accounts or
Commodities Accounts constituting Article 9 Collateral in which any Grantor has
an interest, and (B) there are no Deposit Accounts constituting Article 9
Collateral in which any Grantor has an interest other than (I) the Designated
Deposit Accounts and (II) the Revenue Account;
(2) the Grantors are the sole account holders of
the Revenue Account and the Designated Deposit Accounts, and no Grantor has
consented to, or is otherwise aware of, any Person (other than the Collateral
Agent pursuant hereto) having either sole dominion and control (within the
meaning of common law) or "control" (within the meaning of Section 9-104 of the
UCC) over, or any other interest in (other than Permitted Liens), any such
Revenue Account or Designated Deposit Account or in any money or other property
deposited therein; and
(3) each Grantor has taken all actions reasonably
necessary, including those specified in Section 4.3(a)(ii), to (a) establish the
Collateral Agent's "control" (within the meanings of Sections 8-106 and 9-106 of
the UCC) over any portion of the Article 9 Collateral constituting Certificated
Securities, Uncertificated Securities, Securities Accounts, Securities
Entitlements or Commodity Accounts (each as defined in the UCC); (b) establish
the Collateral Agent's "control" (within the meaning of Section 9-104 of the
UCC) over all Deposit Accounts constituting Article 9 Collateral (provided, that
such Grantor shall not be required to take such actions with respect to
Designated Deposit Accounts until forty-five (45) days after the Closing Date);
and (c) deliver all Instruments constituting Article 9 Collateral to the
Collateral Agent.
(ii) Delivery and Control. With respect to any
Investment Property constituting Article 9 Collateral consisting of Securities
Accounts or Securities Entitlements, the Grantors shall cause the securities
intermediary maintaining such Securities Account or Securities Entitlement to
enter into a control agreement substantially in the form of Annex A hereto
pursuant to which it shall agree to comply with the Collateral Agent's
"entitlement orders" without further consent by any such Grantors. With respect
to any Article 9 Collateral that is a "Deposit Account," the Grantors shall
cause the depositary institution maintaining such account to enter into a
control agreement substantially in the form of Annex A hereto, pursuant to which
the Collateral Agent shall have "control" (within the meaning of Section 9-104
of the UCC) over such Deposit Account. Each Grantor shall have entered into
such control agreements with respect to: (A) any Securities Accounts, Securities
Entitlements or Deposit Accounts (other than Designated Deposit Accounts)
constituting Article 9 Collateral on the Closing Date, as of or prior to the
Closing Date, (B) any Designated Deposit Account that constitutes Article 9
Collateral as of the day that is forty-five (45) days after the Closing Date, no
later than such day, and (C) any Securities Accounts, Securities Entitlements or
Deposit Accounts that become Article 9 Collateral after the Closing Date, within
thirty (30) days after the deposit or transfer of any Securities Entitlements or
funds, whether constituting moneys or investments, into such Securities Accounts
or Deposit Accounts, as applicable.
(b) Investment Property Generally.
(i) Covenants and Agreements. Each Grantor hereby
covenants and agrees that:
(1) except as provided in the next sentence or as
otherwise expressly permitted under the Secured Debt Documents, in the event
such Grantor receives any dividends, interest or distributions on any Investment
Property, or any securities or other property upon the merger, consolidation,
liquidation or dissolution of any issuer of any Investment Property, in each
case constituting Article 9 Collateral, then (A) such dividends, interest or
distributions and securities or other property shall be included in the Article
9 Collateral without further action and (B) such Grantor shall take all steps,
if any, reasonably necessary to ensure the validity, perfection, priority and,
if applicable, control of the Collateral Agent over any such Investment Property
with a value in excess of $100,000 (including, without limitation, delivery
thereof to the Collateral Agent) and pending any such action such Grantor shall
be deemed to hold such dividends, interest, distributions, securities or other
property in trust for the benefit of the Collateral Agent and shall be
segregated from all other property of such Grantor.
(2) If any issuer of any Investment Property is
located in a jurisdiction outside of the United States, each Grantor shall take
such additional actions, including, without limitation, causing the issuer to
register the pledge on its books and records or making such filings or
recordings, in each case as may be reasonably necessary, under the laws of such
issuer's jurisdiction to insure the validity, perfection and priority of the
security interest of the Collateral Agent. Upon the occurrence of an Event of
Default and written notice from the Collateral Agent to the applicable Grantor
(provided that if an Insolvency Proceeding shall have occurred with respect to
such Grantor, such written notice shall not be required and shall be deemed to
have been received by such Grantor upon the occurrence of such Event of
Default), the Collateral Agent shall have the right to transfer all or any
portion of the Investment Property to its name or the name of its nominee or
agent. In addition, the Collateral Agent shall have the right at any time,
without notice to any Grantor, to exchange any certificates or instruments
representing any Investment Property for certificates or instruments of smaller
or larger denominations.
(ii) Delivery and Control. Each Grantor, with respect to
any Investment Property that is represented by a certificate or that is an
"instrument" (other than any Investment Property credited to a Securities
Account) and constitutes Article 9 Collateral, shall cause such certificate or
instrument to be delivered to the Collateral Agent, indorsed in
blank by an "effective indorsement" (as defined in Section 8-107 of the UCC).
With respect to any Investment Property constituting Article 9 Collateral that
is an "uncertificated security" for purposes of the UCC (other than any
"uncertificated securities" credited to a Securities Account), it shall cause
the issuer of such uncertificated security to register the Collateral Agent as
the registered owner thereof on the books and records of the issuer.
(iii) Voting and Distributions.
(1) Unless an Event of Default shall have occurred
and be continuing and written notice shall have been provided by the Collateral
Agent to the applicable Grantor (provided that if an Insolvency Proceeding shall
have occurred with respect to such Grantor, such written notice shall not be
required and shall be deemed to have been received by such Grantor upon the
occurrence of such Event of Default), each Grantor shall be entitled to exercise
all Voting and other rights with respect to any Investment Property constituting
Article 9 Collateral; provided, however, that no vote shall be cast, right
exercised or other action taken which would result in any violation of any
provision of this Agreement or any other Secured Debt Document. Upon the
occurrence and during the continuation of an Event of Default and upon written
notice from the Collateral Agent to such Grantor (provided that if an Insolvency
Proceeding shall have occurred with respect to such Grantor, such written notice
shall not be required and shall be deemed to have been received by such Grantor
upon the occurrence of such Event of Default), all voting and other rights of
such Grantor with respect to any Investment Property constituting Article 9
Collateral which such Grantor would otherwise be entitled to exercise pursuant
to the terms of this Agreement or otherwise shall cease, and all such rights
shall be vested in the Collateral Agent which shall thereupon have the sole
right to exercise such rights. After all Events of Default have been cured or
waived and the Company has delivered to the Collateral Agent a certificate to
that effect, the Grantors' rights under this Section 4.3(b)(iii)(1) shall be
reinstated.
(2) Unless an Event of Default shall have occurred
and be continuing and written notice shall have been provided by the Collateral
Agent to the applicable Grantor (provided that if an Insolvency Proceeding shall
have occurred with respect to such Grantor, such written notice shall not be
required and shall be deemed to have been received by such Grantor upon the
occurrence of such Event of Default), each Grantor shall be entitled to receive
and retain any and all dividends, interest, principal and other distributions
paid on or distributed in respect of any Investment Property constituting
Article 9 Collateral to the extent and only to the extent that all such
dividends, interest, principal and other distributions are permitted by, and
otherwise paid or distributed in accordance with, the terms and conditions of
the Secured Debt Documents. Upon the occurrence and during the continuation of
an Event of Default and upon written notice from the Collateral Agent to such
Grantor (provided that if an Insolvency Proceeding shall have occurred with
respect to such Grantor, such written notice shall not be required and shall be
deemed to have been received by such Grantor upon the occurrence of such Event
of Default), all rights of such Grantor to the dividends, interest, principal
and other distributions shall cease and all such rights shall be vested in the
Collateral Agent which shall thereupon have the sole right to receive such
distributions. After all Events of Defaults have been cured or waived and the
Company has delivered to the Collateral Agent a certificate to that effect, the
Grantors' rights under this Section 4.3(b)(iii)(2) shall be reinstated. All
distributions and other amounts which are received by any Grantor contrary to
the provisions of this
Agreement shall be received in trust for the benefit of the Collateral Agent,
shall be segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent as Article 9 Collateral in the same form as so
received (with any necessary endorsement requested by Collateral Agent).
(3) In order to permit the Collateral Agent to
exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other distributions
which it may be entitled to receive hereunder: (A) each Grantor shall promptly
execute and deliver (or cause to be executed and delivered) to the Collateral
Agent all proxies, dividend payment orders and other instruments as the
Collateral Agent may from time to time reasonably request and (B) each Grantor
acknowledges that the Collateral Agent may utilize the power of attorney set
forth in Article VI.
Section 4.4 Contracts. Each Grantor hereby covenants and agrees that:
(a) the Collateral Agent may at any time notify, or require
any Grantor to so notify, the counterparty on any contract, instrument or other
agreement included in the Article 9 Collateral of the security interest of the
Collateral Agent therein; and
(b) with respect to any Non-Assignable Contract that is a
Third Party Project Document to which it is a party and that constitutes Article
9 Collateral, each Grantor shall, unless the relevant restrictions on transfer
are overridden by Section 9-406 of the UCC, within 30 days of the date hereof
with respect to any such Non-Assignable Contract in effect on the date hereof
and within thirty (30) days after entering into any such Non-Assignable Contract
after the Closing Date, request the consent of the counterparty or
counterparties to such Non-Assignable Contract pursuant to the terms of such
Non-Assignable Contract or applicable law to the assignment or granting of a
security interest in such Non-Assignable Contract to Collateral Agent and use
commercially reasonable efforts to obtain such consent as soon as practicable
thereafter.
