EXHIBIT 10.2.7
ASSIGNMENT AND SECURITY AGREEMENT
THIS ASSIGNMENT AND SECURITY AGREEMENT (this "Assignment Agreement"),
dated as of March 8, 2002, made by CALPINE CORPORATION, a Delaware corporation
(the "Grantor"), in favor of THE BANK OF NOVA SCOTIA, as administrative agent
(together with any successors thereto in such capacity, the "Agent") for each
of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of even date
herewith (together with all amendments and other modifications, if any, from
time to time thereafter made thereto, the "Credit Agreement"), among Grantor,
the various commercial lending institutions (individually a "Lender" and
collectively the "Lenders") as are, or may from time to time become, parties
thereto and the Agent, the Lenders have extended Commitments to the Grantor; and
WHEREAS, as a condition precedent to the effectiveness of the Credit
Agreement, the Grantor is required to execute and deliver this Assignment
Agreement; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Assignment Agreement; and
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Lenders to make Loans (including the initial Loans) to the Grantor and issue
Letters of Credit for the account of the Grantor pursuant to the Credit
Agreement, the Grantor agrees, for the benefit of each Lender Party, as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Assignment Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Agent" is defined in the preamble.
"Assigned Agreement" is defined in Section 2.1.
"Assignment Agreement" is defined in the preamble.
"Calpine Gilroy" means Calpine Gilroy Xxxxx X.X., a Delaware limited
partnership.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Grantor" is defined in the preamble.
"Lender" is defined in the first recital.
"Lender Party" means, as the context may require, any Lender or the Agent
and each of its respective successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Secured Obligations" is defined in the Section 2.2.
"U.C.C." means the Uniform Commercial Code, as in effect in the State of
Delaware.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Assignment
Agreement, including its preamble and recitals, have the meanings provided in
the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Assignment Agreement, including its preamble and recitals,
with such meanings.
ARTICLE II
ASSIGNMENT, ETC.
SECTION 2.1. Assignment. The Grantor hereby collaterally assigns to the
Agent for its benefit and the ratable benefit of each of the Lender Parties,
and hereby grants to the Agent for its benefit and the ratable benefit of each
of the Lender Parties a security interest in, all of the Grantor's right, title
and interest, whether now existing or hereafter arising or acquired, in and to
the following (the "Collateral"): Purchase Agreement, between Calpine
Corporation and Calpine Gilroy Xxxxx X.X., a Delaware limited partnership,
dated as of March 8, 2002, as it may be amended or otherwise modified from time
to time (as so amended or modified, the "Assigned Agreement"), including,
without limitation,
(a) all rights of the Grantor to receive moneys due and to become
due under or pursuant to the Assigned Agreement,
(b) all rights of the Grantor to receive proceeds of any insurance,
indemnity, warranty, guaranty or collateral security with respect to the
Assigned Agreement,
(c) all claims of the Grantor for damages arising out of or for
breach of or default under the Assigned Agreement,
(d) the right of the Grantor to terminate the Assigned Agreement,
to perform thereunder and to compel performance and otherwise exercise all
remedies thereunder, and
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(e) to the extent not included in the foregoing, all proceeds of
any and all of the foregoing collateral.
SECTION 2.2. Security for Obligations. This Assignment Agreement secures
the payment of all obligations of the Grantor now or hereafter existing under
the Credit Agreement, the Notes and each other Loan Document to which the
Grantor is or may become a party, whether for principal, interest, costs, fees,
expenses or otherwise, and all obligations of the Grantor now or hereafter
existing under this Assignment Agreement and each other Loan Document to which
it is or may become a party (all such obligations of the Grantor being the
"Secured Obligations").
SECTION 2.3. Continuing Assignment and Security Interest; Transfer of
Notes. This Assignment Agreement shall create a continuing security interest in
the Collateral and shall
(a) remain in full force and effect until payment in full of all
Secured Obligations and the termination of all Commitments,
(b) be binding upon the Grantor, its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent and each other Lender Party.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Loan held by it
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Lender under any Loan Document (including this Assignment Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 11.11 of the Credit Agreement. Upon
the payment in full of all Secured Obligations and the termination of all
Commitments, the security interest granted herein shall terminate and all
rights to the Collateral shall revert to the Grantor. Upon any such
termination, the Agent will, at the Grantor's sole expense, execute and deliver
to the Grantor such documentation as the Grantor shall reasonably request to
evidence such termination.
SECTION 2.4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
(a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and
shall perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Assignment Agreement had not been
executed,
(b) the exercise by the Agent of any of its rights hereunder shall
not release the Grantor from any of its duties or obligations under any
such contracts or agreements included in the Collateral, and
(c) neither the Agent nor any other Lender Party shall have any
obligation or liability under any such contracts or agreements included in
the Collateral by reason of
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this Assignment Agreement or by the exercise by any Lender Party of its
rights hereunder or under any other Loan Document, nor shall the Agent or
any other Lender Party be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Grantor represents and
warrants unto each Lender Party as set forth in this Article.
