Exhibit 4.3
EXECUTION COPY
--------------------------------------------------------------------------------
UTILITY STOCK PROTECTIVE PLEDGE AGREEMENT
by and among
PG&E CORPORATION,
as Pledgor
BANK ONE, N.A.,
as Trustee
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Agent
for the benefit of the Secured Parties
------------------------------------------------------------------------------
Dated as of July 2, 2003
------------------------------------------------------------------------------
UTILITY STOCK PROTECTIVE PLEDGE AGREEMENT
UTILITY STOCK PROTECTIVE PLEDGE AGREEMENT (as amended, restated,
supplemented, or otherwise modified from time to time, this "Agreement"), dated
as of July 2, 2003, among PG&E CORPORATION, a California corporation (the
"Pledgor"), BANK ONE, N.A., a national banking association organized to do
business under the laws of the United States of America (the "Trustee") acting
in its capacity as Trustee for the Noteholders (as hereinafter defined) and
DEUTSCHE BANK TRUST COMPANY AMERICAS (the "Collateral Agent"), as Collateral
Agent for the benefit of and the representative of the Noteholders (as
hereinafter defined) and the Additional Debt Holders (as hereinafter defined,
and together with the Noteholders, the "Secured Parties").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Indenture dated as of the date hereof
(including all annexes, exhibits and schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified from time to time, the
"Indenture") by and among the Pledgor and the Trustee for the noteholders under
the Indenture (collectively, the "Noteholders"), the Pledgor will issue to the
Noteholders 6-7/8% Senior Secured Notes due 2008 in an initial maximum aggregate
principal amount of $600,000,000 (such notes, as the same may be amended,
exchanged, extended, renewed, restated, supplemented or otherwise modified from
time to time, together with any additional notes issued pursuant to the
Indenture, being herein collectively referred to as the "Notes");
WHEREAS, it is contemplated that, from time to time to the extent
permitted by the Indenture, the Pledgor may, from time to time, issue or
guaranty certain New Senior Secured Debt (as hereinafter defined) and/or New
Junior Secured Debt (as hereinafter defined);
WHEREAS, the Pledgor is the record and beneficial owner of
approximately 94% of the issued and outstanding common stock of Pacific Gas and
Electric Company, a California corporation (the "Utility"); and
WHEREAS, the Pledgor wishes to pledge and grant security interests in
the Collateral (as hereinafter defined) in favor of the Collateral Agent, for
the benefit of the Noteholders and the holders of any New Senior Secured Debt
(the "New Senior Secured Debt Holders"; and together with the Noteholders, the
"Senior Secured Parties"), and for the benefit of the holders of any New Junior
Secured Debt (the "New Junior Secured Debt Holders"; and together with the New
Senior Secured Debt Holders, the "Additional Debt Holders");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements hereinafter contained, the Pledgor hereby agrees with the
Collateral Agent, for the benefit of the Secured Parties, as follows:
1. DEFINITIONS.
1.1 Unless otherwise defined herein, all capitalized terms used herein
and defined in the Indenture shall be used herein as therein defined.
1.2 The following capitalized terms used herein shall have the
definitions specified below:
"Additional Debt Holders" shall have the meaning set forth in
the fourth recital hereto.
"Additional Notes" shall mean any notes (other than the
Initial Notes), if any, issued under the Indenture in accordance with
Sections 2.02, 2.14 and 4.09 thereof.
"Additional Secured Obligations" shall mean, collectively, the
New Senior Secured Obligations and the New Junior Secured Obligations.
"Affiliates" of any specified Person shall mean any other
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For
purposes of this definition, "control," as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or
more of the Voting Stock of a Person shall be deemed to be control. For
purposes of this definition, the terms "controlling," "controlled by"
and "under common control with" have correlative meanings.
"Agent Related Person" shall have the meaning set forth in
Section 22.6 hereof.
"Agreement" has the meaning set forth in the first paragraph
hereof.
"Bankruptcy Code" shall mean Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto.
"Board of Directors" shall mean: (1) with respect to a
corporation, the board of directors of the corporation; (2) with
respect to a partnership, the board of directors of the general partner
of the partnership; and (3) with respect to any other Person, the board
or committee of such Person serving a similar function.
"Capital Stock" shall mean: (1) in the case of a corporation,
corporate stock; (2) in the case of an association or business entity,
any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock; (3) in the case of
a partnership or limited liability company, partnership or membership
interests (whether general or limited); and (4) any other interest or
participation that confers on a Person the right to receive a share of
the profits and losses of, or distributions of assets of, the issuing
Person.
"Capital Lease Obligation" shall mean, at the time any
determination is to be made, the amount of the liability in respect of
a capital lease that would at that time be required to be capitalized
on a balance sheet in accordance with GAAP.
"Collateral" shall have the meaning set forth in Section 3.1
hereof.
"Debt Documents" shall mean, collectively, the Note Documents,
the New Senior Secured Debt Documents and the New Junior Secured Debt
Documents.
2
"Default" shall mean any event that is, or with the passage of
time or the giving of notice or both would be, an Event of Default.
"Disqualified Stock" shall mean any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible, or
for which it is exchangeable, in each case at the option of the holder
of the Capital Stock), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder of the Capital
Stock, in whole or in part, on or prior to the date that is ninety-one
days after the date on which the Notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute
Disqualified Stock solely because the holders of the Capital Stock have
the right to require the Pledgor to repurchase such Capital Stock upon
the occurrence of a change of control, spin-off or an asset sale will
not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Pledgor may not repurchase or redeem any such Capital
Stock pursuant to such provisions prior to compliance by the Pledgor
with the covenants contained in Section 4.10 and Section 4.15 of the
Indenture and unless such repurchase or redemption complies with
Section 4.07 of the Indenture.
"Environmental Laws" shall mean any and all Laws, now or
hereafter in effect, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree
or judgment, relating to the environment, human health or safety, or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or toxic or hazardous substances or wastes
into the environment including, without limitation, ambient air,
surface water, groundwater, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants,
chemicals, or toxic or hazardous substances or wastes.
"Equity Interests" shall mean Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital
Stock).
"Event of Default" shall mean (1) an "Event of Default" as
defined in Section 12 of the Indenture; (2) any "Event of Default" (or
similarly defined event or condition) under any New Senior Secured Debt
Document; and (3) any "Event of Default" (or similarly defined event or
condition) as defined in any New Junior Secured Debt Document.
"Existing Secured Obligations" shall mean, collectively, (1)
the debts, liabilities, and obligations, howsoever arising, owed by the
Pledgor under the Indenture and the other Note Documents in respect of
the Notes as of the date of this Agreement, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising and howsoever evidenced, and the due performance and compliance
by the Pledgor with the terms thereof; (2) any and all sums advanced by
the Trustee or any Noteholder pursuant to the terms of the Note
Documents in order to preserve the Collateral or preserve its security
interest in the Collateral; and (3) the reasonable expenses of
retaking, holding, preparing for sale, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the Collateral
Agent, the Trustee or any Noteholder of its rights under this
Agreement, together with reasonable attorneys' fees and court costs.
3
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which
are in effect on the Issue Date.
"Governmental Approval" shall mean any authorization, consent,
approval, license, ruling, permit, tariff, rate, certification,
exemption, filing, variance, claim, order, judgment, decree,
publication, notice to, declaration of or with, or registration by or
with, any Governmental Authority.
"Governmental Authority" shall mean any government,
governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body, domestic
or foreign, federal, state or local having jurisdiction over the matter
or matters in question.
"Guarantee" shall mean a guarantee (other than by endorsement
of negotiable instruments for collection in the ordinary course of
business), direct or indirect, of all or any part of any Indebtedness
in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in
respect thereof.
"Hedging Obligations" shall mean, with respect to any
specified Person, the obligations of such Person incurred under:
(1)interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; (2) foreign exchange contracts and
currency protection agreements; (3) any commodity futures contract,
commodity option or other similar agreement or arrangement; and (4)
other similar agreements or arrangements.
"Indebtedness" shall mean with respect to any specified
Person, any indebtedness of such Person, whether or not contingent: (1)
in respect of borrowed money; (2) evidenced by bonds, notes, debentures
or similar instruments; (3) in respect of banker's acceptances or
letters of credit (or reimbursement agreements in respect thereof) or
similar instruments; (4) representing Capital Lease Obligations; (5)
representing the balance deferred and unpaid of the purchase price of
any property, except any such balance that constitutes an accrued
expense or trade payable; (6) representing the net obligations of such
Person under any Hedging Obligations (the amount of any such
obligations to be equal at any time to the termination value of the
agreement or arrangement giving rise to such obligation that would be
payable by such Person at such time); or (7) the principal component or
liquidation preference of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Restricted Subsidiary, any preferred
stock; if and to the extent any of the preceding items (other than
letters of credit, Hedging Obligations, Disqualified Stock or, with
respect to any Restricted Subsidiary, preferred stock) would appear as
a liability upon a balance sheet of the specified Person prepared in
accordance with GAAP. In addition, the term "Indebtedness" includes all
Indebtedness of others to the extent secured by a Lien on any asset of
the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the
Guarantee by the specified Person of any Indebtedness of any other
Person. The amount of any Indebtedness outstanding as of any date will
be: (1) the accreted
4
value of the Indebtedness, in the case of any Indebtedness issued with
original issue discount; and (2)the principal amount of the
Indebtedness, together with any interest on the Indebtedness that is
more than 30 days past due, in the case of any other Indebtedness.