Section 4.5 Letter of Credit Rights. Each Grantor hereby represents and
warrants on the Closing Date that it has no Letter of Credit Rights other than
Letter of Credit Rights consisting of Supporting Obligations.
ARTICLE V.
ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES
Section 5.1 Access; Right of Inspection. The Collateral Agent and its
representatives shall, during normal business hours and under reasonable
procedures, (a) have full and free access to all books, correspondence and
records of each Grantor reasonably related to the Article 9 Collateral, and (b)
have the right to examine the same, take extracts therefrom and make photocopies
thereof. Each Grantor agrees to render to the Collateral Agent, at such
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard to the foregoing. The Collateral Agent and its
representatives shall also have the right, during normal business hours and
under reasonable procedures, to enter the premises of any Grantor for the
purpose of inspecting the Article 9 Collateral and observing its use and
condition.
Section 5.2 Further Assurances.
(a) Each Grantor agrees that from time to time, at its own
expense it shall promptly Authenticate, execute and deliver all further
instruments and documents, and take all further action, as may be reasonably
requested by the Collateral Agent, in order to create and/or maintain the
validity, perfection or priority of and protect any security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Article 9
Collateral. Without limiting the generality of the foregoing, each Grantor shall
file such financing or continuation statements, or amendments thereto, and
execute and deliver such other agreements, instruments, endorsements, powers of
attorney or notices, as the Collateral Agent may reasonably request, in order to
perfect and preserve the security interests granted or purported to be granted
hereby.
(b) Each Grantor hereby authorizes the filing of any financing
statements or continuation statements, and amendments to financing statements,
or any similar document in any jurisdictions and with any filing offices as the
Collateral Agent may determine, in its sole discretion, are necessary or
advisable to perfect or otherwise protect the security interest granted to the
Collateral Agent herein. Such financing statements may describe the Article 9
Collateral in the same manner as described herein or may contain an indication
or description of collateral that describes such property in any other manner as
the Collateral Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Article 9 Collateral granted to the Collateral Agent herein, including, without
limitation, describing such property as "all assets" or "all personal property,
whether now owned or hereafter acquired".
ARTICLE VI.
COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT
Each Grantor hereby irrevocably appoints the Collateral Agent (such
appointment being coupled with an interest) as such Grantor's attorney-in-fact,
with full authority in the place and stead of such Grantor and in the name of
such Grantor, the Collateral Agent or otherwise, from time to time in the
Collateral Agent's discretion to take any action and to execute any instrument
that the Collateral Agent may deem reasonably necessary to accomplish the
purposes of this Agreement, including, without limitation, the following, upon
the occurrence and during the continuation of any Event of Default (but, except
as otherwise expressly provided herein, not in any other circumstances):
(a) to obtain and adjust insurance required to be maintained by such
Grantor or paid to the Collateral Agent pursuant to the Secured Debt Documents;
(b) to ask for, demand, collect, xxx for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Article 9 Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) to file any claims or take any action or institute any
proceedings that the Collateral Agent may deem necessary or desirable for the
collection of any of the Article 9 Collateral or otherwise to enforce the rights
of the Collateral Agent with respect to any of the Article 9 Collateral;
(e) to prepare, sign, and file for recordation in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of such Grantor as
assignor;
(f) to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens (other
than Permitted Liens) levied or placed upon or threatened against the Article 9
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, any such payments made by the Collateral Agent to become obligations
of such Grantor to the Collateral Agent, due and payable immediately without
demand;
(g) to exercise remedies, generally to sell, transfer, lease,
license, pledge, make any agreement with respect to or otherwise deal with any
of the Article 9 Collateral as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes; and
(h) to do, at the Collateral Agent's option and such Grantor's
expense, at any time or from time to time, all acts and things that the
Collateral Agent deems reasonably necessary to protect, preserve or realize upon
the Article 9 Collateral and the Collateral Agent's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.
ARTICLE VII.
REMEDIES
Section 7.1 Generally.
(a) If any Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it at law or in equity, all the rights and remedies of the
Collateral Agent available to it under the UCC to collect, enforce or satisfy
any Secured Obligations then owing, whether by acceleration or otherwise, and
also may pursue any of the following separately, successively or simultaneously,
in each case subject to and in accordance with the Collateral Trust Agreement:
(i) notify, or require the applicable Grantor to notify,
any counterparty to a contract, instrument or other agreement to make all
payments under such agreement directly to the Collateral Agent;
(ii) require any Grantor to, and each Grantor hereby
agrees that it shall at its expense and promptly upon request of the Collateral
Agent forthwith, assemble all or part of the Collateral as directed by the
Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent that is
reasonably convenient to both parties;
(iii) enter onto the property where any Article 9
Collateral is located and take possession thereof with or without judicial
process;
(iv) prior to the disposition of the Article 9
Collateral, store, process, repair or recondition the Article 9 Collateral or
otherwise prepare the Article 9 Collateral for disposition in any manner to the
extent the Collateral Agent deems appropriate; and
(v) without notice except as specified below or under
the UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or
otherwise dispose of the Article 9 Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as the Collateral Agent may
deem commercially reasonable.
(b) The Collateral Agent or any Secured Party may be the
purchaser of any or all of the Article 9 Collateral at any public or private
sale (to the extent the portion of the Article 9 Collateral being privately sold
is of a kind that is customarily sold on a recognized market or the subject of
widely distributed standard price quotations) in accordance with the UCC and the
Collateral Agent, as collateral agent for and representative of the Secured
Parties, shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Article, Collateral
sold at any such sale made in accordance with the UCC, to use and apply any of
the Secured Obligations as a credit on account of the purchase price for any
Article 9 Collateral payable by the Collateral Agent at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Grantor, and each Grantor hereby waives (to
the extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Each Grantor agrees that,
to the extent notice of sale shall be required by law, at least ten (10) days
notice to such Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale of
Article 9 Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Grantor agrees that it would not be commercially unreasonable for the Collateral
Agent to dispose of the Article 9 Collateral or any portion thereof by using
Internet sites that provide for the auction of assets of the types included in
the Article 9 Collateral or that have the reasonable capability of doing so, or
that match buyers and sellers of assets. Each Grantor hereby waives any claims
against the Collateral Agent arising by reason of the fact that the price at
which any Article 9 Collateral may have been sold at such a private sale was
less than the price which might have been obtained at a public sale, even if the
Collateral Agent accepts the first offer received and does not offer such
Article 9 Collateral to more than one offeree. Subject to Section 12.15 of this
Agreement, if the proceeds of any sale or other disposition of the Article 9
Collateral are insufficient to pay all the Secured Obligations, each
Grantor shall be liable for the deficiency and the fees of any attorneys
employed by the Collateral Agent to collect such deficiency. Each Grantor
further agrees that a breach of any of the covenants contained in this Section
will cause irreparable injury to the Collateral Agent, that the Collateral Agent
has no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.
Nothing in this Section shall in any way alter the rights of the Collateral
Agent hereunder.
(c) The Collateral Agent may sell the Article 9 Collateral
without giving any warranties as to the Article 9 Collateral. The Collateral
Agent may specifically disclaim or modify any warranties of title or the like.
This procedure will not be considered to adversely effect the commercial
reasonableness of any sale of the Article 9 Collateral.
(d) The Collateral Agent shall have no obligation to marshal
any of the Article 9 Collateral.
Section 7.2 Application of Proceeds. Except as expressly provided
elsewhere in this Agreement, all proceeds received by the Collateral Agent in
respect of any sale, any collection from, or other realization upon all or any
part of the Article 9 Collateral shall be applied in accordance with the terms
of the Collateral Trust Agreement.
Section 7.3 Sales on Credit. If the Collateral Agent sells any of the
Article 9 Collateral upon credit, the Grantors will be credited only with
payments actually made by the purchaser and received by the Collateral Agent and
applied to indebtedness of the purchaser. In the event the purchaser fails to
pay for the Article 9 Collateral, the Collateral Agent may resell the Article 9
Collateral and the Grantors will be credited with proceeds of the sale.
Section 7.4 Investment Property.
(a) Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933 and applicable state
securities laws, the Collateral Agent may be compelled, with respect to any sale
of all or any part of the Investment Property conducted without prior
registration or qualification of such Investment Property under the Securities
Act and/or such state securities laws, to limit purchasers to those who will
agree, among other things, to acquire the Investment Property for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sale may be at prices
and on terms less favorable than those obtainable through a public sale without
such restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale shall be deemed to have been made
in a commercially reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Investment Property for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.
(b) Upon the occurrence and during the continuation of an
Event of Default, the Collateral Agent shall have the right to apply the balance
from any Deposit Account or instruct the bank at which any Deposit Account is
maintained to pay the balance of any Deposit Account to or for the benefit of
the Collateral Agent.
Section 7.5 Cash Proceeds. Cash Proceeds shall be held by each Grantor in
trust for the Collateral Agent, segregated from other funds of such Grantor.