SECTION 3.1.1. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Grantor of this Assignment Agreement, is within
the Grantor's powers, has been duly authorized by all necessary corporate
action, and does not
(a) contravene the Grantor's Organic Documents;
(b) contravene any contractual restriction (including, without
limitation, the Assigned Agreement), law or governmental regulation or
court decree or order binding on or affecting the Grantor; or
(c) except for the Lien created hereunder, result in, or require
the creation or imposition of, any Lien on any of the Grantor's
properties.
SECTION 3.1.2. Validity of Assigned Agreement. The Assigned Agreement, a
true and complete copy of which has been furnished to the Agent, has been duly
authorized, executed and delivered by the parties thereto, has not been amended
or otherwise modified and is in full force and effect and is binding upon and
enforceable against the parties thereto in accordance with its terms. The
Grantor has fully performed all of its obligations under the Assigned Agreement
and, to the best of the Grantor's knowledge, Calpine Gilroy has no defense,
setoff or counterclaim arising under the Assigned Agreement. There exists no
default under the Assigned Agreement by the Grantor and, to the best of the
Grantor's knowledge, by Calpine Gilroy.
SECTION 3.1.3. Location of Collateral, etc. The place of business and
chief executive office of the Grantor and the office where the Grantor keeps
its records concerning the Collateral is the address specified for the Grantor
on the signature page hereto. The Grantor has no trade name. The Grantor has
not been known by any legal name difference from the one set forth on the
signature page hereto, nor has the Grantor been the subject of any merger or
other corporate reorganization. None of the Collateral is evidenced by a
promissory note or other instrument.
SECTION 3.1.4. Ownership, No Liens, etc. The Grantor owns the Collateral
free and clear of any Lien, security interest, charge or encumbrance except for
the security interest created by this Assignment Agreement. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except such as may
have been filed in favor of the Agent relating to this Assignment Agreement.
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SECTION 3.1.5. Validity, etc. This Assignment Agreement creates a valid
and, upon filing of a proper financing statement with the Delaware Secretary of
State, first priority security interest in the Collateral, securing the payment
of the Secured Obligations, and, upon the filing of such financing statement,
all filings and other actions necessary or desirable to perfect and protect
such security interest will have been duly taken.
SECTION 3.1.6. Authorization, Approval, etc. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either
(a) for the grant by the Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Assignment
Agreement by the Grantor, or
(b) for the perfection of or the exercise by the Agent of its
rights and remedies hereunder.
SECTION 3.1.7. Compliance with Laws. The Grantor is in compliance with the
requirements of all applicable laws, rules, regulations and orders of every
governmental authority, the non-compliance with which might materially
adversely affect the business, properties, assets, operations, condition
(financial or otherwise) or prospects of the Grantor or the value of the
Collateral or the worth of the Collateral as collateral security.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. The Grantor covenants and agrees that, so
long as any portion of the Secured Obligations shall remain unpaid or any
Lender shall have any outstanding Commitment, the Grantor will, unless the
Required Lenders shall otherwise consent in writing, perform the obligations
set forth in this Section.
SECTION 4.1.1. As to Assigned Agreement. The Grantor, at its expense,
shall or shall cause Calpine Gilroy, as applicable, to:
(a) perform and observe all the terms and provisions of the
Assigned Agreement to be performed or observed by Grantor or Calpine
Gilroy, maintain the Assigned Agreement in full force and effect, enforce
the Assigned Agreement in accordance with its terms, and take all such
action to such end as may be from time to time requested by the Agent; and
(b) furnish to the Agent promptly upon receipt thereof copies of
all material notices, requests and other documents received by the Grantor
or Calpine Gilroy under or pursuant to the Assigned Agreement, and from
time to time (i) furnish to the Agent such information and reports
regarding the Collateral as the Agent may reasonably request and (ii) upon
request of the Agent make to Calpine Gilroy such demands and requests for
information and reports or for action as the Grantor is entitled to make
under the Assigned Agreement.
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SECTION 4.1.2.Transfers and Other Liens. The Grantor shall not and shall
cause Calpine Gilroy not to:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, or create or suffer to exist any Lien,
security interest or other charge or encumbrance upon or with respect to
any of the Collateral to secure Indebtedness of any Person or entity,
except for the assignment and security interest created by this Assignment
Agreement;
(b) cancel or terminate the Assigned Agreement or consent to or
accept any cancellation or termination thereof;
(c) amend or otherwise modify the Assigned Agreement or give any
consent, waiver or approval thereunder without the consent of the Required
Lenders, such consent by the Required Lenders not to be unreasonably
withheld;
(d) waive any default under or breach of the Assigned
Agreement without the consent of the Required Lenders, such consent by the
Required Lenders not to be unreasonably withheld; or
(e) take any other action in connection with the Assigned Agreement
which would impair the value of the interest or rights of the Grantor
thereunder or which would impair the interest or rights of the Agent.