"Indemnified Liabilities" shall mean any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments,
suits, costs, charges, expenses or disbursements (including reasonable
legal fees and expenses and reasonable fees and expenses of
consultants) of any kind or nature whatsoever which may at any time
(including any Unmatured Surviving Obligations) be imposed on, incurred
by or asserted against any Indemnified Person in any way relating to or
arising out of this Agreement or any other Debt Document and any other
document or instrument contemplated by or referred to herein or
therein, or the transactions contemplated hereby and thereby, or any
action taken or omitted by any such Person under or in connection with
any of the foregoing, including with respect to the exercise by any
Secured Debt Representative, the Collateral Agent and any Secured Debt
Holder of any of its respective rights or remedies under any of the
Debt Documents, and any investigation, litigation or proceeding
(including any bankruptcy, insolvency, reorganization or other similar
proceeding or appellate proceeding) related to this Agreement or any
other Debt Document or the Secured Debt, or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto;
provided, that the Pledgor shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising from
the gross negligence or willful misconduct of such Indemnified Person
as determined by a final judgment of a court of competent jurisdiction.
"Indemnified Person" shall mean each of the Secured Debt
Representatives, the Collateral Agent and each Secured Party and each
of their respective officers, directors, employees, counsel, agents and
attorneys-in-fact and Affiliates.
"Indenture" shall have the meaning set forth in the first
recital hereto.
"Initial Notes" shall mean $600.0 million in aggregate
principal amount of 6-7/8% Senior Secured Notes due 2008 issued under
the Indenture on the Issue Date.
"Issue Date" shall mean July 2, 2003.
"Law" shall mean, with respect to any Person (1) any statute,
law, regulation, ordinance, rule, judgment, order, decree, permit,
concession, grant, franchise, license, agreement or other governmental
restriction or any interpretation or administration of any of the
foregoing by any Governmental Authority (including, without limitation,
Governmental Approvals) applicable to such Person and (2) any
directive, guideline, policy, requirement or any similar form of
decision of or determination by any Governmental Authority which is
binding on such Person, in each case, whether now or hereafter in
effect (including, without limitation, in each case, any Environmental
Law).
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other
title retention agreement, any lease in the nature thereof, any option
or other agreement to sell or give a security interest in such asset.
5
"Moody's" shall mean Xxxxx'x Investors Service, Inc. or any
successor rating agency.
"NEG" shall mean PG&E National Energy Group, LLC, a Delaware
limited liability company, and each of its Subsidiaries.
"Newco" shall mean one or more Persons that, directly or
indirectly, through one or more subsidiaries, own all of the assets of
the Utility other than such assets of the Utility that are distributed
as part of a Spin-Off.
"New Debt Documents" shall mean, collectively, the New Senior
Secured Debt Documents and the New Junior Secured Debt Documents.
"Newco Stock" shall mean the Capital Stock of Newco.
"New Junior Secured Debt" shall be a collective reference to
all Indebtedness of the Pledgor issued pursuant to Section 4.09 of the
Indenture (1) that is permitted by the Indenture and the New Senior
Secured Debt Documents (if applicable) to share in the security
interests granted under this Agreement in accordance with Section 3
hereof; (2) that is designated as "New Junior Secured Debt" by the
Pledgor to each of the Collateral Agent and the Trustee in a writing
substantially in the form of Exhibit 2 attached hereto and (3) with
respect to which, the provisions of Section 2.2 and Section 21 have
been satisfied.
"New Junior Secured Debt Documents" shall mean this Agreement,
the Utility Stock Base Pledge Agreement and all indentures, debentures,
notes, guaranties and other documents executed by the Pledgor in
connection with the issuance of any New Junior Secured Debt.
"New Junior Secured Debt Holders" shall have the meaning set
forth in the fourth recital hereto.
"New Junior Secured Debt Representative" shall mean any
trustee, administrative agent or like representative of the holders of
any New Junior Secured Debt.
"New Junior Secured Obligations" shall mean, collectively, (1)
all loans, advances, debts, liabilities, and obligations, howsoever
arising, owed by the Pledgor under a New Junior Secured Debt Document
to the New Junior Secured Debt Representative or any New Junior Secured
Debt Holder or its Affiliates of every kind and description (whether or
not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, including all
interest, fees, charges, expenses, attorneys' fees and consultants'
fees chargeable to the Pledgor; (2) any and all sums advanced by the
New Junior Secured Debt Representative or any New Junior Secured Debt
Holder pursuant to the provisions of the New Junior Secured Debt
Documents in order to preserve the Collateral or preserve its security
interest in the Collateral; and (3) the reasonable expenses of
retaking, holding, preparing for sale, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the Collateral
Agent, the New Junior Secured Debt Representative or any New
6
Junior Secured Debt Holder of its rights under this Agreement, together
with reasonable attorneys' fees and court costs.
"New Secured Debt" shall mean, collectively, the New Senior
Secured Debt and the New Junior Secured Debt.
"New Senior Secured Debt" shall be a collective reference to
all Indebtedness, including Indebtedness issued under the Indenture, of
the Pledgor issued pursuant to Section 4.09 of the Indenture (1) that
is permitted by the Indenture to share in the security interests
granted under this Agreement in accordance with Section 3 hereof, (2)
that is designated as "New Senior Secured Debt" by the Pledgor to each
of the Collateral Agent and the Trustee in a writing substantially in
the form of Exhibit 2 attached hereto and (3) with respect to which,
the provisions of Section 2.1 and Section 21 have been satisfied.
"New Senior Secured Debt Documents" shall mean this Agreement,
the Utility Stock Base Pledge Agreement and all indentures, debentures,
notes, guaranties and other documents executed by the Pledgor in
connection with the issuance of any New Senior Secured Debt.
"New Senior Secured Debt Holders" shall have the meaning set
forth in the fourth recital hereto.
"New Senior Secured Debt Representative" shall mean any
trustee, administrative agent or like representative of the holders of
any New Senior Secured Debt.
"New Senior Secured Obligations" shall mean, collectively, (1)
all loans, advances, debts, liabilities, and obligations, howsoever
arising, owed by the Pledgor under a New Senior Secured Debt Document
to the New Senior Secured Debt Representative or any New Senior Secured
Debt Holder or its Affiliates of every kind and description (whether or
not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, including all
interest, fees, charges, expenses, attorneys' fees and consultants'
fees chargeable to the Pledgor; (2) any and all sums advanced by the
New Senior Secured Debt Representative or any New Senior Secured Debt
Holder pursuant to the provisions of the New Senior Secured Debt
Documents in order to preserve the Collateral or preserve its security
interest in the Collateral; and (3) the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent, the New Senior Secured Debt Representative or any New
Senior Secured Debt Holder of its rights under this Agreement, together
with reasonable attorneys' fees and court costs.
"Non-Recourse Debt" shall mean Indebtedness: (1) as to which
neither the Pledgor nor any of its Restricted Subsidiaries (a) provides
credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or
indirectly liable as a guarantor or otherwise, or (c) is the lender;
(2) no default with respect to which (including any rights that the
holders of the Indebtedness may have to take enforcement action against
an Unrestricted Subsidiary) would permit upon notice, lapse of time or
both any holder of any other Indebtedness (other than the Notes) of the
Pledgor or
7
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment of the Indebtedness to be accelerated
or payable prior to its stated maturity; and (3) as to which the
lenders have been notified in writing that they will not have any
recourse to the stock or assets of the Pledgor or any of its Restricted
Subsidiaries.
"Note Documents" shall mean the Indenture, this Agreement, and
the Utility Stock Base Pledge Agreement.
"Noteholders" shall have the meaning set forth in the first
recital hereof.
"Officer" shall mean, with respect to any Person, the chairman
of the Board of Directors, the chief executive officer, the president,
the chief financial officer, the treasurer, any assistant treasurer,
the controller, the secretary, any assistant secretary or any
vice-president of such Person.
"Officer's Certificate" shall mean a certificate signed on
behalf of the Pledgor by an Officer of the Pledgor that meets the
requirements of Section 12.05 of the Indenture.