Such Cash Proceeds shall, within 10 Business Days of receipt by such Grantor, be
turned over to the Collateral Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the Collateral Agent, if required) and held by
the Collateral Agent in the Revenue Account. Any Cash Proceeds of a Grantor
received by the Collateral Agent: (i) if no Event of Default shall have occurred
and be continuing under any Secured Debt Document, shall be held by the
Collateral Agent for the benefit of the Secured Parties, as collateral security
for the Secured Obligations (whether matured or unmatured), and (ii) if an Event
of Default shall have occurred and be continuing, (A) be held by the Collateral
Agent for the benefit of the Secured Parties, as collateral security for the
Secured Obligations (whether matured or unmatured), and/or (B) be applied by the
Collateral Agent against any Secured Obligations due and owing.
ARTICLE VIII.
COLLATERAL AGENT
The Collateral Agent has been appointed to act as Collateral Agent
hereunder by each Secured Party pursuant to the Collateral Trust Agreement. The
Collateral Agent shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including, without limitation, the release or
substitution of Article 9 Collateral), solely in accordance with this Agreement
and the Collateral Trust Agreement. In furtherance of the foregoing provisions
of this Section, each Secured Party, by its acceptance of the benefits hereof
and pursuant to the terms of the Collateral Trust Agreement, agrees that it
shall have no right individually to realize upon any of the Collateral
hereunder, it being understood and agreed by such Secured Party that all rights
and remedies hereunder may be exercised solely by the Collateral Agent following
receipt of lawful directions given to it pursuant to the terms of the Collateral
Trust Agreement for the benefit of each Secured Party in accordance with the
terms of this Section and the Collateral Trust Agreement.
ARTICLE IX.
CONTINUING SECURITY INTEREST; TRANSFER OF SECURED OBLIGATIONS
This Agreement shall create a continuing security interest in the
Article 9 Collateral and shall remain in full force and effect with respect to
all Collateral until the Secured Obligations Termination Date and shall be
binding upon each Grantor, its successors and assigns, and inure, together with
the rights and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing, but subject to the terms of the Secured Debt
Documents, each Secured Party may assign or otherwise transfer any Secured
Obligations held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to each Secured Party herein or otherwise.
Upon the Secured Obligations Termination Date, the security interest granted
therein under this Agreement shall terminate hereunder and of record and all
rights to such Collateral shall revert to the applicable Grantor. Upon any such
termination the Collateral Agent shall, at the Grantors' expense, execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence such termination.
ARTICLE X.
STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM
The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Article 9 Collateral and the interests of the
Secured Parties and shall not impose any duty upon it to exercise any such
powers. Except for the exercise of reasonable care in the custody of any Article
9 Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Collateral Agent shall have no duty as to any Article 9
Collateral or as to the taking of any necessary steps or actions of any type to
preserve rights against prior parties or any other rights pertaining to any
Article 9 Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of Article 9 Collateral in its
possession if such Article 9 Collateral is accorded treatment substantially
equal to that which the Collateral Agent accords its own property. Neither the
Collateral Agent, its Affiliates nor any of their directors, officers, employees
or agents shall be liable for failure to demand, collect or realize upon all or
any part of the Article 9 Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Article 9 Collateral
upon the request of any Grantor or otherwise. If any Grantor fails to perform
any material agreement contained herein, the Collateral Agent may itself
perform, or cause performance of, such agreement, and the reasonable expenses of
the Collateral Agent incurred in connection therewith shall be payable by such
Grantor under Article XI.
ARTICLE XI.
INDEMNITY AND EXPENSES
(a) Each Grantor agrees, jointly and severally:
(i) to defend (subject to the Indemnitees' selection of
counsel), indemnify, pay and hold harmless each Indemnitee, from and against any
and all actions, claims, losses and liabilities in any way relating to, growing
out of or resulting from this Agreement and the transactions with respect to the
Grantors and the Article 9 Collateral contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such actions,
claims, losses or liabilities result from such Indemnitee's bad faith, gross
negligence or willful misconduct as determined by a court of competent
jurisdiction; and
(ii) to reimburse the Collateral Agent promptly
following written demand the amount of any and all reasonable costs and
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, with respect to the Grantors and the Article 9
Collateral.
(b) Notwithstanding anything herein or implied by law to the
contrary, the obligations of each Grantor in this Article XI shall survive the
termination of this Agreement, any resignation or removal of the Collateral
Agent and the discharge of such Grantor's other obligations under this Agreement
and the other Secured Debt Documents.
ARTICLE XII.
MISCELLANEOUS
Section 12.1 Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given to a
Grantor or the Collateral Agent shall be sent to such Person's address set forth
in Section 8.5 of the Collateral Trust Agreement and in the manner provided
therein.
Section 12.2 Amendments and Waivers.
(a) Collateral Agent's Consent. Subject to Section 12.2(b), no
amendment, modification, termination or waiver of any provision of this
Agreement, or consent to any departure by any Grantor therefrom, shall in any
event be effective without the written concurrence of the Collateral Agent.
(b) No Waiver; Remedies Cumulative. No failure or delay on the
part of the Collateral Agent in the exercise of any power, right or privilege
hereunder or under any other Secured Debt Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights, powers and remedies existing under this
Agreement and the other Secured Debt Documents are cumulative, and not exclusive
of, any rights or remedies otherwise available. Any forbearance or failure to
exercise, and any delay in exercising, any right, power or remedy hereunder
shall not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.
Section 12.3 Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns including all
persons who become bound as debtor to this Agreement. No Grantor shall, without
the prior written consent of the Collateral Agent, assign any right, duty or
obligation hereunder.
Section 12.4 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of an Event of Default if such action is taken or
condition exists.
Section 12.5 Severability. In case any provision in or obligation
hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
Section 12.6 Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.
Section 12.7 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 12.8 CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST ANY GRANTOR ARISING OUT OF OR RELATING HERETO OR ANY OTHER TRANSACTION
DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF MEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; WAIVES
ANY DEFENSE OF FORUM NON CONVENIENS; AGREES THAT SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION
12.1; AGREES THAT SERVICE AS PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER IT IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND AGREES THAT THE
SERVICE PROCESS MAY BE MADE IN ANY OTHER MANNER PERMITTED BY LAW AND PROCEEDINGS
MAY BE MADE AGAINST ANY PARTY HERETO IN THE COURTS OF ANY OTHER JURISDICTION.
Section 12.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER TRANSACTION
DOCUMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 12.9 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS HERETO. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS
A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 12.10 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
Section 12.11 Effectiveness. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto and receipt
by the Grantors and the Collateral Agent of written or telephonic notification
of such execution and authorization of delivery thereof. Additional Guarantors
under the Secured Debt Documents shall become a party hereto by executing a
Security Agreement Supplement in the form of Exhibit A hereto. Upon the
Collateral Agent's receipt of such Security Agreement Supplement, such "New
Grantor" shall be a Grantor hereunder to the extent set forth therein.
Section 12.12 Entire Agreement. This Agreement and the other Secured Debt
Documents embody the entire agreement and understanding between the Grantors and
the Collateral Agent and supersede all prior agreements and understandings
between such parties relating to the subject matter hereof and thereof.
Accordingly, the Secured Debt Documents may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. There are
no unwritten oral agreements between the parties.
Section 12.13 Reinstatement. This Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any amount received by the
Collateral Agent or any other Secured Party hereunder or pursuant hereto is
rescinded or must otherwise be restored or returned by the Collateral Agent or
such Secured Party upon an Insolvency Proceeding of any Grantor, or upon the
appointment of any intervenor or conservator of, or trustee or similar official
for any Grantor or any substantial part of any Grantor's assets, or upon the
entry of an order by any court avoiding the payment of such amount, or
otherwise, all as though such payments had not been made.
Section 12.14 Collateral Trust Agreement. (a) The rights, powers,
benefits, privileges, immunities and indemnities given to the Collateral Agent
and set forth in the Collateral Trust Agreement are hereby expressly
incorporated herein and shall survive the termination of this Agreement and the
resignation or removal of the Collateral Agent. (b) All the provisions contained
in this Agreement are expressly subject to all of the provisions contained in
the Collateral Trust Agreement in all respects. If any conflict or inconsistency
exists between this Agreement and the Collateral Trust Agreement, the Collateral
Trust Agreement shall govern.
Section 12.15 No Recourse Against the Grantors. NOTWITHSTANDING ANYTHING
TO THE CONTRARY SET FORTH IN THIS AGREEMENT OR ANY OTHER SECURED DEBT DOCUMENT,
THE NOTES, THE TERM LOANS, THE REVOLVING LOANS AND ALL RELATED GUARANTEES ARE
NON-RECOURSE SECURED OBLIGATIONS OF THE COMPANY AND THE GUARANTORS, AS
APPLICABLE. THE ONLY RECOURSE A SECURED PARTY WILL HAVE WITH RESPECT TO THE
PAYMENT OF PRINCIPAL OF, OR INTEREST OR PREMIUM ON, ANY OF THE FOREGOING
OBLIGATIONS WILL
BE ENFORCEMENT OF ITS RIGHTS AGAINST THE COLLATERAL PURSUANT TO THE SECURITY
DOCUMENTS.
[signature page follows]
IN WITNESS WHEREOF, each Grantor and the Collateral Agent have
caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written above.