SECTION 4.1.3. Further Assurances, etc. The Grantor agrees that, from time
to time, at the expense of the Grantor, the Grantor will and will cause Calpine
Gilroy to promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that the
Agent may reasonably request, in order to perfect, preserve and protect any
security interest granted or purported to be granted hereby or to enable the
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, the Grantor
will and will cause Calpine Gilroy to
(a) if any Collateral shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, deliver and pledge
to the Agent hereunder such promissory note or instrument, negotiable
document or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
reasonably satisfactory to the Agent; and
(b) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Agent may reasonably request, in order
to perfect and preserve the security interests and other rights granted or
purported to be granted to the Agent hereby.
With respect to the foregoing and the grant of the security interest hereunder,
the Grantor hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of the Grantor where permitted by law. A
carbon, photographic or other reproduction of this Assignment Agreement
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or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
SECTION 4.1.4. Maintain its Existence. The Grantor shall keep its state of
incorporation in the state of Delaware.
ARTICLE V
THE AGENT
SECTION 5.1. Agent Appointed Attorney-in-Fact. Grantor hereby irrevocably
appoints the Agent the Grantor's attorney-in-fact, with full authority in the
place and stead of the Grantor and in the name of the Grantor or otherwise,
from time to time in the Agent's discretion, but only after the occurrence and
during the continuance of an Event of Default, to take any action (including
any action under the Assigned Agreement that the Grantor is entitled to take)
and to execute any instrument which the Agent may deem necessary or advisable
to accomplish the purposes of this Assignment Agreement, including, without
limitation:
(a) to ask, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection thereof or to enforce compliance with the terms and conditions
of the Assigned Agreement; and
(d) to perform the affirmative obligations of the Grantor hereunder
(including all obligations of the Grantor pursuant to Section 4.1.1 and
Section 4.1.3).
The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Agent May Perform. If the Grantor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Grantor pursuant to Section 6.2.
SECTION 5.3. Agent Has No Duty. In addition to, and not in limitation of,
Section 2.4, the powers conferred on the Agent hereunder are solely to protect
its interest (on behalf of the Lender Parties) in the Collateral and shall not
impose any duty on it to exercise any such powers. Except for reasonable care
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
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SECTION 5.4. Reasonable Care. The Agent is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its
possession; provided, however, the Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral, if it
takes such action for that purpose as the Grantor reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default, but failure of the Agent to comply with any such request
at any time shall not in itself be deemed a failure to exercise reasonable
care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral) and also may exercise any and all rights and remedies of the
Grantor under or in connection with the Assigned Agreement or otherwise in
respect of the Collateral, including, without limitation, any and all
rights of the Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, the Assigned Agreement;
(b) all payments received by the Grantor under or in connection
with the Assigned Agreement or otherwise in respect of the Collateral
shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Grantor and shall be forthwith paid
over to the Agent in the same form as so received (with any necessary
indorsement); and
(c) all payments made under or in connection with the Assigned
Agreement or otherwise in respect of the Collateral and received by the
Agent may, in the discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Agent pursuant to Section 6.2) in
whole or in part by the Agent for the ratable benefit of the Lender
Parties against, all or any part of the Secured Obligations in such order
as the Agent shall elect. Any surplus of such payments held by the Agent
and remaining after payment in full of all the Secured Obligations shall
be paid over to the Grantor or to whomsoever may be lawfully entitled to
receive such surplus.
SECTION 6.2. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Agent from and against any
and all claims, losses and liabilities arising out of or resulting from
this Assignment Agreement (including, without limitation, enforcement of
this Assignment Agreement), except claims, losses or liabilities resulting
from the Agent's or any Lender Party's gross negligence or wilful
misconduct.
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(b) The Grantor will upon demand pay to the Agent the amount of any
and all reasonable fees and expenses of its counsel and of any experts and
agents, which the Agent may incur in connection with (i) the
administration of this Assignment Agreement, (ii) the custody or
preservation of, or the collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of
the Agent or the Lender Parties hereunder, or (iv) the failure by the
Grantor to perform or observe any of the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Assignment Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any provision
of this Assignment Agreement nor consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 7.3. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telefacsimile) and, if to
the Grantor, mailed or telecopied or delivered to it, addressed to it at the
address set forth below its signature hereto, if to the Agent, mailed or
delivered to it, addressed to it at the address of the Agent, telecopied
specified in the Credit Agreement, or as to either party at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices and
other communications shall, when mailed or telecopied, respectively, be
effective when deposited in the mails or telecopied, respectively, addressed as
aforesaid.
SECTION 7.4. Section Captions. Section captions used in this Assignment
Agreement are for convenience of reference only, and shall not affect the
construction of this Assignment Agreement.
SECTION 7.5. Severability. Wherever possible each provision of this
Assignment Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Assignment Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Assignment Agreement.
SECTION 7.6. Governing Law, Entire Agreement, etc. THIS ASSIGNMENT
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL
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LAWS OF THE STATE OF NEW YORK. This Assignment Agreement constitutes the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.
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IN WITNESS WHEREOF, the Grantor has caused this Assignment Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
CALPINE CORPORATION,
a Delaware corporation
By:__________________________________________
Title:
Address:
Attention:
Telecopier:
THE BANK OF NOVA SCOTIA
By:__________________________________________
Title:
Address: 000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Telecopier: 000-000-0000
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