"Permitted Lien" shall mean: (1) Liens on assets (other than
assets that constitute Collateral) securing Indebtedness incurred
pursuant to clauses (b)(i) or (b)(xiii) of Section 4.09 of the
Indenture; (2) Liens securing the Notes; (3) Liens existing on the
Issue Date; (4) Liens in favor of the Pledgor; (5) Liens to secure
Indebtedness of any Restricted Subsidiaries; provided that the
Indebtedness is permitted by the terms of the Indenture to be incurred;
(6) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Pledgor or any Restricted
Subsidiary of the Pledgor or otherwise becomes a Restricted Subsidiary
of the Pledgor; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation or such Person becoming a
Restricted Subsidiary of the Pledgor and do not extend to any assets
other than those of such Person; (7) Liens on property existing at the
time of acquisition of the property by the Pledgor or any Restricted
Subsidiary of the Pledgor; provided that such Liens were not incurred
in connection with such acquisition; (8) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (b)(iv) of
Section 4.09 of the Indenture; (9) Liens securing Permitted Refinancing
Indebtedness incurred to refinance Indebtedness that was previously so
secured; provided that any such Lien is limited to all or part of the
same property or assets (plus improvements, accessions, proceeds or
distributions in respect thereof) that secured or, under the written
arrangements under which the original Lien arose, could secure the
Indebtedness being refinanced; (10) Liens securing Hedging Obligations
so long as the related Indebtedness is, and is permitted to be under
the Indenture, secured by a Lien on the same property securing such
Hedging Obligation; (11) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of
business; (12) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
conducted; provided that any reserve or other appropriate provision as
is required in conformity with GAAP has been made therefor; (13)
pledges or deposits by such Person under workmen's compensation laws,
unemployment insurance laws and other types of social security or
similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or
leases to which such Person is a
8
party, or deposits to secure public or statutory obligations of such
Person or deposits of cash or United States government bonds to secure
surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import or customs duties or for the
payment of rent, in each case incurred in the ordinary course of
business; (14) Liens imposed by law, including carriers',
warehousemen's and mechanics' Liens, in each case for sums not yet
delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; provided that
any reserve or other appropriate provision as is required in conformity
with GAAP has been made therefor; (15) Liens arising solely by virtue
of any statutory or common law provisions relating to banker's Liens,
rights of set-off or similar rights and remedies as to deposit accounts
or other funds maintained with a depositary institution; provided that
(a) such deposit account is not a dedicated cash collateral account and
is not subject to restrictions against access by the Pledgor in excess
of those set forth by regulations promulgated by the Federal Reserve
Board and (b) such deposit account is not intended by the Pledgor or
any Restricted Subsidiary to provide collateral to the depositary
institution; (16) easements, rights-of-way, minor survey exceptions,
zoning and similar restrictions and other similar encumbrances or title
defects incurred or imposed, which do not materially interfere with the
ordinary conduct of the Pledgor's business or the business of its
Subsidiaries; (17) judgment Liens not giving rise to an Event of
Default so long as such Liens are adequately bonded and any appropriate
legal proceedings that may have been duly initiated for the review of
such judgment have not been finally terminated or the period within
which such proceedings may be initiated has not expired; (18) Liens
incurred or deposits made in the ordinary course of business of the
Pledgor or any Restricted Subsidiary of the Pledgor with respect to
obligations that do not exceed $10.0 million at any one time
outstanding; (19) Liens consisting of any interest or title of a
licensor in the property subject to a license; (20) Liens arising from
sales or other transfers of accounts receivable in the ordinary course
of business; and (21) any extensions, substitutions, replacements or
renewals of the foregoing.
"Permitted Refinancing Indebtedness" shall mean any
Indebtedness of the Pledgor or any of its Subsidiaries issued in
exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund other Indebtedness of the
Pledgor or any of its Subsidiaries (other than intercompany
Indebtedness); provided that: (1) the principal amount (or accreted
value, if applicable), the principal component or liquidation
preference, as the case may be, of such Permitted Refinancing
Indebtedness does not exceed the principal amount (or accreted value,
if applicable), the principal component or liquidation preference, as
the case may be, of the Indebtedness extended, refinanced, renewed,
replaced, defeased or refunded (plus all accrued interest on the
Indebtedness and the amount of all expenses and premiums incurred in
connection therewith); (2) such Permitted Refinancing Indebtedness has
a final maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (3) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (4)
such Permitted Refinancing Indebtedness is incurred either by (i) the
Pledgor or (ii) by the Subsidiary that is
9
the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, limited-liability company or government or other entity.
"Pledged Stock" shall mean the shares of Capital Stock of the
Utility described on Annex A hereto, and any shares of Capital Stock of
the Utility at any time issued in respect of the Capital Stock
described on Annex A hereto.
"Pledge Agreements" shall mean, collectively, this Agreement
and the Utility Stock Base Pledge Agreement.
"Pledgor" shall have the meaning set forth in the first
paragraph hereof.
"Proceeds" shall have the meaning given such term in the UCC.
"Reorganization Event" shall mean a merger of the Pledgor into
an Affiliate of the Pledgor; provided that either (a) (i) the Senior
Secured Obligations are secured on an equal and ratable basis with any
senior secured Indebtedness of such Affiliate at any time outstanding
and (ii) the Junior Secured Obligations, if any, are secured on junior
basis on substantially the same terms as this Agreement or (b) the
Senior Secured Obligations are rated Baa3 or better by Moody's and BBB-
or better by Standard & Poor's immediately after the consummation of
such transaction.
"Required Secured Parties" shall mean, for the purposes of
directing the Collateral Agent with respect to actions taken pursuant
to the Pledge Agreements, (1) the Secured Parties holding (a) more than
50% of the aggregate amount of the aggregate outstanding principal
amount of the Notes issued and outstanding under the Indenture, if any,
(b) more than 50% of the aggregate amount of the aggregate outstanding
principal amount of any class or issuance of New Senior Secured Debt
which the Pledgor has designated, in a written notice to the Collateral
Agent at the time of the incurrence of such New Senior Secured Debt, as
being entitled to the benefits of this clause (b), if any, and (c) more
than 50% of the aggregate amount of the aggregate outstanding principal
amount of all other New Senior Secured Debt, if any, in each case,
voting separately as a class, until the indefeasible payment in full in
cash of all Senior Secured Obligations, (2) and thereafter, for the
purposes of directing the Collateral Agent with respect to actions
taken pursuant to the Pledge Agreements, the Secured Parties holding
more than 50% of the aggregate outstanding principal amount of the New
Junior Secured Debt, if any. For the avoidance of doubt, unless and
until all Senior Secured Obligations have been indefeasibly paid in
full, no New Junior Secured Debt Holder shall have any voting rights
with respect to Section 7 hereof.
"Restricted Subsidiary" shall mean any Subsidiary of the
Pledgor that is not an Unrestricted Subsidiary.
"SEC" shall mean the Securities and Exchange Commission.
10
"Secured Debt Representatives" shall mean, collectively, each
of the Trustee, each New Senior Secured Debt Representative and each
New Junior Secured Debt Representative.
"Secured Obligations" shall mean, collectively, the Existing
Secured Obligations and the Additional Secured Obligations.
"Secured Parties" shall have the meaning set forth in the
first paragraph hereto.
"Senior Secured Parties" shall have the meaning set forth in
the fourth recital hereof.
"Senior Secured Obligations" shall mean, collectively, the
Existing Secured Obligations and the New Senior Secured Obligations.
"Securities Act" shall mean the Securities Act of 1933, as
amended and as in effect from time to time.
"Spin-Off" shall mean the distribution of any business or
businesses of the Utility to the shareholders of the Pledgor, pursuant
to a confirmed plan of reorganization under Chapter 11 of Title 11 of
the United States Code.
"Standard & Poor's" shall mean Standard & Poor's Rating
Service, a division of McGraw Hill Inc., a New York corporation, or any
successor rating agency.
"State" shall mean the District of Columbia or any state of
the United States of America.
"Subsidiary" shall mean, with respect to any specified Person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees of the corporation,
association or other business entity is at the time owned or
controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person
or (b) the only general partners of which are that Person or one or
more Subsidiaries of that Person (or any combination thereof).
"Trustee" shall have the meaning set forth in the first
paragraph hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date
on which the Indenture is qualified under the Trust Indenture Act.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York from time to time.
"Unmatured Surviving Obligations" shall mean any obligation
which is contingent and unliquidated and not due and owing and which
pursuant to the provisions of the relevant Debt Document survives
termination of such Debt Document.