CALPINE GENERATING COMPANY, LLC,
a Delaware limited liability company
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
[Security Agreement - Calpine Generating Company, LLC]
THE GUARANTORS AND HOLDING COMPANIES:
CALPINE BAYTOWN ENERGY CENTER LP, LLC
CALPINE BAYTOWN ENERGY CENTER GP, LLC
BAYTOWN POWER GP, LLC
BAYTOWN POWER, LP
CHANNEL POWER, LP
CALPINE CHANNEL ENERGY CENTER LP, LLC
CALPINE CHANNEL ENERGY CENTER GP, LLC
CHANNEL POWER GP, LLC
CALPINE CORPUS CHRISTI ENERGY GP, LLC
CALPINE CORPUS CHRISTI ENERGY, LP
NUECES BAY ENERGY LLC
CALPINE NORTHBROOK SOUTHCOAST INVESTORS, LLC
CPN FREESTONE, LLC
CALPINE FREESTONE, LLC
CALPINE FREESTONE ENERGY GP, LLC
CALPINE FREESTONE ENERGY, LP
CALPINE XXXXX POWER I, LLC
CALPINE XXXXX POWER II, LLC
CALGEN EQUIPMENT FINANCE HOLDINGS, LLC
CALPINE PASTORIA HOLDINGS, LLC
Executing this Agreement on behalf of and so as to bind
each of the limited liability companies and limited
partnerships named above under the caption "The
Guarantors and Holding Companies"
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
[Security Agreement - Calpine Generating Company, LLC]
THE GUARANTORS:
CALGEN EXPANSION COMPANY, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY ONE, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY THREE LLC
CALGEN EQUIPMENT FINANCE COMPANY, LLC
ZION ENERGY LLC
LOS MEDANOS ENERGY CENTER, LLC
XXXXXX ENERGY CENTER, LLC
XXXXXXXX ENERGY LLC
DECATUR ENERGY CENTER, LLC
COLUMBIA ENERGY LLC
DELTA ENERGY CENTER, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY TWO, LLC
PASTORIA ENERGY FACILITY L.L.C.
Executing this Agreement on behalf of and so as to bind
each of the limited liability companies named above
under the caption "The Guarantors"
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
[Security Agreement - Calpine Generating Company, LLC]
THE GUARANTORS:
FREESTONE POWER GENERATION LP
CALPINE POWER EQUIPMENT LP
CHANNEL ENERGY CENTER, LP
CORPUS CHRISTI COGENERATION LP
CALPINE XXXXX POWER, L.P.
BAYTOWN ENERGY CENTER, LP
Executing this Agreement on behalf of and so as
to bind each of the limited partnerships named
above under the caption "The Guarantors"
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
[Security Agreement - Calpine Generating Company, LLC]
WILMINGTON TRUST COMPANY,
as Collateral Agent
By: /s/ Xxxxx X. XxXxxxxx
------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: Authorized Signer
[Security Agreement - Calpine Generating Company, LLC]
SCHEDULE I
TO SECURITY AGREEMENT
GENERAL INFORMATION
(A) FULL LEGAL NAME, TYPE OF ORGANIZATION, JURISDICTION OF
ORGANIZATION, CHIEF EXECUTIVE OFFICE/SOLE PLACE OF BUSINESS
(OR RESIDENCE IF GRANTOR IS A NATURAL PERSON) AND
ORGANIZATIONAL IDENTIFICATION NUMBER OF EACH GRANTOR:
JURISDICTION CHIEF EXECUTIVE
OF OFFICE/SOLE PLACE
FULL LEGAL NAME TYPE OF ORGANIZATION ORGANIZATION OF BUSINESS FEDERAL I.D.#
------------------------- ------------------------- ------------ ----------------- -------------
Calpine Generating
Company, LLC Limited Liability Company DE Corporate1 770555128
CalGen Expansion
Company, LLC Limited Liability Company DE Corporate 770555127
Baytown Energy Center, LP Limited Partnership DE Corporate 770555135
Calpine Baytown Energy
Center GP, LLC Limited Liability Company DE Corporate 770555133
Calpine Baytown Energy
Center LP, LLC Limited Liability Company DE Corporate 770555138
Baytown Power GP, LLC Limited Liability Company DE Corporate 861056699
Baytown Power, LP Limited Partnership DE Corporate 861056708
Xxxxxxxx Energy LLC Limited Liability Company DE Corporate 364309608
Channel Energy Center, LP Limited Partnership DE Corporate 770555137
Calpine Channel Energy
Center GP, LLC Limited Liability Company DE Corporate 770555139
Calpine Channel Energy
Center LP, LLC Limited Liability Company DE Corporate 770555140
Channel Power GP, LLC Limited Liability Company DE Corporate 861056758
-----------------
1 "Corporate" means the Corporate Headquarters of Calpine Corporation,
located at 00 Xxxx Xxx Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000.
X-X-0
XXXXXXXXXXXX XXXXX XXXXXXXXX
XX XXXXXX/XXXX XXXXX
XXXX XXXXX NAME TYPE OF ORGANIZATION ORGANIZATION OF BUSINESS FEDERAL I.D.#
------------------------- ------------------------- ------------ ----------------- -------------
Channel Power, LP Limited Partnership DE Corporate 861056755
Columbia Energy LLC Limited Liability Company DE Corporate 364380154
Corpus Christi
Cogeneration
Limited Partnership DE Corporate 364337040
Nuecess Bay Energy LLC Limited Liability Company DE Corporate 364216016
Calpine Northbrook
Southcoast Investors, LLC Limited Liability Company DE Corporate 364337045
Calpine Corpus Christi
Energy GP, LLC Limited Liability Company DE Corporate 861056770
Calpine Corpus Christi
Energy, LP Limited Partnership DE Corporate 861056497
Decatur Energy Center, LLC Limited Liability Company DE Corporate 770555708
Delta Energy Center, LLC Limited Liability Company DE Corporate 954812214
CalGen Project Equipment
Finance Company Two, LLC Limited Liability Company DE Corporate 770585399
Freestone Power
Generation LP Limited Partnership TX Corporate 760608559
Calpine Freestone, LLC Limited Liability Company DE Corporate 770486738
CPN Freestone, LLC Limited Liability Company DE Corporate 770545937
Calpine Freestone Energy
GP, LLC Limited Liability Company DE Corporate 861056713
Calpine Freestone Energy,
LP Limited Partnership DE Corporate 861056720
Calpine Power Equipment
LP Limited Partnership TX Corporate 760645514
LOS Medanos Energy
Center LLC Limited Liability Company DE Corporate 770553164
CalGen Project Equipment
Finance Company One, LLC Limited Liability Company DE Corporate 770556245
X-X-0
XXXXXXXXXXXX XXXXX XXXXXXXXX
XX XXXXXX/XXXX XXXXX
XXXX XXXXX NAME TYPE OF ORGANIZATION ORGANIZATION OF BUSINESS FEDERAL I.D.#
------------------------- ------------------------- ------------ ----------------- -------------
Xxxxxx Energy Center, LLC Limited Liability Company DE Corporate 770555141
Pastoria Energy Facility
L.L.C Limited Liability Company DE Corporate 770581976
Calpine Pastoria
Holdings, LLC Limited Liability Company DE Corporate 770559247
Calpine Xxxxx Power, L.P. Limited Partnership DE Corporate 752815392
Calpine Xxxxx Power I,
LLC Limited Liability Company DE Corporate 752815390
Calpine Xxxxx Power II,
LLC Limited Liability Company DE Corporate 752815394
Zone Energy LLC Limited Liability Company DE Corporate 364330312
CalGen Project Equipment
Finance Company Three,
LLC Limited Liability Company DE Corporate 100008436
CalGen Equipment Finance
Holdings, LLC Limited Liability Company DE Corporate 770555519
CalGen Equipment Finance
Company, LLC Limited Liability Company DE Corporate 770555523
S-I-3
(B) OTHER NAMES (INCLUDING ANY TRADE-NAME OR FICTITIOUS BUSINESS NAME)
UNDER WHICH EACH GRANTOR HAS CONDUCTED BUSINESS FOR THE PAST FIVE
YEARS:
NAME OF GRANTOR DESCRIPTION OF AGREEMENT
--------------- ------------------------
N/A
S-I-4
(C)(1) CHANGES IN NAME, JURISDICTION OF ORGANIZATION, CHIEF EXECUTIVE
OFFICE OR SOLE PLACE OF BUSINESS (OR PRINCIPAL RESIDENCE IF
GRANTOR IS A NATURAL PERSON) WITHIN PAST FIVE YEARS:
PREVIOUS NAME, JURISDICTION, CHIEF
EXECUTIVE OFFICE OR SOLE PLACE OF
FULL LEGAL NAME BUSINESS
-------------------------------------- ----------------------------------------
CalGen Equipment Finance Company, LLC CCFC II Equipment Finance Company,
LLC / CCFC II Leasing Company, LLC
CalGen Equipment Finance Holdings, LLC CCFC II Equipment Finance Holdings,
LLC / CCFC II Leasing Holdings, LLC
CalGen Expansion Company, LLC CCFC II Development Company, LLC
CalGen Project Equipment Finance CCFC II Project Equipment Finance
Company One, LLC Company One, LLC
CalGen Project Equipment Finance CCFC II Project Equipment Finance
Company Two, LLC Company Two, LLC
CalGen Project Equipment Finance CCFC II Project Equipment Finance
Company Three, LLC Company Three, LLC
Calpine Freestone, LLC Calpine Freestone, Inc.
Calpine Generating Company, LLC Calpine Construction Finance Company
II, LLC
Calpine Northbrook Southwest Investors, SkyGen Southwest Investors, LLC
LLC
Calpine Xxxxx Power I, LLC Panda Xxxxx Power I, LLC
Calpine Xxxxx Power II, LLC Panda Xxxxx Power II, LLC
Calpine Xxxxx Power, LP Panda Xxxxx Power, LP
Calpine Pastoria Holdings, LLC Pastoria Energy Center, LLC
Calpine Power Equipment LP Entergy Power Equipment XX
Xxxxxxxx Energy LLC Bayou Xxxxxx LLC / Bayou Xxxxxx
Energy LLC
CPN Freestone, LLC CPN Freestone, Inc.
Los Medanos Energy Center LLC Pittsburg District Energy Facility, LLC
S-1-5
(C)(2) ENTITIES SUBJECT TO CORPORATE RESTRUCTURING WITHIN PAST FIVE YEARS:
(a) CalGen Expansion Company, LLC (formerly CCFC II Development Company,
LLC) contributed its equity interests in the following entities to
Calpine Generating Company, LLC (formerly Calpine Construction
Finance Company II, LLC):
- Calpine Northbrook Southcoast Investors, LLC (formerly SkyGen
South Coast Investors LLC) and Nueces Bay Energy LLC,
effective April 19, 2002
- CPN Freestone, Inc. and Calpine Freestone, Inc., effective May
1, 2002
- Calpine Project Investment, Inc. and CPN Aidlin, Inc.,
effective June 1, 2002
- Zion Energy LLC, effective June 1, 2002
(b) CalGen Equipment Finance Company, LLC (formerly CCFC II Equipment
Finance Company, LLC) contributed its equity interests in CalGen
Project Equipment Finance Company One, LLC (formerly CCFC II Project
Equipment Finance Company One, LLC) and CalGen Project Equipment
Finance Company Two, LLC (formerly CCFC II Project Equipment Finance
Company Two, LLC) to CalGen Equipment Finance Holdings, LLC
(formerly CCFC II Equipment Finance Holdings, LLC), effective June
1, 2002
(c) The 100% ownership interest in Delta Energy Center, LLC held
collectively by DEC Holdings, LLC and CPN Delta Holdings, LLC was
transferred to Calpine Generating Company, LLC effective March 23,
2004.
(d) The interests in the following companies were transferred to Calpine
Development Holdings, Inc. (which is not part of the CalGen group),
effective March 23, 2004:
- Calpine Project Investments, Inc.
- CPN Aidlin Inc.
- Cloverdale Geothermal Partners, L.P.
- Geothermal Energy Partners, Ltd
- DEC Holdings, LLC
S-I-6
- CPN Delta Holdings, LLC
(e) With respect to each of Calpine Freestone, LLC and CPN Freestone,
LLC, such entities were originally formed as corporations under the
laws of the State of Delaware. Effective February 17, 2004, they
were converted into limited liability companies. Effective February
25, 2004, they were reconverted into corporations. Effective March
23, they were reconverted into limited liability companies.
(f) Calpine Generating Company, LLC contributed its equity interests in
the following entities to CalGen Expansion Company, LLC, effective
March 23, 2004:
- Los Medanos Energy Center LLC
- CPN Freestone, LLC and Calpine Freestone, LLC
- Calpine Channel Energy Center LP, LLC and Calpine Channel
Energy Center GP, LLC
- Zion Energy LLC
- Delta Energy Center, LLC
- Calpine Northbrook Southcoast Investors, LLC and Nueces Bay
Energy LLC
- Xxxxxxxx Energy LLC
- Decatur Energy Center, LLC
- Xxxxxx Energy Center, LLC
- Calpine Baytown Energy Center LP, LLC and Calpine Baytown
Energy Center GP, LLC
- Calpine Xxxxx Power I, LLC and Calpine Xxxxx Power II, LLC
- CalGen Equipment Finance Holdings, LLC
(g) Effective March 23, 2004:
- Calpine Development Holdings, Inc. contributed its equity
interest in Calpine Freestone Energy GP, LLC and Calpine
Freestone Energy, LP to CPN Freestone, LLC
- CPN Freestone, LLC contributed its equity interest (99% LP
interest) in Freestone Power Generation LP and Calpine Power
S-I-7
Equipment, L.P. to Calpine Freestone Energy, LP
- Calpine Development Holdings, Inc. contributed its equity
interest in Channel Power GP, LLC and Channel Power, LP to
Calpine Channel Energy Center LP, LLC
- Calpine Channel Energy Center LP, LLC contributed its equity
interest (99% LP interest) in Channel Energy Center, LP to
Channel Power, LP
- Calpine Development Holdings, Inc. contributed its equity
interest in Calpine Corpus Christi Energy GP, LLC and Calpine
Corpus Christi Energy, LP to Calpine Northbrook Southcoast
Investors, LLC
- Calpine Northbrook Southcoast Investors, LLC contributed its
equity interest (99% LP interest) in Corpus Christi
Cogeneration LP to Calpine Corpus Christi Energy, LP
- Calpine Development Holdings, Inc. contributed its equity
interest in Baytown Power GP, LLC and Baytown Power, LP to
Calpine Baytown Energy Center LP, LLC
- Calpine Baytown Energy Center LP, LLC contributed its equity
interest (99% LP interest) in Baytown Energy Center, LP to
Baytown Power, LP
(h) Calpine CalGen Holdings, Inc. contributed its equity interests in
CalGen Finance Corp. to Calpine Generating Company, LLC, effective
March 23, 2004.
S-I-8
(D) FINANCING STATEMENTS WITH RESPECT TO ARTICLE 9 COLLATERAL ONLY:
NAME OF GRANTOR FILING JURISDICTION(S)
-------------------------------------------- ---------------------------
Calpine Generating Company, LLC California, Delaware
CalGen Expansion Company, LLC California, Delaware
Baytown Energy Center, LP Delaware, Texas
Calpine Baytown Energy Center GP, LLC Delaware, Texas
Calpine Baytown Energy Center LP, LLC California, Delaware, Texas
Baytown Power GP, LLC Delaware
Baytown Power, LP Delaware
Xxxxxxxx Energy LLC Delaware, Louisiana
Channel Energy Center, LP Delaware, Texas
Calpine Channel Energy Center GP, LLC Delaware, Texas
Calpine Channel Energy Center LP, LLC Delaware
Channel Power GP, LLC Delaware
Channel Power, LP Delaware
Columbia Energy LLC Delaware, South Carolina
Corpus Christi Cogeneration LP Delaware, Texas
Nueces Bay Energy LLC Delaware, Texas
Calpine Northbrook Southcoast Investors, LLC Delaware
Calpine Corpus Christi Energy GP, LLC Delaware
Calpine Corpus Christi Energy, LP Delaware
Decatur Energy Center, LLC Alabama, Delaware, Texas
Delta Energy Center, LLC California, Delaware
CalGen Project Equipment Finance Company California, Delaware
Two, LLC
Freestone Power Generation LP California, Texas
Calpine Freestone, LLC Delaware, Texas
CPN Freestone, LLC Delaware, Texas
Calpine Freestone Energy GP, LLC Delaware
Calpine Freestone Energy, LP Delaware
Calpine Power Equipment LP Texas
Los Medanos Energy Center LLC California, Delaware
S-I-9
NAME OF GRANTOR FILING JURISDICTION(S)
---------------------------------------- -----------------------------------
CalGen Project Equipment Finance Company California, Delaware, Nevada, Texas
One, LLC
Xxxxxx Energy Center, LLC Alabama, Delaware
Pastoria Energy Facility L.L.C. California, Delaware
Calpine Pastoria Holdings, LLC California, Delaware
Calpine Xxxxx Power, L.P. Delaware, Oklahoma
Calpine Xxxxx Power I, LLC Delaware, Oklahoma
Calpine Xxxxx Power II, LLC Delaware, Oklahoma
Zion Energy LLC Delaware, Illinois
CalGen Project Equipment Finance Company
Three, LLC Delaware, Illinois
CalGen Equipment Finance Holdings, LLC California, Delaware, Illinois
CalGen Equipment Finance Company, LLC California, Delaware, Illinois
S-I-10
SCHEDULE II
TO SECURITY AGREEMENT
DESIGNATED DEPOSIT ACCOUNTS
DEPOSITARY BANK ACCOUNT DESIGNATION TYPE OF ACCOUNT ACCOUNT #
---------------- ------------------- --------------- ---------
Bank of New York Baytown Revenue 050490
Bank of New York Baytown Construction 050453
Bank of New York Xxxxxxxx Construction 050454
Bank of New York Channel Construction 050460
Bank of New York Channel Revenue 050483
Bank of New York Columbia Construction 050433
Bank of New York Corpus Christi Construction 050461
Bank of New York Corpus Christi Revenue 050482
Bank of New York Decatur Construction 050462
Bank of New York Decatur Revenue 050481
Bank of New York Delta Construction 050457
Bank of New York Delta Revenue 050486
Bank of New York Freestone Revenue 050485
Bank of New York Los Medanos Revenue 050491
Bank of New York Xxxxxx Construction 050463
Bank of New York Xxxxx Construction 050803
Bank of New York Pastoria Construction 051020
Bank of New York Zion Construction 050806
Bank of New York Zion Revenue 050812
Bank of New York Cash Collateral Construction 151057
S-II-1
SCHEDULE III
TO SECURITY AGREEMENT
THIRD PARTY PROJECT DOCUMENTS
Baytown
1. Energy Services Agreement, dated as of January 12, 2000, between
Bayer Corporation and Baytown Energy Center, L.P. (as assignee of
Calpine Construction Finance Company, L.P.), as amended by Amendment
of Project Documents dated as of August 13, 2002.
2. Services Agreement, dated as of January 12, 2000, between Bayer
Corporation and Baytown Energy Center, L.P. (as assignee of Calpine
Construction Finance Company, L.P.), as amended by Amendment of
Project Documents, dated as of August 13, 2002.
3. Ground Lease and Easement Agreement, dated as of January 12, 2000,
between Bayer Corporation and Baytown Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.), as amended
by Amendment of Project Documents, dated as of August 13, 2002.