11
"Unrestricted Subsidiary" shall mean any Subsidiary of the
Pledgor that is designated by the Board of Directors as an Unrestricted
Subsidiary pursuant to a board resolution, but only to the extent that
such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Pledgor or any Restricted Subsidiary of the
Pledgor unless the terms of any such agreement, contract, arrangement
or understanding are no less favorable to the Pledgor or such
Restricted Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of the Pledgor; (3) is a Person
with respect to which neither the Pledgor nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any
specified levels of operating results; (4) has not guaranteed or
otherwise directly or indirectly provided credit support for any
Indebtedness of the Pledgor or any of its Restricted Subsidiaries; and
(5) has at least one director on its Board of Directors that is not a
director or executive officer of the Pledgor or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Pledgor or any of its Restricted
Subsidiaries. Notwithstanding the foregoing, each of the Utility and
NEG, and each of their respective direct and indirect Subsidiaries
shall be deemed to be Unrestricted Subsidiaries, unless the Pledgor
designates one or more of them as Restricted Subsidiaries in accordance
with the terms set forth in the Indenture. Any designation of a
Subsidiary of the Pledgor as an Unrestricted Subsidiary will be
evidenced to the Trustee by filing with the Trustee a certified copy of
a resolution of the Board of Directors giving effect to such
designation and an Officer's Certificate certifying that such
designation complied with the preceding conditions and was permitted
pursuant to Sections 4.07 and 4.17 of the Indenture. If, at any time,
any Unrestricted Subsidiary, other than the Utility or NEG, and each of
their respective direct and indirect Subsidiaries, would fail to meet
the preceding requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of the Pledgor as of such date and,
if such Indebtedness is not permitted to be incurred as of such date
under Section 4.09 of the Indenture, the Pledgor will be in default of
such covenant. The Board of Directors of the Pledgor may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation will be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Pledgor of any
outstanding Indebtedness of such Unrestricted Subsidiary and such
designation will only be permitted if (1) such Indebtedness is
permitted under Section 4.09 of the Indenture, calculated on a pro
forma basis as if such designation had occurred at the beginning of the
four-quarter reference period; and (2) no Default would be in existence
following such designation.
"Utility" shall have the meaning set forth in the third
recital hereto.
"Utility Stock Base Pledge Agreement" shall mean the Utility
Stock Base Pledge Agreement, dated as of the date hereof and as
amended, restated, supplemented or otherwise modified from time to
time, among the parties hereto, pursuant to which 35% of the common
stock of the Utility owned by the Pledgor is being pledged to secure
the Secured Obligations.
"Voting Stock" of any Person as of any date shall mean the
Capital Stock of such Person that is at the time entitled to vote in
the election of the Board of Directors of such Person.
12
"Weighted Average Life to Maturity" shall mean, when applied
to any Indebtedness or Disqualified Stock at any date, the number of
years obtained by dividing: (1) the sum of the products obtained by
multiplying (a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payments of principal,
including payment at final maturity, in respect of the Indebtedness or
redemption or similar payment in respect of the Disqualified Stock by
(b) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment; by (2)
the then outstanding principal amount of such Indebtedness or principal
component or liquidation preference of such Disqualified Stock, as the
case may be.
1.3 Rules of Interpretation. Unless the context otherwise requires:
(a) a term has the meaning assigned to it; (b) an accounting term not otherwise
defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not
exclusive; (d) words in the singular include the plural, and in the plural
include the singular; (e) provisions apply to successive events and
transactions; and (f) references to sections of, or rules under, the Securities
Act will be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
2. SECURITY FOR OBLIGATIONS; PRIORITY.
2.1 Senior Secured Obligations. This Agreement is made by the
Pledgor for the benefit of the Collateral Agent, acting for the benefit of the
Senior Secured Parties (as more particularly described in Section 3.1), to
secure the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all Senior Secured Obligations; provided, however,
that the pledge made and security interest granted in Section 3.1 and any other
provisions of this Agreement shall be effective as to any obligations in respect
of any New Senior Secured Debt Documents only if the New Senior Secured Debt
Holders or the New Senior Secured Debt Representative shall have executed and
delivered to the Collateral Agent a counterpart of this Agreement or an
acknowledgment to this Agreement acknowledged by the Collateral Agent in the
form attached hereto as Exhibit 1.
2.2 Additional Junior Obligations. This Agreement is made by the
Pledgor for the benefit of the Collateral Agent, acting for the benefit of the
New Junior Secured Debt Holders, if any, (as more particularly described in
Section 3.2), to secure the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of all New Junior Secured Obligations;
provided, however, that the pledge made and security interest granted in Section
3.1 and any other provisions of this Agreement shall be effective as to any
obligations in respect of any New Junior Secured Debt Documents only if the New
Junior Secured Debt Holders or the New Junior Secured Debt Representative shall
have executed and delivered to the Collateral Agent a counterpart of this
Agreement or an acknowledgment to this Agreement acknowledged by the Collateral
Agent in the form attached hereto as Exhibit 1.
2.3 Rights in Collateral. Notwithstanding anything to the contrary
contained in any Debt Document, and irrespective of: (a) the time, order or
method of attachment or perfection of the security interests created hereby; (b)
the time, order or filing or recording of financing statements or other
documents filed or recorded to perfect security interests in any Collateral; and
(c) the rules for determining priority under the UCC or any other Law or rule
governing the relative priorities of secured creditors, (i) any security
interest in any Collateral heretofore or hereafter granted to secure any Senior
Secured Obligation shall be secured on an equal and ratable basis and (ii) any
security
13
interest in any Collateral heretofore or hereafter granted to secure any Senior
Secured Obligation has and shall have priority, to the extent of any unpaid
Senior Secured Obligations, over any security interest in such Collateral
granted to secure the New Junior Secured Obligation.
3. PLEDGE OF PLEDGED STOCK, ETC.
3.1 Senior Pledge. (a) The Pledgor hereby transfers, pledges and
assigns to the Collateral Agent, and grants to the Collateral Agent for the
ratable benefit of the Senior Secured Parties, a first priority security
interest in, all of the right, title and interest of the Pledgor in and to the
following, whether now existing or hereafter from time to time acquired by the
Pledgor (collectively, the "Collateral"):
(i) the Pledged Stock;
(ii) all other property hereafter delivered in
substitution for any of the Pledged Stock, all certificates and
instruments representing or evidencing such other property and
all cash, securities, interest, dividends, distributions, rights
and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all thereof (including, without limitation, any Newco
Stock distributed to the Pledgor in respect of the Pledged
Stock); and
(iii) all Proceeds of any and all of the
foregoing.
(b) The foregoing transfer, pledge, assignment and grant of a
security interest is made to secure the prompt and complete payment and
performance when due of the Senior Secured Obligations.
3.2 Junior Pledge. The Pledgor hereby transfers, pledges and assigns
to the Collateral Agent, and grants to the Collateral Agent for the ratable
benefit of the New Junior Secured Debt Holders, if any, a second priority
security interest in the Collateral. The foregoing transfer, pledge, assignment
and grant of a security interest is made to secure the prompt and complete
payment and performance when due of the New Junior Secured Obligations, if any.
3.3 Utility Stock Base Pledge Agreement. Concurrently herewith, the
parties hereto are entering into the Utility Stock Base Pledge Agreement,
covering collateral that is separate and distinct from the Collateral. It is the
intention of the parties hereto and thereto that the security interest and lien
created hereby shall be a separate security interest and lien from those created
by the Utility Stock Base Pledge Agreement.
3.4 Procedures. (a) To the extent that the Pledgor at any time or
from time to time owns, acquires or obtains any right, title or interest in any
Collateral, such Collateral shall automatically (and without the taking of any
action by the Pledgor) be pledged pursuant to Section 3.1 and Section 3.2 of
this Agreement and, in addition thereto, the Pledgor shall (as promptly as
practicable and, in any event, within ten days after it obtains such Collateral)
deliver to the Collateral Agent any stock certificates evidencing such
Collateral, duly endorsed in blank, and take such other actions as the
Collateral Agent shall reasonably request to perfect the Collateral Agent's
security interest in such Collateral.
14
(b) In addition to the actions required to be taken pursuant to
Section 3.4(a) hereof, the Pledgor shall from time to time, at the sole expense
of the Pledgor, cause appropriate financing statements (on Form UCC-1 or other
appropriate form) under the Uniform Commercial Code as in effect in the various
relevant States, in form covering all Collateral hereunder (with the form of
such financing statements to be reasonably satisfactory to the Collateral
Agent), to be filed in the relevant filing offices so that at all times the
Collateral Agent has a security interest in all Collateral which is perfected by
the filing of such financing statements (in each case to the maximum extent
perfection by filing may be obtained under the laws of any relevant State).
3.5 Subsequently Acquired Collateral. If the Pledgor shall acquire
(by purchase, dividend or similar distribution or otherwise) any additional
Collateral at any time or from time to time after the date hereof, such
Collateral shall automatically (and without any further action being required to
be taken) be subject to the pledge and security interests created pursuant to
Section 3.1 and Section 3.2 hereof and, furthermore, the Pledgor will promptly
thereafter take (or cause to be taken) all action with respect to such
Collateral in accordance with the procedures set forth in Section 3.4 hereof,
and will promptly thereafter deliver to the Collateral Agent (i) a certificate
executed by a principal executive officer of the Pledgor describing such
Collateral and certifying that the same has been duly pledged in favor of the
Collateral Agent (for the benefit of the Secured Parties) hereunder and (ii)
supplements to Annex A and Annex B hereto as are reasonably necessary to cause
such annexes to be complete and accurate at such time.