Xxxxxxxx
1. Energy Services Agreement, dated as of December 28, 1999, between
Cos-Mar Incorporated and Xxxxxxxx Energy LLC, as amended by
Amendment No. 1 to Energy Services Agreement, dated as of April
30, 2000, and Amendment No. 2 to Energy Services Agreement, dated as
of June 26, 2001.
2. Agreement for Purchased Power from Qualified Cogeneration Facility,
dated as of August 31, 2002, between Entergy Gulf States, Inc. and
Xxxxxxxx Energy LLC.
Channel
1. Energy Services Agreement, dated as of January 25, 2000, between
Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.).
2. Facility Services Agreement, dated as of January 25, 2000, between
Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.).
3. Operating Lease Agreement, dated as of January 25, 2000, between
Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.), as amended
by Amendment No. 1 to Operating Lease Agreement, dated as of March
30, 2001.
4. Amended and Restated Ground Lease and Easement Agreement, dated as
of October 30,
S-III-1
2001, between Lyondell-Citgo Refining LP and Channel Energy Center,
L.P.
Columbia
1. Energy Services Agreement, dated as of August 15, 2000, between
Xxxxxxx Chemical Company and Columbia Energy LLC, as amended by
First Amendment to Energy Services Agreement, dated as of August
1, 2001, and Second Amendment to Energy Services Agreement, dated as
of October 1, 2002.
2. Amended and Restated Ground Lease Agreement, dated as of August
1, 2001, between Xxxxxxx Chemical Company and Columbia Energy LLC,
as amended by First Amendment to Amended and Restated Ground Lease
Agreement, dated as of October 22, 2002.
Corpus Christi
1. Energy Services Agreement, dated as of March 23, 1999. between
Corpus Christi Cogeneration LP (as assignee of Nueces Bay Energy
LLC) and Citgo Refining and Chemicals, L.P., as amended by Amendment
No. 1 to Energy Services Agreement, dated as of March 22, 2001, and
Second Amendment of Energy Services Agreement, dated as of August
24, 2001.
2. Restated Energy Services Agreement - Steam, dated as of July
26, 2002, between Corpus Christi Cogeneration LP and Element is
Chromium L.P.
3. Energy Services Agreement, dated as of July 24, 2003, between Corpus
Christi Cogeneration LP and Flint Hills Resources, LP.
4. Project Site Lease Agreement, dated as of June 21, 1999, between
Corpus Christi Cogeneration LP (as assignee of Nueces Bay Energy
LLC) and Citgo Refining and Chemicals, L.P., as amended by First
Amendment of Project Site Lease Agreement, dated as of August
24, 2001.
Decatur
1. Second Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of January 31, 2001, between Solutia Inc. and
Decatur Energy Center, LLC, as amended by First Amendment to Second
Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of June 28, 2001, Second Amendment to Second
Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of August 13, 2001, Third Amendment to Second
Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of October 31, 0000, Xxxxxx Xxxxxxxxx to Second
Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of January 28, 2002, and Fifth Amendment to
Second Amended and Restated Lease, Steam Sales and Shared Services
Agreement, dated as of October 7, 2002.
S-III-2
2. Power Purchase Agreement, dated as of June 21, 2002, between Decatur
Energy Center, LLC and Tennessee Valley Authority.
Delta
1. Merchant Plant Lease, dated as of April 13, 2000, between The Dow
Chemical Company and Delta Energy Center, LLC (as assignee of
Calpine Construction Finance Company, L.P.), as amended by First
Amendment to Merchant Plant Lease, dated as of July 31, 2001, Second
Amendment to Merchant Plant Lease, dated as of December 14, 2001,
Third Amendment to Merchant Plant Lease, dated as of February
20, 2003, and Fourth Amendment to Merchant Plant Lease, dated as of
February 20, 2003.
2. Must-Run Service Agreement, dated as of February 10, 2003, between
Delta Energy Center LLC and California Independent System Operator
Corporation and Offer Letter from Delta Energy Center LLC to
California Independent System Operator Corporation for Provision of
RMR Services in 2004.
Freestone
None.
Los Medanos
1. Energy Purchase and Sale Agreement, dated as of December 21, 1998,
between USS-POSCO Industries and Los Medanos Energy Center, LLC (as
successor in interest to Pittsburg District Energy Facility, LLC),
as amended by Modification Agreement (First Amendment to Energy
Purchase and Sale Agreement), dated as of June 30, 1999, and Second
Amendment to Energy Purchase and Sale Agreement, dated as of April
30, 2001
2. Ground Lease Agreement, dated as of October 4, 1999, between
USS-POSCO Industries and Los Medanos Energy Center, LLC (as
successor in interest to Pittsburg District Energy Facility, LLC),
as amended by First Amendment to Ground Lease Agreement, dated as of
August 25, 2000, Second Amendment to Ground Lease Agreement, dated
as of October 30, 2000, Third Amendment to Ground Lease Agreement,
dated as of July 6, 2001, and Fourth Amendment to Ground Lease
Agreement, dated as of May 31, 2002.
3. Energy Supply Arrangements with Dow comprising: Binding Letter of
Intent, dated as of December 10, 2002, among The Dow Chemical
Company, Los Medanos Energy Center, LLC, Calpine Pittsburg, LLC, and
Delta Energy Center, LLC; Steam Supply Agreement, dated as of
December 10, 2002, between Calpine Pittsburg, LLC and Los Medanos
Energy Center, LLC; and Agreement Regarding Power and Steam Supply,
dated as of December 10, 2002, among Calpine Pittsburg, LLC, Los
Medanos Energy Center, LLC, and Delta Energy Center, LLC.
4. Amended and Restated Must-Run Service Agreement, dated June 17,
2003, between Los Medanos Energy Center, LLC and California
Independent System Operator Corporation.
S-III-3
Xxxxxx
1. Project Agreement, dated as of June 1, 2000, between BP Amoco
Chemical Company and Xxxxxx Energy Center, LLC (as assignee of
Calpine Construction Finance Company, L.P.), as amended by First
Amendment to Project Agreement, dated as of August 20, 2001.
2. Energy Sales Agreement, dated as of June 1, 2000, between BP Amoco
Chemical Company and Xxxxxx Energy Center, LLC (as assignee of
Calpine Construction Finance Company, L.P.), as amended by First
Amendment to Energy Sales Agreement, dated as of August 20, 2001,
and Second Amendment to Energy Sales Agreement, dated as of July
31, 2003.
3. Site Interface Agreement, dated as of September 29, 2000, between BP
Amoco Chemical Company and Xxxxxx Energy Center, LLC (as assignee of
Calpine Construction Finance Company, L.P.).
4. Land Lease, dated as of September 29, 2000, between BP Amoco
Chemical Company and Xxxxxx Energy Center, LLC (as assignee of
Calpine Construction Finance Company, L.P.), as amended by First
Amendment of Land Lease and Memorandum of Lease and Grant of
Easements, dated as of August 20, 2001, and Second Amendment of Land
Lease and Memorandum of Lease and Grant of Easements, dated as of
December 13, 2001.
5. Power Purchase Agreement, dated as of June 19, 2003, between Xxxxxx
Energy Center, LLC and Tennessee Valley Authority.
Xxxxx
None.
Pastoria
1. Ground Lease, dated as of July 19, 2001, between Tejon Ranchcorp and
Pastoria Energy Facility L.L.C., as amended by Landlord
Non-disturbance and Consent Agreement, dated as of September
28, 2001.
Zion
1. Amended and Restated Fuel Conversion Services Agreement, dated as of
April 28, 2003, between Zion Energy LLC and Wisconsin Electric Power
Company.
S-III-4
ANNEX A
to Security Agreement
FORM OF
COLLATERAL ACCOUNT CONTROL AGREEMENT
This COLLATERAL ACCOUNT CONTROL AGREEMENT (this "Agreement"), dated
as of [___________], [_____], by and among [_______________] (the "Grantor"),
Wilmington Trust Company, as collateral agent (the "Collateral Agent") for the
Secured Parties under the Collateral Trust Agreement defined below, and
[____________________], in its capacity as a "securities intermediary" as
defined in Section 8-102 of the UCC and a "bank" as defined in Section 9-102 of
the UCC (in such capacities, the "Financial Institution"). Capitalized terms
used but not defined herein shall have the meanings assigned in the Collateral
Trust Agreement (as amended, amended and restated, supplemented and otherwise
modified from time to time, the "Collateral Trust Agreement"), dated as of March
23, 2004, by and among Calpine CalGen Holdings, Inc., a Delaware corporation,
[CALPINE GENERATING COMPANY, LLC,] [THE GRANTOR,] CalGen Finance Corp., a
Delaware corporation, the Guarantors party thereto from time to time, the
Collateral Agent, and the other agents and trustees party thereto from time to
time.(2) All references herein to the "UCC" shall mean the Uniform Commercial
Code as in effect in the State of New York.
RECITALS
WHEREAS, the parties hereto acknowledge that the Grantor has granted
to the Collateral Agent a security interest in the Pledged Accounts (as
hereinafter defined) pursuant to the Security Agreement (as amended, amended and
restated, supplemented and otherwise modified from time to time, the "Security
Agreement"), dated as of March 23, 2004, by and among the [CALPINE GENERATING
COMPANY, LLC,] [THE GRANTOR,] the Guarantors party thereto from time to time and
the Collateral Agent; and
WHEREAS, the parties hereto are entering into this Agreement to
perfect and ensure the priority of such security interest hi the Pledged
Accounts.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree for the benefit of the
Secured Parties as follows:
-----------------
(2) If required by the Financial Institution, such capitalized terms which are
not defined in this form shall be defined based on the definitions set
forth in the Collateral Trust Agreement.
ANNEX A-1
SECTION 1. ESTABLISHMENT AND MAINTENANCE OF PLEDGED ACCOUNTS.
(a) The Financial Institution hereby represents and warrants
that it has established and currently maintains the accounts listed on Schedule
1 hereto and that the Grantor is its sole customer or entitlement holder with
respect to each such account. Each such account and any successor account and
all other accounts that the Grantor now or hereafter maintains with the
Financial Institution, being referred to herein individually as a "Pledged
Account" and collectively as the "pledged accounts." The Financial Institution
covenants and agrees that it shall not change the name or account number of any
Pledged Account without the prior written consent of the Collateral Agent;
(b) Each of the parties hereto acknowledges and agrees that
the accounts listed on Part A of Schedule 1 hereto are intended to be deposit
accounts (as defined in Section 9-102(a)(29) of the UCC) and the accounts listed
on Part B of Schedule 1 hereto are intended to be securities accounts (as
defined in Section 8-501 of the UCC). Notwithstanding such intention, as used
herein "Deposit Account" shall mean any Pledged Account (or any part thereof)
that is determined to be a "deposit account" (within the meaning of Section
9-102(a)(29) of the UCC) and "Securities Account" shall mean any Pledged Account
(or any part thereof) that is determined to be a "securities account" (within
the meaning of Section 8-501 of the UCC).
(c) The Financial Institution covenants and agrees that: (i)
all securities or other property underlying any financial assets credited to any
Securities Account shall be registered in the name of the Financial Institution,
indorsed to the Financial Institution or indorsed in blank or credited to
another securities account maintained in the name of the Financial Institution;
(ii) in no case will any financial asset credited to any Securities Account be
registered in the name of the Grantor, payable to the order of the Grantor or
specially indorsed to the Grantor except to the extent the foregoing have been
specially indorsed to the Financial Institution or indorsed in blank; and (iii)
all such property delivered to the Financial Institution pursuant to the
Security Agreement will be promptly credited to one of the Pledged Accounts.
SECTION 2. "FINANCIAL ASSETS" ELECTION. The Financial Institution
hereby agrees that each item of property (including, without limitation, all
Cash Equivalents and any investment property, financial asset, security,
instrument or cash) credited to any Pledged Account that is a Securities Account
shall be treated as a "financial asset" within the meaning of Section
8-102(a)(9) of the UCC.
SECTION 3. COLLATERAL AGENT'S CONTROL OF THE PLEDGED ACCOUNTS. If at
any time after the Collateral Agent has delivered to the Financial Institution a
Notice of Default in substantially the form set forth in Exhibit A hereto or the
Financial Institution shall receive from the Collateral Agent an entitlement
order (i.e., an order directing transfer or redemption of any financial asset
relating to a Pledged Account) or any instruction (within the meaning of Section
9-104 of the UCC, i.e., an instruction directing the disposition of funds in a
Pledged Account) originated by the Collateral Agent, the Financial Institution
shall comply with such entitlement order or instruction without further consent
by the Grantor or any other person. The Collateral Agent agrees not to deliver a
Notice of Default unless an Event of Default (as defined below) has occurred;
however, it is understood and agreed that the Financial Institution shall rely
exclusively on a Notice of Default as to the existence of an Event of Default
and shall be under
ANNEX A-2
no obligation to make any independent investigation as to the existence of an
Event of Default. If the Grantor is otherwise entitled to give any entitlement
orders or instructions with respect to the Pledged Accounts in accordance with
Section 4 hereof and such entitlement orders or instructions conflict with
instructions of the Collateral Agent, the Financial Institution shall comply
with the entitlement orders and instructions issued by the Collateral Agent. For
purposes of this Agreement, "Event of Default" means an "Event of Default" under
and as defined in any of the Indentures, the Term Loan Agreements, the Revolving
Loan Agreement or any other Secured Debt Document.
In the event that any of the Pledged Accounts is not considered a
"securities account" or "deposit account" under applicable law or a security
interest cannot be granted and perfected in such Pledged Accounts under the UCC,
then such Pledged Accounts and all property deposited therein shall be deemed
under the exclusive dominion and control of the Collateral Agent, and the
Financial Institution as its agent, for the purpose of the creation and
perfection of security interests in favor of the Collateral Agent for the
benefit of the Secured Parties.
SECTION 4. GRANTOR'S ACCESS TO THE PLEDGED ACCOUNTS. If at any time
the Collateral Agent has delivered to the Financial Institution a Notice of
Default in substantially the form set forth in Exhibit A hereto, then the
Financial Institution agrees that thereafter until the Collateral Agent has
informed the Financial Institution in writing that the Event of Default no
longer exists, it will take all directions with respect to the Pledged Accounts
solely from the Collateral Agent and shall not comply with instructions or
entitlement orders of the Grantor or any other person. So long as no Notice of
Default has been delivered to the Financial Institution by the Collateral Agent,
the Grantor shall be entitled to give, and the Collateral Agent may act upon,
any entitlement order or instruction with respect to the Pledged Accounts as it
deems appropriate.
SECTION 5. SUBORDINATION OF LIEN; WAIVER OF SET-OFF. In the event
that the Financial Institution has or subsequently obtains by agreement, by
operation of law or otherwise a security interest in any Pledged Account or any
financial assets, cash or other property credited thereto, the Financial
Institution hereby agrees that such security interest shall be subordinate to
the security interest of the Collateral Agent The financial assets, money and
other items credited to any Pledged Account will not be subject to deduction,
set-off, banker's lien, or any other right in favor of any person other than the
Collateral Agent (except that the Financial Institution may set off (i) all
amounts due to the Financial Institution in respect of customary fees and
expenses for the routine maintenance and operation of the respective Pledged
Account and (ii) the face amount of any checks which have been credited to such
Pledged Account but are subsequently returned unpaid because of uncollected or
insufficient funds).
SECTION 6. CHOICE OF LAW. This Agreement shall be governed by the
laws of the State of New York. Regardless of any provision in any other
agreement, for purposes of the UCC, with respect to each Pledged Account New
York shall be deemed to be the bank's jurisdiction (within the meaning of
Section 9-304 of the UCC) and the securities intermediary's jurisdiction (within
the meaning of Section 8-110 of the UCC). The Pledged Accounts shall be governed
by the laws of the State of New York.
ANNEX A-3
SECTION 7. CONFLICT WITH OTHER AGREEMENTS. The Financial Institution
hereby represents, warrants, covenants and agrees that:
(a) there are no other agreements entered into between the
Financial Institution and the Grantor with respect to any Pledged Account (other
than those referred to herein);
(b) it has not entered into, and until the termination of
this Agreement will not enter into, any agreement with any other person relating
the Pledged Accounts and/or any financial assets credited thereto pursuant to
which it agrees or has agreed to comply with entitlement orders (as defined in
Section 8-102(a)(8) of the UCC) or instructions (within the meaning of Section
9-104 of the UCC) of such other person;
(c) it has not entered into, and until the termination of
this Agreement will not enter into, any agreement with the Grantor or the
Collateral Agent purporting to limit or condition the obligation of the
Financial Institution to comply with entitlement orders or instructions, except
as may be otherwise provided herein; and
(d) in the event of any conflict between this Agreement (or
any portion thereof) and any other agreement now existing or hereafter entered
into, the terms of this Agreement shall prevail.
Notwithstanding the foregoing, it is hereby agreed that the
Collateral Agent and the Financial Institution shall be afforded all of the
rights, powers, protections and immunities set forth in the Collateral Trust
Agreement, the Security Agreement and any other Secured Debt Document to which
they are a party as if the same were specifically set forth herein.
SECTION 8. ADVERSE CLAIMS. The Financial Institution represents and
warrants that, except for the claims and interest of the Collateral Agent, the
Financial Institution and of the Grantor in the Pledged Accounts, it does not
know of any security interest in, lien on or claim to, or other interest in, any
Pledged Account or in any "financial asset" (as defined in Section 8-102(a) of
the UCC) credited thereto. If any person asserts any lien, encumbrance or
adverse claim (including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against the Pledged Accounts or in any financial
asset carried therein, the Financial Institution will promptly notify the
Collateral Agent and the Grantor thereof.
SECTION 9. ADDITIONAL PROVISIONS REGARDING MAINTENANCE OF THE
PLEDGED ACCOUNTS. The Financial Institution covenants and agrees:
(a) Statements and Confirmations. The Financial Institution
will promptly send copies of all statements, confirmations and other
correspondence concerning (i) any Securities Account and/or any financial assets
credited thereto and (ii) any Deposit Account, simultaneously to each of the
Grantor and the Collateral Agent at the address for each set forth in Section 13
of this Agreement.
(b) Tax Reporting. All items of income, gain, expense and
loss recognized in any Securities Account and all interest, if any, relating to
any Deposit Account, shall be reported to the Internal Revenue Service and all
state and local taxing authorities under
ANNEX A-4
the name and taxpayer identification number of the Grantor.
(c) Voting Rights. At any time during which the Grantor is
entitled to give entitlement orders pursuant to Section 4 hereof, the Grantor
shall direct the Financial Institution with respect to the voting of any
financial assets credited to the Pledged Accounts. At all other times, the
Collateral Agent shall control the right to vote with respect to such financial
assets.