3.6 Transfer Taxes. Each pledge of Collateral under Section 3.1 and
Section 3.2 hereof shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
3.7 Certain Representations and Warranties Regarding the Collateral.
The Pledgor represents and warrants that on the date hereof (i) the Pledged
Stock consists of the number and type of shares described in Annex A hereto;
(ii) the Pledged Stock constitutes that percentage of the issued and outstanding
common stock of the Utility as is set forth in Annex A hereto; and (iii) the
Pledgor has complied with the respective procedures set forth in Sections 3.4
hereof with respect to each item of Collateral hereunder.
4. APPOINTMENT OF SUBAGENTS; ENDORSEMENTS, ETC. If and to the extent
necessary to enable the Collateral Agent to perfect its security interest in any
of the Collateral or to exercise any of its remedies hereunder, the Collateral
Agent shall have the right to appoint one or more subagents for the purpose of
retaining physical possession of the Collateral, which may be held in the name
of the Pledgor, endorsed or assigned in blank or in favor of the Collateral
Agent or any nominee or nominees of the Collateral Agent or a subagent appointed
by the Collateral Agent.
5. VOTING, ETC. The Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Collateral owned by it,
and to give consents, waivers or ratifications in respect thereof.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. All cash dividends, cash
distributions, cash Proceeds and other cash amounts payable in respect of the
Collateral shall be received (a) by the Pledgor, if no Event of Default shall
have occurred and be continuing and (b) by the Collateral Agent, if any Event of
Default shall have occurred and be continuing for application
15
toward the payment of the Secured Obligations as provided for in Section 9. The
Collateral Agent shall also be entitled to receive directly, and to retain as
part of the Collateral:
(i) all other or additional capital stock or other property
(including, but not limited to, cash dividends other than as set forth
above) paid or distributed by way of dividend or otherwise in respect
of the Collateral;
(ii) all other or additional capital stock or other property
paid or distributed in respect of the Collateral by way of split,
spin-off, split-up, reclassification, combination or similar
rearrangement;
(iii) all other or additional capital stock or other property
(including, but not limited to, cash) which may be paid in respect of
the Collateral by reason of any consolidation, merger, exchange,
conveyance of assets, liquidation or similar reorganization; and
(iv) without limiting the generality of the foregoing, all
shares of Newco Stock distributed in respect of the Collateral.
Nothing contained in this Section 6 shall limit or restrict in any
way the Collateral Agent's right to have pledged to it Proceeds of the
Collateral in any form in accordance with Section 3 of this Agreement. All
dividends, distributions or other payments which are received by the Pledgor
contrary to the provisions of this Section 6 and Section 7 hereof shall be
received in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of the Pledgor and shall be forthwith paid over to
the Collateral Agent as Collateral in the same form as so received (with any
necessary endorsement).
7. LIMITATION ON REMEDIES
7.1 It is expressly agreed that, subject to Section 8 hereof,
notwithstanding the occurrence of any Default or Event of Default, neither the
Collateral Agent, any Secured Debt Representative, any Secured Party, nor any
Person acting on behalf of any thereof, shall have any right:
(a) to transfer all or any part of the Collateral into the
Collateral Agent's name or the name of its nominee or nominees;
(b) to vote all or any part of the Collateral, give consents,
waivers and ratifications in respect of the Collateral or otherwise act with
respect thereto as though it were the outright owner thereof or to exercise any
of the rights or powers of a stockholder of the Utility;
(c) to sell, assign or deliver, or grant options to purchase, all or
any part of the Collateral, or any interest therein, or otherwise foreclose on
any of the Collateral; or
(d) to set off any Collateral against any Secured Obligations and to
apply such Collateral to the payment of any Secured Obligations;
provided, however, that in the event of any sale or other disposition of any of
the Collateral, the Collateral Agent shall be entitled to receive the Proceeds
thereof, whether such sale or other
16
disposition is consummated in connection with a bankruptcy proceeding in respect
of the Pledgor, or otherwise (it being agreed by the parties hereto that this
Agreement creates in favor of the Collateral Agent, for the benefit of the
Senior Secured Debt Holders, if any, a first priority security interest in the
Collateral and, for the benefit of the New Junior Secured Debt Holders, if any,
a second priority security interest in the Collateral, in each case,
notwithstanding that the Collateral Agent has agreed not to exercise remedies of
a secured party in respect of the Collateral).
8. REMEDIES IN RESPECT OF COLLATERAL OTHER THAN PLEDGED STOCK, ETC.
Anything herein or in any other Debt Document to the contrary notwithstanding,
(a) the Collateral Agent shall have, in respect of all Collateral other than the
Pledged Stock and any shares of Newco Stock that may become Collateral
hereunder, all rights and remedies granted to the Collateral Agent under the
Utility Stock Base Pledge Agreement, including, without limitation, all rights
and remedies of a secured party under Article 9 of the UCC; provided, however,
that such remedies shall be exercised in accordance with Section 7.2 and 7.3 of
the Utility Stock Base Pledge Agreement and (b) in the event of a bankruptcy
proceeding in respect of the Pledgor, the Collateral Agent shall have, in
respect of the Pledgor and all Collateral, all rights and remedies of a secured
creditor, subject to the Bankruptcy Code.
9. APPLICATION OF PROCEEDS. All monies collected by the Collateral
Agent upon any sale or other disposition of the Collateral pursuant to the terms
of this Agreement, together with all other monies received by the Collateral
Agent hereunder, shall be applied for satisfaction of the Secured Obligations as
follows:
First, to the payment of the costs and expenses of such sale,
collective or other realization, including reasonable compensation to
the Collateral Agent and its agents and counsel, and all expenses,
liabilities and advances made or incurred by the Collateral Agent in
connection therewith;
Second, to the payment of the Senior Secured Obligations for
the ratable benefit of the Senior Secured Parties, if any;
Third, only after the payment in full of all Senior Secured
Obligations (other than Unmatured Surviving Obligations), to the
payment of the New Junior Secured Obligations for the ratable benefit
of the New Junior Secured Debt Holders, if any; and
Fourth, after the payment in full of all Secured Obligations
(other than Unmatured Surviving Obligations), to the Pledgor, or its
successors or assigns, or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct, of
any surplus then remaining from such Proceeds.
10. [OMITTED].
11. CERTAIN LIMITATIONS (a) The Collateral Agent shall not be
obligated to perform or discharge any obligation of the Pledgor as a result of
the pledge hereby effected.
(b) The acceptance by the Collateral Agent of this Agreement, with
all the rights, powers, privileges and authority so created, shall not at any
time or in any event obligate the Collateral Agent to appear in or defend any
action or proceeding relating to the Collateral to which it
17
is not a party, or to take any action hereunder or thereunder, or to expend any
money or incur any expenses or perform or discharge any obligation, duty or
liability under the Collateral.
(c) Nothing in this Agreement shall obligate the Pledgor to sell or
otherwise dispose of the Pledged Stock or any shares of Newco Stock that may
become Collateral hereunder during the continuance of an Event of Default or
otherwise.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) At any time and from
time to time, upon the written request of the Collateral Agent, and at the sole
expense of the Pledgor, the Pledgor will promptly and duly execute and deliver
any and all such further instruments and documents and take such further action
as the Collateral Agent reasonably may deem appropriate in order to perfect and
preserve the Collateral Agent's security interest in the Collateral and in order
for the Collateral Agent to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation, the filing
of any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction and the filing of any other equivalent or similar
statement or document under any other applicable Law with any other applicable
Governmental Authority with respect to the security interests granted hereby.
The Pledgor also hereby authorizes the Collateral Agent to file any such
financing or continuation statement without the signature of the Pledgor to the
extent permitted by applicable Law. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be immediately delivered to
the Collateral Agent and pledged to the Collateral Agent hereunder, duly
endorsed, to the extent necessary, to the Collateral Agent.
(b) The Pledgor hereby appoints the Collateral Agent such Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, to act from time to time, solely after
the occurrence and during the continuance of an Event of Default, in the
Collateral Agent's reasonable discretion to take any action and to execute any
instrument which the Collateral Agent may deem reasonably necessary or advisable
to accomplish the purposes of this Agreement.
13. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except as may be
permitted in accordance with the terms of the Debt Documents).
14. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. (a)
The Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and
has good and valid title to, all Collateral consisting of Pledged
Stock and it has all rights in the Collateral necessary for the
security interest purported to be created hereunder to attach
(subject, in each case, to no pledge, lien, security interest,
charge, option or other encumbrance whatsoever, except the liens and
security interests created by this Agreement);
(ii) it has full power, authority and legal right to
pledge all the Collateral pledged by it pursuant to this Agreement;
18
(iii) this Agreement has been duly authorized, executed
and delivered by the Pledgor and constitutes a legal, valid and
binding obligation of the Pledgor enforceable against the Pledgor in
accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no
consent of any other party (including, without limitation, any
stockholder or creditor of the Pledgor or the Utility) and no
consent, license, permit, approval or authorization of, exemption
by, notice or report to, or registration, filing or declaration
with, any Governmental Authority is required to be obtained by the
Pledgor in connection with (a) the execution, delivery or
performance of this Agreement, (b) the validity or enforceability of
this Agreement or (c) the perfection or enforceability of the
Collateral Agent's security interest in the Collateral.
(v) the execution, delivery and performance of this
Agreement will not violate any provision of any applicable Law or
regulation or of any order, judgment, writ, award or decree of any
court, arbitrator or Governmental Authority, domestic or foreign,
applicable to the Pledgor, or of the certificate of incorporation,
operating agreement, limited liability company agreement,
partnership agreement or by-laws of the Pledgor or the Utility or of
any securities or other interests issued by the Pledgor or the
Utility, or of any mortgage, deed of trust, indenture, lease, loan
agreement, credit agreement or other material contract, agreement or
instrument or undertaking to which the Pledgor or the Utility is a
party or by which any of its assets may be bound and will not result
in the creation or imposition of (or the obligation to create or
impose) any lien or encumbrance on any of the assets of the Pledgor
or the Utility except as contemplated by this Agreement;
(vi) all of the Collateral consisting of Pledged Stock
has been duly and validly issued and acquired, is fully paid and
non-assessable and is subject to no options to purchase or similar
rights; and
(vii) the pledge and collateral assignment to the
Collateral Agent of the Collateral consisting of Pledged Stock,
together with continued possession by the Collateral Agent of any
certificates, instruments, documents or other writings evidencing
the Pledged Stock and/or the making of relevant filings or
recordings and/or any other action required to be taken in
accordance with Section 3.4 (all of which have been made or taken,
as the case may be), creates in favor of the Collateral Agent a
valid and perfected first and second priority security interest in
such Collateral, and the proceeds thereof, subject to no prior Lien
or encumbrance (other than any Permitted Lien that is a
non-consensual lien arising by operation of law) or to any agreement
purporting to grant to any third party a Lien or encumbrance (other
than any Permitted Lien that is a non-consensual lien arising by
operation of law) on the property or assets of the Pledgor which
would include the Pledged Stock and the Collateral Agent is entitled
to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant Law as enacted in any relevant
jurisdiction to perfected security interests in respect of such
Collateral.
(b) The Pledgor covenants and agrees that it will defend the
Collateral Agent's right, title and security interest in and to the Collateral
and the proceeds thereof against the claims and
19
demands of all persons whomsoever; and the Pledgor covenants and agrees that it
will have like title to and right to pledge any other property at any time
hereafter pledged to the Collateral Agent as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the
Collateral Agent.
15. JURISDICTION OF ORGANIZATION; NAME. The Pledgor's name,
jurisdiction of organization and identification number are set forth in Annex B
hereto. The Pledgor will not change its name or its jurisdiction of
organization, except upon fifteen days' prior written notice to the Collateral
Agent and delivery to the Collateral Agent of all additional executed financing
statements and other documents reasonably requested by the Collateral Agent to
maintain the validity, perfection and priority of the security interests
provided for herein.
16. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever (except as provided under Section 18), including, without
limitation: (i) any renewal, extension, amendment or modification of or addition
or supplement to or deletion from any Debt Document or any other instrument or
agreement referred to therein, or any assignment or transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or other action or inaction
under or in respect of any such agreement or instrument including, without
limitation, this Agreement; (iii) any furnishing of any additional security to
the Collateral Agent or its assignee or any acceptance thereof or any release of
any security by the Collateral Agent or its assignee (except as provided under
Section 18); (iv) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in whole
or in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to the Pledgor or the Utility, or
any action taken with respect to this Agreement by any trustee or receiver, or
by any court, in any such proceeding, whether or not the Pledgor shall have
notice or knowledge of any of the foregoing.
17. [OMITTED].
18. TERMINATION; RELEASE.
18.1 General. After payment in full of the Secured Obligations
(other than Unmatured Surviving Obligations) and the termination of the Debt
Documents, this Agreement and the security interest created hereby shall
terminate, and the Collateral Agent, at the written request and expense of the
Pledgor, will execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Pledgor (without recourse and
without any representation or warranty) such of the Collateral as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any monies at the time held by the Collateral Agent or
any of its sub-agents hereunder.
18.2 Release of the Collateral. (a) The security interest created
hereby for the benefit of the Noteholders shall be released in whole, (i) upon
payment in full of the principal of, accrued and unpaid interest and premium and
Additional Interest, if any, on the Notes and payment in full of all other
obligations related thereto due and payable at or prior to the time such
principal,
20
accrued and unpaid interest and premium and Additional Interest, if any, are
paid and (ii) upon satisfaction and discharge of the Indenture or (iii) upon a
legal defeasance or covenant defeasance as set forth in Section 8.02 and Section
8.03 of the Indenture, respectively.
(b) The security interest created hereby for the benefit of the
Additional Debt Holders shall be released, in whole, as provided for in the
relevant New Senior Secured Debt Document or New Junior Secured Debt Document,
as the case may be.
18.3 Release of Collateral with Respect to Notes and New Secured
Debt. The security interest created hereby for the benefit of the Secured
Parties shall be released (a) in part, as to any property constituting
Collateral that is sold or otherwise disposed of by the Pledgor in a transaction
permitted by the Indenture, the Pledge Agreements and the then existing New Debt
Documents, if any, at the time of such sale or disposition, to the extent of the
interest sold or disposed of; (b) if such Collateral is the Capital Stock of the
Utility which is being distributed, transferred or otherwise disposed of in
connection with the Spin Off, then on the date necessary to permit the Pledgor
to distribute, transfer or otherwise dispose of such Capital Stock free and
clear of any Lien under this Agreement so long as prior to such date: (i) the
Newco Stock has been distributed to the Pledgor, and (ii) the Pledgor has made
all filings or recordings and/or taken all other action required to be taken in
accordance with Section 3.4 with respect to the Newco Stock; (c) if such
Collateral constitutes all or substantially all of the Collateral, with the
consent of at least (i) 66 2/3% in aggregate principal amount of the Notes then
outstanding, voting as a single class, (including, without limitation, consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Notes), (ii) the required amount of the New Senior Secured Debt, if any,
as provided for in the relevant New Senior Debt Documents and (iii) the required
amount of the New Junior Secured Debt, if any, as provided for in the relevant
New Junior Secured Debt Documents, in each case, voting separately as a class;
(d) if such Collateral constitutes less than all or substantially all of the
Collateral, (i) with the consent of at least a majority in principal amount of
the Notes then outstanding (including, without limitation, consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), (ii) the required amount of the New Senior Secured Debt, if any, as
provided for in the relevant New Senior Secured Debt Documents and (iii) the
required amount of the New Junior Secured Debt, if any, as provided for in the
relevant New Junior Secured Debt Documents, in each case, voting separately as a
class; or (e) upon the occurrence of a Reorganization Event. For the avoidance
of doubt, the release of the security interest with respect to each class of
Secured Debt, as provided for in the foregoing clauses (c) and (d), shall
require only the consent of the holders of that class of Secured Debt with
respect to which such security interest is being released.
19. NOTICES, ETC. All notices, requests, demands or other
communications hereunder shall be in writing and faxed, mailed or delivered, if
to the Pledgor or the Collateral Agent, at its respective facsimile number or
address set forth below or, if to any other Person, at the address or facsimile
number specified for such Person in the applicable Debt Document (or to such
other facsimile number or address for any party as indicated in any notice given
by that party to the other parties). All such notices and communications shall
be effective (i) when sent by an overnight courier service of recognized
standing, on the second Business Day following the deposit with such service;
(ii) when mailed, first class postage prepaid and addressed as aforesaid through
the United States Postal Service, upon receipt; (iii) when delivered by hand,
upon delivery; and (iv) when faxed, upon confirmation of receipt:
21
(a) If to the Pledgor, at:
PG&E Corporation
Xxx Xxxxxx, Xxxxx Xxxxx Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Chief Counsel - Corporate
Tel.: (000) 000-0000
Fax.: (000) 000-0000
(b) If to the Collateral Agent, at:
Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Escrow Department
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to the Trustee at:
Bank One, N.A.
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
20. WAIVER; AMENDMENT.
20.1 General. None of the terms and conditions of this Agreement may
be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by the Pledgor and the Collateral Agent.