(d) Cash Equivalents. At any time during which the Grantor
is entitled to give entitlement orders pursuant to Section 4 hereof, the Grantor
shall direct the Financial Institution with respect to the selection of
investments to be made for any Securities Account; provided, however, that the
Financial Institution shall not honor any instruction to purchase any
investments other than Cash Equivalents. At all other times, the Collateral
Agent shall control the selection of investments to be made for any Securities
Account.
SECTION 10. INDEMNIFICATION OF FINANCIAL INSTITUTION. The Financial
Institution undertakes to perform only such duties as are expressly set forth
herein and no other duties shall be implied. The Financial Institution may rely
upon and shall not be liable for acting or refraining from acting upon any
written notice, instruction or request furnished to it hereunder and believed by
it to be genuine and to have been signed or presented by the proper party or
parties in compliance with the provisions hereof. The Financial Institution
shall be under no duty to inquire into or investigate the validity, accuracy or
content of any such document. The Grantor and the Collateral Agent hereby agree
that (a) the Financial Institution is released from any and all liabilities to
the Grantor and the Collateral Agent arising from the terms of this Agreement
and the compliance of the Financial Institution with the terms hereof, except to
the extent that such liabilities arise from the Financial Institution's gross
negligence as determined by a court of competent jurisdiction and (b) the
Grantor and its successors and assigns shall at all tunes indemnify and save
harmless the Financial Institution from and against any and all claims, actions
and suits of others arising out of the terms of this Agreement or the compliance
of the Financial Institution with the terms hereof, except to the extent that
such arises from the Financial Institution's gross negligence as determined by a
court of competent jurisdiction, and from and against any and all liabilities,
losses, damages, costs, charges, counsel fees and other expenses of every nature
and character arising by reason of the same, until the termination of this
Agreement. The indemnities provided herein shall survive the termination of this
Agreement and any resignation or removal of the Financial Institution.
SECTION 11. SUCCESSORS; ASSIGNMENT. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective successors and assigns, except that neither the Grantor nor the
Financial Institution may delegate its obligations hereunder without the prior
written consent of the Collateral Agent. Additionally, in the event that the
Collateral Agent is replaced as the collateral agent under the Collateral Trust
Agreement, any entity that succeeds to such role shall be entitled to the
benefits of this Agreement. The Collateral Agent agrees to send written notice
to the Financial Institution of any such replacement.
SECTION 12. NOTICES. Any notice, request or other communication
required or permitted to be given under this Agreement shall be in writing and
deemed to have been
ANNEX A-5
properly given when delivered in person, or when sent by telecopy or other
electronic means and electronic confirmation of error free receipt is received
or two days after being sent by certified or registered United States mail,
return receipt requested, postage prepaid, addressed to the party at the address
set forth in the Collateral Trust Agreement or, if to the Financial Institution,
as set forth below.
Financial Institution: __________________________
__________________________
__________________________
Attention: _______________
Facsimile No.: ___________
Any party may change his address for notices by giving notice to the
other parties hereto in the manner set forth above.
SECTION 13. AMENDMENT. No amendment or modification of this
Agreement or waiver of any right hereunder shall be binding on any party hereto
unless it is in writing and is signed by all of the parties hereto.
SECTION 14. TERMINATION. The obligations of the Financial
Institution to the Collateral Agent pursuant to this Agreement shall continue in
effect until the security interests of the Collateral Agent in each of the
Pledged Accounts have been terminated pursuant to the terms of the Security
Agreement and the Collateral Agent has notified the Financial Institution of
such termination in writing. The Collateral Agent agrees to provide a Notice of
Termination in substantially the form of Exhibit B hereto to the Financial
Institution upon the request of the Grantor on or after the termination of the
Collateral Agent's security interest in the Pledged Accounts pursuant to the
terms of the Security Agreement. The termination of this Agreement shall not
terminate the Pledged Accounts or alter the obligations of the Financial
Institution to the Grantor pursuant to any other agreement with respect to the
Pledged Accounts.
SECTION 15. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing and
delivering one or more counterparts.
(signature page follows)
ANNEX A-6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed as of the date first written above.
[_______________________],
as the Grantor
By:_____________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as the Collateral Agent
By:_____________________________________
Name:
Title:
[___________________________],
as the Financial Institution
By:_____________________________________
Name:
Title:
ANNEX A-7
SCHEDULE 1
Part A List of Existing Deposit Accounts Subject to this Agreement
Exact Name of Account Account Number
--------------------- --------------
Part B List of Existing Securities Accounts Subject to this Agreement
Exact Name of Account Account Number
--------------------- --------------
"[__________________]" [_____________]
ANNEX A-8
Exhibit A
[Letterhead of Collateral Agent]
[Date]
[______________________],
as Financial Institution
________________
________________
Attention:___________________
Re: Notice of Default
Ladies and Gentlemen:
As referenced in the Collateral Account Control Agreement, dated as
of [_____________], [____], among [INSERT NAME OF APPLICABLE GRANTOR], you and
the undersigned, we hereby give you notice that an Event of Default has occurred
and is continuing. You are hereby instructed not to accept any direction,
instructions or entitlement orders with respect to the Pledged Accounts or the
financial assets or funds credited thereto from any person other than the
undersigned, unless otherwise ordered by a court of competent jurisdiction or
otherwise directed by us in writing.
You are instructed to deliver a copy of this notice by facsimile
transmission to [INSERT NAME OF APPLICABLE GRANTOR].
Very truly yours,
Wilmington Trust Company,
as Collateral Agent
By:_______________________
Name:
Title:
cc: [INSERT NAME OF APPLICABLE GRANTOR]
ANNEX A-9
Exhibit B
[Letterhead of Collateral Agent]
[Date]
[______________________],
as Financial Institution
__________________
__________________
Attention:___________________
Re: Termination of Collateral Account Control Agreement
You are hereby notified that the Collateral Account Control
Agreement, dated as [__________________], [_____], by and among [INSERT NAME OF
APPLICABLE GRANTOR], you and the undersigned is terminated and you have no
further obligations to the undersigned pursuant to such Agreement.
Notwithstanding any previous instructions to you, you are hereby instructed to
accept all future directions with respect to account
number(s)__________________________________from [INSERT NAME OF APPLICABLE
GRANTOR]. This notice terminates any obligations you may have to the undersigned
with respect to such account; however nothing contained in this notice shall
alter any obligations which you may otherwise owe to [INSERT NAME OF APPLICABLE
GRANTOR] pursuant to any other agreement.
You are instructed to deliver a copy of this notice by facsimile
transmission to [INSERT NAME OF APPLICABLE GRANTOR].
Very truly yours,
Wilmington Trust Company,
as Collateral Agent
By:________________________
Name:
Title:
cc: [INSERT NAME OF APPLICABLE GRANTOR]
ANNEX A-10
EXHIBIT A
TO SECURITY AGREEMENT
SECURITY AGREEMENT SUPPLEMENT
This SECURITY AGREEMENT SUPPLEMENT, dated as of [mm/dd/yy], is
delivered by [NAME OF NEW GRANTOR], a [NAME OF STATE OF INCORPORATION OR
FORMATION] [corporation] [[limited] [general] partnership] [limited liability
company] (the "New Grantor"), pursuant to the Security Agreement, dated as of
March 23, 2004 (as it may be from time to time amended, restated, modified or
supplemented, the "Security Agreement"), among Calpine Generating Company, LLC,
the other Grantors party thereto from time to time, and Wilmington Trust
Company, as the Collateral Agent. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Security
Agreement.
New Grantor hereby confirms the grant to the Collateral Agent in the
Security Agreement of, and does hereby grant to the Collateral Agent, a security
interest in all of New Grantor's right, title and interest in and to all Article
9 Collateral to secure the Secured Obligations, in each case whether now or
hereafter existing or in which New Grantor now has or hereafter acquires an
interest and wherever the same may be located. From and after the date hereof,
New Grantor shall be a "Grantor", [and] a "Guarantor" [and a "Holding Company"]
for all purposes of the Security Agreement. New Grantor hereby makes all of the
representations and warranties set forth in the Security Agreement as of the
date hereof. New Grantor represents and warrants that Schedule I attached hereto
accurately and completely sets forth all additional information required
pursuant to the Security Agreement and hereby agrees that such Schedule I shall
constitute part of the Schedules to the Security Agreement.
IN WITNESS WHEREOF, New Grantor has caused this Security Agreement
Supplement to be duly executed and delivered by its duly authorized officer as
of [mm/dd/yy].
[NAME OF NEW GRANTOR]
By: ______________________________
Name:
Title:
EXHIBIT A-1
SCHEDULE I
TO SECURITY AGREEMENT SUPPLEMENT
GENERAL INFORMATION
(A) Full Legal Name, Type of Organization, Jurisdiction of
Organization, Chief Executive Office/Sole Place of Business
(or Residence if Grantor is a Natural Person) and
Organizational Identification Number of each Grantor:
Chief Executive
Office/sole Place
of Business (or
Residence if
Jurisdiction of Grantor is a
Full Legal Name Type of Organization Organization Natural Person) Organization I.D.#
--------------- -------------------- --------------- ----------------- ------------------
(B) Other Names (including any Trade-Name or Fictitious Business
Name) under which each Grantor has conducted business for the
past five (5) years:
Name of Grantor Description of Agreement
--------------- ------------------------
(C) Changes in Name, Jurisdiction of Organization, Chief Executive
Office or Sole Place of Business (or Principal Residence if
Grantor is a Natural Person) and Corporate Structure within
past five (5) years:
Full Legal Name Trade Name or Fictitious Business Name
--------------- --------------------------------------
(D) Financing Statements:
Name of Grantor Filing Jurisdiction(s)
--------------- ---------------------
EXHIBIT A-2