20.2 Amendment Adverse to the Senior Secured Debt Holders. Any
amendment to, or waiver of, the provisions of this Agreement in any manner (a)
that adversely affects the rights of the Senior Secured Parties, if any, or (b)
that releases any of the Collateral from the Liens under this Agreement (in each
case, other than in accordance with the terms hereof,) shall require the consent
of (i) the Noteholders of at least 66 2/3% of the aggregate principal amount of
Notes then outstanding, if any, and (ii) the New Senior Secured Debt Holders, if
any, of the required amount of the New Senior Secured Debt, as provided for in
the relevant New Senior Secured Debt Documents, in each case, voting separately
as a class; provided, however, that such consent shall not be required if the
Senior Secured Obligations (other than Unmatured Surviving Obligations) have
been indefeasibly paid in full.
20.3 Amendment Adverse to the New Junior Secured Debt Holders. In
addition to any requirements set forth in this Section 20, any amendment to, or
waiver of, the provisions of this Agreement in any manner (a) that adversely
affects the rights of the Junior Secured Debt Holders, if any, or (b) that
releases any of the Collateral from the Liens under this Agreement (in each
case,
22
other than in accordance with the terms hereof) shall require, the consent of
the New Junior Secured Debt Holders, if any, of the required amount of the New
Junior Secured Debt, as provided for in the relevant New Junior Secured Debt
Documents; provided, however, that such consent shall not be required if the New
Junior Secured Obligations (other than Unmatured Surviving Obligations) have
been indefeasibly paid in full.
20.4 Amendment to Cure Defect, Etc. Notwithstanding the requirements
set forth in Section 20.2 and Section 20.3, the Pledgor and the Collateral Agent
may amend or supplement this Agreement without the consent of any Noteholder or
any Additional Debt Holder: (i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for the assumption of the Pledgor's obligations to the
Noteholders and the Additional Debt Holders, as the case may be, in the case of
a merger or consolidation or sale of all or substantially all of the Pledgor's
assets; (iii) to make any change that would provide any additional rights or
benefits to the Secured Parties or that does not adversely affect the legal
rights under the Indenture, any New Senior Debt Document or any New Junior Debt
Document, as the case may be, of any such Secured Party; or (iv) to comply with
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
21. NEW SECURED DEBT. At any time when the Pledgor desires to secure
any Indebtedness that is permitted by the Indenture to share in the security
interest granted under this Agreement, the Pledgor shall execute and deliver (or
cause to be executed and delivered) (a) all such documents (including, without
limitation, any amendments or supplements to this Agreement) as the Collateral
Agent and the Pledgor shall reasonably agree are necessary to appoint the
Collateral Agent as collateral agent hereunder with respect to such Indebtedness
and otherwise to effectuate the inclusion of the relevant Indebtedness as New
Secured Debt hereunder (which documents shall include, without limitation, a
notification of the Collateral Agent and the Trustee in respect of such New
Secured Debt substantially in the form attached hereto as Exhibit 2) and (b) all
other documents that the holder of such Indebtedness shall deem necessary or
desirable in connection with the creation and perfection of such security
interests, provided that such documentation is reasonably acceptable to the
Collateral Agent and the Pledgor.
22. COLLATERAL AGENT.
22.1 Appointment. Each Secured Party hereby appoints, designates and
authorizes the Collateral Agent to take such action on its behalf under the
provisions of the Pledge Agreements and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of any such Pledge
Agreement, together with such powers as are reasonably incidental thereto. Each
Secured Party authorizes the Collateral Agent to execute, deliver and perform
each of the Pledge Agreements and such Secured Party agrees to be bound by all
of the agreements of the Collateral Agent contained in the Pledge Agreements.
Notwithstanding any provision to the contrary contained in the Pledge
Agreements, the Collateral Agent shall not have any duties or responsibilities
except those expressly set forth in the Pledge Agreements, and the Collateral
Agent does not have or shall not be deemed to have any fiduciary relationship
with any Secured Party, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into the Debt Documents or
otherwise exist against the Collateral Agent. Without limiting the generality of
the foregoing sentence, the use of the term "Collateral Agent," in this
Agreement with reference to the Collateral Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law. Instead, such term is used merely as a matter of
market
23
custom, and is intended to create or reflect only a relationship between
independent contracting parties.
22.2 Exculpatory Provisions. Neither the Collateral Agent nor any of
its officers, directors, employees or agents shall (i) be liable for any action
taken or omitted to be taken by it under or in connection with the Pledge
Agreements or the transactions contemplated thereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Secured Parties or any other Person for any recital, statement,
representation or warranty made by the Pledgor or any Affiliate of the Pledgor,
or any officer thereof, contained in the Pledge Agreements, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Collateral Agent under or in connection with, the Pledge
Agreements, or for the value of or title to any Collateral, or the validity,
effectiveness, genuineness, enforceability or sufficiency of the Pledge
Agreements, or for any failure of the Pledgor or any other party to the Pledge
Agreements to perform its obligations thereunder. The Collateral Agent shall not
be under any obligation to any Secured Party to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, any Pledge Agreement, or to inspect the books or records of the
Pledgor or any Affiliate of the Pledgor. Anything in the Pledge Agreements to
the contrary notwithstanding, in no event shall the Collateral Agent be liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to loss of profits).
22.3 Reliance by Collateral Agent. The Collateral Agent shall be
entitled to rely conclusively, and shall be fully protected in so relying, upon
any writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Collateral Agent. The Collateral Agent shall be fully justified in failing or
refusing to take any action under the Pledge Agreements (i) if such action
would, in the opinion of the Collateral Agent (upon consultation with counsel),
be contrary to applicable Law or the terms of the Pledge Agreements, (ii) if
such action is not specifically provided for in the Pledge Agreements and it
shall not have received such written advice or concurrence of the Required
Secured Parties, in each case as the Collateral Agent deems appropriate, (iii)
unless, if it so requests, such Collateral Agent shall first be indemnified to
its satisfaction by the Secured Parties against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Pledge Agreements in accordance
with a written request or written consent of the Required Secured Parties, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Secured Parties.
22.4 Notice of Default. The Collateral Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
unless the Collateral Agent shall have received written notice from a Secured
Party or the Pledgor referring to the relevant Debt Document, describing such
Default or Event of Default and stating that such notice is a "Notice of
Default". If the Collateral Agent receives any such notice of the occurrence of
a Default or an Event of Default, it shall give notice thereof to each Secured
Debt Representative. The Collateral Agent shall take such action with respect to
such Default or Event of Default as may be requested in writing by the Required
Secured Parties; provided, however, that unless and until the Collateral Agent
has received any such request, the Collateral Agent may (but shall not be
obligated to) take such action,
24
or refrain from taking such action, with respect to such Default or Event of
Default under the Pledge Agreements as it shall deem advisable or in the best
interest of the Secured Parties.
22.5 Fees and Expenses. The Pledgor covenants and agrees to pay to
the Collateral Agent from time to time, and the Collateral Agent shall be
entitled to, the fees and expenses agreed in writing between Pledgor and the
Collateral Agent, and will further pay or reimburse the Collateral Agent upon
its request for all reasonable expenses, disbursements and advances incurred or
made by the Collateral Agent in accordance with the provisions hereof or any
other documents executed in connection herewith (including the reasonable
compensation and the reasonable expenses and disbursements of its counsel and
all persons not regularly in its employ). The obligations of the Pledgor under
this Section 22.5 to compensate the Collateral Agent and to pay or reimburse the
Collateral Agent for the reasonable expenses, disbursements and advances shall
survive the satisfaction and discharge of this Agreement or the earlier
resignation or removal of the Collateral Agent.
22.6 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Secured Parties shall indemnify upon demand the
Collateral Agent, its officers, directors, employees, counsel, agents and
attorneys in fact ("Agent Related Person") (to the extent not reimbursed by or
on behalf of the Pledgor within ninety days of the Collateral Agent's request to
the Pledgor for payment and without limiting the obligation of the Pledgor to do
so), pro rata in accordance with the aggregate principal amount of the Secured
Debt held by such Secured Parties (as determined by the Secured Debt
Representatives), from and against any and all Indemnified Liabilities;
provided, however, that no Secured Party shall be liable for the payment to the
Collateral Agent or the Agent Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Secured Party shall
reimburse the Collateral Agent upon demand as provided above of any costs or
out-of-pocket expenses incurred by such Collateral Agent or Agent Related Person
(to the extent not reimbursed by or on behalf of the Pledgor within ninety days
of the Collateral Agent's request to the Pledgor for payment and without
limiting the obligation of the Pledgor to do so) in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, the Pledge
Agreements or any document contemplated by or referred to therein, pro rata in
accordance with the aggregate principal amount of the Loans held by such Secured
Parties (as determined by the Secured Debt Representatives). The provisions of
this section shall survive termination of the Pledge Agreements or earlier
resignation or removal of the Collateral Agent.
Notwithstanding anything herein to the contrary, the Collateral
Agent shall be entitled to set off from any Collateral or proceeds thereof any
amounts due and owing to it pursuant to this Section 22.6 solely to the extent
such amounts are not paid by the Pledgor or the Secured Parties as provided in
the Pledge Agreements and such amounts remain unpaid by the Secured Parties for
a period of thirty days after demand therefor.
22.7 Successor Collateral Agent. Subject to the appointment and
acceptance of a successor as provided below, the Collateral Agent may resign at
any time by giving notice thereof to the Secured Parties and the Pledgor, and
the Collateral Agent may be removed at any time with or without cause by the
Required Secured Parties upon thirty days prior written notice. Upon any such
resignation or removal, the Required Secured Parties shall have the right to
appoint a successor to
25
the Collateral Agent. If no successor Collateral Agent shall have been appointed
by the Required Secured Parties, and shall have accepted such appointment within
thirty days after the resigning Collateral Agent's giving of notice of
resignation or the giving of any notice of removal of such Collateral Agent,
then the resigning Collateral Agent or Collateral Agent being removed, as the
case may be, may at the Pledgor's expense, appoint a successor to such
Collateral Agent or petition a court of competent jurisdiction for a successor.
If the Collateral Agent shall resign or be removed pursuant to the foregoing
provisions, upon the acceptance of appointment by a successor Collateral Agent
hereunder, the former Collateral Agent shall deliver all Collateral then in its
possession to the successor Collateral Agent. Upon the acceptance of its
appointment as a successor Collateral Agent hereunder, such successor Collateral
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of such resigning or removed Collateral Agent, and such
resigning Collateral Agent or removed Collateral Agent shall be discharged from
its duties and obligations under the Pledge Agreements.
22.8 Miscellaneous. (a) None of the provisions of the Pledge
Agreements shall require the Collateral Agent to expend or risk its own funds or
otherwise to incur any liability, financial or otherwise, in the performance of
any of its duties thereunder, or in the exercise of any of its rights or powers
if it shall have reasonable grounds for believing that repayment of such funds
or indemnity satisfactory to it against such risk or liability is not assured to
it.
(b) The Collateral Agent may execute any of the trusts or powers or
perform any duties under any Pledge Agreement either directly or by or through
agents, attorneys, custodians or nominees appointed with due care, and shall not
be responsible for any willful misconduct or negligence on the part of any
agent, attorney, custodian or nominee so appointed.
(c) Any corporation into which the Collateral Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Collateral Agent shall
be a party, or any corporation succeeding to the business of the Collateral
Agent shall be the successor of the Collateral Agent under the Pledge Agreements
without the execution or filing of any paper with any party to the Pledge
Agreements or any further act on the part of any of the parties to the Pledge
Agreements except where an instrument of transfer or assignment is required by
law to effect such succession, anything herein to the contrary notwithstanding.
(d) The Collateral Agent shall not take any instructions with
respect to the Pledge Agreements from any entity that is not a Secured Party
hereunder.
23. MISCELLANEOUS. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of and be enforceable by each of the parties hereto and its successors
and assigns, provided that the Pledgor may not assign any of its rights or
obligations under this Agreement without the prior written consent of the
Collateral Agent. The headings in this Agreement are for purposes of reference
only and shall not limit or define the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument. In the event that any provision of
this Agreement shall prove to be invalid or unenforceable, such provision shall
be deemed to be severable from the other provisions of this Agreement which
shall remain binding on all parties hereto.
26
24. GOVERNING LAW. THIS AGREEMENT, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE AND MATTERS RELATING TO THE CREATION,
VALIDITY, ENFORCEMENT OR PRIORITY OF THE SECURITY INTERESTS CREATED BY THIS
AGREEMENT, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAWS RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW), EXCEPT AS MAY BE REQUIRED BY OTHER MANDATORY
PROVISIONS OF LAW.
25. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING
HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE NOTEHOLDERS
TO PURCHASE THE NOTES, THE ADDITIONAL DEBT HOLDERS, IF ANY, TO ISSUE ANY NEW
SECURED DEBT AND THE COLLATERAL AGENT TO ENTER INTO THIS AGREEMENT AND ANY OTHER
RELEVANT DEBT DOCUMENT TO WHICH IT IS A PARTY.
27
IN WITNESS WHEREOF, the Pledgor, the Trustee and the Collateral
Agent have caused this Agreement to be executed by their duly elected officers
duly authorized as of the date first above written.
PLEDGOR
PG&E CORPORATION
By /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
TRUSTEE
BANK ONE, N.A.
By /s/ Xxxxxx Xxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxx Xxxxxxx
Title: Vice President,
Assistant Secretary
COLLATERAL AGENT
DEUTSCHE BANK TRUST COMPANY AMERICAS
By /s/ Xxxxxxx Xxxxx Day
---------------------------------
Name: Xxxxxxx Xxxxx Day
Title: Vice President
[Signature page to Utility Stock Protective Pledge Agreement]
ANNEX A
to
PLEDGE AGREEMENT
LIST OF PLEDGED STOCK
Percentage of the
issued and
Name of Type of Number of outstanding common
Issuer Interest Shares stock of the Issuer Certificate No.
------ -------- ------ ------------------- ---------------
Pacific Gas and Common Stock 196,191,806 61.06% ZQU11
Electric Company
ANNEX B
to
PLEDGE AGREEMENT
Name of Pledgor: PG&E Corporation
Jurisdiction of Organization: California
Identification Number: C1953580
EXHIBIT 1
to
PLEDGE AGREEMENT
Pledge Agreement Acknowledgment
Ladies and Gentlemen:
Reference is made to the Utility Stock Base Pledge Agreement, made
as of July 2, 2003, by and between PG&E Corporation, as Pledgor, Bank One, N.A.,
as Trustee, and Deutsche Bank Trust Company Americas, as Collateral Agent (the
"Base Pledge Agreement") and the Utility Stock Protective Pledge Agreement, made
as of July 2, 2003, by and between PG&E Corporation, as Pledgor, Bank One, N.A.,
as Trustee, and Deutsche Bank Trust Company Americas, as Collateral Agent (the
"Protective Pledge Agreement"; together with the Base Pledge Agreement, the
"Pledge Agreements"). Defined terms used in this acknowledgment and not
otherwise defined have the meanings given to such terms in the Pledge
Agreements.
The undersigned hereby acknowledges and agrees to be bound by the
terms of the Pledge Agreements. The undersigned further agrees that the
obligations owing to it under the [INSERT NAMES OF RELEVANT DEBT DOCUMENT(S)]
shall be treated as [New Senior Secured Debt][New Junior Secured Debt] under
such Pledge Agreements.
[ADDITIONAL DEBT HOLDER]
[----------------------------------]
By
---------------------------------
Name:
Title:
AGREED AND ACCEPTED BY:
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent
By
-------------------------------
Name:
Title:
EXHIBIT 2
to
PLEDGE AGREEMENT
New Secured Debt Notification
Via Facsimile
Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Escrow Department
Tel: (000) 000-0000
Fax: (000) 000-0000
Bank One, N.A.
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Ladies and Gentlemen:
Reference is made to the Utility Stock Base Pledge Agreement, made
as of July 2, 2003, by and between PG&E Corporation, as Pledgor, Bank One, N.A.,
as Trustee, and Deutsche Bank Trust Company Americas, as Collateral Agent (the
"Base Pledge Agreement") and the Utility Stock Protective Pledge Agreement, made
as of July 2, 2003, by and between PG&E Corporation, as Pledgor, Bank One, N.A.,
as Trustee, and Deutsche Bank Trust Company Americas, as Collateral Agent (the
"Protective Pledge Agreement"; together with the Base Pledge Agreement, the
"Pledge Agreements"). Defined terms used in this notification and not otherwise
defined have the meanings given to such terms in the Pledge Agreements.
In accordance with Section 21 of the Pledge Agreements, PG&E
Corporation hereby notifies you that it has issued [NEW SECURED DEBT] which
shall be treated as [New Senior Secured Debt][New Junior Secured Debt] under the
terms of the Pledge Agreements. [The holders of such New Senior Secured Debt
[shall be][shall not be] entitled to vote separately as a class in any matter
requiring the consent of the Required Secured Parties under the terms of the
Pledge Agreements.]
PG&E Corporation further advises you that all notices, requests,
demands or other communications required to be given to the holders of such [New
Senior Secured Debt][New Junior Secured Debt] in accordance with the terms of
the Pledge Agreements should be directed to [NEW DEBT REPRESENTATIVE] at the
following address: [ADDRESS OF NEW DEBT REPRESENTATIVE].
PG&E CORPORATION, as Pledgor
By
--------------------------
Name:
Title:
AGREED AND ACCEPTED BY:
BANK ONE, N.A., as Trustee
By
-------------------------------
Name:
Title:
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent
By
-------------------------------
Name:
Title:
